<PAGE>
EXHIBIT 10.19
110 ATRIUM PLACE
BELLEVUE, WASHINGTON
OFFICE LEASE AGREEMENT
BETWEEN
WA-110 ATRIUM PLACE, L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY
("LANDLORD")
AND
BSQUARE CORPORATION,
A WASHINGTON CORPORATION
("TENANT")
<PAGE>
OFFICE LEASE AGREEMENT
THIS OFFICE LEASE AGREEMENT (the "LEASE") is made and entered into
as
of January 1, 2004, by and between WA-110
ATRIUM PLACE, L.L.C., A DELAWARE
LIMITED LIABILITY COMPANY ("LANDLORD"), and
BSQUARE CORPORATION, A WASHINGTON
CORPORATION ("TENANT"). The following
exhibits and attachments are incorporated
into and made a part of this Lease:
ADDENDUM, EXHIBIT A-1 (Outline and Location
of Premises), EXHIBIT A-2 (Legal
Description of Property), EXHIBIT B (Expenses
and Taxes), EXHIBIT C (Work Letter -
INTENTIONALLY OMITTED), EXHIBIT D
(Commencement Letter - INTENTIONALLY
OMITTED), EXHIBIT E (Building Rules and
Regulations), EXHIBIT F (Additional
Provisions), and EXHIBIT G (Letter of Credit
Form).
1. BASIC LEASE INFORMATION.
1.01
"BUILDING" shall mean the building located at 110 110th Avenue
NE, Bellevue, Washington 98004 commonly known as 110 Atrium
Place. "RENTABLE SQUARE FOOTAGE OF THE BUILDING" is deemed to
be 224,725 square feet.
1.02
"PREMISES" shall mean the area shown on EXHIBIT A-1 to this
Lease. The Premises is located on the 2nd floor of the
Building and known as suites 200, 215, 220 and 230. 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
43,396 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
PER SQUARE FOOT
BASE RENT
------------------------------------------------------------------------------------------
<S>
<C>
<C>
9/1/04 through 8/31/09
$ 9.00
$32,547.00
------------------------------------------------------------------------------------------
9/1/09 through 8/31/14
$10.00
$36,163.33
------------------------------------------------------------------------------------------
</TABLE>
Notwithstanding anything in this Section 1.03 to the contrary,
if the Commencement Date (defined in Section 1.06 below)
occurs on or before December 31, 2004, then, so long as Tenant
is not in default under this Lease, Tenant shall be entitled
to an abatement of Base Rent and Additional Rent, in the
approximate amount of $63,430.49 per month (i.e. $32,547.00 in
Base Rent and approximately $30,883.49 in Additional Rent),
for the period commencing on the Commencement Date and
expiring on December 31, 2004 (the "RENT ABATEMENT PERIOD").
By way of example but not of limitation, if the Commencement
Date occurs on September 1, 2004, the total amount of Rent
abated during the Rent Abatement Period shall equal
approximately $253,7212.96.
1.04
"TENANT'S PRO RATA SHARE": 19.3107%.
1.05
"BASE YEAR" [INTENTIONALLY OMITTED]
1.06
"TERM": A period of 120 months. Subject to Section 3, the Term
shall commence on September 1, 2004 (the "COMMENCEMENT DATE")
and, unless terminated early in accordance with this Lease,
end on August 31, 2014 (the "TERMINATION DATE").
1.07
Allowance(s): None.
1.08
"SECURITY DEPOSIT": None.
1.09
"GUARANTOR(S)": As of the date of this Lease, there are no
Guarantors.
1.10
"BROKER(S)": Equity Office Properties Management Corp.
("Landlord's Broker"), which represented Landlord in
connection with this transaction.
1.11
"PERMITTED USE": General office use and administrative use,
together with uses reasonably incident thereto. The Permitted
Use shall also include the testing of computers and
intelligent computing devices, including hardware, software
and wired or wireless embedded smart devices; provided,
however, that in no event shall the Permitted Use include
chemical or biological testing.
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1.12
"NOTICE ADDRESS(ES)":
<TABLE>
<CAPTION>
Landlord:
Tenant:
<S>
<C>
WA-110 Atrium Place, L.L.C.
Prior to the Commencement Date, notices shall be sent to
c/o Equity Office Management, L.L.C.
Tenant at the following address:
701 5th Avenue
3150 139th Avenue, S.E.
Suite 4000
Suite 500
Seattle, Washington 98104
Bellevue, Washington 98005
Attn: Property Manager, 110 Atrium
Place
On and after the Commencement Date, notices shall be sent to
Tenant at the Premises, with a copy to:
Ball Janik LLP
One Main Place
101 SW Main Street, Suite 1100
Portland, Oregon 97204-3219
Attn: Dina E. Alexander
</TABLE>
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
that are commonly recognized by other office buildings in the
area where the Building is located. "BUILDING SERVICE HOURS"
are 6:00 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" [INTENTIONALLY OMITTED]
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.
1.16
"LETTER OF CREDIT": $1,200,00.00, as more fully described in
Section I of EXHIBIT F.
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 The Premises are accepted by Tenant in "as is" condition
and
configuration without any representations
or warranties by Landlord (other than
any such representations or warranties that
may be expressly set forth herein).
Notwithstanding the foregoing, Landlord
agrees to deliver the Premises to Tenant
in broom-clean condition (except as
otherwise provided in Section V of EXHIBIT F
attached hereto) and with all carpets
cleaned. 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, in such event, shall be
postponed until the date Landlord delivers
possession of the Premises to Tenant
free from occupancy by any party.
Notwithstanding the foregoing, if the
Commencement Date has not occurred on or
before the Required Delivery Date
(defined below), then: (a) Landlord shall
not be in default hereunder; however,
(b) if Tenant is not then in default
hereunder, Tenant, as its sole remedy, may
terminate this Lease by giving Landlord
written notice of termination on or
before the earlier to occur of: (i) 5
Business Days after the Required Delivery
Date; or (ii) the Commencement Date. In the
event of such termination, this
Lease shall be deemed null and void and of
no further force and effect and
Landlord shall promptly refund any prepaid
rent and Letter of Credit previously
delivered by Tenant under this Lease and
the parties hereto shall have no
further responsibilities or obligations to
each other with respect to this
Lease. The "REQUIRED DELIVERY DATE" shall
mean September 1, 2004; provided,
however, that the Required Delivery Date
shall be postponed by the number of
days the Commencement Date is delayed due
to events of Force Majeure (defined in
Section 26.03) (including, without
limitation, any holdover of all or any
portion of the Premises by tenants
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thereof). Promptly after the determination
of the Commencement Date, Landlord
and Tenant shall execute and deliver a
commencement letter in the form attached
as EXHIBIT D.
3.03 Before the Commencement Date, Landlord shall permit Tenant to
take
possession of any separately demised
portion of the Premises on or before the
later to occur of (a) March 1, 2004, or (b)
the date occurring 10 days after the
latest to occur of (i) Tenant's written
request for delivery of such portion of
the Premises; (ii) Landlord's recovery of
possession of such portion of the
Premises (if Landlord is not in possession
thereof as of the date of this
Lease); or (iii) the completion of any work
that Landlord is required to perform
in such portion of the Premises under
Section 3.02 above (which work Landlord
agrees to use commercially reasonable
efforts to complete within 10 Business
Days after the later to occur of (A) the
mutual execution and delivery of this
Lease, or (B) Landlord's recovery of
possession of such portion of the Premises
[if Landlord is not in possession thereof
as of the date of this Lease]). If
Landlord permits Tenant to take possession
of the Premises before the
Commencement Date, such possession shall be
subject to the terms and conditions
of this Lease; provided, however, that
during such period Tenant shall not be
required to pay Rent (defined in Section
4.01) except for the cost of services
requested by Tenant (e.g. freight elevator
usage).
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 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, provided that
the first installment of Base Rent and the
first monthly installment of
Additional Rent for Expenses and Taxes
shall be payable on December 1, 2004 (and
shall apply to the month of January 2005
unless the Commencement Date does not
occur on or before January 1, 2005, in
which event such payment shall apply to
the first full calendar month of the Term).
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 in
writing 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 for the first 2 late
payments 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 based on the actual
number of days in such month. 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 (the "ADA")
(collectively, "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 use of the
Premises, other than for general office
use, or Alterations or improvements in the
Premises performed or requested by
Tenant. "BASE BUILDING" shall include the
structural portions of the Building,
the Common Areas (including 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. 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).
Landlord shall, at Landlord's expense (except to the extent
properly
included in Expenses), be responsible for
correcting any violation of Law
(including, without limitation, the ADA)
with respect to the Base Building;
provided, however, that Landlord shall not
be responsible for correcting any
such violation to the extent such violation
(i) is caused or triggered by any of
the matters that are Tenant's
responsibility under any provision of this Lease,
including, without limitation, the
preceding paragraph or Section 9 below, or
(ii) arises under any provision of the ADA
other than Title III thereof.
Notwithstanding the foregoing, Landlord
shall have the right to contest any
alleged violation in good faith, including,
without limitation, the right to
apply for and obtain a waiver or deferment
of compliance,
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the right to assert any and all defenses
allowed by Law and the right to appeal
any decisions, judgments or rulings to the
fullest extent permitted by Law.
Landlord, after the exhaustion of any and
all rights to appeal or contest, will
make all repairs, additions, alterations or
improvements necessary to comply
with the terms of any final order or
judgment, provided that if Landlord elects
not to contest any alleged violation,
Landlord will promptly make all repairs,
additions, alterations or improvements
necessary to comply with the notice of
violation. Landlord represents and warrants
to Tenant that, as of the date
hereof, Landlord has not received written
notice from any governmental agency
that the Building is in violation of the
ADA.
6. SECURITY DEPOSIT.
The Security Deposit, if any, shall be delivered to Landlord upon
the
execution of this Lease by Tenant and held
by Landlord without liability for
interest (unless required by Law) as
security for the performance of Tenant's
obligations. The Security Deposit is not an
advance payment of Rent or a measure
of damages. Landlord may use all or a
portion of the Security Deposit to satisfy
past due Rent or to cure any Default
(defined in Section 18) by Tenant. If
Landlord uses any portion of the Security
Deposit, Tenant shall, within 5 days
after demand, restore the Security Deposit
to its original amount. Landlord
shall return any unapplied portion of the
Security Deposit to Tenant within 45
days after the later to occur of: (a)
determination of the final Rent due from
Tenant; or (b) the later to occur of the
Termination Date or the date Tenant
surrenders the Premises to Landlord in
compliance with Section 25. Landlord may
assign the Security Deposit to a successor
or transferee and, following the
assignment, Landlord shall have no further
liability for the return of the
Security Deposit. Landlord shall not be
required to keep the Security Deposit
separate from its other accounts.
7. BUILDING SERVICES.
7.01 Landlord shall furnish Tenant with the following services:
(a)
water for use in the Base Building
lavatories and drinking fountains and any
lavatories and kitchenettes located in the
Premises; (b) customary heat and air
conditioning in season during Building
Service Hours. 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 (which
janitorial service shall be in
accordance with the standards generally met
by other class "A" office buildings
in the Bellevue Central Business District);
(d) elevator service; (e)
electricity in accordance with the terms
and conditions in Section 7.02; (f)
access to the Building for Tenant and its
employees 24 hours per day/7 days per
week, subject to the terms of this Lease
and such security or monitoring systems
as Landlord may reasonably impose,
including, without limitation, sign-in
procedures and/or presentation of
identification cards; 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, at
Landlord's
option, be paid for by Tenant either: (a)
through inclusion in Expenses (except
as provided for excess usage); (b) by a
separate charge payable by Tenant to
Landlord based on Tenant's usage; or (c) if
the Premises is separately metered,
by separate charge billed by the applicable
utility company and payable directly
by Tenant. Without the consent of 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. Notwithstanding the foregoing, if
a Service Failure is reasonably
within the control of Landlord and (a)
continues for 180 consecutive days after
the Service Failure and (b) is not being
diligently remedied by Landlord, then
Tenant, as its sole remedy, shall have the
right to elect to terminate this
Lease within 10 days after the expiration
of said 180-day period without
penalty, by delivering written notice to
Landlord of its election thereof;
provided, however, that if Landlord is
diligently pursuing the repair or
restoration of the service, Tenant shall
not be entitled to terminate this Lease
but rather Tenant's sole remedy shall be to
abate Rent as provided above. The
foregoing termination right
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shall not apply if the Service Failure is
due to fire or other casualty;
instead, in such event, the terms and
provisions of Section 16 shall apply.
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 least 30 days prior to
the Termination Date, 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) any Landlord Work or
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").
Required Removables shall include,
without limitation, internal stairways,
raised floors, personal baths and
showers, vaults, rolling file systems and
structural alterations and
modifications. 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, may
request in writing that Landlord advise
Tenant whether the Alteration or any
portion of the Alteration is a Required
Removable. Within 10 days after receipt
of Tenant's request, Landlord shall advise
Tenant in writing as to which
portions of the Alteration are Required
Removables. Tenant shall have the right,
subject to Landlord's prior written
approval (which shall not be unreasonably
withheld), to select all vendors for the
installation of, and the provision of
services relating to, Cable in the
Premises.
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 and (subject to
the terms of Section 16) damage by Casualty
(defined in Section 16) 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, video and data cabling and
related equipment that is installed by or
for the exclusive benefit of Tenant
(collectively, "CABLE"); (f) supplemental
air conditioning units serving only
the Premises, 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 acts of
Tenant, Tenant Related Parties and their
respective contractors and vendors. If
Tenant fails to make any repairs to the
Premises for more than 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.
9.02 Landlord shall keep and maintain in good repair and working
order
and perform maintenance upon the: (a)
structural elements of the Building
(including foundation); (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
doors and windows of the Building; and
(f) elevators serving the Building.
Landlord shall promptly make repairs for
which Landlord is responsible.
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,
conditioned 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; evidence of contractor's and
subcontractor's insurance in amounts
reasonably required by Landlord and naming
Landlord as an additional insured;
and any security for performance in amounts
reasonably required by Landlord.
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 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 10% of the cost of the
Alterations. Upon completion, Tenant
shall furnish "as-built" plans for
non-Cosmetic Alterations, completion
affidavits and
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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.
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 Building services, Landlord shall
provide Tenant with reasonable prior
verbal notice of entry and shall use
reasonable efforts to minimize any
interference with Tenant's use of the
Premises. If reasonably necessary,
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. Entry by
Landlord in accordance with the terms
of this Section 10 shall not constitute a
constructive eviction or entitle
Tenant to an abatement or reduction of
Rent.
11. ASSIGNMENT AND SUBLETTING.
11.01 Except in connection with a Permitted Transfer (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. 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 (or an
unexecuted copy of the same in
substantially the same form as that which
is to be executed by the parties
thereto) 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; 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 Tenant has not previously done
so, Tenant shall provide Landlord
with a fully executed copy of the
assignment, sublease or other Transfer
documentation promptly following the full
execution thereof. 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 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,
including brokerage fees, legal fees and
construction costs. 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 Tenant's
net worth as of the day prior to the
proposed Ownership Change; (c) the
Permitted Use does not allow the Premises
to be used for retail purposes; and
(d) Tenant shall give Landlord written
notice at least 15 Business Days prior to
the effective date of the Permitted
Transfer. 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.
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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 (to the extent not acting
as agents of Landlord), (c) the
bursting or leaking of any tank, water
closet, drain or other pipe (except to
the extent resulting from Landlord's
failure to maintain the same as required
under this Lease), (d) the inadequacy or
failure of any security services,
personnel or equipment, or (e) any matter
not within the reasonable control of
Landlord. Except to the extent caused by
the negligence or willful misconduct of
Landlord or any Landlord Related Parties,
Tenant shall 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, Landlord shall
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.
14. INSURANCE.
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 Policy is acceptable). Any
company writing Tenant's Insurance shall
have an A.M. Best rating of not less than
A-VIII (provided, however, that, until
June 16, 2004, Atlantic Mutual Insurance
Company may write Tenant's Insurance
even though its A.M. Best rating is less
than A-VIII, but only so long as its
A.M. Best rating is not less than B+). 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. Landlord
shall maintain so called All Risk property
insurance on the Building at
replacement cost value as reasonably
estimated by Landlord.
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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 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 ("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, in which event such termination
shall be effective as of the date of
the Casualty. 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. In addition to
Landlord's right to terminate as provided
herein, Tenant shall have the right to
terminate this Lease if: (a) a substantial
portion of the Premises has been
damaged by the 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 such
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 the Casualty.
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 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 (as reasonably
determined by Landlord, assuming that such
repair will be performed pursuant to a
construction contract providing for a
guaranteed maximum price) 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.
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. Tenant
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 Tenant's ability to profitably operate
its business for the Permitted Use in
the Premises. 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
8
<PAGE>
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 3
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 10
Business Days after written notice to
Tenant provided, however, if Tenant's
failure to comply cannot reasonably be
cured within 10 Business Days, Tenant
shall be allowed additional time (not to
exceed 90 days) as is reasonably
necessary to cure the failure so long as
Tenant begins the cure within 10
Business 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 (other than by means of
a Taking); (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;
(f) Tenant is in default beyond any notice
and cure period under any other lease
or agreement with Landlord at the Building
or Property; or (g) the occurrence of
a Sunset North Default (as defined in
Section VIII.B of EXHIBIT F attached
hereto). If Landlord provides Tenant with
notice of Tenant's failure to comply
with any specific provision of this Lease
on 3 separate occasions during any
period of 12 consecutive months, Tenant's
subsequent violation of such provision
shall, at Landlord's option, be an
incurable Default by Tenant. All notices sent
under this Section shall be in satisfaction
of, and not in addition to, notice
required by Law.
19. REMEDIES.
19.01 Upon Default, Landlord shall have the right to pursue any one
or
more of the following remedies:
(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.
(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, except to
the
extent, if any, required by applicable Law, 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
absolute
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 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, 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 10% 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.
20. LIMITATION OF LIABILITY.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE,
THE
LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR
LANDLORD) SHALL BE LIMITED TO THE
LESSER OF (A) THE INTEREST OF LANDLORD IN
THE PROPERTY, OR (B) THE EQUITY
9
<PAGE>
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. SUCH CURE PERIOD FOR
LANDLORD SHALL BE AT LEAST 60 DAYS AFTER
WRITTEN NOTICE OF DEFAULT FROM TENANT
TO LANDLORD (OR, IF THE DEFAULT CANNOT
REASONABLY BE CURED WITHIN SAID 60 DAY
PERIOD, SUCH LONGER PERIOD OF TIME AS IS
REASONABLY NECESSARY TO CURE SUCH
DEFAULT, PROVIDED LANDLORD COMMENCES THE
CURE WITHIN SUCH 60 DAY PERIOD AND
DILIGENTLY PURSUES SAME), AND, FOR ANY
MORTGAGEE, SUCH CURE PERIOD SHALL BE AT
LEAST 60 DAYS AFTER THE LATER OF (i)
WRITTEN NOTICE OF DEFAULT FROM TENANT TO
SUCH MORTGAGEE, OR (ii) EXPIRATION OF THE
CURE PERIOD AVAILABLE TO LANDLORD AS
PROVIDED ABOVE (OR, IF THE DEFAULT CANNOT
REASONABLY BE CURED WITHIN SAID 60 DAY
PERIOD, SUCH LONGER PERIOD OF TIME AS IS
REASONABLY NECESSARY TO CURE SUCH
DEFAULT, PROVIDED MORTGAGEE COMMENCES THE
CURE WITHIN SUCH 60 DAY PERIOD AND
DILIGENTLY PURSUES SAME). NOTWITHSTANDING
THE FOREGOING, IF TENANT AND ANY SUCH
MORTGAGEE HAVE AGREED TO A LONGER PERIOD OF
TIME IN ANY SEPARATE AGREEMENT BY
AND BETWEEN SUCH PARTIES, THE TERMS OF SUCH
SEPARATE AGREEMENT SHALL CONTROL AS
BETWEEN TENANT AND SUCH MORTGAGEE.
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.
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
provided that such agreement contains
commercially reasonable non-disturbance
provisions. 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, the existence of any defaults and
the amount of Rent that is due and
payabl
