Exhibit 10.3
LEASE
THIS LEASE (this "Lease") is entered into as of this 14th day of September, 1996
between DAVID A. EDELSTEIN and NANCY JO EDELSTEIN, husband and wife ("Landlord")
and The Cobalt Group, Inc. ("Tenant") (collectively, the "Parties").
AGREEMENT
1. EXHIBITS AND DEFINITIONS
1.1 DEFINITIONS. The following terms used in this Lease shall have the
definitions as set forth below; other terms are defined throughout the
Lease.
"BUILDING": The building and all other improvements located on the
Property, as they currently exist or as they may be renovated by
Tenant pursuant to this Lease.
"COMMENCEMENT DATE": The Commencement Date shall be November 1, 1996,
however, Tenant may occupy the Premises as of September 15, 1996.
"COMMON AREAS": Landlord shall make available (or cause to be made
available) throughout the Lease Term such common areas (including, but
not limited to, parking areas, exits, entrances, driveways, truckways,
delivery passages, truck-loading areas, access and egress roads,
parcel pickup stations, retaining walls, sidewalks, walkways,
footbridges, landscaped and planted areas and public restrooms) for
the common use and benefit of the tenants of the Property, their
employees, agents, customers and other invitees. Landlord shall (or
shall cause the same to be done) operate, manage, equip, light,
repair, replace and maintain the common areas for their intended
purposes in such manner as is consistent with the operation and
maintenance of a first-class or well maintained office building
similar in nature to and within the same metropolitan area as the
Property.
[Insert 6.1.1.]
"HAZARDOUS SUBSTANCES": Any hazardous, toxic, or dangerous substance,
waste, or other product, substance, or material that is now or
hereafter considered to be potentially injurious to the public health,
or to the
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environment or which is or becomes regulated under any federal, state,
or local statute, rule, regulation or ordinance now or hereafter in
effect pertaining to environmental protection, environmental
contamination or cleanup, or to the protection of human or animal
health or safety.
"INTEREST": Interest means interest at the rate equal to twelve
percent (12%) per annum.
"LEASE YEAR": The first Lease Year means the period beginning on the
Commencement Date and terminated on the last day of the twelfth (12th)
full calendar month after the Commencement Date. Each subsequent
Lease Year means each (12) month period during the Term following the
first Lease Year. If the first Lease Year has more than 365 days as a
result of the application of this Section, any prorations for the
first Lease Year shall be based on the actual number of days in that
first Lease Year.
"PREMISES": Shall mean the space commonly known as 11,536 rentable
square feet on the third floor of the building as indicated by
Exhibit B attachment, for the sole purpose of identification, together
with all appurtenant rights and easements, and the non-exclusive right
and easement to use all the Common Areas of the Property for their
intended purposes including, without limitation, access, ingress, and
egress.
"PROPERTY": The real property commonly known as 2030 First Avenue,
Seattle, Washington, and legally described on Exhibit A hereto,
together with all easements, licenses, and other rights appurtenant
thereto. Unless otherwise specifically stated, all references to the
Property shall include the Premises and the building.
"TAXES": All taxes or impositions of any kind levied with respect to
the Property or the use and occupation thereof, including without
limitation: service payments levied or assessed wholly or partly in
lieu of taxes; annual or periodic license, permit, inspection, or use
fees; excises, transit charges, housing fund assessments, assessments,
levies, fees, or charges; and all extraordinary, unforeseen as well as
foreseen, of any kind, that are levied, assessed, charges, confirmed,
or imposed by any public, quasi-public, or private authority upon the
property, its operation, the rent payable under this Lease, the land
upon which the property is situated, or the personal property
contained thereupon (but excluding state and federal, personal or
corporate income taxes measured by the net income of Landlord from all
sources, and franchise, inheritance, and estate taxes of Landlord).
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"TERMINATION DATE": The Termination Date of the initial Lease Term
means October 31, 2000.
"UTILITIES": Water, sewer, garbage, heat, air conditioning, and
electricity furnished to Tenant and/or other occupants of the
Building, in the manner and subject to the qualifications set forth in
Section 12.
"UTILITIES EXPENSES": All expenses related to the provision of
Utilities to the various occupants of the Building.
1.2. EXHIBITS. The following exhibits are attached hereto and are made a
part of this Lease.
Exhibit A - Legal Description of Property
Exhibit B - Site Plan of the Premises
Exhibit C - Amendment to Lease
Exhibit D - Second Floor Site Plan
2. DEMISE AND TERM
2.1. PREMISES AND DEMISE. Landlord hereby leases the Premises to Tenant,
and Tenant hereby leases the Premises from Landlord, subject to the
terms and conditions of this Lease.
2.2. TERM. This Lease shall be for four (4) years commencing on the
Commencement Date and terminating at 11:59 p.m. on the Termination
Date (the "Term"). If Tenant shall hold over with Landlord's written
consent following the expiration of the term, such holding over shall
be on a month-to-month tenancy under the terms of this Lease,
terminable by either party upon thirty (30) days written notice to the
other.
2.3. SURRENDER OF PREMISES Upon termination of this Lease, Tenant shall
surrender possession of the Premises to Landlord free of debris, broom
clean, and in good condition, as modified by any repairs, alterations
or improvements (excluding trade fixtures) made by Tenant in
accordance with this Lease, and subject to gradual and ordinary wear
and tear. Ordinary wear and tear shall not include any damage or
deterioration caused by Tenant's failure to perform or observe any
covenant or other provision of this Lease.
2.4. SURRENDER OF LEASE. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not work a merger, and
shall, at the
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option of Landlord, terminate all or any existing subleases or
subtenancies, or may at the option of Landlord, operate as an
assignment to it of any such subtenancies.
2.5 OPTION TO RENEW. Providing Tenant has not materially defaulted on
this Lease during the initial four (4) year Lease Term, Tenant shall
have one (1) five (5) year option(s) to renew the Lease at the then
existing fair market rents. The option shall be exercised by Tenant,
if at all, in writing at least two hundred forty (240) days prior to
the end of the initial Lease Term. [Insert 2.6, 2.7, 2.8]
3. RENT
3.1. MINIMUM RENT. Tenant agrees to pay Landlord Minimum Rent in the
amounts set out in the schedule below. No deduction or offset of any
kind is allowed except for prepaid rent as set out in the schedule
below. Landlord acknowledges receipt of $7,000.00 in prepaid rent
from Tenant, to be applied to the first month of the Lease Term.
BASE RENT DUE PER RENTABLE SQUARE FOOT PER YEAR
Years 1 - 4 $14.00
3.2. PAYMENT. All rent due under this Lease shall be payable in advance at
the Landlord's address for notice purposes set forth below, on the
first business day of each month throughout the Term of this Lease.
Tenant shall pay the first installment of Minimum Rent and last
month's rent upon signing of the Lease. If any monthly installment of
Minimum Rent is not received on or before the tenth (10th) day of the
month for which such payment is due, Tenant agrees to pay Landlord a
late charge in the sum of two percent (2%) of the amount of such
installment. In addition, all sums past due from Tenant shall bear
interest at one (1%) per month or any fraction thereof. If any check
given to Landlord by Tenant shall be dishonored by the bank upon which
it is drawn, Landlord, at its option, may require all future payments
of Rent to be made only by cashier's check.
3.3. PRORATION. All Minimum Rent and Additional Rent shall be prorated for
any partial calendar month at the beginning or end of the Term.
4. UTILITIES, TAXES, AND INSURANCE
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Landlord shall pay before delinquent all Utilities Expenses, Taxes, and the
cost of any insurance to be carried hereunder and which are Landlord's
responsibility per paragraph 12.
5. TITLE, AUTHORITY, AND QUIET ENJOYMENT
5.1. TITLE AND AUTHORITY. Landlord warrants to Tenant that Landlord has
the right to lease the Premises to Tenant. Tenant warrants to
Landlord that Tenant has all requisite right, power, and authority to
enter into this Lease and to perform its obligations hereunder. Each
party shall provide the other party with reasonably satisfactory
evidence of its authority to enter into this Lease upon request.
5.2. QUIET ENJOYMENT. Landlord covenants to Tenant that, so long as Tenant
is not in default under this Lease beyond any applicable cure period,
Tenant shall have quiet enjoyment of the Premises and all of the
rights granted hereunder without interference by Landlord, anyone
acting by, through or under Landlord, or anyone having title or any
lien or interest paramount to Landlord. Landlord may enter the
Premises or the Building, and the same shall not be a breach of this
covenant of quiet enjoyment if done upon forty-eight (48) hours prior
written notice to Tenant (except in the event of emergency, in which
case no notice is required) for the purpose of:
5.2.1. curing a default by Tenant; or
5.2.2. showing the Premises to any prospective purchaser, lessee,
or mortgagee; or
5.2.3. posting reasonable signs indicating the Landlord is not
responsible for the cost of work done thereupon, or that the
Premises is for sale or lease; or
5.2.4. to inspect the Premises; or
5.2.5 in the event of an emergency, to enter the Premises without
notice to perform any duty of Tenant, whether or not
Tenant's failure to have performed by the time of Landlord's
entry then constitutes a default, if done to prevent injury
to persons or loss of property or life; or
5.2.6. to perform any act necessary to remediate any contamination
of the Property by Hazardous Substances; or
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5.2.7. to exercise any other right of Landlord under this Lease.
5.3. RIGHTS IN OTHERS. Landlord reserves the right to grant public utility
easements and other rights on, over, and under the Property without
any abatement in rent, provided that such rights do not materially
interfere with Tenant's business on the Premises. Tenant agrees to
sign any documents reasonably requested by Landlord in regard to the
grant of any such easement rights, dedication, map, or restrictions.
No grant of any such interest shall be a violation of Landlord's
covenant of quiet enjoyments. [Insert 5.4]
6. ACCEPTANCE OF PREMISES
6.1. PHYSICAL DEFECTS; USE RESTRICTIONS. Tenant warrants that it has fully
investigated the physical characteristics of the Premises and any
legal, physical, or other limitations relating to the Premises, and
except as noted in Section 8, is fully satisfied that there are no
physical defects in the Premises, and that there are no restrictions
(including, without limitation, zoning, building, fire, or health code
regulations) that could unfavorably limit Tenant's use of the
Premises. Tenant waives any right to terminate this Lease or to
enforce nay other remedy against Landlord with respect to use the
Premises for any given purpose, whether due to current or future legal
restrictions on the use of the premises, or any other reason
whatsoever, whether known or unknown, and whether existing now or in
the future.
[Insert 6.2]
7. HAZARDOUS SUBSTANCES
7.1. LANDLORD'S ACCESS. At its option, Landlord shall have access to the
Premises as set forth in Section 5.2.6., as may be required to carry
out any remediation, testing, or inspection of the Premises in any way
connected with or required with respect to the detection, analysis,
remediation, or other activity related to the presence or possible
presence of Hazardous Substances on the Premises or the Property.
Landlord shall use all reasonable measures to minimize the disturbance
to Tenant in connection with such entry. If any of the foregoing
actions is required because of a default of Tenant with respect to any
of its obligations set forth in this Lease, whether actual,
threatened, or imminent, Tenant shall pay Landlord's actual reasonable
expenses required to plan, supervise, and carry out any required cure
or remedy of such contamination, including reasonable attorney fees.
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7.2. INDEMNIFICATION OF TENANT. Landlord shall protect, indemnify, defend,
and hold Tenant harmless from and against any claims, demands,
penalties, fees, liens, damages, losses, expenses or liabilities
(including the costs of clean-up and reasonable professional fees,
including fees of Tenant's counsel), incurred by Tenant as a result of
any contamination of the Premises by Hazardous Substances to the
extent caused by Landlord, its agents, employees or contractors,
whether negligent or otherwise and whether occurring before or after
the Commencement Date. Except as provided in the preceding sentence,
Landlord shall not be responsible for any cost or expense of Tenant
arising from any contamination of the Premises by Hazardous Substances
arising from or in any way connected to any act or omission of Tenant
or any party other than Landlord, whether negligent or otherwise. The
indemnity and other duties provided for in this Section shall survive
the expiration or sooner termination of this Lease.
7.3. INDEMNIFICATION OF LANDLORD. Tenant will hold harmless, protect,
indemnify and defend Landlord from and against any claims, demands,
penalties, fees, liens, damages, losses, expenses or liabilities
(including the costs of clean-up and reasonable professional fees,
including fees of Landlord's counsel) incurred by Landlord as a result
of the presence of any Hazardous Substance on the Property to the
extent caused by Tenant, whether negligent or otherwise, and whether
occurring before or after the Commencement Date. Except as provided
in the preceding sentence, Tenant shall not be responsible for any
cost or expense of Landlord arising from any contamination of the
Premises by Hazardous Substances arising from or in any way connect to
any act or omission of Landlord or any party other than Tenant,
whether negligent or otherwise. The indemnity and other duties
provided for in this Section shall survive the expiration or sooner
termination of this Lease, and shall apply notwithstanding any
approval, knowledge, acquiescence, or notice of Landlord of any
activity of the Tenant on the Property.
7.4. TENANT'S RESPONSIBILITIES.
7.4.1. CONFORM WITH LAWS. Tenant shall not create, use or keep in,
on or around the Property any Hazardous Substance except such as is
used or sold by Tenant in the ordinary course of its business and then
only in accordance with all applicable laws, rules, regulations and
ordinances covering the transportation, storage, sale, use and
disposal of any such products. Without limiting the generality of the
foregoing, Tenant shall use and keep all solvents, petroleum, and
petroleum-based products used by it on the Property in conformity with
all applicable laws, rules, regulations and ordinances relating to
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the transportation, storage, sale, use and disposal of any such
products, and in conformity with any Hazardous Substance management
program and/or then-current industry practices related thereto.
7.4.2. DUTY TO INFORM LANDLORD. If Tenant knows, or has reasonable
cause to believe, that a Hazardous Substance, or a condition involving
or resulting from the same, has come to be located in, on, under, or
about the Premises other than as previously consented to by Landlord,
Tenant shall immediately give written notice of such fact to Landlord.
Tenant shall also immediately give Landlord a copy of any statement,
report, notice, registration application, permit, business plan,
license, claim action, or proceeding given to, or received from, any
governmental authority or private part, or persons entering or
occupying the Premises concerning the presence, spill, release,
discharge of, or exposure to, any Hazardous Substance, or
contamination in, or on, or about the Property.
7.5. SURRENDER PROPERTY FREE OF CONTAMINATION. Tenant shall, at its sole
cost, cause any Hazardous Waste contamination of the Premises to the
extent caused solely by any act or omission of Tenant to be fully
remedied to the satisfaction of all governmental entities having
jurisdiction over the Property by the Termination Date.
8. TENANT IMPROVEMENTS
Landlord shall have no duty to make any improvements to the Premises
the exception being the following:
1.) Landlord shall pressure wash the exterior of the Building.
2.) Landlord shall repair all exterior window and roof water leaks
and any damage as a result of.
All improvements shall be completed by Landlord prior to the Commencement
Date of the Lease.
9. TRADE FIXTURES AND PERSONAL PROPERTY
Any trade fixtures, equipment and other personal property installed in
or attached to the Premises by and at the expense of Tenant shall
remain the property of Tenant, except in any case where Tenant is the
lessee of any trade fixtures, equipment or other property, in which
case the lessor of such property shall retain title. Landlord agrees
that Tenant shall have the right to remove any
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and all of its trade fixtures, equipment and other personal property
which it may have stored, attached to, or installed in the Premises;
provided, however, that Tenant will repair all damage to the Premises
occasioned by such removal to Landlord's reasonable satisfaction prior
to the expiration or sooner termination of this Lease.
10. USE
Tenant shall use the Premises only for administrative office
purposes for Tenant's business, and for storage incidental
thereto, and for no other purpose. Tenant shall not use the
Premises in any way that constitutes a nuisance or violates any
law, ordinance, or regulation of any governmental entity having
jurisdiction over the property or causes any damage to any
property.
11. PERSONAL PROPERTY TAXES; LICENSE FEES
Tenant shall pay prior to delinquency all personal property taxes
assessed during the term of this Lease upon Tenant's fixtures,
furnishings, equipment and stock in trade or upon any other
personal property of Tenant situated in or upon the Premises.
Tenant shall also pay all fees or charges related to any permit,
approval, or license required to operate Tenant's business upon
the Premises. Tenant shall indemnify and hold Landlord harmless
from any lien against Landlord's interest in the Property arising
from such taxes and shall immediately cause the same to be
satisfied and removed of record.
12. UTILITIES
12.1. SERVICES INCLUDED. Landlord shall furnish Tenant the following
Utilities of the quality and quantity customarily supplied in
similar office buildings and retail locations located in Seattle,
Washington, all at Landlord's expense.
12.1.1. Water for drinking and office cleaning purposes.
12.1.2. Garbage collection and sewer services for ordinary
office and retail waste.
12.1.3. HVAC services.
12.1.4. Janitorial services
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12.2. Landlord shall be obligated to provide the foregoing services
only on normal business days, excluding Sundays and U.S. national
holidays.
12.3. Landlord does not warrant that the Utilities will be free from
interruption, but Landlord shall take all reasonable steps to
restore any interrupted utilities and services. Interruption of
utilities or services shall not be deemed an eviction or excuse
performance of any of Tenant's obligations under this Lease or
render Landlord liable for damages, unless caused by Landlord's
active negligence or willful misconduct. [Insert 12.3.]
12.4. DEFINITIONS. In Addition to the Minimum Rent provided in Section
3.1 of this Lease, Tenant shall pay to Landlord Tenant's Pro Rata
Share of increases in operating costs and taxes under this
Section 12.4.1 as Additional Rent. The Tenant's Pro Rata Share
shall be determined using a numerator equal to the rentable
square footage then currently leased by Tenant and a denominator
equal to the total rentable square footage for the Building,
which is equal to 33,037 square feet. The following definitions
shall apply to the calculation of Additional Rent.
12.4.1. "Operating Costs" shall mean:
12.4.1.1. All "Real Property Taxes" which shall mean that
portion of all real and personal property taxes, assessments and
charges levied upon or with respect to the Property. Real
Property Taxes shall include, without limitation, taxes on Tenant
improvements which are paid for by Landlord and not reimbursed by
Tenants but not taxes on personal property of Tenants; all
general real property taxes, charges, and general and special
assessments, for transit, housing, police, fire and other
governmental services or purported benefits to the Property, and
service payments in lieu of taxes; and shall also include any
other tax, fee or excise, however described, that may be levied
or assessed as a substitute for, or as an addition to, in whole
or in part, any other Real Property Taxes. Real Property Taxes
shall not include local, state or federal income, franchise, or
transfer taxes of Landlord unless, due to a change in the method
of taxation, any such tax is levied or assessed against Landlord
as a substitute for, in whole or part, any other tax that would
otherwise constitute a Real Property Tax. Real Property Taxes
shall not include interest or penalties assessed due to the late
payment of taxes or assessments by Landlord. All assessments
shall be paid in the maximum permissible number of installments.
If at any time during the Lease Term, any governmental authority
levies or assesses against Landlord any tax, fee or excise on (i)
rents payable under any lease of space or accruing from the use
of space in the Property, (ii) the
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business of renting space in the Property, (iii) the act of
entering into this Lease or any other lease of space in the
Property, (iv) the use or occupancy by Tenants of any space in
the Property, such tax, fee or excise shall constitute a Real
Property Tax. Real Property Taxes shall also include reasonable
legal fees, costs and disbursements incurred in connection with
proceedings to contest, determine or reduce Real Property Taxes.
12.4.1.2. All other expenses paid or incurred by Landlord
for obtaining services and products for maintaining, operating
and repairing the Property and the personal property used in
conjunction therewith, including without limitation, the costs of
refuse collection, water, sewer and other utilities services,
electricity, gas and other similar energy sources, supplies,
janitorial and cleaning services, window washing, landscape
maintenance, services of independent contractors, compensation
(including employment taxes and fringe benefits) off all persons
who perform duties in connection with the operation, maintenance
and repair of the Property, and its insurance premiums, licenses,
permits, and inspection fees, market rate management fees, legal
and accounting expenses and any other expenses or charges whether
or not herein above described, which in accordance with generally
accepted accounting and management practices would be considered
an expense of maintaining, operating, or repairing the Property.
For any costs applicable to properties other than the Property,
only the portion allocable to the Property shall be an Operating
Cost.
The following shall not be considered Operating Costs:
a. Costs incurred in connection with the initial construction or
design of the Property or to repair, change, improve, replace or
correct defects in the original construction or design of the
Property, ordinary wear and tear excepted.
b. Costs that are actually reimbursed to Landlord (other than
through pro-rated absorption of such costs by substantially all
of the Tenants in the Property), including reimbursements through
insurance or warrants.
c. Landlord's administrative and overhead expenses not incurred
directly in maintaining the common areas of the Property.
d. Costs incurred as a result of Landlord's negligence or breach of
any legal obligation (including any obligation of Landlord under
any lease of space in the Property).
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e. Costs, including (without limitation) any professional fees,
commissions, remodeling costs or court costs, incurred in
connection with the enforcement of leases with other Tenants of
the Property, or obtaining or retaining Tenants for the Property.
f. Amounts paid to persons or entities related to Landlord in excess
of the fair market value of services or materials provided in
exchange therefor.
g. Costs of achieving compliance with any environmental or other law
or regulation applicable to the Property.
h. Amounts payable under or in connection with Landlord's mortgage,
deed of trust, ground lease or other financing or refinancing
arrangements.
i. Depreciation of or reserves for replacement of any of Landlord's
assets.
j. Costs incurred in advertising or promoting the Property for any
purpose, including (without limitation) sale of the Property.
k. Costs, fines or penalties incurred due to violation by Landlord
of any applicable law.
l. Wages, salaries or other compensation or costs incurred to (a)
any executive employees or agents of Landlord for the purpose of
managing Landlord's interest in the Property or (b) any persons
employed in commercial concessions operated by Landlord.
m. Costs of traveling to and attending any off-site management
meetings of professional property management for promotional
associations or groups.
n. Capital costs, except for capital costs incurred for capital
repairs and replacements in the Property amortized over their
useful life. Capital costs incurred for renovation or expansion
of the Property shall not be Operating Costs.
12.4.2 "Lease Year" shall mean the twelve-month period
commencing January 1 and ending December 31.
12.4.3 "Actual Operating Costs" means the actual expenses
paid or incurred by Landlord for Operating Costs for any Lease Year of
the term hereof.
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12.4.4 "Actual Operating Costs Allocable to the Premises"
means the Tenant's Pro Rata Share of the Actual Operating Costs
determined by multiplying Tenant's Pro Rata Share by the Actual
Operating Costs.
12.4.5 "Estimated Operating Costs Allocable to the
Premises" means Landlord's estimate of Actual Operating Costs
Allocable to the Premises for the following Lease Year to be given by
Landlord to Tenant pursuant to Section 12.5.1 below.
12.4.6 "Base Service Year" shall mean the calendar year
1997.
12.5 ADDITIONAL CHARGES FOR ESTIMATED INCREASES IN OPERATING COSTS.
12.5.1 At the beginning of each Lease Year after the Base
Service Year, during the term hereof, Landlord shall furnish Tenant a
written statement of the Estimated Operating Costs Allocable to the
Premises for such Lease Year, and a calculation of the Additional
Charges payable hereunder as follows: One-twelfth (1/12) of the
amount, if any, by which such amount exceeds the Actual Operating
Costs Allocable to the Premises for the Base Service Year shall be
Additional Charges payable by Tenant for each month during such Lease
Year.
12.5.2 Within ninety (90) days after the close of each
Lease Year during the term hereof for which an estimated statement was
delivered to Tenant pursuant to Section 12.5.1 above, or as soon
thereafter as practicable, Landlord shall deliver to Tenant a written
statement setting forth in reasonable detail the Actual Operating
Costs for the preceding Lease Year or such prorated portion thereof if
this Lease commences or terminates on a day other than the first or
last day of a Lease Year (based on a 365-day Lease Year). If Tenant's
Pro Rata Share of such costs for any Lease Year exceed Estimated
Operating Costs Allocable to the Premises paid by Tenant to Landlord
pursuant to Section 12.5.1, Tenant shall pay the amount of such excess
to Landlord as Additional Charges within thirty (30) days after
receipt of such statement by Tenant. If such statement shows such
costs to be less than the amount paid by Tenant to Landlord pursuant
to Section 12.5.1, then the amount of such overpayment by Tenant shall
be credited by Landlord to the next Minimum Rent payable by Tenant or,
if the Lease has terminated, paid to Tenant within thirty (30) days
after such termination.
12.5.3 RIGHT TO REVIEW BOOKS. Landlord or its agent
shall keep records in reasonable detail, sufficient to conduct an
audit, showing all expenditures made for the items enumerated above,
which records shall be available for inspection by Tenant at any
reasonable time upon twenty-four (24) hours prior notice for a period
of up to six (6) months after expiration of the Lease Year remains.
Tenant shall be entitled to
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audit and copy these records within such six-month period in the
office of Landlord. In the event that the audit discloses that Tenant
has been overcharged for such expenses, Landlord shall immediately pay
Tenant the amount of such overpayment. Similarly, Tenant shall
immediately pay any underpayment to Landlord. If the overpayment of
any such charge exceeds 3% of Tenant's Pro Rata Share of such charge
for the subject fiscal or calendar year, Landlord shall be liable for
the cost of such audit.
12.5.4 BASE RENT. Notwithstanding anything to the
contrary in this Section 12.5.4, Additional Charges may decrease
throughout the term of this Lease, but the Minimum Rent payable by
Tenant shall in no event be less than the Minimum Rent specified in
Section 3.1. of this Lease.
12.5.5 PERSONAL PROPERTY TAXES. Tenant shall pay, prior
to delinquency, all Personal Property Taxes payable with respect to
all personal property of Tenant located on the Premises or the
Property and promptly, upon request of Landlord, shall provide written
proof of such payment.
13. MAINTENANCE AND REPAIR
13.1. TENANT'S DUTIES. Tenant shall repair and maintain the Premises
and any mechanical or electrical equipment located therein and
solely or primarily serving the Premises in good condition and
repair. Tenant shall also do anything required to put or
maintain the Premises, and any mechanical or electrical equipment
located thereon and solely or primarily serving the Premises, in
compliance with any laws, ordinances, rules, directives, or
requirements of any governmental entity having jurisdiction over
the Property, whether existing now or in the future.
13.2. LANDLORD'S DUTIES. Landlord shall keep in good order, condition
and repair the foundations, exterior walls (excluding the
interior of all walls and any exterior or interior of any
windows, doors, plate glass and display windows), and the Common
Areas of the Premises and the Building, except for the following,
for which Tenant shall bear the sole cost and responsibility for
repairing (i) any damage to the foregoing caused by an act,
negligence or omission of Tenant or Tenant's employees, agents,
contractors or customers; and (ii) any structural or other
alterations or improvements required by any governmental agency
by reason of Tenant's use and occupancy of the Premises.
14. ALTERATIONS
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14.1. RIGHT TO MAKE APPROVED ALTERATIONS. Tenant, at its sole cost and
expense, may make such repairs, alterations, improvements,
constructions, fabrication, or installations to the interior of
the Premises (the "Tenant Alterations") as Tenant deems
desirable; provided, that if the costs of any Tenant Alterations
made during the Term exceeds the cumulative total of Five
Thousand Dollars ($5,000.00), Tenant must first provide Landlord
with final plans and specifications for the Tenant Alterations,
and must thereafter obtain Landlord's written approval of the
Tenant Alterations prior to undertaking any demolition,
construction, or other activity relating to the same, such
consent not to be unreasonably withheld or delayed. Landlord
may, in its sole discretion, withhold approval for any Tenant
Alterations unless Tenant agrees to remove such Tenant
Alterations at the expiration or sooner termination of the Lease,
and to restore the Premises to a similar or better condition as
of the date of approval for the proposed Tenant Alterations is
requested.
14.2. COMPLIANCE WITH LAWS; WORKMANLIKE MANNER. Tenant shall comply
with any applicable laws, ordinances, rules, or regulations of
any governmental entity having jurisdiction over the Premises
relating to the design and accomplishment of the Tenant
Alterations. Tenant shall perform all Tenant Alterations in a
good workmanlike manner. Tenant shall obtain all permits and
approvals required for any aspect of any Tenant Alteration, and
shall provide Landlord with copies of all such permits and
approvals prior to commencing any activity on the Premises
related to the Tenant Alterations.
14.3 LIENS. Tenant shall not permit any liens to be filed against the
Property for materials delivered to the Premises or for labor or
other services performed on or with respect to the Premises at
the request of Tenant, or in any way arising from or related
thereto. Even if not previously required, and without waiving
any violation of this Section, Landlord may require that Tenant
post a bond against any lien filed against the Property in favor
of Landlord, the amount, form, and issuer of which shall be
acceptable to Landlord in it reasonable, discretion exercised
in good faith.
15. DISABILITY LAWS
15.1. ACCESSIBILITY LAW. "Accessibility Law" means any local, State,
or federal law, regulation, ordinance, resolution, order, or
directive relating to access, use, or enjoyment of the Premises
by, or employment thereupon, handicapped persons, or to the
removal of any tangible or intangible barrier or impediment to
access, use, or enjoyment of the Premises by handicapped persons,
including, but not limited to the Americans with Disabilities
Act.
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15.2. NEGATIVE COVENANTS. Notwithstanding anything in this Lease to
the contrary, Tenant shall make no Tenant Alteration that
violates any provision of any Accessibility Law. Tenant shall
not adopt or otherwise allow to exist any policy or practice
related to its use or occupancy of the Premises or the conduct of
its activities thereon that violates any Accessibility Law.
15.3. COLLATERAL CHANGES. Tenant shall reimburse Landlord upon demand
for any cost or expense required to alter any portion of the
Property to comply with any Disability law as a result of any
Tenant Alteration.
15.4. LANDLORD'S APPROVAL OF TENANT ALTERATIONS. Notwithstanding any
contrary provision of Section 14, Landlord shall have no
obligation to approve any Tenant Alteration if Landlord, in its
sole discretion exercised in good faith, determines that such
Tenant Alteration would obligate Landlord to make alterations of
or additions at its cost in the manner provided for other Tenant
Alterations.
15.5. INDEMNITY. If any claim is asserted against Landlord under any
Accessibility Law relating directly to any violation by Tenant of
any of the provisions of this Section 15, Tenant shall defend,
indemnify and hold Landlord harmless from and against any claims,
charges, liabilities, obligations, penalties, damages, judgments,
costs and expenses (including attorney's fees) arising directly
from such violation.
15.6. NO COVENANTS, REPRESENTATIONS, OR WARRANTIES. Landlord has made
no covenant, representation, or warranty regarding the compliance
or extend of noncompliance of any portion of the Property with
any Accessibility Law and hereby disclaims nay implied warranties
with respect thereto, including any implied warranty of
habitability or fitness for a particular purpose. No approval by
Landlord of any plans or specifications for any Tenant
Alterations, or failure to disapprove any such plans,
specifications, or Tenant Alterations shall constitute a
representation or warranty by Landlord, whether express or
implied, that such plans will comply with any Accessibility Law.
By initialing below, Tenant hereby agrees that the provisions of subsection
15.5. were explicitly negotiated.
Tenant ______________________
16. TENANT'S SIGNS
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Tenant may, at its own expense, maintain a door plaque or other
sign identifying the Premises; provided, that Tenant first
obtains Landlord's approval of the design and proposed manner of
installation thereof which approval shall not be unreasonably
withheld or delayed. At the termination of this Lease, all
signs, symbols and advertising matter attached to the Premises,
whether the exterior or interior thereof, shall be removed by
Tenant at its own expense, and any damage or injury to the
Premises caused thereby shall be repaired by Tenant at its sole
cost. Tenant shall maintain no other signs on the Premises in
any manner that would be visible from outside the Premises unless
it has the express written consent of Landlord. Tenant shall
also have the right to signage on the Building's south wall,
similar in size to the existing signage currently in place. The
design of this sign must be approved by Landlord, which approval
shall not be unreasonably withheld or delayed. At Tenant's
option throughout the Term, Tenant shall have the right to place
exterior signage on the south wall of the Building, comparable to
what exists at the date of Lease execution.
17. HOLD HARMLESS; DEFENSE FROM CLAIMS
Tenant agrees to hold harmless, protect, indemnify and defend
Landlord from all demands, claims, causes of action or judgments,
and all reasonable expenses incurred in investigating and
defending the same (including reasonable attorneys' fees and
costs) for injury to person or damage to property occurring on
the Premises during the Term or arising out of Tenant's use of
the Premises or the Property, except if caused by the gross
negligence or willful misconduct of Landlord, in which case
Landlord shall hold harmless, protect, indemnify and defend
Tenant therefrom including reasonable attorney's fee and costs.
Landlord need not have first paid any such claim in order to be
so indemnified. Should Landlord, without fault on Landlord's
part, be made a party to any litigation instituted by Tenant or
by any third party against Tenant, or by or against any person
holding under Tenant. Tenant shall defend and indemnify Landlord
from any liability, damages, or costs (including reasonable
attorneys' fees) arising from such action.
18. INSURANCE
18.1. ALL RISK INSURANCE. Commencing upon the date hereof, and
continuously during the entire term of this Lease, Landlord shall
keep in full force and effect a policy or policies of insurance
covering the Property, with the broadest available "all-risk"
coverage (including flood, boiler, and machinery insurance). The
casualty insurance shall be in an amount equal to the full
replacement cost of the Property. The policy shall not contain
any intra-insured exclusions as
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between insured persons or organizations. The policy shall also
insure against costs related to the enforcement of any ordinance
or law regulating the reconstruction or replacement of any
undamaged sections of the Property required to be demolished or
removed by reasons of the enforcement of any building, zoning,
safety, or land use laws as a result of a covered cause of loss.
18.2. RENTAL VALUE INSURANCE. Commencing on the date hereof and
continuing throughout the Term, Landlord may, at its option, keep
in force a policy or policies with loss payable to Landlord and
its lenders, insuring the loss of the full rental and other
charges payable by Tenant to Landlord under this Lease for one
(1) year (including all real estate taxes, insurance costs, and
any scheduled rental increases). Said insurance shall provide
that the period of indemnity for such coverage shall be extended
beyond the date of the completion of repairs or replacement of
the Premises if necessary to provide one full year's loss of
rental revenues from the date of any such loss. Said insurance
shall contain an agreed valuation provision in lieu of any
co-insurance clause, and the amount of coverage shall be adjusted
annually to reflect the projected rental income, property taxes,
insurance premium costs, and other expenses, if any, otherwise
payable by Tenant for the following twelve (12) month period.
18.3. LIABILITY INSURANCE. Commencing on the date hereof and
continuously during the entire term of the Lease, or such other
time as Tenant occupies the Premises, Tenant shall keep in full
force and effect a policy or policies of liability insurance for
property damage and personal injury, with minimum limits of
$1,000,000.00 for any occurrence within or about the Premises
resulting in bodily injury or death of one person and
consequential damages arising therefrom, and in an amount of not
less than $1,000,000.00 for any occurrence within or about the
Premises resulting in injury to or death of more than one person
and consequential damages arising therefrom. Such policy shall
also include coverage for liability assumed under this Lease as
an "Insured Contract" for the performance of Tenant's indemnity
obligations under this Lease.
18.4. INSURANCE PROCEEDS. Unless this Lease is terminated pursuant to
Section 21, all insurance proceeds relating to the damage or
destruction of the Property shall be used by Landlord to pay all
costs of repair and restoration of any portion of the Property
damaged by an insured casualty. Notwithstanding the foregoing,
Landlord shall have no duty to restore the Property or to pay
over any insurance proceeds to the extend Landlord is required by
the terms of any mortgage or deed of trust superior to this Lease
to apply such proceeds to the debt secured thereby. Landlord
shall by under no obligation to restore or replace any
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personal property or trade fixtures of Tenant located upon the
Premises, unless gross damage to such items was caused by
Landlord's or its agent's grossly negligent acts or omissions.
18.5. GENERAL INSURANCE MATTERS. At Landlord's request made not more
frequently than once every two years during the Term, the amount
of casualty and liability insurance shall be updated to provide
adequate coverage in accordance with then-current industry
standards. Each policy shall name Landlord and Landlord's
lenders as additional named insureds, as their interests appear,
and shall contain a clause that the insurer shall not cancel or
materially change said policies without giving Landlord and
Landlord's lenders at least thirty (30) days prior written
notice. Each policy shall contain a waiver of any co-insurance
clause. Tenant shall deliver certificates of insurance
evidencing the insurance required to be carried by Tenant
hereunder to Landlord within ten (10) days of the Commencement
Date, and thereafter, upon Landlord's reasonable request. Tenant
shall provide Landlord with evidence of renewals or "insurance
binders" evidencing renewal of all insurance to be maintained by
Tenant at least thirty (30) days prior to the expiration of such
policies. If Tenant fails to do so, Landlord may obtain such
insurance and charge the cost thereof to Tenant, which amount
shall be payable by Tenant to Landlord upon demand and shall
constitute Additional Rent. Any insurance policies required
hereunder shall be written by insurance companies admitted and
authorized to do business in the state I which the property is
located, and rated A-IX by Best's Insurance Guide. If any policy
of insurance to be maintained by either party shall contain a
deductible clause, the deductible amount shall not exceed
$1,000.00 per occurrence and the insured shall be liable for such
deductible amount in the event of an insured loss. Tenant shall
settle no claims under any policy of insurance required to be
carried by either party under this Lease without the prior
written approval of Landlord. If Lease is terminated pursuant to
Section 21, all insurance proceeds relating to the damage or
destruction of the Property shall be paid to Landlord.
19. WAIVER OF SUBROGATION
Landlord and Tenant hereby release each other from liability and waive all
right of recovery against each other for any loss in or about the Premises
or the Property from perils insured against by the insurance required
hereunder, whether due to negligence or any other cause; provided that this
Section shall be inapplicable if it would have the effect, of invalidating
or reducing any insurance coverage required hereunder. Landlord and Tenant
shall, at the request of the other, execute and deliver to the other
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a waiver of subrogation in form and content as required by the respective
insurance carriers of each.
20. WAIVER OF LIABILITY
Landlord shall not be liable for injury or damage to the person or goods,
wares, merchandise, or other property of Tenant, Tenant's employees,
contractors, invitees, customers, or any other persons in or about the
Property, whether such damage or injury is caused by or results from fire,
steam, electricity, gas, water, or rain, or from the breakage, leakage,
obstruction, or other defects of pipes, fire sprinklers, wires, appliances,
plumbing, air conditioning or lighting fixtures, or from any other cause,
whether said injury or damage results from conditions arising upon the
Property, or from other sources or places, and regardless of whether the
cause of such damage or injury or the means or repairing the same is
accessible to Tenant or not, except to the extent caused by the gross
negligence, willful or wanton act of Landlord, its agents, employees,
invitees, guests or contractors. Landlord shall not be liable for any
damages arising from any act or negligence of any other Tenant of Landlord.
Notwithstanding Landlord's negligence or breach of this Lease, Landlord
shall under no circumstances be liable for injury to Tenant's business or
for any loss of income or profit therefrom.
By initialing below, Tenant agrees that the terms of this Section 20 have
been explicitly negotiated between the parties and discussed with Tenant's
legal counsel.
Tenant _________________
21. DAMAGE BY CASUALTY
21.1. REPAIR AND RESTORATION. Subject to the provisions of Section
18.4., all insurance payments for damage to the Premises shall be
held for the sole purpose of repairing, rebuilding and/or
restoring the Premises with the exception that any payments from
rent loss insurance carried by Landlord shall be retained by
Landlord. If the Premises is damaged or destroyed by fire or
other insured casualty such that the repair of such damage is
reasonably estimated by Landlord not to exceed fifty percent
(50%) of the then-fair market value of the Premises, Landlord
shall promptly rebuild and restore the damaged area to its
pre-existing condition. If Landlord reasonably estimates the
cost of repairing such damage to the Premises to exceed fifty
percent (50%) of the then-fair market value of the Premises, or
if the Property is damaged by an uninsured casualty or Landlord
is required to apply an insurance proceeds to amounts secured by
a mortgage or deed of trust on the Property senior to this
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Lease, either party may elect to terminate this Lease upon thirty
(30) days written notice to the other, given within thirty (30)
days after such damage. If the Lease is not so terminated, the
Property shall be repaired in the manner and subject to the
conditions provided for above. Notwithstanding the foregoing, if
the Building is damaged or destroyed by fire or other insured
casualty such that the repair of such damage is reasonably
estimated by Landlord to exceed ten percent (10%) of the
then-fair market value of the Building, Landlord may terminate
this Lease upon thirty (30) days written notice to Tenant.
21.2. DAMAGE NEAR END OF TERM. Notwithstanding any contrary provision
of Section 21.1, if at any time during the last six (6) months of
the Term the Premises is damaged to an extent that Landlord
reasonably estimates will cost more than one (1) month's
installment of Minimum Rent to repair, whether or not an insured
loss, Landlord may, at Landlord's option, terminate this Lease
effective sixty (60) days following the date of occurrence of
such damage by giving written notice to Tenant of Landlord's
election to do so within thirty (30) days after the date of the
occurrence of such damage.
21.3. RENTAL ABATEMENT. In the event of damage or destruction to the
Premises or the Property which substantially affects Tenant's
ability to operate its business, Minimum Rent shall be abated in
the same proportion that Tenant's use of the Premises is
adversely affected thereby, until the Premises or the Property
(as the case may be) is repaired or restored.
22. CONDEMNATION
22.1. TOTAL TAKING. If all of the Property is taken by public or
private condemnation or eminent domain or transferred under the
threat thereof (hereinafter, a "Taking"), this Lease shall
automatically terminate as of the date of any final condemnation
judgment or as of the date possession is taken by the condemning
party, whichever is earlier.
22.2. SUBSTANTIAL TAKING. If a portion of the Building or access or
parking related thereto is Taken such that, in Landlord's
reasonable discretion, it is economically infeasible to continue
to operate the Building, Landlord may terminate this Lease within
twenty (20) days after such Taking by written notice to Tenant,
effective thirty (30) days after the date of such notice.
22.3.
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22.3.1. RESTORATION. If this Lease is not terminated upon a Taking
as provided for above, Landlord shall, as far as
economically feasible, promptly restore the Premises to a
unit architecturally and functionally comparable to the unit
existing just prior to such Taking (other than as to size),
and this Lease shall continue, except that rent shall be
adjusted to accommodate the change in size.
22.4. ABATEMENT OF RENT. Commencing with the date on which Tenant is
deprived of actual use of any portion of the Premises or Property
b a Taking, the Minimum Rent shall be reduced by the percentage
by which the fair market rental value of the Premises prior to
such taking or damage.
22.5. PROCEEDINGS. Landlord reserves all rights to an award for
damages to the Premises or the Property resulting from any
condemnation of the Property and Tenant hereby assigns to
Landlord any right Tenant may have to such an award, provided
that Tenant shall retain the right to receive compensation for
the value of: (i) trade fixtures and personal property on the
Premises, and (ii) any award for Tenant's interruption of
business and moving expenses. Neither Landlord nor Tenant shall
have the right to claim any portion of the condemnation of the
condemnation award separately allocated to the other party,
except as stated above.
23. ASSIGNMENT AND SUBLETTING
23.1. NO ASSIGNMENT OR SUBLETTING WITHOUT CONSENT. Tenant may not
assign this Lease or otherwise convey, transfer, or sublet any
interest herein without Landlord's prior written consent.
Landlord shall not unreasonably withhold such consent, but Tenant
agrees that the business experience, reputation and net worth of
any proposed transferee may be appropriately considered by
Landlord. Tenant agrees that Landlord may condition its approval
of an assignment or sublease by requiring amendments to this
Lease as Landlord may reasonably deem necessary or appropriate to
protect its interests with respect to such proposed assignee or
subtenant. [Insert 23.1]
23.2. RECAPTURE. Tenant shall pay Landlord any consideration of any
kind received by Tenant with respect to any sublease or
assignment of the Premises by Tenant to the extent that such
consideration exceeds the Minimum Rent.
23.3. NO RELEASE. The consent of Landlord to an assignment, sublease,
or other transfer to, or occupation of the Premises by, any
person or entity other than
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Tenant shall not discharge any liability of Tenant under this
Lease, nor shall such consent be deemed a consent to any
subsequent transfer to any other party. Any transfer without
Landlord's prior consent shall, at Landlord's option, be void.
23.4. LANDLORD'S EXPENSES. Tenant shall pay Landlord's reasonable
legal costs and other expenses incurred with respect to any
transfer, consent to transfer, or consideration of transfer
described above.
24 NO MERGER
Unless specifically stated otherwise in writing by Landlord, the voluntary
or other surrender of this Lease by Tenant, the mutual termination or
cancellation hereof, or termination hereof by Landlord for breach by
Tenant, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Landlord shall, in the event of any such
surrender, termination, or cancellation, have the option to continue any
one or all of such existing lesser interests. Landlord's failure within
ten (10) days following any such event to give written notice to the
contrary to the holder of any such lesser interests shall constitute
Landlord's election to terminate such interest.
25. DEFAULT
25.1. TENANT'S DEFAULT. The occurrence of any one or more of the
following shall be an Event of Default by Tenant under this
Lease:
25.1.1. PAYMENT. The failure by Tenant to make any payment of
Minimum Rent, Additional Rent, or any other payment
required to be made by Tenant hereunder, as and when
due.
25.1.2. INSURANCE AND BONDS. The failure of Tenant to provide
Landlord with any evidence of insurance or bonds as and
when required under this Lease.
25.1.3. GENERAL FAILURE. The failure by Tenant to observe or
perform any of the covenants, conditions or provisions
of this Lease or of the Lease Termination Agreement
between Landlord and Tenant of even date herewith (the
"Lease Termination Agreement"), or of the Settlement
Documents (as that term is defined in the Lease
Termination Agreement) to be observed or performed by
Tenant.
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25.1.4. INSOLVENCY. The insolvency of Tenant, its failure to
pay its debts in the ordinary course of business, or
the filing by or against Tenant of a petition to have
Tenant adjudged a bankrupt (unless in the case of a
petition filed against Tenant, the same is dismissed
within 60 days) or a petition for reorganization or
arrangement under any law relating to bankruptcy or the
reorganization of the debts of individuals or
corporations, or the appointment of a trustee or a
receiver to take possession of substantially all
Tenant's assets located on the Premises or of Tenant's
interest in this Lease.
25.1.5. NO NOTICE FOR MONETARY DEFAULTS. Tenant shall not be
in default until 10 days after notice of a monetary
default has been given by Landlord to Tenant.
25.1.6 NOTICE FOR NONMONETARY DEFAULTS. Landlord shall give
Tenant fifteen (15) days notice and opportunity cure
any default of more than fifteen (15) calendar days,
then Tenant shall have such longer period to cure such
default as is reasonably necessary, provided Tenant
commences such cure within said fifteen (15) calendar
day period and thereafter diligently prosecutes such
cure to completion within thirty (30) days after
receipt of Landlord's notice. If a cure is not
completed within (30) days after notice from Landlord,
Landlord may immediately pursue any remedy available to
it under the Lease upon the expiration of such period.
25.2. NOTICES CONCURRENT. Any notice and opportunity to cure to be
given by Landlord under the terms of this Lease shall run
concurrently with any such notice or cure rights provided for
under any applicable statute authorizing the forfeiture of leases
for unlawful detainer, and the failure of Tenant to cure any
default within the greater of the two such periods shall
constitute both an unlawful detainer and a breach of this Lease.
25.3 LANDLORD'S DEFAULTS. The occurrence of any one or more of the
following shall be an Event of Default by Landlord under this
Lease:
25.3.1. GENERAL FAILURE. Failure to perform any of the
obligations of Landlord under this Lease if not cured
within (10) calendar days after written notice by
Tenant to Landlord; provided, that if the nature of
Landlord's breach or obligation is such that more than
ten (10) calendar days are required for cure of
performance, then
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Landlord shall not be in default if it commences to cure
within said ten (10) calendar day period and thereafter
diligently prosecutes the same to completion within thirty
(30) days after Tenant's notice.
25.3.2. NOTICE TO LENDER. Tenant shall give any lender of Landlord
holding a security interest in the Property whose name and
address have been furnished to Tenant in writing for such
purpose thirty (30) days notice and opportunity to cure any
default of Landlord before invoking any remedies Tenant may
have by reason thereof.
26. REMEDIES
26.1. LANDLORD'S REMEDIES. Following any Event of Default defined
above that remains uncured beyond any applicable grace period,
Landlord may thereafter exercise any of the following remedies,
all of which remedies shall, to the greatest extent possible, be
cumulative, such that exercise of one shall not exclude any
other.
26 1.1. TERMINATE LEASE. Terminate the Lease and Tenant's
right to possession of the premises by any lawful means
and upon such notice as may be required hereunder and
by law, in which case this Lease shall terminate and
Tenant shall surrender possession of the Premises to
Landlord. In such event Landlord shall be entitled to
recover from Tenant all past due Minimum Rent,
Additional Rent and other payments due hereunder plus
the amount of the brokerage commission paid by Landlord
with respect to this Lease attributable to the
then-unexpired Term, plus the value at the time of
award of the amount by which the unpaid Minimum Rent,
Additional Rent and other payments due hereunder for
the balance of the Lease term after the time of such
award (discounted to present value at the discount rate
of the Federal Reserve Bank of San Francisco plus one
(1) percent) exceed the amount of such loss for the
same period that Tenant proves Landlord could have
avoided through reasonable attempts at mitigation.
Unpaid installments of Minimum Rent, and unpaid
Additional Rent, and any other sums due Landlord shall
bear Interest from the date such sums are payable to
Landlord, in addition to any late charge other fee
levied with respect to such amounts.
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26.1.2. CONTINUE LEASE. Continue the Lease in effect whether
or not Tenant shall have abandoned the Premises. In
such event Landlord shall be entitled to enforce all of
Landlord's rights and remedies under this Lease,
including the right to recover the Minimum Rent,
Additional Rent, and any other payments due hereunder
as they become due and/or relet the Premises in
Tenant's or Landlord's name, enter the Premises and
incur expenses to remove all persons and property from
the Premises, and to restore the same at Tenant's risk
and expense, to put the Premises in Tenantable
condition and to alter or improve the same as required
or any new Tenant, or remedy any other default of
Tenant, and to obtain a new Tenant (including all
brokerage fees related to such new lease), which costs
and expenses shall be considered Additional Rent, and
shall become due and payable by Tenant, with Interest
from the date such expenses are incurred; provided,
that Landlord shall use reasonable diligence to relet
the Premises in order to mitigate Landlord's damages.
Notwithstanding that Landlord may elect to keep this
Lease in force, Landlord may thereafter terminate the
Lease for any previous default that remains uncured or
for any subsequent default.
26.1.3. LANDLORD'S RIGHT TO CURE. If Tenant defaults in the
performance of any of its obligations hereunder,
Landlord may, at its option (but without obligation to
do so), pay such amounts or perform such obligations as
required to cure any defaults of Tenant, all on behalf
of and at the expense of Tenant and under protest if
requested by Tenant, and may do all necessary work and
make all necessary payments in connection therewith,
including but not limited to, the payment of any
reasonable attorney's fees, costs, or charges in
connection with any legal action which may have been
brought. Tenant shall pay Landlord the amount so paid
by Landlord upon demand, with Interest from the date of
payment, all of which shall be Additional Rent.
26.1.4. OTHER REMEDIES; FURTHER DAMAGES. Pursue any other
remedy available to Landlord at law or equity,
including the right to recover any other amount
necessary to compensate Landlord for all reasonably
foreseeable damages proximately caused by the Tenant's
failure to perform its obligations under this Lease.
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26.2 TENANT'S REMEDIES. Upon a default by Landlord that remains uncured
for any applicable grace period, Tenant shall have the right, but not
the obligation, to incur any cost or make any expenditure reasonably
necessary to cure Landlord's default, in which case Landlord shall
reimburse Tenant for any expenditure made or cost incurred with
Interest from the date of such expense. Tenant shall also have the
right to sue Landlord for damages and declaratory or injunctive
relief. Tenant shall have no right to cancel this Lease due to a
default of Landlord under this Lease or any other reason, other than
for a breach of Landlord's covenant of quiet enjoyment set forth
herein.
27. SURVIVAL
Any obligations or liability of Tenant or Landlord accruing prior to the
expiration or sooner termination of this Lease shall survive such
termination or expiration.
28. MEMORANDUM OF LEASE
This Lease shall not be recorded, but at the request of either party a
Memorandum of Lease setting forth the Term hereof and such other provisions
as may be reasonably acceptable to both parties shall be executed and
acknowledged by the parties and recorded in the county where the Property
is located. The party requesting such memorandum shall pay all costs of
recording such memorandum and the other party's reasonable attorneys' fees
required to review such memorandum.
29. SUBORDINATION AND NONDISTURBANCE
29.1. CONDITIONS. If any current or future holder of a mortgage, deed
of trust, or other consensual lien (a "Security Device") on the
Property requires that this Lease be subordinate thereto, Tenant
shall, upon the request of Landlord in writing, subordinate this
Lease to the Security Device and agrees to attorn to the holder
thereof if requested to do so by such holder, provided said
holder executes an agreement with Tenant, substantially providing
that (i) in the event of foreclosure of the lien of said Security
Device, Tenant's possession of the Premises including any options
to extend the Term hereof, shall remain undisturbed so long as
Tenant is not in default beyond any applicable grace period
hereunder, and that (ii) Tenant may remove Tenant's trade
fixtures from the Premises in accordance with the provisions of
this Lease. If any security device held by such lender, the
lender shall give written notice thereof to Tenant, and this
lease shall thereupon be deemed prior to such security device,
notwithstanding the relative dates of documentation or recording
thereof or any prior subordination of this Lease to such lien.
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29.2 AGREEMENT. Subject to the conditions set forth above, Tenant
agrees to execute and deliver to Landlord within fourteen (14)
business days after receipt thereof, any instruments necessary
or proper to effect a subordination complying with this article.
[Insert 29.3]
35. VENUE AND JURISDICTION
The parties agree that any suit, arbitration, action or other legal
proceeding arising out of or relating to this Lease may, at the option of
Landlord, be brought in a federal or state court located in the county in
which the Property is located. The parties consent to the jurisdiction of
each such court in any such suit, action or proceeding, and waive any
objection either may have as to the venue of any such suit, action or
proceeding in any such court. Alternatively, Landlord may institute suit
against Tenant in any other jurisdiction in which Tenant is subject to
suit.
36. MISCELLANEOUS PROVISIONS
36.1. SEVERABILITY. If any term or provision of this Lease or the
application thereof to any person or circumstances shall to any
extent be invalid and unenforceable, the remainder of this Lease
or the application of such term or provision to persons or
circumstances other than those as to which it is invalid or
unenforceable shall not be affected thereby, and each remaining
term and provision of this Lease shall be valid and be enforced
to the extent permitted by law.
36.2. TIME OF ESSENCE. Time is of the essence of this Lease. The
failure of a party to insist upon a strict performance of any of
the terms, conditions and covenants herein or to exercise any
remedy available to it shall not be deemed a waiver of any rights
or remedies that said party may have and shall not be deemed a
waiver of any subsequent breach or default in the terms,
conditions, and covenants herein contained.
36.3 COUNTERPARTS. This agreement may be signed in counterparts, but
when so signed shall constitute but one and the same agreement.
This Lease may be delivered by facsimile transmission. The
party so delivering a document will deliver the original of
such document by overnight courier within two (2) business days
thereafter.
36.4. CONSENTS. No consent or approval of either Landlord or Tenant
required or contemplated under this Lease shaft be unreasonably
withheld or delayed.
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36.5. RULES AND REGULATIONS. Landlord shall have the right to make
reasonable, nondiscriminatory rules and regulations relating to
the use of the Common Areas of the Property and the parking
located thereon, and to amend the same from time to time on
reasonable notice to Tenant. Tenant shall observe such rules and
regulations. [Insert 36.5]
36.6 AMENDMENTS. No change in the provisions of this Lease shall be
effective unless made in writing and signed by the parties
to this Lease and approved by the holder of any mortgage or
deed of trust against the Property if such consent is required
by any agreement of Landlord and such Lender.
36.7. ENTIRE AGREEMENT. There are no verbal or other agreements,
representations, or warranties of the parties (unless attached
hereto or specifically referred to herein) that modify,
supplement, or affect this Lease. This lease supersedes any and
all prior agreements executed by or on behalf of the parties
hereto regarding Tenant's occupancy of the Premises. The
covenants and conditions contained in this Lease run with the
Property and are binding on and inure to the benefit of the
parties and their respective heirs, successors and assigns.
36.8. FORCE MAJEURE. Notwithstanding anything in this Lease to the
contrary, Landlord and Tenant shall not be deemed to be in
default in respect of the performance of any of the terms
covenants and conditions of this lease if any such failure or
delay is due to any strike, lockout, civil commotion, warlike
operation, invasion, rebellion, hostilities, military or usurped
power, sabotage, Act of God, or other cause beyond the reasonable
control of Landlord or Tenant, provided, however, that this
provision shall not excuse any obligation of Landlord or Tenant
to make any payment due to the other or to any third party,
including, but not limited to, Maximum Rent or Additional Rent.
36.9. BROKERAGE COMMISSION. Each party represents and warrants to the
other party that Teutsch Partners was the sole agent involved in
this transaction. Landlord shall pay said agent a leasing
commission equal to five percent (5%) of the total lease value,
half upon lease signing and half upon Tenant's occupancy. This
fee shall be paid in two components, the first portion being paid
over the gross rental for the first 16 months of the Lease Term.
The balance shall be paid within 15 days of Tenant indicating its
intention to continue its occupancy in the building by not
exercising it's option to terminate the Lease after October 1,
1997. In the event Landlord does not pay the balance by said
date, then Tenant shall have the right to make its monthly rental
payments directly to Teutsch Partners until the balance is paid.
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36.10. PREVAILING LAW. This Lease shall be governed by the laws of the
state in which the Property is located, as they exist from time
to time, and by any applicable federal law.
36.11 NO THIRD PARTY BENEFICIARIES. Unless otherwise expressly
specified herein, this Lease shall not be construed to be for the
benefit of any third party.
36.12. CONSTRUCTION. Landlord and Tenant have participated equally in
the negotiation of this Lease. This Lease shall be construed
without regard to which party drafted any particular clause under
consideration.
36.13. HEADINGS. The paragraph headings are not part of this Lease and
shall not be considered in construing the provisions hereof.
38. SECURITY AND/OR DAMAGE DEPOSIT
Concurrently with Tenant's execution of this Lease, Tenant has deposited
with Landlord $9375.33. Said sum shall be held by Landlord as security for
the faithful performance by Tenant of all the terms, covenants, and
conditions of this Lease to be kept and performed by Tenant during the term
hereof. If Tenant defaults with respect to any provision of this Lease,
including but not limited to the provisions relating to the payment of
rent, Landlord may (but shall not be required to) use, apply or retain all
or any part of this sum in default, or for deposit for the payment of any
rent or any other sum in default, or for the payment of any amount which
Landlord may suffer by reason of Tenant's default. If any portion of said
deposit is so used or applied, Tenant shall, within ten (10) days after
written demand thereof, deposit cash with Landlord in an amount sufficient
to restore the security deposit to its original amount and Tenant's failure
to do so shall be a default under this Lease. Landlord shall not be
required to keep this security deposit separate from its general funds, and
Tenant shall not be entitled to interest on such deposit. If Tenant shall
fully and faithfully perform every provision of this Lease to be performed
by it, the security deposit or any balance thereof shall be returned to
Tenant (or, at Landlord's option, to the last assignee of Tenant's interest
hereunder) within ten (10) days following expiration of the Lease Term. In
the event of termination of Landlord's interest in this Lease, Landlord
shall transfer said deposit to Landlord's successor in interest.
Tenant will at all times maintain with the Landlord on deposit a sum equal
to one month's rent for the purposes of this paragraph.
Landlord hereby acknowledges receipt of ____________________________
DOLLARS ($___________) for the security deposit.
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Executed as of the date first above written.
LANDLORD TENANT
DAVID & NANCY EDELSTEIN
By:_________________________________ By_______________________
David A. Edelstein
Title:______________________
For: The Cobalt Group, Inc.
By:_________________________________
Nancy Edelstein
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LANDLORD
STATE OF WASHINGTON )
)SS
COUNTY OF KING )
On this _____ day of ________________, 199_, before me the undersigned, a
Notary Public in and for the State of Washington, duly commissioned and sworn,
personally appeared DAVID A. EDELSTEIN, to me known to be the person who signed
the within and foregoing instrument, and acknowledged said instrument to be
his/her free and voluntary act and deed for the uses and purposes therein
mentioned.
_________________________________
NOTARY PUBLIC in and for the State of
Washington, residing at_____________
My Appointment Expires____________
STATE OF WASHINGTON )
) SS
COUNTY OF KING )
On this _____ day of _________________, 199_, before me the undersigned, a
Notary Public in and for the State of Washington, duly commissioned and sworn,
personally appeared NANCY JO EDELSTEIN, to me known to be the person who signed
the within and foregoing instrument, and acknowledged said instrument to be
his/her free and voluntary act and deed for the uses and purposes therein
mentioned.
_________________________________
NOTARY PUBLIC in and for the State of
Washington, residing at______________
My Appointment Expires_____________
-32-
TENANT
STATE OF WASHINGTON )
) SS
COUNTY OF KING )
On this _____ day of _________________, 199_, before me, the undersigned, a
Notary Public in and for the State of Washington, duly commissioned and sworn,
personally appeared _______________________________ to me known to be the person
who signed the within and foregoing instrument, and acknowledged said instrument
to be his/her free and voluntary act and deed for the uses and purposes therein
mentioned.
IN WITNESS WHEREOF I have hereunto set my hand and official seal the day
and year first above written.
_________________________________
NOTARY PUBLIC in and for the State of
Washington, residing at______________
My Appointment Expires:____________
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EXHIBIT A
Lots 1 and 4, Block 43, Addition to the Town of Seattle as laid out by A.A.
Denny (commonly known as A.A. Denny's 6th Addition to the City of Seattle),
according to the Plat recorded in Volume I of Plats, page 99, in King County,
Washington; except the westerly 9 feet thereof condemned for First Avenue in
King County Superior Court Cause No. 7092, as provided by Ordinance No. 1129 of
the City of Seattle.
Exhibit B
Third Floor Plan
Exhibit C
Amendment to Lease
Dated September ____, 1996
For The Cobalt Group
At the First and Lenora building
SPACE POCKET. (Insert 2.6)
Tenant shall have the right to reduce the amount of office space and
corresponding rent by as much as approximately 5,536 Rentable Square Feet (RSF)
by designating space pockets throughout the premises. Tenant shall have the
right to absorb 5,536 RSF of pocket spaces on an incremental or office-by-office
basis. Tenant will commence paying rent on a portion of the pocketed space by
absorbing 2,036 RSF at the end of the sixth (6th) month of the Lease Term and
the remaining 3,500 RSF at the end of the sixteenth (16th) month of the Lease
Term or upon active use of the space, whichever occurs first.
RIGHT TO CANCEL. (Insert 2.7)
Tenant shall have the right to cancel this Lease after the end of the sixteenth
(16th) month of the Initial Lease Term by providing Landlord written notice of
its intent by no later than October 1, 1997. In the event Tenant chooses to
terminate, then a cancellation fee equal to $9,375.33 shall accompany the
written notice.
RIGHT OF FIRST REFUSAL. (Insert 2.8)
Tenant shall have a right of first refusal for the approximately 4,000 Rentable
Square Feet in the southeast corner of the second floor described herein as
Exhibit D. Upon receipt of a legitimate offer from an outside party for the
space, Landlord shall provide Tenant five (5) business days with which to
declare its intention to lease said space. If Tenant elects to lease this
space, all terms and conditions of the Initial Lease shall apply on a prorated
basis, as necessary.
TITLE, AUTHORITY, AND QUIET ENJOYMENT. (Insert 5.4)
Notwithstanding anything contained herein to the contrary, Landlord, its agents,
employees or contractors' entry onto the Premises, or any repair or work
performed thereon as provided under this Section shall not in any way materially
or unreasonably affect or interrupt with Tenant's use, business or operations on
the Premises or obstruct the visibility or ingress and egress of the Premises.
In the event of such substantial and material interference, Landlord shall first
obtain the written consent of Tenant which consent shall not be unreasonably
withheld, with the exception in case of emergency. Landlord shall be liable for
any damage or injury to persons or property caused by any grossly negligent,
willful, or wanton act of Landlord, its agents, employees, invitees, guests or
contractors resulting from its and/or their
entry onto or the repair or any other work performed. Landlord shall give
Tenant no less than forty-eight (48) hour's notice before any entry hereunder,
unless an emergency requires shorter notice.
USE OF COMMON AREAS. (Insert 6.1.1.)
Tenant and its officers, employees, agents, contractors, customers and invitees
shall have and Landlord hereby grants a irrevocable license (in common with the
other tenants of the Property and their employees, agents, customers and other
invitees) to use the common areas of the Property for the intended purposes
(e.g. parking, access, ingress and egress).
ACCEPTANCE OF PREMISES. (Insert 6.2)
Notwithstanding anything contained herein to the contrary, Landlord represents,
to the best of the Landlord's knowledge, all structural parts, including but not
limited to foundation, roof, exterior walls, plumbing and electrical systems of
the Premises and Building, and any work constructed or caused to be constructed
by Landlord (except any additions, alterations or improvements made or caused to
be made by Tenant that constitute structural parts of the Premises or the
Building), meet and comply with federal, state, and local laws, ordinances and
regulations and are in good sanitary order, condition and repair at delivery of
the Premises to Tenant. Landlord shall promptly correct any latent defects as
they become known. Landlord shall disclose any known conditions that would
adversely affect use as contemplated by this Lease.
UTILITIES. (Insert 12.3)
Tenant shall have the right to sufficient utilities and ventilation necessary to
support its intended use of the Premises. Nothing contained herein precludes
Tenant from seeking recovery of any and all damages suffered and losses incurred
(including but not limited to loss of business) due to an interruption of
utilities for a period greater than forty-eight (48) hours if such interruption
was caused by the intentional or grossly negligent act of Landlord or its
agents, employees, contractors or invitees. If any such interruption continues
for a period of excess of one hundred twenty (120) days, in addition to any
other rights Tenant may have, Tenant shall have the right to terminate this
Lease.
UTILITIES (Insert 12.5)
Landlord shall pay before delinquent all Utilities Expenses, Taxes, and the cost
of any insurance to be carried hereunder by Landlord and which are Landlord's
responsibility per paragraph 12.
DAMAGE BY CASUALTY. (Insert 21.4)
Notwithstanding anything to the contrary contained in this Lease, in the event
of damage or destruction to the Premises or the Building, Tenant shall have the
night to terminate under the
following conditions: (a) the damage is such that the Premises cannot be (or are
not) restored within one hundred eighty (180) days from the date of damage; (b)
damage or destruction is caused by a peril not required to be insured against
hereunder; or (c) the damage or destruction occurs during the last six (6)
months of the Term (or any Extension Term) and Tenant has not previously
exercised any option rights it may for succeeding extension or renewal terms.
ASSIGNMENT AND SUBLETTING. (Insert 23.1)
Notwithstanding the foregoing, Tenant may, without Landlord's prior written
consent, sublet all or any portions of the Premises or assign the Lease to (i) a
parent, subsidiary, affiliate, division, or corporation controlling, controlled
by or under common control with Tenant; (ii) a successor corporation related to
Tenant by merger, consolidation, nonbankruptcy reorganization or government
action; or (iii) a purchaser of substantially all of the Tenant's assets located
in the Premises, provided that, as of the date of such transfer, the purchaser
has the reasonable financial ability to perform its obligations with respect to
this Lease and/or the Premises. For the purpose of the Lease, any sale or
transfer of Tenant's capital stock through any exchange, or redemption or
issuance of additional stock of any class shall not be deemed an assignment,
subletting or any other transfer of the Lease or the Premises.
SUBORDINATION AND NON-DISTURBANCE. (Insert 29.3)
Notwithstanding anything contained herein to the contrary, Tenant's
subordination and attornment under this Article shall be conditioned upon such
transferee, purchaser, landlord, mortgagee, or beneficiary executing and
providing Tenant with a non-disturbance agreement preserving Tenant's rights and
leasehold interest under the Lease. Execution of any instruments required under
this Article shall not diminish or affect in any way Tenant's rights or remedies
under the Lease against Landlord or any other third party claiming under, by or
through Landlord.
MISCELLANEOUS PROVISIONS. (Insert 36.5)
All rules and regulations shall be equally applicable to all tenants. The Lease
provisions shall control and supersede any contradictory or inconsistent
provisions contained in the rules and regulations. Landlord shall provide
reasonable advance notice of any modifications or additions to the rules and
regulations, and such modifications or additions shall not materially, or
unreasonably interfere with Tenant's conduct of its business or Tenant's use or
enjoyment of the Premises, and shall not require payment of additional rent or
the incurring of any other costs and expenses.
Exhibit D
Floor Plan
STATE OF ________________ )
)ss
COUNTY OF ______________ )
On this _________ day of ____________, 1998, before me personally appeared
______________________, to me known to be the _______________________ of THE
COBALT GROUP, INC., a Washington corporation, which executed the within and
foregoing instrument, and acknowledged said instrument to be the free and
voluntary act and deed of said partnership, for the uses and purposes therein
mentioned, and on oath stated that he was authorized to execute said instrument
on behalf of said partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
___________________________________
Notary Public
Commission Expires: ________________