Washington-Seattle-308/316 Occidental Avenue South Lease - Burke State Building LLC and WatchGuard Inc.
OFFICE LEASE
OCCIDENTAL MALL
Martin Smith Inc
500 Watermark Tower
1109 First Avenue
Seattle, WA 98101-2988
Tel: 682-3300 Fax: 340-1283
This Lease is made this 10th day of October 1997 by and between BURKE STATE
BLDG., L.L.C., a Washington limited liability company ("Landlord"), and
WatchGuard, Inc., a Washington corporation ("Tenant"), who agree as follows:
1. Fundamental Terms. As used in this Lease, the following capitalized terms
shall have the following meanings:
(a) "Land" means the land on which the Building is located, situated in the
City of Seattle, County of King, State of Washington, which is described on
Exhibit A.
(b) "Building" means the Burke Building, the street address of which is 316
Occidental Avenue South, Seattle, Washington 98104, and the State Building, the
street address of which is 308 Occidental Avenue South, Seattle, Washington
98104, together known as "the Occidental Mall." The Premises are located in the
Burke Building.
(c) "Premises" means that certain space outlined in red in Exhibit B and
located on the second floor of the Burke Building designated as Suite 200.
(d) "Agreed Areas" means the agreed amount of rentable square feet of space
in the Building and the Premises. Landlord and Tenant stipulate and agree for
all purposes under this Lease that the Building contains approximately 111,308
rentable square feet of space (the "Building Area") and that the Premises
contain approximately 12,296 rentable square feet of space (the "Premises
Area"). Landlord and Tenant further agree that the Building Area may exclude
portions of the Building which are used for other than office purposes, such as
areas used for retail purposes or for storage purposes.
(e) "Tenant's Share" means the Premises Area divided by the Building Area,
expressed as a percentage, which is 11.05 percent). Notwithstanding the
foregoing, if one or more of the facilities, services and utilities the costs of
which are included
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within the definition of Operating Costs is not furnished to one or more tenants
or to particular types of tenants, then in connection with the calculation of
Tenant's Share of each of such costs the Building Area shall be reduced by the
number of rentable square feet of space occupied by such tenants and Tenant's
Share shall be separately computed as to each of such costs.
If a portion of the Building is damaged or condemned, or any other event
occurs which alters the number of rentable square feet of space in the Premises
or the Building, then Landlord shall adjust Tenant's Share to equal the number
of rentable square feet of space then existing in the Premises (as altered by
such event) divided by the number of rentable square feet of space then existing
in the Building (as altered by such event).
(f) "Commencement Date" means December 15, 1997.
(g) "Expiration Date" means April 30, 2001.
(h) "Term" means the period of time commencing on the Commencement Date
and ending on the Expiration Date, unless sooner terminated pursuant to this
Lease.
(i) "Minimum Monthly Rent" means the following amounts as to the following
periods during the Term of this Lease:
Period Monthly Amount
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December 15, 1997 to April 30, 2001 $18,444.00 per month
(j) "Permitted Use" means general administrative office use.
(k) "Base Year" means the calendar year 1997.
(l) "Prepaid Rent" means Eighteen Thousand Four Hundred and Forty-Four
Dollars and 00/100 ($18,444.00).
(m) "Security Deposit" means Eighteen Thousand Four Hundred and Forty-Four
Dollars and 00/100 ($18,444.00).
(n) "Landlord's Address for Notice" means Occidental Mall, c/o Martin
Smith Inc, 1109 First Avenue, Suite 500, Seattle, Washington 98101-2988.
(o) "Landlord's Address for Payment of Rent" means Occidental Mall, c/o
Martin Smith Inc, 1109 First Avenue, Suite 500, Seattle, Washington 98101-2988.
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(p) "Tenant's Address for Notice" means WatchGuard Inc., 316 Occidental
Avenue South, Suite 200, Seattle, Washington 98104.
(q) "Landlord's Agent" means Martin Smith Inc or such other agent as
Landlord may appoint from time to time.
(r) "Broker(s)" means Martin Smith Inc representing Landlord and Eric
Olmstead of Leibsohn & Co. representing Tenant in this transaction.
(s) "Exhibits" means the following Exhibits to this Lease:
Exhibit A - Legal Description of the Property
Exhibit B - Outline Drawing of the Premises
Exhibit C - Work Letter
Exhibit D - Rules and Regulations
(t) "Rider" means the following Rider which is attached hereto: Rider
dated the 10th day of October 1997 by and between Burke-State Bldg., LLC, a
Washington limited liability company ("Landlord") and WatchGuard, a Washington
corporation ("Tenant").
(u) "Definitions" means the words and phrases defined in Section 41
captioned "Definitions".
2. Premises. Landlord leases to Tenant and Tenant leases from Landlord the
Premises for the Term.
3. Appurtenances. Tenant, and its authorized representatives, shall have the
right to use, in common with others and subject to the Rules and Regulations,
the Common Areas of the Building. Landlord shall have the right, in Landlord's
sole discretion, from time to time to (i) make changes to the Building interior
and exterior and Common Areas, including, without limitation, changes in the
location, size, shape, number and appearance thereof, (ii) to close temporarily
any of the Common Areas for maintenance purposes so long as reasonable access to
the Premises remains available, and (iii) to use the Common Areas while engaged
in making additional improvements, repairs or alterations to the Building. All
of the windows and exterior walls of the Premises and any space in the Premises
used for shafts, stacks, pipes, conduits, ducts, electrical equipment or other
utilities or Building facilities are reserved solely to Landlord and Landlord
shall have rights of access through the Premises for the purpose of operating,
maintaining and repairing the same, provided, however, that such changes shall
not materially affect Tenant's access to, or use and occupancy of, the Premises.
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4. Term.
(a) Commencement Date. The Term shall commence on the Commencement Date
and expire on the Expiration Date, unless sooner terminated pursuant to this
Lease. The Commencement Date shall be:
(i) The date specified in Section 1.
(ii) If Tenant shall occupy the Premises for the Permitted Use prior
to the Commencement Date specified in Section 1, then the date of such early
occupancy.
(b) Tenant Termination Rights. If Landlord is unable to deliver
possession of the Premises to Tenant on the Commencement Date as a result of
causes beyond its reasonable control, Landlord shall not be liable for any
damage caused by failing to deliver possession and this Lease shall not be void
or voidable. Tenant shall not be liable for Rent until Landlord delivers
possession of the Premises to Tenant. No delay in delivery of possession of the
Premises to Tenant shall change the Expiration Date or operate to extend the
Term. If Landlord does not deliver possession of the Premises to Tenant within
six (6) months of the Commencement Date, then Tenant may elect to terminate this
Lease by giving notice to Landlord within thirty (30) days following the end of
such six (6) month period.
(c) Confirmation of Commencement Date. When the Commencement Date has
been established as a later date than the Commencement Date specified in Section
1, Landlord shall confirm the Commencement Date by notice to Tenant.
5. Minimum Monthly Rent; Late Charge.
(a) Minimum Monthly Rent. Tenant shall pay to Landlord the Minimum
Monthly Rent without deduction, offset, prior notice or demand, in advance on
the first day of each month during the Term. Minimum Monthly Rent for any
partial month shall be prorated at the rate of 1/30th of the Minimum Monthly
Rent per day. Minimum Monthly Rent is exclusive of any sales, franchise,
business or occupation or other tax based on rents (other than Landlord's
general income taxes) and should such taxes apply during the Term, the Minimum
Monthly Rent shall be increased by the amount of such taxes. All Rent shall be
paid to Landlord at Landlord's Address for Payment of Rent or at such other
address as Landlord may specify by notice to Tenant.
(b) Late Charge. Tenant acknowledges that the late payment by Tenant of
any Rent will cause Landlord to incur administrative, collection, processing and
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accounting costs and expenses not contemplated under this Lease, the exact
amount of which are extremely difficult or impracticable to fix. Therefore, if
any Rent is not received by Landlord from Tenant by the fifth (5th) calendar day
after such Rent is due, Tenant shall immediately pay to Landlord a late charge
equal to Seventy-five and No/100 Dollars ($75.00). Landlord and Tenant agree
that this late charge represents a reasonable estimate of such costs and
expenses and is fair compensation to Landlord for its loss caused by Tenant's
nonpayment. Should Tenant pay said late charge but fail to pay
contemporaneously therewith all unpaid amounts of Rent, Landlord's acceptance of
this late charge shall not constitute a waiver of Tenant's default with respect
to Tenant's nonpayment nor prevent Landlord from exercising all other rights and
remedies available to Landlord under this Lease or under law.
(c) Amortization of Tenant Improvements. Notwithstanding the foregoing,
and in addition to the Minimum Rent discussed in Sections 1.(l) and Section 5
(a) and (b), the Tenant shall pay monthly in advance on the first day of each
month during the Term the amortized cost of the Tenant Improvements. It has
been agreed that Landlord's contribution for the Tenant Improvements shall not
exceed $40,000.00. Landlord's contribution towards the Tenant Improvement shall
be amortized over thirty-eight (38) months at a 10% interest rate per annum. It
is further understood that should the total Tenant Improvement costs not exceed
$40,000.00 Tenant shall pay only the amortized costs of the allowance used. For
example, should Tenant elect to take the entire Forty Thousand and No/100
Dollars and No Cent ($40,000.00) allowance, the monthly payment for these
Improvements would be $1,232.42 in addition to the Minimum Monthly Rent
described in Section 1(1) and Section 5(a).
6. Prepaid Rent and Security Deposit. On execution of this Lease, Tenant shall
deposit with Landlord the Prepaid Rent, as monthly rent for the first full month
of the Term for which Rent is payable, and the Security Deposit, as a Security
Deposit for the performance by Tenant of the provisions of this Lease. If
Tenant is in default, Landlord may use the Security Deposit, or any portion of
it, to cure the default, including, without limitation, paying for the cost of
any work necessary to restore the Premises, the Tenant Improvements and any
alterations to good condition or to compensate Landlord for all damage sustained
by Landlord resulting from Tenant's default. Tenant shall within five (5) days
of demand pay to Landlord a sum equal to the portion of the Security Deposit
expended or applied by Landlord as provided in this Section so as to maintain
the Security Deposit in the sum initially deposited with Landlord. If Tenant is
not in default as of the expiration or termination of the Term, including,
without limitation, in default in payment of the Rent for the last month of the
Term, then Landlord shall return the Security Deposit, without interest, to
Tenant within thirty (30) days after the expiration or termination of the Term.
Landlord's
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obligations with respect to the Security Deposit are those of a debtor and not a
trustee. Landlord may commingle the Security Deposit with Landlord's general and
other funds.
7. Real Property Taxes.
(a) Payment of Tenant's Share of Increases in Real Property Taxes. Tenant
shall pay to Landlord, as Additional Rent, monthly, in advance on the first day
of each month during the Term, an amount equal to one-twelfth (1/12th) of
Tenant's Share of all increases in Real Property Taxes that are or will be
levied or assessed against the Property during each calendar year during the
Term over and above the Real Property Taxes that are levied or assessed against
the Property during the Base Year as reasonably estimated by Landlord. Such
Additional Rent is exclusive of any sales, franchise, business or occupation or
other tax based on rents and should such taxes apply during the Term, such
Additional Rent shall be increased by the amount of such taxes. Within one
hundred twenty (120) days after the end of each calendar year during the Term or
within such longer period of time as may be reasonably necessary, Landlord shall
furnish to Tenant a statement of the Real Property Taxes for the preceding
calendar year and Tenant's Share of the increase in Real Property Taxes. If
Tenant's Share of the increase in such Real Property Taxes for that calendar
year over such Real Property Taxes for the Base Year exceeds the monthly
payments made by Tenant, then Tenant shall pay Landlord the deficiency within
thirty (30) days after receipt of the statement. If Tenant's payments made
during that calendar year exceed Tenant's Share of the increase in such Real
Property Taxes for that calendar year over such Real Property Taxes for the Base
Year, then, at Landlord's option, either Landlord shall pay Tenant the excess at
the time Landlord furnishes the statement to Tenant, or Tenant shall be endued
to offset the excess against the next installment(s) of Minimum Monthly Rent and
Additional Rent, provided, however, that at the end of the Term Landlord shall
pay Tenant the excess at the time Landlord furnishes the statement to Tenant.
(b) General and Special Assessments. With respect to any general or
special assessments which may be levied against or upon the Property, or which
under the laws then in force may be evidenced by improvement or other bonds or
may be paid in annual installments, only the amount of such annual installment,
and interest due thereon, shall be included in the computation of Real Property
Taxes.
(c) Proration. Tenant's Share of Real Property Taxes shall be prorated on
the basis of a 360-day year to account for any fractional portion of a tax year
included in the Term at its commencement and expiration.
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(d) No Effect on Minimum Monthly Rent. Notwithstanding anything to the
contrary in this Section, the Minimum Monthly Rent payable by Tenant shall in no
event be less than the Minimum Monthly Rent specified in Section 1.
(e) Historic Designation. Due to the Historic Designation of the
Occidental Mall, the Building qualifies for a special tax valuation designation
pursuant to the Special Valuation of Property Act, Chapter 84.26 RCW. This
designation was a material economic element necessary to induce Landlord to
undertake and finance the rehabilitation of the Building. As a result of this
Special Valuation of Property Act, the Building qualifies for a special tax
valuation, and, as a result, the real property taxes have been reduced below the
amount that would be due and owing if the Building did not qualify for the
special tax valuation. For purposes of this Section, Real Property Taxes shall
be calculated based on full assessed value multiplied by the applicable millage
rate then in effect.
8. Personal Property Taxes. Tenant shall pay prior to delinquency all
personal property taxes assessed against and levied upon trade fixtures,
furnishings, equipment and all other personal property of Tenant contained in
the Premises or elsewhere. If possible, Tenant shall cause such trade fixtures,
furnishings, equipment and all other personal property of Tenant to be assessed
and billed separately from the Property.
9. Operating Costs.
(a) Payment of Tenant's Share of Increases in Operating Costs. Tenant
shall pay to Landlord, as Additional Rent, monthly, in advance on the first day
of each month during the Term, an amount equal to one-twelfth (1/12th) of
Tenant's Share of the increase in the Operating Costs of the Property for each
calendar year during the Term over the Operating Costs for the Base Year as
reasonably estimated by Landlord. Landlord shall reasonably estimate the
Operating Costs for the Base Year and for each calendar year during the Term
based on the Operating Costs that would have been incurred if the Building had
been 95% occupied during the Base Year or each such calendar year, as the case
may be, taking into account historical operating costs for the Building. Such
Additional Rent is exclusive of any sales, franchise, business or occupation or
other tax based on rents and should such taxes apply during the Term, such
Additional Rent shall be increased by the amount of such taxes. Within one
hundred twenty (120) days after the end of each calendar year during the Term or
within such longer period of time as may be reasonably necessary, Landlord shall
furnish to Tenant a statement of the Operating Costs for the preceding calendar
year and Tenant's Share of the increase in the Operating Costs. If Tenant's
Share of the increase in the Operating Costs for that calendar year over the
Operating Costs for the Base Year exceeds the monthly payments made by Tenant,
then Tenant shall pay Landlord the deficiency within thirty (30) days after
receipt of the statement. If
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Tenant's payments made during that calendar year exceed Tenant's Share of the
increase in the Operating Costs for that calendar year over the Operating Costs
for the Base Year, then, at Landlord's option, either Landlord shall pay Tenant
the excess at the time Landlord furnishes the statement to Tenant, or Tenant
shall be entitled to offset the excess against the next installment(s) of
Minimum Monthly Rent and Additional Rent, provided, however, that at the end of
the Term Landlord shall pay Tenant the excess at the time Landlord furnishes the
statement to Tenant.
(b) Proration. Tenant's Share of Operating Costs shall be prorated on the
basis of a-360 day year to account for any fractional portion of a year included
in the Term at its commencement and expiration.
(c) No Effect on Minimum Monthly Rent. Notwithstanding anything to the
contrary in this Section, the Minimum Monthly Rent payable by Tenant shall in no
event be less than the Minimum Monthly Rent specified in Section 1.
10. Use. Tenant shall use the Premises for the Permitted Use and for no other
use without Landlord's prior consent. Tenant agrees that it has determined to
its satisfaction that the Premises can be used for the Permitted Use. Tenant
waives any right to terminate this Lease if the Premises cannot be used for the
Permitted Use during the Term unless the prohibition on use is the result of
actions taken by Landlord. Tenant's use of the Premises shall be in accordance
with the following:
(a) Insurance. Tenant shall not do, bring, or keep anything in or about
the Premises or the Property that will cause a cancellation of any insurance
covering the Property. If the rate of any insurance carried by Landlord on the
Property as published by the Washington Survey and Rating Bureau, or any
successor rating bureau or agency, is increased as a result of Tenant's use,
then Tenant shall pay to Landlord not less than ten (10) days before the date
Landlord is obligated to pay a premium on the insurance, a sum equal to the
difference between the original premium and the increased premium,
(b) Compliance With Laws. Tenant shall comply with all Laws concerning
the Premises and Tenant's use of the Premises.
(c) Waste, Nuisance and Improper Use. Tenant shall not use the Premises
in any manner that will constitute waste, nuisance or unreasonable annoyance to
other tenants in the Building, including, without limitation, (i) the use of
loudspeakers or sound or light apparatus that can be heard or seen outside the
Premises, (ii) for cooking or other activities that cause odors that can be
detected outside the Premises, or (iii) for lodging or sleeping rooms.
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(d) Damage to Property. Tenant shall not do anything in, on or about the
Premises that will cause damage to the Property.
(e) Rules and Regulations. Tenant and its authorized representatives
shall comply with the Rules and Regulations set forth on Exhibit D attached
hereto. Landlord shall have the right to amend the Rules and Regulations from
time to time. In the event of a conflict between this Lease and the Rules and
Regulations, as amended, this Lease shall control. Landlord shall have the right
to enforce the Rules and Regulations. Landlord shall have no liability or
responsibility whatsoever with respect to the noncompliance by other tenants or
their authorized representatives with any of such Rules and Regulations.
11. Hazardous Substances. Tenant shall not dispose of or otherwise allow the
release of any Hazardous Substances in, on or under the Premises, or the
Property, or in any Tenant Improvements or alterations placed on the Premises by
Tenant. Tenant represents and warrants to Landlord that Tenant's intended use
of the Premises does not involve the use, production, disposal or bringing on to
the Premises of any Hazardous Substances, except for products normally used in
general business offices which constitute Hazardous Substances, provided that
such products are used, stored and disposed of in accordance with applicable
laws and manufacturer's and supplier's guidelines. Tenant shall promptly comply
with all laws and with all orders, decrees or judgments of governmental
authorities or courts having jurisdiction, relating to the use, collection,
treatment, disposal, storage, control, removal or cleanup of Hazardous
Substances, on or under the Premises or the Property, or incorporated in any
Tenant Improvements or alterations, at Tenant's expense.
(a) Compliance; Notification. After notice to Tenant and a reasonable
opportunity for Tenant to effect such compliance, Landlord may, but is not
obligated to, enter upon the Premises and take such actions and incur such costs
and expenses to effect such compliance as it deems advisable to protect its
interest in the Premises and the Property, provided, however that Landlord shall
not be obligated to give Tenant notice and an opportunity to effect such
compliance if (i) such delay might result in material adverse harm to the
Premises, or the Property, or (ii) an emergency exists. Tenant shall reimburse
Landlord for the full amount of all costs and expenses incurred by Landlord in
connection with such compliance activities, and such obligation shall continue
even after expiration or termination of the Term. Tenant shall notify Landlord
immediately of any release of any Hazardous Substances on the Premises or the
Property.
(b) Indemnity by Tenant. Tenant agrees to hold Landlord harmless from and
against any and all damages, charges, cleanup costs, remedial actions, costs and
expenses, which may be imposed on, incurred or paid by, or asserted against
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Landlord, the Premises or the Property by reason of, or in connection with (i)
any misrepresentation, breach of warranty or other default by Tenant under this
Lease, or (ii) the acts or omissions of Tenant, its authorized representatives,
or any subtenant or other person for whom Tenant would otherwise be liable,
resulting in the release of any Hazardous Substances on the Premises or the
Property.
(c) Acknowledgment as to Hazardous Substances. Tenant acknowledges that
the Premises may contain Hazardous Substances, and Tenant accepts the Premises
and the Building notwithstanding such Hazardous Substances. If Landlord is
required by any law to take any action to remove or abate any Hazardous
Substances, or if Landlord deems it necessary to conduct special maintenance or
testing procedures with regard to any Hazardous Substances, or to remove or
abate any Hazardous Substances, Landlord may take such action or conduct such
procedures at times and in a manner that Landlord deems appropriate under the
circumstances, and Tenant shall permit the same.
(d) Survival. The provisions of this Section shall survive the expiration
or sooner termination of the Term. No subsequent modification or termination of
this Lease by agreement of the parties or otherwise shall be construed to waive
or to modify any provisions of this Section unless the termination or
modification agreement or other document expressly so states in writing.
12. Landlord's Maintenance; Inclusion in Operating Costs.
(a) Landlord's Maintenance. Except as provided in Section 13 captioned
"Tenant's Maintenance; Remedies," Section 23 captioned "Destruction" and Section
24 captioned "Condemnation" and except for damage caused by any negligent or
intentional act or omission of Tenant or its authorized representatives,
Landlord shall maintain in good condition and repair the following: (i) the
structural parts of the Building, which structural parts include only the
foundations, bearing and exterior walls (excluding glass and doors), subflooring
and roof, (ii) the building standard lighting fixtures, window coverings and
ceiling tiles and the unexposed electrical, plumbing and sewage systems,
including, without limitation, those portions lying outside the Premises, (iii)
the heating, ventilating and air-conditioning system, if any, servicing the
Building, (iv) the lobbies, corridors, elevators, public or common restrooms and
other common areas of the Building, and (v) the sidewalks, grounds, landscaping,
parking and loading areas, if any, and other common areas of the Property.
(b) Inclusion in Operating Costs. The cost of maintaining, repairing,
replacing or servicing the portions of the Building that Landlord is required to
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maintain pursuant to this Section shall be included in Operating Costs to the
extent provided in Section 9 captioned "Operating Costs."
13. Tenant's Maintenance; Remedies.
(a) Tenant's Maintenance. Except as provided in Section 12 captioned
"Landlord's Maintenance; Inclusion in Operating Costs," Section 23 captioned
"Destruction" and Section 24 captioned "Condemnation" and except for damage
caused by any negligent or intentional act or omission of Landlord or its
authorized representatives, Tenant, at its cost, shall maintain in good
condition and repair the Premises, including, without limitation, all of the
Tenant Improvements (except for latent defects), Tenant's alterations, Tenant's
trade fixtures, Tenant's personal property, signs, walls, interior partitions,
wall coverings, windows, non-building standard window coverings, glass, doors,
carpeting and resilient flooring, non-building standard ceiling tiles, plumbing
fixtures and non-building standard lighting fixtures. Tenant shall be liable
for any damage to the Premises and the Building resulting from the acts or
omissions of Tenant or its authorized representatives.
(b) Landlord's Remedies. If Tenant fails to maintain the Premises in good
condition and repair as required by Subsection 13(a) and if such failure is not
cured within thirty (30) days after notice of such failure is given by Landlord
to Tenant, then Landlord may, at its option, cause the Premises to be maintained
in good condition and repair and Tenant shall promptly reimburse Landlord for
all costs incurred by Landlord in performance of Tenant's obligation to maintain
the Premises.
14. Tenant Improvements and Alterations; Trade Fixtures.
(a) Landlord and Tenant shall install and pay for the improvements and
alterations as set forth in the Work Letter attached hereto as Exhibit C.
Tenant shall not make any other improvements or alterations to the Premises
without Landlord's prior consent. Any improvements and alterations made by
either party shall remain on and be surrendered with the Premises on expiration
or termination of the Term. Any improvements and alterations that remain on the
Premises on expiration or termination of the Term shall automatically become the
property of Landlord and title to such improvements and alterations shall
automatically pass to Landlord at such time without any payment therefor by
Landlord to Tenant. If Tenant or its authorized representatives make any
improvements or alterations to the Premises as provided in this Section, then
such improvements and alterations (i) shall be made in a first-class manner in
conformity with then building standard improvements, (ii) shall be made
utilizing then building standard materials, (iii) shall be made in compliance
with the Rules and Regulations and the reasonable directions of Landlord, (iv)
shall be made pursuant to a valid building permit to be obtained by Tenant, at
its cost, (v) shall be
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made in conformity with then applicable Laws, including without limitation,
building codes, and (vi) shall not be commenced until five (5) days after
Landlord has received notice from Tenant stating the date the installation of
such improvements and alterations is to commence so that Landlord can post and
record an appropriate notice of nonresponsibility.
(b) Trade Fixtures. Tenant shall not install any trade fixtures in or on
the Premises without Landlord's prior consent, which consent shall not be
unreasonably withheld.
15. Mechanics' Liens. Tenant shall pay, or cause to be paid, all costs of
labor, services and/or materials supplied in connection with any Work. Tenant
shall keep the Property free and clear of all mechanics' liens and other liens
resulting from any Work. Prior to the commencement of any Work or the supply or
furnishing of any labor, services and/or materials in connection with any Work,
Tenant shall provide Landlord with a labor and material payment bond in an
amount equal to one hundred percent (100%) of the aggregate price of all
contracts therefor, with release of the bond conditioned on Tenant's payment in
full of all claims of lien claimants for such labor, services and/or materials
supplied in the prosecution of the Work. Said payment bond shall name Landlord
as a primary obligee, shall be given by a surety which is satisfactory to
Landlord, and shall be in such form as Landlord shall approve in its sole
discretion. Tenant shall have the right to contest the correctness or validity
of any such lien if, immediately on demand by Landlord, it procures and records
a lien release bond issued by a responsible corporate surety in an amount
sufficient to satisfy statutory requirements therefor in the State of
Washington. Tenant shall promptly pay or cause to be paid any sums awarded to
the claimant on its suit, and, in any event, before any execution is issued with
respect to any judgment obtained by the claimant in its suit or before such
judgment becomes a lien on the Premises, whichever is earlier. If Tenant shall
be in default under this Section, by failing to provide security for or
satisfaction of any mechanic's or other liens, then Landlord may (but shall not
be obligated to), in addition to any other rights or remedies it may have,
discharge said lien by (i) paying the claimant an amount sufficient to settle
and discharge the claim, (ii) procuring and recording a lien release bond, or
(iii) taking such other action as Landlord shall deem necessary or advisable,
and, in any such event, Tenant shall pay as Additional Rent, on Landlord's
demand, all costs (including reasonable attorney's fees) incurred by Landlord in
settling and discharging such lien together with interest thereon in accordance
with Section 39 captioned "Interest on Unpaid Rent" from the date of Landlords
payment of said costs. Landlord's payment of such costs shall not waive any
default of Tenant under this Section.
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16. Utilities and Services.
(a) Utilities and Services Furnished by Landlord. Landlord shall furnish
the Premises with:
(i) Electricity for lighting and power suitable for the use of the
Premises for ordinary general office purposes; provided, however, that Tenant
shall not at any time have a connected electrical load for lighting purposes in
excess of the wattage per square foot of Premises Area required for budding
standard amounts of lighting, or a connected load for all other power
requirements in excess of four (4) watts per square foot of Premises Area as
determined by Landlord, and the electricity so provided for lighting and power
shall not exceed such limits, subject to any lower limits set by any
governmental authority with respect thereto;
(ii) Subject to the reasonable limitations of the existing building
systems, heating, ventilating and air-conditioning, if the Building has an air-
conditioning system, to maintain a temperature range in the Premises which is
customary for similar office space in the Seattle, Washington area (but in
compliance with any applicable governmental regulations with respect thereto).
Tenant agrees to keep closed, when necessary, blinds, draperies and windows
which must be closed to provide for the efficient operation of the heating and
air-conditioning systems, if any, and Tenant agrees to cooperate with Landlord
and to abide by the regulations and requirements which Landlord may prescribe
for the proper functioning and protection of the heating, ventilating and air-
conditioning system, if any. If Tenant requires heating, ventilating and air
conditioning to the Premises other than during normal business hours from 7:30
A.M. to 6:00 P.M. daily, except Saturdays, Sundays and those legal holidays
generally observed in the State of Washington, Landlord shall, upon Tenant's
request made not less than 24 hours before the time Tenant requires the after-
hour service, and not later than noon on the Friday before any Saturday or
Sunday on which Tenant requires such service, and not later than noon of the day
before any holiday on which Tenant requires such service (except as otherwise
provided in the Rules and Regulations), furnish such heating, ventilating and
air conditioning. If Tenant receives such services, then Tenant shall pay, upon
demand, an amount equal to Tenant's proportionate share of the actual direct
cost to Landlord in providing the heating, ventilating and air conditioning
outside of normal business hours;
(iii) Water for restroom and drinking purposes and access to restroom
facilities;
(iv) Elevator service for general office pedestrian usage if the Building
is serviced by elevators;
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(v) Relamping of building-standard light fixtures;
(vi) Washing of interior and exterior surfaces of exterior windows with
reasonable frequency; and
(vii) Janitorial service five (5) times per week, except holidays.
(b) Payment for Excess Utilities and Services. All services and utilities
for the Premises not required to be furnished by Landlord pursuant to Section
16(a) shall be paid for by Tenant. If Tenant requires, on a regular basis,
water, heat, air conditioning, electric current, elevator or janitorial service
in excess of that provided for in Section 16(a), then Tenant shall first obtain
the consent of Landlord which consent may be withheld in Landlord's sole
discretion. If Landlord consents to such excess use, Landlord may install an
electric current or water meter (including, without limitation, any additional
wiring, conduit or panel required therefor) to measure the excess electric
current or water consumed by Tenant or may cause the excess usage to be measured
by other reasonable methods (e.g. by temporary "check" meters or by survey).
Tenant shall pay to Landlord upon demand (i) the cost of any and all water,
heat, air conditioning, electric current, janitorial, elevator or other services
or utilities required to be furnished to Tenant in excess of the services and
utilities required to be furnished by Landlord as provided in Section 16(a);
(ii) the cost of installation, maintenance and repair of any meter installed in
the Premises; (iii) the cost of all electricity and water consumed by Tenant in
connection with any dedicated heating, ventilating and/or air conditioning,
computer power and/or air conditioning, telecommunications or other special
systems of Tenant, including any power usage other than through existing
standard 110-volt AC outlets; and (iv) any cost incurred by Landlord in keeping
account of or determining such excess utilities or services furnished to Tenant.
Landlord's failure to bill Tenant for any such excess utilities or services
shall not waive Landlord's right to bill Tenant for the excess at a later time.
(c) Temperature Balance. Landlord makes no representation to Tenant
regarding the adequacy or fitness of the heating, ventilating and air-
conditioning systems, if any, in the Building to maintain temperatures that may
be required for, or because of, any of Tenant's equipment which uses other than
the fractional horsepower normally required for office equipment, and Landlord
shall have no liability for loss or damage suffered by Tenant or others in
connection therewith. If the temperature otherwise maintained in any portion of
the Premises by the heating, air conditioning or ventilation system is affected
as a result of (i) any lights, machines or equipment (including without
limitation electronic data processing machines) used by Tenant in the Premises,
(ii) the occupancy of the Premises by more than one person per two hundred (200)
square feet of rentable area therein, (iii) an electrical load for lighting or
power in excess of the limits per square foot of rentable area of the
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Premises specified in Section 16(a), or (iv) any rearrangement of partitioning
or other improvements, Landlord may install any equipment, or modify any
existing equipment (including the standard air conditioning equipment) Landlord
deems necessary to restore the temperature balance. The cost of any such
equipment, including without limitation, the cost of design and installation
thereof, and the cost of operating, metering, maintaining or repairing the same,
shall be paid by Tenant to Landlord upon demand. Tenant shall not install or
operate window-mounted heating or air-conditioning units.
(d) Special Electrical or Water Connections; Electricity Use. Tenant will
not, without the prior consent of Landlord, which Landlord in its sole
discretion may refuse, connect or use any apparatus or device in the Premises
(i) using current in excess of 110 volts or (ii) which will cause the amount of
electricity, water, heating, air conditioning or ventilation furnished to the
Premises to exceed the amount required for use of the Premises for ordinary
general once purposes, as determined by Landlord, during normal business hours
or (iii) which would cause Tenant's connected load to exceed any limits
established in Section 16(a). Tenant shall not connect with electric current
except through existing outlets in the Premises and shall not connect with water
pipes except through existing plumbing fixtures in the Premises. In no event
shall Tenant's use of electricity exceed the capacity of existing feeders to the
Building or the risers or wiring installation, and Landlord may prohibit the use
of any electrical equipment which in Landlord's opinion will overload such
wiring or interfere with the use thereof by other tenants the Building. If
Landlord consents to the use of equipment requiring such changes, Tenant shall
pay the cost of installing any additional risers, panels or other facilities
that may be necessary to furnish energy to the Premises.
Landlord will not permit additional coring of the floor of the Premises in
order to install new electric outlets in the Premises unless Tenant furnishes
Landlord with X-ray scans of the floor area where the Tenant wishes to place
additional electrical outlets and Landlord, in its absolute discretion, is
satisfied, on the basis of such X-ray scans and other information obtained by
Landlord, that coring of the floor in order to install such additional outlets
will not weaken the structure of the floor.
(e) Landlord's Duties. Landlord shall not be in default under this Lease
or liable for any damages resulting from, or incidental to, any of the
following, nor shall any of the following be an actual or constructive eviction
of Tenant, nor shall the Rent be abated by reason of: (i) failure to furnish or
delay in furnishing any of the services described in this Section when such
failure or delay is caused by accident or any condition beyond the reasonable
control of Landlord, including the making of necessary repairs or improvements
to the Premises or to the Building, (ii) any
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electrical surges or spikes, or (iii) failure to make any repair or to perform
any maintenance, unless such failure shall persist for an unreasonable time
after notice of the need for such repair or maintenance is given to Landlord by
Tenant. Landlord shall use reasonable efforts to remedy any interruption in the
furnishing of such services.
(f) Governmental Regulations. Any other provisions of this Section
notwithstanding, if any governmental authority or utility supplier imposes any
laws, controls, conditions, or other restrictions upon Landlord, Tenant, or the
Building, relating to the use or conservation of energy or utilities, mandated
changes in temperatures to be maintained in the Premises or the Building or the
reduction of automobile or other emissions (collectively, the "Controls"), or in
the event Landlord is required or elects to make alterations to the Building in
order to comply with the Controls, Landlord may, in its sole discretion, comply
and may require Tenant to comply with the Controls or make such alterations to
the Building in order to comply with the Controls. Such compliance and the
making of such alterations shall not constitute an actual or constructive
eviction of Tenant, impose on Landlord any liability whatsoever, or entitle
Tenant to any abatement of Rent.
17. Indemnity.
(a) Generally. Tenant shall hold Landlord harmless from and against any
and all damages arising out of any damage to any persons or property occurring
in, on or about the Premises or the Property resulting from the acts or
omissions of Tenant or its authorized representatives. Landlord shall hold
Tenant harmless from and against any and all damages arising out of any damage
to any persons or property occurring in, on or about the Premises or the
Property resulting from the acts or omissions of Landlord or its authorized
representatives. A party's obligation under this Section to indemnify and hold
the other party harmless shall be limited to the sum that exceeds the amount of
insurance proceeds, if any, received by the party being indemnified.
(b) Concurrent Negligence of Landlord and Tenant. Notwithstanding Section
17(a) above, in the event of concurrent negligence of Tenant, or its authorized
representatives, on the one hand, and that of Landlord, or its authorized
representatives, on the other hand, which concurrent negligence results in
damage to any persons or property occurring in, on or about The Premises or the
Property, either party's obligation to indemnify the other party as set forth in
Section 17(a) shall be limited to the extent of the negligence of the
indemnifying party, or its authorized representatives, including the
indemnifying party's proportional share of costs and attorneys' fees incurred in
connection with any claims, actions or proceedings brought with respect to such
damage.
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(c) Waiver of Worker's Compensation Immunity. The indemnification
obligations contained in this Section shall not be limited by any worker's
compensation, benefit or disability laws, and each indemnifying party hereby
waives (solely for the benefit of the indemnified party) any immunity that said
indemnifying party may have under the Industrial Insurance Act, Title 51 RCW and
similar worker's compensation, benefit or disability laws.
(d) Provisions Specifically Negotiated. LANDLORD AND TENANT ACKNOWLEDGE
BY THEIR EXECUTION OF THIS LEASE THAT EACH OF THE INDEMNIFICATION PROVISIONS OF
THIS LEASE (SPECIFICALLY INCLUDING BUT NOT LIMITED TO THOSE RELATING TO WORKER'S
COMPENSATION BENEFITS AND LAWS) WERE SPECIFICALLY NEGOTIATED AND AGREED TO BY
LANDLORD AND TENANT.
18. Exemption of Landlord From Liability. Landlord and Landlord's Agent shall
not be liable for injury to Tenant's business or loss of income therefrom or for
damage which may be sustained by the person, goods, wares, merchandise or
property of Tenant, its authorized representatives, or any other person in or
about the Premises, caused by or resulting from fire, steam, electricity, gas,
water or rain, which may leak or flow from or into any part of the Premises, or
from the breakage, leakage, obstruction or other defects of the pipes,
sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures
of the same, whether the said damage or injury resulting from conditions arising
upon the Premises or upon other portions of the Building or the Property unless
such injury or damage is caused by the gross negligence or willful misconduct of
Landlord or its authorized representatives.
19. Commercial General Liability and Property Damage Insurance. Tenant, at its
cost, shall maintain commercial general liability insurance (including
contractual liability and products and completed operations liability) with
liability limits of not less than $1,000,000 per occurrence and $2,000,000
annual aggregate, insuring against all liability of Tenant and its authorized
representatives arising out of or in connection with Tenant's use and occupancy
of the Premises and property damage insurance with liability limits of not less
than $500,000. All such commercial general liability and property damage
insurance shall insure performance by Tenant of the indemnity provisions of
Section 17 captioned "Indemnity". Landlord and Landlord's Agent shall be
additional named insureds on such insurance policy.
20. Tenant's Fire Insurance. Tenant, at its cost, shall maintain on all of
Tenant's Alterations, Trade Fixtures and Personal Property in, on or about the
Premises, a policy of standard All Risk fire insurance, in an amount equal to at
least their full replacement cost. The proceeds of any such policy shall be
used by Tenant for the restoration of Tenant's Alterations and Trade Fixtures
and the replacement of its
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Personal Property. Any portion of such proceeds not used for such restoration
shall belong to Tenant.
21. Waiver of Subrogation. Landlord and Tenant release each other, and their
respective authorized representatives, from any claims for damage to any person
or to the Premises and the Building and to Tenant's Alterations, Trade Fixtures
and Personal Property that are caused by or result from risks insured against
under any insurance policies carried by the parties, in force at the time of any
such damage and collectible. Landlord and Tenant shall cause each insurance
policy obtained by it to provide that the insurance company waives all right of
recovery by way of subrogation against either party in connection with any
damage covered by any insurance policy. Neither party shall be liable to the
other for any damage caused by fire or any of the risks insured against under
any insurance policy required by this Lease.
22. Other Insurance Matters. All insurance required to be carried by Tenant
under this Lease shall (i) be issued by insurance companies authorized to do
business in the State of Washington with a rating of A/VI or better as rated in
the most recent edition of Best's Insurance Reports (ii) be issued as a primary
policy; and (iii) contain an endorsement requiring thirty (30) days' prior
written notice from the insurance company to both parties, to Landlord's Agent,
and, if requested by Landlord, to Landlord's lender, before cancellation or
change in the coverage, scope, or amount of any policy. Each policy or a
certificate of the policy, together with evidence of payment of premiums, shall
be deposited with Landlord on or before the Commencement Date, and on renewal of
the policy not less than ten (10) days before expiration of the term of the
policy.
23. Destruction.
(a) Insured Damage. If during the Term the Premises or the Building are
partially or totally destroyed by any casualty that is covered by any insurance
carried by Landlord covering the Building, rendering the Premises partially or
totally inaccessible or unusable, Landlord shall restore the Premises or the
Building to substantially the same condition as they were in immediately before
such destruction, if (i) the insurance proceeds available to Landlord equal or
exceed the cost of such restoration, (ii) in the opinion of a registered
architect or engineer appointed by Landlord such restoration can be completed
within one hundred eighty (180) days after the date on which Landlord obtains
all permits necessary for such restoration, and (iii) such restoration is
permitted under then existing laws to be done in such a manner as to return the
Premises, or the Building, as the case may be, to substantially the same
condition as they were in immediately before such destruction. To the extent
that the insurance proceeds must be paid to a mortgagee under, or must be
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applied to reduce any debt secured by, a mortgage covering the Property, the
insurance proceeds shall be deemed not to be available to Landlord unless such
mortgagee permits Landlord to use the insurance proceeds for such restoration.
Such destruction shall not terminate this Lease.
(b) Major or Uninsured Damage. If during the Term the Premises or the
Building are partially or totally destroyed by any casualty and Landlord is not
obligated under Section 23(a) captioned "Insured Damage" to restore the Premises
or the Building, as the case may be, then Landlord may, at its election, either
(i) restore the Premises or the Building to substantially the same condition as
they were in immediately before such destruction, or (ii) terminate this Lease
effective as of the date of such destruction. If Landlord does not give Tenant
notice within sixty (60) days after the date of such destruction of its election
to restore the Premises or the Building, as the case may be, Landlord shall be
deemed to have elected to terminate this Lease. If Landlord elects to restore
the Premises or the Building, as the case may be, Landlord shall use
commercially reasonable efforts to complete such restoration within one hundred
eighty (180) days after the date on which Landlord obtains all permits necessary
for such restoration, provided, however, that such one hundred eighty (180) day
period shall be extended by a period equal to any delays caused by Force
Majeure, and such destruction shall not terminate this Lease.
(c) Damage to the Building. If during the Term the Building is partially
destroyed by any casualty and if in the opinion of Landlord the Building should
be restored in such a way as to materially alter the Premises, then Landlord
may, at Landlord's election, terminate this Lease by giving notice to Tenant of
Landlord's election to do so within sixty (60) days after the date of such
destruction.
(d) Extent of Landlord's Obligation to Restore. If Landlord is required
or elects to restore the Premises as provided in this Section, Landlord shall
not be required to restore alterations made by Tenant, Tenant's trade fixtures
and Tenant's personal property, such excluded items being the sole
responsibility of Tenant to restore.
(e) Abatement or Reduction of Rent. In case of damage to, or destruction
of, the Premises or the Building the Minimum Monthly Rent shall be abated or
reduced, between the date of destruction and the date of completion of
restoration, by an amount that is in the same ratio to the Minimum Monthly Rent
as the total number of square feet of the Premises that are so damaged or
destroyed bears to the total number of square feet in the Premises.
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24. Condemnation. If during the term there is any taking of part or all of the
Premises or the Building by condemnation, then the rights and obligations of the
parties shall be as follows:
(a) Minor Taking. If there is a taking of less than ten percent (10%) of
the Premises, this Lease shall remain in full force and effect.
(b) Major Taking. If there is a taking of ten percent (10%) or more of
the Premises and if the remaining portion of the Premises is of such she or
configuration that Tenant is unable to conduct its business in the Premises,
then the Term shall terminate as of the date of taking.
(c) Taking of Part of the Building. If there is a taking of a part of the
Building other than the Premises and if in the opinion of Landlord the Building
should be restored in such a way as to materially alter the Premises, then
Landlord may terminate the Term by giving notice to such effect to Tenant within
sixty (60) days after the date of vesting of tide in the condemnor and the Term
shall terminate as of the date specified in such notice, which date shall not be
less than sixty (60) days after the giving of such notice.
(d) Award. The entire award for the Premises, the Building and the
Property, shall belong to and be paid to Landlord, Tenant hereby assigning to
Landlord Tenant's interest therein, if any, provided, however, that Tenant shall
have the right to claim and recover from the condemnor compensation for the loss
of any alterations made by Tenant, Tenant's trade fixtures, Tenant's personal
property, moving expenses and business interruption.
(e) Abatement of Rent. If any part of the Premises is taken by
condemnation and this Lease remains in full force and effect, on the date of
taking the Minimum Monthly Rent shall be reduced by an amount that is in the
same ratio to the Minimum Monthly Rent as the total number of square feet in the
Premises taken bears to the total number of square feet in the Premises
immediately before the date of taking.
25. Assignment and Subletting.
(a) Landlord's Consent; Definitions. Tenant acknowledges that the
Building is a multi-tenant office building, occupied by tenants specifically
selected by Landlord, and that Landlord has a legitimate interest in the type
and quality of such tenants, the location of tenants in the Building and in
controlling the leasing of space in the Building so that Landlord can better
meet the particular needs of its tenants and protect and enhance the relative
image, position and value of the Building in the office
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building market. Tenant further acknowledges that the rental value of the
Premises may fluctuate during the term in accordance with market conditions,
and, as a result, the Rent paid by Tenant under the Lease at any particular time
may be higher or lower than the then market rental value of the Premises.
Landlord and Tenant agree, and the provisions of this Section are intended to so
provide, that, if Tenant voluntarily assigns its interest in this Lease or in
the Premises or subleases any pan or all of the Premises, a portion of the
profits from any increase in the market rental value of the Premises shall
belong solely to Landlord. Tenant acknowledges that, if Tenant voluntarily
assigns this Lease or subleases any part or all of the Premises, Tenant's
investment in the subject portion of the Premises (specifically including, but
not limited to, tenant improvements, good will or other assets) may be lost or
reduced as a result of such action.
(b) Consent Required. Tenant shall not voluntarily assign or encumber its
interest in this Lease or in the Premises, or sublease any part or all of the
Premises, without Landlord's prior consent, which consent shall not be
unreasonably withheld. Any assignment, encumbrance or sublease without
Landlord's consent shall be voidable and, at Landlord's election, shall
constitute a default by Tenant under this Lease. In determining whether to
approve a proposed assignment or sublease, Landlord shall place primary emphasis
on the proposed transferee's reputation and creditworthiness, the character of
the business to be conduced by the proposed transferee at the Premises and the
affect of such assignment or subletting on the tenant mix in the Building. In
addition, Landlord shall have the right to approve the specific form of any
assignment or sublease agreement. In no event shall Landlord be obligated to
consent to any assignment or subletting which increases (i) the Operating Costs,
(ii) the burden on the Building services, or (iii) the foot traffic, elevator
usage or security concerns in the Building, or creates an increased probability
of the comfort and/or safety of the Landlord and other tenants in the Building
being unreasonably compromised or reduced (for example, but not exclusively,
Landlord may deny consent to an assignment or subletting where the space will be
used for a school or training facility, an entertainment, sports or recreation
facility, retail sales to the public (unless Tenant's permitted use is retail
sales), a personnel or employment agency, a medical office, or an embassy or
consulate or similar office. Landlord shall not be obligated to approve an
assignment or subletting to (x) a current tenant of the Building unless no
comparable space is available in the Building or (y) a prospective tenant of the
Building with whom Landlord is then negotiating. Landlord's foregoing rights and
options shall continue throughout the entire term of this Lease. No consent to
any assignment, encumbrance or sublease shall constitute a waiver of the
provisions of this Section and no other or subsequent assignment, encumbrance or
sublease shall be made without Landlord's prior consent. Neither an assignment
or subletting nor the collection of Rent by Landlord from any person other than
Tenant, nor the application
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of any such Rent as provided in this Section shall be deemed a waiver of any of
the provisions of this Section or release Tenant from its obligation to comply
with the terms and provisions of this Lease and Tenant shall remain fully and
primarily liable for all of Tenant's obligations under this Lease, including the
obligation to pay Rent under this Lease. Any personal guarantee(s) of Tenant's
obligations under this Lease shall remain in full force and effect following any
such assignment or subletting. Landlord may condition approval of an assignment
or subletting hereunder on an increase in the amount of the Security Deposit or
on receipt of personal guarantees of the assignee's or sublessee's obligations
under this Lease. If Landlord approves of an assignment or subletting hereunder
and this Lease contains any renewal options, expansion options, rights of first
refusal, rights of first negotiation or any other rights or options pertaining
to additional space in the Building, such rights and/or options shall not run to
the assignee or subtenant, it being agreed by the parties hereto that any such
rights and options are personal to Tenant named herein and may not be
transferred.
(c) Conditions to Assignment or Sublease. Tenant agrees that any
instrument by which Tenant assigns or sublets all or any portion of the Premises
shall expressly provide that the assignee or subtenant may not further assign or
sublet the assigned or sublet space without Landlord's prior consent (which
consent shall not, subject to Landlord's rights under Section 25(b), be
unreasonably withheld or delayed), and that the assignee or subtenant will
comply with all of the provisions of this Lease and that Landlord may enforce
the Lease provisions directly against such assignee or subtenant. If this Lease
is assigned, whether or not in violation of the terms and provisions of this
Lease, Landlord may collect Rent from the assignee. If the Premises, or any part
thereof, is sublet, Landlord may, upon a default under this Lease, collect rent
from the subtenant. In either event, Landlord may apply the amount collected
from the assignee or subtenant to Tenant's obligation to pay Rent under this
Lease.
(d) Events Constituting an Assignment or Sublease. For purposes of this
Section, the following events shall be deemed an assignment or sublease, as
appropriate: (i) the issuance of equity interests "(whether stock, partnership
interests or otherwise) in Tenant, or any assignee or subtenant, if applicable,
or any entity controlling any of them, to any person or group of related
persons, in a single transaction or a series of related or unrelated
transactions, such that, following such issuance, such person or group shall
have Control (as defined below) of Tenant, or any assignee or subtenant, if
applicable, or (ii) a transfer of Control of Tenant, or any assignee or
subtenant, if applicable, or any entity controlling any of them, in a single
transaction or a series of related or unrelated transactions (including, without
limitation, by consolidation, merger, acquisition or reorganization), except
that the
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transfer of outstanding capital stock or other listed equity interests by
persons or parties other than "insiders" within the meaning of the Securities
Exchange Act of 1934, as amended, through the "over-the-counter" market or any
recognized national or international securities exchange, shall not be included
in determining whether Control has been transferred. "Control" shall mean direct
or indirect ownership of fifty percent (50%) or more of all the legal and,
equitable interest in any business entity. The restrictions set forth in this
subsection shall not apply to any public or private offering or equity interest
in Tenant or a merger or acquisition of Tenant with a third party, provided
that, in the event of a merger or acquisition, the new entity has a tangible net
wroth equal to or greater than that of Tenant as measured immediately before the
merger or acquisition.
(e) Processing Expenses. Tenant shall pay to Landlord the amount of
Landlord's cost of processing each proposed assignment or subletting, including.
without limitation, attorneys' and other professional fees, and the cost of
Landlord's administrative, accounting and clerical time (collectively,
"Processing Costs"), and the amount of all direct and indirect expense incurred
by Landlord arising from the assignee or sublessee taking occupancy of the
subject space, including, without limitation, costs of freight elevator
operation for moving of furnishings and trade fixtures, security service,
janitorial and cleaning service, rubbish removal service, costs of changing
signage, and costs of changing locks and making new keys (collectively,
"Occupancy Costs"). Notwithstanding anything to the contrary herein, Landlord
shall not be required to process any request for Landlord's consent to an
assignment or subletting until Tenant has paid to Landlord the amount of
Landlord's estimate of the Processing Costs and the Occupancy Costs, provided,
however, such costs shall reflect the actual expenses incurred and shall not
exceed $2,000.00 per assignment or subletting.
(f) Consideration to Landlord. In the event of any assignment or
sublease, whether or not requiring Landlord's consent, Landlord shall be
entitled to receive, as Additional Rent, one-half (1/2) of any consideration,
including, without limitation, payment for leasehold improvements owned by
Landlord, paid by the assignee or subtenant for the assignment or sublease and,
in the case of sublease, the excess of the amount of rent paid for the sublet
space by the subtenant over the total amount of Minimum Monthly Rent under
Section 5 and Additional Rent under Sections 7 and 9. Upon Landlord's request,
Tenant shall assign to Landlord all amounts to be paid to Tenant by the assignee
or subtenant and shall direct such assignee or subtenant to pay the same
directly to Landlord. If there is more than one sublease under this Lease, the
amounts (if any) to be paid by Tenant to Landlord pursuant to the preceding
sentence shall be separately calculated for each sublease and amounts due
Landlord with regard to any one sublease may not be offset against
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rental and other consideration pertaining due under any other sublease. Any
profits shall be calculated only above and beyond the dollars that are spent to
secure a Subtenant (i.e., Tenant Improvement's commissions, free rent, etc.).
With regard to an approved assignment or subletting, Tenant acknowledges
that Landlord's agreement to deal directly with the assignee or subtenant with
regard to such party's occupancy of the Premises and the administration of the
Lease, without requiring Tenant to monitor or become directly involved in such
matters, constitutes appropriate and acceptable consideration for the capture by
Landlord of any rent or consideration paid by the assignee or subtenant in
excess of that required to be paid by Tenant under the Lease.
(g) Procedures. If Tenant desires to assign this Lease or any interest
therein or sublet all or part of the Premises, Tenant shall give Landlord
written notice thereof designating the space proposed to be sublet and the terms
proposed. Landlord shall have the prior right and option (to be exercised by
written notice to Tenant given within fifteen (15) days after receipt of
Tenant's notice) (i) to sublet from Tenant any portion of the Premises proposed
by Tenant to be sublet, for the term for which such portion is proposed to be
sublet, but at the same Rent (including Additional Rent as provided for in
Sections 7 and 9) as Tenant is required to pay to Landlord under this Lease for
the same space, computed on a pro rata square footage basis, and during the term
of such sublease Tenant shall be released of its obligations under the Lease
with regard to the subject space, (ii) if the term of the sublease (including
any renewal terms) will expire during the final eighteen (18) months of the term
(or if Tenant has exercised a renewal option, if any, then during the final
eighteen (18) months of the subject renewal period), to terminate this Lease as
it pertains to the portion of the Premises so proposed by Tenant to be sublet,
or (iii) to approve Tenant's proposal to sublet conditional upon Landlord's
subsequent written approval of the specific sublease obtained by Tenant and the
specific subtenant named therein. If Landlord exercises its option in (i) above,
then Landlord may, at Landlord's sole cost, construct improvements in the
subject space and, so long as the improvements are suitable for general office
purposes, Landlord shall have no obligation to restore the subject space to its
original condition following the termination of the sublease. If Landlord
exercises its option described in (iii) above, Tenant shall submit to Landlord
for Landlord's written approval Tenant's proposed sublease agreement (in which
the proposed subtenant shall be named) together with a current reviewed or
audited financial statement prepared by a codified public accountant for such
proposed subtenant and a credit report on such proposed subtenant prepared by a
recognized credit reporting agency. If Landlord fails to exercise any aforesaid
option to sublet or to terminate, this shall not be construed as or constitute a
waiver of any of the provisions of this Section. If Landlord exercises any such
option to sublet or to
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terminate, Landlord shall not have any liability for any real estate brokerage
commission(s) or with respect to any of the costs and expenses that Tenant may
have incurred in connection with its proposed subletting, and Tenant agrees to
hold Landlord harmless from and against any and all claims (including, without
limitation, claims for commissions) arising from such proposed subletting.
Landlord's foregoing rights and options shall continue throughout the term. For
purposes of this Section, a proposed assignment of this Lease in whole or in
part shall be deemed a proposed subletting of such space.
(h) Documentation. No permitted subletting by Tenant shall be effective
until there has been delivered to Landlord a counterpart of the sublease in
which the subtenant agrees to be and remain jointly and severally liable with
Tenant for the payment of Rent pertaining to the sublet space and for the
performance of all of the terms and provisions of this Lease; provided, however,
that the subtenant shall be liable to Landlord for rent only in the amount set
forth in the sublease. No permitted assignment shall be effective unless and
until there has been delivered to Landlord a counterpart of the assignment in
which the assignee assumes all of Tenant's obligations under this Lease arising
on or after the date of the assignment. The failure or refusal of a subtenant or
assignee to execute any such instrument shall not release or discharge the
subtenant or assignee from its liability as set forth above.
(i) No Merger. Without limiting any of the provisions of this Section, if
Tenant has entered into any subleases of any portion of the Premises, the
voluntary or other surrender of this Lease by Tenant, or a mutual cancellation
by Landlord and Tenant, shall not work a merger, and shall, at the option of
Landlord, terminate all or any existing subleases or substenancies or, at the
option of Landlord, operate as an assignment to Landlord of any or all such
subleases or subtenancies.
26. Default. The occurrence of any of the following shall constitute a default
by Tenant under this Lease:
(a) Failure to Pay Rent. Failure to pay Rent when due, if the failure
continues for a period of five (5) days after written or fax notice of such
default has been given by Landlord to Tenant.
(b) Failure to Comply With Rules and Regulations. Failure to comply with
the Rules and Regulations, if the failure continues for a period of twenty-four
(24) hours after notice of such default is given by Landlord to Tenant. If the
failure to comply cannot reasonably be cured within twenty-four (24) hours, then
Tenant shall not be in default under this Lease if Tenant commences to cure the
failure to comply within twenty-four (24) hours and diligently and in good faith
continues to cure the failure to comply.
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(c) Other Defaults. Failure to perform any other provision of this Lease,
if the failure to perform is not cured within thirty (30) days after notice of
such default has been given by Landlord to Tenant. If the default cannot
reasonably be cured within thirty (30) days, then Tenant shall not be in default
under this Lease if Tenant commences to cure the default within thirty (30) days
and diligently and in good faith continues to cure the default.
(d) Appointment of Trustee or Receiver. The appointment of a trustee or
receiver to take poossession of substantially all of the Tenant's assets located
at the Premises or of Tenant's interest in this Lease, where possession is not
restored to Tenant within sixty (60) days; or the attachment, execution or other
judicial seizure of substantially all of Tenant's assets located at the Premises
or of Tenants interest in this Lease, where such seizure is not discharged
within sixty (60) days.
(e) Cross Default. Landlord and Tenant are parties to that certain Lease
dated the 15th day of March 1996 governing Tenant's occupancy of Suite 301 in
the Building (hereinafter referred to as the "Upstairs Lease"). Landlord and
Tenant hereby agree that a default under the Upstairs Lease shall constitute a
default under this Lease and that a default under this Lease shall constitute a
default under the Upstairs Lease. The Upstairs Lease is hereby so amended.
27. Remedies. If Tenant commits a default, Landlord shall have the following
alternative remedies, which are in addition to any remedies now or later allowed
by law:
(a) Maintain Lease in Force. Maintain this Lease in full force and effect
and recover the Rent and other monetary charges as they become due, without
terminating Tenants right to possession, irrespective of whether Tenant shall
have abandoned the Premises. If Landlord elects to not terminate the Lease,
Landlord shall have the right to attempt to re-let the Premises at such rent and
upon such conditions and for such a term, and to do all acts necessary to
maintain or preserve the Premises as Landlord deems reasonable and necessary
without being deemed to have elected to terminate the Lease including removal of
all persons and property from the Premises; such property may be removed and
stored in a public warehouse or elsewhere at the cost of and for the account of
Tenant. In the event any such re-letting occurs, this Lease shall terminate
automatically upon the new Tenant taking possession of the Premises.
Notwithstanding that Landlord fails to elect to terminate the Lease initially,
Landlord at any time during the term of this Lease may elect to terminate this
Lease by virtue of such previous default of Tenant.
(b) Terminate Lease. Terminate Tenant's right to possession by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately
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surrender possession of the Premises to Landlord. In such event Landlord shall
be entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant's default including without limitation thereto, 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 such rental loss that 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 such rental loss that is proved 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, without limitation, any costs or expenses incurred
by Landlord in (A) retaking possession of the Premises, including reasonable
attorney's fees therefor, (B) maintaining or preserving the Premises after such
default, (C) preparing the Premises for reletting to a new tenant, including
repair or necessary alterations to the Premises for such reletting, (D) leasing
commissions, and (E) any other costs necessary or appropriate to relet the
Premises; plus (v) at Landlord's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time to time by applicable
state law. Upon any such reentry Landlord shall have the right to make any
reasonable repairs, alterations or modifications to the Premises, which Landlord
in its sole discretion deems reasonable and necessary. As used in Subsection
27(b)(i) the "worth at the time of award" is computed by allowing interest at
the rate of fifteen percent (15%) per year from the date of default. As used in
Subsections 27(b)(a) and 27(b)(iii) the "worth at the time of award" is
computed by discounting such amounts at the discount rate of eight percent (8%)
per year.
28. Bankruptcy.
(a) Assumption of Lease. If Tenant becomes a Debtor under Chapter 7 of
the Bankruptcy Code ("Code") or a petition for reorganization or adjustment of
debts is filed concerning Tenant under Chapter 11 or 13 of the Code, or a
proceeding is filed under Chapter 7 of the Code and is transferred to Chapter 11
or 13 of the Code, the Trustee or Tenant, as Debtor and as Debtor-In-Possession,
may not elect to assume this Lease unless, at the time of such assumption, the
Trustee or Tenant has:
(i) Cured all defaults under the Lease and paid all sums due and
owing under the Lease or provided Landlord with "Adequate Assurance" (as
defined below) that (i) within ten (10) days from the date of such assumption,
the Trustee or Tenant will completely pay all sums due and owing under this
Lease and compensate
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Landlord for any actual pecuniary loss resulting from any existing default or
breach of this Lease, including, without limitation, Landlord's reasonable
costs, expenses, accrued interest, and attorneys' fees incurred as a result of
the default or breach; (ii) within twenty (20) days from the date of such
assumption, the Trustee or Tenant will cure all non-monetary defaults and
breaches under this Lease, or, if the nature of such non-monetary defaults is
such that more than twenty (20) days are reasonably required for such cure, that
the Trustee or Tenant will commence to cure such non-monetary defaults within
twenty (20) days and thereafter diligently prosecute such cure to completion;
and (iii) the assumption will be subject to all of the provisions of this Lease.
(ii) For purposes of this Section, Landlord and Tenant acknowledge
that, in the context of a bankruptcy proceeding involving Tenant, at a minimum,
"Adequate Assurance" shall mean (i) the Trustee or Tenant has and will continue
to have sufficient unencumbered assets after the payment of all secured
obligations and administrative expenses to assure Landlord that the Trustee or
Tenant will have sufficient funds to fulfill the obligations of Tenant under
this Lease; (ii) the Bankruptcy Court shall have entered an Order segregating
sufficient cash payable to Landlord and/or the Trustee or Tenant shall have
granted a valid and perfected first lien and security interest and/or mortgage
in or on property of Trustee or Tenant acceptable as to value and kind to
Landlord, to secure to Landlord the obligation of the Trustee or Tenant to cure
the monetary and/or non-monetary defaults and breaches under this Lease within
the time periods set forth above; and (iii) the Trustee or Tenant, at the very
minimum, shall deposit a sum equal to two (2) month's Minimum Monthly Rent to be
held by Landlord (without any allowance for interest thereon) to secure Tenant's
future performance under this Lease.
(b) Assignment of Lease. If the Trustee or Tenant has assumed the Lease
pursuant to the provisions of this Section for the purpose of assigning Tenant's
interest hereunder to any other person or entity, such interest may be assigned
only after the Trustee, Tenant or the proposed assignee has complied with all of
the terms, covenants and conditions of this Lease, including, without
limitation, those with respect to Additional Rent. Landlord and Tenant
acknowledge that such terms, covenants and conditions are commercially
reasonable in the context of a bankruptcy proceeding of Tenant. Any person or
entity to which this Lease is assigned pursuant to the provisions of the Code
shall be deemed without further act or deed to have assumed all of the
obligations arising under this Lease on and after the date of such assignment.
Any such assignee shall upon request execute and deliver to Landlord an
instrument confirming such assignment.
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(c) Adequate Protection. Upon the filing of a petition by or against
Tenant under the Code, Tenant, as Debtor and as Debtor-In-Possession, and any
Trustee who may be appointed agree to adequately protect Landlord as follows:
(i) to perform each and every obligation of Tenant under this Lease until such
time as this Lease is either rejected or assumed by Order of the Bankruptcy
Court; (ii) to pay all monetary obligations required under this Lease,
including, without limitation, the payment of Minimum Monthly Rent, Tenant's
Share of Real Property Taxes, Tenant's Share of Operating Costs and any other
sums payable by Tenant to Landlord under this Lease which is considered
reasonable compensation for the use and occupancy of the Premises; (iii) provide
Landlord a minimum of thirty (30) days' prior written notice, unless a shorter
period is agreed to in writing by the parties, of any proceeding relating to any
assumption of this Lease or any intent to abandon the Premises, which
abandonment shall be deemed a rejection of this Lease; and (iv) to perform to
the benefit of Landlord as otherwise required under the Code. The failure of
Tenant to comply with the above shall result in an automatic rejection of this
Lease.
29. Limitation of Actions. Any claim, demand, right or defense of any kind by
Tenant which is based upon or arises in connection with this Lease or the
negotiations prior to its execution, shall be barred until Tenant commences an
action thereon, or interposes in a legal proceeding a defense by reason thereof,
within one (1) year after the date of the act or omission on which such claim,
demand, right or defense is based.
30. Limitation on Landlord's Liability. Anything in this Lease to the contrary
notwithstanding, covenants, undertakings and agreements herein made on the part
of Landlord are made and intended not as personal covenants, undertakings and
agreements or for the purpose of binding Landlord personally or the assets of
Landlord except Landlord's interest in the Property, but are made and intended
for the purpose of binding only the Landlord's interest in the Property. No
personal liability or personal responsibility is assumed by, nor shall at any
time be asserted or enforceable against Landlord or its partners and their
respective heirs, legal representatives, successors and assigns on account of
this Lease or on account of any covenant, undertaking or agreement of Landlord
contained in this Lease.
31. Signs. Tenant shall not have the right to place, construct or maintain any
sign, advertisement, awning, banner or other exterior decoration without
Landlord's consent. Any sign that Tenant has Landlord's consent to place,
construct and maintain shall comply with all laws, and Tenant shall obtain any
approval required by such laws. Landlord makes no representation with respect to
Tenant's ability to obtain such approval. Tenant shall have the right to
maintain their signage on the front of the Building. In addition, Tenant, at
Tenant's sole cost and expense, shall have the right
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to lobby exposure signage on floor 2. Any signage shall be mutually acceptable
to both Landlord and Tenant.
32. Landlord's Right to Enter the Premises. Landlord and its authorized
representatives shall have the right to enter the Premises at reasonable times
and upon reasonable prior notice (except in an emergency when no such notice
shall be required) for any of the following purposes: (i) to determine whether
the Premises are in good condition and whether Tenant is complying with its
obligations under this Lease, (ii) to do any maintenance; to make any
restoration to the Premises or the Building that Landlord has the right or the
obligation to perform, and to make any improvements to the Premises or the
Building that Landlord deems necessary, (iii) to serve, post or keep posted any
notices required or allowed under the provisions of this Lease, (iv) to post any
ordinary "For Sale". signs at any time during the Term and to post any ordinary
"For Lease" signs during the last ninety (90) days of the Term, and (v) to show
the Premises to prospective brokers, agents, purchasers, tenants or lenders, at
any time during the Term.
Landlord shall not be liable in any manner for any inconvenience,
annoyance, disturbance, loss of business, nuisance, or other damage arising out
of Landlord's entry on the Premises as provided in this Section, except damage
resulting from the grossly negligent or willful acts of Landlord or its
authorized representatives. Tenant shall not be entitled to an abatement or
reduction of Rent if Landlord exercises any right reserved in this Section.
Landlord shall conduct its activities on the Premises as allowed in this Section
in a reasonable manner so as to cause minimal inconvenience, annoyance or
disturbance to Tenant.
33. Subordination. This Lease is and shall be prior to any mortgage recorded
after the date of this Lease affecting the Building. If, however, a lender
requires that this Lease be subordinate to any mortgage, this Lease shall be
subordinate to that mortgage if Landlord first obtains from the lender a written
agreement that provides substantially the following:
"As long as Tenant performs its obligations under this Lease, no
foreclosure of, deed given in lieu of foreclosure of, or sale under
the mortgage, and no steps or procedures taken under the mortgage,
shall affect Tenant's rights under this Lease."
Tenant shall attorn to any purchaser at any foreclosure sale, or to any
grantee or transferee designated in any deed given in lieu of foreclosure,
Tenant shall execute the written agreement and any other documents required by
the lender to accomplish the purposes of this Section.
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If requested by the holder of any mortgage or deed of trust, Tenant shall
enter into a new lease with the holder of such mortgage or deed of trust for the
balance of the term of this Lease upon the same terms and conditions set forth
herein, or shall attorn to such party provided such party agrees to recognize
this Lease as long as Tenant shall not be in default hereunder beyond the period
for curing the same.
34. Right to Estoppel Certificates. Tenant, within ten (10) days after notice
from Landlord, shall execute and deliver to Landlord, in recordable form, a
certificate prepared by Landlord stating that this Lease is unmodified and in
full force and effect, or in full force and effect as modified and stating the
modifications. The certificate shall also state the amount of Minimum Monthly
Rent, the dates to which Rent has been paid in advance, and the amount of any
Prepaid Rent or Security Deposit and such other matters as Landlord may
reasonably request. Failure to deliver the certificate within such ten (10) day
period shall be conclusive upon Tenant for the benefit of Landlord and any
successor to Landlord, that this Lease is in full force and effect and has not
been modified except as may be represented by Landlord requesting the
certificate.
35. Transfer of Landlord's Interest. If Landlord sells or transfers the
Property, Landlord, on consummation of the sale or transfer, shall be released
from any liability thereafter accruing under this Lease if Landlord's successor
has assumed in writing, for the benefit of Tenant, Landlord's obligations under
this Lease. If any Security Deposit or Prepaid Rent has been paid by Tenant,
Landlord shall transfer such Security Deposit or Prepaid Rent to Landlord's
successor and on such transfer Landlord shall be discharged from any further
liability with respect to such Security Deposit or Prepaid Rent.
36. Attorneys' Fees. If either party shall bring any action for relief against
the other party, declaratory or otherwise, arising out of this Lease, including
any action by Landlord for the recovery of Rent or possession of the Premises,
the losing party shall pay the successful party a reasonable sum for attorneys'
fees which shall be deemed to have accrued on the commencement of such action
and shall be paid whether or not such action is prosecuted to judgment.
37. Surrender; Holding Over.
(a) Surrender. On expiration or ten (10) days after termination of the
Term, Tenant shall surrender the Premises and all Tenant Improvements and
alterations to Landlord broom clean and in good condition. Tenant shall remove
all of its trade fixtures and personal property within the time period stated in
this Section. Tenant, at its cost, shall perform all restoration made necessary
by, and repair any damage to the Premises caused by, the removal of its trade
fixtures, personal property
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and signs to Landlord's reasonable satisfaction within the time period stated in
this Section. Landlord may, at its election, retain or dispose of in any manner
any of Tenant's trade fixtures or personal property that Tenant does not remove
from the Premises on expiration or within ten (10) days after termination of the
Term as allowed or required by the provisions of this Lease by giving ten (10)
days' notice to Tenant. Title to any such trade fixtures and personal property
that Landlord elects to retain or dispose of on expiration of such ten (10) day
period shall vest in Landlord. Tenant waives all claims against Landlord for any
damage to Tenant resulting from Landlord's retention or disposition of any such
trade fixtures and personal property. Tenant shall be liable to Landlord for
Landlords' costs for storing, removing and disposing of Tenant's trade fixtures
and personal property. If Tenant fails to surrender the Premises to Landlord on
expiration or ten (10) days after termination of the Term as required by this
Section, Tenant shall pay Landlord Rent in an amount equal to twice the Minimum
Monthly Rent applicable for the month immediately prior to the expiration or
termination of the Term for the entire time Tenant thus remains in possession
and Tenant shall hold Landlord harmless from all damages resulting from Tenant's
failure to timely surrender the Premises, including, without limitation, (i) any
Rent payable by, or any damages claimed by, any prospective tenant of any part
or all of the Premises, and (ii) Landlord's damages resulting from such
prospective tenant rescinding or refusing to enter into the prospective lease of
part or all of the Premises by reason of Tenant's failure to timely surrender
the Premises. If Tenant, without Landlord's prior consent, remains in possession
of the Premises after expiration or termination of the Term, or after the date
in any notice given by Landlord to Tenant terminating this Lease, such
possession by Tenant shall be deemed to be a tenancy at sufferance terminable at
any time by either parry.
(b) Holding Over With Landlord's Consent. If Tenant, with Landlord's
prior consent, remains in possession of the Premises after expiration or
termination of the Term, or after the date in any notice given by Landlord to
Tenant terminating this Lease, such possession by Tenant shall be deemed to be a
month-to-month tenancy terminable by Landlord by a notice given to Tenant at
least twenty (20) days prior to the end of any such monthly period or by Tenant
by a notice given to Landlord at least thirty (30) days prior to the end of any
such monthly period. During such month-to-month tenancy, Tenant shall pay Rent
in the amount then agreed to in writing by Landlord and Tenant. All provisions
of this Lease, except those pertaining to term, shall apply to the month-to-
month tenancy.
38. Agency Disclosure; Broker.
(a) Agency Disclosure. Landlord hereby acknowledges that it has been
previously disclosed to Landlord that Tenant has been represented by Eric
Olmstead
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of Leibsohn & Co. Tenant hereby acknowledges that it has been previously
disclosed to Tenant that Martin Smith Inc represents Landlord in this
transaction.
(b) Commission Indemnity. Tenant represents and warrants that Eric
Olmstead of Liebsohn & Co. is to be paid by Imation Corporation, the parent
corporation of the prior occupant of the Premises. Moreover, each party agrees
to indemnify and hold the other party harmless from and against any and all
liability, costs, damages, causes of action or other proceedings instituted by
any broker, agent or finder, licensed or otherwise, claiming through, under or
by reason of the conduct of the indemnifying party in any manner whatsoever in
connection with this Lease. Each party agrees to indemnify and hold the other
party harmless from and against any and all liability, costs, damages, causes of
action or other proceedings instituted by any broker, agent or finder, licensed
or otherwise, claiming through, under or by reason of the conduct of the
indemnifying party in any manner whatsoever in connection with this Lease.
39. Interest on Unpaid Rent. In addition to the Late Charge as provided in
Section 5(b), Rent not paid when due shall bear interest from the date due until
paid at the rate of eighteen percent (18%) per year, or the maximum legal rate
of interest, whichever is less.
40. Consent. Whenever the consent of either Landlord or Tenant is required
under this Lease, such consent shall not be effective unless given in writing
and shall not be unreasonably withheld or delayed, provided, however, that such
consent may be conditioned as provided in this Lease.
41. Definitions. As used in this Lease, the following words and phrases,
whether or not capitalized, shall have the following meanings:
(a) "Additional Rent" means pass-throughs of increases in Operating Costs
and Taxes, as defined in this Lease, and other monetary sums to be paid by
Tenant to Landlord under the provisions of this Lease.
(b) "Alteration" means any addition or change to, or modification of, the
Premises made by Tenant, including, without limitation, fixtures, but excluding
trade fixtures as defined in this Section.
(c) "Authorized representatives" means any officer, agent, employee,
independent contractor or invites of either party.
(d) "Award" means all compensation, sums or anything of value awarded,
paid or received on a total or partial condemnation.
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(e) "Common Areas" means all areas outside the Premises and within the
Building or on the Land that are provided and designated by Landlord from time
to time for the general, non-exclusive use of Landlord, Tenant and other tenants
of the Building and their authorized representatives, including, without
limitation, common entrances, lobbies, corridors, stairways and stairwells,
elevators, escalators, public restrooms and other public portions of the
Building.
(f) "Condemnation" means the exercise of any governmental power, whether
by legal proceedings or otherwise, by a condemnor and a voluntary sale or
transfer by Landlord to any condemnor, either under threat of condemnation or
while legal proceedings for condemnation are pending.
(g) "Condemnor" means any public or quasi-public authority or entity
having the power of condemnation.
(h) "Damage" means any injury, deterioration, or loss to a person,
property, the Premises or the Building caused by another person's acts or
omissions or by Acts of God. Damage includes death.
(i) "Damages" means a monetary compensation or indemnity that can be
recovered in the courts by any person who has suffered damage to his person,
property or rights through another's acts or omissions.
(j) "Date of taking" means the date the condemnor has the right to
possession of the property being condemned.
(k) "Encumbrance" means any mortgage, deed of trust or other written
security device or agreement affecting the Premises, and the note or other
obligation secured by it, that constitutes security for the payment of a debt or
performance of an obligation.
(l) "Expiration" means the coming to an end of the time specified in the
Lease as its duration, including any extension of the Term.
(m) "Force majeure" means strikes, lockouts, labor disputes, shortages of
labor or materials, fire or other casualty, Acts of God or any other cause
beyond the reasonable control of a party.
(n) "Good condition" means the good physical condition of the Premises and
each portion of the Premises, including, without limitation, all of the Tenant
Improvements, Tenant's alterations, Tenant's trade fixtures, Tenant's Personal
Property, all as defined in this Section, signs, walls, interior partitions,
windows, window coverings, glass, doors, carpeting and resilient flooring,
ceiling tiles,
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plumbing futures and lighting fixtures, as of which shall be in conformity with
building standard finishes, ordinary wear and tear, damage by fire or other
casualty and taking by condemnation excepted.
(o) "Hazardous substances" means any industrial waste, toxic waste,
chemical contaminant or other substance considered hazardous, toxic or lethal to
persons or property or designated as hazardous, toxic or lethal to persons or
property under any laws, including, without limitation, asbestos material or
materials containing asbestos.
(p) "Hold harmless" means to defend and indemnify from all liability,
losses, penalties, damages as defined in this Section, costs, expenses
(including, without limitation, attorney's fees), causes of action, claims or
judgments arising out of or related to any damage, as defined in this Section,
to any person or property.
(q) "Law" means any constitution, statute, ordinance, regulation, rule,
resolution, judicial decision, administrative order or other requirement of any
federal, state, county, municipal or other governmental agency or authority
having jurisdiction over the parties or the Property, or both, in effect either
at the time of execution of this Lease or at any time during the Term,
including, without limitation, any regulation or order of a quasi-official
entity or body (e.g., board of fire examiners or public utilities) and any
legally effective conditions, covenants or restrictions affecting the Property.
(r) "Lender" means the mortgagee, beneficiary, secured party or other
holder of an encumbrance, as defined in this Section.
(s) "Lien" means a charge imposed on the Premises by someone other than
Landlord, by which the Premises are made security for the performance of an act.
(t) "Maintenance" means repairs, replacement, repainting and cleaning.
(u) "Mortgage" means any deed of trust, mortgage or other written security
device or agreement affecting the Premises, and the note or other obligation
secured by it, that constitutes security for the payment of a debt or
performance of an obligation.
(v) "Mortgagee" means the beneficiary under a deed of trust or mortgagee
under a mortgage.
(w) "Mortgagor" means the grantor or trustor under a deed of trust or
mortgagor under a mortgage.
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(x) "Operating Costs" means all costs of any kind incurred by Landlord in
operating, cleaning, equipping, protecting, lighting, repairing, replacing,
heating, air-conditioning, maintaining and insuring the Property. Operating
Costs shall include, without limitation, the following costs: (i) salaries,
wages, bonuses and other compensation (including hospitalization, medical,
surgical, retirement plan, pension plan, union dues, life insurance, including
group life insurance, welfare and other fringe benefits, and vacation, holidays
and other paid absence benefits) relating to employees of Landlord or its agents
directly engaged in the operation, repair, or maintenance of the Property; (ii)
payroll, social security, workers' compensation, unemployment and similar taxes
with respect to such employees of Landlord or its authorized representatives,
and the cost of providing disability or other benefits imposed by law or
otherwise, with respect to such employees; (iii) uniforms (including the
cleaning, replacement and pressing thereof) provided to such employees; (iv)
premiums and other charges incurred by Landlord with respect to fire,
earthquake, other casualty, all risk, rent loss and liability insurance, any
other insurance as deemed necessary or advisable in the reasonable judgment of
Landlord and, after the Base Year, costs of repairing an insured casualty to the
extent of the deductible amount under the applicable insurance policy; (v) water
charges and sewer rents or fees; (vi) license, permit and inspection fees; (vii)
sales, use and excise taxes on goods and services purchased by Landlord in
connection with the operation, maintenance or repair of the Property and
Building systems and equipment; (viii) telephone, facsimile, messenger, express
delivery service, postage, stationery supplies and other expenses incurred in
connection with the operation, management, maintenance, or repair of the
Property; (ix) property management fees and expenses; (x) repairs to and
physical maintenance of the Property, including building systems and
appurtenances thereto and normal repair and replacement of worn-out equipment,
facilities and installations, but excluding the replacement of major building
systems (except to the extent provided in (xvi) and (xvii) below); (xi)
janitorial, window cleaning, security, extermination, water treatment, rubbish
removal, plumbing and other services and inspection or service contracts for
elevator, electrical, HVAC, mechanical and other building equipment and systems
or as may otherwise be necessary or proper for the operation or maintenance of
the Property; (xii) supplies, tools, materials, and equipment used in connection
with the operation, maintenance or repair of the Property; (xiii) accounting,
legal and other professional fees and expenses; (xiv) painting the exterior or
the public or common areas of the Building and the cost of maintaining the
sidewalks, landscaping and other common areas of the Property; (xv) all costs
and expenses for electricity, chilled water, air conditioning, water for
heating, gas, fuel, steam, heat, lights, power and other energy related
utilities required in connection with the operation, maintenance and repair of
the Property; (xvi) the cost of any improvements which Landlord elects to
capitalize made by Landlord to the Property during the term in compliance with
the requirements of any
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<PAGE>
laws or regulation or insurance requirement with which the Property was not
required to comply during the Base Year, as reasonably amortized by Landlord,
with interest on the unamortized balance at the rate of twelve percent (12%) per
year, or the maximum legal rate of interest, whichever is less; (xvii) the cost
of any improvements which Landlord elects to capitalize made by Landlord to the
Property during the term of this Lease for the protection of the health and
safety of the occupants of the Property or that are intended to reduce other
Operating Costs, as reasonably amortized by Landlord, with interest on the
unamortized balance at the rate of twelve percent (12%) per year, or the maximum
legal rate of interest, whichever is less. In this regard, Landlord will follow
generally accepted accounting practices; (xviii) a reasonable reserve for repair
or replacement of equipment used in the maintenance or operation of the
Property; (xix) the cost of furniture, draperies, carpeting, landscaping and
other customary and ordinary items of personal property (excluding paintings,
sculptures and other works of art) provided by Landlord for use in common areas
of the Building or in the Building office (to the extent that such Building
office is dedicated to the operation and management of the Property), such costs
to be amortized over the useful life thereof; (xx) any such expenses and costs
resulting from substitution of work, labor, material or services in lieu of any
of the above itemizations, or for any such additional work, labor, services or
material resulting from compliance with any laws or orders applicable to the
Property; (xxi) Building office rent or rental value; and (xxii) all other costs
which, in accordance with generally accepted accounting principles used by
Landlord, as applied to the maintenance and operation of office and/or retail
buildings, are properly chargeable to the operation and maintenance of the
Property.
Operating Costs shall not include the following: (i) depreciation on the
Building; (ii) debt service; (iii) capital improvements, except as otherwise
provided in clauses (xvi) and (xvii) above, (iv) rental under any ground or
underlying leases; (v) Real Property Taxes, (vi) attorneys' fees and expenses
incurred in connection with lease negotiations with prospective tenants; (vii)
the cost of Tenant Improvements; (viii) advertising expenses; or (ix) real
estate broker's or other leasing commissions.
(y) "Parties" means Landlord and Tenant.
(z) "Party" means Landlord or Tenant.
(aa) "Person" means one or more human beings, or legal entities or other
artificial persons, including, without limitation, partnerships, corporations,
trusts, estates, associations and any combination of human beings and legal
entities.
(bb) "Property" means the Premises, Building and Land.
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<PAGE>
(cc) "Provision" means any term, agreement, covenant, condition, cause,
qualification, restriction, reservation, or other stipulation in this Lease that
defines or otherwise controls, establishes, or limits the performance required
or permitted by either party.
(dd) "Real Property Taxes" means any form of tax, assessment, general
assessment, special assessment, lien, levy, bond obligation, license fee,
license tax, tax or excise on rent, or any other levy, charge or expense,
together with any statutory interest thereon (individually and collectively, the
"Impositions"), now or hereafter imposed or required by any authority having the
direct or indirect power to tax, including any federal, state, county or city
government or any school, agricultural, lighting, drainage or other improvement
or special assessment district thereof (individually and collectively, the
"Governmental Agencies") on any interest of Landlord or Tenant or both
(including any legal or equitable interest of Landlord or its mortgagee, if any)
in the Premises or the Property, including, without limitation:
(i) any Impositions upon, allocable to or measured by the area of the
Premises or the Property, or the rental payable hereunder, including, without
limitation, any gross income tax or excise tax levied by any Governmental
Agencies with respect to the receipt of such rental; or
(ii) any Impositions upon or with respect to the possession, leasing,
operation, management, maintenance, alteration, repair or use or occupancy by
Tenant of the Premises or any portion thereof; or
(iii) any Impositions upon or with respect to the building equipment
and personal property used in connection with the operation and maintenance of
the Property or upon or with respect to the furniture, fixtures and decorations
in the common areas of the Property; or
(iv) any Impositions upon this Lease or this transaction or any
document to which Tenant is a party creating or transferring an interest or an
estate in the Premises; or
(v) any Impositions by Governmental Agencies (whether or not such
Impositions constitute tax receipts) in substitution, partially or totally, of
any impositions now or previously included within the definition of real
property taxes, including those calculated to increase tax increments to
Governmental Agencies and to pay for such services as fire protection, water
drainage, street, sidewalk and road maintenance, refuse removal or other
governmental services formerly provided without charge to property owners or
occupants; or
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<PAGE>
(vi) any and all costs, including, without limitation, the fees of
attorneys, tax consultants and experts, incurred by Landlord should Landlord
elect to negotiate or contest the amount of such real property taxes in formal
or informal proceedings before the Governmental Agency imposing such real
property taxes; provided, however, that real property taxes shall in no event
include Landlord's general income, inheritance, estate, gift or franchise taxes.
(ee) "Rent" means Minimum Monthly Rent, as adjusted from time to time under
this Lease, Additional Rent, Prepaid Rent, Security Deposit, all as defined in
this Section, payments of Tenant's Share of increases in Real Property Taxes and
Operating Costs, insurance, utilities and other charges payable by Tenant to
Landlord.
(ff) "Rentable square feet of space" as to the Premises or the Building, as
the case may be, means the number of usable square feet of space times the
applicable R/U Ratio(s) as defined in this Section.
(gg) "Restoration" means the reconstruction, rebuilding, rehabilitation and
repairs that are necessary to return damaged portions of the Premises and the
Building to substantially the same physical condition as they were in
immediately before the damage.
(hh) "R/U Ratio" means the rentable area of a floor of the Building divided
by the usable area of such floor, both of which shall be computed in accordance
with American National Standard Z65.1-1986 Method of Measuring Floor Space in
Office Buildings as published by the Building Owners and Managers Association,
as amended from time to time.
(ii) "Substantially complete" or "substantially completed" or "substantial
completion" means the completion of Landlord's construction obligation, subject
to completion or correction of "punch list" items, that is, minor items of
incomplete or defective work or materials or mechanical maladjustments that are
of such a nature that they do not materially interfere with or impair Tenant's
use of the Premises for the Permitted Use.
(jj) "Successor" means assignee, transferee, personal representative, heir,
or other person or entity succeeding lawfully, and pursuant to the provisions of
this Lease, to the rights or obligations of either party.
(kk) "Tenant Improvements" means (i) the improvements and alterations set
forth in Exhibit C, (ii) window coverings, lighting fixtures, plumbing fixtures,
cabinetry and other fixtures installed by either Landlord or Tenant at any time
during
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<PAGE>
the Term, and (iii) any improvements and alterations of the Premises made for
Tenant by Landlord at any time during the Term.
(ll) "Tenant's personal property" means Tenant's equipment, furniture, and
movable property placed in the Premises by Tenant.
(mm) "Tenant's trade fixtures" means any property attached to the Premises
by Tenant.
(nn) "Termination" means the ending of the Term for any reason before
expiration, as defined in this Section.
(oo) "Work" means the construction of any improvements or alterations or
the performance of any repairs done by Tenant or caused to be done by Tenant on
the Premises as permitted by this Lease.
42. Miscellaneous Provisions.
(a) Entire Agreement. This Lease sets forth the entire agreement of the
parties as to the subject matter hereof and supersedes all prior discussions and
understandings between them. This Lease may not be amended or rescinded in any
manner except by an instrument in writing signed by a duly authorized officer or
representative of each party hereto.
(b) Governing Law. This Lease shall be governed by, and construed and
enforced in accordance with, the laws of the State of Washington.
(c) Severability. Should any of the provisions of this Lease be found to
be invalid, illegal or unenforceable by any court of competent jurisdiction,
such provision shall be stricken and the remainder of this Lease shall
nonetheless remain in full force and effect unless striking such provision shall
materially alter the intention of the parties.
(d) Jurisdiction. In the event any action is brought to enforce any of
the provisions of this Lease, the parties agree to be subject to exclusive in
personam jurisdiction in the Superior Court, King County, for the State of
Washington or in the United States District Court for the Western District of
Washington and agree that in any such action venue shall lie exclusively at
Seattle, Washington.
(e) Waiver. No waiver of any right under this Lease shall be effective
unless contained in a writing signed by a duly authorized officer or
representative of the party sought to be charged with the waiver and no waiver
of any right arising from
-40-
<PAGE>
any breach or failure to perform shall be deemed to be a waiver of any future
right or of any other right arising under this Lease.
(f) Captions. Section captions contained in this Lease are included for
convenience only and form no part of the agreement between the parties.
(g) Notices. All notices or requested required or permitted under this
Lease shall be in writing. If given by Landlord such notices or requests may be
personally delivered or sent by certified mail, return receipt requested,
postage prepaid. If given by Tenant such notices or requests shall be sent by
certified mail, return receipt requested, postage prepaid. Such notices or
requests shall be deemed given when so delivered or mailed, irrespective of
whether such notice or request is actually received by the addressee. All
notices or requests to Landlord shall be sent to Landlord at Landlord's Address
for Notice and all notices or requests to Tenant shall be sent to Tenant at
Tenant's Address for Notice. Either party may change the address to which
notices shall be sent by notice to the other party.
(h) Binding Effect. Subject to the provisions of Section 25 captioned
"Assignment and Subletting," this Lease shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and assigns. No
permitted assignment of this Lease or Tenant's rights hereunder shall be
effective against Landlord unless and until an executed counterpart of the
instrument of assignment shall have been delivered to Landlord and Landlord
shall have been furnished with the name and address of the assignee. The term
"Tenant" shall be deemed to include the assignee under any such permitted
assignment.
(i) Effectiveness. This Lease shall not be binding or effective until
properly executed and delivered by Landlord and Tenant.
(j) Gender and Number. As used in this Lease, the masculine shall include
the feminine and neuter, the feminine shall include the masculine and neuter,
the neuter shall include the masculine and feminine, the singular shall include
the plural and the plural shall include the singular, as the context may
require.
(k) Time of the Essence. Time is of the essence in the performance of all
covenants and conditions in this Lease for which time is a factor.
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<PAGE>
Dated the date first above written.
Landlord: Tenant:
BURKE-STATE BLDG., L.L.C., a WatchGuard, Inc., a Washington
Washington limited liability corporation
company
By: /s/ H. Martin Smith III By: /s/ Steven N. Moore
--------------------------- ---------------------------
H. Martin Smith III Its: Chief Financial Officer
Managing Partner ---------------------------
By:
---------------------------
Its:
---------------------------
This Lease has been prepared for submission to you and your attorney. Martin
Smith Inc is not authorized to give legal or tax advice. Neither Landlord nor
Martin Smith Inc makes any representations or recommendations as to the legal
sufficiency, legal effect or tax consequences of this document or any
transaction relating thereto. These are questions for your attorney with whom
you should consult before signing the document to determine whether your legal
rights are adequately protected.
[Notary attached]
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<PAGE>
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that Steve Moore is the
person who appeared before me, and said person acknowledged that he/she signed
this instrument, on oath stated that he/she was authorized to execute the
instrument, and acknowledged it as the (title) CFO of (entity) WatchGuard, Inc.,
a Washington corporation to be the free and voluntary act of such party for the
uses and purposes mentioned in the instrument.
Witness my hand and official seal this 17th day of November 1997.
/s/ Ronald Leibsohn
------------------------------------
Notary Public
(Print Name)
------------------------
Residing at Mercer Island
------------------------
My Commission Expires: 12-15-00
-------------
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that H. Martin Smith, III is
the person who appeared before me, and said person acknowledged that he/she
signed this instrument, on oath stated that he/she was authorized to execute the
instrument, and acknowledged it as the (title) Managing Member of (entity)
BURKE-STATE BLDG, L.L.C., a Washington limited liability company to be the free
and voluntary act of such party for the uses and purposes mentioned in the
instrument.
Witness my hand and official seal this 18th day of December 1997.
/s/ Danette A. Brandt
------------------------------------
Notary Public
(Print Name)
------------------------
Residing at Edmonds, WA
------------------------
My Commission Expires: 3/8/2001
------------
Notary Seal Attached
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<PAGE>
RIDER
This Rider is part of that certain Lease dated 10th day of October, 1997 by
and between BURKE-STATE BLDG., LLC, a Washington limited liability company
("Landlord"), and WatchGuard, Inc., a Washington corporation ("Tenant"), who
further agree as follows:
43. Disclosure. BURKE-STATE BLDG., LLC, is a Washington limited liability
company composed of H. Martin Smith, III, and Gregory B. Smith as the managing
members and other individuals and partnerships as members. The managing members
and several of the members are licensed real estate brokers and/or real estate
agents in the State of Washington.
Dated the date first above written.
Landlord: Tenant:
BURKE-STATE BLDG., L.L.C., a WatchGuard, Inc., a Washington
Washington limited liability corporation
company
By: /s/ H. Martin Smith III By: /s/ Steven N. Moore
--------------------------- -----------------------------
Managing Member Its: Chief Financial Officer
-----------------------------
By:
-----------------------------
Its:
-----------------------------
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<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
Occidental Mall
Lots 1, 2, 3, and 4, Block 11, Town of Seattle, as laid out by D. S. Maynard,
commonly known as D. S. Maynard's Plat of Seattle, according to the plat
recorded in Volume 1 of Plats, Page 23, in King County, Washington; EXCEPT the
West 9 feet thereof condemned in District Court Cause No. 7089 for Occidental
Avenue, as provided by Ordinance No. 1109 of the City of Seattle; and EXCEPT
that portion of said Lot 2 conveyed to Wilbert L. Smith by Deed recorded under
recording number 186629 in King County, Washington.
Initials SM
------------
------------
------------
------------
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<PAGE>
EXHIBIT B
[Floor Plan: drawing showing layout of second floor,
showing interior divisions of floor into office areas.]
<PAGE>
EXHIBIT C
WORK LETTER
This Work Letter is made and entered into this 10th day of October 1997 by
and between BURKE-STATE BLDG., LLC, a Washington limited liability company
("Landlord") and WatchGuard, Inc., a Washington corporation ("Tenant").
RECITALS: Landlord and Tenant have entered into a Lease dated of even date
herewith covering certain Premises located in the Occidental Mall in Seattle,
Washington (the "Lease"). The Lease contemplates the construction of certain
improvements to the Premises. Landlord and Tenant desire to set forth their
agreement as to construction of such improvements in writing and hereby agree as
follows:
1. Tenant Improvements. Landlord shall construct or cause to be constructed the
improvements described in the attached proposal from Uniplex Construction
Specialists dated October 31, 1997. Said proposal is attached to this Exhibit C
and by this reference made a part hereof. Landlord shall oversee all aspects of
the construction process, including without limitation, space planning, design,
construction bidding and construction of the Tenant Improvements.
2. Tenant Improvement Allowance; Payment for Tenant Improvements./*/ Landlord
shall pay the cost of the Tenant Improvements up to an Additional/**/ amount
equal to Forty Thousand Dollars and No Cents ($40,000.00) (the "Tenant
Improvement Allowance"). Tenant shall pay the entire cost of the Tenant
Improvements in excess of the Tenant Improvement Allowance. The Tenant
Improvement Allowance is intended to include architectural fees, permit fees,
costs of construction of the Tenant Improvements, a Four Percent (4%)
construction management fee payable to MSI Construction Services, Washington
state sales tax and any and every other cost with respect to the construction of
the Tenant Improvements to be borne by Landlord. In no event shall Landlord be
required to pay any portion of the cost of construction of the Tenant
Improvements or any other costs set forth in the preceding sentence in excess of
the Tenant Improvement Allowance.
_________________
/*/ Landlord has received a certified check in the amount of $15,000 from
Luminous Inc., a Washington corporation for the purpose of payment towards the
completion of improvements to Tenants premise.
/**/ Total Tenant Improvement Allowance contribution shall not exceed
$55,000.00; $15,000.00 referenced directly above and the additional $40,000.00
referenced in Section 2 of Exhibit C.
<PAGE>
3. Change Orders. Tenant or Landlord, without invalidating this agreement, may
order changes in the work consisting of additions, deletions, or modifications.
All such changes in the work shall be authorized by written change order signed
and approved by Landlord, Tenant and Contractor. Landlord and Tenant shall
approve any and all such change orders within two (2) business days. Neither
Landlord, Tenant nor the Contractor shall be liable to pay for or perform any
additions, deletions or modifications unless agreed to in a written change
order. Each such change order shall describe:
a) The work added, deleted or modified;
b) The agreed upon adjustment, if any, to the contract sum payable to
Contractor;
c) The agreed upon adjustment, if any, to the date of substantial
completion and/or Lease Commencement Date; and
d) The date by which Landlord or Tenant must pay Contractor for any added
or modified work. Tenant shall be responsible for the cost of any such change
orders requested by Tenant.
4. Payment. Landlord shall pay the cost of the Tenant Improvements directly to
the Contractor up to the amount of the Tenant Improvement Allowance. After
Landlord has expended the Tenant Improvement Allowance, Tenant shall pay
directly to the Contractor any amount over and above the Tenant Improvement
Allowance within fifteen (15) days of receipt of an invoice from Landlord.
5. Prior Agreements. This Work Letter, together with the Lease, contains the
entire agreement of the parties with respect to any matters covered or mentioned
in this Work Letter and no prior agreements or understandings pertaining to any
such matter shall be effective for any purpose. No provision of this Work
Letter may be amended or added to except in writing signed by the parties hereto
or their respective successors and assigns in interest. This Work Letter shall
not be effective or binding upon any party until fully executed by both parties
hereto.
Dated the date first above written.
Landlord: Tenant:
BURKE-STATE BLDG., LLC, a Washington WatchGuard, Inc., a Washington
limited liability company corporation
<PAGE>
By: /s/ [SIGNATURE ILLEGIBLE] By: /s/ Steven N. Moore
---------------------------------- ---------------------------
Managing Member
Its: CFO
---------------------------
By:____________________________
Its:___________________________
<PAGE>
[UNIPLEX logo]
Construction Specialists
753 18/th/ East
Seattle, Washington 98112
Telephone: (206) 323-4320
Fax: (206) 328-0693
October 31, 1997
WatchGuard Technologies, Inc.
316 Occidental Avenue S., Ste. 300
Seattle, WA 98104
Attn: Shannon Bussard
Re: 2/nd/ Floor Buildout
Shannon,
Our price for the above Project is $39,087.00 plus sales tax. The following
clarifications and exclusions were used to calculate this price.
1. This price is based upon the plan by Marvin Stein dated 10/14/97, 1 page.
2. Provide and install building standard 3' x 8' paint grade doors and jambs
in new offices. All doors to have passage set hardware.
3. The closet bifold doors to be same height as demountable partition doors.
4. Uniplex assumes existing ceiling grid is per code and all changes will be
in accordance with same.
5. Replace ceiling tile where affected by construction.
6. Uniplex assumes the proposed space meets present building code requirements
for both electrical and HVAC equipment.
7. Electrical - Please see attached.
8. Uniplex to provide and install an additional 2 ton water-to-water heat pump
for use in the (6) new offices. The existing ducting and supply for
offices to be redirected for Conference Room use.
<PAGE>
9. WatchGuard to remove and alter all demountable panels that do not fit new
configuration.
10. The following are NIC:
a. Permit.
b. Keying.
c. Any low voltage work (telephone/computers).
d. Window coverings.
e. Casework.
f. Furniture moving.
11. Provide and install new building standard 30 oz. cut pile carpet and 4 inch
Roppe rubber base. Carpet to be Tempest II.
12. New carpet to be installed per the cross-hatch portion of the attached
drawing. Rubber base to be installed on all new partitions.
13. Paint area affected by construction in the existing color.
14. Uniplex has included 3 man days of patch and repair, and 3 man days of
painting for touch up in the remainder of the space.
15. Provide sprinkler alterations and additions as needed for new floor plan.
16. No A.D.A. upgrades have been included in the above proposal.
17. This work will be completed in a single phase during normal business hours.
18. This project will take approximately 20 working days to complete from start
of work.
NOTE: This proposal may be withdrawn by Uniplex after 45 days. Please call to
confirm price after time has elapsed.
ALTERNATE NO. 1: Shampoo all remaining carpet throughout the new space. Price:
$1,186.00 plus tax.
If you have any questions please call.
Sincerely,
/s/ Tim Kenison
Tim Kenison
UNIPLEX, INC.
<PAGE>
Project: 2/nd/ Floor Remodel Date 10/31/97
Building: Burke Revised
PERMIT NIC
DEMOLITION
Partition Movable NIC
Carpet 400
Plastic 80
Disposal 205
CONSTRUCTION
Partitions Std 7,605
Mullions 150
Doors Interior 4,270
Bi-fold 620
Relites Int. NIC
Base Rubber 173
PAINT New Walls 1,350
Soffit 200
Touch up 960
ELECTRICAL N. Star 5,462
HVAC 7,630
SPRINKLERS 605
CEILING Repair 300
CARPET New 3,442
CABINET Pole & Shelf 231
Blinds NIC
Patch/Repair General 195
S. End 560
Clean-Up General 200
Supervision 200
Misc. (OSIF) 697
Profit & Overhead 3,553
-------
TOTAL $39,087
<PAGE>
EXHIBIT D
RULES AND REGULATIONS
1. No sign, placard, picture, advertisement, name or notice shall be installed
or displayed on any part of the exterior or in any area visible from the
exterior of the Building without the prior written consent of the Landlord,
which consent shall not be unreasonably withheld or delayed. Landlord
shall have the right to remove, at Tenant's expense and without notice, any
sign installed or displayed in violation of this rule. All signs or
lettering on doors and walls shall be printed, painted, affixed or
inscribed at the expense of Tenant. At the expiration or termination of
Tenant's Lease, Tenant, at Tenant's sole cost and expense, shall remove all
tenant-installed signage and repair and paint any and all damage resulting
from installation and/or removal of said signage.
2. Tenant shall not install any curtains, blinds, shades, screens or hanging
plants or other similar objects attached to or used in connection with any
window or door of the Premises except building-standard drapes approved by
Landlord. No awning shall be permitted on any part of the Premises.
Tenant shall not place anything against or near glass partitions or doors
or windows which may appear unsightly from outside the Premises.
3. Tenant shall not obstruct any sidewalks, lobbies, halls, passages, exits,
entrances, elevators, or stairways of the Building. The halls, passages,
exits, entrances, lobbies, elevators, and stairways are not open to the
general public. Landlord shall in all cases retain the right to control and
prevent access thereto of all persons whose presence in the judgment of
Landlord would be prejudicial to the safety, character, reputation and
interest of the Building and its Tenants; provided that nothing herein
contained shall be construed to prevent such access to persons with whom
any Tenant normally deals in the ordinary course of its business, unless
such persons are engaged in illegal activities. No Tenant and no employee
or invitee of any tenant shall go upon the roof of the Building without
Landlord's prior written consent.
4. The directory of the Building will be provided exclusively for the display
of the name and location of tenants' business only, and Landlord reserves
the right to exclude any other names therefrom.
5. All cleaning and janitorial services for the Building and the Premises,
unless otherwise in the Lease, shall be provided exclusively through
Landlord, and
<PAGE>
except with the written consent of Landlord, no person or persons other
than those approved by Landlord shall be employed by Tenant or permitted to
enter the Building for the purpose of cleaning the same. Tenant shall not
cause any unnecessary labor by carelessness or indifference to the good
order and cleanliness of the Premises. Landlord shall not in any way be
responsible to any tenant for any loss of property on the Premises, however
occurring, or for any damage to any tenant's property by the janitor or any
other employee or any other person.
6. Landlord shall furnish Tenant with appropriate number of keys to each door
lock in the Premises and to the main entrance door of the Building.
Landlord may make a reasonable charge for any additional keys. Tenant
shall not make or have made additional keys, and Tenant shall not alter any
lock or install a new additional lock or bolt on any door of its Premises.
Tenant, upon termination of its tenancy, shall deliver to Landlord all keys
to all doors which have been furnished to Tenant and in the event of loss
of any keys so furnished, shall reimburse Landlord for the cost of any new
lock(s) required due to such loss.
7. Tenant shall not install computer cabling, telephone, burglar alarm or
similar services without Landlord's approval for installation of same.
Upon termination of Tenant's tenancy, at Landlord's option, Tenant shall
remove any equipment and/or services from the Premises and shall restore
the Premises to its condition prior to such installation.
8. Freight elevator(s), if any, shall be available for use by all tenants in
the Building, subject to such reasonable scheduling as Landlord in its
discretion shall deem appropriate. No equipment, materials, furniture,
packages, supplies, merchandise or other property will be received in the
Building or carried in the passenger elevators except between such hours
and in such elevators as may be designated by Landlord.
9. Tenant shall not place a load upon any floor of the Premises which exceeds
the load per square foot which such floor was designed to carry and which
is allowed by law. Landlord shall have the right to prescribe the weight,
size and position of all equipment, materials, furniture or other property
brought into the Building. Heavy objects shall, if considered necessary by
Landlord, stand on such platforms as determined by Landlord to be necessary
to properly distribute the weight of such objects. Business machines and
mechanical equipment belonging to Tenant which cause noise or vibration
that may be transmitted to the structure of the Building or to any space
therein or to any tenants in the Building shall be placed and maintained by
Tenant, at Tenant's
-2-
<PAGE>
sole cost and expense, on vibration eliminators or other devices sufficient
to eliminate noise or vibration. Landlord will not be responsible for loss
of, or damage to, any such equipment or other property from any cause, and
all damage done to the Building by maintaining or moving such equipment or
other property shall be repaired at the expense of Tenant.
10. Tenant shall not use or keep in the Premises any kerosene, gasoline or
inflammable or combustible fluid or material other than those limited
quantities necessary for the operation or maintenance of office equipment.
Tenant shall not use or permit to be used in the Premises any foul or
noxious gas or substance, or permit or allow the Premises to be occupied or
used in a manner offensive or objectionable to Landlord or other occupants
of the Building by reason of noise, odors, or vibrations, nor shall Tenant
bring into or keep in or about the Premises any animals, including dogs
(except seeing-eye dogs).
11. Tenant shall not use any method of heating or air conditioning other than
that supplied by Landlord.
12. Tenant shall not waste electricity, water or air conditioning, and Tenant
agrees to cooperate fully with Landlord to assure the most effective
operation of the Building's heating and air-conditioning system and to
comply with any governmental energy-saving rules, laws or regulations, of
which Tenant has actual notice, and shall refrain from attempting to adjust
controls. Tenant shall keep corridor and exterior doors closed and shall
close window coverings at the end of each business day.
13. The name of the Building is the Occidental Mall. Landlord reserves the
right, exercisable without notice and without liability to Tenant, to
change the name of the Building.
14. Landlord reserves the right to exclude from the Building between the hours
of 6:00 p.m. and 7:00 a.m. the following day, or such other hours as may be
established from time to time by Landlord, and on Sundays and legal
holidays any person, unless that person is known to the person or employee
in charge of the Building and has a pass or is properly identified. Tenant
shall be responsible for all persons for whom it requests passes and shall
be liable to Landlord for all acts of such persons. Landlord shall not be
liable for damages for any error with regard to the admission to or
exclusion from the Building of any person. Landlord reserves the right to
prevent access to the Building in case of invasion, mob, riot, public
excitement or other commotion by closing the doors or by other appropriate
action.
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15. Tenant shall close and lock the doors of its Premises and entirely shut off
all water faucets or other water apparatus, electricity, copiers and other
office equipment, including coffee pots, etc., before Tenant and its
employees leave the Premises. Tenant shall be responsible for any damage or
injuries sustained by other tenants or occupants of the Building or by
Landlord for noncompliance with this rule.
16. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were
constructed, and no foreign substance of any kind whatsoever shall be
thrown therein. The expense of any breakage, stoppage or damage resulting
from the violation of this rule shall be borne by the tenant, or employees
or invitees of the tenant, who shall have caused it.
17. Tenant shall not make any room-to-room solicitation of business from other
tenants in the Building. Tenant shall not use the Premises for any
business or activity other than that specifically provided for in Tenant's
Lease.
18. Canvassing, soliciting and distribution of handbills or any other written
material, and peddling in the Building are prohibited, and each tenant
shall cooperate to prevent same.
19. Tenant shall not install any radio or television antenna, loudspeaker or
other device on the roof or exterior walls of the Building except as
permitted in the Lease. Tenant shall not interfere with radio or
television broadcasting or reception from or in the Building or elsewhere.
20. Landlord reserves the right to direct electricians as to where and how
telephone, computer or other wiring or cabling are to be introduced to the
Premises. Tenant shall not cut nor bore holes for wiring or cabling
without Landlord's prior written consent, said consent shall not be
unreasonably withheld. Tenant shall not affix any floor covering to the
floor of the Premises in any manner except as approved by Landlord. Tenant
shall repair any damage resulting from noncompliance with this rule.
21. Landlord reserves the right to exclude or expel from the Building any
person who, in Landlord's judgment, is intoxicated or under the influence
of alcohol or drugs or who is in violation of any of the Rules and
Regulations of the Building.
22. Tenant shall store all its trash and garbage within its Premises. Tenant
shall not place in any trash box or receptacle any material which cannot be
disposed
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of in the ordinary and customary manner of trash and garbage disposal. All
garbage and refuse disposal shall be made in accordance with directions
issued from time to time by Landlord. All garbage over and above normal
(i.e., major-delivery wrappings, etc.) shall be at Tenant's sole cost and
expense. Tenant agrees to cooperate with Landlord in recycling programs as
may be established from time to time by Landlord.
23. The Premises shall not be used for lodging nor for manufacturing of any
kind, nor shall the Premises be used for any improper, immoral or
objectionable purpose. No cooking shall be done or permitted by Tenant on
the Premises, except that use by Tenant of Underwriters Laboratory approved
equipment for brewing coffee, tea, hot chocolate and similar beverages, and
microwave ovens shall be permitted; provided that such equipment and use is
in accordance with all applicable federal, state, county and city laws,
codes, ordinances, rules and regulations and does not cause objectionable
odor.
24. Without the written consent of Landlord, Tenant shall not use the name of
the Building in connection with or in promoting or advertising the business
of Tenant except as Tenant's address.
25. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental
agency.
26. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.
27. The requirements of Tenant will be attended to only upon appropriate
application to the office of the Building by an authorized individual.
Employees of Landlord shall not perform any work or do anything outside
their regular duties unless under special instructions from Landlord, and
no employee of Landlord will admit any person (Tenant or otherwise) to any
office of the Building without specific instructions from Landlord.
28. Tenant and Tenant's employees shall not park vehicles in any parking areas
designated by Landlord as reserved parking areas or as visitor parking
areas. Tenant shall not park any vehicles in the Building parking areas
other than automobiles, motorcycles, motor-driven or nonmotor-driven
bicycles or four-wheeled trucks.
29. Tenant and Tenant's delivery personnel shall utilize loading zones and
delivery entrances for all deliveries. Any damage to the Building or
Premises resulting
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from Tenant's deliveries shall be repaired at the sole cost and expense of
the Tenant.
30. Tenant and Tenant's delivery personnel shall not use in any space or in the
common areas of the Building any hand truck except those equipped with
rubber tire and side guards or such other material-handling equipment as
Landlord may approve. Tenant shall not bring vehicles of any other kind
into the Building.
31. All moving of furniture or other equipment shall be done so as to have
minimal impact on other tenants' and visitors' use of elevators, common
areas, and parking facilities.
32. The Building is a nonsmoking building.
33. Landlord may waive any one or more of these Rules and Regulations for the
benefit of Tenant or any other tenant, but no such waiver by Landlord shall
be construed as a waiver of such Rules and Regulations in favor of Tenant
or any other tenant, nor prevent Landlord from thereafter enforcing any
such Rules and Regulations against any or all of the tenants of the
Building.
34. These Rules and Regulations are in addition to and shall not be construed
to in any way modify or amend, in whole or in part, the terms, covenants,
agreements and conditions of any lease of any premises in the Building.
35. Landlord reserves the right to make such other and reasonable Rules and
Regulations as, in its judgment, may from time to time be needed for safety
and security, for care and cleanliness of the Building and for the
preservation of good order therein. Tenant agrees to abide by all such
Rules and Regulations hereinabove stated and any additional reasonable
Rules and Regulations which are adopted.
36. Tenant shall be responsible for the observance of all of the foregoing
Rules and Regulations by Tenant's employees, agents, clients, customers,
invitees and guests.
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[initials]
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