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TABLE OF CONTENTS
1. BASIC LEASE DATA AND EXHIBITS............................................1
2. PREMISES.................................................................2
3. LEASE TERM...............................................................4
(a) Base.................................................................4
(b) Additional Term......................................................4
4. RENT.....................................................................8
5. TENANT'S CONTRIBUTION....................................................9
6. LATE CHARGE; INTEREST...................................................11
7. DEPOSIT.................................................................11
8. USES; PROHIBITIONS......................................................13
9. COMPLIANCE WITH LAW; HAZARDOUS MATERIALS................................13
10. UTILITIES; SERVICES; TAXES AND OTHER CHARGES............................16
11. COMPLETION OF PREMISES; ALTERATIONS.....................................17
12. MAINTENANCE AND REPAIRS.................................................19
13. COMMON AREAS............................................................20
14. LIENS...................................................................21
15. INDEMNITY...............................................................21
16. TENANT'S INSURANCE......................................................22
17. WAIVER OF SUBROGATION...................................................23
18. ASSIGNMENT AND SUBLETTING...............................................23
19. ASSIGNMENT BY LANDLORD..................................................25
20. DESTRUCTION OF PREMISES.................................................25
21. EMINENT DOMAIN..........................................................27
22. BUILDING RULES AND REGULATIONS..........................................28
23. HOLDING OVER............................................................28
24. ENTRY BY LANDLORD.......................................................28
25. TENANT'S DEFAULT........................................................29
26. REMEDIES CUMULATIVE; WAIVER.............................................31
27. DEFAULT OF LANDLORD.....................................................31
28. SURRENDER OF PREMISES...................................................32
29. SIGNS...................................................................32
30. GENERAL PROVISIONS......................................................32
31. CONTINGENCIES...........................................................36
32. INTENTIONALLY DELETED...................................................37
33. RIGHT OF FIRST OFFER....................................................37
34. TENANT REQUESTED ALTERNATES.............................................38
35. LEASEHOLD MORTGAGE......................................................38
36. UNION LABOR.............................................................40
37. RIGHT OF FIRST OFFER....................................................40
38. CONFIDENTIALITY.........................................................41
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LEASE
THIS LEASE made this 21st day of January, 1998 between 2601 ELLIOTT LLC, a
Washington limited liability company ("Landlord") and REALNETWORKS, INC., a
Washington corporation ("Tenant") on the following terms and conditions:
1. BASIC LEASE DATA AND EXHIBITS The following terms shall have the
meanings set forth in Paragraph 1 hereof unless otherwise specifically modified
by the terms of this Lease:
(a) BUILDING: Known as Seattle Trade Center, 2601 Elliott Avenue,
Seattle, Washington (including the skybridge connecting the Building with the
Garage (unless Landlord is required by applicable governmental authority to
close or remove such skybridge), but not the Garage), situated on real property
described more particularly in Exhibit A hereto.
(b) PREMISES: Initially consisting of a floor area of approximately one
hundred forty eight thousand (148,000) rentable square feet, on all five floors
of the north portion of the Building, as indicated by cross hatching on the
floor plans attached hereto as Exhibit B, (such 148,000 RSF shall hereinafter be
referred to as the "Initial Premises") and thereafter expanding in accordance
with the terms of paragraph 2 hereof.
(c) TENANT'S PERCENTAGE OF BUILDING: Initially 45.02% (148,000 /
328,775), as adjusted from time to time by Landlord to reflect increases in the
size of the Premises and/or Building or decreases therein due to damage to or
condemnation of the Premise and/or Building.
(d) COMMENCEMENT DATE: April 1, 1999 or such earlier or later date as
provided in paragraph 3 hereof.
(e) EXPIRATION DATE: The day preceding the twelfth (12th) anniversary
of the Commencement Date.
(f) BASIC MONTHLY RENT: $160,333 per month, as adjusted from time to
time in accordance with the terms of paragraph 4(b) hereof.
(g) GARAGE: That certain above ground parking structure containing
approximately 622 parking stalls, which structure is located adjacent to the
Building on real property described more particularly in Exhibit A-1 hereto.
(h) DEPOSITS: (a) $160,333 in prepaid rent and (b) an escrowed
depositary account of $6,000,000 or a letter of credit in the amount of
$6,000,000.00.
(i) INTENTIONALLY DELETED
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(j) NOTICE ADDRESS:
Landlord: c/o Martin Smith Inc.
1109 First Avenue, Suite 500
Seattle, Washington 98101
Attention: Jeff Roush
Tenant: RealNetworks, Inc.
1111 Third Avenue, Suite 2900
Seattle, Washington 98101
Attention: Chief Financial Officer
With
copy to: RealNetworks, Inc.
1111 Third Avenue, Suite 2900
Seattle, Washington 98101
Attention: General Counsel
(k) USE: General office and related purposes and support functions,
including kitchen and satellite data transmission reception.
(l) INTENTIONALLY DELETED
(m) EXHIBITS:
Exhibit A: Legal description of real property on which
Building is located.
Exhibit A-1: Legal description of real property on which Garage
is located.
Exhibit B: Floor plans showing location of Initial Premises.
Exhibit C: Work letter describing Landlord's Work, the TI
Work, and the Tenant Requested Alternates.
Exhibit D: Operating Cost Exclusions.
Exhibit E: Janitorial Standards.
2. PREMISES
(a) Landlord does hereby lease the Premises to Tenant and Tenant hereby
leases the Premises from Landlord on the terms and conditions hereinafter
stated. The Premises are located in the Building. The Premises shall be jointly
measured by Landlord's architect and the "Architect" (as defined in Exhibit C)
after completion of Landlord's Work with respect to the Initial Premises, and
again after completion of Landlord's Work with respect to the Future Premises in
accordance with the Building Owner's and Managers Association International
definition of
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"rentable square feet" ("RSF") in effect as of the date of this Lease, and the
jointly agreed upon measurements shall be binding on both parties. If such
measurements reflect variations in Premises areas from the estimated areas of
the Initial Premises and Future Premises described in this Lease, then the
parties shall promptly execute an amendment to this Lease to correct such
discrepancies and to adjust the basic monthly rent and Tenant's percentage of
the Building accordingly.
(b) The Initial Premises shall consist of the northerly most 30,000 RSF
(approximately) on four of the five floors (namely, Ground, 1, 2 and 3) in the
north portion of the Building (but with the understanding that the top two
floors will be roughly 4,000 RSF smaller because of the existence of the
atrium), and the northerly most 35,000 RSF (approximately) on Floor 4, as shown
with shading on the floor plans attached hereto as Exhibit B. The Building
contains five full floors of approximately 60,000 RSF per floor, plus a partial
sixth floor on what was the roof of the south portion of the Building, which
partial floor contains approximately 33,000 RSF and is fully occupied by the Art
Institute of Seattle ("AIS"). AIS also occupies approximately 2,000 square feet
of lobby/reception space on the Elliott Avenue level of the Building (such
lobby/reception area shall hereinafter be referred to as the "AIS Elliott Level
Space").
(c) The phrase "Future Premises" is hereby defined to mean the balance
of the interior leaseable space on either Floor 1,2,3 or 4. Landlord shall
advise Tenant which one of those 4 Floors Landlord has chosen for the Future
Premises in a writing delivered to Tenant on or before July 1, 1999. If Landlord
designates Floor 2 or 3, the Future Premises will contain approximately 30,000
RSF. If Landlord designates Floor 1, the Future Premises will contain roughly
22,000 to 28,000 RSF, because the Future Premises may not include the AIS
Elliott Level Space and will not include a lobby on the Elliott Avenue level of
the Building to serve the upper floors on the south portion of the Building. If
Landlord designates Floor 4, the Future Premises will contain approximately
25,000 RSF. The Premises shall initially consist of just the Initial Premises,
but shall be expanded to include the Future Premises, with Landlord's Work
therein substantially completed, on the Future Premises Commencement Date (as
used herein, the Ground Floor shall mean the Alaskan Way level, Floor 1 shall
mean the Elliott Avenue level, Floor 2 shall be the first level above Elliott
Avenue, etc.).
As used in this Lease, the word "Premises" shall be deemed to include the
Initial Premises and, once it has been added thereto, the Future Premises.
Subject to the terms and limitations contained in paragraph 30(p), Landlord
reserves all air rights over the Building, the exterior and roof thereof, all
space under the bottom floor of the Premises and, following reasonable notice to
Tenant, the right to install, maintain, use, repair and replace pipes, ducts,
conduits and wires leading through the Premises in locations which will not (i)
interfere with Tenant's use of the Premises or Tenant's operations thereon, (ii)
increase the cost of the TI Work, (iii) increase Tenant's operating costs or
(iv) materially alter the aesthetic appearance of the Premises. Landlord also
reserves the right to alter and expand the Building, provided Tenant's
visibility from the Premises and quiet enjoyment of the Premises is not
materially affected thereby; to change the name thereof (except to the extent
such right is restricted in paragraph 29) and to alter, expand and rearrange the
common areas and facilities thereof, provided that Tenant's access into the
Premises is not materially and negatively affected thereby.
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3. LEASE TERM
(a) Base. This Commencement Date specified in paragraph 1(d) is an
estimate of the actual Commencement Date. The actual Commencement Date shall be
the earlier of (a) the date on which Tenant both occupies all or any portion of
the Initial Premises and is no longer obligated to pay rent (other than past due
rent) at 1111 Third Avenue in Seattle (Tenant will seek termination of such
rental obligation diligently and in good faith, but Tenant will not be required
to pay for a release from future rental obligations unless Landlord makes the
payment for Tenant) or (b) that day which is ninety (90) days after the date on
which Landlord delivers the Initial Premises to Tenant with the Landlord's Work,
as that phrase is defined in Exhibit C in substantially complete condition.
Landlord shall give Tenant at least six (6) months' prior written notice of its
anticipated delivery date for the Initial Premises in substantially complete
condition (hereinafter referred to as the "Specified Delivery Date"). The "FP
Commencement Date" shall be that date which is seventy five (75) days after the
date on which Landlord delivers the Future Premises to Tenant with the
Landlord's Work in substantially complete condition. Tenant hereby agrees that
it will in all events and at all times diligently and in good faith endeavor to
complete its tenant improvements as soon as is reasonably possible and that it
will occupy the portion of the Premises in question promptly after substantial
completion of such tenant improvement work. Landlord hereby agrees that it will
allow Tenant's tenant improvement contractors to begin the TI Work (as defined
in Exhibit C) prior to substantial completion of the Landlord's Work, provided
such does not unreasonably interfere with completion of the Landlord's Work, and
Tenant hereby agrees that it will direct its tenant improvement contractors to
avail themselves of such opportunity, provided such does not materially increase
the cost of completion of the TI Work. Landlord shall take all reasonable steps
to assure that the Specified Delivery Date is between October 1, 1998 and March
31, 1999, and Landlord shall take all reasonable steps to assure delivery of the
Future Premises with the Landlord's Work in substantially complete condition on
or before February 1, 2000. Delays in delivery of the Initial Premises or Future
Premises beyond the specified paragraph 1(d) Commencement Date or the target FP
Commencement Date, as the case may be, will result in the abatement of rent on
such portion until the later Commencement Date (or later FP Commencement Date),
but will not void the Lease, give the Tenant a right of cancellation or render
Landlord liable to Tenant for loss or damage. Notwithstanding the foregoing,
however, the failure of Landlord to deliver the Initial Premises in
substantially complete condition by that day which is one (1) month after the
Specified Delivery Date shall expose Landlord to liability for the actual
damages suffered by Tenant as a result of such delay, except to the extent that
the delay was of the force majeure type described in paragraph 30 (i) below, in
which case the actual damages suffered by Tenant shall be split equally between
Landlord and Tenant, on the understanding that in no event shall Landlord's
share of any such force majeure-caused actual damages of Tenant exceed
$1,000,000 (however, Landlord acknowledges that if another tenant occupying a
portion of the Initial Premises rightfully or wrongfully refuses to relinquish
its premises, such shall not be deemed to be a force majeure). This Lease shall
expire on the Expiration Date. Although the Lease Term does not commence until
the Commencement Date, all provisions hereof, other than the requirement to pay
rent and additional rent, shall apply during the period commencing on the date
Tenant or its agents or contractors are first permitted on the Initial Premises
or portion of the Future Premises in question.
(b) Additional Term. So long as Tenant is not then in default under
this Lease, Tenant shall have the option to extend the term of this Lease for
one (1) additional term of either three (3) years or ten (10) years, at Tenant's
choice (the "Additional Term"). To exercise its
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option to extend this Lease for the Additional Term, Tenant must deliver to
Landlord a written notice (an "Option Notice") exercising its renewal option at
least eighteen (18) months (but not more than twenty four (24) months) prior to
the Expiration Date, which Option Notice must specify Tenant's irrevocable
election as to whether the Additional Term will be 3 years or 10 years. All of
the terms and conditions of this Lease shall apply during the Additional Term
except (i) the base annual rent shall be an amount mutually agreed to by
Landlord and Tenant or determined by arbitration as set forth below; (ii) unless
otherwise agreed by Landlord in writing, there shall be no further renewal
options after the commencement of the Additional Term; and (iii) there shall be
no Landlord-provided tenant improvements, cash allowances, lease assumptions or
other Landlord concessions during the Additional Term. When the rental rate for
the Additional Term is determined, whether by agreement of the parties or
pursuant to arbitration as provided below, Landlord and Tenant shall execute an
amendment to this Lease setting forth the new base rent for the Premises, the
extended term and such other terms, if any, as may be applicable. If at the time
Tenant delivers the Option Notice to Landlord, or at any time between such date
and the commencement date of the Additional Term, Tenant defaults under this
Lease and fails to cure its default within the applicable cure period, if any,
Landlord may declare the Option Notice null and void by written notice to
Tenant. The base annual rent for the Additional Term shall be the then "Fair
Market Rent" (defined below) for the Premises. The term "Fair Market Rent" means
the rate per rentable square foot per year (including increases therein, if any,
over the Additional Term) that a willing, non-equity tenant would pay in an
arms-length transaction for comparable space (including the Premises and/or
other comparable space in the Building) in a comparable building located between
Royal Brougham Avenue on the south and north/northeast 45th Street on the north
in Seattle, Washington, Puget Sound on the West and Lake Washington on the East
(the "Agreed Area") for leases having a 3 or 10 year term, as the case may be.
The determination of whether a particular building or space or rental rate is
"comparable" or not shall be made after taking into consideration all pertinent
factors, including, but not limited to, the ability to use the roof for
satellite communications equipment, the location of the building, views from the
building (if any), the floor plates in the building, the amount and cost of
parking available in connection with the building, the condition and quality of
the mechanical and electrical systems in the building, the perceived uniqueness
or "charm" attributed to the building, (if any), the term of lease, the size of
the space in question, the age and condition of the building and tenant
improvements in the space in question in the building, the presence or absence
of improvements being made by the landlord, the presence or absence of any
allowances or incentives being paid or provided to the tenant by the landlord
(although, the dollar value of any moving allowances or commissions being paid
by the landlord shall be reduced by one half before being taken into
consideration), the operating costs of the building, the level and nature of
services being provided by the landlord (with and without charge), access to
public transportation and amenities. If it is determined that there are not an
adequate number of comparable buildings or comparable spaces in order to have an
appropriately broad enough spectrum to determine Fair Market Rent, buildings and
spaces that are not comparable may nonetheless be included, provided appropriate
adjustments are made in the Fair Market Rent calculation to take into
consideration the attributes that are different between the building in question
and the Building or the space in question and the Premises. Notwithstanding any
statement to the contrary contained anywhere else in the Lease, the Fair Market
Rent is to be determined prospectively, as of the commencement date of the
Additional Term, taking into account economic conditions and trends. It is not
to be determined as of the time of negotiation
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or arbitration. In other words, the parties or the arbitrator shall endeavor to
analyze the status of the market as of the projected commencement date of the
Additional Term. Landlord and Tenant agree Fair Market Rent, and thus the base
annual rent for the Additional Term, shall be determined as follows:
(i) Promptly after Landlord receives the Option Notice, the
parties (or their designated representatives) shall meet and attempt to agree on
Fair Market Rent for the Additional Term. If the parties have not agreed on the
Fair Market Rent for the Additional Term within one hundred twenty (120) days
after Landlord receives the Option Notice, then unless otherwise agreed in
writing by the parties, the matter shall be submitted to arbitration in
accordance with the terms of the following paragraphs. The last day of such one
hundred twenty (120) day period (as the same may be extended by the written
agreement of the parties) is referred to in this Lease as the "Arbitration
Commencement Date".
(ii) If the parties are unable to reach agreement on Fair
Market Rent during the period specified in paragraph 3(b)(i), then within
fifteen (15) days thereafter either party may advise the other in writing of the
name and address of its arbitrator. The arbitrator shall be a real estate
appraiser (MAI or a member of a successor organization, if the Institute no
longer exists) with at least ten (10) years of experience with commercial office
building rental rates in the Agreed Area. Within ten (10) business days after
receipt of such notice from the initiating party (the "Instigator") designating
its arbitrator, the other party (the "Recipient") shall give notice to
Instigator, specifying the name and address of the person designated by
Recipient to act as arbitrator on its behalf who shall be similarly qualified.
If Recipient fails to notify Instigator of the appointment of its arbitrator,
within or by the time above specified, then the arbitrator appointed by
Instigator shall be the arbitrator to determine the issue. The duty of the
arbitrator(s) shall be to determined the Fair Market Rent. If two (2)
arbitrators are so chosen, the arbitrators so chosen shall meet within ten (10)
business days after the second arbitrator is appointed and, if within ten (10)
business days after such first meeting the two arbitrators shall be unable to
agree promptly upon a determination of Fair Market Rent, they, themselves, shall
appoint a third arbitrator, who shall be a competent and impartial person with
qualifications similar to those required of the first two arbitrators. If they
are unable to agree upon such appointment within five (5) business days after
expiration of said ten (10) day period, the third arbitrator shall be selected
by the parties themselves, if they can agree thereon, within a further period of
ten (10) business days. If the parties do not so agree, then either party, on
behalf of both, may request appointment of such a qualified person by the then
presiding judge of King County Superior Court acting in his or her private
non-judicial capacity, and the other party shall not raise any question as to
such Judge's full power and jurisdiction to entertain the application for and
make the appointment, and the parties agree to indemnify and hold the presiding
judge fully and completely harmless from and against all claims arising out of
the presiding judge's appointment of an arbitrator. The three (3) arbitrators
shall decide the dispute, if it has not been previously resolved, by following
the procedure set forth in this Section. The arbitrators selected by each of the
parties shall state in writing his or her determination of the Fair Market Rent
supported by the reasons therefor with counterpart copies to each party. The
arbitrators shall arrange for a simultaneous exchange of such proposed
resolutions. The role of the third arbitrator shall be to select which of the
two proposed resolutions most closely approximates his or her determination of
Fair Market Rent. The third arbitrator shall have no right to propose a middle
ground or any modification of either of the two proposed resolutions. The
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resolution he or she chooses as most closely approximating his or her
determination shall constitute the decision of the arbitrators and be final and
binding upon the parties.
(A) In the event of a failure, refusal or inability
of any arbitrator to act, his or her successor shall be appointed by him, but in
the case of the third arbitrator, his or her successor shall be appointed in the
same manner as provided for appointment of the third arbitrator. The arbitrators
shall attempt to decide the issue within ten (10) business days after the
appointment of the third arbitrator. Any decision in which the arbitrator
appointed by Landlord and the arbitrator appointed by Tenant concur shall be
binding and conclusive upon the parties. Each party shall pay the fee and
expenses of its respective arbitrator and both shall share equally the fee and
expenses of the third arbitrator, if any, and the attorneys' fees and expenses
of counsel for the respective parties and of witnesses shall be paid by the
respective party engaging such counsel or calling such witnesses.
(B) The arbitrators shall have the right to consult
experts and competent authorities with factual information or evidence
pertaining to a determination of Fair Market Rent, but any such consultation
shall be made in the presence of both parties with full right on their part to
cross-examine. The arbitrators shall render their decision and award in writing
with counterpart copies to each party. The arbitrators shall have no power to
modify the provisions of this Lease.
(c) Termination Option. Tenant shall have the one-time right to
terminate this Lease on the seventh (7th) anniversary of the Commencement Date
(hereinafter referred to as the "Early Termination Date"), provided that (1)
Tenant gives Landlord a written notice on or before that day which is sixty six
(66) months after the Commencement Date (i.e., on or before that date which is
18 months prior to the Early Termination Date) in which Tenant irrevocably and
unconditionally elects to terminate on the Early Termination Date, and (2)
Tenant delivers to Landlord together with such early termination notice the sum
of five million dollars ($5,000,000), which $5,000,000 shall hereinafter be
referred to as the "Termination Payment". Landlord and Tenant agree that the
Termination Payment represents reasonable compensation to Landlord, all things
considered. The parties further agree that the Termination Payment is not a
penalty and is akin to liquidated damages. In arriving at these conclusions, the
parties have considered all pertinent factors and criteria, including, but not
limited to, the following: (i) the uncertainty as to whether the leasing market
as of the Early Termination Date will be weak, thereby exposing Landlord to
lengthy periods of vacancy and potentially lower rents; (ii) the probability
that Landlord will have to pay for new tenant improvements for the replacement
tenant or tenants; (iii) the possibility that Landlord may have to pay leasing
commissions and/or moving expenses for the replacement tenant or tenants; (iv)
the impact of the early termination option on Landlord's ability to secure
favorable loan terms on both its construction and permanent loan; (v) the risk
that Landlord will be unable to secure a fixed rate of interest on its permanent
loan for a 10 or 12 year term, thereby exposing Landlord to the possibility of
substantially higher interest rates in 5 or 7 years; (vi) the impact of the
early termination option on the financial terms Landlord will be able to
negotiate with its future financial partners/members; etc. In the final
analysis, after acknowledging it would be impractical and extremely difficult to
calculate the actual financial impact to Landlord of the early termination
option and/or its exercise by Tenant, and after further acknowledging that such
actual financial impact could be much more or less than the Termination Payment,
the parties have concluded that the Termination Payment reasonably estimates
those financial impacts, using
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all information available as of the date of the execution of this Lease.
Moreover, Tenant hereby waives any right, now or hereafter existing, which would
allow Tenant to claim a refund of all or any portion of the Termination Payment
on the grounds that such constitutes a penalty or otherwise.
4. RENT
(a) Tenant shall pay Landlord without notice or demand the basic
monthly rent specified in paragraph 1(f) hereof, as adjusted from time to time
in accordance with the terms of paragraph 4(b) hereof, and Additional Rent due
hereunder, without offset or deduction, except as expressly provided herein, in
lawful money of the United States on or before the first day of each month at
Landlord's address set forth in paragraph 1(j) hereof or to such other party or
at such other place as Landlord shall from time to time direct. Rent for partial
months shall be prorated.
(b) The basic monthly rent specified in Paragraph 1 (f) is based on an
annual rental rate of $13.00 per RSF per year and an Initial Premises area of
148,000 RSF. If the actual size of the Initial Premises varies slightly (a
material variation is not permitted), such basic monthly rent shall be adjusted
accordingly. Commencing on the first anniversary of the Commencement Date and
continuing on each Commencement Date anniversary thereafter throughout the base
term of this Lease, the base rent per RSF per year applicable to all RSF then in
the Premises shall increase by $.75 over the amount in effect the prior year.
Thus, the base rent schedule is as follows:
Year Base Rent per RSF
1 $13.00
2 $13.75
3 $14.50
4 $15.25
5 $16.00
6 $16.75
7 $17.50
8 $18.25
9 $19.00
10 $19.75
11 $20.50
12 $21.25
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(c) In addition to basic monthly rent, all other sums to be paid or
reimbursed by Tenant to Landlord, whether or not so designated, shall be
"additional rent" for the purposes of this Lease. If Tenant defaults in the
performance of any of its obligations hereunder, Landlord may, after notice and
the expiration of the applicable cure period, but shall not be obligated to,
perform such obligations, and the cost thereof to Landlord shall also be
additional rent. Unless otherwise specifically provided herein, Tenant shall pay
Landlord all additional rent within ten (10) business days after Tenant's
receipt of an invoice therefor.
5. TENANT'S CONTRIBUTION
(a) Before the commencement of each calendar year during the Lease Term
Landlord will notify Tenant in writing of Landlord's estimate of the estimated
Operating Costs and Real Property Taxes for the Building for the coming year and
the amount thereof allocable to Tenant ("Tenant's Share"), based on Tenant's
Percentage of the Building, as defined in paragraph 1(c). Tenant shall pay
one-twelfth (1/12th) of such Tenant's Share in advance on the first day of each
month of such year. At the end of each year, or at the expiration or sooner
termination of the Lease term, Landlord will compute Tenant's Share for such
year, based on actual costs and provide Tenant with an accounting thereof within
one hundred twenty (120) days after the end of such period. If Tenant's Share
for such year is greater than the amounts already paid by Tenant as contribution
for such year, Tenant shall pay Landlord the deficiency within ten (10) business
days of its receipt of the accounting. If the amounts paid by Tenant as
contribution for such year exceeds Tenant's Share, then Landlord shall credit
such excess to the payment of rent and additional rent which may thereafter
become due; provided, however, upon the expiration or sooner termination of the
Lease term, Landlord shall refund such excess to Tenant. If at any time, but not
more frequently than once each year, Landlord obtains additional information
regarding expenses, Landlord may at its election adjust the amount of the
monthly contribution installments due during the balance of the year to reflect
such additional information, by giving Tenant written notice thereof, which
notice shall also state the amount of the deficiency, if any, in the prior
monthly payments for the calendar year. Tenant shall pay any such deficiency
within ten (10) business days of its receipt of the notice and shall make the
adjusted monthly payments for the remainder of the calendar year.
(b) For purposes of this paragraph 5, the following definitions shall
apply:
(i) "Operating Costs" shall mean all costs and expenses paid
or incurred by Landlord for maintaining, operating, repairing, replacing, owning
and administering the Building (including common areas and facilities), and the
personal property used in conjunction therewith, including, without limitation,
the costs of refuse collection, water, sewer, electricity, heat, air
conditioning, fuel, light, fire protection, and other utilities; services;
supplies; janitorial and cleaning services; window washing; snow, garbage and
refuse removal; security services and systems; landscape maintenance; services
of independent contractors; compensation (including employment taxes and fringe
benefits) of all persons who perform duties in connection with the operation,
maintenance, repair, replacement and administration of the Building, its
equipment, and common areas and facilities; all insurance premiums (including
premiums for rental interruption insurance) and deductibles (provided that the
latter are commercially reasonable); licenses, permits and inspection fees;
subsidies and other payments required by public bodies, including those for
traffic signals and controls and for parking and fire protection; a property
management fee (the parties
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hereby agree that, notwithstanding any other statement contained anywhere else
in this Lease or in any of the Exhibits to this Lease, the property management
fee for which Tenant shall be 100% liable shall be three and one quarter percent
(3 1/4%) of all base rent, Operating Costs and Real Property Taxes due from
Tenant each year (payable in equal monthly installments as described above in
paragraph 5(a)), and such 3 1/4% figure shall be fixed as to Tenant during the
entire term of this Lease, including the Additional Term if the option for such
is exercised, regardless of whether such is deemed to be above or below market;
such 3 1/4% management fee shall not be charged against utility payments billed
directly to and paid directly by Tenant on Tenant's separately metered utilities
or against any other expense which is contracted for directly by Tenant, billed
directly to Tenant and paid directly by Tenant); reasonable legal and accounting
expenses and all other expenses or charges of every kind and nature whether or
not herein above described which, in accordance with generally accepted
accounting and management practices, would normally be considered an expense of
maintaining, operating, repairing, replacing or administering the Building,
after excluding those costs identified in Exhibit D and: (a) costs of any
special services rendered to individual tenants (including Tenant) for which a
special charge is made; (b) Real Property Taxes; (c) depreciation or
amortization of costs required to be capitalized in accordance with generally
accepted accounting practices (except Operating Costs shall include amortization
of capital improvements made subsequent to the initial redevelopment of the
Building which are designed with a reasonable probability of improving the
operating efficiency of the Building; provided that such amortization costs
shall not exceed expected savings in operating costs resulting from such capital
improvements and except as outlined in paragraph 13(c)), and (d) costs incurred
in repairing or replacing portions of the common area lobbies, hallways and
bathrooms that are located outside of the Premises and are inaccessible from the
Premises, on the understanding that routine janitorial expenses, light bulb
replacement expenses and other expenses pertaining to such areas that are
incurred on roughly an equivalent basis both inside and outside of the Premises
shall be included in Operating Costs. Landlord and Tenant acknowledge and agree
that it is their mutual desire and intent that, to the degree it is reasonably
practical and economically feasible to do so, the Premises should operate as an
independent cost center. For example, Landlord and Tenant desire that as many of
the utilities consumed in the Premises as possible be separately metered and
paid for in full by Tenant unless the cost of separate metering is prohibitive
(the parties will split equally the cost of any non-prohibitive separate
metering, except the expenses required to segregate the HVAC system serving the
Premises from the HVAC system serving the balance of the Building shall be paid
by Landlord), and to the extent this desire is realized, Tenant will not be
obligated to pay any portion of the separately metered utility or utilities in
question consumed in other leased premises, but Tenant shall remain liable for
its prorata share of such utilities consumed in common areas that are directly
accessible from the Premises and serve the Premises; and Landlord and Tenant
desire that the janitorial company operating in the Building bill for its work
in the Premises separate from its work in other leased portions of the Building,
in which case Tenant shall pay all of the bill for the janitorial services in
the Premises and, notwithstanding language to the contrary in subparagraph (d)
above, none of the bill for janitorial services in other leased portions of the
Building (but Tenant shall continue to be liable for its prorata share of the
expense of janitorial services performed in common areas that are directly
accessible from the Premises and serve the Premises (e.g., the skybridge, the
lobby adjacent to the skybridge, the first floor lobby in the south portion of
the building, etc). Other examples may include elevator maintenance (again, if
Tenant paid all the costs incurred in maintaining the elevators located within
the Premises, it would nonetheless continue to be liable for an equitable
portion of the expenses incurred in maintaining elevators located outside
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of the Premises, to the extent of Tenant's use of such elevators relative to
their use by the other tenants and occupants of the Building) and security costs
(e.g., if Tenant wanted its own security person in the Premises, it would pay
for that person, it would pay little or none (depending on what was equitable
under the circumstances) of the expenses incurred in maintaining security in the
balance of the Building during the hours that Tenant has its own security person
in its Premises and it would pay an equitable portion of the security expenses
incurred by the Building as a whole during the hours that Tenant does not have
its own security person in its Premises).
(ii) "Real Property Taxes" shall mean all taxes on the
Building (including all tenant improvements and common areas and facilities) and
on personal property used in conjunction therewith; surcharges and all local
improvement and other assessments (including surface water and storm water
charges) levied with respect to the Building and all other property of Landlord
used in connection with the operation of the Building; and any taxes levied or
assessed in addition to or in lieu of, in whole or in part, such real or
personal property taxes, or any other tax upon leasing of the Building or rents
collected therefrom, other than any federal or state income or franchise tax.
(c) Landlord covenants to maintain full and complete books and records
on a consistent basis with respect to Operating Costs and Real Property Taxes.
Tenant may, within twenty four (24) months after its receipt of Landlord's
annual accounting of such expenditures, have Landlord's records of such
expenditures associated with that calendar year, including underlying contracts,
reviewed by Tenant or its agent (provided such agent is being compensated on an
hourly basis, not a contingent fee basis), but shall not audit Landlord's
records of Common Area Maintenance expenditures for any Lease year more than
once. If Tenant in good faith contends the annual statement indicates
noncompliance with the provisions of this paragraph 5, Tenant shall notify
Landlord in writing within three (3) months after the two (2) year period
described above, informing Landlord of the amount of the overpayment and
providing Landlord with reasonable supporting documentation, and Landlord shall
pay such amount within fifteen (15) business days thereafter with interest
thereon at the rate specified in paragraph 6 below, unless Landlord in good
faith contests such amount. The cost of Tenant's review shall be borne by Tenant
unless Tenant's review discloses an error of three and one half percent (3 1/2%)
or more, in which case the reasonable expenses of the review, in addition to the
amount of any overpayment, shall be paid by Landlord to Tenant within ten (10)
days after determination of such sum
6. LATE CHARGE; INTEREST Time is of the essence of this Lease. If Tenant
fails to pay any amount due hereunder within ten (10) days of the due date, a
late charge equal to two percent (2%) of the unpaid amount shall be assessed and
be immediately due and payable. In addition, interest shall accrue at a rate
equal to the higher of (i) twelve percent (12%) or (ii) three percent (3%) in
excess of the publicly quoted prime lending rate of Bank of America NT&SA, as it
stood on the date of the default, from the date due until paid on any minimum or
additional rent which is not paid when due.
7. DEPOSIT Tenant shall deposit with Landlord the prepaid rental deposit
specified in paragraph 1(h) and, both as partial consideration for the execution
of this Lease and to ensure Tenant's faithful performance of all of the terms,
covenants and conditions of this Lease to be kept and performed by Tenant during
the term hereof, Tenant shall on or before the closing of Landlord's purchase of
the Building, either (a) deposit with Transnation Title Insurance Company
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("Escrow Agent") the $6,000,000 deposit specified in paragraph 1(h) (the
"Escrowed Deposit") or (b) maintain for Landlord's benefit the below-described
$6,000,000 standby letter of credit . The $160,333 rental deposit shall
constitute prepaid rent and shall be credited against the first rent due from
Tenant under the Lease, until exhausted. The determination as to whether the
$6,000,000 will be in the form of the Escrowed Deposit or the letter of credit
shall be Landlord's and shall be made at least two (2) weeks prior to the date
on which Landlord closes its purchase of the Building. If Landlord selects the
Escrowed Deposit, such must provide security to Landlord that is substantially
equivalent to that provided for by way of a letter of credit (e.g., the ability
to draw on demand with the below-outlined affidavit and without Tenant's
consent; a set of parameters that make the Escrowed Deposit as unreachable by
parties other than Landlord in the event of bankruptcy of Tenant as would be the
case with a letter of credit; etc) and such must provide that interest earned on
the Escrowed Deposit shall be for the account of Tenant and may be disbursed to
Tenant no more frequently than monthly. Notwithstanding the foregoing, if the
Escrowed Deposit provides security to Landlord that is substantially equivalent
to that provided for by way of a letter of credit, with the exception that it
exposes Landlord to a greater risk in the event of a bankruptcy on the part of
Tenant, Landlord will nonetheless accept the Escrowed Deposit on the conditions
that (1) Tenant's cash, cash equivalents and short term investments (including
the Escrowed Deposit itself, but not including dollars in the pledge account
described below in paragraph 11(b)) collectively exceed twenty five million
dollars ($25,000,000), and if such assets fall below such threshold, Tenant
shall within ten (10) days of demand provide and maintain for Landlord's benefit
the below-described $6,000,000 standby letter of credit (the Escrowed Deposit
shall be released to Tenant in return for receipt of such letter of credit) and
(2) Tenant shall provide to Landlord a copy of all financial statements and
related information required to be provided to the Securities Exchange
Commission at the same time such information is provided to the SEC and Tenant
shall provide to Landlord a copy of its quarterly earnings announcement every
quarter at the same time such is publicly released (if the amount of Tenant's
cash, cash equivalents and short term investments is not clearly discernable
from such quarterly earnings announcement, Tenant shall supplement Landlord's
copy of the announcement with a statement of the value of such assets as of the
close of the quarter in question). Assuming such conditions are satisfied and
Landlord therefore elects the Escrowed Deposit approach, if Tenant defaults with
respect to any provision of this Lease, including, but not limited to the
provisions relating to the payment of rent, and fails to cure such default
within the applicable cure period Landlord shall draw against the Escrow Deposit
for the payment of any rent or any other sum in default, or for the payment of
any amount which Landlord may spend or become obligated to spend by reason of
Tenant's default. If any portion of the Escrow Deposit is so used or applied
Tenant shall, within ten (10) days after written demand therefor, deposit with
Escrow Agent an amount sufficient to restore the Escrow Deposit to its original
amount and Tenant's failure to do so shall be a default under this Lease. In the
event of termination of Landlord's interest in this Lease, Landlord shall
transfer Landlord's interest in the Escrow Deposit to Landlord's successor in
interest. If, however, Landlord elects the letter of credit approach, Tenant
shall maintain an irrevocable, unconditional $6,000,000 standby letter of credit
issued by a national bank located in Seattle, Washington acceptable to Landlord
in its reasonable discretion and made payable upon sight. The letter of credit
shall be drawable in the same manner, and to the same extent as draws upon the
Escrow Deposit, but by delivery to the issuing bank of an affidavit by Landlord
that a default has occurred under the Lease and has not been cured within the
applicable cure period or that the letter of credit is due to expire within the
ensuing thirty (30) day period and has not been replaced (when the letter of
credit is due to expire within the ensuing 30 day period and
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has not been replaced, the amount necessary to cure the default shall be the
full $6,000,000, which $6,000,000 shall thereafter be used and held as the
Escrowed Deposit, subject to the foregoing Escrowed Deposit terms). Sums drawn
under the letter of credit shall be held and dispersed in the manner described
above in this paragraph 7. The Escrow Deposit or letter of credit shall be
maintained in effect during the entire term of this Lease unless Tenant achieves
an S & P Corporate Credit Rating equivalent to what would on the execution date
of this Lease be BBB- or better. If Tenant does achieve such a rating, it shall
so advise Landlord in writing and Landlord shall release Tenant from the
Escrowed Deposit/letter of credit requirement until and unless Tenant falls
below such rating, at which time Tenant shall immediately either reestablish the
Escrowed Deposit or post the above-described letter of credit until the BBB-
rating is once again achieved, if ever. Finally, Landlord hereby agrees to pay
one half (1/2) of the cost incurred by Tenant in purchasing the S & P rating
(one time only) and one half (1/2) of the annual payment to S & P to maintain a
rating once the BBB- rating has been achieved, until such rating is lost (e.g.,
Tenant falls below BBB-), if ever.
8. USES; PROHIBITIONS Tenant shall use the Premises only for the purposes
described in paragraph 1(k). Tenant shall not knowingly commit any act that will
increase the then existing insurance costs of the Building without Landlord's
consent, it being understood that the paragraph 1(k) uses are permitted uses
which will not form the basis for charging Tenant for insurance costs under this
paragraph. Tenant shall promptly pay upon demand the amount of such increase in
insurance costs caused by Tenant's unauthorized use. Tenant shall not commit or
knowingly allow to be committed any waste upon the Premises, or any public
nuisance or other act which materially disturbs the quiet enjoyment of any other
tenant in the Building. If any of Tenant's office machines or equipment disturbs
the quiet enjoyment of any other tenant in the Building, then Tenant shall
provide adequate insulation or take such other reasonable action as Landlord
directs to eliminate the disturbance.
9. COMPLIANCE WITH LAW; HAZARDOUS MATERIALS
(a) Tenant shall not use the Premises, or knowingly permit anything to
be done in or about the Premises, which will in any way conflict with any law,
statute, ordinance or governmental rule or regulation now in force or which may
hereafter be enacted or promulgated. Tenant shall, at its sole cost and expense,
promptly comply with all laws, statutes, ordinances and government rules,
regulations or requirements now in force or which may hereafter be in force and
with the requirements of any board of fire underwriters or other similar bodies
now or hereafter constituted relating to or affecting the condition, use or
occupancy of the Premises, except those relating to the foundation, structure,
structural elements, exterior walls, windows and doors, heating, ventilating or
air conditioning system, life safety systems, elevators, escalators and all
other elements of the Building which formed part of Landlord's Work, all of
which excepted compliance work shall be undertaken by Landlord but paid for by
Tenant (compliance items that are unique to the Premise, such as escalators and
Tenant's front door, shall be paid for in full by Tenant, whereas compliance
items that have Building-wide application will be passed through to Tenant and
all other tenants in the Building on a prorata or other equitable basis).
Notwithstanding the foregoing, however, to the extent that the heating,
ventilating or air conditioning system, life safety systems, elevators, or any
other element of the Building which formed part of Landlord's Work was not in
compliance with applicable laws, statutes, ordinances, rules, regulations or
requirements as of the substantial completion of the Landlord's Work in
question, the Landlord shall pay the cost to bring such items into compliance
without reimbursement by Tenant.
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(b) "Hazardous Material" shall mean any matter (whether gaseous, liquid
or solid) which is or may be harmful to persons or property, including but not
limited to materials now or hereafter designated as a hazardous or toxic waste
or substance under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 USC 9601, et seq., or as a Hazardous Substance,
Hazardous Household Substance, Moderate Risk Waste or Hazardous Waste under the
Hazardous Waste Management Act, RCW Chapter 70.105, or as a hazardous substance
under the Model Toxics Control Act RCW Chapter 70.105D, all as now or hereafter
amended, or which may now or hereafter be regulated under any other federal,
state, or local law, statute, ordinance or regulation pertaining to health,
industrial hygiene or the environment, including, without limitation, (i) any
asbestos and/or asbestos containing materials (collectively "ACMs") regardless
of whether such ACMs are in a friable or non-friable state, or (ii) any matter
designated as a hazardous substance pursuant to Section 311 of the Federal Water
Pollution Control Act (33 USC 1317), or (iii) any matter defined as a hazardous
waste pursuant to Section 1004 of the Federal Resource Conservation and Recovery
Act, (42 USC 6901 et seq) pertaining to health or the environment. "Hazardous
Material" shall not include ordinary cleaning and maintenance products which are
used with due care and in accordance with applicable law and the instructions of
the manufacturer of such products in the reasonable and prudent conduct of
Tenant's business on the Premises.
(c) Tenant shall not store, use, sell, release, generate or dispose of
any Hazardous Materials in, on or about the Premises, common areas or any other
part of the Building, without the prior written consent of Landlord, except
those normally used in offices (e.g., photocopy machine toner, etc.), when used,
stored and disposed of in accordance with the requirements of applicable law.
With respect to any Hazardous Materials stored, used, generated or disposed of
from the Premises, Tenant shall promptly, timely and completely comply with all
governmental requirements for recording and recordkeeping; and comply with all
governmental rules, regulations and requirements regarding the use, sale,
transportation, generation, treatment and disposal of such Hazardous Materials.
Prior to the expiration and surrender of the Premises by Tenant, Tenant shall
remove from the Premises any and all Hazardous Materials which Tenant, its
employees, agents, contractors and/or sublessees have brought onto the Premises,
or built into or otherwise utilized, stored or disposed of in the Premises,
including, without limitation, leasehold improvements, wall, flooring and
ceiling materials, to the extent the Hazardous Materials are in quantities in
excess of limits permitted by applicable law. Tenant shall be solely responsible
for and shall defend (with counsel reasonably acceptable to Landlord), indemnify
and hold Landlord, its agents, affiliates and employees harmless from and
against all claims, costs, damages, judgments, penalties, fines, losses,
liabilities and expenses, including attorneys' fees and costs, arising out of or
in connection with Tenant's breach of its obligations contained in this
paragraph 9. Tenant shall be solely responsible for and shall defend (with
counsel reasonably acceptable to Landlord), indemnify and hold Landlord, its
agents, affiliates and employees harmless from and against any and all claims,
costs, damages, lawsuits, penalties, liens, losses and/or liabilities, including
attorneys' fees and costs, arising out of or in connection with removal, cleanup
and restoration work and materials necessary to return the Building and any
other property of whatever nature to their condition existing prior to the
appearance of such Tenant caused Hazardous Material on or about the Building;
provided that Landlord's written approval of such actions and that of any Lender
shall first be obtained, and shall not be unreasonably withheld so long as the
actions do not have any material adverse effect on the Building. Notwithstanding
anything else set forth herein,
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Tenant's obligations under this paragraph 9 shall survive the expiration or
earlier termination of this Lease.
(d) Landlord shall have the right in its sole discretion to conduct an
environmental audit utilizing a contractor of Landlord's choice at the end of
the Lease term, upon the earlier termination of this Lease, upon Tenant's
default hereunder or if Landlord reasonably believes that Hazardous Materials
are being stored, used, sold, generated, released or disposed of from the
Premises in violation of the terms of this paragraph 9. The audit shall consist
of such examinations, tests, inspections, samples and reviews as Landlord or its
consultants shall reasonably determine to be advisable or necessary. Tenant
shall be responsible for the cost of the audit and any remedial or removal work
if such audit discloses the existence, storage, disposal or other presence of
Hazardous Materials in violation of the terms of this paragraph 9 which occurred
during the Lease term and was attributable to Tenant, its employees, agents,
contractors or sublessee, but only to the extent so attributable. Failure of
Landlord to conduct an environmental audit or to detect conditions attributable
to Tenant, its employees, agents, contractors or sublessees, whether such audit
is conducted or not, shall not operate as a release of Tenant or its Guarantor,
if any, of its liability as stated in this Lease or by operation of Law.
Tenant's obligations herein shall survive the expiration of this Lease.
(e) Landlord warrants to Tenant that as of the date of this Lease, to
the best Landlord's knowledge, and except as disclosed in the ATC/Diagnostic
Environmental Inc. report dated March 30, 1993 and revised on August 11, 1993 or
in the Hart Crowser report dated December 10, 1997, Hazardous Materials are not
present in, on or under the Building, and have not been released therefrom, in
violation of applicable law. Landlord shall be solely responsible for and shall
defend (with counsel reasonably acceptable to Tenant), indemnify and hold
Tenant, its agents, affiliates and employees harmless from and against all
claims, costs, damages, judgments, penalties, fines, losses, liabilities and
expenses, including attorneys' fees and costs, arising out of or in connection
with Landlord's breach of the foregoing warranty or to the presence of Hazardous
Materials attributable to the acts or omissions of Landlord or its employees,
agents or contractors. Landlord shall be solely responsible for and shall defend
(with counsel reasonably acceptable to Tenant), indemnify and hold Tenant, its
agents, affiliates and employees harmless from and against any and all claims,
costs, damages, lawsuits, penalties, liens, losses and/or liabilities, including
attorneys' fees and costs, arising out of or in connection with removal, cleanup
and restoration work and materials necessary as a result of the existence of
Hazardous Materials in, on or under the Building or the Premises as of the
Commencement Date or necessary to return the Building and Premises and any other
property of whatever nature to their condition existing prior to the appearance
of any Landlord caused Hazardous Material on or about the Building; provided
that Tenant's written approval of such actions is first obtained, which approval
shall not be withheld so long as the actions do not have any material adverse
effect on Tenant or its use or enjoyment of the Premises and provided further
that Landlord shall not be required to take actions not required by applicable
law and Tenant shall not file complaints or otherwise cause the instigation of a
governmental inquiry or order unless Tenant or its employees are facing actual
(as opposed to theoretical) legal or financial exposure or are physically
suffering as a result of the existence of the Hazardous Material in question.
Notwithstanding anything else set forth herein, Landlord's obligations under
this paragraph 9 shall survive the expiration or earlier termination of this
Lease.
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10. UTILITIES; SERVICES; TAXES AND OTHER CHARGES.
(a) Tenant shall be solely responsible for and shall promptly pay all
charges for telephone and for all other utilities which are separately metered
and supplied to the Premises. Tenant agrees to keep the temperature of the
Premises at such level as may be reasonably required by Landlord to protect the
Building and prevent the dissipation of heat or air conditioning in the areas
adjacent to the Premises
(b) Throughout the Lease term Landlord shall cause the Garage, the
Skybridge (so long as the applicable governmental authorities have not required
the removal or closing of the Skybridge) and those public and common areas of
the Building that are accessible directly from the Premises, such as lobbies,
elevators, stairs, corridors and restrooms, to be maintained in good order,
repair and condition, except for damage occasioned by any act or omission of
Tenant or Tenant's officers, contractors, agents, invitees, licensees or
employees, the repair of which damage, subject to the terms of paragraph 17,
shall be paid for by Tenant. Landlord shall furnish to the Premises in
accordance with Exhibit C electricity for lighting and operation of 110 volt
computers and office equipment, water, heat, air conditioning and elevator
service. In addition, Landlord shall furnish the Premises with janitorial
service in accordance with the standards attached as Exhibit E. Water and
electricity for lighting and computer and office equipment usage and elevator
shall be available twenty four (24) hours per day, seven (7) days per week, but
if Landlord determines in its reasonable discretion that Tenant is using a
disproportionate amount of such utilities, relative to the other tenants in the
Building, Landlord may direct that Tenant install separate meters for its
electricity and water usage at Tenant's expense, in which case Tenant shall pay
all of its own electricity and water usage charges, none of the charges
allocable to other leased or leasable space and its proportionate share of the
common area water and electricity charges. Landlord covenants that it will
operate, manage and maintain the Building and Garage in good condition and
repair and in a clean, orderly and professional manner consistent with that of
comparable buildings in the Agreed Area.
(c) If Tenant requires janitorial services in excess of what is
provided for in Exhibit E, Tenant shall promptly pay Landlord the additional
costs and expenses incurred by Landlord in providing such. If Tenant wishes to
consume more than three and one half (3 1/2) watts per RSF in the Premises as a
whole it shall first request Landlord's written permission to do so. Landlord
may refuse to grant such permission unless Tenant agrees to pay the costs
incurred by Landlord for installing necessary supplementary air conditioning
capacity or electrical systems, if any. In addition, Tenant shall pay Landlord
in advance on the first day of each month during the Lease term amounts
reasonably estimated by Landlord to cover the cost of furnishing electricity for
the operation of such Tenant-installed fixtures or equipment (unless the
electricity being furnished to the Premises is already separately metered); the
cost of operating and maintaining the supplementary systems; and, if Landlord
has elected to install such and if such has not already been installed, the cost
of installation and operation of any monitoring/metering systems to measure such
additional usage.
(d) Except as provided in paragraph 15(b), Landlord shall not be liable
for any loss, injury or damage to any person or property caused by or resulting
from any variation, interruption, or failure of such services due to any cause
whatsoever, or from failure to make any repairs or perform any maintenance.
Except as noted in the following sentence, no temporary
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interruptions or failure of such services incident to the making of repairs,
alterations, or improvements, or due to accident, strike or conditions or events
beyond Landlord's reasonable control shall be deemed an eviction of Tenant or
relieve Tenant from any of Tenant's obligations hereunder or give Tenant a right
of action against Landlord for damages; provided, however, if any interruption
of services materially disrupts Tenant's operations on the Premises and
continues for longer than two (2) days (excluding Sundays), then all rent and
additional rent shall be abated thereafter until service is restored. If the
interruption is attributable to the acts or omissions of Landlord or its
employees, agents or contractors, its continuance for more than five (5) days
shall constitute a default by Landlord.
(e) Tenant shall be liable for, and shall pay throughout the term of
this Lease, all license and excise fees and occupation taxes covering the
business conducted on the Premises and all personal property taxes levied with
respect to all personal property located on the Premises. If any governmental
authority shall in any manner levy a tax or license fee on rents payable under
this Lease or rents accruing from use of the Premises or Building or a tax or
license fee in any form against Landlord or Tenant because of or measured by or
based upon income derived from the leasing or rental thereof (excluding income
taxes), or a transaction privilege tax, such tax or license fee shall be paid by
Tenant, either directly if required by law, or by reimbursing Landlord for the
amount thereof upon demand (notwithstanding the foregoing, however, if a
Business & Occupation tax is levied against rents received by Landlord under
this Lease, such tax shall be split equally between Landlord and Tenant).
11. COMPLETION OF PREMISES; ALTERATIONS
(a) Landlord shall deliver the Premises in accordance with the outline,
descriptions and specifications set forth under Landlord's Work in Exhibit C
hereto.
(b) Tenant shall not make any alterations, additions or improvements to
the Premises which affect the exterior or structure of the Building or its
mechanical or electrical systems or which cost in excess of One Hundred Thousand
Dollars ($100,000) in the case of replacing or rearranging existing,
previous-approved improvements, or which cost an excess of Ten Thousand Dollars
($10,000) in the case of adding new and different improvements or demolishing
and not replacing previously-approved improvements, without first obtaining
Landlord's prior written approval thereof which approval will not be
unreasonably withheld, delayed or conditioned. Tenant covenants that it will
cause all such alterations, additions and improvements to be performed at
Tenant's sole cost and expense by a contractor approved by Landlord and in a
manner which: (a) is consistent with the Landlord-approved plans and
specifications (to the extent Landlord's approval was required pursuant to the
foregoing); (b) is in conformity with commercial standards; (c) includes
acceptable insurance coverage for Landlord's benefit (Landlord's insurance
requirements must be commercially reasonable); (d) does not affect the
structural integrity of the Building; (e) does not materially disrupt the
business or operation of adjoining tenants (Landlord acknowledges that the TI
Work will, by virtue of its size and scope, necessarily cause some noise and
other disruptions, but Tenant agrees that it will instruct its contractors to
take reasonable steps to minimize the impact of the same on the other tenants in
the Building); and (f) does not invalidate or otherwise affect the construction
and systems warranties then in effect with respect to the Building. Tenant shall
secure all governmental permits and approvals and comply with all other
applicable governmental requirements and restrictions. Tenant shall indemnify,
defend and hold Landlord
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harmless from and against all losses, liabilities, damages, liens, fines,
penalties, costs and expenses (including attorneys' fees, but without waiver of
the duty to hold harmless) arising from or out of the performance of such
alterations, additions and improvements, including, but not limited to, all
which arise from or out of Tenant's breach of its obligations under terms of
this paragraph. All such alterations, additions and improvements (expressly
including all light fixtures, heating, ventilation and air conditioning units
and floor coverings), except trade fixtures and appliances and equipment not
affixed to the Premises, shall become the property of Landlord at the end of the
Lease term or upon its earlier termination without any obligation on its part to
pay therefor, and shall not be removed by Tenant prior to the termination of
this Lease unless otherwise directed by Landlord. Tenant acknowledges and agrees
that Landlord's sole obligation with regard to improvements to the Building and
the Premises (other than ongoing maintenance, repair and replacement obligations
as outlined elsewhere in this Lease) is as outlined on Exhibit C. Thus, Tenant
hereby agrees that it will, at its sole expense, improve the Premises in an
office configuration with new improvements and finishes after Landlord provides
Tenant and its agents and contractors with access to the Premises (as outlined
above in paragraph 3, such access may be granted by Landlord prior to
substantial completion of the Landlord's Work). As elaborated upon in Exhibit C,
the phrase "TI Work" is defined to include all such work and all expenses
related thereto. Tenant hereby agrees that the TI Work shall be done in
accordance with the terms of this paragraph 11(b) and Exhibit C. Tenant hereby
further agrees that, on or before the day on which Landlord closes its
acquisition of the Building, Tenant will deposit in a pledge account with
Landlord's construction lender, for the benefit of Landlord and such
construction lender, the total estimated cost of completing the TI Work for the
Initial Premises. Tenant will not have access to such funds without the consent
of Landlord and its construction lender, which consent will not be granted
except to the extent the funds are withdrawn to pay for the TI Work in the
Initial Premises. Moreover, prior to commencement of the TI Work on the Future
Premises, Tenant shall establish with Landlord's lender at that time an
identical pledge account on identical terms, which account must be funded with
the total estimated cost of completing the TI Work in the Future Premises. The
funds in that account will be subject to the same restriction as outlined above
with regard to the Initial Premises TI Work account. In all events, the pledge
accounts for both the Initial Premises TI Work and the Future Premises TI Work
may never contain less than the amount reasonably estimated to complete the TI
Work in question (and thus, if such costs increase as a result of change orders
or otherwise, additional funds must be deposited in the account by Tenant), and
all interest earned on the pledge accounts shall be Tenant's. Prior to the
initial funding of the Initial Premises TI Work pledge account and the Future
Premises TI Work pledge account, Tenant shall provide reasonable documentation
to Landlord and its lender proving that the amount being deposited is sufficient
to pay for the estimated total cost of the TI Work in question. Moreover, Tenant
hereby agrees to keep Landlord and its lender apprised of developments that
cause an increase in the then-estimated total cost of the TI Work in question.
If Tenant does not possess, as of the date on which Landlord acquires the
Building, sufficient information to enable Tenant to estimate the total cost of
the Initial Premises TI Work with a reasonable level of comfort, Landlord and
Tenant agree that the pledge account for the Initial Premises TI Work shall be
initially funded with twenty five dollars ($25.00) per RSF in the Initial
Premises, subject to later adjustment once bids are received. Finally, Tenant
agrees that it will cooperate in good faith with any reasonable requirements of
Landlord's lenders in regard to such pledge accounts, provided that such
requirements do not materially increase Tenant's burdens as outlined above. The
pledge accounts established pursuant to the terms of this paragraph shall (a) be
established with Bank America NT & SA or another well established, financially
strong
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financial institution; (b) be established under terms and conditions such that
Tenant's interest therein and right to have funds disbursed therefrom are
unaffected (i) by the status of Landlord's performance under terms of its
construction or term loans for the Building and Garage (including, without
limitation, the presence of defaults thereunder), or (ii) by the financial
condition of Landlord and its lender (including, without limitation, the
institution of any bankruptcy, reorganization, receivership or other proceeding
by either of them or any creditor of either of them); (c) be invested in a
manner and in investments issued by entities approved by Tenant, on the
understanding that such investments shall in all events be conservative; (d)
provide for disbursements of funds to pay Tenant's costs incurred in connection
with the design, permitting and construction of the TI Work within five (5)
business days after Tenant's presentment of a request for payment (including a
statement from Tenant that the work or service in question has in fact been
provided) accompanied by partial lien waivers from the general contractor
covering all prior disbursements and a contractor draw request, a consultant
billing, an invoice reflecting payment or other evidence of payment of a cost
related to the TI Work, with copy to Landlord, without any requirement of
concurrence or approval by either Landlord or its lender, provided, however,
that the account holder may refuse to disburse such funds until the default is
cured, if it has been provided with a certificate from Landlord that Tenant is
in default under this Lease and has failed to cure such default after notice and
the expiration of the applicable cure period (and the account holder may also
refuse to disburse funds on a certain request if it has reason to believe that
the request is fraudulent); and (e) provide for disbursement of the balance of
the funds upon lien free completion of the TI Work, as evidenced by the delivery
of a certificate of substantial completion from Tenant's architect and delivery
of full lien waivers from all contractors and service providers with lien
rights, regardless of the status of Tenant's performance under the other
requirements of this Lease.
(c) To the degree that Tenant's use of portions of the Premises is such
that Tenant qualifies for sales tax abatement on some of the TI Work pursuant to
R.C.W. 82.63, Tenant shall receive the full benefit of such abatement and
Landlord hereby agrees to cooperate with Tenant to achieve the same, including
the execution of appropriate documentation to obtain such abatement. Likewise,
to the degree that a portion of the Landlord's Work qualifies for such sales tax
abatement, the full sales tax abatement will also be passed through to Tenant in
the form of rent abatement [it shall be Landlord's decision as to whether to
pass through the full benefit against the first months' rent payments until used
in full or to spread it out evenly over the 7 year audit period described in the
statute]. In that event, however, Tenant hereby agrees to be fully liable for
any claims or charges arising out of any audit of the sales tax abatement
entitlement and Tenant hereby agrees to indemnify and hold Landlord harmless
from and against any and all damages, claims, liabilities or expenses (including
reasonable attorneys' fees and expenses arising out of or in any way connected
to any such claims or charges. Landlord covenants to cooperate with Tenant with
respect to the defense of any challenge with respect to the sales tax abatement,
but Landlord shall not be required to incur any out-of-pocket costs in
connection with such cooperation unless such are reimbursed by Tenant.
12. MAINTENANCE AND REPAIRS
(a) Tenant shall at all times during the Lease term maintain the
interior of the Premises in good condition and repair and in a clean, orderly
and professional manner consistent
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with that of comparable offices in the Agreed Area and not intentionally or
knowingly damage the Premises. Without limiting the generality thereof, Tenant
shall provide and replace light bulbs for Tenant-installed lighting; replace
immediately all broken glass in the interior of the Premises, unless Landlord
elects to do so for Tenant's account; make all necessary repairs to, or
replacements of, all door closure apparatus and mechanisms; keep all plumbing
systems within the Premises, including pipes, drains, toilets and basins free of
obstructions; and maintain the improvements installed in the Premises at
Tenant's expense (including systems such as cabling, wiring and gas, if any) in
a good state of repair. Landlord shall be entitled to arrange, at Tenant's
expense, for certain of Tenant's regular, recurring maintenance obligations,
such as quarterly or monthly maintenance of the HVAC system serving the Premises
and the escalators and the elevators located in the Premises, provided that (1)
if an affiliate of Landlord provides any such maintenance services (e.g., HVAC
maintenance), the fee for such services must be commercially reasonable and
competitive in the marketplace, (2) when an unaffiliated party performs such
services, Landlord shall pass the cost through directly to Tenant without any
mark-up or kickback whatsoever and (3) Landlord shall not arrange for more
intensive or more expensive maintenance inside the Premises than it arranges for
on comparable equipment (if any) located in the Building but outside of the
Premises. Tenant's duty to so maintain the Premises shall survive termination of
this Lease.
(b) Landlord shall repair and maintain the structural portions of the
Building, including the exterior walls and roof, the Building heating, lighting,
and ventilating systems and exterior Building windows and doors (except any
exterior doors that provide access only to the Premises, which doors shall be
maintained and repaired solely at Tenant's expense), and the common areas of the
Building that are accessible directly from the Premises without going outside of
the Building, in good and clean order, repair and condition and replace light
bulbs for Landlord-installed lighting. Landlord shall not be liable for any
failure to make such repairs or to perform any such maintenance unless such
failure shall continue after written notice of the need of such repairs or
maintenance is given to Landlord by Tenant, and Landlord's cure period expires.
There shall be no abatement of rent and no liability of Landlord by reason of
any injury to or interference with Tenant's business arising from the making of
any repairs, alterations or improvements in or to any portion of the Building or
the Premises or in or to fixtures, appurtenances and equipment therein, except
that if such materially disrupts Tenant's operations on the Premises and
continues for longer than twenty four (24) hours (ten (10) of which must be
between 8:00 a.m. and 6:00 p.m. on a non-holiday weekday), then all rent and
additional rent reasonably allocated to the portion of the Premises suffering
from such material disruption shall be abated until the disruption ceases.
Tenant waives the right to make repairs at Landlord's expense under any law,
statute, or ordinance now or hereafter in effect, except as permitted by the
Arbitrator's order pursuant to the arbitration mechanism outlined below in
paragraph 27.
13. COMMON AREAS
(a) Landlord shall at all times have the exclusive control and
management of all parking areas, access roads, driveways, entrances, lobbies,
retaining walls, exits, truck ways, loading docks, package pickup stations,
washrooms, signs, shelters, landscaped areas, exterior stairways, elevators, and
other areas, improvements, facilities and services provided by Landlord for the
general use, in common, of tenants of the Building, and their officers, agents,
employees and customers ("common areas and facilities"), but shall not interfere
with Tenant's quiet enjoyment of the Premises or Tenant's exercise of its rights
under this Lease. With respect to the common areas
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and facilities, Landlord shall have the right from time to time to employ
personnel; to establish, modify and enforce reasonable rules and regulations not
inconsistent with the terms of this Lease; to construct, maintain and operate
lighting facilities; to police the common areas and facilities; from time to
time to change the area, level, location and arrangement of common areas and
facilities; to temporarily close all or any portion of the common areas and
facilities to such extent as may, in the opinion of Landlord's counsel, be
legally sufficient to prevent a dedication thereof or the accrual of any rights
to any person or the public therein; to otherwise close temporarily all or any
portion of the common areas and facilities, with Tenant's prior written consent;
and to do and perform such other acts in and to the common areas and facilities
as, using good business judgment, Landlord deems to be advisable with a view to
the improvement of the convenience and use thereof by tenants of the Building,
their employees, invitees and customers. Tenant agrees to comply with all common
area rules and regulations established by Landlord so long as such are not
inconsistent with the terms of this Lease and do not impose any additional cost
or other material obligations on Tenant. Landlord shall in good faith endeavor
to uniformly enforce all such rules and regulations against similar types of
tenants.
(b) All common areas and facilities which Tenant is permitted to use
and occupy, are used and occupied under a revocable license. If the amount of
such areas or facilities be diminished, such diminution shall not be deemed
constructive or actual eviction, and Landlord shall not be subject to any
liability, nor shall Tenant be entitled to any compensation or reduction or
abatement of rent (however, in all events, Landlord must maintain a common area
elevator lobby in the south portion of the Building to serve the Future
Premises, and Landlord may not alter the common areas in such a way as to
materially and negatively impact Tenant's access into the Premises).
(c) If subsequent to the date hereof Landlord determines that
governmental regulations require improvements be made to the Building, Landlord
shall amortize such costs on an equal monthly basis over the useful life of the
improvement in question, utilizing a ten percent (10%) constant. Tenant shall
pay to Landlord as additional rent, a monthly charge to reimburse Landlord for
Tenant's percentage, as specified in paragraph 1(c), of the amortization of such
additional improvements. Capital improvements made to the Building by Landlord
on a voluntary basis, as opposed to those that are required, shall be made at
Landlord's expense and shall not be subject to reimbursement by Tenant unless
such capital improvements fall under the terms of paragraph 5(b)(i)(c).
14. LIENS. Tenant shall at all times keep the Premises and Building free
from any liens arising out of Tenant's use or improvement thereof and shall
indemnify, defend and hold Landlord harmless from all costs, losses,
liabilities, damages and expenses (including attorneys' fees) arising from any
liens. If any lien is filed as a result of Tenant's actions or inaction, Tenant
shall immediately notify Landlord thereof. If any lien is not removed within
fifteen (15) days, then Landlord shall have the right to require Tenant to post
a bond, or to deposit cash with Landlord, in an amount equal to one hundred
fifty percent (150%) of the lien, to protect Landlord from such lien.
15. INDEMNITY
(a) Landlord shall not be liable for any injury to any person, or for
any loss of or damage to any property (including property of Tenant) occurring
in or about the Premises from any
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cause whatsoever, except as provided in paragraph 15(b). Subject to the terms of
paragraph 17, Tenant shall indemnify, defend and save Landlord, its officers,
agents, employees and contractors harmless from all loss, damage, liability or
expense (including reasonable attorneys' fees) resulting from any injury to any
person or from any loss or damage to any property arising out of Tenant's
operation or occupation of the Premises or caused by or resulting from any act
or omission of Tenant or its employees, officers, directors, agents or
contractors in or about the Premises or from Tenant's breach of its other
obligations hereunder or violation of applicable law. Tenant agrees that the
foregoing indemnification duty specifically covers liabilities for actions
brought by its own employees. This indemnification duty with respect to any acts
or omissions during the term of this Lease shall survive any termination or
expiration of this Lease. Tenant shall promptly notify Landlord of casualties or
accidents occurring in or about the Premises.
(b) Subject to the terms of paragraph 17, Landlord shall indemnify,
defend and save Tenant and its officers, directors, agents, employees and
contractors harmless from all loss, damage, liability or expense (including
reasonable attorneys' fees) resulting from any injury to any person or from any
loss or damage to any property arising out of the acts or omissions of Landlord
or its employees, members, officers, directors, agents or contractors or its or
their breach of this Lease or applicable law.
(c) If any loss, damage, liability or expense is caused by the
concurrent negligence of both Landlord and Tenant or their respective employees,
agents, members, officers, directors or contractors a party shall be obligated
to indemnify the other party only to the extent of the first party's negligence
or that of its respective employees, agents, members, officers, directors or
contractors.
16. INSURANCE
(a) Tenant shall, at its own expense, maintain commercial general
liability insurance with broad form endorsement in minimum amounts of $5,000,000
for property damage and minimum amounts of $5,000,000 (per individual) and
$5,000,000 (per accident) for personal injuries. Landlord shall be named as an
additional insured on such policy and shall be furnished with a certificate of
such coverage prior to the commencement of the TI Work which shall bear an
endorsement that the same shall not be canceled without thirty (30) days' prior
written notice to Landlord. Tenant shall also maintain at its own expense during
the Lease term insurance covering its furniture, fixtures, equipment and
personal property against fire and risks covered by an all-risk policy with
extended coverage. All insurance required under this paragraph 16(a) shall (a)
be issued by insurance companies authorized to do business in the State of
Washington and having a financial rating of at least B+, Class VI status, as
rated in the most recent edition of Best's Insurance Reports, or with companies
otherwise acceptable to Landlord; (b) as to claims arising from the Premises, be
issued as a primary policy or under a blanket policy, not contributing with and
not in excess of coverage which Landlord may carry; and (c) as to a liability
policy, have a contractual endorsement covering Tenant's indemnification duty,
except under paragraph 9. If Tenant fails to maintain such insurance, Landlord
may do so, after execution of the applicable notice and cure period and Tenant
shall reimburse Landlord for the cost thereof within five (5) days of its
receipt of an invoice therefor.
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(b) Commencing on its acquisition of the Building and continuing
throughout the term of this Lease Landlord shall maintain in effect with respect
to the Building commercial general liability insurance in the form and with the
limits at least as set forth in paragraph 16(a). Such liability policy shall be
the primary policy as to the common areas and facilities in the Building. Tenant
shall be furnished with a certificate of such coverage prior to the commencement
of the TI Work which shall bear an endorsement that the same shall not be
cancelled without thirty (30) days prior written notice to Tenant. Landlord
shall also maintain in effect throughout the term of this Lease insurance
covering the Building and the TI Work against fire and risks covered by an
all-risk policy with extended coverage, including at Landlord's option coverage
for earthquake (Landlord will opt for earthquake coverage unless Landlord
determines in Landlord's reasonable discretion that such coverage has become
cost prohibitive). Tenant should be named as an additional insured on such
policy and as a loss payee to the extent of its interest in the Depreciated
Value, as defined in paragraph 20, and shall be furnished with a certificate of
coverage in accordance with the requirements of the preceding sentence. All
insurance required under this paragraph 16(b) shall (a) be issued by insurance
companies authorized to do business in the State of Washington and having a
financial rating of at least B+, Class VI status, as rated in the most recent
edition of Best's Insurance Reports, or with companies otherwise acceptable to
Tenant; and (b) as to a liability policy, have a contractual endorsement
covering Landlord's indemnification duty, except under paragraph 9.
17. WAIVER OF SUBROGATION. The parties mutually release each other, and
their respective employees, agents and representatives, from liability and waive
all right of recovery for losses occurring in or about the Premises from risks
that are insured against under fire and all-risk insurance policies, including
extended coverage endorsements, carried by the parties. Each party 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 such policy.
18. ASSIGNMENT AND SUBLETTING
(a) Except as provided elsewhere in this paragraph 18 or in paragraph
35, Tenant shall not sublet the whole or any part of the Premises, nor shall
Tenant assign, transfer or encumber this Lease or any interest thereunder
whether directly or by operation of law or by any process or proceeding of any
court, or otherwise (collectively a "Transfer") without the prior written
consent of Landlord, which consent shall not be unreasonably withheld, delayed
or conditioned as to each Transfer for which consent is required. Each
assignment to which there has been consent shall be by a written instrument, an
executed copy of which shall be provided to Landlord. As a material inducement
to Landlord to execute and deliver this Lease, Tenant agrees it shall be
reasonable under this Lease and under applicable law for Landlord to withhold
consent to any proposed assignment, if Landlord reasonably determines that any
one or more of the following applies (without limitation as to other reasonable
grounds for withholding consent): (a) the transferee proposes to use the
Premises for any purpose other than the permitted uses under this Lease, (b) the
proposed transfer would cause Landlord to be in violation of any other lease or
agreement to which Landlord or the existing owner is a party as of the execution
date of this Lease (to the best of Landlord's knowledge, the existing owner is
not now a party to any leases
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containing exclusive use rights on the part of the tenant), (c) the proposed
transferee fails to deliver to Landlord its written assumption of all of the
obligations to be performed by Tenant under the Lease, or (d) either the net
current assets or the tangible net worth of the proposed transferee, determined
in accordance with general accepted accounting principles, consistently applied
by the proposed transferee's independent certified public accountants, is less
than what a commercially reasonable landlord would require at the time in
question, given the magnitude of the obligations being assumed by the proposed
transferee (but taking into consideration the existence of the $6,000,000
Escrowed Deposit/letter of credit and the continuing liability of Tenant). As a
material inducement to Landlord to execute and deliver this Lease, Tenant agrees
it shall be reasonable under this Lease and under applicable law for Landlord to
withhold consent to any proposed sublease (1) in the case of a sublease that
will not cause more than fifty percent (50%) of the Premises to be subleased, if
either subparagraph (a) or subparagraph (b) from the preceding sentence applies
or, (2) in the case of a sublease that will cause more than fifty percent (50%)
of the Premises to be subleased, if subparagraphs (a), (b) or (d) of the
preceding sentence applies (to facilitate Landlord's analysis of the foregoing,
Tenant shall provide Landlord with a copy of any proposed sublease prior to
executing the same). No Transfer shall release Tenant from primary liability on
this Lease. Except as to Transfers permitted under this Lease without Landlord's
consent, any assignment or sublease without Landlord's prior written consent
shall, at Landlord's option, be void.
(b) If Tenant assigns its interest in this Lease, or sublets the
Premises, then any rent above what is called for hereunder on the space in
question or any other consideration paid by the transferee shall be split
equally between Landlord and Tenant as and when received, after applying any
such "profits" first to reimburse Tenant for (i) reasonable costs and expenses
incurred in connection with the assignment or sublease in question, including,
but not limited to, commissions and marketing expenses, Premises improvements
and modifications, Tenant inducement and other payments, legal fees (including
those payable to Landlord under terms of the next sentence) and (ii) any and all
prior losses incurred by Tenant in connection with prior assignments or
subleases (such prior losses shall not bear interest). Tenant shall also
reimburse Landlord for its reasonable out-of-pocket legal fees and other costs
incurred by Landlord in connection with Landlord's consideration and
documentation of Tenant's request for approval of Transfers.
(c) If Tenant ceases to be a publicly traded entity, then any transfer
of this Lease by merger or consolidation, or any change in the ownership of, or
power to vote the majority of Tenant's outstanding stock, shall constitute an
assignment for the purposes of this paragraph. Notwithstanding the foregoing,
however, Tenant may assign or sublease all or a portion of the Premises (i) to
any parent company, subsidiary or affiliate of Tenant or other entity controlled
by or under common control with Tenant without Landlord's approval or (ii) to
any entity with which Tenant may merge or consolidate, or to any entity
acquiring all or substantially all of the assets or stock of Tenant, without
Landlord's approval, provided that (A) in the case of an item (ii) transfer, the
new entity that will be liable under the Lease has either net current assets or
a tangible net worth, determined in accordance with generally accepted
accounting principles, consistently applied by Tenant's and the new entity's
respective independent certified public accountants, that is at least equal to
the net worth of Tenant as of the date of the proposed transfer, (B) Tenant
shall remain liable under the Lease, to the extent Tenant continues to exist,
(C) Landlord shall be advised of the proposed transfer and supplied with the
requisite financial information and legal documentation
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sufficiently far in advance of the proposed transfer to enable Landlord to
determine whether the foregoing conditions have been satisfied and (D) Tenant
reimburses Landlord for its reasonable out of pocket legal fees and other costs
incurred by Landlord in connection with reviewing the financial and legal
documentation.
(d) Tenant shall have the right to use reasonable and standard methods
to advertise the availability of any sublease space within the Premises,
provided that any signs that Tenant may wish to post on the exterior of the
Building must first be approved by Landlord as to size, design, content and
location, which approval shall not be unreasonably withheld or delayed.
19. ASSIGNMENT BY LANDLORD. If Landlord sells or otherwise transfers the
Building and its interest in this Lease and transfers to the purchaser or
transferee Landlord's rights as to the deposits, in full, and if such purchaser
or transferee or assignee thereof expressly assumes Landlord's obligations under
this Lease, Landlord shall thereupon be relieved of all liabilities accruing
under this Lease thereafter, but this Lease shall otherwise remain in full force
and effect. Notwithstanding the foregoing, however, Landlord shall not be
relieved of future liabilities under this Lease if the assignment occurs prior
to substantial completion of the Landlord's Work, as described in Exhibit C.
20. DESTRUCTION OF PREMISES.
(a) If the Premises are rendered partially or fully untenantable by
fire or other insured casualty occurring either inside or outside of the
Premises, and if the damage is repairable within nine (9) months from the date
of the occurrence (with the repair work and preparations therefor to be done
during regular working hours on regular work days), Landlord shall repair the
Premises with due diligence (if the damage occurred outside the Premises, the
terms of the following sentence shall operate), and the monthly minimum rental
shall be abated in the proportion that the untenantable portion of the Premises
bears to the whole thereof for the period from the date of the casualty to the
completion of the repairs. If the terms of the preceding sentence apply and if
portions of the Building located outside of the Premises are damaged by fire or
other insured casualty, Landlord shall promptly take reasonable steps to repair,
cover over or demolish any such portions that are visible from either the
Premises or the outside of the Building so as to prevent such from becoming a
long term eyesore, and Landlord shall repair any damage necessary in order to
make the Premises tenantable.
(b) If the Premises are completely destroyed by fire or other casualty,
or if they are damaged by uninsured or insured casualty to such an extent that
the damage cannot be repaired within nine (9) months from the date of the
occurrence (with the repair work and preparations therefor to be done during
regular working hours on regular work days), or if damage occurring outside of
the Premises that renders the Premises fully or partially untenantable cannot be
repaired within nine (9) months from the date of the occurrence, Landlord shall
have the option to restore the Premises (and repair any damage occurring outside
of the Premises to the extent necessary to make the Premises tenantable and to
otherwise comply with the terms of the last sentence in paragraph 20(a)) or to
terminate this Lease on thirty (30) days' written notice, effective as of any
date not more than sixty (60) days after the occurrence. If this paragraph
becomes applicable, Landlord shall advise Tenant within thirty (30) days after
such casualty whether Landlord elects to restore the Premises or to terminate
the Lease. If Landlord elects to restore the Premises, it shall commence
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and prosecute the restoration work with diligence. For the period from the date
of the casualty until completion of the repairs (or the date of termination of
the Lease, if Landlord elects not to restore the Premises), the basic monthly
rent shall be abated in the same proportion that the untenantable portion of the
Premises bears to the whole thereof. In no event shall Landlord be liable to
Tenant for destruction or damage to any of Tenant's property including fixtures,
equipment or other improvements.
(c) If at least fifty percent (50%) of the Premises are either entirely
unusable by Tenant or not reasonably usable by Tenant for their intended purpose
as a result of a fire or other casualty and if the damage cannot be repaired
within nine (9) months from the date of the occurrence (with or without overtime
work, at Landlord's option), Tenant shall have the option to terminate this
Lease on thirty (30) days' written notice, effective as of any date not more
than sixty (60) days after the occurrence. In addition, notwithstanding any
statement to the contrary elsewhere in this Lease, Landlord and Tenant hereby
agree that, if this Lease is terminated by either party pursuant to the terms of
this paragraph 20, Tenant shall be entitled to receive that portion of the
casualty insurance proceeds actually paid by the insurer that is allocable to
the TI Work and is equal to the depreciated value of the "hard" TI Work costs
(as defined in Section III (B) of Exhibit C) as of the date of termination of
this Lease, such depreciation to be on a straight line basis over the twelve
(12) year term of this Lease (herein referred to as the "Depreciated Value"). It
is intended that Landlord shall maintain the casualty insurance on the Building
and the TI Work and that the insurer will agree to the terms of the preceding
sentence, and thus the balance of the proceeds allocable to the TI Work would be
paid to Landlord or its lender; however, if it is determined that the only way
to effectively achieve the objective outlined in the preceding sentence is for
the Tenant to maintain a separate casualty insurance policy on the TI Work,
Tenant shall do so, Tenant shall use the proceeds from such policy to rebuild
the TI Work unless this Lease is terminated (in which case, the insurance
proceeds shall be allocated between Landlord and Tenant as outlined in the
preceding sentence), and Tenant shall pay for such policy but not pay for its
pro rata share of the Landlord's casualty policy premium allocable to tenant
improvements in other portions of the Building. Landlord hereby further agrees
that its mortgagee shall be subject to the terms of the preceding sentence and
Tenant may condition any Subordination, Attornment and Nondisturbance Agreement
accordingly. Moreover, if Landlord terminates this Lease pursuant to the terms
of this paragraph 20, and if Tenant does not receive the full Depreciated Value
of the "hard" TI Work costs because all or part of the TI Work was undamaged in
the casualty in question, then Landlord shall be obligated to pay to Tenant
within thirty (30) days from the date of termination the unpaid portion of the
Depreciated Value.
(d) Notwithstanding the foregoing, if the casualty occurs in the last
two years of the term of this Lease, Landlord may terminate this Lease if the
damage cannot be repaired within six (6) months from the date of the occurrence
(with repair work and preparations therefor to be done during regular working
hours on regular work days) and Tenant may terminate this Lease if (i) at least
one third (1/3) of the Premises are unusable as a result of the casualty and
(ii) the damage cannot be repaired within six (6) months from the date of
occurrence (with or without overtime work, at Landlord's option). However, if
Landlord terminates this Lease pursuant to this paragraph 20(d), Tenant may
negate such termination by exercising its extension option outlined in paragraph
3(b) within thirty (30) days after receipt of Landlord's termination notice,
provided that Tenant has an extension option to exercise (in such event, all of
the other terms and conditions of paragraph 3(b) shall continue to be fully
effective).
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(e) In no event will damage to the Garage trigger any of the rights or
obligations outlined above in this paragraph 20. However, if the Garage is
damaged by insured casualty and if the damage is repairable within eighteen (18)
months from the date of the occurrence (with the repair work and preparations
therefor to be done during regular working hours on regular work days), Landlord
shall repair the Garage with due diligence. If, on the other hand, the Garage is
damaged by uninsured or insured casualty and the damage cannot be repaired
within eighteen (18) months from the date of occurrence, with the repair work
and preparations therefor to be done during regular working hours on regular
work days (e.g., if Landlord encounters significant delays in obtaining the
requisite building permit), Landlord shall have the option to repair or not
repair the Garage. Whenever Landlord finishes repairing the Garage, Tenant's
rights therein as outlined below in paragraph 30(s) shall be restored (although,
if the repaired Garage has fewer parking stalls, Tenant's rights shall be
reduced proportionately, but never below the level of the "Required Parking"
(defined below)). Finally, if the terms of the sentence preceding the preceding
sentence apply (e.g., the damage cannot be repaired within eighteen (18) months
from the date of casualty) and if Tenant is unable to secure within sixty (60)
days after the date of the casualty the "Required Parking" (defined below)
within one quarter (1/4) mile from any corner of the Building at rates that are
no more than those that were charged in the Garage as of the date of the
casualty (although, if the rates are higher, Landlord shall have the option to
subsidize them by paying the full amount of the initial excess, and if Landlord
elects to so subsidize, Landlord shall be obligated to pay the same percentage
of the parking rates for the Required Parking as such rates increase over time),
then Tenant may elect to terminate the Lease within thirty (30) days following
the expiration of such 60 day period, in which case Landlord shall pay Tenant
the Depreciated Value within thirty (30) days from the date of termination. The
"Required Parking" is hereby defined to be the lesser of one monthly permit per
1,000 RSF in the Premises as of the date of the casualty or the average number
of permits actually used by Tenant in the Garage in the twelve (12) months
preceding the date of the casualty. In no event will a casualty in the Garage
ever entitle Tenant to abatement of rent on the Premises except via termination
of this Lease in accordance with the terms of this paragraph 20(e). In addition
to the foregoing, if a Garage casualty causes tenant to be unable to use the
Required Parking in the Garage for more than sixty (60) days, and if Landlord
was either required to repair the Garage or elected to do so, Landlord shall
diligently and in good faith endeavor to find the number of parking permits
between (i) those still available to Tenant in the Garage and (ii) the Required
Parking, as close as possible to the Building (whether within one quarter mile
or not) and Landlord shall subsidize the difference, if any, between the rates
charged for such replacement parking permits and the rates that were charged in
the Garage as of the date of the casualty (Landlord shall continue to be liable
to subsidize the same percentage of the rates charged for the replacement
parking in the future, as such rates increase, until the Garage has been
repaired).
21. EMINENT DOMAIN. If more than twenty-five percent (25%) of the Premises
shall be taken or appropriated by any public or quasi-public authority under the
power of eminent domain, or if any taking of the Premises occurs during the last
two (2) years of the Lease Term, then either party hereto shall have the right,
at its option, by written notice given within sixty (60) days after formal
notification of the condemnation proceeding, to terminate this Lease, effective
thirty (30) days after the written notice, unless, in the case of a Landlord
termination-election based on there being less than 2 years remaining in the
Lease Term, Tenant elects to exercise its extension option outlined in paragraph
3(b) within thirty (30) days after receipt of Landlord's termination notice,
provided that Tenant has an extension option to (in such event all of the other
terms and conditions of paragraph 3(b) shall continue to be fully effective). If
either less than or more than
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twenty five percent (25%) of the Premises are taken (and neither party elects to
terminate as herein provided), the basic monthly rent thereafter to be paid
shall be equitably reduced. If twenty five percent (25%) or more of the Building
other than the Premises, is so taken or appropriated, Landlord shall have the
option to terminate this Lease, effective thirty (30) days after the written
notice, by written notice to Tenant given within sixty (60) days after formal
notification of the condemnation proceeding. In the event of any taking or
transfer in lieu thereof, Landlord shall be entitled to any and all awards,
settlements and payments which may be given in connection therewith and Tenant
waives all claims against Landlord for damages for termination of its Lease or
for interference with its business, subject to Landlord's payment to Tenant of
the Depreciated Value (as defined above in paragraph 20) measured as of the date
of termination. Except as noted in the next sentence, Tenant assigns to Landlord
any right Tenant has or hereafter may have to any award in such proceeding and
agrees to execute such documents as Landlord may request to effectuate such.
Tenant shall also be entitled to receive from the condemning authority the
amount offered for Tenant's relocation and moving costs and personal property
taken in the condemning authority's final offer.
22. BUILDING RULES AND REGULATIONS. Tenant shall faithfully observe and
comply with the rules and regulations that Landlord shall from time to time
promulgate and/or modify, provided that such rules and regulations are not
inconsistent with this Lease and do not increase Tenant's costs or materially
restrict its operations. The rules and regulations shall be binding upon the
Tenant upon delivery of a copy of them to Tenant. Landlord shall not be
responsible to Tenant for the nonperformance of any said rules and regulations
by any other tenants or occupants, although Landlord shall in good faith
endeavor to uniformly enforce all such rules and regulations against similar
type tenants.
23. HOLDING OVER. Any holding over by Tenant after the expiration of the
term hereof shall, at Landlord's option, be construed as a tenancy from
month-to-month on the terms and conditions set forth herein, except for base
rent which shall be increased to one hundred and ten percent (110%) times that
in effect during the last month hereof, which tenancy may be terminated by
either party upon at least thirty (30) days' written notice to the other party,
effective as of the last day of a calendar month. If Tenant holds over without
Landlord's consent, in addition to all other remedies at law or in equity to
which Landlord may be entitled, Tenant shall be liable for all damages suffered
by Landlord as a direct consequence of such holding over.
24. ENTRY BY LANDLORD. Landlord reserves to itself and its agents and
contractors the right to enter the Premises at any reasonable time, and from
time to time, following reasonable notice (except in the event of an emergency)
to inspect the same, to submit the Premises to prospective purchasers or
tenants, to post notices of non-responsibility and to repair the Premises and
any portion of the Building that Landlord deems necessary or desirable, and may
for that purpose erect scaffolding and other necessary structures where
reasonably required by the character of the work to be performed. So long as
such actions do not materially impact Tenants operations on the Premises, Tenant
hereby waives any claim for damages or for any injury or inconvenience to or
interference with Tenant's business, any loss of occupancy or quiet enjoyment of
the Premises and for any other loss occasioned thereby. For each of the
aforesaid purposes, Landlord shall at all times have and retain a key with which
to unlock all of the doors in, upon and about the Premises, excluding Tenant's
vaults, safes, files and other areas designated by Tenant as confidential, and
Landlord shall have the right to use any and all reasonable means which Landlord
may deem proper
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to open said doors in an emergency, in order to obtain entry to the Premises
without liability to Tenant, and any such entry by Landlord in an emergency
shall not under any circumstances be construed or deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or an eviction of Tenant
from the Premises or any portion thereof. Except for keys to portions of the
Premises designated by Tenant as confidential, Tenant shall not change the locks
on the doors of the Premises or additional locks without Landlord's prior
consent, nor shall it change the locks to a type which cannot be opened by the
master key for the Building.
25. TENANT'S DEFAULT. Time is of the essence of this Lease. If Tenant
fails to comply with any covenant, term or condition of this Lease, or if Tenant
files or is the subject of a petition in bankruptcy (and such proceeding is not
set aside or stayed within sixty (60) days of filing), or if a trustee or
receiver is appointed for Tenant's assets, (and such proceeding is not set aside
or stayed within sixty (60) days of filing) or if Tenant makes an assignment for
the benefit of creditors, and if such failure continues for or is not remedied
within ten (10) days (or, if no default in the payment of rent is involved,
within thirty (30) days which thirty (30) day period shall be extended for
defaults which cannot reasonably be cured within thirty (30) days, if Tenant
commences such cure within thirty (30) days, for so long as Tenant is diligently
and continuously prosecuting such cure) after notice in writing thereof given by
Landlord to Tenant specifying the failure, then Landlord may:
(a) Declare the term hereof ended and reenter the Premises and take
possession thereof and remove all persons therefrom, and Tenant shall have no
further claim thereon or hereunder; or
(b) Without declaring this Lease terminated, reenter the Premises and
occupy the whole or any part thereof for and on account of Tenant and collect
any unpaid rentals and other charges, which have become payable, or which may
thereafter become payable; or
(c) Even though it may have reentered the Premises, thereafter elect to
terminate this Lease and all of the rights of Tenant in or to the Premises.
If Landlord reenters the Premises under option (b) above, Landlord shall
not be deemed to have terminated this Lease or the liability of Tenant to pay
any rental or other charges thereafter accruing, or to have terminated Tenant's
liability for damages under any of the provisions hereof, by any such reentry or
by any action, in unlawful detainer or otherwise, to obtain possession of the
Premises, unless Landlord shall have notified Tenant in writing that it has so
elected to terminate this Lease, and Tenant further covenants that the service
by Landlord of any notice pursuant to the unlawful detainer statutes and the
surrender of possession pursuant to such notice shall not (unless Landlord
elects to the contrary to the time of or at any time subsequent to the serving
of such notices and such election is evidenced by written notice to Tenant) be
deemed to be a termination of this Lease. If Landlord enters or takes possession
of the Premises, Landlord shall have the right, but not the obligation, to
remove all or any the personal property located therein and place the same in
storage at a public warehouse at the expense and risk of Tenant.
If Landlord elects to terminate this Lease pursuant to the provisions of
options (a) or (c) above, Landlord may recover from Tenant as damages, the
following:
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(i) The worth at the time of award of any unpaid rental 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 rental which would have been earned after termination until the time of
award exceeds the amount of such rental loss Tenant proves could have been
reasonably avoided; plus
(iii) The worth at the time of award of the amount by which the
unpaid rental for the balance of the term after the time of award exceeds the
amount of such rental loss that Tenant proves could be reasonably avoided; plus
(iv) Any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom, including, but not limited, any costs or expenses reasonably
incurred by Landlord in (a) retaking possession of the Premises, including
reasonable attorneys' fees therefor, (b) maintaining or preserving the Premises
after such default, (c) preparing the Premises for reletting to a new tenant,
including repairs or alterations to the Premises for such reletting, (d) leasing
commissions, (but in the case of items (c) or (d), only the pro rata portion of
such expenses relating to the balance of the Lease term) and (e) any other costs
reasonably 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 the laws of the
State of Washington.
As used in items (i) and (ii) above, the "worth at the time of award" is
computed by allowing interest at the interest rate specified in paragraph 6
hereof. As used in item (iii) above, the "worth at the time of award" is
computed by using a discount rate equal to the then effective rate being paid on
U.S. treasury instruments with a maturity date equal to the scheduled expiration
date of this Lease.
For purposes of this paragraph 25 only, the terms "rent" and "rental"
shall be deemed to be the base rent and all additional rent and other sums
required to be paid by Tenant pursuant to the terms of this Lease. All such sums
shall, for the purpose of calculating any amount due under the provisions of
subparagraph (iii) above, be computed on the basis of the average monthly amount
thereof accruing during the immediately preceding twelve (12) month period,
except that if it becomes necessary to compute such rental before such a twelve
(12) month period has occurred then such rental shall be computed on the basis
of the average monthly amount hereof accruing during such shorter period.
Landlord shall use reasonable efforts to relet the Premises and otherwise
mitigate its losses. Landlord shall refund or release any portion of the
paragraph 7 deposit remaining after the full recovery of Landlord's damages
under this paragraph 25, as the parties acknowledge and agree that such deposit
serves as neither liquidated damages nor as a cap on Landlord's damages.
Moreover, while any sums remaining in the pledge account described above in
paragraph 11(b) shall be retained by Landlord, it shall be assumed that such
sums will be used to make tenant improvements in the Premises for purposes of
determining the rent that Landlord could achieve through mitigation efforts.
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26. REMEDIES CUMULATIVE; WAIVER. Each party's remedies hereunder are
cumulative, and not exclusive, and a party's exercise of any right or remedy
shall not be deemed a waiver of, or alter, affect or prejudice any other right
or remedy which that party may have under this Lease or at law or in equity,
including the right to cure the other party's default on the defaulting party's
behalf and recover from the defaulting party upon demand all costs and expenses
incurred by the non-defaulting party in connection therewith, including interest
thereon at the rate stated in paragraph 6 from date incurred until paid. Neither
the acceptance of rent nor any other acts or omissions of a party at any time or
times after the happening of any default or breach by the other party shall
operate as a waiver of any past or future violation, breach or failure to keep
or perform any covenant, agreement, term or condition hereof or to deprive the
non-defaulting party of its right to cancel or forfeit this Lease, or estop the
non-defaulting party from promptly exercising any other option, right or remedy
that it may have under any term or provisions of this Lease, or at law or in
equity.
27. DEFAULT OF LANDLORD. If Landlord defaults in the performance of any
covenant required to be performed by Landlord under this Lease, Tenant may serve
upon Landlord a written notice specifying the default. If Landlord does not
remedy the default within thirty (30) days following receipt thereof or, in the
case of a default which reasonably requires more than thirty (30) days to cure,
if Landlord has not commenced to remedy the same within thirty (30) days
following receipt thereof and be diligently and continuously prosecuting such
cure, Tenant may give Landlord notice of termination of this Lease may pursue
self-help rights or otherwise pursue any other remedy available at law or in
equity. Notwithstanding the foregoing, and notwithstanding any statement to the
contrary contained anywhere else in this Lease, Tenant shall have no offset
rights and no deduction or withholding rights and neither Landlord nor Tenant
shall have any right to demand reimbursement of the costs of a self-help cure
until and unless such is authorized in a written order from the Arbitrator upon
conclusion of the below-outlined arbitration. In the event of a dispute under
the terms of this Lease, either party may provide written notice to the other
invoking an arbitration as follows (in no event shall such arbitration supersede
or in any way diminish Landlord's statutory and common law unlawful detainer
rights, except that Landlord shall not be entitled to bring an unlawful detainer
action to collect sums owed to Landlord as a result of Landlord's exercise of
self help rights unless payment of such sums has been ordered by the Arbitrator
pursuant to the terms of this paragraph 27, and thus, subject to such exception,
any dispute that is subject to resolution by way of an unlawful detainer action
shall be resolved by such unlawful detainer action, not by the below-outlined
arbitration, if Landlord so elects): The dispute shall be resolved by
single-arbitrator arbitration before the American Arbitration Association under
the Commercial Arbitration Rules modified as follows: (i) the total time from
date of demand for arbitration to final award shall not exceed thirty (30) days;
(ii) the Arbitrator shall be chosen by the American Arbitration Association
without submittal of lists and subject to challenge only for good cause shown;
(iii) all notices may be by telephone or electronic communication with later
confirmation in writing; (iv) the time, date and place of the hearing shall be
set by the Arbitrator in his or her sole discretion, provided that there shall
be at least five (5) business days prior notice of the hearing; (v) there shall
be no post-hearing briefs; (vi) there shall be no discovery except by order of
the Arbitrator; and (vii) the Arbitrator shall issue his or her award within
seven (7) days after the close of the hearing. Any of the above provisions may
be modified by stipulation of the parties. The decision of the Arbitrator shall
be final and non-appealable and enforceable in any court of competent
jurisdiction. Landlord and Tenant hereby release the Arbitrator from any and all
claims or possible claims against the Arbitrator based
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upon the decision of the Arbitrator. The prevailing party in the proceeding
shall be awarded reasonable attorneys' fees, expert and non-expert witness costs
and expenses, and other costs and expenses incurred in connection with the
arbitration, unless the Arbitrator for good cause determines otherwise. The
costs and fees of the Arbitrator shall be borne by the non-prevailing party,
unless the Arbitrator for good cause determines otherwise.
28. SURRENDER OF PREMISES. At the expiration or sooner termination of this
Lease, Tenant shall promptly return the Premises to Landlord in the same
condition in which received (or, if altered, then the Premises shall be returned
in such altered condition), reasonable wear and tear and damage by fire or other
casualty and Landlord's breach of this Lease and Landlord's failure to comply
with applicable laws excepted. Prior to such return Tenant shall remove all
trade fixtures and appliances and equipment which do not become a part of the
Premises, but not including the heating, ventilation and air conditioning
systems, however installed, and shall repair any damage to the Premises
resulting from their removal. Tenant's obligation to perform this covenant shall
survive the expiration or termination of this Lease.
29. SIGNS. The Tenant may affix and maintain upon the Premises and
Building only such signs, advertising placards, names, insignia, trademarks and
descriptive material as shall have first received the prior written approval of
the Landlord as to type, size, color, location, nature and display qualities.
Landlord shall not unreasonably withhold, delay or condition its consent to such
signage and the like, and Landlord hereby agrees that Tenant may (i) place
reasonable signage on the exterior of the north half of the Building reflecting
Tenant's name, (ii) place a monument sign in front of Tenant's main entrance in
the north half of the Building, and (iii) if and so long as Tenant occupies at
least seventy five percent (75%) of the RSF in the Building, rename the Building
the "RealNetworks Building" or another name that Tenant may choose, although any
other name (other than Tenant's name or a registered trade name or trademark of
Tenant) shall be subject to Landlord's prior written consent, which shall not be
unreasonably withheld, delayed or conditioned, provided that (a) all such
signage shall be maintained solely at Tenant's expense, (b) all such signage
shall be subject to all applicable governmental laws and regulations, and (c)
the size, design, content and location of any such signage shall be subject to
Landlord's prior written consent, which shall not be unreasonably withheld,
delayed, or conditioned. Tenant shall be responsible for the removal of all
Tenant's signs upon termination of this Lease and shall repair any damage to the
Premises and Building resulting from their removal. This duty shall survive
termination of this Lease.
30. GENERAL PROVISIONS.
(a) Exhibits. The exhibits, addenda and riders, if any, attached to
this Lease are incorporated herein by this reference.
(b) Joint Obligation. If there be more than one Tenant the obligations
hereunder imposed shall be joint and several.
(c) Headings. The headings for the paragraphs of this Lease are not a
part of the Lease and shall have no effect upon the construction or
interpretation of any part hereof.
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(d) Time. Time is of the essence of this Lease and each and all of its
provisions in which performance is a factor.
(e) Successors and Assigns. The covenants and conditions contained
herein, subject to the provisions as to assignment, apply to and bind the heirs,
successors, administrators and permitted assigns of the parties hereto.
(f) Recordation. Neither Landlord nor Tenant shall record this Lease,
but a short form memorandum hereof and of Tenant's rights with respect to the
Garage shall be recorded at the closing of Landlord's purchase of the Building.
(g) Quiet Possession. Landlord covenants that so long as Tenant is
paying the rent reserved hereunder and observing and performing all of the
covenants, conditions and provisions on Tenant's part to be observed and
performed hereunder, Tenant shall have quiet possession and enjoyment of the
Premises for the entire term hereof, but subject to all the provisions of this
Lease.
(h) Prior Agreements. This Lease contains the entire agreement of the
parties hereto, and no prior agreements notices, letters, brochures or
understanding pertaining to any such matters shall be effective for any purpose.
No provision of this Lease may be amended or added to except by an agreement in
writing signed by the parties hereto or their respective successors in interest.
This Lease shall not be effective or binding on any party until fully executed
by both parties hereto.
(i) Inability to Perform. This Lease and the obligations of each party
hereunder shall not be affected or impaired because a party is unable to fulfill
any of its obligations hereunder or is delayed in doing so, if such inability or
delay is caused by reason of fire, earthquake, acts of civil or military
authorities, labor disturbances, strike, labor troubles, acts of God or any
other cause beyond the reasonable control of such party. The foregoing shall not
excuse a party from the payment of sums due hereunder, when due.
(j) Partial Invalidity. Any provision of this Lease which shall prove
to be invalid, void, or illegal shall in no way affect, impair or invalidate any
other provision hereof and such other provision shall remain in full force and
effect.
(k) Choice of Law. This Lease shall be governed by the laws of the
State of Washington.
(l) Attorneys' Fees. In the event of any action or proceeding brought
by either party against the other under this Lease the prevailing party shall be
entitled to recover its costs and expenses, including attorneys' fees in such
action or proceeding, including costs of appeal, if any, in such amount as the
court may adjudge reasonable as attorneys' fees. In addition, should it be
necessary for Landlord to employ legal counsel to enforce any of the provisions
contained herein, including the assertion of any cross-claim or counterclaim or
any claim in any bankruptcy proceeding or any claim instituted by a third party,
Tenant agrees to pay all attorneys' fees and court costs reasonably incurred.
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(m) Brokers' Commission. Subject to Landlord's payment of the sums
specified in the balance of this paragraph 30(m), Tenant agrees to indemnify and
hold Landlord harmless from and against all liabilities or claims for brokerage
commissions or finder's fees which arise from or out of agreements made by
Tenant, including, but not limited to, any claims made by Cushman & Wakefield
and/or Douglas Hanafin and/or Washington Partners. Landlord hereby agrees to pay
a consulting fee to Tenant in the amount of three dollars and fifty cents
($3.50) per RSF occupied by Tenant in the Initial Premises and Future Premises
on the following terms and conditions. Upon satisfaction or waiver of the
contingencies outlined below in paragraph 31, Landlord shall pay to Tenant one
half (1/2) of the total consulting fee due (including the consulting fee due on
the Future Premises). Upon occupancy of the entire Initial Premises, Landlord
shall pay to Tenant the remaining one half (1/2) of the total consulting fee
due. Tenant shall not be paid any consulting fee on any space leased by Tenant
in the Building under paragraph 33 below. Tenant shall at all times have the
option to direct payment of any portion of the consulting fee to another entity.
All such portions of the consulting fee shall be paid by Landlord within ten
(10) business days after the date on which they are due and, if not so paid,
shall bear interest as provided in paragraph 6.
(n) Subordination; Notice to Mortgagee; Attornment. Unless otherwise
designated by Landlord, this Lease shall be subordinate to all existing or
future mortgages and deeds of trust on the Building and to all extensions,
renewals or replacements thereof. Within ten (10) days of Landlord's request
therefor, Tenant shall promptly execute and deliver all instruments or
certificates which Landlord or its lenders reasonably request to reflect the
subordination of this Lease, provided, and so long as such instruments recognize
Tenant's rights and remedies under this Lease, including but not limited to ,
Tenant's rights in and to insurance and condemnation proceeds, and provided that
Tenant's quiet enjoyment hereunder shall not be disturbed so long as Tenant is
not in default beyond the applicable cure period. Within ten (10) business days
of either party's request therefor, the other party shall execute and deliver to
third parties designated by the requesting party an estoppel certificate or
letter that correctly recites the facts with respect to the existence, terms and
status of the Lease. The third party shall be entitled to rely on the truth and
accuracy of such statement. Notwithstanding anything to the contrary in this
Lease, Landlord shall not be in default under any provision hereof unless
written notice specifying such default is given to Landlord and to all persons
identified by Landlord as having an interest in all or part of the Building as
secured parties. Tenant agrees that any such secured parties shall have the
right to cure such default on behalf of Landlord within the cure period provided
in paragraph 27. Tenant further agrees not to invoke any of its remedies under
this Lease until said period has elapsed, or during any period that such secured
parties are proceeding to cure such default, or are diligently taking steps to
obtain the right to enter the Premises and cure the default (although, if a cure
has not been effected within the original thirty (30) day cure period, even if
the secured parties are endeavoring in good faith to cure, Tenant shall have the
right to self-help remedies or other such non-termination remedies if such are
permitted in writing by the Arbitrator pursuant to the terms of paragraph 27
above). Tenant agrees to attorn to Landlord's successor following any
foreclosure sale or transfer in lieu thereof.
(o) Notices. Any notices required in accordance with any of the
provisions herein shall be personally delivered or sent by courier or mailed by
postage prepaid U.S. registered or certified mail, return receipt requested,
addressed to the parties at the addresses set forth in paragraph 1(j) or to such
other address as a party shall from time to time advise in writing. A notice
shall be deemed received three (3) business days after the postmark affixed on
the envelope by the United States Post Office.
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(p) Satellite Dishes. Tenant shall have the non-exclusive right to
install and maintain satellite receiving equipment (the "SRE") on available
portions of the roof of the Building on the following terms and conditions: (i)
Tenant shall be entitled to use fifty five percent (55%) of the available
portions of the roof of the Building (namely, flat or nearly flat portions of
the roof that are not occupied by building equipment and that are structurally
strong enough to support the SRE) for its SRE, and if certain available portions
of the roof are deemed more desirable for SRE than other available portions of
the roof, Tenant shall be allocated 55% of each such portion, (ii) Tenant will
not be entitled to allow other parties to use any portion of the roof for SRE's
or other purposes, whether by way of sublease or otherwise, (iii) such roof
usage shall be free of charge, (iv) Tenant shall be solely responsible to repair
any damage caused by the installation or maintenance of any SRE and to pay for
all costs incurred in connection with the installation of every SRE, (v)
Landlord shall not allow any other party to install or operate satellite
transmitting or receiving equipment on the roof of the Building in such a manner
that causes interference with Tenant's SRE, (vi) Tenant shall comply with all
applicable laws and regulations regarding the installation and/or maintenance of
its SRE, (vii) Tenant shall at its sole expense remove all of its SRE prior to
the expiration or earlier termination of the Lease and repair any damage caused
by the installation, maintenance or removal of the SRE (this obligation shall
survive termination of the Lease), (viii) if Tenant's SRE materially interferes
with another tenant's internal use of the Building by way of electronic
interference, Tenant shall promptly either remove the interfering equipment or
remedy the problem at Tenant's sole expense and (ix) Tenant shall also be
entitled to use available portions of the roof of the Building for the
installation and maintenance of satellite transmitting equipment (as opposed to
SRE's) on the same terms and conditions as outlined above, with the exception
that Tenant shall not allow such transmitting equipment to interfere with the
satellite receiving or transmitting equipment then being operated on the roof by
other parties or with the operations of other tenants then in the Building.
(q) Liability of Landlord. After completion of Landlord's Work,
Tenant shall look solely to rents, issues and profits from the Building (and the
proceeds from any sale, taking or casualty with respect thereto) for the
satisfaction of any judgment or decree against Landlord based upon any default
under this Lease, and no other property or assets of the Landlord shall be
subject to levy, execution or other enforcement procedures for satisfaction of
any such judgment or decree, provided that Landlord's lender agrees to recognize
Tenant's rights to insurance and condemnation proceeds as provided herein.
(r) Authority. Each individual executing this Lease on behalf of
Landlord and Tenant represents and warrants that he or she has duly authorized
to execute and deliver this Lease on behalf of said entity, in accordance with
the organizational documents of said entity, and that this Lease is binding upon
said entity and enforceable in accordance with its terms.
(s) Parking. Landlord represents to Tenant that, at the time
Landlord acquires the Building, title to the Garage will simultaneously be
conveyed either to Landlord or to an entity related to and controlled by
Landlord and Landlord hereby further represents to Tenant that in either event
the owner of the Garage will be bound by Tenant's parking rights expressed
herein. Moreover, Landlord agrees that if title to the Garage is subsequently
sold or transferred, it shall be sold or transferred expressly subject to
Tenant's parking rights expressed herein. Tenant shall have the right to
purchase up to two (2) parking permits in the Garage for each 1,000 RSF in the
Premises on which Tenant is then paying base monthly rent on the following terms
and conditions: (i) one (1)
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parking permit for each 1,000 RSF in the Premises may be used on a 24 hour per
day, seven day per week basis, but any additional parking permits (up to the
maximum of two per 1,000 RSF in the Premises) shall be usable only between
7:00AM and 8:00PM on weekdays and 9:00AM and 1:00PM on Saturdays, (ii) all such
parking shall be on a non-reserved basis only, but with the permit holders
having free in and out privileges, (iii) such parking shall be made available to
Tenant on a monthly basis and at fair market rates for the Garage (as the same
may change from time to time), which is to say at rates being charged for
comparable parking in the neighborhood, (iv) so as to enable Landlord to offer,
for a term longer than one month, parking permits to which Tenant is entitled
but is not using, Tenant hereby agrees to advise Landlord from time to time upon
request, as to how many parking permits Tenant is prepared to relinquish, if
any, and for how long (Tenant shall make such determination reasonably and in
good faith), (v) Landlord shall at all times have the right to require valet
parking, provided that the cost for the same shall not exceed what would the
otherwise be charged pursuant to this paragraph 30 (s) for self-parking and
provided further that no more than one hundred (100) of Tenant's permits will be
valet-parked without Tenant's prior written consent and (vi) in no event may any
of Tenant's permits be used for either storage of inoperable vehicles or for
overnight parking (on other than an incidental basis) by employees who live
nearby or by employees who have an alternate means of commuting but chose to
leave a car in the Garage.
31. CONTINGENCIES. Notwithstanding any statement to the contrary contained
anywhere else in this Lease, Landlord's and Tenant's rights and obligations
under this Lease are hereby made expressly contingent upon (1) Landlord
completing its due diligence work with regard to the Building and the Garage,
electing in its sole discretion to go forward and close its acquisition of the
Building and the Garage and the successful completion of such acquisition on or
before April 15, 1998 (Landlord hereby agrees to promptly advise Tenant in
writing if and when Landlord determines that this contingency will not be
satisfied) and (2) Landlord receiving on or before October 1, 1998 a building
permit on terms and conditions acceptable to Landlord in Landlord's sole
discretion enabling Landlord to complete the Landlord's Work, as outlined in
Exhibit C. Notwithstanding the sole discretion standard outlined in the second
contingency, Landlord shall not be permitted to use the second contingency to
terminate the Lease for reasons other than unanticipated or unreasonable
building permit terms and conditions (e.g., terms and conditions that either
increase the cost of the Landlord's Work by more than ten percent (10%) over the
amount specified in the most recent estimate provided by Landlord's general
contractor prior to the date on which Landlord first became aware of the
unanticipated or unreasonable permit terms and conditions, or delay the date by
which Landlord will be able to substantially complete the Landlord's Work beyond
June 30, 1999 (a delay beyond such date shall entitle Tenant to terminate this
Lease in accordance with the terms of this paragraph 31 as well and, if Tenant
agrees in writing to allow a Specified Delivery Date that is beyond June 30,
1999, Landlord shall not be entitled to terminate this Lease on account of the
delay alone), etc.). In other words, Landlord shall not use the second
contingency as a subterfuge to enable Landlord to terminate this Lease for some
other reason (e.g., so as to be able to lease space to another tenant, etc.).
Moreover, if Landlord terminates this Lease because of such second contingency,
Landlord's post-termination actions will be relevant in determining Landlord's
true motive and thus, for example, if Landlord shortly thereafter accepted the
previously unacceptable building permit terms and conditions, completed the
Landlord's Work and leased space in the Building to another tenant on terms no
more favorable to Landlord than the terms of this Lease, it would be reasonable
to assume that Landlord wrongfully terminated this Lease. Finally, Landlord
shall be required to resist any unacceptable building permit terms and
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conditions with diligence and good faith, to the extent Landlord has any grounds
for resistance. If either of these contingencies fails, this Lease shall
automatically terminate, the Escrowed Deposit/letter of credit and any prepaid
rent shall be immediately refunded/released to Tenant and the parties shall
thereafter be relieved of all rights and obligations hereunder, with the
exception of those that expressly survive termination of the Lease.
Notwithstanding the foregoing, however, Landlord hereby agrees that if it
terminates this Lease because of either contingency outlined in this paragraph
31, it will reimburse the reasonable, actual out-of-pocket expenses incurred by
Tenant in connection with the TI Work (e.g., fees charged by Tenant's
architects, engineers, space planners, etc.) between the date on which this
Lease became fully executed and the date on which Landlord advised Tenant in
writing of the termination of this Lease, provided that Tenant shall not incur
any such expenses (i) before it is reasonably necessary to do so, given the
timelines in questions and (ii) without first approving Landlord's written
approval of the expenditures in question (Landlord's approval rights will be
limited to confirming that the expenditure in question is reasonable and that it
is reasonably necessary to incur the expenditure at the time in question;
Landlord shall respond to requests for approval promptly).
32. INTENTIONALLY DELETED.
33. RIGHT OF FIRST OFFER. Any available space in the Building outside of
the Premises that includes at least all of the space on a given floor other than
space that makes up part of the Initial Premises (i.e., roughly thirty thousand
(30,000) RSF of contiguous space on Floors Ground, 1,2or 3, and roughly 25,000
RSF of contiguous space on Floor 4) shall hereinafter be referred to as "RFO
Space". Subject to any conflicting rights granted to other tenants prior to the
date on which this Lease is fully executed, if any, Tenant shall have a right of
first offer to lease any RFO Space that becomes available (i.e., the space
becomes vacant with no claims to it being made by any party) during the base or
additional term of the Lease on the following terms and conditions:
(a) promptly after Landlord learns that a certain RFO Space will
become available, Landlord shall advise Tenant in writing as to (i) the size,
location and date of availability of such RFO Space and (ii) the fair market
terms on which Landlord in good faith proposes to offer such RFO Space for lease
to the public (in no event shall the offered term of lease expire later than the
later of (1) seven (7) years after the proposed commencement date on the RFO
Space or (2) the then-applicable expiration date of the Lease (of course, the
termination option outlined above in paragraph 3(c) shall not apply to any RFO
Space);
(b) unless Tenant notifies Landlord in writing on or before that day
which is ten (10) business days from the date on which Tenant received the
above-described notice of availability from Landlord that Tenant irrevocably
elects to expand the Premises to include all of the RFO Space on the terms
offered by Landlord or on other terms if such other terms have been mutually
agreed to in writing by Landlord and Tenant, Tenant shall automatically lose all
rights to the offered RFO Space, other than those Future Premises rights which
exist under paragraph 2(c) of this Lease, in which case Landlord shall
thereafter be free to lease all or any portion of such offered RFO Space on
whatever terms and conditions it may choose, with the exception that if the term
of lease on offered RFO Space last proposed by Landlord to Tenant extended
beyond the then-applicable expiration date of this Lease, and if Landlord
subsequently offered a shorter term of lease to a third party, Landlord shall
reoffer the subject RFO Space to Tenant on the terms most recently offered to
the third party, in which case Tenant shall have five (5) business days to
accept such new
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terms in writing. Notwithstanding the foregoing, however, if Tenant loses its
rights to the offered RFO Space in accordance with the foregoing, and if
Landlord thereafter leases such space to a third party, the space will again
become available RFO Space when the new lease with the third party terminates or
expires; and
(c) if at the time Tenant delivers Landlord its written notice
irrevocably electing to expand the Premises to include the offered RFO Space or
at any time between such date and the commencement date for the RFO Space in
question, Tenant has defaulted under the Lease and failed to cure the default in
the cure period outlined in the Lease, Landlord shall have the option to declare
Tenant's notice of exercise null and void, in which case the Premises shall not
be expanded to include the offered RFO Space.
34. TENANT REQUESTED ALTERNATES. In Exhibit C is a section captioned
"Tenant Requested Alternates" outlining certain improvement work to the Building
and/or Premises. Landlord hereby agrees that Tenant may elect to have all, some
or none of the Tenant Requested Alternates work undertaken at Tenant's sole
expense, provided that such election is made in a writing delivered to Landlord
prior to December 31, 1998. Tenant's failure to make such a written election by
such date shall constitute Tenant's irrevocable decision to forego all of the
Tenant Requested Alternates work. Whatever Tenant Requested Alternates work
Tenant elects to have undertaken pursuant to the foregoing shall hereinafter be
referred to the "TRA Work". The TRA Work, if any, shall be contracted for by
Tenant and shall be done in accordance with the terms of the TI Work section of
Exhibit C and paragraph 11(b) above and Landlord shall be entitled to charge a
construction management fee of two and one-half percent (2 1/2%) on all of the
TRA Work. Tenant hereby agrees that it shall endeavor with diligence and good
faith to cause the completion of such TRA Work as soon as is reasonably possible
under the circumstances and Tenant hereby further agrees that in no event shall
the failure to complete the TRA Work constitute a delay in either the
substantial completion of the Landlord's Work or the Commencement Date.
35. LEASEHOLD MORTGAGE. Tenant shall have the right at any time and from
time to time, without Landlord's consent, to mortgage, grant a security interest
in or otherwise encumber all or any portion of Tenant's leasehold estate with a
Leasehold Mortgage. Prior to the execution of a Leasehold Mortgage Tenant shall
give Landlord written notice thereof, including the name and address of the
Leasehold Mortgagee, and provide Landlord with a complete copy of the Leasehold
Mortgage. The term Leasehold Mortgage shall include deeds of trust and security
agreements.
(a) Landlord hereby consents to the inclusion in any Leasehold
Mortgage of a provision for an assignment of proceeds payable to Tenant pursuant
to Tenant's leasehold estate to the Leasehold Mortgagee, and a provision that
the Leasehold Mortgagee in any action to foreclose the same shall be entitled to
the appointment of a receiver of Tenant's leasehold estate, neither of which
provisions shall alter or impair in any manner Landlord's prior rights or
remedies under this Lease. For the benefit of any Leasehold Mortgagee (provided
Landlord has first received written notice of such Leasehold Mortgagee's name
and address), Landlord agrees not to accept a voluntary surrender of this Lease
by Tenant, at any time while a Leasehold Mortgage shall remain a lien on
Tenant's leasehold estate, except following a default hereunder and the
expiration of the applicable cure period. If a Leasehold Mortgagee acquires
Tenant's Leasehold estate by foreclosure or if Tenant assigns its Leasehold
estate to the Leasehold Mortgagee
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(individually, a "Successor" and collectively, "Successors"), the Successors
shall be bound by the obligations of Tenant under this Lease, provided that if a
Leasehold Mortgage thereafter assigns its rights under this Lease to another
party in accordance with the terms of this Lease, the Leasehold Mortgagee shall
be released from those obligations under this Lease which accrue after such
assignment.
(b) If a Leasehold Mortgagee shall have given to Landlord a written
notice signed by Tenant, specifying the name and address of such Leasehold
Mortgagee, Landlord shall send, in accordance with the provisions of paragraph
30(a) to such Leasehold Mortgagee, a copy of each notice of default ("Notice")
at the same time as and whenever any such notice shall be given by Landlord to
Tenant. Landlord shall accept performance and compliance by any such Leasehold
Mortgagee, of and with any term, covenant, agreement, provision, condition or
limitation on Tenant's part to be kept, observed or performed hereunder with the
same force and effect as though kept, observed or performed by Tenant.
(c) Landlord agrees that upon receipt of any Notice, any Leasehold
Mortgagee shall have the right, but not the obligation, to cure any default(s)
(or acts or omissions which are the subjects of the Notice) cited in the Notice
within the cure period contained in this Lease. Upon any Leasehold Mortgagee's
full compliance with or performance of any obligation(s), the noncompliance with
or nonperformance of which was the subject of the Notice, within said applicable
period, the default(s), acts or omissions in question shall be deemed cured and
no longer subject to Landlord's exercise of its default remedies.
(d) If a Leasehold Mortgagee has succeeded to the interest of Tenant
under this Lease and Landlord has terminated this Lease for Tenant's default,
and if within ten (10) days after the receipt of notice thereof, Leasehold
Mortgagee gives Landlord a binding and irrevocable notice that it wishes to
enter into a new Lease, Landlord shall prepare, at the Leasehold Mortgagee's
expense, and Landlord or its nominee and such Leasehold Mortgagee shall within
thirty (30) days thereafter mutually execute and deliver a new lease (the "New
Lease") of the Premises to such Leasehold Mortgagee, for the remainder of the
Term, at the fixed rent and upon the terms, covenants, agreements, provisions,
conditions and limitations herein contained, provided, however, that:
(i) such Leasehold Mortgagee shall pay or cause to be paid to
Landlord at the time of the execution and delivery of such New Lease, any and
all sums which would at the time of execution and delivery thereof be due
pursuant to this Lease but for such termination and, in addition thereto, upon
presentation by Landlord of documentation thereof, all reasonable expenses,
including reasonable attorneys' fees, which Landlord shall have incurred by
reason of such default and termination and the execution and delivery of the New
Lease which have not otherwise been received by Landlord; and
(ii) such Leasehold Mortgagee shall have remedied at or before
the execution of such New Lease any of Tenant's defaults of which such Leasehold
Mortgagee was notified by a Notice, except for any default which, by its nature
(and not by reason of any incapacity or characteristic of such Leasehold
Mortgagee), is not then reasonably susceptible of being cured by such Leasehold
Mortgagee (such Leasehold Mortgagee must continue to diligently and in good
faith endeavor to complete the cure of any such default, however).
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The tenant under such New Lease shall have the same right, title and
interest in and to the Premises and deposit as Tenant has under this Lease. Any
Leasehold Mortgagee shall be liable to perform all obligations imposed on the
tenant by such New Lease during, or which arise on account of, the period such
Leasehold Mortgagee has title to Tenant's leasehold estate, and said Leasehold
Mortgagee shall remain liable for such obligations which arose during, or on
account of, such period even after such period expires. However, a Leasehold
Mortgagee shall not be liable for those obligations which accrue after the date
the Leasehold Mortgagee has assigned its rights under this Lease to another
party in accordance with the terms of this Lease.
(c) Nothing contained in this Lease or in such Leasehold Mortgage
shall be deemed or construed to relieve Tenant from the full and faithful
observance and performance of its covenants herein contained, or from any
liability for the nonobservance or nonperformance thereof, or to require or
provide for the subordination to the lien of such Leasehold Mortgage of any
estate, right, title or interest of Landlord in or to the Premises or this
Lease.
36. UNION LABOR. Tenant hereby agrees that any time during which
Landlord's first mortgagee (whether construction or permanent lender) is a labor
union-based lender (e.g., a pension fund for labor union members, a labor union
itself, a life insurance company for labor union members, a credit union for
labor union members, etc.), Tenant will ensure that any and all of the TI Work,
TRA Work, or subsequent repair, alteration or improvement work undertaken in the
Premises or the Building for Tenant's account is performed only by labor union
contractors that employ or use only labor union members, provided that Landlord
is subject to the same restriction.
37. RIGHT OF FIRST OFFER TO PURCHASE. If the Landlord elects, during the
term of the Lease, to sell the Building with or without the Garage, it will
provide Tenant with a Right of First Offer as follows: (a) the Landlord will
provide to Tenant written notice of the terms it is prepared to accept and
Tenant will then have thirty (30) days in which to either accept such terms or
negotiate other terms acceptable to both parties (in any event, a binding
contract must be entered into within such thirty (30) day period); (b) if such a
binding contract is not entered into within such thirty (30) days, the Landlord
shall then be free to offer the property in question to third parties, with the
caveat that if the Landlord is prepared to accept from such a third party
financial terms that are collectively more than 3% less than those last offered
by Landlord to Tenant, the Landlord must re-offer the property on such better
terms to Tenant, but if Tenant does not accept such better terms in writing
within three (3) business days, its rights shall again be lost; (c) during the
pendency of any post-cure period default by Tenant, Landlord shall be free to
enter into a binding contract to sell the property to a third party without
providing Tenant with its above-outlined Right of First Offer (in such event, of
course, Landlord shall then be empowered to close the sale in accordance with
the terms of the third party contract, but if Tenant cures its default before a
binding contract is entered into with a third party, its rights shall be
reinstituted); and (d) Tenant's Right of First Offer shall not apply to either a
sale of less than 100% of the ownership interests in Landlord (however, the
retention by Landlord or a member of Landlord of a small ownership interest for
the reason of circumventing the terms of this paragraph 37 shall not be
permitted) or to a sale of the Building coupled with another asset (other than
the Garage) worth more than $1,000,000, whether such other asset is owned by the
same entity as the Building or not. In addition, this Right of First Offer shall
not survive the first arms length sale of the subject property by Landlord to an
unrelated party (i.e., it will not be binding on successors to the Landlord's
interests, other than successors who do not qualify as
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arms length third parties), nor shall it operate in the event of a foreclosure
sale by one of Landlord's lenders (in that event, it shall simply be voided).
Finally, a sale by Landlord that is either not arms length or is to a party that
is affiliated with or related to Landlord shall not trigger Tenant's rights
hereunder. If at the time the parties enter into a binding purchase and sale
agreement pursuant to the foregoing or at any time between such date and the
designated closing date, Tenant defaults under this Lease and fails to cure the
default in the cure period outlined in this Lease, Landlord shall have the
option to declare the purchase and sale agreement null and void, in which case
Landlord shall be free to then sell the subject property to a third party on any
terms and conditions provided the sale closes within the following nine (9)
months. The above-described Right of First Offer is exercisable by any assignee
of Tenant's interest under this Lease, provided that the assignment was either
consented to by Landlord in accordance with the terms of paragraph 18 of this
Lease or the assignment was of a type that may be consummated without Landlord's
consent pursuant to the terms of paragraph 18 of this Lease.
38. CONFIDENTIALITY. Landlord is currently bound by certain
confidentiality requirements in its contract with the existing owner of the
Premises. Landlord and such existing owner are currently discussing how best to
advise the existing tenants in the Building of the redevelopment of the Building
required as a result of this Lease. Landlord currently believes that disclosure
of the RealNetworks lease will be permitted within the next thirty (30) days.
However, until the sooner of the date on which such agreement is finalized and
the date on which Landlord acquires the Building, Landlord and Tenant agree that
they shall take all reasonable efforts to ensure the confidentiality of the
existence of, and terms of, this Lease, and neither shall make any public
statements, press releases or other statements to the media without the consent
of the other party, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the forgoing, however, the terms of this paragraph 38 shall not
require either party to violate any applicable law, regulation or court order,
nor shall the terms of this paragraph 38 require Tenant to disregard prudent SEC
practice.
IN WITNESS WHEREOF, the parties hereto have executed this Lease.
LANDLORD
Executed this ___ day of 2601 Elliott LLC, a Washington limited
January, 1998 liability company
By
------------------------------------
Jeffrey A. Roush, Managing Member
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TENANT
Executed this ___ day of RealNetworks, Inc, a Washington
January, 1998 corporation
By
------------------------------------
Its
------------------------------
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STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this ______day of _____________, 1998, before me, the undersigned,
a Notary Public in and for the State of Washington, duly commissioned and sworn
personally appeared JEFFREY A. ROUSH, known to me to be the Managing Member of
2601 ELLIOTT LLC, a Washington limited liability company, the limited liability
company that executed the foregoing instrument, and acknowledged the said
instrument to be the free and voluntary act and deed of said limited liability
company, for the purposes therein mentioned, and on oath stated that he/she was
authorized to execute said instrument.
I certify that I know or have satisfactory evidence that the person
appearing before me and making this acknowledgment is the person whose true
signature appears on this document.
WITNESS my hand and official seal hereto affixed the day and year in
the certificate above written.
--------------------------------------
Signature
--------------------------------------
Print Name
NOTARY PUBLIC in and for the State of
Washington, residing at______________.
My commission expires________________.
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STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this _________day of _______________, 1998, before me, the
undersigned, a Notary Public in and for the State of Washington, duly
commissioned and sworn personally appeared ____________, known to me to be the
____________ of REALNETWORKS, INC., a Washington corporation, the corporation
that executed the foregoing instrument, and acknowledged the said instrument to
be the free and voluntary act and deed of said corporation, for the purposes
therein mentioned, and on oath stated that he/she was authorized to execute said
instrument.
I certify that I know or have satisfactory evidence that the person
appearing before me and making this acknowledgment is the person whose true
signature appears on this document.
WITNESS my hand and official seal hereto affixed the day and year in
the certificate above written.
--------------------------------------
Signature
--------------------------------------
Print Name
NOTARY PUBLIC in and for the State of
Washington, residing at______________.
My commission expires________________.
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