Sample Business Contracts
Washington-Bellevue-3326 160th Avenue SE Lease - Bedford Property Investors Inc. and Lightrealm Inc.
Lease Forms
- Start a state-specific lease for the rental of commercial property. Specify the term and rent due, as well as whether the landlord or tenant is responsible for property taxes, insurance, and maintenance and repairs.
- When a tenant vacates commercial property before the lease term has expired, it may be able to rent the premises to a third party. The tenant would be the sublessor and the third party would be the sublessee. Besides preparing a sublease, both parties will want to review the provisions for assignment or subletting in the original lease agreement between the landlord and the sublessor.
- Tenants of residential property should prepare a sublease agreement if they are seeking to sublease a room or the entire apartment or house to a third party. All parties should review the original lease agreement to see if there are any restrictions on subletting or assigning the premises.
- Triple net leases are a type of commercial leases where the tenant has to pay for property taxes, insurance, utilities, and maintenance, in addition to the monthly rent.
- When renting an office space, tenants should understand the amount of the rent and duration of the lease. Other important terms include whether the space can be subleased, which parties are responsible for maintenance, and whether any furniture and furnishings will be provided.
[LOGO OF BEDFORD PROPERTY INVESTORS]
NET OFFICE LEASE
TABLE OF CONTENTS
1. SALIENT LEASE TERMS................................ 1
2. DEFINITIONS........................................ 2
3. PREMISES........................................... 6
4. TERM............................................... 7
5. PRE-TERM POSSESSION................................ 7
6. DELAY IN DELIVERY OF POSSESSION.................... 7
7. MINIMUM RENT....................................... 7
8. ADDITIONAL RENT.................................... 8
9. ACCORD AND SATISFACTION............................ 9
10. SECURITY DEPOSIT................................... 9
11. USE................................................ 10
12. COMPLIANCE WITH LAWS AND REGULATIONS............... 10
13. SERVICE AND EQUIPMENT.............................. 16
14. WASTE.............................................. 18
15. ALTERATIONS........................................ 18
16. PROPERTY INSURANCE................................. 20
17. INDEMNIFICATION, WAIVER OF CLAIMS AND SUBROGATION.. 20
18. LIABILITY INSURANCE................................ 22
19. INSURANCE POLICY REQUIREMENTS...................... 22
20. LESSEE INSURANCE DEFAULT........................... 23
21. FORFEITURE OF PROPERTY AND LESSOR'S LIEN........... 23
22. MAINTENANCE AND REPAIRS............................ 23
23. DESTRUCTION........................................ 24
24. CONDEMNATION....................................... 25
25. ASSIGNMENT AND SUBLETTING.......................... 26
26. ABANDONMENT........................................ 29
27. ENTRY BY LESSOR.................................... 30
28. SIGNS.............................................. 30
29. DEFAULT............................................ 30
30. REMEDIES UPON DEFAULT.............................. 31
31. BANKRUPTCY......................................... 33
32. SURRENDER OF LEASE................................. 34
33. LESSOR'S EXCULPATION............................... 34
34. ATTORNEYS' FEES.................................... 34
35. NOTICES............................................ 35
36. SUBORDINATION...................................... 35
37. ESTOPPEL CERTIFICATES.............................. 36
38. WAIVER............................................. 36
39. HOLDING OVER....................................... 36
40. SUCCESSORS AND ASSIGNS............................. 36
41. TIME............................................... 36
<PAGE>
42. EFFECT OF LESSOR'S CONVEYANCE...................... 37
43. COMMON AREAS....................................... 37
44. TRANSFER OF SECURITY............................... 37
45. LATE CHARGES....................................... 37
46. CORPORATE AUTHORITY................................ 37
47. MORTGAGEE PROTECTION............................... 37
48. WAIVER OF STATUTES................................. 38
49. MISCELLANEOUS PROVISIONS........................... 40
<PAGE>
NET OFFICE LEASE
THIS LEASE is dated for reference purposes only this 16/th/ day of December
1999.
1. SALIENT LEASE TERMS
1.1 Rent Payment: BEDFORD PROPERTY INVESTORS, INC.
Lockbox # 73048 - Kenyon
P.O. Box 60000
San Francisco, CA 94160-3048
1.2 Parties and Notice Lessor:
Address: BEDFORD PROPERTY INVESTORS, INC.
270 Lafayette Circle
Lafayette, CA 94549
Lessee:
LIGHTREALM, INC.,
a Washington corporation
(Section 35.1)
1.3 Premises: (A) Name and Location of Complex:
Kenyon Center
3326 160th Avenue SE
Bellevue, WA
(B) Leased Premises: Third (3rd) and Fourth (4th)
Floors, Suite 400
(C) Approximately 43,851 square feet.
(Section 3.2)
1.4 Term: (A) Estimated Delivery Date:
March 1, 2000 - Floor 4 (approximately
20,457 RSF); May 15, 2000 - Floor 3
(approximately 23,394 RSF).
(B) Eighty-four (84) months
(Section 4.1)
1.5 Rent: (A) Minimum Rent:
Months 1 - 12: $76,739.25/Mo. NNN
($21.00/RSF)
Months 13 - 24: $78,566.38/Mo. NNN
($21.50/RSF
Months 25 - 36: $80,393.50/Mo. NNN
($22.00/RSF)
Months 37 - 48: $82,220.63/Mo. NNN
($22.50/RSF)
Months 49 - 60: $84,047.75/Mo. NNN
($23.00/RSF)
Months 61 - 72: $85,874.88/Mo. NNN
($23.50/RSF)
Months 73 - 84: $87,702.00/Mo.NNN
($24.00/RSF)
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LESSOR'S INITIALS LESSEE'S INITIALS
<PAGE>
(B) Advance Rent: $58,250.44 (Month 1)
(Section 7.2)
1.6 Initial Security Deposit: $76,739
(Addendum, Part 1 and Section 10.1)
1.7 Use: Premises used solely for general office purposes.
(Section 11.1)
1.8 Initial Pro Rata
Percent: 22.76% until the Third Floor Premises are delivered
to Tenant; thereafter 48.78%
(Section 2.1(l))
(Section 16.3)
1.9 Declaration of Date of Recordation May 13., 1980
Restrictions: Recording No. 8005130448
(Section 3.5)
1.10 Contents: This Lease consists of:
Pages 1 through 43
Sections 1 through 49.17
Addenda: Addendum dated December __, 1999
Exhibits:
A - Legal Description of Complex
B - Plan of the Complex
C - Floor Plan of the Leased Premises
D - Construction Obligations
E - Acknowledgment of Commencement
F - Rules & Regulations
G - Letter of Credit
2. DEFINITIONS
2.1 The terms defined in this Article 2 shall, for all purposes of this
Lease and all agreements supplemental hereto, have the meanings herein specified
unless expressly stated otherwise.
(a) "Building" shall mean the structure which contains the Leased
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Premises, as further defined in Exhibit D hereto.
(b) "Building Standard Work" shall mean the typical interior
----------------------
improvements in the Building Shell (as defined in Exhibit D hereto) constructed
or to be constructed by Lessor, which are of the nature and quality required by
specifications developed for the Complex by Lessor's architect. The Tenant
Improvements (as defined in Exhibit D hereto) to be constructed pursuant to
Exhibit D, unless otherwise specified pursuant to the terms and conditions of
Exhibit D, shall be Building Standard Work.
(c) "Commencement Date" shall mean the earlier of the following
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dates:
(i) The day upon which Lessee takes possession of the Fourth
Floor Premises; or
(ii) The date upon which the Tenant Improvements for the
Fourth Floor Premises are Substantially Complete (as defined in Exhibit D
hereto).
(d) "Common Areas" shall mean all areas and facilities outside the
------------
Leased Premises within the exterior boundaries of the Complex of which the
Leased Premises form a part,
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LESSOR'S INITIALS LESSEE'S INITIALS
<PAGE>
that are provided and designated by Lessor from time to time for the general use
and convenience of Lessee and of other tenants of Lessor having the common use
of such areas, and their respective authorized representatives and invitees.
Common Areas include, without limitation, corridors, stairways, elevator shafts,
janitor rooms, driveways, parking areas, and landscaped areas all as generally
described on Exhibit B attached hereto. Exhibit B is tentative and Lessor
reserves the right to make alterations thereto from time to time, provided such
alterations do not materially impair Lessee's use and enjoyment of the Leased
Premises or the Common Areas.
(e) "Complex" is that parcel of real property of which the Leased
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Premises forms a part, together with the parcels in common ownership therewith,
and contiguous thereto, which property is described with particularity in
Exhibit A attached hereto and made a part hereof by reference.
(f) "Fourth Floor Premises" means that portion of the Leased Premises
---------------------
located on the fourth floor of the Building.
(g) "Lease Year" means any calendar year, or portion thereof,
----------
following the commencement hereof, the whole or any part of which period is
included within the Term.
(h) "Leased Premises" shall mean the portion of space leased to
---------------
Lessee hereunder.
(i) "Lines" shall mean communications, computer, audio and video,
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security and electrical (other than electrical wiring terminating at or
connected to Building standard electrical outlets), cables, wires, lines, duct
work, sensors, switching equipment, control boxes and related improvements at
the Complex, Building or the Leased Premises.
(j) "Major Vertical Penetrations" shall mean stairs, elevator shafts,
---------------------------
flues, pipe shafts, vertical ducts, and the like, and their enclosing walls,
which serve more than one floor of the Building, but shall not include stairs,
dumbwaiters, lifts, and the like, exclusively serving a tenant occupying offices
on more than one floor. The stairs connecting the third and fourth floors of the
Building shall be considered a Major Vertical Penetration for purposes of this
Lease.
(k) "Occupied Floor Area" means that portion of the Rentable Area of
-------------------
the Complex which is leased and occupied.
(l) "Operating Costs" means the total amounts paid or payable,
---------------
whether by Lessor or others on behalf of Lessor, in connection with the
ownership, maintenance, repair, replacement and operations of the Complex
(including, without limitation, all areas and facilities within the exterior
boundaries of the Complex) as determined by standard accounting procedures.
Operating Costs shall include, but not be limited to, the aggregate of the
amount paid for all fuel used in heating and air conditioning of the Building;
the amount paid or payable for all electricity furnished by Lessor to the
Complex (other than electricity furnished to and paid for by other lessees by
reason of their extraordinary consumption of electricity); the cost of periodic
relamping and reballasting of lighting fixtures; the amount paid or payable for
all hot and cold water (other than that chargeable to individual tenants by
reason of their extraordinary consumption of water); the amount paid or payable
for all labor and/or wages and other payments, including the cost to Lessor of
workers' compensation and disability insurance, payroll taxes, welfare and
fringe benefits made to janitors, caretakers, and other employees, contractors
and subcontractors of Lessor (including wages of the Building manager) involved
in the operation, maintenance and repair of the Complex; painting of exterior
walls of the buildings in the Complex; managerial and administrative expenses;
the total charges of any independent contractors employed in the repair, care,
operation, maintenance, and cleaning of the Complex; the amount paid or payable
for all supplies occasioned by everyday wear and tear; the costs of climate
control, window and exterior wall cleaning, telephone and utility costs; the
cost of accounting services necessary to compute the rents and charges payable
by tenants of the Complex and to keep the books and records for the Complex;
fees for legal, accounting, inspection and consulting services; the cost of
operating, repairing and maintaining the Building elevators and the utility
systems, including Lines, of the Complex; the cost of porters, guards and other
protection
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LESSOR'S INITIALS LESSEE'S INITIALS
<PAGE>
services; the cost of establishing and maintaining the Building's directory
board; payments for general maintenance and repairs to the plant and equipment
supplying climate control; the cost of supplying all services pursuant to
Article 13 hereof to the extent such services are not paid by individual
tenants; amortization of the costs, including repair and replacement, of all
maintenance and cleaning equipment and master utility meters and of the costs
incurred for repairing or replacing all other fixtures, equipment and facilities
serving or comprising the Complex which by their nature require periodic or
substantial repair or replacement, and which are not charged fully in the year
in which they are incurred, at rates on the various items determined from time
to time by Lessor in accordance with sound accounting principles; the net cost
and expenses for liability and property insurance for which Lessor is
responsible hereunder or which Lessor or its lenders deems necessary in
connection with the operation of the Complex (including, without limitation,
self-insurance and the payment of deductible amounts under insurance policies);
community association dues or assessments and property owners' association dues
and assessments which may be imposed upon Lessor by virtue of any recorded
instrument affecting title to the Complex; and costs of complying with all
governmental regulations, rules, laws, ordinances and codes. In addition,
Operating Costs shall include any Real Estate Taxes as defined in Paragraph
2.1(o) hereof, and an administrative/management fee payable to Lessor in the
amount of Four Percent (4%) of the gross revenues received by Lessor from the
Complex. Operating Costs shall also include, without limitation, the repair and
replacement, resurfacing and repaving of any paved areas, curbs, gutters or
other surfaces or areas within the Complex, the repair and replacement of any
equipment or facilities located within or serving the Complex, and the cost of
any capital repairs, replacements or improvements made by Lessor to the Complex
("Capital Costs"). However, certain Capital Costs (the "Restricted Capital
Costs") shall be includable in Operating Costs each year only to the extent of
that fraction allocable to the year in question calculated by amortizing such
Restricted Capital Costs over the reasonably useful life of the improvement
resulting therefrom, as determined by Lessor, with interest on the unamortized
balance at the higher of (i) ten percent (10%) per annum; or (ii) the interest
rate as may have been paid by Lessor for the funds borrowed for the purpose of
performing the work for which the Restricted Capital Costs have been expended,
but in no event to exceed the highest rate permissible by law. The Restricted
Capital Costs subject to such amortization procedure are the following: (x)
those costs for capital improvements to the Complex of a type which do not
normally recur more frequently than every five (5) years in the normal course of
operation and maintenance of facilities such as the Complex (specifically
excluding painting of all or a portion of the Complex); (y) costs incurred for
the purpose of reducing other operating expenses or utility costs, and (z)
expenditures by Lessor that are required by governmental law, ordinance,
regulation or mandate, including, without limitation, any Environmental Laws (as
such term is defined in Article 12), which were not applicable to the Complex as
of the date hereof. Except for those improvements that qualify for treatment as
Restricted Capital Costs, Lessee shall not be obligated to pay for any
improvements to the Complex which would constitute a betterment to the Complex,
including, but not limited to: expenses incurred to increase the original
rentable space in the Complex; expenses incurred to upgrade the quality and/or
character of the Complex; any and all other costs incurred where the Lessor or
other tenants will be the primary beneficiary of the expenditure of such costs.
Operating Costs shall not include legal or accounting expenses incurred
expressly for negotiating a lease with a particular tenant, or as a result of a
default of a specific tenant, which negotiation or default does not affect the
operation of the Complex. In addition, the following costs and expenses shall
not be included in Operating Costs:
(i) Interest, charges and fees incurred on debt, payment on
mortgages and rent under ground leases; and costs
expended in connection with any sale, hypothecation,
financing, refinancing, or ground lease of the Building
or Land or Complex or of the Lessor's interest therein.
(ii) Wages, salaries, compensation, and labor burden for any
employee not stationed at the Complex on a full-time
basis or above the level of Lessor's Complex manager
and Lessor's general overhead or any other expense not
related to the Building or Complex.
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LESSOR'S INITIALS LESSEE'S INITIALS
<PAGE>
(iii) Costs, including but not limited to attorneys' fees
associated with the operation of the business of the
entity which constitutes Lessor, as distinguished from
the costs of operation of the Complex, including
accounting and legal matters, costs of defending any
lawsuits with any mortgage, costs of selling,
syndicating, financing, mortgaging or hypothecating any
of Lessor's interest in the Building or any part
thereof, and costs of any disputes between Lessor and
its employees or disputes of Lessor with building
management personnel.
(m) "Pro Rata Percent" shall be that fraction (converted to a
----------------
percentage) the numerator of which is the Rentable Area of the Leased Premises
and the denominator of which is the number of square feet of all Rentable Area
in the Complex. Lessee's Pro Rata Percent as of the commencement of the Term
hereof is specified in Section 1.8. Said Pro Rata Percent shall be recalculated
as may be required effective as at the commencement of any period to which the
calculation is applicable in this Lease. Notwithstanding the preceding
provisions of this Section 2.1(l), Lessee's Pro Rata Percent as to certain
expenses may be calculated differently to yield a higher percentage share for
Lessee as to certain expenses in the event Lessor permits other tenants in the
Complex to directly incur such expenses rather than have Lessor incur the
expense in common for the Complex (such as, by way of illustration, wherein a
tenant performs its own janitorial services). In such case Lessee's Pro Rata
Percent of the applicable expense shall be calculated as having as its
denominator all Rentable Area in the Complex less the Rentable Area of tenants
who have incurred such expense directly. Furthermore, in the event Lessee
consumes extraordinary amounts of any provided utility or other service as
determined in Lessor's good faith judgment, Lessee's Pro Rata Percent for such
utility or service may, at Lessor's election, be based on usage as opposed to
Rentable Area, that is, Lessee's Pro Rata Percent of such a utility or service
would be calculated as having as its denominator the total usage of such utility
or service in the Complex (or Building as the case may be), and having as its
numerator Lessee's usage of such utility or service, as determined by Lessor in
its sole good faith judgment. In any case in which Lessee, with Lessor's
consent, incurs such expenses directly, Lessee's Pro Rata Percent will be
calculated specially so that expenses of the same character which are incurred
by Lessor for the benefit of other tenants in the Complex shall not be prorated
to Lessee. If repairs are required for systems exclusively serving the Leased
Premises (whether within or outside of said Leased Premises), Lessee shall pay
one hundred percent (100%) of such repair costs. Nothing herein shall imply that
Lessor will permit Lessee or any other tenant of the Complex to incur any
Operating Costs directly. Any such permission shall be in the sole discretion of
the Lessor, which Lessor may grant or withhold in its arbitrary judgment.
(n) "R/U Ratio" (an abbreviation for Rentable/Usable Ratio) shall mean
---------
that fraction the numerator of which is Rentable Area and the denominator of
which is Usable Area.
(o) "Real Estate Taxes" or "Taxes" shall mean and include all general
----------------- -----
and special taxes, assessments, fees of every kind and nature, duties and
levies, charged and levied upon or assessed by any governmental authority
against the Complex including the land, the Building, any other improvements
situated on the land other than the Building, the various estates in the land
and the Building, any Tenant Improvements, fixtures, installations, additions
and equipment, whether owned by Lessor or Lessee; except that it shall exclude
any taxes of the kind covered by Section 8.1 hereof to the extent Lessor is
reimbursed therefor by any tenant in the Building and it shall exclude any
state, local or federal personal and corporate income taxes measured by the
income of Lessor from all sources, and any estate and inheritance taxes. Real
Estate Taxes shall also include the reasonable cost to Lessor of contesting the
amount, validity, or the applicability of any Taxes mentioned in this Section.
Further included in the definition of Taxes herein shall be general and special
assessments, license fees, commercial rental tax, levy or tax (other than
inheritance or estate taxes) imposed by any authority having the direct or
indirect power to tax, as against any legal or equitable interest of Lessor in
the Leased Premises or in the Complex or on the act of entering into this Lease
or, as against Lessor's right to rent or other income therefrom, or as against
Lessor's
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LESSOR'S INITIALS LESSEE'S INITIALS
<PAGE>
business of leasing the Leased Premises or the Complex; any tax, fee, or charge
with respect to the possession, leasing, transfer of interest, operation,
management, maintenance, alteration, repair, use, or occupancy by Lessee, of the
Leased Premises or any portion thereof or the Complex; or any tax imposed in
substitution, partially or totally, for any tax previously included within the
definition of Taxes herein, or any additional tax related to the Complex, the
Building or the land they are situated on, the nature of which may or may not
have been previously included within the definition of Taxes. Further, if at any
time during the Term of this Lease the method of taxation or assessment of real
estate or the income therefrom prevailing at the time of execution hereof shall
be, or has been, altered so as to cause the whole or any part of the Taxes now
or hereafter levied, assessed or imposed on real estate to be levied, assessed
or imposed upon Lessor, wholly or partially, as a capital levy, business tax,
fee, permit or other charge, or on or measured by the Rents received therefrom,
then such new or altered taxes, regardless of their nature, which are
attributable to the land, the Building, the Complex or to other improvements on
the land shall be deemed to be included within the term Real Estate Taxes for
purposes of this Section, whether in substitution for, or in addition to any
other Real Estate Taxes, save and except that such shall not be deemed to
include any enhancement of said tax attributable to other income of Lessor. With
respect to any general or special assessments which may be levied upon or
against the Leased Premises, the Complex, or the underlying realty, or which may
be evidenced by improvement or other bonds, and may be paid in annual or semi-
annual installments, only the amount of such installment, prorated for any
partial year, and statutory interest shall be included within the computation of
Taxes for which Lessee is responsible hereunder.
(p) "Rent," "rent" or "rental" means Minimum Rent and all other sums
----
required to be paid by Lessee pursuant to the terms of this Lease.
(q) "Rentable Area." The Rentable Area shall mean all areas available
-------------
or held for the exclusive use and occupancy of occupants or future occupants of
the Complex, measured from the inside finished surface of the dominant portion
of the permanent outer Building walls, excluding any Major Vertical Penetrations
of the floor. No deductions shall be made for columns and projections necessary
to the Building. The Rentable Area of an office on the floor shall be computed
by multiplying the Usable Area of that office by the R/U Ratio described in
Section 2.1(m) for the floor.
(r) "Structural" as herein used shall mean any portion of the Leased
----------
Premises or Complex which provides bearing support to any other integral member
of the Complex such as, by limitation, the roof structure (trusses, joists,
beams), posts, load bearing walls, foundations, girders, floor joists, footings,
and other load bearing members constructed by Lessor.
(s) "Tenant Improvements" shall mean the aggregate of the Building
-------------------
Standard Work and the Building nonstandard work, as further defined in the work
letter agreement which is attached hereto as Exhibit D.
(t) "Term" shall mean the term of the Lease as specified in Article 4
----
hereof, including any partial month at the commencement of the Term.
(u) "Third Floor Premises" means that portion of the Leased Premises
--------------------
located on the third floor of the Building.
(v) "Total Building Area" is the total gross leasable area of the
-------------------
Building.
(w) "Usable Area." The Usable Area of an office shall be the number
-----------
of square feet computed by measuring to the finished surface of the office side
of corridor and other permanent walls, to the center of partitions that separate
the office from adjoining Usable Areas, and to the inside finished surface of
the permanent outer Building walls. No deductions shall be made for the columns
and projections necessary to the Building. The Usable Area of a floor shall be
equal to the sum of all Usable Areas on that floor.
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LESSOR'S INITIALS LESSEE'S INITIALS
<PAGE>
3. PREMISES
3.1 Demising Clause. Lessor hereby leases to Lessee, and Lessee hires from
Lessor a portion of the Complex as hereinafter defined.
3.2 Description. The Complex, as defined in Section 2.1(e), is described
generally in Section 1.3(A) hereof. The premises leased herein are described in
Section 1.3(B) and are delineated on Exhibit C which is attached hereto and made
a part hereof by reference, consisting of the approximate amount of square
footage as specified in Section 1.3(C) hereof (the "Leased Premises.") The term
"Building" shall refer to the Building in which the Leased Premises are located.
Lessee acknowledges that Lessor may change the shape, size, location, number and
extent of the improvements to any portion of the Complex without consent of
Lessee and without affecting Lessee's obligations hereunder. Lessor reserves the
area beneath and above the Building as well as the exterior thereof together
with the right to install, maintain, use, repair and replace pipes, ducts,
conduits, wires, and structural elements leading through the Leased Premises
serving other parts of the Complex, so long as such items are concealed by
walls, flooring or ceilings. Such reservation in no way affects the maintenance
obligations imposed herein, nor shall such reservation alter the parties'
responsibilities and obligations set forth in this Lease regarding Hazardous
Materials (as defined in Section 12.3(a) below). Lessor may exercise the rights
reserved to it in this Section 3.2, subject to not materially impairing Lessee's
use and enjoyment of the Leased Premises and the Common Areas and not
unreasonably interfering with the operation of Lessee's business within the
Leased Premises. To the extent Lessor's entry into the Leased Premises
unreasonably disrupts Lessee's operations in the Leased Premises and such
disruption persists for more than three (3) business days after written notice
to Lessor of such disruption, Lessee shall be entitled as its sole and exclusive
remedy to bring a legal action directly against Lessor seeking recovery of any
and all damages suffered and losses incurred by Lessee (including but not
limited to loss of business) due to such disruption
3.3 Substituted Premises. In the event the Leased Premises consist of less
than six thousand (6,000) square feet, Lessor shall have the right, at any time
during the Term hereof, upon not less than ninety (90) days' prior written
notice to Lessee, to substitute for the Leased Premises such other space in the
Complex as shall be substantially the same size as the Leased Premises (the
"Substituted Premises"), provided that Lessor shall pay all reasonable expenses
of Lessee incidental to Lessee's relocation to the Substituted Premises and that
Lessor shall improve the Substituted Premises for Lessee's use and occupancy at
least to the same extent as the Leased Premises occupied by Lessee prior to such
relocation.
3.4 Covenants, Conditions and Restrictions. The parties agree that this
Lease is subject to the effect of (a) any covenants, conditions, restrictions,
easements, mortgages or deeds of trust, ground leases, rights of way of record,
and any other matters or documents of record; (b) any zoning laws of the city,
county and state where the Complex is situated; and (c) general and special
taxes not delinquent. Lessee agrees that as to its leasehold estate, Lessee and
all persons in possession or holding under Lessee will conform to and will not
violate the terms of any covenants, conditions or restrictions of record which
may now or hereafter encumber the property (hereinafter the "restrictions").
This Lease is subordinate to the restrictions and any amendments or
modifications thereto.
3.5 Declaration of Restrictions. The Leased Premises are subject to a
Declaration of Restrictions as referenced in Section 1.9 hereof.
4. TERM
4.1 Commencement Date. The Term of this Lease shall commence on the
Commencement Date, but in no event earlier than the date specified in Section
1.4(A) hereof, and shall be for the term specified in Section 1.4(B) hereof,
plus any partial month at the commencement of the Term.
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LESSOR'S INITIALS LESSEE'S INITIALS
<PAGE>
4.2 Acknowledgment of Commencement. After delivery of the Third Floor
Premises and Fourth Floor Premises to Lessee, Lessee shall execute a written
acknowledgment of the Commencement Date in the form attached hereto as Exhibit
E, and by this reference it shall be incorporated herein.
5. PRE-TERM POSSESSION
5.1 Conditions of Entry. In the event the Leased Premises are to be
constructed or remodeled by Lessor, Lessor shall notify Lessee when the Leased
Premises are ready for Lessee's fixturing or Lessee's work, which may be prior
to Substantial Completion of the Tenant Improvements in the Leased Premises by
Lessor, and Lessor shall not unreasonably deny Tenant such early entry into the
Leased Premises. Lessee may thereupon enter the Leased Premises for such
purposes at its own risk, to make such improvements as Lessee shall have the
right to make, to install fixtures, supplies, inventory and other property.
Lessee agrees that it shall not in any way interfere with the progress of
Lessor's work in constructing the Tenant Improvements by such entry. Should such
entry prove an impediment to the progress of Lessor's work, in Lessor's
judgment, Lessor may demand that Lessee forthwith vacate the Leased Premises
until such time as Lessor's work is complete, and Lessee shall immediately
comply with this demand.
During the course of any pre-term possession, whether such pre-term period
arises because of an obligation of construction on the part of Lessor, or
otherwise, all terms and conditions of this Lease, except for rent and
commencement, shall apply, particularly with reference to indemnity by Lessee of
Lessor under Article 17 herein for all occurrences within or about the Leased
Premises.
6. DELAY IN DELIVERY OF POSSESSION
6.1 Delay. If Lessor, for any reason whatsoever, cannot deliver possession
of the Third Floor Premises and the Fourth Floor Premises to Lessee at the
Estimated Delivery Dates set forth in Section 1.4 (A), this Lease shall not be
void or voidable, nor shall Lessor be liable for any loss or damage resulting
therefrom, but in that event, Lessee shall have no obligation to pay any Rent
for the period between the Estimated Delivery Date and the Commencement Date. In
the event Lessor cannot deliver possession of the Fourth Floor Premises to
Lessee with the Tenant Improvements for the Fourth Floor Premises Substantially
Complete (as defined in Exhibit D hereto) by March 1, 2000 for reasons other
than Lessee Delay or Forces Majeure (as such terms are defined in Exhibit D),
then Lessee may elect to terminate this Lease. In the event Lessor cannot
deliver possession of the Third Floor Premises to Lessee with the Tenant
Improvements for the Third Floor Premises Substantially Complete (as defined in
Exhibit D hereto) by August 15, 2000 for reasons other than Lessee Delay or
Forces Majeure (as such terms are defined in Exhibit D), then Lessee may elect
to terminate this Lease. In the event the Leased Premises are not fully
delivered within one (1) year from the date of execution, this Lease shall
automatically terminate.
6.2 Boeing Lease Termination Contingency. The parties acknowledge that the
Leased Premises are presently subject to a lease with The Boeing Company (the
"Boeing Lease"). If Lessor is unable to negotiate and deliver to Lessee a fully-
executed termination agreement for the Boeing Lease by December 17, 1999 then
Lessee shall have the following options:
(a) To terminate this Lease, in which event Lessee's deposit shall be
refunded in full; or
(b) To keep this Lease in full and effect, but to modify the "delivery
dates" for the Third and Fourth Floor Premises and the other terms of this Lease
as follows: (i) Lessor shall make the Third Floor Premises available to Lessee
in a broom clean (but otherwise in an "as-is" condition) as soon as possible,
but not later than March 3, 2000, for Lessee's temporary occupancy until such
time as the Fourth Floor Premises have been improved by Lessor as provided in
Exhibit D; (ii) at such time as the Fourth Floor Premises are ready for Lessee's
occupancy, Lessee shall move from the Third Floor Premises to the Fourth Floor
Premises at which time Lessor shall
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<PAGE>
commence improvements to the Third Floor Premises as provided in Exhibit D;
(iii) during such time as Lessee occupies only the Third Floor Premises, the
Minimum Rent shall be $21,550.50 per month and Lessee's Pro Rata Share shall be
15.98%; (iv) during such time as Lessee occupies only the Fourth Floor Premises,
the Minimum Rent shall be $35,799.75 per month and Lessee's Pro Rate Share shall
be 22.76%; and (v) the provisions of Section 6.1 above regarding possible
terminations of this Lease for delayed delivery shall not apply.
If Lessee has not notified Lessor by December 30, 1999 of its election to
terminate this Lease pursuant to Paragraph (a) above, Lessee shall be deemed to
have selected the option set forth in Paragraph (b) above.
6.3 Tenant Improvement Plans Termination Contingency. If the parties have
not approved the Construction Plans (as defined in Exhibit D) by December 17,
1999, then either party by written notice delivered to the other party by no
later than December 22, 1999 may terminate this Lease.
7. MINIMUM RENT
7.1 Payment. Lessee shall pay to Lessor at the address specified in
Section 1.1, or at such other place as Lessor may otherwise designate, as
"Minimum Rent" for the Leased Premises the amount specified in Section 1.5(A)
hereof, payable in advance on the first day of each month during the Term,
provided, however, until possession of the Third Floor Premises is delivered to
Lessee, the Minimum Rent shall be reduced by the amount of $40,939.50 per month
(or a pro rata portion for any partial month). If the Term commences on other
than the first day of a calendar month, the rent for the first partial month
shall be prorated accordingly. Unless the Third Floor Premises are delivered on
the first day of a calendar month, Lessee shall pay Lessor, within five (5) days
of delivery of possession of the Third Floor Premises, the prorated portion of
Minimum Rent allocable to the Third Floor Premises for that first partial month
in which the Third Floor Premises are delivered to Tenant.
All payments of Minimum Rent (including sums defined as rent in Section
2.1(o)) shall be in lawful money of the United States, and payable without
deduction, setoff, offset, counterclaim, recoupment, notice or demand.
7.2 Advance Rent. The amount specified in Section 1.5(B) hereof is paid
herewith to Lessor upon execution of this Lease as advance rent, receipt of
which is hereby acknowledged, provided, however, that such amount shall be held
by Lessor as a "Security Deposit" pursuant to Section 10.1 hereof until it is
applied by Lessor to the first Minimum Rent due hereunder.
8. ADDITIONAL RENT
8.1 Personal Property, Gross Receipts, Leasing Taxes. This Section 8.1 is
intended to deal with impositions or taxes directly attributed to Lessee or this
transaction, as distinct from Real Property Taxes attributable to the Complex
which are to be allocated among various tenants and others and which are
included in Operating Costs. In addition to the Minimum Rent and additional
charges to be paid by Lessee hereunder, Lessee shall reimburse Lessor upon
demand for any and all taxes required to be paid by Lessor (excluding state,
local or federal personal and corporate income taxes measured by the income of
Lessor from all sources, and estate and inheritance taxes) whether or not now
customary or within the contemplation of the parties hereto:
(a) Upon, measured by, or reasonably attributable to the cost or value
of Lessee's equipment, furniture, fixtures and other personal property located
in the Leased Premises or by the cost or value of any Tenant Improvements made
in or to the Leased Premises by or for Lessee, other than Building Standard
Work, regardless of whether title to such improvements shall be in Lessee or
Lessor;
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<PAGE>
(b) Upon or with respect to the possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy by Lessee of the
Leased Premises or any portion thereof to the extent such taxes are not included
as Real Estate Taxes as defined in Section 2.1(n);
(c) Upon this transaction or any document to which Lessee is a party
creating or transferring an interest or an estate in the Leased Premises; and
(d) In connection with any testing, investigation, abatement,
remediation, removal, transportation and/or disposal of any Hazardous Materials
by Lessee, its employees, agents representatives, contractors, invitees,
subtenants and/or assigns (or by Lessor, pursuant to any provision of this Lease
granting to Lessor the right to do any of the foregoing on behalf of Lessee and
to bill Lessee therefor).
For purposes of this Section 8.1, the term "taxes" shall include, but not
be limited to, any fees, charges, fines, penalties and costs.
In the event that it shall not be lawful for Lessee so to reimburse Lessor
for any Real Property Taxes or any other taxes specified in this Section 8.1,
the Minimum Rent payable to Lessor under this Lease shall be increased to net
Lessor (i.e., after payment of the Real Property Taxes or other taxes for which
Lessor may not receive reimbursement from Lessee) the amount of Minimum Rent
plus reimbursement for Real Property Taxes or other taxes which would have been
receivable by Lessor if such Real Property Taxes or other taxes had been
reimbursed to Lessor by Lessee as contemplated herein. All Real Property Taxes
or other taxes payable by Lessee under this Section shall be deemed to be, and
shall be paid as, additional Rent.
8.2 Operating Costs.
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(a) Lessee shall pay to Lessor, as additional rent, its Pro Rata
Percent of the Operating Costs for the Complex for any Lease Year, calculated on
the basis of (i) actual Operating Costs if the Complex is at least ninety
percent (90%) occupied ; or (ii) if the Complex is less than ninety percent
(90%) occupied, as if the Complex were ninety percent (90%) occupied and
operational for the whole of such Lease Year.
(b) If any Lease Year of less than twelve (12) months is included
within the Term, the amount payable by Lessee for such period shall be prorated
on a per diem basis (utilizing a three hundred sixty [360] day year).
8.3 Method of Payment. Any additional Rent payable by Lessee under
Sections 8.1 and 8.2 hereof shall be paid as follows, unless otherwise provided:
(a) During the Term, Lessee shall pay to Lessor monthly, in advance
with its payment of Minimum Rent, one-twelfth (1/12) of the amount of such
additional Rent as reasonably estimated by Lessor in advance, in good faith, to
be due from Lessee.
(b) Annually, as soon as is reasonably possible after the expiration
of each Lease Year, Lessor shall prepare in good faith and deliver to Lessee a
comparative statement, which statement shall be conclusive between the parties
hereto, setting forth (1) the Operating Costs for such Lease Year, and (2) the
amount of additional Rent owed by Lessee as determined in accordance with the
provisions of this Article 8.
(c) If the aggregate amount of such estimated additional Rent payments
made by Lessee in any Lease Year should be less than the additional Rent due for
such year, then Lessee shall pay to Lessor as additional Rent upon demand the
amount of such deficiency. If the aggregate amount of such additional Rent
payments made by Lessee in any Lease Year of the Term should be greater than the
additional Rent due for such year, then should Lessee not be otherwise in
default
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<PAGE>
hereunder, the amount of such excess will be applied by Lessor to the next
succeeding installments of such additional Rent due hereunder; and if there is
any such excess for the last year of the Term, the amount thereof will be
refunded by Lessor to Lessee, provided Lessee is not otherwise in default under
the terms of this Lease.
8.4 Audit Rights. Within thirty (30) days after receipt of Lessor's
annual reconciliation, Lessee shall have the right, after at least thirty (30)
days prior written notice to Lessor given within such thirty-day (30) period, to
examine and conduct an audit at the offices of Lessor or its property manager,
the books and records of Lessor pertaining solely to the Operating Costs for the
immediately preceding calendar year covered in such annual reconciliation
statement. Such audit shall be conducted by an independent certified accounting
firm retained by Lessee. All expenses of the audit shall be borne by Lessee,
unless the audit reveals that the Operating Costs charged to Lessee by Lessor
were overstated by five percent (5%) or more, in which event the cost of the
audit shall be paid by Lessor.
9. ACCORD AND SATISFACTION
9.1 Acceptance of Payment. No payment by Lessee or receipt by Lessor of a
lesser amount of Minimum Rent or any other sum due hereunder as additional Rent
or any other payment shall be deemed to be other than on account of the earliest
due Rent or payment, nor shall any endorsement or statement on any check or any
letter accompanying any such check or payment be deemed an accord and
satisfaction, and Lessor may accept such check or payment without prejudice to
Lessor's right to recover the balance of such Rent or payment or pursue any
other remedy available in this Lease, at law or in equity. Lessor may accept any
partial payment from Lessee without invalidation of any contractual notice
required to be given herein (to the extent such contractual notice is required)
and without invalidation of any notice required to be given pursuant to any
applicable statute or other law of the State of Washington.
10. SECURITY DEPOSIT
10.1 Payment on Lease Execution. Lessee shall pay Lessor at such time as
is specified in Paragraph I in the Addendum to Lease the sum specified in
Section 1.6. This sum is designated as a Security Deposit and shall remain the
sole and separate property of Lessor until actually repaid to Lessee (or at
Lessor's option the last assignee, if any, of Lessee's interest hereunder), said
sum not being earned by Lessee until all conditions precedent for its payment to
Lessee have been fulfilled. As this sum both in equity and at law is Lessor's
separate property, Lessor shall not be required to (1) keep said deposit
separate from its general accounts, or (2) pay interest, or other increment for
its use. If Lessee fails to pay Rent or other charges when due hereunder, or
otherwise defaults with respect to any provision of this Lease, including and
not limited to Lessee's obligation to restore or clean the Leased Premises
following vacation thereof, Lessee, at Lessor's election, shall be deemed not to
have earned the right to repayment of those portions of the Security Deposit,
reasonably required by Lessor to cover the payment of any Rent or other charges
in default, or for the payment of any other sum to which Lessor may become
obligated by reason of Lessee's default, or to compensate Lessor for any loss or
damage which Lessor may suffer thereby. Lessor may retain such portion of the
Security Deposit as it reasonably deems necessary to restore or clean the Leased
Premises following vacation by Lessee. The Security Deposit is not to be
characterized as Rent until and unless so applied in respect of a default by
Lessee.
10.2 Restoration of Deposit. If Lessor elects to use or apply all or any
portion of the Security Deposit as provided in Section 10.1, Lessee shall within
ten (10) days after written demand therefor pay to Lessor in cash, an amount
equal to that portion of the Security Deposit used or applied by Lessor, and
Lessee's failure to so do shall be a material breach of this Lease. The ten (10)
day notice specified in the preceding sentence shall insofar as not prohibited
by law, constitute full satisfaction of notice of default provisions required by
law or ordinance.
11. USE
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<PAGE>
11.1 Permitted Use. The Leased Premises may be used and occupied only for
the purposes specified in Section 1.7 hereof, and for no other purpose or
purposes. Lessee shall promptly comply with all laws, ordinances, orders and
regulations affecting the Leased Premises, their cleanliness, safety, occupation
and use.
11.2 Safes, Heavy Equipment. Lessee shall not place a load upon any floor
of the Leased Premises which exceeds seventy-five (75) pounds per square foot
live load. Lessor reserves the right to prescribe the weight and position of all
safes and heavy installations which Lessee wishes to place in the Leased
Premises so as properly to distribute the weight thereof, or to require plans
prepared by a qualified structural engineer at Lessee's sole cost and expense
for such heavy objects. Notwithstanding the foregoing, Lessor shall have no
liability for any damage caused by the installation of such heavy equipment or
safes.
11.3 Machinery. Business machines and mechanical equipment belonging to
Lessee which cause noise and/or vibration that may be transmitted to the
structure of the Building or to any other leased space to such a degree as to be
objectionable to Lessor or to other tenants in the Complex shall be placed and
maintained by the party possessing the machines or equipment, at such party's
expense, in settings of cork, rubber or spring type noise and/or vibration
eliminators, and Lessee shall take such other measures as needed to eliminate
vibration and/or noise. If the noise or vibrations cannot be eliminated, Lessee
must remove such equipment within ten (10) days following written notice from
Lessor.
11.4 Hazardous Activities. Lessee shall not engage in any activities or
permit to be kept, used, or sold in or about the Leased Premises any article,
which may be prohibited by the standard form of fire insurance policies. Lessee
shall, at its sole cost and expense, comply with any and all requirements
pertaining to the Leased Premises, its occupation and/or use, of any insurance
organization or company, necessary for the maintenance of reasonable fire and
public liability insurance covering the Building, the Complex and appurtenances.
12. COMPLIANCE WITH LAWS AND REGULATIONS
12.1 Lessee's Obligations.
(a) Generally. Lessee, shall, at its sole cost and expense, comply
---------
with all of the requirements of all municipal, state and federal authorities now
in force, or which may hereafter be in force, pertaining to the Leased Premises,
and shall faithfully observe in the use of the Leased Premises all municipal
ordinances and state and federal statutes and regulations now in force or which
may hereafter be in force, including, without limitation, the Environmental Laws
(as hereinafter defined), and the ADA (as hereinafter defined), whether or not
any of the foregoing were foreseeable or unforeseeable at the time of the
execution of this Lease. The judgment of any court of competent jurisdiction, or
the admission of Lessee in any action or proceeding against Lessee, whether
Lessor be a party thereto or not, that any such requirement, ordinance, statute
or regulation pertaining to the Leased Premises has been violated, shall be
conclusive of that fact as between Lessor and Lessee. Within five (5) days after
receipt of notice or knowledge of any violation or alleged violation of any
Environmental Law(s) and/or the ADA pertaining to the Complex, any governmental
or regulatory proceedings, investigations, sanctions and/or actions threatened
or commenced with respect to any such violation or alleged violation, and any
claim made or commenced with respect to such violation or alleged violation,
Lessee shall notify Lessor thereof and provide Lessor with copies of any written
notices or information in Lessee's possession.
(b) ADA Compliance. Under the Americans with Disabilities Act, 42
U.S.C. (S)(S) 12101-12213 (and any rules, regulations, restrictions, guidelines,
requirements or publications promulgated or published pursuant thereto,
collectively herein referred to as the "ADA"), responsibility for compliance
with the ADA may be allocated by agreement between landlord and tenant. Similar
principles apply to the Washington State Barrier Free Facilities Code ("BFFC").
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<PAGE>
Accordingly, (i) Lessee shall be responsible for compliance with the ADA and the
BFFC for any construction, renovation, alterations and repairs made within the
Premises (without regard to which party carries out such construction,
renovation, alteration or repairs or which party pays for the same under the
other provisions of this Lease), and (ii) Lessor shall be responsible for
compliance with the ADA and the BFFC for the exterior and common areas of the
Buildings at all times during the Term. To the extent the exterior and common
areas of the Building do not comply with the requirements of the ADA or the BFFC
in effect as of the date of mutual execution of this Lease, Lessor shall not be
entitled to pass the cost of correcting such violations onto the Lessee as an
Operating Cost. To the extent the exterior and common areas of the Building do
not comply with requirements of the ADA or the BFFC first adopted or promulgated
after the date of mutual execution of this Lease, Lessor shall be entitled to
pass the cost of correcting such violations onto the Lessee as part of Operating
Costs.
12.2 Condition of Leased Premises. Subject to Lessor's work, if any, as
referred to in Exhibit D to this Lease (including completion of any and all
Punchlist Items) and subject to the express warranty contained in this Section
12.2, Lessee hereby accepts the Leased Premises in the condition existing as of
the date of occupancy, subject to all applicable zoning, municipal, county and
state laws, ordinances, rules, regulations, orders, restrictions of record, and
requirements in effect during the Term or any part of the Term hereof regulating
the Leased Premises, and without representation, warranty or covenant by Lessor,
express or implied, as to the condition, habitability or safety of the Leased
Premises, the suitability or fitness thereof for Lessee's intended purposes, or
any other matter. Lessor warrants to Lessee that the Tenant Improvements shall
be free of latent defects for a period of one year commencing as of the date of
substantial completion of the Building. Any warranty claim by Lessee, to be
effective and valid, must be delivered to Lessor in writing prior to expiration
of such one year warranty period.
12.3 Hazardous Materials.
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(a) Hazardous Materials Defined. As used herein, the term "Hazardous
---------------------------
Materials" shall mean any wastes, materials or substances (whether in the form
of liquids, solids or gases, and whether or not air-borne), which are or are
deemed to be pollutants or contaminants, or which are or are deemed to be
hazardous, toxic, ignitable, reactive, corrosive, dangerous, harmful or
injurious, or which present a risk, to public health or to the environment, or
which are or may become regulated by or under the authority of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Section 9601 et seq.; the Hazardous Materials Transportation Act, 39 U.S.C.
Section 1801, et seq.; the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.; the Federal Clean
Water Act, 33 U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Section
7401 et seq.; or under any other applicable local, Washington State or federal
laws, judgments, ordinances, orders, rules, regulations, codes or other
governmental restrictions, guidelines or requirements, any amendments or
successor(s) thereto, replacements thereof or publications promulgated pursuant
thereto (collectively "Environmental Laws"), including, without limitation, any
waste, material or substance which is:
(i) defined as a "hazardous substance" or "pollutant or
contaminant" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601
et seq.;
(ii) listed as an "extremely hazardous substance," "hazardous
chemical," or "toxic chemical" pursuant to the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. (S) 11001 et seq.;
(iii) listed as a "hazardous substance" in the United States
Department of Transportation Table, 49 C.F.R. 172.101 and amendments thereto, or
by the Environmental Protection Agency (or any successor agency) in 40 C.F.R.
Part 302 and amendments thereto;
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<PAGE>
(iv) defined, listed or designated by regulations promulgated
pursuant to any Environmental Law; or
(v) any of the following: pesticide; flammable explosive;
petroleum, including crude oil or any fraction thereof; asbestos or asbestos-
containing material; polychlorinated biphenyl; radioactive material; or urea
formaldehyde.
In addition to the foregoing, the term Environmental Laws shall be
deemed to include, without limitation, local, state and federal laws, judgments,
ordinances, orders, rules, regulations, codes and other governmental
restrictions, guidelines and requirements, any amendments and successors
thereto, replacements thereof and publications promulgated pursuant thereto,
which deal with or otherwise in any manner relate to, air or water quality, air
emissions, soil or ground conditions or other environmental matters of any kind.
(b) Use, etc. of Hazardous Materials. Lessee agrees that during the
--------------------------------
Term, there shall be no use, presence, disposal, storage, generation, leakage,
treatment, manufacture, import, handling, processing, release or threatened
release of Hazardous Materials on, from or under the Leased Premises by Lessee,
its employees, agents, representatives, contractors, invitees, subtenants and/or
assigns (hereinafter collectively, "Lessee's Parties."). Notwithstanding the
preceding sentence, Lessee may use and store ordinary office, cleaning or
janitorial supplies containing Hazardous Materials in the Leased Premises
provided such use and storage is in compliance with all applicable laws and
regulations and is consistent in terms of nature and quantity with that of other
office users. The use, presence, disposal, storage, generation, leakage,
treatment, manufacture, import, handling, processing, release or threatened
release of Hazardous Materials by Lessee's Parties are sometimes hereinafter
individually or collectively referred to as "Hazardous Use." Lessee shall not be
entitled to install any tanks under, on or about the Leased Premises for the
storage of Hazardous Materials without the express written consent of Lessor,
which may be given or withheld in Lessor's sole arbitrary judgment.
(c) Hazardous Materials Report; When Required. In the event that
-----------------------------------------
Lessor agrees in writing that Lessee or Lessee's Parties may make some Hazardous
Use of the Leased Premises, Lessee shall submit to Lessor a written report with
respect to Hazardous Materials ("Report") in the form prescribed in subparagraph
(d) below on the following dates:
(i) Within ten (10) days after the Commencement Date,
(ii) Within ten (10) days after each anniversary of the
Commencement Date during the Term,
(iii) At any time within ten (10) days after written request by
Lessor, and
(iv) At any time when there has been or is planned any
condition which constitutes or would constitute a change in the information
submitted in the most recent Report, including any notice of violation as
referred to in subparagraph (d)(vii) below.
(d) Hazardous Materials Report; Contents. The Report shall contain,
------------------------------------
without limitation, the following information:
(i) Whether on the date of the Report and (if applicable)
during the period since the last Report there has been any Hazardous Use on,
from or under the Leased Premises.
(ii) If there was such Hazardous Use, the exact identity of
the Hazardous Materials, the dates upon which such materials were brought upon
the Leased Premises, the dates upon which the Hazardous Materials were removed
therefrom, and the quantity, location, use and purpose thereof.
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<PAGE>
(iii) If there was such Hazardous Use, any governmental permits
maintained by Lessee with respect to such Hazardous Materials, the issuing
agency, original date of issue, renewal dates (if any) and expiration date.
Copies of any such permits and applications therefor shall be attached.
(iv) If there was such Hazardous Use, any governmental
reporting or inspection requirements with respect to such Hazardous Materials,
the governmental agency to which reports are made and/or which conducts
inspections, and the dates of all such reports and/or inspections (if
applicable) since the last Report. Copies of any such Reports shall be attached.
(v) If there was such Hazardous Use, identification of any
operation or business plan prepared for any government agency with respect to
any Hazardous Use.
(vi) Any liability insurance carried by Lessee with respect to
Hazardous Materials, the insurer, policy number, date of issue, coverage
amounts, and date of expiration. Copies of any such policies or certificates of
coverage shall be attached.
(vii) Any notices of violation of Environmental Laws, written
or oral, received by Lessee from any governmental agency since the last Report,
the date, name of agency, and description of violation. Copies of any such
written notices shall be attached.
(viii) Any knowledge, information or communication which Lessee
has acquired or received relating to (x) any enforcement, cleanup, removal or
other governmental or regulatory action threatened or commenced against Lessee
or with respect to the Leased Premises pursuant to any Environmental Laws; (y)
any claim made or threatened by any person or entity against Lessee or the
Leased Premises on account of any alleged loss or injury claimed to result from
any alleged Hazardous Use on or about the Leased Premises or Complex; or (z) any
report, notice or complaint made to or filed with any governmental agency
concerning any Hazardous Use on or about the Leased Premises or Complex. The
Report shall be accompanied by copies of any such claim, report, complaint,
notice, warning or other communication that is in the possession of or is
available to Lessee.
(ix) Such other pertinent information or documents as are
reasonably requested by Lessor in writing.
(e) Release of Hazardous Materials: Notification and Cleanup. If at
---------------------------------------------------------
any time during the Term Lessee knows or believes that any release of any
Hazardous Materials by Lessee's Parties has come or will come to be located
upon, about or beneath the Leased Premises or the Complex, then Lessee shall
immediately, either prior to the release or following the discovery thereof by
Lessee, give verbal and follow-up written notice of that condition to Lessor.
Lessee covenants to investigate, clean up and otherwise remediate any release of
Hazardous Materials by Lessee's Parties at Lessee's cost and expense; such
investigation, clean-up and remediation shall be performed only after Lessee has
obtained Lessor's written consent, which shall not be unreasonably withheld;
provided, however, that Lessee shall be entitled to respond immediately to an
emergency without first obtaining Lessor's written consent. All clean-up and
remediation shall be done in compliance with Environmental Laws and to the
reasonable satisfaction of Lessor. Notwithstanding the foregoing, whether or not
such work is prompted by the foregoing notice from Lessee or is undertaken by
Lessor for any other reason whatsoever, Lessor shall have the right, but not the
obligation, in Lessor's sole and absolute discretion, exercisable by written
notice to Lessee at any time, to undertake within or outside the Leased Premises
all or any portion of any investigation, clean-up or remediation with respect to
Hazardous Materials brought onto, used, or released on, under or around the
Leased Premises or the Complex by Lessee's Parties (or, once having undertaken
any of such work, to cease same, in which case Lessee shall perform the work),
all at Lessee's cost and expense, which shall be paid by Lessee as additional
Rent within ten (10) days after receipt of written request therefor by Lessor
(and which Lessor may require to be paid prior to commencement
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<PAGE>
of any work by Lessor). No such work by Lessor shall create any liability on the
part of Lessor to Lessee or any other party in connection with such Hazardous
Materials or constitute an admission by Lessor of any responsibility with
respect to such Hazardous Materials. It is the express intention of the parties
hereto that Lessee shall be liable under this Section 12.3(e) for any and all
conditions covered hereby which were caused or created (i) by any of Lessee's
Parties, or (ii) by any Hazardous Materials brought onto the Leased Premises or
the Complex by or for the benefit of Lessee's Parties. Lessee shall not enter
into any settlement agreement, consent decree or other compromise with respect
to any claims relating to any Hazardous Materials in any way connected to the
Leased Premises or the Complex without first (i) notifying Lessor of Lessee's
intention to do so and affording Lessor the opportunity to participate in any
such proceedings, and (ii) obtaining Lessor's prior written consent.
(f) Inspection and Testing by Lessor. Lessor shall have the right at
--------------------------------
all times during the Term to (i) inspect the Leased Premises, as well as
Lessee's books and records related to Hazardous Materials, and to (ii) conduct
tests and investigations to determine whether Lessee is in compliance with the
provisions of this Section. Except in case of emergency, Lessor shall give
reasonable notice to Lessee before conducting any inspections, tests, or
investigations. The cost of all such inspections, tests and investigations shall
be borne by Lessee, if such tests reveal a violation of the provisions of this
Article 12 by any of Lessee's Parties. Neither any action nor inaction on the
part of Lessor pursuant to this Section 12.3(f) shall be deemed in any way to
release Lessee from, or in any way modify or alter, Lessee's responsibilities,
obligations, and/or liabilities incurred pursuant to Section 12.3 hereof.
12.4 Indemnity. Lessee shall indemnify, hold harmless, and, at Lessor's
option (with such attorneys as Lessor may approve in advance and in writing),
defend Lessor and Lessor's officers, directors, shareholders, trustees,
partners, employees, contractors, agents and mortgagees or other lien holders,
from and against any and all claims, demands, expenses, actions, judgments,
damages (whether consequential, direct or indirect, known or unknown, foreseen
or unforeseen), penalties, fines, liabilities, losses of every kind and nature
(including, without limitation, property damage, diminution in value of Lessor's
interest in the Leased Premises or the Complex, damages for the loss or
restriction on use of any space or amenity within the Leased Premises or the
Complex, damages arising from any adverse impact on marketing space in the
Complex, sums paid in settlement of claims and any costs and expenses associated
with injury, illness or death to or of any person), suits, administrative
proceedings, costs and fees, including, but not limited to, attorneys' and
consultants' fees and expenses, and the costs of cleanup, remediation, removal
and restoration (all of the foregoing being hereinafter sometimes collectively
referred to as "Losses"), arising from or related to any violation or alleged
violation of any of the requirements, ordinances, statutes, regulations or other
laws referred to in this Article, including, without limitation, the
Environmental Laws, by any of Lessee's Parties; any breach of the provisions of
this Article 12 by any of Lessee's Parties; or any Hazardous Use on, about or
from the Leased Premises or the Complex by Lessee's Parties. Lessee warrants
that it is leasing the Leased Premises "as-is, where-is," that it has thoroughly
inspected the Leased Premises prior to execution of this Lease, and that it
intends to act as an insurer with respect to any Hazardous Use on, under or
about the Leased Premises or the Complex by Lessee's Parties.
12.5 Landlord Environmental Responsibilities. Notwithstanding anything to
the contrary in Article 12, Lessor represents and warrants to Lessee that, to
Lessor's actual knowledge and except as otherwise disclosed to Lessee in writing
prior to date hereof, the Leased Premises, the Building and Complex, as of the
date hereof, are free of the presence of any Hazardous Materials. Lessor shall
defend, indemnify and hold Lessee harmless from and against any damages, costs,
or expenses (including without limitation attorney and consultant fees, court
costs and litigation expenses) related to or arising out of (a) the breach of
the representations and warranties of Lessor contained in this Section 12.5, (b)
any Hazardous Use on, about or from the Leased Premises or the Complex by any of
Lessor or Lessor's officers, directors, shareholders, trustees, partners,
employees, agents or contractors, or (c) any violation or alleged violation of
the Environmental Laws, by any of Lessor or Lessor's officers, directors,
shareholders, trustees, partners, employees, agents or
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contractors. The foregoing indemnity shall not extend to the acts or omissions
of other tenants in the Complex or the acts and omissions of the officers,
directors, shareholders, trustees, partners, employees, agent or contractors of
such tenants.
13. SERVICE AND EQUIPMENT
13.1 Climate Control. So long as Lessee is not in default under any of the
covenants of this Lease, Lessor, as part of Operating Costs, shall provide
climate control to the Leased Premises from 7:00 a.m. to 6:00 p.m. (the "Climate
Control Hours") on weekdays (Saturdays, Sundays and holidays excepted) to
maintain a temperature adequate for comfortable occupancy, provided that Lessor
shall have no responsibility or liability for failure to supply climate control
service when making repairs, alterations or improvements or when prevented from
so doing by strikes or any other cause beyond Lessor's reasonable control. Any
climate control furnished for periods not within the Climate Control Hours
pursuant to Lessee's request shall be at Lessee's sole cost and expense in
accordance with rate schedules promulgated by Lessor from time to time, which
rate schedules shall be limited to Lessor's actual costs together with a
reasonable markup to compensate Lessor for the administration and collection of
such charges. Lessee acknowledges that Lessor has installed in the Building a
system for the purpose of climate control. Any use of the Leased Premises not in
accordance with the design standards or any arrangement of partitioning which
interferes with the normal operation of such system may require changes or
alterations in the system or ducts through which the climate control system
operates. Any changes or alterations so occasioned, if such changes can be
accommodated by Lessor's equipment, shall be made by Lessee at its cost and
expense but only with the written consent of Lessor first had and obtained, and
in accordance with drawings and specifications and by a contractor first
approved in writing by Lessor. If installation of partitions, equipment or
fixtures by Lessee necessitates the re-balancing of the climate control
equipment in the Leased Premises, the same will be performed by Lessor at
Lessee's expense. Lessee acknowledges that up to one (1) year may be required
after Lessee has fully occupied the Leased Premises in order to adjust and
balance the climate control systems. Any charges to be paid by Lessee hereunder
shall be due within ten (10) days of receipt of an invoice from Lessor, which
invoice may precede Lessor's expenditure for the benefit of Lessee.
13.2 Elevator Service. Lessor, as part of Operating Costs, shall provide
elevator service (which may be with or without operator at Lessor's option)
during normal business hours and after hours provided that Lessee, its
employees, and all other persons using such services shall do so at their own
risk.
13.3 Cleaning Public Areas. Lessor, as part of Operating Costs, shall
maintain and keep clean the street level lobbies, sidewalks, truck dock, public
corridors and other public portions of the Building.
13.4 Refuse Disposal. Lessee shall pay Lessor, within ten (10) days of
being billed therefor, for the removal from the Leased Premises and the Building
of such refuse and rubbish of Lessee as shall exceed that ordinarily accumulated
daily in the routine of business office occupancy.
13.5 Janitorial Service. Lessor, as part of Operating Costs, shall provide
cleaning and janitorial service in and about the Complex and Leased Premises
daily on weekdays (Saturdays, Sundays and holidays excepted) in accordance with
standards in Class A office buildings of comparable age and size in the city in
which the Building is located.
To the extent that Lessee shall require special or more frequent cleaning
and/or janitorial service (hereinafter referred to as "Special Cleaning
Service") Lessor may, upon reasonable advance notice from Lessee, elect to
furnish such Special Cleaning Service and Lessee agrees to pay Lessor, within
ten (10) days of being billed therefor, Lessor's charge for providing such
additional service.
Special Cleaning Service shall include but shall not be limited to the
following:
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(a) The cleaning and maintenance of any Lessee food preparation
facilities, including the removal of refuse and garbage therefrom.
(b) The cleaning and maintenance of Lessee computer centers,
including peripheral areas, and removal of waste paper therefrom to the extent
the cleaning and maintenance required for such computer center is different or
greater than what would be required for the cleaning and maintenance of ordinary
office space.
(c) The cleaning and maintenance of special equipment areas, kitchen
areas, private toilets and locker rooms, medical centers and large scale
duplicating rooms.
(d) The cleaning and maintenance in areas of special security such as
storage units.
(e) The provision of consumable supplies for private toilet rooms.
13.6 Interruptions. Lessor does not warrant that any of the services
referred to above or any other services and/or utilities which Lessor may supply
or are supplied will be free from interruption and/or the need for maintenance
and repairs or replacement. Lessee acknowledges that any one or more such
services may be suspended or reduced by reason of repairs, alterations or
improvements necessary to be made, by strikes or accidents, by any cause beyond
the reasonable control of Lessor, by orders or regulations of any federal,
state, county or municipal authority, or by any other cause or reason. In
addition, Lessor shall have no liability for damages arising from, and Lessor
does not warrant that Lessee's use of any Lines will be free from, (a) any
eavesdropping or wire-tapping by unauthorized parties, (b) any failure of any
Lines to satisfy Lessee's requirements, or (c) any shortages, failures,
variations, interruptions, disconnections, loss or damage caused by
installation, maintenance, replacement, use or removal of Lines by or for other
occupants of the Complex, by any failure of the environmental conditions or the
power supply for the Building to conform to any requirements for the Lines or
any associated equipment or any other problems associated with any Lines by any
other cause.
Any such interruption or suspension of services shall not be deemed an
eviction or disturbance of Lessee's use and possession of the Leased Premises or
any part thereof, nor render Lessor liable to Lessee for damages by abatement of
Rent or otherwise, nor relieve Lessee of performance of Lessee's obligations
under this Lease.
Notwithstanding anything to the contrary in this Section 13.6, if any
interruption in the use of any service or utility continues for more than three
(3) business days after written notice to Lessor of such interruption, such
interruption is caused by Lessor's negligence, willful misconduct or failure to
correct a condition within Lessor's reasonable control and such interruption
results in a cessation of or substantial interference with Lessee's operations
on the Leased Premises, Lessee shall be entitled as its sole and exclusive
remedy to bring a legal action directly against Lessor seeking recovery of any
and all damages suffered and losses incurred by Lessee (including but not
limited to loss of business) due to an interruption of utilities for a period
greater than seventy-two (72) hours.
14. WASTE
14.1 Waste or Nuisance. Lessee shall not commit, or suffer to be
committed, any waste upon the Leased Premises, or any nuisance, or other act or
thing which may disturb the quiet enjoyment of any other tenant or occupant of
the Complex in which the Leased Premises are located.
15. ALTERATIONS
15.1 Consent of Lessor; Ownership. Lessee shall not make, or suffer to be
made, any alterations to the Leased Premises, the Building, or the Complex,
and/or Lines, systems and facilities therein, or any part thereof, without the
written consent of Lessor first had and obtained. Notwithstanding the preceding
sentence, Lessee shall not be required to obtain Lessor's consent to make minor
alterations to the interior of the Leased Premises if (i) such minor alterations
do
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not exceed $10,000 in cost, (ii) such minor alterations do not in any way affect
any structural, mechanical or electrical components of the Building or Complex
or any Common Area elements, and (iii) Lessor receives notice of such minor
alterations at least ten (10) days prior to commencement of construction of such
minor alterations. Any additions to or alterations of the Leased Premises
(except trade fixtures) shall, immediately upon being made, constitute a part of
the realty and Lessor's property, and shall, at the expiration or earlier
termination of this Lease, remain upon the Leased Premises without compensation
to Lessee, excerpt and to the extent that Lessor requires such items to be
removed prior to Lease expiration or termination, as provided in Section 15.4,
below. Except as otherwise provided in this Lease, Lessee shall have the right
to remove its trade fixtures placed upon the Leased Premises, provided that
Lessee restores the Leased Premises as indicated below. Any and all costs
incurred by Lessor, whether in complying with laws, governmental requirements or
otherwise, as a result of any "alterations" (as hereinafter defined), or as a
result of request by Lessee for increased Lines or other utility capacity above
that presently existing (or, in the event the Building is to be constructed or
substantially altered by Lessor prior to the delivery date, above that which is
planned by Lessor for the Building) shall be paid by Lessee within ten (10) days
after demand therefor by Lessor.
15.2 Requirements. Any alterations, additions or installations performed
by Lessee in the Leased Premises or Building (hereinafter collectively
"alterations") shall be subject to strict conformity with the following
requirements:
(a) All alterations shall be at the sole cost and expense of Lessee;
(b) At least ten (10) days prior to commencement of any work of
alteration, Lessee shall submit detailed plans and specifications, including
working drawings (hereinafter referred to as "Plans"), of the proposed
alterations, which shall be subject to the consent of Lessor in accordance with
the terms of Section 15.1 above. Prior to commencement of the Work, Lessor will
notify Lessee in writing whether Lessee will be responsible for removing the
alteration upon surrender of the Leased Premises at expiration or sooner
termination of the Lease;
(c) Following approval of the Plans by Lessor, Lessee shall give
Lessor at least ten (10) days' prior written notice of commencement of work in
the Leased Premises so that Lessor may post notices of non-responsibility in or
upon the Leased Premises as provided by law;
(d) No alterations shall be commenced without Lessee having
previously obtained all appropriate permits and approvals required by and of
governmental agencies;
(e) All alterations shall be performed in a skillful and workmanlike
manner, consistent with the best practices and standards of the construction
industry, and pursued with diligence in accordance with the Plans previously
approved by Lessor and in full accord with all applicable laws and ordinances.
All material, equipment, and articles incorporated in the alterations are to be
new and of recent manufacture and of the most suitable grade for the purpose
intended;
(f) Lessee must obtain the prior written approval from Lessor for
Lessee's contractor and subcontractors before the commencement of the work,
which approval Lessor shall not unreasonably withhold. Lessee's contractor shall
maintain all of the insurance reasonably required by Lessor, including, without
limitation, commercial general liability, workers' compensation, builder's risk
and course of construction insurance. The limits of such insurance shall, at a
minimum, be the same as those specified in Article 18;
(g) As a condition of approval of the alterations, Lessor may require
performance and labor and materialmen's payment bonds issued by a surety
approved by Lessor, in a sum equal to the cost of the alterations guarantying
the completion of the alterations free and clear of all liens and other charges
in accordance with the Plans. Such bonds shall name Lessor as beneficiary;
(h) The alterations must be performed in a manner such that they will
not
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<PAGE>
interfere with the quiet enjoyment of the other lessees in the Complex;
(i) Lessor shall have the right to condition any approval of the
alterations upon (i) submission by Lessee of a Report with respect to Hazardous
Materials, and/or (ii) the performance by Lessee at Lessee's cost and expense of
such investigation, clean-up and remediation with respect to Hazardous Materials
as Lessor may request, in Lessor's sole and absolute discretion; provided,
however, that Lessor shall have the right, but not the obligation, to undertake
all or any portion of such investigation, clean-up or remediation at Lessee's
cost and expense in accordance with the provisions of Section 12.3(e) above.
Lessee acknowledges and agrees that Lessor shall have the right, in its sole and
absolute discretion, to disapprove the making of any such alterations based upon
the results of any investigation with respect to Hazardous Materials.
15.3 Liens. Lessee shall keep the Leased Premises and the Complex in which
the Leased Premises are situated free from any liens arising out of any work
performed, materials furnished or obligations incurred by Lessee. In the event a
mechanic's or other lien is filed against the Leased Premises or the Complex of
which the Leased Premises form a part as a result of a claim arising through
Lessee, Lessor may demand that Lessee furnish to Lessor a surety bond
satisfactory to Lessor in an amount equal to at least one hundred fifty percent
(150%) of the amount of the contested lien claim or demand, indemnifying Lessor
against liability for the same and holding the Leased Premises free from the
effect of such lien or claim. Such bond must be posted within ten (10) days
following notice from Lessor. In addition, Lessor may require Lessee to pay
Lessor's attorneys' fees and costs in participating in any action to foreclose
such lien if Lessor shall decide it is to its best interest to do so. Lessor may
pay the claim prior to the enforcement thereof, in which event Lessee shall
reimburse Lessor in full, including attorneys' fees, for any such expense, as
additional rent, with the next due rental.
15.4 Restoration. Lessee shall return the Leased Premises to Lessor at the
expiration or earlier termination of the Term of this Lease in good and sanitary
order, condition and repair, free of rubble and debris, broom clean, reasonable
wear and tear excepted. However, Lessee shall ascertain from Lessor at least
thirty (30) days prior to the expiration or earlier termination of the Term of
this Lease, whether Lessor still desires removal of the permitted alterations
for which Lessor gave the notice specified in Section 15.2(b), and if Lessor
shall so desire, then Lessee shall forthwith remove such alterations from the
Leased Premises and restore the affected portions of the Leased Premises to
their original condition, entirely at its own expense, excepting normal wear and
tear. All damage to the Leased Premises caused by the removal of such trade
fixtures and other personal property that Lessee is permitted to remove under
the terms of this Lease and/or such restoration shall be repaired by Lessee at
its sole cost and expense prior to termination.
16. PROPERTY INSURANCE
16.1 Use of Premises. No use shall be made or permitted to be made on the
Leased Premises, nor acts done, which will increase the existing rate of
insurance upon the Building in which the Leased Premises are located or upon any
other building or improvement in the Complex or cause the cancellation of any
insurance policy covering the Building or any other building or improvement in
the Complex, or any part thereof, nor shall Lessee sell, or permit to be kept,
used or sold, in or about the Leased Premises or the Complex, any article which
may be prohibited by the standard form of "All Risk" fire insurance policies.
Lessee shall, at its sole cost and expense, comply with any and all requirements
of any insurance organization or company, pertaining to the Leased Premises,
necessary for the maintenance of reasonable property damage and commercial
general liability insurance, covering the Leased Premises, the Building, or the
Complex.
16.2 Increase in Premiums. Lessee agrees to pay to Lessor directly, as
additional Rent and not as part of Operating Costs, any increase in premiums on
policies which may be carried by Lessor on the Leased Premises, the Building or
the Complex, or any blanket policies which include the Building or Complex,
covering damage thereto and loss of Rent caused by fire and other perils,
resulting from the nature of Lessee's occupancy or any act or omission of
Lessee. All payments of
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<PAGE>
additional Rent by Lessee to Lessor pursuant to this Section 16.2 shall be made
within ten (10) days after receipt by Lessee of Lessor's billing therefor.
Lessee shall also pay its Pro Rata Percent of all premiums for insurance carried
by Lessor on the Leased Premises, the Building and the Complex as part of
Operating Costs.
16.3 Personal Property Insurance. Lessee shall maintain in full force and
effect on all of its fixtures, furniture, equipment and other business personal
property in the Leased Premises a policy or policies providing protection
against any peril included within the classification "All Risk" (excluding, at
Lessee's option, earthquake and flood coverage) to the extent of at least ninety
percent (90%) of their replacement cost, or that percentage of the replacement
cost required to negate the effect of a coinsurance provision, whichever is
greater. No such policy shall have a deductible in a greater amount than Five
Thousand Dollars ($5,000). If Lessee has delivered to Lessor the Micron
Guaranty, as defined in the Addendum to Lease Agreement, then Lessee may satisfy
the policy requirement imposed by this Section 16.3 through a blanket insurance
policy maintained by Micron Electronics, Inc., provided that such blanket
insurance policy identifies Lessee as an named insured and provides for a per
location aggregate. If Lessee has delivered to Lessor the Micron Guaranty, as
defined in the Addendum to Lease Agreement, then, at Lessee's election, the
maximum policy deductible specified in this Section 16.3 may be increased from
Five Thousand Dollars ($5,000.00) to One Hundred Thousand Dollars ($100,000);
provided that in such case Lessee agrees that it will not pursue any claims
against Landlord for that portion of the property damage that would have been
covered by proceeds of Lessee's property insurance but for the fact that Lessee
increased its policy deductible amount above Five Thousand Dollars ($5,000).
Lessee shall also insure in the same manner the physical value of all its
leasehold improvements and alterations in the Leased Premises. During the Term,
the proceeds from any such policy or policies of insurance shall be used for the
repair or replacement of the fixtures, equipment, and leasehold improvements so
insured. Lessor shall have no interest in said insurance, and will sign all
documents necessary or proper in connection with the settlement of any claim or
loss by Lessee. Lessee shall also maintain business interruption insurance and
insurance for all plate glass upon the Leased Premises. All insurance specified
in this Section 16.3 to be maintained by Lessee shall be maintained by Lessee at
its sole cost.
16.4 Rent Loss/Business Interruption Insurance. Lessee shall carry
Business Interruption or loss of income insurance covering those risks referred
to in Articles 16 and 18 hereof, in an amount equal to all gross income of
Lessee generated from its operations in the Leased Premises for a period of
twelve (12) months at the then current rate of gross income earning. The parties
have agreed that Lessee may elect to not to maintain insurance policies for
business interruption coverage required under the preceding sentence, provided
that in exchange for Lessor's waiving this insurance requirement, (i) Lessee
agrees to solely assume the responsibility and risk for not procuring such
coverage and waives any claim against Lessor for direct or indirect loss from
business interruption to the extent such loss could have been covered by
business interruption insurance, and (ii) unless Lessee has delivered the Micron
Guaranty to Lessor, Lessee will carry rental value insurance for the benefit of
Lessor to assure that adequate funds would be available in the event of casualty
or other business interruption to pay the Rent due under the Lease for a minimum
period of 12 months.
16.5 Lessor's Insurance. Lessor shall maintain liability and casualty
------------------
insurance for the Building and Complex adequate in Lessor's reasonable judgment
to cover (with deductibles deemed appropriate in Lessor's reasonable judgment)
the risks customarily insured against by prudent owners of properties similar to
the Building (excluding, at Lessor's option, earthquake and flood coverage).
Subject to availability and subject to such deductibles as provided above,
Lessor's casualty insurance shall cover the Complex in an amount equal to at
least one hundred percent (100%) of replacement value of the Complex.
17. INDEMNIFICATION, WAIVER OF CLAIMS AND SUBROGATION
17.1 Intent and Purpose. This Article 17 is written and agreed to in
respect of the intent
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of the parties to assign the risk of loss, whether resulting from negligence of
the parties or otherwise, to the party who is obligated hereunder to cover the
risk of such loss with insurance. Thus, the indemnity and waiver of claims
provisions of this Lease have as their object, so long as such object is not in
violation of public policy, the assignment of risk for a particular casualty to
the party carrying the insurance for such risk, without respect to the causation
thereof.
17.2 Waiver of Subrogation. Lessor and Lessee release each other, and
their respective authorized representatives, from any claims for (i) damage to
the Leased Premises and the Building and other improvements in which the Leased
Premises are located, and to the furniture, fixtures, and other business
personal property, Lessee's improvements and alterations of either Lessor or
Lessee, in or on the Leased Premises and the Building and other improvements in
which the Leased Premises are located, and (ii) for loss of business or income
of either Lessor or Lessee, to the extent covered by insurance proceeds from
insurance policies carried by Lessor or Lessee or to the extent it would have
been covered by insurance proceeds if each party had maintained the insurance
policies required of it under this Lease.
17.3 Form of Policy. Each party shall cause each such property insurance
policy obtained by it to provide that the insurance company waives all rights of
recovery by way of subrogation against either party in connection with any
damage covered by such policy. Neither party shall be liable to the other for
any damage caused by any peril included within the classification "All Risk"
which is insured against under any property insurance policy carried under the
terms of this Lease.
17.4 Indemnity. Lessee, as a material part of the consideration to be
rendered to Lessor, shall indemnify, defend, protect and hold harmless Lessor
against all actions, claims, demands, damages, liabilities, losses, penalties,
or expenses of any kind which may be brought or imposed upon Lessor or which
Lessor may pay or incur by reason of injury to person or property or business,
from whatever cause, all or in any way connected with the acts and omissions of
Lessee, and the condition or use of the Leased Premises, or the improvements or
personal property therein or thereon, including without limitation any liability
or injury to the person or property or business of Lessee, its agents, officers,
employees or invitees. Lessee agrees to indemnify, defend and protect Lessor and
hold it harmless from any and all liability, loss, cost or obligation on account
of, or arising out of, any such injury or loss however occurring, including
breach of the provisions of this Lease and the negligence of the parties hereto.
Notwithstanding the foregoing, nothing contained herein shall obligate Lessee to
indemnify Lessor to extent the injury or damage was caused by the sole or active
negligence or willful misconduct of Lessor, Lessor's agents, contractors,
employees, representatives or invitees, or other tenants in the Complex.
17.5 Defense of Claims. In the event any action, suit or proceeding is
brought against Lessor by reason of any occurrence covered by Section 17.4,
above, Lessee, upon Lessor's request, will at Lessee's expense resist and defend
such action, suit or proceeding, or cause the same to be resisted and defended
by counsel designated either by Lessee or by the insurer whose policy covers the
occurrence and in either case reasonably approved by Lessor. The obligations of
Lessee under this Section arising by reason of any occurrence taking place
during the Term shall survive any termination of this Lease.
17.6 Waiver of Claims. Lessee, as a material part of the consideration to
be rendered to Lessor, hereby waives all claims against Lessor for damages or
injury, as described below, from any cause arising at any time, including the
negligence of the parties hereto:
(a) damages to goods, wares, merchandise and loss of business or
income in, upon or about the Leased Premises and injury to Lessee, its agents,
employees, invitees or third persons, in, upon or about the Leased Premises; and
(b) (notwithstanding anything to the contrary contained in this
Lease, including, without limitation, the definition of Operating Costs in
Section 2.1(k), which includes "policing") damages to goods, wares, merchandise
and loss of business, in, upon or about the Leased Premises
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<PAGE>
or the Complex, and injury to Lessee, its agents, employees, invitees or third
persons in, upon or about the Leased Premises or the Complex, where such damage
or injury results from Lessor's failure to police or provide security for the
Complex or Lessor's negligence in connection therewith.
Notwithstanding the foregoing, in no event shall Lessee be deemed to have
waived any claims as against Lessor where such claims are based upon, or arise
out of, the active negligence or willful misconduct of Lessor or Lessor's
agents, contractors, employees, representatives or invitees, provided, however,
in no event shall Lessor's agents, contractors, employees, representatives or
invitees be deemed to include other tenants in the Complex or the agents,
contractors, employees, representatives or invitees of such other tenants.
Lessee expressly acknowledges and agrees that the provisions of Section
12.6(b) above apply fully with respect to the matters waived pursuant to this
Section 17.6, and, for such purpose, the term Released Matters, as used in
Section 12.5(b), shall be deemed to include the matters waived pursuant to this
Section 17.6.
17.7 References. Wherever in this Article the term Lessor or Lessee is
used and such party is to receive the benefit of a provision contained in this
Article, such term shall refer not only to that party but also to its officers,
directors, shareholders, employees, contractors, partners, agents and mortgagees
or other lien holders.
18. LIABILITY INSURANCE
18.1 Lessee's Insurance. Lessee shall, at Lessee's expense, obtain and
keep in force during the Term, a commercial general liability insurance policy
insuring Lessee against the risks of, bodily injury and property damage,
personal injury, contractual liability, completed operations, products
liability, host liquor liability, owned and non-owned automobile liability
arising out of the ownership, use, occupancy or maintenance of the Leased
Premises and all areas appurtenant thereto. Such insurance shall be a combined
single limit policy in an amount not less than ONE MILLION DOLLARS
($1,000,000.00) per occurrence with a TWO MILLION DOLLAR ($2,000,000.00) annual
aggregate; and an umbrella policy of THREE MILLION DOLLARS ($3,000,000.00) any
one occurrence. Lessor and any lender or other party in interest shall be named
as additional insured(s). The policy shall contain cross liability endorsements,
if available from the insurer, and shall be primary, not contributing with, and
not in excess of coverage which Lessor may carry; shall state that Lessor is
entitled to recovery for the negligence of Lessee even though Lessor is named as
an additional insured; shall provide for severability of interest; shall provide
that an act or omission of one of the insured or additional insureds which would
void or otherwise reduce coverage shall not void or reduce coverages as to the
other insured or additional insured. The limits of said insurance shall not
limit any liability of Lessee hereunder. Not more frequently than every three
(3) years, if, in the reasonable opinion of Lessor, the amount of liability
insurance required hereunder is not adequate, Lessee shall promptly increase
said insurance coverage as required by Lessor. If Lessee has delivered to Lessor
the Micron Guaranty, as defined in the Addendum to Lease Agreement, then Lessee
may satisfy the policy requirements imposed by this Section 18.1 through a
blanket insurance policy maintained by Micron Electronics, Inc., provided that
such blanket insurance policy identifies Lessee as an named insured and provides
for a per location aggregate that meets or exceeds the minimum coverage amount
requirements stated above in this Section 18.1.
18.2 Workers' Compensation Insurance. Lessee shall carry Workers'
Compensation insurance as required by law, including an employers' liability
endorsement.
19. INSURANCE POLICY REQUIREMENTS
19.1 General Requirements. All insurance policies required to be carried
by Lessee (except Lessee's business personal property insurance) hereunder shall
conform to the following requirements:
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(a) The insurer in each case shall carry a designation in "Best's
Insurance Reports" as issued from time to time throughout the Term as follows:
Policyholders' rating of A; financial rating of not less than VII;
(b) The insurer shall be qualified to do business in the state in
which the Leased Premises are located;
(c) The policy shall be in a form and include such endorsements as
are reasonably acceptable to Lessor;
(d) Certificates of insurance shall be delivered to Lessor at
commencement of the Term and certificates of renewal at least thirty (30) days
prior to the expiration of each policy;
(e) Each policy shall require that Lessor be notified in writing by
the insurer at least thirty (30) days prior to any cancellation or expiration of
such policy.
20. LESSEE INSURANCE DEFAULT
20.1 Rights of Lessor. In the event that Lessee fails to obtain any
insurance required of it under the terms of this Lease, Lessor may, at its
option, but is not obligated to, obtain such insurance on behalf of Lessee and
bill Lessee, as additional rent, for the cost thereof. Payment shall be due
within ten (10) days of receipt of the billing therefor by Lessee.
21. FORFEITURE OF PROPERTY AND LESSOR'S LIEN
21.1 Removal of Personal Property. Lessee agrees that as at the date of
termination of this Lease or repossession of the Leased Premises by Lessor, by
way of default or otherwise, it shall remove all personal property to which it
has the right to ownership pursuant to the terms of this Lease. Any and all such
property of Lessee not removed by such date shall, at the option of Lessor,
irrevocably become the sole property of Lessor. Lessee waives all rights to
notice and all common law and statutory claims and causes of action which it may
have against Lessor subsequent to such date as regards the storage, destruction,
damage, loss of use and ownership of the personal property affected by the terms
of this Article. Lessee acknowledges Lessor's need to relet the Leased Premises
upon termination of this Lease or repossession of the Leased Premises and
understands that the forfeitures and waivers provided herein are necessary to
aid said reletting, and to prevent Lessor incurring a loss for inability to
deliver the Leased Premises to a prospective lessee.
22. MAINTENANCE AND REPAIRS
22.1 Lessor's Obligations. Subject to the other provisions of this Lease
imposing obligations in this respect upon Lessee, Lessor shall repair, replace
and maintain the external and Structural parts of the Complex which do not
comprise a part of the Leased Premises and are not leased to others, janitor and
equipment closets and shafts within the Leased Premises designated by Lessor for
use by it in connection with the operation and maintenance of the Complex, and
all Common Areas. Lessor shall perform such repairs, replacements and
maintenance with reasonable dispatch, in a good and workmanlike manner; but
Lessor shall not be liable for any damages, direct, indirect or consequential,
or for damages for personal discomfort, illness or inconvenience of Lessee by
reason of failure of equipment, Lines, facilities or systems or reasonable
delays in the performance of such repairs, replacements and maintenance, unless
caused by the deliberate act or omission of Lessor, its servants, agents, or
employees. The cost for such repairs, maintenance and replacement shall be
included in Operating Costs in accordance with Section 2.1(k) hereof.
22.2 Negligence of Lessee. If the Building, the elevators, boilers,
engines, pipes or apparatus used for the purpose of climate control of the
Building or operating the elevators, or if the water pipes, drainage pipes,
electric lighting or other equipment, Lines, systems and/or facilities of the
Building or the Complex, or the roof or the outside walls of the Building, fall
into a state of
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disrepair or become damaged or destroyed through the negligence, carelessness or
misuse of Lessee, its agents, employees or anyone permitted by it to be in the
Complex, or through it in any way, the cost of the necessary repairs,
replacements or alterations shall be borne by Lessee who shall pay the same to
Lessor as additional charges forthwith on demand.
22.3 Lessee's Obligations. Lessee shall maintain and repair the interior
portions of the Leased Premises, including without limiting the generality of
the foregoing, all interior partitions and walls, fixtures; all Tenant
Improvements and alterations in the Leased Premises; all electrical and
telephone outlets and conduits not concealed by floors, walls or ceilings; all
fixtures and shelving; and all special mechanical and electrical equipment
(which equipment is not a normal part of the Leased Premises) installed by or
for Lessee; reasonable wear and tear, damage with respect to which Lessor has an
obligation to repair as provided in Section 22.1 and Section 23.2 hereof only
excepted. Prior to commencement of any repairs, Lessee shall give Lessor at
least ten (10) days' prior written notice thereof so that Lessor may post
notices of non-responsibility in or upon the Leased Premises as provided by law.
Lessee must obtain the prior written approval from Lessor for Lessee's
contractor before the commencement of the repair, which approval shall not be
unreasonably withheld or delayed. Lessor may require that Lessee use a specific
contractor for certain types of repairs. Lessor may enter and view the state of
repair and Lessee will repair in a good and workmanlike manner according to
notice in writing. Notwithstanding the foregoing, Lessee shall not make any
repairs to the equipment, Lines, facilities or systems of the Building or
Complex which are outside of the Leased Premises or which do not exclusively
serve the Leased Premises.
22.4 Cleaning. Lessee agrees at the end of each business day to leave the
Leased Premises in a reasonably clean condition for the purpose of the
performance of Lessor's cleaning services referred to herein. Lessee shall
maintain the appearance of the Leased Premises in a manner consistent with the
character, use and appearance of the Complex.
22.5 Waiver. Lessee waives all rights it may have under law to make
repairs at Lessor's expense.
22.6 Acceptance. Except as to the construction obligations of Lessor, if
any, stated in Exhibit D to this Lease, Lessee shall accept the Leased Premises
in "as is" condition as of the date of execution of this Lease by Lessee, and
Lessee acknowledges that the Leased Premises in such condition are in good and
sanitary order, condition and repair.
23. DESTRUCTION
23.1 Rights of Termination. In the event the Leased Premises suffers (a)
an "uninsured property loss" (as hereinafter defined) or (b) a property loss
which cannot be repaired within one hundred ninety five (195) days from the date
of destruction under the laws and regulations of state, federal, county or
municipal authorities, or other authorities with jurisdiction, Lessor may
terminate this Lease as at the date of the damage upon written notice to Lessee
following the property loss. In the event of a property loss to the Leased
Premises which cannot be repaired within one hundred ninety-five (195) days of
the occurrence thereof, Lessee shall have the right to terminate the Lease by
written notice to Lessor within twenty (20) days following notice from Lessor
that the time for restoration shall exceed one hundred ninety-five (195) days.
For purposes of this Lease, the term "uninsured property loss" shall mean any
loss arising from a peril not covered by the standard form of "All Risk"
property insurance policy.
23.2 Repairs. In the event of a property loss which may be repaired within
one hundred ninety-five (195) days from the date of the damage, or, in the
alternative, in the event the parties do not elect to terminate this Lease under
the terms of Section 23.1 above, then this Lease shall continue in full force
and effect and Lessor shall forthwith undertake to make such repairs to
reconstitute the Leased Premises to as near the condition as existed prior to
the property loss as practicable. Such partial destruction shall in no way annul
or void this Lease except that Lessee shall be entitled to a proportionate
reduction of Minimum Rent and additional Rent following the property loss and
until
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the time the Leased Premises are restored. Such reduction shall be an amount
which reflects the degree of interference with Lessee's business. So long as
Lessee conducts its business in the Leased Premises, there shall be no abatement
until the parties agree on the amount thereof. If the parties cannot agree
within forty-five (45) days of the property loss, the matter shall be submitted
to arbitration under the rules of the American Arbitration Association. Upon the
resolution of the dispute, the settlement shall be retroactive and Lessor shall
within ten (10) days thereafter refund to Lessee any sums due in respect of the
reduced rental from the date of the property loss. Lessor's obligations to
restore shall in no way include any construction originally performed by Lessee
or subsequently undertaken by Lessee, but shall include solely that property
constructed by Lessor prior to commencement of the Term, including without
limitation, any Tenant Improvements.
23.3 Repair Costs. The cost of any repairs to be made by Lessor pursuant
to Section 23.2 of this Lease shall be paid by Lessor utilizing available
insurance proceeds, and Lessor shall have no obligation to restore the Leased
Premises or the Complex to the extent that the cost of such repairs or
restoration is not covered by insurance proceeds actually received by Lessor in
connection with such damage or destruction.
23.4 Waiver. Lessee hereby waives all statutory or common law rights of
termination in respect to any partial destruction or property loss which Lessor
is obligated to repair or may elect to repair under the terms of this Article.
Further, in event of a property loss occurring during the last two (2) years of
the original Term hereof or of any extension, Lessor need not undertake any
repairs and may cancel this Lease unless Lessee has the right under the terms of
this Lease to extend the Term for an additional period of at least five (5)
years and does so within thirty (30) days of the date of the property loss.
23.5 Lessor's Election. In the event that the Complex or Building in which
the Leased Premises are situated be destroyed to the extent of not less than
thirty-three and one-third percent (33-1/3%) of the replacement cost thereof,
Lessor may elect to terminate this Lease, whether the Leased Premises be injured
or not, in the same manner as in Section 23.1 above. At all events, a total
destruction of the Complex of which the Leased Premises form a part, or the
Leased Premises itself, shall terminate this Lease.
24. CONDEMNATION
24.1 Definitions.
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(a) "Condemnation" means (i) the exercise of any governmental power,
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whether by legal proceedings or otherwise, by a condemnor and/or (ii) a
voluntary sale or transfer by Lessor to any condemnor, either under threat of
condemnation or while legal proceedings for condemnation are pending.
(b) "Date of taking" means the date the condemnor has the right to
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possession of the property being condemned.
(c) "Award" means all compensation, sums or anything of value
-----
awarded, paid or received on a total or partial condemnation.
(d) "Condemnor" means any public or quasi-public authority, or
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private corporation or individual, having the power of condemnation.
24.2 Total Taking. If the Leased Premises are totally taken by
condemnation, this Lease shall terminate on the date of taking.
24.3 Partial Taking; Common Areas.
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(a) If any portion of the Leased Premises is taken by condemnation,
this Lease
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shall remain in effect, except that Lessee can elect to terminate this Lease if
any material portion of the Leased Premises is taken.
(b) If any part of the Common Areas of the Complex is taken by
condemnation, this Lease shall remain in full force and effect so long as there
is no material interference with the access to or parking for the Leased
Premises.
(c) If fifty percent (50%) or more of the Building in which the
Leased Premises are located is taken, Lessor shall have the election to
terminate this Lease in the manner prescribed herein.
24.4 Termination or Abatement. If either party elects to terminate this
Lease under the provisions of Section 24.3 (such party is hereinafter referred
to as the "Terminating Party"), it must terminate by giving notice to the other
party (the "Nonterminating Party") within thirty (30) days after the nature and
extent of the taking have been finally determined (the "Decision Period"). The
Terminating Party shall notify the Nonterminating Party of the date of
termination, which date shall not be earlier than sixty (60) days after the
Terminating Party has notified the Nonterminating Party of its election to
terminate nor later than the date of taking. If Notice of Termination is not
given within the Decision Period, the Lease shall continue in full force and
effect except that Minimum Rent and additional Rent shall be reduced by
subtracting therefrom an amount calculated by multiplying the Minimum Rent and
additional Rent in effect prior to the taking by a fraction, the numerator of
which is the number of square feet taken from the Leased Premises and the
denominator of which is the number of square feet in the Leased Premises prior
to the taking.
24.5 Restoration. If there is a partial taking of the Leased Premises and
this Lease remains in full force and effect pursuant to this Article, Lessor, at
its cost, shall accomplish all necessary restoration so that the Leased Premises
is returned as near as practical to its condition immediately prior to the date
of the taking, but in no event shall Lessor be obligated to expend more for such
restoration than the extent of funds actually paid to Lessor by the condemnor.
24.6 Award. Any award arising from the condemnation or the settlement
thereof shall belong to and be paid to Lessor, except that Lessee shall receive
from the award compensation for the following if specified in the award by the
condemning authority, so long as it does not reduce Lessor's award in respect of
the real property: Lessee's trade fixtures, tangible personal property, loss of
business and relocation expenses. At all events, Lessor shall be solely entitled
to all award in respect of the real property, including the bonus value of the
leasehold. Lessee shall not be entitled to any award until Lessor has received
the above sum in full.
25. ASSIGNMENT AND SUBLETTING
25.1 Lease is Personal. The purpose of this Lease is to transfer
possession of the Leased Premises to Lessee for Lessee's personal use in return
for certain benefits, including rent, to be transferred to the Lessor. Lessee's
right to assign or sublet as stated in this Article is subsidiary and incidental
to the underlying purpose of this Lease. Lessee acknowledges and agrees that it
has entered into this Lease in order to acquire the Leased Premises for its own
personal use and not for the purpose of obtaining the right to convey the
leasehold to others.
25.2 "Transfer of the Leased Premises" Defined. The terms "Transfer of the
Leased Premises" or "Transfer" as used herein shall include any assignment of
all or any part of this Lease (including assignment by operation of law),
subletting of all or any part of the Leased Premises or transfer of possession,
or granting of the right of possession or contingent right of possession of all
or any portion of the Leased Premises including, without limitation, license,
concession, mortgage, devise, hypothecation, agency, franchise or management
agreement, or suffering any other person (the agents and servants of Lessee
excepted) to occupy or use the Leased Premises or any portion thereof. If Lessee
is a corporation which is not deemed a public corporation, or is an
unincorporated association or partnership, or Lessee consists of more than one
party, the transfer, assignment or
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hypothecation of any stock or interest in such corporation, association,
partnership or ownership interest, in the aggregate in excess of twenty-five
percent (25%), shall be deemed a Transfer of the Leased Premises provided,
however, any sale or transfer of stock of Lessee as part of an Initial Public
Offering of its stock, or other similar offering of its ownership interests to
the general public which does not result in a change of the management or
business of Lessee and is not for the principal purposes of circumventing the
restrictions on transfer set forth in this Article 25 ("IPO") shall not
constitute a Transfer. The parties agree that it shall not be necessary for
Lessee to obtain the consent of Lessor before proceeding with any IPO.
25.3 No Transfer Without Consent. Lessee shall not suffer a Transfer of
the Leased Premises or any interest therein, or any part thereof, or any right
or privilege appurtenant thereto without the prior written consent of Lessor,
and a consent to one Transfer of the Leased Premises shall not be deemed to be a
consent to any subsequent Transfer of the Leased Premises. Any Transfer of the
Leased Premises without such consent shall (i) be voidable, and (ii) terminate
this Lease, in either case, at the option of Lessor. Notwithstanding the
foregoing and anything to the contrary elsewhere in this Article 25, Lessor
agrees that Tenant upon ten (10) days advance notice to Lessor may make a
Transfer of the Leased Premises to Micron Electronics, Inc., Micron PC Web
Services, Inc., or any wholly-owned affiliate or subsidiary of either Micron
Electronics, Inc., or Micron PC Web Services, Inc., without obtaining any
further consent from Lessor and without Sections 25.4, 25.5, 25.6 and 25.8(b)
applying to such Transfer, provided that such notice from Lessor identifies the
proposed transferee and includes a copy of an assignment and assumption
agreement in form reasonably satisfactory to Lessor which will be executed and
delivered to Lessor at the time of the Transfer to evidence the transferee's
express assumption of the obligations of Lessee under this Lease.
25.4 When Consent Granted.
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(a) The consent of Lessor to a Transfer may not be unreasonably
withheld, provided that it is agreed to be reasonable for Lessor to consider any
of the following reasons, which list is not exclusive, in electing to consent or
to deny consent:
(i) Financial strength of the proposed transferee is not at
least equal to that of Lessee at the time of execution of this Lease;
(ii) A proposed transferee whose occupation of the Leased
Premises would cause a diminution in the reputation of the Complex or the other
businesses located therein;
(iii) A proposed transferee whose impact on the common
facilities or the other occupants of the Complex would be disadvantageous;
(iv) A proposed transferee whose use presents a risk of
violation of Article 12;
(v) A proposed transferee whose occupancy will require a
variation in the terms of this Lease (for example, a variation in the use
clause) or which otherwise adversely affects any interest of Lessor;
(vi) A proposed transferee who is or is likely to be, or whose
business is or is likely to be, subject to compliance with additional laws or
other governmental requirements beyond those to which Lessee or Lessee's
business is subject; or
(vii) That the validity of the Transfer is conditioned on the
conformity of the Lessee and transferee with all provisions of this Lease at the
time of Transfer, including, without limitation, the requirement that there be
no uncured notices of default under the terms of this Lease.
(b) Notwithstanding the foregoing, Lessee shall have the right,
without the
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consent of Lessor, but upon prior written notice to Lessor, to assign this Lease
to a company incorporated or to be incorporated by Lessee, provided that Lessee
owns or beneficially controls all the issued and outstanding shares of capital
stock of the company; further provided, however, that in the event that at any
time following such assignment, Lessee wishes to sell, mortgage, devise,
hypothecate or in any other manner whatsoever transfer any portion of the
ownership or beneficial control of the issued and outstanding shares in the
capital stock of such company, such transaction shall be deemed to constitute a
Transfer and shall be subject to all of the provisions of this Article 25 with
respect to a Transfer of the Premises including, by specific reference, the
provisions of Section 25.8.
25.5 Procedure for Obtaining Consent.
-------------------------------
(a) Lessor need not commence its review of any proposed Transfer, or
respond to any request by Lessee with respect to such, unless and until it has
received from Lessee adequate descriptive information concerning the transferee,
the business to be conducted by the transferee, the transferee's financial
capacity, and such other information as may reasonably be required in order to
form a prudent judgment as to the acceptability of the proposed Transfer,
including, without limitation, the following:
(i) The past two years' Federal Income Tax returns of the
proposed transferee (or in the alternative the past two years' audited annual
Balance Sheets and Profit and Loss statements, certified correct by a Certified
Public Accountant);
(ii) Banking references of the proposed transferee;
(iii) A resume of the business background and experience of the
proposed transferee;
(iv) At least five (5) business and three (3) personal
references for the proposed transferee;
(v) An executed copy of the instrument by which Lessee
proposes to effectuate the Transfer.
(b) Lessee shall reimburse Lessor as additional Rent for Lessor's
reasonable costs and attorneys' fees incurred in conjunction with the processing
and documentation of any proposed Transfer of the Leased Premises, whether or
not consent is granted.
25.6 Recapture.
---------
(a) By written notice to Lessee (the "Termination Notice") within
twenty (20) business days following submission to Lessor by Lessee of the
information specified in Section 25.5, Lessor may terminate this Lease in the
event of a proposed assignment of this Lease or sublet of the entire Leased
Premises, or terminate this Lease as to the portion of the Leased Premises to be
sublet, if the proposed sublet is to be of less than the entire Leased Premises.
In the event Lessor elects to terminate this Lease as to that portion of the
Leased Premises to be sublet, an amendment to this Lease shall be executed
whereby the description of the Leased Premises is restated and Lessee's
obligations for rent and other charges are reduced in proportion to the
reduction in Rentable Area of the Leased Premises caused thereby.
(b) In the event that Lessor terminates this Lease or terminates this
Lease as to that portion of the Leased Premises proposed to be sublet, Lessor
may, if it elects, enter into a new lease covering the Leased Premises or the
affected portion thereof with the intended assignee or sublessee on such terms
as Lessor and such person may agree, or enter into a new lease covering the
Leased Premises with any other person; in such event, Lessee shall not be
entitled to any portion of the profit if any which Lessor may realize on account
of such termination and reletting. From and
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after the date of such termination of this Lease, the parties shall have no
further obligations to each other under this Lease except for matters occurring
or obligations arising prior to the date of such termination.
25.7 Reasonable Restriction. The restrictions on Transfer described in
this Article 25 are acknowledged by Lessee to be reasonable for all purposes.
25.8 Effect of Transfer. If Lessor consents to a Transfer, the following
conditions shall apply:
(a) Each and every covenant, condition or obligation imposed upon
Lessee by this Lease and each and every right, remedy or benefit afforded Lessor
by this Lease shall not be impaired or diminished as a result of such Transfer.
(b) Lessee shall pay to Lessor on a monthly basis, eighty percent
(80%) of the excess of any sums of money, or other economic consideration
received by Lessee from the Transferee in such month (whether or not for a
period longer than one month) for the, including higher rent, bonuses, key
money, or the like over the aggregate, of (i) the amortized portion of the
reasonable expenses actually paid by Lessee to unrelated third parties for
brokerage commissions, tenant improvements to the Leased Premises, or design
fees incurred as a direct consequence of the Transfer, and, (ii) the total sums
which Lessee pays Lessor under this Lease in such month, or the prorated portion
thereof if the portion of the Leased Premises transferred is less than the
entire Leased Premises. The parties acknowledge and agree that, if the Transfer
is part of a larger transaction (e.g. sale of Lessee's business or sale of
Lessee's premises together with Lessee's furniture and office equipment), Lessor
shall only be entitled under this Section 25.8(b) to participate in that portion
of the economic consideration attributable to the Transfer of the Leased
Premises, as reasonably determined by Lessor. The amount so derived shall be
paid with Lessee's payment of Minimum Rent. The term "amortized portion" is that
portion of the applicable expenses derived by dividing such expenses by the
number of months in the original term of the Transfer transaction.
(c) No Transfer, whether or not consent of Lessor is required
hereunder, shall relieve Lessee of its primary obligation to pay the Rent and to
perform all other obligations to be performed by Lessee hereunder. The
acceptance of Rent by Lessor from any person shall not be deemed to be a waiver
by Lessor of any provision of this Lease or to be a consent to any Transfer of
the Leased Premises.
(d) If Lessor consents to a sublease, such sublease shall not extend
beyond the expiration of the Term (including any renewals thereof available to
Lessee).
(e) No Transfer shall be valid and no transferee shall take
possession of the Leased Premises or any part thereof unless, within ten (10)
days after the execution of the documentary evidence thereof, Lessee shall
deliver to Lessor a duly executed duplicate original of the Transfer instrument
in form reasonably satisfactory to Lessor which provides that (i) the transferee
assumes Lessee's obligations for the payment of Rent and for the full and
faithful observance and performance of the covenants, terms and conditions
contained herein, (ii) such transferee will, at Lessor's election, attorn
directly to Lessor in the event Lessee's Lease is terminated for any reason on
the terms set forth in the instrument of transfer and (iii) such instrument of
Transfer contains such other assurances as Lessor reasonably deems necessary.
26. ABANDONMENT
26.1 Lessee to Occupy. Lessee shall not abandon the Leased Premises at any
time during the Term and if Lessee shall abandon or surrender the Leased
Premises, or be dispossessed by process of law, or otherwise, any personal
property belonging to Lessee and remaining on the Leased Premises after such
abandonment, surrender or dispossession shall, at the option of Lessor, be
deemed abandoned.
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27. ENTRY BY LESSOR
27.1 Rights of Lessor. Lessee shall permit Lessor and Lessor's agents to
enter the Leased Premises at all reasonable times upon twenty (24) hours advance
oral notice to Lessee (except in cases of emergency, in which cases no advance
notice is required) for the purpose of inspecting the same or for the purpose of
maintaining the Building and the Lines, systems and facilities therein, or for
the purpose of making repairs, replacements, alterations or additions to any
portion of the Building and the Lines, systems and facilities therein, including
the erection and maintenance of such scaffolding, canopies, fences and props as
may be required, or for the purpose of posting notices of non-responsibility for
alterations, additions or repairs, or for the purpose of placing upon the
Building any usual or ordinary "for sale" signs, or for the purpose of showing
the Building or the Leased Premises to any potential purchasers, lenders or
tenants, without any rebate of Rent and without any liability to Lessee for any
loss of occupation or quiet enjoyment of the Leased Premises thereby occasioned,
and shall permit Lessor, at any time within ninety (90) days prior to the
expiration of this Lease, to place upon the Leased Premises any usual or
ordinary "to let" or "to lease" signs. This Section in no way affects the
maintenance obligations of the parties hereto. Notwithstanding the foregoing, to
the extent Lessor's entry into the Leased Premises unreasonably disrupts
Lessee's operations in the Premises and such disruption persists for more than
three (3) business days after written notice to Lessor of such disruption,
Lessee shall be entitled as its sole and exclusive remedy to bring a legal
action directly against Lessor seeking recovery of any and all damages suffered
and losses incurred by Lessee (including but not limited to loss of business)
due to such disruption.
28. SIGNS
28.1 Approval, Installation and Maintenance. Lessee shall not place on the
Leased Premises or the Complex any exterior signs or advertisements, nor any
interior signs or advertisements that are visible from the exterior of the
Leased Premises, without Lessor's prior written consent, which Lessor shall not
unreasonably withhold, provided, however, Lessor reserves the right to withhold
its consent for any aesthetic reason in its sole judgment. Subject to the
foregoing limitation, Lessee shall be entitled to signage on the monument signs
serving the Building that shall be proportionate to its Pro Rata Percent. The
cost of installation and regular maintenance of any such signs approved by
Lessor shall be at the sole expense of Lessee. At the termination of this Lease,
or any extension thereof, Lessee shall remove all its signs, and all damage
caused by such removal shall be repaired at Lessee's expense.
29. DEFAULT
29.1 Definition. The occurrence of any of the following shall constitute a
material default and breach of this Lease by Lessee:
(a) Any failure by Lessee to pay the Rent or to make any other
payment required to be made by Lessee hereunder when due, where such failure
continues for three (3) days after written notice thereof by Lessor to Lessee;
(b) The abandonment of the Leased Premises by Lessee in violation of
Section 26.1 hereof;
(c) Any failure by Lessee to provide executed documents as and when
required under the provisions of Section 36.2 and/or Section 37.1, where such
failure continues for three (3) business days after written notice thereof by
Lessor to Lessee;
(d) A failure by Lessee to observe and perform any other provision of
this Lease to be observed or performed by Lessee, where such failure continues
for thirty (30) days after written notice thereof by Lessor to Lessee; provided,
however, that if the nature of the default is such that
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the same cannot reasonably be cured within the thirty (30) day period allowed,
Lessee shall not be deemed to be in default if Lessee shall, within such thirty
(30) day period, commence to cure and thereafter diligently prosecute the same
to completion;
(e) Either (1) the appointment of a receiver (except a receiver
appointed at the instance or request of Lessor) to take possession of all or
substantially all of the assets of Lessee, or (2) a general assignment by Lessee
for the benefit of creditors, or (3) any action taken or suffered by Lessee
under any insolvency or bankruptcy act shall constitute a breach of this Lease
by Lessee. In such event, Lessor may, at its option, declare this Lease
terminated and forfeited by Lessee, and Lessor shall be entitled to immediate
possession of the Leased Premises. Upon such notice of termination, this Lease
shall terminate immediately and automatically by its own limitation.
(f) Any three (3) failures by Lessee to observe and perform the same
provision of this Lease during any twelve (12) month period of the Term, as such
may be extended, shall constitute, at the option of Lessor, a separate and
noncurable default, subject to the following conditions (a) Lessor shall have
given Lessee notice with respect to each of the first two defaults, and (b) the
second notice must affirmatively state that the default in question is deemed by
Lessor to be a second default with the result that a third default would be
subject to this Section 29.1(f).
30. REMEDIES UPON DEFAULT
30.1 Termination and Damages. In the event of any default by Lessee, then
in addition to any other remedies available to Lessor herein or at law or in
equity, Lessor shall have the immediate option to terminate this Lease and all
rights of Lessee hereunder by giving written notice of such intention to
terminate. In the event that Lessor shall elect to so terminate this Lease, then
Lessor may recover from Lessee:
(a) The worth at the time of award of any unpaid rent which had been
earned at the time of such termination; plus
(b) The worth at the time of award of the amount by which the unpaid
rent which would have been earned after termination until the time of award
exceeds the amount of such rental loss Lessee proves could have been reasonably
avoided; plus
(c) The worth at the time of award of the amount by which the unpaid
rent for the balance of the Term after the time of award exceeds the amount of
such rental loss that Lessee proves could be reasonably avoided; plus
(d) Any other amount necessary to compensate Lessor for all the
detriment proximately caused by Lessee's failure to perform its obligations
under this Lease or which in the ordinary course of events would be likely to
result therefrom; and
(e) At Lessor's election, such other amounts in addition to or in
lieu of the foregoing as may be permitted from time to time by the applicable
law in the state in which the Leased Premises are located.
30.2 Definition. As used in subSections 30.1(a) and (b) above, the "worth
at the time of award" is computed by allowing interest at the rate of ten
percent (10%) per annum. As used in subSection 30.1(c) above, the "worth at the
time of award" is computed by discounting such amount at the discount rate of
the Federal Reserve Bank for the region in which the Complex is located at the
time of award plus one percent (1%).
30.3 Personal Property. In the event of any default by Lessee, Lessor
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shall also have the right, with or without terminating this Lease, to reenter
the Leased Premises and remove all persons and property from the Leased
Premises; such property may be removed and stored in a public warehouse or
elsewhere at the cost of and for the account of Lessee.
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30.4 Recovery of Rent; Reletting.
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(a) Lessor may continue Lease in effect after Lessee's breach and
abandonment and recover rent as it becomes due. In the event of the abandonment
of the Leased Premises by Lessee, or in the event that Lessor shall elect to
reenter as provided in Section 30.3 above, or shall take possession of the
Leased Premises pursuant to legal proceeding or pursuant to any notice provided
by law, then if Lessor does not elect to terminate this Lease as provided in
Section 30.1 above, this Lease shall continue in effect for so long as Lessor
does not terminate Lessee's right to possession, and Lessor may enforce all its
rights and remedies under this Lease, including, without limitation, Lessor's
right from, time to time, without terminating this Lease, to either recover all
Rental as it becomes due or relet the Leased Premises or any part thereof for
such term or terms and at such rental or rentals and upon such other terms and
conditions as Lessor, in its sole discretion, may deem advisable, with the right
to make alterations and repairs to the Leased Premises. Acts of maintenance or
preservation or efforts to relet the Leased Premises or the appointment of a
receiver upon initiation of Lessor or other legal proceeding granting Lessor or
its agent possession to protect Lessor's interest under this Lease shall not
constitute a termination of Lessee's right to possession.
(b) In the event that Lessor shall elect to so relet, then rentals
received by Lessor from such reletting shall be applied: first, to the payment
of any indebtedness other than Rent due hereunder from Lessee to Lessor; second,
to the payment of any cost of such reletting; third, to the payment of the cost
of any alterations and repairs to the Leased Premises ; fourth, to the payment
of Rent due and unpaid hereunder; and the residue, if any, shall be held by
Lessor and applied in payment of future Rent as the same may become due and
payable hereunder. Should that portion of such rentals received from such
reletting during any month, which is applied by the payment of Rent hereunder,
be less than the Rent payable during that month by Lessee hereunder, then Lessee
shall pay such deficiency to Lessor immediately upon demand therefor by Lessor.
Such deficiency shall be calculated and paid monthly. Lessee shall also pay to
Lessor, as soon as ascertained, any costs and expenses incurred by Lessor in
such reletting or in making such alterations and repairs not covered by the
rentals received from such reletting.
(c) No reentry or taking possession of the Leased Premises or any
other action under this Section shall be construed as an election to terminate
this Lease unless a written notice of such intention be given to Lessee or
unless the termination thereof be decreed by a court of competent jurisdiction.
Notwithstanding any reletting without termination by Lessor because of any
default by Lessee, Lessor may at any time after such reletting elect to
terminate this Lease for any such default.
30.5 No Waiver. Efforts by Lessor to mitigate the damages caused by
Lessee's default in this Lease shall not constitute a waiver of Lessor's right
to recover damages hereunder.
30.6 Curing Defaults. Should Lessee fail to repair, maintain, keep clean,
and/or service the Leased Premises, or any part or contents thereof at any time
or times, or perform any other obligations imposed by this Lease, then after
having given Lessee reasonable notice of the failure or failures and a
reasonable opportunity which in no case shall exceed thirty (30) days, to remedy
the failure (provided, however, that if the nature of the failure or default is
such that the same cannot reasonably be cured within the thirty (30) day period
allowed, Lessee shall not be deemed to be in default and Lessor shall not
exercise its rights under this Section 30.6 if Lessee shall, within such thirty
(30) day period, commence to cure and thereafter diligently prosecute the same
to completion), Lessor may enter upon the Leased Premises and perform or
contract for the performance of the repair, maintenance, or other Lessee
obligation, and Lessee shall pay Lessor for all direct and indirect costs
incurred in connection therewith within ten (10) days of receiving a bill
therefor from Lessor.
30.7 Cumulative Remedies. The various rights, options, election powers,
and remedies of Lessor contained in this Article and elsewhere in this Lease
shall be construed as cumulative and
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no one of them exclusive of any others or of any legal or equitable remedy which
Lessor might otherwise have in the event of breach or default, and the exercise
of one right or remedy by Lessor shall not in any way impair its right to any
other right or remedy.
30.8 Duty to Mitigate. Notwithstanding anything to the contrary in this
Lease, each party shall have an affirmative obligation to use commercially
reasonable efforts to mitigate its damages (and in Lessor's case, the costs of
reletting) in the event of a default by the other party.
31. BANKRUPTCY
31.1 Bankruptcy Events. If at any time during the Term there shall be
filed by or against Lessee in any court pursuant to any statute either of the
United States or of any state a petition in bankruptcy or insolvency or for
reorganization or for the appointment of a receiver or trustee of all or a
portion of Lessee's property, or if a receiver or trustee takes possession of
any of the assets of Lessee, or if the leasehold interest herein passes to a
receiver, or if Lessee makes an assignment for the benefit of creditors or
petitions for or enters into an arrangement (any of which are referred to herein
as "a bankruptcy event"), then the following provisions shall apply:
(a) At all events any receiver or trustee in bankruptcy or Lessee as
debtor in possession ("debtor") shall either expressly assume or reject this
Lease within sixty (60) days following the entry of an Order for Relief.
(b) In the event of an assumption of the Lease by a debtor, receiver
or trustee, such debtor, receiver or trustee shall immediately after such
assumption (1) cure any default or provide adequate assurances that defaults
will be promptly cured; and (2) compensate Lessor for actual pecuniary loss or
provide adequate assurances that compensation will be made for actual pecuniary
loss; and (3) provide adequate assurance of future performance.
For the purposes of this Section 31.1(b), adequate assurance of
future performance of all obligations under this Lease shall include, but is not
limited to:
(i) Written assurance that rent and any other consideration
due under the Lease shall first be paid before any other of Lessee's costs of
operation of its business in the Leased Premises are paid;
(ii) Written agreement that assumption of this Lease will not
cause a breach of any provision hereof including, but not limited to, any
provision relating to use or exclusivity in this or any other Lease, or
agreement relating to the Leased Premises, or if such a breach is caused, the
debtor, receiver or trustee will indemnify Lessor against such loss (including
costs of suit and attorneys' fees), occasioned by such breach;
(c) Where a default exists under the Lease, the party assuming the
Lease may not require Lessor to provide services or supplies incidental to the
Lease before its assumption by such trustee or debtor, unless Lessor is
compensated under the terms of the Lease for such services and supplies provided
before the assumption of such Lease.
(d) The debtor, receiver, or trustee may only assign this Lease in
accordance with the terms of Article 25 and if adequate assurance of future
performance by the assignee is provided, whether or not there has been a default
under the Lease. For the purpose hereof, adequate assurance of future
performance means written agreement that assignment of this Lease will not cause
a breach of any provision hereof including, but not limited to, any provision
relating to use or exclusivity in this or any other Lease or agreement relating
to the Leased Premises, and that if such a breach is caused, the debtor,
receiver or trustee will indemnify Lessor against such loss (including costs of
suit and attorney's fees), occasioned by such breach. Any consideration paid by
any assignee in excess of the rental reserved in the Lease shall be the sole
property of, and paid to, Lessor. Upon assignment by the debtor or trustee, the
obligations of the Lease shall be deemed to have been
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assumed and the assignee shall execute an assumption agreement on request of
Lessor.
(e) Lessor shall be entitled to the fair market value for the Leased
Premises and the services provided by Lessor (but in no event less than the
rental reserved in the Lease) subsequent to the commencement of a bankruptcy
event.
(f) Lessor specifically reserves any and all remedies available to
Lessor in Article 30 hereof or at law or in equity in respect of a bankruptcy
event by Lessee to the extent such remedies are permitted by law.
32. SURRENDER OF LEASE
32.1 No Merger. The voluntary or other surrender of this Lease by Lessee,
or a mutual cancellation thereof, shall not work as a merger, and shall, at the
option of Lessor, terminate all or any existing subleases or subtenancies, or
may, at the option of Lessor, operate as an assignment to it of any or all such
subleases or subtenancies.
33. LESSOR'S EXCULPATION
33.1 Limited Liability. In the event of default, breach, or violation by
Lessor (which term includes Lessor's partners, co-venturers, co-tenants,
officers, directors, trustees, employees, agents, or representatives) of any of
Lessor's obligations under this Lease, Lessor's liability to Lessee shall be
limited to its ownership interest in the Complex or the proceeds of a public
sale of such interest pursuant to foreclosure of a judgment against Lessor.
33.2 No Recourse. Lessor (as defined in Section 33.1) shall not be
personally liable for any deficiency beyond its interest in the Complex. All
personal liability of all trustees, their employees, agents or representatives,
is expressly waived by Lessee.
34. ATTORNEYS' FEES
34.1 Actions, Proceedings, etc. Lessee hereby agrees to pay, as additional
rent, all attorneys' fees and disbursements, and all other court costs or
expenses of legal proceedings or other legal services which Lessor may incur or
pay out by reason of, or in connection with:
(a) Any action or proceeding brought by Lessor wherein Lessor obtains
a final judgment or award against Lessee (including arbitration) on account of
any default by Lessee in the observance or performance of any obligation under
this Lease including, but not limited to, matters involving payment of Rent and
additional Rent, alterations or other Lessee's work and subletting or
assignment;
(b) Any action or proceeding brought by Lessee against Lessor (or any
officer, partner, or employee of Lessor) in which Lessee fails to secure a final
judgment against Lessor;
(c) Any other appearance by Lessor (or any officer, partner, or
employee of Lessor) as a witness or otherwise in any action or proceeding
whatsoever involving or affecting Lessee or this Lease; and
(e) Any alteration of the Leased Premises by Lessee, and all
negotiations with respect thereto.
In any action or proceeding referred to in Section 34.1, Lessee shall
be entitled to recover its reasonable attorneys' fees and costs if Lessee is the
prevailing party against Lessor.
34.2 Survival. Lessee's obligations under this Section shall survive the
expiration or any other termination of this Lease. This Section is intended to
supplement (and not to limit) other provisions of this Lease pertaining to
indemnities and/or attorneys' fees.
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35. NOTICES
35.1 Writing. All notices, demands and requests required or permitted to
be given or made under any provision of this Lease shall be in writing and shall
be given or made by (i) personal service, or (ii) by mailing same by registered
or certified mail, return receipt requested, postage prepaid, or (iii) by
reputable courier which provides written evidence of delivery, addressed to the
respective party at the address set forth in Section 1.2 of this Lease or at
such other address as the party may from time to time designate, by a written
notice sent to the other in the manner aforesaid.
35.2 Effective Date. Any such notice, demand or request ("notice") given
by registered or certified mail shall be deemed given or made upon receipt or
refusal to receive. Any notice given by personal delivery to the party at its
address as aforesaid shall be deemed given on the day on which delivery is made.
Notice given by a reputable courier service which provides written evidence of
delivery shall be deemed given upon receipt or refusal to receive.
35.3 Authorization to Receive. Each person and/or entity whose signature
is affixed to this Lease as Lessee or as guarantor of Lessee's obligations
("obligor") designates such other obligor its agent for the purpose of receiving
any notice pertaining to this Lease or service of process in the event of any
litigation or dispute arising from any obligation imposed by this Lease.
36. SUBORDINATION
36.1 Priority of Encumbrances. This Lease, at Lessor's option, shall be
subordinate to any ground lease, mortgage, deed of trust, or any other
hypothecation for security now or hereafter placed upon the real property of
which the Leased Premises are a part and to any and all advances made on the
security thereof and to all renewals, modifications, consolidations,
replacements and extensions thereof. Notwithstanding such subordination,
Lessee's right to quiet possession of the Leased Premises shall not be disturbed
if Lessee is not in default and so long as Lessee shall pay the rent and observe
and perform all the provisions of this Lease, unless this Lease is otherwise
terminated pursuant to its terms. If any mortgagee, trustee or ground lessor
shall elect to have this Lease prior to the lien of its mortgage, deed of trust
or ground lease, and shall give written notice thereof to Lessee, this Lease
shall be deemed prior to such mortgage, deed of trust or ground lease, whether
this Lease is dated prior or subsequent to the date of said mortgage, deed of
trust or ground lease or the date of recording thereof.
36.2 Execution of Documents. Lessee agrees to execute any documents
required to effectuate such subordination or to make this Lease prior to the
lien of any mortgage, deed of trust or ground lease, as the case may be, and
failing to do so within ten (10) days after written demand, does hereby make,
constitute and irrevocably appoint Lessor as Lessee's attorney-in-fact and in
Lessee's name, place and stead, to do so. It is understood by all parties that
Lessee's failure to execute the subordination documents referred to above may
cause Lessor serious financial damage by causing the failure of a financing or
sale transaction.
36.3 Attornment. Lessee shall attorn to any purchaser at any foreclosure
sale, or to any grantee or transferee designated in any deed given in lieu of
foreclosure.
37. ESTOPPEL CERTIFICATES
37.1 Execution by Lessee. Within ten (10) days of request therefor by
Lessor, Lessee shall execute a written statement acknowledging the commencement
and termination dates of this Lease, that it is in full force and effect, has
not been modified (or if it has, stating such modifications) and providing any
other pertinent information as Lessor or its agent might reasonably request.
Failure to comply with this Article following notice and expiration of the three
(3) business day cure period specified in Section 29.1(c) shall be a material
breach of this Lease by Lessee giving Lessor all rights and remedies under
Article 30 hereof, as well as a right to damages caused by the loss of a loan or
sale which may result from such failure by Lessee.
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37.2 Financing, Sale or Transfer. If Lessor desires to finance, refinance,
sell, ground lease or otherwise transfer the Leased Premises, or any part
thereof, or the Building, Lessee hereby agrees, within ten (10) days of request
therefor by Lessor, to deliver to Lessor and to any lender or to any prospective
buyer, ground lessor or other transferee designated by Lessor such financial
statements of Lessee, any guarantor of this Lease and Lessee's parent company,
if any, as may be reasonably required by such party. Such statements shall
include the past three (3) years' financial statements of Lessee. All such
financial statements shall be received by Lessor and such other parties in
confidence and shall be used only for the purposes herein set forth. Lessor
shall use reasonable efforts to preserve the confidentiality of such financial
information.
38. WAIVER
38.1 Effect of Waiver. The waiver by Lessor or Lessee of any breach of any
Lease provision shall not be deemed to be a waiver of such Lease provision or
any subsequent breach of the same or any other term, covenant or condition
therein contained. The subsequent acceptance of rent hereunder by Lessor shall
not be deemed to be a waiver of any preceding breach by Lessee of any provision
of this Lease, other than the failure of Lessee to pay the particular rental so
accepted, regardless of Lessor's knowledge of such preceding breach at the time
of acceptance of such rent.
39. HOLDING OVER
39.1 Month-to-Month Tenancy on Acceptance. If Lessee should remain in
possession of the Leased Premises after the expiration of the Term and without
executing a new Lease, then, upon acceptance of Rent by Lessor, such holding
over shall be construed as a tenancy from month-to-month, subject to all the
conditions, provisions and obligations of this Lease as existed during the last
month of the Term hereof, so far as applicable to a month to month tenancy,
except that the Minimum Rent shall be equal to twice the Minimum Rent payable
immediately prior to the expiration or earlier termination of the Lease.
40. SUCCESSORS AND ASSIGNS
40.1 Binding Effect. The covenants and conditions herein contained shall,
subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators and assigns of all of the parties hereto;
and all of the parties hereto shall be jointly and severally liable hereunder.
41. TIME
41.1 Time of the Essence. Time is of the essence of this Lease with
respect to each and every article, section and subsection hereof.
42. EFFECT OF LESSOR'S CONVEYANCE
42.1 Release of Lessor. If, during the Term, Lessor shall sell its
interest in the Building or Complex of which the Leased Premises form a part, or
the Leased Premises, then from and after the effective date of the sale or
conveyance, provided that the transferee of Lessor assumes all of the Lessor's
obligations hereunder from and after the date of such sale or conveyance, Lessor
shall be released and discharged from any and all obligations and
responsibilities under this Lease, except those already accrued.
43. COMMON AREAS
43.1 Lessor shall maintain the Common Areas in similar condition and
repair to comparable office parks (subject to reimbursement of Operating Costs
pursuant to Article 8 hereof). Lessor may also establish and enforce reasonable
rules and regulations concerning such areas, close any of the Common Areas to
whatever extent required in the opinion of Lessor's counsel to prevent
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a dedication of any of the Common Areas or the accrual of any rights of any
person or of the public to the Common Areas, close temporarily any of the Common
Areas for maintenance purposes, and make changes to the Common Areas including,
without limitation, changes in the location of driveways, corridors, entrances,
exits, vehicular parking spaces, parking area, the designation of areas for the
exclusive use of others, the direction of the flow of traffic or construction of
additional buildings thereupon. Lessor may provide security for the Common Areas
but is not obligated to do so.
44. TRANSFER OF SECURITY
44.1 Transfer to Purchaser. If any security be given by Lessee to secure
the faithful performance of all or any of the covenants of this Lease on the
part of Lessee, Lessor may transfer and/or deliver the security, as such, to the
purchaser of the reversion, in the event that the reversion be sold, and
thereupon Lessor shall be discharged from any further liability in reference
thereto.
45. LATE CHARGES
45.1 Late Payment by Lessee. Lessee acknowledges that late payment by
Lessee to Lessor of rent or any other payment due hereunder will cause Lessor to
incur costs not contemplated by this Lease, the exact amount of such costs being
extremely difficult and impractical to fix. Such costs include, without
limitation, processing and accounting charges, and late charges that may be
imposed on Lessor by the terms of any encumbrance and note secured by any
encumbrance covering the Leased Premises. Therefore, if any installment of rent,
or any other payment due hereunder from Lessee is not received by Lessor when
due, Lessee shall pay to Lessor an additional sum of ten percent (10%) of such
rent or other charge as a late charge. Notwithstanding the foregoing sentence,
Lessor agrees to forebear from assessing the late charge one time only, which
forbearance shall apply with respect to the first overdue payment from Lessee
during the Term and which forbearance shall only apply as long as Lessee makes
the overdue payment to Lessor within five (5) business days after receiving
written notice from Lessor of such overdue payment. The parties agree that this
late charge represents a fair and reasonable estimate of the cost that Lessor
will incur by reason of late payment by Lessee. Acceptance of any late charge
shall not constitute a waiver of Lessee default with respect to the overdue
amount, or prevent Lessor from exercising any other rights or remedies available
to Lessor.
46. CORPORATE AUTHORITY
46.1 Authorization to Execute. If Lessee is a corporation, each individual
executing this Lease on behalf of said corporation represents and warrants that
he is duly authorized to execute and deliver this Lease on behalf of said
corporation in accordance with a duly adopted resolution of the Board of
Directors of said corporation or in accordance with the Bylaws of said
corporation, and that this Lease is binding upon said corporation in accordance
with its terms. Further, Lessee shall, within thirty (30) days after execution
of this Lease, deliver to Lessor a certified copy of a resolution of the Board
of Directors of said corporation authorizing or ratifying the execution of this
Lease.
47. MORTGAGEE PROTECTION
47.1 Notice and Right to Cure Default. Lessee agrees to give any
mortgagee(s) and/or trust deed holders, by registered mail, a copy of any notice
of default served upon Lessor, provided that prior to such notice Lessee has
been notified, in writing (by way of Notice of Assignment of Rents and Leases,
or otherwise), of the address of such mortgagees and/or trust deed holders.
Lessee further agrees that if Lessor shall have failed to cure such default
within the time provided for in this Lease, then the mortgagees and/or trust
deed holders shall have an additional thirty (30) days within which to cure such
default or, if such default cannot be cured within that time, then such
additional time as may be necessary if, within such thirty (30) days, any
mortgagee and/or trust deed holder has commenced and is diligently pursuing the
remedies necessary to cure such default (including but not limited to
commencement of foreclosure proceedings, if necessary to effect such cure), in
which
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event this Lease shall not be terminated while such remedies are being so
diligently pursued.
48. WAIVER OF STATUTES
48.1 Waiver by Lessee. In this Lease, numerous provisions have been
negotiated by the parties, some of which provisions are covered by statute.
Whenever a provision of this Lease and a provision of any statute or other law
cover the same matter, the provisions of this Lease shall control. This waiver
applies to future statutes enacted in addition to or in substitution for the
statutes specified herein.
49. MISCELLANEOUS PROVISIONS
49.1 Captions. The captions of this Lease are for convenience only and are
not a part of this Lease and do not in any way limit or amplify the terms and
provisions of this Lease.
49.2 Number and Gender. Whenever the singular number is used in this Lease
and when required by the context, the same shall include the plural, the plural
shall include the singular, and the masculine gender shall include the feminine
and neuter genders, and the word "person" shall include corporation, firm or
association. If there be more than one Lessee, the obligations imposed under
this Lease upon Lessee shall be joint and several.
49.3 Modifications. This instrument contains all of the agreements,
conditions and representations made between the parties to this Lease and may
not be modified orally or in any other manner than by an agreement in writing
signed by all of the parties to this Lease.
49.4 Payments. Except as otherwise expressly stated, each payment required
to be made by Lessee shall be in addition to and not in substitution for other
payments to be made by Lessee.
49.5 Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.
49.6 No Offer. The preparation and submission of a draft of this Lease by
either party to the other shall not constitute an offer, nor shall either party
be bound to any terms of this Lease or the entirety of the Lease itself until
both parties have fully executed a final document and an original signature
document has been received by both parties. Until such time as described in the
previous sentence, either party is free to terminate negotiations with no
obligation to the other.
49.7 Disputed Sums. Under the terms of this Lease numerous charges are and
may be due from Lessee to Lessor including, without limitation, Operating Costs
which include Real Property Taxes, insurance reimbursement and other items of a
similar nature including, at Lessor's option, advances made by Lessor in respect
of Lessee's default. In the event that at any time during the Term there is a
bona fide dispute between the parties as to the amount due for any of such
charges claimed by Lessor to be due, the amount demanded by Lessor shall be paid
by Lessee until the resolution of the dispute between the parties or by
litigation. Failure by Lessee to pay the disputed sums until resolution shall
constitute a default under the terms of the Lease.
49.8 Lessee's Remedies. Notwithstanding anything to the contrary contained
in this Lease, if any provision of this Lease expressly or impliedly obligates
Lessor not to unreasonably withhold its consent or approval, an action for
declaratory judgment or specific performance will be Lessee's sole right and
remedy in any dispute as to whether Lessor has breached such obligation.
49.9 Light, Air and View. No diminution of light, air, or view by any
structure which may hereafter be erected (whether or not by Lessor) shall
entitle Lessee to any reduction of Rent, result in any liability of Lessor to
Lessee, or in any other way affect this Lease or Lessee's obligations hereunder.
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49.10 Public Transportation. Lessee shall comply with all requirements of
any local transportation management ordinance.
49.11 Rules and Regulations. Lessee agrees to comply with all reasonable
rules and regulations adopted and promulgated by Lessor and applicable to all
tenants in the Complex for the lawful, orderly, clean, safe, aesthetic, quiet,
and beneficial use, operation, maintenance, management, and enjoyment of the
Complex. Lessor shall have no liability for violation by any other tenant in the
Complex of any rules or regulations, nor shall such violation or waiver thereof
excuse Lessee from compliance. The initial rules and regulations concerning the
Complex are attached hereto as Exhibit F. Lessor reserves the right to make
additional reasonable rules affecting the Complex throughout the Term hereof.
All delivery and dispatch of supplies, fixtures, equipment and furniture shall
be by means and during hours established by Lessor. Lessee shall not at any time
park its trucks or other delivery vehicles in the Common Areas, except in such
parts thereof as from time to time designated by Lessor.
49.12 Joint and Several Liability. Should Lessee consist of more than one
person or entity, they shall be jointly and severally liable on this Lease.
49.13 Survival of Obligations. All obligations of Lessee which may accrue
or arise during the Term or as a result of any act or omission of Lessee during
said Term shall, to the extent they have not been fully performed, satisfied or
discharged, survive the expiration or termination of this Lease.
49.14 Real Estate Brokers. Lessor and Lessee each represents and warrants
to the other party that it has not authorized or employed, or acted by
implication to authorize or employ, any real estate broker or salesman to act
for it in connection with this Lease other than Kidder Mathews & Segner and New
West Properties who represent Lessee, and Broderick Group who represents Lessor,
(the "Designated Brokers"). Lessor shall be responsible for payment of a real
estate leasing commission to the Designated Brokers in accordance with the terms
of Lessor's separate listing agreement. Lessor and Lessee shall each indemnify,
defend and hold the other party harmless from and against any and all claims by
any real estate broker or salesman, other than the Designated Brokers, whom the
indemnifying party authorized or employed, or acted by implication to authorize
or employ, to act for the indemnifying party in connection with this Lease.
49.15 Nonliability of Lessor for Approvals. Except as may otherwise be
expressly stated by a provision of this Lease, and only to the extent so stated,
the consent or approval, whether express or implied, or the act, failure to act
or failure to object, by Lessor in connection with any plan, specification,
drawing, proposal, request, act, omission, notice or communication
(collectively, "act") by or for, or prepared by or for, Lessee, shall not create
any responsibility or liability on the part of Lessor, and shall not constitute
a representation by Lessor, with respect to the completeness, sufficiency,
efficacy, propriety, quality or legality of such act.
49.16 Interest On Past Due Amounts. If any sum due Lessor from Lessee is
not received by Lessor within five (5) calendar days after the date such sum is
due and payable, such sum shall bear interest from the due date until paid by
Lessee at the rate of two percent (2%) above the Prime Rate (as herein defined),
not to exceed the maximum rate of interest allowed by law in the state where the
Leased Premises are located, and such interest shall be deemed to be additional
rent. "Prime Rate" means the highest rate charged by Bank of America NT&SA, San
Francisco Main Office, on short-term unsecured loans to its most creditworthy
corporate borrowers.
49.17 Conversion To A Limited Liability Entity.
----------------------------------------
(a) No Conversion Without Consent. Anything to the contrary in this
-----------------------------
Lease notwithstanding, if Lessee is currently a partnership (either general or
limited), joint venture, cotenancy, joint tenancy or an individual, Lessee may
not convert (the "Conversion") the Lessee entity or person into any type of
entity which possesses the characteristic of limited liability such
----------------- -----------------
LESSOR'S INITIALS LESSEE'S INITIALS
40
<PAGE>
as, by way of example only, a corporation, a limited liability company, limited
liability partnership or limited liability limited partnership (singularly and
collectively, "Limited Entity"), without the consent of Lessor, which consent,
subject to fulfillment of the conditions below, shall not be unreasonably
withheld.
(b) Conditions to Lessor's Consent. The following are conditions
------------------------------
precedent to Lessor's obligation to act reasonably with respect to a Conversion
to a Limited Entity:
(i) The Limited Entity assumes all of Lessee's business and
assets as of the effective date of the Conversion;
(ii) As of the effective date of the Conversion, the Limited
Entity shall have a net worth ("Net Worth"), which is not less than the greater
of (i) Lessee's Net Worth on the date of execution of the Lease or (ii) Lessee's
Net Worth as of the date Lessee requests Lessor's consent to the Conversion;
(iii) Lessee has not been in default under any of the terms,
covenants or conditions of this Lease during the term of the Lease;
(iv) Lessee delivers to Lessor an agreement, in form and
substance satisfactory to Lessor and executed by each partner of Lessee, wherein
each partner of Lessee agrees to remain personally liable for all of the terms,
covenants and conditions of the Lease that are to be observed and performed by
the Limited Entity; and
(v) Lessee shall reimburse Lessor within ten (10) days
following Lessor's written demand therefor for any and all reasonable costs and
expenses that may be incurred by Lessor in connection with the Conversion
including, without limitation, reasonable attorney's fees.
(c) Nothing in this Section 49.17 shall modify or reduce the
obligations of Lessee to perform under this Lease.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of the
day and year first written above.
LESSOR: LESSEE:
BEDFORD PROPERTY INVESTORS, INC., LIGHTREALM, INC.
a Maryland corporation a Washington corporation
By: /s/ By: /s/ Reviewed
------------------------------ ------------------------------
Its: COO Its: AVP
----------------------------- -----------------------------
FOR OFFICE USE ONLY:
PREPARED BY:
REVIEWED BY:
APPROVED BY:
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LESSOR'S INITIALS LESSEE'S INITIALS
41
<PAGE>
EXHIBIT D
CONSTRUCTION OBLIGATIONS
1. Defined Terms. All capitalized terms referred to in this Exhibit D
-------------
(this "Agreement") not defined below shall have the same meaning as defined in
the Lease of which this Agreement forms a part.
2. Construction of Tenant Improvements. Lessor shall construct the Tenant
-----------------------------------
Improvements in accordance with this Agreement and the Approved Construction
Plans (as hereinafter defined.)
3. Definitions. Each of the following terms shall have the following
-----------
meaning:
"Base Tenant Improvement Allowance" shall mean the amount to be
contributed by Lessor toward Tenant Improvement Cost. The Base Tenant
Improvement Allowance shall be an amount equal to Eighteen and 35/100 Dollars
($18.89) per usable square foot of leased area.
"Building" shall mean the Building Shell and the Tenant Improvements.
"Building Shell" shall mean the basic minimum enclosure of the
Building consisting of the foundation and floors, structural framework, roof
coverings, exterior walls and exterior doors and windows, basic fire sprinkler
systems, underground electrical power stubs, plumbing system stubs, the parking
lots and landscaping appurtenant to the Complex, but excluding all Tenant
Improvements.
"Construction Plans" shall mean the complete plans and specifications
for the construction of the Tenant Improvements, which shall be in substantial
compliance with the Approved Preliminary Plans, consisting of all architectural,
engineering, mechanical and electrical drawings and specifications which are
required to obtain all building permits, licenses and certificates from the
applicable governmental authority(ies) for the construction of the Tenant
Improvements. The Construction Plans shall be prepared by Space Planner, and in
all respects shall be in substantial compliance with all applicable laws, rules,
regulations, building codes for the City of Bellevue
"Contractor" shall mean SGA Corporation, or such other contractor that
is proposed by Lessee and is reasonably acceptable to Lessor. Contractor shall
be responsible for construction of the Building Shell and the Tenant
Improvements.
"Forces Majeure" shall mean any delay resulting from or caused by an
Act of God, fire, earthquake, flood, explosion, action of the elements, war,
invasion, insurrection, riot, mob violence, sabotage, malicious mischief,
inability to procure or general shortage of labor, equipment, facilities,
materials, or supplies in the open market, inability to obtain or delays in
obtaining necessary government approvals, licenses or permits, failure of
transportation, strike, lockout, action of labor unions, litigation not with the
reasonable control of Lessor, condemnation, requisition, law, order or
regulation of government or civil, military or naval authority, or any other
cause (excluding financial inability) whether similar or dissimilar to the
foregoing not within the reasonable control of Lessor. The time for performance
of any obligation of Lessor to construct the Tenant Improvements shall be
extended at Lessor's election by the period of any delay caused by any of the
foregoing Forces Majeure events.
"Lessee Delay" shall mean any delay in the construction of the Tenant
Improvements, or any delays in approvals or submissions required hereunder
beyond the time period provided for in this Agreement caused by (i) any changes
in the nature or scope of the Tenant Improvements requested by Lessee (including
Change Requests, and any changes in the Approved
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LESSOR'S INITIALS LESSEE'S INITIALS
<PAGE>
Preliminary Plan and/or Approved Construction Plans for the Tenant
Improvements), (ii) Lessee's failure to timely provide Lessor with any needed
information on the Tenant Improvements, or (iii) Lessee's failure to timely
review and approve any Preliminary Plans, Construction Plans or finish
specifications for the Tenant Improvements. In the event of any Lessee Delay,
this Lease shall be deemed to have commenced and the obligations of Lessee under
the Lease, including without limitation the obligation to pay all rent due
thereunder, shall have been deemed commence on the date the Lease would
otherwise have commenced had it not been for Lessee Delay. Any and all costs and
expenses incurred by Lessor as a result of any Lessee Delay, including without
limitation, architectural, engineering and space planning fees, permit
resubmittal fees, increased Tenant Improvement Costs, and the like shall be the
sole responsibility and obligation of Lessee and shall be reimbursed by Lessee
to Lessor upon demand therefore.
"Lessee's Personal Property" shall mean all personal property
constructed or installed in the Leased Premises by Lessee at Lessee's expense,
including furniture, fixtures and equipment, but excluding Tenant Improvements.
"Punchlist Items" is defined in Section 11 below.
"Space Planner" shall mean O'Brien & Associates. Space Planner shall
be employed by Lessor and all costs of Space Planner will be the responsibility
of Lessee, as part of the Tenant Improvement Cost.
"Substantial Completion" or "Substantially Complete" shall be the date
that the construction of the Tenant Improvements is sufficiently complete so
that Lessee can legally occupy and utilize the Leased Premises, subject only to
minor "punchlist" items, the completion of which will not materially affect
Lessee's use and occupancy of the Leased Premises. Lessor shall cause all
punchlist items to be completed within a reasonable time following Substantial
Completion.
"Tenant Improvements" shall mean all interior portions of the Building
to be constructed by Lessor for Lessee pursuant to this Agreement and the
Approved Construction Plans, including but not limited to, electrical systems,
heating, ventilating and air conditioning systems ("HVAC"), plumbing and fire
sprinkler systems (to the extent the electrical, HVAC, plumbing and fire
sprinkler systems are not included in the Building Shell), interior partitions,
millwork, floor coverings, acoustical ceilings, interior painting, and similar
items.
"Tenant Improvement Cost" shall mean the costs for construction and
installation of the Tenant Improvements, inclusive of the fees charged by Space
Planner. The costs for construction and installation shall include, but not be
limited to, the following:
(a) architectural / space planning fees and costs charged by
Space Planner in the preparation of the Preliminary Plans and Construction
Plans;
(b) any and all other fees and costs charged by architects,
engineers and consultants in the preparation of the Construction Plans,
including mechanical, electrical, plumbing and structural drawings and of all
other aspects of the Construction Plans, and for processing governmental
applications and applications for payment, observing construction of the work,
and other customary engineering, architectural, interior design and space
planning services;
(c) surveys, reports, environmental and other tests and
inspections of the site and any improvements thereon;
(d) labor, materials, equipment and fixtures supplied by the
Contractor, its subcontractors and/or materialmen;
(e) the furnishing and installation of all HVAC duct work,
terminal boxes, distributing diffusers and accessories required for completing
the heating, ventilating and air
----------------- -----------------
LESSOR'S INITIALS LESSEE'S INITIALS
<PAGE>
conditioning system in the Leased Premises, including costs of meter and key
control for after-hour usage , if required by Lessor;
(f) all electrical circuits, wiring, lighting fixtures, and tube
outlets furnished and installed throughout the Leased Premises, including costs
of meter and key control for after-hour electrical power usage;
(g) all window and floor coverings in the Leased Premises:
(h) all fire and life safety control systems, such as fire walls,
sprinklers and fire alarms, including piping, wiring and accessories installed
within the Leased Premises;
(i) all plumbing, fixtures, pipes and accessories installed within
the Leased Premises;
(j) fees charged by the city and/or county where the Building is
located (including, without limitation, fees for building permits and plan
checks) required for the construction of the Tenant Improvements in the Leased
Premises;
(k) all taxes, fees, charges and levies by governmental and quasi-
governmental agencies for authorization, approvals, licenses and permits; and
all sales, use and excise taxes for the materials supplied and services rendered
in connection with the installation and construction of the Tenant Improvements;
(l) all costs and expenses incurred to comply with all laws, rules,
regulations or ordinances of any governmental authority in connection with the
construction of the Tenant Improvements.
Tenant Improvement Costs shall not include the cost of any of Lessee's
Personal Property or the installation thereof, which shall be performed by
Lessee at its sole cost and expense.
4. Space Plan for Tenant Improvements.
-----------------------------------
4.1 Preparations by Space Planner. The space plan ("Preliminary
Plans") for the Tenant Improvements will be prepared by Space Planner. Within
five (5) business days following execution of the Lease, Lessee shall meet with
Space Planner to develop the Preliminary Plans. As soon as reasonably
practicable after meeting with Lessee, Space Planner shall develop the
Preliminary Plans and shall provide them to Lessee and Lessor for review.
4.2 Review and Approval. Lessor and Lessee will either approve the
Preliminary Plans in writing, or note changes to be made to the Preliminary
Plans in writing, and shall provide such written approval or proposed changes to
Space Planner and the other party within Three (3) business days after receipt
of the Preliminary Plans from Space Planner. Failure to timely send notice shall
be deemed approval of the Preliminary Plans. In the event changes are necessary,
Space Planner shall make such changes following receipt of the written changes
from Lessor and/or Lessee and shall provide the revised Preliminary Plans to
Lessee and Lessor for approval in writing.
4.3 Approved Preliminary Plans. The Preliminary Plans which are
approved by both Lessor and Lessee in writing ("Approved Preliminary Plans"),
and shall be used by Space Planner to develop the Construction Plans.
5. Construction Plans for Tenant Improvements.
------------------------------------------
5.1 Preparation by Space Planner. Space Planner shall provide Lessee
with completed Construction Plans showing (i) Lessee's partition layout and the
location and details; (ii)
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LESSOR'S INITIALS LESSEE'S INITIALS
<PAGE>
the location of telephone and electrical outlets; (iii) the location, style and
dimension of any desired special lighting; (iv) the location, design and style
of all doors, floor coverings and wall coverings; (v) the location, design,
style and dimensions of cabinets and casework; and (vi) all details, including
"cut sheets," for the Tenant Improvements, which shall be in conformity with the
Approved Preliminary Plans. The Construction Plans shall be in a form
satisfactory to appropriate governmental authorities responsible for issuing
permits and licenses required for construction of the Tenant Improvements.
5.2 Lessee's Review of Construction Plans for Tenant Improvements.
Within five (5) business days after receipt of the Construction Plans, Lessee
shall notify Lessor in writing of any reasonable changes necessary to bring the
Construction Plans into substantial conformity with the Approved Preliminary
Plans. Failure of Lessee to deliver to Lessor written notice of the changes
within the five (5) business day period shall constitute approval by Lessee of
the Construction Plans. If any changes requested by Lessee are reasonably
necessary to bring the Construction Plans into substantial conformity with the
Approved Preliminary Plans, Space Planner shall make such changes and the
revised Construction Plans shall be deemed approved by Lessee.
6. Construction Costs. Once the Construction Plans have been reviewed and
------------------
approved by Lessor and Lessee, Contractor shall deliver to Lessor and Lessee its
bid price for constructing the Tenant Improvements (the "Bid") in conformity
with the Construction Plans. Within three (3) business days following delivery
of the Bid, Lessee shall provide Lessor, in writing, with its approval or
disapproval of the amount of the Bid. In the event that Lessee approves the Bid
(the "Approved Bid"), it shall be deemed that Lessee has agreed to pay all
Tenant Improvement Costs up to the total amount of the Approved Bid. In the
event that Lessee disapproves the Bid, Lessee shall as soon as practicable
thereafter, meet with Space Planner and the Contractor and revise the
Construction Plans to reduce the amount of the Bid. Alternatively, Lessee may
propose the use of a different qualified contractor that has submitted a lower
bid for the same work and Lessor shall consider such request in good faith. Any
changes to the Construction Plans proposed by Lessee in order to reduce the
amount of the Bid shall require Lessor's written consent, not to be unreasonably
withheld. Once Lessee has approved the Bid in writing and Lessor and Lessee have
approved in writing the revised Construction Plans the Approved Bid is based
upon (the "Approved Construction Plans"), it shall be deemed that Lessee has
agreed to pay all Tenant Improvement Costs in excess of the Base Tenant
Improvement Allowance.
7. Building Permit. Lessor shall be responsible for obtaining a building
---------------
permit ("Building Permit") for the Tenant Improvements. To the extent requested
by Lessor, Lessee shall assist Lessor in obtaining the Building Permit. After
approval by Lessor and Lessee of the Construction Plans as provided above,
Lessor or its Contractor shall submit the Approved Construction Plans to the
appropriate governmental body for plan checking and a Building Permit. Lessor,
with Lessee's cooperation, shall cause to be made any change in the Approved
Construction Plans necessary to obtain the Building Permit.
8. Change Requests.
---------------
8.1 Approval. No changes to the Approved Construction Plans requested
by Lessee (each, a "Change Request") shall be made without Lessor's prior
written approval, which approval shall not be unreasonably withheld or delayed,
subject to the following:
(i) No Change Request shall affect the structure or
operating systems of the Building;
(ii) Lessor may require Lessee to pay to Lessor within
thirty (30) days of written notice from Lessor, the amount by which the Tenant
Improvement Cost, after implementation of the Change Request, is reasonably
estimated by Lessor to exceed the Base Tenant Improvement Allowance, including
without limitation, increases in construction costs and other charges payable
hereunder caused by any delay in construction of the Tenant Improvements as a
----------------- -----------------
LESSOR'S INITIALS LESSEE'S INITIALS
<PAGE>
result of a Change Request;
(iii) A Change Request shall constitute an agreement by
Lessee to any delay in completion of the Tenant Improvements caused by Lessor's
reviewing, processing and implementing the Change Request, all of which delays
shall be deemed a Lessee Delay;
(iv) Lessor shall accept only Change Requests signed by
Lessee's representative, Lynn Kasel, Lessee may from time to time designate a
different representative to authorize Change Requests.
(v) Any delays in completion of the Tenant Improvements
caused as a result of a Change Request shall not delay the commencement of the
term of the Lease from the date the term of the Lease would otherwise have
commenced had it not been for the Change Request. Lessee agrees that the Lease
and all obligations of Lessee thereunder (including without limitation the
obligation to pay rent) shall commence on the date that the term of the Lease
would otherwise have commenced had it not been for the Change Request.
8.2 Procedure. Except with respect to the mechanical and electrical
systems of the Building, within five (5) business days after receipt of a
written Change Request from Lessee, Lessor shall notify Lessee verbally of
Lessor's approval or disapproval of the Change Request; Lessor shall confirm, in
writing, Lessor's approval or disapproval within five (5) business days after
receipt of Lessee's written Change Request. All costs paid by Lessor to
unaffiliated parties in connection with review of proposed Change Requests shall
be part of the Tenant Improvement Cost. With respect to Change Request related
to the Building's mechanical and electrical systems, Lessor shall have five (5)
business days to respond orally and ten (10) business days to confirm its
decision in writing. If Lessor fails to notify Lessee of Lessor's approval of
the Change Request within the required period, the Change Request shall be
deemed approved.
8.3 Period of Review. The period of Lessor's review of a proposed
Change Request, and the period during which Lessee has the right to revoke a
Change Request, shall be deemed Lessee Delays.
8.4 Minor Changes in Work. Lessor shall have the authority, without
the consent of Lessee, to order any changes to the Tenant Improvements required
by applicable laws or regulations, and to order minor changes in the Tenant
Improvements not involving an increase in cost to Lessee, a delay in the
completion of the Tenant Improvements or a diminution in the quality of the
Tenant Improvements. Lessor shall use reasonable efforts to give Lessee notice
of such minor changes. Delays caused by Lessor's compliance with laws or
regulations shall not be deemed delays within Lessor's control, and Lessor shall
have no responsibility or liability with respect thereto.
9. Payment of Contractor. Once Lessor and Lessee have agreed upon the
---------------------
Approved Bid, and a contract for the construction of the Tenant Improvements has
been entered into with the Contractor, Lessor shall be responsible for making
monthly progress payments to Contractor in accordance with the construction
contract, subject to reimbursement by Lessee pursuant to the following
procedure. Once the Approved Bid has been agreed upon, if the total Approved Bid
is in excess of the Base Tenant Improvement Allowance, Lessee shall reimburse
Lessor each month, within twenty (20) days of receipt of bills or invoices
representing the current months' payment obligation to the Contractor (the
"Monthly Payment"), for that portion of the Monthly Payment determined by taking
a fraction, the numerator of which is the difference between the Bid Price and
the Base Leasehold Improvement Allowance, and the denominator of which is the
Approved Bid, and multiplying the Monthly Payment by such fraction. Lessor shall
have no obligation to pay Contractor unless and until Lessor shall have received
such sum from Lessee. Any delays in construction of the Tenant Improvements
caused as a result of Lessee's failure to timely Lessor as provided herein,
shall be deemed to be a Lessee Delays for which Lessee shall be solely
responsible.
10. Commencement and Completion of Tenant Improvements. As soon as the
--------------------------------------------------
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LESSOR'S INITIALS LESSEE'S INITIALS
<PAGE>
Construction Plans have been prepared, reviewed and approved as specified
herein, Lessor has obtained the Building Permit and other necessary
authorizations for the construction of the Tenant Improvements from the City of
Bellevue and any other governmental, quasi-governmental or regulatory agency,
Lessor and Lessee have agreed upon the Approved Bid and Lessor has entered into
a contract with the Contractor for the construction of the Tenant Improvements,
Lessor shall cause the construction of the Tenant Improvements to commence and
shall diligently pursue same until completion.
11. Punchlist Inspection and Completion. No later than five business days
-----------------------------------
after notice from Lessor that such Tenant Improvements are Substantially
Complete, Lessee shall inspect the Premises and identify in writing to Lessor
any items that are not complete, are defective or are at variance with the
Construction Plans ("Punchlist Items"). If Lessee fails to so inspect the Tenant
Improvements within such period and provide Lessor with a written list of
Punchlist Items, Lessee shall be deemed to have accepted the condition of the
Tenant Improvements. The existence of Punchlist Items shall not delay
Substantial Completion from having occurred or delay the Commencement Date or
Rent Commencement Date under the Lease unless those Punchlist Items are so
material in nature that the existence of such Punchlist Items or the disruption
likely to be caused by Lessor's correction of such Punchlist Items would
materially and adversely impair Lessee's ability to occupy and use the Premises.
Lessor shall proceed to complete the Punchlist Items, if any, arising out of the
Punchlist Inspection, as soon as soon as reasonably practicable and in any event
within 30 days following the Substantial Completion Date, except for those items
that, despite Lessor's diligent and reasonable efforts, require additional time
due to the unavailability of materials within such 30 day period.
12. Payment of Additional Costs. Following Substantial Completion of the
----------------------------
Tenant Improvements and determination of the total Tenant Improvement Cost, to
the extent the Tenant Improvement Cost exceeds the Base Tenant Improvement
Allowance (the "Additional Costs"), Lessee shall be solely responsible for
payment of such Additional Costs. Lessee shall pay to Lessor, within ten (10)
days after written notice from Lessor (accompanied by statement evidencing such
Additional Costs incurred), the amount of the Additional Costs.
13. Importance of Time Periods. The time periods set forth in this
--------------------------
Agreement are to be strictly adhered to and extensions of time shall be granted
only when the circumstances are such that it is clear that the party requesting
the additional time is without fault as to the delay.
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LESSOR'S INITIALS LESSEE'S INITIALS
<PAGE>
ADDENDUM TO LEASE AGREEMENT
Between
Bedford Property Investors (Lessor)
And LightRealm, Inc. (Lessee)
Dated December 16/th/, 1999
I. PARAGRAPH 1.6 SECURITY DEPOSIT
------------------------------
Notwithstanding anything to the contrary contained in Section 1.6 or
Article 10 of the Lease, Lessee shall deliver to Lessor on or before
December17, 1999, in lieu of a cash security deposit, an irrevocable
standby letter of credit naming Lessor as beneficiary, in the amount of One
Million Fifty Thousand Dollars ($1,050,000.00) ("Letter of Credit"). A
major national bank shall issue such Letter of Credit in substance
identical to the form attached to the Lease as Exhibit "G". The Letter of
Credit shall allow draws by Lessor upon sight draft accompanied by a
statement by Lessor that it is entitled to draw upon the Letter of Credit
and shall contain terms which allow Lessor to make partial and multiple
draws up to the face amount of the Letter of Credit. If Lessee has not
delivered to Lessor at least sixty (60) days prior to the expiration of the
original Letter of Credit (or any renewal letter of credit) a renewal or
extension thereof, then following Lessee's failure to do so upon five (5)
days notice, Lessor shall have the right to draw down the entire amount of
the original Letter of Credit (or renewal thereof) and retain, in a
separate, interest-bearing account with interest accruing for the benefit
of Lessee, the proceeds thereof as the security pursuant to this Section.
The amount of the required Letter of Credit shall be reduced by Two Hundred
Sixty-Two Thousand Five Hundred Dollars ($262,500.00) every twelve (12)
months of the Lease Term, beginning at the beginning of year five (5) of
the term, provided the Lessee has not been in default under the Lease.
If (a) Lessee delivers to Lessor a full and unconditional guaranty of all
of Lessee's obligations under this Lease that is in form and substance
satisfactory to Lessor and that is executed by Micron Electronics, Inc.
(the "Micron Guaranty") and (b) the financial net worth of Micron
Electronics, Inc. at the time of delivery of the Micron Guaranty is
comparable to or greater than the financial net worth of Micron
Electronics, Inc., as of the date hereof, Lessee shall be released from any
further obligation to provide a Letter of Credit, and Lessor shall release
to Lessee any Letter of Credit previously delivered by Lessee to Lessor
within thirty (30) days of receipt of the executed Micron Guaranty.
As a condition to final release of the Letter of Credit, whether by virtue
of reductions in the amount of the Letter of Credit specified above or by
virtue of delivery of the Micron Guaranty, Lessee shall deposit with Lessor
the amount specified in Section 1.6 in cash as a Security deposit, which
cash deposit shall be governed by Article 10 of the Lease.
II. OPTION TO EXTEND THE TERMS - NEGOTIATED RENTAL
----------------------------------------------
1. Notice of Exercise. Lessee shall have the right to extend the initial
-------------------
term hereof for one additional period of five (5) years upon the same terms
and conditions as stated herein, except for Minimum Monthly Rent. Minimum
Monthly Rent for the option period shall be at Fair Market Rental. The
extension is herein referred to as "Extended Term." Lessee must exercise
its right, if at all, by written notification (the "Notice of Exercise") to
Lessor not less than three hundred sixty-five (365) days prior to the
expiration of the initial term hereof, provided that Lessee is not then in
default of any of the provisions of this Lease.
----------------- -----------------
LESSOR'S INITIALS LESSEE'S INITIALS
<PAGE>
2. Options are Personal. The option to extend granted herein is personal
--------------------
to the original Lessee, or such Transferee where Lessor's consent is not
required (e.g., Micron Electronics, Inc., or Micron PC Web Services, Inc.
or any wholly-owned affiliate or subsidiary of either Micron Electronics,
Inc., or Micron PC Web Services, Inc.), executing this Lease and
notwithstanding anything to the contrary contained in the Lease, the rights
contained in this Addendum are not assignable or transferable by such
original Lessee except to such Transferee when Lessor's consent is not
required (e.g., Micron, Inc.). Lessor grants the rights contained herein to
Lessee in consideration of Lessee's strict compliance with the provisions
hereof, including, without limitation, the manner of exercise of this
option.
III. FAIR MARKET RENTAL
------------------
1. Fair Market Rental. If Lessee exercises the right to extend the term,
-------------------
then the Minimum Monthly Rent shall be adjusted to equal the Fair Market Rental
for the premises as of the date of the commencement of such Extended Term,
pursuant to the procedures hereinafter set forth. The term "Fair Market Rental"
means the Minimum Monthly Rent chargeable for the Leased Premises based upon the
following factors applicable to the Leased Premises or any comparable premises:
(a) Rental rates being charged for comparable premises in the same
geographical location;
(b) The relative locations of the comparable premises;
(c) Improvements, or allowances provided for improvements, or to be
provided;
(d) Rental adjustments, if any, or rental concessions;
(e) Services and utilities provided or to be provided;
(f) Use limitations or restrictions;
(g) Any other relevant Lease terms or conditions.
In no event, however, shall the Fair Market Rental be less than the
Minimum Monthly Rent in effect immediately prior to the commencement date of the
Extended Term in question. The Fair Market Rental evaluation may include
provision for further rent adjustments during the Extended Term if such
adjustments are commonly required in the market place for similar types of
leases.
2. Determination of Fair Market Rental. Upon exercise of the right to
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extend the term, and included within the Notice of Exercise, Lessee shall notify
Lessor of its opinion of Fair Market Rental as above defined for the Extended
Term. If Lessor disagrees with Lessee's opinion of the Fair Market Rental, it
shall so notify Lessee ("Lessor's Value Notice") within thirty (30) days after
receipt of Lessee's Notice of Exercise. If the parties are unable to resolve
their differences within ten (10) business days thereafter, either party may
apply for Arbitration as provided below. If neither party applies for
Arbitration within ten (10) business days after receipt by Lessee of Lessor's
Value Notice, Lessee shall be bound to the Fair Market Rental stated in Lessor's
Value Notice. Should either party elect to arbitrate, and if the arbitration is
not concluded before the commencement of the Extended Term, Lessee shall pay
Minimum Monthly Rent to Lessor in an amount equal to the Fair Market Rental set
forth in Lessor's Value Notice, until the Fair Market Rental is determined in
accordance with the arbitration provisions hereof ("Arbitration"). If the Fair
Market Rental as determined by Arbitration differs from that stated in Lessor's
Value Notice, then any adjustment required to correct the amount previously paid
by Lessee shall be made by payment by the appropriate party within thirty (30)
days after the determination of Fair Market Rental by Arbitration has been
concluded, as provided herein. Lessee shall be obligated to make payment during
the entire Extended Term of the Minimum Monthly Rent determined in accordance
with the Arbitration procedures hereunder.
3. Arbitration. In the event either party seeks Arbitration of Fair
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Market Rental under the provisions hereof for the Extended Term, the other party
shall be bound to submit the matter for determination by Arbitration. The
Arbitration shall be conducted by the Seattle, Washington office
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<PAGE>
of JAMS/ENDISPUTE or its it successors or, if JAMS/ENDISPUTE and its successors
are no longer in operation, by the Seattle Office of the American Arbitration
Association or its successors (the "Arbitration Service").
4. Demand for Arbitration. A party demanding Arbitration hereunder shall
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make its demand in writing ("Demand Notice") within ten (10) business days after
service of Lessor's Value Notice. A copy of the Demand Notice shall be sent to
the Arbitration Service. If there is no Arbitration Service, then a copy of the
Demand Notice shall be sent to the Presiding Judge of the highest trial court in
such county for the state in which the Leased Premises are located. The
Arbitration Service, or Presiding Judge, whichever is applicable, is hereinafter
referred to as the "Appointer".
The Appointer, acting in his personal, private capacity, shall appoint
within ten (10) days thereafter a real estate broker with at least seven (7)
years' experience leasing properties in the same county for the general type of
use to which the Leased Premises are devoted under the terms of this Lease, i.e.
Shopping Center, Office, Retail. The Arbitrator shall be a person who would be
qualified to serve as an expert witness and to give opinion testimony addressed
to the issue in a court of competent jurisdiction. Such a party is hereinafter
referred to as the "Arbitrator". The parties may, however, before sending the
Demand Notice to the Appointer, mutually agree upon an Arbitrator of their own
choice, in which event such appointment shall nullify the necessity of
appointment of an Arbitrator by an Appointer.
5. Decision of the Arbitrator. The Arbitrator so selected shall, within
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ninety (90) days after his appointment, state in writing his determination as to
whether Lessor's valuation, or Lessee's valuation of Fair Market Rental, most
closely approximates his own. The Arbitrator may not state his own opinion of
Fair Market Rental, but is strictly limited to the selection of Lessor's Fair
Market Rental evaluation as stated in Lessor's Value Notice or Lessee's Fair
Market Rental evaluation as stated in the Notice of Exercise. The Arbitrator
shall have the right to consult experts and competent authorities with factual
information or evidence pertaining to a determination of Fair Market Rental, but
any such consultation shall be made in the presence of both parties with full
right to cross examine. The Arbitrator shall have no right to propose a middle
ground or any modification of either of the proposed valuations, and shall have
no power to modify the provisions of this Lease. The valuation so chosen as most
closely approximating that of the Arbitrator shall constitute the decision of
the Arbitrator and shall be final and binding upon the parties, absent fraud or
gross error. The Arbitrator shall render a decision and award in writing, with
counterpart copies to each party and judgment thereon may be entered in any
court of competent jurisdiction.
6. Successor Arbitrator; Fees and Expenses. In the event of failure,
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refusal, or inability of the Arbitrator to act in a timely manner, a successor
shall be appointed in the same manner as such Arbitrator was first chosen
hereunder, if such Arbitrator was chosen by an Appointer. If chosen by mutual
agreement, the parties shall, in this succeeding instance, choose the Arbitrator
through means of the procedure for the Appointer. The fees and expenses of the
Arbitrator, the Arbitration Service and the administrative hearing fee, if any,
shall be divided equally between the parties. Each party shall bear its own
attorneys' fees and other expenses including fees for witnesses in presenting
evidence to the Arbitrator.
IV. PARKING
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Lessor will maintain a total parking ratio of 4.41 vehicles per 1,000
usable square feet. Twenty-eight (28) covered parking stalls shall be
provided in the building parking garage. Lessee shall pay market rate for
the covered parking stalls which at the time of this Lease was Forty-Five
Dollars ($45) per stall per month. The balance of the parking is free of
charge.
V. SIGNAGE
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LESSOR'S INITIALS LESSEE'S INITIALS
<PAGE>
Lessor shall provide, at its sole cost, lobby directory signage and suite
identification signage per the building standards. Lessee shall have non-
exclusive rights to install an exterior monument sign. Lessee shall
maintain its monument signage rights so long as it is occupying its initial
premises. Installation of an exterior monument sign shall be subject to
Lessor and City of Bellevue approval as to design and location.
Additionally, in the event an exterior building sign has not been granted
during the building's initial lease-up, Lessee shall be provided the right
to install one (1) exterior building sign. This exterior signage right
shall be subject to Landlord and City of Bellevue approval as to design and
location.
VI. BUILDING UPGRADES
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Landlord shall complete, at its sole cost, an upgrade to the main building
lobby and elevator cabs. Additionally, Landlord shall clean the exterior of
the building and improve the landscaping areas.
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LESSOR'S INITIALS LESSEE'S INITIALS