<PAGE>
EXHIBIT 10.3
1111 THIRD AVENUE
SEATTLE, WASHINGTON
OFFICE LEASE AGREEMENT
BETWEEN
EOP-NORTHWEST
PROPERTIES, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY
("LANDLORD")
AND
EVERGREENBANK, A WASHINGTON CORPORATION
("TENANT")
<PAGE>
OFFICE LEASE AGREEMENT
THIS
OFFICE LEASE AGREEMENT (the "LEASE") is made and entered into as
of
the 17th day of January, 2005, by and
between EOP-NORTHWEST PROPERTIES, L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
("LANDLORD") and EVERGREENBANK, A
WASHINGTON CORPORATION ("TENANT"). The
following exhibits and attachments are
incorporated into and made a part of this
Lease: EXHIBIT A-1 (Outline and
Location of Premises), EXHIBIT A-2 (Legal
Description), EXHIBIT B (Expenses and
Taxes), EXHIBIT C (Work Letter), EXHIBIT D
(Commencement Letter - intentionally
omitted), EXHIBIT E (Building Rules and
Regulations), EXHIBIT F (Additional
Provisions) and EXHIBIT G (Outline and
Location of Offering Space).
1. BASIC LEASE
INFORMATION.
1.01
"BUILDING" shall mean
the building located at 1111 Third Avenue,
Seattle, Washington 98101 commonly known as 1111 Third Avenue.
"RENTABLE SQUARE FOOTAGE OF THE BUILDING" is deemed to be
554,945
square feet.
1.02
"PREMISES" shall mean
the area shown on EXHIBIT A-1 to this Lease.
The Premises is located on the 1st floor and known as suite 100.
If
the Premises include one or more floors in their entirety, all
corridors and restroom facilities located on such full floor(s)
shall be considered part of the Premises. The "RENTABLE SQUARE
FOOTAGE OF THE PREMISES" is deemed to be 7,588 square feet.
Landlord
and Tenant stipulate and agree that the Rentable Square Footage
of
the Building and the Rentable Square Footage of the Premises
are
correct.
1.03
"BASE RENT":
<TABLE>
<CAPTION>
ANNUAL RATE
MONTHLY
PERIOD OR MONTHS OF TERM
PER SQUARE FOOT
BASE RENT
------------------------
---------------
----------
<S>
<C>
<C>
MONTHS 1 - 12
$25.00
$15,808.33
MONTHS 13 - 24
$26.00
$16,440.66
MONTHS 25 - 36
$27.00
$17,073.00
MONTHS 37 - 48
$28.00
$17,705.33
MONTHS 49 - 60
$29.00
$18,337.67
MONTHS 61 - 72
$30.00
$18,970.00
MONTHS 73 - 84
$31.00
$19,602.33
MONTHS 85 - 96
$32.00
$20,234.67
MONTHS 97 - 108
$33.00
$20,867.00
MONTHS 109 - 120
$34.00
$21,499.33
</TABLE>
1.04
"TENANT'S PRO RATA
SHARE": 1.3673%.
1.05
"BASE YEAR" for Taxes
(defined in EXHIBIT B): 2005; "BASE YEAR" for
Expenses (defined in EXHIBIT B): 2005.
1.06
"TERM": A period of
120 months. Subject to Section 3, the Term shall
commence on May 1, 2005 (the "COMMENCEMENT DATE") and, unless
terminated early in accordance with this Lease, end on April
30,
2015 (the "TERMINATION DATE").
1.07
"ALLOWANCE(S)": $10.00
multiplied by the Rentable Square Footage of
the Premises per EXHIBIT C (Work Letter).
1.08
"SECURITY DEPOSIT":
None.
1.09
"GUARANTOR(S)":
None.
1.10
"BROKER(S)": Equity
Office Properties Management Corp., representing
Landlord.
1.11
"PERMITTED USE":
General office, banking and related services use;
provided that in no event shall the Premises, or any portion of
the
Premises, be used to sell at retail, whole or freshly ground
coffee
beans, gourmet, brand-identified brewed coffee and/or espresso
or
espresso-based drinks or coffee-based drinks of any kind.
1
<PAGE>
1.12
"NOTICE
ADDRESS(ES)":
Landlord:
Tenant:
EOP-Northwest Properties, L.L.C.
EvergreenBank
c/o Equity Office Management, L.L.C. c/o PEMCO Financial
Services
701 5th Avenue
Real Estate Department
Suite 4000
Attn: Barb
Thorsnes
Seattle, Washington 98104
325 Eastlake Ave. E.
Attn:Property Manager
PO Box 778
Seattle, WA 98111-0778
A copy of any notices to Landlord shall be sent to Equity
Office,
One Market, Spear Tower, Suite 600, San Francisco, California
94105,
Attn: Seattle Regional Counsel.
1.13
"BUSINESS DAY(S)" are
Monday through Friday of each week, exclusive
of New Year's Day, Presidents Day, Memorial Day, Independence
Day,
Labor Day, Thanksgiving Day and Christmas Day ("HOLIDAYS").
Landlord
may designate additional Holidays provided that they are
commonly
recognized by other comparable office buildings in the area
where
the Building is located. "BUILDING SERVICE HOURS" are 7:00 A.M.
to
6:00 P.M. on Business Days and 8:00 A.M. to 1:00 P.M. on
Saturdays.
1.14
"LANDLORD WORK:"
None.
1.15
"PROPERTY" means the
Building and the parcel(s) of land on which it
is located and, at Landlord's discretion, the parking facilities
and
other improvements, if any, serving the Building and the
parcel(s)
of land on which they are located.
2. LEASE GRANT.
The
Premises are hereby leased to Tenant from Landlord, together with
the
right to use any portions of the Property
that are designated by Landlord for
the common use of tenants and others (the
"COMMON AREAS").
3. ADJUSTMENT OF
COMMENCEMENT DATE; POSSESSION.
3.01
INTENTIONALLY
OMITTED.
3.02
Subject to Landlord's
obligation under Section 9.02, the Premises
are accepted by Tenant in "as is" condition
and configuration without any
representations or warranties by Landlord
regarding the condition of the
Premises or the Building. By taking
possession of the Premises, Tenant agrees
that the Premises are in good order and
satisfactory condition. Landlord shall
not be liable for a failure to deliver
possession of the Premises or any other
space due to the holdover or unlawful
possession of such space by another party,
however Landlord shall use reasonable
efforts to obtain possession of the space.
The commencement date for the space, in
such event, shall be postponed until the
date Landlord delivers possession of the
Premises to Tenant free from occupancy
by any party. If Tenant takes possession of
the Premises before the Commencement
Date, such possession shall be subject to
the terms and conditions of this Lease
and Tenant shall pay Rent (defined in
Section 4.01) to Landlord for each day of
possession before the Commencement Date.
Tenant shall not be required to pay
Rent for any days of possession before the
Commencement Date during which
Tenant, with the approval of Landlord, is
in possession of the Premises for the
sole purpose of performing improvements or
installing furniture, equipment or
other personal property, provided, however,
that during such period Tenant shall
be required to pay, as Additional Rent, for
the cost of services specifically
requested by Tenant (e.g., after-hours
HVAC), the cost of which is typically
charged to other tenants of the Building
during such construction and
installation period.
4. RENT.
4.01
Tenant shall pay
Landlord, without any setoff or deduction, unless
expressly set forth in this Lease, all Base
Rent and Additional Rent due for the
Term (collectively referred to as "RENT").
"ADDITIONAL RENT" means all sums
(exclusive of Base Rent) that Tenant is
required to pay Landlord under this
Lease. Tenant shall pay and be liable for
all rental, sales and use taxes (but
excluding income, business and occupation
taxes), if any, imposed upon or
measured by Rent. Base Rent and recurring
monthly charges of Additional Rent
shall be due and payable in advance on the
first day of each calendar month
without notice or demand,
2
<PAGE>
provided that the installment of Base Rent
for the first full calendar month of
the Term, and the first monthly installment
of Additional Rent for Expenses and
Taxes, shall be payable upon the execution
of this Lease by Tenant. All other
items of Rent shall be due and payable by
Tenant on or before 30 days after
billing by Landlord. Rent shall be made
payable to the entity, and sent to the
address, Landlord designates and shall be
made by good and sufficient check or
by other means acceptable to Landlord.
Tenant shall pay Landlord an
administration fee equal to 5% of all past
due Rent, provided that Tenant shall
be entitled to a grace period of 5 days
after written notice for the first late
payment of Rent in a calendar year. In
addition, past due Rent shall accrue
interest at 12% per annum. Landlord's
acceptance of less than the correct amount
of Rent shall be considered a payment on
account of the earliest Rent due. Rent
for any partial month during the Term shall
be prorated. No endorsement or
statement on a check or letter accompanying
payment shall be considered an
accord and satisfaction. Tenant's covenant
to pay Rent is independent of every
other covenant in this Lease.
4.02
Tenant shall pay
Tenant's Pro Rata Share of Taxes and Expenses in
accordance with EXHIBIT B of this
Lease.
5. COMPLIANCE WITH LAWS;
USE.
The
Premises shall be used for the Permitted Use and for no other
use
whatsoever. Tenant shall comply with all
statutes, codes, ordinances, orders,
rules and regulations of any municipal or
governmental entity whether in effect
now or later, including the Americans with
Disabilities Act ("LAW(S)"),
regarding the operation of Tenant's
business and the use, condition,
configuration and occupancy of the
Premises. In addition, Tenant shall, at its
sole cost and expense, promptly comply with
any Laws that relate to the "Base
Building" (defined below), but only to the
extent such obligations are triggered
by Tenant's particular use of the Premises,
other than for general office,
banking and related services uses, or
Alterations or improvements in the
Premises performed or requested by Tenant.
"BASE BUILDING" shall include the
structural portions of the Building, the
public restrooms and the Building
mechanical, electrical and plumbing systems
and equipment located in the
internal core of the Building on the floor
or floors on which the Premises are
located. Tenant shall promptly provide
Landlord with copies of any notices it
receives regarding an alleged violation of
Law. As of the date hereof, Landlord
has not received notice from any
governmental agencies that the Building is in
violation of Title III of the Americans
with Disabilities Act. Tenant shall
comply with the rules and regulations of
the Building attached as EXHIBIT E and
such other reasonable rules and regulations
adopted by Landlord from time to
time, including rules and regulations for
the performance of Alterations
(defined in Section 9). If there is a
conflict between this Lease and any rules
and regulations enacted after the date of
this Lease, the terms of this Lease
shall control. The rules and regulations
shall be generally applicable, and
generally applied in the same manner, to
all tenants of the Building.
6. SECURITY DEPOSIT.
INTENTIONALLY OMITTED.
7. BUILDING SERVICES.
7.01
Landlord shall furnish Tenant with the following services: (a)
water
for use in the Base Building lavatories;
(b) customary heat, ventilation and air
conditioning in season during Building
Service Hours, provided Tenant shall have
the right to receive HVAC service during
hours other than Building Service Hours
by paying Landlord's then standard charge
for additional HVAC service and
providing such prior notice as is
reasonably specified by Landlord; (c) standard
janitorial service on Business Days subject
to Tenant's reasonable security
requirements and restrictions and provided
that janitorial services can be
performed within normal and customary hours
(as of the date of this Lease,
Landlord does not provide such janitorial
services to the Premises on Fridays);
(d) elevator service; (e) electricity in
accordance with the terms and
conditions in Section 7.02; (f) access
control to monitor and control access to
the Building, consistent with office
buildings of comparable age, size and
condition in the vicinity of the Building,
which may be provided through a
system involving any one or a combination
of cameras, monitoring devices or
guards, sign-in or identification
procedures or other comparable system as
reasonably determined by Landlord; and (g)
such other services as Landlord
reasonably determines are necessary or
appropriate for the Property.
7.02
Electricity used by Tenant in the Premises shall be paid for by
Tenant through inclusion in Expenses,
except with respect to excess electrical
usage. The parties acknowledge that the
Premises are currently separately
metered for electrical usage, but that
Landlord and Tenant have elected not to
have Tenant pay directly for electrical
use. Without the consent of
3
<PAGE>
Landlord, Tenant's use of electrical
service shall not exceed, either in
voltage, rated capacity, use beyond
Building Service Hours or overall load, that
which Landlord reasonably deems to be
standard for the Building. Landlord shall
have the right to measure electrical usage
by commonly accepted methods. If it
is determined that Tenant is using excess
electricity, Tenant shall pay Landlord
for the cost of such excess electrical
usage as Additional Rent.
7.03 Landlord's failure to
furnish, or any interruption, diminishment or
termination of services due to the
application of Laws, the failure of any
equipment, the performance of repairs,
improvements or alterations, utility
interruptions or the occurrence of an event
of Force Majeure (defined in Section
26.03) (collectively a "SERVICE FAILURE")
shall not render Landlord liable to
Tenant, constitute a constructive eviction
of Tenant, give rise to an abatement
of Rent, nor relieve Tenant from the
obligation to fulfill any covenant or
agreement. However, if the Premises, or a
material portion of the Premises, are
made untenantable for a period in excess of
3 consecutive Business Days as a
result of a Service Failure that is
reasonably within the control of Landlord to
correct, then Tenant, as its sole remedy,
shall be entitled to receive an
abatement of Rent payable hereunder during
the period beginning on the 4th
consecutive Business Day of the Service
Failure and ending on the day the
service has been restored. If the entire
Premises have not been rendered
untenantable by the Service Failure, the
amount of abatement shall be equitably
prorated.
8. LEASEHOLD
IMPROVEMENTS.
All improvements in and to
the Premises, including any Alterations
(collectively, "LEASEHOLD IMPROVEMENTS")
shall remain upon the Premises at the
end of the Term without compensation to
Tenant. Landlord, however, by written
notice to Tenant at the time Landlord
approves the plans and specifications for
such improvements, may require Tenant, at
its expense, to remove (a) any Cable
(defined in Section 9.01) installed by or
for the benefit of Tenant, and (b)
Alterations that, in Landlord's reasonable
judgment, are of a nature that would
require removal and repair costs that are
materially in excess of the removal
and repair costs associated with standard
office improvements (collectively
referred to as "REQUIRED REMOVABLES").
Tenant shall not be required to remove
any item Landlord determines that a future
tenant will use any such item that
otherwise qualifies as a Required
Removable, then Tenant shall not be obligated
to remove (or pay for) the same. Required
Removables shall include, without
limitation, internal stairways, raised
floors, personal baths and showers,
vaults, safe deposit boxes and rolling file
systems, the teller line, the ATM
and night deposit (defined in Exhibit F),
any specialized HVAC installed by or
for Tenant, and structural alterations and
modifications. However, it is agreed
that Required Removables shall not include
any usual office improvements such as
gypsum board, partitions, ceiling grids and
tiles, fluorescent lighting panels,
Building standard doors and non-glued down
carpeting. Subject to the foregoing
and the terms of Section 25 hereof, none of
the installations in the Premises as
of the date hereof shall be designated
Required Removables. The designated
Required Removables shall be removed by
Tenant before the Termination Date.
Tenant shall repair damage caused by the
installation or removal of Required
Removables. If Tenant fails to perform its
obligations in a timely manner,
Landlord may perform such work at Tenant's
expense. Tenant, at the time it
requests approval for a proposed
Alteration, including the Initial Alterations,
may request in writing that Landlord advise
Tenant whether the Alteration or any
portion of the Alteration, or Initial
Alterations or any portion of the Initial
Alterations, is a Required Removable.
9. REPAIRS AND
ALTERATIONS.
9.01 Tenant shall
periodically inspect the Premises to identify any
conditions that are dangerous or in need of
maintenance or repair. Tenant shall
promptly provide Landlord with notice of
any such conditions. Tenant shall, at
its sole cost and expense, perform all
maintenance and repairs to the Premises
that are not Landlord's express
responsibility under this Lease, and keep the
Premises in good condition and repair,
reasonable wear and tear excepted.
Tenant's repair and maintenance obligations
include, without limitation, repairs
to: (a) floor covering; (b) interior
partitions; (c) doors; (d) the interior
side of demising walls; (e) electronic,
phone and data cabling and related
equipment that is installed by or for the
exclusive benefit of Tenant
(collectively, "CABLE"); (f) supplemental
air conditioning units, kitchens,
including hot water heaters, plumbing, and
similar facilities exclusively
serving Tenant; and (g) Alterations. To the
extent Landlord is not reimbursed by
insurance proceeds, Tenant shall reimburse
Landlord for the cost of repairing
damage to the Building caused by the
negligent or willful acts of Tenant, Tenant
Related Parties (defined in Section 13). If
Tenant fails to commence any repairs
to the Premises within 15 days after notice
from Landlord (although notice shall
not be required in an emergency), Landlord
may make the repairs, and Tenant
shall pay the reasonable cost of the
repairs, together with an administrative
charge in an amount equal to 10% of the
cost of the repairs.
4
<PAGE>
9.02 Landlord shall keep and
maintain in good repair and working order and
perform maintenance upon the: (a) Base
Building and all structural elements of
the Building; (b) mechanical (including
HVAC), electrical, plumbing and
fire/life safety systems serving the
Building in general; (c) Common Areas; (d)
roof of the Building; (e) exterior
(including) windows of the Building; and (f)
elevators serving the Building. Landlord
shall promptly make repairs for which
Landlord is responsible. Landlord will
manage and maintain the Building in a
manner consistent with office buildings of
similar class, size, and age as the
Building located in the vicinity of the
Building.
9.03 Tenant shall not make
alterations, repairs, additions or improvements or
install any Cable (collectively referred to
as "ALTERATIONS") without first
obtaining the written consent of Landlord
in each instance, which consent shall
not be unreasonably withheld or delayed.
However, Landlord's consent shall not
be required for any Alteration that
satisfies all of the following criteria (a
"COSMETIC ALTERATION"): (a) is of a
cosmetic nature such as painting,
wallpapering, hanging pictures and
installing carpeting; (b) is not visible from
the exterior of the Premises or Building;
(c) will not affect the Base Building;
and (d) does not require work to be
performed inside the walls or above the
ceiling of the Premises. Cosmetic
Alterations shall be subject to all the other
provisions of this Section 9.03. Prior to
starting work, Tenant shall furnish
Landlord with plans and specifications;
names of contractors reasonably
acceptable to Landlord (provided that
Landlord may designate specific
contractors with respect to Base Building);
required permits and approvals; and
evidence of contractor's and
subcontractor's insurance in amounts reasonably
required by Landlord and naming Landlord as
an additional insured. Changes to
the plans and specifications must also be
submitted to Landlord for its
approval. Alterations shall be constructed
in a good and workmanlike manner
using materials of a quality reasonably
approved by Landlord. Tenant shall
reimburse Landlord for any reasonable and
customary sums paid by Landlord for
third party examination of Tenant's plans
for non-Cosmetic Alterations. In
addition, Tenant shall pay Landlord a fee
for Landlord's oversight and
coordination of any non-Cosmetic
Alterations equal to $110.00 (the "Initial
Hourly Rate") multiplied by the number of
hours of Landlord's employees spent in
such oversight and coordination. The
Initial Hourly Rate shall be subject to the
annual escalation in accordance with
changes in the CPI in the same manner that
the Minimum Net worth is subject to
escalation pursuant to Section 11.04 below.
Upon completion, Tenant shall furnish
"as-built" plans for non-Cosmetic
Alterations, completion affidavits and full
and final waivers of lien.
Landlord's approval of an Alteration shall
not be deemed a representation by
Landlord that the Alteration complies with
Law.
10. ENTRY BY LANDLORD.
10.01 Landlord may enter the
Premises to inspect, show or clean the Premises
or to perform or facilitate the performance
of repairs, alterations or additions
to the Premises or any portion of the
Building. Except in emergencies or to
provide necessarily urgent Building
services, Landlord shall provide Tenant with
at least 24 hours prior notice (or in the
event of emergency or if not practical
under the circumstances reasonable prior
verbal notice) of entry and shall use
reasonable efforts to minimize any
interference with Tenant's use of the
Premises. If necessary, as determined in
Landlord's sole discretion, Landlord
may temporarily close all or a portion of
the Premises to perform repairs,
alterations and additions. However, except
in emergencies, Landlord will not
close the Premises if the work can
reasonably be completed on weekends and after
Building Service Hours. Except as otherwise
specifically provided in this
Article, entry by Landlord shall not
constitute a constructive eviction or
entitle Tenant to an abatement or reduction
of Rent. Notwithstanding the
foregoing, if Landlord temporarily closes
the Premises as provided above for a
period in excess of 3 consecutive Business
Days, Tenant, as its sole remedy,
shall be entitled to receive a per diem
abatement of Base Rent during the period
beginning on the 4th consecutive Business
Day of closure and ending on the date
on which the Premises are returned to
Tenant in a tenantable condition. Tenant,
however, shall not be entitled to an
abatement if the repairs, alterations
and/or additions to be performed are
required as a result of the acts or
omissions of Tenant, its agents, employees
or contractors, including, without
limitation, a Default by Tenant in its
maintenance and repair obligations under
the Lease.
10.02 Notwithstanding the
foregoing, Tenant may, at its own expense, provide
its own locks to an area within the
Premises, which may include a vault
("SECURED AREA"). Tenant need not furnish
Landlord with a key but upon the
Termination Date, Tenant shall surrender
all such keys to Landlord. If Landlord
must gain access to a Secured Area in a
non-emergency situation, Landlord shall
contact Tenant and Landlord and Tenant
shall arrange a mutually agreed upon time
for Landlord to do so. Landlord shall
comply with all reasonable security
measures pertaining to the Premises and the
Secured Area. If Landlord determines
in its sole discretion
5
<PAGE>
that an emergency in the Building or the
Premises, including, without
limitation, a suspected fire or flood,
requires Landlord to gain access to the
Secured Area, Tenant hereby authorizes
Landlord to forcibly enter the Secured
Area. In such event, Landlord shall have no
liability whatsoever to Tenant, and
Tenant shall pay all reasonable expenses
incurred by Landlord in repairing or
reconstructing any entrance, corridor, door
or other portions of the Premises
damaged as a result of a forcible entry by
Landlord. Landlord shall have no
obligation to provide either janitorial
service or cleaning in the Secured Area.
11. ASSIGNMENT AND
SUBLETTING.
11.01 Except in connection
with a Permitted Transfer (defined in Section
11.04) or Ownership Change (defined in
Section 11.04), Tenant shall not assign,
sublease, transfer or encumber any interest
in this Lease or allow any third
party to use any portion of the Premises
(collectively or individually, a
"TRANSFER") without the prior written
consent of Landlord, which consent shall
not be unreasonably withheld, conditioned
or delayed if Landlord does not
exercise its recapture rights under Section
11.02. If the entity which controls
the voting shares/rights of Tenant changes
at any time, such change of ownership
or control shall constitute a Transfer
unless Tenant is an entity whose
outstanding stock is listed on a recognized
securities exchange or if at least
80% of its voting stock is owned by another
entity, the voting stock of which is
so listed; provided, however, that the
foregoing provision shall not apply so
long as the Tenant is a regulated banking
institution. Any attempted Transfer in
violation of this Section is voidable by
Landlord. In no event shall any
Transfer, including a Permitted Transfer,
release or relieve Tenant from any
obligation under this Lease.
11.02 Tenant shall provide
Landlord with financial statements for the
proposed transferee, a fully executed copy
of the proposed assignment, sublease
or other Transfer documentation and such
other information as Landlord may
reasonably request. Within 15 Business Days
after receipt of the required
information and documentation, Landlord
shall either: (a) consent to the
Transfer by execution of a consent
agreement in a form reasonably designated by
Landlord; (b) reasonably refuse to consent
to the Transfer in writing (this
clause (b) will not be applicable to a
Permitted Transfer); or (c) in the event
of an assignment of this Lease or
subletting of more than 20% of the Rentable
Square Footage of the Premises for more
than 50% of the remaining Term
(excluding unexercised options), recapture
the portion of the Premises that
Tenant is proposing to Transfer. If
Landlord exercises its right to recapture,
this Lease shall automatically be amended
(or terminated if the entire Premises
is being assigned or sublet) to delete the
applicable portion of the Premises
effective on the proposed effective date of
the Transfer. Tenant shall pay
Landlord a review fee of $1,500.00 for
Landlord's review of any Permitted
Transfer or requested Transfer.
11.03 Tenant shall pay
Landlord 50% of all rent and other consideration which
Tenant receives as a result of a Transfer
in accordance with generally accepted
accounting procedures that is in excess of
the Rent payable to Landlord for the
portion of the Premises and Term covered by
the Transfer. Tenant shall pay
Landlord for Landlord's share of the excess
within 30 days after Tenant's
receipt of the excess. Tenant may deduct
from the excess, on a straight-line
basis, all reasonable and customary
expenses directly incurred by Tenant
attributable to the Transfer. If Tenant is
in Default, Landlord may require that
all sublease payments be made directly to
Landlord, in which case Tenant shall
receive a credit against Rent in the amount
of Tenant's share of payments
received by Landlord.
11.04 Tenant may assign this
Lease to a successor to Tenant by purchase,
merger, consolidation or reorganization (an
"OWNERSHIP CHANGE") or assign this
Lease or sublet all or a portion of the
Premises to an Affiliate without the
consent of Landlord, provided that all of
the following conditions are satisfied
(a "PERMITTED TRANSFER"): (a) Tenant is not
in Default; (b) in the event of an
Ownership Change, Tenant's successor shall
own substantially all of the assets
of Tenant and have a net worth which is at
least equal to $17,000,000.00 (the
"Minimum Net Worth"); (c) the Permitted Use
does not allow the Premises to be
used for retail purposes, except as
specifically specified in Section 1.11 of
this Lease; and (d) Tenant shall give
Landlord written notice at least 15
Business Days prior to the effective date
of the Permitted Transfer (unless the
transaction is subject to confidentiality
obligations). Tenant's notice to
Landlord shall include information and
documentation evidencing the Permitted
Transfer and showing that each of the above
conditions has been satisfied. If
requested by Landlord, Tenant's successor
shall sign a commercially reasonable
form of assumption agreement. "AFFILIATE"
shall mean an entity controlled by,
controlling or under common control with
Tenant. Notwithstanding the foregoing
to the contrary, the Minimum Net Worth
shall be subject to adjustment, as of
each anniversary of the Commencement Date
(each an "Adjustment Date") to equal
the initial Minimum Net Worth increased by
the percentage increase in the CPI
(defined below) most recently issued as of
the date immediately preceding the
applicable Adjustment Date (an
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"Adjustment Index") over the CPI issued
most recently prior to the Commencement
Date (the "Base CPI"). For example, if the
Base CPI is 100, and the Adjustment
CPI applicable to the third (3rd)
anniversary of the Commencement Date is 114,
then the Minimum Net Worth applicable to
the fourth (4th) year of the Term shall
be the Initial Minimum Net Worth, increased
by fourteen percent (14%). As used
herein, the "CPI" shall mean the Consumer
Price Index, for All Urban Companies
("CPI-U), U.S. City Average, 1982-84=100
issued by the Bureau of Labor Statutes.
If such index is no longer published,
Landlord shall select another index.
12. LIENS.
Tenant shall not permit
mechanics' or other liens to be placed upon the
Property, Premises or Tenant's leasehold
interest in connection with any work or
service done or purportedly done by or for
the benefit of Tenant or its
transferees. Tenant shall give Landlord
notice at least 15 days prior to the
commencement of any work in the Premises to
afford Landlord the opportunity,
where applicable, to post and record
notices of non-responsibility. Tenant,
within 10 days of notice from Landlord,
shall fully discharge any lien by
settlement, by bonding or by insuring over
the lien in the manner prescribed by
the applicable lien Law. If Tenant fails to
do so, Landlord may bond, insure
over or otherwise discharge the lien.
Tenant shall reimburse Landlord for any
amount paid by Landlord, including, without
limitation, reasonable attorneys'
fees.
13. INDEMNITY AND WAIVER OF
CLAIMS.
Tenant hereby waives all
claims against and releases Landlord and its
trustees, members, principals,
beneficiaries, partners, officers, directors,
employees, Mortgagees (defined in Section
23) and agents (the "LANDLORD RELATED
PARTIES") from all claims for any injury to
or death of persons, damage to
property or business loss in any manner
related to (a) Force Majeure, (b) acts
of third parties, (c) the bursting or
leaking of any tank, water closet, drain
or other pipe, (d) the inadequacy or
failure of any security services, personnel
or equipment, or (e) any matter not within
the reasonable control of Landlord.
Notwithstanding the foregoing, except as
provided in Section 15 to the contrary,
Tenant shall not be required to waive any
claims against Landlord (other than
for loss or damage to Tenant's business)
where such loss or damage is due to
Landlord's negligence or uncured Default
under this Lease. Nothing herein shall
be construed as to diminish the repair and
maintenance obligations of Landlord
contained elsewhere in this Lease. Except
to the extent caused by the negligence
or willful misconduct of Landlord or any
Landlord Related Parties, or Landlord's
contractors, Tenant shall, subject to
Section 15 of this Lease, indemnify,
defend and hold Landlord and Landlord
Related Parties harmless against and from
all liabilities, obligations, damages,
penalties, claims, actions, costs,
charges and expenses, including, without
limitation, reasonable attorneys' fees
and other professional fees (if and to the
extent permitted by Law)
(collectively referred to as "LOSSES"),
which may be imposed upon, incurred by
or asserted against Landlord or any of the
Landlord Related Parties by any third
party and arising out of or in connection
with any damage or injury occurring in
the Premises or any acts or omissions
(including violations of Law) of Tenant,
the Tenant Related Parties or any of
Tenant's transferees, contractors or
licensees. Except to the extent caused by
the negligence or willful misconduct
of Tenant or any Tenant Related Parties, or
Tenant's contractors, Landlord
shall, subject to Section 15 of this Lease,
indemnify, defend and hold Tenant,
its trustees, members, principals,
beneficiaries, partners, officers, directors,
employees and agents ("TENANT RELATED
PARTIES") harmless against and from all
Losses which may be imposed upon, incurred
by or asserted against Tenant or any
of the Tenant Related Parties by any third
party and arising out of or in
connection with the acts or omissions
(including violations of Law) of Landlord
or the Landlord Related Parties or any of
Landlord's contractors.
14. INSURANCE.
14.01 Tenant shall maintain
the following insurance ("TENANT'S INSURANCE"):
(a) Commercial General Liability Insurance
applicable to the Premises and its
appurtenances providing, on an occurrence
basis, a minimum combined single limit
of $2,000,000.00; (b) Property/Business
Interruption Insurance written on an All
Risk or Special Perils form, with coverage
for broad form water damage including
earthquake sprinkler leakage, at
replacement cost value and with a replacement
cost endorsement covering all of Tenant's
business and trade fixtures,
equipment, movable partitions, furniture,
merchandise and other personal
property within the Premises ("TENANT'S
PROPERTY") and any Leasehold
Improvements performed by or for the
benefit of Tenant; (c) Workers'
Compensation Insurance in amounts required
by Law; and (d) Employers Liability
Coverage of at least $1,000,000.00 per
occurrence (provided that if this
coverage is unavailable from the Worker's
Compensation carrier or applicable
State Fund, a "Stop Gap Liability"
endorsement to the Commercial General
Liability
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Policy is acceptable). Any company writing
Tenant's Insurance shall have an A.M.
Best rating of not less than A-VIII. All
Commercial General Liability Insurance
policies shall name as additional insureds
Landlord (or its successors and
assignees), the managing agent for the
Building (or any successor), EOP
Operating Limited Partnership, Equity
Office Properties Trust and their
respective members, principals,
beneficiaries, partners, officers, directors,
employees, and agents, and other designees
of Landlord and its successors as the
interest of such designees shall appear.
All policies of Tenant's Insurance
shall contain endorsements that the
insurer(s) shall give Landlord and its
designees at least 30 days' advance written
notice of any cancellation,
termination, material change or lapse of
insurance. Tenant shall provide
Landlord with a certificate of insurance
evidencing Tenant's Insurance prior to
the earlier to occur of the Commencement
Date or the date Tenant is provided
with possession of the Premises, and
thereafter as necessary to assure that
Landlord always has current certificates
evidencing Tenant's Insurance.
14.02 Landlord shall
maintain the following insurance ("LANDLORD'S
INSURANCE"), the premiums of which will be
included in Expenses: (1) Commercial
General Liability insurance applicable to
the Property, Building and Common
Areas providing, on an occurrence basis, a
minimum combined single limit of at
least $2,000,000.00; (2) All Risk Property
Insurance on the Building at
replacement cost value; (3) Worker's
Compensation insurance as required by the
state in which the Building is located and
in amounts as may be required by
applicable statute; and (4) Employers
Liability Coverage of at least
$1,000,000.00 per occurrence.
14.03 Except as specifically
provided to the contrary, the limits of either
party's insurance shall not limit such
party's liability under this Lease.
15. SUBROGATION.
Landlord and Tenant hereby
waive and shall cause their respective insurance
carriers to waive any and all rights of
recovery, claims, actions or causes of
action against the other for any loss or
damage with respect to Tenant's
Property, Leasehold Improvements, the
Building, the Premises, or any contents
thereof, including rights, claims, actions
and causes of action based on
negligence, which loss or damage is (or
would have been, had the insurance
required by this Lease been carried)
covered by property insurance.
16. CASUALTY DAMAGE.
16.01 If all or any portion
of the Premises becomes untenantable by fire or
other casualty to the Premises
(collectively a "CASUALTY"), Landlord, with
reasonable promptness, shall cause a
general contractor selected by Landlord to
provide Landlord and Tenant with a written
estimate of the amount of time
required using standard working methods to
Substantially Complete the repair and
restoration of the Premises and any Common
Areas necessary to provide access to
the Premises (including all permanent
improvements located therein) ("COMPLETION
ESTIMATE"). If the Completion Estimate
indicates that the Premises or any Common
Areas necessary to provide access to the
Premises cannot be made tenantable
within 270 days from the date the repair is
started, then either party shall
have the right to terminate this Lease upon
written notice to the other within
10 days after receipt of the Completion
Estimate. Tenant, however, shall not
have the right to terminate this Lease if
the Casualty was caused by the
negligence or intentional misconduct of
Tenant or any Tenant Related Parties. In
addition, Landlord, by notice to Tenant
within 90 days after the date of the
Casualty, shall have the right to terminate
this Lease if: (1) the Premises have
been materially damaged and there is less
than 2 years of the Term remaining on
the date of the Casualty; (2) any Mortgagee
requires that the insurance proceeds
be applied to the payment of the mortgage
debt; or (3) a material uninsured loss
to the Building occurs. Tenant shall have
the right to terminate this Lease if:
(a) a substantial portion of the Premises
has been damaged by Casualty and such
damage cannot reasonably be repaired within
60 days after receipt of the
Completion Estimate; (b) there is less than
1 year of the Term remaining on the
date of the Casualty; (c) the Casualty was
not caused by the negligence or
willful misconduct of Tenant or its agents,
employees or contractors; and (d)
Tenant provides Landlord with written
notice of its intent to terminate within
30 days after the date of Tenant's receipt
of the Completion Estimate. Landlord
shall not terminate this Lease pursuant to
this Section 16.01 unless it also
terminates the leases of all similarly
affected office tenants in the Building.
In determining whether other tenants are
similarly affected, Landlord shall be
entitled to consider all relevant factors
such as the extent of damage, the time
to rebuild, the availability of insurance
proceeds and the rights of the tenants
in question to impose penalties upon
Landlord (including the right to terminate)
if the repairs are not completed within a
specified period of time. However,
Landlord shall not be entitled to consider
the rental rates payable under the
leases in question in its determination
of
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whether to terminate or rebuild.
16.02 If this Lease is not
terminated, Landlord shall promptly and
diligently, subject to reasonable delays
for insurance adjustment or other
matters beyond Landlord's reasonable
control, restore the Building, the Premises
and Common Areas. Such restoration shall be
to substantially the same condition
that existed prior to the Casualty, except
for modifications required by Law or
any other modifications to the Common Areas
deemed desirable by Landlord. Upon
notice from Landlord, Tenant shall assign
to Landlord (or to any party
designated by Landlord) all property
insurance proceeds payable to Tenant under
Tenant's Insurance with respect to any
Leasehold Improvements performed by or
for the benefit of Tenant; provided if the
estimated cost to repair such
Leasehold Improvements exceeds the amount
of insurance proceeds received by
Landlord from Tenant's insurance carrier,
the excess cost of such repairs shall
be paid by Tenant to Landlord prior to
Landlord's commencement of repairs.
Within 15 days of demand, Tenant shall also
pay Landlord for any additional
excess costs that are determined during the
performance of the repairs. Landlord
shall not be liable for any inconvenience
to Tenant, or injury to Tenant's
business resulting in any way from the
Casualty or the repair thereof. Provided
that Tenant is not in Default, during any
period of time that all or a material
portion of the Premises is rendered
untenantable as a result of a Casualty, the
Rent shall abate for the portion of the
Premises that is untenantable and not
used by Tenant.
17. CONDEMNATION.
Either party may terminate
this Lease if any material part of the Premises is
taken or condemned for any public or
quasi-public use under Law, by eminent
domain or private purchase in lieu thereof
(a "TAKING"). Landlord shall also
have the right to terminate this Lease if
there is a Taking of any portion of
the Building or Property which would have a
material adverse effect on
Landlord's ability to profitably operate
the remainder of the Building. The
terminating party shall provide written
notice of termination to the other party
within 45 days after it first receives
notice of the Taking. The termination
shall be effective on the date the physical
taking occurs. If this Lease is not
terminated, Base Rent and Tenant's Pro Rata
Share shall be appropriately
adjusted to account for any reduction in
the square footage of the Building or
Premises. All compensation awarded for a
Taking shall be the property of
Landlord. The right to receive compensation
or proceeds are expressly waived by
Tenant, however, Tenant may file a separate
claim for Tenant's Property and
Tenant's reasonable relocation expenses,
provided the filing of the claim does
not diminish the amount of Landlord's
award. If only a part of the Premises is
subject to a Taking and this Lease is not
terminated, Landlord, with reasonable
diligence, will restore the remaining
portion of the Premises as nearly as
practicable to the condition immediately
prior to the Taking.
18. EVENTS OF DEFAULT.
Each of the following
occurrences shall be a "DEFAULT": (a) Tenant's failure
to pay any portion of Rent when due, if the
failure continues for 5 Business
Days after written notice to Tenant
("MONETARY DEFAULT"); (b) Tenant's failure
(other than a Monetary Default) to comply
with any term, provision, condition or
covenant of this Lease, if the failure is
not cured within 20 days after written
notice to Tenant provided, however, if
Tenant's failure to comply cannot
reasonably be cured within 20 days, Tenant
shall be allowed additional time (not
to exceed 60 days) as is reasonably
necessary to cure the failure so long as
Tenant begins the cure within 20 days and
diligently pursues the cure to
completion; (c) Tenant or any Guarantor
becomes insolvent, makes a transfer in
fraud of creditors, makes an assignment for
the benefit of creditors, admits in
writing its inability to pay its debts when
due or forfeits or loses its right
to conduct business; (d) the leasehold
estate is taken by process or operation
of Law; (e) in the case of any ground floor
or retail Tenant, Tenant does not
take possession of or abandons or vacates
all or any portion of the Premises
(notwithstanding the foregoing, Landlord
acknowledges that Tenant may, from time
to time, not use or occupy all of the
portion of the Premises which are not
visible from the lobby or the storefront
windows, which shall not be an event of
abandonment so long at the teller line and
main public areas of the branch are
in reasonable use); or (f) Tenant is in
default beyond any notice and cure
period under any other lease or agreement
with Landlord at the Building or
Property. All notices sent under this
Section shall be in satisfaction of, and
not in addition to, notice required by Law
provided that any such notices are in
the form and are delivered as required by
such Law.
19. REMEDIES.
19.01 Upon Default, Landlord
shall have the right to pursue any one or more
of the following remedies:
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(a)
Terminate this Lease, in which case Tenant shall immediately
surrender
the Premises to Landlord. If
Tenant fails to surrender the Premises,
Landlord, in compliance with
Law, may enter upon and take possession of the
Premises and remove Tenant,
Tenant's Property and any party occupying the
Premises. Tenant shall pay
Landlord, on demand, all past due Rent and other
losses and damages Landlord
suffers as a result of Tenant's Default,
including, without
limitation, all Costs of Reletting (defined below) and any
deficiency that may arise
from reletting or the failure to relet the
Premises. "COSTS OF
RELETTING" shall include all reasonable costs and
expenses incurred by
Landlord in reletting or attempting to relet the
Premises, including, without
limitation, legal fees, brokerage commissions,
the cost of alterations and
the value of other concessions or allowances
granted to a new tenant.
Notwithstanding the foregoing, if Landlord relets
the Premises for a term (the
"RELET TERM") that extends past the stated
Termination Date (without
consideration of any earlier termination pursuant
to this Section 19.01), the
Proratable Costs of Reletting (hereinafter
defined) shall be applied as
provided herein based on the percentage that the
length of the Term remaining
hereunder on the date Landlord terminates the
Lease or Tenant's right to
possession bears to the length of the Relet Term.
For example, if there are 2
years left on the Term at the time that Landlord
terminates possession and,
prior to the expiration of such 2 year period,
Landlord enters into a Relet
Term of 10 years with a new tenant, 20% of the
Proratable Costs of
Reletting shall be considered in determining Landlord's
damages. "PRORATABLE COSTS
OF RELETTING" shall mean the cost of renovating,
decorating and altering the
Premises (except to the extent that such work is
necessary due to the acts of
Tenant, it agents, employees or contractors or
for damage to the Premises
other than ordinary wear and tear), brokerage
fees, and other concessions
granted to the new tenant such as a moving
allowance, lease assumption
and rental abatement. Notwithstanding anything
herein to the contrary, it
is agreed that Costs of Reletting shall be offset
against the rent that
Landlord receives in connection with a reletting of the
Premises and in no event
shall the total damages payable by Tenant hereunder
exceed the amount for which
Tenant would be liable if Landlord had not relet
the Premises or incurred any
Costs of Reletting. Landlord agrees to use
reasonable efforts to
mitigate damages, provided that such reasonable efforts
shall not require Landlord
to relet the Premises in preference to any other
space in the Building or to
relet the Premises to any party that Landlord
could reasonably reject as a
transferee pursuant to Section 11 hereof.
(b)
Terminate Tenant's right to possession of the Premises and, in
compliance with Law, remove
Tenant, Tenant's Property and any parties
occupying the Premises.
Landlord may (but shall not be obligated to) relet
all or any part of the
Premises, without notice to Tenant, for such period of
time and on such terms and
conditions (which may include concessions, free
rent and work allowances) as
Landlord in its reasonable discretion shall
determine. Landlord may
collect and receive all rents and other income from
the reletting. Tenant shall
pay Landlord on demand all past due Rent, all
Costs of Reletting (prorated
as described above in Section 19.01(a)) and any
deficiency arising from the
reletting or failure to relet the Premises. The
re-entry or taking of
possession of the Premises shall not be construed as an
election by Landlord to
terminate this Lease.
19.02 In lieu of calculating
damages under Section 19.01, Landlord may elect
to receive as damages the sum of (a) all
Rent accrued through the date of
termination of this Lease or Tenant's right
to possession, and (b) an amount
equal to the total Rent that Tenant would
have been required to pay for the
remainder of the Term discounted to present
value at nine percent (9%) per
annum, minus the then present fair rental
value of the Premises for the
remainder of the Term, similarly
discounted, after deducting all anticipated
Costs of Reletting. If Tenant is in Default
of any of its non-monetary
obligations under the Lease, Landlord shall
have the right to perform such
obligations. Tenant shall reimburse
Landlord for the cost of such performance
upon demand together with an administrative
charge equal to seven percent (7%)
of the cost of the work performed by
Landlord. The repossession or re-entering
of all or any part of the Premises shall
not relieve Tenant of its liabilities
and obligations under this Lease. No right
or remedy of Landlord shall be
exclusive of any other right or remedy.
Each right and remedy shall be
cumulative and in addition to any other
right and remedy now or subsequently
available to Landlord at Law or in equity.
Landlord agrees to use reasonable
efforts to mitigate damages, provided that
such reasonable efforts shall not
require Landlord to relet the Premises in
preference to any other space in the
Building or to relet the Premises to any
party that Landlord could reasonably
reject as a transferee pursuant to Section
11 hereof.
20. LIMITATION OF LIABILITY.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE,
THE
LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR
LANDLORD) SHALL BE
10
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LIMITED TO THE LESSER OF (A) THE INTEREST
OF LANDLORD IN THE PROPERTY, OR (B)
THE EQUITY INTEREST LANDLORD WOULD HAVE IN
THE PROPERTY IF THE PROPERTY WERE
ENCUMBERED BY THIRD PARTY DEBT IN AN AMOUNT
EQUAL TO 70% OF THE VALUE OF THE
PROPERTY. TENANT SHALL LOOK SOLELY TO
LANDLORD'S INTEREST IN THE PROPERTY FOR
THE RECOVERY OF ANY JUDGMENT OR AWARD
AGAINST LANDLORD OR ANY LANDLORD RELATED
PARTY. NEITHER LANDLORD NOR ANY LANDLORD
RELATED PARTY SHALL BE PERSONALLY
LIABLE FOR ANY JUDGMENT OR DEFICIENCY, AND
IN NO EVENT SHALL LANDLORD OR ANY
LANDLORD RELATED PARTY BE LIABLE TO TENANT
FOR ANY LOST PROFIT, DAMAGE TO OR
LOSS OF BUSINESS OR ANY FORM OF SPECIAL,
INDIRECT OR CONSEQUENTIAL DAMAGE.
BEFORE FILING SUIT FOR AN ALLEGED DEFAULT
BY LANDLORD, TENANT SHALL GIVE
LANDLORD AND THE MORTGAGEE(S) WHOM TENANT
HAS BEEN NOTIFIED HOLD MORTGAGES
(DEFINED IN SECTION 23 BELOW), NOTICE AND
REASONABLE TIME TO CURE THE ALLEGED
DEFAULT.
21. RELOCATION.
[INTENTIONALLY OMITTED]
22. HOLDING OVER.
If Tenant fails to surrender
all or any part of the Premises at the
termination of this Lease, occupancy of the
Premises after termination shall be
that of a tenancy at sufferance. Tenant's
occupancy shall be subject to all the
terms and provisions of this Lease, and
Tenant shall pay an amount (on a per
month basis without reduction for partial
months during the holdover) equal to
150% of the sum of the Base Rent and
Additional Rent due for the period
immediately preceding the holdover. No
holdover by Tenant or payment by Tenant
after the termination of this Lease shall
be construed to extend the Term or
prevent Landlord from immediate recovery of
possession of the Premises by
summary proceedings or otherwise. If
Landlord is unable to deliver possession of
the Premises to a new tenant or to perform
improvements for a new tenant as a
result of Tenant's holdover and Tenant
fails to vacate the Premises within 15
days after notice from Landlord, Tenant
shall be liable for all damages that
Landlord suffers from the holdover.
23. SUBORDINATION TO MORTGAGES;
ESTOPPEL CERTIFICATE.
23.01 Tenant accepts this
Lease subject and subordinate to any mortgage(s),
deed(s) of trust, ground lease(s) or other
lien(s) now or subsequently arising
upon the Premises, the Building or the
Property, and to renewals, modifications,
refinancings and extensions thereof
(collectively referred to as a "MORTGAGE").
The party having the benefit of a Mortgage
shall be referred to as a
"MORTGAGEE". This clause shall be
self-operative, but upon request from a
Mortgagee, Tenant shall execute a
commercially reasonable subordination
agreement in favor of the Mortgagee. As an
alternative, a Mortgagee shall have
the right at any time to subordinate its
Mortgage to this Lease. Upon request,
Tenant, without charge, shall attorn to any
successor to Landlord's interest in
this Lease. Landlord and Tenant shall each,
within 10 Business Days after
receipt of a written request from the
other, execute and deliver a commercially
reasonable estoppel certificate to those
parties as are reasonably requested by
the other (including a Mortgagee or
prospective purchaser). Without limitation,
such estoppel certificate may include a
certification as to the status of this
Lease, Tenant's knowledge of the existence
of any defaults and the amount of
Rent that is due and payable.
23.02 Notwithstanding the
foregoing, upon written request by Tenant, Landlord
will use reasonable
