LEASE AGREEMENT BETWEEN TALON PORTFOLIO SERVICES, LLC, A WASHINGTON LIMITED LIABILITY COMPANY, AS GENERAL RECEIVER FOR W2007 SEATTLE OFFICE 110 ATRIUM PLACE REALTY, LLC, A DELAWARE LIMITED LIABILITY COMPANY, KING COUNTY CASE NO. 12-2-21253-8-SEA, AS LANDLORD, AND AUGME TECHNOLOGIES, INC., A WASHINGTON CORPORATION, AS TENANT, DATED August 26, 2013

EXHIBIT E

 

 

[______________], 20[__]

 

Augme Technologies, Inc.

110 110th Avenue NE, 4th Floor

Bellevue, Washington 98004

 

Re:

Lease Agreement (the “Lease”) dated [_____________], 20[__], between W2007 Seattle Office 110 Atrium Place Realty, LLC, a Delaware limited liability company (“Landlord”), and Augme Technologies, Inc., a Washington corporation (“Tenant”).  Capitalized terms used herein but not defined shall be given the meanings assigned to them in the Lease.

 

Ladies and Gentlemen:

 

Landlord and Tenant agree as follows:

 

1.           Condition of Premises.  Tenant has accepted possession of the Premises pursuant to the Lease.  Any improvements required by the terms of the Lease to be made by Landlord have been completed to the full and complete satisfaction of Tenant in all respects except for the punch-list items described on Exhibit A hereto (the “Punch-list Items”), and except for such Punch-list Items, Landlord has fulfilled all of its duties under the Lease with respect to such initial tenant improvements.  Furthermore, Tenant acknowledges that the Premises are suitable for the Permitted Use.

 

2.           Commencement Date.  The Commencement Date of the Lease is [__________], 20[__].

 

3.           Expiration Date.  The Term is scheduled to expire on the last day of the sixty-sixth (66th) full calendar month of the Term, which date is June 30, 2019.

 

4.           Contact Person.  Tenant’s contact person in the Premises is:

 

_______________________________

 

_______________________________

 

_______________________________

 

Attention:  ______________________

 

Telephone:  ____- ___-_____

 

5.           Ratification.  Tenant hereby ratifies and confirms its obligations under the Lease, and represents and warrants to Landlord that it has no defenses thereto.  Additionally, Tenant further confirms and ratifies that, as of the date hereof, (a) the Lease is and remains in good standing and in full force and effect, and (b) Tenant has no claims, counterclaims, setoffs or defenses against Landlord arising out of the Lease or in any way relating thereto or arising out of any other transaction between Landlord and Tenant.

 

6.           Binding Effect; Governing Law.  Except as modified hereby, the Lease shall remain in full effect and this letter shall be binding upon Landlord and Tenant and their respective successors and assigns.  If any inconsistency exists or arises between the terms of this letter and the terms of the Lease, the terms of this letter shall prevail.  This letter shall be governed by the laws of the State of Washington.

Please indicate your agreement to the above matters by signing this letter in the space indicated below and returning an executed original to us.

 

Sincerely,

 

[PROPERTY MANAGEMENT COMPANY SIGNATURE BLOCK], on behalf of Landlord

 

________________________________________,

 

a _______________________________________ [Insert jurisdiction in which the Property Management Company is organized and type of entity]

 

 

By:           __________________________________

 

Name:                      __________________________________

 

Title:                      __________________________________

 

Agreed and accepted:

AUGME TECHNOLOGIES, INC.,

a Washington corporation

By:           ___________________________

Name:      ___________________________

Title:        ___________________________

 

 

 

Please insert any punch-list items that remain to be performed by Landlord.  If no items are listed below by Tenant, none shall be deemed to exist.

 

 

The undersigned is the Tenant under the Lease (as defined below) between W2007 Seattle Office 110 Atrium Place Realty, LLC, a Delaware limited liability company, as Landlord, and the undersigned as Tenant, for the Premises on the 4th floor of the office building located at 110 110th Avenue, Bellevue, Washington 98004 and commonly known as 110 Atrium Place, and hereby certifies as follows:

 

1.           The Lease consists of the original Lease Agreement dated as of [___________], 20[___] between Tenant and Landlord[‘s predecessor-in-interest] and the following amendments or modifications thereto (if none, please state “none”):

 

______________________________________________________________________________

 

______________________________________________________________________________

 

______________________________________________________________________________

 

The documents listed above are herein collectively referred to as the “Lease” and represent the entire agreement between the parties with respect to the Premises.  All capitalized terms used herein but not defined shall be given the meaning assigned to them in the Lease.

 

2.           The Lease is in full force and effect and has not been modified, supplemented or amended in any way except as provided in Section 1 above.

 

3.           The Term commenced on [__________________], 20[__] and the Term expires, excluding any renewal options, on [_____________________], 20[__], and Tenant has no option, right of first refusal or other right to purchase all or any part of the Premises or the Project or interest therein, or any option to terminate or cancel the Lease, except as expressly set forth in the Lease.

 

4.           Tenant currently occupies the Premises described in the Lease and Tenant has not transferred, assigned, or sublet any portion of the Premises nor entered into any license or concession agreements with respect thereto except as follows (if none, please state “none”):

 

______________________________________________________________________________

 

______________________________________________________________________________

 

______________________________________________________________________________

 

5.           All monthly installments of Basic Rent, all Additional Rent and all monthly installments of estimated Additional Rent have been paid when due through [_____________]_.  The current monthly installment of Basic Rent is [$___________].

 

6.           All conditions of the Lease to be performed by Landlord necessary to the enforceability of the Lease have been satisfied and Landlord is not in default thereunder.  In addition, Tenant has not delivered any notice to Landlord regarding a default by Landlord thereunder.

 

7.           As of the date hereof, there are no existing defenses or offsets, or, to the undersigned’s knowledge, claims or any basis for a claim, that Tenant has against Landlord and no event has occurred and no condition exists, which, with the giving of notice or the passage of time, or both, will constitute a default under the Lease.

 

8.           No rental has been paid more than thirty (30) days in advance and no security deposit has been delivered to Landlord except as provided in the Lease.

9.           If Tenant is a corporation, partnership or other business entity, each individual executing this Estoppel Certificate on behalf of Tenant hereby represents and warrants that Tenant is a duly formed and existing entity qualified to do business in the state in which the Premises are located if required by law and that Tenant has full right and authority to execute and deliver this Tenant Estoppel Certificate and that each person signing on behalf of Tenant is authorized to do so.

 

10.           There are no actions pending against Tenant under any bankruptcy or similar laws of the United States or any state.

 

11.           Other than in compliance with all applicable laws and incidental to the ordinary course of the use of the Premises, Tenant has not used, stored, or released any hazardous substances in the Premises.

 

12.           All tenant improvement work and other improvement work to be performed by Landlord under the Lease has been completed in accordance with the Lease and has been accepted by the undersigned and all reimbursements and allowances due to the undersigned under the Lease in connection with any tenant improvement work have been paid in full.

 

13.           Tenant’s current address for receipt of notices, elections, demands or other communications is [______________________________].

 

Tenant acknowledges that this Tenant Estoppel Certificate may be delivered to Landlord’s current and prospective mortgagees, trust deed holders, ground lessors and/or investors, or prospective purchasers, or investors or any of their respective lenders, and acknowledges that it recognizes that if so delivered, in addition to Landlord, said mortgagees, trust deed holders, ground lessors, investors or purchasers, and their respective lenders, successors and assigns will be relying upon the statements contained herein in disbursing loan advances or making a new loan or investing in or acquiring the property of which the Premises are a part, and/or in accepting an assignment, of the Lease documents as collateral security, and that receipt by it of this Tenant Estoppel Certificate is a condition of making of the loan, disbursing loan proceeds, or investing in, or acquiring, such property.  Tenant hereby agrees to execute such other and further estoppel certificates as any of Landlord’s current or prospective mortgagees, trust deed holders, ground lessors, investors, purchasers or any of their respective lenders, successors or assigns may require.

 

TENANT:

AUGME TECHNOLOGIES, INC.,

a Washington corporation

By:           ___________________________

 

Name:      ___________________________

 

Title:        ___________________________

 

EXHIBIT G

 

 

(1)           Tenant’s Parking Spaces.  Tenant shall have the right, but not the obligation, to license from Landlord throughout the Term of the Lease, up to thirty-one (31) non-exclusive, unreserved, first-come first-served parking spaces (“Tenant’s Standard Parking Spaces”) in the Project’s parking facilities (the “Garage”) at the parking ratio of two and three tenths (2.3) per each one thousand (1,000) rentable square feet of the Premises.  However, as an accommodation to Tenant, until the Building reaches an eighty-five percent (85%) occupancy level (as reasonably determined by Landlord), and subject to availability (as reasonably determined by Landlord), Tenant may license up to nine (9) additional non-exclusive, unreserved, first-come first-served parking spaces (“Tenant’s Additional Parking Spaces”), for an overall parking ratio of three (3) parking spaces per each one thousand (1,000) rentable square feet of the Premises.  Tenant’s Standard Parking Spaces and Tenant’s Additional Parking Spaces are hereinafter collectively referred to as “Tenant’s Parking Spaces,” all of which shall be subject to such terms, conditions and regulations as are from time to time applicable to patrons of the Garage.  The rate payable by Tenant for Tenant’s Parking Spaces (including tax) shall be as set forth hereinbelow:

 

Months 01 – 24: Tenant’s Standard Parking Spaces: Tenant’s Additional Parking Spaces:	$0.00 per parking space, per month $100.00 per parking space, per month
Months 25 – 48: Tenant’s Parking Spaces:	$100.00 per parking space, per month
Months 49 – 66: Tenant’s Parking Spaces:	$150.00 per parking space, per month

 

During the Option Term (as defined in Exhibit J), if any, the parking rate shall be the rate charged from time to time to patrons of the Garage for other non-exclusive, unreserved, first-come, first-served parking spaces.  Throughout the Term, including the Option Term, if any, Tenant shall have the right at any time and from time to time, on at least forty-five (45) days’ prior notice to Landlord (which notice shall designate the first calendar month for the effective date of Tenant’s desired change) to increase or decrease the number of Tenant’s Parking Spaces but in no event shall Tenant have the right to license more than the then-applicable ratio set forth in the first paragraph of this Section 1.  Any time that the number of Tenant’s Additional Parking Spaces is decreased, on or before the effective date of such decrease, Tenant shall return to Landlord any additional parking passes, cards, stickers or other identification that may have been provided to Tenant with respect to such Additional Parking Spaces.  Upon reaching an eighty-five percent (85%) occupancy level (as reasonably determined by Landlord), Landlord shall have the right, but not the obligation, to institute valet assisted parking or other parking management systems within the Garage to help provide for Tenant’s Additional Parking Spaces, commencing as of the first day of the next full calendar month following Tenant’s receipt of written notice therefor from Landlord.  In addition to the rate payable for each of Tenant’s Additional Parking Spaces as provided above, Tenant shall also pay Tenant’s pro-rata share of the costs incurred by Landlord in providing valet parking service to the Building, which pro-rata share shall be determined on a monthly basis, and shall be based on the ratio that the number of Tenant’s Additional Parking Spaces being leased by Tenant during a calendar month bears to the total number of valet parking passes being leased at the Building during such calendar month (the “Valet Service Charge”).  The Valet Service Charge shall be payable by Tenant as part of Operating Costs under this Lease; provided, however, the Valet Service Charge shall not be determined with respect to the Base Year or any base year, expense stop or other similar provision, and Tenant shall be responsible for one hundred percent (100%) of its pro-rata share of the Valet Service Charge.

(2)           Conditions on Use.  The use by Tenant, its employees, suppliers, shippers or customers and invitees, of the Garage shall be on the terms and conditions established by Landlord (or Landlord’s agent), and shall be subject to such other agreement between Landlord and Tenant as may hereinafter be established.  Tenant shall not permit or allow any vehicles that belong to or are controlled by Tenant or Tenant’s employees, suppliers, shippers, customers or invitees to be loaded, unloaded or parked in areas other than those designated for such activities by Landlord.  Tenant shall not store or permit its employees to store any automobiles in the Garage, without the prior written consent of Landlord.  Except for emergency repairs, Tenant and its employees shall not perform any work on any automobiles while located in the Garage or on the Property.  If it is necessary for Tenant or its employees to leave an automobile in the Garage, overnight, Tenant shall provide Landlord with prior notice thereof designating the license plate number and model of such automobile.  If Tenant permits or allows any of the prohibited activities, then Landlord shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to Tenant, which cost shall be payable within thirty (30) days of Tenant’s receipt of an invoice from Landlord, together with reasonable supporting evidence.  Tenant shall have no right to assign or sublicense any of its rights in Tenant’s Parking Spaces, except as part of a permitted assignment of this Lease or a sublease of the Premises.  Landlord shall have the right to terminate Tenant’s rights hereunder (including termination of any parking agreement related thereto) with respect to any of Tenant’s Parking Spaces that Tenant desires to sublicense or assign except as part of a permitted assignment of this Lease or a sublease of the Premises.  Landlord may, in its discretion, allocate and assign parking spaces in the Garage among Tenant and other tenants and occupants in the Project so long as Tenant has access to Tenant’s Required Parking Spaces.  Landlord shall also have the right from time to time to promulgate reasonable rules and regulations regarding the Garage, Tenant’s Parking Spaces and the use thereof, including rules and regulations controlling the flow of traffic to and from various areas of the Garage, the angle and direction of parking and the like.  Tenant shall comply with and cause its employees to comply with all such rules and regulations, all reasonable additions and amendments thereto, and the terms and provisions hereof.  Landlord may elect to provide parking cards or keys to control access to the Garage.  In such event, Landlord shall provide Tenant with one (1) card or key for each of Tenant’s Parking Spaces, provided that Landlord shall have the right to require Tenant or its employees to place a deposit on such access cards or keys and to pay a fee for any lost or damaged cards or keys.  Tenant’s use of the Garage shall be at Tenant’s sole risk, and Landlord shall have no liability for any personal injury or damage or theft of any vehicles or other property occurring in the Garage, regardless of whether such loss or theft occurs when the Garage or other areas therein are locked or otherwise secured.  Except as caused by the negligence or willful misconduct of Landlord and without limiting the terms of the preceding sentence, Landlord shall not be liable for any loss, injury or damage to persons using the Garage, or automobiles or other property therein, it being agreed that, to the fullest extent permitted by law, the use of the Unreserved Spaces shall be at the sole risk of Tenant and its employees.  Landlord specifically reserves the right to change the size, configuration, design, layout, location and all other aspects of the Garage and Tenant acknowledges and agrees that Landlord may, without incurring any liability to Tenant and without any abatement of Rent under this Lease, from time to time, close off or restrict access to the Garage or relocate Tenant’s parking to other parking structures and/or surface parking areas within a reasonable distance of the Project, for purposes of permitting or facilitating construction, repair, maintenance, alteration or improvements with respect to the Garage, or to accommodate or facilitate renovation, alteration, construction or other modification of other improvements or structures located at the Project or at the location of the Garage, as the case may be, or if required as a result of any Force Majeure events.  If, for any reason, Landlord is unable to provide Tenant with the use all or any portion of the Tenant’s Parking Spaces for a period in excess of five (5) consecutive business days, then Tenant’s obligation to pay for such Tenant’s Parking Spaces shall be abated commencing on the expiration of such five (5) business-day period and continuing until Tenant’s use thereof is restored, and in the event Landlord is unable to provide Tenant with the use of all or any portion of Tenant’s Parking Spaces for more than sixty (60) days, then Landlord shall provide for alternate unreserved parking for Tenant, which alternate parking is to be located within four (4) blocks of the Building, and in no event shall the rate payable by Tenant for such alternate parking be in excess of the then-applicable rate for unreserved parking at the Garage.  Except as provided in the immediately preceding sentence, no deductions or allowances shall be made for any days when Tenant and/or any of its employees does not utilize the Garage or any of Tenant’s Parking Spaces.  Landlord may delegate its responsibilities hereunder to a parking operator, in which case such parking operator shall have all the rights of control attributed hereby to Landlord.  If requested by Landlord, Tenant shall execute and deliver to Landlord or the parking operator, as applicable, the standard parking agreement used by Landlord or the parking operator for the Parking Spaces.  Landlord shall have no liability for claims arising through acts or omissions of any such parking operator, except as otherwise provided in this Lease.

 

EXHIBIT H

 

 

Basic Rent shall be conditionally abated during the first seven (7) full calendar months of the initial Term (the “Abatement Period”).  As provided in this Lease, Tenant shall, contemporaneously with its execution of this Lease, pay to Landlord Basic Rent for the eighth (8th) month of the Term; thereafter, Tenant shall make Basic Rent payments as otherwise provided in this Lease.  Notwithstanding such abatement of Basic Rent (a) all other sums due under this Lease, including Additional Rent, shall be payable as provided in this Lease, and (b) any increases in Basic Rent set forth in this Lease shall occur on the dates scheduled therefor.  The amount of Basic Rent conditionally abated for the Abatement Period pursuant to this Exhibit H shall be referred to herein as the “Abated Rent”.

 

The Abated Rent provided for in this Exhibit H is conditioned upon there not being any Event of Default (beyond the applicable notice and cure period set forth in this Lease) by Tenant under this Lease during the Abatement Period, and in the event there is such an Event of Default by Tenant during the Abatement Period, then (i) the Abatement Period shall immediately terminate, (ii) Tenant shall not be entitled to any further Abated Rent, and (iii) Tenant shall immediately begin paying Basic Rent for the Premises in the amount set forth in the Basic Lease Information of this Lease.

EXHIBIT I

 

 

1.           Exercise of Right to Terminate.  Tenant shall have the one-time right to terminate the Lease (the “Right to Terminate”) at any time between the forty-second (42nd) and the forty-seventh (47th) full calendar months of the initial Term of this Lease.  In order to exercise such Right to Terminate, Tenant shall give Landlord not less than nine (9) months and not more than twelve (12) months prior written notice therefor (the “Termination Notice”), which Termination Notice shall specify the date (the “Termination Date”) upon which such Right of Terminate is to occur, and in any event such Termination Date shall be on the last day of a calendar month.  

2.           Termination Fee.  Concurrently with the delivery of such Termination Notice, Tenant shall deliver to Landlord a “Termination Fee,” as that term is defined hereinbelow, as consideration for and as a condition precedent to such termination of the Premises. Upon Tenant's delivery of the Termination Notice to Landlord, all of Tenant's rights under Exhibit J, the Extension Option, and Exhibit K, the Right of First Refusal, shall automatically terminate and be of no further force and effect.  As used in this Lease, the "Termination Fee" shall be equal to the unamortized value as of the Termination Date of the sum of (A) the leasing costs, including the Tenant Improvement Allowance actually spent by Landlord in further improving the Premises beyond its current condition as of the date of this Lease, (B) the Broker commissions paid by Landlord in connection with this Lease, (C) the Abated Rent provided to Tenant under the terms of Exhibit H of the Lease, and (D) the Moving Allowance provided to Tenant under the terms of Exhibit D, which amortization shall be calculated on a straight-line basis, resulting in an equal amount of principal being reduced each month, with interest at a rate of eight percent (8%), over a fifty-nine (59) month period commencing on the first day of the eighth (8th) full calendar month of the initial Term.

3.           Termination of Lease.  Provided that Tenant timely elects to exercise its Right to Terminate in accordance with this Exhibit I, then this Lease shall automatically terminate and be of no further force or effect (and Landlord and Tenant shall be relieved of their respective obligations under this Lease) as of the Termination Date, except with respect to those obligations set forth in this Lease which specifically survive the expiration or earlier termination of this Lease.

4.           Rights Personal to Tenant.  The Termination Right is personal to the Original Tenant, and may be exercised only by the Original Tenant or by a Permitted Transferee to whom Original Tenant’s entire interest in this Lease or the Premises has been transferred in a Permitted Transfer under the terms of Section 10(g) of this Lease, shall not be assigned or otherwise transferred, voluntarily or involuntarily to, or exercised by, any person other than the Original Tenant or such Permitted Transferee, and shall only be exercisable if the Original Tenant or such Permitted Transferee occupies the entire Premises at the time Landlord receives the Termination Notice.  If the Original Tenant shall transfer this Lease (or any interest therein), then simultaneously with such transfer, Tenant’s Right to Terminate shall terminate and be of no further force or effect.  No transferee of Tenant’s interest in this Lease (or any interest therein) or any portion of the  Premises (other than a  Permitted Transferee to whom Original Tenant’s entire interest in this Lease or the Premises has been transferred in a Permitted Transfer) shall have any right to exercise the option right set forth in this Exhibit I.

5.           No Tenant Default.  Notwithstanding anything to the contrary contained in this Exhibit I, Tenant shall have no right to exercise Tenant’s Right to Terminate set forth in this Exhibit I, if Tenant is in uncured default under this Lease as of the date of Tenant's delivery to Landlord of the Termination Notice or, at Landlord's option, at any time prior to the Termination Date.  If Tenant is in default under the Lease following Tenant's delivery to Landlord of the Termination Notice but prior to the Termination Date, then, at Landlord's option, the Termination Notice shall be null and void and of no further force or effect. 

EXHIBIT J

 

 

(1)           Option Terms.  Subject to the terms and conditions set forth below, Tenant shall have one (1) option (an “Extension Option”) to extend the Term for a period of five (5) years (the “Option Term”).  If Tenant properly exercises the Extension Option, all of the terms, covenants and conditions of this Lease shall continue in full force and effect during the Option Term, including provisions regarding payment of Rent, which shall remain payable on the terms herein set forth, except that (a) the Basic Rent payable by Tenant during the Option Term shall be as calculated in accordance with Section 3 and Section 4 below, (b) Tenant shall continue to possess and occupy the Premises in their existing condition, “as is” as of the commencement of such Option Term, and Landlord shall have no obligation to repair, remodel, improve or alter the Premises, to perform any other construction or other work of improvement upon the Premises or the Project, and (c) Tenant shall have no further rights to extend the Term of this Lease after the expiration of the Option Term.

 

(2)           Exercise.  To exercise the Extension Option, Tenant must deliver an irrevocable, unconditional binding notice to Landlord (“Exercise Notice”) not sooner than twelve (12) months, nor later than nine (9) months, prior to the Expiration Date, the time of such exercise being of the essence.  If Tenant fails to timely give its notice of exercise with respect to the Extension Option, Tenant will be deemed to have waived the Extension Option.

 

(3)           Market Rate Calculation.  The Basic Rent payable by Tenant for the Premises during the Option Term shall be the Market Rate (as defined below) for the Premises, valued as of the commencement of the Option Term, determined in the manner hereinafter provided.  As used herein, the term “Market Rate” shall mean the annual amount of Basic Rent at which tenants, as of the commencement of the Option Term, are leasing non-sublease, non-encumbered, non-equity space under then-prevailing ordinary rental market practices (e.g., not pursuant to extraordinary rental, promotional deals or other concessions to tenants that deviate from what is the then-prevailing ordinary practice), at arm’s length, that is comparable to the Premises within the Building or other comparable first-class office buildings in the Bellevue central business district, Washington area (the “Comparison Buildings”), based upon binding lease transactions for tenants in the Comparison Buildings that, where possible, commence or are to commence within six (6) months prior to or within six (6) months after the commencement of the Option Term (the “Comparison Leases”). Rental rates payable under Comparison Leases shall be adjusted to account for variations between this Lease and the Comparison Leases with respect to:  (a) the length of the Option Term compared to the lease or renewal term of the Comparison Leases; (b) rental structure, including, rental rates per rentable square foot (including type, gross or net, and if gross, adjusting for the resetting of the base year or expense stop), additional rental, annual rent adjustments, escalation provisions, all other payments and escalations; (c) the size of the Premises compared to the size of the premises of the Comparison Leases; (d) free rent, moving expenses and other cash payments, allowances or other monetary concessions affecting the rental rate; (e) the age and quality of construction of the buildings; and (f) leasehold improvements and/or allowances, taking into account the value of existing leasehold improvements to the existing tenant.

 

(4)           Basic Rent Determination.  The Basic Rent payable by Tenant for the Premises during the Option Term shall be determined as follows:

 

(a)           If Tenant provides Landlord with its Exercise Notice, then, prior to the commencement of the Option Term, Landlord shall deliver to Tenant a good faith written proposal of the Market Rate. Within twenty-one (21) days after receipt of Landlord’s proposal, Tenant shall notify Landlord in writing (1) that Tenant accepts Landlord’s proposal or (2) that Tenant elects to submit the determination of Market Rate to arbitration in accordance with Section 4(b) through 4(d) below.  If Tenant does not give Landlord a timely notice in response to Landlord’s proposal, Landlord’s proposal of Market Rate shall be binding upon Tenant.

 

(b)           If Tenant timely elects to submit the determination of Market Rate to arbitration, Landlord and Tenant shall first negotiate in good faith in an attempt to determine the Market Rate.  If Landlord and Tenant are able to agree within thirty (30) days following the delivery of Tenant’s notice to Landlord electing arbitration (or if Tenant accepts Landlord’s initial proposal), then such agreement shall constitute a determination of Market Rate for purposes of this Section, and the parties shall immediately execute an amendment to this Lease stating the Basic Rent for the Option Term; provided, however, that an otherwise valid exercise

of the Extension Option shall be fully effective whether or not such amendment is executed and delivered.  If Landlord and Tenant are unable to agree on the Market Rate within such thirty (30)-day negotiating period, then within fifteen (15) days after the expiration of such negotiating period, the parties shall meet and concurrently deliver to each other in envelopes their respective good faith estimates of the Market Rate (set forth on a net effective rentable square foot per annum basis).  If the higher of such estimates is not more than one hundred five percent (105%) of the lower, then the Market Rate shall be the average of the two.  Otherwise, the dispute shall be resolved by arbitration in accordance with Sections 4(c) and 4(d) below.

 

(c)           Within fifteen (15) days after the exchange of estimates, the parties shall select as an arbitrator an independent member of the Appraisal Institute who has been active during the fifteen (15) year period ending on the date of such appointment in appraising leases of office space in Comparison Buildings (a “Qualified Appraiser”).  If the parties cannot agree on a Qualified Appraiser, then within ten (10) days after the expiration of such fifteen (15)-day period, each shall select a Qualified Appraiser and within ten (10) days thereafter the two (2) appointed Qualified Appraisers shall select an independent Qualified Appraiser and the independent Qualified Appraiser shall be the sole arbitrator.  If one party shall fail to select a Qualified Appraiser within the first ten (10)-day period, then the Qualified Appraiser chosen by the other party shall be the sole arbitrator.

 

(d)           Within twenty-one (21) days after submission of the matter to the arbitrator, the arbitrator shall determine the Market Rate by choosing whichever of the estimates submitted by Landlord and Tenant the arbitrator judges to be more accurate.  The arbitrator shall notify Landlord and Tenant of its decision, which shall be final and binding.  If the arbitrator believes that expert advice would materially assist him, the arbitrator may retain one or more qualified persons to provide expert advice.  The fees of the arbitrator and the expenses of the arbitration proceeding, including the fees of any expert witnesses retained by the arbitrator, shall be paid by the party whose estimate is not selected.  Each party shall pay the fees of its respective counsel and the fees of any witness called by that party.

 

(e)           Until the matter is resolved by agreement between the parties or a decision is rendered in any arbitration commenced pursuant to this Exhibit J, Tenant’s monthly payments of Basic Rent shall be in an amount equal to Landlord’s determination of the Market Rate.  Within ten (10) Business Days following the resolution of such dispute by the parties or the decision of the arbitrator, as applicable, Tenant shall pay to Landlord, or Landlord shall pay to Tenant, the amount of any deficiency or excess, as the case may be, in the Basic Rent theretofore paid.

 

(5)           Rights Personal to Tenant.  The Extension Option is personal to, may be exercised only by the Original Tenant or by a Permitted Transferee to whom Original Tenant’s entire interest in this Lease or the Premises has been transferred in a Permitted Transfer under the terms of Section 10(h) of this Lease, shall not be assigned or otherwise transferred, voluntarily or involuntarily to, or exercised by, any person other than the Original Tenant or such Permitted Transferee, and shall only be exercisable if the Original Tenant or such Permitted Transferee occupies one hundred percent (100%) of the Premises at the time Landlord or such Permitted Transferee receives the Exercise Notice and at the commencement date of the Option Term.  If the Original Tenant shall transfer this Lease (or any interest therein), or any portion of the Premises (other than a transfer of its entire interest in this Lease or the Premises to a Permitted Transferee pursuant to a Permitted Transfer), then simultaneously with such transfer Tenant’s Extension Option shall terminate and be of no further force or effect.  No transferee of Tenant’s interest in this Lease (or any interest therein) or any portion of the  Premises (other than a  Permitted Transferee to whom Original Tenant’s entire interest in this Lease or the Premises has been transferred in a Permitted Transfer) shall have any right to extend the Term pursuant to this Exhibit J.

 

(6)           Conditions of Exercise.  Notwithstanding anything in this Exhibit J to the contrary, if an uncured Event of Default has occurred on or prior to the date Tenant’s Exercise Notice is received by Landlord or at any time thereafter until the commencement of the Option Term, Landlord shall have the right, in addition to all of its other rights and remedies under this Lease (but not the obligation), to unilaterally revoke Tenant’s exercise of the Extension Option, in which case this Lease shall expire on the Expiration Date, unless earlier terminated pursuant to the terms hereof, and Tenant shall have no further rights under this Lease to renew or extend the Term.

EXHIBIT K

 

 

(1)           Right of First Refusal.  Tenant shall have a one-time right of first refusal (the “Right of First Refusal”) during the initial Term of this Lease to lease space in the Building listed on Schedule 1 attached to this Exhibit K (“First Refusal Space”) identified in an offer to lease received by Landlord from a third party, who is not an Affiliate of Landlord, which offer Landlord is prepared to accept (“Offer”).  If not earlier terminated, Tenant’s rights pursuant to this Exhibit K shall automatically terminate on the expiration or earlier termination of this Lease.

 

(2)           Exercise Conditions and Procedures.  Tenant’s right to exercise the Right of First Refusal with respect to an Offer is subject to the following conditions:  (i) that this Lease is in full force and effect on the date Landlord receives the Offer, on the date Landlord receives the ROFR Acceptance Notice (as defined below) with respect to such Offer and on the date Tenant is scheduled to accept possession of the First Refusal Space identified in such Offer; (ii) that an Uncured Event of Default has not occurred on the date Landlord receives the Offer; (iii) that an Uncured Event of Default has not occurred on the date Landlord receives the ROFR Acceptance Notice with respect to such Offer or on the date Tenant is scheduled to accept possession of the First Refusal Space identified in such Offer; (iv) that the Right of First Refusal has not terminated as of the date that Landlord receives the Offer; and (v) that Tenant’s then current financial condition as set forth in its most recent financial statements demonstrates in Landlord’s discretion that Tenant’s Tangible Net Worth is at least equal to its Tangible Net Worth at the time this Lease was executed and delivered by Tenant.  Provided that the conditions set forth set forth in clauses (i), (ii), (iii), (iv) and (v) above are satisfied, Landlord shall give notice to Tenant of the terms and conditions of each Offer received prior to the termination of the Right of First Refusal (the “Offer Notice”) which shall include a copy of the acceptable Offer described herein.  On or before the date that is five (5) business days after Tenant’s receipt of Landlord’s notice (the “ROFR Acceptance Deadline”) Tenant may, at its option, accept the terms and conditions of such Offer by notifying Landlord of its irrevocable, unconditional exercise of the Right of First Refusal with respect to such Offer (each a “ROFR Acceptance Notice”).  Tenant may only exercise its Right of First Refusal with respect to all of the First Refusal Space identified in the Offer Notice.  Tenant’s ROFR Acceptance Notice shall include the financial information required by clause (v) above and such other financial information as may be reasonably requested by Landlord.  In the event of a failure of any of the conditions set forth hereinabove for the exercise of the Right of First Refusal (including Landlord’s failure to receive a ROFR Acceptance Notice from Tenant on or prior to the ROFR Acceptance Deadline), Tenant shall have no further rights hereunder to lease the First Refusal  Space identified in the applicable Offer Notice.  Time is of the essence of this provision and Tenant acknowledges and agrees that Landlord will have no obligation to lease to Tenant any First Refusal Space identified in an Offer Notice if Tenant does not deliver the ROFR Acceptance Notice to Landlord on or before the ROFR Acceptance Deadline.  Any qualified or conditional acceptance by Tenant of an Offer Notice shall be deemed to be a counter-offer to, and a rejection of, such Offer Notice.  If Tenant’s ROFR Acceptance Notice is not a written, unconditional, irrevocable acceptance of the Offer Notice, or is not delivered by the ROFR Acceptance Deadline, then Tenant shall be deemed to have rejected the First Offer Notice.  If Tenant rejects or is deemed to have rejected a First Offer Notice for any reason, the Right of First Refusal shall automatically terminate and be of no further force or effect with respect to the First Refusal Space identified in the Offer Notice and Landlord shall thereafter have the right to lease all or any portion of such First Refusal Space to third party making the Offer on any terms and conditions Landlord desires (including terms and conditions more favorable than the terms and conditions set forth in such Offer Notice), free of the rights of Tenant under this Exhibit K.  In the event the third party making such Offer does not lease the First Refusal Space identified therein within two hundred ten (210) days after the date of the ROFO Acceptance Deadline, Landlord shall be obligated to follow the foregoing procedure for any subsequent Offer that it receives with respect to such First Refusal Space prior to the termination of the Right of First Refusal until such First Refusal Space is leased to a third party.  If Tenant exercises the Right of First Refusal, then effective on the delivery date specified in the applicable Offer, the First Refusal Space identified in such Offer shall automatically be included in the Premises on all of the terms and subject to the conditions of this Lease, except as set forth in the applicable Offer and as follows:

 

(a)           Unless a new lease is entered into under Section (1)(c) below, Tenant’s Proportionate Share, shall be recalculated, using the total rentable square footage of the Premises, as increased by the First Refusal Space identified in the applicable Offer.

(b)           Except as set forth in the applicable Offer, the First Refusal Space identified therein shall be leased to Tenant on an “AS IS” basis and Landlord shall have no obligation to repair, remodel, improve or alter such First Refusal Space, to perform any other construction or other work of improvement in the Premises or at the Project, or grant Tenant any construction, refurbishment, improvement or other allowance whatsoever with respect such First refusal Space; provided, however, that an otherwise valid exercise of the Right of First Refusal shall be fully effective whether or not any such amendment is executed and delivered.

 

(c)           Tenant shall execute an amendment to this Lease adding such First Refusal Space to this Lease at the rent and for the term and on the other terms and conditions set forth in the applicable Offer within ten (10) business days after receipt of such document from Landlord

 

(3)           Personal to Tenant.  The Right of First Refusal is personal to, may be exercised only by, the Original Tenant or by a Permitted Transferee to whom Original Tenant’s entire interest in this Lease or the Premises has been transferred in a Permitted Transfer under the terms of Section 10(g) of this Lease, shall not be assigned or otherwise transferred, voluntarily or involuntarily to, or exercised by, any person other than the Original Tenant or such Permitted Transferee, and shall only be exercisable if the Original Tenant or such Permitted Transferee occupies one hundred percent (100%) of the Premises on the date Landlord receives the applicable ROFR Acceptance Notice and on the date Tenant or such Permitted Transferee is scheduled to accept possession of the First Refusal Space identified therein as provided in this Exhibit K.  If the Original Tenant shall transfer this Lease (or any interest therein), or any portion of the Premises (other than a transfer of its entire interest in this Lease or the Premises to a Permitted Transferee pursuant to a Permitted Transfer), then simultaneously with such transfer Tenant’s Right of First Refusal shall terminate and be of no further force or effect.  No transferee of Tenant’s interest in this Lease (or any interest therein) or any portion of the  Premises (other than a  Permitted Transferee to whom Original Tenant’s entire interest in this Lease or the Premises has been transferred in a Permitted Transfer) shall have any right to lease First Refusal Space pursuant to this Exhibit K.

 

(4)           Limits on Landlord’s Obligations.  Landlord shall have no obligation to offer for lease to third parties all or any portion of the First Refusal Space that becomes available for lease, and notwithstanding anything herein to the contrary, Tenant’s Right of First Refusal shall be subject and subordinate to all rights of expansion, renewal, extension, first refusal, first offer or similar rights for all or any portion of the First Refusal Space granted to any tenants of the Project, whether or not the extension or renewal of an existing tenant is pursuant to an express written provision in such tenant’s lease and without regard to whether any such renewal is characterized by the parties as a “renewal” or a “new lease”.

 

(5)           Events Not Triggering Right of First Refusal.  Anything contained herein to the contrary notwithstanding, the Right of First Refusal shall be deemed not to have arisen or to be in force and effect if any of the following events occur:  (a) the sale or transfer of stock or other ownership interests in Landlord, (b) Landlord’s entering into a management or similar agreement that transfers control of the First Refusal Space; (c) Landlord’s entering into a ground lease, mortgage deed of trust or other encumbrance respecting all or any portion of the First Refusal Space; or (iv) Landlord’s entering into a contract for the sale of the Project or the Building.

 

(6)           Cross Default.  Tenant agrees that any default by it under this Lease shall be deemed to constitute a like default under any new lease or leases for First Refusal Space executed pursuant hereto.  Tenant further agrees that any new lease or leases for First Refusal Space shall provide that any default by Tenant thereunder shall be deemed to be a like default under this Lease.

 

EXHIBIT K