Exhibit 10.1
STANDARD MULTI-TENANT LEASE
This
Standard Multi-Tenant Lease (" Lease
") is made and entered into as of the 19 th
day of June, 2008, by and between ARDEN REALTY LIMITED
PARTNERSHIP, a Maryland limited partnership (" Landlord
"), and SCOLR PHARMA, INC., a Delaware corporation ("
Tenant
").
Landlord
hereby leases to Tenant and Tenant hereby leases from Landlord
the premises described as a portion of the first floor, as
designated on the plan attached hereto and incorporated herein
as Exhibit "A" (" Premises
"), of the project (" Project
") now known as Building One of North Creek Corporate
Center whose address is 19204 North Creek Parkway, Bothell,
Washington, and located upon the real property (" Real
Property ") described on Exhibit "A-1". All
existing leasehold improvements within the Premises are
included in the term "Premises." The Real Property is a
separate legal parcel and a separate tax
parcel. The Real Property is known as North Creek
Corporate Center, including the parking area for North Creek
Corporate Center, and is shown on the Site Plan attached
hereto as Exhibit "F" and made a part hereof (the "
Development
"). The restrooms (other than any located within a
tenant's rentable space), building lobby and elevator within
the Project are common areas for use by all tenants of the
Project and, during the term of this Lease, Tenant shall have
the non-exclusive right to the use and benefit of such common
areas. The total rentable square footage of the
Project is 49,115 square feet. The Development is a
contiguous three-building development known as North Creek
Corporate Center owned by Landlord and the other two (2)
buildings in the Development are Building Two (having a
total rentable square footage of 18,212 square feet), whose
address is 19310 North Creek Parkway and Building Three
(having a total rentable square footage of 27,356 square feet)
whose address is 19102 North Creek Parkway. The
Project and the other portions of the Development share
connecting driveways, walkways, parking areas and landscaped
area (the " Development
Common Areas ") and, subject to the terms and
conditions of this Lease, all tenants in the Development have,
and during the term of this Lease, shall have the
non-exclusive right to use the Development Common
Areas. Landlord recognizes that it has been
informed by Tenant that Tenant is a specialty pharmaceutical
company that uses its proprietary technology platform to
develop novel pharmaceutical, over-the-counter and nutritional
products and that Tenant's use of the Premises may, subject to
the terms and conditions of this Lease, include production of
prototype tablets in the Premises (such uses are collectively
referred to herein as the " Pharmaceutical
Development Uses "). This Lease shall be for
the Term and upon the terms and conditions hereinafter set
forth, and Landlord and Tenant hereby agree as
follows:
ARTICLE
1
BASIC
LEASE PROVISIONS
|
A.
|
Term
:
|
Eighty-eight
(88) months.
|
| |
Commencement
Date :
|
The
earlier of (i) the date Tenant first commences to conduct
business in all of the Premises, or (ii) the later of (a)
September 1, 2008, or (b) the date of Substantial
Completion of Improvements in all of the
Premises. The Commencement Date is anticipated to
be on or about September 1, 2008.
|
| |
Expiration
Date :
|
The
date immediately preceding the eighty-eighth (88 th
) monthly anniversary of the Commencement Date; provided,
however, that if the Commencement Date is a date other than
the first (1 st
) day of a month, the Expiration Date shall be the last day of
the month which is eighty-eight (88) months after the month in
which the Commencement Date falls, unless extended or earlier
terminated pursuant to this Lease.
|
|
B.
|
Square
Footage :
|
A
total of 20,468 rentable square feet consisting of 9,360
rentable square feet of office space (the " Office
Portion "), 8,939 rentable square feet of lab space
(the " Lab
Portion ") and 2,169 rentable square feet of warehouse
space (the " Warehouse
Portion ").
|
|
C.
|
Basic
Rental :
|
|
|
1.
|
Office
Portion
|
|
| |
Months
|
Annual
Basic Rental
|
Monthly
Basic Rental
|
Monthly Basic Rental
Per Square Foot
|
|
1-12
|
$149,385.60
|
$12,448.80*
|
$1.33
|
|
13-24
|
$153,878.40
|
$12,823.20
|
$1.37
|
| |
25-36
|
$158,371.20
|
$13,197.60
|
$1.41
|
| |
37-48
|
$163,987.20
|
$13,665.60
|
$1.46
|
| |
49-60
|
$168,480.00
|
$14,040.00
|
$1.50
|
| |
61-72
|
$174,096.00
|
$14,508.00
|
$1.55
|
| |
73-84
|
$178,588.80
|
$14,882.40
|
$1.59
|
| |
85-88
|
$184,204.80
|
$15,350.40
|
$1.64
|
| |
*Subject
to abatement as provided in Article 3 below.
|
|
2.
|
Lab
Portion
|
|
|
|
| |
Months
|
Annual
Basic Rental
|
Monthly
Basic Rental
|
Monthly Basic Rental
Per Square Foot
|
| |
1-12
|
$210,245.28
|
$17,520.44*
|
$1.96
|
| |
13-24
|
$216,681.36
|
$18,056.78
|
$2.02
|
| |
25-36
|
$223,117.44
|
$18,593.12
|
$2.08
|
| |
37-48
|
$229,553.52
|
$19,129.46
|
$2.14
|
| |
49-60
|
$235,989.60
|
$19,665.80
|
$2.20
|
| |
61-72
|
$243498.36
|
$20,291.53
|
$2.27
|
| |
73-84
|
$251,007.12
|
$20,917.26
|
$2.34
|
| |
85-88
|
$258,515.88
|
$21,542.99
|
$2.41
|
| |
*Subject
to abatement as provided in Article 3 below.
|
|
3.
|
Warehouse
Portion
|
|
|
| |
Lease Year
|
Annual
Basic Rental
|
Monthly
Basic Rental
|
Monthly Basic Rental
Per Square Foot
|
| |
1-12
|
$16,918.20
|
$1,409.85*
|
$0.65
|
| |
13-24
|
$17,438.76
|
$1,453.23
|
$0.67
|
| |
25-36
|
$17,959.32
|
$1,496.61
|
$0.69
|
| |
37-48
|
$18,479.88
|
$1,539.99
|
$0.71
|
| |
49-60
|
$19,000.44
|
$1,583.37
|
$0.73
|
| |
61-72
|
$19,521.00
|
$1,626.75
|
$0.75
|
| |
73-84
|
$20,301.84
|
$1,691.82
|
$0.78
|
| |
85-88
|
$20,822.40
|
$1,735.20
|
$0.80
|
| |
*Subject
to abatement as provided in Article 3 below.
|
|
4.
|
Total
Premises
|
|
|
|
| |
Months
|
Annual
Basic Rental
|
Monthly
Basic Rental
|
|
| |
1-12
|
$376,549.08
|
$31,379.09*
|
|
| |
13-24
|
$387,998.52
|
$32,333.21
|
|
| |
25-36
|
$399,447.96
|
$33,287.33
|
|
| |
37-48
|
$412,020.60
|
$34,335.05
|
|
| |
Months
|
Annual
Basic Rental
|
Monthly
Basic Rental
|
|
| |
49-60
|
$423,470.04
|
$35,289.17
|
|
| |
61-72
|
$437,115.36
|
$36,426.28
|
|
| |
73-84
|
$449,897.76
|
$37,491.48
|
|
| |
85-88
|
$463,543.08
|
$38,628.59
|
|
| |
*Subject
to abatement as provided in Article 3 below.
|
|
D.
|
Tenant's
Proportionate Share (ratio of rentable area of the Premises
to rentable area of the Project):
|
41.67%.
|
|
E.
|
Security
Deposit/Letter of Credit :
|
A
security deposit of $38,628.59 shall be due and payable by
Tenant to Landlord upon Tenant's execution of this
Lease. In addition, concurrently with Tenant's
execution of this Lease, Tenant shall provide Landlord with a
Letter of Credit in the amount of $564,000.00 as further
provided in Section 4(b) below.
|
|
F.
|
Permitted
Use :
|
Pharmaceutical
Development Uses and general office, lab, research,
development, distribution and warehouse use and, to the extent
reasonably approved by Landlord, any other legally permitted
use for the Project.
|
|
G.
|
Brokers
:
|
Flinn
Ferguson (representing Tenant) and Pacific Real Estate
Partners (representing Landlord).
|
|
H.
|
Parking
Passes :
|
Tenant
shall be entitled to use three point five (3.5) unreserved
parking passes for each 1,000 rentable square feet contained
in the Premises, which equals seventy-two (72)
passes. Each such parking pass shall entitle Tenant
to an unreserved parking space in the parking facility located
in the Development on a first come-first served
basis.
|
|
I.
|
Initial
Installment of Basic Rental :
|
The
first full month's Basic Rental of $31,379.09 shall be due and
payable by Tenant to Landlord upon Tenant's execution of this
Lease.
|
ARTICLE
2
TERM/PREMISES
(a)
Term
. The Term of this Lease shall commence on the
Commencement Date as set forth in Article 1.A. of the Basic
Lease Provisions and shall end on the Expiration Date set forth in
Article 1.A. of the Basic Lease Provisions. For
purposes of this Lease, the term " Lease
Year " shall mean each consecutive twelve (12) month period
during the Lease Term, with the first (1 st
) Lease Year commencing on the Commencement Date; however,
(a) if the Commencement Date falls on a day other than the
first (1 st
) day of a calendar month, the first (1 st
) Lease Year shall end on the last day of the eleventh (11
th
) month after the Commencement Date and the second (2 nd
) and each succeeding Lease Year shall commence on the first (1
st
) day of the next calendar month, and (b) the last Lease Year
shall end on the Expiration Date. If Landlord does not
deliver possession of the Premises to Tenant on or before the
anticipated Commencement Date (as set forth in Article 1.A above),
Landlord shall not be subject to any liability for its failure to
do so, and such failure shall not affect the validity of this Lease
nor the obligations of Tenant hereunder; provided, however, if
during construction of the Improvements in the Premises, Landlord
and Tenant reasonably determine that Substantial Completion of the
Improvements in all of the Premises will not occur on or before
October 31, 2008, and Landlord
will promptly instruct Contractor to
focus its efforts in such manner so that Tenant may occupy at least
such portions of the Premises prior to October 31,
2008. Landlord and Tenant agree to reasonably work
together, in good faith, to identify portions of the Premises
within which the Contractor may focus its efforts in order to cause
such portions to be in a condition which may be legally occupied by
Tenant prior to October 1. If Tenant so occupies
any portion of the Premises prior to the Commencement Date, all of
the terms and conditions of this Lease apply during the period of
such occupancy and prior to the Commencement Date including,
without limitation, Tenant's obligation to maintain insurance
pursuant Article 14 below; however, (i) Tenant's obligation to
pay monthly Basic Rental and any Direct Costs shall be prorated
during such period based upon the number of rentable square feet so
occupied by Tenant (and as to Basic Rental at the initial rate
specified in Section 1(C) above), which payments shall be due
within thirty (30) days after invoice, and (ii) the Commencement
Date for this Lease shall not occur until the date specified in the
definition of Commencement Date in Section 1(A) above
occurs. Tenant's entry onto the Premises pursuant to
Section 6.4 of the Tenant Work Letter to conduct its
fixturization shall not constitute Tenant's conducting business in
the Premises for purposes of the definition of Commencement
Date.
(b)
Premises . Landlord and Tenant hereby stipulate
that the Premises contains the number of square feet specified in
Article 1.B. of the Basic Lease
Provisions. Landlord may deliver to Tenant a
Commencement Letter in a form substantially similar to that
attached hereto as Exhibit "C", which, if the completed information
therein is accurate, Tenant shall execute and return to Landlord
within five (5) days of receipt thereof. Failure of
Tenant to execute and deliver the Commencement Letter or object in
writing to any inaccuracy therein within such period shall
constitute an acknowledgment by Tenant that the statements included
in such notice are true and correct, without
exception.
ARTICLE
3
RENTAL
(a)
Basic Rental . Tenant agrees to pay to Landlord
during the Term hereof, at Landlord's office or to such other
person or at such other place as directed from time to time by
written notice to Tenant from Landlord, the initial monthly sums as
set forth in Article 1.C. of the Basic Lease Provisions,
payable in advance on the first (1 st
) day of each calendar month, without demand, setoff or deduction,
except as expressly provided in this Lease, and in the event this
Lease commences or the date of expiration of this Lease occurs
other than on the first day or last day of a calendar month, the
rent for such month shall be prorated. Notwithstanding
anything to the contrary contained herein, Landlord hereby agrees
to abate Tenant's obligation to pay monthly Basic Rental for the
second (2 nd
) through and including the fifth (5 th
) months of the initial Lease Term. During such
abatement period, Tenant shall still be responsible for the payment
of all of its other monetary obligations under the
Lease. If an Event of Default occurs that results in
early termination of this Lease pursuant to the provisions of
Section 20(a) of this Lease, then as a part of the recovery
set forth in Section 20 of this Lease, Landlord shall be
entitled to the recovery of the unamortized portion of the monthly
Basic Rental that was abated under the provisions of this
Article 3. In addition, notwithstanding the
foregoing, the first (1 st
) full month's Basic Rental shall be paid to Landlord in accordance
with Article 1.I. of the Basic Lease Provisions and, if the
Commencement Date is not the first day of a month, Basic Rental and
Rental Tax for the partial month commencing as of the Commencement
Date shall be prorated based upon the actual number of days in such
month and shall be due and payable upon the Commencement
Date.
(b)
Direct
Costs . Tenant shall pay an additional sum for
each calendar year during the Term equal to the product of the
Tenant's Proportionate Share set forth in Article 1.D. of the
Basic Lease Provisions multiplied by the amount of Direct
Costs. In the event either the Premises and/or the
Project is expanded or reduced, then Tenant's Proportionate Share
shall be appropriately adjusted based on the ratio of the rentable
area of the Premises to the rentable area of the Project, and as to
the calendar year in which such change occurs, Tenant's
Proportionate Share for such calendar year shall be determined on
the basis of the number of days during that particular calendar
year that such Tenant's Proportionate Share was in
effect. In the event this Lease shall terminate on any
date other than the last day of a calendar year, the additional sum
payable hereunder by Tenant during the calendar year in which this
Lease terminates shall be prorated on the basis of the relationship
which the number of days which have elapsed from the
commencement of said calendar year to
and including said date on which this Lease terminates bears to
three hundred sixty-five (365). Any and all amounts due
and payable by Tenant pursuant to this Lease (other than Basic
Rental) shall be deemed " Additional
Rent " and Landlord shall be entitled to exercise the same
rights and remedies upon default in these payments as Landlord is
entitled to exercise with respect to defaults in monthly Basic
Rental payments. Basic Rental and Additional Rent may be
collectively referred to herein as " Rent
". At the same time as any payment of Rent is to be made
by Tenant hereunder, Tenant shall also pay any and all rental
taxes, gross receipts taxes, transaction privilege taxes, sales
taxes, and/or similar taxes levied currently or in the future on
the Rent amount then due or otherwise assessed in connection with
the rental activity then occurring (collectively, " Rental
Tax "). (c)
Definitions . As used herein the term "
Direct
Costs " shall mean the sum of the
following:
(i)
"
Tax
Costs ", which shall mean any and all real estate taxes and
other similar charges on real property or improvements,
assessments, water and sewer charges, and all other charges
assessed, reassessed or levied upon the Project and appurtenances
thereto and the parking or other facilities thereof, or the Real
Property during the Term which are assessed, reassessed or levied
by the United States, the State of Washington, any applicable
county within the State of Washington, any applicable city, town or
other local government authority within the State of Washington,
and/or any other agency or political subdivision of the State of
Washington, and shall include Landlord's reasonable legal fees,
costs and disbursements incurred in connection with proceedings for
reduction of Tax Costs or any part thereof; provided, however, if
at any time after the date of this Lease the methods of taxation
now prevailing shall be altered so that in lieu of or as a
supplement to or a substitute for the whole or any part of any Tax
Costs, there shall be assessed, reassessed or levied (a) a tax,
assessment, reassessment, levy, imposition or charge wholly or
partially as a net income, capital or franchise levy or otherwise
on the rents, issues, profits or income derived therefrom, or (b) a
tax, assessment, reassessment, levy (including but not limited to
any municipal, state or federal levy), imposition or charge
measured by or based in whole or in part upon the Real Property and
imposed upon Landlord, then except to the extent such items are
payable by Tenant under Article 6 below, such taxes,
assessments, reassessments or levies or the part thereof so
measured or based, shall be deemed to be included in the term
"Direct Costs." Notwithstanding the foregoing, Tax Costs
shall not include any income, business and occupancy, capital levy,
franchise, capital stock, gift, transfer, real estate excise estate
or inheritance tax, or any interest, penalties or damages incurred
for late payment of taxes or assessments. If a tax or
assessment is payable in installments, Tax Costs applicable thereto
for a year shall include only the amount of the installment and any
interest due and payable during that year.
(ii)
"
Operating
Costs ", which shall mean all costs and expenses incurred by
Landlord in connection with the maintenance, operation, management
and repair of the Project, the equipment, the intra-building
cabling and wiring, adjacent walks, driveways and landscaped and
common areas and the parking lot, areas and facilities of the
Project. Operating Costs shall include but not be
limited to, salaries, wages, medical, surgical and general welfare
benefits and pension payments, payroll taxes, fringe benefits,
employment taxes, workers' compensation, uniforms and dry cleaning
thereof for all employees at or below the portfolio manager level
who perform duties connected with the operation, maintenance and
repair of the Project, its equipment, the intra-building cabling
and wiring and the adjacent walks and landscaped areas, including
gardening, security, parking, operating engineer, elevator,
painting, plumbing, electrical, carpentry and window washing,
(provided, however that to the extent personnel perform services
for buildings other than the Project, the labor costs associated
with such personnel shall be included in Operating Costs only to
the extent and in the proportion that such personnel perform
services for the Project); a reasonable allowance for depreciation
of the cost of acquiring or the rental expense of personal property
used in the maintenance, operation and repair of the Project,
accountant's fees incurred in the preparation of rent adjustment
statements and real estate tax consulting fees pertaining to the
Project; personal property taxes on property used in the
maintenance and operation of the Project; fees, costs, expenses or
owners' association dues payable pursuant to the terms of any
recorded covenants, conditions or restrictions pertaining to the
Project; the amortized cost of capital improvements made to the
Project which are performed primarily to reduce Operating
Costs or otherwise improve the operating efficiency of the Project
amortized on a straight line basis over the useful life of such
improvements (but not to exceed the projected annual reduction in
Operating Costs) and the amortized cost of capital improvements to
the Project required to comply with any applicable Laws that
are
enacted after the Commencement Date ("
New
Laws "); non-capital maintenance costs incurred on a regular
recurring basis every three (3) or more years for certain
maintenance projects on the Project (e.g., parking lot slurry coat
and roof patching, but not repaving of the parking lot or roof
replacement); the cost of all charges for utilities furnished to
the common areas of the Project and utilities that are not
separately payable by tenants of the Project, including any taxes
thereon; the cost of all charges for fire and extended coverage,
liability and all other insurance in connection with the Project
carried by Landlord; the cost of all supplies and materials used in
the maintenance and operation of the Project; the cost of all
charges for cleaning, maintenance and service contracts and other
services with independent contractors and administration fees; a
property management fee (which fee may be imputed if Landlord has
internalized management or otherwise acts as its own property
manager) and license, permit and inspection fees relating to the
Project.
Notwithstanding
anything above to the contrary, Operating Costs shall not
include (1) the cost of providing any service directly to
and paid directly by any tenant (outside of such tenant's
Direct Cost payments) such as where a Tenant directly
contracts for electric power or other utilities with the local
public services company, provided that in each such case,
Landlord shall have the right to "gross up" such item as if
such space was vacant; (2) the cost of any items for
which Landlord is reimbursed by insurance proceeds (or would
have been reimbursed if Landlord maintained the insurance
required to be maintained by Landlord under this Lease),
condemnation awards, a tenant of the Development (outside of
such tenant's Direct Cost payments), or otherwise to the
extent so reimbursed; (3) any real estate brokerage
commissions or other costs incurred in procuring tenants, or
any fee in lieu of commission; (4) amortization of
principal and interest on mortgages or ground lease payments
(if any); (5) costs of items considered capital repairs,
replacements, improvements and equipment under generally
accepted accounting principles consistently applied except as
expressly included in Operating Costs pursuant to the
definition above; (6) costs incurred by Landlord due to
the violation by Landlord or any tenant of the terms and
conditions of any lease of space in the Development or any
law, code, regulation, ordinance or the like; (7) any
compensation paid to clerks, attendants or other persons in
commercial concessions operated by Landlord (other than in the
parking facility for the Development); (8) costs incurred
in connection with upgrading the Project or Development to
comply with disability, life, seismic, fire and safety codes,
ordinances, statutes, or other laws in effect prior to the
Commencement Date, including, without limitation, the then
applicable requirements of the Americans with Disabilities Act
(" ADA
"), including penalties or damages incurred due to such
non-compliance; (9) bad debt expenses and interest,
principal, points and fees on debts (except in connection with
the financing of items which may be included in Operating
Costs); (10) marketing costs, including those costs
described in (3) above, attorneys' fees in connection
with the negotiation and preparation of letters, deal memos,
letters of intent, leases, subleases, assignments, agreements
relating to financing or sale of the Project or Development,
space planning costs, and other costs and expenses incurred in
connection with lease, sublease and/or assignment negotiations
and transactions with present or prospective tenants or other
occupants of the Development, including attorneys' fees and
other costs and expenditures incurred in connection with
disputes with present or prospective tenants or other
occupants of the Development, or in connection with any
financing or sale transactions pertaining to the Project or
Development; (11) costs, including permit, license and
inspection costs, incurred with respect to the installation of
other tenants' or occupants' improvements made for tenants or
other occupants in the Project or incurred in renovating or
otherwise improving, decorating, painting or redecorating
vacant space for tenants or other occupants in the Project;
(12) any costs expressly excluded from Operating Costs
elsewhere in this Lease; (13) costs of any items
(including, but not limited to, costs incurred by Landlord for
the repair of damage to the Project or Development) to the
extent Landlord receives reimbursement from insurance proceeds
or from a third party (except that any commercially reasonable
deductible amount under any insurance policy shall be included
within Operating Costs); (14) rentals and other related
expenses for leasing an HVAC system, elevators, or other items
(except when needed in connection with normal repairs and
maintenance of the Project) which if purchased, rather than
rented, would constitute a capital improvement not included in
Operating Costs pursuant to this Lease;
(15) depreciation, amortization and interest payments,
except as specifically included in Operating Costs pursuant to
the terms of this Lease and except on materials, tools,
supplies and vendor-type equipment purchased by Landlord to
enable Landlord to supply services Landlord might otherwise
contract for with a third party, where such depreciation,
amortization and interest payments would otherwise have been
included in the charge for such third party's services, all as
determined in accordance with generally accepted accounting
principles,
consistently applied, and when
depreciation or amortization is permitted or required, the item
shall be amortized over its reasonably anticipated useful life;
(16) expenses in connection with services or other benefits
which are not offered to Tenant or for which Tenant is charged for
directly but which are provided to another tenant or occupant of
the Development, without charge; (17) costs incurred in
connection with the operation of retail stores selling merchandise,
specialty service facilities and restaurants in the Project or
Development to the extent such costs are in excess of the costs
Landlord reasonably estimates would have been incurred had such
space been used for general office use; (18) costs (including
in connection therewith all attorneys' fees and costs of
settlement, judgments and/or payments in lieu thereof) arising from
claims, disputes or potential disputes in connection with potential
or actual claims litigation or arbitrations pertaining to Landlord
and/or the Project or Development, other than such claims or
disputes respecting any services or equipment used in the operation
of the Project or Development by Landlord; (19) costs
associated with the operation of the business of the partnership
which constitutes Landlord as the same are distinguished from the
costs of operation of the Project or Development; (20) costs
incurred in connection with the original construction of the
Project or Development; (21) costs of correcting defects in or
inadequacy of the initial design or construction of the Project or
Development; (22) costs incurred to (i) remove, remediate,
contain treat or comply with laws relating to the removal of any
"Hazardous Material," as that term is defined in Article 28 of
this Lease, which was in existence on the Project or Development
prior to the Commencement Date, and (ii) remove, remediate,
contain or treat or comply with Laws relating to the removal of any
Hazardous Material, which Hazardous Material is brought onto the
Project or Development after the date hereof by Landlord or any
other tenant of the Project or Development or other third party
(provided, however, the cost of removal of de minimis amounts of
Hazardous Material customarily found in office developments (such
as cleaners, solvents, lubricants, parking lot runoff, etc.) as
part of the general operation of the Development may be included in
Operating Costs); (23) property management fees and other
service fees to the extent they exceed the amount which would
generally be expected to be the cost of such services rendered by
comparably qualified, unaffiliated third parties; and
(24) damages or penalties arising from Landlord's breach of
any agreement or contract.
It
is understood that Operating Costs shall be reduced by all
cash discounts, rebates,. trade discounts, or quantity
discounts received by Landlord or Landlord's managing agent in
the purchase of any goods, utilities, or services in
connection with the operation of the
Project. Landlord shall make payments for goods,
utilities and services in a timely manner. Landlord
agrees to keep records of Operating Costs in accordance with a
system of accounts and accounting practices consistently
maintained on a year-to-year basis.
It
is understood that to the extent applicable all Operating
Costs shall be calculated by Landlord in accordance with
generally accepted accounting principles or otherwise in
accordance with standard real estate accounting practices
utilized by institutional quality landlords in the State of
Washington and reduced by all cash discounts, trade discounts,
or quantity discounts actually received by Landlord or
Landlord's managing agent in the purchase of any goods,
utilities, or services in connection with the operation of the
Project.
In
the event, during any calendar year, the Project is less than
ninety-five percent (95%) occupied at all times, those
components of Operating Costs that are variable with occupancy
shall be adjusted and determined for such calendar year as if
the Project was ninety-five percent (95%) occupied at all
times, and the increase or decrease in the sums owed hereunder
shall be based upon such Operating Costs as so
adjusted.
(d)
Determination of Payment .
(i)
Landlord
shall give Tenant a yearly expense estimate statement (the "
Estimate
Statement ") which shall set forth Landlord's reasonable
estimate (the " Estimate
") of what the total amount of Direct Costs for the then-current
calendar year shall be (the " Estimated
Direct Costs " ) ,
together with the amount payable by Tenant for Tenant's
Proportionate Share of such Estimated Direct Costs. The
failure of Landlord to timely furnish the Estimate Statement for
any calendar year shall not preclude Landlord from subsequently
enforcing its rights to collect any Estimated Direct Costs under
this Article 3, once such Estimated Direct Costs have been
determined by Landlord. Tenant shall pay, with its next
installment of Monthly Basic Rental which is due at least twenty
(20) days from the date Tenant receives the Estimate Statement, a
fraction of the Tenant's Proportionate Share of such Estimated
Direct Costs for the then-current calendar year (reduced by any
amounts paid pursuant to the last sentence of
this
Section 3(d)(i)). Such
fraction shall have as its numerator the number of months which
have elapsed in such current calendar year to the month of such
payment, both months inclusive, and shall have twelve (12) as its
denominator. Until a new Estimate Statement is
furnished, Tenant shall pay monthly, with the monthly Basic Rental
installments, an amount equal to one-twelfth (1/12) of the total of
Tenant's Proportionate Share of such Estimated Direct Costs
Estimated Direct Costs set forth in the previous Estimate Statement
delivered by Landlord to Tenant. (ii)
In
addition, Landlord shall endeavor to give to Tenant as soon as
reasonably practicable following the end of each calendar year (but
not later than one hundred eighty (180) days after the end of such
year), a statement (the " Statement
") which shall state the Direct Costs incurred or accrued for such
preceding calendar year. Upon receipt of the Statement
for each calendar year during the Term, if amounts paid by Tenant
as Estimated Direct Costs are less than Tenant's actual
Proportionate Share of Direct Costs as specified on the Statement,
Tenant shall pay, with its next installment of monthly Basic Rental
which is due at least twenty (20) days from the date Tenant
receives the Estimate Statement, the full amount of Tenant's actual
Proportionate Share of Direct Costs for such calendar year, less
the amounts, if any, paid during such calendar year as Estimated
Direct Costs. If, however, the Statement indicates that
amounts paid by Tenant as Estimated Direct Costs are greater than
Tenant's actual Proportionate Share of Direct Costs as specified on
the Statement, such overpayment shall be credited against Tenant's
next installments of Rent. The failure of Landlord to
timely furnish the Statement for any calendar year shall not
prejudice Landlord or Tenant from enforcing its rights under this
Article 3, once such Statement has been
delivered. Even though the Term has expired and Tenant
has vacated the Premises, when the final determination is made of
Tenant's Proportionate Share of the Direct Costs for the calendar
year in which this Lease terminates, Tenant shall immediately pay
to Landlord (or Landlord shall reimburse to Tenant) an amount as
calculated pursuant to the provisions of this
Section 3(d). The provisions of this
Section 3(d)(ii) shall survive the expiration or earlier
termination of the Term.
(iii)
If
the Project is a part of a multi-building development, those Direct
Costs attributable to such development as a whole (and not
attributable solely to any individual building therein) shall be
allocated by Landlord to the Project and to the other buildings
within such development on an equitable and commercially reasonable
basis.
(e)
Audit Right . Within one hundred eighty (180)
days after receipt of a Statement by Tenant (" Review
Period "), if Tenant disputes the amount set forth in the
Statement, Tenant's employees or an independent certified public
accountant (which accountant is a member of a nationally or
regionally recognized accounting firm and is not retained on a
contingency fee basis), designated by Tenant, may, after reasonable
notice to Landlord (" Review
Notice ") and at reasonable times, inspect Landlord's
records at Landlord's offices in the Seattle metropolitan area,
provided that Tenant is not then in default after expiration of all
applicable cure periods and provided further that Tenant and such
accountant or representative shall, and each of them shall use
their commercially reasonable efforts to cause their respective
agents and employees to, maintain all information contained in
Landlord's records in confidence, provided such information may be
disclosed to Tenant’s lawyers, advisors, lenders and others
who have a legitimate need to know such
information. Notwithstanding the foregoing, Tenant shall
only have the right to review Landlord's records one (1) time
(which review may occur over a period of more than one day, as
reasonably required) during any twelve (12) month
period. If after such inspection, but within sixty (60)
days after the Review Period, Tenant notifies Landlord in writing
(" Dispute
Notice ") that Tenant still disputes such amounts, a
certification as to the proper amount shall be made in accordance
with Landlord's standard accounting practices, at Tenant's expense,
by a neutral, independent certified public accountant selected by
Landlord and who is a member of a nationally or regionally
recognized accounting firm which has no affiliation or contractual
relationship with Landlord or Tenant. Landlord shall
engage such independent accountant within thirty (30) days after
Landlord receives the Dispute Notice. Tenant's failure
to deliver the Review Notice within the Review Period or to deliver
the Dispute Notice within sixty (60) days after the Review Period
shall be deemed to constitute Tenant's approval of such Statement
and Tenant, thereafter, waives the right or ability to dispute the
amounts set forth in such Statement. If Tenant timely
delivers the Review Notice and the Dispute Notice, Landlord shall
cooperate in good faith with Tenant and the independent accountant
to show Tenant and such accountant the information upon which the
certification is to be based. However, if such
certification by the independent accountant proves that the Direct
Costs set forth in the Statement were overstated by more than four
percent (4%), then the cost of the independent accountant and the
cost of such certification shall be paid for by
Landlord.
Promptly following the parties receipt
of such certification, the parties shall make such appropriate
payments or reimbursements, as the case may be, to each other, as
are determined to be owing pursuant to such
certification. Tenant agrees that this section shall be
the sole method to be used by Tenant to dispute the amount of any
Direct Costs payable by Tenant pursuant to the terms of this Lease,
and Tenant hereby waives any other rights at law or in equity
relating thereto.
ARTICLE
4
SECURITY
DEPOSIT/LETTER OF CREDIT
(a)
Security Deposit . Tenant has deposited or
concurrently herewith is depositing with Landlord the sum set forth
in Article 1.E. of the Basic Lease Provisions as security for
the full and faithful performance of every provision of this Lease
to be performed by Tenant. If an Event of Default occurs
and is continuing, Landlord may use all or any part of this
security deposit for the payment of any rent or any other sums in
default, or to compensate Landlord for any expense actually and
reasonably incurred by Landlord as a result of Tenant's default or
if Landlord has terminated the Lease, the damages to which Landlord
is entitled pursuant to Article 20 of this
Lease. If any portion of said deposit is so used or
applied, Tenant shall, within five (5) business days after written
demand therefor, deposit cash with Landlord in an amount sufficient
to restore the security deposit to its full
amount. Tenant agrees that Landlord shall not be
required to keep the security deposit in trust, segregate it or
keep it separate from Landlord's general funds but Landlord may
commingle the security deposit with its general funds and Tenant
shall not be entitled to interest on such deposit. At
the expiration of the Term, and except to the extent Tenant owes
Landlord money due to a default by Tenant hereunder, the security
deposit or any balance thereof shall be returned to Tenant (or, at
Landlord's option, to Tenant's "Transferee", as such term is
defined in Article 15 below), provided that subsequent to the
expiration of this Lease, Landlord may retain from said security
deposit (i) an amount reasonably estimated by Landlord to cover
potential Direct Cost reconciliation payments due with respect to
the calendar year in which this Lease terminates or expires (such
amount so retained shall not, in any event, exceed ten percent
(10%) of Estimated Direct Cost payments due from Tenant for such
calendar year through the date of expiration or earlier termination
of this Lease and any amounts so retained and not applied to such
reconciliation shall be returned to Tenant within thirty (30) days
after Landlord's delivery of the Statement for such calendar year),
(ii) any and all amounts reasonably estimated by Landlord to cover
the anticipated costs to be incurred by Landlord to remove any
signage provided to Tenant under this Lease, to remove cabling and
other items required to be removed by Tenant under Section 29(b)
below and to repair any damage caused by such removal (in which
case any excess amount so retained by Landlord shall be returned to
Tenant within thirty (30) days after such removal and repair), and
(iii) any and all amounts permitted by law and this Article 4.
Tenant hereby waives any provisions of law, now or hereafter in
effect, which provide that Landlord may claim from a security
deposit only those sums reasonably necessary to remedy defaults in
the payment of rent, to repair damage caused by Tenant or to clean
the Premises, it being agreed that Landlord may, in addition, claim
those sums specified in this Article 4 above, and all of Landlord's
damages under this Lease and Washington law including, but not
limited to, any damages accruing upon termination of this Lease
and/or those sums reasonably necessary to compensate Landlord for
any other actual damage, foreseeable or unforeseeable, caused by
the acts or omissions of Tenant or any officer, employee, agent,
contractor or invitee of Tenant.
(b)
Letter
of Credit . Concurrently with Tenant's execution
of this Lease, Tenant shall deliver to Landlord an unconditional,
irrevocable and renewable letter of credit (" Letter of
Credit ") in favor of Landlord substantially in the form
attached hereto as Exhibit E, issued by Silicon Valley Bank or
other bank reasonably satisfactory to Landlord with a branch which
will honor draws located in the Seattle area or permitting draws
electronically or by mail, overnight courier or facsimile, in the
principal amount (" Stated
Amount ") specified below, to be held by Landlord in
accordance with the terms, provisions and conditions of this
Lease. Tenant shall pay all expenses, points and/or fees
incurred by Tenant in obtaining the Letter of Credit. If
the Letter of Credit delivered by Tenant is inconsistent with the
form attached hereto as Exhibit E (including, without
limitation, the wrong name or address for the Beneficiary),
Landlord may so notify Tenant in writing, in which case Tenant
shall cause the Letter of Credit to be corrected within five (5)
business days after such notice. The Stated Amount shall
initially be Five Hundred Sixty-Four Thousand Dollars
($564,000.00); provided, however, that, except as
hereinafter provided, upon the dates
specified below (" Adjustment
Dates "), the Stated Amount shall be reduced to the
following amounts:
|
Date
|
|
Stated Amount
|
|
|
November 30,
2011
|
|
$ |
376,000.00 |
|
|
November 30,
2012
|
|
$ |
188,000.00 |
|
|
November 30,
2013
|
|
$ |
0.00 |
|
However,
if Tenant does not utilize the entire Improvement Allowance by
the earlier of (i) the date Tenant gives Landlord written
notice that it will not seek to obtain any credit for any
unused portion of the Improvement Allowance or (ii)
March 31, 2009, then, subject to the next sentence below,
Tenant may cause the Stated Amount to be reduced on such date
by the amount of the Improvement Allowance which is not so
utilized by Tenant and the Stated Amount may be further
reduced upon the Adjustment Dates on a proportionate basis (
i.e.
, on the first (1 st
) Adjustment Date, the Stated Amount may be reduced to
two-thirds (2/3 rds
) of the revised original Stated Amount, on the second (2
nd
) Adjustment Date, the Stated Amount may be reduced to
one-third (1/3) of the revised original Stated Amount, and
upon the third (3 rd
) Adjustment Date, the Stated Amount may be reduced to zero
dollars). Furthermore, if (i) a default by
Tenant occurs under this Lease, or (ii) circumstances
exist that would, with notice or lapse of time, or both,
constitute a default by Tenant, and Tenant has failed to cure
such default within the time period permitted by
Article 19 or such lesser time as may remain before the
relevant Adjustment Date as provided above, the Stated Amount
shall not thereafter be reduced unless and until such default
shall have been fully cured pursuant to the terms of this
Lease, at which time the Stated Amount may be reduced as
hereinabove described. Upon any change to the
Stated Amount, the Letter of Credit shall be concurrently
amended or replaced by a Letter of Credit in the new reduced
Stated Amount, and Landlord and Tenant shall take the steps
reasonably necessary to cause the existing Letter of Credit to
be delivered to the issuing bank and the issuing bank to amend
the Letter of Credit or issue a new replacement Letter of
Credit in the new reduced Stated Amount on the date the Stated
Amount is required to be adjusted. The Letter of
Credit shall state that an authorized officer or other
representative of Landlord may make demand on Landlord's
behalf for the Stated Amount of the Letter of Credit, or any
portion thereof, and that the issuing bank must immediately
honor such demand upon presentation to it of the original
Letter of Credit, without qualification or satisfaction of any
conditions, except the proper identification of the party
making such demand and such party's certification that
Landlord is entitled to draw on the Letter of Credit pursuant
to this Lease. In addition, the Letter of Credit
shall indicate that it is transferable in its entirety by
Landlord as beneficiary to any transferee of Landlord's
interest under this Lease who assumes Landlord's obligations
under this Lease or to a lender under any mortgage or deed of
trust encumbering the Project (provided that such lender
agrees that draws may be made on the Letter of Credit only as
permitted by this Lease, the drawn amounts shall only be used,
applied or retained as permitted by this Lease, the drawn
amounts shall be returned to Tenant to the extent required by
this Lease, and that no further assignments shall be made by
such lender of the beneficiary's interest in the Letter of
Credit except as permitted by this Lease) and that upon
receiving written notice of transfer along with such party's
certification confirming that the transfer meets the above
requirements, and upon presentation to the issuing bank of the
original Letter of Credit, the issuer or confirming bank will
reissue the Letter of Credit naming such transferee as the
beneficiary. Tenant shall be responsible for the
payment to the issuing bank of any transfer costs imposed by
the issuing bank in connection with any such
transfer. If (A) the term of the Letter of
Credit held by Landlord will expire prior to the last
Adjustment Date specified above and the Letter of Credit is
not extended, or a new Letter of Credit for an extended period
of time is not substituted, in either case at least (30) days
prior to the expiration of the Letter of Credit, or
(B) an Event of Default has occurred and is continuing,
including the filing of a voluntary petition under
Title 11 of the United States Code (i.e., the bankruptcy
Code), or Tenant otherwise becomes a debtor in any case or
proceeding under the Bankruptcy Code, as now existing or
hereinafter amended, or any similar law or statute, Landlord
may (but shall not be required to) draw upon all or any
portion of the Stated Amount of the Letter of Credit, and the
proceeds received from such draw shall constitute Landlord's
property (and not Tenant's property or the property of the
bankruptcy estate of Tenant) and Landlord may then use, apply
or retain all or any part of the proceeds (1) for the
payment of any sum which is in default, (2) to reimburse
Landlord for any expense actually and reasonably incurred by
Landlord as a result of Tenant's default, and (3) if
Landlord has terminated this Lease, the damages to which
Landlord is entitled
pursuant to Article 20 of this
Lease. If any portion of the Letter of Credit proceeds
are so used or applied, Tenant shall, within ten (10) days after
demand therefor, post an additional Letter of Credit in an amount
to cause the aggregate amount of the unused proceeds and such new
Letter of Credit to equal the Stated Amount required in this
Article 4 above. Landlord shall not be required to
keep any proceeds from the Letter of Credit separate from its
general funds. Should Landlord sell its interest in the
Premises during the Lease Term, Landlord shall transfer the Letter
of Credit and any unapplied proceeds of the Letter of Credit to the
purchaser, and if Landlord transfers the Letter of Credit and
deposits with the purchaser thereof the Letter of Credit and any
unapplied proceeds of the Letter of Credit and such purchaser
assumes in writing Landlord’s obligations with respect
thereto, thereupon Landlord shall be discharged from any further
liability with respect to the Letter of Credit and said proceeds
and Tenant shall look solely to such transferee for the return of
the Letter of Credit or any proceeds therefrom. The
Letter of Credit or any remaining proceeds of the Letter of Credit
held by Landlord after expiration or earlier termination of the
Lease Term, after any deductions described in this Article 4
above, shall be returned to Tenant or, at Landlord's option, to the
last assignee of Tenant's interest hereunder, within
sixty (60) days following the expiration of the Lease Term;
provided, if the Stated Amount is reduced while Landlord is holding
any such unapplied proceeds, Landlord shall promptly return to
Tenant (so long as no Event of Default is continuing) the amount by
which such proceeds and the remaining balance of the Letter of
Credit exceeds the reduced Stated Amount. The
use, application or retention of the Letter of Credit, the proceeds
or any portion thereof, shall not prevent Landlord from exercising
any other rights or remedies provided under this Lease, it being
intended that Landlord shall not be required to proceed against the
Letter of Credit, and such use, application or retention of the
Letter of Credit shall not operate as a limitation on any recovery
to which Landlord may otherwise be entitled. No trust
relationship is created herein between Landlord and Tenant with
respect to the Letter of Credit.
Landlord
and Tenant acknowledge and agree that in no event or
circumstance shall the Letter of Credit, any renewal thereof
or substitute therefor or the proceeds thereof be deemed to be
or treated as a "security deposit" within the meaning of any
laws or statutes. The parties hereto
(A) recite that the Letter of Credit is not intended to
serve as a security deposit and any laws, rules and
regulations applicable to security deposits in the commercial
context (" Security
Deposit Laws ") shall have no applicability or
relevancy thereto and (B) waive any and all rights,
duties and obligations either party may now or, in the future,
will have relating to or arising from the Security Deposit
Laws. Notwithstanding the foregoing, to the extent
any Security Deposit Law in any way: (a) is applicable to this
Lease or the Letter of Credit (or any proceeds thereof); or
(b) controls Landlord's rights to draw on the Letter of Credit
or apply the proceeds of the Letter of Credit to any amounts
due under this Lease or any damages Landlord may suffer
following termination of this Lease, then Tenant fully and
irrevocably waives the benefits and protections of such
Security Deposit Law, it being agreed that Landlord may
recover from the Letter of Credit (or its proceeds) amounts
expressly provided in this Article 4.
ARTICLE
5
HOLDING
OVER
Should
Tenant, without Landlord's written consent, hold over after
termination of this Lease, Tenant shall, at Landlord's option,
become either a tenant at sufferance or a month-to-month
tenant upon each and all of the terms herein provided as may
be applicable to such a tenancy and any such holding over
shall not constitute an extension of this
Lease. During such holding over, Tenant shall pay
in advance, monthly, Basic Rental at a rate equal to one
hundred fifty percent (150%) of the rate in effect for the
last month of the Term of this Lease or one hundred percent
(100%) of Landlord's then asking rate for comparable space in
the Project, whichever is greater, in addition to, and not in
lieu of, all other payments required to be made by Tenant
hereunder including but not limited to Tenant's Proportionate
Share of any increase in Direct Costs. Nothing
contained in this Article 5 shall be construed as consent
by Landlord to any holding over of the Premises by Tenant, and
Landlord expressly reserves the right to require Tenant to
surrender possession of the Premises to Landlord as provided
in this Lease upon the expiration or earlier termination of
the Term. If Tenant fails to surrender the Premises
upon the expiration or termination of this Lease, Tenant
agrees to indemnify, defend and hold Landlord
harmless from all costs, loss, expense
or liability, including without limitation, claims made by any
succeeding tenant and real estate brokers claims and attorney's
fees and costs.
ARTICLE
6
OTHER
TAXES
Tenant
shall pay, prior to delinquency, all taxes assessed against or
levied upon trade fixtures, furnishings, equipment and all
other personal property of Tenant located in the
Premises. In the event any or all of Tenant's trade
fixtures, furnishings, equipment and other personal property
shall be assessed and taxed with property of Landlord, or if
the cost or value of any leasehold improvements in the
Premises exceeds the cost or value of a Project-standard
buildout as determined by Landlord and, as a result, real
property taxes for the Project are increased, Tenant shall pay
to Landlord, within ten (10) days after delivery to Tenant by
Landlord of a written statement setting forth such amount, the
amount of such taxes applicable to Tenant's property or
above-standard improvements. Tenant shall assume
and pay to Landlord at the time Basic Rental next becomes due
(or if assessed after the expiration of the Term, then within
ten (10) days), any excise, sales, use, rent, occupancy,
garage, parking, gross receipts or other taxes (other than net
income taxes) which may be assessed against or levied upon
Landlord on account of letting of the Premises to Tenant or
the payment of Basic Rental or any other sums due or payable
hereunder, and which Landlord may be required to pay or
collect under any law now in effect or hereafter
enacted. In addition to Tenant's obligation
pursuant to the immediately preceding sentence, Tenant shall
pay directly to the party or entity entitled thereto all
business license fees, gross receipts taxes and similar taxes
and impositions which may from time to time be assessed
against or levied upon Tenant, as and when the same become due
and before delinquency. Notwithstanding anything to
the contrary contained herein, any sums payable by Tenant
under this Article 6 shall not be included in the
computation of "Tax Costs."
ARTICLE
7
USE
Tenant
shall use and occupy the Premises only for the use set forth
in Article 1.F. of the Basic Lease Provisions and shall
not use or occupy the Premises or permit the same to be used
or occupied for any other purpose without the prior written
consent of Landlord, which consent may be given or withheld in
Landlord's sole and absolute discretion, and Tenant agrees
that it will use the Premises in such a manner so as not to
unreasonably interfere with or infringe upon the rights of
other tenants or occupants in the Project. Subject
to casualty, condemnation and repairs, Tenant shall have the
right to use and have access to the Premises and the common
areas serving the Premises on a seven (7) days a week,
twenty-four (24) hours a day basis throughout the Term without
obtaining any consent from or giving notice to
Landlord. Except to the extent such compliance
obligations are otherwise those of Landlord as provided
herein, Tenant shall, at its sole cost and expense, promptly
comply with all applicable laws, statutes, ordinances,
governmental regulations or requirements (collectively, "
Laws
") now in force or which may hereafter be in force relating to
or affecting (i) the condition, use or occupancy of the
Premises or the Project (excluding structural changes to the
Project not related to Tenant's particular use of the
Premises), and (ii) improvements installed or constructed in
the Premises by or for the benefit of
Tenant. Tenant's use of the Premises shall be
subject to all applicable Laws including, without limitation,
any applicable zoning laws. Tenant shall not
knowingly do or permit to be done anything which would
invalidate or increase the cost of any insurance policy
covering the Project and/or the property located therein and
Tenant shall comply (but without obligation to install any
improvements or additions or make any upgrades) with all
rules, orders, regulations and requirements of any
organization which sets out standards, requirements or
recommendations commonly referred to by major fire insurance
underwriters, and Tenant shall promptly upon demand reimburse
Landlord for any additional premium charges for any such
insurance policy assessed or increased by reason of Tenant's
failure to comply with the provisions of this
Article. Tenant agrees not to keep any trash,
garbage, waste or other refuse on the Premises except in
sanitary containers and agrees to regularly and frequently
remove same from the Premises. Tenant shall keep
all containers or other equipment used for storage of such
materials in a clean and sanitary condition. Tenant
shall keep the sewage disposal system in the Premises free of
all obstructions and in good operating
condition. If the volume of Tenant's
trash
becomes
excessive in Landlord's judgment, Landlord shall have the right to
charge Tenant for additional trash disposal services and/or to
require that Tenant contract directly for additional trash disposal
services at Tenant's sole cost and expense. Tenant
shall, at its own cost, retain a licensed, bonded professional pest
and sanitation control service to perform inspections of the
Premises not less frequently than quarterly for the purpose of
eliminating infestation by and controlling the presence of insects,
rodents and vermin and shall promptly cause any corrective or
extermination work recommended by such service to be
performed. Such work shall be performed pursuant to a
written contract, a copy of which shall be delivered to Landlord by
Tenant upon request.
ARTICLE
8
CONDITION
OF PREMISES
Tenant
hereby agrees that except as otherwise expressly provided in
this Lease or as provided in the Tenant Work Letter attached
hereto as Exhibit "D" and made a part hereof and without
limiting Landlord’s repair and maintenance obligations
set forth in this Lease,
the Premises shall be taken "as is", "with all faults",
"without any representations or warranties", and Tenant hereby
agrees and warrants that it has investigated and inspected the
condition of the Premises and the suitability of same for
Tenant's purposes, and except for any obligations of Landlord
expressly set forth in this Lease, Tenant does hereby waive
and disclaim any objection to, cause of action based upon, or
claim that its obligations hereunder should be reduced or
limited because of the condition of the Premises or the
Project as of the Commencement Date or the suitability of same
for Tenant's purposes. Tenant acknowledges that,
except as expressly set forth in this
Lease, neither Landlord nor any agent nor any
employee of Landlord has made any representations or warranty
with respect to the Premises or the Project or with respect to
the suitability of either for the conduct of Tenant's business
and Tenant expressly warrants and represents that, except as
expressly set forth in this Lease, Tenant has relied solely on
its own investigation and inspection of the Premises and the
Project in its decision to enter into this Lease and let the
Premises in the above-described condition. In
addition to the existing leasehold improvements in the
Premises, the Premises shall be initially improved
as provided in, and subject to, the Tenant Work Letter
attached hereto as Exhibit "D" and made a part
hereof. The existing leasehold improvements in the
Premises as of the date of this Lease, together with the
Improvements (as defined in the Tenant Work Letter) may be
collectively referred to herein as the " Tenant
Improvements ." The taking of possession of
the Premises by Tenant shall conclusively establish that the
Premises and the Project were at such time in satisfactory
condition, subject to latent defects, punch-list items,
conditions or items that are not in compliance with Laws, and
conditions or items covered by construction
warranties. Tenant hereby waives any provisions of
law which would otherwise permit Tenant to make repairs
required of Landlord under this Lease.
ARTICLE
9
REPAIRS
AND ALTERATIONS
(a)
Landlord's Obligation . Landlord shall maintain
and repair the Project-wide systems and the structural portions of
the Project including, without limitation, the foundation,
floor/ceiling slabs, roof, curtain wall, exterior glass, columns,
beams, shafts, stairs, stairwells and common
areas. Landlord shall also repair at its sole cost and
expense, any latent defects in the design or construction of the
Project or Development Common Areas, any defects in the
Improvements which constitute a breach of the one-year construction
warranty provided by the Contractor who installs the Improvements
or are not installed in accordance with the approved drawings,
plans and specifications. Landlord shall, at no cost to
Tenant, make such modifications, repairs and upgrades to the
Project and Development Common Areas as are necessary to comply
with disability, life, seismic, fire and safety codes, ordinances,
statutes, or any other applicable Laws in effect on or prior to the
Commencement Date, including, without limitation, then current
requirements of the Americans with Disabilities
Act. Notwithstanding any provision set forth in this
Article 9 to the contrary, if Tenant provides written notice to
Landlord of an event or circumstance which requires the action of
Landlord with respect to repair and/or maintenance of the Premises
only (and not any other portion of the Project), and Landlord fails
to provide such action within thirty (30) days after Landlord's
receipt of such
notice, or if the nature of the work
reasonably requires more than thirty (30) days to complete, and
such work is not commenced by Landlord within thirty (30) days
after such notice and thereafter continuously and diligently
pursued by Landlord to completion within a reasonable time, then
Tenant may proceed to take the required action upon delivery of an
additional ten (10) days notice to Landlord specifying that Tenant
is taking such required action, and if such action was required
under the terms of the Lease to be taken by Landlord and was not
taken by Landlord within such ten (10) day period, then Tenant
shall be entitled to prompt reimbursement by Landlord of Tenant's
actual and reasonable costs in taking such
action. However, if the work so performed by Tenant
pertains to items that would otherwise be includable under Direct
Costs pursuant to Article 3 above, then Landlord may include
the amount of such reimbursement in Direct Costs. In the
event Tenant takes such action, and such work will affect the
Project systems or the structural integrity of the Project, Tenant
shall use only those contractors used by Landlord in the Project
for work on such Project systems or structure unless such
contractors are unwilling or unable to perform, or timely perform,
such work, in which event Tenant may utilize the services of any
other qualified contractor which normally and regularly performs
similar work in comparable first-class buildings.
(b)
Tenant's Obligation . Except as expressly
provided as Landlord's obligation in this Article 9, Tenant
shall keep the Premises, all systems therein exclusively serving
the Premises and the backup generator described in
Section 11(e) below in good condition and
repair. Except to the extent covered by insurance and
subject to the waiver of subrogation provision herein, all damage
or injury to the Premises or the Project resulting from the
wrongful act or negligence of Tenant, its employees, agents or
visitors, guests, invitees or licensees, or by the use of the
Premises, shall be promptly repaired by Tenant at its sole cost and
expense, to the reasonable satisfaction of Landlord; provided,
however, that for damage to the Project as a result of casualty or
for any repairs that may impact the mechanical, electrical,
plumbing, heating, ventilation or air-conditioning systems of the
Project, Landlord shall have the right (but not the obligation) to
select the contractor and oversee all such
repairs. Landlord may make any repairs that are Tenant's
responsibility which are not promptly made by Tenant after Tenant's
receipt of written notice and the reasonable opportunity of Tenant
to make said repair within five (5) business days from receipt of
said written notice, and charge Tenant for the cost thereof, which
cost shall be paid by Tenant within five (5) days from invoice from
Landlord. Subject to the provisions of the Tenant Work
Letter, Tenant shall be responsible for the design and function of
all non-standard improvements of the Premises, made by or at the
request of Tenant, whether or not installed by Landlord at Tenant's
request. Except as expressly provided in
Section 9(a) above, Tenant waives all rights to make repairs
at the expense of Landlord, or to deduct the cost thereof from the
rent.
(c)
Alterations
. Tenant shall make no alterations, installations,
changes or additions in or to the Premises or the Project
(collectively, " Alterations
") without Landlord's prior written
consent. Notwithstanding anything to the contrary
contained herein, Tenant may make strictly cosmetic changes to the
finish work in the Premises (the " Cosmetic
Alterations "), without Landlord's consent, provided that
the aggregate cost of any such alterations does not exceed
$20,000.00 in any twelve (12) month period, and further provided
that such alterations do not (i) require any structural or
other substantial modifications to the Premises, (ii) require
any changes to, nor adversely affect, the systems and equipment of
the Project, or (iii) affect the exterior appearance of the
Project. Tenant shall give Landlord at least ten (10)
days prior notice of such Cosmetic Alterations, which notice shall
be accompanied by reasonably adequate evidence that such changes
meet the criteria contained in this
Section 9(c). As used herein, the term
"Alterations" does not include any of the Tenant
Improvements. Any Alterations approved by Landlord must
be performed in accordance with the terms hereof, using only
contractors approved by Landlord in writing and upon the approval
by Landlord in writing of fully detailed and dimensioned plans and
specifications pertaining to the Alterations in question, to be
prepared and submitted by Tenant at its sole cost and
expense. Tenant shall at its sole cost and expense
obtain all necessary approvals and permits pertaining to any
Alterations. Tenant shall cause all Alterations to be
performed in a good and workmanlike manner, in conformance with all
applicable federal, state, county and municipal laws, rules and
regulations, pursuant to a valid building permit (if one is
required), and in conformance with Landlord's construction rules
and regulations. If Landlord, in approving any
Alterations, specifies a commencement date therefor, Tenant shall
not commence any work with respect to such Alterations prior to
such date; provided that Tenant shall be entitled to commence such
work within thirty (30) days after such approval is
given. Tenant hereby agrees to indemnify, defend, and
hold Landlord free and harmless from all liens and claims of lien,
and all other liability, claims and demands arising out
of any work done or material supplied
to the Premises by or at the request of Tenant in connection with
any Alterations. (d)
Insurance; Liens . Prior to the commencement of
any Alterations requiring Landlord's consent, Tenant shall, upon
Landlord's request, provide Landlord with evidence that Tenant
carries "Builder's Risk" insurance in an amount approved by
Landlord covering the construction of such Alterations, and such
other insurance as Landlord may reasonably require, it being
understood that all such Alterations shall be insured by Tenant
pursuant to Article 14 of this Lease immediately upon
completion thereof. In addition, for Alterations
requiring Landlord's consent, Landlord may, in its discretion,
require Tenant to obtain a payment and performance bond or some
alternate form of security satisfactory to Landlord in an amount
sufficient to ensure the lien free completion of such Alterations
and naming Landlord as a co-obligee.
(e)
Costs and Fees; Removal . If permitted
Alterations are made, they shall be made at Tenant's sole cost and
expense and shall be and become the property of Landlord, except
that Landlord may, by written notice to Tenant given at the time of
Landlord's consent to such Alteration or Improvement (provided
Tenant requests that Landlord make such determination at the time
of Tenant's request for consent) or in the case of Cosmetic
Alterations, by written notice to Tenant within fifteen (15) days
after Landlord's receipt of Tenant's notice of such Cosmetic
Alterations (provided Tenant requests that Landlord make such
determination at the time of Tenant's notice), require Tenant at
Tenant's expense to remove such Improvements and Alterations from
the Premises at the expiration or earlier termination of this
Lease, and to repair any damage to the Premises and the Project
caused by such removal. Any and all costs attributable
to or related to the applicable building codes of the city in which
the Project is located (or any other authority having jurisdiction
over the Project) arising from Tenant's Alterations shall be paid
by Tenant at its sole cost and expense. With regard to
repairs required to be made by Tenant, Alterations or any other
work arising from or related to this Article 9, Landlord shall
be entitled to receive a reasonable administrative/coordination fee
(which fee shall vary depending upon whether or not Tenant orders
the work directly from Landlord) sufficient to compensate Landlord
for all overhead, general conditions, fees and other costs and
expenses arising from Landlord's involvement with such work,
provided such fee shall in no event exceed five percent (5%) of the
cost of the work. The construction of initial
improvements to the Premises shall be governed by the terms of the
Tenant Work Letter and not the terms of this Article 9, except
as expressly provided in the first sentence of this
Section 9(e). Notwithstanding anything to the
contrary in this Lease, Tenant shall have no obligation to remove
any of the existing leasehold improvements in the
Premises.
ARTICLE
10
LIENS
Tenant
shall keep the Premises and the Project free from any
mechanics' liens, vendors liens or any other liens arising out
of any work performed, materials furnished or obligations
incurred by Tenant, and Tenant agrees to defend, indemnify and
hold Landlord harmless from and against any such lien or claim
or action thereon, together with costs of suit and reasonable
attorneys' fees and costs incurred by Landlord in connection
with any such claim or action. Before commencing
any work of alteration, addition or improvement to the
Premises, Tenant shall give Landlord at least ten (10)
business days' written notice of the proposed commencement of
such work. In the event that there shall be
recorded against the Premises or the Project or the property
of which the Premises is a part any claim or lien arising out
of any such work performed, materials furnished or obligations
incurred by Tenant and such claim or lien shall not be removed
or discharged by Tenant pursuant to RCW 60.04.161 (or any
successor statute(s)) within ten (10) days after written
notice to Tenant of such filing, Landlord shall have the right
but not the obligation to pay and discharge said lien without
regard to whether such lien shall be lawful or correct, unless
Tenant promptly (within three (3) days after demand) deposits
with Landlord in cash, lawful money of the United States, one
hundred fifty percent (150%) of the amount of such claim,
which sum may be retained by Landlord until such claim shall
have been removed of record or until judgment shall have been
rendered on such claim and such judgment shall have become
final, at which time Landlord shall have the right to apply
such deposit in discharge of the judgment on said claim and
any costs, including attorneys' fees and costs incurred by
Landlord, and shall remit the balance thereof to
Tenant.
ARTICLE
11
PROJECT
SERVICES
(a)
Basic Services . Landlord shall provide the
existing equipment servicing the Premises in its "as is" but
operable condition in order to provide electric current, heat and
air-conditioning therein. Landlord and Tenant hereby
acknowledge that an independent heating, ventilation and
air-conditioning system (" HVAC
System ") will service the Premises. Landlord
shall be responsible for the maintenance and repair of the HVAC
System and shall, as an Operating Cost, maintain a service and
maintenance contract for such HVAC System with a contractor
reasonably designated by Landlord, which contractor shall perform
all maintenance and repairs on the HVAC System as reasonably
determined by Landlord to be necessary. Tenant shall be
entitled to utilize the existing supplementary heating, ventilation
and air conditioning system for a portion of the Premises and to
install, as an Improvement or as an Alteration, subject to
Landlord's reasonable approval of plans and specifications, other
heating, ventilation and air conditioning units (collectively, "
Supplementary
Units ") within the Premises at Tenant's sole cost and
expense (or as a charge to the Improvement Allowance). A
submeter will also be installed, at Tenant's sole cost and expense
(or as a charge to the Improvement Allowance) in order to measure
the amount of electricity furnished to the Supplementary Units and
Tenant shall be responsible for Landlord's actual cost of supplying
electricity to such units as reasonably determined by Landlord
based upon such submeter, which amounts shall be payable on a
monthly basis as Additional Rent. Tenant shall be solely
responsible for maintenance and repair of the Supplementary Units
and such units shall be considered to be a fixture within the
Premises and shall remain upon the Premises upon the expiration or
earlier termination of this Lease. Except as otherwise provided in
this Lease, the electricity and other utilities furnished to the
Premises shall be included in Operating Costs. Tenant
shall be responsible for retaining a bonded janitorial contractor,
which contractor shall be reasonably approved by Landlord, and
Tenant hereby acknowledges that Landlord shall have no obligation
whatsoever to provide janitorial service to the
Premises. Tenant shall comply with all rules and
regulations which Landlord may reasonably establish for the proper
functioning and protection of any common systems of the
Project. Landlord shall not be liable for, and except as
expressly provided in Section 11(f) below, there shall be no
rent abatement as a result of, any stoppage, reduction or
interruption of any such services caused by governmental rules,
regulations or ordinances, riot, strike, labor disputes,
breakdowns, accidents, necessary repairs or other
cause. In the event of interruption of services to the
Premises, Landlord shall use commercially reasonable efforts to
cause the services to be promptly restored. Except as
specifically provided in this Article 11, Tenant agrees to pay
for all utilities and other services utilized by Tenant and any
additional building services furnished to Tenant which are not
uniformly furnished to all tenants of the Project at the rate
generally charged by Landlord to tenants of the Project for such
utilities or services.
(b)
HVAC Balance . If any lights, machines or
equipment (including but not limited to computers and computer
systems and appurtenances) are used by Tenant in the Premises which
materially affect the temperature otherwise maintained by the air
conditioning system, or generate substantially more heat in the
Premises than may be accommodated by the system, Tenant shall be
responsible for installing, at Tenant's sole cost and expense, any
machinery and equipment reasonably necessary to restore temperature
balance, including but not limited to modifications to the standard
air conditioning equipment.
(c)
Telecommunications . Upon request from Tenant
from time to time, Landlord will provide Tenant with a listing of
telecommunications and media service providers serving the Project,
and Tenant shall have the right to contract directly with the
providers of its choice. If Tenant wishes to contract
with or obtain service from any provider which does not
currently serve the Project or wishes to obtain from an existing
carrier services which will require the installation of additional
equipment, such provider must, prior to providing service, enter
into a written agreement with Landlord setting forth the terms and
conditions of the access to be granted to such
provider. In considering the installation of any new or
additional telecommunications cabling or equipment at the Project,
Landlord will consider all relevant factors in a reasonable and
non-discriminatory manner, including, without limitation, the
existing availability of services at the Project, the impact of the
proposed installations upon the Project and its operations and the
available space and capacity for the proposed
installations. Landlord may also consider whether the
proposed service may result in interference with or interruption
of
other services at the Project or the
business operations of other tenants or occupants of the
Project. In no event shall Landlord be obligated to
incur any costs or liabilities in connection with the installation
or delivery of telecommunication services or facilities at the
Project. All such installations shall be subject to
Landlord’s prior approval, not to be unreasonably withheld,
and shall be performed in accordance with the terms of Article
9. If Landlord approves the proposed installations in
accordance with the foregoing, Landlord will deliver its standard
form agreement upon request and will use commercially reasonable
efforts to promptly enter into an agreement on reasonable and
non-discriminatory terms with a qualified, licensed and reputable
carrier confirming the terms of installation and operation of
telecommunications equipment consistent with the
foregoing.
(d)
Sole Electrical Representative . Tenant agrees
that Landlord shall be the sole and exclusive representative to the
electrical service provider with respect to, and shall maintain
exclusive control over, the reception, utilization and distribution
of electrical power to the Project, regardless of point or means of
origin, use or generation.
(e)
Backup Generator . Throughout the Term of this
Lease (as may be extended), Tenant shall be entitled to utilize the
existing backup generator for the Premises. Tenant
acknowledges that Landlord is providing such backup generator in
its "as is" condition and that Landlord makes no representation or
warranty with respect to the condition of such backup generator or
its suitability for Tenant's use and Landlord shall have no
maintenance or repair obligations with respect to the backup
generator. Such backup generator may be used by Tenant
only during (i) testing and regular maintenance, and
(ii) any period of electrical power outage in the
Project. Tenant shall be entitled to operate the backup
generator for testing and regular maintenance only upon notice to
Landlord and at times reasonably approved by
Landlord. In addition, Tenant shall ensure that the
backup generator does not result in any Hazardous Materials being
introduced to the Project in violation of applicable law, and
Section 28(a) will apply to Tenant's use of the backup
generator. Further, Tenant shall be responsible for
ensuring that the backup generator does not interfere with the use
of the Project by other tenants. Such backup generator
shall be deemed to be a part of the Premises for purposes of
Article 14 of this Lease.
(f)
Abatement Events . An " Abatement
Event " shall be defined as an event that prevents Tenant
from using the Premises or any portion thereof, as a result of any
failure to provide services or access to the Premises or as a
result of Landlord's activities pursuant to Section 12(b)
below or as a result of the presence of Hazardous Materials in
violation of Environmental Laws not caused by Tenant, its agents,
employees, contractors or invitees, where (i) Tenant does not
actually use the Premises or such portion thereof, and
(ii) such event is not caused by the negligence or willful
misconduct of Tenant, its agents, employees or
contractors. Tenant shall give Landlord notice ("
Abatement
Notice ") of any such Abatement Event, and if such Abatement
Event continues beyond the "Eligibility Period" (as that term is
defined below), then the Basic Rental and Tenant's Proportionate
Share of Direct Costs shall be abated entirely or reduced, as the
case may be, after expiration of the Eligibility Period for such
time that Tenant continues to be so prevented from using, and does
not use, the Premises or such portion thereof, in the proportion
that the rentable area of the portion of the Premises that Tenant
is prevented from using, and does not use, bears to the total
rentable area of the Premises; provided, however, in the event that
Tenant is prevented from using, and does not use, a portion of the
Premises for a period of time in excess of the Eligibility Period
and the remaining portion of the Premises is not sufficient to
allow Tenant to effectively conduct its business therein, and if
Tenant does not conduct its business from such remaining portion,
then for such time after expiration of the Eligibility Period
during which Tenant is so prevented from effectively conducting its
business therein, the Basic Rental and Tenant's Proportionate Share
of Direct Costs for the entire Premises shall be abated entirely
for such time as Tenant continues to be so prevented from using,
and does not use, the Premises. If, however, Tenant
reoccupies any portion of the Premises during such period, the
Basic Rental and Tenant's Proportionate Share of Direct Costs
allocable to such reoccupied portion, based on the proportion that
the rentable area of such reoccupied portion of the Premises bears
to the total rentable area of the Premises, shall be payable by
Tenant from the date Tenant reoccupies such portion of the
Premises. The term " Eligibility
Period " shall mean a period of five (5) consecutive
business days after Landlord's receipt of any Abatement
Notice(s). Such right to abate Basic Rental and Tenant's
Proportionate Share of Direct Costs shall be Tenant's sole and
exclusive remedy at law or in equity for an Abatement
Event.
ARTICLE
12
RIGHTS
OF LANDLORD
(a)
Right of Entry . Landlord and its agents shall
have the right to enter the Premises at all reasonable times upon
twenty-four (24) hours prior notice (except that no notice shall be
required in the case of an emergency or regularly scheduled
service) for the purpose of examining or inspecting the same,
serving or posting and keeping posted thereon notices as provided
by law, or which Landlord deems necessary for the protection of
Landlord or the Project, showing the same to prospective tenants,
lenders or purchasers of the Project, in the case of an emergency,
and for making such alterations, repairs, improvements or additions
to the Premises or to the Project as Landlord may deem necessary or
desirable and are otherwise permitted by this Lease; provided,
however, that except in the case of an emergency, no such entry
into the Lab Portion of the Premises shall be permitted without
Landlord permitting Tenant to have a representative of Tenant
present and, if required by Tenant, any such individuals entering
the Lab Portion of the Premises shall wear protective goggles and
such other protective clothing or equipment as Tenant may
reasonably require. Notwithstanding the foregoing,
Landlord shall have the right to enter the Premises to show the
same to prospective tenants only during the last nine (9) months of
the Term or the Option Term, if applicable, or at any time in which
Tenant is in default under this Lease after expiration of
applicable cure periods. If Tenant shall not be
personally present to open and permit an entry into the Premises at
any time when such an entry by Landlord is necessary and otherwise
permitted hereunder, Landlord may enter by means of a master key or
may forcibly enter in the case of an emergency, in each event
without liability to Tenant for such entry and without affecting
this Lease. Notwithstanding the foregoing,
(A) except in the event of the negligence or willful
misconduct of Tenant or its agents, contractors or employees, any
entry into the Lab Portion of the Premises by Landlord or any other
party Landlord brings to the Lab Portion of the Premises shall be
at their sole risk and Tenant shall have no liability for injuries
or damage any of them may sustain by reason of such entry into the
Lab Portion of the Premises, and (B) Landlord shall use
commercially reasonable efforts to conduct any such entry with the
least inconvenience to Tenant as is reasonably practicable and so
as to minimize, to the extent reasonably practicable, any
disruption of or interference with Tenant's normal operations in
the Premises. Landlord agrees to use commercially
reasonable efforts not to disclose, use or disseminate or permit
the disclosure, use or dissemination by its employees, agents or
contractors of any information concerning Tenant's prototype
tablets, pharmaceutical and nutritional products, research,
development and testing efforts, procedures, methods and results
and other proprietary technology information (collectively, "
Confidential
Information ") that may be obtained by entry into the Lab
Portion of the Premises by Landlord or its employees, agents or
contractors. Landlord agrees that Tenant may prohibit
the photographing, video taping, photocopying or other reproduction
of any Confidential Information. Landlord agrees that
Tenant shall be entitled to pursue a temporary restraining order or
other injunctive relief for any breach by Landlord of its
obligations with respect to Confidential Information as described
in this Section 12(a) above.
(b)
Maintenance Work . Landlord reserves the right
from time to time, but subject to payment by and/or reimbursement
from Tenant as may be otherwise provided herein, at reasonable
times and in a reasonable manner: (i) to install, use, maintain,
repair, replace, relocate and control for service to the Premises
and/or other parts of the Project pipes, ducts, conduits, wires,
cabling, appurtenant fixtures, equipment spaces and mechanical
systems, wherever located in the Premises or the Project, (ii) to
alter, close or relocate any facility in the Premises or the common
areas or otherwise conduct any of the above activities for the
purpose of complying with a general plan for fire/life safety for
the Project or for repairs, and (iii) to comply with any federal,
state or local law, rule or order. Landlord shall use
commercially reasonable efforts to perform any such work with the
least inconvenience to Tenant as is reasonably practicable and so
as to minimize to the extent reasonably practicable any disruption
of or interference with Tenant’s normal operations in the
Premises, but in no event shall Tenant be permitted to withhold or
reduce Basic Rental or other charges due hereunder as a result of
same (except as provided in Section 11(f) above), make any
claim for constructive eviction or otherwise make any claim against
Landlord for interruption or interference with Tenant's business
and/or operations; provided, however, Landlord shall not be
entitled to reduce the useable area of the Premises pursuant to
such actions in a manner or to a degree that would impair Tenant's
operations in the Premises.
(c)
Rooftop . If Tenant desires to use the rooftop of
the Project for any purpose, including the installation of
communication equipment to be used from the Premises, such rights
will be granted in Landlord’s sole discretion and Tenant must
negotiate the terms of any rooftop access with Landlord or the
rooftop management company or lessee holding rights to the rooftop
from time to time. Any rooftop access granted to Tenant
will be at prevailing rates and will be governed by the terms of a
separate written agreement or an amendment to this
Lease.
ARTICLE
13
INDEMNITY;
EXEMPTION OF LANDLORD FROM LIABILITY
(a)
Indemnity . Except for matters and claims for
which Landlord is obligated hereunder to indemnify Tenant, Tenant
shall indemnify, defend and hold Landlord, Arden Realty, Inc.,
their subsidiaries, partners, parental or other affiliates and
their respective officers, directors, employees and contractors
(collectively, " Landlord
Parties ") harmless from and against any and all claims
arising from (i) Tenant's use of the Premises or the Project
(including, without limitation, Tenant's signage) or from the
conduct of its business or from any activity, work or thing which
may be permitted or suffered by Tenant in or about the Premises or
the Project, (ii) any breach or default in the performance of any
obligation on Tenant's part to be performed under this Lease, or
(iii) any negligence or willful misconduct of Tenant or any of its
agents, contractors, or employees in or about the Project and from
any and all costs, attorneys' fees and costs, expenses and
liabilities incurred in the defense of any claim or any action or
proceeding brought thereon, including negotiations in connection
therewith. However, notwithstanding the foregoing,
Tenant shall not be required to indemnify, defend and/or hold
Landlord harmless from any claim, loss, cost, liability, damage or
expense, including, but not limited to, penalties, fines,
attorneys' fees or costs (collectively, " Claims
"), by, for or to any person, property or entity to the extent
resulting from the negligence or willful misconduct of Landlord or
its agents, contractors, or employees or from Landlord's breach or
default in the performance of any obligation on Landlord's part to
be performed under this Lease or covered by insurance required to
be carried under this Lease by Landlord or actually carried by
Landlord. Landlord hereby indemnifies Tenant and holds
Tenant harmless from any Claims to the extent resulting from the
negligence or willful misconduct of Landlord or its agents,
contractors or employees or from Landlord's breach or default in
the performance of any obligation on Landlord's part to be
performed under this Lease and not covered by insurance required to
be carried under this Lease by Tenant or actually carried by
Tenant; provided, however, that (A) because Landlord maintains
insurance on the Project and Tenant compensates Landlord for such
insurance as part of Tenant's Proportionate Share of Direct Costs
and because of the existence of waivers of subrogation set forth in
Article 14 of this Lease, Landlord hereby agrees to indemnify,
defend and hold Tenant harmless from any Claims to any property
outside of the Premises to the extent such Claim is covered by such
insurance, even if resulting from the negligent acts, omissions, or
willful misconduct of Tenant or those of its agents, contractors,
or employees, and (B) because Tenant must carry insurance
pursuant to Article 14 to cover its personal property within
the Premises and the Tenant Improvements, Tenant hereby agrees to
indemnify, defend and hold Landlord harmless from any Claim to any
property within the Premises, to the extent such Claim is covered
by such insurance, even if resulting from the negligent acts,
omissions or willful misconduct of Landlord or those of its agents,
contractors, or employees. Further, Tenant's agreement
to indemnify Landlord and Landlord's agreement to indemnify Tenant
pursuant to this Section 13(a) is not intended to and shall
not relieve any insurance carrier of its obligations under policies
required to be carried by Landlord or Tenant pursuant to this
Lease, to the extent such policies cover the matters subject to
such indemnification obligations. Except for matters and
Claims for which Landlord is obligated to indemnify Tenant
hereunder, (1) Tenant hereby assumes all risk of damage to property
or injury to persons in or about the Premises from any cause, and
(2) Tenant hereby waives all claims in respect thereof against
Landlord and the Landlord Parties.
(b)
Exemption of Landlord from Liability . Landlord
and the Landlord Parties shall not be liable for injury to Tenant's
business, or loss of income therefrom, however occurring
(including, without limitation, from any failure or interruption of
services or utilities or as a result of Landlord's negligence), or,
subject to the waivers in Article 14(d) below to the extent
applicable and except in connection with damage or injury resulting
from the negligence or willful misconduct of Landlord, its
agents or the Landlord Parties or Landlord's breach of
this Lease or matters or claims for which Landlord is obligated to
indemnify Tenant pursuant to
Section 13(a) hereof (provided
that in such cases Landlord's liability shall be limited to amounts
not covered by insurance carried by Tenant or required to be
carried by Tenant pursuant to this Lease), for damage that may be
sustained by the person, goods, wares, merchandise or property of
Tenant, its employees, invitees, customers, agents, or contractors,
or any other person in, on or about the Premises directly or
indirectly caused by or resulting from any cause whatsoever,
including, but not limited to, fire, steam, electricity, gas,
water, or rain which may leak or flow from or into any part of the
Premises, or from the breakage, leakage, obstruction or other
defects of the pipes, sprinklers, wires, appliances, plumbing, air
conditioning, light fixtures, or mechanical or electrical systems
or from intrabuilding cabling or wiring, whether such damage or
injury results from conditions arising upon the Premises or upon
other portions of the Project or from other sources or places and
regardless of whether the cause of such damage or injury or the
means or repairing the same is inaccessible to
Tenant. Except for matters or Claims for which Landlord
is obligated to indemnify Tenant pursuant to Section 13(a)
hereof, Landlord and the Landlord Parties shall not be liable to
Tenant for any damages arising from any willful or negligent action
or inaction of any other tenant of the Project.
(c)
Security . Tenant acknowledges that Landlord's
election whether or not to provide any type of mechanical
surveillance or security personnel whatsoever in the Project is
solely within Landlord's discretion; Landlord and the Landlord
Parties shall have no liability in connection with the provision,
or lack, of such services and Tenant hereby agrees to release
Landlord and the Landlord Parties with regard to any such potential
claim. Landlord and the Landlord Parties shall not be
liable for losses due to theft, vandalism, or like
causes.
ARTICLE
14
INSURANCE
(a)
Tenant's Insurance . Tenant, shall at all times
during the Term of this Lease, and at its own cost and expense,
procure and continue in force the following insurance
coverage: (i) Commercial General Liability Insurance,
written on an occurrence basis, with a combined single limit for
bodily injury and property damages of not less than Two Million
Dollars ($2,000,000) per occurrence and Three Million Dollars
($3,000,000) in the annual aggregate, including products liability
coverage if applicable, owners and contractors protective coverage,
blanket contractual coverage including both oral and written
contracts, and personal injury coverage, covering the insuring
provisions of this Lease and the performance of Tenant of the
indemnity and exemption of Landlord from liability agreements set
forth in Article 13 hereof; (ii) a policy of standard fire,
extended coverage and special extended coverage insurance (all
risks), including a vandalism and malicious mischief endorsement,
sprinkler leakage coverage and earthquake sprinkler leakage where
sprinklers are provided in an amount equal to the full replacement
value new without deduction for depreciation of all (A) Tenant
Improvements, Alterations, fixtures and other improvements in the
Premises, including but not limited to all mechanical, plumbing,
heating, ventilating, air conditioning, electrical,
telecommunication and other equipment, systems and facilities, and
(B) trade fixtures, furniture, equipment and other personal
property installed by or at the expense of Tenant; (iii) Worker's
Compensation coverage as required by law; and (iv) business
interruption, loss of income and extra expense insurance covering
any failure or interruption of Tenant's business equipment
(including, without limitation, telecommunications equipment) and
covering all other perils, failures or interruptions sufficient to
cover a period of interruption of not less than twelve (12)
months. Tenant shall carry and maintain during the
entire Term (including any option periods, if applicable), at
Tenant's sole cost and expense, reasonable increased amounts of the
insurance required to be carried by Tenant pursuant to this
Article 14 and such other reasonable types of insurance
coverage and in such reasonable amounts covering the Premises and
Tenant's operations therein, as may be reasonably required by
Landlord, but Landlord shall only be entitled to require such
increased amounts and/or other coverages if they are then generally
required by owners of comparable office buildings in the Bothell,
Washington area.
(b)
Form of Policies . The aforementioned minimum
limits of policies and Tenant's procurement and maintenance thereof
shall in no event limit the liability of Tenant
hereunder. The Commercial General Liability Insurance
policy shall name Landlord, Arden Realty, Inc., Landlord's property
manager, and Landlord's lender(s) (provided Landlord provides
Tenant with notice of the names of such property manager and any
such lender(s)), as additional insureds' with an appropriate
endorsement to the policy(s). All such insurance
policies carried by Tenant
shall be with companies having a
rating of not less than A-VIII in Best's Insurance
Guide. Tenant shall furnish to Landlord, from the
insurance companies, or cause the insurance companies to furnish,
certificates of coverage. The deductible under each such
policy shall be reasonably acceptable to Landlord. No
such policy shall be cancelable or subject to reduction of coverage
below the limits required hereunder or other modification or
cancellation except after thirty (30) days prior written notice to
Landlord by the insurer. All such policies shall be
endorsed to agree that Tenant's policy is primary and that any
insurance carried by Landlord is excess and not contributing with
any Tenant insurance requirement hereunder. Tenant
shall, at least twenty (20) days prior to the expiration of such
policies, furnish Landlord with renewals or
binders. Tenant agrees that if Tenant does not take out
and maintain such insurance or furnish Landlord with renewals or
binders in a timely manner, Landlord may (but shall not be required
to) procure said insurance on Tenant's behalf and charge Tenant the
cost thereof, which amount shall be payable by Tenant upon demand
with interest (at the rate set forth in Section 20(e) below)
from the date such sums are expended. Tenant shall have
the right to provide such insurance coverage pursuant to blanket
policies obtained by Tenant, provided such blanket policies
expressly afford coverage to the Premises and to Tenant as required
by this Lease.
(c)
Landlord's Insurance . Landlord shall, as a cost
to be included in Operating Costs, procure and maintain at all
times during the Term of this Lease, (i) a policy or policies of
insurance covering loss or damage to the Project in the amount of
the full replacement costs without deduction for depreciation
thereof, providing protection against all perils included within
the classification of fire and extended coverage, vandalism
coverage and malicious mischief, sprinkler leakage, water damage,
and special extended coverage on the
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