LEASE TERMINATION AND RENT PAYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made June 14, 1994, by
and between DJ&J SOFTWARE CORPORATION, a Washington corporation doing
business as Egghead Software ("Egghead"), and SAMMAMISH PARK PLACE II
LIMITED PARTNERSHIP, a Washington limited partnership ("Landlord").
RECITALS
A. Landlord and Egghead are the parties to an Office Building
Lease dated March 23, 1992, under which Egghead is a tenant (the
"Existing Lease"), covering portions of the first and second floors
("Premises") of Sammamish Park Place Building B ("Building"), located in
the City of Issaquah, King County, Washington, which is more fully
described as follows:
Lot 2 of Short Plat No. 1288032, according to the short plat
recorded under King County Recording No. 8911080548.
A complete and true copy of the Existing Lease is attached as Exhibit A
to this Agreement as a reference for determining the terms and
conditions of the Existing Lease.
B. Microsoft Corporation ("Microsoft") desires to enter into a
lease with Landlord for the Building (the "Microsoft Lease").
C. Egghead is willing to surrender the Premises to Landlord so
it can lease them to Microsoft, and Landlord is willing to accept such
surrender and terminate the Existing Lease under the terms set forth in
this Agreement.
D. All capitalized terms used in this Agreement have the same
meaning as set forth in the Existing Lease, except as otherwise
indicated in this Agreement.
NOW THEREFORE, recognizing that Landlord will materially rely on
this Agreement, and in consideration of the mutual promise, in this
Agreement, Egghead and Landlord agree as follows:
1. Surrender of Premises. Egghead shall surrender and vacate the
Premises on or before June 15, 1994.
2. Condition of Premises on Surrender. Egghead shall remove its
personal property and trade fixtures from the Premises at its expense.
Egghead shall leave the Premises in the condition received, except for
reasonable wear and tear, casualty and condemnation damage, and pre-
existing defects.
3. Leasehold Improvements. The leasehold improvements constructed by
Egghead in the Premises shall remain and shall become the property of
Landlord on the Termination Date of the Existing Lease, as defined
below.
4. Indemnity. Landlord agrees to indemnify, hold harmless and defend
Egghead against any damages, costs, liabilities or expenses that Egghead
may incur as a result of Microsoft's possession of the Premises prior to
the Termination Date. Egghead acknowledges that Microsoft will
substantially modify the existing tenant improvements in the Building.
5. Lease Termination. The Existing Lease shall terminate on the
earlier of the date that the Microsoft Lease commences or
September 1, 1994 (the "Termination Date"), without any further action
or notice by the parties. Egghead shall continue to make all payments
due under the Existing Lease until the Termination Date, as defined in
the prior sentence.
6. Condition Subsequent. This Agreement shall be null and void if
Microsoft and Landlord have not executed the Microsoft Lease by
September 1, 1994.
7. Termination of Agreement. This Agreement terminates on
November 1, 1999, regardless of any remaining term or extension under
the Microsoft Lease.
8. Payment of Spread. Egghead agrees to pay to Landlord on the first
day of each calendar month following the Termination Date until the
earlier of the date this Agreement terminates, the date payment of the
Full Amount (defined below) restarts following termination of the
Microsoft Lease, or the date the New Lease (defined below) commences, an
amount equal to (a) the Basic Rent and Operating Costs due each month
under the Existing Lease had it not been terminated, less (b) the
$44,049.13 and utility charges which are attributable to the Premises
each month under the Microsoft Lease (the "Spread"). The utility
charges to be deducted from Operating Costs paid by Egghead are
electricity, natural gas, storm water, water, sewer, disposal and refuse
collection, and any other utility cost payable under the Existing Lease
which are attributable to the Premises or the Common Areas. All charges
that may otherwise qualify as Operating Costs that arise due to a
request by Microsoft or any other tenant of the Building (outside the
scope of Operating Costs as they had been charged to Egghead under the
Existing Lease) shall not be included in Operating Costs payable by
Egghead. Egghead's payment of its portion of the estimated Operating
Costs shall be reconciled against actual Operating Costs in accordance
with the provisions of Exhibit A to this Agreement (that is, the
Existing Lease before it was terminated by this Agreement). Landlord
shall provide Egghead an invoice in substantially the form attached as
Exhibit B each month setting forth the calculation of the Spread.
Landlord shall send Egghead an invoice for payment each month in advance
of the due date based on an estimate of Operating Costs, and will
reconcile those estimates to actual Operating Costs each year, all in
accordance with the provisions of Exhibit A to this Agreement.
9. Payment of Full Amount. Egghead agrees to pay to Landlord on the
first day of each calendar month following the date Microsoft no longer
possesses the Premises after expiration of either the 2-year original
term of the Microsoft Lease, or any of the three 1-year extension
options in the Microsoft Lease, until the earlier of the date this
Agreement terminates or the date the New Lease (defined below)
commences, an amount equal to the Basic Rent and Operating Costs due
each month under the Existing Lease had it not been terminated (the
"Full Amount"). Egghead shall not be obligated to pay the Full Amount
before the expiration of the 2-year original term of the Microsoft Lease
or any extension thereof, regardless of any default under or early
termination of the Microsoft Lease.
10. Late Payment. Egghead acknowledges that late payment of the sums
due under this Agreement will cause Landlord to incur costs not
contemplated by this Agreement, the exact amount of which is difficult
to determine. Therefore, if Egghead fails to pay any sum when due under
this Agreement, and where such failure shall continue for a period of
five (5) days after written notice thereof by Landlord to Egghead, then
Egghead shall pay Landlord the greater of the following: (a) a late
charge equal to five percent (5%) of the amount owing; or (b) that
portion of any penalties, including without limitation additional
interest or default "fees" which Landlord's lenders may impose or
require due solely to the late payment by Egghead (the "Late Charge").
In addition to the Late Charge, Egghead shall pay interest at a rate
equal to six percent (6%) per annum above the prime rate charged from
time to time by SeaFirst Bank or its successor on all late payments
under this Agreement thirty (30) days or more past due, or such lower
maximum allowable interest rate for payments due under this Agreement if
the aforesaid rate violates any applicable laws or regulations.
11. Exercise of Extension Options. Landlord shall provide Egghead
with a copy of Microsoft's election to exercise any option to extend the
Microsoft Lease for any additional term that commences before
November 1, 1999.
12. Modification of Microsoft Lease. Upon written notice to Egghead,
Landlord and Microsoft may modify or waive any of the terms or
conditions of the Microsoft Lease, and may grant and agree to
indulgences for defaults or extensions of time to Microsoft without
releasing Egghead from its obligations under this Agreement. However,
Egghead's liability under this Agreement for the Spread shall not be
increased or accelerated as a result of any such modification.
13. New Lease. Upon termination of the Microsoft Lease and vacation
of the Premises by Microsoft, Egghead and Landlord agree to negotiate in
good faith whether or not to enter a new lease of the Premises
containing the same terms and conditions as the Existing Lease for the
remainder of its originally scheduled term, or on such other terms as
are mutually agreeable (the "New Lease"); provided Egghead shall have no
liability for circumstances or events involving the Premises, and for
the use or condition of the Premises, during any period after the
Existing Lease was terminated and before the commencement date of the
New Lease; and further provided Landlord shall have no obligation to
alter or restore the Premises to the condition existing during the
Existing Lease whether or not the parties enter into a New Lease. If
the parties enter into a New Lease, then there will be no further
Improvement Allowance, as provided for under Section 22.2 of the
Existing Lease. Neither party is obligated to enter the New Lease.
Notwithstanding the provisions of this Section 13, Egghead is obligated
to pay the Full Amount under the terms of Section 9 above unless and
until the earlier of the date this Agreement terminates or the date the
New Lease commences.
14. Commissions. Upon execution of the Microsoft Lease, Egghead shall
pay fifty percent (50%) of that portion of the real estate brokerage
commission due to CB Commercial Real Estate Group, Inc. ("Broker")
attributable to the Premises for the initial term of the Microsoft
Lease, and the other fifty percent (50%) of such portion of the
commission upon Microsoft's occupancy of the Premises. Egghead agrees
to pay that portion of the Broker's commission attributable to each
extension of the Microsoft Lease term attributable to the Premises at
the time Microsoft elects to exercise each of its options to extend.
The Broker's commission payable by Egghead under this Section shall be
based upon Microsoft's lease of that portion of the entire Building that
is the Premises (37,096 rentable square feet), as more fully described
in Exhibit C to this Agreement. Egghead shall not be liable for any
other brokerage commissions in relation to the Microsoft Lease or the
New Lease.
15. Acknowledgments by Egghead. Egghead acknowledges to Landlord and
agrees to the following:
a. Except as set forth in this Agreement, Landlord has made no
representations to Egghead regarding the economic benefits to be derived
by Egghead under this Agreement;
b. Egghead is not a third-party beneficiary of the Microsoft
Lease; and
c. Egghead is not entitled to assert any breach of the
Microsoft Lease by either Landlord or Microsoft thereunder as a basis of
any kind against either Landlord or Microsoft.
16. Notices. All invoices, notices and demands which may or are
required to be given by any party to another under this Agreement shall
be in writing and shall be deemed to have been fully given when
delivered in person, or three days after the postmark date if sent by
first class United States mail with postage prepaid, or on the date
shown on the receipt if sent certified or registered United States mail
with return receipt requested and postage prepaid, and addressed to
Egghead at 22011 S.E. 51st Street, P.O. Box 7004, Issaquah, WA 98027,
and to Landlord at 3605 132nd Avenue S.E., Bellevue, Washington, 98006-
1323. The parties may change the address to which notices may be sent
under this Agreement by providing the other party with written notice of
such change.
17. Successors. The terms of this Agreement are binding upon and
shall inure to the benefit of the parties and their respective heirs,
successors and assigns.
18. Governing Law. This Agreement shall be construed and enforced
under the laws of the State of Washington. The parties consent to the
personal jurisdiction of and venue laid in any court of competent
jurisdiction sitting in King County, Washington.
19. Attorney Fees. The prevailing party in any action to interpret or
enforce this Agreement shall be entitled to collect its reasonable costs
and attorney fees incurred in such action, or in any appeal thereof, or
in any bankruptcy or receivership action, from the non-prevailing party.
20. Amendments. This Agreement may be amended only by written
instrument signed by both Egghead and Landlord.
21. Authority. Each person signing this Agreement on behalf of a
corporation or partnership represents and warrants that they are duly
authorized by the corporation or partnership to execute this Agreement
and that no other signature or authorization is necessary to bind the
corporation or partnership.
22. Entire Agreement. This Agreement is the entire agreement between
the parties concerning the subjects contained in this Agreement.
23. Multiple Originals. This Agreement may be executed in duplicate
or triplicate, each of which shall be deemed an original, and together
they shall constitute one and the same agreement.
24. Recitals. All recital paragraphs shall be part of the parties'
agreement hereunder.
LANDLORD:
SAMMAMISH PARK PLACE II LIMITED
PARTNERSHIP, a Washington limited
partnership
By: VYZIS COMPANY, a Washington
corporation as Managing General
Partner
By: /s/ Cheryl A. Smith
Cheryl A. Smith
Its: Executive Vice President
EGGHEAD:
D J & J SOFTWARE CORPORATION, a
Washington corporation
By: /s/ R. J. Smith
Ronald J. Smith
Its: Vice President
STATE OF WASHINGTON
ss.
COUNTY OF KING
On this 14th day of June, 1994, before me personally appeared Cheryl A.
Smith to me known to be the Executive Vice President of VYZIS COMPANY,
the corporation that is the General Managing Partner of SAMMAMISH PARK
PLACE II LIMITED PARTNERSHIP, the limited partnership executed the
within and foregoing instrument, and acknowledged said instrument to be
the free and voluntary act and deed of said partnership for the uses and
purposes therein mentioned, and on oath stated that she was authorized
to execute said instrument on behalf of the partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
my official seal the day and year first above written.
/s/ Sheila J. Gill
Name (Printed): Sheila J. Gill
NOTARY PUBLIC in and for the State
of Washington, residing at
Kirkland
My appointment expires: 5-25-96
STATE OF WASHINGTON
ss.
COUNTY OF KING
On this 14th day of June, 1994, before me personally appeared RONALD J.
SMITH, known to be a VICE PRESIDENT of DJ&J SOFTWARE CORPORATION, the
corporation executed the within and foregoing instrument, and
acknowledged said instrument to be the free and voluntary act and deed
of said corporation, for the uses and purposes therein mentioned, and on
oath stated that he was authorized to execute said instrument on behalf
of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
/s/ Denise J. Ullery
Name (Printed): Denise Ullery
NOTARY PUBLIC in and for the
State of Washington, residing
at King County
My appointment expires: 9-1-96
EXHIBIT "B"
SAMPLE INVOICE - 1994
SAMMAMISH PARK PLACE II LTD PSHP
3605 132ND AVE. S.E.
SUITE 300
BELLEVUE, WA 98006-1323
EGGHEAD DISCOUNT SOFTWARE
REAL ESTATE DEPARTMENT
ATTN: LESLIE EVENSON
P.O. BOX 7004
ISSAQUAH, WA 98027
BASE RENT 43,276.33
OPERATING EXPENSES (1) 12,148.29
INSURANCE 195.93
ELECTRICITY & OTHER UTILITIES 0.00
SUBTOTAL 55,620.55
LESS: MICROSOFT RENT CREDIT 44,049.13
TOTAL 11,571.42 ($3.74/SQ.FT)
(1) ANY SPECIAL CHARGES ARE BILLED DIRECTLY TO MICROSOFT AND ARE NOT
INCLUDED IN INVOICE TO EGGHEAD.
PLEASE REMIT PAYMENT TO:
SAMMAMISH PARK PLACE II LTD PSHP
3605 132ND AVE. S.E.
SUITE 300
BELLEVUE, WA 98006-1323
EXHIBIT "C"
COMMISSION
This exhibit is incorporated into and made a part of the Lease
Termination Agreement dated June 14, 1994, between Sammamish Park Place
II Limited Partnership, a Washington Limited Partnership, and D J & J
Corporation, a Washington corporation.
The real estate brokerage commission due under the terms of the
Agreement shall be calculated, based on 37,096 rentable square feet, in
accordance with the following terms:
Initial Lease Term: 2 years CB Commercial will be compensated by
a commission of 5% of the total
lease consideration (base rent
combined with operating expenses and
real estate taxes) during this two-
year period. This is calculated to
be a total of $52,861.80 payable by
Egghead one-half (1/2) upon
execution of the Microsoft Lease and
one-half (1/2) upon Microsoft's
occupancy of the Premises.
First Extension Option: 1 year CB Commercial will be compensated by
commission of 5% of the total lease
consideration (base rent combined
with operating expenses and real
estate taxes) during this one-year
period.
Second Extension Option: 1 year CB Commercial will be compensated by
commission of 5% of the total lease
consideration (base rent combined
with operating expenses and real
estate taxes) during this one-year
period.
Third Extension Option: 1 year CB Commercial will be compensated by
commission of 5% of the total lease
consideration (base rent combined
with operating expenses and real
estate taxes) during this one-year
period.
Commission for each of the 1-year lease extension options, if exercised,
shall be due and payable by Egghead upon the commencement of the first
day of the term of each lease extension option exercised by Microsoft.