EXHIBIT 10.38

 

SEATTLE DESIGN CENTER

LEASE

 

This Lease made this 23rd day of March, 2000, by and between Bay West Design
Center, LLC, a Delaware limited liability company, hereinafter called Lessor,
and EpicEdge, Inc., a Texas corporation, hereinafter called Lessee.

 

1.             PREMISES.  Lessor does hereby lease to Lessee those certain
premises being space in those certain buildings known as the Seattle Design
Center, (herein referred to as “the buildings”) to wit:

 

Approximately 8,725 rentable square feet of space, being Suite #600, located at
5601 Sixth Avenue South, Seattle, Washington, 98108, as outlined in blue on
Exhibit B attached hereto (hereinafter called “Premises”) being situated upon
land described in Exhibit A attached hereto.  Said square footage includes an
agreed upon 10% load factor.

 

2.             TERM.  This Lease shall be for a term of five (5) years
commencing June 1, 2000, and terminating May 31, 2005.

 

3.             RENT/SECURITY DEPOSIT/LETTER OF CREDIT.  Lessee covenants and
agrees to pay Lessor, at PO Box 24842, Seattle, Washington 98124-0842, or to
such other party or at such other place as Lessor may hereafter designate,
monthly rent in advance without offset or deduction, on or before the first day
of each month of the Lease term in the following amount: Thirteen Thousand
Eighty Seven and 50/100 Dollars ($13,087.50). (SEE PARAGRAPH 36)

 

Lessor acknowledges receipt of the first month’s rent ($13,087.50) and operating
expense charge ($2,776.20).  Lessor further acknowledges receipt from Lessee of
a security deposit (the “Security Deposit”) in the amount of Fifteen Thousand
Ninety-Four and 25/100 Dollars ($15,094.25), which sum shall be held and owned
by Lessor, without obligation to pay interest, as security for the performance
of Lessee’s covenants and obligations under this Lease.  The Security Deposit is
not an advance rental deposit or a measure of damages incurred by Lessor in case
of Lessee’s default.  Upon the occurrence of any event of default by Lessee,
Lessor may from time to time, without prejudice to any other remedy provided
herein or by law, use such fund as a credit to the extent necessary to credit
against any arrears of Rent or other payments due to Lessor hereunder, and any
other damage, injury, expense or liability caused by such event of default, and
Lessee shall pay to Lessor, on demand, the amount so applied in order to restore
the Security Deposit to its original amount.  Although the Security Deposit
shall be deemed the property of Lessor, any remaining balance of such deposit
shall be returned by Lessor to Lessee at such time after termination of this
Lease that all of Lessee’s obligations under this Lease have been fulfilled,
reduced by such amounts as may be required by Lessor to remedy defaults on the
part of Lessee in the payment of Rent or other obligations of Lessee under this
Lease, to repair damage to the Premises, Building or Project caused by Lessee or
any Lessee’s Parties and to clean the Premises.  Lessor may use and commingle
the Security Deposit with other funds of Lessor.

 

In addition to the Security Deposit and as further security for the performance
of the obligations of this Lease by Lessee, upon execution of this Lease Lessee
shall provide to Lessor and cause to be in effect for the first twelve (12)
months of the term of this Lease, an unconditional, irrevocable letter of credit
naming Lessor as beneficiary, in the amount of Thirty Thousand Dollars
($30,000).  Lessor shall hold the letter of credit as security for the
performance of Lessee’s obligations under this Lease.  Lessor shall have the
right to draw upon said letter or credit, without prejudice to any other remedy
of Lessor, upon the failure of Lessee to pay to Lessor when due rent or
additional rent or any other charges after notice as provided in the Lease.  In
the event Lessor draws upon the letter of credit, Lessee shall have delivered to
Lessor a revised letter of credit in the full amount required to be provided as
security.  Following the end of the twelfth month of the Lease term, the letter
of credit shall no longer be required by Lessor.

 

4.             USE.  The premises shall be used only for the purpose of

 

Office.

 

Lessee shall at its own expense obtain any and all licenses and permits
necessary for such use, and shall comply with all governmental laws, ordinances,
regulations, orders, and directives applicable to the use of the Premises,
except that Lessor agrees to deliver the Premises in compliance with the
Americans with Disabilities Act and Lessee shall be responsible for maintaining
the Premises thereafter.  Lessee shall not occupy or use, or permit any portion
of the Premises to be occupied or used, for any purpose which would increase the
rate of fire insurance coverage on said Premises, the buildings or their
contents.  In the event Lessee shall cause any increase above normal rates,
Lessee agrees to pay to Lessor, as additional rental, an amount equal to all
such increases.

 

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5.             RULES AND REGULATIONS.  Lessee agrees to comply with the Rules
and Regulations attached hereto (Exhibit C), as well as such other reasonable
rules and regulations as may from time to time be adopted by Lessor for the
management and safety of common areas, the buildings, and tenants.  Lessee shall
be responsible for the compliance with such rules and regulations by its
employees, agents, and invitees.  The failure of Lessor to enforce any of such
rules and regulations against Lessee or any other tenant of the buildings shall
not be deemed to be a waiver of same.

 

6.             MAINTENANCE.  Lessee agrees by taking possession that the
Premises are in tenantable and good condition and that Lessor has made no
promises, agreements, or representations as to the decoration, repair or
alteration of the Premises or any other portion of the buildings except as
expressly set forth herein or as may otherwise be mutually agreed upon in
writing.  Lessor shall maintain the heating and air conditioning systems, roof,
exterior walls (excluding windows, plate glass and all doors in and to the
Premises), grounds, parking areas, public restrooms, hallways, entrances and
other portions of the buildings used in common by all tenants in good repair and
condition, reasonable wear and tear excepted, and the costs of such maintenance
shall be shared as provided in paragraph 8, below.  Lessee shall be responsible
for all other maintenance and repairs required in connection with the Premises
and shall maintain the Premises in a neat, clean and sanitary condition.  Lessee
shall also be responsible for repair or replacement of any damage or injury to
the Premises or the buildings caused by Lessee, its agents, employees or
invitees; provided, however, if Lessee fails to make such repairs or
replacements promptly, Lessor may do so, and the cost thereof shall be
additional rent due on the first of the following month.

 

7.             UTILITIES AND SERVICES.  Lessor shall furnish electricity for
light, heat and air conditioning to the Premises, and in addition shall furnish
water, janitorial services, sewer and toilet facilities to common areas in the
buildings, and the cost of such utilities and services shall be shared as
provided in paragraph 8, below.  In the event that Lessee’s electrical needs
exceed the building standard requirements supplied by Lessor, Lessee shall have
the right, at Lessee’s sole cost and expense, to install additional electrical
service capacity to the Premises.  Lessee’s plans and specifications shall be
subject to the prior approval of Lessor, and the additional electrical service
shall include one or more separate meters in order to permit Lessor to invoice
Lessee directly for the additional electrical usage.  Lessor shall not be liable
for any injury or damages suffered as a result of the interruption of utilities
or services by fire, or other casualty, strike, riot, vandalism, the making of
necessary repairs or improvements, or any other cause.

 

8.             MONTHLY OPERATING EXPENSE ADJUSTMENTS.  Lessee shall pay as
additional monthly rent Lessee’s pro-rata share of expenses incurred by Lessor
for operation of the land and buildings described on Exhibit A hereto during the
term or any extension hereof, as follows:

 

(a)  Real estate taxes and assessments including taxes, if any, direct or
indirect, in whole or in part, upon the rents or the income derived from real
estate or rental property (excluding Federal or State taxes on net income);

 

(b)  Usual and necessary costs of operation, maintenance and repair as
determined by standard accounting practice, including without limitation, all
utilities and services not metered or charged directly to Lessee, insurance,
painting, upkeep and repair of building exterior, roofing, parking, landscaping,
and all common areas and facilities, and Lessor’s fee for supervision and
administration of the items set forth in this sub-paragraph, currently at 10%,
but excluding depreciation, loan payments, and replacement of major building
structural elements.  Depreciation, as used in this section, is defined
specifically to be related to the purchase price of the building, subsequent
improvements within tenant spaces, and payments of lease commissions.

 

Lessor shall from time to time estimate to Lessee its monthly pro-rata share of
such expenses based upon existing costs.  Lessee’s pro-rata share shall be that
percentage of the total expenses as the square footage of Lessee’s Premises
bears to the total applicable net rentable square footage of the buildings or
such other equitable apportionment as may be adopted.  Such monthly estimated
amount shall be paid by Lessee on or before the first day of each month.
 Lessor, annually or upon termination hereof, shall compute Lessee’s actual
pro-rata share of such expenses.  Any overpayment shall be refunded or credited
to Lessee, at its option, and any deficiency shall be paid by Lessee within
fifteen (15) days after date of Lessor’s statement.  Lessor’s records showing
expenditures made for such expenses shall be available for Lessee’s inspection
at any reasonable time.

 

9.             LESSOR’S RESERVATIONS.  Lessor reserves the right without
liability to Lessee: (a) to inspect the Premises, to show them to prospective
tenants, and if they are vacated, to prepare them for reoccupancy; (b) to retain
at all times and to use in appropriate instances keys, to which only authorized
building personnel have access, to doors within and into the Premises; (c) to
make repairs, alterations, additions or improvements, whether structural or
otherwise, in or about the buildings, and for such purposes to enter upon the
Premises and during the continuance of any work, to close common areas and to
interrupt or temporarily suspend building services and facilities, all without
affecting any of Lessee’s

 

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obligations hereunder, so long as the Premises are reasonably accessible; and
(d) generally to perform any acts relating to the safety, protection and
preservation of the Premises or building.

 

10.           POSSESSION.  If Lessor fails to deliver possession of the Premises
at the commencement date of the term hereof, Lessee may give Lessor written
notice of its intention to cancel this Lease unless possession is delivered
within sixty (60) days after receipt of such notice by Lessor; provided such
commencement date shall be extended a period of time equal to the period of any
delays resulting from causes beyond Lessor’s control.  Lessor shall not be
liable for any damages caused by failure to deliver possession of the Premises
and Lessee shall not be liable for any rent until such time as Lessor delivers
possession.  A delay in possession shall not extend the term of the termination
date.  If Lessor offers possession of the Premises prior to the commencement
date of the term of this Lease, and if Lessee accepts such early possession,
both parties shall be bound by the terms hereof during such period, including
the payment of rent, which shall be prorated.

 

11.           ASSIGNMENT AND SUBLETTING.  Lessee shall not either voluntarily or
by operation of law assign, transfer, convey or encumber this Lease or any
interest under it, or sublet the Premises or any part thereof, or allow any
other person to occupy or use the Premises without Lessor’s prior written
consent.  Lessor reserves the right to recapture the Premises in lieu of giving
its consent by giving notice to Lessee of such recapture within twenty (20) days
after receipt of a written request for assignment or subletting.  Such recapture
shall terminate this Lease as of the proposed date of assignment or subletting,
which shall be the last day of a calendar month and not earlier than sixty (60)
days after receipt of Lessee’s request hereunder.

 

In the event that Lessor shall not elect to recapture the Premises and shall
thereafter give its consent, Lessee shall pay Lessor a reasonable fee, not to
exceed $500.00, to reimburse Lessor for processing costs.  Lessor’s consent, if
given, shall not release or discharge Lessee from any liability under this Lease
and shall not be deemed consent to any future assignment or sublease.  Any
assignment or subletting without Lessor’s consent shall be void, and shall
constitute a default under this Lease.  A transfer by the present majority
shareholders of ownership or control of a majority of the voting stock of a
corporate Lessee shall be deemed an assignment for the purpose of this
paragraph.

 

12.           ALTERATIONS.  After prior written consent of Lessor, Lessee may
but is not obligated to make minor alterations, additions and improvements in
the Premises at its sole cost and expense.  In the performance of such work,
Lessee shall save Lessor harmless from any damage, loss, or expense and shall
comply with all laws, ordinances, rules and regulations of any proper public
authority.  Upon termination of this Lease, such alterations, additions and
improvements made in, to or on the Premises (including without limitation
partitions, draperies, carpeting, lighting and other physically attached
fixtures) shall remain upon and be surrendered as a part of the Premises;
provided, however, that upon Lessor’s written request, Lessee shall promptly
remove such additions, alterations, or improvements, repair any damage caused
thereby and restore the Premises to its original condition at Lessee’s sole cost
and expense.

 

13.           SIGNS.  Lessee shall not paint or install any signs or symbols on
the exterior doors, plate glass or walls of the Premises or install any
electrically lighted signs in or upon the Premises, without the prior written
consent of Lessor.  No showcases or other fixtures or objects shall be placed by
Lessee inside or outside of the buildings, in the corridors, or elsewhere in or
about the buildings, other than within the Premises.  Windows facing on
corridors shall at all times be wholly clear and uncovered (except for such
signs as Lessor may approve) so that a full unobstructed view of the interior of
the Premises may be had from the corridors.  No sign, tag, label, picture,
advertisement, or notice (other than price tags of customary size used in
marking samples) shall be displayed, distributed, inscribed, painted or affixed
by Lessee on any part of the outside or inside of the buildings or the Premises
without the prior written consent of Lessor.

 

14.           ACCIDENTS AND LIABILITY.  Lessor or its agents shall not be liable
for any injury or damage to persons or property sustained by Lessee or others in
and about the Premises or the buildings, except to the extent caused by Lessor’s
negligence, if any.  Lessee agrees to defend and hold Lessor and its agents
harmless from any claim, action and/or judgment for injury or damage to persons
or property suffered in or about the Premises by any person, firm or
corporation, except to the extent caused by Lessor’s negligence, if any.  Lessee
shall, at its expense, carry public liability insurance, such insurance to
afford minimum protection to the combined limit of not less than Five Hundred
Thousand Dollars ($500,000.00) or such other reasonable amount as Lessor may
require in respect to injury or damage to persons or property.  Lessee shall
submit a certificate of such insurance to Lessor and such insurance shall not be
cancelable without thirty (30) days prior written notice thereof to Lessor.

 

15.           DAMAGE OR DESTRUCTION.  If the Premises or the building shall be
damaged or destroyed by fire or other casualty, Lessor shall have the option
either (a) to repair or rebuild within one hundred eighty (180) days, or (b) not
to repair or rebuild, and to cancel this Lease on thirty (30) days notice.  If
Lessor fails to give Lessee written notice of its election within thirty (30)
days from the date of damage, or if the restoration of the Premises cannot be
completed within one hundred eighty (180) days

 

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from date of notice, Lessee may cancel this Lease on thirty (30) days notice. 
During the period of untenantability, rent shall abate in the same ratio as the
portion of the Premises rendered untenantable bears to the whole of the
Premises.

 

16.           EMINENT DOMAIN.  If the whole of the Premises shall be taken by
any public authority under the power of eminent domain, or purchased by the
condemnor in lieu thereof, the term of this Lease shall cease as of the date
possession is taken by such public authority.  If only a part of the Premises
shall be so taken, the Lease shall terminate only as to the portion taken, and
shall continue in full force and effect as to the remainder of said Premises,
and the monthly rent shall be reduced proportionately; provided, however, if the
remainder of the Premises cannot be made tenantable for the purposes for which
Lessee has been using the Premises or if more than twenty-five percent (25%) of
the rentable square footage of the Premises shall be so taken, then either
party, by written notice to the other, given at least thirty (30) days prior to
the date that possession must be surrendered to the public authority, may
terminate this Lease effective as of such surrender of possession.  If any part
of the buildings other than the Premises shall be so taken so as to render in
Lessor’s opinion the termination of this Lease beneficial to the remaining
portion of the buildings, Lessor shall have the right within sixty (60) days of
said taking to terminate this Lease upon thirty (30) days written notice to
Lessee.  In the event of any taking, whether whole of partial, Lessor shall be
entitled to all awards, settlement, or compensation which may be given for the
land and buildings.  Lessee shall have no claim against Lessor for the value of
any unexpired term of this Lease.

 

17.           LIENS AND INSOLVENCY.

 

(a).  Tenant shall keep the Premises and the building free from any lien or
claim of lien arising out of any work performed upon or materials furnished to
the Premises by or on behalf of Tenant.  Tenant hereby agrees to indemnify and
hold Landlord harmless from any loss, cost, or liability resulting from any such
lien or claim of lien, performed at Tenant’s cost and expense at the direction
of Tenant.  In the event any lien or claim of lien is filed against the
building, the land or the Premises by any person claiming by, through or under
Tenant, Tenant shall, upon the request of Landlord, immediately post in favor of
Landlord, at Tenant’s expense, a bond in form and amount satisfactory to
Landlord (but not exceeding 150% of the reasonably estimated liability for costs
and expenses which Landlord may incur in connection with the removal of the
lien) and issued by a surety satisfactory to Landlord, indemnifying Landlord
against all liability, cost, and expenses, including attorneys’ and collection
agency fees, which Landlord may incur as a result of the lien.  Provided that
such bond has been furnished to Landlord, Tenant, at its sole cost and expense
and after written notice to Landlord, may contest, by appropriate proceedings
conducted in good faith and with due diligence, any lien, encumbrance, or charge
against the Premises arising from work done or materials provided to the
Premises for or on behalf of Tenant, provided such proceedings suspend the
collection thereof and Landlord determines that neither the Premises, the
building nor any part thereof or interest therein is or will be in any danger of
being sold, forfeited or lost.

 

(b).  If Lessee shall be declared insolvent or bankrupt, or if Lessee’s
leasehold interest herein shall be levied upon or seized under writ of any court
of law, or if a trustee, receiver or assignee be appointed for the property of
Lessee, whether under operation of State or Federal statutes, then Lessor may,
at its option, immediately (notice being expressly waived) terminate this Lease
and take possession of said Premises, without terminating Lessee’s obligations
hereunder.

 

18.           DEFAULT AND REENTRY.  If Lessee fails to keep or perform any of
the covenants and agreements herein contained, then the same shall constitute a
breach hereof.  If Lessee has not remedied such breach within three (3) days
after written notice thereof from Lessor if the breach is non-payment of rent or
other charges, or within twenty (20) days after written notice thereof from
Lessor in the event of the breach of any other covenant, then Lessor may, at its
option, without further notice or demand:

 

(a)  Cure such breach for the account and at the expense of Lessee and such
expense shall be deemed additional rent due on the first of the following month;
or

 

(b)  Reenter the premises, remove all persons therefrom, take possession of the
Premises and remove all equipment, fixtures, and personal property therein at
Lessee’s risk and expense, and (1) terminate this Lease, or (2) without
terminating the Lease or in any way affecting the rights and remedies of Lessor
or the obligations of Lessee, re-let the whole or any part of the Premises as
agent for Lessee, upon such terms and conditions and for such term as Lessor may
deem advisable.  In either event, the rents received and any last month’s rent
deposit held under this Lease may first be applied by Lessor to the costs and
expenses of re-letting, including without limitation, cleaning and necessary
renovation and alteration, and the balance of such rent shall be applied toward
payment of all sums due or to become due to Lessor hereunder, and Lessee shall
pay to Lessor any deficiency; however, Lessor shall not be required to pay any
excess to Lessee.  The above remedies of Lessor are cumulative and in addition
to any other remedies now or hereafter allowed by law or elsewhere provided for
in this Lease.

 

19.           REMOVAL OF PROPERTY.  Any goods or fixtures of Lessee removed by
Lessor in accordance with paragraph 18 above may be stored by Lessor at the cost
and expense of Lessee or may be deposited on any sidewalk or delivery area
adjacent to the buildings, at the sole risk of Lessee and without any further
responsibility on the part of Lessor, and Lessor may without removing said goods
or

 

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fixtures or after removing said goods and fixtures, without obligation to do so
and without any notice to Lessee, sell or dispose of the same at public or
private sale for the account of Lessee, in which event the proceeds may be
applied by Lessor upon any indebtedness due from Lessee to Lessor.  Lessee
hereby waives all claims for damages that may be caused by Lessor re-entering
and taking possession of the Premises and removing or disposing of said goods
and fixtures and herein provided.

 

20.           COSTS AND ATTORNEY’S FEES.  If by reason of any default or breach
on the part of either party in the performance of any of the provisions of this
Lease, a legal action is instituted, the prevailing party shall be entitled to
all reasonable costs and attorney’s fees in connection therewith.  Any action
brought hereunder shall be maintained in the Superior Court in King County,
Washington.

 

21.           SUBROGATION WAIVER.  Lessor and Lessee each herewith and hereby
releases and relieves the other and waives its entire right of recovery against
the other for loss or damage arising out of or incident to the perils described
in “all risk” insurance policies, including earthquake and flood insurance
endorsements, approved for use in the State of Washington which occurs in, on or
about the Premises, whether due to the negligence of either party, their agents,
employees or otherwise.

 

22.           RELOCATION OF PREMISES.  Lessee agrees that Lessor may at any time
during the term or any extension hereof after at least thirty (30) days prior
written notice, require Lessee to move to other space elsewhere in the buildings
at the cost and expense of Lessor.  In lieu of such relocation, Lessee shall
have the option to terminate this lease, effective on the date Lessee is
required to move, by written notice to Lessor within fifteen (15) days after
delivery of Lessor’s notice.

 

23.           HOLDING OVER.  If Lessee, with the implied or express consent of
Lessor, shall hold over after the expiration of the term of this Lease, Lessee
shall remain bound by all the covenants and agreements herein, except that the
tenancy shall be from month to month, and the monthly rent shall be at the rate
of one hundred fifty percent (150%) of the last paid rent.

 

24.           SUBORDINATION.  Lessee agrees that this Lease shall be subordinate
to the lien of any mortgages or deeds of trust now or hereafter placed against
the real property of which the Premises comprise a part, and to all renewals and
modifications, supplements, consolidations and extensions thereof; provided,
however, in the event that any mortgagee or beneficiary shall elect to
subordinate its lien to this Lease, Lessor reserves the right to subordinate
said mortgage lien to this Lease upon the terms required by such mortgagee or
beneficiary.

 

25.           SURRENDER OF POSSESSION.  Lessee, prior to the termination of this
Lease or of Lessee’s right to possession, shall remove from the Premises all of
Lessee’s furniture, trade fixtures and other unattached personal property, and
such alterations, additions, improvements or signs required by Lessor to be
removed, and shall repair or pay for all damage to the Premises caused by such
removal.  All such property remaining and every interest of Lessee in the same
shall be conclusively presumed to have been conveyed by Lessee to Lessor under
this Lease as a bill of sale, without compensation, allowance, or credit to
Lessee.  Lessee shall upon termination of this Lease or of Lessee’s right of
possession, deliver all keys to Lessor and peacefully quit and surrender the
Premises without notice, neat and clean, and in as good condition as when Lessee
took possession, except for reasonable wear and tear as determined by Lessor.

 

26.           LATE PAYMENT AND INTEREST.  If any amount due from Lessee is not
received in the office of Lessor on or before the tenth (10th) day following the
date upon which such amount is due and payable, a late charge of ten percent
(10%) of said amount shall become immediately due and payable, which late charge
Lessor and Lessee agree represents and fair and reasonable estimate of the
processing and accounting costs that Lessor will incur by reason of such late
payment.  All past due amounts owing to Lessor under this Lease, including rent
and the above late charge, shall be assessed interest at the annual percentage
rate of eighteen percent (18%) from the date due or date of invoice, whichever
is earlier, until paid.

 

27.           NOTICE.  Any notice required to be given by either party to the
other pursuant to the provisions of this Lease or any law, present or future,
shall be in writing and shall be deemed to have been duly given or sent if
delivered personally or if properly deposited in the United States Mail by
registered or certified mail, return receipt requested, addressed to the Lessor
at 5701 Sixth Avenue South, Suite 440, Seattle, WA 98108 or to Lessee at the
following address, or to such other address as either party may designate to the
other in writing from time to time.

 

5601 Sixth Avenue South, Suite 600, Seattle, Washington 98108

and

3200 Wilcrest, Suite 370, Houston, TX 77042

 

28.           CONDUCT OF BUSINESS.  Intentionally deleted.

 

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29.           NO WAIVER OF COVENANTS.  Time is of the essence of this Lease. 
Any waiver by either party of any breach hereof by the other shall not be
considered a waiver of any future similar or other breach.  This Lease contains
all the agreements between the parties; and there shall be no modification of
the agreements contained herein except by written instrument.

 

30.           BINDING ON HEIRS, SUCCESSORS AND ASSIGNS.  The covenants and
agreements of this Lease shall be binding upon the heirs, executors,
administrators, successors and assigns of both parties hereto, except as
hereinabove provided.

 

31.           ASSIGNMENT OF LEASE.  Lessee acknowledges that Lessor, in
connection with its mortgage financing upon the real property of which the
Premises are a part, may assign this Lease for additional security purposes, and
that pursuant to the terms of that assignment, unless and until the Lessee shall
have received notice from such lender to the contrary, Lessee shall pay all
rents and other monies due under this Lease as specified herein.

 

32.           PAYMENTS TO LESSOR.  In the event any payment due form Lessee to
Lessor is made by a party other than Lessee, such payments shall be deemed to
have been made by and for the account of Lessee, and the party making such
payment shall have no rights under this Lease.

 

33.           CORPORATE AUTHORITY.  Lessee warrants that all necessary corporate
actions have been duly taken to permit Lessee to enter into this Lease and that
each undersigned officer has been duly authorized and instructed to execute this
Lease.

 

34.           LIABILITY OF LESSOR.  Lessee agrees that no trustee, officer,
employee, agent, manager, or individual partner of Lessor, or its constituent
entities, shall be personally liable for any obligation of Lessor hereunder, and
that Lessee must look solely to the interest of Lessor or its constituent
entities in the subject real estate for the enforcement of any claims against
Lessor arising hereunder.

 

35.           ESTOPPEL CERTIFICATE.  Within ten (10) days after notice from
Lessor, Lessee shall execute and deliver to Lessor a certificate stating that
this Lease is unmodified and in full force and effect, or in full force and
effect as modified, and stating the modifications.  The certificate also shall
state the amount of total rent, the dates to which the rent has been paid in
advance, the amount of any security deposit or prepaid rent, the fact that there
are no current defaults under the Lease by either Lessor or Lessee except as
specified in such statement, and such other matters as may reasonably be
requested by Lessor or any purchaser or lender of Lessor.  Lessee acknowledges
that any statement delivered pursuant to this paragraph may be relied upon by
any mortgagee, beneficiary, purchaser or prospective purchaser of the buildings
or any interest therein.  Failure to deliver the certificate within said ten
(10) day period shall constitute a material breach of this Lease and shall be
deemed a conclusive admission by Lessee that this Lease is in full force and
effect and has not been modified except as may be represented by Lessor.

 

36.           RENT ADJUSTMENT.  Effective June 1, 2003, the monthly rent as
provided for in Paragraph 3 of the Lease shall be Fifteen Thousand Ninety Four
and 25/100 Dollars ($15,094.25).

 

37.           TENANT IMPROVEMENTS.  Lessor agrees to provide up to Thirty
Thousand and 00/100 Dollars ($30,000.00) so that Lessor can complete the
following improvements to the Premises:

 

1.             Paint

 

2.             Carpet

 

The Thirty Thousand and 00/100 Dollars ($30,000.00) for tenant improvements
shall include but not be limited to contractor’s profit which shall not exceed
7%, construction costs, construction management: fee of seven percent (7%)
payable to Lessor, building permits, permit fees, architectural fees, directory
sign updates, suite keys and Washington State Sales Tax.

 

Any additional tenant improvements that exceed the scope of work described
above, for which the Lessee is responsible or has requested, shall be at the
sole expense of the Lessee.

 

38.           PARKING.  Lessee shall have the right to up to ten (10) unreserved
parking stalls in the building garage in an area specified by Lessor.  Lessee
recognizes that Lessor currently has no parking attendant and/or parking control
system implemented by Lessor.  Parking shall be free of charge to Lessee unless
and until all tenants at Seattle Design Center are charged for parking in a
uniform way.

 

39.           NON DISCLOSURE.  Neither Lessee, nor any of its officers,
shareholders, directors, employees, or representatives, shall disclose, divulge,
communicate or otherwise reveal to any person the existence, or any of the
provisions or contents, of this Agreement, except and only to the extent, Lessee

 

6

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becomes legally compelled (by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or similar process or requirements of
Federal Securities’ laws) to disclose the existence, or any of the provisions or
contents, of this Agreement, in which event Lessee shall provide Lessor with
prompt prior written notice of such requirement so that Lessor may seek a
protective order or other appropriate remedy and/or waive compliance with terms
of this Paragraph.  Lessee warrants and represents that neither the provisions
nor the intention of this Paragraph have been violated at any time prior to the
execution by Lessee of this Agreement.  This violation of the provisions or the
intention of this Paragraph, whether said violation occurred or occurs prior to,
on, or after the execution by Lessee of this Agreement, shall be deemed an
“Event of Default” under the Lease, and shall entitle Lessor to exercise any or
all of its rights and remedies under the Lease, at law or in equity.

 

Lessor:

Lessee:

 

 

Bay West Design Center, LLC,

EpicEdge, Inc.,

a Delaware limited liability company

a Texas corporation,

 

 

By:

BW Seattle Corp.,
a Washington corporation
its manager

 

 

 

 

 

 

 

 

By:

/s/ Timothy Treadway

 

By:

/s/ Jeff Sexten

 

Timothy Treadway, Executive Vice President

Jeff Sexten, President & COO

 

7

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EXHIBIT A

 

LEGAL DESCRIPTION

SEATTLE DESIGN CENTER

 

Those portions of Blocks 1 and 2, Georgetown Riverfront Addition, and Blocks 26
and 27, Commercial Street Steam Motor Addition, City of Seattle, King County,
Washington, described as follows:

 

Beginning at the Northwest corner of Lot 1, Block 27, of the Plat of Commercial
Street Steam Motor Addition, according to plat recorded in Volume 3 of Plats,
Page 85, in King County, Washington; thence N 00º46’18” E along the northerly
extension of the west line of said Lot 1 a distance of 10.00 feet to the south
margin of South Orcas Street as established by Vacation Ordinance No. 60786,
records of the City of Seattle; thence S 89º05’18” E along said south margin a
distance of 567.58 feet; thence along a curve to the right having a radius of
15.00 feet, an arc distance of 24.47 feet through a central angle of 93º29’10”
to the west margin of Sixth, Avenue South as established by Acceptance Ordinance
No. 98789 and Vacation Ordinance No, 98793, records of the City of Seattle;
thence S 04º23’52” W along said west margin a distance of 196.42 feet; thence
along a curve to the right having a radius of 15.00 feet an arc distance of
22.65 feet through a central angle of 86º31’59” to the south line of Block 2 of
the Plat of Georgetown Riverfront Addition, according to Plat recorded in Volume
11 of Plats, Page 5, in King County, Washington; thence N 89º04’09” W along said
south line of Block 2 and of Block 1 of said Plat of Georgetown Riverfront
Addition a distance of 514.75 feet of the east line of Lot 1 of said Block 1;
thence N  00º48’13”  E along said east line of Lot 1 and its northerly extension
a distance of 107.93 feet to the alley centerline 8 feet north of the north line
of said Lot 1; thence N 89º04’09” W along said centerline a distance of 40.36
feet to the southerly extension of the west line of said Lot 1, Block 27, Plat
of Commercial Street Steam Motor Addition; thence N 00º46’18” E along the
southerly extension of said Lot 1 and along the west line of said Lot 1 of Block
27 of the Plat of Commercial Street steam Motor Addition, a distance of 107.95
feet to the point to beginning.

 

Also, Lots 1 through 18 inclusive of Block 17 of the plat of Commercial Street
Steam Motor Addition to the City of Seattle, recorded in Volume 3 of Plats, Page
85, in King County, Washington, together with vacated alley and portion of South
Findlay Street adjoining, vacated per city Ordinance No. 110210.

 

[INITIALS]

 

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EXHIBIT B

 

[FLOORPLAN]

 

 

[INITIALS]

 

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EXHIBIT C

 

RULES AND REGULATIONS

 

1.     Any directories provided by Lessor for the Building will be for the
display of the name and location of tenants only unless otherwise approved by
Lessor.

 

2.     Lessee shall not place any new or additional locks on any doors of the
Premises, nor re-key any existing locks without the consent of Lessor.

 

3.     Lessor reserves the right to close and keep locked all common entrances
and exits during such hours as Lessor may deem advisable.  Entrance by tenants
to the Buildings on Building holidays and weekends, other than Show Days, shall
be limited to those doors designated by Lessor.

 

4.     Lessor reserves the right to exclude or expel from the buildings any
person who, in the judgment of Lessor, is intoxicated, under the influence of
drugs or whose conduct is otherwise disturbing to others, or who shall in any
manner violate any of the rules and regulations.

 

5.     Lessee shall not do or permit to be done within the Premises anything
which would unreasonably annoy or interfere with the rights of other tenants of
the Buildings.

 

6.     Lessor will not be responsible for lost or stolen personal property,
equipment or money from the Buildings at any time.

 

7.     Lessee shall not permit its employees or invitees to loiter in or about
the common areas, to obstruct any of the entries, passages, corridors of common
areas, nor to place any rubbish, litter, merchandise or material of any nature
into any Building, delivery, parking, traffic or other common areas except as
designated by Lessor.

 

8.     Canvassing, soliciting, or peddling in and about the Buildings are
prohibited, and Lessee shall cooperate to prevent such activity.

 

9.     During non-business hours and days, Lessor may refuse access to the
Buildings or the Premises by master-key controlled by Lessor unless the person
seeking access is known to Lessor's employees, has a pass, or is properly
identified.  Lessor shall not be liable for damages for any error in admitting
or excluding any person from the Buildings or Premises.

 

10.   Lessee shall not make or permit any use of the Premises which may be
dangerous to life, limb, or property, nor permit any noise, odor, or vibrations
to emit from the Premises which are objectionable to Lessor or to other
occupants of the Buildings.  Lessee shall not cause a nuisance or violation of
any regulation of any governmental agency within the Premises or the Buildings.

 

11.   Lessee shall not commit any waste, damage, or injury to the Premises, the
Buildings or parking, loading, and other common areas.

 

12.   Lessee shall not at any time display a "For Rent" sign upon the Premises.

 

13.   No vehicles or animals shall be brought into the Buildings.

 

14.   Lessee and its employees shall park only in such areas as may be
designated by Lessor.

 

15.   Lessee shall not use any person or contractor who has not been approved by
Lessor to perform window washing, cleaning, decorating, repair or other work in
the Premises.

 

16.   Lessor reserves the right to prescribe the weight, size and position of
all safes and other heavy equipment brought into the Buildings and also the time
and the manner of moving such items, merchandise, furniture and similar items in
and out of the Buildings.  Movements of Lessee's property in, out, or within the
Buildings are entirely at the risk and responsibility of Lessee.

 

17.   Lessee shall not keep or use in or upon the Premises any oil, burning
fluid, gasoline or other combustible or explosive materials.

 

18.   Lessee agrees that it will install on its entrance doors decals supplied
by Lessor that shall read "Showrooms are not open to the public.  Authorized
professional buyers only".

 

19.   Lessee shall at all times keep clean the glass of all showroom windows and
doors.  Lessor reserves the right to require window treatments of specified
types on windows of the Premises which are visible from Atriums or Common Areas.

 

20.   Lessee shall not waste electricity or water and shall cooperate fully with
Lessor to assume the most effective and economical operation of the Buildings'
lighting, heating, air conditioning, and other utilities systems.  Lessee shall
refrain from adjusting any controls other than room thermostats installed for
Lessee's use.

 

21.   Lessor reserves the right to approve the installation our use of any light
fixtures, office or showroom equipment which would cause the electrical usage
within the Premises to exceed a maximum allowable electrical load of 2.35 watts
per square foot of Premises.  Lessor also reserves the right to approve
connections to electric current other than through existing electrical outlets
provided for Lessee's use.

 

22.   Lessee shall keep Lessor advised of the current telephone number(s) of
Lessee's employees who may be contacted in an emergency, i.e., fire, break-in,
vandalism, etc.  If Lessor shall deem it necessary to respond to such emergency
on Lessee's behalf in order to protect the Premises or the Buildings, Lessee
shall pay all reasonable costs incurred, including any time spent by Lessor's
employees in responding to such emergency.

 

23.   Lessor is not responsible to any tenant for the non-observance or
violation of the rules and regulations by any other tenant.

 

--------------------------------------------------------------------------------

 

LESSEE:

 

STATE OF

Texas

)

 

 

)  ss.

COUNTY OF

Travis

)

 

On this 1st day of May 2000, personally appeared before me Jeffrey Sexton, to me
known to be the President & COO of the corporation that executed the within
instrument, and acknowledged to me that       was authorized to sign the same on
behalf of the corporation as its free and voluntary act and deed for the uses
and purposes therein mentioned.

 

[SEAL]

 

SANDRA M. ROY

 

/s/ Sandra M. Roy

 

 

MY COMMISSION EXPIRES

 

NOTARY PUBLIC in and for the

 

 

October 31, 2000

 

State of Texas, residing at

 

 

 

 

100 Lido Cr P-3, Austin, TX 78734.

 

 

 

 

My commission expires: 10/31/2000.

 

 

LESSOR:

 

STATE OF

Washington

)

 

 

)  ss.

COUNTY OF

King

)

 

On this 4th day of May 2000, before me personally appeared Timothy Treadway, to
me known to be the Executive Vice President of BW Seattle Corp., a Washington
corporation, which is manager of Bay West Design Center, LLC, a Delaware limited
liability company, Lessor, that executed the within and foregoing instrument,
and acknowledged the said instrument to be the free and voluntary act and deed
of said property manager, for the uses and purposes therein mentioned, and on
oath stated that he was authorized to execute the said instrument.

 

IN WITNESS WHEREOF I have hereunto set my hand and affixed my official seal the
day and year first above written.

 

TIA BOCOCK

 

/s/ Tia Bocock

NOTARY PUBLIC

 

NOTARY PUBLIC in and for the

COMMISSION EXPIRES

 

State of Washington residing

12-9-02

 

at Seattle

STATE OF WASHINGTON

 

My commission expires: 12-9-02.

 

--------------------------------------------------------------------------------

 

Property # 3002

 

Tenant # 530

 

Unit # 600

 

 

 

 

 

 

 

 

RENTAL PAYMENT COUPON - July 2000

 

 

 

Property Address:

 

Payment Due:

 

 

 

 

 

 

 

 

 

EpicEdge, Inc.

 

Rent

 

$

13,087.50

 

5601 6 Ave S, Suite 600

 

CAM

 

2,776.20

 

Seattle WA 98108

 

Storage

 

0.00

 

 

 

Total Payment due on 7/1/00

 

$

15,863.70

 

 

 

 

 

 

 

Remittance Address:

 

 

 

 

 

 

 

 

 

 

 

Bay West Design Center, LLC

 

Late Charge

 

1,586.37

 

P O Box 24842

 

 

 

 

 

Seattle WA 98124-0842

 

Total if payment received
after 7/10/00

 

$

17,450.07

 

 

Property # 3002

 

Tenant # 367

 

Unit # 600

 

RENTAL PAYMENT COUPON - August 2000

 

 

 

Property Address:

 

Payment Due:

 

 

 

 

 

 

 

 

 

EpicEdge, Inc.

 

Rent

 

$

13,087.50

 

5601 6 Ave S, Suite 600

 

CAM

 

2,776.20

 

Seattle WA 98108

 

Storage

 

0.00

 

 

 

Total Payment due on 8/1/00

 

$

15,863.70

 

 

 

 

 

 

 

Remittance Address:

 

 

 

 

 

 

 

 

 

 

 

Bay West Design Center, LLC

 

Late Charge

 

1,586.37

 

P O Box 24842

 

Total if payment received
after 8/10/00

 

 

 

Seattle WA 98124-0842

 

 

$

17,450.07

 

 

Property # 3002

 

Tenant # 530

 

Unit # 600

 

RENTAL PAYMENT COUPON - Sept 2000

 

 

 

Property Address:

 

Payment Due:

 

 

 

 

 

 

 

 

 

EpicEdge, Inc.

 

Rent

 

$

13,087.50

 

5601 6 Ave S, Suite 600

 

CAM

 

2,776.20

 

Seattle WA 98108

 

Storage

 

0.00

 

 

 

Total Payment due on 9/1/00

 

$

15,863.70

 

 

 

 

 

 

 

Remittance Address:

 

 

 

 

 

 

 

 

 

 

 

Bay West Design Center, LLC

 

Late Charge

 

1,586.37

 

P O Box 24842

 

 

 

 

 

Seattle WA 98124-0842

 

Total if payment received
after 9/10/00

 

$

17,450.07

 

 

--------------------------------------------------------------------------------

 

Property # 3002

 

Tenant # 530

 

Unit # 600

 

RENTAL PAYMENT COUPON - October 2000

 

 

 

Property Address:

 

Payment Due:

 

 

 

 

 

 

 

 

 

EpicEdge, Inc.,

 

Rent

 

$

13,087.50

 

5601 6 Ave S, Suite 600

 

CAM

 

2,776.20

 

Seattle WA 98108

 

Storage

 

0.00

 

 

 

Total Payment due on 10/1/00

 

$

15,863.70

 

 

 

 

 

 

 

Remittance Address:

 

 

 

 

 

 

 

 

 

 

 

Bay West Design Center, LLC

 

Late Charge

 

1,586.37

 

P O Box 24842

 

 

 

 

 

Seattle WA 98124-0842

 

Total if payment received
after 10/10/00

 

$

17,450.07

 

 

Property # 3002

 

Tenant # 530

 

Unit # 600

 

RENTAL PAYMENT COUPON - Nov 2000

 

 

 

Property Address:

 

Payment Due:

 

 

 

 

 

 

 

 

 

EpicEdge, Inc.,

 

Rent

 

$

13,087.50

 

5601 6 Ave S, Suite 600

 

CAM

 

2,776.20

 

Seattle WA 98108

 

Storage

 

0.00

 

 

 

Total Payment due on 11/1/00

 

$

15,863.70

 

 

 

 

 

 

 

Remittance Address:

 

 

 

 

 

 

 

 

 

 

 

Bay West Design Center, LLC

 

Late Charge

 

1,586.37

 

P O Box 24842

 

 

 

 

 

Seattle WA 98124-0842

 

Total if payment received
after 11/10/00

 

$

17,450.07

 

 

Property # 3002

 

Tenant # 530

 

Unit # 600

 

RENTAL PAYMENT COUPON - Dec 2000

 

 

 

Property Address:

 

Payment Due:

 

 

 

 

 

 

 

 

 

EpicEdge, Inc.

 

Rent

 

$

13,087.50

 

5601 6 Ave S, Suite 600

 

CAM

 

2,776.20

 

Seattle WA 98108

 

Storage

 

0.00

 

 

 

Total Payment due on 12/1/00

 

$

15,863.70

 

 

 

 

 

 

 

Remittance Address:

 

 

 

 

 

 

 

 

 

 

 

Bay West Design Center, LLC

 

Late Charge

 

1,586.37

 

P O Box 24842

 

 

 

 

 

Seattle WA 98124-0842

 

Total if payment received
after 12/10/00

 

$

17,450.07

 

 

--------------------------------------------------------------------------------

 

[WELLS FARGO BANK LOGO]

ESTOPPEL AGREEMENT

 

Loan #85-0200161

 

Tenant’s Trade Name: Epic Edge

 

This ESTOPPEL AGREEMENT (“Agreement”) is made as of the date set forth below, by
Epic Edge, Inc., a Texas Corporation (“Tenant”), based upon the following facts
and understandings of Tenant:

 

RECITALS

 

A.            Bay West Design Center, LLC, (“Owner”) is or is about to become
the owner of the land and improvements commonly known as the Seattle Design
Center (“Property”) and the owner of the landlord’s interest in the lease
identified in Recital B below (“Lease”).

 

B.            Tenant is the owner of the tenant’s interest in that lease dated
03/23/00, which was originally executed by Timothy Treadway, Executive Vice
President, as landlord, and by Jeff Sexton President & COO as tenant.  (Said
lease and the referenced amendment(s) thereto are collectively referred to
herein as the “Lease”).

 

C.            Owner, as borrower or as co-borrower with one or more other
co-borrower(s), has a loan (“Loan”), with LaSalle Bank National Association, as
Trustee for Bear Steams Commercial Mortgage Securities Inc., Commercial Mortgage
Pass-Through Certificates Series 1999-WF2, Wells Fargo Bank, N.A. as Master
Servicer Wells Fargo Bank, N.A. (“Lender”) which is secured by, among other
things, a mortgage, deed of trust, trust indenture or deed to secure debt
encumbering the Property (“Mortgage”).

 

D.            As a condition to the release of certain impounds under the Loan,
Lender has required that Tenant furnish certain assurances to, and make certain
agreements with, Lender, as set forth below.

 

THEREFORE, Tenant warrants and represents to, and agrees with, Lender as
follows:

 

1.             ESTOPPEL.  Tenant warrants and represents to Lender, as of the
date hereof, that:

 

1.1           Lease Effective.  The Lease has been duly executed and delivered
by Tenant and, subject to the terms and conditions thereof, the Lease is in full
force and effect, the obligations of Tenant thereunder are valid and binding,
and there have been no modifications or additions to the Lease, written or oral,
other than those, if any, which are referenced above in Recital B.

 

1.2           Tenant Improvement; Occupancy.  All Tenant improvements required
to be constructed by Owner under the Lease have been fully completed to Tenant’s
satisfaction and Tenant has accepted the leased premises and is currently
occupying them.

 

1.3           No Default.  To the best of Tenant’s knowledge: (a) there exists
no breach, default, or event or condition which, with the giving of notice or
the passage of time or both, would constitute a breach or default under the
Lease either by Tenant or Owner; and (b) Tenant has no existing claims, defenses
or offsets against rental due or to become due under the Lease.

 

1.4                                 Entire Agreement.  The Lease constitutes the
entire agreement between Owner and Tenant with respect to the Property, and
Tenant claims no rights of any kind whatsoever with respect to the Property,
other than as set forth in the Lease.

 

1

--------------------------------------------------------------------------------

 

1.5                                 Minimum Rent.  The annual minimum rent under
the Lease is $833412, subject to any escalation, percentage rent and/or common
area maintenance charges provided in the Lease.

 

1.6                                 Rental Payment Commencement Date.  The rents
stated in Section 1.5 above will begin or have begun on 5/1/00.

 

1.7                                 Rentable area.  The rentable area of the
leased premises is 8725 square feet.

 

1.8                                 Commencement Date.  The term of the Lease
commenced or will commence on 5/1/00.

 

1.9                                 Expiration Date.  The term of the Lease will
expire on 5/31/05.

 

1.10                           No Deposits or Prepaid Rent.  No deposits or
prepayments of rent have been made in connection with the Lease, except as
follows: 15,094.25(if none, write “None”).

 

1.11                           No Other Assignment.  Tenant has received no
notice, and is not otherwise aware of, any other assignment of the landlord’s
interest in the Lease.

 

1.12                           No Purchase Option or Refusal Rights.  Tenant
does not have any option or preferential right to purchase all or any part of
the Property, except as follows: None (if none, write “None”).

 

2.                                       HEIRS, SUCCESSORS AND ASSIGNS.  The
covenants herein shall be binding upon, and inure to the benefit of, the heirs,
successors and assigns of the parties hereto.  Whenever necessary or appropriate
to give logical meaning to a provision of this Agreement, the term “Owner” shall
be deemed to mean the then current owner of the Property and the landlord’s
interest in the Lease.

 

3.                                       ATTORNEYS’ FEES.  If any legal action,
suit or proceeding is commenced between Tenant and Lender regarding their
respective rights and obligations under this Agreement, the prevailing party
shall be entitled to recover, in addition to damages or other relief, all costs
and expenses, attorneys’ fees and court costs (including, without limitation,
expert witness fees).  As used herein, the term “prevailing party” shall mean
the party which obtains the principal relief it has sought, whether by
compromise settlement or judgment.  If the party which commenced or instituted
the action, suit or proceeding shall dismiss or discontinue it without the
concurrence of the other party, such other party shall be deemed the prevailing
party.

 

4.                                       LENDER’S AGREEMENT.  Lender’s
acceptance of this Agreement shall constitute Lender’s agreement to be bound
hereby.

 

IN WITNESS WHEREOF, Tenant has executed this instrument as
of                         , 19      .

 

“Tenant”

 

NAME OF FIRST TENANT HERE

 

By:

 

 

 

 

 

Its:

 

 

 

2

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