SUNSET NORTH
BELLEVUE, WASHINGTON
OFFICE LEASE AGREEMENT
BETWEEN
WRC SUNSET NORTH LLC
("LANDLORD")
AND
DRUGSTORE.COM, INC., a Delaware corporation
("TENANT")
<PAGE>
TABLE OF CONTENTS
I. Basic Lease Information.......................... 1
II. Lease Grant...................................... 4
III. Adjustment of Commencement Date; Possession...... 4
IV. Rent............................................. 5
V. Compliance with Laws; Use........................ 10
VI. Security Deposit................................. 10
VII. Services to be Furnished by Landlord............. 12
VIII. Leasehold Improvements........................... 13
IX. Repairs and Alterations.......................... 14
X. Use of Electrical Services by Tenant............. 15
XI. Entry by Landlord................................ 16
XII. Assignment and Subletting........................ 16
XIII. Liens............................................ 18
XIV. Indemnity and Waiver of Claims................... 18
XV. Insurance........................................ 19
XVI. Subrogation...................................... 20
XVII. Casualty Damage.................................. 20
XVIII. Condemnation..................................... 21
XIX. Events of Default................................ 21
XX. Remedies......................................... 22
XXI. Limitation of Liability.......................... 23
XXII. No Waiver........................................ 23
XXIII. Quiet Enjoyment.................................. 24
XXIV. Relocation....................................... 24
XXV. Holding Over..................................... 24
XXVI. Subordination to Mortgages; Estoppel Certificate. 24
XXVII. Attorneys' Fees.................................. 25
XXVIII. Notice........................................... 25
XXIX. Excepted Rights.................................. 25
XXX. Surrender of Premises............................ 26
XXXI. Miscellaneous.................................... 26
XXXII. Entire Agreement................................. 28
<PAGE>
OFFICE LEASE AGREEMENT
This Office Lease Agreement (the "Lease") is made and entered into as
of the 22/nd/ day of November, 1999, by and between WRC SUNSET NORTH LLC, a
Washington limited liability company ("Landlord") and DRUGSTORE.COM, INC., a
Delaware corporation ("Tenant").
I. Basic Lease Information.
A. "Buildings" shall mean the office buildings commonly known as
Building 3, Building 4 and Building 5 of Sunset North Corporate Campus, located
at the Northeast corner of 139th Avenue Southeast and Southeast 32nd Street,
Bellevue, King County, Washington. "Building" means any one of the Buildings,
individually.
B. "Property" shall mean the Buildings and the parcel(s) of land on
which they are located, all other property in the Sunset North Corporate Campus,
the garages serving the Buildings, and all other improvements owned by Landlord
and serving the Buildings and the tenants thereof and the parcel(s) of land on
which they are located. The legal description of the Property is set forth on
Exhibit A-2, attached hereto and incorporated herein by this reference.
C. "Rentable Square Footage of the Property" is deemed to be 460,629
square feet.
D. "Premises" shall mean the areas shown on Exhibit A to this Lease.
---------
The Premises are located on the floors of the Buildings set forth below, and the
"Rentable Square Footage of the Premises" is approximately 57,436 square feet,
consisting of the areas set forth below.
Building Location Rentable Area Usable Area
3 2nd Floor 10,000 8,649
4 1st Floor 26,663 24,341
5 1st Floor 20,773 17,967
Total 57,436 50,957
The precise square footage of the Premises shall be determined by Landlord and
Tenant based upon Tenant's Final Plans, and once so determined shall not be
further adjusted except to reflect additions to or other modifications of the
Premises. Once the area of the Premises is so determined, the area of the
Premises, Base Rent, Tenant's Pro Rata Share and the Allowance shall be
appropriately adjusted and confirmed in writing by Landlord and Tenant. 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. "Rentable Area," "rentable square feet" and similar terms shall
mean Rentable Area as determined in accordance with the American National
Standard Method of measuring floor space in office buildings as published by the
<PAGE>
Building Owners and Managers Association International dated June 7, 1996
("BOMA"). "Usable Area "and "usable square feet" shall mean Usable Area as
determined in accordance with BOMA.
E. "Base Rent":
Period Annual Rate Per Annual Base Rent Monthly Base Rent
Square Foot
Years 1 through 3 $22.50 $1,292,310.00 $107,692.50
F. "Tenant's Pro Rata Share": 12.4690%.
G. "Term": A period of approximately thirty six (36) months,
commencing on the later to occur of (i) March 1, 2000 (the "Target Commencement
Date") and (ii) the date on which the Landlord Work is Substantially Complete,
as determined by Section III.A. The Termination Date shall be the last day of
the calendar month in which the third anniversary of the Commencement Date
occurs. If Landlord fails to Substantially Complete the Landlord Work by the
Target Commencement Date, it shall not be a default by Landlord or otherwise
render Landlord liable for damages. Notwithstanding the foregoing, if there
have been no Tenant Delays and the Commencement Date does not occur by June 1,
2000 (the "Outside Completion Date"), 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) five (5) Business Days after the Outside Completion
Date; and (ii) the Commencement Date. In such event, this Lease shall be deemed
null and void and of no further force and effect and Landlord shall promptly
refund any prepaid Rent and Security Deposit previously advanced by Tenant under
this Lease and, so long as Tenant has not previously defaulted under any of its
obligations under the Work Letter, the parties hereto shall have no further
responsibilities or obligations to each other with respect to this Lease.
Landlord and Tenant acknowledge and agree that: (i) the determination of the
Commencement Date shall take into consideration the effect of any Tenant Delays
by Tenant; and (ii) the Outside Completion Date shall be postponed by the number
of days the Commencement Date is delayed due to events of Force Majeure.
Notwithstanding anything herein to the contrary, if Landlord determines that it
will be unable to cause the Commencement Date to occur by the Outside Completion
Date, Landlord shall have the right to immediately cease its performance of the
Landlord Work and provide Tenant with written notice (the "Outside Extension
Notice") of such inability, which Outside Extension Notice shall set forth the
date on which Landlord reasonably believes that the Commencement Date will
occur. Upon receipt of the Outside Extension Notice, Tenant shall have the
right to terminate this Lease by providing written notice of termination to
Landlord within five (5) Business Days after the date of the Outside Extension
Notice. In the event that Tenant does not terminate this Lease within such five
(5) Business Day period, the Outside Completion Date shall automatically be
amended to be the date set forth in Landlord's Outside Extension Notice.
Promptly after the determination of the Commencement Date, Landlord and Tenant
shall enter into a commencement letter agreement in the form attached as Exhibit
-------
C.
-
2
<PAGE>
H. Tenant allowance(s): $27.50 per square foot of usable area in
the Premises. See Exhibit D.
---------
I. "Security Deposit": $200,000
J. "Guarantor(s)": None.
K. "Broker(s)": Geoff Boguch of Colliers International representing
Tenant, and John Black of Broderick Group, Inc. representing Landlord.
L. "Permitted Use": General office uses, and any other legally
permitted use suitable for the Building, considering the business of the other
tenants in the Building and the Building's prestige.
M. "Notice Addresses":
Tenant: notices shall be sent to Tenant at the following
address:
drugstore.com, inc.
Attention: Office Manager
13920 SE Eastgate Way, Suite 300
Bellevue, WA 98005
Fax: (425) 372-3800
And to:
drugstore.com, inc.
Attention: Director of Finance
13920 SE Eastgate Way, Suite 300
Bellevue, WA 98005
Fax: (425) 372-3800
Landlord:
WRC Sunset North LLC
1191 Second Avenue, Suite 2000
Seattle, WA 98101
Attention: Building Manager
With a copy to:
Equity Office Properties Trust
Two North Riverside Plaza, Suite 2200
Chicago, IL 60606
Attention: Regional Counsel -- West Region
3
<PAGE>
Payments of Rent shall be made payable to the order of: WRC Sunset
North LLC at the address of the Landlord set forth above, or such other address
as may be specified in the Commencement Letter delivered to Tenant pursuant to
Section I.G.
N. "Business Day(s)" are Monday through Friday of each week,
exclusive of New Year's Day, Martin Luther King, Jr. Day, President's Day,
Memorial Day, Independence Day, Labor Day, Veterans' Day, Thanksgiving Day and
Christmas Day ("Holidays"). Landlord may designate additional Holidays,
provided that the additional Holidays are commonly recognized by other office
buildings in the area where the Buildings are located.
O. "Landlord Work" means the work, if any, that Landlord is
obligated to perform in the Premises pursuant to a separate work letter
agreement (the "Work Letter"), if any, attached as Exhibit D.
---------
P. "Law(s)" means all applicable statutes, codes, ordinances,
orders, rules and regulations of any municipal or governmental entity.
Q. "Normal Business Hours" for the Buildings 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.
II. Lease Grant.
Landlord leases the Premises to Tenant and Tenant leases the Premises
from Landlord, together with the right in common with others to use any portions
of the Property that are designated by Landlord for the common use of tenants
and others, such as sidewalks, driveways, parking structures, unreserved parking
areas, common corridors, elevator foyers, restrooms, vending areas and lobby
areas (the "Common Areas").
III. Adjustment of Commencement Date; Possession.
A. The Landlord Work shall be deemed to be "Substantially Complete"
on the date that all Landlord Work has been performed, other than any details of
construction, mechanical adjustment or any other similar matter, the
noncompletion of which does not materially interfere with Tenant's use of the
Premises. However, if Landlord is delayed in the performance of the Landlord
Work as a result of any Tenant Delay(s) (defined below), the Landlord Work shall
be deemed to be Substantially Complete on the date that Landlord could
reasonably have been expected to Substantially Complete the Landlord Work absent
any Tenant Delay. "Tenant Delay" means any act or omission of Tenant or its
agents, employees, vendors or contractors that actually delays the Substantial
Completion of the Landlord Work, including, without limitation: (1) Tenant's
failure to furnish information or approvals within any time period specified in
this Lease, including the failure to prepare or approve preliminary or final
plans by any applicable due date; (2) Tenant's selection of equipment or
materials that have long lead times after first being informed by Landlord that
the selection may result in a delay; (3) changes requested or made by Tenant to
previously approved plans and specifications; (4) performance of work in the
Premises by Tenant or Tenant's contractor(s) during the performance of the
Landlord Work; or (5) if the performance of any portion of the Landlord
4
<PAGE>
Work depends on the prior or simultaneous performance of work by Tenant, a delay
by Tenant or Tenant's contractor(s) in the completion of such work.
B. Subject to (i) Landlord's obligation to perform Landlord Work
(including punchlist items) and Landlord's obligations under Section IX.B., and
(ii) latent structural or systemic defects in the Buildings, the Premises are
accepted by Tenant in "as is" condition and configuration. By taking possession
of the Premises, Tenant agrees that the Premises are in good order and
satisfactory condition, except as may otherwise be noted by Tenant to Landlord
in writing within thirty (30) days after the Commencement Date, and that there
are no representations or warranties by Landlord regarding the condition of the
Premises or the Buildings. If Landlord is delayed delivering possession of the
Premises or any other space due to the holdover or unlawful possession of such
space by any party, Landlord shall use reasonable efforts to obtain possession
of the space. Any claim by Tenant with respect to Landlord Work or a latent or
structural defect must be made in writing and delivered to Landlord within one
(1) year after the Commencement Date; thereafter Tenant shall have no right to
make any such claim.
C. 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 IV.A.) to Landlord for each day of
possession before the Commencement Date. Notwithstanding the foregoing, Tenant
shall have the right to enter the Premises at no cost for up to fifteen (15)
days prior to the Commencement Date for purposes of installing furniture,
fixtures, cabling, wiring and equipment (the "Installation Period"), provided
that the Installation Period shall not delay the Commencement Date. Tenant shall
coordinate its work with the Shell and Core Contractor and the Tenant
Improvements Contractor and shall not interfere with any such contractors or
their subcontractors. Tenant shall not be charged Rent during the Installation
Period unless Tenant has occupied the Premises during such period for normal
business operations.
IV. Rent.
A. Payments. As consideration for this Lease, Tenant shall pay
--------
Landlord, without any setoff or deduction, except as expressly permitted
hereunder, the total amount of Base Rent and Additional Rent due for the Term.
"Additional Rent" means all sums (exclusive of Base Rent) that Tenant is
required to pay Landlord. Additional Rent and Base Rent are sometimes
collectively referred to as "Rent". 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 under applicable Law. 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 installment
of Base Rent for the first full calendar month of the Term 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. All payments
of Rent shall be by good and sufficient check or by other means (such as
automatic debit or electronic transfer) acceptable to Landlord. If Tenant fails
to pay any item or installment of Rent when due, Tenant shall pay Landlord an
administration fee equal to 5% of the 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 given calendar year. If the Term commences on a day other than the first day
of a calendar month or terminates on a
5
<PAGE>
day other than the last day of a calendar month, the monthly Base Rent and
Tenant's Pro Rata Share of Expenses (defined in Section IV.C.) and Taxes
(defined in Section IV.D.) for the month shall be prorated based on the number
of days in such calendar month. Landlord's acceptance of less than the correct
amount of Rent shall be considered a payment on account of the earliest Rent
due. No endorsement or statement on a check or letter accompanying a check or
payment shall be considered an accord and satisfaction, and either party may
accept the check or payment without prejudice to that party's right to recover
the balance or pursue other available remedies. Tenant's covenant to pay Rent is
independent of every other covenant in this Lease.
B. Payment of Tenant's Pro Rata Share of Expenses and Taxes. Tenant
--------------------------------------------------------
shall pay Tenant's Pro Rata Share of the total amount of Expenses (defined in
Section IV.C.) and Taxes (defined in Section IV.D.) for each calendar year
during the Term. Landlord shall endeavor to provide Tenant with a good faith
estimate of the total amount of Expenses and Taxes for each calendar year during
the Term no later than March 31 of each year. On or before the first day of
each month, Tenant shall pay to Landlord a monthly installment equal to one-
twelfth of Tenant's Pro Rata Share of Landlord's estimate of the total amount of
Expenses and Taxes. If Landlord determines that its good faith estimate was
incorrect by over five percent (5%), Landlord shall provide Tenant with a
revised estimate. After its receipt of the revised estimate, Tenant's monthly
payments shall be based upon the revised estimate. If Landlord does not provide
Tenant with an estimate of the total amount of Expenses and Taxes by January 1
of a calendar year, Tenant shall continue to pay monthly installments based on
the previous year's estimate until Landlord provides Tenant with the new
estimate. Upon delivery of the new estimate, an adjustment shall be made for
any month for which Tenant paid monthly installments based on the previous
year's estimate. Tenant shall pay Landlord the amount of any underpayment
within 30 days after receipt of the new estimate. Any overpayment shall be
refunded to Tenant within 30 days or credited against the next due future
installment(s) of Additional Rent.
As soon as is practical following the end of each calendar year,
Landlord shall furnish Tenant with a statement of the actual amount of Expenses
and Taxes for the prior calendar year and Tenant's Pro Rata Share of the actual
amount of Expenses and Taxes for the prior calendar year. If the estimated
amount of Expenses and Taxes for the prior calendar year is more than the actual
amount of Expenses and Taxes for the prior calendar year, Landlord shall apply
any overpayment by Tenant against Additional Rent due or next becoming due,
provided if the Term expires before the determination of the overpayment,
Landlord shall promptly refund any overpayment to Tenant after first deducting
the amount of Rent due. If the estimated amount of Expenses and Taxes for the
prior calendar year is less than the actual amount of Expenses and Taxes for
such prior year, Tenant shall pay Landlord, within 30 days after its receipt of
the statement of Expenses and Taxes, any underpayment for the prior calendar
year.
C. Expenses Defined. "Expenses" means all costs and expenses
----------------
incurred in each calendar year in connection with operating, maintaining,
repairing, and managing the Property, including, but not limited to:
1. Labor costs, including, wages, salaries, social security and
employment taxes, medical and other types of insurance, uniforms, training,
and retirement and
6
<PAGE>
pension plans, but only to the extent the personnel representing such labor
costs devote their time to the Buildings and the Property.
2. Management fees (not to exceed market rates), the cost of
equipping and maintaining a management office, accounting and bookkeeping
services, legal fees not attributable to financing, sale, leasing or
collection activity or defense of Landlord's title, and other
administrative costs. Landlord, by itself or through an affiliate, shall
have the right to directly perform or provide any services under this Lease
(including management services), provided that the cost of any such
services shall not exceed the cost that would have been incurred had
Landlord entered into an arms-length contract for such services with an
unaffiliated entity of comparable skill and experience.
3. The cost of services, including amounts paid to service providers
and the rental and purchase cost of parts, supplies, tools and equipment,
but only to the extent that such services, parts, supplies, tools and
equipment were used in connection with the Property.
4. Premiums and deductibles paid by Landlord for insurance, including
workers' compensation, fire and extended coverage, earthquake, general
liability, rental loss, elevator, boiler and other insurance customarily
carried from time to time by owners of comparable office buildings.
5. Electrical Costs (defined below) and charges for water, gas, steam
and sewer, but excluding those charges for which Landlord is reimbursed by
tenants. "Electrical Costs" means: (a) charges paid by Landlord for
electricity; and (b) costs incurred in connection with an energy management
program for the Property. Electrical Costs shall be adjusted as follows:
(i) amounts received by Landlord as reimbursement for above standard
electrical consumption shall be deducted from Electrical Costs; (ii) the
cost of electricity incurred to provide overtime HVAC to specific tenants
(as reasonably estimated by Landlord) shall be deducted from Electrical
Costs; and (iii) if Tenant is billed directly for the cost of building
standard electricity to the Premises as a separate charge in addition to
Base Rent, the cost of electricity to individual tenant spaces in the
Property shall be deducted from Electrical Costs.
6. The amortized cost of capital improvements (as distinguished from
replacement parts or components installed in the ordinary course of
business) made to the Property which are: (a) performed primarily to
reduce operating expense costs or otherwise improve the operating
efficiency of the Property; or (b) required to comply with any Laws that
are enacted, or first interpreted to apply to the Property, after the date
of this Lease. The cost of capital improvements shall be amortized by
Landlord over the lesser of the Payback Period (defined below) or 5 years.
The amortized cost of capital improvements may, at Landlord's option,
include actual or imputed interest at the rate that Landlord would
reasonably be required to pay to finance the cost of the capital
improvement. "Payback Period" means the reasonably estimated period of
time that it takes for the cost savings resulting from a capital
improvement to equal the total cost of the capital improvement.
Notwithstanding the foregoing, the portion of the annual amortized costs to
be included in Expenses in any calendar year with respect to a capital
7
<PAGE>
improvement which is intended to reduce expenses or improve the operating
efficiency of the Property or Building shall equal the lesser of: a) such
annual amortized costs; and b) the projected annual amortized reduction in
expenses for that portion of the amortization period of the capital
improvement which falls within the Term (based on the total cost savings
for such period, as reasonably estimated by Landlord).
If Landlord incurs Expenses for the Property together with one or more
other buildings or properties, whether pursuant to a reciprocal easement
agreement, common area agreement or otherwise, the shared costs and expenses
shall be equitably prorated and apportioned between the Property and the other
buildings or properties. Expenses shall not include: the cost of capital
improvements (except as set forth above); depreciation; interest (except as
provided above for the amortization of capital improvements); principal payments
of mortgage and other non-operating debts of Landlord; the cost of repairs or
other work to the extent Landlord is reimbursed by insurance or condemnation
proceeds or to the extent made to correct or mitigate any defect in design,
materials or workmanship of the Buildings, or the Common Areas, or to the extent
necessitated by the negligence or misconduct of Landlord; costs in connection
with leasing space in the Property, including brokerage commissions and
advertising costs; lease concessions, including rental abatements and
construction allowances, granted to specific tenants; costs incurred in
connection with the sale, financing or refinancing of the Property; fines,
interest and penalties incurred due to the late payment of Taxes (defined in
Section IV.D.) or Expenses; organizational expenses associated with the creation
and operation of the entity which constitutes Landlord; any penalties or damages
that Landlord pays to Tenant under this Lease or to other tenants in the
Property under their respective leases; Landlord's general overhead expenses not
related to the Buildings; costs (including permit, license and inspection fees)
incurred in renovating or otherwise improving, decorating, painting or altering
(1) vacant space (excluding common areas) in the Buildings or (2) space for
tenants or other occupants in the Buildings; costs incurred due to a violation
by Landlord of the terms and conditions of a lease; expenses incurred as a
result of allowing any other tenant of a Building or any other person or entity
to use the roof of a Building for any purpose; any recalculation of or addition
of Expenses actually incurred more than two (2) years prior to the year in which
Landlord proposes that such costs be included; rentals and other related
expenses incurred in leasing air conditioning systems, elevators or other
equipment ordinarily considered to be of a capital nature, if purchased, except
equipment not affixed to a Building; costs arising from Landlord's political or
charitable contributions; or costs for acquisitions or sculpture, paintings or
other objects of art (but the expense of maintaining such items shall be
included). Landlord shall not collect in excess of one hundred percent (100%)
of Operating Expenses and shall not recover any item of cost more than once. If
the Property is not at least 95% occupied during any calendar year or if
Landlord is not supplying services to at least 95% of the total Rentable Square
Footage of the Property at any time during a calendar year, Expenses that vary
based on occupancy, such as utilities and janitorial services provided to areas
other than Common Areas (and at Landlord's option, Taxes) shall, at Landlord's
option, be determined as if the Property had been 95% occupied and Landlord had
been supplying services to 95% of the Rentable Square Footage of the Property
during that calendar year. The extrapolation of Expenses under this Section
shall be performed by appropriately adjusting the cost of those components of
Expenses that are impacted by changes in the occupancy of the Property.
8
<PAGE>
D. Taxes Defined. "Taxes" shall mean: (1) all real estate taxes
-------------
and other assessments on the Property, including, but not limited to,
assessments for special improvement districts and building improvement
districts, taxes and assessments levied in substitution or supplementation in
whole or in part of any such taxes and assessments and the Property's share of
any real estate taxes and assessments under any reciprocal easement agreement,
common area agreement or similar agreement as to the Property; (2) all personal
property taxes for property that is owned by Landlord and used in connection
with the operation, maintenance and repair of the Property; and (3) all costs
and fees incurred in connection with seeking reductions in any tax liabilities
described in (1) and (2), including, without limitation, any costs incurred by
Landlord for compliance, review and appeal of tax liabilities. Without
limitation, Taxes shall not include any income, capital levy, franchise, capital
stock, gift, estate or inheritance tax. If an assessment is payable in
installments, Taxes for the year shall include the amount of the installment and
any interest due and payable during that year. For all other real estate taxes,
Taxes for that year shall, at Landlord's election, include either the amount
accrued, assessed or otherwise imposed for the year or the amount due and
payable for that year, provided that Landlord's election shall be applied
consistently throughout the Term. If a change in Taxes is obtained for any year
of the Term, then Taxes for that year will be retroactively adjusted and
Landlord shall provide Tenant with a credit, if any, based on the adjustment.
E. Audit Rights. Tenant may, within 120 days after receiving
------------
Landlord's statement of Expenses, give Landlord written notice ("Review Notice")
that Tenant intends to review Landlord's records of the Expenses for that
calendar year. Within a reasonable time after receipt of the Review Notice,
Landlord shall make all pertinent records available for inspection that are
reasonably necessary for Tenant to conduct its review. If any records are
maintained at a location other than the office of the Building, Tenant may
either inspect the records at such other location or pay for the reasonable cost
of copying and shipping the records. If Tenant retains an agent to review
Landlord's records, the agent must be with a licensed CPA firm. Landlord agrees
that Tenant may retain a third party agent to review Landlord's books and
records which third party agent is not a CPA firm, so long as the third party
agent retained by Tenant shall have expertise in and familiarity with general
industry practice with respect to the operation of and accounting for a first
class office building and whose compensation shall in no way be contingent upon
or correspond to the financial impact on Tenant resulting from the review.
Tenant shall be solely responsible for all costs, expenses and fees incurred for
the audit. Within 60 days after the records are made available to Tenant,
Tenant shall have the right to give Landlord written notice (an "Objection
Notice") stating in reasonable detail any objection to Landlord's statement of
Expenses for that year. If Tenant fails to give Landlord an Objection Notice
within the 60 day period or fails to provide Landlord with a Review Notice
within the 90 day period described above, Tenant shall be deemed to have
approved Landlord's statement of Expenses and shall be barred from raising any
claims regarding the Expenses for that year. If Tenant provides Landlord with a
timely Objection Notice, Landlord and Tenant shall work together in good faith
to resolve any issues raised in Tenant's Objection Notice. If Landlord and
Tenant determine that Expenses for the calendar year are less than reported,
Landlord shall provide Tenant with a credit against the next installment of Rent
in the amount of the overpayment by Tenant. Likewise, if Landlord and Tenant
determine that Expenses for the calendar year are greater than reported, Tenant
shall pay Landlord the amount of any underpayment within 30 days. In addition,
if Landlord and Tenant determine that Basic Costs for the Building for the year
in question were less than stated by more than five percent (5%),
9
<PAGE>
Landlord, within thirty (30) days after its receipt of paid invoices therefor
from Tenant, shall reimburse Tenant for any reasonable amounts paid by Tenant to
third parties in connection with such review by Tenant. The records obtained by
Tenant shall be treated as confidential. In no event shall Tenant be permitted
to examine Landlord's records or to dispute any statement of Expenses unless
Tenant has paid and continues to pay all Rent when due.
V. Compliance with Laws; Use.
The Premises shall be used only for the Permitted Use and for no other
use whatsoever. Tenant shall not use or permit the use of the Premises for any
purpose which is illegal, dangerous to persons or property or which, in
Landlord's reasonable opinion, unreasonably disturbs any other tenants of the
Buildings or interferes with the operation of the Buildings. Tenant shall
comply with all Laws, including the Americans with Disabilities Act, regarding
the operation of Tenant's business and the use, condition, configuration and
occupancy of the Premises. Tenant, within 10 days after receipt, shall provide
Landlord with copies of any notices it receives regarding a violation or alleged
violation of any Laws. Tenant shall comply with the rules and regulations of
the Buildings attached as Exhibit B and such other reasonable rules and
---------
regulations adopted by Landlord from time to time after prior written notice to
Tenant. Tenant shall also cause its agents, contractors, subcontractors,
employees, customers, and subtenants to comply with all rules and regulations.
Landlord shall not knowingly discriminate against Tenant in Landlord's
enforcement of the rules and regulations.
VI. Security Deposit.
The Security Deposit shall be in the form of cash or a letter of
credit, as Tenant may elect. If Tenant elects to deposit a letter of credit,
the terms of Section VI.B. below shall apply.
A. Applicable Terms. The Security Deposit shall be delivered to
----------------
Landlord upon the execution of this Lease by Tenant and shall be held by
Landlord without liability for interest (unless required by Law) as security for
the performance of Tenant's obligations. The Security Deposit may be in the
form of a letter of credit, in which case the terms of Section VI.B. below shall
apply. The Security Deposit is not an advance payment of Rent or a measure of
Tenant's liability for damages. Landlord may, from time to time following a
default and the expiration of any applicable notice and cure period, without
prejudice to any other remedy, use all or a portion of the Security Deposit to
satisfy past due Rent or to cure any uncured default by Tenant. If Landlord
uses the Security Deposit, Tenant shall on 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: (1) the
determination of Tenant's Pro Rata Share of Expenses and Taxes for the final
year of the Term; (2) the date Tenant surrenders possession of the Premises to
Landlord in accordance with this Lease; or (3) the Termination Date. If
Landlord transfers its interest in the Premises, Landlord may assign the
Security Deposit to the 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. Notwithstanding anything to the contrary contained in this Article
VI, and provided that Tenant has not been in default beyond any
10
<PAGE>
applicable cure period under the Lease as of the second (2nd) anniversary of the
Commencement Date, Landlord shall return the Security Deposit (whether in the
form of cash or letter of credit) to Tenant within five (5) business days
following such second (2nd) anniversary of the Commencement Date.
B. Letter of Credit.
----------------
1. Security Amounts. If Tenant elects to provide a letter of credit
----------------
for the Security Deposit, Tenant shall, concurrently with the execution of
this Lease, deposit with Landlord, and shall keep on deposit at all times
during the term hereof, as security for the faithful performance of all the
terms, conditions and covenants of this Lease, one or more unconditional
and irrevocable letters of credit in form satisfactory to Landlord in its
sole discretion (each, a "Letter of Credit" and collectively, the "Letters
of Credit"), in the principal amount of Two Hundred Thousand Dollars
($200,000).
2. Terms of Payment. The Letters of Credit shall be payable at
----------------
sight, upon draft of Landlord, accompanied by the Letter of Credit and a
certificate signed by a duly authorized officer of Landlord that "Tenant
has committed an 'event of default' as defined in this Lease, as Tenant,
beyond applicable notice and cure periods", and stating the amount then due
and owing to Landlord.
3. Term of Each Credit Facility. The first Letter of Credit may be
----------------------------
for a term less than the term of this Lease. The first Letter of Credit
shall be deposited with Landlord upon execution of this Lease, and any
subsequent Letter of Credit shall be deposited with Landlord no later than
forty-five (45) days prior to the expiration of the preceding Letter of
Credit.
4. Actions Upon Non-Renewal. Notwithstanding Subsection 3 above,
------------------------
upon Tenant's receipt of any notice from the issuing bank that it will not
renew or replace the Letter of Credit in the scheduled amount, as required
hereunder, for the succeeding period, Tenant shall promptly notify Landlord
of such notice and provide Landlord with a copy thereof. If such Letter of
Credit is not, in fact, renewed or replaced with a Letter of Credit from
another qualified issuer pursuant hereto, or replaced with a $200,000 cash
deposit, not later than thirty (30) days prior to expiration of such Letter
of Credit, such event shall also be an event of default hereunder, without
the necessity of further written notice or time to cure. If Tenant fails
to renew or replace the then existing Letter of Credit prior to such forty-
five (45) day period, Landlord may draw upon such existing Letter of Credit
and hold such funds as security until a new Letter of Credit in the amount
required under the corresponding period as outlined in the schedule set
forth in subsection 1 above has been provided to Landlord, at which time
Landlord shall return to Tenant without interest the amount previously
drawn against the prior Letter of Credit. Any draw upon a Letter of Credit
by Landlord pursuant to this Section shall not relieve Tenant from its
obligation to provide Landlord with a Letter of Credit in the appropriate
amount in future years.
11
<PAGE>
5. Issuer. The Letters of Credit shall be issued by a banking
------
association acceptable to Landlord. The Letters of Credit shall be
assignable and transferable by Landlord.
6. Purpose of Credit Facility. Tenant acknowledges that the Letters
--------------------------
of Credit are intended to provide Landlord with the same unconditional and
unhinderable access to such security as it would have if Tenant were to
deliver to Landlord cash funds as a Security Deposit.
7. Draws on Credit Facility. If, at any time during the Term, Tenant
------------------------
has committed an event of default in the payment or performance of any
provision of this Lease, beyond any applicable notice and cure periods,
Landlord shall have the right to draw on the then-current or any succeeding
Letter of Credit in whole or in part and use the proceeds, or so much as is
necessary, in payment of any rent or other sums due from Tenant and in
default hereunder, reimbursement of any expense incurred by Landlord, and
in payment of any damages incurred by Landlord by reason of Tenant's
default. The Letter of Credit shall provide that the issuing bank agrees
with the drawers, endorsers and bona fide holders of drafts drawn under and
in compliance with the terms of the Letter of Credit that such drafts will
be duly honored on presentation to the drawee. Drafts on the last Letter
of Credit deposited hereunder must be drawn and presented to the issuing
bank not later than sixty (60) days after the Termination Date.
8. Obligation to Restore. If Landlord draws an amount under a Letter
---------------------
of Credit, the issuing bank shall endorse the amount paid to Landlord on
the reverse side of the Letter of Credit, and Tenant and Tenant's issuing
bank shall promptly restore such Letter of Credit to the original amount
and shall immediately return the Letter of Credit so endorsed and re-funded
to Landlord.
9. Refunds. If the Letter of Credit is not used as aforesaid, the
-------
last Letter of Credit, or so much as has not been used, shall be refunded
to Tenant, without interest, upon full performance of this Lease by Tenant
(or after the second anniversary of the Commencement Date, as provided by,
and subject to the terms of, Section VI.A. above).
10. Claims in Excess of Proceeds. If claims of Landlord under the
----------------------------
terms of the Lease exceed the proceeds of the Letter of Credit, Tenant
shall remain liable for the balance of such claims, as provided for herein
and in the Lease.
VII. Services to be Furnished by Landlord.
A. Landlord agrees to furnish Tenant with the following services
seven (7) days per week, twenty four (24) hours per day, unless otherwise
specified: (1) Water service for use in the drinking fountains and lavatories
on each floor on which the Premises are located and in any lunchroom or kitchen
facility within the Premises; (2) Heat and air conditioning during Normal
Business Hours, at such temperatures and in such amounts as are standard for
comparable buildings or as required by governmental authority. Tenant, upon
such advance notice as is reasonably required by Landlord, shall have the right
to receive HVAC service during hours other than Normal Business Hours. Tenant
shall pay Landlord the actual cost for
12
<PAGE>
the additional service (including additional wear and tear on equipment) as
reasonably determined by Landlord from time to time, which charge is currently
$14.00 per hour; (3) Maintenance and repair of the Property as described in
Section IX.B.; (4) Janitor service on Business Days. If Tenant's use, floor
covering or other improvements require special services in excess of the
standard services for the Buildings, Tenant shall pay the additional cost
attributable to the special services; (5) Elevator service; (6) Electricity to
the Premises for general office use, in accordance with and subject to the terms
and conditions in Article X; and (7) such other services as Landlord reasonably
determines are necessary or appropriate for the operation of the Property as a
first class office facility.
B. Landlord's failure to furnish, or any interruption or
termination of, services due to the application of Laws, the failure of any
equipment, the performance of repairs, improvements or alterations, or the
occurrence of any event or cause beyond the reasonable control of Landlord (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 portion of the Premises, is made untenantable for a period in
excess of three (3) consecutive days, or more than six (6) periods of at least
twenty four (24) hours each in any ninety (90) day period, as a result of the
Service Failure, 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 day of the Service Failure, or the fourth (4th) day of such Service
Failure within such 90-day period, as the case may be, and ending on the day the
service has been restored. If the entire Premises has not been rendered
untenantable by the Service Failure, the amount of abatement that Tenant is
entitled to receive shall be prorated based upon the percentage of the Premises
rendered untenantable and not used by Tenant. In no event, however, shall
Landlord be liable to Tenant for any loss or damage, including the theft of
Tenant's Property (defined in Article XV), arising out of or in connection with
a Service Failure. In case of a Service Failure caused by Landlord's fault or
neglect, or which is otherwise within Landlord's reasonable control, Tenant may
abate Rent as provided above except that Tenant's abatement right shall begin
one (1) day after the Service Failure. Landlord shall use reasonable efforts to
restore any Service Failure as soon as reasonably possible in order to minimize
the disruption to Tenant caused by the Service Failure.
VIII. Leasehold Improvements.
All improvements to the Premises (collectively, "Leasehold
Improvements") shall be owned by Landlord and shall remain upon the Premises
without compensation to Tenant. However, Landlord, by written notice to Tenant
within 30 days prior to the Termination Date, may require Tenant to remove, at
Tenant's expense, any Leasehold Improvements that are performed by or for the
benefit of Tenant and, 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"). Without limitation, it is
agreed that Required Removables include internal stairways, raised floors,
personal baths and showers, vaults, rolling file systems and structural
alterations and modifications of any type, but shall not include Cable (defined
in Section IX.A.). The Required Removables designated by Landlord shall be
removed by Tenant before the Termination Date, provided that upon prior written
notice to Landlord, Tenant may remain in the
13
<PAGE>
Premises for up to 5 days after the Termination Date for the sole purpose of
removing the Required Removables. Tenant's possession of the Premises shall be
subject to all of the terms and conditions of this Lease, including the
obligation to pay Rent on a per diem basis at the rate in effect for the last
month of the Term. Tenant shall repair damage caused by the installation or
removal of Required Removables. Upon Tenant's removal of the Required
Removables, Landlord and Tenant shall jointly inspect the Premises and agree in
writing upon the satisfactory completion of the Required Removables. If Tenant
fails to remove any Required Removables or perform related repairs in a timely
manner, Landlord, at Tenant's expense, may remove and dispose of the Required
Removables and perform the required repairs. Tenant, within 30 days after
receipt of an invoice, shall reimburse Landlord for the reasonable costs
incurred by Landlord. Notwithstanding the foregoing, Tenant, at the time it
requests approval for a proposed Alteration (defined in Section IX.C.), may
request in writing that Landlord advise Tenant whether the Alteration or any
portion of the Alteration will be designated as 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, if any, will be considered to be
Required Removables.
IX. Repairs and Alterations.
A. Tenant's Repair Obligations. Tenant shall, at its sole cost and
---------------------------
expense, promptly perform all maintenance and repairs to the Premises that are
not Landlord's express responsibility under this Lease, and shall keep the
Premises in good condition and repair, reasonable wear and tear and damage from
insured casualty excepted. Tenant's repair obligations include, without
limitation, repairs to: (1) floor covering; (2) interior partitions; (3) doors;
(4) the interior side of demising walls; (5) electronic, phone and data cabling
and related equipment (collectively, "Cable") that is installed by or for the
exclusive benefit of Tenant and located in the Premises or other portions of the
Buildings; (6) supplemental air conditioning units, private showers and
kitchens, including hot water heaters, plumbing, and similar facilities serving
Tenant exclusively; and (7) Alterations performed by contractors retained by
Tenant, including related HVAC balancing. All work shall be performed in
accordance with the rules and procedures described in Section IX.C. below. If
Tenant fails to make any repairs to the Premises for more than 15 days after
written notice from Landlord (although notice shall not be required if there is
an emergency), Landlord may make the repairs, and Tenant shall pay the
reasonable cost of the repairs to Landlord within 30 days after receipt of an
invoice.
B. Landlord's Repair Obligations. Landlord shall keep and maintain
-----------------------------
in good repair and working order and make repairs to and perform maintenance
upon: (1) structural elements of the Buildings; (2) mechanical (including
HVAC), electrical, plumbing and fire/life safety systems serving the Buildings
and Premises in general; (3) Common Areas; (4) the roofs of the Buildings; (5)
exterior windows of the Buildings; and (6) elevators serving the Buildings.
Landlord shall promptly make repairs (considering the nature and urgency of the
repair) for which Landlord is responsible.
C. Alterations. Tenant shall not make alterations, additions or
-----------
improvements to the Premises or install any Cable in the Premises or other
portions of the Buildings (collectively referred to as "Alterations") without
first obtaining the written consent of Landlord
14
<PAGE>
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"): (1) is of a
cosmetic nature such as painting, wallpapering, hanging pictures and installing
carpeting; (2) is not visible from the exterior of the Premises or Buildings;
(3) will not affect the systems or structure of the Buildings; and (4) does not
require work to be performed inside the walls or above the ceiling of the
Premises. However, even though consent is not required, the performance of
Cosmetic Alterations shall be subject to all the other provisions of this
Section IX.C. Prior to starting work, Tenant shall furnish Landlord with plans
and specifications reasonably acceptable to Landlord; names of contractors
reasonably acceptable to Landlord (provided that Landlord may designate specific
contractors with respect to Building systems); copies of contracts; necessary
permits and approvals; evidence of contractor's and subcontractor's insurance in
amounts reasonably required by Landlord; and any security for performance that
is 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 that is at least
equal to the quality designated by Landlord as the minimum standard for the
Buildings. Landlord may designate reasonable rules, regulations and procedures
for the performance of work in the Buildings and, to the extent reasonably
necessary to avoid disruption to the occupants of the Buildings, shall have the
right to designate the time when Alterations may be performed. Tenant shall
reimburse Landlord within 30 days after receipt of an invoice for sums paid by
Landlord for third party examination of Tenant's plans for non-Cosmetic
Alterations. In addition, within 30 days after receipt of an invoice from
Landlord, 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
non-Cosmetic Alterations. Upon completion, Tenant shall furnish "as-built" plans
(except for Cosmetic Alterations), completion affidavits, full and final waivers
of lien and receipted bills covering all labor and materials. Tenant shall
assure that the Alterations comply with all insurance requirements and Laws.
Landlord's approval of an Alteration shall not be a representation by Landlord
that the Alteration complies with applicable Laws or will be adequate for
Tenant's use.
X. Use of Electrical Services by Tenant.
A. Electricity used by Tenant in the Premises shall, at Landlord's
option, be paid for by Tenant either: (1) through inclusion in Expenses (except
as provided in Section X.B. for excess usage); (2) by a separate charge payable
by Tenant to Landlord within 30 days after billing by Landlord; or (3) by
separate charge billed by the applicable utility company and payable directly by
Tenant. Electrical service to the Premises may be furnished by one or more
companies providing electrical generation, transmission and distribution
services, and the cost of electricity may consist of several different
components or separate charges for such services, such as generation,
distribution and stranded cost charges. Landlord shall have the exclusive right
to select any company providing electrical service to the Premises, to aggregate
the electrical service for the Property and Premises with other buildings, to
purchase electricity through a broker and/or buyers group and to change the
providers and manner of purchasing electricity. Landlord shall not charge any
other fees specifically related to providing electricity to the Property.
Landlord shall not charge Tenant for electricity at above-market rates.
15
<PAGE>
B. Tenant's use of electrical service shall not exceed, either in
voltage, rated capacity, use beyond Normal Business Hours or overall load, that
which Landlord deems to be standard for the Buildings. If Tenant requests
permission to consume excess electrical service, Landlord may condition consent
upon conditions that Landlord reasonably elects (including, without limitation,
the installation of utility service upgrades, meters, submeters, air handlers or
cooling units), and the additional usage (to the extent permitted by Law),
installation and maintenance costs shall be paid by Tenant. Landlord shall have
the right to separately meter electrical usage for the Premises and to measure
electrical usage by survey or other commonly accepted methods.
XI. Entry by Landlord.
Landlord, its agents, contractors and representatives may enter the
Premises to inspect or show the Premises, to clean and make repairs, alterations
or additions to the Premises, and to conduct or facilitate repairs, alterations
or additions to any portion of the Buildings, including other tenants' premises.
Entry to the Premises for purposes of showing the Premises to prospective
tenants shall be limited to the last twelve (12) months of the Lease term.
Except in emergencies or to provide janitorial and other Building services after
Normal Business Hours, Landlord shall provide Tenant with reasonable prior
notice of entry into the Premises (except in case of emergency), which may be
given orally, but which also must be given in writing at least twenty four (24)
hours in advance, and if Tenant so requires, with a representative of Tenant
present. If reasonably necessary for the protection and safety of Tenant and
its employees, Landlord shall have the right to 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 Normal Business Hours. Entry by
Landlord shall not constitute 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
three (3) consecutive days, Tenant, as its sole remedy, shall be entitled to
receive a per diem abatement of Base Rental during the period beginning on the
fourth (4th) consecutive 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.
XII. Assignment and Subletting.
A. Except in connection with a Permitted Transfer (defined in Section
XII.E. below), 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 elect to exercise its termination
rights under Section XII.B. below. Without limitation, it is agreed that
Landlord's consent shall not be considered unreasonably withheld if: (1) the
proposed transferee's financial condition does not meet the criteria Landlord
uses to select Building tenants having similar leasehold obligations; (2) the
proposed transferee's business is not suitable for the Building considering the
business of
16
<PAGE>
the other tenants and the Building's prestige, or would result in a violation of
another tenant's rights; (3) the proposed transferee is a governmental agency or
occupant of the Building; (4) Tenant is then in default after the expiration of
the notice and cure periods in this Lease; or (5) any portion of the Buildings
or Premises would likely become subject to additional or different Laws as a
consequence of the proposed Transfer. Any attempted Transfer in violation of
this Article shall, at Landlord's option, be void. Consent by Landlord to one or
more Transfer(s) shall not operate as a waiver of Landlord's rights to approve
any subsequent Transfers. In no event shall any Transfer or Permitted Transfer
release or relieve Tenant from any obligation under this Lease.
B. As part of its request for Landlord's consent to a Transfer,
Tenant shall provide Landlord with financial statements for the proposed
transferee, a complete copy of the proposed assignment, sublease and other
contractual documents and such other information as Landlord may reasonably
request. Landlord shall, by written notice to Tenant within thirty (30) days of
its receipt of the required information and documentation, either: (1) consent
to the Transfer by the execution of a consent agreement in a form reasonably
designated by Landlord or reasonably refuse to consent to the Transfer in
writing; or (2) notify Tenant of its intention to exercise its right to
terminate this Lease with respect to the portion of the Premises that Tenant is
proposing to assign or sublet. If Tenant does not withdraw its request for the
proposed transfer within ten (10) days after receiving Landlord's notice of its
election to terminate, then Landlord may terminate the Lease, and any such
termination shall be effective on the proposed effective date of the Transfer
for which Tenant requested consent. Tenant shall pay Landlord a review fee of
$750.00 for Landlord's review of any Permitted Transfer or requested Transfer,
provided if Landlord's actual reasonable costs and expenses (including
reasonable attorney's fees) exceed $750.00, Tenant shall reimburse Landlord for
its actual reasonable costs and expenses in lieu of a fixed review fee.
C. Tenant shall pay Landlord 100% 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 any excess within 30
days after Tenant's receipt of such excess consideration. Tenant may deduct from
the excess all reasonable and customary expenses directly incurred by Tenant
attributable to the Transfer (other than Landlord's review fee), including
brokerage fees, legal fees, construction costs and, to the extent paid to the
new tenant as a lease concession, moving costs. If Tenant is in Monetary Default
(defined in Section XIX.A. below), 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 any payments received (less Landlord's
share of any excess).
D. Except as provided below with respect to a Permitted Transfer, if
Tenant is a corporation, limited liability company, partnership, or similar
entity, and if the entity which owns or controls a majority of the voting
shares/rights at any time changes for any reason (including but not limited to a
merger, consolidation or reorganization), such change of ownership or control
shall constitute a Transfer. The foregoing shall not apply so long as Tenant is
an entity whose outstanding stock is listed on a recognized security exchange,
or if at least 80% of its voting stock is owned by another entity, the voting
stock of which is so listed.
17
<PAGE>
E. Notwithstanding anything herein to the contrary, Landlord hereby
consents to an assignment of this Lease, or a subletting of all or part of the
Premises (a "Permitted Transfer"), to (i) any entity that controls, is
controlled by, or is under common control with, Tenant (control meaning the
ability to direct the management policy of the entity in question), (ii) any
corporation in whom or with which Tenant may be merged or consolidated, or (iii)
any entity to whom Tenant sells all or substantially all of its assets, provided
that in each such instance such entity expressly assumes all of Tenant's
obligations hereunder, and provided further that in instance (ii) and (iii) such
entity has a net worth at least equal to the greater of (A) the net worth of
Tenant on the date hereof or (B) the net worth of Tenant immediately prior to
such assignment or transaction. With respect to the transactions described in
Subsections (ii) above, such net worth may be on a consolidated basis with
Tenant's affiliated entity, and every net worth determination hereunder shall be
made on a balance sheet (not on a market capitalization or other basis). An
initial public offering of Tenant's stock and any subsequent transfers shall not
be considered a Transfer hereunder.
XIII. Liens.
Tenant shall not permit mechanic's 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 benefit of Tenant. If a lien
is so placed, Tenant shall, within fifteen (15) days of notice from Landlord of
the filing of the lien, fully discharge the lien by settling the claim which
resulted in the lien or by bonding or insuring over the lien in the manner
prescribed by the applicable lien Law. If Tenant fails to discharge the lien,
then, in addition to any other right or remedy of Landlord, Landlord may bond or
insure over the lien or otherwise discharge the lien. Tenant shall reimburse
Landlord for any amount paid by Landlord to bond or insure over the lien or
discharge the lien, including, without limitation, reasonable attorneys' fees
(if and to the extent permitted by Law) within 30 days after receipt of an
invoice from Landlord.
XIV. Indemnity and Waiver of Claims.
A. Except to the extent caused by the negligence or willful
misconduct of Landlord or any Landlord Related Parties (defined below), Tenant
shall indemnify, defend and hold Landlord, its trustees, members, principals,
beneficiaries, partners, officers, directors, employees, Mortgagee(s) (defined
in Article XXVI) and agents ("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), which may
be imposed upon, incurred by or asserted against Landlord or any of the Landlord
Related Parties 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 (defined below) or any of Tenant's
transferees, contractors or licensees.
B. Except to the extent caused by the negligence or willful
misconduct of Tenant or any Tenant Related Parties (defined below), 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 liabilities,
18
<PAGE>
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), which may be imposed upon,
incurred by or asserted against Tenant or any of the Tenant Related Parties and
arising out of or in connection with the acts or omissions (including violations
of Law) of Landlord, the Landlord Related Parties or any of Landlord's
contractors.
C. Landlord and the Landlord Related Parties shall not be liable for,
and Tenant waives, all claims for loss or damage to Tenant's business or loss,
theft or damage to Tenant's Property or the property of any person claiming by,
through or under Tenant resulting from: (1) wind or weather; (2) the failure of
any sprinkler, heating or air-conditioning equipment, any electric wiring or any
gas, water or steam pipes; (3) the backing up of any sewer pipe or downspout;
(4) the bursting, leaking or running of any tank, water closet, drain or other
pipe; (5) water, snow or ice upon or coming through the roof, skylight, stairs,
doorways, windows, walks or any other place upon or near the Buildings; (6) any
act or omission of any party other than Landlord or Landlord Related Parties;
and (7) any causes not reasonably within the control of Landlord. Tenant shall
insure itself against such losses under Article XV below.
XV. Insurance.
Tenant shall carry and maintain the following insurance ("Tenant's
Insurance"), at its sole cost and expense: (1) 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; (2) All Risk
Property/Business Interruption Insurance, including flood and earthquake,
written at replacement cost value and with a replacement cost endorsement
covering all of Tenants trade fixtures, equipment furniture and other personal
property within the Premises ("Tenant's Property"); (3) Workers' Compensation
Insurance as required by the state in which the Premises 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. Any company writing any of
Tenants Insurance shall have an A.M. Best rating of not less than A-VIII. All
Commercial General Liability Insurance policies shall name Tenant as a named
insured and Landlord (or any successor), Equity Office Properties Trust, a
Maryland real estate investment trust, EOP Operating Limited Partnership, a
Delaware limited partnership, Wright Runstad Associates Limited Partnership, a
Washington limited partnership, any Mortgagee(s), and their respective members,
principals, beneficiaries, partners, officers, directors, employees, and agents,
and other designees of Landlord as the interest of such designees shall appear,
as additional insureds. 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 change, cancellation, termination 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
for any reason, and upon renewals at least 15 days prior to the expiration of
the insurance coverage. So long as the same is available at commercially
reasonable rates, Landlord shall maintain so called All Risk property insurance
on the Buildings at replacement cost value, as reasonably estimated by Landlord.
Except as specifically provided to the contrary, the limits of either party's'
insurance shall not limit such party's liability under this Lease.
19
<PAGE>
XVI. Subrogation.
Notwithstanding anything in this Lease to the contrary, Landlord and
Tenant shall cause their respective insurance carriers to waive any and all
rights of recovery, claim, action or causes of action against the other and
their respective trustees, principals, beneficiaries, partners, officers,
directors, agents, and employees, for any loss or damage that may occur to
Landlord or Tenant or any party claiming by, through or under Landlord or
Tenant, as the case may be, with respect to Tenant's Property, the Buildings,
the Premises, any additions or improvements to the Buildings or Premises, or any
contents thereof, including all rights of recovery, claims, actions or causes of
action arising out of the negligence of Landlord or any Landlord Related Parties
or the negligence of Tenant or any Tenant Related Parties, which loss or damage
is (or would have been, had the insurance required by this Lease been carried)
covered by insurance.
XVII. Casualty Damage.
A. If all or any part of the Premises is damaged by fire or other
casualty, Tenant shall immediately notify Landlord in writing. During any
period of time that all or a material portion of the Premises is rendered
untenantable as a result of a fire or other casualty, the Rent shall abate for
the portion of the Premises that is untenantable and not used by Tenant.
Landlord shall have the right to terminate this Lease if: (1) the Building
shall be damaged so that, in Landlord's reasonable judgment, substantial
alteration or reconstruction of the Building shall be required (whether or not
the Premises has been damaged); (2) Landlord is not permitted by Law to rebuild
the Building in substantially the same form as existed before the fire or
casualty; (3) the Premises have been materially damaged and there is less than
one (1) year of the Term remaining on the date of the casualty; (4) any
Mortgagee requires that the insurance proceeds be applied to the payment of the
mortgage debt; or (5) a material uninsured loss to the Building occurs.
Landlord may exercise its right to terminate this Lease by notifying Tenant in
writing within 90 days after the date of the casualty. In addition to
Landlord's rights 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 fire or other casualty and such damage cannot reasonably be repaired
within sixty (60) days after the date of such fire or other casualty; (b) there
is less than one (1) year of the Lease 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 thirty
(30) days after the date of the fire or other casualty. If neither Landlord nor
Tenant elect to terminate this Lease, Landlord shall commence and proceed with
reasonable diligence to repair and restore the Building and the Leasehold
Improvements (excluding any Alterations that were performed by Tenant in
violation of this Lease). However, in no event shall Landlord be required to
spend more than the insurance proceeds received by Landlord. Landlord shall not
be liable for any loss or damage to Tenant's Property or to the business of
Tenant resulting in any way from the fire or other casualty or from the repair
and restoration of the damage. Landlord and Tenant hereby waive the provisions
of any Law relating to the matters addressed in this Article, and agree that
their respective rights for damage to or destruction of the Premises shall be
those specifically provided in this Lease.
B. If all or any portion of the Premises shall be made untenantable
by fire or other casualty, Landlord shall, with reasonable promptness, cause an
architect or general
20
<PAGE>
contractor selected by Landlord to provide Landlord and Tenant with a written
estimate of the amount of time required to substantially complete the repair and
restoration of the Premises and make the Premises tenantable again, using
standard working methods ("Completion Estimate"). If the Completion Estimate
indicates that the Premises cannot be made tenantable within 210 days from the
date the repair and restoration is started, then regardless of anything in
Section XVII.A. above to the contrary, either party shall have the right to
terminate this Lease by giving written notice to the other of such election
within 30 days after receipt of the Completion Estimate. Tenant, however, shall
not have the right to terminate this Lease if the fire or casualty was caused by
the negligence or intentional misconduct of Tenant, Tenant Related Parties or
any of Tenant's transferees, contractors or licensees.
XVIII. Condemnation.
Either party may terminate this Lease if the whole or any material
part of the Premises shall be 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 leave the
remainder of the Building unsuitable for use as an office building in a manner
comparable to the Building's use prior to the Taking. In order to exercise its
right to terminate the Lease, Landlord or Tenant, as the case may be, must
provide written notice of termination to the other within 45 days after the
terminating party first receives notice of the Taking. Any such termination
shall be effective as of the date the physical taking of the Premises or the
portion of the Building or Property occurs. If this Lease is not terminated,
the Rentable Square Footage of the Building, the Rentable Square Footage of the
Premises and Tenant's Pro Rata Share shall, if applicable, be appropriately
adjusted. In addition, Rent for any portion of the Premises taken or condemned
shall be abated during the unexpired Term of this Lease effective when the
physical taking of the portion of the Premises occurs. All compensation awarded
for a Taking, or sale proceeds, shall be the property of Landlord, any right to
receive compensation or proceeds being expressly waived by Tenant. However,
Tenant may file a separate claim at its sole cost and expense for Tenant's
Property and Tenant's reasonable relocation expenses, provided the filing of the
claim does not diminish the award which would otherwise be receivable by
Landlord.
XIX. Events of Default.
Tenant shall be considered to be in default of this Lease upon the
occurrence of any of the following events of default:
A. Tenant's failure to pay when due all or any portion of the
Rent, if the failure continues for 3 days after written notice to Tenant
("Monetary Default").
B. Tenant's failure (other than a Monetary Default) to comply with
any term, provision or covenant of this Lease, if the failure is not cured
within 30 days after written notice to Tenant. However, if Tenant's failure to
comply cannot reasonably be cured within 30 days, Tenant shall be allowed
additional time (not to exceed 60 days) as is reasonably necessary to cure the
failure so long as: (1) Tenant commences to cure the failure within 30 days,
and (2) Tenant diligently pursues a course of action that will cure the failure
and bring Tenant back
21
<PAGE>
into compliance with the Lease. However, if Tenant's failure to comply creates a
hazardous condition, the failure must be cured immediately upon notice to
Tenant. In addition, if Landlord provides Tenant with notice of Tenant's failure
to comply with any particular term, provision or covenant of the Lease on 3
occasions during any 12 month period, Tenant's subsequent violation of such
term, provision or covenant shall, at Landlord's option, not require a thirty
(30) day cure period.
C. Tenant or any Guarantor becomes insolvent, makes a transfer in
fraud of creditors or makes an assignment for the benefit of creditors, or
admits in writing its inability to pay its debts when due.
D. The leasehold estate is taken by process or operation of Law.
XX. Remedies.
A. Upon any default, Landlord shall have the right without notice or
demand (except as provided in Article XIX) to pursue any of its rights and
remedies at Law or in equity, including any one or more of the following
remedies:
1. Terminate this Lease, in which case Tenant shall immediately
surrender the Premises to Landlord. If Tenant fails to surrender the
Premises, Landlord may, in compliance with applicable Law and without
prejudice to any other right or remedy, enter upon and take possession of
the Premises and expel and remove Tenant, Tenant's Property and any party
occupying all or any part of the Premises. Tenant shall pay Landlord on
demand the amount of all past due Rent and other losses and damages which
Landlord may suffer as a result of Tenant's default, whether by Landlord's
inability to relet the Premises on satisfactory terms or otherwise,
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 costs and expenses
incurred by Landlord in reletting or attempting to relet the Premises,
including, without limitation, reasonable legal fees, brokerage
commissions, the cost of alterations and the value of other concessions or
allowances granted to a new tenant.
2. Terminate Tenant's right to possession of the Premises and, in
compliance with applicable Law, expel and remove Tenant, Tenant's Property
and any parties occupying all or any part of the Premises. Landlord may
relet all or any part of the Premises, without notice to Tenant, for a term
that may be greater or less than the balance of the Term and on such
conditions (which may include concessions, free rent and alterations of the
Premises) and for such uses as Landlord in its reasonable business judgment
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 unless a written notice of termination is
given to Tenant. Landlord shall make reasonable efforts to mitigate its
damages as required by law or equity following a default by Tenant.
22
<PAGE>
3. In lieu of calculating damages under Sections XX.A.1. or XX.A.2.
above, 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 the Prime Rate (defined in Section XX.B. below) then in
effect, minus the then present fair rental value of the Premises for the
remainder of the Term, similarly discounted, after deducting the
proportionate share of the anticipated Costs of Reletting attributable to
the period between the Lease termination date and the last day of the Lease
term.
B. Unless expressly provided in this Lease, the repossession or re-
entering of all or any part of the Premises shall not relieve Tenant of its
liabilities and obligations under the 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. If Landlord declares Tenant to be in
default, Landlord shall be entitled to receive interest on any unpaid item of
Rent at a rate equal to the Prime Rate plus 4%. For purposes hereof, the "Prime
Rate" shall be the per annum interest rate publicly announced as its prime or
base rate in the "Money Rates" column of the Wall Street Journal. Forbearance
by Landlord to enforce one or more remedies shall not constitute a waiver of any
default.
XXI. Limitation of Liability.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, THE
LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR LANDLORD) TO TENANT SHALL BE LIMITED
TO THE INTEREST OF LANDLORD IN THE PROPERTY. TENANT SHALL LOOK SOLELY TO
LANDLORD'S INTEREST IN THE PROPERTY FOR THE RECOVERY OF ANY JUDGMENT OR AWARD
AGAINST LANDLORD. NEITHER LANDLORD NOR ANY LANDLORD RELATED PARTY SHALL BE
PERSONALLY LIABLE FOR ANY JUDGMENT OR DEFICIENCY. BEFORE FILING SUIT FOR AN
ALLEGED DEFAULT BY LANDLORD, TENANT SHALL GIVE LANDLORD AND THE MORTGAGEE(S)
(DEFINED IN ARTICLE XXVI BELOW) WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES
(DEFINED IN ARTICLE XXVI BELOW) ON THE PROPERTY, BUILDING OR PREMISES, NOTICE
AND REASONABLE TIME TO CURE THE ALLEGED DEFAULT. IN ADDITION, TENANT
ACKNOWLEDGES THAT ANY ENTITY MANAGING THE BUILDING ON BEHALF OF LANDLORD, OR
WHICH EXECUTES THIS LEASE AS AGENT FOR LANDLORD, IS ACTING SOLELY IN ITS
CAPACITY AS AGENT FOR LANDLORD AND SHALL NOT BE LIABLE FOR ANY OBLIGATIONS,
LIABILITIES, LOSSES OR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE
LANDLORD'S OBLIGATIONS UNDER THIS LEASE, ALL OF WHICH ARE EXPRESSLY WAIVED BY
TENANT.
XXII. No Waiver.
Either party's failure to declare a default immediately upon its
occurrence, or delay in taking action for a default shall not constitute a
waiver of the default, nor shall it
23
<PAGE>
constitute an estoppel. Either party's failure to enforce its rights for a
default shall not constitute a waiver of its rights regarding any subsequent
default. Receipt by Landlord of Tenant's keys to the Premises shall not
constitute an acceptance or surrender of the Premises.
XXIII. Quiet Enjoyment.
Tenant shall, and may peacefully have, hold and enjoy the Premises,
subject to the terms of this Lease, provided Tenant pays the Rent and fully
performs all of its covenants and agreements. This covenant and all other
covenants of Landlord shall be binding upon Landlord and its successors only
during its or their respective periods of ownership of the Buildings, and shall
not be a personal covenant of Landlord or the Landlord Related Parties.
XXIV. Relocation.
[Intentionally omitted.]
XXV. Holding Over.
Except for any permitted occupancy by Tenant under Article VIII, if
Tenant fails to surrender the Premises at the expiration or earlier termination
of this Lease, occupancy of the Premises after the termination or expiration
shall be that of a tenancy at sufferance. Tenant's occupancy of the Premises
during the holdover 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 greater of: (1) the
sum of the Base Rent and Additional Rent due for the period immediately
preceding the holdover; or (2) the fair market gross rental for the Premises as
reasonably determined by Landlord. No holdover by Tenant or payment by Tenant
after the expiration or early 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. In addition to the payment of the
amounts provided above, 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 30
days after Landlord notifies Tenant of Landlord's inability to deliver
possession, or perform improvements, Tenant shall be liable to Landlord for all
damages, including, without limitation, consequential damages, that Landlord
suffers from the holdover.
XXVI. 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 Buildings 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 subordination agreement in the
form of Exhibit F attached hereto or in other commercially reasonable form
---------
containing a nondisturbance clause. In lieu of having the Mortgage be superior
to this Lease, a Mortgagee shall have the right at any time to subordinate its
Mortgage to this Lease. If requested by a successor-in-interest to all or a part
of
24
<PAGE>
Landlord's interest in the Lease, Tenant shall, without charge, attorn to the
successor-in-interest. Landlord and Tenant shall each, within 10 days after
receipt of a written request from the other, execute and deliver an estoppel
certificate to those parties as are reasonably requested by the other (including
a Mortgagee or prospective purchaser). The estoppel certificate shall include a
statement certifying that this Lease is unmodified (except as identified in the
estoppel certificate) and in full force and effect, describing the dates to
which Rent and other charges have been paid, representing that, to such party's
actual knowledge, there is no default (or stating the nature of the alleged
default) and indicating other matters with respect to the Lease that may
reasonably be requested. Tenant approves the form of Estoppel Certificate
attached hereto as Exhibit G. Landlord shall use commercially reasonable efforts
---------
to furnish Tenant with an executed Subordination Agreement in the form of
Exhibit F within thirty (30) days after mutual execution of this Lease.
---------
XXVII. Attorneys' Fees.
If either party institutes a suit against the other for violation
of or to enforce any covenant or condition of this Lease, or if either party
intervenes in any suit in which the other is a party to enforce or protect its
interest or rights, the prevailing party shall be entitled to all of its costs
and expenses, including, without limitation, reasonable attorneys' fees.
XXVIII. Notice.
If a demand, request, approval, consent or notice (collectively
referred to as a "notice") shall or may be given to either party by the other,
the notice shall be in writing and delivered by hand or sent by registered or
certified mail with return receipt requested, or sent by overnight or same day
courier service or sent by facsimile (with electric confirmation of receipt) at
the party's respective Notice Address(es) set forth in Article I, except that if
Tenant has vacated the Premises (or if the Notice Address for Tenant is other
than the Premises, and Tenant has vacated such address) without providing
Landlord a new Notice Address, Landlord may serve notice in any manner described
in this Article or in any other manner permitted by Law. Each notice shall be
deemed to have been received or given on the earlier to occur of actual delivery
or the date on which delivery is refused, or, if Tenant has vacated the Premises
or the other Notice Address of Tenant without providing a new Notice Address,
three (3) days after notice is deposited in the U.S. mail or with a courier
service in the manner described above. Either party may, at any time, change its
Notice Address by giving the other party written notice of the new address in
the manner described in this Article.
XXIX. Excepted Rights.
This Lease does not grant any rights to light or air over or about
the Buildings. Landlord excepts and reserves exclusively to itself the use of:
(1) roofs, (2) telephone, electrical and janitorial closets, (3) equipment
rooms, Building risers or similar areas that are used by Landlord for the
provision of Building services, (4) rights to the land and improvements below
the floor of the Premises, (5) the improvements and air rights above the
Premises, (6) the improvements and air rights outside the demising walls of the
Premises, and (7) the areas within the Premises used for the installation of
utility lines and other installations serving occupants of
25
<PAGE>
the Buildings. Landlord has the right to change the Building's name or address.
Landlord also has the right to make such other changes to the Property and
Buildings as Landlord deems appropriate, provided the changes do not materially
affect Tenant's ability to use the Premises for the Permitted Use. Landlord
shall also have the right (but not the obligation) to temporarily close the
Buildings if Landlord reasonably determines that there is an imminent danger of
significant damage to the Buildings or of personal injury to Landlord's
employees or the occupants of the Buildings. The circumstances under which
Landlord may temporarily close the Buildings shall include, without limitation,
electrical interruptions, hurricanes and civil disturbances. A closure of the
Buildings under such circumstances shall not constitute a constructive eviction
nor entitle Tenant to an abatement or reduction of Rent.
XXX. Surrender of Premises.
At the expiration or earlier termination of this Lease or Tenant's
right of possession, Tenant shall remove Tenant's Property (defined in Article
XV) from the Premises, and quit and surrender the Premises to Landlord, broom
clean, and in good order, condition and repair, ordinary wear and tear and
damage from casualty excepted. Tenant shall also be required to remove the
Required Removables in accordance with Article VIII. If Tenant fails to remove
any of Tenant's Property within 2 days after the termination of this Lease or of
Tenant's right to possession, Landlord, at Tenant's sole cost and expense, shall
be entitled (but not obligated) to remove and store Tenant's Property. Landlord
shall not be responsible for the value, preservation or safekeeping of Tenant's
Property. Tenant shall pay Landlord, upon demand, the expenses and storage
charges incurred for Tenant's Property. In addition, if Tenant fails to remove
Tenant's Property from the Premises or storage, as the case may be, within 30
days after written notice, Landlord may deem all or any part of Tenant's
Property to be abandoned, and title to Tenant's Property shall be deemed to be
immediately vested in Landlord.
XXXI. Miscellaneous.
A. This Lease and the rights and obligations of the parties shall
be interpreted, construed and enforced in accordance with the Laws of the state
of Washington and Landlord and Tenant hereby irrevocably consent to the
jurisdiction and proper venue of such state. If any term or provision of this
Lease shall to any extent be invalid or unenforceable, the remainder of this
Lease shall not be affected, and each provision of this Lease shall be valid and
enforced to the fullest extent permitted by Law. The headings and titles to the
Articles and Sections of this Lease are for convenience only and shall have no
effect on the interpretation of any part of the Lease.
B. Tenant shall not record this Lease or any memorandum without
Landlord's prior written consent.
C. Whenever a period of time is prescribed for the taking of an
action by Landlord or Tenant, the period of time for the performance of such
action shall be extended by the number of days that the performance is actually
delayed due to strikes, acts of God, shortages of labor or materials, war, civil
disturbances and other causes beyond the reasonable control of the performing
party ("Force Majeure"). However, events of Force Majeure shall not extend any
26
<PAGE>
period of time for the payment of Rent or other sums payable by either party or
any period of time for the written exercise of an option or right by either
party.
D. Landlord shall have the right to transfer and assign, in whole
or in part, all of its rights and obligations under this Lease and in the
Buildings and/or Property referred to herein, and upon such transfer Landlord
shall be released from any future, unaccrued obligations hereunder, and Tenant
agrees to look solely to the successor in interest of Landlord for the
performance of such obligations.
E. 1. Tenant represents that it has dealt directly with and only
with the Broker as a broker in connection with this Lease. Tenant shall
indemnify and hold Landlord and the Landlord Related Parties harmless from all
claims of any other brokers claiming to have represented Tenant in connection
with this Lease. Landlord agrees to indemnify and hold Tenant and the Tenant
Related Parties harmless from all claims of any brokers claiming to have
represented Landlord in connection with this Lease. Landlord agrees to pay a
brokerage commission to Broker in accordance with the terms of a written
commission agreement between Landlord and Broker.
2. Agency Disclosure. At the signing of this Lease, Landlord's
-----------------
leasing agent John Black, of Broderick Group, Inc., represented Landlord. At
the signing of this Lease, Tenant's agent, Geoff Boguch of Colliers
International, represented Tenant. Each party signing this document confirms
that the prior oral and/or written disclosure of agency was provided to such
party in this transaction, as required by RCW 18.86.030(l)(g).
3. Landlord and Tenant, by their execution of this Lease, each
acknowledge and agree that they have timely received a pamphlet on the law of
real estate agency as required under RCW 18.86.030(1)(f).
F. Tenant covenants, warrants and represents that: (1) each
individual executing, attesting and/or delivering this Lease on behalf of Tenant
is authorized to do so on behalf of Tenant; (2) this Lease is binding upon
Tenant; and (3) Tenant is duly organized and legally existing in the state of
its organization and is qualified to do business in the state in which the
Premises are located. If there is more than one Tenant, or if Tenant is
comprised of more than one party or entity, the obligations imposed upon Tenant
shall be joint and several obligations of all the parties and entities.
Notices, payments and agreements given or made by, with or to any one person or
entity shall be deemed to have been given or made by, with and to all of them.
G. Time is of the essence with respect to Tenant's exercise of any
expansion, renewal or extension rights granted to Tenant. This Lease shall
create only the relationship of landlord and tenant between the parties, and not
a partnership, joint venture or any other relationship. This Lease and the
covenants and conditions in this Lease shall inure only to the benefit of and be
binding only upon Landlord and Tenant and their permitted successors and
assigns.
H. The expiration of the Term, whether by lapse of time or
otherwise, shall not relieve either party of any obligations which accrued prior
to or which may continue to
27
<PAGE>
accrue after the expiration or early termination of this Lease. Without limiting
the scope of the prior sentence, it is agreed that Tenant's obligations under
Sections IV.A., IV.B., VIII, XIV, XX, XXV and XXX shall survive the expiration
or early termination of this Lease.
I. Landlord has delivered a copy of this Lease to Tenant for
Tenant's review only, and the delivery of it does not constitute an offer to
Tenant or an option. This Lease shall not be effective against any party hereto
until an original copy of this Lease has been signed by such party.
J. All understandings and agreements previously made between the
parties are superseded by this Lease, and neither party is relying upon any
warranty, statement or representation not contained in this Lease. This Lease
may be modified only by a written agreement signed by Landlord and Tenant.
K. Tenant, within 15 days after request, shall provide Landlord
with a current financial statement and such other information as Landlord may
reasonably request in order to create a "business profile" of Tenant and
determine Tenant's ability to fulfill its obligations under this Lease.
Landlord, however, shall not require Tenant to provide such information unless
Landlord is requested to produce the information in connection with a proposed
financing or sale of the Buildings. Upon written request by Tenant, Landlord
shall enter into a commercially reasonable confidentiality agreement covering
any confidential information that is disclosed by Tenant.
XXXII. Entire Agreement.
This Lease and the following exhibits and attachments constitute
the entire agreement between the parties and supersede all prior agreements and
understandings related to the Premises, including all lease proposals, letters
of intent and other documents: Exhibit A (Outline and Location of Premises),
---------
Exhibit A-2 (Legal Description of Property), Exhibit B (Rules and Regulations),
----------- ---------
Exhibit C (Commencement Letter), Exhibit D (Work Letter Agreement, if required),
--------- ---------
Exhibit E (Additional Provisions, if required), Exhibit F (Subordination
--------- ---------
Agreement; Acknowledgment of Lease Assignment, Estoppel, Attornment and Non-
Disturbance Agreement); and Exhibit G (Tenant Estoppel Certificate).
---------
28
<PAGE>
Landlord and Tenant have executed this Lease as of the day and year
first above written.
LANDLORD:
WRC SUNSET NORTH LLC, a Washington limited liability
company
By: WRIGHT RUNSTAD
ASSOCIATES LIMITED
PARTNERSHIP, a Washington
limited partnership, its Manager
By: WRIGHT RUNSTAD &
COMPANY, a Washington
corporation, its general partner
By:
--------------------------------
Its:
--------------------------------
EOP SUNSET NORTH, L.L.C., a
Delaware limited liability company, its
manager
By: EOP OPERATING LIMITED
PARTNERSHIP, a Delaware limited
partnership, its sole member
By: EQUITY OFFICE
PROPERTIES TRUST, a
Maryland real estate investment
trust, its managing general
partner
By:
--------------------------------
Its:
--------------------------------
29
<PAGE>
TENANT:
drugstore.com, inc.,
a Delaware corporation
By:
--------------------------------
Its:
--------------------------------
LANDLORD ACKNOWLEDGMENTS
STATE OF WASHINGTON )
) ss:
COUNTY OF KING )
On this the ______ day of _______________, 1999, before me a Notary Public
duly authorized in and for said County in the State aforesaid to take
acknowledgments personally appeared _________________________ known to me to be
_______________ of Wright Runstad & Company, the general partner of Wright
Runstad Associates Limited Partnership, a Member of WRC SUNSET NORTH LLC, a
Washington limited liability company, the Landlord in the foregoing instrument,
and acknowledged that as such officer, being authorized so to do, (s)he executed
the foregoing instrument on behalf of said corporation by subscribing the name
of such corporation by himself/herself as such officer and caused the corporate
seal of said corporation to be affixed thereto, as a free and voluntary act, and
as the free and voluntary act of said corporation, for the uses and purposes
therein set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public:
--------------------------------------------
Printed Name:
---------------------------------------------
Residing at:
----------------------------------------------
My Commission expires:
------------------------------------
30
<PAGE>
STATE OF _______________ )
) ss:
COUNTY OF ______________ )
On this the ______ day of _______________, 1999, before me a Notary Public
duly authorized in and for said County in the State aforesaid to take
acknowledgments personally appeared _________________________ known to me to be
_______________ of Equity Office Properties Trust, the general partner of EOP
Operating Limited Partnership, the sole member of EOP Sunset North, L.L.C., a
Member of WRC SUNSET NORTH LLC, a Washington limited liability company, the
Landlord in the foregoing instrument, and acknowledged that as such officer,
being authorized so to do, (s)he executed the foregoing instrument on behalf of
said corporation by subscribing the name of such corporation by himself/herself
as such officer and caused the corporate seal of said corporation to be affixed
thereto, as a free and voluntary act, and as the free and voluntary act of said
corporation, for the uses and purposes therein set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public:
--------------------------------------------
Printed Name:
---------------------------------------------
Residing at:
----------------------------------------------
My Commission expires:
------------------------------------
31
<PAGE>
TENANT ACKNOWLEDGMENT
STATE OF WASHINGTON )
) ss:
COUNTY OF KING )
On this the ______ day of _______________, 1999, before me a Notary Public
duly authorized in and for said County in the State aforesaid to take
acknowledgments personally appeared _________________________ known to me to be
_______________ of drugstore.com, inc., a Delaware corporation, the Tenant in
the foregoing instrument, and acknowledged that as such officer, being
authorized so to do, (s)he executed the foregoing instrument on behalf of said
corporation by subscribing the name of such corporation by himself/herself as
such officer and caused the corporate seal of said corporation to be affixed
thereto, as a free and voluntary act, and as the free and voluntary act of said
corporation, for the uses and purposes therein set forth.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
Notary Public:
--------------------------------------------
Printed Name:
---------------------------------------------
Residing at:
----------------------------------------------
My Commission expires:
------------------------------------
32
<PAGE>
EXHIBIT A-1
PREMISES
This Exhibit is attached to and made a part of the Lease dated
November 22, 1999, by and between WRC SUNSET NORTH LLC, a Washington limited
liability company ("Landlord") and drugstore.com, inc., a Delaware corporation
("Tenant") for space in the Buildings located at the Northeast corner of 139th
Avenue Southeast and Southeast 32nd Street, Bellevue, King County, Washington.
Exhibit A-1, Page 1
<PAGE>
EXHIBIT A-2
LEGAL DESCRIPTION OF PROPERTY
This Exhibit is attached to and made a part of the Lease dated
November 22, 1999, by and between WRC SUNSET NORTH LLC, a Washington limited
liability company ("Landlord") and drugstore.com, inc., a Delaware corporation
("Tenant") for space in the Buildings located at the Northeast corner of 139th
Avenue Southeast and Southeast 32nd Street, Bellevue, King County, Washington.
LOTS 6 THROUGH 10 OF SUNSET RIDGE I-90 CORPORATE CAMPUS, A BINDING SITE PLAN, AS
PER PLAT RECORDED IN VOLUME 154 OF PLATS, PAGES 77 THROUGH 80, RECORDS OF KING
COUNTY;
EXCEPT ANY PORTION CONVEYED FOR 139TH AVE. S.E., BY DEED RECORDED UNDER
RECORDING NO. 9101280422;
TOGETHER WITH AN UNDIVIDED 60% INTEREST IN LOT 11 AND TRACT C OF SAID PLAT;
AND TOGETHER WITH THOSE CERTAIN EASEMENT RIGHTS AS DELINEATED IN INSTRUMENT
RECORDED UNDER RECORDING NO. 9601091040;
AND TOGETHER WITH THOSE CERTAIN EASEMENT RIGHTS AS DELINEATED IN INSTRUMENT
RECORDED UNDER RECORDING NO. 9107260572;
AND TOGETHER WITH THOSE CERTAIN EASEMENT RIGHTS AS DELINEATED IN INSTRUMENT
RECORDED UNDER RECORDING NO. 9309292404;
SITUATE IN THE CITY OF BELLEVUE, COUNTY OF KING, STATE OF WASHINGTON.
Exhibit A-2, Page 1
<PAGE>
EXHIBIT B
BUILDING RULES AND REGULATIONS
The following rules and regulations shall apply, where applicable, to
the Premises, the Buildings, the parking garage (if any), the Property and the
appurtenances. Capitalized terms have the same meaning as defined in the Lease.
1. Sidewalks, doorways, vestibules, halls, stairways and other
similar areas shall not be obstructed by Tenant or used by Tenant for any
purpose other than ingress and egress to and from the Premises. No rubbish,
litter, trash, or material shall he placed, emptied, or thrown in those areas.
At no time shall Tenant permit Tenant's employees to loiter in Common Areas or
elsewhere about the Buildings or Property.
2. Plumbing fixtures and appliances shall be used only for the
purposes for which designed, and no sweepings, rubbish, rags or other unsuitable
material shall be thrown or placed in the fixtures or appliances. Damage
resulting to fixtures or appliances by Tenant, its agents, employees or
invitees, shall be paid for by Tenant, and Landlord shall not be responsible for
the damage.
3. No signs, advertisements or notices shall be painted or affixed to
windows, doors or other parts of the Buildings, except those of such color,
size, style and in such places as are first approved in writing by Landlord and
except those that are within the interior of the Premises and not visible from
outside the Premises. All tenant identification and suite numbers at the
entrance to the Premises shall be installed by Landlord, at Tenant's cost and
expense, using the standard graphics for the Buildings. Except in connection
with the hanging of lightweight pictures and wall decorations, no nails, hooks
or screws shall be inserted into any part of the Premises or Buildings except by
the Building maintenance personnel.
4. Landlord shall provide and maintain in the first floor (main
lobby) of the Building an alphabetical directory board or other directory device
listing tenants, and no other directory shall be permitted unless previously
consented to by Landlord in writing.
5. Tenant shall not place any lock(s) on any door in the Premises or
Buildings without Landlord's prior written consent and Landlord shall have the
right to retain at all times and to use keys to all locks within and into the
Premises. A reasonable number of keys to the locks on the entry doors in the
Premises shall be furnished by Landlord to Tenant at Tenant's cost, and Tenant
shall not make any duplicate keys. All keys shall be returned to Landlord at the
expiration or early termination of this Lease.
6. All contractors, contractors representatives and installation
technicians performing work in the Buildings shall be subject to Landlord's
prior approval (which shall not be unreasonably withheld) and shall be required
to comply with Landlord's standard rules, regulations, policies and procedures,
which may be revised from time to time following prior written notice to Tenant.
Exhibit B, Page 1
<PAGE>
7. Movement in or out of the Buildings of furniture or office
equipment, or dispatch or receipt by Tenant of merchandise or materials
requiring the use of elevators, stairways, lobby areas or loading dock areas,
shall be restricted to hours designated by Landlord. Tenant shall obtain
Landlord's prior approval by providing a detailed listing of the activity. If
approved by Landlord, the activity shall be under the supervision of Landlord
and performed in the manner required by Landlord. Tenant shall assume all risk
for damage to articles moved and injury to any persons resulting from the
activity. If equipment, property, or personnel of Landlord or of any other party
is damaged or injured as a result of or in connection with the activity, Tenant
shall be solely liable for any resulting damage or loss.
8. Landlord shall have the right to approve the weight, size, or
location of heavy equipment or articles in and about the Premises. Damage to the
Buildings by the installation, maintenance, operation, existence or removal of
property of Tenant shall be repaired at Tenant's sole expense.
9. Corridor doors, when not in use, shall be kept closed.
10. Tenant shall not: (1) make or permit any improper, objectionable
or unpleasant noises or odors in the Buildings, or otherwise interfere in any
way with other tenants or persons having business with them; (2) solicit
business or distribute, or cause to be distributed, in any portion of the
Buildings, handbills, promotional materials or other advertising; or (3) conduct
or permit other activities in the Buildings that might, in Landlord's sole
opinion, constitute a nuisance.
11. No animals, except those assisting handicapped persons, shall be
brought into the Buildings or kept in or about the Premises.
12. No inflammable, explosive or dangerous fluids or substances shall
be used or kept by Tenant in the Premises, Buildings or about the Property
except for those properly stored and typically associated with office use,
including cleaning supplies, and except for samples of pharmaceuticals, and
other products stored and disposed of in compliance with all applicable laws and
regulations. Tenant shall not, without Landlord's prior written consent, use,
store, install, spill, remove, release or dispose of, within or about the
Premises or any other portion of the Property, any asbestos-containing materials
or any solid, liquid or gaseous material now or subsequently considered toxic or
hazardous under the provisions of 42 U.S.C. Section 9601 et seq. or any other
applicable environmental Law which may now or later be in effect. Tenant shall
comply with all Laws pertaining to and governing the use of these materials by
Tenant, and shall remain solely liable for the costs of abatement and removal.
13. Tenant shall not use or occupy the Premises in any manner or for
any purpose which might injure the reputation or impair the present or future
value of the Premises or the Buildings. Tenant shall not use, or permit any part
of the Premises to be used, for lodging, sleeping or for any illegal purpose.
14. Tenant shall not take any action which would violate Landlord's
labor contracts or which would cause a work stoppage, picketing, labor
disruption or dispute, or interfere with Landlord's or any other tenant's or
occupant's business or with the rights and
Exhibit B, Page 2
<PAGE>
privileges of any person lawfully in the Buildings ("Labor Disruption"). Tenant
shall take the actions necessary to resolve the Labor Disruption, and shall have
pickets removed and, at the request of Landlord, immediately terminate any work
in the Premises that gave rise to the Labor Disruption, until Landlord gives its
written consent for the work to resume. Tenant shall have no claim for damages
against Landlord or any of the Landlord Related Parties, nor shall the date of
the commencement of the Term be extended as a result of the above actions.
15. Tenant shall not install, operate or maintain in the Premises or
in any other area of the Buildings, electrical equipment that would overload the
electrical system beyond its capacity for proper, efficient and safe operation
as determined solely by Landlord. Tenant shall not furnish cooling or heating to
the Premises, including, without limitation, the use of electronic or gas
heating devices, without Landlord's prior written consent, or as provided in
Exhibit D. Tenant shall not use more than its proportionate share of telephone
lines and other telecommunication facilities available to service the Buildings.
Current base Building design for telephone capacity is 300 lines per floor, as
provided by U.S. West, although Tenant may arrange with that service provider to
increase that capacity at Tenant's expense.
16. Tenant shall not operate or permit to be operated a coin or token
operated vending machine or similar device (including, without limitation,
telephones, lockers, toilets, scales, amusement devices and machines for sale of
beverages, foods, candy, cigarettes and other goods), except for machines for
the exclusive use of Tenant's employees, and then only if the operation does not
violate the lease of any other tenant in the Buildings.
17. Bicycles and other vehicles are not permitted inside the
Buildings or on the walkways outside the Buildings, except in areas designated
by Landlord.
18. Landlord may from time to time adopt systems and procedures for
the security and safety of the Buildings, its occupants, entry, use and
contents. Tenant, its agents, employees, contractors, guests and invitees shall
comply with Landlord's systems and procedures.
19. Landlord shall have the right to prohibit the use of the name of
the Buildings or any other publicity by Tenant that in Landlord's sole opinion
may impair the reputation of the Buildings or their desirability. Upon written
notice from Landlord, Tenant shall refrain from and discontinue such publicity
immediately.
20. Tenant shall not canvass, solicit or peddle in or about the
Buildings or the Property.
21. Neither Tenant nor its agents, employees, contractors, guests or
invitees shall smoke or permit smoking in the Common Areas, unless the Common
Areas have been declared a designated smoking area by Landlord, nor shall the
above parties allow smoke from the Premises to emanate into the Common Areas or
any other part of the Buildings. Landlord shall have the right to designate the
Buildings (including the Premises) as a non-smoking building.
22. Landlord shall have the right to designate and approve standard
window coverings for the Premises and to establish rules to assure that the
Buildings present a uniform
Exhibit B, Page 3
<PAGE>
exterior appearance. Tenant shall ensure, to the extent reasonably practicable,
that window coverings are closed on windows in the Premises while they are
exposed to the direct rays of the sun.
23. Deliveries to and from the Premises shall be made only at the
times, in the areas and through the entrances and exits reasonably designated by
Landlord. Tenant shall not make deliveries to or from the Premises in a manner
that might interfere with the use by any other tenant of its premises or of the
Common Areas, any pedestrian use, or any use which is inconsistent with good
business practice.
24. The work of cleaning personnel shall not be hindered by Tenant
after 6:00 p.m., and cleaning work may be done at any time when the offices are
vacant. Windows, doors and fixtures may be cleaned at any time. Tenant shall
provide adequate waste and rubbish receptacles to prevent unreasonable hardship
to the cleaning service.
Exhibit B, Page 4
<PAGE>
EXHIBIT C
COMMENCEMENT LETTER
Date
------------------------
Tenant
Address
Re: Commencement Letter with respect to that certain Lease dated
____________________ by and between WRC SUNSET NORTH LLC, a Washington
limited liability company, as Landlord, drugstore.com, inc., a Delaware
corporation, as Tenant for 57,436 square feet of Rentable Area in the
Buildings located at Northeast comer of 139th Avenue Southeast and
Southeast 32nd Street, Bellevue, King County, Washington.
Dear _______________:
In accordance with the terms and conditions of the above referenced Lease,
Tenant hereby accepts possession of the Premises and agrees as follows:
1. The Commencement Date of the Lease is __________________;
2. The Termination Date of the Lease is ___________________.
Please acknowledge your acceptance of possession and agreement to the terms
set forth above by signing all three (3) copies of this Commencement Letter in
the space provided and returning two (2) fully executed copies of the same to my
attention.
Sincerely,
Property Manager
Agreed and Accepted:
Tenant:__________________________________
By:______________________________________
Name:____________________________________
Title:___________________________________
Date:____________________________________
Exhibit C, Page 1
<PAGE>
EXHIBIT D
WORK LETTER
This Exhibit is attached to and made a part of the Lease dated
November 22, 1999, by and between WRC SUNSET NORTH LLC, a Washington limited
liability company ("Landlord") and drugstore.com, inc., a Delaware corporation
("Tenant") for space on the Buildings located at the Northeast corner of 139th
Avenue Southeast and Southeast 32nd Street, Bellevue, King County, Washington.
Defined terms used in this Exhibit D shall have the same meanings
given them in the attached Lease.
I. IMPROVEMENTS PROVIDED BY LANDLORD: Landlord agrees to provide
improvements to the Buildings and the Premises pursuant to the attached Exhibit
D-1, Base Building Condition (together with the Tenant Improvements, as defined
below, the "Landlord Work"), on or before the date the Tenant Improvement
Contractor commences construction of the Tenant Improvements.
II. IMPROVEMENTS BY TENANT/REIMBURSEMENT BY LANDLORD: Design and
construction of all improvements in the Premises beyond those listed on Exhibit
D-1 (the "Tenant Improvements") shall be provided at Tenant's expense. Landlord
shall pay the cost of such additional improvements up to an amount equal to
$27.50 per square foot of "Tenant's Usable Area" as outlined on the floor
plan(s) in Exhibit A, for a total payment by Landlord, based on a usable area of
50,957 square feet, of $1,401,317.50 (the "Allowance"). The Allowance shall be
applied only to the cost of design and construction of such improvements,
including but not be limited to: architectural and engineering design,
partitions (including one-half (1/2) the cost of any public corridor or demising
partitions enclosing the Tenant's Usable Area), doors, door frames, hardware,
paint, wall coverings, base, ceilings, lights, mechanical distribution,
diffusers, thermostats, sprinkler distribution, sprinkler heads, emergency
speakers, fire extinguishers and cabinets, telephone and electrical outlets,
light switches, floor coverings, and all applicable permit fees and sales tax.
Notwithstanding anything to the contrary contained herein, the Allowance may
only be applied to Building Standard tenant improvements unless otherwise
approved in writing by Landlord.
Landlord shall obtain all permits and government approvals and assume
specific responsibility for delivery of the Premises as defined in the Lease and
this Exhibit D, provided Tenant shall have met the drawing delivery dates
herein. If Tenant does not initially select a contractor, then Landlord shall
manage the bidding of tenant improvements to at least three (3) firms acceptable
to Landlord, one of which shall be Landlord's Contractor. The contractor
selected by Tenant to construct the Tenant Improvements, Turner Construction,
Inc., shall be hereinafter known as the "Tenant Improvement Contractor.
III. BUILDING STANDARD IMPROVEMENTS: As used herein, "Building
Standard" shall mean the type, grade, brand, quality and/or quantity of
materials Landlord designates from time to time to be the minimum quality and/or
quantity to be used in
Exhibit D, Page 1
<PAGE>
the Building. Tenant shall use Building Standard lighting, window coverings,
doors, relites, hardware, ceiling treatment and heating, ventilating and air
conditioning distribution equipment and controls, except that Tenant may install
a Liebert or similar dedicated cooling system in the technical rooms in the
Premises. If such system will connect to the Building system, its compatibility
must be approved by Landlord.
IV. DESIGN OF TENANT IMPROVEMENTS: Tenant, at Tenant's initial cost
and with the approval of Landlord, has retained Marvin Stein, Inc. ("Tenant's
Office Planner") to prepare the necessary drawings for Basic Plans and supply
the information necessary to complete the Working Drawings and Engineering
Drawings referred to in Section IV(B) of this Exhibit D for construction of the
tenant improvements in Tenant's area. All of Tenant's plans described below
("Tenant's Plans") shall be delivered to Landlord on the dates stated (the "Plan
Delivery Dates"), and shall be subject to approval of Landlord, such approval
not to be unreasonably withheld or delayed. Landlord agrees to respond in
writing with approval or comments within five (5) business days after initial
receipt of each component of Tenant's Plans or other initial requests for review
or approval under this Exhibit D, and two (2) business days after receipt of any
changes or additions to an initial submittal.
Tenant's Office Planner shall ensure that the work shown on Tenant's
Plans is compatible with the basic Building plans and that necessary basic
Building modifications are included in Tenant's Plans. Such modifications shall
be subject to Landlord approval. If such approved basic Building modifications
are made subsequent to completion of the shell and core documents or Landlord's
architect reasonably charges Landlord for such changes, then such modifications
shall be subject to Landlord's approval and the cost of the changes to the
documents as well as any increased shell and core construction costs shall be
paid by Tenant.