EXHIBIT 10
LEASE AGREEMENT
BETWEEN
BELLEVUE GOLDWELL ASSOCIATES LLC
("Landlord")
and
MICROSOFT CORPORATION
("Tenant")
SUNSET CORPORATE CAMPUS,
BUILDING ONE
BELLEVUE, WASHINGTON
Table of Contents
Page
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ARTICLE 1 BASIC LEASE TERMS............................................. 1
1.1 Terms......................................................... 1
1.2 Exhibits...................................................... 4
ARTICLE 2 DESCRIPTION OF PREMISES....................................... 5
2.1 Premises...................................................... 5
2.2 [Intentionally Omitted.]...................................... 6
2.3 Right of First Offer.......................................... 6
2.4 Other Space................................................... 6
ARTICLE 3 TERM.......................................................... 6
3.1 Term.......................................................... 6
3.2 Extension Option.............................................. 7
3.3 [Intentionally Omitted.]...................................... 7
3.4 Conditions to Tenant's Obligations............................ 7
ARTICLE 4 RENT.......................................................... 7
ARTICLE 5 OPERATING COSTS, CAPITAL EXPENDITURES AND REAL ESTATE TAXES... 8
5.1 Operating Costs............................................... 8
5.2 Estimated Operating Costs..................................... 12
5.3 Verification of Operating Expenses............................ 12
5.4 Capital Expenditures.......................................... 12
5.5 Tenant's Proportionate Share.................................. 13
5.6 Real Estate Taxes............................................. 13
5.7 [Intentionally Omitted.]...................................... 13
5.8 Payment of Real Estate Taxes.................................. 14
5.9 Contesting Real Estate Taxes.................................. 14
5.10 Installment Payments.......................................... 14
5.11 Subsequent Assessments........................................ 14
ARTICLE 6 UTILITIES AND SERVICES........................................ 15
6.1 Utilities..................................................... 15
6.2 Costs of Electrical Service................................... 15
6.3 HVAC.......................................................... 16
6.4 Janitorial Service............................................ 16
6.5 Security Service.............................................. 16
6.6 Interruption of Services or Utilities......................... 16
6.7 Tenant Security System........................................ 16
6.8 Landlord Access............................................... 17
6.9 Year 2000 Compliance.......................................... 17
ARTICLE 7 USE OF PREMISES............................................... 17
7.1 Purpose....................................................... 17
7.2 Code Compliance for Tenant's Occupancy........................ 18
7.3 Prohibited Activities......................................... 18
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ARTICLE 8 TENANT'S WORK................................................. 18
8.1 Tenant Plans.................................................. 18
8.2 Contractor.................................................... 18
8.3 Reliance on Landlord Information.............................. 19
8.4 [Intentionally Omitted.]...................................... 19
8.5 Construction of Tenant's Work................................. 19
8.6 Tenant Allowances............................................. 19
8.7 Tenant's Access During Construction........................... 19
8.8 Substantial Completion........................................ 19
8.9 Intentionally Omitted......................................... 20
8.10 [Intentionally Omitted.]...................................... 20
8.11 Delay in Substantial Completion............................... 20
8.12 Construction Insurance........................................ 20
8.13 Tenant's Construction Representative.......................... 21
8.14 Signage....................................................... 22
8.15 Communications Equipment...................................... 22
ARTICLE 9 COMPLIANCE WITH LAW........................................... 23
9.1 Compliance with Law........................................... 23
9.2 ADA Compliance................................................ 23
9.3 Contesting Legal Requirement.................................. 23
ARTICLE 10 ALTERATIONS, ADDITIONS AND IMPROVEMENTS....................... 24
10.1 Nonstructural................................................. 24
10.2 Major Alterations............................................. 24
10.3 Contractor.................................................... 25
10.4 Landlord Charges.............................................. 25
10.5 Building Standard Finishes.................................... 25
10.6 Compliance with Law........................................... 25
10.7 Construction Insurance........................................ 25
ARTICLE 11 CONDITION, REPAIR AND MAINTENANCE OF PREMISES................. 25
11.1 Repair of Defects............................................. 25
11.2 Tenant's Maintenance.......................................... 25
11.3 Landlord's Maintenance........................................ 26
11.4 Time to Complete Work......................................... 26
ARTICLE 12 DAMAGE AND DESTRUCTION........................................ 26
12.1 Repair........................................................ 26
12.2 Termination................................................... 27
12.3 Delay in Completing Repair.................................... 27
12.4 Final Year of Term............................................ 27
12.5 Abatement..................................................... 27
ARTICLE 13 CONDEMNATION.................................................. 27
13.1 Taking........................................................ 28
13.2 Termination for Material Interference......................... 28
13.3 Taking of Parking............................................. 28
13.4 Abatement..................................................... 28
13.5 Taking Award.................................................. 28
13.6 Savings Clause................................................ 29
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ARTICLE 14 SUBORDINATION, RECOGNITION, NON-DISTURBANCE AND ATTORNMENT.... 29
14.1 Subordination................................................. 29
14.2 Holder's Election............................................. 29
14.3 Delivery of SAND Agreement.................................... 29
ARTICLE 15 LANDLORD'S WARRANTIES......................................... 29
ARTICLE 16 INSURANCE; WAIVER OF CLAIM.................................... 30
16.1 Tenant's Liability Insurance.................................. 30
16.2 Tenant's Property Insurance................................... 30
16.3 Landlord's Liability Insurance................................ 31
16.4 Landlord's Property Insurance................................. 31
16.5 Waiver of Recovery and Subrogation............................ 31
ARTICLE 17 INDEMNIFICATION............................................... 31
17.1 Tenant........................................................ 31
17.2 Landlord...................................................... 32
17.3 Survival...................................................... 33
ARTICLE 18 ASSIGNMENT AND SUBLETTING..................................... 33
18.1 Assignment Without Consent.................................... 33
18.2 Assignment With Consent....................................... 33
18.3 Effect of Transfer............................................ 34
ARTICLE 19 TENANT'S PROPERTY............................................. 34
19.1 Removal of Property During Term............................... 34
19.2 Removal of Property at End of Term............................ 35
19.3 No Lien....................................................... 35
ARTICLE 20 DEFAULT....................................................... 35
20.1 Tenant's Default.............................................. 35
20.2 Landlord's Remedies........................................... 35
20.3 Landlord's Default............................................ 37
20.4 Tenant's Remedies............................................. 37
20.5 No Cure Period................................................ 37
20.6 Self-help..................................................... 37
20.7 Survival...................................................... 37
ARTICLE 21 NOTICES....................................................... 38
ARTICLE 22 QUIET ENJOYMENT............................................... 38
ARTICLE 23 HOLDING OVER.................................................. 38
ARTICLE 24 MEMORANDUM OF LEASE........................................... 38
ARTICLE 25 ESTOPPEL CERTIFICATES......................................... 38
ARTICLE 26 ENVIRONMENTAL PROVISIONS...................................... 39
26.1 Environmental Law............................................. 39
26.2 Hazardous Substances.......................................... 39
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26.3 Landlord's Obligations........................................ 39
26.4 Tenant's Obligations.......................................... 40
ARTICLE 27 ADDITIONAL PROVISIONS......................................... 41
27.1 Removal of Liens.............................................. 41
27.2 Brokers....................................................... 41
27.3 Successors.................................................... 41
27.4 Severability.................................................. 41
27.5 Integration................................................... 41
27.6 Governing Law................................................. 42
27.7 No Waiver..................................................... 42
27.8 Construction.................................................. 42
27.9 Time.......................................................... 42
27.10 Cumulative Remedies........................................... 42
27.11 Protest....................................................... 42
27.12 Execution; Binding Effect..................................... 42
27.13 Authority..................................................... 42
27.14 Rules and Regulations......................................... 42
27.15 Force Majeure................................................. 43
27.16 Attorneys' Fees............................................... 43
27.17 Confidentiality............................................... 43
27.18 Reasonableness................................................ 43
27.19 [Intentionally Omitted.]...................................... 44
27.20 Landlord's Exculpation........................................ 44
27.21 Landlord's Knowledge.......................................... 44
27.22 Assignment by Landlord........................................ 44
27.23 Late Charge; Interest......................................... 44
EXHIBIT A-1 Premises
EXHIBIT A-2 Site Plan
EXHIBIT A-3 Floor Plans
EXHIBIT B Permitted Encumbrances
EXHIBIT C Commencement Date Agreement
EXHIBIT D Janitorial Services
EXHIBIT E Subordination Non-Disturbance and Attornment Agreement
EXHIBIT F Building Standard Finishes
EXHIBIT G Building Signage Policy
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ARTICLE 1
BASIC LEASE TERMS
1.1 Terms. Reference in this Lease to any of the terms listed below shall
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be deemed to incorporate and be a reference to the data or definition set forth
next to such term in this Article.
(a) Landlord: Bellevue Goldwell Associates LLC, a Delaware limited
liability company
(b) Landlord's Address:
Bellevue Goldwell Associates LLC
c/o Voit Property Management
13810 Southeast Eastgate Way
Bellevue, Washington 98005
With a copy sent to:
O.C. Real Estate Management, LLC
420 East Third Street, Suite 600
Los Angeles, CA 90013
Attn: Mr. William H. Cunningham, Jr.
(c) Tenant: Microsoft Corporation, a Washington corporation
(d) Tenant's Address:
Microsoft Corporation
One Microsoft Way
Redmond, WA 98052-6399
Attn: Larry Neilson
General Manager, Real Estate & Facilities / Corporate
Security
With a copy sent to:
Microsoft Corporation
One Microsoft Way
Redmond, WA 98052-6399
Attn: John A. Seethoff
Law and Corporate Affairs
(e) Address of Premises:
13810 S.E. Eastgate Way
Bellevue, WA 98005
(f) Building: See Article 2
(g) Premises: All of the fourth (4th) floor of the Building and
portions of the third (3rd) and fifth (5th) floors of the Building as more
particularly shown on Exhibit A-3 attached.
(h) Execution Date: The last date appearing adjacent to the
parties' signatures below
(i) Commencement Date: See Article 3
(j) Delivery Date: See Article 8
(k) Option: See Article 3
(l) Land: See Article 2
(m) Term: See Article 3
(n) [Intentionally Omitted]
(o) Tenant's Work: See Article 8
(p) Substantial Completion: See Article 8
(q) Use of Premises: See Article 7
(r) Base Rent:
Annual Rental Rate per Square Foot of
Lease Year Rentable Area
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One $29.00
Two $29.00
Three $29.00
Four $31.61
Five $31.61
(s) Additional Rent: See Article 4
(t) Rent: Base Rent and Additional Rent (See Article 4)
(u) Base Rent During Option Term: "Market Rent" means the prevailing
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market rental rate (including any periodic increases) that a willing tenant
would pay and a willing landlord would accept in an arm's length bona fide
negotiation for office space in an office building of comparable quality, design
and location in the I-90 Corridor [I-405 to Issaquah] for tenancies of at least
20,000 square feet of Rentable Area (provided that if there are fewer than three
(3) such "comparable" leaseholds in the I-90 Corridor the market area shall be
expanded to the Redmond, Bellevue, Issaquah areas), being under no compulsion to
lease the Premises as of the first day of the Option Term, taking into
consideration the uses permitted under this Lease, having a five (5) year term
and reflecting the relevant provisions of this Lease (e.g., base year rental
rate, services provided by Landlord and method of calculating Rentable Area and
creditworthiness of Tenant), and taking into consideration all other relevant
factors including, without limitation, any concessions or inducements (e.g.,
rent abatement, tenant improvement and other allowances) then being offered by
landlords to prospective or renewal tenants of similar size (or by prospective
or renewal tenants to landlords), definition of "rentable area" applicable to
the comparable spaces, distinction between gross and net rentals, services
provided and creditworthiness of tenant. For purposes of determining comparable
"quality and design," the Premises shall be deemed to exclude (i) that portion
of Tenant's Work constructed at a cost in excess of the Tenant Improvement
Allowance, (ii) any increase in the value of the Premises resulting from
Alterations constructed at the expense of Tenant. For purposes of determining
the Market Rent, the parties will first look to comparable transactions
involving renewal tenants, and if there are fewer than three (3) such
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comparable transactions, then to new tenancies. Tenant shall receive an
improvement allowance for the Option term which shall be not less than $5.00 per
square foot of usable area in the Premises.
Base Rent for each Option term shall be the Market Rent for the Option
Term. The parties shall negotiate in good faith to establish the Market Rent.
If the parties are unable to agree on Market Rent within fifteen (15) days after
Tenant gives Landlord its notice exercising the Option (the "Notice Date"), then
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the parties or their representatives shall promptly meet and attempt to agree on
the Market Rent. If within thirty (30) days after the Notice Date (such date
being referred to herein as the "Trigger Date") the parties have not agreed on
the Market Rent, then each party shall appoint a disinterested, independent
appraiser who is a member of the American Institute of Real Estate Appraisers
(an "Appraiser") and has at least ten (10) years experience appraising
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commercial office building properties in the greater Bellevue-Redmond area. The
Appraisers shall agree upon a mutually acceptable third appraiser (the "Third
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Appraiser") meeting the aforesaid criteria for an Appraiser. If the Appraisers
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are unable to reach agreement on the Third Appraiser within a period of ten (10)
business days, then either Appraiser, on behalf of both Appraisers, may request
that the president of the Seattle Chapter of the American Institute of Real
Estate Appraisers, if there is one and he or she is independent of both Landlord
and Tenant, appoint the Third Appraiser who meets the aforesaid criteria for an
Appraiser. If there is no such independent president, then either Appraiser, on
behalf of both, may request appointment of a Third Appraiser meeting the
aforesaid criteria for an Appraiser 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 Appraiser. Upon reaching said agreement or after such
appointment, the originally designated Appraisers shall endeavor to reach
agreement regarding Market Rent. If the Appraisers are unable to reach
agreement about Market Rent within forty-five (45) days after the Trigger Date,
then either party on written notice to the other may request the involvement of
the Third Appraiser, and each Appraiser promptly shall submit his determination
of Market Rent to the Third Appraiser. The Third Appraiser shall determine
Market Rent (applying the definition stated above) within fifteen (15) days
after involvement and the three appraisals shall be averaged in order to
establish Market Rent; provided, however, if the low appraisal or high
appraisal, or both, are more than five percent (5%) lower or higher (as the case
may be) than the middle appraisal, the low appraisal or the high appraisal, or
both (as the case may be), shall be disregarded. If only one appraisal is
disregarded, the remaining two appraisals shall be averaged in order to
establish the Market Rent. If both the low appraisal and the high appraisal are
disregarded, the middle appraisal shall establish the Market Rent. After the
Market Rent has been so established, the Third Appraiser shall immediately
notify Landlord and Tenant in writing. Each party shall bear the expense of
retaining its Appraiser. The fees and expenses of the Third Appraiser and other
expenses of the arbitration shall be borne equally by the parties. The Third
Appraiser's determination of Market Rent shall be final and binding on the
parties. Judgment upon the determination of Market Rent rendered by the Third
Appraiser may be entered in any court having jurisdiction.
(v) Premises Rentable Area: 67,209 square feet
(w) Building Rentable Area: 153,501 square feet
(x) [Intentionally Omitted]
(y) Tenant's Proportionate Share: See Section 5.5
(z) Rentable Area: In the event it becomes necessary to measure any
space added to the Premises pursuant to this Lease or otherwise, or in the event
of a reduction of the space within the
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Premises, Rentable Area shall be calculated according to the Building Owners and
Managers Association International ("BOMA") standards, namely the "Standard
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Method for Measuring Floor Area in Office Buildings - American National
Standard," ANSI Z65.1-1996 (Revisions of ANSI Z65.1-1980) approved June 7, 1996
by American National Standards Institute, Inc. as interpreted by written
guidance published by BOMA entitled "Answers to 26 Key Questions About the
ANSI/BOMA Standard for Measuring Floor Area in Office Buildings, and in any
event excluding vertical penetrations, building rooftops and penthouses. Any
dispute about measurement or calculation of Rentable Area shall be submitted to
the Independent Arbiter for resolution.
(aa) Lease Year: The first twelve (12) full calendar months of the
Term and each succeeding twelve (12) month period.
(bb) Laws: Laws, ordinances, rules and regulations, including but not
limited to building and zoning laws, including the Americans with Disabilities
Act, health, energy, and fire codes of the state, local and federal governments,
agencies, and boards, and the requirements and regulations of Boards of Fire
Underwriters having jurisdiction and of insurance carriers of all insurance on
the Premises (collectively "Laws").
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(cc) Independent Arbiter: A practicing architect with at least ten
(10) years experience and membership in the American Institute of Architects
("AIA") who has not been employed by either party or any affiliate of either
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party or who is currently pursuing work for or has worked for either party or
any affiliate of either party during the preceding twelve (12) months. The
Independent Arbiter shall be appointed by the president of the AIA chapter in
the locality where the Premises are located. Either Landlord or Tenant may
apply for appointment of the Independent Arbiter. Except as otherwise provided
in this Lease, each party shall pay one half (1/2) of the expenses of the
Independent Arbiter.
(dd) Development: See Section 2.2. Buildings One and Two of the
project known as Sunset Corporate Campus, including the associated Common Areas,
depicted on the Site Plan attached as Exhibit A-2.
1.2 Exhibits. The Exhibits listed below are attached and are incorporated
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in this Lease by this reference.
(a) Exhibit A-1 Land
(b) Exhibit A-2 Site Plan
(c) Exhibit A-3 Premises
(d) Exhibit B Permitted Encumbrances
(e) Exhibit C Commencement Certificate
(f) Exhibit D Janitorial Services
(g) Exhibit E Subordination Non-Disturbance and Attornment
Agreement
(h) Exhibit F Building Standard Finishes
(i) Exhibit G Building Signage Policy
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ARTICLE 2
DESCRIPTION OF PREMISES
2.1 Premises. Landlord leases to Tenant all of the fourth
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floor and portions of the third and fifth floors of that certain building (the
"Building") erected on that certain parcel of land ("Land") described in Exhibit
- --------- ---- -------
A-1 attached, together with appurtenances and the benefits of any appurtenant
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easements and rights of way. A Site Plan attached as Exhibit A-2 depicts the
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location of the Building. The floor plans attached as Exhibit A-3 depict the
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location of the Premises. Tenant, its agents, employees and invitees shall have
the non-exclusive, irrevocable right, privilege and easement to use in common
with other tenants of the Development, the Common Areas described below for the
purposes for which they were intended, including without limitation for adequate
and unobstructed pedestrian and vehicular traffic, access, ingress and egress
to, from and between the streets and highways adjoining the Building without
payment of any fee or other charge by Landlord being made therefor except the
sums expressly provided to be paid by Tenant under this Lease, subject to the
Rules described in Section 27.14 below. "Common Areas" means the Building
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common entrances, lobbies, public restrooms, elevators, stairways and
accessways, loading docks, ramps, drives and platforms and any passageways and
serviceways thereto, and the common pipes, conduits, wires and appurtenant
equipment serving the Premises, loading and unloading areas, trash areas,
parking areas, roadways, sidewalks, walkways, parkways, driveways and landscaped
areas and similar areas and facilities. Notwithstanding the descriptive
inclusion of parking areas in the definition of "Common Areas," Tenant's
specific right to parking spaces is described in Section 2.2 below. No changes
shall be made to the Common Areas that would materially interfere with Tenant's
access to the Premises or use of the Premises except as may otherwise be
required by applicable law.
There currently are 1,046 parking stalls at the Development. Landlord
shall not allow or cause a reduction in the number of stalls below this amount
unless a tenant surrenders specific rights to stalls that are removed from use
and Landlord thereafter makes a corresponding reduction in the number of stalls
it offers for rental to tenants at the Development. Any such reduction shall not
limit or affect Tenant's right to purchase permits as provided in the next
sentence. Tenant shall have the right to purchase four (4) parking permits per
1,000 square feet of usable area in the Premises to park vehicles in the
Development parking areas as follows: sixty-nine percent (69%) of the parking
permits shall be for parking in the parking garage adjacent to the Building;
thirteen percent (13%) of the parking permits shall be for parking in the
reserved executive parking area directly beneath the Building and have direct
elevator access to the Premises; and the remaining parking permits shall be for
the surface parking lots. Tenant shall be required to purchase such permits at
the then standard monthly charges for such parking permits as set forth in
Landlord's parking rate schedule as the same may change from time to time in
accordance with its rate schedule for the Building. Landlord agrees that it
will not change the monthly parking charges more frequently than once in any
calendar year, in no event shall the parking rate exceed the tenant parking rate
charged at comparable suburban properties, and in no event shall Tenant be
charged a parking rate that is greater than a majority of the tenants in the
Building are being charged for similar parking privileges. The initial charge
for covered parking under the Building will be $50.00 per permit per month, and
the initial charge for parking in the parking garage adjacent to the Premises
will be $35.00 per month. Initially, there will be no charge for parking in the
surface parking area.
The use of the parking areas shall be subject to the rules of Landlord
and the garage operator (to the extent such rules are not inconsistent with this
Lease and are enforced in compliance with Section 27.14), and Laws applicable to
the Development. If Landlord determines that the demand for parking in the
Development exceeds the number of available parking stalls, Landlord may
institute such parking procedures and methods as it determines are necessary to
efficiently operate the Development parking areas which may include valet
parking for guests and visitors, issuance of parking permits, and/or
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designating specific areas of the parking facilities as reserved for the
exclusive use of tenants of particular buildings, provided that any such
measures do not diminish the availability to Tenant of the number of spaces for
which it purchases permits. In accordance with state and city requirements to
minimize the use of single occupant vehicles, Tenant shall participate in
Landlord's transportation management program. Landlord's program may include
providing information and referral service to Tenant and Tenant's employees
regarding bus schedules, car pooling, van pooling, flex-time and job sharing and
may include other transportation management programs as are deemed appropriate
by Landlord from time to time. Tenant assumes full financial responsibility for
all parking permits purchased by Tenant or Tenant's employees or used by
Tenant's clients or guests.
2.2 [Intentionally Omitted.]
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2.3 Right of First Offer. Tenant shall have a right of first
--------------------
offer to lease the remainder of the space on the third (3rd) and fifth (5th)
floors of the Building (the "RFO Space") as it may become available for lease
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from time to time. Tenant's right to the 5th floor RFO Space are subject to the
rights of all of the existing tenants of the RFO Space. In addition to this
general right, Tenant shall have the specific right to lease all or a portion of
the remainder of the 3rd floor (approximately 10,600 square feet of Rentable
Area) in June 2003 (such date however being subject to the existing tenant of
such space having timely vacated the space), for which Landlord shall give
Tenant the notice described in the following sentence on September 1, 2002.
Whenever any portion of the RFO Space becomes available for lease, Landlord
shall provide Tenant with written notice of availability not more than nine (9)
months and not less than three (3) months prior to the date Landlord intends to
commence marketing the RFO Space, which notice shall state the date when Tenant
could begin renovation of the offered space (the "Availability Date"), the rent
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commencement date, a base rental rate per square foot of Rentable Area in the
RFO Space, an improvement allowance per square foot of Rentable Area for the RFO
Space, the parking ratio, the parking rental rate, and such other terms and
provisions on which Landlord is willing to lease the RFO Space, if any. Tenant
shall have sixty (60) days to notify Landlord of the acceptability of Landlord's
proposed terms, following which the parties shall have fifteen (15) days to
execute a letter of intent or lease amendment memorializing the terms on which
Tenant will Lease the RFO Space (the "Accepted Space"). Tenant's failure to
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respond timely shall constitute a rejection of Landlord's proposal. Promptly
after acceptance by Tenant, the parties shall execute an amendment to this Lease
incorporating the Accepted Space as part of the Premises and incorporating any
applicable terms and conditions. If Tenant does not accept the proposal, and
Landlord does not, within twelve (12) months after the seventy-five (75) day
period, lease the offered RFO Space to a third party on terms that are not less
than ninety-five percent (95%) of the net present value of the terms offered to
Tenant, or if any such space shall be leased to another tenant in accordance
with this Section 2.3 and again become available for lease, then the space shall
again be subject to Tenant's right of first offer. The Accepted Space shall
include a pro rata allocation of parking stalls matching the number of stalls
allocated to the initial Premises.
2.4 Other Space. At the request of Tenant, Landlord or its
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agent will advise Tenant of space availability in the Building or the
Development or in any adjacent property owned by Landlord or an affiliate of
Landlord.
ARTICLE 3
TERM
3.1 Term. The term of this Lease begins on the earlier of (a)
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Tenant occupying the Premises for the conduct of its business or (b) thirty (30)
days after Landlord provides access to the Premises for the purpose of
undertaking Tenant's Work as provided in Article 8 (the "Commencement Date") and
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ends on the last day of the month in which falls the fifth (5th)full year from
the Commencement Date (the
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"Term"), unless the Option is exercised or the Term ends earlier under this
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Lease. If the Commencement Date would be a Saturday, Sunday or holiday, then the
Commencement Date shall be the next business day. Landlord shall deliver to
Tenant physical possession of the Premises not later than January 1, 2000 in
accordance with Article 8, subject only to its inability to do so caused by the
present tenant, Infoseek Corporation, having failed to timely vacate. If
Infoseek fails to timely vacate, Landlord shall undertake all reasonable efforts
to remove Infoseek from the Premises, including without limitation promptly
instituting and prosecuting to completion unlawful detainer or other legal
proceedings to evict Infoseek, and shall keep Tenant apprised of the status of
such efforts. If Landlord fails to make the Premises available by February 29,
2000 for any reason, Tenant shall have the right to terminate this Lease by
giving written notice to Landlord. Landlord and Tenant have agreed that if
Infoseek fails to timely vacate possession of the Premises and Landlord performs
its covenants contained in this Section 3.1, Landlord will have no liability to
Tenant if the date Landlord delivers the Premises is later than January 1, 2000.
The date Landlord delivers possession of the Premises to Tenant is referred to
in this Lease as the "Turnover Date." Within sixty (60) days of commencement of
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the Term, Landlord and Tenant shall execute and deliver a certificate in the
form set forth on Exhibit C attached setting forth the commencement and
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expiration dates of the Term and the Premises Rentable Area as of the
Commencement Date.
3.2 Extension Option. Tenant shall have the right to extend this
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Lease for one (1) additional period of five (5) years (the "Option"), upon the
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same terms and conditions of this Lease except that Base Rent shall be
determined as set forth in Section 1(u) and except that the Base Year shall be
adjusted to be the first calendar year of the Option term. To exercise an
Option, Tenant must not be in Default at the time it exercises the Option, and
must give notice to Landlord that Tenant is exercising the Option at least 270
days before the Term expires. Any remaining Option will expire if Tenant does
not timely exercise the preceding Option.
3.3 [Intentionally Omitted.]
3.4 Conditions to Tenant's Obligations. The obligations of Tenant
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under this Lease are subject to satisfaction of the following conditions
precedent:
(a) Landlord shall have delivered the Premises in accordance with
the requirements of Article 8;
(b) All of the representations and warranties contained in
Article 15 shall be true and correct as of the date the Term commences; and
(c) Landlord shall have caused each party holding a lien or
encumbrance superior to this Lease to execute and deliver to Tenant a
Subordination, Non-Disturbance and Attornment Agreement in the form of Exhibit E
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attached, or such other form as may be reasonably acceptable to Tenant, which
Agreement(s) Tenant agrees to promptly execute, modified to conform to the facts
of this Lease existing at that time.
ARTICLE 4
RENT
The Base Rent for the Premises shall be as set forth in Article 1 of
this Lease. Tenant shall pay Base Rent on the first day of each month during
the Term in the monthly installments set forth in Article 1, except that Base
Rent for any portion of a calendar month during the Term shall be prorated by
dividing the annual Base Rent by three hundred sixty-five (365) and multiplying
the result by the number of days in the partial month for which Base Rent is
owed. Payments shall be made at Landlord's Address
or at such other address as Landlord may from time to time designate in writing.
All other payments required by this Lease to be made by Tenant during the Term
are "Additional Rent". The Rent shall be paid without setoff, adjustment or
---------------
deduction unless the offset or deduction is made by Tenant as permitted under
Articles 12, 13 and 20 or to recover any unpaid nonappealable court judgment
Tenant has against Landlord, and without abatement except as provided in this
Lease. Notwithstanding any other provision of this Lease, Tenant shall commence
paying rent on portions of the Premises as Tenant takes occupancy thereof and
commences use thereof for purposes other than completing Tenant's Work.
ARTICLE 5
OPERATING COSTS, CAPITAL EXPENDITURES AND REAL ESTATE TAXES
5.1 Operating Costs. Starting on January 1, 2001, and thereafter
---------------
throughout the Term, Tenant shall pay to Landlord as Additional Rent Tenant's
Proportionate Share of all increases in the Operating Costs above the amount of
Operating Costs for the Base Year. The "Base Year" is the calendar year 2000. If
---------
in any calendar year, including the Base Year, the average occupancy level of
the Building or the Development is less than ninety-five percent (95%), the
actual Operating Costs for the Building or the Development, as applicable, shall
be proportionately adjusted to reflect those costs which vary based on the
amount of occupied space occupied that reasonably would have been incurred, had
the Building or Development, as applicable, been ninety-five percent (95%)
occupied during such calendar year. The Operating Costs for the Base Year will
be calculated and stated as an annual sum of dollars against which future actual
Operating Costs for subsequent calendar years shall be compared for purposes of
determining increases or decreases in the Operating Costs payable by Tenant as
Additional Rent. Landlord shall provide in any statement submitted pursuant to
Section 5.3 a detailed description of how Operating Costs were grossed up. For
the purpose of computing increases in Operating Costs, no category of Operating
Expenses or change in service level scope or frequency in excess of what is
comparable for similar properties in the I-90 corridor may be included in the
Operating Costs in any year subsequent to the Base Year unless such item was
included in Operating Costs in the Base Year, provided, however, at Landlord's
election, any such items not actually incurred in the Base Year may still be
included in Operating Costs in any year subsequent to the Base Year when
actually incurred if Operating Costs in the Base Year are increased by the
amount such item would reasonably have cost if incurred in the Base Year.
The term "Operating Costs" means the management, maintenance,
---------------
replacement, repair and operating costs actually incurred by Landlord in the
management and operation of the Development, the Building and Common Areas,
subject to the exclusion or deduction of those items listed at the end of this
Section 5.1, including but not limited to:
(a) The cost of all reasonable and necessary repairs, maintenance and
operation of the parking areas, sidewalks and grounds including, without
limitation, all exterior lighting and the snowplowing of all walks, driveways
and parking areas on the Land, including the cost of materials and supplies
consumed in connection with any such maintenance, repair and operation;
(b) A management fee for Landlord or Landlord's managing
agent;
(c) Salary of Landlord's employees directly engaged in the operation
and maintenance of the Premises allocated to the Building based on the
percentage of time each such employee devotes to the Premises or Building;
(d) Premiums incurred by Landlord for insurance coverages and the
cost of service contracts maintained by Landlord that are required by this Lease
or that are required under a Mortgage;
-8-
(e) Service and other costs for elevators within the Building to the
extent such costs are not covered by warranty;
(f) Cost of repair, maintenance and operation with respect to the
Building and Common Areas systems and utility lines contained therein, except
that Landlord shall first look to any existing warranties and/or guaranties or
other responsible third parties to pay such costs;
(g) The cost of refuse removal and janitorial services;
(h) Cost of supplies and materials used in connection with the
operation, repair and maintenance of the Building and Common Areas, including,
without limitation, bathroom and cleaning supplies, light bulbs, ballasts,
fuses, and other electrical supplies, paper and paper goods; and
(i) Wages, bonuses and other compensation of those employees of
Landlord and Landlord's managing agent, if any, who are directly engaged in the
management, administration, operation and maintenance of the Development.
Landlord shall at all times use its reasonable efforts to operate the
Building and Common Areas in an economically reasonable manner at costs not
disproportionately higher than those experienced by other comparable buildings
in the I-90 corridor [I-405 to Issaquah].
Notwithstanding the generality of the preceding text, the following items
shall be excluded from Operating Costs:
(1) leasing commissions, fees and costs, advertising and promotional
expenses and other costs incurred in procuring tenants or in selling the
Building;
(2) The management fee for Landlord or Landlord's managing agent
shall be limited to a reasonable and customary fee in accordance with the local
marketplace for comparable buildings, which shall be inclusive of Landlord's
general overhead, and salaries and benefits of Landlord's personnel, officers
and executives;
(3) costs of renovating or otherwise improving or decorating space
for any tenant or other occupant of the Building, including Tenant, or
relocating any tenant;
(4) financing costs including interest and principal amortization of
debts and the costs of obtaining the same, except Operating Costs shall include
the amortization of capital expenses as expressly permitted herein;
(5) rental on ground leases or other underlying leases and the costs
of obtaining the same;
(6) (A) wages, bonuses and other compensation shall be limited to
those employees of Landlord and Landlord's managing agent, if any, who are
directly engaged in the operation and maintenance of the Development allocated
based on the percentage of time each such employee actually devotes to the
Development, and (B) employee fringe benefits other than insurance plans and
tax-qualified benefit plans shall be excluded in their entirety;
(7) any liabilities, costs or expenses associated with or incurred in
connection with the removal, enclosure, encapsulation or other handling of
asbestos or other hazardous or toxic materials or substances not caused by
Tenant;
-9-
(8) costs of any items for which Landlord is paid or reimbursed by
insurance;
(9) increased insurance or Real Estate Taxes assessed specifically to
any tenant of the Building or Development or for which Landlord is entitled to
reimbursement directly from any other tenant other than as part of the operating
costs chargeable to such tenant;
(10) charges for electricity, water, or other utilities and applicable
taxes for which Landlord is entitled to reimbursement from any other tenant;
(11) cost of any HVAC, janitorial or other services provided to
tenants on an extra cost basis after regular business hours;
(12) cost of installing, operating and maintaining any specialty
service not available as an amenity to Tenant without charge, such as an
observatory, broadcasting facilities, child or daycare, luncheon club or
athletic or recreation club;
(13) cost of correcting defects in the design, construction or
equipment of, or latent defects in, the Building or Development;
(14) cost of any work or service performed on an extra cost basis for
any tenant in the Building or Development to a materially greater extent or in a
materially more favorable manner than furnished generally to the tenants and
other occupants;
(15) cost of any work or services performed for any facility other
than the Building or Development;
(16) any cost representing an amount paid to a person, firm,
corporation or other entity related to Landlord that is in excess of the amount
which would have been paid in the absence of such relationship;
(17) any cost of painting or decorating any interior parts of the
Building or Development other than Common Areas;
(18) [intentionally omitted];
(19) any cost associated with operating an on-or off-site management
office for the Building or Development, except to the extent that, and in
proportion to, services performed at such office directly pertaining to the
Building or the Development;
(20) Landlord's general overhead and any other expense not directly
attributable to operation and management of the Building and Development (e.g.,
the activities of Landlord's officers and executives or professional development
expenditures);
(21) cost of initial cleaning and rubbish removal from the Building or
Development to be performed before final completion of the base building or
tenant space;
(22) [intentionally omitted];
(23) [intentionally omitted];
-10-
(24) attorneys' fees, accounting fees and other expenditures incurred
in connection with negotiations, disputes and claims of tenants or occupants of
the Building or the Development or with other third parties, except as
specifically otherwise provided in this Lease;
(25) cost of any alterations, additions, changes, repairs,
replacements or other items which, under generally accepted accounting
principles, are properly classified as capital expenses, except to the extent
Landlord is expressly allowed to recover such costs under Section 5.4;
(26) lease payments for rental equipment (other than equipment for
which amortization is properly chargeable as an expense) that would constitute a
capital expenditure if the equipment were purchased;
(27) [intentionally omitted];
(28) late fees or charges incurred by Landlord due to late payment of
expenses;
(29) cost of acquiring, sculptures, paintings and other art objects;
(30) Real Estate Taxes or taxes on Landlord's business (such as
income, excess profits, franchise, capital stock, estate, inheritance, etc.),
the recovery of Real Estate taxes being covered in Section 5.8 below;
(31) costs due to Landlord's violation of any governmental rule or
authority;
(32) if there is a separate charge for transient parking at the
Development, the revenue collected from transient parking shall be netted
against direct costs or allocable costs (such as Real Estate Taxes) associated
with parking operations so that only those costs in excess of such revenue
shall be included in Operating Costs;
(33) costs related to compliance with Law in connection with those
parts of the Building and Development that Landlord is responsible for
maintaining and repairing, except with respect to changes in Law after the
Effective Date or changes in judicial interpretation of existing Laws adopted
after the Effective Date;
(34) cost of complying with the Americans With Disabilities Act,
whether such costs are classified as capital items or expenses under generally
accepted accounting principles, except for the cost of complying with changes to
the ADA occurring after the Effective Date or changes in judicial interpretation
of the ADA;
(35) charitable or political contributions;
(36) costs of complying with the Year 2000 Compliant requirement set
forth in Section 6.9, and costs incurred as a result of the failure to comply
with such requirement (including without limitation costs of consultants,
systems review, and upgrades in software or programming), whether such costs are
classified as capital items or expenses under generally accepted accounting
principles; and
(37) Landlord shall not recover any item of cost more than once.
5.2 Estimated Operating Costs. Landlord shall reasonably estimate the
-------------------------
increase in Operating Costs for each calendar year wholly or partially included
within the Term and shall send notice of the
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estimate to Tenant at least thirty (30) days before commencement of each
calendar year for which Tenant is obligated to pay for increases in Operating
Costs. If Tenant requests, but not more frequently than once each calendar year
or upon a change in estimate, Landlord will give Tenant reasonably detailed
documentation supporting Landlord's estimate. During each calendar year included
in the Term for which Tenant is to pay Operating Costs, Tenant shall pay, as
Additional Rent, one twelfth (1/12th) of the applicable estimate each month to
Landlord together with the Base Rent. If Landlord does not give Tenant an
estimate within the time period stated above, then Tenant shall continue to make
estimated payments based upon the preceding year's estimate and within thirty
(30) days after receipt of the new estimate for the current calendar year,
Tenant shall commence payment of the new estimated monthly amount and shall pay
in a lump sum any retroactive amounts due from the beginning of the new calendar
year.
5.3 Verification of Operating Expenses. Not later than one hundred fifty
----------------------------------
(150) days after the expiration of each calendar year included in the Term for
which Tenant is obligated to pay Operating Costs, Landlord shall submit to
Tenant a written statement, certified by an officer of Landlord's or an officer
of Landlord's property manager in sufficient detail for verification by Tenant,
containing the amount of actual Operating Costs for such calendar year broken
down by component expenses, Base Year Operating Costs broken down by component
expenses, the Operating Cost increase for the calendar year, the amount of
Tenant's Proportionate Share of the Operating Cost increase, the amount paid by
Tenant towards the Operating Costs increase, and the amount, if any, Tenant owes
Landlord or the amount Landlord owes Tenant as a refund for such year. If
Landlord does not furnish Tenant with a certified statement of Operating Costs
within eight (8) months after the end of the calendar year, then Landlord shall
be deemed to have waived forever any and all claims for reimbursement from
Tenant for underpayment of Operating Costs for the calendar year, in addition to
any other rights and remedies to which Tenant may be entitled under this Lease.
Tenant or its audit representatives shall have the right to inspect and audit
Landlord's books and records with respect to this Lease no more often that once
each calendar year and not more than forty (40) months after receipt of the
Landlord statement of the prior year's Operating Costs to verify actual
Operating Costs. Landlord's books and records shall be kept on an accrual basis
according to generally accepted accounting principles, provided that prepaid
items shall be amortized to match the period in which the service or benefit is
received. If Tenant's audit of the Operating Costs reveals an overcharge of more
than five percent (5%), Landlord promptly shall reimburse Tenant for the
reasonable cost of the audit. Any overcharge or underpayment of Operating Costs
shall be due from one party to the other within thirty (30) days after the
amount of the overcharge or underpayment has been fixed. The foregoing rights
also shall apply with respect to verification of any amounts charged by Landlord
to Tenant for utility costs. Any review or audit of Landlord's books and records
shall occur at the office of the Building manager or at such other location in
the Seattle metropolitan area as Landlord may designate and shall occur during
the normal business hours of the Building manager, unless otherwise specified by
Landlord. The results of the audit and any information obtained by Tenant from
the audit or Tenant's review of Landlord's books and records shall be kept
confidential and not disclosed to any person or entity (including without
limitation any other tenant of the Building or the Development) except Tenant's
agents, auditors and attorneys. Landlord, at its option, may require that
Tenant's audit representative execute a confidentiality agreement incorporating
the terms and conditions of this paragraph.
5.4 Capital Expenditures. If, during the Term of this Lease, Landlord
--------------------
shall make a capital expenditure for an improvement to the Building or
Development that (a) is required due to a change in Law following the Effective
Date or changes occurring after the Effective Date or changes in judicial
interpretation of existing Laws adopted after the Effective Date, or (b) results
in a savings in operating the Building or Development and of which Landlord has
given information reasonably satisfactory to Tenant demonstrating a cost savings
equal to or greater than Tenant's Share of the Annual Amortization of
-12-
such improvement, then Tenant shall pay Tenant's Proportionate Share of the
Annual Amortization of such capital expenditure, such payment in the case of
item (b) not to exceed the amount of Tenant's Proportionate Share of the savings
realized by the expenditure. In addition, Tenant shall pay as part of Operating
Costs the Annual Amortization of Capital Improvements made for the general
convenience or benefit of tenants of the Building or the Development provided
such costs have been approved in advance by Tenant (which approval may be
granted or withheld by Tenant in its sole discretion. "Annual Amortization"
-------------------
shall be determined by amortizing the original capital expenditure over the
number of years of the useful life of the capital expenditure using an interest
rate equal to ten percent (10%) per year.
With respect to capital expenditures, Tenant shall commence payment as
Additional Rent of one twelfth (1/12th) of the annual amount shown in Landlord's
notice of the Annual Amortization of such capital expenditure with the next and
each succeeding installment of Base Rent becoming due during the Term, provided
that the item for which the expenditure was made has been fully completed on the
date of Tenant's first payment, and further provided that Tenant has received
notice of such amount at least fifteen (15) days prior to the date on which
payment is due, but if it is not so received, then Tenant's payment shall
commence as of the following month, retroactive to the prior month. For
purposes of this Lease, "capital expenditure" is defined as: (a) the acquisition
-------------------
of a prior non-existing asset or the replacement of a pre-existing asset; (b)
not acquired in the ordinary course of business; and (c) not characterized as an
operating cost or expense within generally accepted accounting principles,
provided that the acquired asset must enhance the value of the real estate over
its useful life, be permanently affixed to the real estate and excludes all
removable trade fixtures, and repairs to existing assets.
5.5 Tenant's Proportionate Share. "Tenant's Proportionate Share"
---------------------------- ----------------------------
equals the ratio of Tenant's Rentable Area within the Building to the total
Rentable Area of the Building. Initially, Tenant's Proportionate Share is
estimated to be 43.78%.
5.6 Real Estate Taxes. "Real Estate Taxes" means general real
----------------- -----------------
estate taxes and surface water assessments levied against the Development and
that become due and payable in a calendar year, but not any special assessments
or taxes in the nature of improvement or betterment assessments which shall be
governed solely by Section 5.11. Real Estate Taxes shall also exclude, without
limitation, any income, franchise, gross receipts, corporation, capital levy,
excess profits, revenue, rent, inheritance, gift, estate, payroll or stamp tax
or any tax upon the sale, transfer or assignment of Landlord's title or estate,
which at any time may be assessed against or become a lien upon all or any part
of the Development or this leasehold. In addition, Real Estate Taxes shall
exclude any liens or taxes, penalties or interest that are levied or assessed
against the Development for any time prior to the Term. In addition, Real
Estate Taxes shall exclude taxes on any portion of the Development separately
leased to a third party by which the lessee is responsible for paying the taxes
assessed against the portion of the Development so leased. If at any time
during the Term the laws concerning the methods of real property taxation
prevailing at the commencement of the Term are changed so that a tax or excise
on rents or any other such tax, however described, is levied or assessed against
Landlord the tax or excise on rents shall be deemed to be Real Estate Taxes (but
only to the extent that it can be ascertained that there has been a substitution
and that as a result Tenant has been relieved from the payment of Real Estate
Taxes it would otherwise have been obligated to pay). Any reduction in Real
Estate Taxes below the Base Year amount shall be credited against any increase
in Operating Costs.
5.7 [Intentionally Omitted.]
5.8 Payment of Real Estate Taxes. Tenant shall pay as Additional
----------------------------
Rent its Proportionate Share of the increase in Real Estate Taxes assessed
against the Development above Real Estate Taxes assessed for the Base Year for
each tax period or portion thereof included within the Term and which during the
Term are levied or imposed upon or become a lien or liens upon the Development.
If the tax
-13-
parcels containing the Development have not been fully assessed as a completed
and occupied unit with all improvements contemplated by this Lease as of the
Commencement Date, then Base Year Real Estate Taxes shall be deemed to be an
amount equal to the Real Estate Taxes as if such tax parcel was fully assessed.
Landlord shall provide verification of any computation of Proportionate Share of
Real Estate Taxes upon request by Tenant. Real Estate Taxes for the tax years in
which the Term commences and expires shall be apportioned between Landlord and
Tenant by dividing the amount of Real Estate Taxes by three hundred sixty-five
(365) and multiplying the result by the number of days falling within the Term.
5.9 Contesting Real Estate Taxes. If Tenant's proportionate share of
----------------------------
the Building is twenty-five percent (25%) or greater, Tenant shall have the
right to contest or review (in the name of Tenant, or of Landlord, or both, as
Landlord in its discretion shall elect) by appropriate proceedings (which may be
instituted either during or after the Term, and if instituted shall be with
written notice to and the reasonable cooperation of Landlord if requested) any
valuation of the tax parcel on which the Building is located for Real Estate Tax
assessment purposes and/or any increase in the tax rate. Landlord shall without
limitation furnish, on a timely basis, such data, documents, information and
assistance and make such appearances as may be reasonably required by Tenant.
Landlord will execute all necessary instruments in connection with any such
protest, appeal or other proceedings. If any proceeding may only be instituted
and maintained by Landlord, then Landlord shall do so at the request and expense
of Tenant. Landlord shall not settle any appeal or other proceeding initiated by
Tenant without obtaining Tenant's prior written approval in each instance, which
consent will not be unreasonably withheld, delayed or conditioned. Tenant shall
not abandon any appeal without first offering to Landlord the right to prosecute
such appeal at Landlord's expense. Tenant shall be entitled to Tenant's
Proportionate Share of any refund (net of Tenant's and Landlord's expenses
incurred in obtaining same) obtained by reason of any such proceeding or
otherwise whether obtained during or after the expiration of the Term and
whether obtained by Landlord or Tenant, except that if the refund shall relate
to the year in which the Term commences or expires, the refund (after deducting
all costs of Landlord or Tenant in obtaining same) shall be apportioned between
Landlord and Tenant according to the number of days within the Term.
5.10 Installment Payments. If, by law, any Real Estate Taxes may be
--------------------
paid in installments (whether or not interest accrues on the unpaid balance), at
Tenant's option the Real Estate Taxes shall be paid in installments as they
become due and before any fine or penalty may be added for nonpayment. Tenant
shall pay to Landlord its Proportionate Share of any installments, including
interest if required, coming due during the Term prorated for any fraction of an
installment period included within the Term.
5.11 Subsequent Assessments. Landlord represents and warrants it has
----------------------
no actual knowledge of any planned special assessments. Landlord shall pay when
due all betterment assessments for municipal improvements levied against the
Development during the Term. Landlord shall elect whenever permitted by
applicable law to have such assessments payable in installments. Landlord shall
give notice to Tenant of the annual amount. Tenant shall, during the remainder
of the Term, pay to Landlord monthly, one twelfth (1/12th) of its Proportionate
Share of the amount shown in such notice, payable with the Base Rent payments
due and payable under Article 4 but starting not less than thirty (30) days
after receipt of the notice by Tenant.
ARTICLE 6
UTILITIES AND SERVICES
6.1 Utilities. Landlord will provide, at no cost to Tenant, at or
---------
before commencement of the initial Term, the following utility lines up to the
interior primary and secondary connection points within the interior walls of
the Building: potable water (hot water only in restrooms) meeting local, state
and
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federal requirements for water quality for lavatory and drinking purposes,
sprinkler, electricity, sewer and a telephone service access point in telelphone
rooms on each floor of the Premises. The installation of telephones within the
Premises shall be the responsibility of Tenant. Landlord represents and warrants
that, at a minimum, the following electrical capacity is available on each floor
of the Building for the operation of the electrical facilities installed in the
Premises and for the operation of Tenant's fixtures and equipment:
(a) 10 watts per usable square foot for general power, HVAC and
lighting requirements;
(b) access to 480 volt service convenient to the Premises, for
Tenant's Uninterrupted Power Supply ("UPS") facility; and
---
(c) a source of back-up power in common areas providing power for life
safety purposes.
6.2 Costs of Electrical Service.
---------------------------
(a) Electrical service to Premises shall be separately metered
pursuant to meters installed by Landlord at the expense of Tenant.
(b) Landlord and Tenant acknowledge that various federal and state
initiatives are under way that are expected, over time, to result in
deregulation of the electric utility industry so that the historic, vertically-
integrated monopoly for generation and delivery of electrical power and services
is replaced by market-priced elements of production, capacity, transmission and
ancillary services.
(c) In order to maximize the benefit of this opportunity, throughout
the Term Tenant shall have the right, upon thirty (30) days notice to Landlord,
to acquire its electrical energy or other electrical utility service directly
from a third party or parties that has the legal authority to provide such
service and, from time to time without further notice to Landlord, to change
such third party or parties. Provided Tenant pays all of the additional costs
of such delivery including any charged to Landlord, Landlord shall allow
delivery to Tenant's meter or meters via Landlord's electrical lines such
electric energy or other services as Tenant contracts for delivery to the
Premises. Landlord shall reasonably cooperate with Tenant in giving effect to
this Section 6.2 so that Tenant is afforded the unrestricted opportunity to
purchase electrical energy and electrical utility service from such third party
or parties as Tenant in its sole discretion may choose. Tenant shall pay all
costs of every kind and nature related to any change in electrical service
provided or requested by Tenant, including but not limited to, Landlord's out-
of-pocket expenses and the cost of reconnecting the original service provider at
the end of the Lease Term. Tenant shall be solely responsible for any delays or
disruption of electrical service or of Landlord's performance of its leasehold
obligations attributable to such a change. If the substitute service provider
requires changes be made in or to the utility system serving the Building as a
condition of providing service to the Premises, then Landlord shall have the
right to reject Tenant's request for use of such substitute service provider.
6.3 HVAC. Landlord shall furnish a heating, ventilation and air
----
conditioning ("HVAC") system serving the Premises twenty-four (24) hours per day
----
that is capable of heating all areas of the Premises to an inside temperature of
seventy-two (72) degrees Fahrenheit with the outside temperature as shown in
ASHRAE 1989 Fundamentals Chapter 24 table (using the two and one-half percentage
(2 1/2%) table) that cools all areas of the Premises to an inside temperature of
seventy-four (74) degrees Fahrenheit plus or minus two (2) degrees with the
outside temperature as shown in ASHRAE 1989 Fundamentals Chapter 24 table (using
the two and one-half percentage (2 1/2%) table) plus or minus five
-15-
percent (5%). The HVAC system shall provide indoor air quality at the minimum
operation standards contained within any and all applicable Laws, and within
ASHRAE Standard 1996, including, without limitation, to provide 15 cubic feet
per minute of outside air per person in the Premises. The business hours for the
Building shall be 7:00 a.m. to 6:00 p.m. Monday through Friday and 8:00 a.m. to
noon on Saturday. Upon Tenant's request, Landlord shall furnish HVAC to the
Premises at times other than that stated above and Tenant shall pay Landlord its
then standard charge for after-hours HVAC service which is currently $28.00 per
hour per floor, and $14.00 per hour for half floors. Tenant shall not be charged
more for after-hours HVAC service than the lowest rate then charged a majority
of the other tenants in the Development. If any tenants in the same service zone
as Tenant request after-hours HVAC for the same times as Tenant, the after-hours
HVAC charges shall be pro-rated based on the relative square footages of such
tenants in such zone requesting such service.
6.4 Janitorial Service. Landlord shall provide janitorial service to
------------------
the Premises five (5) days each week of the Term so that the Premises are
cleaned according to the standards set forth in the Janitorial Service
specifications attached as Exhibit D. Landlord will use its reasonable efforts
---------
to hire a contractor to recycle all items for the Building. Tenant will be
responsible for separating its trash.
6.5 Security Service. Access to the Building outside Building
----------------
business hours shall be via a card/access system paid for by Landlord. Landlord
may impose a charge to Tenant for lost or misplaced access cards provided to
Tenant the cost of which shall not exceed the actual out-of-pocket cost to
Landlord of obtaining access cards.
6.6 Interruption of Services or Utilities. Landlord understands that
-------------------------------------
the availability of continuous, 24-hour, year-round utility service is a
material inducement to Tenant entering into this Lease. If the utilities or
services that are required for Tenant's use and occupancy of the Premises are
interrupted so that they are provided only intermittently or the utilities or
services altogether cease to be provided to the Premises for any reason
whatsoever, other than (i) default or negligence of Tenant, or (ii) default of
any entity supplying or delivering electricity to Tenant other than Landlord,
for a period of sixty (60) days, Tenant at the end of the period "Non-Service
-----------
Period") has the right to terminate this Lease as to the affected Building by
- ------
giving written notice thereof to Landlord within ten (10) days of the end of the
Non-Service Period, and this Lease shall terminate thirty (30) days from the
date of notice, unless service is restored prior to the termination date. Rent
shall abate beginning on the fourth (4th) day of the interruption (except if
caused by Tenant's act or omission) until the interrupted utilities or services
are fully restored. Landlord shall use its diligent efforts to promptly resume
or restore the interrupted utilities or services. This section shall not apply
to a power disruption occasioned by a casualty to which Article 12 applies.
6.7 Tenant Security System. Tenant may install keyed, combination or
----------------------
cipher locks on interior doors of the Premises. Tenant may install an electronic
security system in the Premises, including, but not limited to, pass card door
lock systems and camera surveillance systems. At the end of the Term Tenant
shall remove all security systems and locks installed by it and repair any
damage resulting from their removal. Tenant shall either have onsite personnel
twenty-four (24) hours per day available to afford Landlord access or provide
Landlord with keys or combinations as applicable, so that Landlord may have
access to the Premises in an emergency and to perform the obligations of
Landlord under this Lease.
6.8 Landlord Access. Landlord and its representatives, agents and
---------------
contractors shall be entitled to access to the Premises accompanied by a
representative of Tenant upon giving Tenant sufficient notice to allow Tenant to
prepare, at its option, for any potential interference. The parties agree that
the following will constitute sufficient advance notice: three (3) days or if
the purpose of such entry is to make minimally intrusive repairs that may
reasonably be completed within one day, twenty-
-16-
four (24) hours, except that in the case of an emergency that gives rise to
imminent danger to persons or property, Landlord need only give Tenant such
notice, if any, as is reasonable under the circumstances. Landlord shall cause
the least interference to Tenant's business reasonably possible. Landlord shall
promptly finish any work for which it entered. Access by Landlord shall be
strictly in accordance with the security and confidentiality requirements that
Tenant may adopt from time to time, including, without limitation, a requirement
that persons other than Landlord having access to the Premises shall sign and
deliver to Tenant a confidentiality and nondisclosure agreement in form and
content acceptable to Tenant. Tenant may object to and Landlord shall prevent
access to the Premises by any prospective purchaser or tenant or other visitor
whom Landlord intends to bring onto the Premises who is, or may reasonably be
suspected by Tenant to be or represent, a competitor of Tenant. If Landlord's
entry materially interferes with the conduct of Tenant's business, the Rent
shall abate in proportion to the Rentable Area so affected. If Landlord or
Landlord's actions are the cause of damage to Tenant's property, Landlord shall
be liable for any such damage to the extent such claim is not waived by the
provisions of Section 16.5.
During the nine (9) months preceding expiration of the Term, Tenant
shall, at all reasonable times upon forty-eight (48) hours prior notice, permit
Landlord or its agents to enter the Premises to show them to others and to affix
to any suitable part of the Building or Premises, but not so as to interfere
unreasonably with any of the signs or the windows of Tenant, a notice for
letting the Premises.
6.9 Year 2000 Compliance. To Landlord's actual knowledge, all
--------------------
equipment, products, systems and processes utilized by Landlord in fulfilling
its obligations under this Lease, including without limitation all hardware,
software and networks are fully and effectively Year 2000 Compliant. "Year 2000
---------
Compliant" shall mean that neither performance nor functionality is affected by
- ---------
dates prior to, during or after the year 2000, and in particular, but without
prejudice to the generality of the foregoing (i) no value for current date will
cause any interruption in operation; (ii) date-based functionality will behave
consistently, correctly and for the purposes for which it was intended, for
dates prior to, during and after the year 2000; (iii) in all interfaces and data
storage, the century in any date must be specified either explicitly or by
unambiguous algorithms or inferencing rules; and (iv) Year 2000 must be
recognized as a leap year.
ARTICLE 7
USE OF PREMISES
7.1 Purpose. Tenant may use the Premises (a) for general and
-------
executive offices, (b) demonstration of Tenant's business and associated
products and training thereon, (c) research and development to the extent
permitted by applicable laws, and (d) for any other lawful purpose, or Tenant
may allow part or all of the Premises to remain vacant. Landlord shall not
hereafter knowingly take any action that will cause the specific uses delineated
in this Section 7.1 to be prohibited or otherwise restricted by any covenant,
condition, restriction, easement or other instrument or matter affecting title
or use of the Premises or any part thereof, provided, however, no portion of the
Premises may be used under part (d): (i) for any purpose that would result in a
governmentally mandated increase in required parking; (ii) for any purpose that
would void Landlord's insurance coverage; (iii) for any purpose that violates
any restriction or prohibition contained in this Lease; (iv) for any purpose
that would require any structural change to or seismic upgrade of any Building
or the Development, except as permitted or provided in Section 10.2; (v) for any
governmental or other purpose serving the general public unless approved by
Landlord; or (vi) for any purpose that would interfere with the satellite,
microwave or other communications transmission or reception equipment in the
Development installed prior to the date on which Tenant commenced its activity
creating the interference; (vii) training facilities open to the general public;
(viii) educational facilities open to the general public; or (ix) an employment
agency.
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7.2 Code Compliance for Tenant's Occupancy. Except as
--------------------------------------
otherwise provided in Section 8.1 below, Landlord will procure all
authorizations and permits that may be required for any use made of the Premises
including but not limited to certificates of occupancy and variances (if
required) prior to the time Tenant occupies the Premises for the purposes set
forth in Section 7.1. Tenant shall assist Landlord to obtain such
authorizations and permits, if its assistance is required by the issuing
authority or authorities, but such assistance shall be given at no cost to
Tenant. Any special business permits or licenses that may be required of Tenant
to conduct its business in the State or locality where the Premises are located
are the responsibility of Tenant.
7.3 Prohibited Activities. Nothing shall be done upon or about the
---------------------
Premises that violates any law, ordinance, regulation or requirement of any
public authority having jurisdiction. Tenant shall not commit or allow to be
committed any waste on the Premises, or any public or private nuisance or other
act which disturbs the quiet enjoyment of any other tenant of the Building or
the Development. Tenant will keep the Premises reasonably clean and will not do
or keep anything in or upon the Premises that may prevent the obtaining of any
insurance on the Premises or that may void any such insurance.
ARTICLE 8
TENANT'S WORK
8.1 Tenant Plans. The leasehold improvements that Tenant
------------
intends to initially install in the Premises are referred to as "Tenant's Work."
-------------
Tenant will select the architect(s) to prepare the design and construction
drawings for Tenant's Work. Tenant will submit to Landlord for its review and
approval two (2) sets of complete construction documents for Tenant's Work,
including drawings and specifications. Landlord's review shall be deemed
completed and approval given without comment if Landlord fails to respond in
writing with its comments regarding the such drawings and specifications within
fifteen (15) days of receipt from Tenant. Tenant shall incorporate into the
construction documents Landlord's reasonable comments that are timely received.
Tenant shall be solely responsible for obtaining all permits and other
governmental approvals necessary for Tenant to commence and complete Tenant's
Work, and also for obtaining any certificate of occupancy or other governmental
approval necessary for Tenant to use and occupy the Premises to the extent
required as a result of Tenant's Work.
8.2 Contractor. Construction shall be performed by reputable
----------
contractors and subcontractors reasonably satisfactory to Landlord. Landlord
shall be deemed to have approved a Tenant contractor if Landlord does not
respond to Tenant's request for approval within ten (10) days after the request
is made. Upon completion of Tenant's Work, Tenant shall provide Landlord with
two (2) sets of as-built drawings prepared by Tenant's architect. Seneca Real
Estate Group, Inc. or The Voit Companies will act as Landlord's construction
representative to oversee construction of Tenant's Work. Tenant will reimburse
for the reasonable cost of such services determined according to the market cost
in the construction management industry for a similar scope of work and provided
such cost has first been paid by Landlord. If Tenant elects to use contractors
for the electrical or mechanical portions of Tenant's Work other than the
Landlord's contractors for those systems, Tenant shall reimburse Landlord for
its third party costs up to $2,000.00 incurred in reviewing the plans for
Tenant's contractors' work. Landlord shall not charge any other fee for its
involvement in the design or construction process.
8.3 Reliance on Landlord Information. Tenant shall be entitled to
--------------------------------
rely on all written information regarding the Building received from Bill
Cunningham, Loretta Alake, Michael Thompson or David Victor on behalf of
Landlord, its employees, representatives and agents. Landlord shall be
responsible for and at its sole expense shall remedy and correct any instance
where Tenant's Work is incompatible with the Building because Landlord's
information was inaccurate.
8.4 [Intentionally Omitted.]
-18-
8.5 Construction of Tenant's Work. Landlord shall use its
-----------------------------
reasonable efforts to assist Tenant in obtaining construction and occupancy
permits. Upon obtaining all necessary permits for construction of Tenant's
Work, Tenant may commence construction of Tenant's Work. The construction shall
be performed by or on behalf of Tenant in a good and workmanlike manner and in
compliance with all Laws. The Premises and any staging area depicted on the
Tenant Plans shall be made available to Tenant's contractors for purposes of
undertaking Tenant's Work not later than the Turnover Date vacant and with all
personal property of prior tenants or occupants removed, except to the extent
Tenant has agreed with the current tenant of the Premises, Infoseek Corporation,
to acquire any of its personal property. Tenant has inspected the Premises, is
familiar with the condition of the Premises and Tenant agrees to accept
possession of the Premises in is current condition, as-is, where-is, provided
the forgoing shall not relieve Landlord of the obligation to deliver building
systems that meet the specifications set forth in Article 6.
8.6 Tenant Allowances. Landlord shall pay Tenant an allowance of (a)
-----------------
Ten Dollars and 00/100 Dollars ($10.00) per square foot of usable area of the
fourth floor of the Premises determined according to BOMA and (b) Five Dollars
and 00/100 Dollars ($5.00) per square foot of usable area in the remainder of
the Premises determined according to BOMA (the "Tenant Improvement Allowance")
----------------------------
on the later of the Commencement Date or the date Tenant's Work is substantially
completed. Tenant may apply the Tenant Improvement Allowance to any
construction, design, engineering, fixturing or other costs directly or
indirectly incurred by Tenant in connection with Tenant's Work or occupying the
Premises. It shall be a condition precedent to payment of the Tenant Improvement
Allowance that Tenant deliver to Landlord lien waivers or releases for Tenant's
Work.
8.7 Tenant's Access During Construction. Tenant or its
-----------------------------------
representative(s) may enter upon the Premises during construction of the
Tenant's Work for purposes of conducting all such activities as are necessary,
appropriate or desirable with respect to completing Tenant's Work without being
deemed thereby to have taken possession. Tenant's use of the Premises for the
purposes herein stated shall be on all of the terms, covenants, and conditions
of this Lease, except as to commencement of the Term and payment of Rent.
8.8 Substantial Completion. The phrases "substantial completion" or
---------------------- ----------------------
"substantially complete(d)" as used in this Lease shall be deemed to mean the
------------------------
availability of the Premises for uninterrupted use and occupancy by Tenant with
a minimum of interference by Landlord which will be indicated by the fact that
the following shall have occurred: (a) all Tenant's Work shall have been
completed, and shall have been inspected and approved by the appropriate
authorities and a final certificate of occupancy has been issued; (b)
mechanical, plumbing, electrical, conveying and sprinkler systems (installed and
tested as per specifications) shall have been completed such that the
appropriate services to be rendered by such systems can be and are being
supplied and such systems are fully operational; (c) the entrance and lobby of
the Building shall have been completed and the means of ingress and egress are
not interfered with by any scaffolding, building materials, or other articles;
and (d) the parking areas and access roads have been completed.
8.9 [Intentionally Omitted].
-----------------------
8.10 [Intentionally Omitted.]
8.11 Delay in Substantial Completion. If substantial completion of
-------------------------------
Tenant's Work does not occur by the Commencement Date due to delay caused by
Landlord, its representatives, agents or contractors, Tenant is hereby granted
an abatement of Base Rent equal to two (2) days of such rent for each day of
delay, such abatement commencing with the first installment of Base Rent payable
under this
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Lease. The parties shall endeavor to have any dispute about Tenant's Work
resolved by the Independent Arbiter expeditiously and the parties shall use good
faith efforts not to permit the resolution of any dispute to materially delay
construction. Any delay resulting solely and directly from this dispute
resolution process shall result in a commensurate extension of the dates set
forth for performance of Tenant's Work and the Commencement Date.
8.12 Construction Insurance. During construction, each of the parties
----------------------
who is performing work under this Lease or its general contractor shall procure
and maintain in effect the following insurance coverages with an insurance
company or companies authorized to do business in the State where the Premises
are located:
(a) Workmen's Compensation - Statutory Limits for the State in
which the work is to be performed, together with "ALL STATES", "VOLUNTARY
COMPENSATION" and "FOREIGN COMPENSATION" coverage endorsements;
(b) Employer's Liability Insurance with a limit of not less than
One Million and 00/100 Dollars ($1,000,000.00);
(c) Commercial General Liability - at least Two Million and
00/100 Dollars ($2,000,000.00) Combined Single Limit, including Personal Injury,
Contractual and Products/Completed Operations Liability naming Landlord and
Tenant as additional insured. Coverage must be primary and non-contributing and
include the following:
(i) Premises - Operations,
(ii) Elevators and Hoists,
(iii) Independent Contractor,
(iv) Contractual Liability assumed under the construction
contract,
(v) Completed Operations - Products,
(vi) Explosion, Underground and Collapse (XUC) Coverage;
(d) Automobile Liability - Including Owned, Hired and Non-owned
licensed vehicles used in connection with performance of the construction work
of at least: One Million and 00/100 Dollars ($1,000,000.00) each person Bodily
Injury Three Million and 00/100 Dollars ($3,000,000.00) each occurrence Bodily
Injury Five Hundred Thousand and 00/100 Dollars ($500,000.00) each occurrence
Property Damage. Coverage must include the following:
(i) Owned vehicles,
(ii) Leased vehicles,
(iii) Hired vehicles,
(iv) Non-owned vehicles;
(e) Procure or cause contractor to procure and maintain
installation floater insurance to protect against the risk of physical damage
until acceptance of the construction work;
-20-
(f) Furnish Tenant or Landlord, as the case may be, with
certificates of insurance evidencing such coverage prior to the commencement of
the construction work. All insurance shall be carried in companies reasonably
acceptable to the other party;
(g) The following statement shall appear in each certificate of
insurance provided Tenant by Landlord hereunder:
"It is agreed that in the event of any material change in,
cancellation or non-renewal of this policy, the Company shall endeavor to give
thirty (30) days prior notice to";
(h) During construction of Tenant's Work, Landlord shall give
prompt notice to Tenant of all losses, damages, or injuries to any person or to
property of Tenant, Landlord or third parties. Landlord shall promptly report to
Tenant all such claims of which Landlord has notice, whether related to matters
insured or uninsured. No settlement or payment for any claim for loss, injury or
damage or other matter as to which Tenant may have an obligation for any payment
or reimbursement, shall be made by Landlord without the written approval of
Tenant;
(i) The carrying of any of the insurance required hereunder
shall not be interpreted as relieving the insuring party of any responsibility
to the other party, and the other party does not waive any rights that it may
have against the insuring party and/or its representatives for any expense and
damage to persons and property (tangible and intangible) from any cause
whatsoever with respect to the insuring party's work;
(j) Landlord and Tenant shall assist and cooperate with any
insurance company in the adjustment or litigation of all claims arising under
the terms of this Article; and
(k) The contract for construction shall include an
indemnification substantially similar to the text of Article 17 by the
contractor for the benefit of Landlord and Tenant.
8.13 Tenant's Construction Representative. Tenant hereby appoints
------------------------------------
Michael Duffy to act on its behalf and represent its interests with respect to
all matters requiring Tenant action in this Article. No consent, authorization
or other action by Tenant with respect to matters set forth in this Article
shall bind Tenant unless in writing and signed by the aforementioned person.
Landlord hereby expressly recognizes and agrees that no other person claiming to
act on behalf of Tenant is authorized to do so. If Landlord complies with any
request or direction presented to it by anyone else claiming to act on behalf of
Tenant, such compliance shall be at Landlord's sole risk and responsibility and
shall not in any way alter or diminish the obligations and requirements created
and imposed by this Article, and Tenant shall have the right to enforce
compliance with this Article without suffering any waiver, dilution or
mitigation of any of its rights hereunder.
8.14 Signage. Landlord at its expense shall provide Building standard
-------
signage at the entrance to the Premises on each floor and in the Building lobby
directory. To the extent permitted under applicable laws, Tenant is authorized
to install at its expense a sign identifying Tenant by its business name on the
Building exterior and to install a sign at each entrance to the Premises
advising employees and invitees that portions of the Premises are subject to
surveillance. The exterior sign shall be in the location specified in Exhibit G
---------
attached, and in a form mutually approved by the parties, and shall be of a size
comparable to the existing GMAC sign on the Building. If either the existing
GMAC sign or the existing PageNet sign are removed and such tenant's rights to
exterior Building signage have expired or been terminated, Tenant shall have the
right to move its sign to the location of the removed sign. Tenant's right to so
relocate its sign shall be a one-time right. Landlord's approval shall be deemed
-21-
given if Landlord does not comment in writing to Tenant's request for approval
stating in detail any Landlord comments or objections within fifteen (15) days
after delivery of Tenant's plans for an exterior sign. All such signs shall be
installed in compliance with the requirements of applicable Laws and the
provisions of Exhibit G. Tenant's exterior signage shall be removed by Tenant at
the end of the Term, and any damage resulting from such removal shall be
repaired by Tenant.
8.15 Communications Equipment. Tenant shall be entitled to install
------------------------
up to two (2) satellite and/or microwave dishes and antenna (the "Equipment")
---------
for reception and transmission of electromagnetic signals on the Building. If
Tenant wishes it may install up to six (6) additional antennae provided that an
administrative charge of $100.00 per month per additional whip antenna and $100
per diameter foot per month for dishes shall be due and payable from Tenant to
Landlord at the same time Base Rent is due and payable. Any such additional
antennae or dishes shall also constitute "Equipment." Prior to installation, in
addition to the location of the Equipment, Landlord must approve, which approval
will not be unreasonably withheld: (1) the Equipment; (2) drawings submitted by
Tenant showing the Equipment to be installed, method of installation, connectors
to electrical services, and conduit to the Premises in the Building; and (3) the
contractor selected by Tenant to install the Equipment, and the terms of the
contract between Tenant and its contractor. The installation work shall be done
in a manner which does not invalidate any roof warranty then in effect. The
Equipment may be used only for Tenant's own communications needs and a non-fee
basis. Tenant shall pay all personal property taxes, if any, separately
assessed with respect to the Equipment; and if and to the extent the Equipment
is assessed for tax purposes as part of the Building or Landlord's personal
property, reimburse Landlord within thirty (30) days of Landlord's written
demand for all additional taxes, if any, attributable to the Equipment as
reasonably determined by Landlord. Landlord shall cooperate with and assist
Tenant in obtaining permits necessary for the installation of such equipment.
Tenant shall be responsible for the cost of installation, maintenance and
removal of such equipment. Tenant shall utilize Landlord's roofing contractor
during the installation of any such device and shall bear the cost, if any, to
repair damage to the roof structure or membrane caused by such installation or
removal of any such device. Except as provided above, Tenant shall not be
charged any additional rent or fees for installation or operation of such
communication systems, provided they are not used for the transmission of
signals in connection with the conduct of a business whose primary purpose is
the delivery of telecommunication services for a fee. Tenant shall install,
operate and maintain such equipment in accordance with any applicable laws
including, but not limited to, FCC rules and regulations relating to licensing
and frequency interference. Tenant's operation of such equipment shall be
conducted so as not to create interference with equipment of other tenants of
the Development that has been installed prior to installation of Tenant's
equipment. If Landlord receives complaints regarding interference with
reception from another tenant of the Development, and Landlord reasonably
believes the source of the interference is the Equipment, Tenant shall take such
steps as are necessary to stop the interference. Landlord shall require that
any other tenant or occupant of the Development not interfere with the reception
or transmission of such systems as described in specifications provided to
Landlord by Tenant. Tenant shall indemnify, defend and hold harmless Landlord,
its employees, agents and contractors, from any and all liabilities, claims,
causes of action, losses, damages, costs, fees and expenses arising out of or
relating to the installation, operation, maintenance, repair or removal of such
communications equipment. Tenant shall remove the communications equipment upon
the expiration or earlier termination of this Lease and repair any damage to the
Building or roof caused by such removal, all at its sole cost and expense.
Tenant agrees that Landlord will not be liable for, nor shall there be any
abatement of rent or other claims against Landlord, for any interruption of
communications operations, unless such interruption is due to the negligence of
Landlord. Tenant shall bear the cost, if any, to repair damage to the roof,
roof structure or membrane caused by the installation, operation, maintenance or
removal of the communications equipment and for Tenant's access to the roof and
shall conduct its activities so as to maintain in effect the roof warranties.
-22-
ARTICLE 9
COMPLIANCE WITH LAW
9.1 Compliance with Law.
-------------------
(a) Tenant shall comply with the requirements of any Laws (i)
regarding the physical condition of nonstructural portions of the Premises to
the extent such Laws pertain to the particular manner in which Tenant uses the
Premises, or (ii) that relate to the lawful use of the Premises and with which
only the occupant can comply.
(b) Landlord shall be solely responsible for compliance with Laws
affecting the Premises, except to the extent Tenant is expressly made
responsible in the preceding sentence.
9.2 ADA Compliance. Landlord shall be solely responsible at its cost
--------------
and expense for insuring compliance with the Americans With Disabilities
Act ("ADA") for use as a public accommodation in all respects at the Premises
---
and Building except for any change in the interior of the Premises necessitated
by Tenant's Work or reconfiguration of the interior of the Premises after the
same is occupied by Tenant, provided certain costs incurred by Landord in
complying with the ADA may be included as an Operating Cost as provided in
Article 5 above. Landlord represents and covenants to Tenant that to Landlord's
actual knowledge, Building bathrooms, water fountains, lobbies, building
entrances, elevators, fire exits, stairways and fire/life safety devices are in
compliance with the ADA and other applicable Laws.
9.3 Contesting Legal Requirement. Landlord and Tenant shall each
----------------------------
have the right upon giving notice to the other to contest with the governmental
authority having jurisdiction thereof any obligations imposed upon either by
this Article and to defer compliance during the pendency of such contest,
provided the enforcement of the requirement or law is stayed during the contest
and the contest will not subject the other party to criminal penalty, civil
penalty or fine or materially interfere with Tenant's use and occupancy of the
Premises, the use or occupancy of the Building by other tenants, or jeopardize
the Landlord's title to the Building and Land. Each party shall cooperate with
the other in the contest and shall execute any documents reasonably required in
the furtherance of that purpose. A party contesting the application of Laws
under this Article shall not be deemed to be in default (i) until and unless it
is determined that the party must perform the obligation and it fails to do so
by the date upon which all applicable appeal periods have expired, or (ii)
provided enforcement is stayed pending appeal, until all appeals have been
finally decided against the party and the party fails to comply with the
resulting decision. Tenant's obligation under this Article 9 with respect to
performance of its obligations that accrue while this Lease is in force and
effect shall survive the expiration or termination of this Lease.
ARTICLE 10
ALTERATIONS, ADDITIONS AND IMPROVEMENTS
10.1 Nonstructural. "Alterations" are any alterations, additions
------------- -----------
or improvements made to the Premises by Tenant but excluding Tenant's Work
described in Article 8. "Minor Alterations" are any Alterations to the Premises
-----------------
that do not involve or affect structural elements of the Building or its roof or
exterior, or the mechanical or electrical systems of the Building and that in
any one instance cost $50,000 or less. Regardless of the cost thereof, any
Alterations involving an individual floor penetration is a "Major Alteration" as
defined below and not a Minor Alteration. Tenant may, from time to time, at its
own cost and expense and without the consent of Landlord make Minor Alterations,
provided Tenant first notifies Landlord in writing of any such Minor Alterations
and provides with such notice plans and specifications and a cost estimate of
the proposed Minor Alterations. Alterations that Tenant divides into separate
projects and submittals for the purpose of evading the requirement that Tenant
obtain
-23-
Landlord's prior consent to Alterations the cost of which exceeds $50,000 shall
be deemed to constitute a Major Alteration requiring Landlord's approval. Tenant
may also install additional security systems within the Premises without
Landlord's consent, regardless of cost, provided Tenant first notifies Landlord
in writing thereof and provides Landlord the information required by Section
6.7. All such work performed by Tenant in making Alterations hereunder shall not
commence until Tenant has obtained permits from the applicable governmental
authority. Tenant shall provide Landlord with a copy of the as-built plans and
specifications for the Alterations at its sole cost and expense. The $50,000
limitation in this Section 10.1 shall be increased annually by five percent (5%)
per year.
10.2 Major Alterations. Except as permitted in Section 10.1, if
-----------------
Tenant desires to make any Alterations to the Premises (a "Major Alteration"),
----------------
Tenant must first obtain the written consent of Landlord which consent will not
be unreasonably withheld. In the case of Major Alterations that are structural
in nature, it shall be reasonable for Landlord to withhold its consent if in
Landlord's reasonable judgment the proposed Alteration would have an adverse
impact on structural integrity, operating costs for the Building, the market
value of the Building or the Development, or the Rentable Area of the Building.
In the case of Major Alterations that are nonstructural in nature, it shall be
reasonable for Landlord to withhold its consent if in the Landlord's reasonable
judgment, the proposed Alteration would reduce the Rentable Area (unless Tenant
has agreed to restore the area affected by the Alteration to its condition prior
to the Alteration). It is agreed that structural changes to accommodate
increased floor loading are reasonable provided the Alteration does not diminish
floor-to-structure clearances, however Landlord shall continue to have a right
to review and approve the plans and specifications for such structural changes
according to the procedures set forth in this Section 10.2. As a condition of
approving a Major Alteration, Landlord may require that Tenant restore the
Premises to the condition it was in prior to such Alterations by providing
written notice to Tenant of such requirement concurrent with or prior to the
Landlord's consent to such Alteration. Landlord's consent shall be deemed given
if Landlord does not respond within fifteen (15) business days of receipt of
Tenant's request for consent and delivery of the plans and specifications for
the proposed Alterations. Tenant shall incorporate Landlord's comments that are
timely provided into the construction documents for the Alterations. No
Alterations may be constructed outside the Building, except as permitted with
respect to communications equipment under Section 8.15.
10.3 Contractor. Alterations may be done by any contractor chosen by
---------
Tenant provided the contractor is reputable, bondable by reputable bonding
companies, and carries the kinds of insurance and in the amounts set forth in
this Article.
10.4 Landlord Charges. Landlord shall not charge a supervisory fee for
----------------
its involvement in the design or construction process for Tenant's Alterations;
except that Tenant will reimburse Landlord within ten (10) days of demand for
any reasonable out-of-pocket costs incurred by Landlord which are in excess of
$1,000.00.
10.5 Building Standard Finishes. In making any alterations to the
--------------------------
Premises, Tenant shall comply with the building standards for finishes attached
as Exhibit F with respect to the portion of such alterations that face common
---------
areas (e.g., doors, latch sets and hinges).
10.6 Compliance with Law. Tenant in making any Alterations shall
-------------------
cause all work to be done in a good and workmanlike manner using materials equal
to or better than those used in the construction of the Premises and shall
comply with or cause compliance with all Laws and with any direction given by
any public officer pursuant to law. Tenant shall obtain or cause to be obtained
and maintain in effect, as necessary, all building permits, licenses, and other
governmental approvals which may be required in connection with the making of
the Alterations. Landlord shall cooperate with Tenant in obtaining them and
shall execute any documents reasonably required in furtherance of such purpose.
Staging areas for
-24-
all Alterations shall be maintained consistent with good construction practices
and restored to their previous condition upon completion of the Alterations.
10.7 Construction Insurance. Tenant shall procure or cause its
----------------------
contractor to procure and maintain in effect during the construction of
Alterations, the insurance coverages specified in Article 8.
ARTICLE 11
CONDITION, REPAIR AND MAINTENANCE OF PREMISES
11.1 Repair of Defects. Landlord, at its sole cost and expense
-----------------
without cost or charge to or contribution by Tenant, shall be responsible for
and make all repairs, replacements and maintenance required because of (a)
defective design or construction of the Building, and all equipment and systems
associated therewith and/or incorporated therein, excluding defects in the
design or construction of the Tenant's Work, (b) latent defects in any of the
foregoing, or (c) seismic upgrading required during the Term. Landlord
represents and warrants that to the best of its knowledge the Building and the
Premises have been built in accordance with and comply with all applicable Laws.
11.2 Tenant's Maintenance. Tenant shall take good care of the
--------------------
Premises (including, but not limited to, all doors, entrances and lighting and
plumbing fixtures located within the Premises) and shall reimburse Landlord for
the cost of repairing all damage done to the Building, the Premises or the
Common Areas occasioned by any act or omission of Tenant or Tenant's officers,
contractors, agents, invitees, licensees or employees, including, but not
limited to, cracking or breaking of glass. If Tenant fails to take good care of
the Premises, and Tenant does not cure such failure within five (5) days after
written notice from Landlord to Tenant (except in an emergency when simultaneous
notice shall be acceptable), Landlord may, at its option, do so, and in such
event, upon receipt of written statements from Landlord, Tenant shall promptly
pay the entire cost thereof as Additional Rent. Landlord shall have the right
to enter the Premises for such purposes. Except for Landlord's obligation to
provide janitorial services under Section 6.4 of this Lease, and Landlord's
obligations under Section 11.3 below, Landlord shall have no obligation to make
repairs to or maintain the Premises. Tenant shall be responsible for stocking
and replacing any nonstandard bulbs.
11.3 Landlord's Maintenance. Except for maintenance, repairs and
----------------------
replacements that Tenant must make under Section 11.2, Landlord shall perform
all repairs, replacements and maintenance necessary to keep the Premises, the
Building, the Common Areas and any other Improvements in good working order and
repair and to maintain the Building and Premises in a clean, safe and tenantable
condition comparable to other first class office buildings in the I-90 corridor
[I-405 to Issaquah]. This maintenance and repair shall include without
limitation the roof, foundation, exterior walls, interior structural walls, all
structural components, utility lines to Tenant's access points, all systems,
equipment and facilities serving the Premises and Building, such as mechanical,
electrical, HVAC, plumbing and sewer, replacement of lighting tubes, lamp
ballasts and bulbs for standard light fixtures, and extermination and pest
control when necessary, and snow and ice removal. The actual cost of Landlord
repairs necessitated by Tenant's negligence or intentional misconduct of Tenant,
its employees or agents shall be reimbursed by Tenant within ten (10) days of
demand. Landlord's work under this Section 11.3 shall be accomplished with the
least possible amount of interference with the conduct of Tenant's business and,
to the extent practicable, shall be done outside normal business hours to the
extent such work is being conducted within the Premises. Landlord will
indemnify, protect, defend and hold harmless Tenant against all claims,
liabilities, damages, costs or causes of action (including attorneys' fees)
arising out of or brought on account of injury to any person or property or loss
of life resulting from any failure by Landlord to perform its obligations under
this Article 11.
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11.4 Time to Complete Work. All work to be performed by either
---------------------
party under this Article shall be completed promptly but in any event within
twenty-four (24) hours in any Emergency (as defined below) and within twenty
(20) days for all other repairs. If the work cannot be completed within twenty-
four (24) hours or twenty (20) days, as the case may be, it shall be commenced
within the applicable period and prosecuted continuously and diligently
thereafter until completion. "Emergency" means a situation or casualty that (a)
---------
threatens the physical well-being of persons within the Premises, (b) materially
disrupts Tenant's use and/or occupancy of the Premises or any portion thereof,
or (c) materially disrupts Tenant's use of parking.
ARTICLE 12
DAMAGE AND DESTRUCTION
12.1 Repair. If (a) all or part of the Premises or Building are
------
damaged or destroyed, or (b) Tenant's access to the Building, Premises, parking
area or any Common Areas to which Tenant must have access for the continued use
and occupancy of the Premises ("Access") is materially obstructed or hindered by
------
casualty, and Landlord in good faith estimates the time required to repair the
damage and destruction and restore the Building or the Premises to their
condition existing immediately prior to the damage (including all leasehold
improvements for which Tenant was granted an allowance under this Lease or that
were completed at Landlord's cost and expense) is less than one hundred eighty
days, then Landlord shall substantially complete (i) repair and restoration of
the damage and destruction, including, at Landlord's sole cost and expense, all
leasehold improvements for which Tenant was granted an allowance under the Lease
or that were completed at Landlord's cost and expense, and/or (ii) restoration
of Access. If insurance proceeds, plus the actual amount of any applicable
deductible are insufficient to pay all or any part of the cost of repair and
restoration and Landlord has maintained the insurance required by Section 16.4,
then Landlord may elect not to repair and restore by giving Tenant written
notice of the amount by which the estimated cost of repair exceeds the amount of
the insurance proceeds plus the deductible within sixty (60) days after the date
of the casualty, subject to Tenant's right to nullify such election as described
below. If Landlord's estimate of the time required for repair exceeds one
hundred eighty (180) days or if Landlord elects not to proceed with repair and
restoration work pursuant to its right to do so in the preceding sentence,
Tenant shall have the right to terminate this Lease by giving written notice to
Landlord within thirty (30) days after receipt of the Landlord's estimate.
Notwithstanding the foregoing, if Landlord notifies Tenant that it elects not to
proceed with repair and restoration, Tenant shall have the right to nullify such
election by delivering written notice thereof to Landlord within thirty (30)
days of Tenant's receipt of Landlord's cancellation notice that Tenant will pay
the difference between the cost of repair and restoration and the insurance
proceeds available for the same. If Tenant exercises this right in accordance
with the previous sentence, Landlord's election not to repair and restore shall
be nullified, this Lease shall continue in full force and effect, and the repair
and restoration of the Premises shall proceed as required by this Article 12.
12.2 Termination. If Tenant exercises its termination right under
-----------
this Article, this Lease shall terminate on the date specified in the
termination notice. Notwithstanding any other provision of this Article 12,
Landlord shall not be entitled to exercise a right of termination under this
Article unless Landlord also terminates all other similarly affected tenants in
the Building to the extent termination is permitted by the applicable leases.
Rent shall be payable to the cancellation date less any abatement. Landlord
will promptly refund to Tenant any prepaid Rent.
12.3 Delay in Completing Repair. If Landlord does not
--------------------------
substantially complete repair and restoration of partial damage or does not
restore Access, as applicable, within one hundred eighty (180) days, measured
from the date of the casualty or loss of Access, Tenant shall have the right to
immediately terminate this Lease by giving written notice to Landlord within
thirty (30) days after expiration of such period unless Landlord completes such
repair and restoration within the thirty-day period.
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12.4 Final Year of Term. If (a) damage or destruction affecting more
------------------
than twenty-five percent (25%) of the Building, or (b) the loss of Access occurs
during the last year of the Term, either party may terminate this Lease by
giving notice to the other party, provided the forgoing shall not apply where
Tenant has duly exercised its Option to extend the Term. Notwithstanding the
foregoing, if Landlord notifies Tenant that it desires to terminate this Lease
pursuant to the previous sentence and Tenant, at the time of the damage or
destruction or loss of Access, has an unexercised Option, then Tenant shall have
the right, notwithstanding any provision of this Lease to the contrary, to
exercise such Option by delivering written notice thereof to Landlord within
thirty (30) days of Tenant's receipt of Landlord's cancellation notice. If
Tenant exercises such Option in accordance with the previous sentence,
Landlord's termination notice shall be nullified, this Lease shall continue in
full force and effect, and the repair and restoration of the Premises shall
proceed if and as required by this Article 12.
12.5 Abatement. The Rent shall abate in proportion to that part of
---------
the Premises that is unfit for use in Tenant's business as a consequence of the
casualty. The abatement shall consider the nature and extent of interference
with Tenant's ability to conduct business in the Premises and the need for
Access and essential services. The abatement shall continue from the date the
damage occurred until ten (10) business days after (a) Landlord completes the
repairs and restoration, (b) Landlord gives notice to Tenant that the repairs
and restoration are completed, and (c) Tenant has completed the repair and
restoration of any portion of the Premises for which Landlord is not
responsible.
ARTICLE 13
CONDEMNATION
13.1 Taking. "Taking" means a taking by condemnation or by the
------ ------
exercise of the power of eminent domain by a public or quasi-public authority or
entity, whether or not there is a taking of title, or a conveyance in lieu
thereof. If there is a taking of the entire Building, or the entire Premises,
or of the entire parking area serving the Building, this Lease shall terminate
as of the earlier of the date title vests or the date Tenant is dispossessed by
the Taking authority.
13.2 Termination for Material Interference. If a Taking of part of
-------------------------------------
the Premises or the Building in Tenant's judgment reasonably exercised (a)
materially interferes with Tenant's ability to conduct its business in the
Premises, or (b) substantially denies or interferes with Tenant's access to the
Building or Premises, Tenant shall have the right to terminate this Lease by
giving Landlord notice of its election within thirty (30) days of the Taking.
This Lease shall terminate on the earlier of the date when title vests, the date
Tenant is dispossessed by the Taking authority or sixty (60) days following
Tenant's notice; provided that such termination shall in no event extinguish or
diminish Tenant's right under Section 13.5 to receive a portion of the award
payable on account of the Taking.
13.3 Taking of Parking. If only a portion of the parking area
-----------------
serving the Development is the subject of a Taking, and as a result the Taking
reduces the ratio of parking spaces to square feet of usable Area in the
Development below 3.5:1,000 ("Parking Ratio"), then Tenant shall have the right
-------------
to terminate this Lease by giving notice to Landlord within thirty (30) days
after title vests in the Taking authority. Landlord may suspend the
effectiveness of Tenant's notice by notifying Tenant, within five (5) days of
receiving Tenant's termination notice, that Landlord will preserve the Parking
Ratio for Tenant by either (a) providing, within thirty (30) days of the vesting
of title, substitute parking spaces equal to the number taken within one quarter
(1/4) mile of the Building, or (b) reducing the allocation of stalls to other
tenants of the Development. If Landlord restores the Parking Ratio for Tenant
within the thirty (30) days, Tenant's notice of termination shall be nullified
and of no force and effect. If Landlord does not restore the Parking Ratio for
Tenant within the thirty (30) day period, this Lease shall automatically
terminate at the expiration of such thirty (30) day period.
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13.4 Abatement. If this Lease is not terminated as a result of a
---------
Taking: (a) Rent shall abate, from the earlier of the date title vests in the
Taking authority or the date Tenant is dispossessed by the Taking authority, in
proportion to the part of the Premises subject to the Taking and Tenant's pro
rata share shall be proportionally reduced; and (b) Landlord, at its sole
expense, shall commence the work of repairing and restoring the Building to a
complete architectural unit and the work of restoring the remainder of the
Premises as nearly as possible to its condition existing immediately prior to
the Taking and to restore Tenant's access to the Building and Premises or
provide comparable access thereto within one hundred eighty (180) days after the
earlier to occur of title vesting in the Taking authority or the date Tenant is
dispossessed by the Taking authority. If Landlord does not complete the work of
repair and restoration within the one hundred eighty (180) day period, Tenant
has the right to terminate this Lease by giving Landlord notice within thirty
(30) days after the one hundred eighty (180) day period expires. Tenant's
notice shall specify a termination date not more than sixty (60) days from the
date of the notice.
13.5 Taking Award. Within ten (10) days of the effective date of a
------------
termination of this Lease or an abatement of Rent under this Article 13, Tenant
shall receive: (a) a refund from Landlord of all prepaid, unaccrued Rent; and
(b) from the award payable on account of the Taking, the value of Tenant's
unamortized leasehold improvements (less the portion thereof funded by the
Tenant Improvement Allowance paid by Landlord to Tenant), moving expenses, and
trade fixtures and equipment, Tenant being entitled to obtain this portion of
the award from Landlord only if applicable law prevents Tenant from making a
separate claim for such amounts from the awarding authority. Landlord expressly
permits Tenant to make a claim for such amount in any appropriate proceeding.
13.6 Savings Clause. Landlord and Tenant may exercise any rights of
--------------
termination even though their respective right, title, or interest may have been
taken or divested.
ARTICLE 14
SUBORDINATION, RECOGNITION, NON-DISTURBANCE AND ATTORNMENT
14.1 Subordination. This Lease is not subordinate to the lien of
-------------
any first deed of trust or mortgage of the entire fee interest of the Premises
to provide construction or permanent financing and any renewals, modifications
or extensions thereof ("Mortgage"), unless a Subordination, Attornment and Non-
--------
Disturbance Agreement ("SAND Agreement") is executed, acknowledged and delivered
--------------
to Tenant by the holder of the Mortgage ("Mortgagee") in a form substantially
---------
similar to Exhibit E attached, or such other form as may be reasonably
---------
acceptable to Tenant.
Tenant shall execute and send to Landlord any such SAND Agreement within
thirty (30) days of receipt if the SAND Agreement contains substantially the
provisions set forth in Exhibit E, or within fifteen (15) days after agreement
---------
of the parties to the contents of same.
14.2 Holder's Election. If a Mortgagee requires that this Lease have
-----------------
priority over its Mortgage, Tenant shall, upon request of the Mortgagee,
execute, acknowledge and deliver to the Mortgagee an agreement acknowledging
such priority.
14.3 Delivery of SAND Agreement. If Landlord does not deliver to Tenant a
--------------------------
SAND Agreement of Landlord's current Mortgagee within thirty (30) days after
this Lease is signed, then Tenant shall have the right to cancel this Lease by
delivering Landlord written notice of cancellation within thirty (30) days after
the thirty (30) day period ends.
ARTICLE 15
LANDLORD'S WARRANTIES
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To induce Tenant to execute this Lease, and in addition to the other
representations and warranties of Landlord contained in this Lease, Landlord
warrants and represents that:
(a) Landlord is the owner in fee simple of the Premises;
(b) Landlord has good and marketable title to the Building and Land,
there are no liens, easements, restrictions or encumbrances upon the Building,
the Land, or the income accruing therefrom, which do or will prohibit, limit,
restrict or adversely affect Tenant's rights under this Lease, other than those
shown on Exhibit B, and none of the matters listed on Exhibit B ("Permitted
--------- --------- ---------
Encumbrances") and no restrictions contained in any leases of other tenants at
- ------------
the Building does or shall prohibit, restrict, conflict with or adversely affect
Tenant's use and occupancy of the Premises or the intended use of the rights and
easements granted to Tenant in this Lease;
(c) Access to the Building and/or Development is by public roadways,
and occupants of the Building have access to the Building over the existing
roads, paths, walks and drives on the land owned by Landlord or by virtue of
nonterminable easements appurtenant benefiting the land;
(d) To Landlord's actual knowledge, all utility lines and
appurtenances which serve the Building or the Premises are located in public
ways with appropriate consents and authorizations from the authorities, agencies
and bodies having jurisdiction having been obtained and not subject to
termination;
(e) The Building is sprinklered with smoke detectors; and
(f) Landlord has full right and lawful authority to enter into and
perform Landlord's obligations under this Lease for the full Term.
In addition to any other right or remedy, if any representation or
warranty in this Article 15 or contained elsewhere in this Lease is breached by
Landlord, Landlord shall be responsible for and reimburse Tenant on demand for
the reasonable and actual costs of curing the breach, subject to the notice and
cure periods in Section 20.3 below.
ARTICLE 16
INSURANCE; WAIVER OF CLAIM
16.1 Tenant's Liability Insurance. Tenant, at Tenant's expense,
----------------------------
shall purchase and keep in force during the Term a Commercial General Liability
Policy with limits of not less than Five Million and 00/100 Dollars
($5,000,000.00) for each occurrence covering bodily injury to persons, including
death, and damage to property. Such insurance shall be with Tenant's liability
insurer so long as Tenant is Microsoft Corporation; otherwise such insurance
shall be with insurers having a Best rating of A-8 or better. Such insurance
shall provide coverage for Tenant's premises and operations, independent
contractors, and contractual liability assumed in Article 17. Tenant shall
cause its Commercial General Liability insurer to name Landlord (and the holder
of any Mortgage designated by Landlord) as an additional insured under such
insurance to the extent of Tenant's insurable contractual liability assumed in
Article 17.1. The insurance policy shall contain a severability of interests
provision, a provision that the insurance provided to Landlord as additional
insured shall be primary to and not contributory with insurance maintained by
Landlord, and a provision that an act or omission of one of the insureds or
additional insureds that would void or otherwise reduce coverage shall not
reduce or void the coverage as to the other named and additional insureds. A
certificate of insurance evidencing that the foregoing insurance is in effect
shall be delivered to Landlord prior to Tenant's occupancy of the Premises, and
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shall be kept current throughout the Term. Such certificate shall reflect the
status of Landlord as additional insured, and shall provide for at least fifteen
(15) days advance notice to Landlord in the event of cancellation.
16.2 Tenant's Property Insurance. Throughout the Term of the
---------------------------
Lease, Tenant shall maintain standard form property insurance insuring against
the perils of fire, extended coverage, vandalism, malicious mischief, special
extended coverage (All Risk) and sprinkler leakage. This insurance policy shall
be upon all property owned by Tenant, for which Tenant is legally liable, or
that was installed at Tenant's expense, and which is located at the Premises,
including but not limited to furniture, fittings, installations, fixtures (other
than Tenant improvements installed by Landlord), and any other personal property
of Tenant, in an amount not less than ninety percent (90%) of the replacement
cost thereof so long as Tenant is Microsoft Corporation or its transferee under
Section 18.1(a), and otherwise at full replacement value. At Tenant's option,
Tenant may undertake to maintain deductibles under the property insurance policy
and may elect to self-insure some or all of the property located at the
Premises. Any undertaking by Tenant to assume deductibles or self-insure its
property located at the Premises shall not serve to adversely affect Landlord,
and Landlord shall be protected against loss or damage to Tenant's property in
the same manner as if Tenant had obtained separate insurance on its property as
provided herein.
16.3 Landlord's Liability Insurance. Landlord shall purchase and
------------------------------
keep in force during the Term a Commercial General Liability Policy with limits
of not less than Five Million and 00/100 Dollars ($5,000,000.00) each occurrence
covering bodily injury to persons, including death, and damage to property.
Such insurance shall be with responsible insurers with a financial rating
comparable to or better than that of Tenant's liability insurer, and shall
provide coverage for Landlord's premises and operations, independent
contractors, and contractual liability assumed in Article 17. Landlord shall
cause its Commercial General Liability insurer to name Tenant as an additional
insured under such insurance to the extent of Landlord's insurable contractual
liability assumed in Article 17. The insurance policy shall contain a
severability of interests provision, a provision that the insurance provided to
Tenant as additional insured shall be primary to and not contributory with
insurance maintained by Tenant, and a provision that an act or omission of one
of the insureds or additional insureds that would void or otherwise reduce
coverage shall not reduce or void the coverage as to the other named and
additional insureds. A certificate of insurance evidencing that the foregoing
insurance is in effect shall be delivered to Tenant prior to Tenant's occupancy
of the Premises, and shall be kept current throughout the Term. Such
certificate shall reflect the status of Tenant as additional insured, and shall
provide for fifteen (15) days advance notice to Tenant in the event of
cancellation.
16.4 Landlord's Property Insurance. At all times during the Term
-----------------------------
of the Lease, Landlord shall maintain a standard form property insurance policy
with responsible insurers covering the Premises and the Building(s) against the
perils of fire, extended coverage, vandalism, malicious mischief, special
extended coverage ("All Risk") and sprinkler leakage with an endorsement to
--------
cover the cost of law mandated changes to the Building(s) in connection with
restoration after a casualty. Such insurance shall provide coverage for all
property in which Landlord holds an interest (including any Tenant Improvements
where title vests with Landlord and which Tenant is not required to insure) in
an amount equal to the replacement value of the property. Proceeds of such
insurance shall be used by Landlord to repair or replace the damaged portion of
the Building and/or Premises on the same land to the extent required under this
Lease. The deductibles for Landlord's coverage shall not exceed reasonable and
customary deductibles.
16.5 Waiver of Recovery and Subrogation. Except with respect to
----------------------------------
Landlord's liability for damage under Section 6.8, Landlord and Tenant release
and relieve the other and waive their entire right of recovery for loss or
damage to property located within or constituting a part or all of the Building
or
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the Development to the extent that the loss or damage either (a) is actually
covered by the injured party's property insurance, or (b) would have been
covered by the property insurance the injured party is required to carry under
this Article 16, whichever is greater. This waiver applies regardless of the
cause or origin of the claim including without limitation loss due to the
negligent acts or omissions of Landlord or Tenant, or their respective officers,
directors, employees, agents, contractors, or invitees. Each of Landlord and
Tenant shall have their respective property insurers endorse the applicable
insurance policies to reflect the foregoing waiver of claims, provided however,
that the endorsement shall not be required if the applicable policy of insurance
permits the named insured to waive rights of subrogation on a blanket basis, in
which case the blanket waiver shall be acceptable.
ARTICLE 17
INDEMNIFICATION
17.1 Tenant. Subject to the waiver of recovery and subrogation in
------
Section 16.5, Tenant shall indemnify and hold harmless Landlord from claims,
suits, actions, or liabilities for personal injury, death or for loss or damage
to property that arises out of (a) Tenant's or its employees, agents,
contractors or invitees use of the Premises, (b) the negligence or willful
misconduct of Tenant, its employees, agents, or invitees, or (c) any breach or
default by Tenant in the performance of any obligation on Tenant's part to be
performed under this Lease.
This indemnity does not apply: (x) to claims, suits, actions or
liabilities to the extent they are caused by the negligence or willful
misconduct of Landlord, its agents, employees, contractors or invitees; (y) to
damage, claims, suits, actions or liabilities waived under Section 16.5; or (z)
to the matters covered by the Hazardous Materials indemnity in Article 26.
In the absence of comparative or concurrent negligence on the part of
Landlord, its agents, their affiliates and subsidiaries, or their respective
directors, employees or contractors, the foregoing indemnity shall also include
reasonable costs, expenses and attorneys' fees incurred in connection with any
indemnified claim or incurred by Landlord in successfully establishing the right
to indemnity. Tenant shall have the right to assume the defense of any claim
subject to this indemnity with counsel reasonably satisfactory to Landlord.
Landlord agrees to cooperate fully with Tenant and Tenant's counsel in any
matter where Tenant elects to defend, provided Tenant promptly reimburses
Landlord for reasonable costs and expenses incurred in connection with its duty
to cooperate.
The foregoing indemnity is conditioned upon Landlord providing prompt
notice to Tenant of any claim or occurrence that is likely to give rise to a
claim, suit, action or liability that will fall within the scope of the
foregoing indemnity as soon as Landlord has knowledge thereof, along with
sufficient details as are known to Landlord that will enable Tenant to make a
reasonable investigation of the claim.
When the claim is caused by the concurrent negligence or willful
misconduct of Tenant and Landlord, or Tenant and a third party unrelated to
Tenant (except Tenant's agents, officers, employees or invitees), Tenant's duty
to indemnify and defend shall be proportionate to Tenant's allocable share of
joint negligence or willful misconduct.
17.2 Landlord. Subject to the waiver of recovery and subrogation in
--------
Section 16.5, Landlord shall indemnify and hold harmless Tenant from claims,
suits, actions, or liabilities for personal injury, death or for loss or damage
to property that arises from: (a) any activity, work, or thing done, permitted
or suffered by Landlord in or about the Premises; (b) the negligence or willful
misconduct of Landlord, its employees, agents or contractors; or (c) any breach
or default by Landlord in the performance of any obligation on Landlord's part
to be performed under this Lease.
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This indemnity does not apply: (x) to claims, suits, actions or liabilities
to the extent they are caused by the negligence or willful misconduct of Tenant,
its agents, employees, contractors or invitees; (y) to damage, claims, suits,
actions or liabilities waived under Section 16.5; or (z) to the matters covered
by the Hazardous Materials indemnity in Article 26.
In the absence of comparative or concurrent negligence on the part of
Tenant, its agents, their affiliates and subsidiaries, or their respective
directors, employees or contractors, the foregoing indemnity shall also include
reasonable costs, expenses and attorneys' fees incurred in connection with any
indemnified claim or incurred by Tenant in successfully establishing the right
to indemnity. Landlord shall have the right to assume the defense of any claim
subject to this indemnity with counsel reasonably satisfactory to Tenant.
Tenant agrees to cooperate fully with Landlord and Landlord's counsel in any
matter where Landlord elects to defend, provided Landlord promptly reimburses
Tenant for reasonable costs and expenses incurred in connection with its duty to
cooperate.
The foregoing indemnity is conditioned upon Tenant providing prompt notice
to Landlord of any claim or occurrence that is likely to give rise to a claim,
suit, action or liability that will fall within the scope of the foregoing
indemnity, along with sufficient details that will enable Landlord to make a
reasonable investigation of the claim.
When the claim is caused by the concurrent negligence or willful misconduct
of Tenant and Landlord, or Landlord and a third party unrelated to Landlord
(except Landlord's agents, officers, employees or invitees), Landlord's duty to
indemnify and defend shall be proportionate to Landlord's allocable share of
joint negligence or willful misconduct.
17.3 Survival. This Article 17 shall survive termination of this Lease.
--------
ARTICLE 18
ASSIGNMENT AND SUBLETTING
18.1 Assignment Without Consent. Without Landlord's consent, but after
--------------------------
written notice to Landlord:
(a) This Lease may be assigned in part or whole (whether by operation
of law or otherwise) or all or any part of the Premises may be sublet at any
time:
(i) to a subsidiary of Tenant, to the entity with which or into
which Tenant may merge, whether or not Tenant is the survivor of such merger, to
any affiliate of Tenant, to an entity that is controlled by, controls or is
under common control with Tenant (or a valid assignee of this Lease); or
(ii) to the purchaser of substantially all of the assets of the
operating division of Tenant using the Premises; or
(b) One or more parts of the Premises may be used or occupied by a
party or parties in connection with the transaction of business with Tenant or
an entity that controls, is controlled by or is under common control with Tenant
(or a valid assignee of Tenant).
For purposes of this Article 18, "control" means the possession, direct or
-------
indirect, of the power to direct or cause the direction of the management and
policies of a person or entity, or majority ownership of any sort, whether
through the ownership of voting securities, by contract or otherwise.
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18.2 Assignment With Consent. Except as provided in Section 18.1,
-----------------------
Tenant may only assign this Lease in part or whole or sublet all or any part of
the Premises if Tenant first obtains Landlord's consent to the proposed assignee
or subtenant in writing. Landlord's consent shall not be unreasonably withheld.
Landlord shall be deemed to have consented if Landlord does not respond to
Tenant's request within fifteen (15) days after Tenant requests consent. Tenant
shall provide Landlord with a copy of the letter of intent or proposed
assignment of sublease, current financial information as to the proposed
transferee and other information reasonably requested by Landlord as to such
transferee, provided that Landlord makes the request for such information within
five (5) business days after Tenant's request. In the case of any waiver by
Landlord of a specific obligation of an assignee of Tenant, such waiver shall
also be deemed a waiver of such obligation with respect to the immediate and
remote assignors of such assignee.
Landlord's consent or refusal of consent shall be in writing and, if
Landlord refuses consent, the reasons for refusal shall be stated with
reasonable particularity. Landlord's consent to an assignment or sublease shall
be accompanied by a statement addressed to Tenant and the assignee or subtenant,
upon which statement Tenant and the assignee or subtenant may conclusively rely,
stating that to Landlord's knowledge Tenant is not in default under the Lease
(or setting forth in what respects Tenant is in default), that this Lease has
not been amended or modified (or setting forth such amendments or
modifications), the expiration date of this Lease, and the date to which Rent
has been paid. If Tenant receives rent for the assignment or subletting in
excess of the Rent and other amounts payable under this Lease ("Excess
------
Consideration"), then Tenant shall pay to Landlord one-half (1/2) of the Excess
- -------------
Consideration after Tenant has recovered from the Excess Consideration any
amounts expended by Tenant for leasing commissions, tenant improvements or other
out-of-pocket costs attributable to the assignment or subletting.
Notwithstanding the foregoing, Tenant may convey, in connection with an
assignment or subletting, but pursuant to a separate legally binding agreement,
the Tenant's assets, business and trade fixtures, inventory, equipment or
furniture or other Tenant's Property to the extent paid for by Tenant, and
Tenant shall be entitled to retain any and all consideration received in
connection with such conveyance.
Landlord hereby consents to a sublease to Drugstore.com, Inc. of the
portion of the Premises located on the third floor of the Building.
18.3 Effect of Transfer. Landlord agrees, upon request by Tenant,
------------------
(a) to amend the notice address for Tenant to add the transferee, and (b) to
deliver to Tenant or its successor concurrently with the delivery thereof to
such transferee, copies of any notices of default delivered pursuant to the
terms of this Lease. Additionally, if requested of Landlord pursuant to an
assignment or sublease, the transferee shall have the right to cure any default
under this Lease within the applicable cure period provided for Tenant in this
Lease. In the case of any modification of this Lease made after the date of an
assignment or other transfer of this Lease by Tenant, if such modification
increases or enlarges the obligations of Tenant or reduces the rights of Tenant,
then (a) Tenant named in this Lease and each respective assignor or transferor
shall not be liable under or bound by such increase, enlargement or reduction
unless Tenant consents to the modification, and (b) in the case of any waiver by
Landlord of a specific obligation of an assignee or transferee of Tenant, such
waiver shall also be deemed a waiver of such obligation with respect to the
immediate and remote assignors or transferors of such assignee or transferee,
subject to the terms of Section 18.2 above. If the assignment or sublease
permits Tenant to recover possession of the Premises from the transferee and
again take possession of the Premises as Tenant, Landlord agrees to again
recognize Tenant as the "Tenant" under this Lease. Tenant's rights to assign
its leasehold interest and to sublet the Premises shall be continuing rights.
Accordingly, persons to whom Tenant's leasehold interest is assigned shall have
the right to further assign the leasehold interest, and persons to whom the
demised premises are sublet shall have the right to sub-sublet to others.
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ARTICLE 19
TENANT'S PROPERTY
19.1 Removal of Property During Term. Tenant's trade fixtures and
-------------------------------
personal property (collectively called "Tenant's Property"), however installed
-----------------
or located on the Premises, shall be and remain the property of Tenant and may
be removed at any time and from time to time during the Term. Tenant shall
repair any damage caused by removal of Tenant's Property.
19.2 Removal of Property at End of Term. Upon the expiration or
----------------------------------
termination of this Lease, Tenant shall remove its security systems in
accordance with Section 6.7 and all of Tenant's Property from the Premises. In
addition, Tenant shall remove those portions of any Alterations performed by or
on behalf of Tenant that were designated as requiring removal pursuant to
Section 10.1 or Section 10.2. In connection with such removal, Tenant shall
restore the areas of such removal to their condition prior to such Alteration,
normal wear and tear excepted, and comply with the provisions of Section 19.1
with respect to Tenant's Property. Any of Tenant's Property remaining in the
Premises ten (10) days after expiration or termination of the Term shall be
deemed abandoned by Tenant. Tenant's failure to remove its property shall not
constitute or be deemed to constitute a holding over or effect an extension or
renewal of the Term.
19.3 No Lien. In no event (including a default under this Lease)
-------
shall Landlord have any lien or other security interest in any of Tenant's
Property located in the Premises or elsewhere, and Landlord hereby expressly
waives and releases any lien or other security interest however created or
arising.
ARTICLE 20
DEFAULT
20.1 Tenant's Default. Each of the following constitutes a
----------------
default ("Default"):
-------
(a) If Tenant fails to pay Rent as required by this Lease
within ten (10) days after receipt of written notice of failure to pay from
Landlord;
(b) If Tenant fails to perform or observe any other obligation
of Tenant under this Lease within thirty (30) days after receipt of written
notice from Landlord setting forth in reasonable detail the nature and extent of
the failure referencing pertinent Lease provisions (or if the breach requires
longer than thirty (30) days to cure, Tenant fails to start curing within thirty
(30) days after receipt of written notice and to prosecute the cure to
completion with due diligence); or
(c) If Tenant files a voluntary petition in bankruptcy or is
adjudicated a bankrupt or insolvent, or files any petition or answer seeking an
arrangement, composition, liquidation or dissolution under any present or future
Federal, State, or other statute, law or regulation relating to bankruptcy,
insolvency or other relief for debtors, or shall seek or consent to or acquiesce
in the appointment of a trustee, receiver or liquidator of Tenant or of all or a
substantial part of its assets, or of the Premises, or shall make a general
assignment for the benefit of creditors, or shall admit in writing its inability
to pay its debts generally as they become due; or
(d) If a court enters an order, judgment or decree approving a
petition filed against Tenant seeking an arrangement, composition, liquidation,
dissolution or similar relief under the present or future Federal, State or
other statute, law or regulation relating to bankruptcy, insolvency or other
relief for debtors, and the order, judgment or decree remains unvacated or
unstayed for sixty (60) days.
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20.2 Landlord's Remedies. If Tenant commits a Default, Landlord
-------------------
may do any one or more of the following, in addition to pursuing its remedies at
law or in equity:
(a) Declare the Term hereof ended and re-enter 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, pursuant to
applicable legal process re-enter 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 re-entered the Premises, thereafter
elect to terminate this Lease and all of the rights of Tenant in or to the
Premises.
If Landlord re-enters 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 re-entry
or by any such 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. Tenant further covenants that 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 at the time of, or at any time subsequent to, the serving
of such notice 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 any or all of Tenant's 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:
(i) The worth at the time of award of any unpaid rental which has
been earned; plus
(ii) The worth at the time of award, of the unpaid rental which
would have been earned after termination until the time of award; plus
(iii) The worth at the time of award of the unpaid rental for the
balance of the term after the time of award; plus
(iv) Any other amounts 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 events would be likely to
result therefrom including, but not limited to, any reasonable costs or expenses
incurred by Landlord in (a) re-taking possession of the Premises, including
reasonable attorneys' fees therefor; (b) maintaining or preserving the Premises
after such default; (c) preparing the Premises for re-letting to a new tenant,
including repairs or alterations to the Premises for such re-letting; (d)
reasonable leasing commissions; and (e) any other costs reasonably necessary or
appropriate to re-let the Premises.
As used in items (i) and (ii) above, "worth at time of award" shall be
computed by allowing interest at the prime lending rate of Bank of America,
Seattle office plus three percent (3%). As used in item (iii) above, "worth at
the time of award" shall be computed by using a discount rate of eight percent
(8%).
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Landlord shall mitigate its damages by making reasonable efforts to relet
the Premises on reasonable terms. Landlord may re-let for a shorter or longer
period of time than the Lease Term and may make necessary repairs or
alterations. If Landlord re-lets for a period longer than the Lease Term, then
any special concessions given to the new tenant shall be allocated throughout
the entire re-letting term so that Tenant is charged only with the proportion of
the concessions allocated to the remainder of Tenant's Lease term. All sums
collected from re-letting shall be applied first to Landlord's expenses of re-
letting, and then to the payment of amounts due from Tenant to Landlord under
this Lease.
20.3 Landlord's Default. Landlord's failure to perform or observe any
------------------
of its obligations under this Lease or to correct a breach of any warranty
or representation made in this Lease within thirty (30) days after receipt of
written notice from Tenant setting forth in reasonable detail the nature and
extent of the failure referencing pertinent Lease provisions or if more than
thirty (30) days is required to cure the breach, Landlord's failure to begin
curing within the thirty (30) day period and diligently prosecute the cure to
completion shall constitute a default ("Default").
-------
20.4 Tenant's Remedies. If Landlord commits a Default, Tenant may,
-----------------
without waiving any claim for damages for breach of agreement or any other
rights or remedies it may have under this Lease at law or in equity, at any time
thereafter do any of the following, subject to any limitations set forth in the
form of Subordination, Nondisturbance and Attornment Agreement attached as
Exhibit E:
(a) Cure the Default for the account of Landlord, and any amount paid
or any contractual liability incurred by Tenant in so doing shall be deemed paid
or incurred for the account of Landlord, and Landlord shall reimburse such
amount (plus interest accruing at the annual rate of twelve percent (12%) until
paid) to Tenant on demand. If Landlord fails to reimburse Tenant on demand for
any sum it otherwise owes Tenant under this Lease, the amount may be deducted by
Tenant from the next or any succeeding payments of Base Rent.
(b) Abate Rent for the portion(s) of the Premises rendered unusable
for Tenant's purposes.
(c) If the obligations of landlord under this Lease are not performed
during the pendency of a bankruptcy or insolvency proceeding involving Landlord
as the debtor, or following the rejection of this Lease in accordance with
Section 365 of the United States Bankruptcy Code and the election of Tenant to
remain in possession of the Premises in a bankruptcy or insolvency proceeding
involving Landlord as the debtor, then notwithstanding any provision of this
Lease to the contrary, so long as Tenant is not in Default under this Lease,
Tenant shall have the right to set off against Rent next due and owing under
this Lease (a) any and all damages that it demonstrates to the Bankruptcy Court
were caused by nonperformance of Landlord's obligations under this Lease by
Landlord, debtor-in-possession, or the bankruptcy trustee, and (b) any and all
damages caused by the nonperformance of Landlord's obligations under this Lease
following any rejection of this Lease in accordance with Section 365 of the
United States Bankruptcy Code.
20.5 No Cure Period. The cure periods in Sections 20.1(b) and 20.3
--------------
do not apply to failure to maintain the insurance required by this Lease.
20.6 Self-help. If either party Defaults, the other party may,
---------
without being obligated to do so and without waiving the Default, cure the
Default. The defaulting party shall pay the nondefaulting party on demand all
costs, expenses and disbursements incurred by the nondefaulting party to cure
the Default.
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20.7 Survival. The remedies permitted in this Article, Landlord's
--------
obligation to mitigate and the indemnities in Articles 17 and 26 shall survive
termination or expiration of this Lease.
ARTICLE 21
NOTICES
All notices, demands, approvals or requests under this Lease shall be
given in writing and delivered personally or sent by United States Certified
Mail, postage prepaid, return receipt requested, or nationally recognized
overnight air carrier, and addressed to the Landlord's Address or Tenant's
Address, as the case may be. Notices shall be deemed to have been given upon
receipt or attempted delivery where delivery is not accepted. Either party may
change its address upon notice given to the other. Tenant shall also give
default notices to any Mortgagee after receiving notice from Landlord of the
Mortgagee's name and address.
ARTICLE 22
QUIET ENJOYMENT
Landlord warrants and agrees that, so long as this Lease has not been
terminated as a result of a default by Tenant, Tenant's peaceable and quiet
enjoyment of the Premises shall not be disturbed by Landlord or anyone claiming
by or through Landlord.
ARTICLE 23
HOLDING OVER
Any holding over by Tenant after the expiration of the term hereof
consented to in advance in writing by Landlord shall be construed as a tenancy
from month-to-month on the terms and conditions set forth herein, except the
Base Rent shall be one hundred ten percent (110%) of the Base Rent. Any such
holdover tenancy may be terminated by either party upon thirty (30) days written
notice to the other party. If Tenant holds over without the prior written
consent of Landlord, Tenant shall indemnify, defend and hold harmless Landlord
from all losses, damages, liabilities and expenses resulting from such failure,
including, without limiting the generality of the foregoing, any claims made by
any succeeding tenant arising out of Tenant's failure to surrender possession.
Any holding over by Tenant after the expiration of the Lease Term without
Landlord's consent shall be deemed a tenancy at will, terminable at any time by
Landlord, at a rental rate equal to one and one-half (1 1/2) times the Base Rent
and Additional Rent payable by Tenant during the last month rent is payable by
Tenant pursuant to this Lease.
ARTICLE 24
MEMORANDUM OF LEASE
This Lease shall not be recorded except as permitted in this Article. At
the request of either party, the parties shall promptly execute and record, at
the cost of the requesting party, a short form memorandum describing the
Premises and stating this Lease's Term (including any options to extend), the
Commencement Date, any rights of first refusal or expansion rights held by
Tenant, other information the parties agree to include, and such other
information as necessary to satisfy the notice of lease statute of the State
where the Premises are located.
ARTICLE 25
ESTOPPEL CERTIFICATES
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Upon request of either party at any time and from time to time, Landlord
and Tenant shall execute and deliver to the other, within fifteen (15) business
days after receipt of the request, a written instrument, duly executed:
(a) Certifying that this Lease has not been amended or modified and is
in full force and effect or, if there has been a modification or amendment, that
this Lease is in full force and effect as modified or amended, and stating the
modifications or amendments;
(b) Specifying the date to which the Rent has been paid;
(c) Stating whether to the best knowledge of the party executing the
instrument, the other party is in default and, if so, stating the nature of the
default; and
(d) Stating the Commencement Date and whether any option to extend
the Term has been exercised.
ARTICLE 26
ENVIRONMENTAL PROVISIONS
26.1 Environmental Law. The term "Environmental Law" means any federal,
----------------- -----------------
state or local law, statute, ordinance, regulation or order pertaining to
health, industrial hygiene, environmental conditions or hazardous substances or
materials including those defined in this Article as "Hazardous Substances."
26.2 Hazardous Substances. The term "Hazardous Substance" means any
-------------------- -------------------
hazardous or toxic substance, material or waste, pollutants or contaminants, as
defined, listed or regulated now or in the future by any federal, state or local
law, ordinance, code, regulation, rule, order or decree regulating, relating to
or imposing liability or standards of conduct concerning, any environmental
conditions, health or industrial hygiene, including without limitation, (a)
chlorinated solvents, (b) petroleum products or by-products, (c) asbestos and
(d) polychlorinated biphenyls, excluding, however minor quantities of materials
and substances which otherwise would constitute Hazardous Substances and are
used in the ordinary course of business by tenants in Class A office Buildings
and cleaning supplies and other substances used in the ordinary course of
operating and maintaining Class A office buildings.
26.3 Landlord's Obligations. Landlord represents, warrants and agrees
----------------------
that:
(a) Landlord has not during its period of ownership used, generated,
manufactured, produced, stored, released, discharged or disposed of on, under or
about the Building or Land (or off-site of the Building or Land that might
affect the Building or Land) or transported from the Building or Land, any
Hazardous Substance, nor to the best of Landlord's knowledge, but with Landlord
having no obligation to have made any independent study or investigation, and
except as identified in the Phase I Environment Site Assessment Update prepared
by Dames & Moore, D&M Job No. 40766-001-005, dated October 13, 1998 (the
"Report"), or otherwise disclosed to Tenant in writing prior to Tenant's
execution of this Lease, (i) there have been no releases of Hazardous Substances
from the Premises, the Building, or the Land; (ii) no Hazardous Substances have
been used, generated, treated, stored, or disposed of at the Premises, the
Building, or the Land; and (iii) no claim of liability relating to the presence
of Hazardous Substances in violation of any applicable law at the Premises, the
Building, or the Land has been made or is threatened by any governmental agency
or other third party. On request, Landlord has provided Tenant with a copy of
the Report.
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(b) Landlord will not use, generate, manufacture, produce, store,
release, discharge or dispose of on, under or about the Building or Land (or
off-site of the Building or Land that might affect the Building or Land), or
transport to or from the Building or Land, any Hazardous Substance, except minor
quantities of materials and substances which otherwise would constitute
Hazardous Substances and are used in the ordinary course of business by tenants
in Class A office Buildings and cleaning supplies and other substances used in
the ordinary course of operating and maintaining Class A office buildings in
compliance with Environmental Law.
(c) Except as otherwise disclosed in the Dames and Moore Report
referred to above, to the best of Landlord's knowledge no underground storage
tanks have been removed from the Building or Land, and no underground storage
tanks are located on the Building or Land.
(d) Landlord shall protect, indemnify, defend and hold harmless Tenant
and its directors, officers, employees, agents, parents, subsidiaries,
successors and assigns from any loss, damage, cost, expense or liability
(including reasonable attorneys' fees and costs) directly or indirectly arising
out of or attributable to Landlord's use, generation, manufacture, production,
storage, release, threatened release, discharge or disposal of a Hazardous
Substance on, under or about the Development (or off-site on property owned or
operated by Landlord that affected the Development) or a breach of any
representation, warranty, covenant or agreement contained in this Section 26.3
including, without limitation, the costs of any required or necessary repairs,
cleanup or detoxification of the Building or Land and the preparation and
implementation of any closure, remedial or other required plans. Rent shall
abate to the extent the presence of a Hazardous Substance or a violation of
Environmental Law (in either case not caused by Tenant, its employees, agents or
contractors) materially interferes with Tenant's use of the Premises. If
interference with Tenant's use of the Premises continues for more than one
hundred eighty (180) days, Tenant may terminate this Lease by giving Landlord
notice of termination. If the presence of a Hazardous Substance or a violation
of Environmental Law (in either case not caused by Tenant, its employees, agents
or contractors) creates an unacceptable risk to the health or safety of Tenant's
employees or invitees as determined in Tenant's reasonable judgment, and the
condition is not abated within thirty (30) days after Tenant notifies Landlord
of the condition, Tenant may terminate this Lease.
26.4 Tenant's Obligations. Tenant agrees that:
--------------------
(a) Neither Tenant nor its employees, agents or contractors will use,
generate, manufacture, produce, store, release, discharge or dispose of on,
under or about the Premises, or off-site the Premises, or transport to or from
the Premises, any Hazardous Substance except minor quantities of materials and
substances which otherwise would constitute Hazardous Substances and are used in
the ordinary course of business by tenants in Class A office Buildings and
cleaning supplies and other substances used in the ordinary course of operating
and maintaining Class A office buildings in compliance with Environmental Laws.
(b) Tenant shall give prompt written notice to Landlord of:
(i) any proceeding or inquiry by any governmental authority
known to Tenant with respect to the presence of any Hazardous Substance on the
Premises; and
(ii) all claims made or threatened by any third party against
Tenant or the Premises relating to any loss or injury resulting from any
Hazardous Substance; and
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(iii) Tenant's discovery of any occurrence or condition on the
Premises that could cause the Premises or any part thereof to be subject to any
restrictions on occupancy or use of the Premises under any Environmental Law.
(c) Tenant shall protect, indemnify, defend and hold harmless Landlord
and its directors, partners, officers, employees, agents, parents, subsidiaries,
successors and assigns from any loss, damage, cost, expense or liability
(including reasonable attorneys' fees and costs) directly or indirectly arising
out of or attributable to the use, generation, manufacture, production, storage,
release, discharge, disposal or presence of a Hazardous Substance on the
Premises (or off-site of the Premises) caused by Tenant and its employees,
agents or contractors, or a breach of any representation, warranty, covenant or
agreement contained in this Section 26.4 including, without limitation, the
costs of any required or necessary repairs, cleanup or detoxification of the
Premises and the preparation and implementation of any closure, remedial or
other required plans.
26.5 This Article 26 shall survive expiration or termination of this
Lease.
ARTICLE 27
ADDITIONAL PROVISIONS
27.1 Removal of Liens. If Landlord is doing, or is having done,
----------------
any work in the Premises at Landlord's expense, and liens are placed against the
Premises by any person or entity entitled to do so by law and engaged in
providing work, services, or materials for or to such work, Landlord has the
sole and exclusive obligation to take whatever steps may be appropriate and
necessary, at Landlord's sole cost and expense, to discharge, bond or otherwise
remove the liens, Tenant having no such obligation whatsoever. Tenant agrees
not to suffer or permit any lien of mechanics or materialmen to be placed on the
Premises, the Building or the Development, and if any such lien does so attach
to immediately pay, remove or bond over the same within thirty (30) days after
Landlord notifies Tenant of the existence of the lien. If Tenant does not
timely pay, remove or bond over the lien, Landlord may satisfy the lien and the
sum paid by Landlord shall constitute Additional Rent due and payable by Tenant.
27.2 Brokers. Landlord and Tenant warrant to each other that the
-------
only broker(s) that have been retained in connection with the negotiation and
consummation of this Lease is Trammell Crow Company ("Tenant's Broker").
---------------
Landlord shall pay to Tenant's Broker a commission of $4.00 per square foot of
Rentable Area of the Premises, $1.00 of which shall be allocated to Leo Backer
(Liebsohn and Company) who has assisted Tenant's Broker in connection with this
Lease. Each party agrees to indemnify, defend and hold the other party harmless
from all damages, judgments, liabilities, claims and expenses (including
reasonable attorneys' fees) arising out of or in connection with any claim or
demand of any other broker, agent or finder with whom the indemnifying party has
dealt for any commission or fee alleged to be due in connection with its
participation in the procurement of Tenant or the negotiation of this Lease.
The indemnification obligation in this Section 27.2 shall survive the
termination of this Lease.
27.3 Successors. This Lease shall bind and inure to the benefit
----------
of Landlord, its successors and assigns, and Tenant and its successors and
assigns.
27.4 Severability. If any provision of this Lease is determined
------------
to be invalid or unenforceable, then that provision and the remainder of this
Lease shall continue in effect and be enforceable to the fullest extent
permitted by law. It is the intention of the parties that if any provision of
this Lease is capable of two constructions, one of which would render the
provision void, and the other of which would render the provision valid, then
the provision shall have the meaning that renders it valid.
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27.5 Integration. This instrument contains the entire integrated
-----------
agreement between the parties as to the Premises, and supersedes any oral
statements or representations or prior written matter not contained in this
instrument. This Lease shall not be modified except by a written document
signed by both parties.
27.6 Governing Law. This Lease shall be governed by and construed
-------------
and enforced in accordance with the laws of the State where the Premises are
located.
27.7 No Waiver. Failure of either party to complain of any act or
---------
omission on the part of the other, no matter how long the same may continue,
shall not constitute a waiver of any rights under this Lease. No waiver by
either party of any breach of any provisions of this Lease shall be deemed a
waiver of a breach of any other provision of this Lease or a consent to any
subsequent breach of the same or any other provision. If any action of any
party requires the consent or approval of the other, consent or approval given
on one occasion shall not be deemed a consent to or approval of that action on
any other occasion. No extension of time for performance of any obligation or
act shall be deemed an extension of the time for performance of any other
obligation or act.
27.8 Construction. Captions are solely for the convenience of the
------------
parties and are not a part of this Agreement. This Agreement shall not be
construed as if it had been prepared by one of the parties, but rather as if
both parties had prepared it.
27.9 Time. Time is of the essence of every provision of this Agreement
----
27.10 Cumulative Remedies. The rights and remedies that either
-------------------
party may have under this Lease or at law or in equity, upon any breach, are
distinct, separate and cumulative and shall not be deemed inconsistent with each
other, and no one of them shall be deemed to be exclusive of any other.
27.11 Protest. If a dispute arises with respect to the performance of
-------
any obligation including an obligation to pay money, the party against which the
obligation is asserted shall have the right to perform the obligation under
protest. Performance of an obligation under protest shall not be regarded as
voluntary performance. A party that has performed under protest shall have the
right to institute a lawsuit to recover any amount paid or the reasonable cost
of otherwise complying with the disputed obligation.
27.12 Execution; Binding Effect. This Lease shall not be effective or
-------------------------
binding on the parties until it has been signed by both Landlord and Tenant. If
Landlord does not return a fully executed copy of this Lease to Tenant within
fifteen (15) days of execution by Tenant, this Lease is null and void and of no
force and effect.
27.13 Authority. Each party represents to the other that the person
---------
signing this Lease on its behalf is properly authorized to do so, and in the
event this Lease is signed by an agent or other third party on behalf of
Landlord, written authority to sign on behalf of Landlord in favor of the agent
or third party shall be provided to Tenant either prior to or simultaneously
with the return to Tenant of a fully executed copy of this Lease.
27.14 Rules and Regulations. Tenant will use reasonable efforts to
---------------------
cause its employees, agents and any others permitted by Tenant to occupy or
enter the Premises to abide by rules and regulations adopted by Landlord to
govern conduct of its tenants ("Rules"). The Rules and all new and modified
-----
Rules shall be of uniform application to substantially all tenants of the
Building, and shall not be enforced against Tenant in a discriminatory manner,
and, to the extent enforced, shall be enforced in a
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substantially equal manner against all tenants of the Building. The provisions
of this Lease shall supercede any conflicting provisions of the Rules.
27.15 Force Majeure. Performance by Landlord or Tenant of their
-------------
obligations under this Lease shall be extended by the period of delay caused by
force majeure, provided, however, that Landlord's obligations with respect to
repair and restoration, resumption of utility service(s), hazardous substances,
and construction and preparation of the Premises shall not be subject to
extension of time pursuant to this paragraph. Force majeure is war, natural
catastrophe, strikes, walkouts or other labor disturbance, order of any
government, court or regulatory body having jurisdiction, shortages, blockade,
embargo, riot, civil disorder, or any similar cause beyond the reasonable
control of the party who is obligated to render performance (but excluding
financial inability to perform, however caused). Nothing in this Section 27.15
shall limit or otherwise modify or waive Tenant's obligation to pay Base Rent
and Additional Rent as and when due pursuant to the terms of this Lease.
27.16 Attorneys' Fees. If legal proceedings are initiated to enforce
---------------
any term of this Lease, to recover any Rent due under this Lease, for the breach
of any covenant or condition of this Lease, or for the restitution of the
Premises to Landlord and/or eviction of Tenant, the prevailing party shall be
entitled to recover, as an element of its cost of suit and not as damages,
reasonable attorneys' fees and costs to be fixed by the court.
27.17 Confidentiality. Both parties agree that the terms and conditions
---------------
of this Lease and details regarding its negotiation are and shall remain
confidential between Landlord and Tenant. Neither party shall distribute, copy
or otherwise submit, orally or in writing, this Lease or any summary thereof, to
any other person or entity without the other party's prior written consent,
except (i) Landlord's or Tenant's servants, agents, employees, legal
representatives, successors or assigns, (ii) Landlord's current and prospective
Mortgagees and purchasers of the Development or Building, and (iii) Tenant's
prospective assignees or subtenants, provided that in the case of parties
covered by clauses (ii) or (iii) they shall have agreed in writing to honor the
confidentiality provisions of this Section 27.17. In addition, Landlord shall
not make any public announcements regarding Tenant's proposed or actual
occupancy of the Premises without Tenant's prior written consent, which Tenant
may withhold in its sole discretion. In addition, all information learned by or
disclosed to Landlord with respect to Tenant's business, or information
disclosed or discovered during an entry by Landlord into the Premises, shall be
kept strictly confidential by Landlord, Landlord's legal representatives,
successors, assigns, employees, servants and agents and shall not be used
(except for Landlord's confidential internal purposes) or disclosed to others by
Landlord, or Landlord's servants, agents, employees, legal representatives,
successors or assigns, without the express prior written consent of Tenant,
which Tenant may withhold in its sole and absolute discretion.
27.18 Reasonableness. In determining the reasonableness of the
--------------
decision made, action taken, or consent given or withheld by a party, the
following standards and covenants shall apply:
(a) no party shall challenge the validity or enforceability of any
provision in this Lease requiring it to act reasonably in its decisions and
actions and to not unreasonably withhold consents or approvals;
(b) common sense shall be applied in determining whether a party was
reasonable;
(c) what is reasonable in a commercial leasing context shall be
taken into account; and
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(d) it shall be deemed unreasonable to withhold consent or
approval because of the failure of one party to pay or provide something of
value to the other party where this Lease does not require the same as a
condition of approval or consent.
27.19 [Intentionally Omitted.].
27.20 Landlord's Exculpation. If Landlord fails to perform any covenant,
----------------------
term or condition of this Lease upon Landlord's part to be performed, and if as
a consequence of Landlord's default Tenant obtains a money judgment against
Landlord, the judgment shall be satisfied only (a) by offset against Rent due
after the entry of such judgment, (b) out of the proceeds of sale received upon
execution of the judgment and levied thereon against the right, title and
interest of Landlord in the Premises, Building, Development and/or Land, (c) out
of rents, issues or other income receivable by Landlord, (d) out of the
consideration received by Landlord from the sale or other disposition of all or
any part of Landlord's right, title and interest in the Premises, Building,
Development and/or Land, or (e) out of insurance or condemnation proceeds
receivable or received by Landlord. Nothing contained herein shall limit or
affect any right that Tenant might otherwise have to obtain injunctive relief or
other remedies or actions against Landlord that do not involve the personal
liability of Landlord or of the persons that comprise Landlord to respond in
monetary damages from property other than Landlord's interest in the Building,
Development and Land where the Premises are located.
27.21 Landlord's Knowledge. For purposes of this Lease, where any
--------------------
provisions of this Lease are qualified by language such as "to the best of
Landlord's knowledge," or "to Landlord's actual knowledge," or "Landlord is not
aware," Landlord's knowledge is limited to the current actual knowledge of
William H. Cunningham, Jr., a Senior Vice President of O.C. Real Estate
Management, LLC, one of the members of Landlord, and Loretta Alake, Michael
Thompson and David Victor.
27.22 Assignment by Landlord. If Landlord sells or otherwise transfers
----------------------
the Building, such purchaser or transferee shall be deemed to have assumed
Landlord's obligations hereunder, and Landlord shall be relieved of all
liabilities hereunder arising upon such purchaser or transferee executing and
accepting an assumption of Landlord's obligations under this Lease and Tenant
shall attorn to Landlord's successor.
27.23 Late Charge; Interest. Time is of the essence of this Lease. If
---------------------
Tenant fails to pay any Base Rent or Additional Rent within five (5) days after
notifying Tenant the payment is delinquent, a late charge equal to the greater
of $50.00, or five percent (5%) of the unpaid amount, shall be assessed and be
immediately due and payable by Tenant. In addition, any Base Rent or Additional
Rent more than ten (10) days past due shall bear interest from the date due
until paid in full (together with late charges and interest) at an interest rate
equal to the lesser of the prime lending rate charged by Bank of America
(Seattle office) plus three percent (3%), or the maximum rate of interest
permitted by applicable law.
LANDLORD:
BELLEVUE GOLDWELL ASSOCIATES, LLC, a
Delaware limited liability company
By: O.C. Real Estate Management, LLC, a
Delaware limited liability company, a
Member
Date: __________________ By__________________________________
-43-
William Cunningham
Its Senior Vice President
TENANT:
MICROSOFT CORPORATION
Date: __________________ By___________________________________
Larry Neilson
Its: General Manager, Real Estate
& Facilities/Corporate Security
-44-
[Bellevue Goldwell]
STATE OF _______________ )
) ss.
COUNTY OF ______________ )
I certify that I know or have satisfactory evidence that William Cunningham is
the person who appeared before me, and said person acknowledged that he signed
this instrument, on oath stated that he was authorized to execute the instrument
and acknowledged it as the Senior Vice President of O.C. Real Estate Management,
LLC, a Delaware limited liability company, a Member of Bellevue Goldwell
Associates LLC, a Delaware limited liability company, to be the free and
voluntary act of such party for the uses and purposes mentioned in the
instrument.
Dated: ________________________
(Seal or stamp)
---------------------------------------
(Signature)
---------------------------------------
(Printed Name)
Notary Public
My appointment expires
-----------------
[Microsoft]
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that Larry Neilson is
the person who appeared before me, and said person acknowledged that he signed
this instrument, on oath stated that he was authorized to execute the instrument
and acknowledged it as the General Manager, Real Estate & Facilities/Corporate
Security of Microsoft Corporation, to be the free and voluntary act of such
party for the uses and purposes mentioned in the instrument.
Dated: ________________________
(Seal or stamp)
-----------------------------------
(Signature)
-----------------------------------
(Printed Name)
Notary Public
My appointment expires
-------------
-45-
Exhibit A-1
Premises
A-1-1
Exhibit A-2
-----------
Site Plan
A-2-1
Exhibit A-3
-----------
Floor Plans
A-3-1
Exhibit B
---------
Permitted Encumbrances
B-1
Exhibit C
---------
Commencement Date Agreement
This Agreement is entered into this __ day of ______________, ____ pursuant
to Lease Agreement dated __________, ____ (the "Lease") between ______________,
as landlord and Microsoft Corporation, as tenant.
The undersigned hereby certify to and agree with each other as to the
following information in connection with the Lease:
1. The "Commencement Date" under, and as defined in, the Lease is
_____________________. Accordingly, the initial Term of the Lease expires on
________________.
2. As of the Commencement Date, the "Premises Rentable Area" under, and as
defined in, the Lease is ___________.
LANDLORD:
BELLEVUE GOLDWELL ASSOCIATES, LLC, a
Delaware limited liability company
By: O.C. Real Estate Management, LLC, a
Delaware limited liability company, a
Member
Date: __________________ By___________________________________
William Cunningham
Its Senior Vice President
TENANT:
MICROSOFT CORPORATION
Date: __________________ By___________________________________
Larry Neilson
Its: General Manager, Real Estate &
Facilities/Corporate Security
C-1
Exhibit D
---------
Janitorial Services and Security Services
D-1
Exhibit E
---------
Subordination Non-Disturbance and Attornment Agreement
E-1
Exhibit F
---------
Building Standard Finishes
E-1