1
EX 10.18
▇▇▇▇▇▇▇ PLACE OFFICE BUILDING
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LEASE AGREEMENT
▇▇▇▇▇▇▇ PLACE, LLC
LANDLORD
AND
TERA COMPUTER COMPANY
TENANT
2
TABLE OF CONTENTS
PAGE
1. LEASE DATA AND EXHIBITS...............................................1
(a) BUILDINGS....................................................1
(b) PREMISES.....................................................1
(c) POCKET SPACE.................................................2
(d) TENANT'S PERCENTAGE OF THE BUILDING..........................2
(e) BASIC PLANS DELIVERY DATE....................................2
(f) COMMENCEMENT DATE............................................2
(g) EXPIRATION DATE..............................................2
(h) RENT.........................................................2
(i) SECURITY DEPOSIT.............................................3
(j) OPTION TO RENEW..............................................3
(k) OPTION RENT..................................................3
(l) EXPANSION OPTION.............................................3
(m) NOTICE ADDRESSES.............................................3
(n) EXHIBITS.....................................................3
2. PREMISES..............................................................3
3. COMMENCEMENT AND EXPIRATION DATES.....................................4
(a) COMMENCEMENT DATE............................................4
(b) TENANT OBLIGATIONS...........................................4
(c) CONFIRMATION OF COMMENCEMENT DATE............................4
(d) EXPIRATION DATE..............................................4
(e) EARLY TERMINATION............................................4
(f) OPTION TO EXTEND TERM........................................4
(g) MARKET RENT..................................................5
(h) EXPANSION OPTION.............................................5
4. RENT..................................................................6
5. SECURITY DEPOSIT......................................................6
6. USES..................................................................6
7. SERVICES AND UTILITIES................................................7
(a) STANDARD SERVICES............................................7
(b) INTERRUPTION OF SERVICES.....................................7
(c) ADDITIONAL SERVICES..........................................8
8. COSTS OF OPERATIONS AND REAL ESTATE TAXES.............................8
(a) DEFINITIONS..................................................8
(b) BASE AMOUNTS................................................12
(c) ADDITIONAL RENT FOR SERVICE AND UTILITY COSTS...............12
-i-
3
(d) ADDITIONAL RENT FOR REAL PROPERTY TAXES.....................13
(e) DETERMINATIONS..............................................13
(f) FURTHER ADJUSTMENT..........................................14
(g) ADDITIONAL RENT NOT DUE.....................................14
(h) PERSONAL PROPERTY TAXES.....................................14
9. IMPROVEMENTS.........................................................14
10. CARE OF PREMISES.....................................................14
(a) TENANT'S MAINTENANCE........................................14
(b) LANDLORD'S MAINTENANCE......................................15
11. ACCEPTANCE OF PREMISES...............................................15
12. ACCESS...............................................................15
13. DAMAGE OR DESTRUCTION................................................16
(a) DAMAGE AND REPAIR...........................................16
(b) DESTRUCTION DURING LAST YEAR OF TERM........................16
(c) BUSINESS INTERRUPTION.......................................16
(d) TENANT IMPROVEMENTS.........................................16
(e) EXPRESS AGREEMENT...........................................17
14. WAIVER OF SUBROGATION................................................17
15. INDEMNIFICATION......................................................17
(a) TENANT'S INDEMNIFICATION....................................17
(b) LANDLORD'S INDEMNIFICATION..................................17
16. INSURANCE............................................................18
(a) TENANT'S INSURANCE..........................................18
(b) LANDLORD'S INSURANCE........................................18
17. ASSIGNMENT AND SUBLETTING............................................19
(a) ASSIGNMENT OR SUBLEASE......................................19
(b) ASSIGNEE OBLIGATIONS........................................20
(c) SUBLESSEE OBLIGATIONS.......................................20
18. SIGNS................................................................20
19. LIENS AND INSOLVENCY.................................................20
(a) LIENS.......................................................20
(b) INSOLVENCY..................................................21
-ii-
4
20. DEFAULT..............................................................21
(a) TENANT'S DEFAULT............................................21
(b) LANDLORD'S DEFAULT..........................................22
21. SUBORDINATION...............................................23
22. SURRENDER OF POSSESSION..............................................23
23. REMOVAL OF PROPERTY..................................................23
24. NON-WAIVER...........................................................24
25. HOLDOVER.............................................................24
26. CONDEMNATION.........................................................24
(a) ENTIRE TAKING...............................................24
(b) CONSTRUCTIVE TAKING OF ENTIRE PREMISES......................24
(c) PARTIAL TAKING..............................................25
(d) AWARDS AND DAMAGES..........................................25
27. NOTICES..............................................................25
28. COSTS AND ATTORNEYS FEES.............................................25
29. LANDLORD'S LIABILITY.................................................25
30. LANDLORD'S CONSENT...................................................26
31. ESTOPPEL CERTIFICATES................................................26
32. TRANSFER OF LANDLORD'S INTEREST......................................26
33. RIGHT TO PERFORM.....................................................26
34. AUTHORITY............................................................27
(a) CORPORATE AUTHORITY.........................................27
(b) PARTNERSHIP AUTHORITY.......................................27
35. HAZARDOUS SUBSTANCES.................................................27
-iii-
5
36. PARKING..............................................................27
367. TENANT'S EXISTING LEASE..............................................28
368. GENERAL..............................................................28
(a) HEADINGS....................................................28
(b) HEIRS AND ASSIGNS...........................................28
(c) NO BROKERS..................................................28
(d) ENTIRE AGREEMENT............................................29
(e) SEVERABILITY................................................29
(f) OVERDUE PAYMENTS............................................29
(g) FORCE MAJEURE...............................................29
(h) RIGHT TO CHANGE PUBLIC SPACES...............................29
(i) GOVERNING LAW...............................................29
(j) BUILDING DIRECTORY..........................................30
(k) BUILDING NAME...............................................30
-iv-
6
LEASE AGREEMENT
THIS LEASE ("Lease") made this _____ day of ___________, 1997, between
▇▇▇▇▇▇▇ PLACE LLC, a Washington limited liability company ("Landlord"), and TERA
COMPUTER COMPANY, a Washington corporation ("Tenant").
In consideration of the mutual promises, covenants and conditions
contained herein, the parties hereto agree as follows:
1. LEASE DATA AND EXHIBITS. The following terms as used herein shall
have the meanings provided in this Section 1, unless otherwise specifically
modified by provisions of this Lease.
(a) BUILDINGS. Certain structures situated on a portion of the
real property more particularly described on Exhibit A attached hereto and
incorporated herein by reference (the "Property"), with a postal address of ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The structures on the Property
are shown on the site plan attached hereto as Exhibit A-1 and are referred to
herein as the "Sellar Hambach Building", the "Schwabacher Building" and the
"Warehouse Building" (individually a "Building" and collectively, the
"Buildings").
(b) PREMISES. The leased premises (the "Premises") shall
include approximately 95,938 square feet of office space as hereafter designated
by Tenant from the space in the Sellar Hambach Building described as follows:
▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Building 3,321 Sq. Ft.
Floor 2 Sellar Hambach Building 19,814 Sq. Ft.
Floor 3 Sellar Hambach Building 19,048 Sq. Ft.
Floor 4 Sellar Hambach Building 18,868 Sq. Ft.
Floor 5 Sellar Hambach Building 18,382 Sq. Ft.
Floor 6 Sellar Hambach Building 18,096 Sq. Ft.
Floor 7 Sellar Hambach Building 17,457 Sq. Ft.
Said areas are outlined on the floor plan(s) attached hereto as Exhibit B and
incorporated herein by this reference. The Premises also include tenant
improvements, as described in Exhibit C attached hereto and incorporated herein
by this reference. Not later than December 31, 1997, Tenant shall notify
Landlord which portions of the above described space in the Sellar Hambach
Building will be included in the approximately 95,938 square feet of the initial
Premises. Once Tenant has so notified Landlord, Exhibit B shall be amended to
show the portion included as the initial Premises and the portion included as
Additional Pocket Space (as defined below).
-1-
7
(c) POCKET SPACE. Not later than the Commencement Date, Tenant
shall designate up to approximately 10,938 square feet of the initial Premises
as the "Initial Pocket Space" and such Initial Pocket Space will be shown on an
attachment to Exhibit B. In addition, the portions of the Sellar Hambach
Building described above which are not included in the initial Premises and the
following spaces shown on Exhibit B-1 are hereby designated as the "Additional
Pocket Space":
Floor 2 Schwabacher Building 8,400 Sq. Ft.
Floor 3 Schwabacher Building 8,400 Sq. Ft.
The Initial Pocket Space shall become part of the Premises on the
earlier of eighteen (18) months after the Commencement Date or the date Tenant
occupies such space for other than the storage of furniture or supplies. The
Additional Pocket Space shall become part of the Premises thirty-six (36) months
after the Commencement Date. Until such date, Landlord may lease any of the
Additional Pocket Space to third parties. The parties agree there will be a new
lease executed by Tenant and the ▇▇▇▇▇▇▇ Place Building Condominium Association
on terms identical to this Lease for Tenant's lease of Additional Pocket Space
in the Schwabacher Building. The Initial Pocket Space and the Additional Pocket
Space are referred to herein collectively as the "Pocket Space."
(d) TENANT'S PERCENTAGE OF THE BUILDING. The initial Premises
constitute 74.96% of the non-retail space in the Sellar Hambach Building and
will, when fully occupied (including the Pocket Space), constitute 89.84% of the
non-retail space in the Sellar Hambach Building ("Tenant's Percentage of the
Building(s)") calculated by dividing the net rentable area of the Premises from
time to time, by the area of the non-retail space on floors 1 through 7 of the
Sellar Hambach Building (127,992 net rentable square feet). The rentable area of
the Premises as expanded from time to time and the rentable area of the
Buildings shall be determined by the architectural firm of JPC utilizing BOMA
standards. Based upon such calculations, "Tenant's Percentage of the
Building(s)," the Rent deposit described in Section 1(h), and the Security
Deposit described in Section 1(i) will be adjusted to reflect such measurements.
(e) BASIC PLANS DELIVERY DATE. February 1, 1998.
FINAL PLANS DELIVERY DATE. April 1, 1998.
(f) COMMENCEMENT DATE. November 1, 1998 or such earlier date
as provided in Section 3 hereof.
(g) EXPIRATION DATE. 120 months following the Commencement
Date.
(h) RENT. Monthly rent (the "Rent") in the following amounts:
Months 1 - 36: $1.70 per rentable square foot
Months 37 - 60: $1.833 per rentable square foot
-2-
8
Months 61 - 84: $1.933 per rentable square foot
Months 85 - 120:$2.033 per rentable square foot
The Rent shall be payable without offset or deduction on or before the first day
of each month. Additional rent "Additional Rent" shall be calculated and paid
from time to time as provided in Section 7 and Section 8 hereof. Tenant shall
deposit with Landlord within three (3) days of the execution of this Lease
$144,500.00 to be applied to the first Rent payment due hereunder.
(i) SECURITY DEPOSIT. $267,920.94.
(j) OPTION TO RENEW. One (1) period of five (5) years.
(k) OPTION RENT. A monthly rental of 95% of Market Rent for
similar office space in the Pioneer Square area, but not less than $2.033 per
rentable square foot.
(l) EXPANSION OPTION. Continuing right of first right of
refusal on all non-retail space in the Buildings other than Additional Pocket
Space.
(m) NOTICE ADDRESSES.
Landlord: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tenant: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(n) EXHIBITS. The following exhibits or riders are made a part
of this Lease:
Exhibit A Legal Description of the Property
Exhibit A-1 Site Plan of Property
Exhibit B Floor Plan of Premises
Exhibit B-1 Floor Plan of Additional Pocket
Space in Schwabacher Building
Exhibit C Tenant Improvements
Exhibit D Memorandum of Lease
Exhibit E Building Rules and Regulations
Exhibit F Janitorial Services
2. PREMISES. Landlord does hereby lease to Tenant, and Tenant does
hereby lease from Landlord, upon the terms and conditions herein set forth, the
Premises described in Section 1(b) hereof as shown on Exhibits B and B-1,
together with the appurtenances, including without limitation the right to use,
in common with others, the lobbies, elevators and other common areas located on
the Property.
-3-
9
3. COMMENCEMENT AND EXPIRATION DATES.
(a) COMMENCEMENT DATE. The Commencement Date shall be the
earlier of the date specified in Section l(f) or the date Tenant occupies the
Premises.
(b) TENANT OBLIGATIONS. If Tenant's tenant improvements are
not completed on the Commencement Date due to the failure of Tenant to fulfill
any obligation pursuant to the terms of this Lease or any exhibit hereto
including, without limitation, Tenant's failure to deliver documents necessary
to comply with the Plan Delivery Dates described in Section l(e) and Exhibit C,
the Lease shall be deemed to have commenced upon the Commencement Date.
(c) CONFIRMATION OF COMMENCEMENT DATE. In the event the
Commencement Date is established as a date other than November 1, 1998, Landlord
shall confirm the same to Tenant in writing. At Landlord's request, once the
Commencement Date is known, the parties will execute a Memorandum of Lease in
the form attached hereto as Exhibit D.
(d) EXPIRATION DATE. The Lease shall expire on the date
specified in Section l(g).
(e) EARLY TERMINATION. Tenant shall have the right to
terminate this Lease in the event Landlord cannot provide adequate office space
to meet Tenant's expansion needs in the Buildings or in any other buildings
owned by Landlord or an affiliate of Landlord within one block of the Buildings
(provided rent in the other building is 95% of Market Rent (calculated as
provided below) and has similar parking to the Property). Tenant may exercise
this early termination any time between the 60th and 72nd months of the Lease
term provided Tenant gives Landlord written notice of Tenant's intent to
terminate not later than the 42nd month of the Lease term and pays Landlord a
termination fee equal to the unamortized portion of the tenant improvements as
shown on Exhibit C, and leasing costs associated with Tenant's occupancy of the
Building, provided, however, that Tenant shall not be required to pay any
termination fee if it moves to another building owned by Landlord or the same
parties which comprise Landlord. As of the time Tenant intends to vacate the
Premises pursuant to its early termination right, Tenant must provide Landlord
with satisfactory evidence that Tenant has leased, from a third party, new space
containing at the minimum one hundred and ten percent (110%) the then Premises,
or this Lease shall not be deemed terminated.
(f) OPTION TO EXTEND TERM. Provided Tenant is not in default,
beyond any applicable cure period, at the time of exercise or commencement of
the option, Tenant shall have the right to extend the term of this Lease for one
(1) additional period of five (5) years. Tenant shall notify Landlord no later
than one (1) year prior to expiration of the initial ten year term of this Lease
of Tenant's intention to exercise this option to extend the Lease term. If
Tenant so exercises the option to extend the term of this Lease, such extension
shall be on all terms, conditions and provisions contained in this Lease, except
that the Rent shall be equal to 95% of the then market rent (the "Market Rent")
for comparable space at the time such option period commences; provided,
however, in no event shall the Rent during such option period be less than
$2.033 per rentable square foot.
-4-
10
(g) MARKET RENT. If Landlord and Tenant are unable to agree on
Market Rent within thirty (30) days following Tenant's exercise of the extension
option (the "Exercise Date"), both Landlord and Tenant shall submit their final
estimate of the Market Rent to the other in writing within ten (10) days
thereafter, and the Market Rent shall be determined by arbitration as follows:
(i) The arbitration will be by three arbitrators, all
of whom must be (1) neutral parties and (2) either MAI appraisers or licensed
real estate brokers who have been active over the five (5) years ending on the
date of appointment in the brokering or appraisal of office space in the greater
Seattle Central Business District. Landlord and Tenant shall each select one of
the arbitrators and such selection shall be accomplished within thirty (30) days
after the Exercise Date. The third arbitrator will be selected by the two
arbitrators so chosen by Landlord and Tenant. If the two arbitrators cannot
agree upon the third arbitrator within sixty (60) days following the Exercise
Date, the third arbitrator will be selected by application by either party to
the American Arbitration Association.
(ii) Within one hundred twenty (120) days following
the Exercise Date, (the "Decision Date"), the arbitrators shall decide on the
Market Rent for the Premises for a five (5) year term. The decision of the
majority of the arbitrators shall control. If a majority of the arbitrators do
not agree within the stipulated time period, then each arbitrator shall render
his or her separate determination of the Market Rent on or before the Decision
Date. In such case, the three determinations shall be averaged to determine the
Market Rent. However, if the lowest Market Rent and/or the highest Market Rent
is more than ten percent (10%) lower or higher than the middle Market Rent, the
low market Rent and/or high Market Rent shall be disregarded. If only one Market
Rent is disregarded, the remaining two Market Rents will be averaged in order to
establish the Market Rent.
(iii) Both parties may submit any information to the
arbitrators for their consideration with copies to the other party. In using
comparable lease rates to aid in the determination the rates must be for
comparable space within a two (2) mile radius of the Building. A copy of the
arbitrators' written decision will be given to both parties when the Market Rent
has been determined. The determination of the Market Rent will be final and
binding upon Landlord and Tenant. The cost of the arbitration will be paid by
Tenant if the Market Rent is one hundred ten percent (110%) or more of the
Market Rent specified in the notice given by Tenant to Landlord, and shall be
paid by Landlord if the Market Rent is less than ninety percent (90%) of the
Market Rent specified in the notice given by Landlord to Tenant, and otherwise
shall be paid equally by Landlord and Tenant.
(h) EXPANSION OPTION. Provided Tenant is not then in default,
beyond the applicable cure period, under this Lease, Tenant shall have the
ongoing right of first offer on all non-retail space in the Buildings, other
than Pocket Space, as such space becomes available. Prior to entering into
negotiations with other prospective tenants for space on which Tenant has a
right of first offer, Landlord shall provide Tenant with written notice (an
"Offer Notice") specifying the amount of space available and the date of
availability. Tenant shall notify Landlord in writing within ten (10) days after
receipt of any Offer Notice of Tenant's desire to
-5-
11
lease such space, and if Tenant has not given such notice Tenant shall be deemed
to have waived any right to lease such space which space may thereafter be
leased to any other party. Any space in the Buildings leased by Tenant pursuant
to the right of first offer contained in this paragraph shall be added to the
Premises and all other conditions of this Lease including, but not limited to,
the Lease term, Rent and Option to Extend Term shall apply to such added space.
4. RENT. Tenant shall pay Landlord without notice the Rent stated in
Section l(h) hereof and Additional Rent as provided in Section 7 and Section 8
and any other additional payments due under this Lease without deduction or
offset in lawful money of the United States in advance on or before the first
day of each month at Landlord's Notice Address set forth in Section 1(m) hereof,
or to such other party or at such other place as Landlord may hereafter from
time to time designate in writing. Rent and Additional Rent for any partial
month at the beginning or end of the Lease term shall be prorated in proportion
to the number of days in such month falling within the Lease term.
5. SECURITY DEPOSIT. As security for the full and faithful performance
of every covenant and condition of this Lease to be performed by Tenant, Tenant
shall, not later than the Commencement Date, pay to Landlord the Security
Deposit as specified in Section 1(i) hereof. If Tenant shall default with
respect to any covenant or condition of this Lease, including but not limited to
the payment of Rent, Additional Rent or any other payment due under this Lease,
Landlord may apply all or any part of the Security Deposit to the payment of any
sum in default or any other sum which may be required or which Landlord may, in
its reasonable discretion, deem necessary to spend or incur by reason of
Tenant's default. In such event, Tenant shall, within five (5) days of written
demand therefor by Landlord, deposit with Landlord the amount so applied. If
Tenant shall have fully complied with all of the covenants and conditions of
this Lease, but not otherwise, the amount of the Security Deposit then held by
Landlord shall be retained by Landlord and applied against the Rent for the last
month of the Lease term. In the event of Tenant's default under this Lease,
Landlord's right to retain the Security Deposit shall be deemed to be in
addition to any and all other rights and remedies at law or in equity available
to Landlord. Landlord shall not be required to keep any Security Deposit
separate from its general funds and Tenant shall not be entitled to any interest
thereon.
6. USES. The Premises are to be used only for general office purposes
and for assembling computers and packaging computer components ("Permitted
Uses"), and for no other business or purpose without the prior written consent
of Landlord, which consent may be withheld if Landlord, in its sole discretion,
determines that any proposed use is inconsistent with or detrimental to the
maintenance and operation of the Buildings as first-class office buildings in
Seattle, Washington or is inconsistent with any restriction on use of the
Premises, the Buildings or the Property contained in any lease, mortgage or
other agreement or instrument by which the Landlord is bound or to which any of
such property is subject. Tenant shall not commit any act that will increase the
then existing rate of insurance on the Buildings without Landlord's consent.
Tenant shall promptly pay upon demand the amount of any increase in insurance
rates caused by any act or acts of Tenant. Tenant shall not commit or allow to
be committed any waste upon the Premises, or any public or private nuisance or
other act which disturbs the quiet enjoyment of any other tenant in the
Buildings or which is
-6-
12
unlawful. Tenant shall not, without the written consent of Landlord, use any
apparatus, machinery or device in or about the Premises which will cause any
substantial noise, vibration or fumes. If any of Tenant's office machines or
equipment should disturb the quiet enjoyment of any other tenant in the
Buildings, then Tenant shall, at its expense, provide adequate insulation or
take other action as may be necessary to eliminate the disturbance. Tenant shall
comply with all laws relating to its use or occupancy of the Premises and shall
observe such reasonable rules and regulations (including, but not limited to,
the rules and regulations attached hereto as Exhibit E) as may be adopted and
made available to Tenant by Landlord from time to time for the safety, care and
cleanliness of the Premises, the Buildings, or the Property and for the
preservation of good order therein.
7. SERVICES AND UTILITIES.
(a) STANDARD SERVICES. Landlord shall cause the Premises and
the public and common areas of the Buildings and the Property, such as lobbies,
elevators, stairs, corridors and restrooms, to be maintained in reasonably good
order and condition consistent with the operation and maintenance of the
Buildings as first-class office buildings in Seattle, Washington, except for
damage occasioned by any act or omission of Tenant or Tenant's officers,
contractors, agents, invitees, licensees or employees, the repair of which
damage shall be paid by Tenant. Landlord shall furnish the Premises with
electricity for normal office use, including lighting and operation of low power
usage office machines, water and elevator service at all times during the term
of the Lease. Landlord shall also provide lamp replacement service for building
standard light fixtures, toilet room supplies, window washing at reasonable
intervals and customary building janitorial service as shown on Exhibit F. No
janitorial service shall be provided Saturdays, Sundays or legal holidays. The
Rent stated in Section l(h) hereof does not include the costs of any janitorial
or other service provided or caused to be provided by Landlord to Tenant which
are in addition to the services ordinarily provided Building tenants and such
costs shall be paid by Tenant as Additional Rent on the first day of the month
following the month in which such additional services are provided.
From 7:00 a.m. to 6:00 p.m. on weekdays and from 8:00 a.m. to
1:00 p.m. on Saturdays, excluding legal holidays ("Normal Business Hours"),
Landlord shall furnish to the Premises heat and air conditioning. The tenant
improvements described in Exhibit C include upgrades to allow Landlord to
furnish, at Tenant's direction, heat and air conditioning at times other than
Normal Business Hours. The reasonable cost of such services as established by
Landlord shall be paid by Tenant as Additional Rent. During other than Normal
Business Hours, Landlord may restrict access to the Building in accordance with
the Building's security system, provided that Tenant shall at all times during
the term of this Lease (24 hours of all days) have reasonable access to the
Premises.
(b) INTERRUPTION OF SERVICES. Landlord shall not be liable for
any loss, injury or damage to person or property caused by or resulting from any
variation, interruption, or failure of such service due to any cause whatsoever,
or from failure to make any repairs or perform any maintenance unless caused by
the negligence or willful misconduct of Landlord. No temporary interruption or
failure of such services incident to the making of repair, alterations or
improvements, or due to accident, strike or conditions or events beyond
-7-
13
Landlord's reasonable control shall be deemed an eviction of Tenant or relieve
Tenant from any of Tenant's obligations hereunder.
(c) ADDITIONAL SERVICES. The Building Standard mechanical
system is designed to accommodate heating loads generated by lights and
equipment using up to 3.0 ▇▇▇▇▇ per square foot. Before installing lights and
equipment in the Premises which in the aggregate exceed such amount, Tenant
shall obtain the written permission of Landlord. Landlord may refuse to grant
such permission unless Tenant shall agree to pay the costs of Landlord for
installation of supplementary air conditioning capacity or electrical systems as
necessitated by such equipment or lights. If Landlord's approval has been given,
Tenant shall in advance, on the first day of each month during the Lease term,
pay Landlord the reasonable amount estimated by Landlord as the cost of
furnishing electricity for the operation of such equipment or lights and the
reasonable amount estimated by Landlord as the cost of operation and maintenance
of supplementary air conditioning units necessitated by Tenant's use of such
equipment or lights. The Rent stated in Section 1(h) hereof does not include any
amount to cover the cost of furnishing electricity or such additional air
conditioning for such purposes and such costs shall be paid by Tenant as
Additional Rent. Landlord shall be entitled to install and operate at Tenant's
cost a monitoring/metering system in the Premises to measure the added demands
on electrical, heating, ventilation and air conditioning systems resulting from
such equipment and lights and from Tenant's after-hours heating, ventilation and
air conditioning service requirements. Tenant shall comply with Landlord's
instructions for the use of drapes and thermostats in the Building. In addition,
Landlord shall provide the Buildings with security guards who will patrol the
Buildings and the parking garage twenty-four (24) hours per day and who will be
available, upon request, to escort Tenant's personnel to and from the parking
garage and the Premises at any time, day or night.
8. COSTS OF OPERATIONS AND REAL ESTATE TAXES.
(a) DEFINITIONS. In addition to the Rent provided in Section
1(h) of this Lease, Tenant shall pay to Landlord increases in Operating Costs
under this Section 8 as Additional Rent, utilizing the following definitions:
(i) "OPERATING COSTS" shall include Real Property
Taxes, Services and Utility Costs.
(1) "REAL PROPERTY TAXES" shall mean taxes
on real property and personal property; charges and assessments (or any
installments thereof due during the Lease Year) levied with respect to the
Property, the Buildings, any improvements, fixtures and equipment, and all other
property of Landlord, real or personal, used directly in the operation of the
Buildings and located in or on the Buildings; and any taxes levied or assessed
(or any installment thereof due during the Lease Year) in addition to or in lieu
of, in whole or in part, such real property or personal property taxes, or any
other tax upon leasing of the Buildings or rents collected, but not including
any federal or state income, estate, inheritance, franchise or business and
occupation tax.
-8-
14
(2) "SERVICE AND UTILITY COSTS" shall mean
all other expenses paid or incurred by Landlord for obtaining services and
products for maintaining, operating and repairing the Buildings and the common
areas of the Property outside of the Buildings and the parking garage, and the
personal property used in conjunction therewith, including, without limitation,
the costs of refuse collection, water, sewer and other utilities services,
electricity, gas and other similar energy sources, supplies, janitorial and
cleaning services, window washing, landscape maintenance, services of
independent contractors, compensation (including employment taxes and fringe
benefits) of all persons who perform duties in connection with the operation,
maintenance and repair of the Buildings, its equipment and the Property upon
which they are situated, insurance premiums, licenses, permits, and inspection
fees, customary management fees, legal and accounting expenses and any other
expenses or charges whether or not hereinabove described, which in accordance
with generally accepted accounting and management practices would be considered
an expense of maintaining, operating or repairing the Buildings, excluding or
deducting, as appropriate:
(3) The following items shall not be
included in the Service and Utility Costs:
(A) Costs of any special services
rendered to individual tenants (including Tenant) for which a special charge is
collected;
(B) Depreciation or amortization of
costs required to be capitalized in accordance with generally accepted
accounting practices (except other Operating Costs shall include amortization of
capital improvements made subsequent to the initial development of the Buildings
which are designed with a reasonable probability of improving the operating
efficiency of the Buildings, provided that such amortization expense shall not
exceed reasonably expected savings in operating costs resulting from such
capital improvements);
(C) Legal fees, brokerage
commissions, advertising costs, or other related expenses incurred by Landlord
in an effort to generate rental income;
(D) Repairs, alterations,
additions, improvements, or replacements made to rectify or correct any defect
in the original design, materials or workmanship of Buildings or common areas
(but not including repairs, alterations, additions, improvements or replacements
made as a result of ordinary wear and tear);
(E) Damage and repairs attributable
to fire or other casualty;
(F) Damage and repairs necessitated
by the negligence or willful misconduct of Landlord, Landlord's employees,
contractors or agents;
(G) Executive salaries or salaries
of service personnel to the extent that such personnel perform services not
solely in connection with the management, operations, repair or maintenance of
the Buildings;
-9-
15
(H) Landlord's general overhead
expenses not related to the Buildings (if Landlord or a Landlord-related entity
is the Building manager and receives a fee for its management services, which
fee would be subject to the terms of paragraph K below, the only overhead
expenses of Landlord that shall be included is the value of any rent-free or
rent-reduced occupancy in the Building if such is given to the managing entity
in lieu of a higher management fee);
(I) Legal fees, accountants' fees
and other expenses incurred in connection with disputes with tenants or other
occupants of the Buildings or associated with the enforcement of the terms of
any leases with tenants or the defense of Landlord's title to or interest in the
Buildings or any part thereof;
(J) Costs incurred due to a
violation by Landlord or any other tenant of the Buildings of the terms and
conditions of a lease;
(K) Building management fees in
excess of management fees charged by independent property managers, and the cost
of any service that would typically be supplied by the building manager at no
additional charge.
(L) Costs and expenses incurred in
complying with hazardous waste and environmental laws, including, but not
limited to, the cost of removing or encapsulating asbestos, excluding those
costs related to the disposal of waste products generated by Tenant;
(M) Fees paid to Landlord or any
affiliate of Landlord for goods or services in excess of the fees that would
typically be charged by unrelated, independent persons or entities for similar
goods and services;
(N) Cost incurred with owning
and/or operating any parking garage or parking lot serving the Buildings;
(O) Rent called for under any
ground lease or master lease;
(P) Principal and/or interest
payments called for under any debt secured by a mortgage or deed of trust on the
Buildings; and
(Q) Costs (including permit,
license and inspection fees) incurred in renovating or otherwise improving,
decorating, painting or altering (1) vacant space (excluding common areas) in
the Building(s) or (2) space for tenants or other occupants in the Building(s)
and costs incurred in supplying any item or service to less than all of the
tenants in the Building(s);
(R) Costs of any service provided
to Tenant or other occupants of the Building(s) for which Landlord is
reimbursed, or any other expense for which
-10-
16
Landlord is or will be reimbursed by another source (i.e. expenses covered by
insurance or warranties);
(S) Costs and expenses which would
be capitalized under generally accepted accounting principles, with the
exception that cost-saving capital improvements may be included if, but only if,
the savings reasonably expected to be generated by the improvement will exceed,
during each year of the Lease term, the cost of the improvement divided by the
number of years in the useful life of the improvements (in which case no more
than the cost of the improvement divided by the number of years in its useful
life shall be included in operating expenses in any given year);
(T) Any condominium dues which are
not herein specifically included as Service and Utility Costs.
(U) Any other expense which, under
generally accepted accounting principles applicable to real estate operations,
would not be considered a reasonable maintenance and operating expense. Landlord
shall not collect in excess of one hundred percent (100%) of the operating
expenses and shall not recover any item of cost more than once.
(ii) "LEASE YEAR" shall mean the twelve
month period commencing January 1 and ending December 31.
(iii) ACTUAL OPERATING COSTS.
(A) "ACTUAL SERVICE AND UTILITY
COSTS" shall mean the actual expenses paid or incurred by Landlord for Service
and Utility Costs during any Lease Year of the term hereof.
(B) "ACTUAL REAL PROPERTY TAXES"
shall mean the amount of Real Property Taxes paid or incurred by Landlord during
any Lease Year of the term hereof.
(iv) ACTUAL OPERATING COSTS ALLOCABLE TO THE
PREMISES.
(A) "ACTUAL SERVICE AND UTILITY
COSTS ALLOCABLE TO THE PREMISES" shall mean the Tenant's share of the Actual
Service and Utility Costs determined by multiplying Tenant's Percentage of the
Buildings described in Section 1(d) by the Actual Service and Utility Costs
except that, to the extent such costs vary depending upon occupancy of the areas
served, the variable portion shall be allocated in accordance with Tenant's
share of the weighted average occupied area of the Building or Buildings during
the Lease Year.
(B) "ACTUAL REAL PROPERTY TAXES
ALLOCABLE TO THE PREMISES" shall mean the Tenant's share of the Actual Real
Property Taxes determined by multiplying Tenant's Percentage of the Buildings
described in Section 1(d) by the Actual Real Property Taxes.
-11-
17
(v) ESTIMATED OPERATING COSTS ALLOCABLE TO
THE PREMISES.
(A) "ESTIMATED SERVICE AND UTILITY
COSTS ALLOCABLE TO THE PREMISES" shall mean Landlord's estimate of Actual
Service and Utility Costs Allocable to the Premises for the following Lease Year
to be given by Landlord to Tenant pursuant to Section 8(c)(i) below.
(B) "ESTIMATED REAL PROPERTY TAXES
ALLOCABLE TO THE PREMISES" shall mean Landlord's estimate of Real Property Taxes
Allocable to the Premises for the following Lease Year to be given by Landlord
to Tenant pursuant to Section 8(d)(i) below.
(vi) "BASE SERVICE YEAR" shall mean calendar
1998.
(b) BASE AMOUNTS.
(i) SERVICE AND UTILITY COSTS BASE AMOUNT.
For purposes of this Section 8, the Service and Utility Costs Base Amount shall
be an amount equal to the Actual Service and Utility Costs Allocable to the
Premises for the Base Service Year.
(ii) REAL PROPERTY TAXES BASE AMOUNT. For
purposes of this Section 8, the Real Property Taxes Base Amount shall be an
amount equal to the Actual Real Property Taxes Allocable to the Premises for the
Base Service Year.
(c) ADDITIONAL RENT FOR SERVICE AND UTILITY COSTS.
(i) ADDITIONAL RENT FOR ESTIMATED INCREASES
IN SERVICE AND UTILITY COSTS. At the beginning of each Lease Year after the Base
Service Year, during the term hereof, Landlord shall furnish Tenant a written
statement of the Estimated Service and Utility Costs Allocable to the Premises,
for such Lease Year, and a calculation of the Additional Rent as follows:
One-twelfth (1/12) of the amount, if any, by which such amount exceeds the
Service and Utility Costs Base Amount shall be Additional Rent payable by Tenant
as provided in Section 4 for each month during such Lease Year. If at any time
or times during such Lease Year, it appears to Landlord that the Actual Service
and Utility Costs Allocable to the Premises will vary from the Estimated Service
and Utility Costs Allocable to the Premises by more than five percent (5%) on an
annual basis, Landlord may, by written notice to Tenant, revise its estimate for
such Lease Year and Additional Rent payments by Tenant for the remainder of such
Lease Year shall be based on such revised estimate.
(ii) ACTUAL SERVICE AND UTILITY COSTS.
Within ninety (90) days after the close of each Lease Year during the term
hereof for which an estimated statement was delivered to Tenant pursuant to
subsection (c)(i) above, or as soon thereafter as practicable, Landlord shall
deliver to Tenant a written statement setting forth the Actual Service and
Utility Costs Allocable to the Premises during the preceding Lease Year or such
prorated portion thereof if this Lease commences or terminates on a day other
than the first or last day of a
-12-
18
Lease Year (based on a 365-day Lease Year). If such costs for any Lease Year
exceed Estimated Service and Utility Costs Allocable to the Premises paid by
Tenant to Landlord pursuant to subsection (c)(i), Tenant shall pay the amount of
such excess to Landlord as Additional Rent within thirty (30) days after receipt
of such statement by Tenant. If such statement shows such costs to be less than
the amount paid by Tenant to Landlord pursuant to subsection (c)(i), then the
amount of such overpayment by Tenant shall be credited by Landlord to the next
Rent payable by Tenant or, if the Lease has terminated, will be paid to Tenant.
(d) ADDITIONAL RENT FOR REAL PROPERTY TAXES.
(i) ADDITIONAL RENT FOR ESTIMATED INCREASES
IN REAL PROPERTY TAXES. At the beginning of each Lease Year during the term
hereof, Landlord shall furnish Tenant a written statement of the Estimated Real
Property Taxes Allocable to the Premises, for such Lease Year, and a calculation
of the Additional Rent as follows: One twelfth (1/12) of the amount, if any, by
which such amount exceeds the Real Property Taxes Base Amount shall be
Additional Rent payable by Tenant as provided in Section 4 for each month during
such Lease Year. If at any time or times during such Lease Year it appears to
Landlord that the Actual Real Property Taxes Allocable to the Premises will vary
from the Estimated Real Property Taxes Allocable to the Premises by more than
five percent (5%) on an annual basis, Landlord shall, by written notice to
Tenant, revise its estimate for such Lease Year and Additional Rent payments by
Tenant for the remainder of such Lease Year shall be based on such revised
estimate.
(ii) ACTUAL REAL PROPERTY TAXES. Within
ninety (90) days after the close of each Lease Year during the term hereof for
which an estimated statement was delivered to Tenant pursuant to subsection
(d)(i) above, or as soon thereafter as practicable, Landlord shall deliver to
Tenant a written statement setting forth the Actual Real Property Taxes
Allocable to the Premises during the preceding Lease Year or such prorated
portion thereof if this Lease commences or terminates on a day other than the
first or last day of a Lease Year (based on a 365-day Lease Year). If such taxes
for any Lease Year exceed Estimated Real Property Taxes Allocable to the
Premises paid by Tenant to Landlord pursuant to subsection (d)(i), Tenant shall
pay the amount of such excess to Landlord as Additional Rent within thirty (30)
days after receipt of such statement by Tenant. If such statement shows such
cost to be less than the amount paid by Tenant to Landlord pursuant to
subsection (d)(i), then the amount of such overpayment by Tenant shall be
credited by Landlord to the next Rent payable by Tenant or, if the Lease has
terminated, will be paid to Tenant.
(e) DETERMINATIONS. The determination of Actual Service and
Utility Costs and Taxes and Estimated Service and Utility Costs and Taxes
Allocable to the Premises shall be made by Landlord. The Service and Utility
Costs, other than for the common areas of the Property outside the Buildings and
the parking garage, shall only include those costs for the Buildings in which
the Premises are located from time to time; and the new lease for any of the
Premises in the Schwabacher Building will only include those Service and Utility
Costs which are included as Service and Utility Costs in the Sellar Hambach
Building. Landlord or its agent shall keep records in reasonable detail showing
all expenditures made for the items
-13-
19
enumerated above, which records shall be available for inspection and audit by
Tenant at any reasonable time.
(f) FURTHER ADJUSTMENT. In the event the Sellar Hambach
Building is not at least ninety-five percent (95%) fully occupied during the
Base Year, the Actual Costs for such year shall be proportionately adjusted by
Landlord to reflect those costs which would have occurred had the Sellar Hambach
Building been ninety-five percent (95%) occupied during such year, based on the
average weighted occupancy during such Lease Year.
(g) ADDITIONAL RENT NOT DUE. Notwithstanding anything to the
contrary contained herein, Tenant shall not be obligated to pay any Additional
Rent for Service and Utility Costs or any Additional Rent for Real Estate Taxes
for a period of one (1) year following the Commencement Date.
(h) PERSONAL PROPERTY TAXES. Tenant shall pay, prior to
delinquency, all Personal Property Taxes payable with respect to all Property of
Tenant located on the Premises or the Building and promptly, upon request of
Landlord, shall provide written proof of such payment. As used herein, "Property
of Tenant" shall include all personal property located on the Premises and all
improvements to the Premises which have been paid for by Tenant. "Personal
Property Taxes" shall include all property taxes assessed against the Property
of Tenant, whether assessed as real or personal property.
9. IMPROVEMENTS. Landlord and Tenant agree to make certain improvements
to the Premises ("tenant improvements") and to the Buildings as set forth in
Exhibit C following the procedure and with the allowances set forth therein.
Upon expiration or sooner termination of this Lease, all improvements and
additions to the Premises, except Tenant's trade fixtures, shall be deemed the
property of Landlord.
10. CARE OF PREMISES.
(a) TENANT'S MAINTENANCE. Tenant shall take good care of the
Premises. Tenant shall not make any alterations, additions or improvements
("Alterations") in or to the Premises, or make changes to locks on doors, or
add, disturb or in any way change any plumbing or wiring ("Changes") without
first obtaining the written consent of Landlord and, where appropriate, in
accordance, with plans and specifications approved by Landlord. Any such
Alterations or Changes shall not adversely affect either the strength or
exterior appearance, or the mechanical, electric or plumbing services of the
Buildings. Tenant shall reimburse Landlord for any sums expended for examination
and approval of architectural or mechanical plans and specifications of the
Alterations and Changes. Tenant shall also pay Landlord a sum equal to the
direct costs incurred during any inspection or supervision of the Alterations or
Changes. All damages or injury done to the Premises or Buildings by Tenant or by
any persons who may be in or upon the Premises or Buildings with the express or
implied consent of Tenant, including but not limited to the cracking or breaking
of any glass of windows and doors, shall be paid for by Tenant. In addition,
subject to the provisions of Section 14, Tenant shall pay for all damage to the
Buildings caused by acts or omissions of Tenant or Tenant's officers,
contractors, agents, invitees, licensees, or employees.
-14-
20
(b) LANDLORD'S MAINTENANCE. Landlord shall, at its sole cost
and expense, make all repairs and replacements and perform all maintenance
necessary to keep the Premises, the Buildings and the common areas of the
Buildings and the Property in good working order and repair and to maintain the
Buildings and Premises in a clean, safe and tenantable condition comparable to
other first class office buildings in Seattle, Washington. This maintenance and
repair shall include without limitation the roof, foundation, exterior walls,
interior structural walls, all structural components, utility lines, all
systems, equipment and facilities serving the Premises and the Buildings, such
as mechanical, electrical, HVAC, plumbing and sewer, replacement of lighting
tubes, lamp ballasts and bulbs, and extermination and pest control when
necessary, and snow and ice removal, unless such repair is Tenant's
responsibility pursuant to Section 10(a). Landlord's work under this Section
10(b) shall be accomplished with the least possible amount of interference with
the conduct of Tenant's business and, to the extent practicable, shall be done
after Normal Business Hours.
11. ACCEPTANCE OF PREMISES. If this Lease shall be entered into prior
to the completion of tenant improvements in the Premises, the acceptance of the
Premises by Tenant shall be deferred until Landlord informs Tenant of the
completion of such construction. Within five (5) days ("Inspection Period")
after Landlord provides Tenant with written notice of such completion, Tenant
shall make such inspection of the Premises as Tenant deems appropriate. Except
as otherwise specified by Tenant in writing to Landlord within the Inspection
Period, Tenant shall be deemed to have accepted the Premises in their then
condition except for latent defects. If, as a result of such inspection, Tenant
discovers minor deviations or variations from the plans and specifications for
Tenant's improvements of a nature commonly found on a "punch list" (as the term
is used in the construction industry), Tenant shall, during the Inspection
Period, notify Landlord of such deviations. Landlord shall promptly repair all
punch list items. The existence of such punch list items shall not postpone the
Commencement Date of this Lease or the obligation of Tenant to pay Rent. Any
tenant improvements made by Landlord shall include a one (1) year warranty for
materials and workmanship.
12. ACCESS. Subject to Landlord's execution of Tenant's standard
nondisclosure agreement, Tenant shall permit Landlord and its agents to enter
into and upon the Premises at all reasonable times for the purpose of inspecting
the same or for the purpose of cleaning, repairing, altering or improving the
Premises or the Buildings provided Landlord gives Tenant reasonable advance
notice, except in emergencies, and Tenant has the right to accompany Landlord or
its agents. Nothing contained in this Section 12 shall be deemed to impose any
obligation upon Landlord not expressly stated elsewhere in this Lease. When
reasonably necessary Landlord may temporarily close entrances, doors, corridors,
elevators or other facilities without liability to Tenant by reason of such
closure and without such action by Landlord being construed as an eviction of
Tenant or release of Tenant from the duty of observing and performing any of the
provisions of this Lease. Landlord shall have the right to enter the Premises
for the purpose of showing the Premises to prospective tenants within the period
of one hundred eighty (180) days prior to the expiration or sooner termination
of the Lease term.
-15-
21
13. DAMAGE OR DESTRUCTION.
(a) DAMAGE AND REPAIR. If any of the Buildings containing the
Premises is damaged by fire or any other cause to such extent that the cost of
restoration, as reasonably estimated by Landlord, will equal or exceed thirty
percent (30%) of the replacement value of the Building (exclusive of
foundations) just prior to the occurrence of the damage, or if insurance
proceeds sufficient for restoration are for any reason unavailable, then
Landlord may no later than the thirtieth day following the damage, give Tenant a
notice of Landlord's election to terminate this Lease. In the event of such
election, this Lease shall be deemed to terminate on the third day after the
giving of such notice, and Tenant shall surrender possession of the Premises
within a reasonable time thereafter, and the Rent and Additional Rent shall be
apportioned as of the date of Tenant's surrender and any Rent paid for any
period beyond such date shall be repaid to Tenant. If the cost of restoration as
estimated by Landlord shall amount to less than thirty percent (30%) of said
replacement value of the Building and insurance proceeds sufficient for
restoration are available, or if Landlord does not elect to terminate this
Lease, Landlord shall restore the Building and the Premises (to the extent of
the improvements to the Premises originally provided by Landlord hereunder) with
reasonable promptness, subject to delays beyond Landlord's control and delays in
the making of insurance adjustments by Landlord, and Tenant shall have no right
to terminate this Lease except as provided in this Section 13. To the extent
that any portion of the Premises are rendered untenantable, the Rent and
Additional Rent shall proportionately ▇▇▇▇▇, except in the event such damage
resulted from or was caused, directly or indirectly, by the willful misconduct
of Tenant, Tenant's officers, agents, or employees, in which event Rent shall
▇▇▇▇▇ only to the extent Landlord receives proceeds from any rental income
insurance policy to compensate Landlord for loss of Rent hereunder. In the event
Landlord intends to restore the Building and the Premises, as provided herein,
it will provide Tenant with a schedule for such restoration. If the restoration
is scheduled to take more than ninety (90) days to complete, Tenant, at its
option, may terminate the Lease.
(b) DESTRUCTION DURING LAST YEAR OF TERM. In case any of the
Buildings containing the Premises shall be destroyed by fire or other cause to
the extent that the cost of restoration estimated by Landlord will equal or
exceed thirty percent (30%) of the replacement value of the Building at any time
during the last Lease Year of this Lease, either Landlord or Tenant may
terminate this Lease upon written notice to the other given within sixty (60)
days of the date of such destruction.
(c) BUSINESS INTERRUPTION. No damages, compensation or claim
shall be payable by Landlord for inconvenience, loss of business or annoyance
arising from any repair or restoration of any portion of the Premises or the
Buildings. Landlord shall use its best efforts to effect such repairs promptly.
(d) TENANT IMPROVEMENTS. Landlord will not carry insurance of
any kind on Tenant's furniture, furnishings, fixtures, equipment or
appurtenances of Tenant under this Lease and Landlord shall not be obligated to
repair any damage thereto or replace the same.
-16-
22
(e) EXPRESS AGREEMENT. The provisions of this Section 13 shall
be considered an express agreement governing any case of damage or destruction
of the Buildings or Premises by fire or other casualty.
14. WAIVER OF SUBROGATION. Whether any loss or damage to the Premises,
the Buildings, or any property therein, is due to the negligence of either
Landlord or Tenant, their agents or employees, or any other cause, Landlord and
Tenant do each hereby release and relieve the other, their agents or employees,
from responsibility for, and waive their entire claim of recovery for any loss
or damage to the real or personal property of either located anywhere in the
Buildings, including the Buildings themselves, arising out of or incident to the
occurrence of any of the perils which are covered by their respective property
and related insurance policies. Each party shall use best efforts to cause its
insurance carriers to consent to the foregoing waiver of rights of subrogation
against the other party. Notwithstanding the foregoing, no such release shall be
effective unless and to the extent the aforesaid insurance policy or policies
shall expressly permit such a release or contain a waiver of the carrier's right
to be subrogated.
15. INDEMNIFICATION.
(a) TENANT'S INDEMNIFICATION. Subject to the provisions of
Section 14, Tenant shall indemnify and hold Landlord harmless from and against
all common law or statutory liabilities, damages, obligations, losses, claims,
civil actions, costs, or expenses, including attorneys fees, arising from any
act, omission, or negligence of Tenant or its officers, contractors, licensees,
agents, servants, employees, guests, invitees, or visitors in or about the
Buildings or the Premises, or arising from any injury or damage to any person or
property, occurring in or about the Buildings or the Premises as a result of any
act, omission or negligence of Tenant, or its officers, contractors, licensees.
agents, employees, guests. or visitors or arising from any breach or default
under this Lease by Tenant. As part of such indemnity, Tenant waives its
immunity from suit under the provisions of RCW 51, et seq. The foregoing
provisions shall not be construed to make Tenant responsible for loss, damage,
liability or expense resulting from injuries to third parties caused by the
negligence of Landlord, or its officers, contractors, licensees, agents,
employees, invitees or other tenants of the Buildings.
(b) LANDLORD'S INDEMNIFICATION. Subject to the provisions of
Section 14, Landlord shall indemnify, defend and hold Tenant, its officers,
agents, employees and contractors harmless from all losses, damages, fines,
penalties, liability and expenses (including reasonable attorneys' fees and
costs) resulting from any actual injury to any person or from any actual loss of
or damage to any property attributable to Landlord's operation of the Buildings
or caused by or resulting from any negligent or intentional act or omission of
Landlord or any employee, agent, contractor, guest or invitee of Landlord. The
foregoing indemnities specifically cover actions brought by each party's own
employees and shall survive the expiration or earlier termination of this Lease.
Landlord shall not be liable for interference with Tenant's light, air or view
in or from the Premises.
-17-
23
LANDLORD AND TENANT ACKNOWLEDGE THE FOREGOING INDEMNIFICATION
PROVISIONS WERE SPECIFICALLY NEGOTIATED AND AGREED UPON BY THEM.
Further, Landlord shall not be liable for any loss or damage to persons or
property sustained by Tenant or other persons, which may be caused by theft, or
by any act or neglect of any tenant or occupant of the Buildings or any other
third parties.
16. INSURANCE.
(a) TENANT'S INSURANCE.
(1) LIABILITY INSURANCE. Tenant shall, throughout the
term of this Lease and any renewal hereof, at its own expense, keep and maintain
in full force and effect, a policy of comprehensive general liability insurance
including a contractual liability endorsement covering Tenant's obligations
under Section 15, insuring Tenant's activities upon, in or about the Premises,
the Buildings in which the Premises are located, or the Property, and against
claims of bodily injury or death or property damage or loss with a limit of not
less than Two Million Dollars ($2,000,000) per occurrence and Three Million
Dollars ($3,000,000) in the aggregate combined single limit.
(2) PROPERTY INSURANCE. Tenant shall throughout the
term of this Lease and any renewal hereof at its own expense, keep and maintain
in full force and effect, what is commonly referrer to as "all risk" coverage
insurance (but excluding earthquake and flood) on Tenant's leasehold
improvements in an amount not less than the current One Hundred percent (100%)
replacement value thereof with commercially reasonable deductibles.
(3) INSURANCE POLICY REQUIREMENTS. All insurance
required under this Section 16 shall be with companies reasonably approved by
Landlord. No insurance policy required under this Section 16 shall be cancelled
or reduced in coverage and each insurance policy shall provide that it is not
subject to cancellation or a reduction in coverage except after thirty (30) days
prior written notice to Landlord.
(4) DELIVERY OF POLICIES. Tenant shall deliver to
Landlord on or before the Commencement Date and from time to time thereafter,
copies of policies of such insurance or certificates evidencing the existence
and amounts of same and naming Landlord and, if requested by Landlord,
Landlord's mortgagee, as additional insured thereunder. In no event shall the
limits of any insurance policy required under Section 16 be considered as
limiting the liability of Tenant under this Lease.
(b) LANDLORD'S INSURANCE. Landlord shall maintain at all times
during the Lease term a policy or policies of property insurance with extended
coverage endorsement covering the Buildings in an amount equal to the full
replacement cost of the Buildings. Further, Landlord shall maintain at all times
during the Lease term a policy or policies of commercial general liability, or a
combination of commercial general liability and umbrella or excess liability
insurance, with combined limits as determined to be appropriate by Landlord,
-18-
24
but in no event less than Three Million Dollars ($3,000,000). The liability
insurance required hereunder shall cover all of Landlord's operations and
activities and all contingent liability of Landlord for all operations performed
at the Buildings on Landlord's behalf by Landlord's contractors or
subcontractors. The liability coverage required hereunder shall provide that
Landlord's insurance applies separately to each named insured or additional
insured against whom a claim is made or suit is brought, except with respect to
the limits of the insurer's liability.
17. ASSIGNMENT AND SUBLETTING.
(a) ASSIGNMENT OR SUBLEASE. Tenant shall not assign, mortgage,
encumber or otherwise transfer this Lease or sublet the whole or any part of the
Premises without in each case first obtaining Landlord's prior written consent.
Such consent shall not be unreasonably withheld except, (1) Landlord may
withhold its consent if in Landlord's reasonable judgment occupancy by any
proposed assignee, subtenant or other transferee: (i) is not consistent with the
maintenance and operation of a first-class office building due to the proposed
occupant's nature or manner of conducting business, or (ii) is likely to cause
disturbance to the normal use and occupancy of the Buildings by other tenants,
their employees, customers, clients or other guests or visitors; (2) Landlord
may, in its absolute and sole discretion, withhold consent to any mortgage,
hypothecation, pledge or other encumbrance of any interest in this Lease by
Tenant or any subtenant, whereby this Lease or any interest therein becomes
collateral for any obligation of Tenant or any other person; and (3) Landlord
may withhold its consent to the extent Landlord reasonably determines necessary
to comply with a restriction on use of the Premises, the Buildings or the
Property contained in any lease, mortgage, or other agreement or instrument by
which the Landlord is bound or to which any of such property is subject. No such
assignment, subletting or other transfer shall relieve Tenant of any liability
under this Lease. Consent to any such assignment, subletting or transfer shall
not operate as a waiver of the necessity for consent to any subsequent
assignment, subletting or transfer. In the event Tenant intends to sublease
space Tenant does not intend to use in the future, Tenant may so notify Landlord
which may, at its option, terminate the Lease as to such space, in which event
Landlord shall enter into the relationship of landlord and tenant with any such
subtenant or assignee, based on the rent (and/or other compensation) and the
term agreed to by such subtenant or assignee and otherwise upon the terms and
conditions of this Lease. In connection with each request for an assignment or
subletting, Tenant shall pay the reasonable cost of processing such assignment
or subletting, including attorneys fees, upon demand of Landlord. Tenant shall
provide Landlord with copies of all assignments, subleases and assumption
instruments.
Any transfer of this Lease by acquisition, merger,
consolidation or liquidation, or any change in the ownership of, or power to
vote, a majority of Tenant's outstanding voting stock during any three (3) month
period shall constitute an assignment for the purpose of this Section 17,
provided Landlord must consent to such an assignment if Landlord is given prior
written notice of the event and if the successor Tenant has a net worth equal to
or greater than the net worth of Tenant on the execution of this Lease.
-19-
25
(b) ASSIGNEE OBLIGATIONS. As a condition to Landlord's
approval of any assignment, any potential assignee otherwise approved by
Landlord shall assume in writing all obligations of Tenant under this Lease and
shall be jointly and severally liable with Tenant for the payment of Rent and
performance of all terms, covenants and conditions of this Lease.
(c) SUBLESSEE OBLIGATIONS. Any sublessee shall assume all
obligations of Tenant as to the portion of the Premises which is subleased to
such sublessee and shall be jointly and severally liable with Tenant for rental
and other payments and performance of all terms, covenants and conditions of
such approved sublease.
18. SIGNS. Except for Tenant's business sign which Tenant may, at
Tenant's sole cost and expense, install on the east exterior wall of the Sellar
Hambach Building near the main Sellar Hambach Building entrance (the exact
location, size and design of such sign are subject to the approval of Landlord
and the Pioneer Square Review Board, and subject to any requirements of the City
of Seattle), Tenant shall not inscribe any inscription, or post, place, or in
any manner display any sign, graphics, notice, picture, placard or poster, or
any advertising matter whatsoever anywhere in or about the Premises, the
Buildings or the Property at places visible (either directly or indirectly as an
outline or shadow on a glass pane) from anywhere outside the Premises without
first obtaining Landlord's written consent thereto, such consent to be at
Landlord's sole discretion. Any such consent by Landlord shall be upon the
understanding and condition that Tenant shall remove the signs at the expiration
or sooner termination of this Lease and Tenant shall repair any damage to the
Premises or the Buildings caused thereby.
19. LIENS AND INSOLVENCY.
(a) LIENS. Tenant shall keep its interest in this Lease and
any property of Tenant (other than unattached personal property) and the
Premises, the Property and the Buildings free from all liens arising out of any
work performed or materials ordered or obligations incurred or on behalf of
Tenant and Tenant hereby indemnifies and holds Landlord harmless from any
liability from any such lien, including without limitation, liens arising from
any work performed pursuant to Exhibit C hereto. In the event any lien is filed
against the Buildings, the Property or the Premises by any person claiming by,
through or under Tenant, Tenant shall, upon request of Landlord, at Tenant's
expense, immediately either cause such lien to be released of record or furnish
to Landlord a bond in form and amount and issued by a surety satisfactory to
Landlord, indemnifying Landlord, the Property and the Buildings against all
liability, costs and expenses, including attorneys fees, which Landlord may
incur as a result thereof. Provided that such bond has been furnished to
Landlord, Tenant, at its sole cost and expense and after written notice to
Landlord, may contest, by appropriate proceedings conducted in good faith and
with due diligence, any lien, encumbrance or charge against the Premises, the
Property or the Buildings arising from work done or materials provided to and
for Tenant, if, and only if, such proceedings suspend the collection thereof
against Landlord, and the Premises, Buildings and Property, and neither the
Premises, the Buildings, the Property nor any part thereof or interest therein
is or will be in any danger of being sold, forfeited or lost.
-20-
26
(b) INSOLVENCY. If Tenant becomes insolvent or voluntarily or
involuntarily bankrupt, or if a receiver, assignee or other liquidating officer
is appointed for the business of Tenant, Landlord at its option may terminate
this Lease and Tenant's right of possession under this Lease and in no event
shall this Lease or any rights or privileges hereunder be an asset of Tenant in
any bankruptcy, insolvency or reorganization proceeding.
20. DEFAULT.
(a) TENANT'S DEFAULT. Any payment due under this Lease by
Tenant which is more than five (5) business days late shall incur a late charge
equal to five percent (5%) of the amount of the late payment. Thereafter, Tenant
shall have a period of ten (10) business days from the day of written notice
from Landlord to Tenant within which to cure any default in the payment of Rent,
Additional Rent or other sums due hereunder. Tenant shall have a period of
fifteen (15) days from the date of written notice from Landlord to Tenant within
which to cure any other default hereunder; provided, however, that with respect
to any such default which cannot be cured within fifteen (15) days, the default
shall not be deemed to be uncured if Tenant commences to cure within fifteen
(15) days and for so long as Tenant is diligently prosecuting the cure thereof.
(1) VACATION AND ABANDONMENT. Any vacation or
abandonment by Tenant shall be considered a default with no right to cure,
allowing Landlord to re-enter the Premises under Section 20(c). Vacation shall
be defined as being out of the Premises for thirty (30) consecutive days, except
as a result of casualty damage or similar occurrence. Abandonment shall be
defined as an absence from the Premises of five (5) days or more while Tenant is
in default.
(2) LANDLORDS RE-ENTRY. Upon an uncured default of
this Lease by Tenant, Landlord, besides other rights or remedies it may have, at
its option, may enter the Premises or any part thereof, either with or without
process of law, and expel, remove or put out Tenant or any other persons who may
be therein, together with all personal property found therein; and Landlord may
terminate this Lease, or it may from time to time, without terminating this
Lease and as agent of Tenant, rent the Premises or any part thereof for such
term or terms (which may be for a term less than or extending beyond the term
hereof), and at such rental or rentals and upon such other terms and conditions
as Landlord in its sole, reasonable discretion may deem advisable, (with the
right to repair, renovate, remodel, redecorate, alter and change the Premises)
and Tenant shall remain liable for any deficiency computed as set forth in
Section 20(a)(3). In the case of any default, re-entry and/or dispossession, by
summary proceedings or otherwise, all Rent and Additional Rent shall become due
thereupon and be paid up to the time of such reentry or dispossession together
with such expenses as Landlord may reasonably incur for attorneys fees,
advertising expenses, brokerage fees and/or putting the Premises in good order
or preparing the same for re-rental together with interest thereon as provided
in Section 38(f) hereof, accruing from the date of any such expenditure by
Landlord.
(3) RELETTING THE PREMISES. At the option of
Landlord, rents received by Landlord from such reletting shall be applied first
to the payment of any
-21-
27
indebtedness from Tenant to Landlord other than Rent and Additional Rent due
hereunder; second, to the payment of any costs and expenses of such reletting
and including, but not limited to, attorneys fees, advertising fees and
brokerage fees, and to the payment of any repairs, renovations, remodeling,
redecoration, alterations and changes in the Premises; third, to the payment of
Rent and Additional Rent due and to become due hereunder, and if after so
applying said rents there is any deficiency in the Rent or Additional Rent to be
part by Tenant under this Lease, Tenant shall pay any deficiency to Landlord
monthly on the dates specified herein and any payment made or suits brought to
collect the amount of the deficiency for any month shall not prejudice in any
way the right of Landlord to collect the deficiency for any subsequent month.
The failure or refusal of Landlord to relet the Premises or any part or parts
thereof shall not release or affect Tenant's liability hereunder, nor shall
Landlord be liable for failure to relet, or in the event of reletting, for
failure to collect the rent thereof, and in no event shall Tenant be entitled to
receive any excess of net rents collected over sums payable by Tenant to
Landlord hereunder. No such re-entry or taking possession of the Premises shall
be construed as an election on Landlord's part to terminate this Lease unless a
written notice of such intention be given to Tenant. Notwithstanding any such
reletting without termination, Landlord may at any time thereafter elect to
terminate this Lease for Tenant's previous breach and default. Should Landlord
at any time terminate this Lease by reason of any default, in addition to any
other remedy it may have, it may recover from Tenant the present value at a
discount rate of nine percent (9%) of the amount of Rent and Additional Rent
reserved in this Lease for the balance of the term, as it may have been
extended, over the then fair market rental value of the Premises for the same
period, plus all court costs and attorneys fees incurred by Landlord in the
collection of the same.
(4) WAIVER OF REDEMPTION RIGHTS. Tenant, for itself,
and on behalf of any and all persons claiming through or under it, including
creditors of all kinds, does hereby waive and surrender all right and privilege
which they or any of them might have under or by reason of any present or future
law, to redeem the Premises or to have a continuance of this Lease for the term
hereof, as it may have been extended, after having been dispossessed or ejected
therefrom by process of law or under the terms of this Lease or after the
termination of this Lease as herein provided.
(5) NONPAYMENT OF ADDITIONAL RENT. All costs and
expenses which Tenant assumes or agrees to pay to Landlord pursuant to this
Lease shall be deemed Additional Rent and, in the event of nonpayment thereof,
Landlord shall have all the rights and remedies herein provided for in case of
nonpayment of Rent.
(6) CUMULATIVE REMEDIES. All rights of Landlord
herein enumerated shall be cumulative, and none shall exclude any other right or
remedy allowed by law. In addition to the other remedies in this Lease provided,
Landlord shall be entitled to restrain by injunction the violation or attempted
violation by Tenant of any of the covenants, agreements or conditions of this
Lease.
(b) LANDLORD'S DEFAULT. If Landlord fails to perform any
covenant or condition of this Lease, requiring the payment of money on the part
of Landlord and such failure is not cured within ten (10) days after written
notice from Tenant to Landlord, or if
-22-
28
Landlord shall fail to keep or perform any of the covenants or conditions of
this Lease other than a covenant or condition requiring payment of money by
Landlord and such failure is not cured within thirty (30) days after written
notice of the failure from Tenant to Landlord, then, in addition to all other
rights or remedies available to Tenant under this Lease, at law or in equity,
Tenant may perform the covenant or condition which Landlord failed to perform
and Landlord shall, upon receipt of an invoice from Tenant, pay Tenant the
actual costs incurred by Tenant in so doing, together with interest thereon at
an interest rate provided in paragraph 38(f), provided, however, if Landlord
commences curative efforts of a nonmonetary failure within the thirty (30) day
cure period and is diligently prosecuting the cure in good faith, then the
thirty (30) day period shall be extended so long as Landlord is diligently
prosecuting the cure to completion. In addition to the foregoing rights and
remedies of Tenant, if Tenant has also given notice of the failure to Landlord's
lender as provided in the SND Agreement (defined below), and the default is not
cured within the applicable time periods, Tenant shall, in addition to all other
rights and remedies at law or in equity, also have the right to terminate the
Lease on written notice to Landlord and its lender.
21. SUBORDINATION. Landlord represents and warrants to Tenant that
Landlord is the fee owner of the Building and the Property, subject only to the
covenants, easements and restrictions of record, including that certain Deed of
Trust dated and recorded in the records of King County, Washington under
Recording No. 9701021191, in which Bank of America National Trust and Savings
Association doing business as Seafirst Bank ("Lender") is the beneficiary,
Rainier Credit Company is the trustee and Landlord is the grantor. Upon the
execution of this Lease by Tenant, Landlord shall cause Lender to execute and
deliver to Tenant a Subordination and Non-Disturbance Agreement (the "SND
Agreement") in the form approved by the Lender. Such SND Agreement must be
binding on all successors and assigns of Lender and reasonably acceptable to
Tenant in form and content. In consideration for such non-disturbance agreement,
Tenant will also execute the SND Agreement for Lender's benefit in which Tenant
(i) confirms that this Lease is subordinate to the Deed of Trust, (ii) agrees to
attorn to Lender if Lender becomes the owner of the Property or the Building,
(iii) agrees to give Lender copies of whatever notices of default Tenant may
give Landlord hereunder, (iv) agrees to accept a cure by Lender of any of
Landlord's defaults, provided such cure is completed within the cure period set
forth in the SND Agreement, and (v) agrees not to pay rent more than one (1)
month in advance. Tenant agrees to subordinate its interests in this Lease to
any subsequent lender having an interest in the Property if such lender executes
for Tenant's benefit a non-disturbance agreement that is substantially identical
to the one described above for Lender's execution.
22. SURRENDER OF POSSESSION. Subject to the terms of Section 13
relating to damage and destruction, upon expiration of the term of this Lease,
whether by lapse of time or otherwise Tenant shall promptly and peacefully
surrender the Premises to Landlord in as good condition as when received by
Tenant from Landlord or as thereafter improved, reasonable use, wear and tear
and damage by casualty, described in Section 13 excepted.
23. REMOVAL OF PROPERTY. Tenant shall remove all of its movable
property and trade fixtures which can be removed without damage to the Premises
at the expiration or sooner termination of this Lease, and shall pay Landlord
any damages for injury
-23-
29
to the Premises or Buildings resulting from such removal. If Tenant shall fail
to remove any of its property of any nature whatsoever from the Premises or the
Buildings at the termination of this Lease or when Landlord has the right of
re-entry, Landlord may remove and store said property without liability for loss
thereof or damage thereto, such storage to be for the account and at the expense
of Tenant. If Tenant shall not pay the cost of storing any such property after
it has been stored for a period of thirty (30) days or more, Landlord may, at
its option, sell, or permit to be sold, any or all such property at public or
private sale, in such manner and at such times and places as Landlord in its
sole discretion may deem proper, without notice to Tenant, unless notice is
required under applicable statutes, and shall apply the proceeds of such sale:
first, to the cost and expense of such sale, including reasonable attorneys fees
actually incurred; second, to the payment of the costs or charges for storing
any such property; third, to the payment of any other sums of money which may
then be or thereafter become due Landlord from Tenant under any of the terms
hereof; and, fourth, the balance, if any, to Tenant.
24. NON-WAIVER. Waiver by Landlord of any term, covenant or condition
herein contained or any breach thereof shall not be deemed to be a waiver of
such term, covenant, or condition or of any subsequent breach of the same or any
other term, covenant, or condition herein contained. The subsequent acceptance
of Rent or Additional Rent hereunder by Landlord shall not be deemed to be a
waiver of any preceding breach by Tenant of any term, covenant or condition of
this Lease, other than the failure of Tenant to pay the particular Rent or
Additional Rent so accepted, regardless of Landlord's knowledge of such
preceding breach at the time of acceptance of such Rent or Additional Rent.
25. HOLDOVER. Tenant shall not hold over after the expiration of the
term of this Lease, without the written consent of Landlord. Any holdover by
Tenant shall create a month-to-month tenancy which may be terminated as provided
by applicable state law. During such tenancy, Tenant shall be bound by all of
the terms, covenants and conditions herein so far as applicable, except rental
which shall be the greater of (a) the then quoted rates for similar space in the
Building, or (b) the Rent and Additional Rent stated herein.
26. CONDEMNATION.
(a) ENTIRE TAKING. If all of the Premises or such portions of
the Buildings as may be required for the reasonable use of the Premises, are
taken by eminent domain, this Lease shall automatically terminate as of the date
title vests in the condemning authority and all Rent, Additional Rent and other
payments shall be paid to that date.
(b) CONSTRUCTIVE TAKING OF ENTIRE PREMISES. In the event of a
taking of a material part of but less than all of a Building, where Landlord or
Tenant shall determine that the remaining portions of the Building cannot be
economically and effectively used by it (whether on account of physical,
economic, aesthetic or other reasons) or where Landlord determines the Building
should be restored in such a way as to materially alter the Premises, the party
determining to terminate the Lease shall forward a written notice to the other
party of such determination not more than sixty (60) days after the date of
taking. The term of this
-24-
30
Lease shall expire upon such date as the party shall specify in such notice but
not earlier than sixty (60) days after the date of such notice.
(c) PARTIAL TAKING. Subject to the provisions of the preceding
Section 26(b), in case of taking of a part of the Premises, or a portion of a
Building not required for the reasonable use of the Premises, then this Lease
shall continue in full force and effect and the Rent shall be equitably reduced
based on the proportion by which the floor area of the Premises is reduced, such
Rent reduction to be effective as of the date title to such portion vests in the
condemning authority.
(d) AWARDS AND DAMAGES. Landlord reserves all rights to
damages to the Premises for any partial, constructive, or entire taking by
eminent domain, and Tenant hereby assigns to Landlord any right Tenant may have
to such damages or award, and Tenant shall make no claim against Landlord or the
condemning authority for damages for termination of the leasehold interest or
interference with Tenant's business. Tenant shall have the right, however, to
claim and recover from the condemning authority compensation for any loss to
which Tenant may be put for Tenant's moving expenses, business interruption or
taking of Tenant's personal property (not including Tenant's leasehold interest)
provided that such damages may be claimed only if they are awarded separately in
the eminent domain proceedings and not out of or as part of the damages
recoverable by Landlord.
27. NOTICES. All notices under this Lease shall be in writing and
delivered in person or sent by registered or certified mail, postage prepaid, to
Landlord and to Tenant at the Notice Addresses provided in Section l(m)
(provided that after the Commencement Date any such notice shall be mailed or
delivered by hand to Tenant at the Premises) and to the holder of any Landlord's
mortgage at such place as such holder shall specify to Tenant in writing; or
such other addresses as may from time to time be designated by any such party in
writing. Notices mailed as aforesaid shall be deemed given on the date of such
mailing.
28. COSTS AND ATTORNEYS FEES. If Tenant or Landlord shall bring any
action for any relief against the other, declaratory or otherwise, arising out
of this Lease, including any suit by Landlord for the recovery of Rent,
Additional Rent or other payments hereunder or for possession of the Premises,
each party shall, and hereby does, to the extent permitted by law, waive trial
by jury and the losing party shall pay the prevailing party a reasonable sum for
attorney's and paralegal's fees in such suit, at trial and on appeal, and such
attorney's and paralegal's fees shall be deemed to have accrued on the
commencement of such action.
29. LANDLORD'S LIABILITY. Anything in this Lease to the contrary
notwithstanding, covenants, undertakings and agreements herein made on the part
of Landlord are made and intended not as personal covenants, undertakings and
agreements for the purpose of binding Landlord personally or the assets of
Landlord except Landlord's interest in the Premises, the Buildings, and the
Property but are made and intended for the purpose of binding only the
Landlord's interest in the Premises, the Buildings, and the Property and their
replacements, rents, sale proceeds, insurance proceeds or condemnation awards as
the same may from time to time be encumbered. No personal liability or personal
responsibility is
-25-
31
assumed by, nor shall at any time be asserted or enforceable against Landlord or
its members or their respective heirs, legal representatives, successors or
assigns on account of the Lease or on account of any covenant, undertaking or
agreement of Landlord in this Lease contained.
30. LANDLORD'S CONSENT. Except as specified in other provisions of this
Lease, whenever Landlord's consent is required under the terms hereof, such
consent shall not be unreasonably withheld, provided, the withholding of
Landlord's consent due to any mortgagee's refusal to grant its consent, shall
not be deemed unreasonable.
31. ESTOPPEL CERTIFICATES. Tenant shall, from time to time, upon
written request of Landlord, execute, acknowledge and deliver to Landlord or its
designee a written statement stating: the date this Lease was executed and the
date it expires; the date the term commenced and the date Tenant accepted the
Premises; the amount of minimum monthly Rent and the date to which such Rent has
been paid; and certifying: that this Lease is in full force and effect and has
not been assigned, ratified, supplemented or amended in any way (or specifying
the date and terms of agreement so affecting this Lease); that this Lease
represents the entire agreement between the parties to this Lease; that all
conditions under this Lease to be performed by the Landlord have been satisfied;
that all required contributions by Landlord to Tenant on account of Tenant's
improvements have been received; that on this date there are no existing claims,
defenses or offsets which the Tenant has against the enforcement of this Lease
by the Landlord; that no Rent has been paid more than one month in advance; and
that no security has been deposited with Landlord (or, if so, the amount
thereof). It is intended that any such statement delivered pursuant to this
paragraph may be relied upon by a prospective purchaser or mortgagee of
Landlord's interest or assignee of any mortgage upon Landlord's interest in the
Buildings. If Tenant shall fail to respond within ten (10) days of receipt by
Tenant of a written request by Landlord as herein provided, Tenant shall be
deemed to have given such certificate as above provided without modification and
shall be deemed to have admitted the accuracy of any information supplied by
Landlord to a prospective purchaser or mortgagee and to have certified that this
Lease is in full force and effect, that there are no uncured defaults in
Landlord's performance, that the security deposit is as stated in the Lease, and
that not more than one month's Rent has been paid in advance.
32. TRANSFER OF LANDLORD'S INTEREST. In the event of any transfer or
transfers of Landlord's interest in the Premises, the Buildings, or the Property
other than a transfer for security purposes only, the transferor shall be
automatically relieved of any and all obligations and liabilities on the part of
Landlord accruing from and after the date of such transfer provided transferee
assumes such liability, and the transferee shall have no obligation or liability
with respect to any matter occurring or arising prior to the date of such
transfer. Tenant agrees to attorn to the transferee.
33. RIGHT TO PERFORM. If Tenant shall fail to pay any sum of money
required to be paid by it hereunder; or shall fail to perform any other act on
its part to be performed hereunder, and such failure shall continue for ten (10)
days after notice thereof by Landlord, Landlord may, but shall not be obligated
so to do, and without waiving or releasing Tenant from any obligations of
Tenant, make such payment or perform any such other act on Tenant's part to be
made or performed as provided in this Lease. In such event, the amount so
-26-
32
paid by Landlord shall constitute Additional Rent and shall be paid, together
with interest at the rate set forth in Section 38(f), from the date of
Landlord's payment, by Tenant to Landlord within ten (10) days of Tenant's
receipt of a ▇▇▇▇ from Landlord. Landlord shall have (in addition to any other
right or remedy of Landlord) the same rights and remedies in the event of the
nonpayment of sums due under this Section 33 as in the case of default by Tenant
in the payment of Rent.
34. AUTHORITY.
(a) CORPORATE AUTHORITY. If Tenant is a corporation, each
individual executing this Lease on behalf of Tenant represents and warrants that
he or she is duly authorized to execute and deliver this Lease on behalf of
Tenant, in accordance with a duly adopted resolution of the Board of Directors
of Tenant and in accordance with the bylaws of Tenant, and that this Lease is
binding upon Tenant in accordance with its terms. At Landlord's request, Tenant
shall, within thirty (30) days after execution of this Lease, deliver to
Landlord a certified copy of a resolution of the Board of Directors of Tenant
authorizing or ratifying the execution of this Lease.
(b) PARTNERSHIP AUTHORITY. If Tenant is a partnership, each
individual executing this Lease on behalf of Tenant represents and warrants that
he or she is duly authorized to execute and deliver this Lease on behalf of
Tenant, in accordance with the partnership agreement of Tenant, ant that this
Lease is binding upon Tenant in accordance with its terms.
35. HAZARDOUS SUBSTANCES. Without Landlord's consent, Tenant shall not
keep, use, release or dispose of any substances designated as, or containing
components now or hereafter designated as, hazardous, dangerous, toxic or
harmful and/or subject to regulation under any federal, state or local law,
regulation or ordinance ("Hazardous Substances") on or about the Premises, the
Buildings or the Property; provided, the foregoing shall not preclude Tenant
from keeping and using in or about the Premises and the Buildings, office
supplies, ordinary cleaning products and the like which are normally found in
business offices and computer component packaging materials, solutions and
adhesives and which contain or may contain Hazardous Substances, so long as
Tenant uses, stores and disposes of any such products, supplies, materials,
solutions and adhesives in compliance with all applicable environmental laws.
Tenant hereby agrees to defend, indemnify and hold Landlord harmless from any
and all clean up costs and expenses and any and all other charges, expenses,
fees, fines, penalties (both civil and criminal) and costs relating to any
remedial action or clean up suffered or incurred by Landlord and caused by
Tenant's use of the Premises or the Buildings.
36. PARKING. Tenant shall, throughout the term of this Lease, lease at
least one hundred (100) parking stalls in the parking garage on the Property. In
addition, upon sixty (60) days' prior written notice to Landlord, Tenant may,
from time to time, (a) increase the number of parking stalls it will lease up to
a maximum of the greater of one hundred forty (140) parking stalls or one (1)
parking stall per one thousand (1,000) square feet of rentable space in the
Premises up to a maximum of One Hundred Seventy-Five (175) parking stalls or (b)
may decrease the number of parking stalls leased provided the number of parking
stalls leased shall not be reduced below one hundred (100). Tenant may also,
from time to time,
-27-
33
upon thirty (30) days' prior written notice to Landlord, designate that a
portion of the leased parking stalls, not to exceed fifteen (15), be classified
as "reserved". The monthly rental for the parking stalls for the first three (3)
years of the Lease term will be One Hundred Ten Dollars ($110.00) for
non-reserved stalls and One Hundred Forty-Five Dollars ($145.00) for reserved
parking stalls. After the first three (3) years of the Lease term, rent for the
parking stalls will be eighty-five percent (85%) of the rate for reserved and
non-reserved parking in Pioneer Square. Landlord only guarantees that the
reserved parking stalls will be available at all times after Normal Business
Hours, including during events in the Pioneer Square area. Tenant shall have a
right of first refusal to other available parking controlled by Landlord in a
two block radius of the Buildings at a monthly rate of eighty-five percent (85%)
of the market rate for parking in Pioneer Square. In addition, the parking
stalls for automobiles described above, Landlord shall, at no cost to Tenant,
provide Tenant with secured parking space for up to seventy (70) bicycles in the
parking garage.
37. TENANT'S EXISTING LEASE. Tenant currently leases space under a
lease with a term ending on April 30, 1999. Tenant agrees to use its best
efforts to terminate its existing Lease effective as soon as possible after the
Commencement Date. In the event Tenant is unable to cause the termination of its
existing Lease prior to its currently scheduled expiration date, Landlord shall,
upon subsatisfactory verification of payment by Tenant, reimburse Tenant for
one-half of the monthly rent and other costs incurred by Tenant under its
existing Lease from November 1, 1998, until April 30, 1999, or any earlier
termination of the existing lease. Landlord, at its option, may reimburse Tenant
by crediting Tenant's next monthly Rent under this Lease by the appropriate
reimbursement amount.
38. GENERAL.
(a) HEADINGS. Titles to Sections of this Lease are not a part
of this Lease and shall have no effect upon the construction or interpretation
of any part hereof.
(b) HEIRS AND ASSIGNS. All of the covenants, agreements, terms
and conditions contained in this Lease shall inure to and be binding upon the
Landlord and Tenant and their respective heirs, executors, administrators,
successors and assigns.
(c) NO BROKERS. Tenant represents and warrants to Landlord
that it has not engaged any broker, finder or other person who would be entitled
to any commission or fees in respect of the negotiation, execution or delivery
of this Lease, other than ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Inc. ("KMS"), and shall
indemnify and hold harmless Landlord against any loss, cost, liability or
expense incurred by Landlord as a result of any claim asserted by any other
broker, finder or other person on the basis of any arrangements or agreement
made or alleged to have been made by or on behalf of Tenant. The provisions of
this Section 38(c) shall not apply to brokers with whom Landlord has an express
written broker agreement and Landlord agrees to pay KMS a real estate fee equal
to four percent (4%) of the Rent payable hereunder for the first five (5) years
of the Lease term plus two percent (2%) of the Rent for the remaining five (5)
years of the initial Lease term. Thirty-five percent (35%) of the real estate
fee will be paid on the execution of this Lease. The remaining sixty-five
percent (65%) of the real estate fee will be paid in two parts: the sixty-five
percent (65%) of the real estate fee
-28-
34
based on Rent from the initial Premises (95,938 square feet) will be paid after
the Commencement Date on Tenant's first occupancy of any such space, and the
sixty-five percent (65%) of the real estate fee based on Rent from the
Additional Pocket Space will be paid upon Tenant's occupancy of that space.
(d) ENTIRE AGREEMENT. This Lease, including all Exhibits,
contains all covenants and agreements between Landlord and Tenant relating in
any manner to the leasing, use and occupancy of the Premises, and to Tenant's
use of the Buildings and other matters set forth in this Lease. No prior
agreements or understanding pertaining to the same shall be valid or of any
force or effect and the covenants and agreements of this Lease shall not be
altered, modified or added to except in writing signed by Landlord and Tenant.
(e) SEVERABILITY. Any provision of this Lease which shall
prove to be invalid, void or illegal shall in no way affect, impair or
invalidate any other provision hereof and the remaining provisions hereof shall
nevertheless remain in full force and effect.
(f) OVERDUE PAYMENTS. Any Rent, Additional Rent or other sums
payable by Tenant to Landlord under this Lease which shall not be paid upon the
due date thereof, shall bear interest at a rate equal to three percentage points
above the prime rate of interest stated from time to time by Seattle-First
National Bank or its successor, or, in the absence of an established prime rate,
five percentage points over that bank's rate for one year certificates of
deposit, but not in excess of the highest lawful rate permitted under applicable
laws, calculated from the original due date thereof to the date of payment.
(g) FORCE MAJEURE. Except for the payment of Rent, Additional
Rent or other sums payable by Tenant to Landlord, time periods for Tenant's or
Landlord's performance under any provision, of this Lease shall be extended for
periods of time during which Tenant's or Landlord's performance is prevented due
to circumstances beyond Tenant's or Landlord's control, including without
limitation, strikes, embargoes, shortages of labor or materials, governmental
regulations, acts of God, war or other strife.
(h) RIGHT TO CHANGE PUBLIC SPACES. Landlord shall have the
right at any time, without thereby creating an actual or constructive eviction
or incurring any liability to Tenant therefor, to change the arrangement or
location of such of the following as are not contained within the Premises or
any part thereof: entrances, passageways, doors and doorways, corridors, stairs,
toilets and other like public service portions of the Buildings and common areas
of the Property outside of the Buildings and the parking garage, provided,
Landlord shall not unreasonably impair Tenant's access to the Premises.
Nevertheless, in no event shall Landlord diminish any service, change the
arrangement or location of the elevators serving the Premises, make any change
which shall diminish the area of the Premises, or make any change which shall
change the character of the Buildings from that of a first-class office
building.
(i) GOVERNING LAW. This Lease shall be governed by and
construed in accordance with the laws of the state of Washington.
-29-
35
(j) BUILDING DIRECTORY. Landlord shall maintain in the lobby
of the Sellar Hambach Building a directory which shall include the name of
Tenant and any other names reasonably requested by Tenant in proportion to the
number of listings given to comparable tenants of the Building.
(k) BUILDING NAME. The Buildings will be known by such name or
names as Landlord may designate from time to time.
IN WITNESS WHEREOF this Lease has been executed the day and year first
above set forth.
LANDLORD: ▇▇▇▇▇▇▇ PLACE, LLC, a Washington
limited liability company
By NSD, LLC, a Washington limited liability
company - Manager
By: ______________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇ - Member
TENANT: TERA COMPUTER COMPANY,
a Washington corporation
By: _____________________________
Its: _________________________
By: _____________________________
Its: _________________________
-30-
36
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
THIS IS TO CERTIFY that on this ____ day of ______________, 1997,
before me, the undersigned, a notary public in and for the state of Washington,
duly commissioned and sworn, personally appeared ▇▇▇▇▇ ▇▇▇▇▇▇▇, to me known to
be a Member of NSD, LLC, a Washington limited liability company, to me known to
be the Manager of ▇▇▇▇▇▇▇ Place, LLC, the Washington limited liability company
that executed the within and foregoing instrument, and acknowledged the said
instrument to be the free and voluntary act and deed of each limited liability
company for the uses and therein mentioned, and on oath stated that said
individual was authorized to execute said instrument.
WITNESS my hand and official seal hereto affixed this _______ day of
November, 1997.
_____________________________________________________
(Print name)_________________________________________
Notary Public in and for the State of Washington.
My appointment expires______________________________.
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that
________________________________ and _______________________________ are the
persons who appeared before me and said persons acknowledged that they signed
this instrument, on oath stated that they were authorized to execute the
instrument as the ___________________________ and ______________________________
of TERA COMPUTER COMPANY, a Washington corporation, to be the free and voluntary
act and deed of said corporation, for the uses and purposes mentioned in the
instrument.
WITNESS my hand and official seal hereto affixed this _______
day of ________, 1997.
_____________________________________________________
(Print name)_________________________________________
Notary Public in and for the State of Washington.
My appointment expires______________________________.
-31-
37
EXHIBIT A
Legal Description
-1-
38
EXHIBIT B
Floor Plan
-1-
39
EXHIBIT C
Tenant Improvements
I. IMPROVEMENTS BY TENANT/REIMBURSEMENT BY LANDLORD
Design and construction of all improvements in the Premises beyond
those existing on the date hereof and those provided by Landlord as set forth
below, shall be provided at Tenant's expense. Landlord shall pay the cost of
such additional tenant improvements up to an amount equal to $15.00 per square
foot of Tenant's Premises, including all Pocket Space. In addition, on or before
September 1, 1998, Landlord agrees to acquire shares of Tenant's common stock
for a purchase price equal to $10.00 per square foot of Tenant's Premises,
including Pocket Space (the "Additional Tenant Allowance"). Tenant agrees to
deposit such funds with Landlord to be used to pay for the construction of
tenant improvements to the Premises. The shares so acquired by Landlord shall be
"restricted Securities" and the number of shares to be received by Landlord
shall be determined by dividing the Additional Tenant Allowance by, at
Landlord's option, either the average closing price of Tenant's common stock for
the fifteen (15) business days ending on the date of execution of this Lease or
the fifteen (15) business days immediately prior to the Commencement Date. No
fractional shares shall be issued. The cost of such tenant improvements shall
include, but not be limited to: Architectural and engineering design, partitions
(including one-half (1/2) the cost of any public corridor or demising
partitions enclosing the Tenant's unimproved area), doors, door frames,
hardware, paint, wall covering, base, ceilings, lights, mechanical distribution,
diffusers, thermostats, sprinkler distribution, sprinkler heads, emergency
speakers, fire extinguishers and cabinets, telephone and electrical wiring and
outlets, cabling, HVAC improvements, light switches, window coverings, floor
coverings, construction supervision fee, and all applicable permit fees and
sales tax. Tenant may use the full amount of the allowance and the Additional
Tenant Allowance for immediate tenant improvements or may reserve portions of
the allowance for use for tenant improvements for the Pocket Space.
II. DESIGN OF TENANT IMPROVEMENTS
In addition to the allowances provided in paragraph I above, Landlord
agrees to reimburse Tenant in an amount equal to $.15 per square foot of the
Premises for the design of the tenant improvements. Tenant shall retain the
services of a qualified architect or office planner approved by Landlord, to
prepare the necessary drawings for Basic Plans and supply the information
necessary to complete the Working Drawings and Engineering Drawings referred to
in Section II.B of this Exhibit C for construction of the tenant improvements in
Tenant's unimproved area including the Pocket Space. Alternatively, at Tenant's
option, Landlord will have its architect prepare one (1) set of basic plans with
two (2) revisions. All Tenant's Plans shall be subject to approval of Landlord
in accordance with Section II.C of this Exhibit C.
Tenant's architect or office planner shall ensure that the work shown
on Tenant's Plans is compatible with the basic Building Plans and that necessary
basic Building modifications are
-1-
40
included in Tenant's Plans. Such modifications shall be subject to the
Landlord's approval and the cost thereof shall be paid by Tenant.
On or before the indicated dates, Tenant shall supply Landlord with one
(1) reproducible copy and five (5) black line prints of the following Tenant
Plans:
A. BASIC PLANS DELIVERY DATE: February 1, 1998.
The Basic Plans due on this date shall be signed by Tenant and include
Architectural Floor Plans. The Architectural Floor Plans shall be fully
dimensioned floor plans showing partition layout and identifying each room with
a number and each door with a number. The Basic Plans must clearly identify and
locate equipment requiring plumbing or other special mechanical systems, area(s)
subject to above-normal floor loads, special openings in the floor, and other
major or special features.
B. WORKING DRAWINGS DELIVERY DATE: March 1, 1998.
On this date and at Tenant's expense, Tenant's architect shall produce
four (4) sets of Full Working Drawings for construction from the Basic Plans
using the Pin Bar System, which system shall be approved by Landlord for
compatibility with the other Building drawings. The four (4) sets of Working
Drawings due on this date shall be signed by the Tenant and include all items in
the Basic Plans referenced in Section II.A above plus the following additional
information:
(1) Electrical and Telephone Outlets: Locate all power and
telephone requirements. Dimension the position from a corner and give height
above concrete slab for all critically located outlets. Identify all dedicated
circuits and identify all power outlets greater than 120 volts. For the
equipment used in these outlets which require dedicated circuits and/or which
require greater than 120 volts, identify the type of equipment, the
manufacturer's name and the manufacturer's model number, and submit a brochure
for each piece of equipment. Also identify the manufacturer's name of the phone
system to be used and the power requirements, size and location of its
processing equipment.
(2) Reflected Ceiling Plan: Lighting layout showing location
and type of all Building Standard and special lighting fixtures.
(3) Furniture Layout: Layout showing furniture location so
that Landlord's engineer can review the location of all light fixtures.
At Tenant's expense, Landlord's engineers shall prepare plumbing,
electrical, heating, air conditioning and structural plans ("Engineering
Drawings") for Tenant's improvements based on the signed Working Drawings.
C. FINAL PLANS REVIEW DATE: March 15, 1998.
On this date, Tenant's architect shall deliver to Tenant and Landlord
for review and approval four (4) complete sets of Final Plans which will
incorporate the Working Drawings referenced in Section II.B above, plus the
following additional information:
-2-
41
(1) Millwork Details: These drawings shall be in final form
with Tenant's architect's title block in the lower right hand corner of the
drawing, and shall include construction details of all cabinets, paneling, trim,
bookcases, and door and jamb details for non-Building Standard doors and jambs.
(2) Keying Schedules and Hardware Information: This
information shall be in final form and include a Keying Schedule indicating
which doors are locked and which key(s) open each lock, plus an "X" on the side
of the door where the key will be inserted if a keyed door. Complete
specifications for all non-Building Standard hardware will also be provided.
(4) Room Finish and Color Schedule: This information shall be
in final form and include locations and specifications for all wall finishes,
floor covering and base for each room.
(5) Construction Notes and Specifications: Complete
specifications for every item included except those specified by the Landlord.
D. FINAL PLANS DELIVERY DATE: April 1, 1998.
The four (4) sets of Final Plans approved by Landlord and Tenant and
due on this date shall include all the Final Plans referenced in Sections II.C
above. Final Plans are to be signed by Tenant and delivered to Landlord by the
Final Plans Delivery Date. Landlord shall return one (1) signed set to Tenant
for Tenant's records. Landlord will incorporate Engineering Drawings with
Tenant's Final Plans for transmittal to the general contractor.
Tenant shall be responsible for delays and additional costs in
completion of Tenant's work caused by changes made to any of Tenant's Plans
after the specified Plan Delivery Date, by inadequacies of plans and
specifications, or by delay in delivery of special materials requiring long lead
times. Tenant shall further be responsible for such delays as provided in
Section 3(b) of the Lease.
III. CONSTRUCTION OF TENANT IMPROVEMENTS
A. AUTHORIZATION TO PROCEED. Upon completion of Tenant's Final
Plans and at the request of Tenant, Landlord shall obtain bids from three (3)
qualified contractors for the construction of such tenant improvements. Within
five (5) days of receipt of such bids, Tenant shall give Landlord written
authorization to complete the Premises in accordance with such Final Plans
utilizing the lowest bidder. Tenant may in such authorization delete any or all
items of extra cost; however, if Landlord deems these changes to be extensive,
at its option, Landlord may refuse to accept the authorization to proceed until
all changes have been incorporated in the Final Plans signed by Tenant and
written acceptance of the revised price has been received by Landlord from
Tenant. In the absence of such written authorization to proceed, Landlord shall
not be obligated to commence work on the Premises and Tenant shall be
responsible for any costs due to any resulting delay in completion of the
Premises and as provided in Section 3(b) of the Lease.
-3-
42
B. PAYMENTS. Landlord's contractor shall complete Tenant's improvements
in accordance with Tenant's approved Final Plans. Tenant shall pay, within ten
(10) days after receipt of monthly progress statements from Landlord, the full
amount of such progress billing which pertains to such amounts in excess of the
$25.00 per rentable square foot allowance and Additional Tenant Allowance
provided by Landlord pursuant to Section I of this Exhibit C. Tenant may retain
an amount equal to five percent (5%) of the estimated cost of such improvements
from the last payment due immediately prior to the credit for Landlord's
reimbursement. Final billing shall be rendered and payable within ten (10) days
after acceptance of the Premises by Tenant in accordance with the terms of the
Lease. Retainage pursuant to the terms of this paragraph shall be payable with
such final billing. In the event acceptance of the Premises is subject to punch
list items as provided in the Lease, a portion of the retainage equal to the
cost to complete each outstanding punch list item may be retained until such
punch list item is complete.
C. FINAL PLANS AND MODIFICATIONS. If Tenant shall request any change,
Tenant shall request such change in writing to Landlord and such request shall
be accompanied by all plans and specifications necessary to show and explain
changes from the approved Final Plans. After receiving this information,
Landlord shall give Tenant a written price for the cost of engineering and
design services to incorporate the changes in Tenant's Final Plans. If Tenant
approves such price in writing, Landlord shall have such Final Plans changes
made and Tenant shall promptly pay Landlord for this cost. Promptly upon
completion of such changes in the Final Plans, Landlord shall notify Tenant in
writing of the cost, if any, which shall be chargeable or credited to Tenant for
such change, addition or deletion. The cost for such change, whether chargeable
or credited to Tenant, shall include a Landlord coordination fee equal to
fifteen percent (15%) of the amount of such change. Tenant shall within five (5)
days notify Landlord in writing to proceed with such change, addition or
deletion. In the absence of such notice, Landlord shall proceed in accordance
with the previously approved Final Plans before such change, addition or
deletion was requested. In accordance with Section 3(b) of the Lease, Tenant
shall be responsible for any resulting delay in completion of the Premises due
to modification of Final Plans. Tenant shall also be responsible for any
demolition work required as a result of the change.
D. IMPROVEMENTS CONSTRUCTED BY TENANT. If any work is to be performed
in connection with Tenant improvements on the Premises by Tenant or Tenant's
contractor:
(1) Such work shall proceed upon Landlord's written approval
of (i) Tenant's contractor, (ii) public liability and property damage insurance
satisfactory to Landlord carried by Tenant's contractor, (iii) detailed plans
and specifications for such work, and (iv) amount of general conditions to be
paid by Tenant to Landlord for the services still provided by Landlord's
contractor.
(2) All work shall be done in conformity with a valid building
permit when required, a copy of which shall be furnished to Landlord before such
work is commenced, and in any case, all such work shall be performed in
accordance with all applicable governmental regulations. Notwithstanding any
failure by Landlord to object to any such work, Landlord shall have no
responsibility for Tenant's failure to meet all applicable regulations.
(3) All work by Tenant's contractor shall be scheduled through
Landlord.
-4-
43
(4) Tenant or Tenant's contractor shall arrange for necessary
utility, hoisting and elevator service with Landlord's contractor and shall pay
such reasonable charges for such services as may be charged by Landlord's
contractor. This will be included in the general conditions of Subsection
(1)(iv) above.
(5) Tenant shall promptly reimburse Landlord for costs
incurred by Landlord due to faulty work done by Tenant or its contractors, or by
reason of any delays caused by such work, or by reason of inadequate clean-up.
(6) Prior to commencement of any work on the Premises by
Tenant or Tenant's contractor, Tenant or Tenant's contractor shall enter into an
indemnity agreement and a lien priority agreement satisfactory to Landlord
indemnifying and holding harmless Landlord and Landlord's contractor for any
liability, losses or damages directly or indirectly from lien claims affecting
the Property, the Building or the Premises arising out of Tenant's or Tenant's
contractor's work or that of subcontractors or suppliers, and subordinating any
such liens to the liens of construction and permanent financing for the
Building.
(7) Landlord shall have the right to post a notice or notices
in conspicuous place in or about the Premises announcing its non-responsibility
for the work being performed therein.
E. TENANT'S ENTRY TO PREMISES. Tenant's entry to the Premises for any
purpose, including without limitation, inspection or performance of Tenant
Construction by Tenant's agents, prior to the Commencement Date as specified in
Section 3(a) of the Lease shall be scheduled in advance with Landlord and shall
be subject to all the terms and conditions of the Lease, except the payment of
Rent. Tenant's entry shall mean entry by Tenant, its officers, contractors,
office planner, licensees, agents, servants, employees, guests, invitees, or
visitors.
F. TENANT'S TELEPHONE. Tenant is responsible for Tenant's telephone
service. Tenant shall select Tenant's telephone system and shall coordinate its
installation with the Landlord.
IV. IMPROVEMENTS BY THE LANDLORD
Notwithstanding anything to the contrary contained herein, Landlord
shall, at Landlord's sole cost and expense, make the following
modifications/refurbishments to the Building:
A. LOADING AREA/FREIGHT ELEVATOR. To be located on the west side of the
Hambach Building. The alley location shall accommodate up to a 73'0" tractor
trailer rig 8'6" wide and 13'6" tall.
Landlord will provide for all costs to design and construct a freight
elevator to meet Tenant's equipment needs. In general, the freight elevator will
move equipment to the first, second & third Floors. The elevator must
accommodate a minimum of an 8,000 pound load. All transitions shall be smooth
and level to and from the elevator. The dimensions, including allowances for a
pallet ▇▇▇▇ and minimal clearance around the crate are approximately 102" (h) x
144" (w) x 64" (d). The freight elevator will have double doors. Each door must
have a minimum clear opening width of ▇▇▇".
-▇-
▇▇
▇. ▇▇▇▇▇ LOAD CAPACITY. The first and second floors of the Hambach
Building will be used for assembling and packaging computer components. Landlord
will ensure that the building can accommodate an electric pallet ▇▇▇▇, moving a
5,000 pound load and a stationary load of 15,500 pounds in certain locations on
the second floor.
C. SUPPLEMENTAL COOLING. Landlord will provide adequate space on site
for two 125 ton chillers with an approximate total dimension of 36' x 8' x 9'
and a total weight of approximately 20,000 pounds, to service the assembling and
packaging areas. (Tenant will pay for the cost and installation of the
chillers.)
D. SECURITY SYSTEMS. Landlord will add additional security cameras to
its current system at the entrances to the garage and at the loading/freight
elevator area.
E. HEATING, VENTILATION & AIR CONDITIONING. Landlord, at Landlord's
expense will provide improvements to the current HVAC and control system to
allow Tenant to control HVAC units after normal business hours. The improvements
will also include upgrading the HVAC to allow for multiple zones per floor.
V. COST SAVINGS
So long as Landlord's costs in regard to the construction of tenant
improvements are not increased, Landlord agrees to assist Tenant in working to
maximize any and all funding available through any special cost savings
programs, such as reduced real estate taxes, low interest rate loans, and refund
of state sales taxes with respect to the construction of any tenant
improvements. Any savings from these programs will accrue to Tenant.
-6-
45
EXHIBIT D
Memorandum of Lease
-1-
46
RETURN ADDRESS:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇, ▇▇▇▇▇▇▇ & Cleveland, PLLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
MEMORANDUM OF LEASE
GRANTOR: ▇▇▇▇▇▇▇ PLACE LLC
GRANTEE: TERA COMPUTER COMPANY
ABBREVIATED LEGAL DESCRIPTION: Portion of Block 4, ▇.▇. ▇▇▇▇▇▇▇'▇ Plat of
Seattle, Vol. 1, Pg. 23
(See Page 4 for full legal description)
ASSESSOR'S TAX PARCEL NO.: 524780-0200-03
THIS MEMORANDUM OF LEASE is made this _____ day of __________________,
1997, by and between ▇▇▇▇▇▇▇ PLACE LLC, a Washington limited liability company
("Landlord"), and TERA COMPUTER COMPANY, a Washington corporation ("Tenant").
W I T N E S S E T H:
IN CONSIDERATION of the rents reserved in that certain Lease Agreement
between the parties dated _________________________, 1997 (the "Lease"), and of
the terms, covenants, conditions and agreements on the part of Tenant therein,
notice is hereby given that Landlord has leased to Tenant ________ square feet
of the buildings (the "Premises") located on certain real property having a
postal address of ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, which real property is legally described on Exhibit A attached hereto and
made a part hereof, together with all and singular the building or buildings,
privileges and advantages, with any and all appurtenances belonging or in any
way appertaining to the Premises hereby leased, including the right in Tenant,
its successors, assigns, subtenants, employees, customers, licensees and
invitees to use the parking areas, sidewalks, common areas and access areas to
and from public streets and highways.
-1-
47
TO HAVE AND TO HOLD the Premises for the initial term of one hundred
twenty (120) months, ending at the time indicated in the Lease, with options to
extend the term for one additional period of five (5) years, upon the terms,
covenants and conditions specified in the Lease.
"LANDLORD" ▇▇▇▇▇▇▇ PLACE LLC,
a Washington limited liability company
By: NSD, LLC,
a Washington limited liability company,
its Manager
By: ________________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇, Member
"TENANT" TERA COMPUTER COMPANY,
a Washington corporation
By: _________________________________________________
Its:_____________________________________________
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that ▇▇▇▇▇ ▇▇▇▇▇▇▇
is the person who appeared before me, and said person acknowledged that he
signed this instrument, on oath stated that he was authorized to execute the
instrument and acknowledged it as the Member of NSD, LLC, in its capacity as the
Manager of ▇▇▇▇▇▇▇ PLACE LLC, to be the free and voluntary act and deed of said
limited liability company, for the uses and purposes mentioned in the
instrument.
WITNESS my hand and official seal hereto affixed this ______ day of
_________________________, 1997.
_____________________________________________________
(Print name) ________________________________________
Notary Public in and for the State of Washington.
My appointment expires _____________________________.
-2-
48
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
I certify that I know or have satisfactory evidence that
______________________________ is the person who appeared before me, and said
person acknowledged that he/she signed this instrument, on oath stated that
he/she was authorized to execute the instrument and acknowledged it as the
__________________ of TERA COMPUTER COMPANY, to be the free and voluntary act
and deed of said corporation, for the uses and purposes mentioned in the
instrument.
WITNESS my hand and official seal hereto affixed this ______ day of
_________________________, 1997.
_____________________________________________________
(Print name) ________________________________________
Notary Public in and for the State of Washington.
My appointment expires _____________________________.
-3-
49
EXHIBIT A
(LEGAL DESCRIPTION)
-4-
50
EXHIBIT E
Additional Terms of Lease
1. PARKING. Tenant shall have the right to park up to 140 automobiles
and 70 bicycles in the parking garage portion of the Building, at the then
prevailing parking rate in the garage, provided that there will be no charge for
parking bicycles in the garage. The use of the garage shall be subject to such
rules and regulations as Landlord or its parking garage operator may adopt from
time to time. Tenant may, at its option, at any time during the Lease Term, on
sixty (60) days' advance notice to Landlord, lease the entire garage, subject to
existing contracts for space in the garage, at a net rent of $23,000 per month
[for the first year only].
-1-
51
EXHIBIT F
Building Rules and Regulations
-1-
52
EXHIBIT E
Rules and Regulations
1. The sidewalks, halls, passages, exits, entrances, elevators and
stairways of the Building shall not be obstructed by Tenant or used by it for
any purpose other than for ingress to and egress from the Premises. The halls,
passages, exits, entrances, elevators and stairways are not for the use of the
general public, and Landlord shall in all cases retain the right to control and
prevent access thereto of all persons whose presence in the judgment of Landlord
would be prejudicial to the safety, character, reputation and interests of the
Building and its tenants, provided that nothing herein contained shall be
construed to prevent such access to persons with whom Tenant normally deals in
the ordinary course of its business, unless such persons are engaged in illegal
activities. Tenant shall not go upon the roof of the Building.
2. No sign, placard, picture, name, advertisement or notice visible
from the exterior of the Premises shall be inscribed, painted, affixed or
otherwise displayed by Tenant on any part of the Building without the prior
written consent of Landlord. Landlord will adopt and furnish to Tenant general
guidelines relating to signs inside the Building on the office floors. Tenant
agrees to conform to such guidelines, but may request approval of Landlord for
modifications. All approved signs or lettering on doors shall be printed,
painted, affixed or inscribed at the expense of Tenant by a person approved by
Landlord. Materials shall not be placed on windowsills. Any materials visible
from outside the Building will not be permitted.
3. The Premises shall not be used for storage of merchandise held for
sale to the general public or for lodging. No cooking shall be done or permitted
by Tenant on the Premises, except that use by Tenant of Underwriters'
Laboratory-approved microwave oven and equipment for brewing coffee, tea, hot
chocolate and similar beverages shall be permitted, provided that such use is in
accordance with all applicable federal, state and city laws, codes, ordinances,
rules and regulations.
4. Tenant shall not employ any person or persons other than the janitor
of Landlord for the purpose of cleaning the Premises, unless otherwise agreed to
by Landlord in writing. Except with the written consent of Landlord, no person
or persons other than those approved by Landlord shall be permitted to enter the
Building for the purpose of cleaning same. Tenant shall not cause any
unnecessary labor by reason of Tenant's carelessness or indifference in the
preservation of good order and cleanliness. Janitor service will not be
furnished on nights when rooms are occupied after 9:30 p.m. unless, by agreement
in writing, service is extended to a later hour for specifically designated
rooms.
5. Landlord will furnish Tenant with an agreed number of keys to the
Premises, free of charge. No additional locking devices shall be installed
without the prior written consent of Landlord. Landlord may make reasonable
charge for any additional lock or any bolt installed on any door of the Premises
without the prior consent of Landlord. Tenant shall in each case furnish
Landlord with a key for any such lock. Tenant, upon the termination of its
tenancy, shall deliver to Landlord all keys to doors in the Building and the
Premises that shall have been furnished to Tenant.
-1-
53
6. The building freight elevator shall be available for use by Tenant,
subject to such reasonable scheduling as Landlord shall deem appropriate. The
persons employed by Tenant to move equipment or other items in or out of the
Building must be acceptable to Landlord. Landlord shall have the right to
prescribe the weight, size and position of all equipment, materials, supplies,
furniture or other property brought into the Building. Heavy objects shall, if
considered necessary by Landlord, stand on wood strips of such thickness as is
necessary to properly distribute the weight of such objects. Landlord will not
be responsible for loss of or damage to any such property from any cause, and
all damage done to the Building by moving or maintaining Tenant's property shall
be repaired at the expense of Tenant.
7. Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline or flammable or combustible fluid or materials or use any
method of heating or air conditioning other than that supplied by Landlord.
Tenant shall not use, keep or permit or suffer the Premises to be occupied or
used in a manner offensive or objectionable to Landlord or other occupants of
the Building by reason of noise, odors, and/or vibrations, or interfere in any
way with other tenants or those having business in the Building.
8. Landlord reserves the right to exclude from the Building between the
hours of 6 p.m. and 8 a.m. and at all hours on Sundays and legal holidays and
after 2 p.m. on Saturdays all persons who do not present an access card for
entrance. Landlord will furnish access cards to persons for whom Tenant requests
same in writing. Tenant shall be responsible for all persons for whom it
requests cards and shall be liable to Landlord for all acts of such persons.
Landlord shall in no case be liable for damages for any error with regard to the
admission to or exclusion from the Building of any person. In the case of
invasion, mob, riot, public excitement or other circumstances rendering such
action advisable in Landlord's opinion, Landlord reserves the right to prevent
access to the Building during the continuance of same by such action as Landlord
may deem appropriate, including closing doors.
9. The directory of the Building will be provided for the display of
the name and location of tenants and a reasonable number of the principal
officers and employees of tenants, and Landlord reserves the right to exclude
any other names therefrom. Any additional name that Tenant shall desire to place
upon the directory must first be approved by Landlord and, if so approved, a
charge will be made therefor.
10. No curtains, draperies, blinds, shutters, shades, screens or other
coverings, hangings or decorations shall be attached to, hung or placed in, or
used in connection with any window of the Building without the prior written
consent of Landlord. In any event, with the prior written consent of Landlord,
such items shall be installed on the office side of Landlord's standard window
covering and shall in no way be visible from the exterior of the Building.
11. Tenant shall see that the doors of the Premises are closed and
locked and that all water faucets, water apparatus and utilities are shut off
before Tenant or Tenant's employees leave the Premises, so as to prevent waste
or damage, and for any default or carelessness in this regard Tenant shall make
good all injuries sustained by other tenants or occupants of the Building or
Landlord. On multiple-tenancy floors, all tenants shall keep the doors to the
Building corridors closed at all times except for ingress and egress.
12. The toilet rooms, toilets, urinals, wash bowls and other apparatus
shall not be used
-2-
54
for any purpose other than that for which they were constructed, no foreign
substance of any kind whatsoever shall be deposited therein, and any damage
resulting to same from Tenant's misuse thereof shall be paid for by Tenant.
13. Except with the prior consent of Landlord, Tenant shall not sell,
or permit the sale from the Premises of, or use or permit the use of any
sidewalk or common area adjacent to the Premises for the sale of, newspapers,
magazines, periodicals, theatre tickets or any other goods, merchandise or
service, nor shall Tenant carry on, or permit or allow any employee or other
person to carry on, business in or from the Premises for the service or
accommodation of occupants of any other portion of the Building, nor shall the
Premises be used for manufacturing of any kind, or for any business or activity
other than that specifically provided for in Tenant's lease.
14. Tenant shall not install any radio or television antenna, satellite
dish, loudspeaker, or other device on the roof or exterior walls of the
Building.
15. Tenant shall not use in any space, or in the common areas of the ,
any handtrucks except those equipped with rubber tires and side guards or such
other material-handling equipment as Landlord may approve. No other vehicles of
any kind shall be brought by Tenant into the Building or kept in or about the
Premises.
16. Tenant shall store all its trash and/garbage within the Premises
until removal of same to such/location in the Building as may be designated from
time to time by Landlord. No material shall be placed in the Building trash
boxes or receptacles if such material is of such nature that it may not be
disposed of in the ordinary and customary manner of removing and disposing of
trash and garbage in the City of Seattle without being in violation of any law
or ordinance governing such disposal.
17. All loading and unloading of merchandise, supplies, materials,
garbage and refuse shall be made only through such entryways and elevators and
at such times as Landlord shall designate. In its use of the loading areas on
the first basement floor, Tenant shall not obstruct or permit the obstruction of
said loading areas, and at no time shall Tenant park vehicles therein except for
loading and unloading.
18. Canvassing, soliciting, peddling or distribution of handbills or
any other written material in the Building is prohibited, and Tenant shall
cooperate to prevent same.
19. Landlord reserves the right to select the name of the Building and
to make such change or changes of name as it may deem appropriate from time to
time, and Tenant shall not refer to the Building by any name other than: (i) the
names as selected by Landlord (as same may be changed from time to time), or
(ii) the postal address, approved by the United States Post Office. Tenant shall
not use the name of the Building in any respect other than as an address of its
operation in the Building, without the prior written consent of Landlord.
20. The requirements of Tenant will be attended to only upon
application by telephone or writing or in person at the office of the Building.
Employees of Landlord shall not perform any work or do anything outside of their
regular duties unless under special instructions from Landlord. If Landlord's
employees are made available for the assistance of Tenant, Landlord- shall- be
paid for their services by Tenant at reasonable hourly rates.
-3-
55
21. Landlord may waive any one or more of these Rules and Regulations
for the benefit of any particular tenant or tenants, but no such waiver by
Landlord shall be construed as a waiver of these Rules and Regulations in favor
of any other tenant or tenants, nor prevent Landlord from thereafter enforcing
any such Rules and Regulations against any or all of the tenants of the
Building.
22. Wherever the word "Tenant" occurs in these Rules and Regulations,
it is understood and agreed that it shall mean Tenant's associates, agents,
clerks, employees and visitors. Wherever the word "Landlord" occurs in these
Rules and Regulations, it is understood and agreed that it shall mean Landlord's
assigns, agents, clerks, employees and visitors.
23. These Rules and Regulations are in addition to, and shall not be
construed in any way to modify, alter or amend, in whole or in part, the terms,
covenants, agreements and conditions of any lease of premises in the Building.
24. Landlord reserves the right to make such other and reasonable rules
and regulations as in its judgment may from time to time be needed for the
safety, care and cleanliness of the Building and for the preservation of good
order therein.
25. Subject to the provisions of Exhibit C to the Lease, Landlord shall
have the right to limit the weight, size and to designate the locations of all
safes, filerooms, libraries and other heavy property within the Building.
Maximum uniform floor loading allowed is 150 pounds per square foot live load
and 40 pounds per square foot dead load. Tenant warrants that under no
circumstances shall it load the floor in excess of this limit. If excess floor
loading is required, all costs (including engineering) to prepare the floor
surface and structure to withstand excess floor loads shall be borne by Tenant.
No vending machine or machines of any description shall be installed, maintained
or operated on the Premises without the prior written consent of the Landlord.
Landlord may, however, rescind such consent at any time without liability to
Tenant.
-4-