Washington-Seattle-1000 Dexter Avenue North Lease - Firdex Associates and MegaDepot.com Inc.
1000 DEXTER
OFFICE LEASE
BETWEEN
FIRDEX ASSOCIATES
AS LANDLORD,
AND
MEGADEPOT.COM, INC.
AS TENANT
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INDEX
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SECTION 1. Lease Data; Exhibits........................................................ 1
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SECTION 2. Premises.................................................................... 2
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(a) Premises...................................................................... 2
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(b) Common Areas.................................................................. 2
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(c) Alterations................................................................... 3
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SECTION 3. Term........................................................................ 3
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(a) Initial Term.................................................................. 3
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(b) Renewal Option................................................................ 3
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SECTION 4. Rent........................................................................ 5
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(a) Base Rent and Additional Rent................................................. 5
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(b) Adjustments to Base Rent...................................................... 5
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SECTION 5. Tenant's Share of Operating Costs and Real Property Taxes................... 5
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(a) Amount........................................................................ 5
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(b) Definitions................................................................... 6
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SECTION 6. Late Charge; Interest....................................................... 7
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SECTION 7. Deposit..................................................................... 7
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SECTION 8. Tenant's Operations......................................................... 8
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(a) Use of Premises............................................................... 8
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(b) Unlawful Use.................................................................. 8
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(c) Liens and Encumbrances........................................................ 8
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(d) Hazardous Substances.......................................................... 8
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(e) Signs......................................................................... 9
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SECTION 9. Utilities and Services; Deliveries.......................................... 9
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(a) Tenant's Responsibility....................................................... 9
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(b) Services...................................................................... 9
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(c) Interruption..................................................................10
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(d) Telecommunications Services...................................................10
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SECTION 10. Licenses and Taxes.........................................................10
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SECTION 11. Alterations by Tenant......................................................11
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SECTION 12. Care of Premises...........................................................11
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SECTION 13. Surrender of Premises......................................................11
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SECTION 14. Waiver; Indemnity..........................................................12
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(a) Tenant Indemnity..............................................................12
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(b) Landlord's Indemnity..........................................................12
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(c) General Indemnity Provisions..................................................12
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(d) Release of Claims.............................................................12
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SECTION 15. Insurance.................................................................. 12
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(a) Tenant's Insurance............................................................ 12
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(b) General Insurance Requirements................................................ 13
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(c) Landlord's Insurance.......................................................... 13
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(d) Waiver of Subrogation......................................................... 13
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SECTION 16. Assignment or Subletting................................................... 13
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(a) Consent Required.............................................................. 13
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(b) Recapture Right............................................................... 14
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(c) Additional Consideration...................................................... 14
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(d) Entities...................................................................... 14
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(e) Assignment by Landlord........................................................ 14
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SECTION 17. Destruction................................................................ 14
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(a) Partial Destruction........................................................... 14
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(b) Total Destruction............................................................. 15
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(c) Limitation.................................................................... 15
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SECTION 18. Eminent Domain............................................................. 15
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(a) Taking........................................................................ 15
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(b) Award......................................................................... 15
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SECTION 19. Default by Tenant.......................................................... 16
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(a) Definition.................................................................... 16
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(b) Remedies...................................................................... 16
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(c) Reentry....................................................................... 16
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(d) Termination................................................................... 17
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(e) Adequate Security............................................................. 17
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(f) Landlord's Remedies Cumulative; Waiver........................................ 17
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SECTION 20. Default by Landlord; Lender Protection..................................... 17
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(a) Default by Landlord........................................................... 17
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(b) Notice to Lender.............................................................. 17
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SECTION 21. Attorneys' Fees............................................................ 18
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SECTION 22. Access by Landlord......................................................... 18
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SECTION 23. Holding Over............................................................... 18
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SECTION 24. Subordination; Estoppel Certificates....................................... 18
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(a) Subordination................................................................. 18
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(b) Estoppel Certificates......................................................... 19
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SECTION 25. Reserved................................................................... 19
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SECTION 26. Liability of Landlord...................................................... 19
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SECTION 27. Miscellaneous.............................................................. 19
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(a) Quiet Enjoyment............................................................... 19
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(b) Notices....................................................................... 19
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(c) Successors or Assigns......................................................... 19
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(d) Authority and Liability....................................................... 19
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(e) Brokers' Commission........................................................... 20
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(f) Partial Invalidity............................................................ 20
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(g) Recording..................................................................... 20
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(h) Force Majeure................................................................. 20
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(i) Name of Building............................................................... 20
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(j) Headings....................................................................... 20
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(k) Execution by Landlord and Tenant; Approval of Lender........................... 20
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(l) Transportation Management Programs; Recycling.................................. 20
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(m) Entire Agreement; Applicable Law............................................... 21
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(n) Financial Statements........................................................... 21
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SECTION 28. Additional Provisions...................................................... 21
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(a) Parking........................................................................ 21
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(b) Storage........................................................................ 21
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(c) Letter of Credit............................................................... 22
(d) Expansion...................................................................... 23
(e) Rooftop Equipment.............................................................. 23
(f) Emergency Power Generator...................................................... 24
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<PAGE>
Exhibit 10.7
OFFICE LEASE
THIS LEASE is made as of April __, 1999, between FIRDEX ASSOCIATES, a
Washington general partnership ("Landlord"), and MEGADEPOT.COM, INC., a
Washington corporation ("Tenant"). Landlord and Tenant covenant and agree as
follows:
SECTION 1. Lease Data; Exhibits. The following terms shall have the
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following meanings, except as otherwise specifically modified in this Lease:
(a) Building: The building containing approximately 110,534 rentable
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square feet of office and commercial space, located at 1000
Dexter Avenue North in Seattle, King County, Washington, situated
on the real property (the "Land") legally described in Exhibit A
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attached. The Building consists of an office tower containing
approximately 100,261 rentable square feet of space (the "Tower")
and an adjacent parking structure with approximately 10,273
rentable square feet of commercial space situated on 8th Avenue
North.
(b) Premises: An area of approximately 19,136 rentable square feet
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consisting of the entire fourth (4th) floor of the Tower as shown
on the floor plan attached to this Lease as Exhibit B (the "Floor
---------
Plan").
(c) Lease Term: A period of eighty four (84) full calendar months,
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commencing on the Commencement Date and expiring on the
Expiration Date; provided, if the Commencement Date is a day
other than the first day of a calendar month, unless otherwise
agreed in writing, the Lease Term shall not commence until the
first day of the first calendar month starting after the
Commencement Date, however all of the terms and conditions of
this Lease (including those regarding the payment of rent) shall
be applicable on the Commencement Date. Base Rent and Additional
Rent for partial calendar months will be pro rated as provided in
Section 4 below.
(d) Commencement Date: The Commencement Date shall be determined as
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provided in Section 3. The estimated Commencement Date is July
1, 1999.
(e) Expiration Date: 11:59 p.m. on the last day of the eighty fourth
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(84th) full calendar month following the Commencement Date.
(f) Base Rent: Tenant shall pay $38,272.00 per month as Base Rent on
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or before the first day of each month. The amount of the monthly
Base Rent will be adjusted as provided in Section 4 below.
(g) Additional Rent: Whether or not so designated, all other sums
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due from Tenant under this Lease shall constitute Additional
Rent, payable when specified in this Lease.
(h) Operating Costs and Property Taxes: Tenant will pay its share of
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Operating Costs and Property Taxes pursuant to Section 5 of this
Lease.
(i) Deposit. $147,274.66.
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(j) Permitted Use: General business offices.
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(k) Building Standard Hours:
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Monday through Friday 7 a.m. to 6 p.m., and 7:00 a.m. to 1:00
p.m. on Saturdays, excluding legal holidays and holiday
weekends.
(l) Notice Addresses:
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To Landlord: c/o Alper Northwest, Inc.
700 Fifth Avenue, Suite 6000
Seattle, WA 98104
To Tenant: Prior to the Commencement Date -
209 1/2 1st Avenue South, Suite 302
Seattle, WA 98104
Attention: Mark T. Calvert, Vice President
and Chief Financial Officer
After the Commencement Date -
At the Premises
(m) Brokers:
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Listing Broker - None
Tenant's Broker - Flinn Ferguson
(n) Name and Address for Payments to Landlord:
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Firdex Associates
c/o Alper Management Services, Inc.
700 Fifth Avenue, Suite 6000
(o) Exhibits: The following exhibits are made a part of this
-------- Lease:
Exhibit A - Legal Description of Land
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Exhibit B - Floor Plan - Premises
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Exhibit C - Workletter
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Exhibit D - Rules and Regulations
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Exhibit E - Estoppel Certificate
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Exhibit F - Floor Plan - Storage Space
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SECTION 2. Premises.
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(a) Premises. Landlord hereby leases to Tenant, and Tenant hereby
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leases from Landlord, those certain premises (the "Premises") located on the
floor(s) and in the location referenced in Section 1. The Premises are leased by
Landlord and accepted by Tenant in an "AS IS" condition, subject to the
requirement that Landlord complete any improvements, alterations or
modifications to be made by Landlord pursuant to Exhibit C attached (the
"Workletter"), if any. Prior to taking occupancy of the Premises or moving any
of its furniture, fixtures or equipment, Tenant shall inspect the Premises and
Landlord and Tenant shall prepare and agree upon a "punchlist" of any items or
repairs which are the responsibility of Landlord. The existence of repairs or
defects of a nature commonly found on a "punchlist," as such term is used in the
construction industry, shall not postpone the Commencement Date or result in a
delay or abatement of Tenant's obligation to pay rent or give rise to a damage
claim against Landlord.
(b) Common Areas. During the Lease Term, Tenant and its licensees,
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invitees, customers and employees shall have the non-exclusive right to use all
<PAGE>
entrances, lobbies, elevators, stairs, corridors, restrooms and other public
areas of the Building (the "Building Common Areas"), and the "Project Common
Areas" (defined below), in common with Landlord, other Building tenants, other
"Project" (defined below) tenants, and their respective licensees, invitees,
customers and employees. The Building Common Areas and the Project Common Areas
are referred to in this Lease collectively as the "Common Areas". Landlord shall
at all times have exclusive control and management of the Common Areas and no
diminution thereof shall be deemed a constructive or actual eviction or entitle
Tenant to compensation or a reduction or abatement of rent.
(c) Alterations. Landlord may in its discretion increase, decrease
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or change the number, locations and dimensions of any hallways, lobby areas,
Common Areas and other improvements which are not within the Premises. Landlord
reserves the right from time to time (i) to install, use, maintain, repair,
relocate and replace pipes, ducts, conduits, wires and appurtenant meters and
equipment for service to the Premises or to other parts of the Building in areas
above the suspended ceiling surfaces, below the floor surfaces, within the walls
and in the central core areas of the Building, within the Premises and elsewhere
in the Building; (ii) to alter or expand the Building; and (iii) to alter,
relocate or substitute any of the Common Areas.
SECTION 3. Term.
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(a) Initial Term. The Commencement Date listed in Section 1 of this
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Lease represents an estimate of the actual Commencement Date. The actual
Commencement Date shall be the first to occur of the following events: (i) three
(3) days after Landlord notifies Tenant that any improvements, alterations or
modifications to be made by Landlord pursuant to the Workletter are
substantially completed, or (ii) the date on which Tenant takes possession of
the Premises for purposes other than completing tenant improvements. If the
Commencement Date is later than the estimated Commencement Date specified in
Section 1 above, this Lease shall not be void or voidable. Landlord shall
confirm the Commencement Date by written notice to Tenant. The Lease Term shall
begin on the Commencement Date and end on the Expiration Date, unless extended
or sooner terminated in accordance with the terms of this Lease.
(b) Renewal Option. So long as Tenant is not then in default under
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this Lease, on the terms and conditions stated in this Paragraph 3(b), Tenant
shall have the option to extend the term of this Lease for one (1) additional
thirty six (36) month period (the "Additional Term"). To exercise its option to
extend this Lease for the Additional Term, Tenant must deliver to Landlord a
written notice (an "Option Notice") exercising its renewal option at least nine
(9) months (but not more than twelve (12) months) prior to the date the then
Lease Term will expire, together with a then current financial statement of
Tenant. If such financial statement show a material adverse change in Tenant's
financial condition as compared with Tenant's financial condition as of three
(3) years prior to the date of the Option Notice, at Landlord's option, Tenant's
exercise of its renewal option shall be null and void. The renewal option
granted to Tenant pursuant to this paragraph is personal to Tenant and may not
be exercised by or for the benefit of any assignee or sublessee of Tenant. All
of the terms and conditions of this Lease shall apply during the Additional Term
except (i) the Base Rent shall be the "fair market rent" (defined below) for the
Premises as agreed to by Landlord and Tenant or determined by arbitration as set
forth below; (ii) unless otherwise agreed by Landlord in writing, there shall be
no further renewal options after the commencement of the Additional Term; and
(iii) Landlord shall have no tenant improvement obligations with respect to the
Premises except as otherwise agreed in writing by Landlord. The Base Rent during
the Additional Term will be adjusted at the commencement of the last twelve (12)
months of the Additional Term as provided in Section 4 below. When the rental
rate for the Additional Term is determined, whether by agreement of the parties
or pursuant to arbitration as provided below, Landlord and Tenant shall enter
into a lease extension agreement setting forth the new base rent for the
Premises and such other terms as may be applicable. If at the time Tenant
delivers the Option Notice to Landlord, or at any time between such date and the
commencement date of the Additional Term, Tenant defaults under this Lease and
fails to cure its default within the applicable cure period, if any, Landlord
may declare the Option Notice null and void by written notice to Tenant. The
term "fair market rent" means the rate per rentable square foot that a willing,
non-equity tenant would pay in an arms-length transaction for a three year lease
of comparable space in the Building and in comparable buildings in the Seattle
metropolitan area, taking into account the then condition of the improvements in
the Premises, the location of the Building, and the views and
<PAGE>
other amenities of the Building and the Premises as applicable. Landlord and
Tenant agree the Base Rent for the Additional Term shall be determined as
follows:
(i) Landlord shall advise Tenant in writing ("Landlord's Notice")
of Landlord's determination of fair market rent not later than thirty (30) days
after receiving the Option Notice. Within thirty (30) days after receiving
Landlord's Notice, Tenant shall notify Landlord in writing ("Tenant's Notice")
whether or not Tenant accepts Landlord's determination of the fair market rent.
If Tenant disagrees with Landlord's determination of fair market rent, Tenant's
Notice shall set forth Tenant's determination of fair market rent. If Tenant
fails to give Tenant's Notice to Landlord within such thirty (30) day period,
then the Option Notice shall be deemed null and void, unless otherwise agreed in
writing by Landlord and Tenant. If Tenant does not accept Landlord's
determination of fair market rent, and Tenant has given Tenant's Notice, the
parties (or their designated representatives) shall promptly meet and attempt to
agree on the fair market rent. If the parties have not agreed on the fair market
rent within ninety (90) days after Landlord receives the Option Notice, and
Tenant's renewal option is still in effect in accordance with the terms of this
paragraph, then unless otherwise agreed in writing by the parties, the parties
shall submit the matter to arbitration in accordance with the terms of the
following paragraphs. The last day of such ninety (90) day period (as the same
may be extended by the written agreement of the parties) is referred to in this
Lease as the "Arbitration Commencement Date".
(ii) The arbitration will be conducted by three MAI real estate
appraisers who have been active over the five (5) year period ending on the
Arbitration Commencement Date in the appraisal of commercial office buildings in
the Seattle metropolitan area. One appraiser will be selected by Tenant, one
appraiser will be selected by Landlord, and the third appraiser will be selected
by the two appraisers so chosen. If the two appraisers chosen by the parties
cannot agree on a third appraiser within ten (10) days after the date the second
appraiser has been appointed, the third appraiser will be appointed by the
Seattle office of the American Arbitration Association upon the application of
either party. Each party shall select its appraiser within ten (10) days after
the Arbitration Commencement Date. If either party fails to select its appraiser
within such ten (10) day period, and the other party timely selects its
appraiser, then the appraiser selected by the other party shall be the sole
arbitrator for determining fair market rent.
(iii) Within thirty (30) days after the selection of the third
appraiser (or if only one appraiser is to render the decision as provided in
subparagraph (ii) above, within thirty (30) days after the last day of the
above-referenced ten (10) day period), the appraiser(s) shall determine fair
market rent. If more than one appraiser has been appointed, the decision of a
majority of the appraisers shall control. If a majority of the appraisers do not
agree within the stipulated time period, then each appraiser shall in writing
render his or her separate determination as to fair market rent within five (5)
days after the expiration of the thirty (30) day period. In such case, the three
determinations shall be averaged to determine the fair market rent; however, if
the lowest fair market rent or the highest fair market rent is ten percent (10%)
lower or higher, as applicable, than the middle fair market rent, then the low
fair market rent and/or the high fair market rent, as applicable, shall be
disregarded and the remaining fair market rent(s) will be averaged in order to
establish the fair market rent.
(iv) Both parties may submit any information to the arbitrators
for their consideration, with copies to the other party. The arbitrators shall
have the right to consult experts and competent authorities for factual
information or evidence pertaining to the determination of fair market rent. The
arbitrators shall render their decision and award in writing with counterpart
copies to each party. The arbitrators shall have no power to modify the
provisions of this Lease. The determination of the arbitrators will be final and
binding upon Landlord and Tenant. The cost of the arbitration will be paid by
Landlord if the fair market rent determined by arbitration is ninety percent
(90%) or less than the fair market rent specified in Landlord's Notice; by
Tenant if the fair market rent determined by arbitration is one hundred ten
percent (110%) or more than the fair market rent specified in Tenant's Notice;
and otherwise shall be shared equally by Landlord and Tenant.
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SECTION 4. Rent.
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(a) Base Rent and Additional Rent. Tenant shall pay to Landlord at
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the address specified by Landlord in Section 1 above or such other address as
Landlord may hereafter designate in writing, without notice or demand, or any
setoff or deduction whatsoever except as provided in this Lease, in lawful money
of the United States: (a) Base Rent in the amount specified in Section 1 above
in advance on the first day of each month, and (b) Additional Rent as and when
specified elsewhere in this Lease, but if not specified, then within thirty (30)
days of demand. Base Rent and Additional Rent shall be prorated on a daily
basis (based on a 30-day month and the actual number of days elapsed) for any
partial month within the Lease Term. If the Lease Term starts on a day other
than the first day of a calendar month, rent for such initial partial month
shall be due on the first day of the Lease Term.
(b) Adjustments to Base Rent. Commencing with the second (2nd)
------------------------
anniversary of the Commencement Date, and on every other anniversary of the
Commencement Date thereafter (each such date being referred to herein as an
"Adjustment Date"), the amount of the monthly Base Rent shall be increased in
order to reflect the proportionate increase, if any, occurring in the cost of
living as indicated by the Consumer Price Index for All Urban Consumers - US
Average - All Items, as published by the U.S. Department of Labor's Bureau of
Labor Statistics (1982 - 1984 = 100) (the "Index"). Such adjustment shall be
calculated by multiplying the monthly Base Rent for the calendar month
immediately preceding the applicable Adjustment Date by a fraction, the
numerator of which shall be the Index level most recently published prior to the
applicable Adjustment Date, and the denominator of which shall be the Index
level most recently published prior to the immediately preceding Adjustment
Date. During the Additional Term, if applicable, the Adjustment Dates shall be
the second anniversary of the date the Additional Term commences. Any adjustment
of Base Rent shall become effective immediately. In no event shall the adjusted
Base Rent be less than the Base Rent for a month prior to the applicable
Adjustment Date. If publication of the Index shall be discontinued, adjustments
to the Base Rent shall be based on the replacement index of consumer prices, if
any, published by the United States Government, or if none, another index of
consumer prices published by an independent financial periodical or recognized
authority selected by Landlord and reasonably acceptable to Tenant. In the event
of use of comparable statistics in place of the Index, revisions shall be made
in the method of computation herein provided as the circumstances may require to
carry out the intent of this section. By way of illustration only, if the
Commencement Date is in fact July 1, 1999, then the first Adjustment Date will
be July 1, 2001, and the initial Index-based adjustment will be calculated by
multiplying the June, 2001 monthly Base Rent (i.e., $38,272.00) by a fraction,
the numerator of which is the Index level most recently published prior to July
1, 2001, and the denominator of which is the Index level most recently published
prior to July 1, 1999. The Base Rent will again be adjusted on July 1, 2003 and
again on July 1, 2005.
SECTION 5. Tenant's Share of Operating Costs and Real Property Taxes.
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(a) Amount. In addition to Base Rent, Tenant shall pay to Landlord
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as Additional Rent, "Tenant's Share" (defined below) of "Building Operating
Costs" (defined below), "Property Taxes" (defined below) and "Tower Operating
Costs" (defined below) incurred by Landlord in any "Lease Year" (defined below).
Promptly after the Commencement Date, and the end of each Lease Year thereafter,
Landlord will notify Tenant in writing of Landlord's estimate (based on such
information as Landlord deems reasonable and appropriate) of Tenant's Share of
the estimated Building Operating Costs, Tower Operating Costs and Property Taxes
for the current Lease Year. Tenant shall pay the estimated amount set forth in
Landlord's notice, in advance, in equal monthly installments, without deduction
or offset whatsoever, on or before the first (1st) day of each calendar month,
with the payment of Base Rent required pursuant to Section 4 above. Until
Landlord provides Tenant with the notice provided for above in this paragraph,
Tenant shall continue to pay Tenant's Share of Building Operating Costs, Tower
Operating Costs and Property Taxes in the monthly amounts specified in the last
such notice given to Tenant by Landlord. Following the end of each Lease Year,
Landlord will compute Tenant's Share due under this Section 5 for such Lease
Year, based on actual costs, and, if Tenant's Share for such Lease Year is
greater than that already paid by Tenant for such Lease Year, Tenant shall pay
<PAGE>
Landlord the deficiency within twenty (20) days of its receipt of written notice
or an invoice for the amount of the deficiency. If the total amount paid by
Tenant under this Section 5 for a Lease Year exceeds Tenant's Share, then
Landlord shall credit such excess to the payment of Base Rent and Additional
Rent thereafter coming due; however, upon the expiration or sooner termination
of the Lease Term, Landlord shall refund the excess to Tenant, provided if
Tenant is then in default of any of its obligations under this Lease, Landlord
may deduct from the amount due Tenant any damages which Landlord has incurred or
claims to have incurred as a result of Tenant's default. If during a Lease Year
Landlord obtains information regarding Building Operating Costs, Tower Operating
Costs or Property Taxes which alters its prior estimates, Landlord may adjust
the amount due from Tenant under this Section 5 during the balance of that Lease
Year to reflect such new information by written notice to Tenant. In determining
Tenant's Share of Building Operating Costs and/or Tower Operating Costs which
vary based on occupancy of the Building and/or Tower (such as utility and
janitorial costs), if less than one hundred percent of the Building or the
Tower, as applicable, shall have been occupied by tenants at any time during a
Lease Year, Tenant's Share of such Building Operating Costs and/or Tower
Operating Costs, as applicable, shall be adjusted to an amount, determined by
Landlord in its reasonable discretion, which would be expected had such
occupancy been one hundred percent throughout the applicable Lease Year;
however, in no event shall Landlord recover from Tenant and other tenants more
than one hundred percent of such Operating Costs actually incurred by Landlord
in the applicable Lease Year. Operating Costs will be equitably allocated by
Landlord between Building Operating Costs and Tower Operating Costs based on
such information as Landlord deems reasonable and appropriate.
(b) Definitions. For purposes of this Lease:
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(i) "Operating Costs" means all expenses paid or incurred by
Landlord or charged to Landlord for maintaining, managing, operating, repairing
and administering the Building and/or the Common Areas, and the personal
property used in conjunction therewith, including without limitation, water,
sewer, electricity, heat, air conditioning, fuel, light, fire protection, and
other utilities and services; supplies; janitorial and cleaning services; window
washing; snow, garbage and refuse removal; security services and systems
(including parking attendants); landscape maintenance; parking maintenance and
operations; compensation (including employment taxes and fringe benefits) of all
persons who perform duties in connection with the operation, management,
maintenance, repair and administration of the Building and/or the Common Areas;
insurance premiums for all insurance carried by Landlord with respect to the
Building and/or the Common Areas; licenses, permits and inspection fees;
subsidies and other payments required by public bodies (such as bus rider and
other transit subsidies); property management fees; costs of compliance with any
applicable transportation management plan; rent for any on-site property
management office; easement and license fees; legal and accounting expenses and
all other expenses or charges whether or not hereinabove described which, in
accordance with generally accepted accounting and management practices, would be
considered an expense of maintaining, managing, operating, repairing and
administering the Building and/or the Common Areas, excluding: (a) costs of any
special services rendered to individual tenants (including Tenant) for which a
special charge is made; (b) ground lease rental payments and debt service on
mortgages or deeds of trust; (c) leasing commissions and attorneys' and other
fees and costs incurred in leasing space in the Building or in connection with
disputes with tenants of the Building; (d) depreciation or amortization
expenses; (e) the cost of capital improvements (as opposed to capital
replacements) required to be capitalized in accordance with generally accepted
accounting practices, except Operating Costs shall include the amortization of
capital improvements (1) designed with a reasonable probability of improving the
operating efficiency of the Building and/or the Common Areas provided the amount
of the amortization thereof included within Operating Costs does not exceed the
amount of the reasonably expected savings, (2) required to comply with
governmental laws or regulations (including amendments to existing laws and
regulations) taking effect after the completion of the initial construction of
the Building, or (3) made for the general benefit or convenience of tenants of
the Building; and (f) Operating Costs separately billed to and paid by tenants.
(ii) "Building Operating Costs" means Operating Costs incurred by
Landlord in maintaining, managing, operating, repairing and administering the
Building as a whole but shall not include any Operating Costs which are a Tower
Operating Cost. Building Operating Costs shall include expenses incurred in
connection with the operation, management, maintenance,
<PAGE>
repairs and administration of all parking facilities serving the Building. The
Building will be part of a multiple phase project which includes the office
building located at 1100 Dexter Avenue (collectively with the Building the
"Project"). Building Operating Costs shall include the pro rata share of the
costs and expenses allocated to the Building pursuant to the declaration of
covenants, conditions, restrictions and/or easements for the Project (the
"Declaration"), related to the maintenance, repair, operation and management of
those areas (the "Project Common Areas") of the Project made available for the
general use, convenience and benefit of all occupants of the Project. The
Project Common Areas shall include without limitation exterior sidewalks,
landscape and plaza areas, service entrances, truck ramps, refuse collection and
recycling areas, loading and delivery areas, exterior pedestrian walkways,
emergency exit corridors, exterior stairs, and similar areas.
(iii) "Tower Operating Costs" means Operating Costs incurred by
Landlord only in connection with maintaining, managing, operating, repairing and
administering the Tower.
(iv) "Property Taxes" means all taxes of every kind and nature
on the Building and/or the Land and on personal property used by Landlord in
conjunction therewith; surcharges and all local improvement and other
assessments levied with respect to the Building, the Land and all other property
of Landlord used in connection with the operation of the Building; any taxes
levied or assessed in lieu of, in whole or in part, such real or personal
property taxes; any taxes in addition to such real and personal property taxes,
including, but not limited to, taxes or license fees upon or measured by the
leasing of the Building or the rents or other income collected therefrom, other
than any federal or state net income or inheritance tax; and all costs and
expenses incurred by Landlord in efforts to reduce or minimize such taxes to the
extent not in excess of the amount of the reduction.
(v) "Lease Year" means a twelve (12) month period beginning
January 1st and ending December 31st; however, if the Commencement Date is a
date other than the first day of a calendar year, the first Lease Year shall
commence on the Commencement Date and end on December 31 of such calendar year,
and the last Lease Year shall commence on January 1 of the last calendar year
during the Lease Term and end on the Expiration Date. Operating Costs and
Property Taxes for partial calendar years constituting a Lease Year shall be
prorated based on the number of days in the applicable calendar years.
(vi) "Tenant's Share" means (A) with respect to Building
Operating Costs and Property Taxes, the percentage determined by dividing the
rentable area of the Premises by the rentable area of the Building as a whole,
and (B) with respect to Tower Operating Costs, the percentage determined by
dividing the rentable area of the Premises by the rentable area of the Tower.
SECTION 6. Late Charge; Interest. Time is of the essence of this Lease.
---------------------
If Tenant fails to pay any Base Rent or Additional Rent within five (5) days of
the due date, a late charge equal to the greater of $50.00, or five percent (5%)
of the unpaid amount, shall be assessed and be immediately due and payable by
Tenant. In addition, any Base Rent or Additional Rent more than five (5) days
past due shall bear interest from the date due until paid in full (together with
late charges and interest) at an interest rate equal to the lesser of one and
one-half percent (1.5%) per month, or the maximum rate of interest permitted by
applicable law.
SECTION 7. Deposit. Tenant has deposited with Landlord the sum specified as
the Deposit in Section 1 of this Lease. This sum shall belong to Landlord and
shall constitute partial consideration for the execution of this Lease, subject
only to repayment when required in this Section. So long as Tenant is not then
in default under this Lease, $97,274.66 of the Deposit will be credited to the
Base Rent and Additional Rent payable for the first and second full calendar
months for which Base Rent is due under this Lease. Landlord shall pay Tenant
the remaining balance of the Deposit without any liability for interest within
thirty (30) days after the expiration or prior termination of the Lease Term, or
any extension thereof, provided if Tenant is then in default of any of its
obligations under this Lease, Landlord may deduct from the Deposit any damages
which Landlord has incurred or claims to have incurred as a result of Tenant's
default. Landlord may withdraw from the Deposit the amount of any unpaid rent or
other charges not paid
<PAGE>
to Landlord when due, and Tenant shall immediately redeposit an amount equal to
that so withdrawn within ten (10) days of demand.
SECTION 8. Tenant's Operations.
-------------------
(a) Use of Premises. Tenant shall use the Premises only for the
Permitted Use specified in Section 1. Tenant shall not permit any act that will
increase the then existing rate of insurance on the Building, without
Landlord's prior written consent. Tenant shall pay on demand the amount of the
increase in insurance rates caused by any such acts or omissions by Tenant, or
its agents or employees. Tenant shall not commit or allow to be committed any
waste on the Premises, or any public or private nuisance or other act which
disturbs the quiet enjoyment of any other tenant of the Building or the
Project. Tenant shall not, without the prior written consent of Landlord, use
any apparatus, machinery or devise in or about the Premises which will cause
any substantial noise, vibration or fumes. If any of Tenant's office machines
or equipment disturb the quiet enjoyment of any other tenant of the Building or
the Project, Tenant shall provide adequate insulation or take such other action
as Landlord directs to eliminate the disturbance.
(b) Unlawful Use. Tenant shall not use or permit the Premises, the
------------
Common Areas or any part thereof to be used for any purpose in violation of any
municipal, county, state or federal law, ordinance or regulation which the
Building is a part and Tenant shall comply with and shall cause its employees,
invitees and contractors to comply with such rules and regulations as Landlord
may from time to time promulgate. The current Building rules and regulations are
attached to this Lease as Exhibit D. Tenant shall promptly comply, at its sole
cost and expense, with all laws, ordinances and regulations now in force or
hereafter adopted relating to or affecting the condition, use or occupancy of
the Premises, including without limitation the Americans With Disabilities Act
of 1990, as now or hereafter amended (the "ADA").
(c) Liens and Encumbrances. Tenant shall Premises, the Building and
-----------------------
keep the the Land free and clear of, and shall indemnify, defend and hold
Landlord harmless from, any and all liens and encumbrances arising or growing
out of Tenant's acts or omissions, or breach of this Lease or its use,
improvement or occupancy of the Premises. If any lien is so filed against the
Premises, the Land or the Building, Tenant shall cause the same to be fully
discharged and released of record within ten (10) days of demand or within such
period provide Landlord with cash or other security acceptable to Landlord in an
amount equal to one and one-half (1 1/2) times the amount of the claimed lien as
security for its prompt removal. Landlord shall have the right to disburse such
security to cause the removal of the lien if a judgment is entered against
Tenant in the lien proceeding, if such lien causes difficulties for Landlord in
connection with its financing of the Building, or if Tenant is otherwise in
default under this Lease.
(d) Hazardous Substances. Tenant shall Landlord's prior written
---------------------
not, without consent, keep any substances designated as, or containing
components now or hereafter designated as, hazardous, dangerous, toxic or
harmful and/or subject to regulation under any federal, state orlocal law,
regulation or ordinance ("Hazardous Substances") on or about the Premises or
Building. Notwithstanding the preceding sentence, Tenant may keep, use, store
and dispose of, in, on and from the Premises, materials and supplies otherwis e
constituting Hazardous Substances which are normally used in general business
offices, provided such materials and supplies are used, handled, stored and
disposed of in accordance with all applicable governmental rules,regulations,
laws and requirements, and in accordance with all applicable manufacturers' or
suppliers' recommendations. With respect to any Hazardous Substances stored with
Landlord's consent orpermitted hereunder, Tenant shall: promptly, timely and
completely comply with all governmental requirements for reporting and record
keeping; submit to Landlord true and correct copies of all reports, manifests
and identification numbers at the same time as they are required to be and/or
are submitted to the appropriate governmental authorities; within five (5) days
of Landlord's request, provide evidence satisfactory to Landlord of Tenant's
compliance with all applicable governmental rules, regulations and requirements;
and comply with all governmental rules, regulations and requirements regarding
the proper and lawful use, sale, transportation, generation, treatment and
disposal of Hazardous Substances. Any and all costs incurred by Landlord and
associated with Landlord's inspections of the Premises and Landlord's monitoring
of Tenant's compliance with this Section 8(d), including Landlord's
<PAGE>
attorneys' fees and costs, shall be Additional Rent and shall be due and payable
to Landlord within ten (10) days of Landlord's demand. Tenant shall be fully and
completely liable to Landlord for any and all cleanup costs and expenses and any
and all other charges, expenses, fees, fines, penalties (both civil and
criminal) and costs imposed with respect to Tenant's use, disposal,
transportation, generation and/or sale of Hazardous Substances, in or about the
Premises or Building. Tenant shall indemnify, defend and hold Landlord, and
lenders to Landlord (each a "Lender"), harmless from any and all of the costs,
fees, penalties, charges and expenses assessed against or imposed upon Landlord
and Lender (as well as Landlord's and Lender's attorneys' fees and costs) as a
result of Tenant's use, disposal, transportation, generation and/or sale of
Hazardous Substances.
(e) Signs. Tenant shall not erect or place, or permit to be erected
------
or placed, or maintain any signs of any nature or kind whatsoever on the
exterior walls or windows of the Premises or elsewhere in the Building or the
Common Areas, with the exception of (i) a Building standard sign identifying
Tenant in the Building Directory on the first floor of the Building and (ii)
signage in the fourth floor elevator lobby, subject to Landlord's approval of
location, design and color. The cost of such signs shall be deducted from the
"Construction Allowance" (defined in the Workletter).
SECTION 9. Utilities and Services; Deliveries.
----------------------------------
(a) Tenant's Responsibility. In accordance with Section 5 of this
-----------------------
Lease, as Additional Rent, Tenant shall pay Tenant's Share of all charges for
heat, air conditioning, water, gas, electricity, sewer, garbage, fire
protection, security and any other utilities and/or services used or consumed by
or supplied to the Building, including the Premises, or the Common Areas, and
not separately metered or charged to Tenant or any other tenant of the Building.
Tenant shall be solely responsible for and shall promptly pay when due all
charges for telephone and all other charges for other utilities and/or services
which are separately metered or charged to the Premises.
(b) Services. Landlord shall cause the Common Areas, such as lobbies,
--------
elevators, stairs, corridors and restrooms, to be maintained in good order and
condition, except for reasonable wear and tear and damage occasioned by any act
or omission of Tenant or Tenant's officers, contractors, agents, invitees,
licensees or employees, the repair of which latter damage shall be paid for by
Tenant. Twenty-four (24) hours per day, seven (7) days per week, Tenant shall
have access to the Premises (subject to such Building security systems and
procedures as may be in place from time to time), and Tenant shall have
available to it water and electrical service for lighting and operation of 110-
volt office equipment. Electrical service to the Premises shall be separately
metered by a "deduct meter" to be installed with the initial improvements to the
Premises pursuant to the Workletter and paid for from the Construction Allowance
being made available under the Workletter. Tenant's consumption of electricity
will be separately billed to Tenant by Landlord and paid for by Tenant. In
calculating Tenant's Share of Tower Operating Costs, the cost of electricity
provided to other leased premises in the Building shall be excluded from Tower
Operating Costs; however Tenant will pay Tenant's Share of the electricity used
or consumed in connection with the Common Areas as reasonably estimated by
Landlord. During the Building Standard Hours specified in Section 1 above,
Landlord shall furnish the Premises with heat and air conditioning services. If
requested by Tenant, Landlord shall furnish HVAC service to the Premises at
times other than Building Standard Hours, and Tenant shall pay for the cost of
such after-hours services at rates established by Landlord from time to time.
The initial rate for HVAC service at times other than Normal Building Hours will
be $30.00 per hour.
(i) Janitorial. Landlord will provide janitorial services customary
----------
for buildings comparable to the Building in quality and location. If Tenant
requires excessive or specialized janitorial services, Tenant shall promptly pay
Landlord the additional costs and expenses incurred by Landlord in providing
such services.
(ii) Additional Service. The Building standard mechanical system is
------------------
designed to accommodate heating loads generated by lights and 110-volt office
equipment normally found in general business offices. Before installing lights
and equipment in the Premises which in the aggregate exceed the heating and
cooling loads of the Building's mechanical system, Tenant
<PAGE>
shall obtain the written permission of Landlord. Landlord may refuse
to grant such permission unless Tenant agrees to pay the cost of installing
supplementary air conditioning units or electrical systems as necessitated by
such equipment or lights. In addition, Tenant shall pay to Landlord in advance,
on the first day of each month during the Lease Term, the amount estimated by
Landlord as the cost of furnishing electricity for the operation of such
equipment or lights and the amount estimated by Landlord as the costs of
operation and maintenance of supplementary air conditioning units or electrical
systems as necessitated by Tenant's use of such equipment or lights. Landlord
shall be entitled to install and operate at Tenant's cost a monitoring/metering
system in the Premises to measure the added demands on electricity, heating,
ventilation, and air conditioning systems resulting from such equipment and
lights and from Tenant's after-hours heating, ventilation and air conditioning
service requirements. Tenant shall comply with Landlord's instructions, rules
and regulations for the use of window coverings and thermostats in the Building.
(c) Interruption. Landlord shall not be liable for any loss, injury
------------
or damage to person or property caused by or resulting from any variation,
interruption, or failure of such services due to any cause whatsoever, or from
failure to make any repairs or perform any maintenance. No temporary
interruption or failure of such services incident to the making of repairs,
alterations or improvements, or due to accident, strike or conditions or other
events beyond Landlord's reasonable control shall be deemed an eviction of
Tenant or to relieve Tenant from any of Tenant's obligations hereunder or to
give Tenant a right of action against Landlord for damages. Notwithstanding any
of the foregoing, if for reasons within the reasonable control of Landlord the
services to the Premises are interrupted for more than five (5) consecutive
business days to such an extent that Tenant is unable to reasonably use and
occupy the Premises for its intended purpose, the Base Rent and the Additional
Rent shall equitably abate in proportion to the extent of the interference with
Tenant's use of the Premises, commencing on the last day of such five (5) day
period until the services are restored or the interference ceases to the extent
Tenant can again reasonably use and occupy the Premises for its intended
purposes.
(d) Telecommunications Services. All telephone and
---------------------------
telecommunications services desired by Tenant shall be ordered and utilized by
Tenant at its sole cost and expense. Tenant shall separately contract with a
telephone or telecommunications provider (a "Provider") to provide telephone and
telecommunications services to the Premises. If Tenant desires to utilize the
services of a Provider whose equipment is not presently servicing the Building,
such Provider must obtain the written consent of Landlord (which consent will
not be unreasonably withheld) before it will be permitted to install its lines
or other equipment within the Building. Landlord's consent to the installation
of lines or equipment within the Building by any Provider shall be evidenced by
a written agreement between Landlord and the Provider, which contains terms and
conditions acceptable to Landlord in its reasonable discretion. Landlord's
refusal for any reason whatsoever to consent to any prospective Provider shall
not be deemed a default or breach by Landlord of its obligations under this
Lease. Landlord makes no warranty or representation to Tenant as to the
suitability, capability or financial strength of any Provider whose equipment is
presently serving the Building, and Landlord's consent to a Provider whose
equipment is not presently serving the Building shall not be deemed to
constitute such a representation or warranty. To the extent the service by a
Provider is interrupted, curtailed or discontinued for any reason whatsoever,
Landlord shall have no obligation or liability in connection therewith unless
the interruption is caused by the negligence or intentional misconduct of
Landlord, and it shall be the sole obligation of Tenant at its expense to obtain
substitute service. The provisions of this paragraph are solely for the benefit
of Tenant and Landlord, are not for the benefit of any third party, specifically
including without limitation, no telephone or telecommunications provider shall
be deemed a third party beneficiary hereof.
SECTION 10. Licenses and Taxes. Tenant shall be liable for, and shall pay
------------------
throughout the term of this Lease, all license and excise fees and occupation
taxes covering the business conducted on the Premises and all personal property
taxes levied with respect to all personal property located at the Premises. If
any governmental authority levies a tax or license fee on rents payable under
this Lease or rents accruing from use of the Premises or a tax or license fee in
any form against Landlord or Tenant because of or measured by or based upon
income derived from the leasing or rental thereof (other than a net income tax
on Landlord's income), or a transaction privilege tax, such tax or license fee
shall be paid by Tenant, either directly if required by law, or by reimbursing
Landlord for the amount thereof upon demand.
<PAGE>
SECTION 11. Alterations by Tenant. After the completion of the Tenant
---------------------
Improvements, Tenant shall not make any alterations, additions or improvements
in or to the Premises without first obtaining Landlord's prior written approval,
and if required by Landlord, submitting to Landlord professionally-prepared
plans and specifications. Tenant covenants it will cause all such alterations,
additions and improvements to be performed at Tenant's sole cost and expense by
a contractor reasonably acceptable to Landlord and in a manner which: (a) is
consistent with any Landlord-approved plans and specifications and any
reasonable conditions imposed by Landlord; (b) is in conformity with Building
standards for tenant improvements as described in Exhibit C-1 attached and other
-----------
first class commercial standards as may be applicable; (c) includes acceptable
insurance coverage for Landlord's benefit; (d) does not affect the structural
integrity of the Building or the Building's systems; (e) does not disrupt the
business or operations of other tenants; and (f) does not invalidate or
otherwise affect the construction and systems warranties then in effect with
respect to the Building. Tenant shall secure all governmental permits and
approvals and comply with all other applicable governmental requirements and
restrictions, and reimburse Landlord for all expenses incurred in connection
therewith. Except as provided in Section 14 with regard to concurrent
negligence, Tenant shall indemnify, defend and hold Landlord harmless from and
against all losses, liabilities, damages, liens, costs, penalties and expenses
(including attorneys' fees, but without waiver of the duty to hold harmless)
arising from or out of the performance of such alterations, additions and
improvements, including, but not limited to, all which arise from or out of
Tenant's breach of its obligations under terms of this Section 11. All
alterations, additions and improvements (expressly including all light fixtures,
heating, ventilation and air conditioning units and floor, window and wall
coverings), except Tenant's moveable trade fixtures and appliances and equipment
not affixed to the Premises, shall immediately become the property of Landlord
without any obligation on its part to pay therefor. These improvements remain
Landlord's and Tenant shall not remove all or any portion thereof on the
termination of this Lease unless otherwise specified by Landlord at the time
Tenant requests Landlord's consent to the improvements pursuant to this Section
11.
SECTION 12. Care of Premises. Tenant shall take commercially reasonable care
----------------
of the Premises (including all doors, entrances and lighting and plumbing
fixtures located within the Premises) and shall reimburse Landlord for the cost
of repairing all damage done to the Building, the Premises or the Common Areas
occasioned by any act or omission of Tenant or Tenant's officers, contractors,
agents, invitees, licensees or employees, including, but not limited to,
cracking or breaking of glass, reasonable wear and tear excepted. If Tenant
fails to take commercially reasonable care of the Premises, and Tenant does not
cure such failure within five (5) days after written notice from Landlord to
Tenant (except in an emergency when simultaneous notice shall be acceptable),
Landlord may, at its option, do so, and in such event, upon receipt of written
statements from Landlord, Tenant shall promptly pay the entire cost thereof as
Additional Rent. Landlord shall have the right to enter the Premises for such
purposes. Landlord shall not be liable for interference with light, air or view.
Except as provided in Section 17, there shall be no abatement or reduction of
rent arising by reason of Landlord's making of repairs, alterations or
improvements. Except for Landlord's obligation to provide janitorial services
under Section 9 of this Lease, Landlord shall have no obligation to make repairs
to or maintain the Premises.
SECTION 13. Surrender of Premises. At the expiration or sooner termination
---------------------
of the Lease Term, Tenant shall return the Premises to Landlord in the same or
better condition than on the Commencement Date (or, if altered, then the
Premises shall be returned in such altered condition unless otherwise directed
by Landlord pursuant to Section 11), except for reasonable wear and tear, damage
by condemnation and damage by insured casualty. Prior to such return, Tenant
shall remove its furniture and equipment and shall restore the Premises to the
condition of the Premises on the Commencement Date, and Tenant shall repair any
damage resulting from their removal. In no event shall Tenant remove heating,
ventilating and air conditioning equipment; lighting equipment or fixtures; or
floor, window or wall coverings unless otherwise specifically directed by
Landlord in writing or otherwise permitted under this Lease. Tenant's
obligations under this Section 13 shall survive the expiration or termination of
this Lease. Tenant shall indemnify Landlord for all damages and losses suffered
as a result of Tenant's failure to so redeliver the Premises on a timely basis.
<PAGE>
SECTION 14. Waiver; Indemnity.
-----------------
(a) Tenant Indemnity. Except as otherwise provided in this Section
----------------
14 or in Section 15 below, Tenant shall indemnify, defend and hold Landlord, its
partners, officers, agents, employees and contractors and Lenders, harmless from
all claims, suits, losses, damages, fines, penalties, liabilities and expenses
(including Landlord's reasonable attorneys' fees and other costs incurred in
connection with claims, regardless of whether such claims involve litigation)
resulting from any actual or alleged injury (including death) of any person or
from any actual or alleged loss of or damage to any property arising out of or
in connection with (i) Tenant's occupation, use or improvement of the Premises
or that of its employees, agents or contractors, (ii) Tenant's breach of its
obligations hereunder, or (iii) any negligent or willful act or omission of
Tenant or any subtenant, licensee, assignee or concessionaire of Tenant, or of
any officer, agent, contractor, employee, guest or invitee of Tenant, or of any
such entity in or about the Premises, the Building or the Project.
(b) Landlord's Indemnity. Except as otherwise provided in this
--------------------
Section 14 or in Section 15 below, Landlord shall indemnify, defend and hold
Tenant, its partners, officers, agents, employees and contractors, harmless from
all claims, suits, losses, damages, fines, penalties, liabilities and expenses
(including Tenant's reasonable attorneys' fees and other costs incurred in
connection with claims, regardless of whether such claims involve litigation),
resulting from any actual or alleged injury (including death) of any person or
from any actual or alleged loss of or damage to any property arising out of or
in connection with (i) Landlord's breach of its obligations hereunder, or (ii)
any negligent or willful act or omission of Landlord or any officer, agent,
contractor, employee, guest or invitee of Landlord, or of any such entity, in or
about the Premises, the Building or the Project.
(c) General Indemnity Provisions. The indemnities in Sections 14(a)
----------------------------
and 14(b) above are intended to specifically cover actions brought by the
indemnifying party's own employees, and with respect to acts or omissions during
the term of this Lease shall survive termination or expiration of this Lease.
Such indemnities are specifically and expressly intended to constitute waivers
by the indemnifying party of its immunity, if any, under Washington's Industrial
Insurance Act, RCW Title 51, to the extent necessary to provide the other party
with a full and complete indemnity from claims made by the indemnifying party
and its employees, to the extent of their negligence. Tenant shall promptly
notify Landlord of casualties or accidents occurring in or about the Premises.
If losses, liabilities, damages, liens, costs and expenses covered by either
party's indemnity are caused by the sole negligence of the other party or by the
concurrent negligence of both Landlord and Tenant, their employees, agents,
invitees and licensees, then the indemnifying party shall indemnify the other
only to the extent of the indemnifying party's own negligence or that of its
officers, agents, employees, guests or invitees. LANDLORD AND TENANT ACKNOWLEDGE
THAT THE INDEMNIFICATION PROVISIONS OF SECTION 12 AND THIS SECTION 14 WERE
SPECIFICALLY NEGOTIATED AND AGREED UPON BY THEM.
(d) Release of Claims. Except as provided in Section 14(b) above or
-----------------
elsewhere in this Lease, Tenant hereby fully and completely waives and releases
all claims against Landlord for any losses or other damages sustained by Tenant
or any person claiming through Tenant resulting from any accident or occurrence
in or upon the Premises, including but not limited to: any defect in or failure
of Building equipment; any failure to make repairs; any defect, failure, surge
in, or interruption of Building facilities or services; any defect in or failure
of Common Areas; broken glass; water leakage; the collapse of any Building
component; or any act, omission or negligence of co-tenants, licensees or any
other persons or occupants of the Building.
SECTION 15. Insurance.
---------
(a) Tenant's Insurance. Tenant shall, at its own expense, maintain
------------------
comprehensive or commercial general liability insurance with broad form and stop
gap endorsements with combined single limits of Two Million Dollars
($2,000,000), for property damage and loss and for personal injuries (including
death), insuring against claims, demands, losses, damages, liabilities and
expenses arising out of or in connection with the use, operation,
<PAGE>
occupancy or condition of the Premises and Tenant's operations in and
about the Premises. Landlord shall have the right to periodically review the
appropriateness of such limits in view of inflation and/or changing industry
conditions and to require a reasonable increase in such limits no more
frequently than annually, upon ninety (90) days prior written notice. Landlord,
any Lender designated by Landlord, and any agents of Landlord designated by
Landlord (such as the Building property manager), shall be named as additional
insureds and shall be furnished with a certificate of insurance on request. All
such insurance shall bear an endorsement that the same shall not be canceled or
materially altered without at least thirty (30) days prior written notice to
such additional insureds. During the Lease Term, Tenant shall also maintain at
its own expense insurance covering its furniture, fixtures, equipment and
inventory and all improvements which it makes to the Premises in an amount equal
to the full replacement cost thereof, against fire and such other perils as are
covered by an all risk policy including plate glass coverage and coverage for
sprinkler leakage.
(b) General Insurance Requirements. All insurance required of
------------------------------
Tenant under this Lease shall (a) be issued by insurance companies authorized to
do business in the State of Washington and otherwise acceptable to Landlord; (b)
be issued as a primary policy, or under a blanket policy, not contributing with
and not in excess of coverage which Landlord may carry; (c) in the case of the
liability policy, contain a contractual liability coverage endorsement covering
Tenant's indemnification duties under this Lease to the fullest extent
insurable; and (d) have deductibles reasonably acceptable to Landlord. Tenant
shall deliver to Landlord prior to the Commencement Date, and thereafter not
less than ten (10) days before the expiration dates of any expiring policies of
insurance, and from time to time thereafter within ten (10) days after written
request from Landlord, certificates of insurance evidencing the insurance
coverages required of Tenant pursuant to this Section 15. In no event shall the
limits of any such policies be considered as limiting the liability of Tenant
under this Lease. If Tenant does not deliver to Landlord certificates of
insurance as required above, Landlord may charge Tenant a $50.00 noncompliance
fee. If Tenant fails to maintain any insurance required of it under this Section
15, Landlord may do so, and Tenant shall reimburse Landlord for the full expense
thereof upon demand.
(c) Landlord's Insurance. Throughout the Landlord shall maintain
--------------------
such Lease Term, property and liability insurance coverages as are customarily
maintained by owners of buildings similar in age, location and construction to
the Building, and such additional insurance as any Lender may reasonably
require, and the cost of all such insurance shall be considered an Operating
Cost.
(d) Waiver of Subrogation. Neither Landlord nor Tenant shall be
---------------------
liable to the other party or to any insurance company (by way of subrogation or
otherwise) insuring the other party for any loss or damage to any building,
structure or tangible personal property of the other occurring in or about the
Premises, Land or the Building, even though such loss or damage might have been
occasioned by the negligence of such party, its agents or employees, if such
loss or damage is covered by insurance benefiting the party suffering such loss
or damage or was required to be covered by insurance under terms of this Lease.
Each party shall use its best efforts to cause each insurance policy obtained by
it to contain the waiver of subrogation clause. Notwithstanding the foregoing,
no such release shall be effective unless a party's insurance policy or policies
expressly permit such a release or contain a waiver of the carrier's right to be
subrogated.
SECTION 16. Assignment or Subletting.
-------------------------
(a) Consent Required. Tenant shall not sublet or encumber the whole
----------------
or any part of the Premises, nor shall this Lease or any interest thereunder be
assignable (for security purposes or otherwise) or transferable, voluntarily or
involuntarily, by operation of law or by any process or proceeding of any court
or otherwise without the prior written consent of Landlord, which consent shall
not be unreasonably withheld. In determining whether to consent to a proposed
assignment or subletting, Landlord may consider any commercially reasonable
basis for approving or disapproving the proposed subletting or assignment,
including without limitation any of the following: (i) the experience or
business reputation of the proposed assignee or sublessee, (ii) whether the
clientele, personnel or foot traffic which will be generated by
<PAGE>
the business of the proposed assignee or sublessee is consistent in
Landlord's opinion with the businesses of other tenants of the Building, (iii)
notwithstanding that Tenant or others may remain liable under this Lease,
whether the proposed assignee or sublessee has a net worth and financial
strength and credit record satisfactory to Landlord, and (iv) whether the use of
the Premises by the proposed assignee or sublessee will be substantially the
same as the use of the Premises by Tenant, or whether such use is consistent
with the businesses of other tenants then occupying the Building, and whether
such use will violate or create any potential violation of any laws or a breach
or violation of any other lease or agreement by which Landlord is bound. Any
assignment or sublease without Landlord's prior written consent, at Landlord's
option, shall be void. No assignment or sublease shall release Tenant from
primary liability hereunder. Each assignment and sublease shall be by an
instrument in writing in form satisfactory to Landlord. The granting of consent
to a given transfer shall not constitute a waiver of the consent requirement as
to future transfers. Tenant shall also pay all reasonable out-of-pocket legal
fees and other reasonable out-of-pocket costs incurred by Landlord in connection
with Landlord's consideration of Tenant's request for approval of assignments or
subleases, including assignments for security purposes. Tenant shall deliver to
Landlord with its request for Landlord's approval of a proposed assignment or
subletting a fee of $500.00 which shall be credited against the fees and costs
payable by Tenant pursuant to the preceding sentence.
(b) Recapture Right. In lieu of giving its consent to a proposed
---------------
assignment or subletting during the last three (3) years of the Initial Term or
at any time during the Additional Term, Landlord may terminate the Lease as to
the portion of the Premises affected by the action for which Landlord's consent
is requested and recover possession thereof from Tenant within twenty (20) days
following written notice thereof to Tenant. All costs incurred by Landlord in
separating the remainder of the Premises from the area so retaken shall be paid
by Tenant as Additional Rent.
(c) Additional Consideration. If Tenant assigns its interest in
------------------------
this Lease or sublets the Premises, Tenant shall pay to Landlord one-half (1/2)
of any and all consideration received by Tenant for such assignment or sublease,
whether such additional consideration is in the form of rent in excess of the
Base Rent and/or Additional Rent payable by Tenant under this Lease, cash
payments or otherwise; however, such additional consideration shall be reduced
by any reasonable costs and expenses (including brokerage fees, legal fees,
architectural and engineering fees and tenant improvement costs) incurred by
Tenant in connection with the sublease or assignment.
(d) Entities. If Tenant is a corporation, then any transfer of this
--------
Lease by merger, consolidation or liquidation, or any direct or indirect change
in the ownership of, or power to vote the majority of, Tenant's outstanding
voting stock, shall constitute an assignment for the purposes of this Lease; if
Tenant is a partnership, then a change in general partners in or voting or
decision-making control of the partnership shall also constitute an assignment;
or if Tenant is a limited liability company, then a change in the members in or
voting or decision-making control of the company shall also constitute an
assignment. The foregoing limitations shall not be applicable so long as the
stock in Tenant is publicly traded on the New York Stock Exchange or NASDAQ.
(e) Assignment by Landlord. If Landlord sells or otherwise
----------------------
transfers the Building, such purchaser or transferee shall be deemed to have
assumed Landlord's obligations hereunder, and Landlord shall thereupon be
relieved of all liabilities hereunder arising thereafter, but this Lease shall
otherwise remain in full force and effect and Tenant shall attorn to Landlord's
successor.
SECTION 17. Destruction.
-----------
(a) Partial Destruction. If the Premises are rendered partially
-------------------
untenantable by fire or other insured casualty, and if the damage is repairable
within sixty (60) days from the date of the occurrence (with the repair work and
preparations therefore to be done during regular working hours on regular work
days), Landlord shall repair the Premises with due diligence, to the extent of
the insurance proceeds available, and the monthly Base Rent and Additional Rent
shall be abated in the proportion that the untenantable portion of the Premises
<PAGE>
bears to the whole thereof for the period from the date of the casualty to the
completion of the repairs, unless the casualty is uninsured and results from
Tenant's negligence or its breach of the terms hereof. If thirty percent (30%)
or more of the rentable area of the Building is destroyed or damaged, regardless
of whether the Premises are damaged, Landlord may terminate this Lease as of the
date of such damage or destruction by giving notice to Tenant within thirty (30)
days thereafter of the election to so terminate this Lease.
(b) Total Destruction. If the Premises are completely destroyed by
-----------------
fire or other casualty, or if they are damaged by uninsured casualty, or by
insured casualty to such an extent that the damage cannot be repaired within
ninety (90) days of the occurrence, Landlord shall have the option to restore
the Premises or to terminate this Lease on thirty (30) days written notice,
effective as of any date not more than sixty (60) days after the occurrence. If
this Section becomes applicable, Landlord shall advise Tenant within thirty (30)
days after such casualty whether Landlord elects to restore the Premises or to
terminate this Lease. If Landlord elects to restore the Premises, it shall
commence and prosecute the restoration work with diligence. For the period from
the date of the casualty until completion of the repairs (or the date of
termination of this Lease, if Landlord elects not to restore the Premises), the
monthly Base Rent and Additional Rent shall be abated in the same proportion
that the untenantable portion of the Premises bears to the whole thereof, unless
the casualty is uninsured and results from Tenant's negligence or its breach of
its obligations under this Lease. If the Premises are totally damaged or
destroyed, and the repairs to the Premises have not been completed within nine
(9) months after the damage or destruction (subject to delays such as force
majeure delays which are beyond Landlord's control), Tenant shall have the right
to terminate this Lease by written notice given to Landlord after the end of the
foregoing nine (9) month period, provided Landlord does not complete the repairs
within thirty (30) days after the date Tenant delivers its termination notice to
Landlord.
(c) Limitation. Except as otherwise provided in this Lease, Landlord
----------
shall not be liable to Tenant for destruction or damage to any of Tenant's
property including fixtures, equipment or other improvements, or for damages or
compensation for inconvenience, loss of business or disruption arising from
repairs or restoration of any portion of the Building or the Premises.
SECTION 18. Eminent Domain.
--------------
(a) Taking. If all of the Premises are taken by Eminent Domain,
------
this Lease shall terminate as of the date Tenant is required to vacate the
Premises and all Base Rent and Additional Rent shall be paid to that date. The
term "Eminent Domain" shall include the taking or damaging of property by,
through or under any governmental or statutory authority, and any purchase or
acquisition in lieu thereof, whether the damaging or taking is by government or
any other person which under applicable law has the power to exercise the power
of condemnation or eminent domain. If, in the reasonable judgment of Landlord, a
taking of any part of the Premises by Eminent Domain renders the remainder
thereof unusable for the business of Tenant this Lease, at the option of either
party, may be terminated by written notice given to the other party not more
than thirty (30) days after Landlord gives Tenant written notice of the taking,
and such termination shall be effective as of the date when Tenant is required
to vacate the portion of the Premises so taken. If this Lease is so terminated,
all Base Rent and Additional Rent shall be paid to the date of termination.
Whenever any portion of the Premises is taken by Eminent Domain and this Lease
is not terminated, Landlord shall at its expense proceed with all reasonable
dispatch to restore, to the extent of available proceeds and to the extent it is
reasonably prudent to do so, the remainder of the Premises to the condition they
were in immediately prior to such taking, and Tenant shall at its expense
proceed with all reasonable dispatch to restore its personal property and all
improvements made by it to the Premises to the same condition they were in
immediately prior to such taking. The Base Rent and Additional Rent payable
hereunder shall be reduced from the date Tenant is required to partially vacate
the Premises in the same proportion that the rentable area taken bears to the
total rentable area of the Premises prior to taking.
(b) Award. Landlord reserves all right to the entire damage award or
-----
payment for any taking by Eminent Domain, and except as provided below, Tenant
waives all claim whatsoever against Landlord for damages for termination of its
leasehold interest in the Premises or for interference with its business. Tenant
hereby grants and assigns to Landlord
<PAGE>
any right Tenant may now have or hereafter acquire to such damages and agrees to
execute and deliver such further instruments of assignment as Landlord may from
time to time request. Tenant shall, however, have the right to claim from the
condemning authority all compensation that may be recoverable by Tenant on
account of any loss incurred by Tenant in moving Tenant's merchandise,
furniture, trade fixtures and equipment, provided, however, that Tenant may
claim such damages only if they are awarded separately in the eminent domain
proceeding and not out of or as part of Landlord's damages.
SECTION 19. Default by Tenant.
-----------------
(a) Definition. Each of the following events and circumstances
----------
shall constitute a default by Tenant under this Lease: (i) Tenant vacates or
abandons the Premises, (ii) Tenant fails to pay Base Rent or Additional Rent, or
make any other payment required of Tenant under this Lease on the date such rent
or payment is due, or Tenant fails to comply with Section 28(c) of this Lease,
(iii) Tenant violates or breaches or fails to keep or perform any covenant, term
or condition of this Lease other than those requiring the payment of rent or
otherwise requiring Tenant to make payments pursuant to this Lease, (iv) Tenant
or any Guarantor, if any, files a petition in bankruptcy, or a trustee or
receiver is appointed for Tenant, and any Guarantor, or either of their
respective assets, or Tenant or a Guarantor makes an assignment for the benefit
of creditors, or Tenant or a Guarantor is adjudicated insolvent, or (v) a
petition in bankruptcy is filed against Tenant or a Guarantor and such petition
is not dismissed within forty-five (45) days after filing. With respect to a
default under (ii) above, Tenant shall have five (5) days after receiving
written notice of the default to remedy or cure its default. With respect to a
default under (iii) above, Tenant shall have twenty (20) days after receiving
written notice from Landlord to remedy or cure the default; however, if the
default cannot reasonably be cured within such twenty (20) day period, and
Tenant commences the cure within the twenty (20) day period, and Tenant
thereafter diligently prosecutes the cure to completion in good faith, such
twenty (20) day period shall be extended for such period of time as is
reasonably necessary for Tenant to cure the default, but in no event more than
an additional sixty (60) days. The foregoing notice and cure provisions shall be
inclusive of and not in addition to the notices and cure periods provided for in
RCW 59.12, as now or hereafter amended, or any legislation in lieu or
substitution thereof.
(b) Remedies. If Tenant defaults and fails to cure the default
--------
within the applicable cure period, if any, Landlord shall have the following
rights and remedies, at its option, which shall be cumulative and not exclusive,
and which shall be in addition to and not in lieu of any other rights or
remedies available to Landlord at law or in equity, or elsewhere in this Lease:
(i) to declare the Lease Term ended and reenter the Premises and take possession
thereof and remove all persons therefrom, and Tenant shall have no further claim
thereon or hereunder; (ii) to cure such default on Tenant's behalf and at
Tenant's cost and expense and charge Tenant as Additional Rent for all costs and
expenses incurred by Landlord in effecting the cure; (iii) without declaring
this Lease terminated, to reenter the Premises and occupy the whole or any part
thereof for and on account of Tenant and collect any unpaid rentals and other
charges, which have become payable, or which may thereafter become payable; (iv)
even though it may have reentered the Premises, to thereafter elect to terminate
this Lease and all of the rights of Tenant in or to the Premises.
(c) Reentry. If Landlord reenters the Premises under option (iii) of
-------
Section 19(b), Landlord shall not be deemed to have terminated this Lease or the
liability of Tenant to pay any Rent thereafter accruing as it becomes due, or to
have terminated Tenant's liability for damages under any of the provisions
hereof, by any such reentry or by any action, in unlawful detainer or otherwise,
to obtain possession of the Premises, unless Landlord shall have notified Tenant
in writing that it has so elected to terminate this Lease, and Tenant shall be
liable for and reimburse Landlord upon demand for all reasonable costs and
expenses of every kind and nature incurred in retaking possession of the
Premises and all other losses suffered by Landlord as a consequence of Tenant's
default. In the event of any entry or taking possession of the Premises,
Landlord shall have the right, but not the obligation, to remove therefrom all
or any part of the personal property located therein and may place the same in
storage at a public warehouse at the expense and risk of Tenant.
<PAGE>
(d) Termination. If Landlord elects to terminate this Lease pursuant
-----------
to the provisions of options (i) or (iv) of Section 19(b), Landlord may recover
from Tenant as damages, the following: (i) the worth at the time of award of any
unpaid Rent which had been earned at the time of such termination; plus (ii) the
worth at the time of award of the amount by which the unpaid Rent which would
have been earned after termination until the time of award exceeds the amount of
the Rent loss Tenant proves could have been reasonably avoided; plus (iii) the
worth at the time of award of the amount by which the unpaid Rent for the
balance of the term after the time of award exceeds the amount of the Rent loss
that Tenant proves could be reasonably avoided; plus (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom, including but not
limited to, any costs or expenses incurred by Landlord in retaking possession of
the Premises, including reasonable attorneys' fees therefor; maintaining or
preserving the Premises after such default; preparing the Premises for reletting
to a new tenant, including repairs or alterations to the Premises for such
reletting; leasing commissions; and any other costs necessary or appropriate to
relet the Premises; and (v) such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by the laws of the State of
Washington. As used in items (i) and (ii) of this Section 19(d), the "worth at
the time of award" shall be computed by allowing interest at the interest rate
specified in Section 6 of this Lease. As used in item (iii) above, the "worth at
the time of award" shall be computed by using the then applicable discount rate
quoted by the Federal Reserve Bank of San Francisco or its successor. For
purposes of this Section 22 only, the term "rent" shall be deemed to be the Base
Rent and all Additional Rent and other sums required to be paid by Tenant
pursuant to the terms of this Lease.
(e) Adequate Security. If a petition is filed by or against Tenant
-----------------
under any provision of the Bankruptcy Code or successor act, Tenant agrees that
it shall be obligated to post a cash bond with Landlord equal to six (6) months
Base Rent and Additional Rent, to provide Landlord with adequate security for
Tenant's performance of its obligations under this Lease.
(f) Landlord's Remedies Cumulative; Waiver. Landlord's rights and
--------------------------------------
remedies hereunder are not exclusive, but cumulative, and Landlord's exercise of
any right or remedy due to a default or breach by Tenant shall not be deemed a
waiver of, or alter, affect or prejudice any other right or remedy which
Landlord may have under this Lease or by law or in equity. Neither the
acceptance of rent nor any other acts or omissions of Landlord at any time or
times after the happening of any event authorizing the cancellation or
forfeiture of this Lease shall operate as a waiver of any past or future
violation, breach or failure to keep or perform any covenant, agreement, term or
condition hereof or to deprive Landlord of its right to cancel or forfeit this
Lease, upon the written notice provided for herein, at any time that cause for
cancellation or forfeiture may exist, or be construed so as at any future time
to estop Landlord from promptly exercising any other option, right or remedy
that it may have under any term or provision of this Lease.
SECTION 20. Default by Landlord; Lender Protection.
---------------------------------------
(a) Default by Landlord. Landlord shall be in default if Landlord
-------------------
fails to perform its obligations under this Lease within twenty (20) days after
its receipt of notice of nonperformance from Tenant; provided that if the
default cannot reasonably be cured within the twenty (20) day period, Landlord
shall not be in default if Landlord commences the cure within the twenty (20)
day period and thereafter diligently pursues such cure to completion.
(b) Notice to Lender. Notwithstanding anything to the contrary in
----------------
this Lease, Landlord shall not be in default under any provision of this Lease
unless written notice specifying such default is given to Landlord and to any
Lender who has been identified (with its address) to Tenant in writing as a
party to whom notice must be sent. Any Lender of Landlord entitled to notice
pursuant to the preceding sentence shall have the right to cure any default on
behalf of Landlord within the later of (a) thirty (30) days after receipt of
such notice, or (b) thirty (30) days after the expiration of any cure period
provided to Landlord pursuant to this Lease; provided, if such default cannot
reasonably be cured within such thirty (30) day period, the
<PAGE>
Lender shall be entitled to such additional time as may be reasonably necessary
to cure the default, if within the thirty (30) day period the Lender commences
and thereafter diligently pursues the actions necessary for the Lender to cure
such default by Landlord (including, if possession of the Premises is necessary
to cure the default, commencing such judicial or nonjudicial proceedings as may
be necessary for the Lender or a receiver to take possession of the Premises).
So long as a Lender is diligently taking the actions reasonably necessary for it
to cure Landlord's default, Tenant shall not exercise its remedies for
Landlord's default under this Lease.
SECTION 21. Attorneys' Fees. If either party retains the services of an
---------------
attorney in connection with enforcing the terms of this Lease, or if suit is
brought for the recovery of the Base Rent or Additional Rent due under this
Lease or for the breach of any covenant or condition of this Lease or for the
restitution of the Premises to Landlord and/or eviction of Tenant during the
term of this Lease or after the expiration thereof, the substantially prevailing
party therein will be entitled to recover from the other party the substantially
prevailing party's reasonable attorneys' fees, witness fees and other court
costs incurred in connection therewith.
SECTION 22. Access by Landlord. Landlord and its agents shall have the right
------------------
to enter the Premises at any time upon reasonable prior notice to Tenant to
examine the same, and to show them to prospective purchasers or lenders or, at
any time during the last eighteen (18) months of the Lease Term or following a
default by Tenant, to prospective tenants, and to make such repairs to the
Premises or repairs, alterations, improvements, additions or improvements to the
Building as Landlord may deem necessary or desirable; provided, in an emergency
or perceived emergency or to provide normal services (such as janitorial and
security services) to the Premises, no advance notice shall be required. If
Tenant is not personally present to permit entry and an entry is necessary in an
emergency, Landlord may enter the same by master key or may forcibly enter the
same, without rendering Landlord liable therefor. Nothing contained herein shall
be construed to impose upon Landlord any duty of repair or other obligation not
specifically stated in this Lease. Tenant shall change the locks to the Premises
only through Landlord and upon paying Landlord for all costs related thereto.
SECTION 23. Holding Over. Any holding over by Tenant after the expiration
------------
of the term hereof consented to in advance in writing by Landlord shall be
construed as a tenancy from month-to-month on the terms and conditions set forth
herein, except the Base Rent shall be the Base Rent agreed to by Landlord and
Tenant. Any such holdover tenancy may be terminated by either party upon thirty
(30) days written notice to the other party. If Tenant fails to surrender the
Premises upon the termination of this Lease, without the prior written consent
of Landlord, Tenant shall indemnify, defend and hold harmless Landlord from all
losses, damages, liabilities and expenses resulting from such failure,
including, without limiting the generality of the foregoing, any claims made by
any succeeding tenant arising out of such failure. Any holding over by Tenant
after the expiration of the Lease Term without Landlord's consent shall be
deemed a tenancy at will, terminable at any time by Landlord, at a rental rate
equal to one and one-half (1-1/2) times the Base Rent and Additional Rent
payable by Tenant during the last month rent is payable by Tenant pursuant to
this Lease.
SECTION 24. Subordination; Estoppel Certificates.
-------------------------------------
(a) Subordination. This Lease shall be automatically subordinate to all
-------------
of Landlord's mortgages, deeds of trust, or ground leases which heretofore and
hereafter affect the Premises, the Building or the Land, to any and all advances
made or to be made thereunder, to the interest on the obligations secured
thereby, and to all renewals, modifications, consolidations, replacements or
extensions thereof. This subordination shall be self operative, and no further
instrument of subordination shall be necessary to effect such subordination;
nevertheless, within fifteen (15) days after receiving a written request from
Landlord, Tenant shall execute such additional instrument of subordination as
may be required by Landlord (or its lenders or ground lessors) if such
instrument of subordination contains a nondisturbance provision reasonably
acceptable to Tenant which provides that so long as Tenant is not in default
hereunder beyond any applicable cure period in this Lease, Tenant shall have
continued enjoyment of the Premises free from any disturbance or interruption by
reason of any foreclosure of any such deed of trust,
<PAGE>
mortgage or the exercise of any remedies by the lessor under any such ground
lease. In the event of sale or foreclosure of any such mortgage or deed of
trust, or exercise of the power of sale thereunder, or in the event of a
transfer in lieu of foreclosure, or in the event a ground lessor acquires the
Landlord's interests in the Building, Tenant shall attorn to the purchaser (or
transferee) of the Building at such foreclosure or sale and recognize such
purchaser (or transferee) as Landlord under this Lease if so requested by such
purchaser (or transferee). Such attornment shall be self operative and no
further instruments need be executed to effect such attornment. If any lender
elects to have this Lease superior to its mortgage or deed of trust and gives
notice of its election to Tenant, then this Lease shall thereupon become
superior to the lien of such mortgage or deed of trust, whether this Lease is
dated or recorded before or after the mortgage or deed of trust.
(b) Estoppel Certificates. Tenant shall, within ten (10) days of the
---------------------
receipt thereof, acknowledge and deliver to Landlord an estoppel certificate in
the form attached to this Lease as Exhibit D, or such other form requested by
Landlord from time to time, certifying, to the extent true, that (i) Tenant
shall be in occupancy, (ii) this Lease is unmodified and in full force and
effect, or if there have been modifications, that the same is in full force and
effect as modified and stating the modifications, (iii) Base Rent and Additional
Rent have been paid only through a certain specified date, (iv) Tenant has no
offsets, defenses or claims against Landlord, and (v) such other matters as
Landlord may reasonably request. Tenant's failure to deliver an estoppel
certificate within the fifteen (15) day period shall be deemed its confirmation
of the accuracy of the information supplied by Landlord to the prospective
lender or purchaser. Tenant acknowledges and agrees that Landlord and others
will be relying and are entitled to rely on the statements contained in such
estoppel certificates.
SECTION 25. Reserved.
--------
SECTION 26. Liability of Landlord. Tenant shall look solely to Landlord's
---------------------
interest in the Building or the Land, and the rents, issues and profits from the
Building, for the satisfaction of any judgment or decree against Landlord,
whether for breach of the terms hereof or arising from a right created by
statute or under common law. Tenant agrees that no other property or assets of
the Landlord or any partner in Landlord shall be subject to levy, execution or
other enforcement procedures for satisfaction of any such judgment or decree;
and no partner, shareholder of other holder of an ownership interest in Landlord
shall be sued or named as a party in any suit or action (except as may be
necessary to secure jurisdiction over the partnership).
SECTION 27. Miscellaneous.
-------------
(a) Quiet Enjoyment. If Tenant fully complies with and promptly performs
---------------
all of the terms, covenants and conditions of this Lease on its part to be
performed, it shall have quiet enjoyment of the Premises throughout the Lease
term, subject, however, to matters of record (including the Declaration) and to
those matters to which this Lease may be subsequently subordinated.
(b) Notices. Any notices required in accordance with any of the
-------
provisions herein shall be in writing and delivered personally, sent via Federal
Express or another overnight courier service, or mailed by registered or
certified mail to the parties at the addresses set forth in Section l above, or
to such other address as a party shall from time to time designate in writing by
notice given pursuant to this Section 27(b). If Tenant is a partnership, any
notice required or permitted hereunder may be given by or to any one partner
thereof with the same force and effect as if given by or to all thereof. If
mailed, a notice shall be deemed received on the date of delivery or the date
delivery is refused.
(c) Successors or Assigns. All of the terms, conditions, covenants and
---------------------
agreements of this Lease shall be binding upon and subject to Section 16 above,
benefit Landlord, Tenant and their respective heirs, administrators, executors,
successors and assigns, and upon any person or persons coming into ownership or
possession of any interest in the Premises by operation of law or otherwise.
(d) Authority and Liability. Each party warrants to the other that this
-----------------------
Lease has been duly authorized, executed and delivered by it, and it has the
<PAGE>
requisite power and authority to enter into this Lease and perform its
obligations hereunder. Each party covenants to provide the other with evidence
of its authority and the authorization of this Lease upon request. All persons
and entities named as Tenant or Landlord herein shall be jointly and severally
liable for Tenant's or Landlord's respective liabilities, covenants and
agreements under this Lease.
(e) Brokers' Commission. Each party represents to the other that it has
-------------------
not dealt with any broker, agent or finder in connection with this Lease other
than the brokers listed in Section 1 of this Lease, and each party agrees to
indemnify and hold the other party harmless from all damages, judgments,
liabilities, claims and expenses (including attorneys' fees) arising out of or
in connection with any claim or demand of any other broker, agent or finder with
whom the indemnifying party has dealt for any commission or fee alleged to be
due in connection with its participation in the procurement of Tenant or the
negotiation of this Lease. Landlord agrees to pay Tenant's Broker a fee in
connection with this Lease in as provided in a separate agreement between
Landlord and Tenant's Broker.
(f) Partial Invalidity. If any court determines that any provision of
------------------
this Lease or the application thereof to any person or circumstance is, to any
extent, invalid or unenforceable, the remainder of this Lease, or application of
such provision to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby and each other
term, covenant or condition of this Lease shall be valid and be enforced to the
fullest extent permitted by law.
(g) Recording. Tenant shall not record this Lease or a memorandum
---------
thereof without the prior written consent of Landlord.
(h) Force Majeure. Neither party shall be deemed in default under this
-------------
Lease for failing to perform its duties or obligations under this Lease if such
failure is due to causes beyond its reasonable control, including but not
limited to acts of God, acts of civil or military authorities, fires, floods,
windstorms, adverse weather conditions, earthquakes, strikes or labor
disturbances, civil commotion, delays in transportation, governmental delays or
war; provided, nothing in this Section 27(h) shall limit or otherwise modify or
waive Tenant's obligation to pay Base Rent and Additional Rent as and when due
pursuant to the terms of this Lease.
(i) Name of Building. Landlord may change the name of the Building at
----------------
any time. Any such change shall not require amendment of this Lease or affect in
any way Tenant's obligations under this Lease, and except for the name change,
all terms and conditions of this Lease shall remain in full force and effect.
(j) Headings. The section headings used in this Lease are used for
--------
purposes of convenience and do not alter or limit in any manner the content of
the sections. Whenever appropriate from the context, the use of any gender shall
include any other or all genders, and the singular shall include the plural, and
the plural shall include the singular.
(k) Execution by Landlord and Tenant; Approval of Lender. Landlord shall
----------------------------------------------------
not be deemed to have made an offer to Tenant by furnishing Tenant with a copy
of this Lease with particulars inserted. No contractual or other rights shall
exist or be created between Landlord and Tenant until all parties have executed
this Lease, and if specified in writing by Landlord, until it has been approved
in writing by Landlord's lender and fully executed copies have been delivered to
Landlord and Tenant. Tenant agrees to make such changes herein as may be
reasonably requested by Landlord's lender, so long as such changes do not
increase Base Rent and Additional Rent due from Tenant or otherwise materially
alter Tenant's rights or obligations hereunder.
(l) Transportation Management Programs; Recycling. Tenant shall
---------------------------------------------
cooperate with Landlord in meeting the objectives and complying with the terms
and conditions of any transportation management plan (the "TMP") now or
hereafter instituted by any governmental authority and applicable to the
Building. Landlord will provide Tenant with notice of any such transportation
plan now or hereafter in effect. In
<PAGE>
addition, Tenant will cooperate with and participate in any and all recycling
programs now or hereafter in place with respect to the Building, whether or not
governmentally mandated, if all tenants of the Building are requested to
participate.
(m) Entire Agreement; Applicable Law(m). This Lease and the attached
-----------------------------------
exhibits set forth the entire agreement of Landlord and Tenant concerning the
Premises and the Building, and there are no other agreements or understanding,
oral or written, between Landlord and Tenant concerning the Premises or the
Building. Any subsequent modification or amendment of this Lease shall be
binding upon Landlord and Tenant only if reduced to writing and signed by them.
This Lease shall be governed by, and construed in accordance with the laws of
the State of Washington.
(n) Financial Statements. Within twenty (20) days after Landlord's
--------------------
written request, Tenant shall provide Landlord with a current financial
statement, prepared in accordance with generally accepted accounting principles,
consistently applied, or such other accounting practices as may be reasonably
acceptable to Landlord, and certified as true and correct by the President or
chief financial officer of Tenant. Landlord will keep such financial statements
confidential and will not provide copies of such financial statements to persons
or entities other than Landlord's financial and legal advisors and actual or
prospective lenders or purchasers of the Building, or as otherwise required by
applicable law or court order. At the request of Tenant, Landlord will execute a
non-disclosure agreement with terms and conditions reasonably acceptable to
Landlord and Tenant.
SECTION 28. Additional Provisions.
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(a) Parking. On the Commencement Date, Tenant shall be allocated and
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shall purchase and pay for three (3) parking permits per 1,000 rentable square
feet of the Premises initially leased for unreserved, unassigned parking
privileges in the Building parking facilities. Tenant acknowledges that the
number of parking permits allocated to Tenant pursuant to this Section 28(a) may
be reduced to the extent Landlord is required to set aside parking spaces in the
Building as short term visitor parking or for carpools or vanpools in order to
comply with the TMP. For each parking permit so allocated to Tenant, Tenant
shall be charged a monthly charge equal to the then monthly charge for
unreserved parking in the Building, as such charge may change from time to time
to reflect changes in the market (but not more than once per Lease Year). In no
event, however, shall the monthly charge per parking permit be less than the
monthly charge per permit during the initial Lease Year. The initial charge for
unreserved, unassigned monthly parking in the Building garage shall be $80.00
per space per month (plus applicable sales tax). Tenant's parking privileges in
the Building shall be subject to whatever parking methods (e.g., stack parking,
valet parking, self- parking, etc.) are then being used in the Building and
subject to any applicable rules and regulations. Any parking spaces allocated to
Tenant pursuant to this Section 28(a) and not initially purchased by Tenant
shall immediately and irrevocably revert to Landlord and may be reallocated by
Landlord to other tenants of the Project. If Tenant elects to purchase the full
number of parking permits allocated to it pursuant to this Section 28(c) but
Tenant does not require the use of all such parking permits, Landlord agrees to
assist Tenant in finding other tenants in the Building or the Project to
purchase such permits on an interim basis.
(b) Storage. In addition to the Premises, Tenant hereby leases from
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Landlord and Landlord hereby leases to Tenant approximately 212 square feet of
storage space (the "Storage Space") located on the mid-parking level of the
Building garage, as more specifically shown on Exhibit F attached. Landlord
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shall have the option of relocating the Storage Space to another space in the
Building or the Project with substantially the same square footage as the
initial Storage Space by giving Tenant at least thirty (30) days advance written
notice. If Landlord so elects to relocate the Storage Space, at its expense,
Landlord will construct any walls necessary to demise the substitute space and
Landlord, at its expense, will cause the substitute space to be improved with
improvements comparable to those, if any, then existing in the initial Storage
Space. As rent for the Storage Space (the "Storage Space Rent"), Tenant shall
pay monthly (with the Base Rent required to be paid pursuant to this Lease), an
amount equal to $194.33 per month (the "Storage Rent"). The Storage Rent shall
be adjusted at the same times and in the same manner that Base Rent is adjusted
pursuant to Section 4 above. Tenant's use of the Storage Space shall be at its
sole risk and expense, and Tenant hereby assumes full responsibility for the
safety of any goods, personal
<PAGE>
property or other items stored therein by Tenant. Tenant will use and occupy the
Storage Space in compliance with all applicable laws, keep and maintain the
Storage Space in neat, clean, sanitary and orderly condition, and comply with
all reasonable rules and regulations issued by Landlord with respect to the
Storage Space. At the end of the Lease Term, Tenant shall return the Storage
Space to Landlord in the same condition as when received, except for reasonable
wear and tear, damage by condemnation, and damage by fire or other casualty. All
Storage Space shall be leased to Tenant on an "AS IS, WHERE IS" basis, without
any obligation by Landlord to make any improvements to the Storage Space after
the completion of the Building to Shell Condition. Tenant shall not alter or
improve the Storage Space without Landlord's prior consent, which consent shall
not be unreasonably withheld or delayed.
(c) Letter of Credit.
----------------
(i) As additional security for the payment and performance by
Tenant of all its obligations under this Lease, and as a condition precedent to
the effectiveness of this Lease, within two (2) business days after the full
execution of this Lease, Tenant will deliver to Landlord an irrevocable standby
letter of credit in the amount of $650,000 (the "Letter of Credit"). The Letter
of Credit must be issued to Landlord and its assigns as beneficiary by a bank
acceptable to Landlord, and must be acceptable to Landlord in form and content.
The Letter of Credit shall be issued in such form as to enable Landlord, at its
option, to draw the same, in whole or in part, from time to time on demand.
Tenant authorizes Landlord to draw on the Letter of Credit and apply the
proceeds thereof toward the payment of any sum in default or any other sum which
Landlord may be required or may in its reasonable discretion deem necessary to
spend or incur by reason of Tenant's default. The Letter of Credit shall renew
annually for consecutive one (1) year periods, at least thirty (30) days prior
to each anniversary of its initial issuance. Landlord shall have the right to
assign the Letter of Credit to any person to whom Landlord sells the Building.
Tenant may elect at any time to replace all or part of the Letter of Credit with
a cash deposit with Landlord. Any cash so deposited with Landlord will be held
by Landlord in a non-interest bearing account and may be used by Landlord in the
same manner that Landlord can draw on the Letter of Credit pursuant to this
Section 28(c).
(ii) If Tenant defaults under this Lease and fails to cure the
default prior to the expiration of any applicable cure period, Landlord may draw
on the entire amount of the Letter of Credit and deduct from the proceeds of the
Letter of Credit the amount of any unpaid rent or other sums due to Landlord as
a result of the default. Tenant on demand by Landlord will cause a replacement
Letter of Credit (which also must be issued by a bank and be in form and content
acceptable to Landlord) in the amount of the initial Letter of Credit (as the
same may have been reduced pursuant to subparagraph (iii) below) to be issued to
Landlord within ten (10) days of Landlord's demand to do so. Upon receipt of the
replacement Letter of Credit, Landlord will deliver to Tenant the unused balance
of the funds drawn under the original Letter of Credit so long as Tenant is not
then in default under this Lease. If Tenant fails to renew the Letter of Credit
as required by this Section 28(c), or if Tenant defaults under this Lease and
fails to provide Landlord with a replacement Letter of Credit as required
pursuant to the preceding sentence, then Landlord without notice may draw upon
the entire Letter of Credit if it has not already done so and the amount so
drawn by Landlord will be held by Landlord as a deposit to secure the payment
and performance of Tenant's obligations under this Lease. A failure by Tenant to
provide Landlord with a replacement Letter of Credit pursuant to this Section
28(c) or to otherwise comply with the requirements of this Section 28(c) will
constitute a default under Section 19(a)(ii) of this Lease. If Tenant defaults
in the payment or performance of any of its obligations under this Lease, and
fails to cure the default prior to the expiration of the applicable cure period,
if any, Landlord may withdraw from any funds held by Landlord pursuant to the
preceding sentence for the amount of any unpaid rent or other sums due to
Landlord as a result of the default, and the remaining balance of any such funds
shall be returned to Tenant without interest within thirty (30) days after the
expiration or earlier termination of the Lease Term if Tenant is not then in
default of any its obligations under this Lease.
(iii) So long as Tenant is not then in default under this Lease,
on each of December 31, 1999, December 31, 2000 and December 31, 2001, the
required amount of the Letter of Credit will be reduced to by one-third (1/3)
of its original amount, if and only if Tenant is able to provide Landlord with
evidence acceptable to Landlord in its sole discretion that during
<PAGE>
the three (3) month period preceding the applicable date, the average cash
balances in Tenant's depository accounts with financial institutions equaled or
exceeded $9,000,000.
(d) Expansion. If Tenant requires additional space, Tenant shall so
---------
advise Landlord and Landlord will advise Tenant if any space is available in the
Building for to satisfy Tenant's space needs, the date the available space will
be available and the terms and conditions on which Landlord will make such space
available to Tenant.
(e) Rooftop Equipment.
-----------------
(i) Subject to the terms of this Section 28(e), Tenant shall have
a non-exclusive license to install on the roof of the Building or elsewhere in
the Project in a mutually acceptable location, an antenna or antennas and
related communications equipment using signal strength similar to such equipment
commonly located on the rooftops of Class A downtown office buildings in Seattle
(the "Equipment"). Landlord's approval of the Equipment and its location in the
Project shall not be unreasonably withheld. Prior to installation, in addition
to the location of the Equipment, Landlord must approve, which approval will not
be unreasonably withheld, (1) the Equipment, (2) drawings submitted by Tenant
showing the Equipment to be installed, method of installation, connectors to
electrical services, conduit to the Premises in the Building, and such other
information concerning the installation, use and maintenance of the Equipment
which Landlord may request, and (3) the contractor selected by Tenant to install
the Equipment, and the terms of the contract between Tenant and its contractor.
If required by Landlord, Tenant shall use Landlord's roofing contractor during
the installation of the Equipment. The installation work shall be done in a
manner which does not invalidate any roof warranty then in effect, and Tenant
will repair any damage to the roof or roof structure caused by such
installation. The Equipment may be used only for Tenant's own communications
needs and on a non-fee basis. Tenant shall obtain (through Landlord or with
Landlord's approval) all permits and approvals required by any governmental
entities to install, operate or maintain the Equipment. At its sole cost and
expense, Tenant shall maintain the Equipment and comply with all the laws,
rules, regulations, ordinances and standards of all governmental authorities
having jurisdiction over the Equipment or the Building. Tenant shall be
responsible for all roof repair and additional maintenance costs, if any,
attributable to the Equipment and Tenant's use of the Building roof pursuant to
this Section 28(e). Tenant shall pay for all utilities used or consumed in
connection with the Equipment; pay all personal property taxes, if any,
separately assessed with respect to the Equipment; and if and to the extent the
Equipment is assessed for tax purposes as part of the Building or Landlord's
personal property, reimburse Landlord within thirty (30) days of Landlord's
written demand for all additional taxes, if any, attributable to the Equipment
as reasonably determined by Landlord.
(ii) Installation, maintenance and use of the Equipment shall not
in any way interfere with the systems of the Building or the Project or the
quiet enjoyment by any other tenant or occupant of the Building or the Project,
including without limitation the use of computers, television, radio, telephone
and other communications equipment and any other communications apparatus now or
hereafter located on the roof of the Building or elsewhere in the Project. If
Landlord receives complaints regarding interference with reception from another
tenant, and Landlord reasonably believes the source of the interference is the
Equipment, Tenant shall take all steps necessary to stop the interference. To
the extent Landlord has the right to do so, Landlord will cause other tenants
that are being interfered with to use replacement equipment or other filter
devices, in either case at Tenant's expense, in accordance with the requirement
of the Federal Communications Commission, in order to solve the problem. Tenant
shall reimburse Landlord within ten (10) days after demand for all losses,
liabilities, damages and expenses related to the repair of such damage
attributable to such interference. Tenant shall within thirty (30) days
following expiration or earlier termination of the Lease or this license, remove
the Equipment, repair any damage caused by such removal and restore the roof and
any other affected areas of the Building or the Project to a condition at least
as good as its condition immediately prior to the installation of the Equipment,
ordinary wear and tear excepted. If Tenant fails to so remove the Equipment and
restore the Building or the Project, Landlord may do so on Tenant's behalf, and
Tenant shall within ten (10) days after demand pay to Landlord the actual costs
incurred by Landlord in so doing. Landlord agrees to permit Tenant reasonable
access to the roof and other common areas of the Building or the Project to
facilitate the
<PAGE>
installation, use and maintenance of the Equipment and the removal of the
Equipment. Any Equipment so installed shall be installed and used at Tenant's
sole risk, and in no event shall Landlord be liable under any circumstances for
any damage to the Equipment or loss of use related to the Equipment, except to
the extent the damage is the result of the negligence or intentional misconduct
of Landlord. Nothing in this Section 28(e) is intended to create any exclusive
right in favor of Tenant to use the roof of the Building any other portion of
the Project for telecommunications equipment or otherwise. Tenant agrees to
cooperate with Landlord in relocating the Equipment to another location on the
roof of the Building or elsewhere in the Project so long as Landlord pays the
reasonable cost of such relocation.
(f) Emergency Power Generator.
-------------------------
(i) Subject to the terms of this Section 28(f), Tenant shall have
a non- exclusive right to install an emergency power generator at a mutually
acceptable location in the Project (the "Generator"). Prior to installation, in
addition to the location, Landlord must approve, which approval shall not be
unreasonably withheld, (1) the Generator, (2) drawings submitted by Tenant
showing the Generator to be installed, method of installation, connectors to
electrical services, conduit to the Premises, and such other information
concerning the installation, use and maintenance of the Generator which Landlord
may request, and (3) the contractor selected by Tenant to install the Generator,
and the terms of the contract between Tenant and its contractor. The Generator
shall be painted in a color approved by Landlord to match the adjacent
improvements and shall be surrounded by an acoustic shield. Tenant shall obtain
(through Landlord or with Landlord's approval) all permits and approvals
required by any governmental entities to install, operate or maintain the
Generator. At its sole cost and expense, Tenant shall maintain the Generator and
comply with all the laws, rules, regulations, ordinances and standards of all
governmental authorities having jurisdiction over the Building. Tenant shall be
responsible for all additional maintenance costs, if any, attributable to the
use, operation or maintenance of the Generator. Tenant shall pay for all
utilities used or consumed in connection with the Generator; pay all personal
property taxes, if any, separately assessed with respect to the Generator; and
if and to the extent the Generator is assessed for tax purposes as part of the
Building or Landlord's personal property, reimburse Landlord within thirty (30)
days of Landlord's written demand for all additional taxes, if any, attributable
to the Generator. The Generator shall be used only for periodic testing and in
the event Tenant's primary electrical service is interrupted. All testing shall
take place at times reasonably selected to minimize interference with other
tenants. The Generator shall be used only for backup power only for Tenant, and
may not be used as a primary power source.
(ii) Installation, maintenance and use of the Generator shall not
in any way interfere with the systems of the Building or the Project or the
quiet enjoyment by any other tenant or occupant of the Building or the Project.
Tenant shall within thirty (30) days following expiration or earlier termination
of the Lease, remove the Generator, repair any damage caused by such removal and
restore the affected areas of the Building or the Project to a condition at
least as good as its condition immediately prior to the installation of the
Generator, ordinary wear and tear excepted. If Tenant fails to so remove the
Generator and restore the Building or the Project, Landlord may do so on
Tenant's behalf, and Tenant shall within ten (10) days after demand pay to
Landlord the actual costs incurred by Landlord in so doing. Landlord agrees to
permit Tenant reasonable access to the common areas of the Building or the
Project to facilitate the installation, use and maintenance of the Generator and
the removal of the Generator. Any Generator so installed shall be installed and
used at Tenant's sole risk, and in no event shall Landlord be liable under any
circumstances for any damage to the Generator or loss of use related to the
Generator.
DATED as of the day and year first indicated above.
LANDLORD:
FIRDEX ASSOCIATES, a Washington
general partnership
By: ALPER NORTHWEST, INC., a Washington
<PAGE>
corporation, Managing General Partner
By /s/ Kenneth V. Bellamy
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Its President
-----------------------------------
By /s/ Dean R. Erickson
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Its Vice President
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TENANT:
MEGADEPOT.COM, INC., a Washington
corporation
By /s/ Mark Calvert
-------------------------------------
Its CFO
----------------------------------
<PAGE>
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this 5th day of May, 1999, before me, a Notary Public in and for the State
of Washington, duly commissioned and sworn, personally appeared Kenneth V.
Bellamy and Dean R. Erickson, to me known to be the President and Vice
President, respectively, of ALPER NORTHWEST, INC., the Managing General Partner
of FIRDEX ASSOCIATES, the partnership named in and which executed the foregoing
instrument; and they acknowledged to me that they signed the same as the free
and voluntary act and deed of said corporation and partnership for the uses and
purposes therein mentioned.
I certify that I know or have satisfactory evidence that the persons appearing
before me and making this acknowledgment are the persons whose true signatures
appear on this document.
WITNESS my hand and official seal the day and year in this certificate above
written.
/s/ Eleanor C. Romero
---------------------
Signature
Eleanor C. Romero
-----------------
Print Name
NOTARY PUBLIC in and for the State of
Washington, residing at Kent.
My commission expires 11-19-01.
<PAGE>
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this 4TH day of May, 1999, before me, the undersigned, a Notary Public in
and for the State of Washington, duly commissioned and sworn personally appeared
Mark Calvert, known to me to be the CFO of MEGADEPOT.COM, INC., the corporation
that executed the foregoing instrument, and acknowledged the said instrument to
be the free and voluntary act and deed of said corporation, for the purposes
therein mentioned, and on oath stated that he/she was authorized to execute said
instrument.
I certify that I know or have satisfactory evidence that the person appearing
before me and making this acknowledgment is the person whose true signature
appears on this document.
WITNESS my hand and official seal hereto affixed the day and year in the
certificate above written.
/s/ Angela Leonard
------------------
Signature
Angela Leonard
--------------
Print Name
NOTARY PUBLIC in and for the State of
Washington, residing at King County.
My commission expires 2-9-2000.