Exhibit 10.38
LEASE
EARL DAVIE BUILDING
THIS LEASE is entered into and effective as of October 4, 2002 ("Effective
Date"), between ARE-1208 EASTLAKE AVENUE, LLC, a Delaware limited liability
company ("Landlord") and ZYMOGENETICS, INC., a Washington corporation
("Tenant").
The parties agree as follows:
1. PREMISES/LEASE
1.1 Premises. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord on the terms contained herein all property purchased by Landlord
from Tenant and located at 1208 Eastlake Avenue East, Seattle, Washington
("Premises"), including (Section 27.2) the land described on Exhibit A, together
with the easements, rights and appurtenances thereto and the buildings and other
improvements located thereon ("Improvements"); including the Fixed Equipment
(Section 8.8) and excluding the Removable Equipment (Section 8.8).
1.2 Operating Lease. Landlord and Tenant stipulate that this Lease is a
true lease and does not represent a financing arrangement. Each party shall
reflect the transactions represented by this Lease in a manner consistent with
"true lease" treatment rather than "financing" treatment in all applicable
books, records and reports (including income tax filings). Tenant intends to
record this Lease as an operating lease for SEC reporting purposes in accordance
with generally accepted accounting principles ("GAAP"), but failure to do so
shall not be considered a default under this Lease.
1.3 Acceptance of Premises. As the prior owner of the Premises, Tenant
designed and constructed the Improvements on the Premises and has occupied the
Improvements since their completion and is therefore completely familiar with
the condition of the Improvements. By entering this Lease, Tenant is deemed to
have accepted the Premises in its current condition, AS-IS and with all faults.
To the extent necessary to comply with its obligations to maintain and repair
the Premises, Tenant shall enforce the warranties and other obligations of
contractors and suppliers for the original construction of the Premises and
Landlord shall cooperate with Tenant in doing so, but Landlord shall have no
other responsibility or liability for the design, construction or condition of
Premises and makes no warranties with respect thereto and Tenant shall reimburse
Landlord for all its reasonable out-of-pocket third party costs and expenses,
including its attorneys' fees, incurred in connection with its cooperation.
Landlord shall not be required to make any repairs or replacements of any kind
whatsoever during the Term. Notwithstanding the sale of the Premises to
Landlord, all warranties and guaranties regarding the development of the
Premises remain with Tenant for the Term and any remaining warranties and
guaranties will be deemed automatically transferred to Landlord upon termination
of this Lease.
2. TERM
2.1 Initial Term. The Initial Term of this Lease shall be 15 years
commencing on October 4, , 2002 ("Commencement Date") and ending on October 3,
2017, unless sooner terminated pursuant to any provision hereof. The Initial
Term is subject to extension pursuant to Section 24. As used herein, "Term"
shall mean the Initial Term and any Renewal Term (Section 2.2) which becomes
effective hereunder.
2.2 Extensions. Provided that Tenant is not in default on exercise of a
right to extend or on the commencement of the Renewal Term (unless such default
is cured within any applicable cure period), Tenant shall have the right to
extend this Lease for 4 consecutive renewal terms (each, a "Renewal Term") of 5
years each, with at least 16 months prior written notice to Landlord. If
Landlord does not receive such notice 16 months prior to the end of a current
Term, Tenant's renewal rights shall lapse. The rights to extend the Lease for
the Renewal Terms are personal to Tenant and may not be assigned,
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pledged or transferred to any third party. Notwithstanding the foregoing, such
rights may be assigned or transferred to Tenant's Affiliates (Section 13.2).
2.3 Rent For Renewal Terms. As of the commencement of each Renewal Term,
the Base Rent (Section 3.1) shall be adjusted to the greater of (a) the fair
market rental value of the Premises as of the commencement of the Renewal Term,
or (b) 90% of the Base Rent applicable to the last year of the term prior to
commencement of the applicable Renewal Term. Fair market rental value shall be
the amount of rent which a well-informed tenant, willing, but not obliged to
lease the Premises, would pay, and which a well-informed landlord, willing, but
not obligated to lease, would accept, taking into consideration all uses to
which the Premises is adapted and might in reason be applied, and the then
market terms being offered in the Seattle metropolitan area (e.g. including
Elliott Bay, the University District, Queen Anne/Interbay, Lake Union, Denny
Triangle, etc.) for space reasonably comparable to the Premises. If, after
bargaining in good faith for 30 days (the "Bargaining Period"), the parties have
not reached agreement on the fair market rental value, it shall be established
by binding arbitration in accordance with Section 2.4. Commencing at the start
of the second year of each Renewal Term and continuing each year thereafter, the
Renewal Term's Base Rent shall be increased by 3.5%.
2.4 Arbitration. The arbitration process outlined below must be commenced
no more than 18 months before the first day of the ensuing Renewal Term and
pursued in good faith. Each arbitrator shall be an MAI real estate appraiser
with at least 7 years experience in appraising real property used for comparable
"wet science" biological laboratory and research and development facilities or
such similar uses to which the parties agree ("Arbitrator"). If the parties are
able to reach agreement on a single Arbitrator within 10 days after the end of
the Bargaining Period, that Arbitrator shall determine the fair market rental
value. Otherwise, each party shall select its own Arbitrator and shall provide
the name to the other party within 15 days following expiration of the
Bargaining Period. The two Arbitrators shall meet within 20 days following their
selection and attempt in good faith during such 20 days to reach agreement on
the fair market rental value of the Premises. If the two Arbitrators are unable
to agree, they shall jointly select a third Arbitrator. If they fail to either
agree on the fair market rental value or appoint a third Arbitrator within 20
days following their appointments, the third Arbitrator shall be selected by the
then Presiding Judge of King County Superior Court upon the request of either
party. Within 10 days after the appointment of the third Arbitrator, the first
two Arbitrators shall each submit in writing to the third Arbitrator the amount
which they propose be established as the Renewal Term's Base Rent
("Submissions"). The Submissions shall not be disclosed by the third Arbitrator
until the third Arbitrator has received both of the other Arbitrators'
Submissions. Each Arbitrator may include in such Submissions any information
which he/she deems relevant or helpful to the third Arbitrator in determining
the fair market rental value of the Premises, and the third Arbitrator may not
obtain, accept or consider any additional information in making its decision.
The third Arbitrator's determination of the fair market rental value is strictly
limited to selection, as the more reasonable approximation of the fair market
rental value of the Premises, of the amount stated in one of the Submissions,
and third Arbitrator may not select or declare any third number. The third
Arbitrator's decision shall be made within 20 days after delivery of the
Submissions, by a report in writing to each of the parties and in any event at
least 12 1/2 months before the commencement of the Renewal Term. Each party
shall pay the costs of its own Arbitrator and one-half of the single Arbitrator
or the third Arbitrator's fee. If the Arbitrator's determination of fair market
rental value is greater than 110% of the then Base Rent payable during the 12
months immediately preceding the applicable Renewal Term, Tenant may elect to
rescind exercise of the option by written notice to Landlord given at least 12
months before the commencement of the Renewal Term. Notwithstanding the
provisions of this Section 2.4, if during the arbitration period, Tenant and
Landlord reach agreement on fair market rental value (independent of
Arbitrator's findings), the arbitration shall be terminated and the
determination of the parties shall govern.
3. RENT
3.1 Base Rent. Commencing on the Commencement Date, and continuing on the
first of each month thereafter, Tenant shall pay to Landlord $140,317.86 per
month ("Base Rent"). Base Rent shall be remitted to the Landlord at its address
stated for notices in this Lease as the same may be amended from time to time or
to such other address required by Landlord in a written notice to Tenant
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and shall be due and payable on the first day of each month during the Term and
tendered in cash. Base Rent for any partial month shall be prorated based on the
number of days in the applicable calendar month.
3.2 Increases in Base Rent. Commencing one year after the Commencement Date
and continuing annually thereafter, the Base Rent shall be increased by 3.5%.
3.3 Expansion. See Section 24.10.
3.4 Additional Rent. All amounts other than Base Rent due by Tenant to
Landlord under this Lease shall be deemed "Additional Rent" and Landlord shall
have all of the same remedies for Tenant's failure to pay Additional Rent as for
failure to pay Base Rent. The term "Rent" shall mean the combined Base Rent and
Additional Rent. Tenant's obligations to pay Rent are in the nature of
independent covenants and all Rent shall be paid without demand, notice,
abatement, reduction or offset, except that Additional Rent may be subject to
demand or notice where provided in this Lease.
3.5 Late Fee. If any installment of Base Rent is not received by Landlord
by the 5th of the month, Tenant shall pay to Landlord, on demand, a late charge
equal to six percent (6%) on such overdue installment of Base Rent (the "Late
Fee"). Notwithstanding the foregoing, Landlord agrees that pursuant to Section
15.2 below, Landlord will deliver notice to Tenant of any such delinquency and,
not more than once each Lease Year, Landlord will waive the Late Fee if such
delinquency is paid within three business days after Tenant's receipt of such
notice. Tenant acknowledges that such late charge represents a reasonable
estimate of the costs Landlord will incur as a result of such late payment.
3.6 Fines/Penalties. Subject to Section 22, Tenant shall pay and discharge
when due all other amounts and obligations which Tenant assumes or agrees to pay
pursuant to this Lease.
3.7 Abatement of Rent. Except as expressly agreed upon in Sections 10 and
12 below, Tenant's obligations to pay Rent shall not abate during any period
that the Premises or any part thereof are untenantable regardless of the cause
of such untenantability.
3.8 Asset Management Fee. In addition to the Base Rent, Tenant shall pay to
Landlord each month with the Base Rent an asset management fee equal to one-half
of one percent (0.5%) of the Base Rent.
4. USE
4.1 Use. Tenant may use the Premises only for office and laboratory, and
research and development facilities and uses that are a reasonably necessary
adjunct thereto. "Laboratory" as used herein refers to that portion of the
Premises devoted to "wet" laboratory and related research and development use.
Exhibit H shows the current allocation of Laboratory and office spaces. Changes
resulting in more than 40% or less than 25% of the net rentable square feet of
the Premises designated for office use will be considered a change in use. The
methodology which will be used for calculating the percent of use will be
calculated consistent with the methodology as was employed to calculate the
current use percentage as described on Exhibit H (said uses and the permitted
deviation in the ratio being hereinafter referred to as the "Use Requirements").
Any other uses or changes in uses shall require Landlord's approval, in
accordance with the approval standards set forth in Section 8. The Premises
shall not be used for any purpose which would constitute a public or private
nuisance or waste, or violate the agreements listed on Exhibit B ("Title
Encumbrances").
4.2 Compliance with Laws. Tenant shall, at its cost, comply with all Laws
(Section 27.2) and the requirements of any board of fire underwriters, including
all modifications required thereby, relating to or affecting the condition, use
or occupancy of the Premises. Upon request of Landlord, Tenant shall provide
Landlord with copies of all documents evidencing Tenant's compliance with any
particular Law specified by Landlord. Tenant shall notify Landlord in writing
immediately of any
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threatened or actual notice or citation, regarding an alleged failure of the
Premises to comply with any Law.
4.3 Mechanic's Liens. Except for claims for delinquent payments for which
Landlord is contractually obligated, which shall be the sole responsibility of
Landlord, Tenant agrees that during the Term hereof it shall not do or suffer
any waste to the Premises, or cause, suffer or permit any liens for labor,
services or materials to attach to the Premises by reason of any act or omission
of Tenant or person claiming through Tenant. If any lien is filed arising out of
work performed for Tenant, Tenant shall either discharge the lien or post a bond
pursuant to RCW 60.04.161 to remove the lien from the Premises within 30 days
after it receives notice of the lien.
4.4 Quiet Enjoyment. So long as no Event of Default (Section 15.2) exists
hereunder, Landlord covenants that Tenant shall have quiet occupation and
enjoyment of the Premises from any person claiming through Landlord.
5. MAINTENANCE AND REPAIR
5.1 Tenant's Obligations. Tenant shall keep and maintain all portions of
the Premises in good order and condition, in a manner typical of other properly
maintained and operated facilities of a similar nature and in accordance with
all Laws and with the standards of maintenance and repair adhered to by Tenant
prior to the Commencement Date. Tenant shall promptly make all repairs and
replacements required in order to keep and maintain the Premises in such order
and condition. Tenant shall also keep the Premises in compliance with all Laws
and the requirements of the property and environmental insurance coverages. The
provisions of this Section shall not conflict with Tenant's rights to obtain
insurance and condemnation proceeds under Sections 10, 11 and 12. If Tenant
fails to perform the required maintenance and repairs, Landlord shall have the
cure rights described in Section 15.7.
5.2 Condition on Surrender. Upon termination of this Lease, Tenant shall
remove its personal property, repair any damage caused by removal, comply with
any removal and Restoration Requirements (Section 8), and leave the Premises in
good repair and condition, subject to Section 10.3. In addition, prior to
termination of the Lease, Tenant shall perform all decommissioning required by
governmental agencies and shall provide copies of all decommissioning reports to
Landlord. If Tenant has failed to complete the governmental decommissioning
process by the expiration or earlier termination date of this Lease, and as a
result, the Premises cannot be relet, the Tenant shall be required to continue
to pay full Rent and perform its obligations hereunder until such
decommissioning is complete. The foregoing shall also be considered holding over
and be subject to the terms of Section 27.13 if, and for so long as, Tenant
fails to pursue such decommissioning with due diligence. The Fixed Equipment
then existing in the Premises shall be surrendered with the Premises in good and
operating condition and free of any liens, financing leases or other
encumbrances created by or imposed against Tenant, and belong solely to
Landlord.
6. UTILITIES AND TAXES
6.1 Utilities. Subject to Section 22, Tenant shall pay when due all charges
for utility services provided to the Premises including power, water and sewer,
and gas. No interruption of utility service shall give Tenant the right to abate
Rent or terminate this Lease.
6.2 Taxes. Subject to Section 22, Tenant shall pay when due all Real
Property Taxes. "Real Property Taxes" shall mean: (i) the ad valorem property
taxes and other similar taxes levied against the Premises which become due and
payable during the Term, (ii) all installments of assessments imposed by
governmental entities on the Premises which become due and payable during the
Term, and (iii) governmental licensing or similar fees. Real Property Taxes
shall include all taxes and assessments levied against the Premises other than
conveyance taxes arising from Landlord's transfer of the Premises, Landlord's
rental taxes (if any), Landlord's business and occupation taxes, franchise or
net income taxes of Landlord, any estate, succession, gift, capital levy or
similar taxes. If any assessment may be paid in installments, Tenant shall be
responsible only for those installments due and payable
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during the Term and for those portions of installments to the extent they
accrued during the Lease Term, even if they are payable thereafter. If Landlord
enters into private agreements for off-site improvements for the benefit of the
Premises which are in lieu of government imposed improvements, Tenant shall pay
Landlord's installments thereunder to the extent they accrued during the Term.
Notwithstanding the foregoing, if the amortization period used in calculating
the amount of the installments is less than the amortization period that would
have been used for the government assessment that would have otherwise been
imposed, then Tenant shall pay a portion of the Landlord's installments due
under such private agreements, to the extent they accrued during the Term,
recalculated using the same amortization period as would have been used for the
government assessment. Tenant shall pay all personal property taxes levied
against the Premises as and when due to the extent the levy thereof is
attributable to the Term and all such taxes are assessed against its own
property. It is Landlord's and Tenant's express intent that all Fixed Equipment
identified on Exhibit G and all substitutions, modifications or additions
thereto, is part of the real property and not personal property. No personal
property is being leased by Landlord to Tenant. Notwithstanding the foregoing,
if the Department of Revenue assesses any personal property taxes relating to
the Premises, the Fixed Equipment or this Lease, Tenant shall pay such taxes,
subject to Section 22.
7. SECURITY DEPOSIT
7.1 General Requirements. Upon execution of this Lease, Tenant will provide
to Landlord a security deposit ("Security Deposit") in the amount of $280,635.72
(i.e. two months Base Rent). Tenant shall increase the amount of the Security
Deposit to correspond to increases in Base Rent at the time such adjustments
become effective. Tenant can elect to provide the Security Deposit in the form
of either a letter of credit ("LOC"), or pledged marketable securities from
Tenant's corporate cash investment portfolio, or a combination thereof, variable
over the Term. Landlord will hold the Security Deposit as security for the
performance of Tenant's obligations under the Lease. The Security Deposit will
not be considered an advance payment of Rent or a measure of Tenant's liability
for damages. Landlord may, from time to time, without prejudice to any other
remedy, upon the occurrence of an Event of Default, use all or a portion of the
Security Deposit to cure any Event of Default. Following any such application of
the Security Deposit, Tenant will replenish the Security Deposit to its required
amount. Landlord shall transfer the Security Deposit to any subsequent owner of
the Premises. Landlord and its successors and assigns will not be bound by any
assignment or encumbrance of the Security Deposit by Tenant, provided, however,
if Tenant's interest in the Lease has been assigned, Landlord will return the
Security Deposit to such assignee in accordance with the terms and conditions
hereof. Within 30 days following the expiration of this Lease and the
performance by Tenant of all of its obligations hereunder, Landlord shall return
the then existing balance of the Security Deposit to Tenant. Landlord shall have
no obligation to pay interest on the Security Deposit. If Landlord returns the
Security Deposit to Tenant's assignee as aforesaid, Landlord will have no
further obligation to any party with respect thereto. Tenant shall not encumber
the Security Deposit.
7.2 Letter of Credit. During any period that Tenant elects to satisfy all
or any portion of the Security Deposit with an LOC, the LOC must be an
irrevocable and unconditional standby letter of credit, issued by the Bank of
America or its successors or another financial institution reasonably
satisfactory to Landlord and with a term of at least one year substantially in
the form of Exhibit D. Landlord may draw upon the LOC to cure any Event of
Default, as described in Section 7.1. In addition, if at any time there are less
than 30 days remaining before the expiration of the LOC, and if Tenant does not
deliver an extension or replacement of the LOC within 5 business days after
notice from Landlord, Landlord may draw upon the LOC; provided that if Tenant
subsequently provides a replacement LOC, and to the extent Landlord has not
applied the same to any default, Landlord will return the funds drawn to Tenant
without interest.
7.3 Pledged Securities. So long as Tenant's reported Cash Position (defined
below) is at least $50,000,000.00 (the "Cash Position Minimum"), Tenant may
satisfy all or any portion of the Security Deposit with marketable securities
satisfying the criteria stated in this Section 7.3. "Cash Position" is defined
as the sum of unrestricted cash, cash equivalents and marketable securities as
determined by reference to GAAP. If Tenant's reported Cash Position drops below
the Cash Position
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Minimum at any time, then Tenant shall immediately convert all of its Security
Deposit to an LOC. Tenant may subsequently satisfy its Security Deposit with
marketable securities once Tenant has again exceeded the Cash Position Minimum
for at least two consecutive quarters. During any period that Tenant elects to
satisfy all or any portion of the Security Deposit with marketable securities,
the pledge will be of short term (2 years or less) fixed income marketable
securities from Tenant's corporate cash investment portfolio, including money
market funds, rated not lower than Aa, AA, A1 or P1 or equivalent by a
nationally recognized credit rating service. The pledged marketable securities
will be held by Union Bank of California or another bank or financial
institution mutually approved by Landlord and Tenant as custodian for Landlord,
either in a separate custodian account or as specially designated securities
within a larger custodian account. The pledge agreement must be substantially in
the form of Exhibit E and provide Landlord with a perfected first lien security
interest in the pledged securities. The custodial agreement must be
substantially in the form of Exhibit F and provide direct access authorization
which would permit Landlord in an Event of Default, without approval of Tenant,
to authorize the sale of the securities and the withdrawal of the proceeds
thereof (not to exceed the amount of the then required Security Deposit) for
application by Landlord to cure any Event of Default, as described in Section
7.1. So long as the value of the pledged securities comply with the requirements
of this Lease, Tenant will be entitled to retain all interest and other earnings
generated by the pledged securities. If the market value of the pledged
securities drops below the required amount of the Security Deposit, Tenant will
immediately add additional marketable securities to the pledge to increase the
value of the pledged securities to equal or exceed the required level. Failure
of Tenant to increase the pledged securities as required within 3 business days
of notice from Landlord and/or the account custodian will constitute an Event of
Default. Tenant will have the right to substitute marketable securities meeting
the rating criteria and having all of the other characteristics specified above
for the securities subject to the pledge.
8. ALTERATIONS
8.1 General. Except as provided in Section 24 regarding the Expansion, all
alterations of Premises shall be made at Tenant's sole cost and expense. All
alterations shall be made in a good and workmanlike manner and in compliance
with all Laws and insurance requirements and Tenant shall enforce any warranties
to the extent necessary to cause any defects in workmanship or materials to be
corrected. Subject to Section 8.6, all alterations shall be fully consistent
with the overall character of the Premises as a first class scientific research
and development facility (the "Function Requirements") and the Use Requirements.
Tenant shall indemnify, defend and hold Landlord harmless from all claims, costs
(including attorneys' fees and costs) or damage occurring in connection with
Tenant's alterations; notwithstanding the foregoing, Tenant shall not be liable
to reimburse Landlord for Landlord's overhead and expenses in reviewing any
plans, specifications and other documents or in otherwise confirming Tenant's
conformance to the requirements of this Section 8 ("Review Costs") except that
for Category D and E Alterations, Tenant shall pay Landlord a fee equal to the
lesser of $10,000 or 5% of all costs incurred by Tenant or its contractors or
agents in connection with any Category D or E Alteration, to defray Landlord's
Review Costs. Prior to commencing any alterations, Tenant shall obtain all
necessary permits from governmental authorities. Irrespective of Landlord's
receipt, review and any approval of the plans and specifications for Tenant's
alterations, Tenant, and not Landlord, shall have sole responsibility for the
accuracy or sufficiency of the plans and specifications, their compliance with
applicable Laws, codes, regulations or statutes, and their fitness for Tenant's
purpose. If any alterations by Tenant trigger any legal requirements to make
other modifications to the Premises, Tenant shall make such modifications at its
sole cost and expense. Tenant shall provide to Landlord as-built drawings for
all alterations by Tenant promptly after completion of the alteration. Except
for Removable Equipment, all alterations shall become the property of Landlord
immediately upon installation or completion and shall be subject to all of the
terms of this Lease. Prior to commencing any Category "B-E" Alteration, Tenant
must deliver to Landlord evidence of insurance from all contractors and
subcontractors reasonably satisfactory to Landlord to protect Landlord against
liability for personal injury or property damage during construction, naming
Landlord as an additional insured.
8.2 Category "A" Alterations. An alteration is a "Category A Alteration" if
the estimated cost of such alteration is less than $5,000 and the alteration
does not fall within the definition of Category D or E Alterations. For Category
A Alterations, in addition to the requirements of Section 8.1, Tenant will
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deliver notice to Landlord describing the alteration promptly after its
completion, in the manner stated in Section 27.3.
8.3 Category "B" Alterations. An alteration is a "Category B Alteration" if
the estimated cost of such alteration is between $5,000 and $25,000, and the
alteration does not fall within the definition of Category D or E Alterations.
For Category B Alterations, in addition to the requirements of Section 8.1,
Tenant shall notify Landlord, in the manner stated in Section 27.3, of the
planned alteration at least 5 business days prior to commencement of the work,
providing a brief description of the work, the estimated cost, and any permit
drawings, if applicable.
8.4 Category "C" Alterations. An alteration is a "Category C Alteration" if
the estimated cost of such alteration exceeds $25,000 and the alteration does
not fall within the definition of Category D or E Alterations. For Category C
Alterations, in addition to the requirements of Section 8.1, Tenant shall notify
Landlord, in the manner stated in Section 27.3, of the planned alteration at
least 10 business days prior to the commencement of the work, providing a
description of the work, the estimated cost and any permit drawings for
Landlord's review and approval. Landlord will not withhold its approval of the
alteration, however Landlord may impose reasonable conditions on the alteration
to the extent necessary to protect its investment, provided that Landlord may
not require Tenant to restore the Premises or remove the Category C Alteration
as a condition of its consent. For Category C Alterations, if Landlord does not
respond to Tenant's notice of such alteration within the 10 business day period,
Landlord shall be deemed to have approved such alteration without conditions.
8.5 Category "D" Alterations. An alteration is a "Category D Alteration,"
regardless of estimated cost, if such alteration does not fall within the
definition of a Category E Alteration, and either (a) such alteration when
aggregated with past alterations and concurrent alterations, fails to comply
with the Use Requirements, or (b) such alteration results in a net change in
rentable square footage for any Function which is outside of the "Function
Tolerances" set forth in the Table of Uses contained in Exhibit H.
"Function" is defined by reference to physical and functional distinctions
evident in the floor plans attached as Exhibit H. For Category D Alterations, in
addition to the requirements of Section 8.1, Tenant must obtain Landlord's prior
written approval, which shall not be unreasonably withheld. To request
Landlord's approval, Tenant shall provide to Landlord schematic drawings for
Category D Alterations and Landlord shall respond with its comments on such
proposed alteration within 10 business days after receipt thereof. Such approval
is also subject to Landlord's subsequent 10 business day review and approval of
the construction drawings for the proposed alteration. Landlord shall be
required to approve the Category D Alteration and the construction drawings, if
(i) Landlord had previously approved the schematic drawings, and (ii) the
construction drawings reflect the same alterations as such schematic drawings.
If Landlord disapproves of either the schematic drawings or the construction
drawings, it shall provide Tenant with reasonably detailed reasons therefor.
Failure to provide any such notice shall not be construed as an approval of or
consent to any alteration. Landlord may condition its approval of Category D
Alterations on a Restoration Requirement (Section 8.7).
8.6 Category "E" Alterations. An alteration is a "Category E Alteration,"
regardless of estimated cost, if such alteration (a) fails to comply with the
Function Requirements, (b) incorporates materials or employs construction
standards that are of a materially lesser quality than those used in the then
existing Premises, (c) decreases the number of net rentable square feet in the
Premises, (d) involves any alterations to the foundation, roof or structural
components of the Improvements, (e) alters the exterior appearance of the
Premises (but specifically excluding landscaping, Removable Equipment, antennas
or mechanical systems on the roof, and signage when reasonably required for
Tenant's business); (f) is designed for any use that is not expressly permitted
under Section 4.1; (g) results in Laboratory space being improved for use as a
"Process Lab" (defined by reference to Exhibit H) or "Vivarium" (as defined by
reference to Exhibit H) outside of the "Extreme Max" Function Tolerances set
forth in Exhibit H; (h) results in more than 60% of the Premises being improved
for office use; or (i) results in more than 80% of the Premises being improved
for Laboratory use (Section 4.1). For Category E Alterations, in addition to the
requirements of Section 8.1, Tenant must request Landlord's prior written
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approval, which is subject to Landlord's sole discretion. To request Landlord's
approval, Tenant shall provide to Landlord schematic drawings for Category E
alterations and Landlord shall respond with its comments on the proposal within
10 business days after receipt thereof, which is subject to Landlord's
subsequent 10 business day review and approval of the construction drawings.
Landlord shall approve the Category E Alteration and the construction drawings,
if (i) Landlord had previously approved the schematic drawings, and (ii) the
construction drawings reflect the same alterations as such schematic drawings.
If Landlord disapproves of either the schematic drawings or the construction
drawings, it shall provide Tenant with reasonably detailed reasons therefor.
Failure to provide any such notice shall not be construed as an approval of or
consent to any alteration. Landlord may condition its approval of Category E
Alterations on a Restoration Requirement.
8.7 Restoration Requirement and Restoration Deposit. Landlord may condition
its approval of Category D and E Alterations on a requirement that Tenant remove
such alterations at the end of the Term and fully restore the Premises to the
location, size, design, configuration, condition and state of improvement and
fixturing that existed immediately prior to making such alterations and
consistent with the degree of maintenance and repair required by this Lease (the
"Restoration Requirement"). If Landlord conditions its approval of a Category D
or E Alteration on a Restoration Requirement, Landlord may further require that
Tenant post a deposit (the "Restoration Deposit") in an amount equal to
Landlord's reasonable estimate of the removal and restoration costs in any
circumstance in which the same exceed $100,000 and which shall be subject to the
same terms and conditions as those that are applicable to the Security Deposit;
provided, however, the Restoration Deposit shall be returned to Tenant to the
extent and at the earlier of such time as (a) Landlord waives its requirement in
writing that such alterations be removed and the Premises restored, which
election shall be at Landlord's sole and absolute discretion, or (b) Tenant
completes the removals and restorations, Landlord accepts the same as having
complied with Tenant's obligations under this section, and Tenant provides
Landlord with final lien waivers and evidence of payment for all of the costs
and expenses incurred to do so. Notwithstanding the foregoing, in no event shall
Tenant be required to post a Restoration Deposit unless (a) Landlord has made a
good faith determination that Restoration will likely be required and (b)
Tenant's cash flow position drops below the Cash Position Minimum (Section 7.3).
8.8 Fixed and Removable Equipment. This Lease arises simultaneously with
the sale of the Premises by Tenant to Landlord pursuant to that certain
Agreement of Purchase and Sale dated August 29, 2002, as amended (the "Purchase
Agreement"). In order to establish which elements and/or pieces of equipment
within the Premises were included in the sale and which were not, the parties
applied the criteria listed below to develop the listing contained on Exhibit G
containing those items which were considered affixed and part of the Premises.
All other items not listed on Exhibit G were considered personal property
retained by Tenant. "Fixed Equipment" is defined as the equipment listed on
Exhibit G, plus any new equipment brought onto the Premises which either
replaces the items listed on Exhibit G, has the same the physical and functional
distinctions as the equipment listed on Exhibit G, or satisfies the criteria
stated below.
FIXED EQUIPMENT CRITERIA:
1) Equipment that is built into the facility in such a manner that it
will require the removal of walls, floors, ceilings or additions to or
modifications of existing structural support, whether temporary or
permanent, to install or relocate it;
2) Equipment that is connected to common building systems in such a way
that the service must be modified outside the local area or room where
the equipment is located when the equipment is disconnected; or
3) Equipment that provides service to other Fixed Equipment or without
which such other Fixed Equipment would not be functional.
As new equipment is brought into the Premises, the determination of whether
such equipment is considered Fixed Equipment or Removable Equipment will be made
by using the physical and functional
8
distinctions evident in the listing attached as Exhibit G and where that does
not provide sufficient guidance, applying the above Fixed Equipment criteria. If
any alteration is intended to include attached equipment, Tenant shall give
written notice to Landlord of its suggested classification as either Fixed or
Removable when it gives the notices or requests the approvals as required above.
New Fixed Equipment shall become Landlord's property immediately. No Fixed
Equipment may be leased or subject to any lien or security interest by Tenant.
9. INSURANCE
9.1 Tenant's Insurance. Tenant shall maintain at its sole cost and expense
the following insurance on the Premises, and in all cases such policies shall
name as additional insureds (a) Landlord, (b) any lender of Landlord holding any
security interest in the Premises, and (c) any management company retained by
Landlord to manage the Premises:
9.1.1 Property. Insurance against loss or damage to the Premises on an
all risk basis, including sprinkler damage and flood for an amount not less than
the actual replacement cost of the Premises. The insurance shall include
coverage from business interruption and extra expense for a period of not less
than 18 months. Tenant shall also carry earthquake insurance and insurance
against damage caused by terrorism and acts of war to the extent the same is or
are available at commercially reasonable rates and is required by Landlord. In
determining whether such insurance is available at a commercially reasonably
rate, the parties will take into consideration the cost and availability of
similar policies for Landlord's (or its affiliates') other Seattle properties
(or in similarly rated seismic areas if Landlord or its affiliates no longer own
other Seattle properties). At Tenant's option, the Premises may be included in
Landlord's (or its affiliates') blanket policy of insurance, if and for so long
as the same is maintained by Landlord (or its affiliates), in which case the
cost of insurance allocable to the Premises will be based on the insurer's cost
calculations. In addition, Tenant shall maintain during the Term all risk
insurance for Tenant's personal property (including business interruption and
extra expense coverage) covering the full replacement cost of all property,
improvements and equipment placed in or on the Premises by Tenant, with the
understanding that the proceeds of such policies shall be paid to and belong to
Tenant.
9.1.2 Liability. Commercial liability insurance with a combined single
limit (including umbrella) of at least $10 million per occurrence and $10
million in the aggregate, naming Landlord as an additional insured and such
insurance shall be primary to and not contributory with any insurance carried by
Landlord regarding events that occur in the Premises.
9.1.3 Boiler. Insurance against loss or damage from explosion of any
steam or pressure boilers or similar apparatus located in or about the Premises
in an amount not less than the actual cost to repair or replace the insured
equipment/machinery. At Tenant's option, the Premises may be included in
Landlord's (or its affiliates') blanket policy of insurance, if and so long as
the same is maintained by Landlord (or its affiliates), in which case the cost
allocable to the Premises will be based on the insurer's cost calculations.
9.1.4 Builder's Risk. Whenever Tenant, whether as Landlord's
construction agent or otherwise, is engaged in alterations costing in excess of
$5 million, Tenant shall obtain completed value builder's risk insurance.
9.1.5 Environmental Insurance. To the extent available at a
commercially reasonable rate, pollution legal liability insurance with a limit
of not less than $10,000,000 covering the Premises and contamination therefrom.
In determining whether such insurance is available at a commercially reasonable
rate, the parties will take into consideration the cost and availability of
similar policies for other of Landlord's (or its affiliates') similar
properties. Such insurance shall be on a claims-made basis. At Tenant's option,
the Premises may be included in Landlord's (or its affiliates') blanket policy
of insurance, if and for so long as Landlord (or its affiliates) maintains such
policies, in which case the cost of such insurance allocable to the Premises
will be based on the insurer's cost calculations.
9
9.1.6 Workers' Compensation. Tenant shall maintain workers'
compensation insurance with no less than the minimum limits required by law.
9.1.7 Other Tenant Insurance. In addition to the insurance coverage
listed above in this Section 9.1, at Tenant's and Landlord's option, Tenant may
be included in Landlord's (or its affiliates') blanket policy for other
insurance (e.g. mold insurance), if and for so long as Landlord (or its
affiliates) maintains such policies, in which case the cost of such insurance
allocable to the Premises will be based on the insurer's cost calculations.
9.1.8 Landlord's Evidence of Insurance. In those instances where
Tenant is included in Landlord's (or its affiliates') blanket policies of
insurance, at Tenant's request, Landlord shall provide Tenant with insurance
certificates, or such other reasonable evidence of coverage under such policies.
9.2 Rating. The insurance required by Section 9.1 shall be written by
companies rated not less than A - and having a size rating of X or higher in the
current edition of A. M. Best's Key Rating Guide, and all such companies shall
be authorized to do insurance business in Washington, or otherwise agreed to by
Landlord. The insurance policies shall be in amounts sufficient at all times to
satisfy any coinsurance requirements thereof. If said insurance or any part
thereof shall expire or be withdrawn, Tenant shall immediately obtain new or
additional insurance reasonably satisfactory to Landlord. As of the date of the
Lease, Tenant's insurers are rated A++ (Chubb) and A+ (FM Global).
9.3 Mortgagee. Each insurance policy referred to in Sections 9.1.1,
9.1.3 and 9.1.4, shall contain standard non-contributory mortgagee clauses in
favor of any mortgagee. Each such policy shall provide that the issuer will
endeavor to notify the mortgagee if there are any material changes to the
policy.
9.4 Renewal. Tenant shall pay when due all premiums for the insurance
required by this Section 9 and shall deliver to Landlord copies of any insurance
policy upon Landlord's request and a certificate or other evidence (reasonably
satisfactory to Landlord) of the existing policies and of renewal or replacement
policies prior to the policy expiration date (which may be by extension of the
existing policy). If Tenant fails to comply with the requirements of this
Section 9 within 5 business days after written notice by Landlord to Tenant,
Landlord shall be entitled to procure such insurance pursuant to Section 15.7.
9.5 Landlord's Blanket Policies. As noted in Sections 9.1.1, 9.1.3, and
9.1.5, Tenant shall have the option of obtaining the insurance through
Landlord's (or its affiliates') blanket insurance policies for its portfolio to
obtain improved coverage or cost savings, if and for so long as Landlord (or its
affiliates) maintains such policies. At Tenant's request, Landlord will provide
Tenant with premium rating information, copies of insurance policies, and other
information reasonably necessary to facilitate Tenant's evaluation of this
option.
9.6 Landlord's Insurance. Landlord, at its expense, shall carry
comprehensive general liability insurance with a combined single limit
(including umbrella) of at least $5 million per occurrence and $5 million in the
aggregate.
9.7 Waiver of Subrogation. Notwithstanding any other provisions of
this Lease to the contrary, Landlord and Tenant waive their respective rights of
recovery against the other and the officers, employees, agents and
representatives of such other party for damage to the property of the other by
fire or other casualty to the extent such damage is insured or required
hereunder to be insured. The insurance policies carried by Landlord and Tenant
shall include a waiver of the insurer's rights of subrogation.
10
10. CASUALTY; OBLIGATION TO RESTORE
10.1 Definitions.
"Casualty" shall mean damage to or destruction of the Premises by storm,
fire, lightning, earthquake, or from any other cause, other than such damage or
destruction which is the subject of a Condemnation (Section 12).
"Excess Insurance Proceeds" shall mean that portion of any Insurance
Proceeds which are received by the Landlord or its mortgagee that are not used
to pay the third party costs of restoring any damage to the Premises or any
other third party out of pocket costs incurred, including attorneys' fees, in
connection with the Casualty, including such costs to obtain the Insurance
Proceeds, but in any event excluding Tenant's Proceeds. The determination of
Excess Insurance Proceeds shall be made upon completion of the Casualty
Restoration.
"Excess Insurance Proceeds Rent Reduction" shall mean a dollar for dollar
reduction to the Base Rent for the then remainder of the Term until exhausted,
from and after the date Landlord receives any Excess Insurance Proceeds.
"Fair Market Value of Premises" for purposes of this Section 10 is defined
in Exhibit L.
"Insurance Proceeds" shall mean the proceeds of any insurance maintained by
Tenant under Section 9, which is paid for a Casualty Restoration (Section 10.4),
but excludes Tenant's Proceeds.
"Substantial or Full Casualty" shall mean a Casualty which is certified, by
an affidavit from Tenant's president, chief executive officer or chief financial
officer, stating with a reasonable basis that such event has rendered the
Premises (taken separately from any other properties owned or leased by Tenant)
unavailable for Tenant's continued business operations in compliance with the
Use Requirements and Function Requirements for more than 12 months and the cost
of restoring the Premises is reasonably estimated to exceed $10,000,000.
"Tenant's Proceeds" shall mean any proceeds of insurance policies payable
for Tenant's business interruption or damage to Tenant's personal property.
10.2 Substantial or Full Casualty in Last 18 Months of Term. If and only if
there is a Substantial or Full Casualty of the Premises during the last 18
months of the then current Term, then (i) Landlord will receive the Insurance
Proceeds; and (ii) provided Tenant has maintained the insurance coverages
required under this Lease, the Lease will terminate effective as of the date of
the Casualty, and Tenant's obligations under the Lease will be replaced by an
obligation for Tenant to pay any deductibles under applicable insurance
policies, plus Rent for the balance of the then current Term.
10.3 Substantial or Full Casualty Prior to Last 18 Months of Term. If and
only if there is a Substantial or a Full Casualty of the Premises prior to the
last 18 months of the then current Term, then Tenant shall have the option to
either (i) continue the Lease pursuant to Section 10.3.1 below; or (ii) make a
rejectable offer to purchase pursuant to Section 10.3.2 below. If Tenant makes a
rejectable offer to purchase, unless and until Tenant closes on the purchase, or
the Lease terminates pursuant to 10.3.2, Tenant shall continue to pay Rent when
due.
10.3.1 Lease Continuation. If there is a Substantial or Full Casualty
of the Premises prior to the last 18 months of the then current Term, unless
Tenant delivers a Termination Notice under Section 10.3.2 below, the Lease shall
continue in full force and effect, and no Rent shall abate under this Lease as a
result of such Substantial or Full Casualty; provided, however, the Base Rent
under this Lease shall be subject to an Excess Insurance Proceeds Rent Reduction
(as defined above). In such event, Tenant's restoration obligations set forth in
Section 10.4 below shall apply. If Tenant elects to restore, and pursuant to
Tenant's rights to sublet or assign under Section 13, Tenant may exercise up to
11
2 of its remaining 5 year Renewal Options. In such event Tenant waives its
rescission right under Section 2.4 as it relates to such exercise only.
10.3.2 Lease Termination. If there is a Substantial or Full
Casualty of the Premises prior to the last 18 months of the then current Term,
and Tenant will not be re-occupying the Premises following such Substantial or
Full Casualty Restoration, then Tenant may elect to terminate this Lease by
delivering notice of such election to Landlord within 90 days after the Casualty
("Casualty Termination Notice"). The Casualty Termination Notice shall include
an offer by Tenant to purchase the Premises from Landlord for the greater of (i)
the original purchase price paid by Landlord for the Premises plus any Allowance
(Section 24.8.2) disbursed by Landlord pursuant to this Lease; or (ii) the Fair
Market Value of the Premises. Within 60 days from Landlord's receipt of the
Casualty Termination Notice, Landlord will notify Tenant whether it will accept
or reject Tenant's offer to purchase the Premises, with Landlord's silence
deemed rejection.
If Landlord accepts Tenant's offer to purchase, then notwithstanding
Section 10.5 below, Tenant shall be entitled to all Insurance Proceeds, and such
purchase shall close on the later of (i) 10 business days after Tenant's receipt
of all Insurance Proceeds; or (ii) 30 days after Tenant's receipt of Landlord's
acceptance of such offer.
If Landlord rejects, or is deemed to have rejected, Tenant's offer to
purchase, then the Lease will be deemed terminated effective as of the date of
Landlord's rejection, with Landlord retaining the Insurance Proceeds. In such
event, Tenant shall also be liable to pay Landlord any applicable deductibles on
insurance policies relating to the Casualty Restoration, and Tenant shall pay
such deductible amount to Landlord within 30 days of the date of Landlord's
rejection and the Lease's termination date.
10.4 Obligation to Restore. If there is a Casualty and the Lease has
not terminated by the application of Sections 10.2 or 10.3 above, then,
irrespective of the extent of the Casualty or whether the cause is covered by
insurance, Tenant shall repair, restore and rebuild the Premises in accordance
with the Function Requirements and the Use Requirements and all applicable
building and zoning codes at the time of rebuilding to substantially the same
location, size, design, configuration and condition immediately prior to damage
or destruction (with any departures from said characteristics in accordance with
Section 8 for Alterations) and this Lease shall remain in full force and effect.
Such repair, restoration and rebuilding, including the repair, restoration or
replacement of Fixed Equipment (all of which are herein called a "Casualty
Restoration") shall be commenced as soon as reasonably practical and taking into
consideration a reasonable time for the insurance adjustment of the loss, the
work to design the repairs/replacements, and permitting delays; and shall be
diligently pursued to completion.
10.5. Insurance Proceeds. Insurance Proceeds shall be paid to Tenant
for application to costs of Casualty Restoration; provided that if the proceeds
exceed $3 million (unless Landlord's mortgagee should require a lesser amount,
but in no event less than $1 million), they shall be held by an insurance
trustee pursuant to Section 11. If the Insurance Proceeds are insufficient to
cover the cost of repair, the deficit shall be paid by Tenant. Any Excess
Insurance Proceeds shall be paid and belong to Landlord. For avoidance of doubt,
this Section 10.5 shall not apply to Tenant's Proceeds; in every instance
Tenant's Proceeds shall be paid to and be the sole property of Tenant.
10.6 No Casualty Termination. Notwithstanding any other provisions of
this Lease to the contrary, unless Sections 10.2 or 10.3 above apply, this Lease
may not be terminated by Tenant or Landlord as a result of a Casualty to the
Premises, irrespective of the extent thereof, whether such loss is insured or
when such Casualty occurs, or whether such damage is legally permitted to be
restored, and Tenant and Landlord waive the provisions of any Law permitting
termination of a lease due to destruction of the Premises.
10.7 No Abatement of Rent. Except to the extent stated in Sections 10.2
and 10.3 above, no Rent shall abate under this Lease as a result of any
Casualty, whether or not or to the extent the same may be insured, and
irrespective of whether or not such damage or destruction is prohibited from
being
12
repaired or restored; provided, however, the Base Rent shall be subject to an
Excess Insurance Proceeds Rent Reduction.
11. INSURANCE TRUSTEE
11.1 Procedure. If the Insurance Proceeds exceed $3 million (unless
Landlord's mortgagee should require a lesser amount, but in no event less than
$1 million) and this Lease has not terminated by application of Sections 10.2 or
10.3, then such Insurance Proceeds shall be held by an insurance trustee which
shall be a financial institution jointly selected by Landlord and Tenant and
reasonably satisfactory to any mortgagee(s) (the "Trustee"). If Landlord's
mortgagee is an institutional lender, such lender may elect to be the Trustee.
Each insurer is authorized to make payment directly to the Trustee; and Tenant
and Landlord each appoints such Trustee as its attorney-in-fact to endorse any
check for Insurance Proceeds after approval by Tenant of the Trustee (if other
than Landlord's mortgagee). The Insurance Proceeds, net of reasonable expenses
incurred in obtaining them, shall be retained in a separate interest-bearing
federally insured account by the Trustee for application to restoration, with
the interest added to the proceeds. The Trustee shall make the net Insurance
Proceeds available to Tenant for restoration, in accordance with the provisions
of this Section 11. The net Insurance Proceeds held by the Trustee shall be
disbursed in accordance with the following conditions:
11.1.1 Landlord's Approval. The plans and specifications for the
restoration shall be subject to Landlord's reasonable approval, which approval
shall be granted to the extent that the plans and specifications conform with
the conditions specified in Section 10.4.
11.1.2 No Default. At the time of any disbursement, no Event of
Default shall exist and no mechanics' or materialmen's liens shall have been
filed and remain undischarged or unbonded except to the extent the disbursement
would satisfy and discharge such liens.
11.2 Disbursements. After all of the uninsured costs to repair and restore
the Premises have been paid by Tenant out of its own funds, disbursements shall
be made monthly by the Trustee to reflect that percentage of the work that is
being paid for with the Insurance Proceeds that has been completed since the
prior disbursement upon receipt of (1) a Draw Certificate (Section 11.3), (2)
completion and performance of the work to date in a good and workmanlike manner
in accordance with the contracts, plans and specifications, (3) customary lien
waivers for the work covered by the prior progress payments, and (4) other
reasonable evidence of cost and payment so that Trustee can verify that the
amounts disbursed from time to time constitute the same percentage of the total
budgeted Casualty Restoration costs, as such budget may be adjusted from time to
time.
11.3 Draw Certificates. Each request for disbursement shall be accompanied
by a certificate using AIA Forms G702 and G703 ("Draw Certificates"), as the
same may be amended or replaced by AIA or a similar entity describing the work,
materials or other costs or expenses, for which payment is requested, stating
the cost incurred in connection therewith and stating that Tenant has not
previously received payment for such work or expense. For soft costs, where the
referenced AIA Forms would not apply, Tenant's delivery of reasonable
documentation of such costs shall satisfy the Draw Certificate requirement. The
Draw Certificate to be delivered by Tenant upon completion of the work shall, in
addition, state that the work covered by the request has been substantially
completed.
12. CONDEMNATION
12.1 Definitions.
"Condemnation" shall mean any taking of the Premises by condemnation or
other eminent domain proceedings pursuant to any Law or any conveyance under
threat thereof.
"Excess Condemnation Award" shall mean that portion of any Condemnation
Award which is paid to Landlord or its mortgagee and not used by Landlord, its
mortgagee or Tenant to pay the third
13
party out of pocket costs of restoring any damage to the Premises caused by the
Condemnation or any third party out of pocket costs, including attorneys' fees,
incurred by Landlord or its mortgagee in connection with the Condemnation.
"Fair Market Value of Premises" for purposes of this Section 12 is
defined in Exhibit L.
"Substantial or Complete Condemnation" shall mean a Condemnation that
is not a Temporary Taking, which is certified by an affidavit from Tenant's
president, chief executive officer or chief financial officer, stating with a
reasonable basis that such Condemnation has rendered the Premises (taken
separately from any other properties owned or leased by Tenant) unavailable for
Tenant's continued business operations in compliance with this Lease's Use
Requirements and Function Requirements and results in a loss of 35% or more of
the rentable square feet of the Premises.
"Temporary Taking" shall mean a condemnation of all or part of the
Premises for up to two (2) years.
12.2 Notice/Award. Either party, promptly upon obtaining knowledge of
any Condemnation proceeding affecting the Premises, shall notify the other party
and both parties shall be entitled to participate in any Condemnation
proceeding. Subject to the provisions of this Section 12, Tenant hereby
irrevocably assigns to Landlord any award or payment with respect to any
Condemnation of Landlord's interest in the Premises (the "Condemnation Award"),
except that nothing in this Lease shall be deemed to preclude Tenant from making
a separate claim for an award on account of the Removable Equipment, moving
expenses, relocation costs, business interruption or out-of-pocket expenses
incidental to the move so long as in doing so the amount of Landlord's award is
not reduced.
12.3 Substantial or Complete Condemnation. If there is a Substantial or
Complete Condemnation of the Premises Tenant will deliver notice thereof to
Landlord within 120 days after receipt of demand for turnover from the
condemning agency ("Condemnation Termination Notice") and this Lease shall
terminate. The Condemnation Termination Notice shall verify the Substantial or
Complete Condemnation and include an offer by Tenant to terminate the Lease by
paying Landlord the greater of (i) the original purchase price paid by Landlord
for the Premises plus any Allowance disbursed by Landlord pursuant to this
Lease; or (ii) the Fair Market Value of the Premises (the "Termination Fee").
Within 60 days from Landlord's receipt of the Termination Notice, Landlord will
notify Tenant whether it will accept or reject Tenant's offer to terminate the
Lease with Landlord's silence deemed rejection.
If Landlord accepts Tenant's offer to terminate the Lease, then
notwithstanding Section 12.2 above, Tenant shall be entitled to the entire
Condemnation Award, and Tenant shall pay Landlord the Termination Fee by the
later of (y) 10 business days after Tenant's receipt of the Condemnation Award;
or (z) 30 days after Tenant's receipt of Landlord's acceptance of such offer. If
there is less than a total condemnation, Landlord shall transfer to Tenant fee
title to any remainder of the Premises, upon Landlord's receipt of the
Termination Fee.
If Landlord rejects, or is deemed to have rejected Tenant's offer to
terminate the Lease, then the Lease will be deemed terminated effective as of
the date the Premises are surrendered to the condemning authority, with Landlord
retaining the Condemnation Award (subject to Section 12.2).
Tenant shall continue to pay Rent until the latest of date on which (a)
the Termination Fee is paid, (b) the Lease is deemed terminated, or (c) the
Tenant vacates the Premises.
12.4 Partial Condemnation. If there is a partial Condemnation which is
not a Substantial or Complete Condemnation, Section 12.3 shall not apply, this
Lease will not terminate and the Condemnation Award shall be made available to
Tenant to restore the Premises to a complete architectural unit with the
character, function and commercial value as nearly as possible equal to the
value of the Premises immediately prior to the taking. For such purposes,
Landlord may require that the Condemnation Award be deposited with and disbursed
by a trustee in the same manner that would have
14
been applicable had the Premises been damaged by a casualty that invoked the
provisions of Section 11. The Base Rent shall then be reduced to reflect the
reduction in the Premises. If the reduction is to the interior, the Rent would
be proportionately reduced to reflect the reduction in the rentable square feet;
if the reduction affects the number of parking spaces available, the Rent
reduction will reflect the excess cost to Tenant for comparable parking. There
will be no Rent reduction for the Condemnation of unimproved or landscaped
areas. Notwithstanding the foregoing, in no event shall the net present value of
the Rent reduction exceed the Excess Condemnation Award.
12.5 Temporary Taking. If there is a Temporary Taking, then notwithstanding
Section 12.2 above, the entire Condemnation Award shall be paid to Tenant to the
extent it is attributable to the Term and Tenant shall continue to pay the Rent
due hereunder without abatement or adjustment.
13. SUBLETTING AND ASSIGNMENT
13.1 General. Tenant shall have the right to assign or sublet the Premises,
in whole or in part (any of which events being a "Transfer" and any assignee or
sublessee being a "Transferee"), with the consent of Landlord, which shall not
be unreasonably withheld as further detailed in this Section 13. Landlord will
be deemed to have approved the Transfer unless within 10 business days after
receipt of Tenant's request complying with this Section 13, Landlord gives
written notice specifying its objections to the Transfer. Such request shall be
accompanied by a complete and accurate copy of the proposed assignment or
sublease, the name of the proposed assignee or sublessee, its address, telephone
number and principal representative who may be contacted for information and
inquiries, the uses it intends to make of the Premises, if and how it is
affiliated with Tenant, and a then current credit report, an operating statement
for the immediately preceding 12 months and a then current financial statement
reflecting its financial condition in accordance with GAAP (Section 1.2).
13.2 Affiliates/Cooperative Business Arrangements. Notwithstanding Section
13.1, Tenant shall have the right, upon not less than 30 days' advance written
notice to Landlord but without Landlord's consent, to Transfer this Lease in
whole or in part to Affiliates. "Affiliates" shall mean (a) entities which
control, are controlled by or are under common control with Tenant; (b) Tenant's
successor entities by merger or acquisition; and (c) entities in which Tenant is
a 50% or more owner or joint venturer, and jointly pursuing business objectives
consistent with Tenant's business operations, such as discovery or development
of pharmaceutical products, so long as such entity has a Cash Position equal to
or greater than Tenant's then Cash Position (Section 7.3).
13.3 Landlord's Consent. Landlord will not withhold its consent to a
Transfer if:
(a) The proposed uses of the Transferee comply with the provisions of
Section 4.1.
(b) In the case of a sublease, the demising configuration between the
retained space and the subleased space does not unreasonably impair the
marketability of the remaining space.
13.4 No Release. No Transfer shall release Tenant from any obligations
hereunder and Tenant shall remain primarily liable for performance of its
obligations under this Lease. Landlord may accept any Rent or performance of
Tenant's obligations from any Transferee and such acceptance shall not
constitute a waiver of Landlord's rights. If an Event of Default occurs,
Landlord may proceed directly against Tenant, or any Transferee, without first
exhausting Landlord's remedies against any other person or entity responsible
therefor.
13.5 Assumption. Any assignee of this Lease shall execute an assumption
agreement in form and substance reasonably satisfactory to Landlord in which
such assignee becomes jointly and severally liable with Tenant for the
performance of Tenant's obligations under the Lease to the extent claims arise
after the effective date of the assumption.
15
13.6 Subleases. Each sublease shall provide that (a) it is subject and
subordinate to this Lease; (ii) the term is not longer than the then Term of
this Lease, plus any extensions which have been irrevocably exercised, and (iii)
if this Lease is terminated for any reason, Landlord may, at its option, either
(A) terminate the sublease, or (B) takeover all of the rights and interest of
Tenant under the sublease, in which case the sublessee shall attorn to Landlord.
If Landlord elects to takeover the rights and interest of Tenant, Landlord shall
not (1) be liable for any previous act or omission of Tenant under the sublease,
(2) be subject to any defense or offset in favor of the sublessee against
Tenant, (3) be bound by any modification to the sublease made without Landlord's
written consent or by any prepayment by sublessee of more than one month's rent,
or (4) be liable for the application or return of any security deposit not
actually received by Landlord. Landlord will agree to the same waiver of
subrogation with sublessees as is set forth in Section 9.7.
13.7 Assignment and Sublease Profit. Landlord and Tenant shall each be
entitled to 50% of the rent profit on assignment consideration (i.e.
consideration for assignment of the Lease) and sublease rents. The assignment
consideration shall be determined and paid as and when received by Tenant. For
any nonmonetary consideration, Tenant will have option of assigning half of such
non-monetary consideration to Landlord, or having the nonmonetary consideration
fairly valued and half of such value paid to Landlord in immediately available
funds within a reasonable time after receipt by Tenant of the consideration, to
allow for liquidation/valuation. The rent profit on subleases will be determined
and paid each month during the sublease term. The rent profit on subleases shall
be calculated by taking the rent and other consideration and reimbursements
payable by the sublessee to Tenant or to any third party pursuant to the
sublease and subtracting (a) the Base Rent due from Tenant hereunder with
respect to the subleased space over the same period to which the sublessee's
rent applies (per square foot allocation), (b) the monthly amortization of the
costs incurred in connection with the sublease for commissions, tenant
improvement costs and legal fees (all amortized on a straight-line basis over
the sublease term), (c) any reasonable amounts specified in the sublease as
rental payments for use of equipment owned by Tenant, (d) Tenant's reasonable
estimate of those third party costs payable by Tenant under the Lease or under
the sublease and other direct actual reimbursements of third party costs
incurred at sublessee's request in connection with the Premises or sublessee's
business operations at the Premises, (e) Tenant's reasonable estimate of the
cost of providing additional services to the sublessee such as maintaining
agreed temperature ranges with regard to the HVAC system and specified air
pressures to fume hoods that are in addition to the costs Tenant would otherwise
incur for such portion of the Premises. If the sublease is subsequently
extended, the then outstanding balance of costs described in clause (b) above
shall be reamortized over the remainder of the then sublease term and including
the extension. Landlord shall have the right to require Tenant to provide
subsequent reports for and confirmations and calculations of the amounts
subtracted for (b) through (e) above and the parties agree that Landlord's share
of the rent profit may be adjusted from time to time to more closely reflect the
actual costs incurred by Tenant and reasonably allocated to sublessee pursuant
to this Section.
14. TENANT'S INDEMNIFICATION
Except to the extent caused by the gross negligence or willful misconduct
of Landlord or any Landlord Related Parties, and subject to the waiver of
subrogation in Section 9.7, Tenant shall indemnify, defend and hold Landlord,
its employees, mortgagee(s) and agents ("Landlord Related Parties") harmless
from and against all claims, liabilities, damages and costs (including attorneys
fees and costs) arising out of (a) its use of or activities on the Premises, (b)
any acts or omissions (including violations of Law) by Tenant or Tenant Related
Parties (Section 19.1), and (c) any breach of this Lease by Tenant or Tenant
Related Parties.
15. TENANT'S INSOLVENCY OR DEFAULT
15.1 Insolvency. Tenant shall be in default upon the occurrence of one or
more of the following events (each, an "Event of Default"): (i) Tenant files a
petition in bankruptcy or otherwise seeks any judicial protection, stay or
relief against its creditors generally, (ii) an involuntary petition in
bankruptcy against Tenant or any request for the appointment of a receiver or a
custodian or other similar officer for any portion of the Tenant's property is
filed or made and not dismissed within 90 days; or (iii) the
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assignment for the benefit of creditors of any portion of the Tenant's property
is made; or (iv) Tenant's interests in this Lease shall be attached, levied upon
or judicially seized, whereupon Landlord may, by notice to Tenant, terminate
this Lease, and neither Tenant nor any person claiming through or under Tenant
shall be entitled to be in possession of the Premises but shall forthwith
surrender the same, and Landlord, in addition to the other rights Landlord may
have, retains as security for its damages any Rent, Security Deposit or other
monies received by Landlord on behalf of Tenant. If any such action, case or
petition has been commenced by an unrelated third party against Tenant and is
dismissed within a period of 90 days, then the Event of Default shall be deemed
cured for purposes hereof. This Lease is upon the further condition that if a
petition for relief under any chapter of the Bankruptcy Code is filed by an
unrelated third party against Tenant and the trustee or debtor or debtor in
possession has not cured all defaults hereunder and assigned or assumed this
Lease under the Bankruptcy Code within 90 days after the entry of the Order for
Relief, then this Lease shall, at Landlord's sole option, terminate. In case of
termination pursuant to this Section 15.1, Tenant shall indemnify Landlord
against all costs and expenses and loss of Rent, including amounts due under
Section 15.3.
15.2 Defaults. Tenant shall be in default hereunder if: (i) Tenant fails to
pay any installment of Base Rent or Additional Rent when due; or (ii) Tenant
abandons the Premises, or (iii) Tenant fails to perform any other covenant,
term, agreement or condition of this Lease not referred to in (i), (ii) or (iv)
when required; or (iv) any insurance required to be maintained by Tenant is
cancelled or reduced below its required limits or in its scope of coverage and
Tenant does not replace the same at least 20 business days before the effective
date of such cancellation or reduction (an "Insurance Default"). An "Event of
Default" will exist if (a) Tenant is in default under subsection (i) and the
default is not cured within 5 days after Landlord gives Tenant written notice of
such default; (b) Tenant abandons the Premises, (c) Tenant is in default under
subsection (iii) and the default is not cured within 30 days after Landlord
gives Tenant written notice specifying the default (provided that if the default
can not be cured within the 30 day period, Tenant shall have such additional
time to cure the default as is reasonably necessary so long as Tenant commences
the cure within 10 days after such notice is given and diligently prosecutes the
cure to completion within 90 days after Tenant is given the default notice, and
such deadline may be further extended for Force Majeure (Section 27.11),
provided that Tenant delivers notice to Landlord of such Force Majeure and
monthly written status reports during any further extension arising therefrom),
(d) an Insurance Default has occurred and Tenant has not cured such default by
the sooner of 5 days after Landlord's notice of default or 10 days before the
effective date of such cancellation or reduction, or (e) a default by Tenant
occurs and is not cured within any applicable cure period, under (i) the
Purchase Agreement, (ii) the Lease between Landlord's Affiliate and Tenant dated
concurrently herewith for the property located at 1201 Eastlake Avenue East,
Seattle, WA ("Steam Plant Lease"), or (iii) the Line of Credit Loan (Section
26). When there is an Event of Default, Landlord may, at any time thereafter,
exercise any of its legal, equitable or contractual remedies for a Tenant
default, which may include an election to terminate this Lease by notice, lawful
entry or otherwise, in which latter event Landlord shall be entitled to recover
possession of the Premises from Tenant and those claiming through Tenant. Any
termination of this Lease and any repossession of the Premises shall be without
prejudice to any remedies which Landlord might otherwise have. In case of such
termination, Tenant shall indemnify Landlord against all third party out of
pocket costs and expenses including the amounts due under Section 15.3 and loss
of Rent. All notice and cure periods provided for in this Lease shall run
concurrently with any notice and cure periods provided for in any and all of the
agreements referred to in part (e) of this Section.
15.3 Expense Recovery. Expenses for which Tenant shall indemnify Landlord
shall include all third-party out of pocket collection costs, including
attorneys' fees and all other third party out of pocket costs proximately caused
by the Event of Default, with or without litigation, including any such costs
incurred in connection with issues that are particular to a bankruptcy or any
other type of proceeding and on appeal. These sums shall be due immediately upon
notice from Landlord and shall bear interest at the Default Rate (Section 15.8)
if not paid within 5 business days after written demand. If proceedings are
brought under the Bankruptcy Code which relate to this Lease, Landlord shall be
paid the costs incurred by Landlord in connection with the proceedings.
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15.4 Damages. Notwithstanding termination of this Lease and reentry by
Landlord pursuant to Section 15.1 or Section 15.2, Landlord shall be entitled to
recover from Tenant:
(i) The worth at the time of an award (including interest at the
Default Rate) of any unpaid Rent which had been earned by Landlord at the time
of termination; plus
(ii) The worth at the time of an award (including interest at the
Default Rate) of the amount by which the unpaid Rent which would have been
earned after termination until the time of an award exceeds the amount of loss
of Rent that Tenant proves could have been reasonably avoided; plus
(iii) The worth at the time of an award of the amount by which the
unpaid Rent and Additional Rent for the balance of the Term (as extended, if at
all prior to termination) exceeds the amount of such loss of Rent that Tenant
proves could have been reasonably avoided (including Default Interest from the
date of the award until paid). Such worth at the time of award shall be computed
at the discount rate of the Federal Reserve Bank of San Francisco, or successor
Federal Reserve Bank, on the date of termination; plus
(iv) Any other amount necessary to compensate Landlord for all the
damage proximately caused by Tenant's failure to perform Tenant's obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom, including amounts due and payable pursuant to Section 15.3.
15.5 Non-Termination of Lease. If Landlord reenters the Premises
pursuant to Section 15.1, Landlord may elect, by notice to Tenant, not to
terminate this Lease, in which case Tenant shall indemnify Landlord for the loss
of Rent by a payment at the end of each month during the remaining Term
representing the difference between the Rent due in accordance with this Lease
and the rental actually derived from the Premises by Landlord for such month.
Without any previous notice or demand, separate actions may be maintained by
Landlord against Tenant from time to time to recover any damages which, at the
commencement of any action, have then or theretofore become due and payable to
Landlord under this Section 15 without waiting until the end of the Term.
15.6 Reletting. If this Lease is terminated as hereinabove provided or
by summary proceedings or otherwise, Landlord may at any time and from time to
time relet the Premises in whole or in part either in its own name or as agent
of Tenant for any period equal to or greater or less than the remainder of the
then-current Term. All rentals received by Landlord from such reletting shall be
applied first to the payment of the costs of the reletting and alterations and
repairs; second, to the payment of any amounts other than Base Rent due to
Landlord; third, to Rent due and unpaid hereunder, and the residual, if any,
shall be held by Landlord and applied in payment of future Rent when it becomes
due.
15.7 Right of Landlord to Cure Defaults. If an Event of Default occurs,
Landlord may, but shall not be required to, cure the Event of Default, for the
account and at the expense of Tenant, if Tenant has not cured the default within
15 business days' after written notice from Landlord that Landlord intends to
take action to cure Tenant's Event of Default; provided, however, such notice
need not precede Landlord's payment or action in any circumstance that involves
an immediate risk of foreclosure, loss or impairment of any insurance, property
damage, personal injury, or enforcement by any governmental entity. Where an
Event of Default concerns a release or imminent release of Hazardous Materials,
Landlord will not have the ability to exercise self-help if Tenant (a) has
previously delivered to Landlord a Hazardous Materials Response Plan (the
"Response Plan") which outlines methods and persons reasonably acceptable to
Landlord to address, treat, abate, forestall or prevent the release or imminent
release of Hazardous Materials; and (b) promptly delivers written notice to
Landlord of any release or imminent release of Hazardous Materials along with
confirmation that Tenant is complying with the Response Plan. Tenant shall
reimburse Landlord for any third party out of pocket expenses incurred in such
cure, with interest accruing pursuant to Section 15.8, as Additional Rent,
within 30 days after receipt of Landlord's invoice.
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15.8 Default Interest. Any amounts owing from Tenant to Landlord under this
Lease which are not paid when due shall bear interest at the greater of (a) 12%
per annum or (b) 4% higher than and varying daily with the prime rate quoted by
any of the three largest banks in the United States (as measured by assets) or
such similar rate that is generally publicly announced by commercial lending
institutions as an index for loans to its most credit-worthy customers (said
prime rate or similar rate being hereinafter referred to as the "Prime Rate"),
in either event calculated from the date due or expended until and including the
date of payment (the "Default Rate").
15.9 Other Available Remedies. At Landlord's election, upon an Event of
Default, Landlord may pursue such other amounts or other remedies in addition to
or in lieu of any one or more of the specific remedies listed in this Section
and no articulation of any remedy shall be construed to be in lieu of any others
that may be available to Landlord at law or in equity.
16. LANDLORD'S DEFAULT
16.1 Default. Landlord shall be in default hereunder if Landlord fails to
perform any of its obligations hereunder within 30 business days after receipt
of written notice from Tenant specifying such failure; provided that if the
nature of the default is such that more than 30 business days are necessary for
the cure, Landlord shall have such additional time as is reasonably necessary so
long as Landlord commences the cure within the cure period and diligently
pursues it to completion. Tenant shall not have the right to terminate the Lease
due to a Landlord default.
16.2 Limitations on Landlord's Liability. The term "Landlord" as used
herein shall mean only the owner or owners, at the time in question, of the fee
title of the Premises. If Landlord transfers its interest in this Lease other
than for security purposes, Landlord shall cause its assignee or transferee to
assume the provisions of this Lease and Landlord shall deliver notice of such
assignment or transfer and a copy of the effective instrument of transfer to
Tenant within 15 business days after the date of transfer. Tenant shall be
entitled to continue to pay Rent and give all notices to Landlord until Tenant
has received the foregoing from Landlord. Landlord shall deliver all funds in
which Tenant has an interest except those which are then in the possession of an
insurance or condemnation trustee, including but not limited to Tenant's
Security Deposit to Landlord's purchaser or assignee. From and after such
transfer, Landlord shall be released from all liability toward Tenant arising
from this Lease due to any act, occurrence or omission of Landlord's successors
occurring after the transfer of Landlord's interest in this Lease, provided
Landlord's purchaser or assignee expressly assumes Landlord's duties and
covenants under this Lease subject to the same limitations upon its personal
liability as are applicable to Landlord in Section 16.3.
Landlord's liability hereunder is limited to the extent agreed upon in
Section 16.3 below, and except for Landlord's gross negligence or intentional
misconduct, Landlord shall not be liable for any business interruption, property
damage or personal injury (including death) sustained by Tenant or any person
claiming through Tenant resulting from any accident, casualty, or other event or
matter of any kind or nature occurring on or about the Premises and Tenant
hereby waives and covenants not to bring any action based upon any claims or
losses for which Landlord is not liable as stated above.
16.3 Further Limitations on Landlord's Liability. NOTWITHSTANDING ANYTHING
SET FORTH HEREIN OR IN ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT TO THE
CONTRARY: (A) LANDLORD SHALL NOT BE LIABLE TO TENANT OR ANY OTHER PERSON FOR
(AND TENANT AND EACH SUCH OTHER PERSON ASSUME ALL RISK OF) LOSS, DAMAGE OR
INJURY, WHETHER ACTUAL OR CONSEQUENTIAL TO: ANY TENANT'S PERSONAL PROPERTY OF
EVERY KIND AND DESCRIPTION, INCLUDING, WITHOUT LIMITATION TRADE FIXTURES,
REMOVABLE EQUIPMENT, INVENTORY, SCIENTIFIC RESEARCH, SCIENTIFIC EXPERIMENTS,
LABORATORY ANIMALS, PRODUCT, SPECIMENS, SAMPLES, AND/OR SCIENTIFIC, BUSINESS,
ACCOUNTING AND OTHER RECORDS OF EVERY KIND AND DESCRIPTION KEPT AT THE PREMISES
AND ANY AND ALL INCOME DERIVED OR DERIVABLE THEREFROM; (B) TENANT WAIVES ALL
CLAIMS FOR CONSEQUENTIAL DAMAGES; (C) THERE SHALL BE NO PERSONAL RECOURSE TO
LANDLORD FOR ANY ACT OR OCCURRENCE IN, ON OR ABOUT THE PREMISES OR ARISING IN
ANY WAY UNDER THIS LEASE OR ANY OTHER AGREEMENT BETWEEN
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LANDLORD AND TENANT WITH RESPECT TO THE SUBJECT MATTER HEREOF AND ANY LIABILITY
OF LANDLORD HEREUNDER SHALL BE STRICTLY LIMITED SOLELY TO LANDLORD'S INTEREST IN
THE PREMISES AND ANY PROCEEDS FROM SALE, CONDEMNATION THEREOF OR ANY INSURANCE
PROCEEDS PAYABLE IN RESPECT OF LANDLORD'S INTEREST IN THE PREMISES OR IN
CONNECTION WITH ANY SUCH LOSS AND (D) IN NO EVENT SHALL ANY PERSONAL LIABILITY
BE ASSERTED AGAINST ANY OF LANDLORD'S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
CONTRACTORS. UNDER NO CIRCUMSTANCES SHALL LANDLORD OR ANY OF LANDLORD'S
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS BE LIABLE FOR INJURY TO
TENANT'S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT THEREFROM. NOTWITHSTANDING
THE CONTRARY, NOTHING IN THIS SECTION 16.3 WILL LIMIT THE LIABILITY OF THOSE
LANDLORD'S CONTRACTORS OR AGENTS WHO EXECUTE A SEPARATE "ACCESS AND
CONFIDENTIALITY AGREEMENT" (SECTION 21.2) DIRECTLY WITH TENANT, AND SUCH AGENTS
AND CONTRACTORS' LIABILITY DIRECTLY TO TENANT SHALL BE AS AGREED UPON IN THOSE
SEPARATE AGREEMENTS ALTHOUGH IN NO EVENT SHALL TENANT HAVE A CLAIM AGAINST
LANDLORD UNDER SUCH SEPARATE AGREEMENT, AS LANDLORD'S LIABILITY FOR THE ACTIONS
OF ITS CONTRACTORS AND AGENTS IS LIMITED TO THE EXTENT AGREED UPON IN THIS
SECTION 16.3 AND IN SECTION 21.5.
17. LANDLORD'S FINANCING. So long as Tenant's rights of possession to the
Premises will not be disturbed in the absence of a Tenant's Event of Default
under this Lease, Tenant shall, upon request, enter into a Subordination,
Non-Disturbance and Attornment Agreement ("SNDA") with any Landlord mortgagee in
the form customarily required by such mortgagee, provided that such form does
not require Tenant to adversely modify its rights or obligations under this
Lease. Tenant agrees to provide Landlord's ,mortgagees with copies of notices
sent to Landlord pursuant to Section15, upon Landlord's request and pursuant to
the SNDA.
18. TENANT'S FINANCING. Tenant shall not pledge or encumber this Lease or enter
into a financing lease and leaseback or comparable financing arrangement.
Landlord shall cooperate with Tenant regarding any financing by Tenant which
encumbers Removable Equipment or other personal property, including the
execution of reasonable confirmations regarding the status of this Lease and the
extent to which Tenant's lender may have access to the Premises to inspect or
remove the Removable Equipment during the term hereof, and Tenant shall
reimburse Landlord of all of its third party out of pocket costs and expenses,
including its attorneys' fees in doing so. Tenant may enter into UCC fixture
filings and/or financing statements for its Removable Equipment and other
personal property.
19. HAZARDOUS SUBSTANCES
19.1 Prohibition. Tenant shall not cause or permit any Hazardous Materials
(Section 19.8) to be brought upon, kept, used, stored, handled, treated,
generated in or about, or released or disposed of from, the Premises in
violation of applicable Environmental Requirements (as hereinafter defined) by
Tenant, its Affiliates and their respective assignees, sublessees, employees,
agents or contractors (collectively "Tenant Related Party").
19.2 Tenant's Indemnity. If Tenant breaches the obligation stated in Section
19.1, or if the presence of any Hazardous Materials in the Premises results in
contamination of the Premises prior to or during the Term, any Renewal Term or
any holding over by Hazardous Materials brought into, kept, used, stored,
handled, treated, generated in or about, or released or disposed of from, the
Premises by anyone other than Landlord and Landlord's employees, agents and
contractors (collectively the "Relevant Contamination"), Tenant hereby
indemnifies and shall defend and hold Landlord, its officers, directors,
employees, agents and contractors harmless from any and all actions (including,
without limitation, remedial or enforcement actions of any kind, administrative
or judicial proceedings, and orders or judgments arising out of or resulting
therefrom), costs, claims, damages (including, without limitation, punitive
damages and damages based upon diminution in value of the Premises or the loss
of, or restriction on, use of the Premises), expenses (including, without
limitation, attorneys', consultants' and experts' fees, court costs and amounts
paid in settlement of any claims or actions), fines, forfeitures or other civil,
administrative or criminal penalties, injunctive or other relief (whether or not
based upon
20
personal injury, property damage, or contamination of, or adverse effects upon,
the environment, water tables or natural resources), liabilities or losses
(collectively, "Environmental Claims") which arise prior to, during or after the
Term as a result of Relevant Contamination. This indemnification of Landlord by
Tenant includes, without limitation, costs incurred in connection with any
investigation of site conditions or any cleanup, treatment, remediation,
removal, or restoration work required by any federal, state or local
governmental authority because of Hazardous Materials present in the air, soil
or ground water above, on, or under the Premises. Without limiting the
foregoing, if the presence of any Hazardous Materials on the Premises or any
adjacent property caused or permitted by Tenant or any Tenant Related Party
results in the Relevant Contamination of the Premises or any adjacent property,
Tenant shall promptly take all actions at its sole expense and in accordance
with applicable Environmental Requirements as are necessary to return the
Premises or any adjacent property to the condition existing prior to the time of
such contamination, provided that Landlord's approval of such action shall first
be obtained, which approval shall not be unreasonably withheld so long as such
actions would not potentially have any material adverse long-term or short-term
effect on the Premises. Notwithstanding anything to the contrary stated in this
Section 19, (a) for claims relating to Relevant Contamination of property
adjacent to the Premises, Tenant's obligations under this Section 19.2 are
limited to any clean up requirement imposed by a governmental entity; and (b) in
no event shall Tenant's obligations in this Section 19 include any Hazardous
Materials releases to the extent they are caused by Landlord, its employees,
agents or contractors.
19.3 Tenant's Business. Landlord acknowledges that it is not the intent
of this Section to prohibit Tenant from using the Premises pursuant to the Use
Requirements. Tenant may operate its business according to prudent industry
practices so long as the use or presence of Hazardous Materials is strictly and
properly monitored according to all applicable Environmental Requirements.
Tenant shall deliver to Landlord prior to the Commencement Date copies of
Tenant's current Hazardous Materials reports, which list each type of Hazardous
Materials currently present at the Premises and thereafter to annually provide
Landlord with copies of updated reports to incorporate any additional Hazardous
Materials which Tenant has brought upon, kept, used, stored, handled, treated,
generated on or released or disposed of from the Premises during the past year,
along with copies of citations, claims of noncompliance or liability,
Remediation Plans relating to Hazardous Materials, if any and Hazardous
Materials assessments provided by third parties, if any. Landlord agrees that
Tenant's annual delivery of reports Tenant has prepared and delivered to
governmental entities to comply with Environmental Requirements reporting
requirements will satisfy this Section 19.3 and specifically, Landlord agrees
that either the HMIS (Hazardous Material Inventory Statement) Report submitted
to the Seattle Fire Department or the Dangerous Waste Annual Report filed with
the Washington State Department of Ecology, satisfy this reporting requirement.
To the extent not included in any other written report given by Tenant to
Landlord, and reasonably requested by Landlord, Tenant shall provide Landlord
with copies of permits and permit applications relating to Hazardous Materials
at the Premises. To the extent reasonably requested by Landlord, Tenant will
summarily explain requested matters regarding information provided to Landlord
by Tenant under this Section 19.3. Tenant is not required, to include in the
annual Hazardous Materials reports information of a proprietary nature. It is
not the intent of this Section to provide Landlord with proprietary information
which could be detrimental to Tenant's business should such information become
possessed by Tenant's competitors.
19.4 Tenant's Representations and Warranties. Tenant hereby represents
and warrants to Landlord that as of the Effective Date, except as related to
1150 Eastlake Ave. East in Seattle and as disclosed in Property Documents (as
defined in the Purchase Agreement) (i) Tenant has not been required by any prior
landlord, lender or governmental authority at any time to take remedial action
in connection with Hazardous Materials contaminating any property which
contamination was permitted by Tenant or its predecessors or resulted from
Tenant's or its predecessors' action or use of the Premises, and (ii) Tenant is
not subject to any enforcement order for any property issued by any governmental
authority in connection with the use, storage, handling, treatment, generation,
release or disposal of Hazardous Materials (including, without limitation, any
order related to the failure to make a required reporting to any governmental
authority).
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19.5 Testing. Subject to the terms of Section 21.5, Landlord shall have
the right to conduct annual tests and examinations of the Premises, at
Landlord's sole expense, to determine whether any contamination of the Premises
or on the Premises has occurred as a result of Tenant's use. Tenant shall be
required to pay Landlord's third-party out of pocket expenses relating to such
annual test or examination of the Premises only if such test or examination
discloses unreported Relevant Contamination for which Tenant is liable pursuant
to Section 19.2. If Tenant conducts its own tests of the Premises, at Tenant's
expense, using third party contractors and test procedures reasonably acceptable
to Landlord, and the tests are certified to Landlord, Landlord shall accept such
tests in lieu of Landlord's annual tests. Landlord's right to conduct Hazardous
Materials testing of the Premises at all other times to determine if
contamination has occurred as a result of Tenant's use of the Premises shall be
governed by Sections 15.7 and 21. In connection with Landlord's Hazardous
Materials testing or examination, upon the request of Landlord, Tenant shall
deliver to Landlord or its consultant such non-proprietary information
concerning the use of Hazardous Materials in or about the Premises by Tenant or
any Tenant Related Party. Landlord shall provide Tenant with a copy of all third
party, non-confidential reports and tests of the Premises made by or on behalf
of Landlord during the Term without representation or warranty and subject to a
confidentiality agreement. If necessary and pursuant to Section 15.7 and a
Response Plan referenced therein, Tenant shall, at its sole cost and expense,
promptly and satisfactorily remediate any environmental conditions identified by
such testing in accordance with all Environmental Requirements. Landlord's
receipt of or satisfaction with any environmental assessment in no way waives
any rights which Landlord may have against Tenant.
19.6 Underground Tanks. Tenant will not install underground storage
tanks storing Hazardous Materials on the Premises without first obtaining
Landlord's advance written consent, which will be given or withheld at
Landlord's sole discretion. If Tenant is permitted to install underground
storage tanks, it shall install, use, monitor, operate, maintain, upgrade and
manage such storage tanks, maintain appropriate records, obtain and maintain
appropriate insurance, implement reporting procedures, properly close any
underground storage tanks, and take or cause to be taken all other actions
necessary or required under applicable state and federal Environmental
Requirements, as such now exists or may hereafter be adopted or amended in
connection with the installation, use, maintenance, management, operation,
upgrading and closure of such underground storage tanks.
19.7 Tenant's Obligations. Tenant's obligations under this Section 19
shall survive the expiration or earlier termination of the Lease. During any
period of time after the expiration or earlier termination of this Lease
required by Tenant or Landlord to complete the removal from the Premises of any
Hazardous Materials (including, without limitation, the release and termination
of any licenses or permits restricting the use of the Premises and the
completion of a surrender plan reasonably approved by Landlord), Tenant shall
continue to pay the pro-rata Rent as reasonably adjusted to reflect the
differential rental values of different portions of the Premises, in accordance
with this Lease for that portion of the Premises which cannot be relet by
Landlord due to and during such clean up, provided such Rent shall be pro-rated
daily and provided further that Tenant's obligation to pay the pro-rated Rent
under this Section 19.7 is conditioned on Tenant having full access to such
portion of the Premises.
19.8 Definitions. As used herein, the term "Environmental Requirements"
means all applicable present and future statutes, regulations, ordinances,
rules, codes, judgments, orders or other similar enactments of any governmental
authority regulating or relating to health, safety, or environmental conditions
on, under, or about the Premises, or the environment, including without
limitation, the following: the Comprehensive Environmental Response,
Compensation and Liability Act; the Resource Conservation and Recovery Act; and
all state and local counterparts thereto, and any regulations or policies
promulgated or issued thereunder. As used herein, the term "Hazardous Materials"
means and includes any substance, material, waste, pollutant, or contaminant
listed or defined as hazardous or toxic, or regulated by reason of its impact or
potential impact on humans, animals and/or the environment under any
Environmental Requirements, asbestos and petroleum, including crude oil or any
fraction thereof, natural gas liquids, liquefied natural gas, or synthetic gas
usable for fuel (or mixtures of natural gas and such synthetic gas) and
Stacchybotris chartarum and other toxic molds. As defined in Environmental
Requirements, Tenant is and shall be deemed to be the "operator" of Tenant's
"facility" and the "owner" of
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all Hazardous Materials brought on the Premises by Tenant or any Tenant Related
Party, and the wastes, by-products, or residues generated, resulting, or
produced therefrom.
19.9 Notice to Landlord. To the extent that Tenant or Landlord has actual
knowledge thereof, such party shall promptly provide notice to the other of any
of the following matters:
(i) any proceeding or investigation commenced or threatened by any
governmental authority, against Tenant or Landlord, with respect to the
presence, suspected presence, release or threatened release of Hazardous
Materials on or from the Premises;
(ii) all written notices of any pending or threatened claims or citations
regarding Hazardous Materials on the Premises or released from the
Premises;
(iii) the discovery of any occurrence or condition on the Premises, or
written notice received by Tenant of an occurrence or condition on any real
property adjoining or in the vicinity of the Premises, which reasonably
could be expected to lead to the Premises or any portion thereof being in
violation of Environmental Requirements or which might subject Landlord to
any claim alleging potential liability arising out of (A) the presence, or
release into the environment, of any Hazardous Materials at the Premises,
or (B) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Requirement; and
(iv) the commencement, nature, extent and completion of any remedial
work.
20. FIRST OFFER. Tenant shall have a "Right of First Offer" if Landlord elects
to market or sell the Premises to an unrelated third party. In such event,
Landlord shall provide Tenant with a notice in writing of its intention to sell,
setting forth the terms under which Landlord is prepared to sell the Premises.
Tenant shall have 30 days to notify Landlord in writing whether it wishes to
purchase the Premises on the proposed terms. If Landlord's notice states that
its affiliate also intends to sell the Lake Union Steam Plant property also
leased by Tenant, Tenant will be required to purchase both unless Landlord and
its affiliate specifically provides a single building alternative. If Tenant
notifies Landlord that it wishes to purchase the applicable property (the "Sale
Property") on the terms and conditions stated in Landlord's notice, the parties
will negotiate in good faith for 30 days to reach agreement on a purchase and
sale agreement. In the event that Tenant does not notify Landlord of its intent
to purchase the Sale Property or the parties are unable to reach an agreement on
a purchase and sale agreement within the prescribed time frames, Landlord shall
be free to sell the Sale Property to any third party on such terms and
conditions that Landlord finds acceptable. If Landlord does not transfer
ownership of the Sale Property within 18 months of its original notice to
Tenant, Tenant's Right of First Offer shall be reinstated. If Landlord does
transfer ownership within 18 months of its original notice to Tenant to any
unrelated third party, Tenant's Right of First Offer shall automatically
terminate and be of no further force or effect for that or any subsequent sale
of any property demised by this Lease or the Steam Plant Lease. All of Tenant's
rights under this Section are personal to Tenant and may not be assigned,
pledged or transferred to any third party. Notwithstanding the foregoing, such
rights may be assigned or transferred to Tenant's Affiliate (Section 13.2).
Tenant also agrees that its rights provided for in this Section shall not apply
(a) so long as any Event of Default exists hereunder at the time Landlord's
notice was otherwise required to be given to Tenant, in which event Landlord may
proceed to negotiate and consummate a sale free of such right, (b) to any lease,
mortgage or encumbrance of the Premises or other transfer of less than fee
simple title thereto or any portion thereof, (c) to any transfer of any kind of
any portion or all of the membership interests in Landlord, or (d) to any
conveyance of the Premises or any portion thereof to (i) any entity that
controls, is controlled by or under the common control with Landlord or any of
their respective affiliates, or (ii) any entity in condemnation or in lieu of
condemnation, or (iii) any judicial or nonjudicial foreclosure or deed in lieu
of a judicial or nonjudicial foreclosure, and Tenant's right of first offer
shall automatically terminate with respect to the Premises or any portion
thereof which are conveyed pursuant to part (ii) or (iii) of this Section.
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21. ACCESS BY LANDLORD
21.1 Access. Subject to the terms and provisions of this Section 21, Tenant
shall permit Landlord and its employees and authorized agents, consultants,
contractors, and representatives (with Landlord, the "Landlord Representatives")
to enter upon the Premises during normal business hours to inspect, examine, and
show the Premises for lease (during the last 12 months of the Term), financing
or sale, or to cure an Event of Default pursuant to Section 15.7 (generally,
"Inspections"); provided, however, Landlord may enter the Premises during other
hours when it is reasonably necessary to either address an emergency or an Event
of Default. This right specifically excludes the right to obtain proprietary
information relating to Tenant's business operations. Hazardous Materials tests
and responses are specifically limited by Sections 15.7 and 19.5.
21.2 Conditions to Entry. At least 2 business days prior to entering the
Premises or conducting any Inspections, Landlord shall (a) give Tenant oral or
written notice of the times and dates it wishes to do so, (b) make arrangements
with Tenant to have the Landlord Representatives to be accompanied by a
representative of Tenant ("Tenant's Representative"), and (c) cause each
Landlord Representative (other than the Landlord) accessing the Premises to sign
an "Access and Confidentiality Agreement" in the form attached as Exhibit C or
such other form reasonably acceptable to Tenant. The advance notice agreed upon
shall apply in emergencies and following a default; provided that Tenant
promptly delivers to Landlord reasonable assurances that such emergency or
default is being adequately and diligently addressed (and for Hazardous
Materials, so long as Tenant delivers and confirms compliance with its Response
Plan). All Inspections shall be in accordance with all applicable Laws and
regulations. Tenant agrees to make reasonable efforts to cause Tenant's
Representatives to be available for such purposes during normal business hours.
Tenant agrees that Landlord shall have no liability for any breach of an Access
and Confidentiality Agreement by anyone other than Landlord except to the extent
of Landlord's indemnity set forth in Section 21.5 below.
21.3 Inspection Costs. Except for any salary to be paid to Tenant's
Representatives or as otherwise stated in this Lease or when necessitated by an
Event of Default, Landlord shall bear the cost of all Inspections.
21.4 Inspection Obligations. (a) In conducting any Inspections, Landlord
Representatives shall: (i) not materially interfere with the use of the Premises
by any occupant; (ii) not materially interfere with the operation and
maintenance of the Premises or any construction on the Premises; (iii) not
damage any part of the Premises or personal property located at the Premises;
(iv) not injure or otherwise cause bodily harm to any Tenant's Representative or
any other person or entity or their respective employees, agents, contractors,
representatives, guests, or invitees; (iv) at Tenant's request, provide Tenant
with complete and accurate copies of all of the third-party reports and
assessments of the Premises that are not proprietary to Landlord (collectively
"Inspection Reports"); and (v) provide Tenant with copies of any Inspection
Reports which provide information relating to Tenant's obligations under this
Lease. No Landlord Representative will conduct any invasive Inspections which
damage the Premises, unless such Inspections are (1) otherwise permitted by this
Lease, (2) required by any governmental entity, (3) subject to Section 21.2, and
except as restricted under Section 15.7, reasonably necessary in connection with
a release or potential release of Hazardous Materials or there exists a
reasonable belief that Environmental Requirements have been violated and such
access and testing is conducted only by Landlord Representatives who are
appropriately qualified as experts; or (4) are otherwise reasonably necessary
and Landlord has first obtained Tenant's consent, which consent will not be
unreasonably withheld. For Inspections relating to Hazardous Materials, the
terms of Section 19.5 shall also apply. If the Premises are damaged during an
Inspection, Landlord will immediately repair such damage and restore the
Premises, pursuant to Section 21.5 below. Tenant acknowledges and agrees that
Landlord shall have no responsibility for the accuracy or completeness of any
such report or assessment or the suitability thereof for use by any person other
than Landlord.
(b) Landlord and all Landlord Related Parties, including their
respective partners, members, officers, directors, and attorneys will treat as
confidential the information disclosed to them by Tenant or discovered on
account of or pursuant to Landlord's Inspections (which information is disclosed
24
orally, in writing or in visual or electronic form, and including any
observations, knowledge, information, reports (written or oral), tests, or
studies (together with the results of such studies and tests) obtained by or
provided to Landlord or any Landlord Related Parties regarding the Premises,
whether in connection with the Inspections, or otherwise, but shall not include
information known by Landlord or Landlord Related Parties prior to any
disclosures by Tenant or any Inspections or any other information that is
generally known or available to the public) (the "Information"), giving it at
least the same care as Landlord's own confidential information, and make no use
of any such Information except in connection with (a) verifying Tenant's
compliance with the terms of this Lease, (b) disclosing the condition of the
Premises in connection with a sale, financing or lease of the Premises, or (c)
to the extent required by court or legal requirements (which may include SEC
regulations, NYSE and NASDAQ requirements). In addition, and except as required
by applicable law, neither Landlord nor Tenant shall make or agree to any press
releases in which the other party is identified without the prior written
consent of the other party, and when such consent is given, the information
disclosed and the persons to whom it is disclosed shall be limited to such
releases. To the extent that the terms, provisions, and obligations of this
Section 21, are inconsistent with the other provisions of this Lease, the terms
of this Section 21 will control, but subject to limitations stated in Section
16.3. This Section 21.4(b) is not applicable to any Landlord Related Party who
is also a Landlord Representative (Section 21.2) who executes a Access and
Confidentiality Agreement pursuant to Section 21.2.
21.5 Indemnification and Repair. Landlord hereby agrees to indemnify,
defend (with counsel reasonably acceptable to Tenant), and hold Tenant and its
officers, directors, successors, and assigns harmless from and against any and
all liens, claims, causes of action, liabilities, demands, suits, obligations,
losses, penalties, costs, and expenses (including reasonable attorneys' fees)
(generally, "Damages") including without limitation Damages for any actual
physical damage to the Premises or any injury to persons, all to the extent
caused by or in connection with the entry onto the Premises by a Landlord
Representative or an act of a Landlord Representative in connection with the
Inspections; provided, however, that Landlord's indemnity hereunder shall be
limited to actual, direct damages only and shall not include (a) any
consequential damages, or (b) any damages to the extent resulting from (i) the
acts or omissions of any Tenant's Representative, or (ii) the discovery of any
condition of the Premises that existed prior to Landlord's entry thereon (a
"Pre-Existing Condition"), except that such indemnity shall apply to the extent,
and only to the extent, such Pre-Existing Condition is directly exacerbated,
aggravated, or worsened by the entry onto the Premises by an Landlord
Representative or an act of an Landlord Representative in connection with the
Inspections. In addition, Landlord shall promptly repair any physical damage to
the Premises caused by any Landlord Representative (including without limitation
damage relating to an Inspection) and shall promptly restore the Premises to the
condition in which it existed prior to such entry; provided, however, that
Landlord shall have no obligation to repair any damage caused by the acts or
omissions of any Tenant's Representative or to remediate, remove, contain,
abate, or control any Pre-Existing Condition, except to the extent, and only to
the extent, necessary to restore the Pre-Existing Condition to the condition in
which it existed prior to such entry. As an example only, if a Landlord
Representative should cause a limited and confined release of asbestos while
taking a sample of ceiling materials within the Premises, Landlord's sole
obligation would be to remove, control and abate any released asbestos,
indemnify and defend Tenant for any personal injury Damages claimed relating to
the release, and to re-seal the ceiling materials where the sample was taken;
Landlord would have no further obligation to remediate, remove, contain, abate,
control, or take any further action whatsoever with respect to the asbestos
contained in the sampled or any other ceiling materials. Landlord's obligations
under this Section 21 shall survive termination of the Lease; provided that
Tenant will only have two years from the expiration or termination of this Lease
to commence an action against Landlord under this Section.
21.6 Building Signage. Landlord hereby agrees not to modify or require
any changes to the current signage at the Premises, and further agrees that
during the Term, Tenant shall have the sole right to designate the name of the
Premises', but subject to Landlord's consent, which will not be unreasonably
withheld (e.g., the "Earl Davie Building"). Tenant's right under this Section
21.6 are personal to Tenant and Tenant may not Transfer (Section 13.1) such
rights, except to Tenant's Affiliates (Section 13.2).
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22. CONTESTS
22.1 Notice. Notwithstanding the provisions of this Lease which require
Tenant pay certain amounts to third parties ("Third Party Payments") on or
before the date due (Sections 3.4, 4.3 and 6), Tenant shall not be required to
(i) pay any Third Party Amounts, (ii) comply with any Law, or (iii) discharge or
remove any lien arising out of Tenant, so long as Tenant contests, in good faith
and at its expense, the existence, the amount or the applicability or validity
thereof, and by appropriate proceedings so long as during the pendency thereof
Tenant takes any necessary steps to prevent (A) the collection of, or other
realization upon, the claim so contested, (B) the sale, forfeiture or loss of
any of the Premises, or the Rent to satisfy the same, (C) any interference with
the use or occupancy of any of the Premises, and (D) the cancellation of any
insurance Tenant is required to carry pursuant to Section 9.
22.2 Conditions. In no event shall Tenant pursue any contest in such manner
that exposes Landlord to (i) criminal liability, penalty or sanction, or (ii)
defeasance of its interest in the Premises.
22.3 Hold Harmless. Tenant agrees that each contest shall be promptly and
diligently prosecuted to a final conclusion, except that Tenant shall have the
right to attempt to settle or compromise such contest through negotiations;
provided that if such contest is not concluded and all amounts for which Tenant
is liable are not paid prior to the expiration of this Lease, then Tenant agrees
that its obligation to diligently pursue or settle such contest and its
liability for such unpaid amounts shall survive the expiration of this Lease.
Tenant shall pay and save Landlord harmless against any and all losses,
judgments, decrees and costs (including all attorneys' fees and expenses) in
connection with any such contest and shall, promptly after the final
determination of such contest, fully pay and discharge the amounts which shall
be levied, assessed, charged or imposed or be determined to be payable therein
or in connection therewith, together with all penalties, fines, interest, costs
and expenses thereof or in connection therewith, and perform all acts the
performance of which shall be ordered or decreed as a result thereof.
23. ESTOPPEL CERTIFICATE. Each party shall at any time and from time to time
upon not less than 20 days written notice from the other and without charge,
execute and deliver to the other an estoppel certificate in the form of Exhibit
J.
24. EXPANSION
24.1 Overview. Tenant shall have the right in its sole discretion, but no
obligation, to expand the Earl Davie Building to the north as described in the
schematic design included in the revised basis of design dated August 30, 2002
(the "Basis of Design") prepared by MBT Architecture ("MBT") provided to
Landlord by Tenant (the "Expansion"). The schematic design is included in
Exhibit H. Tenant will be primarily responsible for the design and construction
of the Expansion with limited oversight by Landlord. Prior to commencing the
Expansion, Landlord and Tenant shall appoint one or more individuals in a
written notice to the other which will authorize and enable the recipient to
communicate with such individual or each of them with respect to all matters
involving the Expansion, and all payments, notices, directions, agreements,
waivers and other actions made by or to any such individuals shall be
conclusively those of that party without the necessity for the other party to
inquire into or ascertain such individual's authority. Beginning in 2001 and
continuing through the present, Tenant has been planning the Expansion. This
work has included engaging MBT to work on the preliminary design, working with
the City of Seattle ("City") and the Washington State Department of
Transportation ("WSDOT") regarding acquiring the necessary land for the
Expansion, initiating discussions with community groups regarding mitigation
issues, and consulting with Turner Construction ("Turner") on project
construction planning, cost estimates, identification of recommended
subcontractors, and other preconstruction work, and with Clark, Richardson &
Biskup Consulting Engineers ("CRB") on project engineering. Based on their work
to date on the Expansion, Tenant anticipates continuing to work with MBT, CRB
and Turner on the development of the Expansion. All contracts with third party
contractors, architects and service providers in connection with permitting,
designing and constructing the Expansion and all permits and designs, plans and
specifications therefor shall be subject to Landlord's approval and the
contracts shall include provisions such that the plans, specifications and
design shall be the sole property of Landlord.
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24.2 Land. The Expansion will be located to the north of the Earl Davie
Building, on a combination of the existing undeveloped land included in the
Premises and property to be acquired in connection with the vacation of the
portion of Bellevue Avenue East lying easterly of Eastlake Avenue East, all
approximately as shown on the drawing attached as Exhibit K. If Tenant elects to
go forward with the Expansion, then upon approval of the vacation ordinance by
the City Council, the southwesterly half of the vacated road would attach to the
land described on Exhibit A to this Lease and become owned by Landlord by
operation of law. If Tenant does not elect to go forward with the Expansion,
then the Expansion Land (as defined below) will not become owned by the Landlord
or attached to the land described on Exhibit A. If Tenant elects to discontinue
its acquisition of the Expansion Land, it shall give prompt written notice
thereof to Landlord and Landlord shall have the right to pursue the vacation and
acquisition, in which event the Expansion Land shall not be added to this Lease.
Tenant shall make available to Landlord such reports, applications, surveys and
studies as it may have with respect to the acquisition of the Expansion Land and
Landlord shall reimburse Tenant for its actual third party out of pocket costs
incurred to obtain the same to the extent such deliveries result in out of
pocket savings to Landlord. Tenant's goal, which has been discussed with WSDOT
and the City but not yet fully agreed upon, is to have the City vacate the
street and for Tenant to acquire from WSDOT the majority of the northeasterly
half of the vacated street that would otherwise become part of WSDOT's property.
The property acquired from WSDOT shall be transferred to Landlord by WSDOT or
Tenant. As part of that acquisition, Tenant has offered to transfer to WSDOT the
small parcel Tenant acquired from King County and enabling WSDOT to retain as an
access way to its southerly parcel. Tenant anticipates continuing these
discussions to reach formal agreements with the City and WSDOT with the final
result of acquiring the property necessary for the Expansion (the "Expansion
Land"). The costs incurred in this process are part of the Expansion Costs
described below. Following acquisition of the Expansion Land as a result of
Tenant's efforts, Landlord and Tenant agree to execute an amendment to this
Lease modifying Exhibit A to include the Expansion Land. As improvements are
constructed on the Expansion Land, the improvements shall automatically be owned
by Landlord, included within the Premises, and subject to all of the terms of
the Lease, including Tenant's liability for Additional Rent and its indemnities
herein that relates thereto, except Base Rent shall be adjusted as and in the
amount specified in Section 24.10.
24.3 Design. As noted above, Tenant has engaged MBT to do preliminary
design and engineering work for the Expansion. Landlord has received and
approved the proposal dated July 3, 2002 from MBT and a proposal dated August
26, 2002 from CRB for continuing work on the Expansion. Following this
preliminary work, Tenant, in consultation with Landlord, will negotiate a
contract with MBT for the balance of the engineering and design work for the
Expansion (the "Design Contract"). CRB's work under its current contract will be
substantially completed prior to the Commencement Date. CRB may perform
additional consulting engineering work if requested by Tenant. Within 5 business
days after receipt of the proposed Design Contract and any amendments thereto,
Landlord shall either provide its approval or provide detailed comments on
changes required to obtain its approval. Landlord will not unreasonably withhold
its approval of the Design Contract, and any amendments thereto. Tenant's
obligations include diligently enforcing the Design Contract and warranties and
bringing defects to Landlord's attention in a timely manner. Tenant shall
defend, indemnify and hold Landlord harmless from and against any and all
claims, liability and damages arising from its actions as "Owner" under the
Design Contract. The design must result in the Premises conforming to the
Function Requirements and Use Requirements applicable following completion of
the Expansion.
24.4 Plans and Specifications. Pursuant to the Design Contract, MBT has
prepared the Basis of Design and Landlord has approved the Basis of Design. MBT
will prepare construction drawings and specifications (the "Proposed Plans").
The Proposed Plans shall be submitted to Landlord for its review and approval.
Landlord will not unreasonably withhold its approval of the Proposed Plans and
after receipt of same will either approve them or disapprove them within 15
business days after receipt giving specific comments regarding what changes
would be required to obtain Landlord's approval. If the Proposed Plans do not
vary from the Basis of Design already approved by Landlord, then Landlord shall
be required to approve the Proposed Plans. The plans and specifications approved
by Landlord are referred to herein as the "Final Plans." Following Landlord's
approval of the Final Plans, Tenant will continue to work with MBT and Turner to
optimize the plans and construction, which will result in
27
subsequent changes to the Final Plans. Tenant shall notify Landlord promptly
upon its actual knowledge of a Material Departure from the Final Plans; and
Tenant must also present all Material Departures from the Final Plans to
Landlord for its approval, together with a revised plan from MBT detailing the
Material Departure(s). Landlord will respond within 5 business days of
Landlord's receipt of such request. "Material Departure" shall mean a change
which (a) materially adversely affects the quality of materials or construction
below the quality of the development of the original Premises ("Existing
Standard"), or (b) departs in any respect from the Function Requirements or the
Use Requirements applicable after completion of the Expansion. Landlord will
cooperate with Tenant regarding any changes to the Final Plans required by
governmental authorities during the permitting process. Copies of all changes
shall be concurrently provided to Landlord. Landlord shall have no obligations
with respect to the accuracy or adequacy of any Proposed or Final Plans or the
extent the same comply with applicable Laws.
24.5 Construction Contract. Tenant has selected Turner Construction as
the contractor for the Expansion (the "Project Contractor") and Landlord has
approved that selection. Tenant, in consultation with Landlord, will negotiate a
contract with Project Contractor for the Expansion (the "Construction
Contract"). The Construction Contract shall be subject to Landlord's approval,
which shall not be unreasonably withheld. Within 5 business days after receipt
of the final Construction Contract to be executed by Tenant and Project
Contractor, Landlord shall either provide its approval or provide detailed
comments on changes required in order to obtain its approval. Upon Landlord's
approval of the Construction Contract, Tenant will sign the Construction
Contract as Owner. Tenant shall be required to obtain Landlord's approval of all
Material Change Orders, and the standards for the granting or withholding of
Landlord's approval shall be consistent with the following: "Material Change
Orders" shall mean any change orders which (a) reduce the quality of materials
or construction below the Existing Standard, (b) departs from the Function
Requirements or the Use Requirements, or (c) amends the Construction Contract.
In addition, Tenant shall provide to Landlord for its approval, which shall not
be unreasonably withheld, any change orders which represent changes in the scope
of the project. Landlord will provide its approval (or disapproval with detailed
reasons therefor) within 5 business days for a "change of scope" change order,
defined as a change order that involves a cost increase or decrease of $250,000
or more, and within 3 business days for all others. Landlord's approval will not
be required for field directive changes. Tenant will defend, indemnify and hold
Landlord harmless from and against any and all claims, liability and damages
arising from its actions as "Owner" under the Construction Contract and
warranties.
24.6 Permits and Approvals/Diligence. Tenant shall be responsible for
obtaining all governmental permits and approvals for the Expansion and the cost
incurred in connection therewith shall be included in Expansion Costs. Tenant
will promptly provide Landlord with copies of all permits and approvals. Tenant
shall also be an agent of Landlord for the limited purpose of pursuing and
obtain all necessary approvals for the Expansion, including discussions and
negotiations with governmental authorities, and applying for permits and
approvals. Landlord shall cooperate with Tenant in all respects in connection
with obtaining the permits and approvals, which cooperation may include entering
into mitigation agreements with the associated costs included in Expansion Costs
and execution and delivery of applications, permits and other instruments
required to obtain the permits and approvals. If Tenant obtains the necessary
permits and elects to proceed with construction of the Expansion, Tenant shall
use commercially reasonable efforts to cause such construction to be promptly
commenced and diligently pursued and to be accomplished in compliance with all
applicable Laws and regulations. Tenant shall defend, indemnify and hold
Landlord harmless from and against all claims, liability and damages relating to
any failure to pay any permit fees or breach of the terms of any permit.
24.7 Other Consultants. Tenant shall have the right to engage other
specialists and consultants of its choice as necessary or appropriate in order
to complete the Expansion. Tenant shall enter into these contracts directly with
the applicable third parties and such contracts shall contain corresponding
indemnification and insurance requirements. Tenant shall enforce the contracts
and warranties, and other obligations of such specialists and consultants.
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24.8 Budget/Allowance.
24.8.1 Budget/Costs. As used herein, "Expansion Costs" shall
mean and include all out of pocket hard and soft costs incurred in the
Expansion, including land acquisition (including the cost of purchasing the
Expansion Land and the parcel from King County, and related mitigation costs),
design, development, construction and permitting and other predevelopment costs.
Expansion Costs shall not include any costs of purchasing, leasing of Removable
Equipment (other than construction equipment) or installing any Removable
Equipment (other than construction equipment) or any other property that will
not become immediately owned by Landlord. Tenant has provided to Landlord a
preliminary budget for the Expansion Costs (the "Budget") and will periodically
provide to Landlord updated Budgets reflecting current cost and monthly cash
flow projections. As of the date hereof, the current total Budget for Expansion
Costs is approximately $23,141,000.00, and the amount incurred to date is
approximately $500,000.
24.8.2 Calculation of Allowance. Landlord shall provide an
allowance equal to $330 times the net increase in the square footage of rentable
area in the Premises as a result of the Expansion (the "Allowance") to be
applied toward the Expansion Costs. Initially, the estimated amount of the
Allowance shall be determined by using the estimated net increase in rentable
square footage expected to result from the construction shown in the permit
drawings, as measured by Burgess Weaver Design Group ("Burgess"). Upon
completion of the Expansion, either party may elect to require that a jointly
selected architect (the "Approved Architect") measure the entire building,
including the constructed Expansion, and the final Allowance (and rent
adjustment required by Section 24.10), shall be based on the net increase in
rentable square footage shown by that measurement, with an adjustment between
the parties so that Landlord has funded the final Allowance and Tenant has paid
the balance. If neither party so elects to require measurement of the completed
building, then the Allowance and the Rent Adjustment under Section 24.10 shall
be derived from the Burgess measurement based on the permit drawings. The
increase in rentable area shall be calculated in accordance with applicable BOMA
standards (ANSI/BOMA Z65.1 1996) ("BOMA Standards"), as applied by Burgess,
which excluded major vertical penetrations, stairs, elevators and major
mechanical shafts; as shown on Exhibit I.
24.8.3 Funding of Allowance. The Allowance shall be applied
only to (a) Expansion Costs incurred by Tenant, (b) the Oversight Fee (Section
24.9), and (c) any construction period interest (described below). Tenant shall
have the option of either paying the Expansion Costs out of its own funds as the
Expansion goes forward and being reimbursed from the Allowance upon substantial
completion of the Expansion, as evidenced by the issuance of a temporary
certificate of occupancy therefor, or having Landlord fund the payment of
Expansion Costs from the Allowance as they are incurred. Tenant shall make this
election by written notice to Landlord no later than 30 days prior to
commencement of construction of the Expansion, which shall be deemed to occur
when grading begins under a valid grading permit. To the extent that Tenant
elects to draw funds from the Allowance prior to the Expansion Rent Commencement
Date, the amounts drawn shall accrue construction period interest at 3% over the
Prime Rate, reset as of the first of each calendar month, from the date of
disbursement until the Expansion Rent Commencement Date and which interest shall
be paid monthly from the Allowance. The availability of and Landlord's
obligations to fund the Allowance shall be conditioned upon commencement of
construction of the Expansion by January 1, 2005. Any provision in this Lease to
the contrary notwithstanding, no portion of the Allowance shall be disbursed so
long as any Event of Default exists and Landlord's obligation to disburse the
Allowance shall terminate altogether if the Expansion is not begun by January 1,
2005. Landlord may also cause the disbursements to be made subject the same to
such certifications, lien waivers, retentions and other conditions as are
commonly imposed by commercial construction lenders when disbursing a
construction loan (i.e. AIA G702, G703). Advances shall not be made more than
once each month, and no retention need be disbursed until Landlord has received
a certificate of substantial completion (AIA Form G704) signed by the Expansion
architect, contractor and Tenant and to which the final punch list of incomplete
items is attached. Landlord may withhold 150% of the estimated cost of the
punchlist items until Landlord has received (a) evidence acceptable to Landlord
that all of said punch list items have been completed, (b) final lien waivers
from all contractors, principal subcontractors, and principal material
suppliers, and (c) such other documentation and certifications as Landlord may
reasonably require of Contractor. If the Allowance has not been entirely
disbursed to
29
Tenant by January 1, 2006, Landlord may elect to disburse the then remaining
balance of the Allowance to Tenant on January 1, 2006 or at any time thereafter,
in advance of or upon Tenant's application therefor and in advance of or upon
the corresponding costs becoming due and payable, and upon such disbursement,
the above construction period interest shall begin to accrue on those funds.
Accrual of construction period interest shall automatically cease on the
Expansion Rent Commencement Date.
24.8.4 Funding of Excess. The Expansion Costs are currently
projected to exceed the Allowance. All Expansion Costs that are not covered by
the Allowance shall be paid by Tenant from its own funds as and when due. As the
design, engineering and predevelopment work proceeds, the Budget will be
adjusted and will more accurately reflect the likely total cost of the
Expansion. So long as no Event of Default then exists and the Expansion has
begun by January 1, 2005, Landlord will disburse the Allowance to pay Expansion
Costs as reimbursements are applied for, and/or construction draws presented not
more frequently than once per month, so long as the total amount disbursed to
date does not exceed total estimated Allowance times the then percentage
completion of the Expansion as determined by MBT.
24.8.5 Processing of Allowance Disbursements. Each application
by Tenant for a disbursement from the Allowance shall be supported by the
applicable supporting documentation reasonably acceptable to Landlord. Payment
will be made by Landlord on the application within 20 days after receipt of the
application and supporting documentation; provided that the construction draw
requests shall be processed within the time period required by the Construction
Contract (approved by Landlord) and the draw requests will be accompanied by the
documentation required by such Construction Contract, including lien releases
and such other documentation as is customarily required by a commercial
construction lender on a typical construction loan.
24.8.6 Shell Space. Notwithstanding the provisions of this
Section 24.8, Tenant agrees that on completion of the Expansion, not more than
the space described as "shell" on Exhibit H shall be left in shell condition.
The shell space shall be finished within the Function Tolerances for the
Premises stated in Section 8.5, and with no more than 1,000 rentable square feet
improved for use as office space, within 4 years from the date of the last
disbursement of the Allowance unless Landlord otherwise consents in writing. If
improvements to the shell space are not completed within such 4 year period it
will not be a default hereunder so long as Tenant posts an LOC in the form
attached as Exhibit D for $1,000,000.00 by the end of the said 4-year period
until such improvements are completed by Tenant. The LOC shall be returned to
Tenant when (a) Tenant completes the shell build out as required hereunder, (b)
Landlord accepts the same as having complied with Tenant's obligations under
this section, and (c) Tenant provides Landlord with final lien waivers and
evidence of payment for all of the costs and expenses incurred to do so. If the
shell build out required hereunder is not completed by the expiration or earlier
termination of this Lease, Landlord will have the right to draw down on such LOC
upon such expiration or termination and retain such proceeds as liquidated
damages for such failure to complete. During the pendency of this Lease the LOC
will otherwise be subject to the same terms and conditions as those that are
applicable to the Security Deposit, to the extent not inconsistent with this
Section 24.8.6.
24.9 Landlord Oversight Fee. Landlord's primary objective in the
oversight of the Expansion will be to monitor and protect its investment. Such
oversight will include but will not necessarily be limited to the following
customary services: plan review, periodic construction inspections, monthly draw
and invoice review, lien release adherence and title search as necessary,
monthly disbursement of proceeds, travel and other associated expenses. Landlord
shall be given full access to the construction site and all design, development
and construction documentation in order to perform its oversight. Out of the
Allowance, Landlord shall be entitled to collect an oversight fee (the
"Oversight Fee") which shall be equal to its actual time and expenses; but not
to exceed a total of $25,000 for the Expansion, which sum shall be payable
whether or not the Expansion is pursued to completion. The Oversight Fee shall
be due on the Expansion Rent Commencement Date.
24.10 Rent for Expansion. Only if Tenant elects at its sole option
to build the Expansion, then commencing (the "Expansion Rent Commencement Date")
on the earlier of (a) July 1, 2006 or (b) the
30
date a temporary or permanent certificate of occupancy is issued for the
Expansion, the Base Rent shall be increased by an amount equal to the net
increase in rentable area of the Premises times the Applicable Rate, divided by
12. The net increase in square footage of rentable area shall be determined
pursuant to Section 24.8.2. The "Applicable Rate" shall be as follows, selected
based on the Expansion Rent Commencement Date: (a) $32.18/rsf from the Lease
Commencement Date for the first 12 months of the Term and any partial month in
which the Lease Commencement Date occurs, (b) $33.3063/rsf for the second 12
month period in the Term, (c) $34.4720/rsf for the third 12 month period in the
Term, (d) $35.6785/rsf for the fourth 12 month period in the Term, and (e)
$36.9273/rsf for the fifth 12 month period in the Term. The Base Rent, increased
as described in this Section 24.10, shall continue as increased until the next
annual Rent Adjustment Date. On that date and continuing thereafter, the then
Base Rent (as increased to reflect the Expansion as described above) shall
increase by 3.5% and shall thereafter continue to increase by 3.5% each year,
subject to adjustment at the commencement of any Renewal Term.
24.11 Extension of Initial Term. As of the Expansion Rent
Commencement Date, the Initial Term of this Lease shall be extended to a date
which is 180 months from the Expansion Rent Commencement Date. Such extension
will not affect the Lease extension rights described in Section 2.2 above, and
the first Renewal Term, if exercised, will commence on expiration of the Initial
Term, extended as described in this paragraph. Within 30 business days after the
Expansion Rent Commencement Date, the parties hereto shall enter into an
Amendment to this Lease in the form attached hereto as Exhibit M stating the
Expansion Rent Commencement Date, the new Base Rent, and the extended expiration
date of the Initial Term.
24.12 As-Built Documents/Closeout Package. Within 30 business days
after receipt of the project "closeout package" from Turner and prior to
Landlord's disbursement of the final draw or retainage, Tenant will provide to
Landlord (a) a complete set of as-built plans for the Expansion, (b) a complete
set of all of the permit applications and permits, property studies and
evaluations, soils and environmental assessments and other studies Tenant has
obtained in connection with the Expansion (excluding those of a proprietary
nature that relate to Tenant's business and processes), (c) an ALTA/ACSM land
survey showing the boundaries of the Expansion Land, the location of the
Expansion improvements, and all easements, setback areas and encroachments
within the Expansion Land and such other matters as are required by the insurer
issuing Landlord's title insurance supplement, (d) copies of the temporary, and
any permanent, certificate of occupancy for the Expansion, (e) all warranties
provided under contracts signed by Tenant, and (f) a supplement to Landlord's
title insurance policy issued in connection with its acquisition of the Premises
which (i) is in an extended form with the same endorsements issued with the
original policy, (ii) adds the Expansion Land to the description of the insured
property, (iii) increases the policy amount by the amount of the Expansion
Costs, and (iv) insures Landlord as the sole holder of fee simple title to the
Expansion Land and improvements thereon subject to no exceptions other than the
liens for nondelinquent real property taxes and assessments, non-monetary
encumbrances arising out of the vacation of Bellevue Avenue that do not include
encroachments over boundary lines, easements or setbacks, except for
non-material encroachments similar to those existing with the original Earl
Davie Building and for which Landlord receives at Tenant's expense a forced
removal endorsement to Landlord's title insurance, and which are not
inconsistent with the Use Requirements, and such other matters as are reasonably
acceptable to Landlord. Tenant shall deliver the items referred to in (a) and
(b) above without charge and shall pay for the costs of the survey and the
premium for the standard portion of Landlord's title policy supplement and
Landlord shall pay for the extended coverage and endorsements therein.
24.13 Encumbrance. Landlord shall have no obligation to grant a
security interest in its real or personal property to secure third party loans
to Tenant for the Expansion.
24.14 Development Disclaimer/Assignment of Rights. Except to the
extent that Landlord requires that particular materials or construction methods
be employed over Tenant's written objection made within 5 business days after
Tenant is given notice describing the same, and then only with regard to those
objected to materials or methods, Landlord shall have no liability for any
alleged defects in the design, materials or construction of the Expansion or the
failure of the Expansion to conform to any
31
applicable plans, Laws or regulations or to be suitable for Tenant's purposes
and Tenant shall look solely to its own consultants, architects, contractors and
suppliers with respect thereto. Landlord, with regard to those Expansion
contracts entered into by it as principal, and Tenant with regard to those
Expansion contracts entered into by it as principal, agrees to enforce all of
their respective rights as principal under those contracts and agreements (the
"Expansion Contracts") to the extent necessary to enable Tenant to comply with
its construction, maintenance and repair obligations under this Lease and to
enable the parties to obtain the benefits of the Expansion Contracts. Upon
expiration or termination of this Lease, Tenant will assign back to Landlord any
remaining rights it holds under the Expansion Contracts with regard to future
performance.
24.15 Expansion Without Allowance. If, for any reason, Tenant
develops the Expansion but does not obtain the Allowance from Landlord, the
Expansion shall be included in the Premises, owned by Landlord and subject to
all of the requirements of this Lease, except that there shall be no increase in
Base Rent as described in Section 24.10 above to reflect the Expansion and the
determination of the fair market rental value of the Premises under Section 2.3
shall exclude the value of the Expansion.
24.16 Disputes. Landlord and Tenant agree that in the event of any
dispute over any approval or consent required by this Section 24 they shall make
a diligent and good faith effort to resolve the same without resort to
arbitration or litigation. In the event they are unable to resolve such dispute,
Landlord's good faith decisions shall be controlling to the extent they relate
to the Expansion's exterior appearance, structural components and building
shell, and Tenant's good faith decisions shall be controlling with respect to
the building systems and the manner in which the interior of the Expansion is
configured, fixtured and furnished.
25. PARKING AT STEAM PLANT. In the Steam Plant Lease, Landlord's affiliate
has granted Tenant the right to utilize up to 49 parking stalls which are
located in the Lake Union Steam Plant property at 1201 Eastlake Avenue East and
have been specifically covenanted and reserved for Tenant; provided that Tenant
shall make commercially reasonable efforts to minimize or eliminate the need for
Tenant to utilize such parking.
26. CROSS DEFAULTS. At Tenant's option, Landlord (or its affiliate) and
Tenant may be parties to a $3,000,000 line of credit loan ("Line of Credit
Loan") which will be documented by the forms attached to the fourth amendment to
the Purchase Agreement, with such forms executed upon Tenant's election to draw
on the Line of Credit Loan. Regardless of the actual date of execution of the
Line of Credit Loan documents, the maturity date thereunder shall be five years
from the Effective Date. As provided in Section 15.2, any Event of Default under
the Line of Credit Loan or the Steam Plant Lease (Section 15.2) shall be an
Event of Default hereunder and any default under this Lease shall be a default
under the Steam Plant Lease and the Line of Credit Loan.
27. MISCELLANEOUS
27.1 Tenant's Obligations Unconditional. Tenant acknowledges and
agrees that except as otherwise specifically stated in this Lease it shall be
absolutely and unconditionally obligated to pay all Rent and all of the costs
and expenses that relate to the ownership, occupancy, use, maintenance,
insurance, repair, restoration, replacement, and remediation of the Premises and
all utilities and other services provided thereto and taxes and installments of
assessments levied thereon during the Initial Term and any Renewal Term and for
those portions of installments of assessments to the extent they accrued during
the Term of this Lease, even if they are payable thereafter and to take such
other actions at its sole expense as are required to comply with all existing
and future Laws with respect thereto and such obligations shall not be subject
to abatement, offset or impairment for any cause or reason whatsoever. Except as
otherwise stated in this Lease, nothing in this Section 27.1 is intended to
require Tenant to pay or reimburse Landlord for (a) those taxes and assessments
excluded from Tenant's obligations in Section 6.2, (b) Landlord's internal costs
and expenses, (c) Landlord's third party out of pocket expenses, or (d) any
Hazardous Materials remediation costs in excess of those agreed upon by the
parties in Section 19 above.
32
27.2 Additional Definitions. "Landlord" as used in this Lease shall
include the original Landlord hereunder, its successors, and if this Lease shall
be validly assigned, shall also include Landlord's assignees. "Tenant" shall
include the original Tenant hereunder, its successors, and if this Lease shall
be validly assigned or sublet, shall include also Tenant's assignee or sublessee
as to premises covered by such assignment or sublease. References to "Tenant's
knowledge" shall refer to the actual personal knowledge of any one or more of
the officers of Tenant, not the actual or constructive knowledge of any other
employee, agent, officer, director or other representative of Tenant and shall
in no case impose upon Tenant any duty or obligation to investigate or verify
the information. References herein to "Law" shall mean any governmental statute,
ordinance, rule or regulation now in force or which may hereafter be enacted,
promulgated or modified and any easement, reservation, restriction or covenant
now or hereafter recorded against the Premises or any portion thereof to the
extent applicable to the particular matter at issue (collectively "CC&Rs"),
excluding CC&Rs to the extent that they are created without Tenant's consent
after the Effective Date and that they interfere with Tenant's use of the
Premises or cause Tenant to incur additional cost. References to "including" or
"includes" shall mean "includes, without limitation" and "including, but not
limited to." References to "business days" shall mean Monday through Friday,
excluding federal and national bank holidays. If any time period is to expire on
a date which is not a business day, the time period shall be extended to the
next business day.
27.3 Notices. Any notice or consent required to be given by or on
behalf of either party to the other shall be in writing and given by mailing
such notice or consent by either (i) one business day after sending by an
overnight courier service when deposited with the courier in time for delivery
the next business day or otherwise on the next business day thereafter, or (ii)
2 business days after deposit with the United States Post Office by registered
or certified mail, return receipt requested, as evidenced by the date of the
postmark thereon, or (iii) on the day transmitted via facsimile if completed in
time for receipt by 12:00 p.m. recipient's time on a business day or otherwise
on the next business day thereafter (provided that facsimile notice is only
effective if notice is also delivered pursuant to Sections 27.3(i) or (ii) the
next business day following the transmission of the facsimile notice); addressed
to the other party as follows:
If to Landlord: ARE-1208 Eastlake Avenue, LLC
135 N. Los Robles Ave., Ste. 250
Pasadena, CA 91101
Attn: Corporate Secretary
Telephone: (626) 578-0777
Fax: (626) 578-0770
With a copy to: Stoel Rives LLP
Attn: David H. Rockwell
600 University Street, Suite 3600
Seattle, WA 98101-3197
Telephone: (206) 386-7694
Fax: (206) 386-7500
If to Tenant: ZymoGenetics, Inc.
Attn: Chief Financial Officer
1201 Eastlake Avenue E.
Seattle, WA 98102
Telephone: (206) 442-6600
Fax: (206) 442-6808
With a copy to: Real Property Law Group, PLLC
Attn: Cynthia Thomas
1218 Third Avenue, Suite 1900
Seattle, WA 98101
Telephone: (206) 625-1717
Fax: (206) 374-2782
33
or to such other addresses as the parties may designate in writing by the means
above described.
In addition to the foregoing, any notice Tenant gives to Landlord which in any
manner relates to any Alterations or the Expansion shall be given to:
Alexandria Real Estate Equities, Inc.
9820 Willow Creek Road
Suite 440
San Diego, CA 98131
Attn: Senior Vice President, Construction & Development
Telephone: (858) 530-8190
Fax: (858) 530-8191
The time period in which to respond to any notice or consent shall commence to
run on the date on which such notice is deemed effective as stated above. Any
notices of the same matter that are required by or given in connection with this
Lease, the Steam Plant Lease, the Purchase Agreement or the Line of Credit Loan
need be given once to a party and not duplicated for each such contract.
27.4 Survival. The obligations of each party applicable to time
periods prior to the termination or expiration of this Lease shall survive
termination or expiration of this Lease, including each party's right to
indemnification and defense from claims arising from matters occurring prior to
termination even though the claim is asserted after termination.
27.5 No Oral Agreements. It is expressly agreed between Landlord
and Tenant that there is no verbal understanding or agreement which in any way
changes the terms, covenants and conditions herein set forth, and that no
modification of this Lease shall be effective unless made in writing and duly
executed by the authorized officers of the necessary parties or party and
consented to by Landlord's mortgagee, if any. Landlord and Tenant hereby agree
that all prior or contemporaneous oral understandings, agreements or
negotiations relative to the leasing of the Premises are merged into this Lease.
27.6 No Waiver. The failure of Landlord or Tenant to insist, in one
or more instances, upon the strict performance by Tenant or Landlord of any of
the provisions of this Lease shall not be construed as a waiver of any right or
remedy available for any future breach of such provisions. Receipt by Landlord
of Rent with knowledge of the breach of any provisions hereof shall not be
deemed a waiver of any right or remedy available for such breach.
27.7 Time of Essence. Time is of the essence of this Lease.
27.8 Waiver of Common Law. Tenant waives any of the following
rights, to the extent they exist now or will exist in the future under
Law (including common law): the right to terminate this Lease, any right to
offset amounts due against Rent, and/or any right to make repairs at the expense
of Landlord. Landlord waives any statutory landlord's lien against Tenant's
personal property, including its Removable Equipment.
27.9 Legal Expense. If either party incurs any third party out of
pocket costs or expenses, including those of a collection agency and any
attorneys' fees, to collect any sum which is past due hereunder, the defaulting
party shall reimburse the nondefaulting party therefor, with or without
litigation. If any action, arbitration or proceeding (including any appeal
thereof) is brought by either party to enforce its rights under this Lease or to
collect a judgment against the other arising from this Lease ("Action"), the
unsuccessful party therein shall pay all enforcement costs incurred by the
prevailing party therein, including reasonable attorneys' fees and costs.
27.10 Governing Law/Venue/Waiver of Jury. This Lease shall be
performed, construed and enforced in accordance with the laws of the State of
Washington and the parties agree that venue shall lie
34
in King County, Washington. Landlord and Tenant each unconditionally waives any
right to trial by jury to resolve any claim, action or demand asserted in
connection with any matter arising in connection with this Lease.
27.11 Force Majeure. Except as specifically provided otherwise
herein, and except for the periods during which either party may cure a default
hereunder the time periods for Landlord's or Tenant's performance hereunder
(except for the payment of money) shall be extended for periods of time during
which the non-performing party's performance is prevented due to circumstances
beyond the party's control, including, without limitation, strikes, embargoes,
newly imposed governmental regulations, inclement weather and other acts of God,
war or other strife (collectively "Force Majeure"). Notwithstanding the
foregoing, a Force Majeure may apply to certain Events of Default pursuant to
Section 15.2.
27.12 Headings. The headings used in this Lease are for convenience
only and shall not have any bearing or meaning with respect to the content or
context of this instrument.
27.13 Holding Over. Tenant shall have no right to retain possession
of the Premises beyond the expiration or earlier termination of the Lease. If
Tenant holds over after the expiration of the Term, with the express consent of
Landlord, such tenancy shall be from month-to-month only, and not a renewal
hereof or an extension for any further Term, and such month-to-month tenancy
shall be subject to each and every term, covenant and agreement contained
herein; provided, however, that Tenant shall pay as rent during any holding over
period, an amount equal to 150% of the Base Rent payable immediately preceding
the expiration of the Term plus all Additional Rent. Nothing in this Section
shall be construed as a consent by Landlord to any holding over by Tenant and
Landlord expressly reserves the right to require Tenant to surrender possession
of the Premises upon the expiration of the Term or upon the earlier termination
thereof and to assert any remedy in law or equity to evict Tenant and/or collect
damages in connection with such holding over.
27.14 Rights Are Cumulative. All rights, powers and privileges
conferred hereunder upon the parties shall be cumulative, but not restricted to
those given by law.
27.15 Severability. If any term or provision of this Lease shall be
held invalid or unenforceable to any extent, the remaining terms, conditions and
covenants of this Lease shall not be affected thereby and each of said terms,
covenants and conditions shall be valid and enforceable to the fullest extent
permitted by law, unless an essential purpose of this Lease would be defeated by
loss of the invalid or unenforceable provision.
27.16 Interpretation. This Lease has been fully negotiated and no
provision shall be construed for or against either Tenant or Landlord, and this
Lease shall be interpreted in accordance with its general tenor in an effort to
reach an equitable result. Whenever words such as "herein," "hereunder," etc.,
are used in this Lease, they shall mean and refer to this Lease in its entirety
and not to any specific section, paragraph or other part of this Lease.
27.17 Brokers. The Staubach Company represents Tenant and
Insignia/Kidder Mathews represents Landlord. Each party shall be responsible for
paying any commissions or fees due to its broker and shall hold the other party
harmless from any claims for commissions or finders fees due from any other
third parties claiming to have been engaged by that party.
27.18 Counterparts. This Lease may be executed in counterparts
which, when taken together, will comprise a single original agreement. Facsimile
signatures shall be binding upon transmission.
35
IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed as of
the day and year first written above.
LANDLORD:
ARE-1208 Eastlake Avenue, LLC,
a Delaware limited liability company
By: ALEXANDRIA REAL ESTATE EQUITIES, L.P.
a Delaware limited partnership,
its managing member
By: ARE-QRS CORP., a Maryland corporation,
general partner
By: /s/ Peter J. Nelson
----------------------------------------
Peter J. Nelson, Chief Financial Officer
TENANT:
ZYMOGENETICS, INC.
a Washington corporation
By: /s/ James A. Johnson
---------------------------------------
James A. Johnson
Senior Vice President - Chief Financial Officer
EXHIBITS:
Exhibit A: Legal Description
Exhibit B: Title Encumbrances
Exhibit C: Access and Confidentiality Agreement
Exhibit D: Letter of Credit
Exhibit E: Pledge Agreement
Exhibit F: Custodial Agreement
Exhibit G: Fixed Equipment
Exhibit H: Use and Function of Leased Space
Exhibit I: BOMA Measurement of Earl Davie Building (before and after Expansion)
Exhibit J: Estoppel
Exhibit K: Site Plan of Expansion
Exhibit L: Fair Market Value Determination
Exhibit M: Amendment to Lease for Expansion
36
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
I certify that I know or have satisfactory evidence that PETER J.
NELSON 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 Chief Financial Officer of ARE-QRS, CORP.,
a Maryland corporation, which is the General Partner of ALEXANDRIA REAL ESTATE
EQUITIES, L.P., a Delaware limited partnership, which is the Managing Member of
ARE-1208EASTLAKE AVENUE, LLC, to be the free and voluntary act of such party for
the uses and purposes mentioned in this instrument.
DATED: October 15, 2002
--------------------
/s/ Teresa A. Flores
-------------------------------------
(Signature of Notary Public)
Teresa A. Flores
-------------------------------------
(Printed Name of Notary Public)
My Appointment expires: 6-24-05
--------------
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that James A.
Johnson is the person who appeared before me, and said person acknowledged that
he/she signed this instrument, on oath stated that he/she was authorized to
execute the instrument and acknowledged it as the Senior Vice President - Chief
Financial Officer of ZYMOGENETICS, INC. to be the free and voluntary act of such
party for the uses and purposes mentioned in this instrument.
DATED: October 16, 2002
--------------------
/s/ Carol A. Alto
-------------------------------------
(Signature of Notary Public)
Carol A. Alto
-------------------------------------
(Printed Name of Notary Public)
My Appointment expires: 3-7-06
--------------
37
EXHIBIT A
LEGAL DESCRIPTION
Earl Davie Building (Parcel B)
LOTS 4 AND 5, BLOCK 4, FRANCE'S ADDITION TO THE CITY OF SEATTLE, ACCORDING TO
THE PLAT THEREOF, RECORDED IN VOLUME 1 OF PLATS, PAGE(S) 195, IN KING COUNTY,
WASHINGTON;
EXCEPT PORTION THEREOF CONDEMNED IN KING COUNTY SUPERIOR COURT CAUSE NUMBER 8064
FOR EASTLAKE AVENUE EAST; AND
LOTS 5, 6 AND 7, BLOCK 13, EAST PARK ADDITION TO THE CITY OF SEATTLE, ACCORDING
TO THE PLAT THEREOF, RECORDED IN VOLUME 8 OF PLATS, PAGE(S) 83, IN KING COUNTY,
WASHINGTON;
EXCEPT ANY PORTION THEREOF CONDEMNED IN KING COUNTY SUPERIOR COURT CAUSE NUMBER
8064 FOR EASTLAKE AVENUE EAST.
A-1
EXHIBIT B
CURRENT ENCUMBRANCES
EXCEPTIONS AND RESERVATIONS CONTAINED IN DEED FROM THE STATE OF WASHINGTON,
WHEREBY THE GRANTOR EXCEPTS AND RESERVES ALL OIL, GASES, COAL, ORES, MINERALS,
FOSSILS, ETC., AND THE RIGHT OF ENTRY FOR OPENING, DEVELOPING AND WORKING THE
SAME AND PROVIDING THAT SUCH RIGHTS SHALL NOT BE EXERCISED UNTIL PROVISION HAS
BEEN MADE FOR FULL PAYMENT OF ALL DAMAGES SUSTAINED BY REASON OF SUCH ENTRY.
RIGHT OF STATE OF WASHINGTON OR ITS SUCCESSORS, SUBJECT TO PAYMENT OF
COMPENSATION THEREFOR, TO ACQUIRE RIGHTS OF WAY FOR PRIVATE RAILROADS, SKID
ROADS, FLUMES, CANALS, WATER COURSES OR OTHER EASEMENTS FOR TRANSPORTING
AND MOVING TIMBER, STONE, MINERALS AND OTHER PRODUCTS FROM THIS AND OTHER
PROPERTY, AS RESERVED IN DEED REFERRED TO ABOVE.
RELEASE OF DAMAGE AGREEMENT AND THE TERMS AND CONDITIONS THEREOF:
BETWEEN: ZYMOGENETICS, INC. AND: CITY OF SEATTLE
RECORDED: APRIL 25, 1997
RECORDING NUMBER: 9704251301
RELEASING CITY OF SEATTLE FROM ALL FUTURE CLAIMS FOR DAMAGES RESULTING FROM:
PERMISSION TO OCCUPY DEDICATED STREET AREA ON EASTLAKE AVENUE EAST FROM NELSON
PLACE ON THE SOUTH, 155 FEET TO BELLEVUE AVENUE ON THE NORTH; ON NELSON PLACE
FROM EASTLAKE AVENUE EAST ON THE WEST, 105 FEET EAST TO THE POINT OF TERMINATION
BY ERECTING AND MAINTAINING THEREIN A SHORING SYSTEM WITH EXTERIOR TIEBACKS.
AGREEMENT AND THE TERMS AND CONDITIONS THEREOF:
BETWEEN: ZYMOGENETICS, INC.AND: CITY OF SEATTLE
RECORDED: MAY 1, 1997
RECORDING NUMBER: 9705011660
REGARDING: TRANSPORTATION MANAGEMENT PLAN
AGREEMENT AND THE TERMS AND CONDITIONS THEREOF:
BETWEEN: ZYMOGENETICS AND: CITY OF SEATTLE
RECORDED: MAY 9, 1997
RECORDING NUMBER: 9705090214
REGARDING: MAINTENANCE OF DRAINAGE CONTROL FACILITY
RELEASE OF DAMAGE AGREEMENT AND THE TERMS AND CONDITIONS THEREOF:
BETWEEN: ZYMOGENETICS AND: CITY OF SEATTLE
RECORDED: NOVEMBER 19, 1997
RECORDING NUMBER: 9711190862
RELEASING CITY OF SEATTLE FROM ALL FUTURE CLAIMS FOR DAMAGES RESULTING FROM:
SOIL MOVEMENT BY REASON OF OR ARISING OUT OF ISSUANCE OF THE PERMIT(S) BY THE
CITY FOR DEVELOPMENT ON THE PROPERTY.
RIGHT TO MAKE NECESSARY SLOPES FOR CUTS OR FILLS UPON PROPERTY HEREIN DESCRIBED
AS CONDEMNED IN KING COUNTY SUPERIOR COURT CAUSE NUMBER 49286.
MATTERS DISCLOSED BY UNRECORDED SURVEY BY BUSH, ROED & HITCHINGS, INC., DATED
JUNE 2, 2002, JOB NO. 96189.09.
B-1
NON-DELINQUENT TAXES AND ASSESSMENTS WHICH ARE NOT SHOWN AS EXISTING LIENS BY
THE RECORDS OF ANY TAXING AUTHORITY THAT LEVIES TAXES OR ASSESSMENTS ON REAL
PROPERTY OR BY THE PUBLIC RECORD.
GENERAL TAXES AND RELATED CHARGES PAYABLE THEREWITH, IF ANY, FOR 2002, A LIEN
NOW PAYABLE, BUT NOT YET DELINQUENT.
B-2
EXHIBIT C
ACCESS AND CONFIDENTIALITY AGREEMENT
This ACCESS AND CONFIDENTIALITY AGREEMENT (this "Agreement") is executed
effective as of the date indicated below, by undersigned ("Contractor") for the
benefit of ZYMOGENETICS, INC., a Washington corporation ("ZGI").
A. ZGI owns certain real property and improvements commonly known as 1201
and 1208 Eastlake Avenue East in Seattle, Washington (the "Property").
B. ZGI is the tenant and _______________________________.("ARE") is the
landlord under those certain Leases dated _______________________, 2002 for the
Property (the "Leases"). Pursuant to Section 21 of each of the Leases, Landlord
has various rights of access to the Property and a corresponding right to extend
that right of access to its agents, consultants, contractors and
representatives.
C. ARE requested that ZGI allow Contractor to enter the ________________
Property (the "Subject Property") for the following purpose:
_____________________________________ (the "Access Purpose").
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Contractor agrees and acknowledges as follows:
1. Purpose. Subject to the terms and provisions of this Agreement and the
Leases, Contractor, as ARE's agent, will be entering upon the Subject Property
to perform the Access Purpose at ARE's request and direction.
2. Conditions to Entry. Contractor's access to the Property will be
limited to regular business hours. At least 2 business days prior to entering
onto or into the Subject Property, Contractor shall contact ZGI's
representative, Scott Anderson at (206) 442-6747 or Cecil Weight at (206)
442-6689 who will make arrangements to have the Contractor accompanied by a ZGI
representative ("ZGI Representative"). Contractor must be accompanied by a ZGI
Representative at all times Contractor is on the Subject Property, and all of
Contractor's activities shall be in accordance with all applicable Laws and
regulations.
3. Costs. Contractor is engaged by ARE. ARE is not acting as ZGI's agent
and ZGI is not liable to pay Contractor for any services provided by Contractor
to ARE.
4. Inspection Obligations. While on the Subject Property and while
performing the Access Purpose, Contractor shall: (a) not interfere with the use
of the Subject Property by any occupant; (b) not interfere with the operation
and maintenance of the Subject Property or any construction on the Subject
Property; (c) not damage any part of the Subject Property or personal property
located at the Subject Property owned or held by any person or entity; (d) not
injure or otherwise cause bodily harm to any ZGI Representative or any other
person or entity; (e) maintain comprehensive general liability (occurrence)
insurance covering any accident arising in connection with the presence of the
Contractor on the Subject Property in an amount not less than $2,000,000,
evidence of such insurance shall name ZGI as an additional insured and be
delivered to the ZGI Representative prior to accessing the Subject Property; (f)
not permit any liens to attach to the Subject Property by reason of Contractor's
work; and (g) not conduct any invasive activities, unless Contractor confirms in
advance that ZGI has consented to each such invasive inspection.
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5. Confidentiality. Contractor and all of Contractor's partners, members,
officers, directors, and attorneys (collectively the "Contractor Parties") will
treat as confidential all the information disclosed to them by ZGI and/or ARE or
discovered in connection with its access to the Subject Property (whether
information is disclosed orally, in writing or in visual or electronic form, and
including any observations, knowledge, information, reports (written or oral),
tests, or studies (together with the results of such studies and tests) obtained
by or provided to any of the Contractor Parties regarding the Subject Property,
whether in connection with the Inspections, Contractor's review of the due
diligence materials delivered or made available to Contractor, or otherwise, but
not including information known by Contractor prior to any disclosures by ZGI
and/or ARE or any information that is generally known or available to the
public) (the "Information"), giving it no less care than Contractor's own
confidential information, and make no use of any such Information except in
connection with its engagement by ARE and subject to the limitations on ARE's
use of the Information pursuant to Section 21.4 of the Leases, or to the extent
required by court or legal requirements (which may include SEC regulations, NYSE
and NASDAQ requirements). Contractor will not record any memorandum disclosing
this Agreement.
If Contractor receives any Information from ZGI, it will return originals
and all copies of Information to ZGI immediately upon request (except for the
copy delivered to ARE). In addition, and except as required by applicable law,
Contractor shall not issue any release, make any statement to, or confirm or
deny any statement made by the media without both ZGI and ARE's advance written
consent, which may be withheld in their sole and absolute discretion.
6. Indemnification and Repair. Contractor hereby agrees to indemnify,
defend (with counsel acceptable to ZGI), and hold ZGI and its officers,
directors, successors, and assigns harmless from and against any and all liens,
claims, causes of action, liabilities, demands, suits, obligations, losses,
penalties, costs, and expenses (including reasonable attorneys' fees)
(generally, "Damages"), including without limitation, Damages for any actual
physical damage to the Subject Property or any injury to persons, all to the
extent caused by or in connection with the entry onto the Subject Property by a
Contractor Party or an act of a Contractor Party; provided, however, that
Contractor's indemnity hereunder shall not include any Damages to the extent
resulting from the acts or omissions of any ZGI Representative; and provided
further, if there are any liens arising from or relating to Contractor's entry
or any other activity of the Contractor Parties relating to the Subject
Property, then Contractor will cause such liens to be removed from the Subject
Property within 10 business days after notice thereof, and if Contractor fails
to timely perform, then ZGI shall thereafter have the right but not the
obligation to pay the amount claimed on the lien and collect from Contractor all
costs incurred in removing the lien, including attorney's fees. In addition,
Contractor shall promptly repair any physical damage to the Subject Property
caused by any Contractor Party. ZGI will only have two years from the last date
of Contractor's access to the Subject Property to commence an against Contractor
under this Section.
7. No Right of Contribution from ARE. Contractor agrees that if it
breaches its rights hereunder and such breach results in a payment to ZGI, then
Contractor will not have any right to seek contribution or reimbursement from
ARE.
8. Entire Agreement. This Agreement reflects the entire Agreement between
Contractor and ZGI, and there are no other agreements, oral or written, between
Contractor and ZGI regarding the Subject Property. This Agreement can be amended
only by written agreement signed by both ZGI and Contractor.
9. Survival. This Agreement, and the terms, covenants, and conditions
herein contained, shall inure to the benefit of and be binding upon the heirs,
personal representatives, successors, and assigns of each of the Contractor and
ZGI. Contractor agrees that all of the Contractor Parties' access to the Subject
Property is subject to this Agreement.
10. Governing Law, Legal Expenses. This Agreement will be construed,
performed, and enforced in accordance with the laws of the State of Washington.
Supplementing ZGI's rights under Section 6 above, if any action, arbitration or
proceeding (including any appeal thereof) is brought by ZGI to enforce its
rights under this Agreement or to collect a judgment against Contractor arising
from this
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Agreement, the unsuccessful party therein shall pay all enforcement costs
incurred by the prevailing party therein, including reasonable attorneys' fees
and costs.
11. Notice. For purposes of this Agreement only, any notice (including
written notice) required by this Agreement may be provided either to:
ZGI: ZYMOGENETICS, INC.
Attn: Chief Financial Officer
1201 Eastlake Avenue East
Seattle, WA 98121
Telephone: (206)442-6600
Facsimile: (206)442-6608
Contractor: see address below signature
IN WITNESS WHEREOF, Contractor has executed this Agreement effective as of
_______________, 2002.
Contractor:
_____________________________________
a____________________________________
By:__________________________________
Name:________________________________
Title:_______________________________
Notice Address:______________________
_____________________________________
Fax:_________________________________
Telephone:___________________________
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EXHIBIT D
LETTER OF CREDIT
IRREVOCABLE STANDBY LETTER OF CREDIT
PLACE AND DATE OF ISSUE: CREDIT NUMBER: ___________
____________________[PLACE] DATE AND PLACE OF EXPIRY: ___________ [DATE]
____________________[DATE] IN ____________________[PLACE]
BENEFICIARY: APPLICANT: [TENANT]
__________________________ ___________________________
__________________________ ___________________________
__________________________ ___________________________
Up to an aggregate amount of ____________________ US DOLLARS (US$____________).
Dear Sirs:
We hereby issue in your favor this Standby Letter of Credit which is available
by your drafts at sight drawn on [ISSUER], at [OFFICE OF ISSUER] and accompanied
by one of the following documents:
1. Your notarized signed written certification, stating substantially the
following (all blank spaces shall be completed by Beneficiary):
In reference to [ISSUER] Letter of Credit No. ____________, we
hereby certify and affirm that an event has occurred which
entitles [BENEFICIARY] to draw on this Letter of Credit pursuant
to that certain lease dated [LEASE DATE] between [BENEFICIARY],
"Landlord," and [TENANT] "Tenant."
We hereby irrevocably instruct [ISSUER] to pay the sum of $
_______ Such sum shall be paid directly to [BENEFICIARY] at
___________________________________.
IN WITNESS WHEREOF, the undersigned has executed and delivered
this Certificate as of the ____ day of _______________, 200__.
__________________________,
By: _______________________________
Name:
Title:
2. Your notarized signed written certification, notarized, stating
substantially the following (all blank spaces shall be completed by
Beneficiary):
In reference to [ISSUER] Letter of Credit No. ________ we hereby
certify that this Letter of Credit is to expire within 30
business days and Tenant has not provided a renewal of this
Letter of Credit or an acceptable security replacement after 5
business days notice as required by that certain Lease dated
[LEASE DATE] between [BENEFICIARY], "Landlord," and [TENANT]
"Tenant."
We hereby irrevocably instruct [ISSUER] to pay the sum of
$__________ directly to [BENEFICIARY] at
_______________________________ ____________________.
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IN WITNESS WHEREOF, the undersigned has executed and delivered
this Certificate as of the ____ day of _______________, 200___.
__________________________,
By: _______________________________
Name:
Title:
This Letter of Credit may be drawn in whole or in part from time to time to the
aggregate of its face amount.
This Letter of Credit is transferable. Transfer of this Letter of Credit is
subject to our receipt of beneficiary's instructions in the form attached hereto
as Exhibit A accompanied by the original Letter of Credit and amendment(s) if
any, costs or expenses of such transfer shall be for the account of the
beneficiary.
We hereby agree with the beneficiary that documents presented to our office in
compliance with the terms and conditions of this letter of credit will be duly
honored as specified herein.
This Letter of Credit is subject to the International Standby Practices 1998,
ICC Publication No. 590. [or other convention selected by Issuer]
All inquiries and/or correspondence pertaining to this Letter of Credit must be
in writing and directed to the attention of _____________________, telephone
number _____________________ at the above mentioned address and must
specifically refer to this Letter of Credit No. ____________________.
Very truly yours,
[ISSUER]
By: _________________________
Authorized Signature
Title:
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EXHIBIT A
REQUEST FOR ENTIRE TRANSFER OF LETTER OF CREDIT
WITHOUT SUBSTITUTION OF INVOICES
{Issuer}
________________________ Letter of Credit No.________
ADDRESS
________________________
TO: [Issuer]
We request you to transfer all of our rights as beneficiary under the Letter of
Credit referenced above to a second beneficiary named below:
________________________________________________________________________________
NAME OF SECOND BENEFICIARY
________________________________________________________________________________
ADDRESS
By this transfer, all our rights as the original beneficiary, including all
rights to make drawings under the Letter of Credit, go to the second
beneficiary. The second beneficiary shall have sole rights as beneficiary,
whether existing now or in the future, including sole rights to agree to any
amendments, including increases or extensions or other changes. All amendments
will be sent directly to the second beneficiary without the necessity of consent
by or notice to us.
We enclose the original letter of credit and any amendments. Please indicate
your acceptance of our request for the transfer by endorsing the letter of
credit and send it to the second beneficiary with your customary notice of
transfer.
__ Enclose is our check for $_________________
__ You may debit my/our account No. __________
We also agree to pay you on demand any expenses which may be incurred by you in
connection with this transfer.
The signature and title below conform with those shown in our files as
authorized to sign for the beneficiary. Policies governing signature
authorization as required for withdrawals from customer accounts shall also be
applied to the authorization of signatures on this form.
__________________________________
NAME OF BENEFICIARY
__________________________________
NAME OF AUTHORIZED SIGNER AND TITLE
__________________________________
AUTHORIZED SIGNATURE
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- ---------------------------------- Date:______________________________
________________________________
NAME OF BANK
________________________________
AUTHORIZED SIGNATURE AND TITLE
- ----------------------------------
D-4
EXHIBIT E
PLEDGE AGREEMENT
SECURITY DEPOSIT PLEDGE AGREEMENT
THIS SECURITY DEPOSIT PLEDGE AGREEMENT (the "Agreement"), dated as of
_______________, 20__, is between ZYMOGENETICS, INC, a Washington corporation
("Tenant"), and ____________________________, a _______________ ("Landlord").
The parties hereto agree as follows:
1. Definitions
For purposes of this Agreement, the following terms have the meanings
set forth below:
"Collateral" has the meaning specified in Section 5.
"Collateral Securities" means fixed income securities that meet the
following requirements:
(a) are rated AA or A1 or better by Standard & Poor's Rating Group;
(b) are freely transferable without restriction of any kind (including
any restrictions that may be imposed under federal or state securities laws);
and
(c) have remaining maturities of not more than 2 years.
"Control Account" means the account established by Tenant in its name
at _________________ or such other brokerage firm or bank as Landlord may
reasonably approve, which account is subject to the terms and conditions of the
Control Account Agreement.
"Control Account Agreement" means the "Security, Custodian and Control
Account Agreement" in substantially the form of EXHIBIT A hereto, which is
entered into with respect to the Control Account.
"Event of Default" has the meaning specified in Section 8.
"Lease" means the "Lease" between Tenant and Landlord dated
______________, 2002, as now or hereafter amended, relating to_____________
[street address], Seattle, Washington.
"Market Value" means, as of any date of determination, the market value
of the Collateral Securities then held in the Control Account, as reflected, at
Landlord's option, as of the end of a business day in the Wall Street Journal or
other any nationally recognized business publication of similar stature
containing the current bid and asked prices for securities traded on a major
exchange in the United States or on the most recently monthly account statement
delivered to Landlord and Tenant pursuant to the Control Account Agreement.
2. Purpose
This Agreement is for the purpose of securing the prompt payment and
performance in full when due, whether at stated maturity, by acceleration or
otherwise, of Tenant's obligations (the "Obligations") with respect to the
security deposit (the "Security Deposit") that are detailed in Section 7 of the
Lease. The amount of the Security Deposit which is to be covered by the
Collateral described in this Agreement is $______________ and is referred to
herein as the "Required Balance."
3. Collateral Securities
As collateral for the Obligations throughout the term of the Lease,
Tenant will pledge to Landlord, and grant Landlord, a perfected, first priority
security interest in, Collateral Securities held in the Control
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Account with a Market Value at all times equal to the Required Balance.
A list of the initial Collateral Securities pledged by Tenant and held in the
Control Account is attached to this Agreement as EXHIBIT B.
4. Control Account
Subject to the terms of the Agreement and the Control Account
Agreement, the Collateral Securities pledged by Tenant pursuant to this
Agreement shall at all times be held in the Control Account. The maintenance,
disposition and transfer of the Control Account and all Collateral Securities
held therein shall at all times be subject to the terms of the Agreement and the
Control Account Agreement.
5. Grant of Perfected First Lien Security Interest
Throughout the term of the Lease, as security for the Obligations,
Tenant hereby delivers, pledges, grants, transfers, assigns and sets over to
Landlord, and hereby grants to Landlord a continuing perfected first lien
security interest in, the following (the "Collateral"):
(a) All Collateral Securities, cash and other assets held in the
Control Account;
(b) The Control Account;
(c) All securities entitlements and financial assets relating to
the foregoing; and
(d) All proceeds and products of any of the foregoing held in the
Control Account.
6. Consent Rights, Trading Rights and Payments in Respect of the
Collateral
(a) So long as no Event of Default has occurred and is continuing,
Tenant shall be entitled (i) to exercise (but not in a manner inconsistent with
this Agreement or the Control Account Agreement) all consent or other voting
rights with respect to the Collateral Securities, (ii) to receive and retain all
regularly scheduled payments of interest or dividends in respect of the
Collateral Securities or (iii) to substitute at any time during the term of the
Lease the Collateral Securities with other Collateral Securities, provided
Landlord obtains a perfected first priority security interest in the substitute
Collateral Securities prior to the release of the pledged Collateral Securities
and provided that Market Value of all Collateral Securities after the
substitution is equal to or greater than the Required Balance. Upon such
substitution, release and withdrawal of such released assets from the Control
Account, such released assets will no longer be subject to a security interest
in favor of Landlord and, unless subsequently re-deposited into the Control
Account, will no longer be "Collateral": within the meaning of this Agreement.
(b) If an Event of Default (as defined in the Lease) has occurred
and is continuing, Landlord shall be entitled (i) to exercise all consent or
other voting rights with respect to the Collateral Securities, (ii) to any and
all rights of sale, conversion, exchange, subscription, withdrawal and any other
rights, privileges or options pertaining to the Collateral as if Landlord were
the absolute owner thereof and (iii) to receive and retain, as additional
Collateral hereunder, any and all interest, dividends or other payments at any
time and from time to time paid on the Collateral; provided, however, that prior
to any exercise by Landlord of any of the preceding rights with respect to the
Collateral Securities, Landlord agrees to provide Tenant 3 business days' prior
written notice of its intent to exercise its rights to the Collateral.
(c) Any principal amount at any time paid in respect of the
Collateral Securities (whether at the acceleration thereof, as a scheduled or
mandatory sinking fund payment, in redemption or prepayment thereof or at the
maturity thereof) shall constitute part of the Collateral and shall be held in
the Control Account until reinvested as provided in the Collateral Account
Agreement. If for any reason Tenant should receive any such payment of principal
in respect of the Collateral Securities, Tenant shall receive and hold the same
in trust, for the benefit of Landlord, and shall promptly deposit such payment
(or, at Tenant's option, substitute Collateral Securities) in the Control
Account.
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7. Representations, Warranties and Covenants by Tenant
(a) Tenant represents that the execution, delivery and performance
of this Agreement does not violate any agreement to which it is bound or any law
or regulation applicable to Tenant, and that it has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder.
(b) Tenant represents that it is the sole beneficial owner of the
Collateral Securities and the proceeds thereof free and clear of any security
interest or other encumbrance other than the first priority security interest
created favor of Landlord pursuant to and in accordance with this Agreement and
Tenant will not create or permit to exist any other security interest or other
encumbrance against the Collateral. Tenant further represents, except as
permitted under this Agreement and the Control Account Agreement, that for the
term of this Agreement it will not sell, convey, transfer or otherwise dispose
of any of the Collateral Securities.
(c) Tenant represents that this Agreement and delivery of the
Collateral into the Collateral Account creates a valid, perfected, and first
priority security interest in the Collateral in favor of Landlord, and all
actions necessary to achieve such perfection have been duly taken.
(d) Tenant represents that this Agreement and delivery of the
substitute Collateral Securities into the Collateral Account pursuant to clause
(iii) of Section 6(a) will create a valid, perfected, and first priority
security interest in the substitute Collateral in favor of Landlord, and all
actions necessary to achieve such perfection, upon delivery to the Custodian,
will have been duly taken.
(e) Tenant at all times will cause the Control Agreement to remain
in full force and effect and will cause the Collateral Securities to be held in
the Control Account.
(f) Upon demand by Landlord, Tenant will permit inspection of the
Collateral Securities by Landlord.
(f) Tenant at all times will cause the Market Value of Collateral
Securities held in the Control Account to equal or exceed the Required Balance.
If, at any time, the Market Value of Collateral Securities held in the Control
Account is less than the Required Balance, Tenant shall immediately cause to be
deposited in the Control Account additional Collateral Securities with a Market
Value sufficient to cause the aggregate Market Value of all Collateral
Securities then held in the Collateral Account to equal or exceed the Required
Balance.
8. Liability
Tenant shall indemnify the financial institution party to the Control
Account Agreement for any and all costs and expenses, and attorney's fees and
court costs, which directly result from any sale of Collateral Securities and
the withdrawal of the settlement proceeds thereof (not to exceed the amount of
the Security Deposit Amount) authorized by Landlord to fulfill any of Tenant's
Obligations; provided, however, that nothing in this indemnification provision
shall operate or be construed to limit Tenant's rights against Landlord under
the terms of the Lease or Landlord's rights against Tenant thereunder. Tenant
shall indemnify and defend, with counsel reasonably acceptable to Landlord,
Landlord's right, title and first priority security interest in the Collateral
and Substitute Collateral. After Landlord delivers a Notice of Exclusive Control
to the financial institution party to the Control Account Agreement, (a)
Landlord may liquidate or sell all or any part of the Collateral in a
commercially reasonable manner and whether or not the value of any of the
Collateral is rising, falling or holding, and (b) Landlord is not required to
exercise any right, option or privilege arising from or relating to the
Collateral. The provisions of this section shall survive expiration or
termination of this Agreement or any determination that this Agreement or any
portion is void or voidable.
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9. Assignment and Amendment
(a) This Agreement may not be amended without the prior written
consent of both parties.
(b) This Agreement may not be assigned by either party without the
prior written consent of the other party; provided, however, that:
(i) Landlord may, at any time, and without notice to or the necessity of
obtaining Tenant's consent, assign to any financial institution providing a
loan to Landlord in connection with the property subject of the Lease
(together with any such financial institution's successors or assigns, the
"Lender") all of its rights under, and interest in, this Agreement. Within
one (1) business day after making any such assignment, Landlord shall
deliver to Tenant written notice of the assignment and a copy of the
instrument of assignment. Upon receipt by Tenant of the aforementioned
notice, Lender shall thereafter succeed to all of the rights and privileges
of Landlord and shall be subject to the same obligations, terms, conditions
and restrictions applicable to Landlord under the terms of this Agreement,
provided that after Lender sends Custodian a Lender Notice of Exclusive
Control pursuant to Section 10(b) of the Control Account Agreement, Lender
shall also be subject to the same obligations (including indemnification
obligations arising from and after the date of the Lender Notice of
Exclusive Control) as Landlord. Lender will not be liable for any act,
omission or breach by Landlord of any obligation under this Agreement or the
Control Account Agreement which occurs prior to the date of the Lender
Notice of Exclusive Control and will, upon any sale or transfer by Lender of
its interest in the property and the Lease, automatically be released and
discharged from any and all liability thereafter accruing under this
Agreement or the Control Account Agreement; and
(ii) If Landlord assigns its interest in the Lease, whether voluntarily or
through involuntary assignment or transfer such as bankruptcy or
foreclosure, such assignment will automatically and without further action
or notice to Tenant, cause an assignment of Landlord's rights in this
Agreement and the Collateral to the assignee and upon the assignee's
assumption of Landlord's obligations under the Lease (including Landlord's
obligations with respect to this Agreement and the Collateral), Landlord
will thereafter accrue no further liability for the return of the
Collateral. Upon request of either party, Landlord and Tenant agree to
execute such documents as may be necessary or desirable to reflect or better
confirm such assignment, assumption and/or release.
10. Waivers
A waiver by either party of a breach of any provision of this Agreement
shall not constitute a waiver of any subsequent breach of such provision or of
any other provision hereof. Failure of either party to enforce at any time or
from time to time any provision of this Agreement shall not be construed as a
waiver thereof.
11. Severability
Each provision of this Agreement is intended to be severable from the
others so that if any provision or term hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the validity
of the remaining provisions and terms hereof.
12. Governing Law: Successors Bound
This Agreement shall be construed in accordance with the internal laws
of the State of Washington, determined without regard to conflicts of law.
Subject to all the terms and provisions hereof, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Each party hereto consents to submit to the jurisdiction
of the courts of the State of Washington and of the United States of America
located in King County, Washington for any action, suit or proceeding arising
out of or relating to this Agreement. Each party further waives any objection to
the laying of venue of any such action, suit or proceeding in such courts, and
further agrees
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not to plead or claim in any such court that any such action, suit or proceeding
has been brought in an inconvenient forum.
13. Notices
All notices must be in writing and must be sent by personal delivery,
United States registered or certified mail (postage prepaid) or by an
independent overnight courier service, addressed to the addresses specified
below or at such other place which is not a post office box as either party may
designate to the other party by written notice given in accordance with this
section. Notices given by mail are deemed effective within 3 business days after
the party sending the notice deposits the notice with the United States Post
Office. Notices delivered by courier are deemed effective on the next business
day after the day the party delivering the notice timely deposits the notice
with the courier for overnight (next day) delivery.
If to Tenant: ZymoGenetics, Inc.
Attn: Chief Financial Officer
1201 Eastlake Avenue E.
Seattle, WA 98121
Telephone: (206) 442-6600
Fax: (206) 442-6608
With a copy to: Real Property Law Group, PLLC
Attn: Cynthia Thomas
1218 Third Avenue, Suite 1900
Seattle, WA 98101
Telephone: (206) 625-1717
Fax: (206) 374-2782
If to Landlord: ___________________________
Attn: _____________________
___________________________
___________________________
Telephone: ________________
Fax: ______________________
With a copy to: Stoel Rives LLP
Attn: David H. Rockwell
600 University Street, Suite 3600
Seattle, WA 98101-3197
Telephone: (206) 386-7694
Fax: (206) 386-7500
14. Entire Agreement
This Agreement, together with the Lease and the Control Account
Agreement, embody the entire agreement and understanding between the parties
pertaining to the subject matters hereof and thereof, and supersedes any prior
agreements, understandings, negotiations, representations and discussions,
whether oral or written, of the parties, pertaining to such subject matters. The
parties acknowledge that they have all participated in the drafting of this
Agreement, and that they all have been represented by legal counsel of their own
choosing and the language of all parts of this Agreement shall in all cases be
construed as a whole, according to its fair meaning, and not strictly for or
against any of the parties.
15. Further Assurances
Tenant shall, upon the request of Landlord, execute and deliver such
other instruments and take and cause to be taken such further actions as may be
reasonably necessary or reasonably appropriate to
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carry out the provisions and purposes of this Agreement, and specifically to
continue the creation, attachment and perfection of the security interest
granted hereunder.
IN WITNESS WHEREOF, Tenant and Landlord have caused this Agreement to
be executed by their proper corporate officers as of the day and year first
above written.
TENANT
ZymoGenetics, Inc.
a Washington corporation
By________________________________
Name:________________________
Title:_______________________
LANDLORD:
_________________________,
a _____________________
By________________________________
Name:________________________
Title:_______________________
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EXHIBIT F
CUSTODIAL AGREEMENT
ACCOUNT CONTROL AGREEMENT
THIS ACCOUNT CONTROL AGREEMENT (this "Agreement") is made and entered
into as of the _____________day of _________________, 200_, by and among UNION
BANK OF CALIFORNIA, N.A., a national banking association ("Securities
Intermediary'), ___________________________________, a
___________________("Customer"), and ____________________________________, a
_________________________________________("Secured Party").
RECITALS:
A. Pursuant to a Personal Custody Agreement, dated _______________,
200_ (the "Account Agreement"), by and between Customer and Securities
Intermediary, Customer has established a securities account, bearing Account No.
_________ _______________________ (the "Account"), with Securities Intermediary.
B. Pursuant to a ____________________________ , dated
__________________, 200_ (the "Security Agreement"). Customer has granted to
Secured Party a security interest in certain personal property of Customer,
including without limitation (i) the Account, (ii) all securities entitlements,
investment property and other financial assets now or hereafter credited to the
Account, (iii) all of Customer's rights in respect of the Account, such
securities entitlements, investment property and other financial assets, and
(iv) all products, proceeds and revenues of and from any of the foregoing
personal property (collectively, the "Collateral").
C. Securities Intermediary, Customer and Secured Party are entering
into this Agreement in order to perfect Secured Party's security interest in the
Account by means of control.
AGREEMENT:
In consideration of the foregoing recitals, Securities Intermediary, Customer
and Secured Party hereby agree as follows:
1. All terms used in this Agreement which are defined in the Commercial Code of
the state whose law governs this Agreement ("Commercial Code") but are not
otherwise defined herein shall have the meanings assigned to such terms in the
Commercial Code, as in effect on the date of this Agreement.
2. Upon receipt of a fully executed and acknowledged Notice of Exclusive
Control, substantially in the form attached as Exhibit A, Securities
Intermediary will comply with all entitlement orders originated by Secured Party
with respect to the Collateral, or any portion of the Collateral, without
further consent by Customer.
3. Securities Intermediary hereby represents and warrants (a) that the records
of Securities Intermediary show that Customer is the sole owner of the
Collateral, (b) that Securities Intermediary has not been served with any notice
of levy or received any notice of any security interest in or other claim to the
Collateral, or any portion of the Collateral, other than Secured Party's claim
pursuant to this Agreement, and (c) that Securities Intermediary is not
presently obligated to accept any entitlement order from any person with respect
to the Collateral, except for entitlement orders that Securities Intermediary is
obligated to accept from Secured Party under this Agreement and entitlement
orders that Securities Intermediary, subject to the provisions of Section 5
below, is obligated to accept from Customer.
F-1
4. Without the prior written consent of Secured Party, Securities Intermediary
will not enter into any agreement by which Securities Intermediary agrees to
comply with any entitlement order of any person other than Secured Party or,
subject to the provisions of Section 5 below, Customer, with respect to any
portion or all of the Collateral. Securities Intermediary shall promptly notify
Secured Party and Customer if any person requests Securities Intermediary to
enter into any such agreement or otherwise assert or seeks to assert a lien,
encumbrance or adverse claim against any portion or all of the Collateral.
5. Except as otherwise provided in this Section 5, Securities Intermediary may
allow Customer to effect sales, trades, transfers and exchanges of Collateral
within the Account, but will not, without the prior written consent of Secured
Party, allow Customer to withdraw any Collateral from the Account (other than
withdrawals consisting solely of ordinary cash dividends or interest income).
Securities Intermediary acknowledges that Secured Party reserves the right, by
delivery of a fully executed and acknowledged Notice of Exclusive Control to
Securities Intermediary, to prohibit Customer from effecting any further
withdrawals (including withdrawals of ordinary cash dividends and interest
income), sales, trades, transfers or exchanges of any Collateral held in the
Account. Further, upon receipt of such fully executed and acknowledged Notice of
Exclusive Control, Securities Intermediary hereby agrees from thereafter to
comply with any and all written instructions delivered by Secured Party to
Securities Intermediary and from thereafter has no obligation to and will not,
investigate the reason for any action taken by Secured Party, the amount of any
obligations of Customer to Secured Party, the validity of any of Secured Party's
claims against or agreements with Customer, the existence of any defaults under
such agreements, or any other matter.
6. Customer hereby irrevocably waives any rights Customer may have under the
Account Agreement to the extent such rights are inconsistent with the provisions
of this Agreement, and hereby irrevocably authorizes Securities Intermediary to
comply with all instructions and entitlement orders delivered by Secured Party
to Securities Intermediary.
7. Securities Intermediary will not attempt to assert control, and does not
claim and will not accept any security or other interest in any part of the
Collateral, and Securities Intermediary will not exercise, enforce or attempt to
enforce any right of setoff against the Collateral, or otherwise charge or
deduct from the Collateral any amount whatsoever, except for any right
Securities Intermediary may have to collect account maintenance or similar fees
under the Account Agreement.
8. Securities Intermediary and Customer shall not amend, supplement or otherwise
modify the Account Agreement (including, without limitation the choice of law
provision and provisions providing for treatment of property held in the Account
as a financial asset) in any respect without Secured Party's prior written
consent.
9. Securities Intermediary shall not terminate the Account, and shall not permit
Customer to terminate the Account, without Secured Party's prior written
consent.
10. This Agreement shall remain in full force and effect until Securities
Intermediary receives written notice of its termination given by Secured Party.
11. Securities Intermediary and Customer hereby agree that any property held in
the Account shall be treated as a financial asset under such section of the
Commercial Code as corresponds with Section 8-102 of the Uniform Commercial
Code, notwithstanding any contrary provision of any other agreement to which
Securities Intermediary may be a party.
12. Securities Intermediary is hereby authorized and instructed, and hereby
agrees, to send to Secured Party at its address set forth in Section 18 below,
concurrently with the sending thereof to Customer, duplicate copies of any and
all monthly Account statements or reports issued or
F-2
sent to Customer with respect to the Account. In addition, Securities
Intermediary shall (i) issue a confirmation or safekeeping receipt to both
Customer and Secured Party for each transaction made on the Account; and (ii)
upon request will provide Secured Party with information on the Account and the
financial assets held therein, and will provide Customer with a copy of any
information provided to Secured Party.
13. This Agreement does not create any obligation or duty on the part of
Securities Intermediary other than those expressly set forth herein. Secured
Party and Customer hereby acknowledge that Securities Intermediary has no
obligation to monitor the value of the Collateral for Secured Party or Customer.
14. Secured Party and Customer hereby agree, jointly and severally, to indemnify
and hold harmless Securities Intermediary from and against any and all losses,
liabilities, demands, claims, expenses and attorneys' fees which Securities
Intermediary may incur or suffer if all or any portion of the Collateral is
found to be fraudulent in nature or otherwise worthless or invalid for any
reason excepting only such losses, liabilities, demands, claims, expenses and
attorneys' fees which result solely from the gross negligence or willful
misconduct of Securities Intermediary.
15. Any forbearance or failure or delay by Secured Party in exercising any right
hereunder shall not be deemed a waiver thereof and any single or partial
exercise of any right shall not preclude the further exercise thereof. This
Agreement may be amended only in writing signed by all parties hereto.
16. Notwithstanding the terms of any other agreement, the parties hereto agree
that this Agreement shall be governed under and in accordance with the laws of
the State of California and, for purposes of this Agreement, such state shall be
deemed to be Securities Intermediary's jurisdiction.
17. This Agreement constitutes the entire agreement among Securities
Intermediary, Customer and Secured Party with respect to the subject matter
hereof, and all prior communications, whether verbal or written, between any of
the parties hereto with respect to the subject matter hereof shall be of no
further effect or evidentiary value.
18. Any notice or other communication provided for or allowed hereunder shall be
effective only when given by one of the following methods and addressed to the
respective party at its address provided below (or at such other address as the
party changing its address shall notify the others as provided herein) and shall
be considered to have been validly given (a) upon delivery, if delivered
personally, (b) upon receipt, if mailed, first class postage prepaid with the
United States Postal Service, (c) on the next business day, if sent by overnight
courier service of recognized standing, and (d) upon telephoned confirmation of
receipt, if telecopied:
If to Securities Intermediary:
Union Bank of California, N.A.
________________________
________________________
________________________
If to Secured Party:
________________________
________________________
________________________
If to Customer:
________________________
________________________
________________________
F-3
19. To the extent that the terms or conditions of this Agreement are
inconsistent with the Account Agreement or any other document, instrument or
agreement between Securities Intermediary and Customer, the terms and conditions
of this Agreement shall prevail.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.
"Securities Intermediary" "Customer" "Secured Party"
{Signature blocks to be inserted}
F-4
EXHIBIT A
TO
ACCOUNT CONTROL AGREEMENT
Form of Notice of Exclusive Control
____________, __
TO: [Name and address of Custodian]
_______________________________
_______________________________
_______________________________
Re: Notice of Exclusive Control--Account No. __________ (the
"Account")
Dear Sir/Madam:
Pursuant to the provisions of the Account Control Agreement dated as of
___________, among the undersigned as Secured Party, ZymoGenetics, Inc. as
Customer and you as Securities Intermediary (the "Agreement"), the undersigned
hereby gives notice of the exercise of exclusive control over the Account due to
the occurrence and continuance of an Event of Default under the security
agreement between Customer and the undersigned. Subject to the provisions of the
Agreement, you are hereby notified that from this date forward you are
instructed to comply only with entitlement orders for the Account issued by the
undersigned.
In accordance with the Agreement, you are hereby notified to cease
complying with entitlement orders or other directions concerning the Account or
the Financial Assets therein, or from making any withdrawals from the Account,
if such directions, orders or requests are originated by Customer or its
representatives.
The undersigned hereby affirms and certifies under penalty of perjury
that three (3) business days prior to the date hereof it has given notice to
Customer that it is in default under the security agreement, that Customer has
not cured such default, and such notice informed Customer that the undersigned
intended to exercise its remedies under the Agreement.
All capitalized terms used herein without definition have the same
meanings as are ascribed to such terms in the Agreement.
Very truly yours,
________________________________
By______________________________
Name:________________________
Title:_______________________
F-5
STATE OF _____________ )
) ss.
COUNTY OF ___________ )
I certify that I know or have satisfactory evidence that _______________________
is the person who appeared before me, and said person acknowledged that he/she
signed this instrument, on oath stated that he/she was authorized to execute the
instrument and acknowledged it as the _________________________ of
_______________________, to be the free and voluntary act of such party for the
uses and purposes mentioned in this instrument.
DATED: ________________________.
__________________________________________
(Signature of Notary Public)
__________________________________________
(Printed Name of Notary Public)
My Appointment expires: __________________
F-6
EXHIBIT G
FIXED EQUIPMENT
Equipment No. Description
------------- -----------
AD-1 AIR DRYER, REFRIGERATED
AHU-1A AIR HANDLING UNIT, LAB SUPPLY
AHU-1B AIR HANDLING UNIT, LAB SUPPLY
AHU-2A AIR HANDLING UNIT, LAB EXHAUST
AHU-2B AIR HANDLING UNIT, LAB EXHAUST
AHU-4 AIR HANDLING UNIT, LAB SUPPLY
AHU-5A AIR HANDLING UNIT, LAB EXHAUST
AHU-5B AIR HANDLING UNIT, LAB EXHAUST
AHU-6 AIR HANDLING UNIT, LAB SUPPLY
AHU-7A AIR HANDLING UNIT, LAB SUPPLY
AHU-7B AIR HANDLING UNIT, LAB SUPPLY
AHU-8 AHU, OFFICE SUPPLY
AUTOCLV-010 AUTOCLAVE, GRAVITY, STEAM
AUTOCLV-013 AUTOCLAVE, NON-GMP
AUTOCLV-016 AUTOCLAVE, STEAM PRESSURE, STERILIZER
BOIL-STM-N001 BOILER, STEAM, FORCED DRAFT, 150 PSI
BOIL-STM-N002 BOILER, STEAM, FORCED DRAFT, 150 PSI
CHILLER-001 CHILLER, SCREW
CHILLER-002 CHILLER, SCREW
CHILLER-004 CHILLER, RECIRCULATING LOOP
COLD-RM-004 COLD ROOM
COLD-RM-005 COLD ROOM
COMPACTOR-002 TRASH COMPACTOR, AUGER
COMP-AIR-003 COMPRESSOR, AIR, DRY FIRE SPRINKLER SYS
COMP-AIR-004 COMPRESSOR, AIR, LABORATORY/PROCESS
CP-N001 PUMP, CHILLED WATER PRODUCTION
CP-N002 PUMP, CHILLED WATER PRODUCTION
CP-N003 PUMP, CHILLED WATER DISTRIBUTION
CP-N004 PUMP, CHILLED WATER DISTRIBUTION
CP-N005 PUMP, HEATING, HOT WATER
CP-N006 PUMP, HEATING, HOT WATER
CP-N007 PUMP, HEAT RECOVERY
CP-N008 PUMP, LAB HOT WATER
CP-N009 PUMP, LAB HOT WATER
CP-N010 PUMP, HEAT RECOVERY
CP-N012 PUMP, CONDENSATE
CP-N019 PUMP, CONDENSATE
CP-N020 PUMP, DOMESTIC HOT WATER
CP-N029 PUMP, CONDENSATE
CP-N030 PUMP, LAB HOT WATER
DOOR-ROLL-006 DOOR, ROLLUP,LOADING DOCK,INTERIOR, NELS
DOOR-ROLL-007 DOOR, ROLLUP, COMPACTOR,NELSON
EF-2 FAN, EXHAUST, VIVARIUM FUME
EF-3 FAN, EXHAUST, 2ND FLR FUME
EF-4 FAN, EXHAUST, GARAGE
EF-5 FAN, EXHAUST, GAS STORAGE
G-1
EF-6 FAN, EXHAUST, 4TH FLR TOILET EXH.
EF-7 FAN, EXHAUST, 4TH FLR RELIEF
EF-8 FAN, EXHAUST, 3RD FLR FUME
EF-9 FAN, EXHAUST, GLASSWASH
ELEVATOR-003 ELEVATOR, SERVICE, NELSON
EUH-N1 HEATER, ELECTRICAL UNIT,WATER RM
EUH-N2 HEATER, ELECTRICAL UNIT, 2ND FLR. MECH.
EUH-N3 HEATER, ELECTRICAL UNIT, 3RD FLR. MECH.
EUH-N4 HEATER, ELECTRICAL UNIT, 4TH FLR. MECH.
EUH-N5 HEATER, ELECTRICAL UNIT, ELEVATOR MECH.
FET-N101 HVAC FUME EXHAUST TERMINAL BOX
FET-N102 HVAC FUME EXHAUST TERMINAL BOX
FET-N103 HVAC FUME EXHAUST TERMINAL BOX
FET-N104 HVAC FUME EXHAUST TERMINAL BOX
FET-N105 HVAC FUME EXHAUST TERMINAL BOX
FET-N106 HVAC FUME EXHAUST TERMINAL BOX
FET-N107 HVAC FUME EXHAUST TERMINAL BOX
FILTER-HEPA-004 FILTER,HEPA,IN-LINE
FIRE-SYS-003 FIRE ALARM SYSTEM AT NELSON [SITE #03]
FLTR-WTR-002 FILTER, WATER, DOMESTIC SYSTEM (SOUTH)
FLTR-WTR-003 FILTER, WATER, DOMESTIC SYSTEM (NORTH)
GENERATOR-002 GENERATOR, 500 KW
GET-N101 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N102 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N103 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N104 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N105 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N106 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N107 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N108 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N109 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N110 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N111 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N112 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N113 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N114 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N115 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N116 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N117 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N118 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N301 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N302 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N303 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N304 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N305 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N306 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N307 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N308 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N309 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N310 HVAC, GENERAL EXHAUST TERMIAL BOX
G-2
GET-N311 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N312 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N313 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N314 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N315 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N316 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N317 HVAC, GENERAL EXHAUST TERMIAL BOX
GET-N318 HVAC, GENERAL EXHAUST TERMIAL BOX
HOOD-BSC-058 BIO SAFETY CABINET, CLASS II TYPE B2
HOOD-FUME-013 HOOD, FUME
HOOD-FUME-023 HOOD, FUME
HOOD-FUME-041 HOOD, FUME, 6' CHEMGARD RADIO-ISOTOPE
HOOD-FUME-042 HOOD, FUME, RADIO-ISOTOPE
HOOD-FUME-043 HOOD, FUME, 4' CHEMGARD RADIO-ISOTOPE
HOOD-FUME-044 HOOD, FUME, RADIO-ISOTOPE
HOOD-FUME-045 HOOD, FUME, 6' CHEMGARD RADIO-ISOTOPE
HOOD-FUME-046 HOOD, FUME, 6' CHEMGARD RADIO-ISOTOPE
HOOD-FUME-048 HOOD, FUME
HOOD-FUME-049 HOOD, FUME
INDICATOR-003 INDICATOR, DIGITAL, WEIGHT
PRESS-RED-001 H2O SUPPLY TO RABBIT WATERING SYSTEM
PUMP-HSVAC-002 PUMP,VACUUM, HOUSE,NELSON
RO-DI-002 WATER SYSTEM, RO-DI
RO-SYS-001 REVERSE OSMOSIS WATER SYSTEM
SF-1 FAN, SUPPLY, ELEVATOR SHAFT
SP-1 PUMP, SUMP, WASTE WATER
SP-2 PUMP, SUMP, WASTE WATER
SP-3 PUMP, SUMP, FOOTING DRAIN
SP-4 PUMP, SUMP, FOOTING DRAIN
SPRINK-DRY-004 SPRINKLER, FIRE, DRY,
SPRINK-WET-002 SPRINKLER, FIRE, WET
STEAM-GEN-001 STEAM GENERATOR, CLEAN
STILL-001 STILL, WATER FOR INJECTION
TANK-DA-001 TANK, DEAERATOR, SPRAYMASTER
UPS-002 UNINTERUPTABLE POWER SOURCE
VAV-FAN-N401 VAV,WITH ELECTRIC HEAT,FAN POWERED
VAV-FAN-N402 VAV,WITH ELECTRIC HEAT,FAN POWERED
VAV-FAN-N403 VAV,WITH ELECTRIC HEAT,FAN POWERED
VAV-FAN-N404 VAV,WITH ELECTRIC HEAT,FAN POWERED
VAV-FAN-N405 VAV,WITH ELECTRIC HEAT,FAN POWERED
VAV-FAN-N406 VAV,WITH ELECTRIC HEAT,FAN POWERED
VAV-FAN-N407 VAV,WITH ELECTRIC HEAT,FAN POWERED
VAV-FAN-N408 VAV, FAN POWERED
VAV-FAN-N409 VAV, FAN POWERED
VAV-N101 VAV, WITH HOT WATER REHEAT
VAV-N102 VAV, WITH HOT WATER REHEAT
VAV-N103 VAV, WITH HOT WATER REHEAT
VAV-N104 VAV, WITH HOT WATER REHEAT
VAV-N105 VAV, WITH HOT WATER REHEAT
VAV-N106 VAV, WITH HOT WATER REHEAT
G-3
VAV-N107 VAV, WITH HOT WATER REHEAT
VAV-N108 VAV, WITH HOT WATER REHEAT
VAV-N109 VAV, WITH HOT WATER REHEAT
VAV-N110 VAV, WITH HOT WATER REHEAT
VAV-N111 VAV, WITH HOT WATER REHEAT
VAV-N112 VAV, WITH HOT WATER REHEAT
VAV-N113 VAV, WITH HOT WATER REHEAT
VAV-N114 VAV, WITH HOT WATER REHEAT
VAV-N115 VAV, WITH HOT WATER REHEAT
VAV-N116 VAV, WITH HOT WATER REHEAT
VAV-N117 VAV, WITH HOT WATER REHEAT
VAV-N118 VAV, WITH HOT WATER REHEAT
VAV-N119 VAV, WITH HOT WATER REHEAT
VAV-N120 VAV, WITH HOT WATER REHEAT
VAV-N121 VAV, WITH HOT WATER REHEAT
VAV-N122 VAV, WITH HOT WATER REHEAT
VAV-N123 VAV, WITH HOT WATER REHEAT
VAV-N124 VAV, HOT WATER REHEAT,FAN POWERED
VAV-N125 VAV, WITH HOT WATER REHEAT
VAV-N126 VAV, WITH HOT WATER REHEAT
VAV-N127 VAV, WITH HOT WATER REHEAT
VAV-N128 VAV, WITH HOT WATER REHEAT
VAV-N129 VAV, WITH HOT WATER REHEAT
VAV-N130 VAV, WITH HOT WATER REHEAT
VAV-N131 VAV, WITH HOT WATER REHEAT
VAV-N301 VAV, WITH HOT WATER REHEAT
VAV-N302 VAV, WITH HOT WATER REHEAT
VAV-N303 VAV, WITH HOT WATER REHEAT
VAV-N304 VAV, WITH HOT WATER REHEAT
VAV-N305 VAV, WITH HOT WATER REHEAT
VAV-N306 VAV, WITH HOT WATER REHEAT
VAV-N307 VAV, WITH HOT WATER REHEAT
VAV-N308 VAV, WITH HOT WATER REHEAT
VAV-N309 VAV, WITH HOT WATER REHEAT
VAV-N310 VAV, WITH HOT WATER REHEAT
VAV-N311 VAV, WITH HOT WATER REHEAT
VAV-N312 VAV, WITH HOT WATER REHEAT
VAV-N313 VAV, WITH HOT WATER REHEAT
VAV-N314 VAV, WITH HOT WATER REHEAT
VAV-N315 VAV, WITH HOT WATER REHEAT
VAV-N316 VAV, WITH HOT WATER REHEAT
VAV-N317 VAV, WITH HOT WATER REHEAT
VAV-N318 VAV, WITH HOT WATER REHEAT
VAV-N319 VAV, WITH HOT WATER REHEAT
VAV-N320 VAV, WITH HOT WATER REHEAT
VAV-N321 VAV, WITH HOT WATER REHEAT
VAV-N322 VAV, WITH HOT WATER REHEAT
VAV-N323 VAV, WITH HOT WATER REHEAT
VAV-N324 VAV, WITH HOT WATER REHEAT
VAV-N325 VAV, WITH HOT WATER REHEAT
G-4
VAV-N326 VAV, WITH HOT WATER REHEAT
VAV-N327 VAV, WITH HOT WATER REHEAT
WARM-RM-003 WARM ROOM, WALK IN, 37 DEG
WASH-ACCES-001 SPINDLE HEADERS FOR GLASS WASHER
WASH-CAGE-002 WASHER, CAGE
WASH-GLASS-004 WASHER, GLASSWARE
WASH-GLASS-005 WASHER, GLASSWARE, SUPER DRYER
WASTE-CHEM-001 WASTE TREATMENT SYSTEM
WATER-PUR-006 PURIFIER, WATER FILTER SYSTEM FOR BOTTLE FILLER
WFI-SYS-001 WFI, WATER FOR INJECTION SYSTEM
G-5
EXHIBIT H
Use and Function of Leased Space
H-1
EXHIBIT I
BOMA Measurement
I-1
EXHIBIT J-1
Landlord Estoppel Certificate
THIS LANDLORD ESTOPPEL CERTIFICATE ("Certificate"), dated as of
________ __, 2001, is executed by ____________________, a _____________
("Landlord") in favor of_____________________________, ( "Subtenant"[or other
appropriate identifier, such as "Assignee"]).
RECITALS
A. Tenant and Landlord have entered into that certain Lease Agreement dated
as of ________ ___, 20___ (together with all amendments, modifications,
supplements, guarantees and restatements thereof, the "Lease"), for a portion of
the improved real property located in the City of Seattle, County of King, State
of Washington, more particularly described on Exhibit A attached hereto ( the
"Property").
B. Pursuant to the Lease, Landlord has agreed that upon the request of
Tenant, Landlord would execute and deliver an estoppel certificate certifying
the status of the Lease.
C. Tenant has requested that Landlord execute this Certificate with an
understanding that Subtenant will rely on the representations and agreements
below in [subleasing space in the Premises from Tenantinsert appropriate
description of transaction] (the "Transaction").
NOW, THEREFORE, Landlord certifies and represents to Subtenant as follows:
1. Lease. Attached hereto as Exhibit B is a true, correct and complete copy
of the Lease, including the following amendments, modifications, supplements,
guarantees and restatements thereof, which together represent all of the
amendments, modifications, supplements, guarantees and restatements thereof:
_______________________________________________________________________________
(If none, please state "None.")
2. Premises. Pursuant to the Lease, Tenant leases those certain premises
(the "Premises") consisting of approximately ___________ rentable square feet
within the Property, as more particularly described in the Lease. In addition,
pursuant to the terms of the Lease, Tenant has the right to use [_______ parking
spaces/the parking area] located on the Property during the term of the Lease.
3. Full Force of Lease. The Lease has been duly authorized, executed and
delivered by Landlord, is in full force and effect has not been terminated and
constitutes a legally valid instrument, binding and enforceable against Landlord
in accordance with its terms, subject only to applicable limitations imposed by
laws relating to bankruptcy and creditor's rights.
4. Complete Agreement. The Lease constitutes the complete agreement between
Landlord and Tenant for the Premises and the Property, except as modified by the
Lease amendments noted above (if any), has not been modified, altered or
amended.
5. Lease Term. The term of the Lease commenced on ________ ___, 20___ and
ends on ________ ___, 20___, subject to the following options to extend:
________________________________________________________________________________
(If none, please state "None.")
6. Purchase Rights. Tenant has no option, right of first refusal, right of
first offer, or other right to acquire or purchase all or any portion of the
Premises or all or any portion of, or interest in, the Property, except as
follows:_______________________________________________________________________
J-1-1
________________________________________________________________________________
(If none, please state "None.")
7. Rights of Tenant. Except as expressly stated in this Certificate,
Tenant:
(a) has no right to renew or extend the term of the Lease, except as
follows: ;
(b) has no right, title, or interest in the Premises, other than as Tenant
under the Lease or as the owner of all Removable Equipment and personal property
not identified as Fixed Equipment under the Lease.
8. Rent.
(a) The obligation to pay Rent under the Lease commenced on ________ ___,
20___. The Rent under the Lease is curRent, and to the best of Landlord's actual
knowledge, Tenant is not in default in the performance of any of its obligations
under the Lease.
(b) Tenant is currently paying Base Rent under the Lease in the amount of
$________ per month. Tenant has not received and is not, presently, entitled to
any abatement, refunds, rebates, concessions or forgiveness of Rent or other
charges, free Rent, partial Rent, or credits, offsets or reductions in Rent,
except as follows:______________________________________________________________
________________________________________________________________________________
(If none, please state "None.")
(c) There are no existing defenses or offsets against Rent due or to become
due under the terms of the Lease, and there presently is no default or other
wrongful act or omission by Landlord under the Lease or otherwise in connection
with Tenant's occupancy of the Premises, nor to the best of Landlord's actual
knowledge is there a state of facts which with the passage of time or the giving
of notice or both could ripen into a default on the part of Tenant, , except as
follows:________________________________________________________________________
________________________________________________________________________________
(If none, please state "None.")
9. Security Deposit. Tenant's compliance with the Security Deposit
provision of the Lease (Section 7) is through a Letter of Credit in the amount
of $______ and pledged marketable securities of $________.
10. Prepaid Rent. The amount of prepaid Rent, separate from the security
deposit, is $___________, covering the period from ________ ___, 20___ to
________ ___, 20___.
11. Insurance. To the best of Landlord's actual knowledge, all insurance,
if any, required to be maintained by Tenant under the Lease is presently in
effect.
12. Pending Actions. There is not pending or, to the best of Landlord's
actual knowledge, threatened against or contemplated by the Landlord, any
petition in bankruptcy, whether voluntary or otherwise, any assignment for the
benefit of creditors, or any petition seeking reorganization or arrangement
under the federal bankruptcy laws or those of any state.
13. Tenant Improvements. As of the date of this Certificate, to the best of
Landlord's actual knowledge: Tenant has performed all obligations required of
Tenant pursuant to the Lease; no offsets, counterclaims, or defenses of Landlord
under the Lease exist against Tenant; and no events have occurred that, with the
passage of time or the giving of notice, would constitute a basis for offsets,
counterclaims, or defenses against Tenant, except as follows:___________________
__________________________________.(If none, please state "None.")
J-1-2
14. Assignments by Tenant. To the best of Landlord's actual knowledge,
Tenant has not sublet or assigned the Premises or the Lease or any portion
thereof to any sublessee or assignee. No one except Tenant and its employees
will occupy the Premises. The address for notices to be sent to Tenant is as set
forth in the Lease or is:___________________________.
15. Reliance. Landlord makes this Certificate with the knowledge that it
will only be relied upon by Subtenant in agreeing to complete the Transaction.
Landlord has executed this Certificate as of the date first written above
by the person named below, who is duly authorized to do so.
LANDLORD: ___________________________________________________________,
a __________________________________________________________
By:_________________________________________________________
Name:______________________________________________
Its:_______________________________________________
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Exhibit J-2
Tenant Estoppel Certificate
THIS TENANT ESTOPPEL CERTIFICATE ("Certificate"), dated as of ________ __,
2001, is executed by ____________________, a _____________ ("Tenant") in favor
of_____________________________, ( "Buyer"[or other appropriate identifier, such
as "Lender"]).
RECITALS
A. Tenant and Landlord have entered into that certain Lease Agreement dated
as of ________ ___, 20___ (together with all amendments, modifications,
supplements, guarantees and restatements thereof, the "Lease"), for a portion of
the improved real property located in the City of Seattle, County of King, State
of Washington, more particularly described on Exhibit A attached hereto ( the
"Property").
B. Pursuant to the Lease, Tenant has agreed that upon the request of
Landlord, Tenant would execute and deliver an estoppel certificate certifying
the status of the Lease.
C. Landlord has requested that Tenant execute this Certificate with an
understanding that Buyer [Lender} will rely on the representations and
agreements below in [acquiring the Property and Landlord's interest under the
Lease] [connection with a loaninsert appropriate description of transaction]
(the "Transaction").
NOW, THEREFORE, Tenant certifies and represents to Buyer as follows:
16. Lease. Attached hereto as Exhibit B is a true, correct and complete
copy of the Lease, including the following amendments, modifications,
supplements, guarantees and restatements thereof, which together represent all
of the amendments, modifications, supplements, guarantees and restatements
thereof:__
_______________________________________________________________________________.
(If none, please state "None.")
17. Leased Premises. Pursuant to the Lease, Tenant leases those certain
premises (the "Premises") consisting of approximately ___________ rentable
square feet within the Property, as more particularly described in the Lease. In
addition, pursuant to the terms of the Lease, Tenant has the right to use
[_______ parking spaces/the parking area] located on the Property during the
term of the Lease.
18. Full Force of Lease. The Lease has been duly authorized, executed and
delivered by Tenant, is in full force and effect has not been terminated and
constitutes a legally valid instrument, binding and enforceable against Tenant
in accordance with its terms, subject only to applicable limitations imposed by
laws relating to bankruptcy and creditor's rights.
19. Complete Agreement. The Lease constitutes the complete agreement
between Landlord and Tenant for the Premises and the Property, except as
modified by the Lease amendments noted above (if any), has not been modified,
altered or amended.
20. Acceptance of Premises. Tenant has accepted possession and is currently
occupying the Premises.
21. Lease Term. The term of the Lease commenced on ________ ___, 20___ and
ends on ________ ___, 20___, subject to the following options to extend:________
(If none, please state "None.")
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22. Purchase Rights. Tenant has no option, right of first refusal, right of
first offer, or other right to acquire or purchase all or any portion of the
Premises or all or any portion of, or interest in, the Property, except as
follows:________________________________________________________________________
________________________________________________________________________________
(If none, please state "None.")
23. Rights of Tenant. Except as expressly stated in this Certificate,
Tenant:
(a) has no right to renew or extend the term of the Lease except as
follows:_______________________________________________________________________;
(b) has no right, title, or interest in the Premises, other than as Tenant
under the Lease or as the owner of all Removable Equipment and personal property
not identified as Fixed Equipment under the Lease.
24. Rent.
(a) The obligation to pay rent under the Lease commenced on ________ ___,
20___. The Rent under the Lease is current, and Tenant is not in default in the
performance of any of its obligations under the Lease.
(b) Tenant is currently paying Base Rent under the Lease in the amount of
$________ per month. Tenant has not received and is not, presently, entitled to
any abatement, refunds, rebates, concessions or forgiveness of Rent or other
charges, free rent, partial Rent, or credits, offsets or reductions in rent,
except as follows:______________________________________________________________
________________________________________________________________________________
(If none, please state "None.")
(c) There are no existing defenses or offsets against Rent due or to become
due under the terms of the Lease, and there presently is no default or other
wrongful act or omission by Landlord under the Lease or otherwise in connection
with Tenant's occupancy of the Premises, nor is there a state of facts which
with the passage of time or the giving of notice or both could ripen into a
default on the part of Tenant, or to the best of Tenant's actual knowledge, or
could ripen into a default on the part of Landlord under the Lease, except as
follows:________________________________________________________________________
________________________________________________________________________________
(If none, please state "None.")
25. Security Deposit. Tenant's compliance with the Security Deposit
provision of the Lease (Section 7) is through a Letter of Credit in the amount
of $______ and pledged marketable securities of $________.
26. Prepaid Rent. The amount of prepaid Rent, separate from the Security
Deposit, is $___________, covering the period from ________ ___, 20___ to
________ ___, 20___.
27. Insurance. All insurance, required to be maintained by Tenant under the
Lease is presently in effect.
28. Pending Actions. There is not pending or, to the best of Tenant's
actual knowledge, threatened against or contemplated by the Tenant, any petition
in bankruptcy, whether voluntary or otherwise, any assignment for the benefit of
creditors, or any petition seeking reorganization or arrangement under the
federal bankruptcy laws or those of any state.
29. Tenant Improvements. As of the date of this Certificate, to the best of
Tenant's actual knowledge: Landlord has performed all obligations required of
Landlord pursuant to the Lease; no offsets, counterclaims, or defenses of Tenant
under the Lease exist against Landlord; and no events have
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occurred that, with the passage of time or the giving of notice, would
constitute a basis for offsets, counterclaims, or defenses against Landlord,
except as follows:______________________________________________________________
________________________________________________________________________________
(If none, please state "None.")
30. Assignments by Landlord. Tenant has received no notice of any
assignment, hypothecation or pledge of the Lease or rentals under the Lease by
Landlord. Tenant hereby consents to an assignment of leases and rents to be
executed by Landlord to Buyer in connection with the Transaction and
acknowledges that said assignment does not violate the provisions of the Lease.
The address for notices to be sent to Landlord is as set forth in the Lease or
is:_____________________________.
31. Assignments by Tenant. Tenant has not sublet or assigned the Premises
or the Lease or any portion thereof to any sublessee or assignee. No one except
Tenant and its employees will occupy the Premises. The address for notices to be
sent to Tenant is as set forth in the Lease or is:_____________________________.
32. Environmental Matters. Tenant is in compliance with the Lease and
Environmental Requirements in connection with its generation, treatment,
storage, disposal or release into the environment of any Hazardous Materials at
the Premises. Environmental Requirements and Hazardous Materials are defined by
reference to Lease Section 19.8. Concerning Lease Section 19 specifically, there
presently is no default or other wrongful act or omission by Tenant under the
Lease or otherwise in connection with Tenant's occupancy of the Premises, nor is
there a state of facts which with the passage of time or the giving of notice or
both could ripen into a default under Lease Section 19 on the part of Tenant;
except as follows:_________________________________________________. (If none,
please state "None.")
33. Succession of Interest. Tenant agrees that, in the event Buyer succeeds
to interest of Landlord under the Lease:
(a) Buyer shall not be bound by any amendments or modifications of the
Lease, subsequent to the date of this Certificate, made without prior consent of
Buyer which will not be unreasonably withheld, delayed or conditioned; with the
understanding that this Section 17(a) shall not longer apply if the Transaction
terminates;
34. Reliance. Tenant makes this Certificate with the knowledge that it will
only be relied upon by Buyer in agreeing to complete the Transaction.
Tenant has executed this Certificate as of the date first written above by
the person named below, who is duly authorized to do so.
TENANT: ___________________________________________________,
a___________________________________________________
By:_________________________________________________
Name: ______________________________________
Its:________________________________________
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EXHIBIT K
SITE PLAN OF EXPANSION
Expansion shown with heavy black outline. Refer to Basis of Design approved by
Landlord for further detail.
K-1
EXHIBIT L
Fair Market Value Determination For Premises (Lease Sections 10 and 12)
Determination of "Fair Market Value" of the Premises under paragraphs 10 and 12
of this Lease shall be made in accordance with the following procedures, which
shall be valued assuming the Premises are encumbered by the Lease and Renewal
Options, with the sum of such determinations being the Fair Market Value of the
Premises as a whole:
(a) Fair Market Value of the Premises shall be determined by the agreement of
two (2) appraisers (each, an "Initial Appraiser"), one of which shall be
selected by Landlord and the other of which shall be selected by Tenant as
set forth in this Exhibit L. Each of the parties shall concurrently
identify in writing, an Initial Appraiser selected and retained by such
party and specifically identify such Initial Appraiser's name, address,
phone number and qualifications as an appraiser. Within five (5) days after
the parties have designated their Initial Appraisers, each of Landlord and
Tenant shall direct, in writing with a copy to the other party, its Initial
Appraiser to work with the other party's Initial Appraiser to endeavor to
determine and reach agreement upon the Fair Market Value of the Premises
(including the land and the improvements), considered as encumbered by this
Lease and its extensions, and considered as not having been the subject of
a casualty or condemnation, as applicable, and thereafter to deliver in
writing to Landlord and Tenant within thirty (30) days (such 30-day period,
the "Valuation Period") the agreed-upon Fair Market Value (the "Valuation
Notice"). The costs and expenses of each Initial Appraiser shall be paid by
the party selecting such Initial Appraiser. If Tenant fails to identify in
writing an Initial Appraiser as required by this Exhibit, Landlord shall
identify an Initial Appraiser on behalf of Tenant; provided, however,
Tenant shall be liable for the costs and expenses of such Initial Appraiser
identified on Tenant's behalf by Landlord as if Tenant had selected such
Initial Appraiser.
(b) If the Initial Appraisers are not able to reach agreement upon the Fair
Market Value within the Valuation Period, within ten (10) days after the
end of the Valuation Period each Initial Appraiser shall deliver a written
notice to Landlord, Tenant, and the other Initial Appraiser setting forth
(i) such Initial Appraiser's valuation of the Fair Market Value (each, an
"Initial Valuation") and (ii) the name, address and qualifications of a
third appraiser selected jointly by the Initial Appraisers (the "Third
Appraiser"). The Initial Appraisers shall, in writing with a copy to
Landlord and Tenant, direct the Third Appraiser (or substitute Third
Appraiser) to determine a valuation of the Fair Market Value of the
Premises (including the land and the improvements), considered as
encumbered by this Lease and its extensions, and considered as not having
been the subject of a casualty or condemnation, as applicable, and to
deliver in writing to Landlord, Tenant and the Initial Appraisers such
valuation (the "Third Valuation") within twenty (20) days of the date of
the written direction retaining such Third Appraiser. The Fair Market Value
shall be the arithmetic mean of (A) the Third Valuation and (B) the Initial
Valuation closer to the Third Valuation. If the Third Valuation is exactly
between the two Initial Valuations, then the Fair Market Value shall be the
Third Valuation. If the Initial Appraisers are unable to agree upon the
designation of a Third Appraiser within the requisite time period or if the
Third Appraiser selected does not make a valuation of the Fair Market Value
within twenty (20) days after being directed by the Initial Appraisers,
then such Third Appraiser or a substitute Third Appraiser, as applicable,
shall, at the request of Landlord or Tenant, be appointed by the President
or Chairman of the American Arbitration Association in the area in which
the Premises exist which is the subject of the fair market valuation
determination determined hereunder. The costs and expenses of the Third
Appraiser (and substitute Third Appraiser and the American Arbitration
Association, if applicable) shall be divided evenly between, and paid for
by, Landlord and Tenant.
(c) All appraisers selected or appointed pursuant to this Exhibit shall be
independent qualified appraisers and shall be, at a minimum, MAI real
estate appraisers with at least 7 years experience in appraising real
property used for comparable "wet science" biological laboratory
L-1
and research and development facilities or such similar uses to which the
parties agree. Such appraisers shall have no right, power or authority to
alter or modify the provisions of this Lease, and such appraisers shall
determine the Fair Market Value of the Premises, as applicable, considered
as encumbered by this Lease including assuming all Extension Terms have
been exercised by Tenant and considered as not having been the subject of a
casualty or condemnation, as applicable.
(d) Notwithstanding the foregoing, if Landlord and Tenant are able to agree
upon a Fair Market Value of the Premises, Landlord and Tenant shall execute
an agreement setting forth such agreed-upon Fair Market Value of the
Premises, as applicable, and waiving each party's right to have the Fair
Market Value of the Premises, as applicable, determined in accordance with
the procedures set forth in paragraphs (a) and (b) of this Exhibit.
(e) If Tenant elects not to make an offer to purchase the Premises under
Sections 10 or 12 after this valuation process has been conducted, Tenant
shall reimburse Landlord its out of pocket third party costs (including
attorney's fees and the costs of Landlord's Initial Appraiser). and pay all
charges assessed by the Third Appraiser.
L-2
EXHIBIT M
Lease Amendment Form
AMENDMENT NO. __ TO LEASE
This AMENDMENT NO. ____ TO LEASE (this "Amendment") is entered into as
of the below date between ARE-1208 EASTLAKE AVENUE, LLC, a Delaware limited
liability company("Landlord") and ZYMOGENETICS, INC., a Washington corporation
("Tenant").
Landlord and Tenant are parties to that certain Lease dated October
___, 2002, as amended by Amendment No. to Lease ___ dated ____________ {Note -
this would be the amendment to incorporate the additional land} (as amended, the
"Lease"). Capitalized terms not defined herein shall have the meanings set forth
in the Lease. Pursuant to Section 24 of the Lease, Tenant constructed the
Expansion and the purpose of this Amendment is to reflect the changes to the
Lease as a result of completion of the Expansion.
Now, therefore, Landlord and Tenant agree as follows:
1. EXPANSION RENT COMMENCEMENT DATE. The Expansion Rent Commencement
Date is _____________________, 200_. Effective on the Expansion Rent
Commencement Date: (a) the Base Rent is increased to $____________ per month,
(b) expiration date of the Initial Term of the Lease is extended to
____________________, which date is 180 months from the Expansion Rent
Commencement Date, and (c) the Security Deposit required under Section 7.1 of
the Lease is increased to $__________________.
2. NO OTHER AMENDMENTS. Except as modified by this Amendment and by
Amendment No. ____ dated ______________, the Lease remains in full force and
effect and has not been modified or amended.
DATED: _______________________.
LANDLORD:
ARE-1208 Eastlake Avenue, LLC,
a Delaware limited liability company
By: ALEXANDRIA REAL ESTATE EQUITIES, L.P.,
a Delaware limited partnership,
managing member
By: ARE-QRS CORP.,
a Maryland corporation,
general partner
By: ___________________________
Peter J. Nelson, CFO
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TENANT:
ZYMOGENETICS, INC.,
a Washington corporation
By _______________________________________
Name:_______________________________________
Title:______________________________________
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that ______________________
signed this instrument, on oath stated that he was authorized to execute the
instrument and acknowledged it as the _____________________________ of
ZymoGenetics, Inc. to be the free and voluntary act of such party for the uses
and purposes mentioned in the instrument.
Dated: _________________.
______________________________________
(Signature)
______________________________________
Title
My appointment expires _______________
STATE OF _____________ )
) ss.
COUNTY OF ___________ )
I certify that I know or have satisfactory evidence that Peter J.
Nelson is the person who appeared before me, and said person acknowledged that
he/she signed this instrument, on oath stated that he/she was authorized to
execute the instrument and acknowledged it as the Chief Financial Officer of
ARE-QRS Corp., general partner of Alexandria Real Estate Equities, L.P., the
Managing Member of ARE-1208 Eastlake Avenue, LLC, to be the free and voluntary
act of such party for the uses and purposes mentioned in this instrument.
DATED: ____________________
__________________________________
(Signature of Notary Public)
__________________________________
(Printed Name of Notary Public)
My Appointment expires:___________
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