OFFICE BUILDING LEASE 24000 DEVELOPMENT LLC, A WASHINGTON LIMITED LIABILITY

Lease Agreement

You are currently viewing:

This Lease Agreement involves

24000 DEVELOPMENT LLC,

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.

Title: OFFICE BUILDING LEASE 24000 DEVELOPMENT LLC, A WASHINGTON LIMITED LIABILITY
Governing Law: Washington Date: 8/31/2005
Industry: Computer Storage Devices Sector: Technology

OFFICE BUILDING LEASE 24000 DEVELOPMENT LLC, A WASHINGTON LIMITED LIABILITY, Parties: 24000 development llc

<PAGE>

EXHIBIT 10.1

OFFICE BUILDING LEASE

BETWEEN

24000 DEVELOPMENT LLC, A WASHINGTON LIMITED LIABILITY

COMPANY

LANDLORD

AND

EMULEX DESIGN & MANUFACTURING CORPORATION

TENANT

<PAGE>

TABLE OF CONTENTS

<TABLE>

Page

----

<S> <C>

1. BASIC LEASE TERMS...................................................................................... 1

2. PREMISES AND EXTERIOR AREAS............................................................................ 3

(a) Premises...................................................................................... 3

(b) Mutual Covenants.............................................................................. 3

(d) Operation of Building and Exterior Areas...................................................... 4

3. TERM................................................................................................... 4

4. POSSESSION............................................................................................. 4

(a) Delivery of Possession........................................................................ 4

(b) Condition of Premises......................................................................... 4

5. RENT................................................................................................... 5

(a) Monthly Base Rent............................................................................. 5

(b) Late Payments................................................................................. 5

(d) Abated Monthly Base Rent...................................................................... 6

6. OPERATING EXPENSES; REAL PROPERTY TAXES AND ASSESSMENTS; UTILITIES COSTS............................... 6

(a) Covenant to Pay............................................................................... 6

(b) Estimate Statement............................................................................ 6

(d) Miscellaneous................................................................................. 6

(e) Audit Rights.................................................................................. 7

(f) Controllable Operating Expenses............................................................... 7

7. USE.................................................................................................... 7

(a) Tenant's Use of the Premises.................................................................. 7

(b) Compliance.................................................................................... 7

8. NOTICES................................................................................................ 9

9. BROKERS................................................................................................ 9

10. SURRENDER; HOLDING OVER................................................................................ 9

(a) Surrender..................................................................................... 9

(b) Holding Over.................................................................................. 9

11. TAXES ON TENANT'S PROPERTY; RENT TAX................................................................... 10

</TABLE>

(i)

<PAGE>

<TABLE>

PAGE

----

<S> <C>

(a) Taxes on Tenant's Property.................................................................... 10

(b) Rent Tax...................................................................................... 10

12. ALTERATIONS............................................................................................ 10

(a) Permitted Alterations......................................................................... 10

(b) Landlord's Approval........................................................................... 10

(d) Manner of Performance......................................................................... 11

(e) Ownership..................................................................................... 11

(f) Personal Property............................................................................. 11

13. REPAIRS................................................................................................ 11

(a) Landlord's Obligations........................................................................ 11

(b) Tenant's Obligations.......................................................................... 12

14. LIENS.................................................................................................. 12

15. ENTRY BY LANDLORD...................................................................................... 12

16. UTILITIES AND SERVICES................................................................................. 13

17. INSURANCE.............................................................................................. 13

(a) Tenant's Insurance............................................................................ 13

(b) Supplemental Tenant Insurance Requirements.................................................... 13

(d) Waiver of Insurers............................................................................ 14

(e) Landlord Insurance............................................................................ 14

(f) Blanket Insurance............................................................................. 14

18. DAMAGE OR DESTRUCTION.................................................................................. 14

(a) Partial Destruction........................................................................... 14

(b) Substantial Destruction....................................................................... 15

(d) Abatement of Rent............................................................................. 15

(e) Inability to Complete......................................................................... 15

(f) Damage Near End of Term....................................................................... 15

(g) Termination................................................................................... 15

(h) Subordination................................................................................. 16

19. EMINENT DOMAIN......................................................................................... 16

(a) Substantial Taking............................................................................ 16

(b) Partial Taking; Abatement of Rent............................................................. 16

</TABLE>

(ii)

<PAGE>

<TABLE>

PAGE

----

<S> <C>

(d) Temporary Taking.............................................................................. 16

20. DEFAULTS AND REMEDIES.................................................................................. 16

(a) Defaults...................................................................................... 16

(b) Landlord's Remedies........................................................................... 17

(d) Late Payment.................................................................................. 17

(e) Rights and Remedies Cumulative................................................................ 18

21. LANDLORD'S DEFAULT..................................................................................... 18

22. ASSIGNMENT AND SUBLETTING.............................................................................. 18

(a) Restriction on Transfer....................................................................... 18

(b) Non-Transfers................................................................................. 19

(d) Excess Rent................................................................................... 19

(e) Miscellaneous................................................................................. 19

(f) No Release.................................................................................... 20

(g) Costs......................................................................................... 20

(h) Landlord Cooperation.......................................................................... 20

23. SUBORDINATION.......................................................................................... 20

(a) Current Lienholders........................................................................... 20

(b) Future Liens.................................................................................. 20

24. ESTOPPEL CERTIFICATE................................................................................... 21

(a) Tenant's Obligations.......................................................................... 21

(b) Tenant's Failure to Deliver................................................................... 21

(d) Landlord's Failure to Deliver................................................................. 21

25. WAIVER................................................................................................. 22

26. PARKING................................................................................................ 22

27. FORCE MAJEURE.......................................................................................... 22

28. SIGNS.................................................................................................. 22

29. QUIET ENJOYMENT........................................................................................ 22

30. EXTENSION OPTIONS...................................................................................... 23

31. ROOFTOP COMMUNICATION EQUIPMENT........................................................................ 24

32. LANDLORD'S ACQUISITION OF LAND......................................................................... 24

</TABLE>

(iii)

<PAGE>

<TABLE>

PAGE

----

<S> <C>

(a) Purchase Agreement............................................................................ 24

(b) Property Materials............................................................................ 24

33. MISCELLANEOUS.......................................................................................... 25

(a) Keys.......................................................................................... 25

(b) Conflict of Laws.............................................................................. 25

(d) Attorneys' Fees............................................................................... 25

(e) Terms and Headings............................................................................ 25

(f) Time.......................................................................................... 25

(g) Prior Agreement; Amendments................................................................... 25

(h) Authority..................................................................................... 25

(i) Separability.................................................................................. 26

(j) Counterparts; Copy............................................................................ 26

(k) Landlord's Liability; Transfer................................................................ 26

(l) Financial Information......................................................................... 26

(m) Title 51 Waiver............................................................................... 27

(n) Arbitration................................................................................... 27

</TABLE>

EXHIBITS:

A Legal Description of Land

B Work Letter Agreement

C Definition of Operating Expenses, Real Property Taxes and Assessments, and

Utilities Costs

D Standards for Utilities and Services

E Subordination, Non-Disturbance and Attornment Agreement

F-1 Tenant Estoppel Certificate

F-2 Landlord Estoppel Certificate

SCHEDULES:

D-1 Janitorial Specifications

(iv)

<PAGE>

OFFICE BUILDING LEASE

This OFFICE BUILDING LEASE ("Lease") is entered into as of the 25th day of

August, 2005 (the "Effective Date") by and between 24000 Development LLC, a

Washington limited liability company ("Landlord"), and EMULEX DESIGN &

MANUFACTURING CORPORATION, a Delaware corporation ("Tenant") (collectively, the

"Parties").

1. BASIC LEASE TERMS. For purposes of this Lease, the following terms have the

following definitions and meanings:

(a) LANDLORD: 24000 Development LLC, a Washington limited liability company

(b) LANDLORD'S ADDRESS (FOR NOTICES):

6850 - 126th Ave NE

Kirkland, WA 98033

Attention: Stavros Anastasiou

or such other place as Landlord may from time to time designate by notice to

Tenant.

(d) TENANT'S ADDRESS (FOR NOTICES):

Emulex Design & Manufacturing Corporation

3333 Susan Street

Costa Mesa, California 92626

Attention: Sadie Herrera, EVP HR and Facilities

In each case with a copy to

Emulex Corporation

3333 Susan Street

Costa Mesa, California 92626

Attention: Randall Wick, Esq., General Counsel

or such other place as Tenant may from time to time designate by notice to

Landlord.

(e) BUILDING: An office building situated on land legally described in Exhibit

"A" attached hereto (the "Land") located at 24000 35th Avenue, in the City of

Bothell ("City"), County of Snohomish ("County"), State of Washington ("State").

(f) PREMISES: The entire Building and the Land. Prior to the Commencement Date,

JPC Architects, P.L.L.C. ("Tenant's Architect") shall certify in writing to

Landlord and Tenant the total rentable square feet of the Building, which shall

be calculated in accordance with the Standard Method for Measuring Floor Area in

Office Buildings (American National Standards Industry, Inc.) ANSI/BOMA

Z65.1-1996, as interpreted by Tenant's Architect. Tenant's Architect's

certification of the rentable square feet of the Building shall be binding on

Landlord and Tenant absent manifest error. Currently, Landlord estimates that

the Building contains 42,784 rentable square feet.

(g) TERM: Seventy-two (72) full calendar months, subject to possible extension

upon Tenant's exercise of its Extension Options in accordance with Section 30

below. The Lease Term shall expire on the last day of the calendar month which

is seventy-two (72) full calendar months after the

<PAGE>

Commencement Date, subject to possible extension upon Tenant's exercise of its

Extension Options in accordance with Section 30 below.

(h) COMMENCEMENT DATE: The Commencement Date shall be the date on which Landlord

achieves Substantial Completion (as defined in the Work Letter Agreement

attached hereto as Exhibit "B" [the "Work Letter"]); provided, however, that the

Commencement Date shall be accelerated for Tenant Delays (as defined in the Work

Letter) in accordance with the Work Letter. This Lease shall be binding on the

parties as of the Effective Date. Landlord and Tenant currently anticipate that

Landlord will deliver possession of the Premises to Tenant, with the Tenant

Improvements (as defined in the Work Letter) Substantially Complete (as defined

in the Work Letter) on December 12, 2005 (the "Target Delivery Date").

(i) MONTHLY BASE RENT: "Monthly Base Rent" shall be:

<TABLE>

<S> <C>

Months 1 through and including 8*: $0 (abatement period), subject to adjustment as provided in

Section 1(l) below.

Months 9 through and including 47*: $1.50 per rentable square foot of the Building, calculated in

accordance with Section 1(f) above, per month during the initial Term

($18.00 per rentable square foot per year), subject to adjustment as

provided in Section 1(l) below.

Months 48 through and including 59*: $1.56 per rentable square foot of the Building, calculated in

accordance with Section 1(f) above, per month during the initial Term

($18.72 per rentable square foot per year), subject to adjustment as

provided in Section 1(l) below.

Months 59 through and including 71*: $1.62 per rentable square foot of the Building, calculated in

accordance with Section 1(f) above, per month during the initial Term

($19.47 per rentable square foot per year), subject to adjustment as

provided in Section 1(l) below.

</TABLE>

* from and after the Commencement Date

As used in this Lease, the term "Rent" (or "rent") shall mean Monthly Base

Rent, plus all additional rent and other amounts due from Tenant under

this Lease.

(j) SECURITY DEPOSIT: There shall be no security deposit under this Lease.

(k) TENANT IMPROVEMENTS: All tenant improvements installed or to be installed

within the Premises to prepare the Premises for occupancy pursuant to the terms

of the Work Letter, except for Landlord's express covenants under this Lease and

all exhibits attached hereto.

(l) TENANT IMPROVEMENT ALLOWANCE: Forty and 19/100 ($40.19) per rentable square

foot of the Building, calculated in accordance with Section 1(f) above (the

"Initial Tenant Improvement Allowance"). In Tenant's sole and absolute

discretion, Tenant may elect to increase the Initial Tenant Improvement

Allowance by up to an additional Ten Dollars ($10.00) per rentable square foot

of the Building, calculated in accordance with Section 1(f) above (the

"Additional Tenant Improvement Allowance"), but only for the purpose of paying

TI Costs (as defined in the Work Letter), by the delivery of written notice of

such election delivered to Landlord on or before the Commencement Date. If the

Tenant obtains the Additional Tenant Improvement Allowance, the Monthly Base

Rent (starting on the Commencement Date, with no abatement) shall be increased

by an amount equal to the amount of the Additional Tenant Improvement

-2-

<PAGE>

Allowance paid by Landlord to Tenant, amortized over seventy-two months using an

interest factor of six percent (6%). (By way of example, if the Additional

Tenant Improvement Allowance is $427,840 ($10.00 times 42,784 rentable square

feet), then the Monthly Base Rent shall be increased by $7,090.54 each month,

for seventy-two months, commencing on the Commencement Date.) The Tenant

Improvement Allowance shall be disbursed in accordance with the Work Letter. Any

portion of the Tenant Improvement Allowance not disbursed or used by the date

which is ninety (90) days after the Commencement Date shall be paid by Landlord

to Tenant at that time.

(m) PERMITTED USE: General office use and any other legally permitted uses under

applicable laws, regulations, ordinances and codes applicable to the use and

occupancy of the Premises (collectively, "Laws").

(n) PARKING: All parking located on the Land shall be for the exclusive use of

Tenant and its agents, contractors, employees, representatives, invitees,

licensees, subtenants and assignees, free of charge during the Term of this

Lease.

(o) BROKER(s): Washington Partners, Inc. and Studley, Inc., representing Tenant.

No Broker representing Landlord.

(p) INTEREST RATE: shall mean twelve percent (12%) per annum.

(q) EXHIBITS: Exhibits "A" through "F-2", inclusive, which Exhibits are attached

to this Lease and incorporated herein by this reference.

(r) TENANT PARTIES: Tenant and/or any of Tenant's agents, contractors,

employees, representatives, subtenants and assignees.

(s) LANDLORD PARTIES: Landlord and/or any of Landlord's agents, contractors,

employees, and representatives.

This Section 1 represents a summary of the basic terms and definitions of this

Lease. In the event of any inconsistency between the terms contained in this

Section 1 and any specific provision of this Lease, the terms of the more

specific provision shall prevail.

2. PREMISES AND EXTERIOR AREAS.

(a) PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases from

Landlord the Premises as improved or to be improved with the Tenant Improvements

described in the Work Letter. Tenant shall have entry access to the Building and

access to the Premises twenty-four (24) hours per day, seven (7) days per week

year-round.

(b) MUTUAL COVENANTS. Landlord and Tenant agree that the letting and hiring of

the Premises is upon and subject to the terms, covenants and conditions

contained in this Lease and each party covenants as a material part of the

consideration for this Lease to keep and perform their respective obligations

under this Lease.

the Tenant Parties shall have the nonexclusive right to use in common with

Landlord, subject to the terms of this Lease, the Building, the Land and the

following:

(i) All exterior areas situated on the Land, including, without

limitation, the Land's parking facilities (the "Parking Areas"), trash areas,

roadways, sidewalks, walkways, parkways, driveways, landscaped areas, plaza

areas, outdoor eating areas, fountains and similar areas and facilities

(collectively, "Exterior Areas").

-3-

<PAGE>

(ii) Any available conduits in the Building and elsewhere on the Land and

the right to install and maintain conduits, cabling and/or wiring within such

conduits and other conduit and risers previously installed in the Building and

elsewhere on the Land for such purposes or in other commercially feasible

locations reasonably approved by Landlord for power and telecommunications

purposes.

(iii) Any currently existing facilities bringing water and other utilities

to the Building and the right to install and maintain additional utility

conveyance facilities elsewhere in the Building or on the Land in other

commercially feasible locations reasonably approved by Landlord.

(d) OPERATION OF BUILDING AND EXTERIOR AREAS. Landlord shall operate and

maintain the Building and Exterior Areas in accordance with the standards and

specifications ("Maintenance Standards") set forth in this Lease and Exhibit "D"

attached hereto (including Schedules "D-1" through "D-4", inclusive).

Notwithstanding the foregoing, at any time during the Term, Tenant may elect, by

the delivery of written notice ("Tenant's Repair Election") to Landlord, to

perform the repair, maintenance and upkeep of the Building and the Exterior

Areas to be performed by Landlord hereunder. Such repair, maintenance and upkeep

shall be in accordance with the Maintenance Standards, and at Tenant's sole cost

and expense. Tenant's Repair Election shall become effective on the later of (i)

the date specified in Tenant's notice of the exercise of Tenant's Repair

Election or (ii) the first day of a calendar month, which is at least one full

calendar month after the delivery of Tenant's Repair Election. If Tenant

thereafter wishes to return to Landlord the obligation to perform repair,

maintenance and upkeep, the obligation shall be returned to Landlord no earlier

than the first day of a calendar month which is at least one full calendar month

after the date that Tenant provides written thereof to notice to Landlord. If

Tenant exercises Tenant's Repair Election, then Operating Expenses reimbursed by

Tenant to Landlord pursuant to Section 6 shall not include costs for work

performed, and/or services provided, by Tenant from and after the effective date

of Tenant's Repair Election.

3. TERM. The term of this Lease ("Term") will be for the period designated in

Section 0, commencing on the Commencement Date, plus any extensions of the Term

pursuant to any provision of this Lease or any future amendment of this Lease.

Once the Commencement Date occurs, the Parties, and the request of either party,

shall sign a written confirmation of the Commencement Date.

4. POSSESSION.

(a) DELIVERY OF POSSESSION. Landlord shall use commercially reasonable efforts

to deliver possession of the Premises (and keys thereto) to Tenant, with the

Tenant Improvements Substantially Complete, on or before the Target Delivery

Date. Notwithstanding any entry, use or occupancy of the Premises by Tenant

prior to the Commencement Date, Tenant shall not have any obligation to pay

Monthly Base Rent, Operating Expenses, Real Property Taxes and Assessments or

Utilities Costs until the Commencement Date, at which time such obligations

shall begin to accrue.

(b) CONDITION OF PREMISES. Landlord hereby represents and warrants to Tenant

that the Premises, the Building (including without limitation all Building

systems) and all Exterior Areas, as of the date Landlord delivers possession of

the Premises to Tenant with the Tenant Improvements Substantially Complete,

shall be (i) in material compliance with all applicable Laws in effect as of the

date of this Lease, including, without limitation, the Americans with

Disabilities Act and all related state and local access laws, regulations and

requirements (the "ADA"), local building codes and local fire/life/safety codes,

and (ii) in good and working order. Landlord, at its sole cost and expense,

shall be responsible for correcting (x) any latent defects in the structural

portions of the Building, (y) any breaches of Landlord's covenants,

representations and warranties set forth in this Section or elsewhere in this

Lease or the Work Letter. Subject to Landlord's covenants imposed by this

Section 4(b), elsewhere in this Lease and the Work Letter, Tenant shall accept

the Premises in its "as is" condition upon delivery by Landlord.

19, 2005, then the Commencement Date may not occur until on or after January 9,

2006. If the Commencement Date has not occurred on or before February 1, 2006,

then Landlord shall pay to Tenant "DELAY DAMAGES" equal to the "holdover amount"

payable by Tenant to the landlord under Tenant's lease in the Bothell

-4-

<PAGE>

North Creek area ("CURRENT SPACE"). The "holdover amount" shall mean (i) the

difference between (A) the monthly base rental rate (on a per rentable square

foot basis) paid by Tenant to its landlord for the use of the Current Space

after February 1, 2006 and (B) the monthly base rental rate (on a per rentable

square foot basis) paid by Tenant to its landlord for the use of the Current

Space immediately prior to the scheduled expiration date of Tenant's lease of

the Current Space, multiplied by (ii) the number of rentable square feet of the

Current Space. If the Commencement Date has not occurred on or before June 1,

2006, then Tenant may terminate this Lease by giving ten (10) days' prior

written notice to Landlord of such intent to terminate, and if the Commencement

Date has not occurred on or before the expiration of such ten (10) day period,

this Lease shall terminate, and Tenant shall retain a claim against Landlord for

damages constituting Tenant's actual costs incurred in connection with this

Lease and/or as a result of Landlord's failure to achieve Substantial Completion

by June 1, 2006, (Landlord shall not in any event be liable for lost revenues,

profits, or business opportunities, or incidental or consequential damages of

any kind). Notwithstanding the foregoing, the February 1 and the June 1 dates in

this Section 4(c) shall be extended on a day for day basis for Permit Delays (as

defined in the Work Letter) in accordance with the Work Letter.

5. RENT.

(a) MONTHLY BASE RENT. Tenant agrees to pay Landlord the Monthly Base Rent for

the Premises in advance on the first day of each calendar month during the Term

without prior notice or demand. If the Term of this Lease commences on a day

other than the first day of a calendar month, then the rent for such period will

be prorated in the proportion that the number of days this Lease is in effect

during such period bears to the number of days in such month. The obligation to

pay Rent is absolute and unconditional, and shall not at any time be subject to

offset, discount, or reduction of any kind whatsoever, except as specifically

provided in this Lease.

(b) LATE PAYMENTS. Late payments of Monthly Base Rent and/or any item of

additional rent will be subject to interest and a late charge as provided in

Section 20(d) below.

in the event Tenant's use of all or a material part of the Building is

materially impaired, for any reason other than the acts or omissions of Tenant

or any of the Tenant Parties, such that the disruption materially and adversely

interferes with the conduct of Tenant's business in the Building for three (3)

consecutive business days after written notice from Tenant to Landlord or ten

(10) days after written notice from Tenant to Landlord in any twelve (12) month

period (such three (3) consecutive business day period or ten (10) day period

after written notice from Tenant to Landlord, as applicable, is referred to

herein as the "Eligibility Period"), due to (i) an interruption of utility or

mechanical services to the Building (A) caused by the negligence or misconduct

of a Landlord Party, or (B) which is covered by Landlord's rental loss insurance

policy, (ii) an inability to access the Building or Parking Areas (A) due to

actions of a Landlord Party, or (B) which is covered by Landlord's rental loss

insurance policy, (iii) the performance of repairs, maintenance or other work

required to be made to the Building which are the responsibility of Landlord

under this Lease or which otherwise are performed by or on behalf of Landlord,

and/or (iv) Landlord's failure to perform repairs, maintenance or other work

required to be made to the Building which are the responsibility of Landlord

under this Lease or which otherwise are performed by or on behalf of Landlord,

then Tenant shall be entitled to an equitable abatement of Monthly Base Rent

under this Lease based upon the portion of the Building affected thereby

(provided that if the operation of Tenant's business from the remainder of the

Building not affected thereby is not reasonably practicable under the

circumstances and Tenant in fact does not operate for business from the

remainder of the Building, all Monthly Base Rent (but not additional rent) under

this Lease shall be subject to such abatement) from the commencement of the

Eligibility Period until the applicable material impairment is cured. The

provisions of this Section 5(d) shall not, however, apply in the event of a

casualty governed by the provisions of Section 18 below or in the event of a

taking or condemnation governed by the provisions of Section 19 below. No

abatement of rent shall apply to any portion of the Building which is not

physically occupied and actually used by the Tenant during the Eligibility

Period.

-5-

<PAGE>

(d) ABATED MONTHLY BASE RENT. Notwithstanding anything in this Lease to the

contrary, Tenant's installments of Monthly Base Rent (but not any additional

rent or other payments or amounts due) for the first eight (8) full calendar

months of the Term shall be abated in full.

6. OPERATING EXPENSES; REAL PROPERTY TAXES AND ASSESSMENTS; UTILITIES COSTS.

(a) COVENANT TO PAY. In addition to Monthly Base Rent, commencing on the

Commencement Date, Tenant agrees to pay Landlord as additional rent in

accordance with the terms of this Section 6, determined on an annual basis, but

payable monthly as provided herein, Operating Expenses, Real Property Taxes and

Utilities Costs attributable to the Premises. "Operating Expenses," "Real

Property Taxes and Assessments," and "Utilities Costs" shall have the meanings

set forth in Exhibit "C" hereto.

(b) ESTIMATE STATEMENT. Commencing on the Commencement Date, and from time to

time thereafter during the Term of this Lease, Landlord may deliver to Tenant a

statement ("Estimate Statement") wherein Landlord will estimate some or all of

the Operating Expenses, Real Property Taxes and Assessments, and Utilities Costs

attributable to the Premises for the then current calendar year. Tenant agrees

to pay Landlord, as additional rent, one-twelfth (1/12th) of the estimated

Operating Expenses, Real Property Taxes and Assessments and Utilities Costs

pursuant to the most recently delivered Estimate Statement each month

thereafter, beginning with the next installment of rent due, until such time as

Landlord issues a revised Estimate Statement; except that, (i) concurrently with

the regular monthly rent payment next due following the receipt of each such

revised Estimate Statement, Tenant agrees to pay Landlord an amount equal to one

monthly installment of any amounts by which the revised Estimate Statement

exceeds the prior Estimate Statement (less any applicable Operating Expenses,

Real Property Taxes and Assessments, and/or Utilities Costs already paid)

multiplied by the number of months from the beginning of the applicable calendar

year to the month of such rent payment next due, all months inclusive, (ii)

Landlord shall not provide Tenant with revised Estimate Statements more than one

time in any calendar year of the Term, and (iii) if Landlord delivers a revised

Estimate Statement later than the twentieth (20th) day of a calendar month, then

such revised Estimate Statement shall not be effective until the first day of

the second calendar month after delivery.

of each calendar year during the Term of this Lease, Landlord will deliver to

Tenant a statement ("Reconciliation Statement") which states the actual amounts

incurred by Landlord for Operating Expenses, Real Property Taxes and

Assessments, and Utilities Costs for the preceding calendar year. If the

Reconciliation Statement reveals that the actual Operating Expenses, Real

Property Taxes and Assessments, and Utilities Costs are more than the total

additional rent paid by Tenant for Operating Expenses, Real Property Taxes and

Assessments, and Utilities Costs on account of the preceding calendar year,

Tenant agrees to pay Landlord the difference in a lump sum within thirty (30)

days of receipt of the Reconciliation Statement. If the Reconciliation Statement

reveals that the actual Operating Expenses, Real Property Taxes and Assessments,

and Utilities Costs are less than the additional rent paid by Tenant for

Operating Expenses, Real Property Taxes and Assessments, and Utilities Costs on

account of the preceding calendar year, Landlord will credit any overpayment

toward the next monthly installments of Operating Expenses, Real Property Taxes

and Assessments, and Utilities Costs due under this Lease; provided however, if

such excess exceeds $10,000 or this Lease has expired or terminated, Landlord

will promptly refund any such overpayment to Tenant.

(d) MISCELLANEOUS. Even though the Term has expired and Tenant has vacated the

Premises, when the final determination is made of the actual Operating Expenses,

Real Property Taxes and Assessments, and Utilities Costs for the year in which

this Lease terminates (which shall occur if at all within 120 days of the

expiration of the calendar year in which Lease termination occurs), Tenant

agrees to promptly pay any increase due over the estimated amounts paid and,

conversely, any overpayment made in the event said amounts decrease shall

promptly be rebated by Landlord to Tenant or offset against the Monthly Base

Rent coming due pursuant to this Lease. Such obligation will be a continuing one

which will survive the expiration or earlier termination of this Lease.

-6-

<PAGE>

(e) AUDIT RIGHTS. Tenant and its duly authorized representatives or any

certified public accountant selected by Tenant shall have the right to audit the

records of Landlord related to Operating Expenses, Real Property Taxes and

Assessments and Utilities Costs. Any such audit shall be performed, if at all,

within six (6) months after receipt of the applicable Reconciliation Statement

for a calendar year. Any audit hereunder shall be upon not less then ten (10)

days' prior written notice to Landlord, during normal business hours at the

Building. Tenant may review and photocopy, at Tenant's expense, reasonable

documentation supporting Operating Expense, Real Property Tax and Assessment and

Utilities Cost items under review. If Tenant's Percentage of actual Operating

Expenses, Real Property Taxes and Assessments and Utilities Costs are determined

to have been overstated by Landlord for any calendar year in excess of one

percent (1%), Landlord shall reimburse Tenant for the reasonable cost of

Tenant's audit within thirty (30) days following Tenant's submission to Landlord

of reasonable evidence of the amount of such costs; provided, however, that such

reimbursement shall not exceed the amount of the overcharge. Tenant's payment of

Operating Expenses, Real Property Taxes and Assessments and Utilities Costs in

accordance with Landlord's Estimate Statements or Reconciliation Statements

shall not constitute a waiver of any right to audit and/or dispute such expenses

as set forth herein.

(f) CONTROLLABLE OPERATING EXPENSES. Notwithstanding anything in this Lease or

Exhibit "C" attached hereto to the contrary, Tenant shall not be liable to

Landlord for any aggregate increase in Controllable Operating Expenses (defined

below) in excess of four percent (4%) over the Controllable Operating Expenses

paid in the prior calendar year, with such excess to be borne by Landlord at

Landlord's sole cost and expense. As used herein, "Controllable Operating

Expenses" shall mean Operating Expenses which can be reasonably controlled by

Landlord and shall not include insurance costs, Real Property Taxes and

Assessments or Utilities Costs. Operating Expenses shall not be deemed to be

"Controllable Operating Expenses" if Landlord exercises reasonable efforts to

obtain competitive bids for the Operating Expense items in question and is not

able to obtain a lower bid from a reasonably qualified contractor or service

provider, for the same quality and quantity of items or services; provided,

however, if Landlord fails to seek bids for an Operating Expense item that is

likely to result in bids of varying prices, or if Landlord bids out work for an

Operating Expense item and Landlord does not select the lowest bid from a

reasonably qualified contractor or service provider, for the same quality and

quantity of items or services, then such Operating Expenses shall be deemed to

be Controllable Operating Expenses.

7. USE.

(a) TENANT'S USE OF THE PREMISES. The Premises may be used for the use or uses

set forth in Section 1(m) only, and Tenant will not use or permit the Premises

to be used for any other purpose without the prior written consent of Landlord,

which consent Landlord shall not unreasonably withhold, condition or delay.

(b) COMPLIANCE. At Tenant's sole cost and expense, Tenant agrees to procure,

maintain all governmental licenses, insurance and permits required for the

proper and lawful conduct of Tenant's business from the Premises, if any. Tenant

agrees not to use, alter or occupy the Premises or allow the Premises to be

used, altered or occupied in violation of, and Tenant, at its sole cost and

expense, agrees to use and occupy the Premises in compliance with: (i) subject

to Landlord's covenants under this Lease, any and all applicable laws,

ordinances, rules and regulations ("Laws"), and (ii) the requirements of the

Board of Fire Underwriters and any other similar body. Tenant agrees not to

cause, maintain or permit any nuisance or waste in, on, under or about the

Premises. No obligation of Tenant to comply with Laws shall require Tenant to

make any alterations, additions or improvements to the systems or structure of

the Building or any areas outside the Premises, which obligation shall be

performed by Landlord at its sole cost and expense; provided, however, Tenant

shall construct the Tenant Improvements pursuant to the Work Letter in

compliance with all applicable Laws (including the ADA).

(i) TENANT HAZARDOUS MATERIALS REQUIREMENTS. Except for ordinary office

and equipment supplies typically used in the ordinary course of business within

office buildings, such as copier toner,

-7-

<PAGE>

liquid paper, glue, ink and common household cleaning materials (some or all of

which may constitute "Hazardous Materials" as defined in this Lease and are

referred to hereinafter as the "Permitted Substances"), Tenant agrees not to

cause or permit any Hazardous Materials to be brought upon, stored, used,

handled, generated, released or disposed of on, in, under or about the Premises,

the Building or the Land by Tenant or the Tenant Parties, without the prior

written consent of Landlord, which consent Landlord may withhold in its sole and

absolute discretion. All use of Hazardous Materials by a Tenant Party shall be

in compliance with all Environmental Laws.

(ii) LANDLORD HAZARDOUS MATERIALS REQUIREMENTS. Landlord represents and

warrants to Tenant that, to Landlord's actual knowledge, there are no Hazardous

Material(s) which are, or have previously been, located in, or about the

Building, the Exterior Areas or the Land; except as disclosed in the August 15,

2005, Phase I Environmental Assessment prepared by Environmental Associates,

Inc., a copy of which has been provided to Tenant. Landlord, at its sole cost

and expense, shall be responsible for the removal of any Hazardous Materials

located in or about the Building or Land as of date that possession of the

Premises is delivered to Tenant, to the extent that removal is required by the

Environmental Laws or to the extent that the presence of such Hazardous

Materials (even if in compliance with Environmental Laws) would materially

adversely affect Tenant's use and occupancy of the Building pursuant to this

Lease. Except for Permitted Substances, and except as may be in compliance with

applicable Environmental Laws, Landlord agrees not to cause or knowingly permit

any Hazardous Materials to be brought upon, stored, used, handled, generated,

released or disposed of on, in, under or about the Premises, the Building, the

Exterior Areas or any other portion of the Land by Landlord Parties"). Further,

Landlord's cost of the removal of Hazardous Materials in the Building or in any

other location on the Land shall be excluded from an Operating Expenses that

would be passed through to Tenant.

(iii) HAZARDOUS MATERIALS INDEMNITIES. To the fullest extent permitted by

law, Tenant agrees to promptly indemnify, protect, defend and hold harmless

Landlord and Landlord's partners, officers, members, directors, employees and

agents (collectively, "Landlord Indemnified Parties") from and against any and

all claims, damages, judgments, suits, causes of action, losses, liabilities,

penalties, fines, expenses and costs (including, without limitation, clean-up,

removal, remediation and restoration costs, sums paid in settlement of claims,

attorneys' fees, consultant fees and expert fees and court costs) which arise or

result from Hazardous Materials released on, in, under or about the Premises,

the Building or the Land by Tenant Parties. Tenant agrees to promptly notify

Landlord of any release of Hazardous Materials at the Premises, the Building or

any other portion of the Land which Tenant becomes aware of during the Term of

this Lease, whether caused by Tenant or any other persons or entities. To the

fullest extent permitted by law, Landlord agrees to promptly indemnify, protect,

defend and hold harmless Tenant and Tenant's partners, officers, directors,

employees, agents, successors and assigns (collectively, "Tenant Indemnified

Parties") from and against any and all claims, damages, judgments, suits, causes

of action, losses, liabilities, penalties, fines, expenses and costs (including,

without limitation, clean-up, removal, remediation and restoration costs, sums

paid in settlement of claims, reasonable attorneys' fees, consultant fees and

expert fees and court costs) which arise or result from the presence of

Hazardous Materials on, in, under or about the Premises, the Building or any

other portion of the Land which exist prior to the Actual Delivery Date or which

are caused by Landlord or any Landlord Parties.

(iv) HAZARDOUS MATERIALS. As used in this Lease, the term "Hazardous

Materials" shall mean and include any chemical, substance, material, controlled

substance, object, condition, waste, living organism or combination thereof,

whether solid, semi-solid, liquid or gaseous, which is or may be hazardous to

human health or safety or to the environment due to its radioactivity,

ignitability, corrosivity, reactivity, explosivity, toxicity, carcinogenicity,

mutagenicity, phytotoxicity, infectiousness or other harmful or potentially

harmful properties or effects, including, without limitation, tobacco smoke,

petroleum and petroleum products, asbestos, radon, polychlorinated biphenyls

(PCBs), refrigerants (including those substances defined in the Environmental

Protection Agency's "Refrigerant Recycling Rule," as amended from time to time)

and all of those chemicals, substances, materials, controlled substances,

objects, conditions, wastes, living organisms or combinations thereof which are

now or become in the future listed, defined or regulated in any manner by any

Environmental Law based upon, directly or indirectly, such

-8-

<PAGE>

properties or effects. As used herein, "Environmental Laws" means any and all

federal, state or local environmental, health and/or safety-related laws,

regulations, standards, decisions of courts, ordinances, rules, codes, orders,

decrees, directives, guidelines, permits or permit conditions, currently

existing and as amended, enacted, issued or adopted in the future which are or

become applicable to Tenant, the Premises or the Land.

(v) SURVIVAL. The provisions of this Section 7(c) shall survive the

expiration of earlier termination of this Lease.

8. NOTICES. Any notice required or permitted to be given hereunder must be in

writing and may be given by personal delivery (including delivery by overnight

courier or an express mailing service) or by mail, if sent by registered or

certified mail. Notices to Tenant shall be sufficient if delivered to Tenant at

the address designated in Section 1(d) and notices to Landlord shall be

sufficient if delivered to Landlord at the address designated in Section 1(b).

Either party may specify a different address for notice purposes by written

notice to the other. Notice shall be deemed to be delivered upon the earlier of

(a) actual receipt or refusal of delivery or (b) (i) if by overnight courier or

express mailing service, one (1) business day after deposit with delivery

expenses prepared and addressed as provided above or (ii) five (5) business days

after deposit with the U.S. Postal Service, postage prepaid and addressed as

provided above.

9. BROKERS. The Parties acknowledge that the brokers who negotiated this Lease

are stated in Section 1(o) (the "Brokers"). Landlord shall be responsible for

the commissions payable to such brokers in connection with this Lease in

accordance with separate commission agreements between Landlord and such

brokers. Each party represents and warrants to the other, that, to its

knowledge, no other broker, agent or finder (a) negotiated or was instrumental

in negotiating or consummating this Lease on its behalf, and (b) is or might be

entitled to a commission or compensation in connection with this Lease. Landlord

shall promptly indemnify, protect, defend and hold Tenant harmless from and

against any and all claims, damages, judgments, suits, causes of action, losses,

liabilities, penalties, fines, expenses and costs (including attorneys' fees and

court costs) in connection with (i) any failure or alleged failure by Landlord

to pay commissions payable to the Brokers, (ii) any failure or alleged failure

by Landlord to pay fees or commissions related to with Landlord's acquisition of

the Land and/or (iii) any broker, agent or finder alleging representation of or

agreement with Landlord in connection with this Lease. Tenant shall promptly

indemnify, protect, defend and hold Landlord harmless from and against any and

all claims, damages, judgments, suits, causes of action, losses, liabilities,

penalties, fines, expenses and costs (including attorneys' fees and court costs)

that may be asserted or brought by any broker, agent or finder alleging

representation of or agreement with Tenant in connection with this Lease. The

foregoing indemnities shall survive the expiration or earlier termination of

this Lease.

10. SURRENDER; HOLDING OVER.

(a) SURRENDER. The voluntary or other surrender of this Lease by Tenant, or a

mutual cancellation thereof, shall not constitute a merger, and shall, at the

option of Landlord, operate as an assignment to Landlord of any or all subleases

or subtenancies. Upon the expiration or earlier termination of this Lease,

Tenant agrees to peaceably surrender the Premises to Landlord broom clean, with

data and telecommunications wiring and cabling in place, and in reasonably good

repair and condition, ordinary wear and tear and casualty damage excepted, with

all of Tenant's personal property removed from the Premises and all damage

caused by such removal repaired. The delivery of keys to any employee of

Landlord or to Landlord's agent or any employee thereof alone will not be

sufficient to constitute a termination of this Lease or a surrender of the

Premises.

(b) HOLDING OVER. Tenant will not be permitted to hold over possession of the

Premises after the expiration or earlier termination of the Term without the

express written consent of Landlord, which consent Landlord may withhold in its

sole and absolute discretion. If Tenant holds over after the expiration or

earlier termination of the Term, Landlord may, at its option, treat Tenant as a

tenant at sufferance only, and such continued occupancy by Tenant shall be

subject to all of the terms, covenants and conditions of this Lease, so far as

applicable, except that the Monthly Base Rent for any such

-9-

<PAGE>

holdover period shall be (i) the same Monthly Base Rent in effect under this

Lease immediately prior to such holdover during the first ninety (90) days of

holdover, and (ii) thereafter one hundred fifty percent (150%) of the Monthly

Base Rent in effect under this Lease immediately prior to such holdover.

Notwithstanding anything in this Lease to the contrary, Tenant shall not be

liable for any consequential, punitive or other damages caused by the first

ninety (90) days of any holdover, but if Tenant fails to surrender the Premises

within ninety (90) days after the expiration of this Lease in accordance with

the terms of this Section 10(b) despite demand to do so by Landlord, Tenant

agrees to promptly indemnify, protect, defend and hold Landlord harmless from

all claims, damages, judgments, suits, causes of action, losses, liabilities,

penalties, fines, expenses and costs (including attorneys' fees and costs),

including, without limitation, costs and expenses incurred by Landlord in

returning the Premises to the condition in which Tenant was to surrender it and

claims made by any succeeding tenant founded on or resulting from Tenant's

failure to surrender the Premises. The provisions of this Section 10(b) will

survive the expiration or earlier termination of this Lease.

11. TAXES ON TENANT'S PROPERTY; RENT TAX.

(a) TAXES ON TENANT'S PROPERTY. Tenant agrees to pay before delinquency, all

taxes and assessments (real and personal) levied against any personal property,

trade fixtures or Alterations placed by Tenant in or about the Premises

(including any increase in the assessed value of the Premises based upon the

value of any such personal property or trade fixtures). If any such taxes or

assessments are levied against Landlord or Landlord's property, Landlord may,

after written notice to Tenant (and under proper protest if requested by Tenant)

pay such taxes and assessments, in which event Tenant agrees to reimburse

Landlord all amounts paid by Landlord within ten (10) business days after demand

by Landlord; provided, however, Tenant, at its sole cost and expense, will have

the right, with Landlord's cooperation, to bring suit in any court of competent

jurisdiction to recover the amount of any such taxes and assessments so paid

under protest.

(b) RENT TAX. Tenant shall pay to Landlord as additional rent, any tax ("RENT

TAX") upon Rent payable under this Lease or any tax or fee in any form payable

by Landlord because of or measured by receipts or income of Landlord derived

from this Lease. The preceding sentence shall not apply to general income tax or

business and occupation tax of Landlord, except to the extent a Rent Tax is

imposed as a business and occupation tax. If a Rent Tax imposed on a monthly

basis as Rent is due, then such Rent Tax shall be payable monthly on the first

day of each calendar month; provided, however, that the first payment shall be

due no sooner than thirty (30) days after written notice from Landlord, and each

change in the amount due shall require thirty (30) days written notice prior to

the change.

12. ALTERATIONS. After installation of the initial Tenant Improvements for the

Premises pursuant to Exhibit "B", Tenant may, at its sole cost and expense, make

alterations, additions, improvements and decorations (including, without

limitation, wall coverings, window coverings, floor coverings and other

finishes) to the Premises (collectively, "Alterations") subject to and upon the

following terms and conditions:

(a) PERMITTED ALTERATIONS. Except for Permitted Alterations, Tenant shall not

perform any Alterations in the Premises or the Land without the prior written

consent of Landlord, which shall not be unreasonably withheld, conditioned or

delayed. Notwithstanding the foregoing, Tenant may without the prior written

consent of Landlord, but upon prior notice to Landlord, replace carpeting, floor

coverings and/or wall coverings; repaint walls; and make other Alterations that

do not (i) materially and adversely affect the Building's structure, equipment,

services or systems, or the proper functioning thereof; (ii) materially and

adversely affect the outside appearance or character of the Building; or (iv)

cost more than the greater of $2.50 per square foot or One Hundred Thousand and

No/100ths Dollars ($100,000.00) per project (exclusive of the cost of carpeting,

painting, floor coverings and/or wall coverings) (collectively, "Permitted

Alterations").

(b) LANDLORD'S APPROVAL. Before proceeding with any Alterations other than

Permitted Alterations, Tenant must first obtain Landlord's written approval of

the plans, specifications and working drawings for such Alterations, which

approval Landlord will not unreasonably withhold, condition or delay as long as

-10-

<PAGE>

(i) Tenant delivers to Landlord notice and a copy of any final plans,

specifications and working drawings for any such Alterations at least ten (10)

days prior to commencement of the work thereof, and (ii) the other conditions of

this Section 12 are satisfied. Landlord shall approve or be deemed to have

approved all such requests for approval within twenty (20) days after request

therefor.

installed only by contractors and subcontractors which have been approved by

Landlord, which approval Landlord will not unreasonably withhold, condition or

delay. Before proceeding with any Alterations, Tenant agrees to provide Landlord

with ten (10) days prior written notice and Tenant's contractors must obtain and

maintain, on behalf of Tenant and at Tenant's sole cost and expense all

necessary governmental permits and approvals for the commencement and completion

of such Alterations. Throughout the performance of any Alterations, Tenant

agrees to obtain, or cause its contractors to obtain, workers compensation

insurance and general liability insurance in compliance with the provisions of

Section 17 of this Lease.

(d) MANNER OF PERFORMANCE. All Alterations must be performed: (i) substantially

in accordance with the approved plans, specifications and working drawings (if

applicable); (ii) in a lien-free and first-class and workmanlike manner; and

(iii) in compliance with all applicable permits, laws, statutes, ordinances,

rules, regulations, orders and rulings now or hereafter in effect and imposed by

any governmental agencies and authorities having jurisdiction.

(e) OWNERSHIP. The Tenant Improvements and all Alterations will become the

property of Landlord and will remain upon and be surrendered with the Premises

and become the property of the Landlord at the end of the Term of this Lease;

provided, however, Landlord may, by written notice delivered to Tenant

concurrently with Landlord's approval of any Alterations, identify those

Alterations which Landlord will require Tenant to remove at the end of the Term

of this Lease. Tenant shall have no obligation to remove upon termination of the

Lease any initial Tenant Improvements constructed in accordance with the Work

Letter, any Alterations to which Landlord does not require removal in writing

concurrently with its approval of working drawings, or any Permitted

Alterations. If Landlord requires Tenant to remove any Alterations pursuant to

this Section, Tenant, at its sole cost and expense, agrees to remove the

identified Alterations on or before the expiration or earlier termination of

this Lease and repair any damage to the Premises caused by such removal and

return the Premises back to the substantially the same condition as when

originally received by Landlord, normal wear and tear and casualty excepted.

(f) PERSONAL PROPERTY. All articles of personal property owned by Tenant or

installed by Tenant at its expense in the Premises (including Tenant's business

and trade fixtures, furniture, movable partitions, raised floors, and equipment

such as telephones and switches, video conference equipment, projectors, copy

machines, computer terminals, wireless network equipment, refrigerators,

supplemental HVAC units and facsimile machines), whether or not attached to the

Building, will be and remain the property of Tenant, and must be removed by

Tenant from the Premises, at Tenant's sole cost and expense, on or before the

expiration or earlier termination of this Lease. Tenant agrees to repair any

damage caused by such removal at its cost on or before the expiration or earlier

termination of this Lease.

13. REPAIRS.

(a) LANDLORD'S OBLIGATIONS. Landlord agrees to repair and maintain or cause to

be repaired or maintained in a manner consistent with similar office buildings

with similar physical characteristics in King County and Snohomish County,

Washington, but in no event to a lesser standard than described in Exhibit "D"

attached hereto, the structural portions of the Building (including the shell

and core), the plumbing, heating, ventilating, air conditioning, elevator and

electrical systems for the Building, and all Exterior Areas (excluding the

Tenant Improvements, Alterations, and any improvements and equipment installed

by Tenant), unless such maintenance and repairs are caused by the act, neglect

or omission of any duty by Tenant or the Tenant Parties under this Lease.

Landlord will not be liable for any failure to make any such repairs or to

perform any maintenance unless such failure shall persist for ten (10) days (or

24 hours in the case of an emergency) after written notice of the need of such

repairs or maintenance is given to Landlord by Tenant.

-11-

<PAGE>

(b) TENANT'S OBLIGATIONS. Subject to Landlord's repair and maintenance

obligations under Section 13(a) above and Exhibit "D" attached hereto, Tenant

agrees to keep, maintain and preserve the Premises in good condition and repair

(reasonable wear and tear, damage by casualty event, Landlord's repair and

maintenance obligations under this Lease and/or the negligence or misconduct of

Landlord or Landlord Parties excepted) and, when and if needed, at Tenant's sole

cost and expense, to make all repairs to the Premises and every part thereof.

Tenant has no authority to allow any liens to encumber all or any portion of the

Premises, and Tenant agrees to cause any mechanics' liens or other liens arising

as a result of work performed by Tenant or at Tenant's direction to be

eliminated as provided in Section 14 below.

Landlord agrees that if Landlord fails to perform any repair or maintenance

obligation under this Lease which it is obligated to perform within the time

periods set forth in Section 21 below, then Tenant shall be permitted to perform

such obligations on Landlord's behalf in the Premises, provided Tenant first

delivers to Landlord an additional three (3) business days' prior written notice

that Tenant will be performing such obligations, and provided further that

Landlord fails to commence to perform such obligations within such additional

three (3) business day period and diligently prosecute such work to completion.

Notwithstanding the foregoing, if the nature of the unperformed obligation is

such that a bona fide emergency involving an immediate and imminent danger to

life, health or property or material interference with Tenant's business exists,

the foregoing time periods and those set forth in Section 21 shall be reasonably

reduced based upon such emergency circumstances. All contractors engaged by

Tenant pursuant to this Section 13(c) shall be subject to Landlord's reasonable

approval, and Landlord agrees to approve or reject any contractor proposed to be

used by Tenant within twenty-four (24) hours of receipt of Tenant's second

notice, provided that if a proposed contractor is licensed and reputable, and

all requisite permits have been obtained for the desired work, then Landlord

shall be deemed to have given its approval of the proposed contractor. Any work

performed by Tenant, and the obligations of Landlord, pursuant to this Section

13(c) shall be subject to the terms of Section 21 below.

14. LIENS. Tenant has no authority to allow any liens to encumber all or any

portion of the Premises. Tenant agrees not to permit any mechanic's,

materialmen's or other liens to be filed against all or any part of the Land,

the Building or the Premises, nor against Tenant's leasehold interest in the

Premises, by reason of or in connection with any repairs, alterations,

improvements or other work contracted for or undertaken by Tenant or any other

act or omission of Tenant or the Tenant Parties. Landlord will have the right at

all reasonable times to post on the Premises and record any notices of

non-responsibility which it deems necessary for protection from such liens. If

any such liens are filed, Tenant will, at its sole cost, promptly cause such

liens to be released of record or removed by posting a bond in compliance with

RCW 60.04.161 so that they no longer affects title to the Land, the Building or

the Premises.

15. ENTRY BY LANDLORD. Landlord and its employees and agents will at all times

have the right to enter the Building as reasonably necessary to provide the

janitorial services pursuant to Exhibit "D" attached hereto (such service shall

be scheduled for outside of Normal Building Hours - "NORMAL BUILDING HOURS" for

the Building shall be 7:00 AM to 6:00 PM, Pacific Time, Monday through Friday;

and 8:00 AM to 1:00 PM Saturdays) and, upon at least forty-eight (48) hours'

prior written notice (except in cases of emergency) to Tenant, to (i) inspect

the Premises, perform maintenance, repairs and other obligations required to be

performed by Landlord under this Lease, (ii) show the Premises to prospective

purchasers and prospective lenders and/or, (iii) during the last nine (9) months

of the term only, show the Premises to prospective tenants. In exercising such

entry rights, Landlord will use commercially reasonable efforts to minimize, as

reasonably practicable, the interference with Tenant's business, and will

provide Tenant with reasonable advance notice of any such entry (except in

emergency situations). Landlord, in exercising its rights under this Lease, (i)

shall not interfere with access to the Premises or Tenant's use and enjoyment of

the Premises, the Parking Areas and/or the Exterior Areas, (ii) shall in no

event have access to Tenant's designated secure area except in the case of an

emergency, and (iii) shall repair, restore and redecorate any damage to the

Premises caused by or at the direction of Landlord in exercising such rights.

Prior notice is not required for Landlord to inspect the Premises outside the

Building.

-12-

<PAGE>

16. UTILITIES AND SERVICES. Throughout the Term of the Lease so long as the

Premises are occupied, Tenant, at its sole cost and expense, shall be

responsible for obtaining directly from the utility providers all utilities to

the Premises, including but not limited to electricity, sewer, water, natural

gas, telephone, and cable (collectively the "UTILITIES"). Landlord (as an

Operating Expense) agrees to furnish or cause to be furnished only those

utilities and services described in the Standards for Services attached hereto

as Exhibit "D", subject to the conditions and in accordance with the standards

set forth therein.

17. INSURANCE.

(a) TENANT'S INSURANCE. On or before the earlier to occur of (i) the

Commencement Date, or (ii) the date Tenant commences any work of any type in the

Premises pursuant to this Lease (which may be prior to the Commencement Date),

and continuing throughout the entire Term hereof and any other period of

occupancy, Tenant agrees to keep in full force and effect, at its sole cost and

expense, the following insurance:

(i) "Causes of Loss - Special Form" (or, if not available at any time,

then the broadest form available at such time) property insurance including at

least the following perils: fire and extended coverage, smoke damage, vandalism,

malicious mischief, sprinkler leakage. This insurance policy must be upon all

property owned by Tenant and located at the Building including, without

limitation, any Alterations made by or for the Tenant (expressly excluding the

initial Tenant Improvements installed by Tenant per Exhibit "B" which shall be

insured by Landlord as part of its coverage of the Building's shell and core),

and all furniture, fittings, installations, fixtures and any other personal

property of Tenant, in an amount not less than the full replacement cost

thereof.

(ii) Commercial General Liability Insurance or Comprehensive General

Liability Insurance with an aggregate liability amount not less than $5,000,000

combined single limit for both bodily injury and property damage, including

blanket broad form property damage, personal injury, completed operations,

products liability and host liquor liability (or liquor liability, if

applicable). At least $1,000,000 of such coverage shall be provided by a primary

liability policy, and any balance may be provided by a so-called "umbrella" or

excess liability policy. If such policy is an aggregate liability limit policy,

not less than $5,000,000 of such limit per annum shall be available for claims

originating at the Premises.

(iii) Workers' Compensation as required by the laws of the State,

including employer's liability at a limit of not less than One Million Dollars

($1,000,000).

(b) SUPPLEMENTAL TENANT INSURANCE REQUIREMENTS.

(i) All policies must be issued by insurers with a policyholder rating of

"A" and a financial rating of "VIII" in the most recent version of Best's Key

Rating Guide.

(ii) All policies, except for the workers' compensation coverage required

pursuant to Section 17(a)(iii) above, must contain a requirement that the

insurer will endeavor to notify Landlord (and Landlord's partners, members and

property manager and any mortgagees or ground lessors of Landlord who are named

as additional insureds, if any) in writing not less than ten (10) days prior to

any material adverse change, reduction in coverage, cancellation or other

termination thereof. Tenant agrees to deliver to Landlord, as soon as

practicable after placing the required insurance, but in any event within the

time frame specified in Section 17(a) above, certificate(s) of insurance

evidencing the existence of such insurance (except for the workers' compensation

coverage required pursuant to Section 17(a)(iii) above) and Tenant's compliance

with the provisions of this Section 17. Tenant agrees to cause replacement

certificates to be delivered to Landlord not less than ten (10) days prior to

the expiration of any such policy or policies.

(iii) General Liability policies under Section 17(a)(ii) must include

policy endorsements naming Landlord (and at Landlord's request, Superior

Mortgagees of which Tenant has been informed in writing) as additional insureds.

-13-

<PAGE>

against each other with respect to any claims or damages or losses which are

caused by or result from (a) any occurrence insured against under any insurance

policy (other than the commercial general liability insurance) carried by

Landlord or Tenant (as the case may be) pursuant to the provisions of this Lease

and enforceable at the time of such damage or loss, or (b) any occurrence which

would have been covered under any insurance (other than the commercial general

liability insurance) required to be obtained and maintained by Landlord or

Tenant (as the case may be) under this Lease (as applicable) had such insurance

been obtained and maintained as required therein. The foregoing waivers shall be

in addition to, and not a limitation of, any other waivers or releases contained

in this Lease.

(d) WAIVER OF INSURERS. Each party shall cause each insurance policy (other than

the commercial general liability insurance) required to be obtained by it

pursuant to this Lease to provide that the insurer waives all rights of recovery

by way of subrogation against either Landlord or Tenant, as the case may be, in

connection with any claims, losses and damages covered by such policy. If either

party fails to maintain any such insurance required hereunder, such insurance

shall be deemed to be self-insured with a deemed full waiver of subrogation as

set forth in the immediately preceding sentence.

(e) LANDLORD INSURANCE.

(i) "LANDLORD INSURANCE" shall mean the following: (a) Commercial General

Liability Insurance, including Contractual Liability Insurance coverage,

applicable to the Building and Land, on an occurrence basis, with a minimum

combined single limit of at least $5,000,000; (b) property insurance on the

Building (including Tenant Improvements) and Land (including parking), and

personal property related thereto, with coverage for perils as set forth under

the Causes of Loss - Special Form (or, if not available at any time, then the

broadest form available at such time), with coverage extended for the perils of

flood and earthquake, in an amount equal to full insurable replacement cost, and

with an ordinance and law endorsement, and debris removal coverage; (c) Rent

Loss Insurance for not less than twelve (12) months, and not more than

twenty-four (24) months; and (d) such other coverage as may be required by

Landlord's lender holding a lien against the Building and Land provided that

such insurance coverage is commercially reasonable given the location and

physical characteristics of the Building.

(ii) If at any time Landlord does not maintain any one or more of the

policies of Landlord Insurance as provided in this Section 17(e), then Tenant

may obtain the policy or policies that are not maintained by Landlord (the

"NON-MAINTAINED POLICY"), at Tenant's expense (including the payment of any

deductibles). If Tenant maintains an insurance policy in replacement of a

Non-maintained Policy, and Landlord subsequently decides to obtain a policy with

such coverage, then Landlord may not charge to Tenant, as an Operating Expense,

the cost of the policy until after thirty (30) days' prior written to Tenant. If

at any time Landlord maintains insurance not included in the definition of

Landlord Insurance, Landlord may not charge to Tenant as an Operating Expense,

the additional cost of such coverage.

(f) BLANKET INSURANCE. Notwithstanding anything to the contrary in this Section

17, Tenant's obligation to obtain and maintain the insurance required hereunder

may be satisfied by obtaining coverage under so-called blanket and excess

liability policies of insurance carried and maintained by Tenant provided that

the coverage afforded Landlord will not be reduced or diminished by reason of

the use of such blanket and excess liability policies of insurance and provided

further that the other applicable requirements of this Section 17 are satisfied.

18. DAMAGE OR DESTRUCTION.

(a) PARTIAL DESTRUCTION. If the Premises, the Building or the Exterior Areas

(including Parking Areas) are damaged by fire or other casualty to an extent not

exceeding fifty percent (50%) of the full replacement cost thereof, and the

damage thereto may be repaired, reconstructed or restored to substantially its

condition immediately prior to such damage within three hundred sixty five (365)

days from the date of such casualty, then Landlord agrees to commence and

proceed diligently with the work of repair, reconstruction and restoration and

this Lease will continue in full force and effect. Landlord agrees to give

written notice to Tenant of its intention to repair or terminate, as permitted

above, within

-14-

<PAGE>

the earlier of sixty (60) days after the occurrence of such casualty, or fifteen

(15) days after Landlord's receipt of the estimate from Landlord's contractor

(the applicable time period to be referred to herein as the "Notice Period").

(b) SUBSTANTIAL DESTRUCTION. Any damage or destruction to the Premises, the

Building or the Exterior Areas (including the Parking Areas) which Landlord is

not obligated to repair pursuant to Section 18(a) above will be deemed a

substantial destruction. In the event of a substantial destruction, either

Landlord or Tenant may elect to terminate this Lease effective as of the date

thirty (30) days after receipt of either party's written election to so

terminate; provided, however, that such written notice to so terminate shall be

effective only if given within sixty (60) days after the occurrence of such

casualty. If this Lease is not terminated in accordance with this Section 18(b),

then Landlord shall repair, reconstruct and restore the portion of the Building,

the Premises and the Exterior Areas damaged by such casualty in accordance with

this Section 18.

any part of the Premises, Tenant agrees to immediately notify Landlord thereof.

Landlord shall insure the Tenant Improvements installed by Tenant pursuant to

Exhibit "B" and, subject to any termination rights hereunder, shall be

responsible for repairing and restoring the Tenant Improvements if Landlord

elects or is required to repair and restore the Premises, the Building and/or

the Exterior Areas under this Lease. Subject to Section 12, at Tenant's expense

as provided in this Lease, Tenant shall restore any Alterations and Tenant's

furniture, fixtures, equipment and other personal property unless this Lease is

terminated as permitted in this Section 18.

(d) ABATEMENT OF RENT. In the event of any damage, repair, reconstruction and/or

restoration described in this Section 18, rent will be abated or reduced, as the

case may be, from the date of such casualty, in proportion to the degree to

which Tenant's use of the Building is impaired during such period of repair

until Landlord completes all repairs to be performed by Landlord under this

Lease and Tenant has been given a reasonable period of time not to exceed

forty-five (45) days to re-fixturize and move back into the Premises.

(e) INABILITY TO COMPLETE. Notwithstanding anything to the contrary contained in

this Section 18, if Landlord is obligated or elects to repair, reconstruct

and/or restore the damaged portion of the Building or the Premises pursuant to

Section 18(a) or 18(b) above, but is delayed from completing such repair,

reconstruction and/or restoration beyond the date which is the earlier of (i)

forty-five (45) days after the date estimated by Landlord's contractor for

completion thereof by reason of any causes (other than delays caused by Tenant

or Tenant Parties, but excluding Force Majeure Delay pursuant to Section 27

below) or (ii) three hundred sixty five (365) days after the date of the

casualty damage, then Tenant may elect to terminate this Lease upon ten (10)

days' prior written notice given to Landlord after the expiration of such

forty-five (45) day period (unless the work is completed within such ten (10)

day notice period.

(f) DAMAGE NEAR END OF TERM. Either Landlord or Tenant shall have the right to

terminate this Lease if any damage to the Building occurs during the last twelve

(12) months of the Term of this Lease and either Landlord or Tenant reasonable

determines that the restoration of such damage cannot be completed within sixty

(60) days after the date of such casualty; provided, however, notwithstanding

any provision of this Lease to the contrary, if Landlord has elected to

terminate this Lease pursuant to this Section 18(f), then within thirty (30)

days after receipt of written notice of such termination, Tenant may exercise

any of its unexercised Extension Options, which exercise shall negate and render

null and void Landlord's election to terminate this Lease, and the restoration

of the Building and other improvements to the Land shall proceed in accordance

with this Section 18.

(g) TERMINATION. Upon any termination of this Lease under any of the provisions

of this Section 18, the Parties will be released without further obligation to

the other from the date possession of the Premises is surrendered to Landlord

except for items which have accrued and are unpaid as of the date of termination

and matters which are to survive any termination of this Lease as provided in

this Lease.

-15-

<PAGE>

(h) SUBORDINATION. Nothing in this Section 18 shall be construed as overriding

any requirements in the Superior Mortgages regarding damage and/or destruction,

and the Landlord's obligations in connection therewith, and/or any provisions or

requirements in the Superior Mortgages regarding the use and control of

insurance proceeds; all provisions in this Section 18 shall be subject and

subordinate to the requirements and provisions of the Superior Mortgages;

provided, however, Landlord and Tenant acknowledge and agree that this Section

18(h) shall not operate to absolve or otherwise excuse Landlord from Landlord's

obligation to restore the Premises when and as required pursuant to this Section

18.

19. EMINENT DOMAIN.

(a) SUBSTANTIAL TAKING. If the whole of the Building, or such part of the Land

or the Building as shall substantially and adversely interfere with Tenant's use

and occupancy of the Premises as contemplated by this Lease (including without

limitation Tenant's use of the Parking Areas), is taken for any public or

quasi-public purpose by any lawful power or authority by exercise of the right

of appropriation, condemnation or eminent domain, or sold to prevent such

taking, then Tenant will have the right to terminate this Lease effective as of

the date possession is required to be surrendered to such authority. With

respect to a taking or condemnation affecting solely the number of parking

spaces available in the Parking Areas, so long as the number of parking stalls

remaining on the Land are not reduced below the minimum number required by City

of Bothell codes applicable to Tenant's use of the Premises, then such taking

shall not be deemed to substantially and/or adversely interfere with Tenant's

use and occupancy of the Premises provided that reasonable ingress and egress to

the Parking Areas from public streets remains available.

(b) PARTIAL TAKING; ABATEMENT OF RENT. In the event of a taking of a portion of

the Building which does not materially or adversely interfere with Tenant's use

and occupancy of the Building, then Landlord will thereafter proceed to make a

functional unit of the remaining portion of the Building, and rent will be

abated with respect to the part of the Building which Tenant is deprived of on

account of such taking.

Building, Landlord will be entitled to receive the entire amount of any award

which may be made or given in such taking or condemnation, without deduction or

apportionment for any estate or interest of Tenant, it being expressly

understood and agreed by Tenant that no portion of any such award will be

allowed or paid to Tenant for any so-called bonus or excess value of this Lease,

and such bonus or excess value will be the sole property of Landlord. Tenant

agrees not to assert any claim against Landlord or the taking authority for any

compensation because of such taking (including any claim for bonus or excess

value of this Lease); provided, however, if any portion of the Premises is

taken, Tenant will have the right to recover from the condemning authority (but

not from Landlord) any compensation as may be separately awarded or recoverable

by Tenant for the taking of Tenant's furniture, fixtures, equipment and other

personal property within the Premises (but not the Tenant Improvements), for

Tenant's relocation expenses, for any loss of goodwill or other damage to

Tenant's business by reason of such taking, and any other damages that may be

recovered under the laws of the State, so long as any award to Tenant does not

reduce any award to Landlord.

(d) TEMPORARY TAKING. In the event of taking of the Building or any part thereof

for temporary use, (i) this Lease will remain unaffected thereby and rent will

abate for the duration of the taking in proportion to the extent Tenant's use of

the Building is interfered with, and (ii) Landlord will be entitled to receive

such portion or portions of any award made for such use. For purpose of this

Section 19(d), a temporary taking shall be defined as a taking for a period of

ninety (90) days or less.

20. DEFAULTS AND REMEDIES.

(a) DEFAULTS. The occurrence of any one or more of the following events will be

deemed a "Default" by Tenant:

(i) The failure by Tenant to make any payment of Rent or any other payment

required to be made by Tenant hereunder, as and when due, where such failure

continues for a period of five (5) business days

-16-

<PAGE>

after written notice thereof from Landlord to Tenant; provided, however, that

written notice shall not be required more than twice in any calendar year.

(ii) The failure by Tenant to observe or perform any of the express or implied

covenants or provisions of this Lease to be observed or performed by Tenant,

other than as specified in Section 20(a)(i) above, where such failure continues

(where no other period of time is expressly provided) for a period of thirty

(30) days after written notice thereof from Landlord to Tenant. If the nature of

Tenant's Default is such that more than thirty (30) days are reasonably required

for its cure, then Tenant will not be deemed to be in Default if Tenant

commences such cure within such thirty (30) day period and thereafter diligently

prosecutes such cure to completion, but in not event longer than one hundred

twenty (120) days.

(iii) (a) The making by Tenant of any general assignment for the benefit of

creditors; (b) the filing by or against Tenant of a petition to have Tenant

adjudged a bankrupt or a petition for reorganization or arrangement under any

law relating to bankruptcy (unless, in the case of a petition filed against

Tenant, the same is dismissed within sixty (60) days); (c) the appointment of a

trustee or receiver to take

SITE SEARCH

AGREEMENTS / CONTRACTS

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates