Exhibit 10.2

Basic Lease Information Sheet

 

1.    Date of Lease   May 23, 2006 2.    Tenant:   SAFECO INSURANCE COMPANY OF
AMERICA, a Washington corporation 3.    Tenant’s Address Prior to Occupancy:  
4300 Brooklyn Avenue NE
Seattle, WA 98185
Attn: Corporate Real Estate
With copy to:
Alston, Courtnage & Bassetti LLP
Attn: Michael S. Courtnage
1000 Second Avenue, Suite 3900
Seattle, WA 98104-1045 4.    Tenant’s Address After Occupancy   1001 Fourth
Avenue, Suite              [Suite # to be designated by Tenant using any floor
of the Premises.]
Seattle, WA 98154      With copy to:      Alston, Courtnage & Bassetti LLP
Attn: Michael S. Courtnage
1000 Second Avenue, Suite 3900
Seattle, WA 98104-1045 5.    Landlord:   NOP 1001 FOURTH LLC, a Delaware limited
liability company 6.    Landlord’s Address:   c/o Hines Interests
1001 Fourth Avenue, Suite 3615
Seattle, WA 98154 7.    Initial Premises
Rentable Area:   Floor      Rentable Square Feet           8      17,766        
9      17,564         10      17,569         11      17,569         12     
17,569         13      17,569         14      17,569         15      17,569   
     16      17,569         17      17,569         27      18,116         28
     18,116         29      18,116         30      18,118         31      18,116
        47      18,138   

 

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8.    Net Rentable Area/Tenant’s Proportionate Share:    Net Rentable Area of
Premises: 284,602 square feet
Tenant’s Proportionate Share: Thirty-nine and 88/100 percent (39.88%) 9.    Term
Commencement Date:    See Article 2 10.    Term:    Initial Lease Term: Eleven
(11) Years following the Term Commencement Date (as defined in Section
2.l(a) below) Extension Term(s): Two (2) options for five (5) years each

11.    Annual Base Rent
per square foot of
Net Rentable Area
(net of Operating
Costs) by year and
floor:     

     Floors 8 - 17    Floors 27 - 31    Floor 47 Year 1    $ 13.00    $ 13.00   
$ 20.50 Year 2    $ 14.00    $ 14.00    $ 21.50 Year 3    $ 15.00    $ 15.00   
$ 22.50 Year 4    $ 16.00    $ 16.00    $ 23.50 Year 5    $ 17.00    $ 17.00   
$ 24.50 Year 6    $ 18.00    $ 18.00    $ 25.50 Year 7    $ 19.00    $ 19.00   
$ 26.50 Year 8    $ 20.00    $ 20.00    $ 27.50 Year 9    $ 21.00    $ 21.00   
$ 28.50 Year 10    $ 22.00    $ 22.00    $ 29.50 Year 11    $ 23.00    $ 23.00
   $ 30.50 Year 12    $ 24.00    $ 24.00    $ 31.50

12.    Parking:    Tenant shall lease one (1) parking pass per one thousand five
hundred (1,500) square feet of Net Rentable
Area pursuant to Section 14.23. 13.    Cash Allowance:    Fifty-eight and 50/100
Dollars ($58.50) per square foot of Net Rentable Area in the Initial Premises,
to be
used as provided in Exhibit C 14.    Broker(s):    Landlord’s Broker: Pacific
Real Estate Partners, Inc.
Tenant’s Broker: Pacific Real Estate Partners, Inc.

 

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Tenant’s Initials/Date     Landlord’s Initials/Date

 

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TABLE OF CONTENTS

 

          Page Basic Lease Information Sheet    A ARTICLE 1   

Premises

   1     1.1   

Lease

   1     1.2   

Landlord’s Reserved Rights

   3     1.3   

Common Areas

   3     1.4   

Calculation of Net Rentable Area

   4     1.5   

Lead Tenant Rights

   4 ARTICLE 2   

Term, Use of Premises, Base Rent and Option to Contract

   4     2.1   

Term

   4     2.2   

Delay in Delivery

   6     2.3   

Confirmation

   7     2.4   

Use

   7     2.5   

Payments by Tenant

   7     2.6   

Payment of Base Rent

   7     2.7   

Partial Months

   9     2.8   

Option to Contract

   9 ARTICLE 3   

Security Deposit

   10 ARTICLE 4   

Payment of Operating Costs

   10     4.1   

Net Lease

   10     4.2   

Estimated Payments

   10     4.3   

Tenant’s Proportionate Share

   10     4.4   

Operating Costs

   11     4.5   

Adjustment for Occupancy

   15     4.6   

Computation of Operating Costs Adjustment

   15     4.7   

Adjustment for Variation Between Estimated and Actual

   15     4.8   

Cap on Controllable Operating Costs

   16     4.9   

Audit Right

   16 ARTICLE 5   

Landlord’s Covenants

   17     5.1   

Basic Services

   17     5.2   

Hours of Operation

   19     5.3   

Interruption

   19     5.4   

Extra Services

   19     5.5   

Window Coverings

   20     5.6   

Graphics and Signage

   20     5.7   

Tenant Extra Improvements

   20     5.8   

Peaceful Enjoyment

   20     5.9   

Building Naming Rights

   21 ARTICLE 6   

Tenant’s Covenants

   22     6.1   

Compliance With Exhibit C

   22

 

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    6.2   

Construction of Tenant Improvements

   22     6.3   

Telecommunications

   22     6.4   

Taxes on Personal Property and Tenant Extra Improvements

   23     6.5   

Repairs by Tenant

   23     6.6   

Waste

   23     6.7   

Alterations, Additions, Improvements

   23     6.8   

Liens

   24     6.9   

Compliance With Laws and Insurance Standards

   24     6.10   

Entry for Repairs, Inspection, Posting Notices, Etc

   25     6.11   

No Nuisance

   25     6.12   

Rules and Regulations

   25     6.13   

Surrender of Premises on Termination

   26     6.14   

Corporate Authority

   26     6.15   

Utilities

   26 ARTICLE 7   

Hazardous Materials

   27     7.1   

Prohibition and Indemnity With Respect to Hazardous Materials

   27     7.2   

Definitions

   27     7.3   

Asbestos

   28 ARTICLE 8   

Assignment or Sublease

   29     8.1   

Consent Required

   29     8.2   

Transfers to Qualified Transferees, Joint Ventures

   29     8.3   

Landlord’s Options

   30     8.4   

Division of Excess Rent

   30     8.5   

Tenant Not Released

   30     8.6   

Written Agreement

   31     8.7   

No Transfer Period

   31     8.8   

Conditions

   31     8.9   

Expenses

   31     8.10   

No Restriction on Landlord

   31     8.11   

No Leasehold Financing

   31 ARTICLE 9   

Condition and Operation of the Building

   31     9.1   

No Warranty

   31     9.2   

Building Alterations

   32 ARTICLE 10   

Lender Rights

   32     10.1   

Subordination

   32     10.2   

Attornment

   32     10.3   

REAs

   33     10.4   

Estoppel Certificate

   33 ARTICLE 11   

Insurance

   33     11.1   

Landlord’s Property Insurance

   33     11.2   

Liability Insurance

   33     11.3   

Tenant’s Insurance

   33     11.4   

Indemnity and Exoneration

   35     11.5   

Indemnity for Liens

   35

 

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    11.6   

Waiver of Subrogation Rights

   35 ARTICLE 12   

Casualty and Eminent Domain

   36     12.1   

Damage and Destruction

   36     12.2   

Condemnation

   37 ARTICLE 13   

Default

   38     13.1   

Events of Default

   38     13.2   

Remedies Upon Default

   39     13.3   

Damages Upon Termination

   40     13.4   

Computation of Rent for Purposes of Default

   40     13.5   

Late Charge

   40     13.6   

Remedies Cumulative

   41     13.7   

Tenant’s Remedies

   41 ARTICLE 14   

Miscellaneous

   41     14.1   

No Waiver

   41     14.2   

Holding Over

   42     14.3   

Attorneys’ Fees

   42     14.4   

Amendments

   42     14.5   

Transfers by Landlord

   42     14.6   

Severability

   43     14.7   

Notices

   43     14.8   

Building Planning

   43     14.9   

No Option

   43     14.10   

Integration and Interpretation

   43     14.11   

Quitclaim

   44     14.12   

No Easement for Light, Air and View

   44     14.13   

No Merger

   44     14.14   

Memorandum of Lease

   44     14.15   

Survival

   44     14.16   

Financial Statements

   44     14.17   

No Joint Venture

   44     14.18   

Successors and Assigns

   45     14.19   

Applicable Law

   45     14.20   

Time of the Essence; Force Majeure

   45     14.21   

Confidentiality

   45     14.22   

Interpretation

   45     14.23   

Parking

   45     14.24   

Brokers

   47     14.25   

USA Patriot Act Disclosures

   47     14.26   

Bike Storage

   47     14.27   

Conference Center; Rooftop Deck

   47     14.28   

Roof Access

   48     14.29   

Counterparts

   48

 

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Attachments:

   Exhibit A    Floor Plan of the Premises Exhibit B    Legal Description of the
Real Property Exhibit C    Work Letter Exhibit D    Rules and Regulations
Exhibit E    Lease Commencement Certificate Exhibit F    Form of Estoppel
Certificate Exhibit G    Asbestos Disclosure Exhibit G-l    Asbestos Standards
Exhibit H    Form of SNDA Exhibit I    Janitorial Specifications

 

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SCHEDULE OF DEFINED TERMS

 

    

Section No.

        Page No. ACM    Section 7. 3       28 Adjustment Date    Section 2.6(b)
      7 Affected Space    Section 8.3       30 Alterations    Section 6.7      
23 Antenna    Section 14.28       48 Asbestos Standards    Section 1.1(c)      
2 Base Building Improvements    Exhibit C, Paragraph 1       1 Basic Services   
Section 5.1       17 Bike Storage Area    Section 14.26       47 Blocked Persons
   Section 14.25       47 Building Components    Section 1.2       3 Building
Conference Center    Section 14.27       47 Building    Section 1.1(a)       1
Building Standard Improvement    Section 5.7       20 Business Days    Section
5.2       19 CAD    Exhibit C, Paragraph 5       2 Cash Allowance   
Exhibit C, Paragraph 14       5 Claims    Section 7.1       27 Common Areas   
Section 1.3       4 Conceptual Plans    Exhibit C, Paragraph 4       2
Contraction Date    Section 2.8       9 Contraction Space    Section 2.8       9
Control    Section 8.2       29 Controllable Operating Costs    Section 4.8   
   16 Cost Statement    Section 4.6       15 Covered Parties    Section 14.25   
   47 CPI Index    Section 13.4(b)       40 Delivery Date    Section 2.1(a)   
   5 Design Manual    Section 6.1       22 Estimated Operating Costs    Section
4. 2       10 Event of Default    Section 13.1       38 Executive Order   
Section 14.25       47 Expansion Allowance    Section 1.1(b)(ii)       2
Expansion Option    Section 1.1(b)       1 Expansion Space    Section 1.1(b)   
   1 Expiration Date    Section 2.1(a)       5 Extension Option    Section
2.1(b)       5 Extension Terms    Section 2.1(b)       5 Extra Services   
Section 5.4       19 Fair Market Rent    Section 2.6(c)       7 Floor
Commencement Date    Section 2.1(a)       5 Force Majeure    Section 14.20      
45 Garage    Section 14.23       46 Hazardous Material    Section 7.2(a)      
27 Hazardous Materials Claims    Section 7.2(b)       28 Hazardous Materials
Laws    Section 7.2(c)       28 HVAC    Section 5.1(b)       17

 

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Initial Premises    Section l.l(a)       1 Initial Term    Section 2.1(a)      
5 Landlord    Introduction       1 Landlord Parties    Section 6.5       23 Laws
   Section 6.9(a)       24 Lead Tenant Rights    Section 1.5       4 Lease   
Introduction       1 List    Section 14.25       47 Major Vertical Penetrations
   Section 1.2       3 Minimum Occupancy Requirement    Section 1.5       4 Net
Rentable Area    Section 1.4       4 Normal Office Hours    Section 5.2       19
OFAC    Section 14.25       47 Operating Costs Adjustment    Section 4.6      
15 Operating Costs    Section 4.4       11 Parking Pass    Section 14.23      
45 Parking Rent    Section 14.23       45 Permitted Hazardous Materials   
Section 7.2(d)       28 Permitted Use    Section 2.4       7 Premises    Section
l.l(d)       3 Provider    Section 6.3       22 Qualified Auditor    Section
4.8(d)       16 Qualified Joint Venture    Section 8.2       29 Qualified
Transferee    Section 8. 2       29 Rate Chart    Section 14.23       45 Real
Property    Section l.l(a)       1 Real Property Taxes    Section 4.4(j)      
12 Reletting Expenses    Section 13.2(b)       39 Rent    Section 2.5       7
Reserved Parking    Section 14.23       46 Rooftop Deck    Section 14.27      
47 Rules and Regulations    Section 6.12       25 Scheduled Delivery Dates   
Section 2.l(a)       5 Senior Instruments    Section 10.1       32 Senior
Parties    Section 10.1       32 Storage Rent    Section 14.26       47
Submission    Section 2.6(c)(i)       8 Successor    Section 10.2       32
Supplemental Parking    Section 14.23       45 Tenant Extra Improvements   
Exhibit C, Paragraph 2       1 Tenant Improvements    Exhibit C, Paragraph 2   
   1 Tenant    Introduction       1 Tenant Parties    Section 6.5       23
Tenant’s Personal Property    Section 6.4       23 Tenant’s Proportionate Share
   Section 4.3       10 Term Commencement Date    Section 2.1(a)       5 Term   
Section 2.1(b)       6 TI Architect    Exhibit C, Paragraph 3       1 TI
Construction Contract    Exhibit C, Paragraph 9       4 Total Affected Space   
Section 8.3       30 Transfer    Section 8.1       29 Transferee    Section 8.1
      29 Valet Parking    Section 14.23       46 Working Drawings    Exhibit C,
Paragraph 5       2

 

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OFFICE BUILDING LEASE

This Office Building Lease (the “Lease”) is made and entered into as of the date
specified in Item 1 of the Basic Lease Information Sheet attached hereto and
incorporated herein by this reference, by and between NOP 1001 FOURTH LLC, a
Delaware limited liability company (“Landlord”) and SAFECO INSURANCE COMPANY OF
AMERICA, a Washington corporation (“Tenant”). Tenant authorizes Landlord to
insert the date of Landlord’s execution hereof on the Basic Lease Information
Sheet as the date of this Lease.

Now, therefore, in consideration of the mutual covenants and agreements
contained in this Lease, the parties agree as follows:

ARTICLE 1

Premises

1.1 Lease.

(a) Initial Premises. Subject to the terms, covenants and conditions set forth
herein, Landlord leases to Tenant and Tenant leases from Landlord those certain
premises identified in the Basic Lease Information Sheet as Item 7, which are
schematically depicted on the floor plans attached hereto as Exhibit A (the
“Initial Premises”). The Initial Premises are deemed to contain two hundred
eighty-four thousand six hundred and two (284,602) square feet of Net Rentable
Area. The Initial Premises are a part of the building and other improvements,
including common areas (collectively, the “Building”), located on the real
property situated in the City of Seattle, County of King, State of Washington,
legally described on Exhibit B (the “Real Property”).

(b) Expansion Option. Subject and subordinate to the rights of any other tenant
in the Building under any lease that is either currently in place or entered
into by Landlord with respect to any increment of space offered to Tenant as
Expansion Space if Tenant does not exercise its Expansion Option on such space,
including any expansion, extension or renewal rights granted to such tenant,
Tenant shall have a continuing right to expand the square footage of the Initial
Premises (the “Expansion Option”) by exercising a first right to lease all or
part of any space on any floor of the Building that is adjacent to any floor
then leased and occupied by Tenant or any other space in the Building that
contains more than ten thousand (10,000) square feet of Net Rentable Area, that
is available to lease from time to time (the “Expansion Space”). Tenant’s
Expansion Option shall be personal to Tenant and may not be exercised by any
Transferee (other than a Qualified Transferee under Section 8 below who takes an
assignment of all of Tenant’s rights under this Lease) or for the benefit of any
Transferee (other than a Qualified Transferee under Section 8 below who takes an
assignment of all of Tenant’s rights under this Lease and subtenants of up to
two (2) floors of the Premises) without Landlord prior written consent. Tenant’s
Expansion Option shall be exercised at the following times and in accordance
with the following terms and conditions:

(i) Prior to Commencement of Tenant Improvement Construction. Prior to the
commencement of construction of the Tenant Improvements (as defined in Exhibit
C) in the Initial Premises, Landlord shall notify Tenant in writing of any
proposal by Landlord to lease all or part of the Expansion Space to a third
party which notice shall include the proposed delivery date for the space. If
Landlord delivers a notice pursuant to the preceding sentence, within ten
(10) Business Days after receipt of Landlord’s notice, Tenant may exercise its
Expansion Option with respect to the Expansion Space described in such notice by
written notice to Landlord. If Tenant leases any the Expansion Space under this
Section l.l(b)(i), the square footage of such space shall be added to the square
footage of the Initial Premises and Tenant shall lease such Expansion Space
subject to all of the terms and conditions of this Lease, including, but not
limited to, those terms and conditions relating to Base Rent, the Term, the Cash
Allowance and parking except that Landlord shall not be required to commit to
any particular delivery date nor pay any penalty for late delivery under
Section 2.2 below. Landlord shall make good faith efforts to deliver the space
on the date specified in the notice but Tenant acknowledges that the Landlord
can only deliver the space after the prior occupant vacates the space.

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(ii) After Commencement of Tenant Improvement Construction. After the
commencement of construction of Tenant Improvements in the Initial Premises and
throughout the Initial Term, Landlord shall provide Tenant with written notice
before Landlord markets for lease all or any portion of the Expansion Space
which notice shall identify the Net Rentable Area, proposed Base Rent and the
amount of tenant improvement allowance that Landlord will pay with respect to
such space (the “Expansion Allowance”), and whether any asbestos in that
Expansion Space has been or will be abated prior to delivery to Tenant. If
Landlord delivers a notice pursuant to the preceding sentence, within ten
(10) days after receipt of Landlord’s notice, Tenant may exercise its Expansion
Option with respect to the Expansion Space described in such notice by written
notice to Landlord. If Tenant leases any Expansion Space under this Section
1.1(b)(ii), the square footage of such space shall be added to the square
footage of the Initial Premises, and Tenant shall lease such Expansion Space
subject to all of the terms and conditions of this Lease, except that: (A) Base
Rent for the Expansion Space shall be established at the then current Fair
Market Rent (as defined in Section 2.6(c) with consideration given to the amount
of the Expansion Allowance) determined as of the date the Expansion Space is
added to the Premises, but in no event less than Tenant’s then current Base Rent
for space on floors 8-17 of the Initial Premises; (B) Landlord shall pay the
Expansion Allowance in lieu of the Cash Allowance; provided, however, that the
Expansion Allowance (stated on a per square foot basis) shall never be more than
the Cash Allowance for the Initial Premises prorated based on the number of
months then remaining in the Initial Term (Fifty-eight and 50/100 Dollars
($58.50) multiplied by a fraction the numerator of which is the number of months
then remaining in the Initial Term and the denominator of which is 132); and
(C) Landlord shall not be required to commit to any particular delivery date nor
pay any penalty for late delivery under Section 2.2 below. The Expansion
Allowance for each increment of Expansion Space shall be paid according to the
procedures for payment of the Cash Allowance for the Initial Premises under
Exhibit C. Notwithstanding anything herein to the contrary, after the
eighty-fourth (84th) month of the Initial Term, Tenant may not exercise the
Expansion Option unless Tenant has previously exercised or simultaneously
exercises the first Extension Option under Section 2.1(b) below.

(iii) No Default. Notwithstanding anything to the contrary in this
Section 1.1(c). Tenant shall not have the right to lease any Expansion Space at
any time during which an uncured Event of Default (as defined in Section 13.1)
exists under this Lease.

(c) Condition of Space.

(i) Initial Premises. Landlord shall deliver each floor of the Initial Premises
to Tenant in a broom clean condition with (A) all existing improvements removed,
(B) asbestos on such floor abated or encapsulated in accordance with the
standards attached hereto as Exhibit G-l (the “Asbestos Standards”), and (C) all
Building Systems serving such floors in working order. In addition, within two
(2) weeks after Landlord delivers each floor of the Initial Premises to Tenant
Landlord shall complete the following: (D) the heating ventilation and air
conditioning system shall be in place with the main loop installed for the shell
and core (all distribution and VAV boxes to be provided by Tenant as part of the
Tenant Improvements), (E) the main sprinkler loop shall be installed with the
minimum number of Building standard sprinkler heads required by applicable Law
for the shell and core. During completion of items (D) and (E) Tenant’s work in
the Premises shall take priority and Landlord shall cooperate with Tenant’s
contractor to coordinate such work.

(ii) Abated Expansion Space. If the asbestos on the floor on which the Expansion
Space is located has already been abated or encapsulated in accordance with the
Asbestos Standards when Tenant exercises its Option to Expand into such space,
then Landlord shall deliver that increment of Expansion Space to Tenant in its
then-current “as is” condition and shall pay the Expansion Allowance as provided
above.

 

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(iii) Unabated Expansion Space. If the asbestos on the floor on which the
Expansion Space is located has not already been abated or encapsulated in
accordance with the Asbestos Standards when Tenant exercises its Option to
Expand into such space, Landlord shall deliver that increment of Expansion Space
to Tenant in its then-current as is condition and shall not be required to make
any alterations to such space except that if and when Tenant takes possession of
a full floor of Expansion Space Landlord shall (A) remove all existing
improvements, (B) install the heating ventilation and air conditioning system
with the main loop installed for the shell and core (all distribution and VAV
boxes to be provided by Tenant as part of the Tenant Improvements), (C) install
the main sprinkler loop with the minimum number of Building standard sprinkler
heads required by applicable Law for the shell and core, (D) abate or
encapsulate asbestos on such floor in accordance with the Asbestos Standards,
and (E) ensure that all Building systems serving such floor are in working
order. If Tenant occupies a partial floor of Expansion Space that has not had
asbestos abated or encapsulated in accordance with the Asbestos Standards and
if, at a later date, Tenant leases the entire floor as Expansion Space,
Landlord, at Landlord’s expense, when space becomes available, shall temporarily
relocate Tenant’s operations on such unabated floor into other space in the
Building and shall complete the foregoing work. Alternatively, if Tenant leases
a partial floor of Expansion Space that has not had asbestos abated or
encapsulated in accordance with the Asbestos Standards and at a later date
Tenant leases a different full floor of Expansion Space that has been abated or
encapsulated in accordance with the Asbestos Standards, then Tenant may elect to
(1) continue to lease the partial floor in its as-is condition, or (2) surrender
the partial floor to Landlord and relocate from the partial floor onto the full
floor and the partial floor shall no longer be part of the Premises after it is
surrendered to Landlord. Tenant shall only be entitled to the Expansion
Allowance when it occupies abated Expansion Space and Landlord shall never be
required to abate asbestos on a partial floor.

(d) Definition of Premises. The term “Premises” as used in this Lease shall
include the Initial Premises, the Lobby Area and the Expansion Space, if any,
leased by Tenant pursuant to Section 1.1(c).

1.2 Landlord’s Reserved Rights. In addition to all other rights reserved by
Landlord under this Lease, Landlord reserves from the leasehold estate
hereunder, and the Premises shall not include, (a) the exterior surfaces of the
walls and windows bounding the Premises, and (b) all space located within the
Premises for Major Vertical Penetrations (as defined below), conduits, electric
and all other utilities, heating ventilation and air-conditioning and fire
protection and life safety systems, sinks or other Building facilities that do
not constitute Tenant Improvements (collectively, “Building Components”).
Landlord shall have the use of the Building Components and access through the
Premises for operation, maintenance, repair or replacement thereof. Landlord
shall have the right from time to time, to install, remove or relocate any of
the Building Components within the Premises to locations within the core of the
Building within the Premises so long as Landlord does not unreasonably interfere
with Tenant’s access to or use of the Premises. As used herein, the term “Major
Vertical Penetrations” shall mean the area or areas within Building stairs
(excluding the landing at each floor), elevator shafts, and vertical ducts that
service more than one floor of the Building. The area of Major Vertical
Penetrations shall be bounded and defined by the dominant interior surface of
the perimeter walls thereof (or the extended plane of such walls over areas that
are not enclosed). Major Vertical Penetrations shall exclude, however, areas for
the specific use of Tenant or installed at the request of Tenant, such as
special stairs or elevators.

1.3 Common Areas. Tenant shall have the nonexclusive right (in common with other
tenants or occupants of the Building, Landlord and all others to whom Landlord
has granted or may hereafter grant such rights) to use the Common Areas, subject
to the Rules and Regulations (as defined in Section 6.12 below). Landlord may at
any time close temporarily any Common Areas to make repairs or changes therein
or to effect construction, repairs, or changes within the Building, or to
prevent the acquisition of public rights in such areas, or to discourage parking
by parties other than tenants, and may do such other acts in and to the Common
Areas as in its judgment may be desirable. Landlord may from

 

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time to time permit limited portions of the Common Areas to be used exclusively
by specified tenants so long as such use does not unreasonably impact or
interfere with Tenant’s access to or use of the Premises or demonstrably
increase its costs or otherwise unreasonably reduce its rights hereunder.
Landlord may also, from time to time, place or permit customer service and
information booths, kiosks, stalls, push carts and other merchandising
facilities in the Common Areas. All rents and revenues received by Landlord for
the use of the Common Areas shall be applied as an offset against Operating
Costs. “Common Areas” shall mean any of the following or similar items (a) to
the extent included in the Building the total square footage of areas of the
Building devoted to nonexclusive uses such as ground floor lobbies, seating
areas and elevator foyers; fire vestibules; mechanical areas; restrooms and
corridors on all floors (other than on full floors within the Premises);
elevator foyers and lobbies on multi-tenant floors; electrical and janitorial
closets; telephone and equipment rooms; and other similar facilities maintained
for the benefit of Building tenants and invitees, but shall not mean Major
Vertical Penetrations; and (b) all parking garage vestibules; restrooms; loading
docks; locker rooms, exercise and conference facilities available for use by
Building tenants (if any); walkways, roadways and sidewalks; trash areas;
mechanical areas; landscaped areas including courtyards, plazas and patios; and
other similar facilities maintained for the benefit of Building tenants and
invitees.

1.4 Calculation of Net Rentable Area. The term “Net Rentable Area” as used in
this Lease shall mean the area or areas of space within the Building determined
by Landlord from time to time in accordance with Landlord’s customary formula
for measuring rentable area within the Building, which starts with the useable
area calculated under the “Standard Method for Measuring Floor Area in Office
Buildings, ANSI Z65.1-1996” and adds a load factor of fourteen percent (14%) for
single tenant floors and twenty-two percent (22%) for multi-tenant floors to
allocate to the Premises a portion of the common areas and service areas of the
Building. Landlord and Tenant hereby confirm and stipulate that the number of
square feet of Net Rentable Area for the Premises initially leased by Tenant
pursuant to this Lease (i) is as set forth in the Basic Lease Information Sheet,
(ii) has been calculated in accordance with Landlord’s standard rentable area
measurement standards used for the Building, and (iii) is not subject to
remeasurement, adjustment or modification, and accordingly, there shall be no
modification or adjustment of the Base Rent, Tenant’s Proportionate Share, the
Cash Allowance (if any) or any other dollar amounts set forth in this Lease
which are based upon square footage.

1.5 Lead Tenant Rights. Landlord and Tenant acknowledge that due to the size of
the Premises, Landlord has granted Tenant certain rights that would not
otherwise be available to lesser tenants in the Building including Tenant’s
Expansion Option and Tenant’s rights with respect to the name of the Building
under Section 5.9 (the “Lead Tenant Rights”). Notwithstanding anything to the
contrary in this Lease, the Lead Tenant Rights shall only be effective so long
as Tenant satisfies the following “Minimum Occupancy Requirement” : Tenant must
lease and occupy at least one hundred fifty thousand (150,000) square feet of
Net Rentable Area under this Lease provided that, for purposes of determining
whether Tenant satisfies the Minimum Occupancy Requirement, up to two (2) full
floors of subleased space within the Premises shall be treated as “occupied” by
Tenant. If at any time during the Term or any Extension Term Tenant ceases to
satisfy the Minimum Occupancy Requirement, Landlord may, by written notice
delivered to Tenant at any time thereafter, permanently revoke the Lead Tenant
Rights in Landlord’s sole discretion and the Lead Tenant Rights shall terminate
and be of no further force or effect unless Tenant again satisfies the Minimum
Occupancy Requirement within thirty (30) days after delivery of such notice.

ARTICLE 2

Term, Use of Premises. Base Rent and Option to Contract

2.1 Term.

(a) Initial Term. This Lease shall be effective and binding upon the parties in
accordance with its terms upon mutual execution. Except as otherwise provided
herein, the term “Term

 

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Commencement Date” shall mean the last Floor Commencement Date (as defined
below) for the Initial Premises (if the last Floor Commencement Date occurs on
the first day of a calendar month) and otherwise means the first day of the
first calendar month that commences after the last Floor Commencement Date.
“Initial Term” of this Lease shall mean the number of years set forth in the
Basic Lease Information Sheet as Item 10, commencing on the Term Commencement
Date through and including the Expiration Date. “Expiration Date” shall mean the
last day of the Term or such earlier date upon which this Lease is terminated
pursuant to the terms hereof.

The “Floor Commencement Date” for any floor of the Premises shall be the earlier
of (a) the date that is four (4) months after the date on which Landlord
delivers possession of such floor to Tenant in the condition required hereunder
(the “Delivery Date”), or (b) the date on which Tenant takes occupancy of such
floor. Landlord may deliver the floors at different times, but each time shall
deliver possession of all of the Net Rentable Area included on at least (2) full
floors provided that access to the final increment of the each set of floors of
Initial Premises may be less than two (2) floors.

Landlord and Tenant shall each work in good faith to facilitate Tenant’s
occupancy of the entire Premises as soon as reasonably possible after the date
of this Lease. Landlord shall use good faith efforts to keep Tenant informed as
to the anticipated delivery schedule for each floor including the steps taken to
relocate any existing tenants or to evict any holdover tenants. Landlord shall
use diligent and commercially reasonable efforts to cause the Delivery Date for
each increment of the Initial Premises to take place according to the following
schedule (the “Scheduled Delivery Dates”):

 

Floors

  

Scheduled Delivery Date

Floors 10 - 17    August 1, 2006 Floors 8, 9, 47    December 1, 2006 Floors 27
- 31    June 30, 2007

If any tenant currently occupying any portion of the Premises does not vacate
such space upon termination of its lease then Landlord shall promptly take and
shall diligently pursue all necessary legal action to gain possession of such
space. Landlord needs to relocate tenants prior to delivering portions of the
Premises to Tenant, Landlord shall use commercially reasonable and diligent
efforts to enforce its rights to relocated the tenants pursuant to the terms of
their leases.

(b) Extension Terms. Provided that an uncured Event of Default does not exist at
the time of exercise, Tenant shall have two (2) consecutive options (each an
“Extension Option”) to extend the Term of this Lease with respect to whole
floors of the Premises comprising at least one hundred fifty thousand
(150,000) square feet of Net Rentable Area for the number of years set forth in
the Basic Lease Information Sheet as “Extension Terms” in Item 10, commencing on
the day after the expiration of the Initial Term or the first Extension Term (as
applicable), subject to all of the terms and conditions of this Lease, except
that Base Rent shall be adjusted as provided in Section 2.6(b) below. If an
uncured Event of Default exists at the time Tenant exercises an Extension
Option, then Landlord shall, in its sole discretion, have the right to cancel
the Extension Option until such Event of Default is cured. Tenant shall provide
Landlord with irrevocable written notice of Tenant’s intent to exercise the
Extension Option specifying the portion of the Premises for which the Expansion
Option is being exercised no later than fourteen (14) months prior to the
expiration of the Initial Term or the first Extension Term (as applicable). If
Tenant does not exercise its Extension Option by such date, at any time
thereafter Landlord may notify Tenant in writing that Tenant has missed the
deadline for exercising the Extension Option and Tenant shall have a period
often (10) days after the effective date of such notice within which to exercise
the Extension Option. If Landlord delivers such notice and Tenant does not
deliver a notice of exercise by such date then the Extension Option shall
immediately terminate and be of no further force or effect and this Lease shall
terminate on the scheduled Expiration Date. If Landlord does not deliver such

 

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notice then Tenant may exercise the Expansion Option no later than eight
(8) months prior to the expiration of the Initial Term or the first Extension
Term (as applicable) and if Tenant does not deliver a notice of exercise within
such time period then the Extension Option shall immediately terminate and be of
no further force or effect and this Lease shall terminate on the scheduled
Expiration Date. If Tenant does not exercise the first Extension Option then the
second Extension Option shall immediately terminate and be of no further force
or effect. The Extension Options shall be personal to Tenant, and may not be
exercised by any Transferee (other than a Qualified Transferee under Section 8
below who takes an assignment of all of Tenant’s rights under this Lease) or for
the benefit of any Transferee (other than a Qualified Transferee under Section 8
below who takes an assignment of all of Tenant’s rights under this Lease and
subtenants of up to two (2) floors of the Premises) without Landlord prior
written consent. Landlord shall not pay any broker’s fees or commission on any
renewal or extension of Tenant’s tenancy by virtue of any agreements made by
Tenant. As used herein the “Term” shall mean the Initial Term and each Extension
Term if validly exercised.

2.2 Delay in Delivery. If the Delivery Date for any floor of the Initial
Premises does not occur on or before the Scheduled Delivery Date identified in
Section 2.l(a), then Landlord shall pay Tenant a penalty for such delay in the
amount set forth in the table set forth below. The Scheduled Delivery Dates
shall be extended on a day for day basis for Force Majeure (as defined in
Section 14.20 below) and delays caused by Tenant. The penalty amount shall be
prorated on a daily basis. Any penalty due from Landlord under this Section 2.2
shall be offset against the first Rent due and payable for that floor.

The parties acknowledge that the actual damages to Tenant caused by late
delivery are difficult to estimate, Landlord and Tenant agree that the penalties
under this Section 2.2 constitute a fair and reasonable estimate of the damage
Tenant is likely to suffer and agree that the sums set forth here shall be
liquidated damages and Tenant shall have no other remedy hereunder nor claim for
damages of any other kind against Landlord as a result of Landlord’s failure to
deliver any portion of the Premises to Tenant in a timely manner.

 

Target Delivery Date

  

Landlord’s Penalty (shaded)

  

Floors 10 - 17

  

Floors 8 - 9, 47

  

Floors 27 - 31

August 1, 2006 –
September 30, 2006    None    Not applicable    Not applicable October 1, 2006 –
November 30, 2006    $0.25 per square foot per month    Not applicable    Not
applicable December 1, 2006 –
June 30, 2007    $0.50 per square foot per month    Not applicable    Not
applicable July 1, 2007 –
August 31, 2007    $0.75 per square foot per month    Not applicable    $2.00
per square foot per month September 1, 2007 –
September 30, 2008    $1.00 per square foot per month    Not applicable    $2.00
per square foot per month February 1, 2007 –
August 31,2007    Not applicable    $0.25 per square foot per month    Not
applicable September 1, 2007 –
October 31,2007    Not applicable    $0.75 per square foot per month    Not
applicable November 1, 2007 –
November 30, 2008    Not applicable    $1.00 per square foot per month    Not
applicable

 

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2.3 Confirmation. When each Floor Commencement Date and the actual Term
Commencement Date are determined, Tenant shall, within ten (10) Business Days
after receipt thereof, execute and return to Landlord a Rent/Lease Commencement
Certificate in the form of Exhibit E attached hereto, or any similar form
requested by Landlord, confirming the information thereon.

2.4 Use. Subject to the restrictions set forth in Section 7.1, Tenant shall use
the Premises solely for executive, professional, corporate or administrative
offices and any ancillary purposes reasonably related to office use and a
cafeteria and other purposes supporting Tenant’s general office use (the
“Permitted Use”) and for no other use or purpose. Notwithstanding the foregoing,
for the purpose of limiting the type of use permitted by Tenant, or any party
claiming through Tenant, but without limiting Landlord’s right to lease any
portion of the Building to a tenant of Landlord’s choice, the Permitted Use
shall not include: (a) offices of any agency or bureau of the United States or
any state or political subdivision thereof; (b) offices or agencies of any
foreign government or political subdivision thereof; (c) offices of any health
care professionals or service organization, except for administrative offices
where no diagnostic, treatment or laboratory services are performed; (d) schools
or other training facilities that are not ancillary to executive, professional
or corporate administrative office use; (e) retail or restaurant uses;
(f) broadcast studios or other broadcast production facilities, such as radio
and/or television stations; (g) product display or demonstration facilities
except for Tenant’s internal purposes and not for use by the general public;
(h) personnel agencies, except offices of executive search firms; (i) the right
to install or operate any automatic teller or banking machine anywhere in the
Building; or (j) on floors 1-5 of the Building only, any bank including any
national bank, state bank, federal savings and loan association, state savings
and loan association, mutual savings bank, bank holding company, foreign bank
and any other similar banking institution (a “Bank”).

2.5 Payments by Tenant. As used herein, the term “Rent” shall include Base Rent,
Operating Costs (as defined in Article 4 below) and all other sums payable by
Tenant to Landlord. Tenant shall pay Rent at the times and in the manner herein
provided. All obligations of Tenant hereunder to make payments to Landlord shall
constitute Rent and failure to pay the same when due shall give rise to all of
the rights and remedies provided herein.

2.6 Payment of Base Rent.

(a) General. Tenant’s obligation to pay Rent and its other obligations under
this Lease shall commence for each floor of the Premises upon the Floor
Commencement Date for such floor (except as expressly otherwise provided herein
with respect to obligations arising earlier). The annual increases in Base Rent
for all floors shall occur on the annual anniversary of the first Floor
Commencement Date. Tenant shall pay the Base Rent in the amounts set forth in
the Basic Lease Information Sheet as Item 11 (as the same may be adjusted from
time to time hereunder) in advance on or before the first day of each calendar
month during the Term and any extensions or renewals thereof. All payments of
Rent due under this Lease shall be payable in advance, without demand (except as
specifically provided herein) and without reduction, abatement, counterclaim or
setoff (except as specifically provided herein), at the address specified in the
Basic Lease Information Sheet as Item 6, or at such other address as may be
designated by Landlord.

(b) Adjustment of Base Rent. If Tenant exercises an Extension Option under
Section 2.1(b), the Base Rent for the Extension Term for the Floor(s) to which
the Extension Option applies shall be equal to ninety-five percent (95%) of the
Fair Market Rent (as defined in Section 2.6(c) below) for such floor based on a
five (5) year term to begin on the first day of each Extension Term (the
“Adjustment Date”) but in no event less than the Base Rent for the lower floors
in the Premises in effect on the last day of the Initial Term or the first
Extension Term, as applicable.

(c) Definition of Fair Market Rent. “Fair Market Rent” as of any date shall mean
the rate being charged during the preceding six (6) month period by direct
landlords (including

 

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Landlord), in nonsublease, nonassignment, nonequity, nonexpansion lease
transactions, for comparable space with comparable quality construction in the
Building and comparable quality class A office buildings in the Seattle central
business district with comparable systems, services and amenities, taking into
consideration: location in the Building or other building, the quantity and
quality of tenant improvements or allowances existing or to be provided versus
the amounts offered by Landlord, proposed term of lease, extent of service
provided or to be provided, the time the particular rate under consideration
became or is to become effective and any other relevant terms, conditions or
concessions but excluding brokerage commissions.

(i) Landlord’s Determination. Fair Market Rent as of any Adjustment Date shall
be determined by Landlord with written notice given to Tenant not later than one
hundred twenty (120) days prior to the Adjustment Date, subject to arbitration
pursuant to the provisions of Section 2.6(c)(ii). Failure on the part of
Landlord to give such notice in a timely manner shall not vitiate the right to
require adjustment of Base Rent or delay the effective date of the adjustment in
Base Rent. If Tenant disputes the amount claimed by Landlord as Fair Market
Rent, the parties shall attempt to agree on Fair Market Rent within thirty
(30) days thereafter. If such dispute is not resolved by mutual agreement, then
either party may submit the issue to arbitration based on each party’s final
proposal as to Fair Market Rent submitted in writing to the other party prior to
the end of the negotiation period (each a “Submission”). Should the arbitration
not be concluded prior to the Adjustment Date, Tenant shall pay Rent to Landlord
after the Adjustment Date, including Base Rent adjusted to reflect Fair Market
Rent as Landlord has so determined. If the amount of Fair Market Rent as
determined by arbitration is greater than or less than Landlord’s determination,
then any adjustment required to correct the amount previously paid shall be made
by payment by the appropriate party within ten (10) days after such
determination of Fair Market Rent.

(ii) Arbitration of Fair Market Rent. The award rendered in any such arbitration
may be entered in any court having jurisdiction and shall be final and binding
between the parties. The arbitration shall be conducted and determined in the
City of Seattle, Washington, in accord with the then-prevailing commercial
arbitration rules of the American Arbitration Association or its successor for
arbitration of commercial disputes except that the procedures mandated by said
rules shall be modified as follows:

(A) If the parties are unable to reach an agreement on Fair Market Rent during
the period specified in Section 2.6(c)(i), the party demanding arbitration in
its demand shall specify the name and address of the person to act as the
arbitrator on its behalf. Each arbitrator hereunder shall be qualified as a real
estate appraiser with at least five (5) years experience appraising first-class
commercial office space in the Seattle central business district who would
qualify as an expert witness over objection to give testimony addressed to the
issue in a court of competent jurisdiction. Within ten (10) Business Days after
receipt of a demand for arbitration, the recipient shall give notice to the
other party specifying the name and address of the person to act as the
arbitrator on its behalf. If the recipient fails to notify the other party of
the appointment of its arbitrator, within or by the time above specified, then
the arbitrator appointed by the other party shall be the arbitrator to determine
the issue. When the arbitrator(s) have been selected, the parties shall deliver
to the arbitrator(s) a copy of each party’s Submission.

(B) If two (2) arbitrators are chosen pursuant to the preceding Section, the
arbitrators so chosen shall meet within ten (10) Business Days after the second
arbitrator is appointed and, if within ten (10) Business Days after such first
meeting the two arbitrators have not agreed upon a determination of Fair Market
Rent, they shall appoint a third arbitrator, who shall be a competent and
impartial person with qualifications similar to those required of the first two
arbitrators. If they are unable to agree upon such appointment within five (5)
Business Days after expiration of said ten (10) Business Day period, the third
arbitrator shall be selected by the parties themselves if they can agree
thereon, within a further period of ten (10) Business Days. If the parties do
not so agree, then either party,

 

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on behalf of both, may request appointment of such a qualified person by a court
of the State of Washington sitting in King County pursuant to RCW 7.04.050.
Request for appointment shall be made in writing with a copy given to the other
party. Each party agrees that said court shall have the power to make the
appointment, provided, however, if the court does not make a determination
within ten (10) days of request by either party for the appointment of a third
arbitrator, appointment of such third arbitrator shall be made in accordance
with the selection procedure of the commercial arbitration rules of the American
Arbitration Association or its successor for arbitration of commercial disputes.
The three (3) arbitrators shall decide the dispute, if it has not previously
been resolved, by following the procedure set forth below.

(C) The arbitrator selected by each of the parties shall state in writing his
determination of which Submission properly reflects the Fair Market Rent,
supported by the reasons therefor, and shall deliver a copy to each party. The
arbitrators shall arrange for a simultaneous exchange of such proposed
resolutions. The role of the third arbitrator shall be to select which of the
two (2) Submissions most closely approximates his determination of Fair Market
Rent. The third arbitrator shall have no right to propose a middle ground or any
modification of either of the Submissions. The resolution he chooses as most
closely approximating his determination of Fair Market Rent shall constitute the
decision of the arbitrators and shall be final and binding upon the parties.

(D) If any arbitrator fails, refuses or is unable to act, his successor shall be
appointed by him, but in the case of the third arbitrator, his successor shall
be appointed in the same manner as provided for appointment of the third
arbitrator. The arbitrators shall attempt to decide the issue within ten
(10) Business Days after the appointment of the third arbitrator. Any decision
in which the arbitrator appointed by Landlord and the arbitrator appointed by
Tenant concur shall be binding and conclusive upon the parties. Each party shall
pay the fees and costs of its own counsel and other consultants. The losing
party shall pay the fees and costs of the arbitrators and of the expert
witnesses (if any) of the prevailing party as well as those of its expert
witnesses. For purposes hereof, the losing party shall be that party whose
selected arbitrator’s statement of Fair Market Rent was not selected by the
third arbitrator.

(E) The arbitrators shall have the right to consult experts and competent
authorities with factual information or evidence pertaining to a determination
of Fair Market Rent, but any such consultation shall be made in the presence of
both parties with full right on their part to cross-examine. The arbitrators
shall render their decision and award in writing and shall deliver copies to
each party. The arbitrators shall have no power to modify the provisions of this
Lease.

2.7 Partial Months. If the Term Commencement Date occurs on other than the first
day of a calendar month, then Base Rent and Operating Costs for such partial
calendar month shall be prorated based on the actual number of days in the month
and the prorated installment shall be paid on the Term Commencement Date
together with any other amounts payable on that day. If the Expiration Date
occurs on other than the last day of a calendar month, then Base Rent and
Operating Costs for such partial calendar month shall be prorated based on the
actual number of days in the month and the prorated installment shall be paid on
the first day of the calendar month in which the Expiration Date occurs.

2.8 Option to Contract. Landlord hereby grants to Tenant an option to partially
terminate this Lease (the “Option to Contract”) with respect to Floor 16 and
Floor 17 (the “Contraction Space”). Tenant may elect to exercise the Option To
Contract effective as of the first day of either the sixty-first (61st) or
ninety-first (91st) month after the Term Commencement Date (each a “Contraction
Date”) on the terms and conditions set forth herein. If Tenant desires to
exercise its Option to Contract, Tenant shall deliver irrevocable written notice
to Landlord no less than twelve (12) months prior to the selected Contraction
Date and such notice shall be effective so long as no uncured Event of Default
exists at the time of exercise or on the selected Contraction Date. At the time
Tenant provides its notice, Tenant shall pay Landlord a termination fee in an
amount equal to the Unamortized Lease Costs (as defined below)

 

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plus, (a) if the Contraction Date is the last day of the sixty-first
(61st) month after the Term Commencement Date, an amount equal to six (6) months
of Base Rent and Tenant’s Proportionate Share of Operating Costs, or, (b) if the
Contraction Date is the last day of the ninety-first (91st) month after the Term
Commencement Date, an amount equal to four (4) months of Base Rent and Tenant’s
Proportionate Share of Operating Costs. As used herein, “Unamortized Lease
Costs” shall mean all unamortized out-of-pocket costs incurred by Landlord to
finalize this Lease, including Broker’s commissions, the Cash Allowance paid
with respect to the Initial Premises, and legal fees, amortized on a
straight-line basis over the Initial Term at an interest rate equal to 9.94% per
annum which amount shall be divided by the Net Rentable Area of the Initial
Premises and the per square foot number shall be multiplied by the number of
square feet in the Contraction Space. If such payment is not made in a timely
manner or if Tenant does not vacate the Contraction Space in a timely manner
then Landlord may elect in its sole discretion to revoke Tenant’s Option to
Contract and the size of the Premises shall not be adjusted, or Landlord may
elect to pursue any other remedy available for such breach. If Tenant exercises
its Option to Contract under this Section, Tenant’s Proportionate Share shall be
adjusted and upon Landlord’s request, Tenant shall execute an amendment to this
Lease or other written confirmation documenting the new Net Rentable Area in the
Premises and Tenant’s revised Proportionate Share.

ARTICLE 3

Security Deposit

Intentionally Omitted.

ARTICLE 4

Payment of Operating Costs

4.1 Net Lease. This is a net lease. Except as otherwise provided herein, Base
Rent shall be paid to Landlord absolutely net of all costs and expenses. The
provisions of this Article 4 for payment of Operating Costs by means of periodic
payment of Tenant’s Proportionate Share (as defined in Section 4.3) of Estimated
Operating Costs (as defined in Section 4.2) and the Operating Costs Adjustment
(as defined in Section 4.6) are intended to pass on to Tenant and reimburse
Landlord for Tenant’s Proportionate Share of all costs and expenses of the
nature described in Section 4.4.

4.2 Estimated Payments. Tenant shall pay Tenant’s Proportionate Share of
Estimated Operating Costs in advance on or before the first day of each calendar
month during the Term and any extensions or renewals thereof. “Estimated
Operating Costs” for any calendar month shall mean Landlord’s estimate of
Operating Costs for the calendar year within which such month falls, divided
into twelve (12) equal monthly installments. Landlord shall provide Tenant with
a statement setting forth the Estimated Operating Costs and Tenant’s
Proportionate Share thereof within a reasonable period of time before the first
Floor Commencement Date and within a reasonable period of time after the
commencement of each calendar year thereafter. Landlord may adjust such estimate
from time to time once during such calendar year by written notice. Until a new
statement of Estimated Operating Costs is received Tenant shall continue to make
the monthly payment of Estimated Operating Costs applicable to the prior year.
The monthly charge for estimated Operating Costs shall be prorated for any
partial month by dividing the Estimated Operating Costs by three hundred
sixty-five (365) and multiplying the result by the number of days in the partial
month for which Operating Costs are owed.

4.3 Tenant’s Proportionate Share. “Tenant’s Proportionate Share” shall be
calculated by Landlord for each calendar year of the Term and shall mean a
percentage equal to the Net Rentable Area of the Premises divided by the greater
of (a) ninety-five percent (95%) of the total Net Rentable Area in the Building
leased or held for lease, or (b) the Net Rentable Area of the Building actually
leased to tenants. As of the date of this Lease, Tenant’s Proportionate Share is
estimated to be the percentage set forth in the Basic Lease Information Sheet as
Item 8.

 

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4.4 Operating Costs. “Operating Costs” shall mean all expenses and costs (but
not specific costs that are separately billed to and paid by specific tenants)
of every kind and nature that Landlord shall pay or incur or become obligated to
pay or incur (including, without limitation, costs incurred by managers and
agents that are reimbursed by Landlord) because of or in connection with the
management, repair, maintenance, replacement, preservation, ownership, and
operation of the Building and any supporting facilities directly serving the
Building (as allocated to the Building in accordance with standard accounting
practices, consistently applied). Operating Costs shall include, but not be
limited to the following types of expenses:

(a) Wages, salaries, reimbursable expenses and benefits of all on-site personnel
and an allocable share of those expenses for off-site personnel engaged in the
operation, repair, maintenance and security of the Building and the direct costs
of training such employees. To the extent any employee is not working solely on
the Project, the compensation of such employee shall be prorated so that it is
proportionate to the time spent on the Project.

(b) Costs (including allocated rental) for the on-site property management
office and office operation and an allocable share of those expenses for
Landlord’s off-site property management office; costs of operating exercise
facilities in the Building, if any, available for use by tenants, including the
cost of acquiring or leasing equipment therein; and costs of operating any
conference facilities in the Building, if any, available for use by tenants,
including the cost of acquiring or leasing equipment therein (less revenues
received in connection with the use thereof).

(c) All supplies, materials, furniture and rental equipment used in the
operation and maintenance of the Building, including, without limitation, the
cost of erecting, maintaining and dismantling art work and similar decorative
displays commensurate with operation of a Class A office project.

(d) Utilities, including, without limitation, water, gas, power, sewer, waste
disposal, communication and cable television facilities, heating, cooling,
lighting and ventilation of the Building.

(e) All maintenance, extended warranties (amortized over the period of such
warranty), janitorial and service agreements for the Building and the equipment
therein, including, but not limited to, alarm service, window cleaning, elevator
maintenance, and maintenance and repair of the Building and all Building
Components.

(f) A management fee equal to three percent (3%) of all revenue (excluding such
management fee) derived from the Building, including without limitation, all
Rent hereunder, all rent and other payments derived from other tenants in the
Building, parking revenues and other revenues derived from licenses of any other
part of or right in the Building.

(g) Legal and accounting services for the Building, including, but not limited
to, the costs of audits by certified public accountants of Operating Costs
records; provided, however, that Operating Costs shall not include legal fees
related to (i) negotiating lease terms for prospective tenants, (ii) negotiating
termination or extension of leases with existing tenants, or (iii) proceedings
by or against tenants.

(h) All insurance premiums and costs, including but not limited to, the premiums
and cost of fire, casualty, liability, rental abatement or interruption and
earthquake insurance applicable to the Building and Landlord’s personal property
used in connection therewith (and all amounts paid as a result of loss sustained
that would be covered by such policies but for “deductible” or self-insurance
provisions); provided, however, that (A) (except for earthquake and terrorism
coverage) the deductible or self-insured retention shall not exceed one hundred
thousand dollars ($100,000) per occurrence (provided that this maximum
deductible shall be adjusted over time to reflect increases in the CPI Index (as
defined below), and (B) the deductible or self-insured retention for earthquake
and terrorism coverage (or any other coverage for which deductibles are commonly
stated as a percentage of value or are otherwise

 

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higher than normal casualty coverage limits) shall not exceed ten percent
(10%) of Operating Costs in any calendar year. If any deductible or self-insured
retention described in clause (B) is not fully recouped in the year in which the
insured event occurs, the balance of the deductible shall be included in
Operating Costs in subsequent years provided that the maximum pass through in
any year shall not exceed ten percent (10%) of Operating Costs for that year and
in no event shall the deductible for any occurrence be passed through for more
than five (5) years.

(i) Repairs, replacements and general maintenance of the Building (except for
repairs and replacements (x) paid for from the proceeds of insurance or
warranties, or (y) paid for directly by Tenant, other tenants or any third
party).

(j) All real and personal property taxes, assessments, local improvement or
special benefit district charges and other governmental charges, special and
general, known and unknown, foreseen and unforeseen, of every kind and nature
whatsoever (i) attributable to the Real Property or the Building or levied,
assessed or imposed on, the Real Property or the Building, or any portion
thereof, or interest therein; (ii) attributable to or levied upon Landlord’s
personal property located in and used in connection with the Building;
(iii) surcharges and all local improvement or special benefit and other
assessments levied with respect to the Building, the Real Property, and all
other property of Landlord used in connection with the operation of the
Building; (iv) any taxes levied or assessed in lieu of, in whole or in part, or
in addition to such real or personal property taxes; (including, but not limited
to, leasehold taxes, business and occupation taxes and taxes or license fees
upon or measured by the leasing of the Building or the rents or other income
collected therefrom (vi) any and all reasonable costs, expenses and attorneys’
fees paid or incurred by Landlord in connection with any proceeding or action to
contest in whole or in part, formally or informally, the imposition, collection
or validity of any of the foregoing taxes, assessments, charges or fee
(collectively, “Real Property Taxes”). If by law any Real Property Taxes may be
paid in installments at the option of the taxpayer, then Landlord shall include
within Real Property Taxes for any year only those installments (including
interest, if any) which would become due by exercise of such option and shall
pay Real Property Taxes over the longest period of time permitted by applicable
law without interest. Real Property Taxes shall not include (x) inheritance or
estate taxes imposed upon or assessed against the Building, or any part thereof
or interest therein, or (y) federal or state income taxes computed upon the
basis of the Landlord’s net income.

(k) Amortization (together with reasonable financing charges) of capital
improvements made to the Building (i) to comply with the requirements of law,
ordinance rule or regulation first applied to the Building after the date of
this Lease, (ii) to replace items which Landlord would be obligated to maintain
under this Lease; or (iii) to improve the operating efficiency or reduce
Operating Costs of the Building if Landlord reasonably believes the amortized
cost will approximate the cost savings over the useful life of the item in
question. As used in this Section, “amortization” shall mean allocation of the
cost equally to each year of useful life of the items being amortized as
reasonably determined by Landlord. Notwithstanding the foregoing, however,
Landlord may treat as expenses (chargeable in the year incurred), and not as
capital costs, items that on a cumulative basis are less than two percent
(2%) of Estimated Operating Costs for the year in question.

(l) All charges of any kind and nature imposed, levied, assessed, charged or
collected by any governmental authority or other entity either directly or
indirectly (i) for or in connection with public improvements, user, maintenance
or development fees, transit, parking, housing, employment, police, fire, open
space, streets, sidewalks, utilities, job training, child care or other
governmental services or benefits, (ii) for environmental matters or as a result
of the imposition of mitigation measures, including compliance with any
transportation management plan, or fees, charges or assessments as a result of
the treatment of the Building, or any portion thereof or interest therein, as a
source of pollution or storm water runoff.

Notwithstanding the foregoing, Operating Costs shall not include:

(i) rental on ground leases or other underlying leases and the costs of
providing same;

 

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(ii) wages, bonuses, fringe benefits and other compensation of employees above
the grade of senior property manager;

(iii) cost of any HVAC, janitorial or other services provided to tenants on an
extra cost basis after Normal Office Hours;

(iv) charitable or political contributions;

(v) noncash items such as depreciation, and amortization or expenditures which
under generally accepted accounting principles are capital expenses, except as
permitted under Section 4.4(k) (including the rental of any items that, were
they purchased, would have been capital expenses);

(vi) all costs and expenses relating to any portion of the Building exclusively
used for purposes other than office purposes or other than Common Areas serving
office tenants;

(vii) federal, state, county or municipal taxes imposed on the income of
Landlord or revenue of Landlord from the operation of the Building, except to
the extent such taxes are imposed in lieu of ad valorem property taxes,
provided, however, that any business and occupancy taxes incurred as a result of
managing the Building shall be recoverable operating expenses;

(viii) the cost of repairs, replacements or other work occasioned by fire,
windstorm or other casualty, to the extent such are actually reimbursed through
insurance proceeds;

(ix) the cost of repairs, replacements or other work occasioned by the exercise
of eminent domain;

(x) leasing commissions, attorneys’ fees, costs, disbursements and other
expenses incurred directly in connection with solicitation of and negotiation
for leases with tenants, other occupants or prospective tenants or other
occupants of the Building, or similar costs incurred in connection with disputes
with tenants, other occupants, or prospective tenants or other occupancy of the
Building;

(xi) all “tenant allowances”, “tenant concessions” and other costs or expenses
incurred in completing, fixturing, furnishing, renovating or otherwise
improving, decorating or redecorating tenant space for tenants or other
occupants of the Building, or vacant lease space in the Building including space
planning fees;

(xii) all items, utilities and services (or portion thereof) for which Tenant or
any other tenant or occupant of the Building specifically reimburses Landlord;

(xiii) except for the management fee permitted under Section 4.4(f), any
overhead or profit increments to any subsidiary or affiliate of Landlord for
services on or to the Building and/or the Real Property, to the extent that the
costs of such services materially exceed competitive costs for services of
comparable scope and quality rendered by persons or entities of similar skill,
competence and experience, other than a subsidiary or affiliate of Landlord;

(xiv) payment of principal, finance charges or interest on debt or amortization
on any mortgage or other debt or any penalties assessed as a result of
Landlord’s late payments of such amounts;

(xv) any compensation paid to clerks, attendants or other persons in commercial,
for-profit concessions, if any, operated by Landlord or any subsidiary or
affiliate of Landlord;

(xvi) any costs incurred in installing, operating, maintaining or owning any
specialty equipment or facilities not necessary for Landlord’s operation,
repair, maintenance of the Building or to provide required services for the
Building and/or any associated parking facilities, including, but not limited
to, any observatory, broadcasting facility (other than the Building’s music
system, life support

 

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security systems, and other systems integral to the management of the Building),
luncheon club, etc, with the exception of a Building conference room and
helipad/deck, to the extent provided and made available to all tenants in the
Building except that this exclusion shall not apply to any specialty equipment
or facility that is required to be provided by any agency with jurisdiction over
the Building and which is made available to all tenants in the Building and
furthermore, to the extent an item of specialty equipment or facility becomes
desirable in the market and Landlord presents such specialty equipment or
facility to Tenant for its approval and Tenant grants such approval, the costs
related to such specialty equipment or facility shall be deemed recoverable
Operating Costs;

(xvii) any costs or expenses incurred with respect to the purchase, ownership,
leasing, for sculpture, paintings, or other works of art, except the cost of
maintaining and insuring works of art that are in Landlord’s opinion integral to
the Building or required by any agency with jurisdiction over the Building and
except for holiday decorations all of which shall be included in Operating
Costs;

(xviii) contributions to Operating Cost reserves;

(xix) all expenses directly resulting from the Landlord’s failure to act in
accordance with the ordinary and customary standard of care followed by
commercial property owners or the willful misconduct of the Landlord, its
agents, servants or other employees or any breach of any tenant’s lease by
Landlord; (xx) all bad debt loss, rent loss, or reserve for bad debt or rent
loss;

(xxi) all costs and expenses associated with the operation of the business of
the entity which constitutes Landlord as the same are distinguished from the
costs of operation of the Building, including accounting and legal matters,
costs of defending any lawsuits with any Senior Party (as defined below), costs
of selling, syndicating, financing, mortgaging or hypothecating any of the
Landlord’s interest in the Building, costs of any disputes between Landlord and
its employees (if any) not engaged in Building operation, disputes of Landlord
with Building management, or fees or costs paid in connection with such
disputes;

(xxii) if separate fees are charged for parking, salaries and wages and other
compensation related to operation of the Garage, as well as normal operating
expenses related to operation of the Garage (other than Real Property Taxes);

(xxiii) any costs in connection with services (including electricity), items or
other benefits of a type or quantity which are not standard for the Building and
which are not available to Tenant without specific charge therefore, but which
are provided to another tenant or occupant of the Building, whether or not such
other tenant or occupant is specifically charged therefore by Landlord;

(xxiv) any liabilities, costs or expenses associated with or incurred in
connection with the removal, enclosure, encapsulation or other handling of
asbestos and the cost of defending against claims in regard to the existence or
release of asbestos at the Building;

(xxv) increases in insurance or Real Property Taxes specifically identifiable as
due to any other tenant of the Building;

(xxvi) charges for electricity, water, or other utilities, services or goods and
applicable taxes that any tenant, occupant, person or other party pays directly
to the utility or reimburses Landlord except as part of the general
reimbursement of Operating Costs;

(xxvii) cost of any work or services performed for any facility other than the
Building;

(xxviii) Landlord’s general overhead and any other expense not attributable to
operation and management of the Building (e.g., the activities of Landlord’s
officers and executives);

(xxix) cost of initial cleaning, asbestos removal and abatement and rubbish
removal from the Premises to be performed before delivery of the Premises to
Tenant;

 

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(xxx) any fees, costs or expenditures incurred in connection with negotiations,
disputes and claims of other tenants or occupants of the Building;

(xxxi) costs and expenses (including fines and penalties) incurred in connection
with remedying, contesting or settling any claimed violation of law or
requirements of law as applied to and enforced against the Building as of the
date hereof;

(xxxii) any costs for balloons, flowers or other gifts in excess of reasonable
amounts;

(xxxiii) any liabilities, costs or expenses associated with or incurred in
connection with the removal, enclosure, encapsulation or other handling of
asbestos or other Hazardous Materials (as defined below) and the cost of
defending against claims in regard to the existence or release of Hazardous
Materials at the Building, provided that this exclusion shall not apply to any
liabilities, costs or expenses incurred to comply with Applicable Laws with
respect to Hazardous Materials used in operation of the Building, including but
not limited to cleaning supplies, batteries, lighting, construction materials
and computers and for maintenance and repairs if such Hazardous Materials are
used in compliance with Applicable Laws;

(xxxiv) costs incurred as a result of Landlord’s breach of any contract to which
it is a party except to the extent the breach occurs in Landlord’s good faith
belief that it is acting in the interest of the Building tenants in the exercise
of customary property management practices;

(xxxv) all other items for which another party compensates or pays (other than
as part of Operating Costs) so that Landlord shall not recover any item of cost
more than once; and

(xxxvi) any fines or penalties incurred by Landlord as a result of violations of
applicable Laws not in effect as of the date hereof except to the extent
Landlord incurs such fines or penalties because of Landlord’s failure to operate
the Building in first class manner consistent with customary property management
practices.

4.5 Adjustment for Occupancy. Notwithstanding any other provision herein to the
contrary, if during any year of the Term the Building is not fully occupied or
all premises within the Building do not receive Basic Services (as defined in
Section 5.1 below), then an adjustment shall be made in computing variable
Operating Costs for such year so that variable Operating Costs shall be computed
as though the Building had been fully occupied and provided with Basic Services
during such year; provided, however, that in no event shall Landlord collect in
total, from Tenant and all other tenants of the Building, an amount greater than
one hundred percent (100%) of Operating Costs during any year of the Term. As
used herein “variable Operating Costs” shall mean those Operating Costs that
change due to changes in the occupancy level within the Building such as
janitorial services for tenant occupied spaces.

4.6 Computation of Operating Costs Adjustment. The term “Operating Costs
Adjustment” for any calendar year shall mean the difference, if any, between
Estimated Operating Costs and actual Operating Costs for that calendar year.
Landlord shall, within a reasonable period of time after the end of any calendar
year for which Estimated Operating Costs differs from actual Operating Costs,
give written notice thereof to Tenant (a “Cost Statement”). The Cost Statement
shall include a statement of the total Operating Costs applicable to such
calendar year and the computation of the Operating Costs Adjustment. Landlord’s
failure to give such Cost Statement within a reasonable period of time after the
end of any calendar year for which an Operating Costs Adjustment is due shall
not release either party from the obligation to make the adjustment provided for
in Section 4.7.

4.7 Adjustment for Variation Between Estimated and Actual. If Tenant’s
Proportionate Share of Operating Costs for any calendar year exceeds the
payments received by Landlord towards Tenant’s Proportionate Share of Estimated
Operating Costs for such year, Tenant shall pay to Landlord Tenant’s
Proportionate Share of the Operating Costs Adjustment within thirty (30) days
after the date of

 

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the Landlord’s Cost Statement. If the Tenant’s Proportionate Share of Operating
Costs for any calendar year is less than the payments received by Landlord
towards Tenant’s Proportionate Share of Estimated Operating Costs for such year,
then Landlord, at Tenant’s option, shall either (a) pay Tenant’s Proportionate
Share of the Operating Costs Adjustment to Tenant in cash, or (b) credit said
amount against future installments of Estimated Operating Costs payable by
Tenant hereunder. If the Term commences or terminates at any time other than the
first day of a calendar year, Tenant’s Proportionate Share of the Operating
Costs Adjustment shall be calculated based upon the exact number of calendar
days during such calendar year that fall within the Term, and any payment by
Tenant required hereunder shall be paid even if the Term has expired when such
determination is made.

4.8 Cap on Controllable Operating Costs. Notwithstanding anything in this
Article to the contrary, the amount of Controllable Operating Costs charged to
and payable by Tenant for each year shall not increase by more than the greater
of (i) five percent (5%) per year on a cumulative, compounding basis over the
then-expired portion of the Term, or (ii) the cumulative increase in the CPI
Index (as defined in Section 13.4 below) over the then-expired portion of the
Term. “Controllable Operating Costs” shall mean Operating Costs other than:
utilities charges, insurance premiums and deductibles to the extent permitted
hereunder, any service contract where an extraordinary increase in the
compensation payable to the employees of the service provider (including
unionized employees of Landlord) results in an extraordinary increase in the
cost of such service contract (without prior notice to Landlord and a reasonable
opportunity for Landlord to either negotiate more favorable terms or obtain a
feasible substitute vendor on more favorable terms), property management fees if
the fee is based on rental income, government imposed charges which are
Operating Costs, capital amortization programs allowed under the terms of this
Lease. Operating Costs for calendar year 2006 shall not exceed Ten and 00/100
Dollars ($10.00) per rentable square foot plus any necessary adjustment for
increases in Operating Costs that are not Controllable Operating Costs and any
increases attributable to supplying and operating the building conference room.

4.9 Audit Right. Tenant shall have the right to conduct an audit of Landlord’s
books and records relating to Operating Costs during the immediately preceding
two (2) calendar years in accordance with the following terms and provisions
provided that Tenant delivers written notice of its intent to audit within
ninety (90) days after receipt by Tenant of Landlord’s Cost Statement for either
of the two (2) years, and completes such audit within one hundred and twenty
(120) days after the date of Tenant’s notice of intent to audit:

(a) No Event of Default is outstanding with respect to payment of Base Rent or
Tenant’s Proportionate Share of Operating Costs.

(b) Tenant shall have the right to have an employee of Tenant or a Qualified
Auditor (as defined below) inspect Landlord’s accounting records at Landlord’s
office no more than once per calendar year.

(c) Neither the employee of Tenant nor the Qualified Auditor shall be employed
or engaged on a contingency basis, in whole or in part.

(d) Prior to commencing the audit, Tenant and the auditor shall: (i) provide
Landlord with evidence that the auditor is from a nationally recognized
accounting firm or one of the top five (5) accounting firms in the Seattle
metropolitan area and that the individual performing the audit is a certified
public accountant (a “Qualified Auditor”); (ii) each sign a confidentiality
letter to be provided by Landlord, consistent with the provisions of this
Section 4.8; and (iii) provide Landlord with evidence of the fee arrangement
between the auditor and Tenant.

(e) The audit shall be limited solely to confirming that the Operating Costs
reported in the Landlord’s Cost Statement are consistent with the terms of this
Lease. The auditor shall not make any judgments as to the reasonableness of any
item of expense and/or the total Operating Costs of the Building, nor shall such
reasonableness be subject to audit except where this Lease specifically states
that a particular item must be reasonable.

 

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(f) If Tenant’s auditor finds errors or overcharges in Landlord’s Cost Statement
that Tenant wishes to pursue, then within the time period set forth above Tenant
shall advise Landlord thereof in writing with specific reference to claimed
errors and overcharges and the relevant Lease provisions disqualifying such
expenses. Landlord shall have a reasonable opportunity to meet with Tenant’s
auditor (and any third auditor selected hereinbelow, if applicable) to explain
its calculation of Operating Costs, it being the understanding of Landlord and
Tenant that Landlord intends to operate the Building as a first- class office
building with services at or near the top of the market. If Landlord agrees with
said findings, appropriate rebates or charges shall be made to Tenant. If
Landlord does not agree, Landlord shall engage its own auditor to review the
findings of Tenant’s auditor and Landlord’s books and records. The two
(2) auditors and the parties shall then meet to resolve any difference between
the audits.

(g) If agreement cannot be reached within two (2) weeks thereafter, then the
auditors shall together select a third auditor (who shall be a Qualified Auditor
not affiliated with and who does not perform services for either party or their
affiliates) to which they shall each promptly submit their findings in a final
report, with copies submitted simultaneously to the first two (2) auditors,
Tenant and Landlord. Within two (2) weeks after receipt of such findings, the
third auditor shall determine which of the two reports best meets the terms of
this Lease, which report shall become the “Final Finding”. The third auditor
shall not have the option of selecting a compromise between the first two
auditors’ findings, nor to make any other finding.

(h) If the Final Finding determines that Landlord has overcharged Tenant,
Landlord shall credit Tenant toward the payment of the Base Rent next due and
payable under this Lease the amount of such overcharge. If the Final Finding
determines that Tenant was undercharged, then within twenty (20) days after the
Final Finding, Tenant shall reimburse Landlord the amount of such undercharge.

(i) If the Final Finding results in a credit to Tenant in excess of three
percent (3%) of Tenant’s Proportionate Share of the Operating Costs for a
calendar year subject to the audit, Landlord shall pay its own audit costs and
reimburse Tenant for its costs associated with said audits. If the Final Finding
results in a credit to Tenant of less than one percent (1%) of Tenant’s
Proportionate Share of the Operating Costs for a calendar year subject to the
audit, Tenant shall pay its own costs and shall reimburse Landlord for
Landlord’s costs associated with said audits. In all other events, each party
shall pay its own audit costs, including one half (1/2) of the cost of the third
auditor.

(j) The results of any audit of Operating Costs hereunder shall be treated by
Tenant, all auditors, and their respective employees and agents as confidential,
and shall not be discussed with nor disclosed to any third party, except for
disclosures required by applicable law, court rule or order or in connection
with any litigation or arbitration involving Landlord or Tenant.

ARTICLE 5

Landlord’s Covenants

5.1 Basic Services. During the Term, Landlord shall provide the following
(“Basic Services”) consistent with a first class office building standard:

(a) Cold and hot water (other than hot water for special needs such as kitchens
and showers within the Premises which will be supplied as an Extra Service) at
those points of supply provided to Tenant in the Premises.

(b) Central heat, ventilation, and air conditioning (“HVAC”) that meets the
criteria set forth below (subject to normal deviations and fluctuations and as
may be permitted or controlled by applicable Laws), during Normal Office Hours
(as defined below). During the summer, the Building’s

 

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HVAC shall be programmed to maintain the Premises between 72 and 76 degrees
Fahrenheit and during the winter the Building’s HVAC shall be programmed to
maintain the Premises between 70 and 74 degrees Fahrenheit, assuming the Tenant
constructs Building Standard Improvements in a customary executive office layout
and does not install equipment requiring supplemental HVAC. Supplemental HVAC to
the Premises shall be separately metered using meters to be installed by Tenant
as part of the Tenant Improvements and Tenant shall pay for the cost of above
standard HVAC based on such measured usage.

(c) Maintenance, repairs, structural and exterior maintenance (including
exterior glass and glazing), painting and electric lighting service for all
public areas and special service areas of the Building in good condition and in
compliance with all applicable Laws and in a manner consistent with first-class
office buildings. Landlord’s obligation with respect to repair as part of Basic
Services under this Section 5.1 shall be limited to (i) the footings, foundation
and all structural elements of the Building, (ii) the exterior walls of the
Building, including glass and glazing, (iii) the roof, roof membrane and
structure, (iv) mechanical, electrical, plumbing and life safety systems that
are considered Building Standard Improvements (as defined in Exhibit C attached
hereto), and (v) Common Areas.

(d) Janitorial service on a five (5) day week basis, excluding holidays, in
accordance with the standards attached hereto as Exhibit I.

(e) An electrical system to convey power delivered by public utility or other
providers selected by Landlord, in amounts sufficient for normal office
operations during Normal Office Hours as provided in similar office buildings,
but not to exceed a total allowance of four (4) watts per square foot of Net
Rentable Area (which includes an allowance for lighting of the Premises),
provided that no single item of electrical equipment consumes more than one-half
(0.5) kilowatt at rated capacity. Installation of any equipment that requires a
voltage other than one hundred twenty (120) volts, single phase shall be subject
to Landlord’s reasonable approval and Tenant shall be responsible for any costs
of upgrading the electrical service to accommodate such equipment. If Tenant’s
electrical requirements, as estimated by Landlord based upon rated capacity (or
based upon metered consumption), exceed four (4) watts per square foot of Net
Rentable Area or if Tenant installs equipment exceeding the foregoing capacity
Tenant shall pay the full amount of such excess together with any additional
cost necessary to provide such excess capacity. If the installation and
operation of Tenant’s electrical equipment requires additional air conditioning
capacity above that provided by the Building Standard Improvements (as defined
in Exhibit C), then the cost of installing additional air conditioning and
operation thereof (including utilities) shall be paid by Tenant and shall be
considered an Extra Service, subject to the provisions of Section 5.4 below.
Above-standard power for electrical usage shall be separately metered by Tenant
as part of the Tenant Improvements and Tenant shall pay for all excess
electrical consumption based on such measured usage. Tenant shall pay for
operation of the utility meters.

(f) Installation, maintenance and replacement of Building standard lamps, bulbs
and ballasts used in the Premises.

(g) Security service for the Building, including electronic card key access;
provided, however, that the security service shall be provided by unarmed
personnel and shall not include alarm systems for special surveillance of the
Premises; and provided, further, that Landlord shall not be liable to Tenant or
any third party for any breach of security or any losses due to theft, burglary,
battery or for damage done or injury inflicted by persons in or on the Building
except to the extent arising out of Landlord’s gross negligence.

(h) Public elevator service to the Garage and the floors on which the Premises
are situated during Normal Office Hours; provided, however, that Tenant shall
have access to the Premises twenty-four (24) hours per day, seven (7) days per
week.

 

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5.2 Hours of Operation. The term “Business Days” shall mean Monday through
Friday, excluding State and Federal holidays and all days that maintenance
employees of the Building are entitled to take off or to receive extra
compensation for, from time to time under their union contract or other
agreement. The term “Normal Office Hours” shall mean Business Days from 6:00
a.m. to 6:00 p.m., and Saturdays from 9:00 a.m. to 3:00 p.m.

5.3 Interruption. Landlord shall not be liable for damages to either person or
property, nor shall Landlord be deemed to have evicted Tenant, nor shall there
be any abatement of Rent, nor shall Tenant be relieved from performance of any
covenant on its part to be performed hereunder by reason of (a) interruption of,
or deficiency in, the provision of Basic Services; (b) breakdown or malfunction
of lines, cables, wires, pipes, equipment or machinery utilized in supplying or
permitting Basic Services or telecommunications; or (c) curtailment or cessation
of Basic Services due to causes or circumstances beyond the reasonable control
of Landlord, including but not limited to (i) strikes, lockouts or other labor
disturbance or labor dispute of any character, (ii) governmental regulation,
moratorium or other governmental action, (iii) inability, despite the exercise
of reasonable diligence, to obtain electricity, water or fuel from the providers
thereof, (iv) acts of God, and (v) war, terrorism, civil unrest, and rioting.
Landlord shall use reasonable diligence to make such repairs as may be required
to lines, cables, wires, pipes, equipment or machinery within the Building to
provide restoration of Basic Services and, where the cessation or interruption
of Basic Services has occurred due to circumstances or conditions beyond Real
Property boundaries or outside the Landlord’s control, to cause the same to be
restored, by application or request to the provider thereof. Notwithstanding the
foregoing, if an interruption or curtailment of any Basic Service to be provided
by Landlord occurs by reason of Landlord’s negligence, omission or breach of its
obligations hereunder or if Landlord materially interferes with Tenant’s use of
or access to the Premises in exercising Landlord’s rights under Section 1.2
above, and (A) the interruption or interference causes the Premises or a portion
thereof to be untenantable, (B) Tenant ceases to use the Premises or the
untenantable portion thereof, and (C) Tenant has given Landlord notice of such
interruption or interference, then, on the fifth (5th) consecutive Business Day
following the date on which all of the foregoing conditions are satisfied (or
such earlier date, if any, on which Landlord is entitled to receive rental
abatement insurance proceeds), Base Rent shall abate (in whole or in part based
on the number of square feet that are untenantable) until the Premises (or the
untenantable portion thereof) are rendered tenantable; provided, however, that
in no event shall Tenant be entitled to an abatement of Base Rent if the
interruption was caused by any action or inaction by Tenant or its employees,
agents, contractors, or invitees or by causes not within Landlord’s direct
control.

5.4 Extra Services. Landlord may provide to Tenant in Landlord’s discretion and
at Tenant’s cost and expense (and subject to the limitations hereinafter set
forth) the additional services described below (“Extra Services”). Tenant shall
pay Landlord for the cost (including capital costs, out-of-pocket expenses and
the incremental cost of Landlord’s employees) of providing any Extra Services,
together with an administrative fee equal to ten percent (10%) of such cost,
within ten (10) days following presentation of an invoice therefor by Landlord
to Tenant provided that the administrative fee shall be five percent (5%) for
all items of Extra Services that are provided on a regular basis (such as
janitorial service for the Extra Cleaning Items under Section 5.4(a) below).
Landlord shall not charge the administrative fee on the services described in
Sections 5.4(b) and 5.4(c). The cost chargeable to Tenant for Extra Services
shall constitute additional Rent. Landlord shall credit the amount of the
administrative fee collected against Operating Costs in the year in which the
fee is collected.

(a) Any extra cleaning and janitorial services in excess of that required for
Building Standard Improvements or in excess of the services required to be
provided under the janitorial specifications attached hereto as Exhibit I. At
the time Landlord reviews and approves any plans that Tenant submits for
approval for Tenant Improvements or Alterations, Landlord shall identify those
items shown in the plans that will require above-standard cleaning or janitorial
service (“Extra Cleaning Items”). Landlord shall have its janitorial service
provider furnish Landlord and Tenant with an estimate for the cost of cleaning
the Extra Cleaning Items.

 

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(b) Additional air conditioning and ventilating capacity required by reason of
any electrical, data processing or other equipment or facilities or services
required to support the same, in excess of that which would be required for
Building Standard Improvements.

(c) HVAC or extra electrical equipment or service during hours other than the
hours specified in Section 5.Kb), provided that Landlord shall only charge
Tenant for additional HVAC use at a rate not to exceed Landlord’s full and
complete cost of after-hours HVAC and condenser water usage (including overhead
allocations).

(d) Repair and maintenance for which Tenant is responsible hereunder if Tenant
is in default or requests Landlord to complete such work.

(e) Any Basic Service in amounts determined by Landlord to exceed the amounts
required to be provided under Section 5.1, but only if Landlord elects to
provide such additional or excess service.

(f) Any services requested by Tenant in connection with construction of the
Tenant Improvements except to the extent Landlord agrees to provide such
services under Exhibit C.

(g) Any other item described in this Lease as an Extra Service or which Landlord
is not required to provide as part of Basic Services.

5.5 Window Coverings. Except in connection with the improvement or alteration of
the Premises (subject to Landlord’s approval thereof if required by this Lease),
Tenant shall not remove, replace or install any window coverings, blinds or
drapes on any exterior window without Landlord’s prior written approval. Tenant
acknowledges that breach of this covenant shall directly and adversely affect
the exterior appearance of the Building and the operation of the heating,
ventilation and air conditioning systems.

5.6 Graphics and Signage. In addition to the Tenant’s signage rights under
Section 5.9 below, Landlord shall provide the initial identification of Tenant’s
name on the directory board and/or electronic directory, if any, in the main 4th
Avenue lobby of the Building. Tenant may identify multiple employees or
departments in the electronic directory but only Tenant’s name shall be
identified on the physical directory board. Any changes to the directories shall
be paid for by Tenant. All signs, notices and graphics of every kind or
character, visible in or from public corridors, the Common Areas or the exterior
of the Premises shall be subject to Landlord’s reasonable prior written
approval.

5.7 Tenant Extra Improvements. “Building Standard Improvements” shall mean
painted drywall for straight room partitions, ceiling grid, carpet of a quality
customarily provided by Landlord to Building tenants, building standard lighting
fixtures, sprinkler coverage and HVAC for a normal office distribution using the
Building’s customary materials and equipment, assuming an open floor plan or
perimeter office lay out for up to one hundred five (105) people per floor. In
instances where this Lease refers to Tenant Extra Improvements as a standard for
the provision of services, maintenance, repair or replacement by Tenant or
Landlord, such reference shall be to the difference in required services,
maintenance, repairs or replacements between the Tenant Improvements as
constructed in the Premises and the Building Standard Improvements, had the
Building Standard Improvements been constructed in the Premises.

5.8 Peaceful Enjoyment. Tenant shall peacefully have, hold and enjoy the
Premises, subject to the other terms hereof, provided that Tenant pays the Rent
and performs all of Tenant’s covenants and agreements herein contained. This
covenant and the other covenants of Landlord contained in this Lease shall be
binding upon Landlord and its successors only with respect to breaches occurring
during its and their respective ownerships of Landlord’s interest hereunder.

 

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5.9 Building Naming Rights. So long as Tenant satisfies the Minimum Occupancy
Requirement and there have not been more than three (3) Events of Default for
which Landlord has given Tenant at least three (3) Business Days notice (even if
notice is not required under the terms of Article 13 below) under this Lease
within any twelve (12) month period, Tenant shall have the right to require the
Building to be named “Safeco Plaza” (or such other similar project name
incorporating “Safeco” as Landlord and Tenant may mutually select, such as
Safeco Tower or Safeco Center) subject to the following conditions and
limitations: (i) Tenant shall be responsible for any and all costs related to
the changing of the signage in or on the Building; (ii) Tenant shall have the
right, at Tenant’s sole cost and expense, to place a sign on each of the
Building’s east and west exterior facades near the main entrances and in the
main Building lobby, as approved by Landlord, which approval shall not be
unreasonably withheld, delayed or conditioned; (iii) Landlord shall not permit
any other exterior signs on the Building other than a “Major Tenant Sign” (as
defined below) and signs for the Building’s retail tenants, without Tenant’s
prior approval, which shall not be unreasonably withheld or delayed; and
(iv) each Major Tenant Sign shall include the name of the Building at the top,
followed by Tenant’s name and then by the names of the other Major Tenants, and
each tenant’s space on the sign shall be proportional to its Proportionate Share
of the Building. Notwithstanding anything herein to the contrary, Tenant shall
be responsible for Tenant’s share of the costs of the Major Tenant Sign in
proportion to the area of the sign allocated to the Building identity and
Tenant’s name as a percentage of the overall area available to tenants on the
Major Tenant Sign. Tenant must submit plans for any Building signage to Landlord
for review and approval before Tenant shall be permitted to install any signage
on the exterior of the Building. Landlord shall not be required to change any
materials identifying the Building (such as uniforms or stationery) unless
Tenant agrees to pay the cost of such changes.

By the end of the Lease Term or on thirty (30) days notice if Tenant fails to
satisfy the requirements under the first sentence of Section 5.9, then Tenant at
Tenant’s sole cost and expense shall: (A) remove any signage installed by Tenant
on the Building exterior, (B) restore the Building substantially to its
condition prior to installation of such signage, and (C) in the case where
Tenant either requests that “Safeco” be removed from the Building’s name or
Landlord terminates Tenant’s naming right by reason of Tenant’s failure to
satisfy the requirements under the first sentence of Section 5.9, then Tenant
shall reimburse Landlord for all reasonable out-of-pocket expenses and costs
incurred by Landlord in connection with a change in the Building name. All
exterior signage for Tenant shall be provided at Tenant’s sole cost and expense
and shall be subject to Landlord’s reasonable approval and all City of Seattle
and other applicable governmental requirements. As used herein, the term “Major
Tenant Sign” shall mean any sign(s) designed and installed by Landlord and
located at or near the main entrances to the Building identifying the names of
the Building’s largest or most significant tenants, as reasonably determined by
Landlord but generally meaning all tenants leasing at least one full floor.
Landlord shall have the sole right to design all Major Tenant Signs. The rights
granted herein are personal to Safeco Insurance Company of America and any
Qualified Transferee who takes an assignment of all of Tenant’s rights under
this Lease.

In no event may the Building name include the words “Bank,” “Finance,” or
“Financial” nor may the Building be named after any Bank (as defined in
Section 2.4 above). So long as Bank of America or any successor is a tenant in
the Building, the Building may not be named after any competitor of Bank of
America (or any successor to its rights under its lease in the Building) without
Bank of America’s consent which it is not obligated to give. Any change in the
Building name from “Safeco Plaza” requested by Tenant shall be subject to
Landlord’s prior written approval which may be withheld in its discretion;
provided, however, Landlord shall not unreasonably withhold its approval unless,
in Landlord’s judgment, the proposed new name shall: (1) be inconsistent with a
first class downtown office tower; (2) be offensive; or (3) violate the
provisions of any other tenant lease in the Building. If the parties cannot
agree on a name, the Building shall be called “1001 Fourth Avenue Plaza.”
Landlord and Tenant will work together to develop a logo incorporating the name
selected above.

 

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ARTICLE 6

Tenant’s Covenants

6.1 Compliance With Exhibit C. Tenant shall use diligent efforts to comply with
the terms and conditions and deadlines set forth in Exhibit C and with Sections
II and V and Appendices C, D and E of the Design Manual for the Building in the
form provided to Tenant on May 4, 2006 (such sections and appendices are
referred to herein as the “Design Manual”) with respect to the construction of
the Tenant Improvements in the Premises.

6.2 Construction of Tenant Improvements. Tenant shall be solely responsible for
the design, permitting and construction of all Tenant Improvements pursuant to
Exhibit C and the Design Manual. All additions to or improvements of the
Premises, whether of Building Standard Improvements or Tenant Extra
Improvements, shall be and become the property of Landlord upon installation and
shall be surrendered to Landlord upon termination of this Lease by lapse of time
or otherwise, except as otherwise stated herein. Although Tenant Extra
Improvements become the property of Landlord upon installation, they are
intended to be for the convenience of Tenant and are not intended to be a
substitute for Rent or any part thereof.

6.3 Telecommunications. Tenant shall install and maintain all required
intrabuilding network cable and other communications wires and cables necessary
to serve the Premises from the point of delivery to the Premises (if already
servicing the Building) or presence in the Building, if the vendor was added at
Tenant’s request. Tenant shall obtain telecommunications services within the
Building from vendors selected by Tenant and approved by Landlord in its
reasonable discretion (a “Provider”). If Tenant desires to obtain
telecommunications services from a Provider not selected by Landlord then Tenant
shall submit to Landlord a list of such proposed vendor(s) together with such
other information regarding the vendors as Landlord may request, including
financial information, references from at least two (2) owners of comparable
projects in which the vendor has experience and a description of the vendor’s
business activities in downtown Seattle. Landlord shall notify Tenant within
fifteen (15) Business Days of receipt of the list (and any additional
information reasonably requested by Landlord) if Landlord approves any of
Tenant’s proposed vendors. Failure to notify Tenant shall be deemed disapproval.
If Landlord approves a Provider selected by Tenant, the Provider must agree in
writing to abide by all of Landlord’s policies and procedures for
telecommunications vendors and to pay for the use of any space outside the
Premises in which the Provider’s equipment is installed at the rate established
by Landlord from time to time; provided, however, that the Provider shall not be
required to pay for temporary space used only during the period of installation.
The Provider shall also reimburse Landlord for the reasonable costs incurred by
Landlord to build out such space. If Tenant desires to utilize the services of a
Provider not selected by Landlord, such Provider must obtain the written consent
of Landlord to the plans and specifications for its lines or equipment within
the Building prior to installation in the Building and must install such lines
and equipment in locations designated by Landlord. Tenant shall obtain any
necessary governmental permits relating to the installation, use or operation of
Provider’s lines and equipment. Landlord shall provide Tenant and its Provider
and contractors with reasonable access to portions of the Building outside the
Premises to the extent necessary to install, maintain or replace any
telecommunications equipment serving the Premises. Landlord’s consent to a
Provider shall not be deemed to constitute a representation or warranty as to
the suitability, capability or financial strength of any Provider. To the extent
the service by a Provider is interrupted, curtailed or discontinued for any
reason whatsoever, Landlord shall have no obligation or liability in connection
therewith, except to the extent caused by Landlord’s gross negligence or
intentional misconduct. The provisions of this Section are solely for the
benefit of Tenant and Landlord, are not for the benefit of any third party, and
no telephone or telecommunications provider shall be deemed a third party
beneficiary hereof. Tenant acknowledges and agrees that Landlord has not
represented or warranted that Tenant will have unlimited access to riser space
or other space outside the Premises for the purpose of the installing
telecommunications equipment and Landlord shall have no obligation to construct
or designate additional riser space or equipment space

 

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to accommodate the Tenant’s or its Provider’s telecommunications equipment.
Tenant acknowledges that roof and riser space are a finite commodity and that
Landlord may in its discretion limit Tenant’s total use of such space to
accommodate and take into account use of the Building systems and the needs of
other Building tenants.

6.4 Taxes on Personal Property and Tenant Extra Improvements. In addition to,
and wholly apart from its obligation to pay Tenant’s Proportionate Share of
Operating Costs, Tenant shall be responsible for, and shall pay prior to
delinquency, all taxes or governmental service fees, possessory interest taxes,
fees or charges in lieu of any such taxes, capital levies, or other charges that
are demonstrably imposed upon, levied with respect to or assessed against
Tenant’s furniture, equipment, machinery, trade-fixtures, personal property,
goods or supplies (“Tenant’s Personal Property”), on the value of its Tenant
Extra Improvements, on its interest pursuant to this Lease or on any use made of
the Premises or the Common Areas by Tenant in accordance with this Lease. To the
extent that any such taxes are not separately assessed or billed to Tenant,
Tenant shall pay the amount thereof as invoiced to Tenant by Landlord.

6.5 Repairs by Tenant. Except to the extent covered by Landlord’s obligations
under this Lease or damaged due to fire or casualty and subject to the waiver of
subrogation in Section 11.6, Tenant shall maintain and repair the interior of
the Premises and keep the same in good condition, ordinary wear and tear
excepted. Tenant’s obligation shall include, without limitation, the obligation
to maintain and repair all walls, floors, ceilings and fixtures and to repair
all damage caused by Tenant or Tenant’s employees, agents, contractors,
licensees, subtenants, assignees, invitees and guests (“Tenant Parties”) to the
Premises or the Building, whatever the scope of the work of maintenance or
repair required. Tenant shall repair all damage caused by removal of Tenant’s
movable equipment or furniture or the removal of any Tenant Extra Improvements
or Alterations (as defined in Section 6.7) permitted or required by Landlord,
all as provided in Section 6.13. Any repair or maintenance that Tenant is
required to perform under this Lease shall be performed at Tenant’s expense by
contractors selected by Tenant and reasonably approved by Landlord. If Tenant
fails or refuses to perform such work within ten (10) days after written notice
or immediately in the event of an emergency, then Landlord may perform such work
for the account of Tenant as an Extra Service. Any work of repair and
maintenance performed by or for the account of Tenant by persons other than
Landlord shall be performed at Tenant’s risk using contractors approved by
Landlord prior to commencement of the work, which approval shall not be
unreasonably withheld, delayed or conditioned, and in accordance with procedures
Landlord may from time to time reasonably establish. All such work shall be
performed in compliance with all applicable Laws and the Rules and Regulations
and Tenant shall provide to Landlord copies of all permits and records of
inspection issued or obtained by Tenant in connection therewith to establish
such compliance. Tenant shall not be required to perform any maintenance or
repair required solely by reason of the negligence or wrongful acts of Landlord
or its employees, agents, contractors, officers, directors, partners, licensees,
invitees and guests, Landlord’s affiliates or Landlord’s members (“Landlord
Parties”). Tenant shall promptly notify Landlord of any needed repairs in the
Premises or to the Building Components within the Premises or Landlord’s breach
of this Lease or any applicable Law.

6.6 Waste. Tenant shall not commit or allow Tenant Parties to commit any waste
or damage in any portion of the Premises or the Building.

6.7 Alterations, Additions, Improvements. Tenant shall not make or allow to be
made any alterations, additions or improvements in or to the Premises
(collectively, “Alterations”) without obtaining the prior written consent of
Landlord, which consent shall not be unreasonably withheld, delayed or
conditioned if the proposed Alterations (a) comply with all applicable Laws and
the Rules and Regulations; (b) are compatible with the Design Manual and the
Building, its architecture and its mechanical, electrical, HVAC and life safety
systems; (c) do not interfere with the use and occupancy of any other portion of
the Building by any other tenant or their invitees; (d) do not affect the
structural portions of the Building; (e) do not and shall not, whether alone or
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improvements, require the construction of any other improvements or alterations
within the Building; (f) do not reduce the value of the Premises; (g) do not
affect the exterior appearance of the Building; and (h) are reasonably expected
to cost less than Ten Dollars ($10.00) per square foot of the space actually
altered. Notwithstanding the foregoing, Landlord’s consent shall not be required
for decorative or cosmetic alterations such as paint and carpet but Tenant shall
provide Landlord with notice in advance of making such Alterations describing
the work to be performed. In determining whether to consent to any proposed
Alterations requiring its approval, Landlord shall have the right to review and
approve plans and specifications for proposed Alterations, construction means
and methods, the identity of any contractor or subcontractor to be employed on
the work for Alterations, and the time for performance of such work. Tenant
shall supply to Landlord any documents and information reasonably requested by
Landlord in connection with any Alterations to the Premises. When reasonably
required, Landlord may hire outside consultants to review such documents and
information and Tenant shall reimburse Landlord for the cost thereof as well as
Landlord’s internal costs as an Extra Service subject to Section 5.4. All
Alterations permitted hereunder shall be made and performed by Tenant without
cost or expense to Landlord. Landlord may supervise and administer the
installation of Alterations as an Extra Service. Upon completion of any
Alterations, Tenant shall provide Landlord, at Tenant’s expense, with a complete
set of “as built” plans on mylar and specifications reflecting the actual
conditions of the Alterations as constructed in the Premises, together with a
copy of such plans on diskette in the AutoCAD format or such other format as may
then be in common use for computer assisted design purposes. The obligations of
the parties with respect to removal of Alterations shall be controlled by
Section 6.13.

6.8 Liens. Tenant shall keep the Premises and the Building free from any liens
arising out of any (a) work performed or material furnished to or for the
Premises, and (b) obligations incurred by or for Tenant or any person claiming
through or under Tenant. Tenant shall, within twenty (20) days after it learns
of the imposition of any such lien, cause such lien to be released of record by
payment or posting of a bond satisfactory to Landlord in form and substance and
in compliance with RCW 60.04. Landlord shall have the right at all times to post
and keep posted on the Premises any notices permitted or required by law, or
that Landlord shall deem proper for the protection of Landlord, the Premises,
the Building and any other party having an interest therein, from mechanics’,
materialmen’s and other liens. Landlord may cause such liens to be released by
any means it deems proper, including, without limitation, payment of any such
lien, at Tenant’s sole cost and expense. All costs and expenses incurred by
Landlord in causing such liens to be released shall be repaid by Tenant to
Landlord immediately upon demand, together with an administrative fee equal to
twenty percent (20%) of such costs and expenses. In addition to all other
requirements contained in this Lease, Tenant shall give Landlord at least ten
(10) Business Days prior written notice before commencement of any material
construction on the Premises.

6.9 Compliance With Laws and Insurance Standards.

(a) Except as specifically allocated to Landlord in this Lease, Tenant shall
comply with all federal, state and local laws, ordinances, codes, orders, rules,
regulations and policies (collectively, “Laws”), now or hereafter in force, as
amended from time to time, that are related to Tenant’s particular use of the
Premises (as opposed to general office use) or the condition or occupancy of the
Premises (including improvements to or alterations of the Premises), regardless
of when such Laws become effective, including, without limitation, all
applicable Hazardous Materials Laws (as defined in Section 7.2(a)), the
Americans with Disabilities Act of 1990, as amended and any laws prohibiting
discrimination against, or segregation of, any person or group of persons on
account of race, color creed, religion, sex, marital status, national origin or
ancestry. Tenant shall also comply with the terms of any transportation
management program or similar programs affecting the Building and required by
any governmental authority. Tenant shall immediately deliver to Landlord a copy
of any notices received from any governmental agency in connection with the
Premises. It is the intention of Tenant and Landlord that the obligations of
Tenant under this Section 6.9 shall apply irrespective of the scope of work
required to achieve such compliance. Tenant shall not use or occupy the Premises
in any manner that creates, requires or causes imposition of any requirement by
any governmental authority for structural or other upgrading of or improvement
to the Building.

 

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(b) Tenant shall not occupy or use, or permit any portion of the Premises to be
occupied or used, for any business or purpose that is unlawful or constitutes a
fire hazard. Tenant shall not permit anything to be done that would increase the
rate of fire or other insurance coverage on the Building and/or its contents.
Landlord acknowledges that general administrative office use does not violate
this provision or increase insurance rates. If Tenant does or permits anything
to be done that increases the cost of any insurance policy carried by Landlord,
then Tenant, at Landlord’s option, shall not be in default under this Lease, but
shall reimburse Landlord, upon demand, for any such additional premiums as an
Extra Service.

(c) Landlord, at Landlord’s expense, shall cause any violations under Title III
of the Americans with Disabilities Act in the Common Areas as of the date of
this Lease to be corrected if (i) compliance is necessary in order for Tenant’s
employees and visitors to have safe access to and from the Premises, or
(ii) Landlord’s failure to cause such compliance would impose liability upon
Tenant under any applicable Law, or (iii) if ordered to do so by any
governmental authority. Landlord shall have the right to contest any alleged
violation in good faith, including, without limitation, the right to apply for
and obtain a waiver or deferment of compliance, the right to assert any and all
defenses allowed by Law and the right to appeal any decisions, judgments or
rulings to the fullest extent permitted by Law provided that Landlord shall
indemnify, defend and hold Tenant harmless against any costs related to such
contest if Tenant is named in any enforcement action or lawsuit with respect to
such alleged violation during the pendency of such contest.

6.10 Entry for Repairs, Inspection, Posting Notices, Etc. After reasonable
notice (except in emergencies where no such notice shall be required), and
subject to Tenant’s reasonable security requirements that have been communicated
to Landlord in advance in writing, Landlord or Landlord Parties shall have the
right to enter the Premises to inspect the same, to clean, to perform such work
as may be permitted or required of Landlord hereunder, to make repairs to or
alterations of the Building or other tenant spaces therein, to deal with
emergencies, to post such notices as may be permitted or required by law to
prevent the perfection of liens against Landlord’s interest in the Building or
to exhibit the Premises to prospective tenants (during the last year of the
Term), purchasers, encumbrancers or others, or for any other purpose as Landlord
may deem necessary or desirable; provided, however, that Landlord shall make
reasonable efforts not to unreasonably interfere with Tenant’s business
operations. In no event shall Tenant be entitled to any abatement of Rent by
reason of the exercise of any such right of entry, except as provided for in the
last sentence of Section 5.3.

6.11 No Nuisance. Tenant shall not create any nuisance or materially interfere
with, endanger or disturb any other tenant or Landlord in its operation of the
Building. Tenant shall not place any loads upon the floor, walls or ceiling of
the Premises that endanger the structure nor place any harmful liquids or
Hazardous Material (as defined in Section 7.2) in the drainage system of the
Building. Tenant shall not permit any vibration, noise or odor to escape from
the Premises and shall not do or permit anything to be done within the Premises
which would adversely affect the quality of the air in the Building.

6.12 Rules and Regulations. Tenant shall comply with the rules and regulations
for the Building attached as Exhibit D and such amendments or supplements
thereto as Landlord may adopt from time to time with prior notice to Tenant so
long as such amendments do not demonstrably increase Tenant’s costs or
unreasonably or materially interfere with its operations on or access to the
Premises (the “Rules and Regulations”). Landlord shall not be liable to Tenant
for or in connection with the failure of any other tenant of the Building to
comply with any rules and regulations applicable to such other tenant under its
lease, provided it uses reasonable efforts to enforce the rules and regulations
in a uniform manner.

 

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6.13 Surrender of Premises on Termination. On expiration of the Term, Tenant
shall quit and surrender the Premises to Landlord, broom clean, in good order,
condition and repair as required by this Lease, with all of Tenant’s movable
equipment, furniture, trade fixtures and other personal property removed
therefrom. In addition, Tenant shall remove from the Building all
telecommunications and computer networking wiring and cabling serving the
Premises installed by or on behalf of Tenant, unless Landlord requires such
materials to be surrendered to Landlord. All Alterations and Tenant Improvements
shall be surrendered with the Premises in good condition and repair, reasonable
wear and tear (but only to an extent consistent with the Premises remaining in
good condition and repair) and casualty damage excepted, unless (a) Tenant has
obtained Landlord’s agreement in writing that it can remove an Alteration or
item of Tenant Improvements, or (b) Landlord has notified Tenant that Tenant
must remove an Alteration or item of Tenant Extra Improvements; provided,
however, that if Landlord’s approval is sought for an Alteration or Tenant Extra
Improvement, Landlord shall notify Tenant at the time it approves the Alteration
or Tenant Extra Improvement which elements thereof will be subject to removal
under this Section (the “Removable Improvements”). With respect to Alterations,
Tenant’s request for consent shall conspicuously state that it is requesting
Landlord’s determination as to whether the Alterations are subject to removal on
lease termination. If Landlord desires to have the Premises, or any part or
parts thereof, restored to a condition that existed prior to installation of any
Removable Improvements, Landlord shall notify Tenant in writing at any time (as
applicable) either (A) not less than ninety (90) days prior to the regularly
scheduled Expiration Date (or if Landlord reasonably anticipates that any
Removable Improvement will require more than ninety (90) days to remove then at
such earlier time as is reasonably anticipated to be necessary in order to have
the Required Removable removed and damage restored prior to the Expiration Date;
or (B) if this Lease is terminated sooner than the Expiration Date, within ten
(10) days after the date of such termination, and in either event, upon receipt
of such notice, Tenant shall, at Tenant’s sole cost and expense, so restore the
Premises, or such part or parts thereof, before the regularly scheduled
Expiration Date (or if this Lease is sooner terminated, as soon as reasonably
practicable). Any property of Tenant not removed from the Premises shall be
deemed, at Landlord’s option, to be abandoned by Tenant and Landlord may store
such property in Tenant’s name at Tenant’s expense, and/or dispose of the same
in any manner permitted by law. Landlord shall not require Tenant to remove any
Building Standard Improvements. Tenant shall repair at its sole cost and
expense, all damage caused to the Premises or the Building by removal of
Tenant’s movable equipment or furniture and such Tenant Improvements and
Alterations as Tenant shall be allowed or required to remove from the Premises
by Landlord. If the Premises are not surrendered as of the end of the Term in
the manner and condition herein specified, Tenant shall indemnify, defend,
protect and hold Landlord and Landlord Parties harmless from and against any and
all damages resulting from or caused by Tenant’s delay or failure in so
surrendering the Premises, including, without limitation, any claims made by any
succeeding tenant due to such delay or failure. Tenant acknowledges that
Landlord shall be attempting to lease the Premises with any such lease to be
effective upon expiration of the Term, and failure to surrender the Premises
could cause Landlord to incur liability to such successor tenant for which
Tenant shall be responsible.

6.14 Corporate Authority. If Tenant is a corporation or limited liability
company or partnership or if Tenant is a partnership on whose behalf a partner
which is a corporation or limited liability company executes this Lease, then in
any such case, each individual executing this Lease on behalf of such
corporation, limited liability company, or partnership represents and warrants
that he or she is duly authorized to execute and deliver this Lease on behalf of
said corporation, limited liability company and/or partnership, as the case may
be.

6.15 Utilities. Except as provided in Section 6.3 above, Tenant shall not obtain
any electrical or other utility services from vendors other than those selected
by Landlord or approved by Landlord in writing.

 

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ARTICLE 7

Hazardous Materials

7.1 Prohibition and Indemnity With Respect to Hazardous Materials.

(a) By Tenant. Except as stated below, Tenant shall not cause or permit any
Hazardous Material to be brought upon, kept or used in or about the Premises by
Tenant or Tenant Parties without the prior written consent of Landlord. Tenant
may, at Tenant’s risk, bring, store and use reasonable quantities of Permitted
Hazardous Materials in the Premises for their intended use. If Tenant violates
this provision, or if contamination of the Premises or the Real Property by
Hazardous Material occurs for which Tenant or any Tenant Party is responsible,
or if Tenant’s activities or those of Tenant Parties result in or cause a
Hazardous Materials Claim, then Tenant shall indemnify, defend, protect and hold
Landlord and Landlord Parties harmless from and against any and all claims,
judgments, damages, penalties, fines, costs, expenses, liabilities or losses
(including, without limitation, diminution in value of the Premises or the
Building or the Real Property, damages for the loss or restriction on use of
rentable or usable space or of any amenity of the Premises or the Building,
damages arising from any adverse impact on marketing of space, and sums paid in
settlement of claims, attorneys’ fees, consultants’ fees and experts’ fees)
(collectively, “Claims”) which arise during or after the Term as a result of
such contamination. This indemnification of Landlord by Tenant includes, without
limitation, costs incurred in connection with any investigation of site
conditions or any cleanup, remedial, removal or restoration work required by any
federal, state or local government agency or political subdivision because of
any Hazardous Material present in the soil or ground water on or under the
Premises. The foregoing indemnity shall survive the expiration or earlier
termination of this Lease.

(b) By Landlord. Except for cleaning and repair and maintenance supplies,
Landlord shall not cause or permit any Hazardous Material to be brought upon,
kept or used in or about the Premises by Landlord or Landlord Parties without
the prior written consent of Tenant. If Landlord violates this provision, or if
activities of Landlord’s or Landlord Parties result in or cause a Hazardous
Materials Claim, then Landlord shall indemnify, defend, protect and hold Tenant
and Tenant Parties harmless from and against any and all Claims, which arise
during or after the Term as a result of such violation or activities of
Landlord’s or Landlord Parties. This indemnification of Tenant by Landlord
includes, without limitation, costs incurred in connection with any
investigation of site conditions or any cleanup, remedial, removal or
restoration work required by any federal, state or local government agency or
political subdivision as a result of such violation or activities of Landlord’s
or Landlord Parties. The foregoing indemnity shall survive the expiration or
earlier termination of this Lease.

7.2 Definitions. The following terms shall have the meanings given below for
purposes of this Lease.

(a) “Hazardous Material” shall mean any (a) oil, flammable substances,
explosives, radioactive materials, hazardous wastes or substances, toxic wastes
or substances or any other wastes, materials or pollutants which (i) pose a
hazard to the Building or to persons on or about the Building or (ii) cause the
Building to be in violation of any Hazardous Materials Laws; (b) asbestos in any
form, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, or
radon gas; (c) chemical, material or substance defined as or included in the
definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,”
“extremely hazardous waste,” “restricted hazardous waste,” “moderate risk
waste,” or “toxic substances” or words of similar import under any applicable
local, state or federal law or under the regulations adopted or publications
promulgated pursuant thereto, including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. § 9601, et seq.; the Hazardous Materials Transportation Act, as amended,
49 U.S.C. § 1801, et seq.; the Federal Water Pollution Control Act, as amended,
33 U.S.C. § 1251, et seq.; and the Model Toxics Control Act, as amended, RCW
70.105D; (d) chemicals, materials or substances, exposure to which is
prohibited,

 

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limited or regulated by any governmental authority or may or could pose a hazard
to the health and safety of the occupants of the Building or the owners and/or
occupants of property adjacent to or surrounding the Building, or any other
person coming upon the Building or adjacent property; and (e) other chemicals,
materials or substances which may or could pose a hazard to the environment.

(b) “Hazardous Materials Claims” shall mean any enforcement, cleanup, removal,
remedial or other governmental or regulatory actions, agreements or orders
instituted pursuant to any Hazardous Materials Laws; and any claims made by any
third party against Landlord, Tenant or the Building relating to damage,
contribution, cost recovery compensation, loss or injury resulting from the
presence, release or discharge of any Hazardous Materials. Tenant shall promptly
cure and satisfy all Hazardous Materials Claims arising out of or by reason of
the activities or business of Tenant, Tenant Parties or any party claiming by or
through Tenant and its employees, agents, contractors, officers, directors,
partners, licensees, invitees and guests.

(c) “Hazardous Materials Laws” shall mean any federal, state or local laws,
ordinances, orders, rules, regulations or policies, now or hereafter in force,
as amended from time to time, in any way relating to the environment, health and
safety, and Hazardous Materials (including, without limitation, the use,
handling, transportation, production, disposal, discharge or storage thereof) or
to industrial hygiene or the environmental conditions on, under or about the
Building and Real Property, including, without limitation, soil, groundwater and
indoor and ambient air conditioning.

(d) “Permitted Hazardous Materials” shall mean Hazardous Materials which are
contained in ordinary office supplies of a type and in quantities typically used
in the ordinary course of business within executive offices of similar size and
location, but only if and to the extent that such supplies are transported,
stored and used in full compliance with all Hazardous Materials Laws and their
packaging instructions and otherwise in a safe and prudent manner. Hazardous
Materials which are contained in ordinary office supplies but which are
transported, stored and used in a manner which is not in full compliance with
all Hazardous Material Laws and their packaging instructions or which is not in
any respect safe and prudent shall not be deemed to be Permitted Hazardous
Materials for the purposes of this Lease.

7.3 Asbestos. Tenant acknowledges receipt of the Asbestos Disclosure Letter
attached hereto as Exhibit G. Tenant acknowledges that Landlord has disclosed
that the fire insulation applied on the steel beams and under floor slabs at the
time the Building was constructed has been found to contain asbestos containing
materials (“ACM”). Tenant further acknowledges that, except as expressly
provided herein, Landlord has not agreed to remove or encapsulate any ACM that
may be present in the Premises or the Building and that ACM can pose a health
hazard if not treated properly. Landlord has developed a stringent program on
how to operate, maintain and perform tenant improvement work in areas affected
with ACM and all tenants are strictly prohibited from performing any work in
areas that may contain ACM. Tenant shall indemnify and defend Landlord for, from
and against any Claims that arise as a result of Tenant’s failure to disclose
any relevant ACM related information known to Tenant about the Premises to any
employee, contractor, agent, subtenant or assignee of Tenant. Tenant agrees that
it will not perform or retain any third party to perform any work in areas of
the Building that may contain ACM except for those contractors designated by
Landlord and operating under the direction of Landlord. Tenant shall indemnify,
defend with counsel reasonably satisfactory to Landlord, protect, and hold
Landlord harmless from and against any Claims arising out of any Tenant act in
violation of this Section 7.3. Tenant releases Landlord from Claims by Tenant
arising out of any alleged or actual injury to Tenant’s employees or the
employees of any Transferee or other occupant of the Premises due to the
presence of ACM in the Building provided, however, that to the extent that any
such Claim is covered by insurance maintained by Tenant, Tenant shall indemnify,
defend and hold Landlord harmless from such Claim to the extent of such
insurance unless Landlord is found to have violated the terms of any Hazardous
Materials Laws or has failed to comply with the Asbestos Standards with respect
to such ACM and such violation or failure to comply caused the alleged injury.
Upon request from Tenant (but no more frequently than once per calendar month),
Landlord shall provide Tenant with copies of the results of any air sampling
tests performed within the Premises.

 

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ARTICLE 8

Assignment or Sublease.

8.1 Consent Required. Tenant shall not assign this Lease in whole or in part,
sublease all or any part of the Premises or otherwise sell, transfer or
hypothecate this Lease or grant any right to use or occupy the Premises to
another party (all of such events shall be referred to herein as a “Transfer”
and any such assignee, purchaser, subtenant or other transferee shall be a
“Transferee” for purposes of this Article) without Landlord’s prior written
consent, which consent shall not be unreasonably withheld or conditioned. If
Tenant intends to enter into a Transfer, Tenant shall give Landlord at least
thirty (30) days written notice of such intent. Tenant’s notice shall set forth
the effective date of such Transfer and shall be accompanied by an exact copy of
the proposed agreements between Tenant and the proposed Transferee and complete
financial information regarding the proposed Transferee. If requested by
Landlord, Tenant shall provide Landlord with (a) any additional information or
documents reasonably requested by Landlord relating to the proposed Transfer or
the Transferee, and (b) an opportunity to meet and interview the proposed
Transferee. This Lease may not be transferred by operation of law. All of the
following shall constitute Transfers subject to this Article 8: (x) if Tenant is
a corporation that is not publicly traded on a national exchange or controlled
by an entity so traded, then any transfer of this Lease by merger, consolidation
or liquidation, or any direct, indirect or cumulative change in the ownership
of, or power to vote the majority of Tenant’s outstanding voting stock, shall
constitute a Transfer; (y) if Tenant is a partnership, then a change in general
partners in, or voting or decision-making control of, the partnership shall
constitute a Transfer; and (z) if Tenant is a limited liability company, then a
change in members in, or voting or decision-making control of, the limited
liability company shall constitute a Transfer. Any change in ownership of
Tenant’s parent of the type described in (x), (y) or (z) above shall also
constitute a Transfer subject to this Article 8. These provisions shall apply to
any single transaction or any series of transactions having the effect
described.

8.2 Transfers to Qualified Transferees, Joint Ventures. Notwithstanding anything
herein to the contrary, Landlord shall consent to any proposed assignment or
subletting by Tenant under this Article 8 to: (i) any of the following (a
“Qualified Transferee”): (a) an entity which is a subsidiary controlled by
Tenant; (b) an entity with which or into which Tenant may merge, whether or not
Tenant is the survivor of such merger; or (c) any entity that is controlled by,
controls or is under common control with Tenant (provided, however, that for any
assignment of this Lease [or any sublease for all of the Premises for
substantially all of the then-remaining Term] under clauses (a) through (c),
such entity shall have a net worth as demonstrated by its audited financial
statements which is equal to or greater than that of Tenant at the time of the
proposed Transfer); or (ii) a sublease of two (2) floors or less of the Premises
to any partnership or joint venture between Tenant and a business partner of
Tenant, in which Tenant owns a significant and material interest in such entity
(a “Qualified Joint Venture”). “Control” for purposes of this Article 8 shall
mean ownership of a majority voting interest in any such entity. In addition,
Landlord shall consent to any sublease that when taken together with all prior
subleases (excluding subleases to Qualified Transferees) results in Tenant
subleasing no more than two (2) full floors of the Premises. In the event Tenant
desires to effect any subletting pursuant to this Section 8.2, then, unless
otherwise prohibited or restricted by applicable law, Tenant must provide
Landlord with at least thirty (30) days prior written notice of such proposed
Transfer, together with such evidence as Landlord may reasonably request to
establish that the proposed Transferee is a Qualified Transferee or a Qualified
Joint Venture as defined herein and will not result in Tenant subleasing more
than two (2) full floors of the Premises. Notwithstanding anything herein to the
contrary, it shall not be considered a Transfer if Tenant permits any vendor,
partner or other entity with whom Tenant has an ongoing business relationship to
use or occupy a portion of the Premises without payment of any rental and
without demising the space provided that Tenant must notify Landlord of such use
or occupancy promptly.

 

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8.3 Landlord’s Options. If Tenant proposes a Transfer that is not permitted
under Section 8.2, then Landlord may elect to: (a) terminate this Lease as to
the Affected Space (as hereinafter defined) as of the date specified by Tenant
in its notice under Section 8.1 if the Total Affected Space exceeds the
equivalent of two (2) floors of Net Rentable Area; (b) permit Tenant to complete
the Transfer on the terms set forth in such notice, subject, however, to such
reasonable conditions as Landlord may require and to the balance of this Article
8; or (c) deny the request to Transfer the Lease so long as Landlord’s denial is
not unreasonable. As used herein, the term “Affected Space” shall mean all Net
Rentable Area covered by a particular proposed or approved Transfer, and the
term “Total Affected Space” shall mean the sum of the Affected Space in the
proposed Transfer and all Affected Space in all prior Transfers (to the extent
such Transfers have not terminated or expired by the date of Tenant’s notice
under Section 8.1).

Landlord shall have a period of twenty (20) days following any interview and
receipt of such additional information as Landlord reasonably requests (or
thirty (30) days from the date of Tenant’s original notice if Landlord does not
request additional information or an interview) within which to respond to
Tenant’s request. If Landlord fails to notify Tenant in writing of such election
within said period, Landlord shall be deemed to have waived options (a) and
(b) above and to have denied consent to the proposed Transfer. In deciding
whether to consent to a proposed Transfer, Landlord may consider any factors
that Landlord deems relevant, including but not limited to the following:
(i) whether the use of the Premises by the proposed Transferee would be a
Permitted Use; (ii) only with respect to any assignment of this Lease or any
sublease for all of the Premises for substantially all of the then-remaining
Term, whether the proposed Transferee is of sound financial condition and has
sufficient financial resources and business expertise, as determined by
Landlord, to perform under this Lease; (iii) whether the proposed Transferee’s
use involves the storage, use, treatment or disposal of any Hazardous Materials;
(iv) whether the proposed use or the proposed Transferee could cause the
violation of any covenant or agreement of Landlord to any third party or
sublessee or permit any other tenant to terminate its lease; (v) whether there
is other comparable space available for lease in the Building in the same
elevator bank in which Tenant desires to sublease space; and (vi) whether the
terms of the proposed Transfer are reasonable; however, Landlord may not
consider as a factor whether the proposed Transferee leases or occupies any
other space in the Building or whether there is other comparable space available
for lease in the Building in another elevator bank. Failure by Landlord to
approve a proposed Transfer shall not cause a termination of this Lease, and the
sole remedy of Tenant shall be an action for injunctive or declaratory relief.

Notwithstanding the foregoing, if Tenant proposes a Transfer and Landlord
exercises either option (a) or option (b) above, Tenant may withdraw its request
by written notice to Landlord given within five (5) Business Days after
Landlord’s delivery of its notice of recapture hereunder, in which event such
Transfer shall not occur, neither option (a) or option (b) shall become
effective, and this Lease shall remain in full force and effect as to the space
subject to the proposed Transfer.

8.4 Division of Excess Rent. Any rent or other consideration realized by Tenant
in connection with or as a result of any Transfer (other than a Transfer to a
Qualified Transferee or a Qualified Joint Venture) in excess of the Rent payable
hereunder, after first deducting all reasonable and customary costs actually
incurred by Tenant in connection with or to effect such Transfer (such as tenant
improvements, brokerage fees, advertising costs and the like) shall be divided
equally between Landlord and Tenant and Landlord’s share shall be paid to
Landlord as Rent hereunder promptly after Tenant’s recovery of such costs and
receipt of such sums; provided, however, that Landlord shall be entitled to
receive the total rent and other consideration if Tenant is in default of any
obligation under this Lease until such default is cured.

8.5 Tenant Not Released. No Transfer by Tenant shall relieve Tenant of any
obligation under this Lease unless otherwise agreed by Landlord in a writing
executed by Landlord. Any Transfer that conflicts with the provisions hereof
shall be void. No consent by Landlord to any Transfer shall

 

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constitute a consent to any other Transfer nor shall it constitute a waiver of
any of the provisions of this Article 8 as they apply to any such future
Transfers. Following any Transfer, the obligations for which the Tenant or
subsequent transferor remains liable under this Lease shall include all
obligations under this Lease in effect at the time of the Transfer and any
subsequent amendments to this Lease executed by Landlord and the Transferee.
Tenant covenants and agrees that the documentation evidencing any Transfer
involving an assignment shall not restrict or limit the Transferee’s right or
ability to amend this Lease.

8.6 Written Agreement. Any Transfer must be in writing and the Transferee shall
assume in writing, for the express benefit of Landlord, all of the obligations
of Tenant under this Lease with respect to the space transferred, provided that
no such assumption shall be deemed a novation or other release of the transferor
unless otherwise agreed in writing. Tenant shall provide to Landlord true and
correct copies of the executed Transfer documents and any amendment thereto
during the Term.

8.7 No Transfer Period. Except with respect to Transfers to Qualified
Transferees and Qualified Joint Ventures pursuant to Section 8.2 above, Tenant
shall not enter into any Transfer of this Lease until the third
(3rd) anniversary of the Term Commencement Date.

8.8 Conditions. If the portion of the Premises subject to any Transfer will have
a separate entry from the balance of the Premises on that floor, Landlord may
condition its consent to that Transfer on Tenant’s construction of a
multi-tenant corridor in a configuration and design approved by Landlord. Any
improvements, additions, or alterations to the Building that are required by any
law, ordinance, rule or regulation as a result of any Transfer hereunder, shall
be installed and provided by Tenant in accordance with Section 6.7. without cost
or expense to Landlord.

8.9 Expenses. Landlord may hire outside consultants to review the Transfer
documents and information. Except for Transfers that do not require Landlord’s
consent and for Transfers to Qualified Transferees and Qualified Joint
Venturers, Tenant shall pay Landlord an administrative fee of One Thousand
Dollars ($1,000) and in addition shall reimburse Landlord for all reasonable
costs and expenses incurred by Landlord in connection with any request for
consent under this Article 8 (even if consent is denied or the request is
withdrawn) and such reimbursement shall include the reasonably allocated cost of
Landlord’s or its management company’s staff plus all out-of-pocket expenses,
including reasonable attorneys’ fees within twenty (20) days after presentment
of an itemization thereof.

8.10 No Restriction on Landlord. Without liability to Tenant, Landlord shall
have the right to offer and to lease space in the Building, or in any other
property, to any party, including without limitation parties with whom Tenant is
negotiating, or with whom Tenant desires to negotiate, a Transfer.

8.11 No Leasehold Financing. Tenant shall not encumber, pledge or mortgage the
whole or any part of the Premises or this Lease, nor shall this Lease or any
interest thereunder be assignable or transferable by operation of law or by any
process or proceeding of any court or otherwise without the prior written
consent of Landlord, which consent may be given or withheld in Landlord’s sole
discretion.

ARTICLE 9

Condition and Operation of the Building

9.1 No Warranty. Except for representations and warranties listed below in this
Section 9.1, and its covenants elsewhere in this Lease, Landlord’s entire
obligation with respect to the condition of the Premises, its suitability for
Tenant’s uses and the improvements to be installed therein shall be as stated in
Exhibit C. Except for representations and warranties listed below in this
Section 9.1, and its covenants elsewhere in this Lease, Landlord shall have no
other obligation of any kind or character, express or implied, with respect to
the condition of the Premises, or the Building or the suitability thereof for
Tenant’s purposes, and Tenant acknowledges that it has neither received nor
relied upon any representation or warranty made by or on behalf of Landlord with
respect to such matters. Landlord represents and warrants to Tenant as follows:

(a) Tenant’s use of the Premises for general office space is authorized by
applicable law;

 

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(b) There is no transportation management or governmental plan currently in
effect with respect to the Building although Tenant as a large employer may be
subject to comparable requirements;

(c) To Landlord’s current actual knowledge, the Common Areas of the Building
comply with the Title III of the Americans With Disabilities Act; and

(d) Landlord has not received any written notice from any governmental authority
that any portion of the Building is currently in violation of any applicable
Law.

9.2 Building Alterations. Landlord may, in its sole discretion, at any time and
from time to time, so long as such do not materially and negatively affect
Tenant’s access to, use of or operations on the Premises, its parking, its
naming rights, or materially and demonstrably increase its costs of operations
in the Premises or its share of Operating Costs: (a) make alterations,
structural modifications, seismic modifications or additions to the Building
(but not build additional stories); (b) change, add to, eliminate or reduce the
extent, size, shape or configuration of any aspect of or improvement (Including
the Building) located on the Real Property or its operations; (c) change the
arrangement, character, use or location of corridors, stairs, toilets,
mechanical, plumbing, electrical or other operating systems or any other parts
of the Building; (d) except as expressly provided herein, change the name,
number or designation by which the Building is commonly known; or (e) alter or
relocate any portion of the Common Areas or any other common facility. Subject
to such limitations and the other limitations in this Lease, none of the
foregoing acts shall be deemed an actual or constructive eviction of Tenant,
entitle Tenant to any reduction of Rent or result in any liability of Landlord
to Tenant. Subject to such limitations and the other limitations in this Lease,
Landlord shall have the exclusive rights to the airspace above and around, and
the subsurface below, the Premises and the Building, including, without
limitation, the exclusive right to use all exterior walls, roofs and other
portions of the Building for signs, notices and other promotional purposes.
Subject to the other provisions of this Lease, Landlord shall have the sole and
exclusive right to possession and control of the Common Areas and all other
areas of the Building and Real Property outside the Premises.

ARTICLE 10

Lender Rights

10.1 Subordination. This Lease is subject and subordinate to each ground or land
lease which may now or hereafter cover all or any portion of the Building or
Real Property mortgage, deed of trust or other financing or security agreement
which may now or hereafter encumber all or any portion of the Building or Real
Property and to all renewals, modifications, consolidations, replacements and
extensions thereof (collectively, the “Senior Instruments”), subject to the
execution of an SNDA as provided for below. Landlord shall make good faith
efforts to obtain a non-disturbance agreement from the holder of any Senior
Instrument (the “Senior Parties”) for the benefit of Tenant in substantially the
form attached hereto as Exhibit H to confirm such subordination, attornment and
nondisturbance (an “SNDA”). If Landlord cannot obtain an SNDA in the form of
Exhibit H from the holder of any Senior Instrument in effect as of the date
hereof or if such Senior Party does not approve this Lease, then either Landlord
or Tenant may terminate this Lease at any time within thirty (30) days after the
date hereof.

10.2 Attornment. In the event of the enforcement by any Senior Party under any
Senior Instrument provided for by law or by such Senior Instrument, Tenant shall
attorn to any person or party succeeding to the interest of Landlord as a result
of such enforcement including any purchaser of all or any portion of the
Building or the Real Property at a public or private foreclosure sale or
exercise of a power of sale under such mortgage or deed of trust (collectively,
“Successor”) and shall recognize such Successor as the Landlord under this Lease
without change in the terms or other provisions of this Lease

 

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except as provided in the SNDA. Notwithstanding the foregoing, a Senior Party
may elect at any time to cause its interest in the Building or the Real Property
to be subordinate and junior to Tenant’s interest under this Lease by filing an
instrument in the real property records of King County, Washington effecting
such election and providing Tenant with notice of such election. In no event
shall any Senior Party or any Successor have any liability or obligation
whatsoever to Tenant or Tenant’s successors or assigns for the return of all or
any part of the Security Deposit unless, and then only to the extent that, such
Senior Party or Successor actually receives all or any part of the Security
Deposit.

10.3 REAs. Intentionally Omitted.

10.4 Estoppel Certificate. Within ten (10) Business Days of a written request
from Landlord, Tenant shall execute and deliver to Landlord an estoppel
certificate addressed to Landlord and/or to any Senior Party or prospective
Senior Party or, any purchaser or prospective purchaser of all or any portion
of, or interest in, the Building or Real Property, on a form supplied by
Landlord or such other addressee, certifying as to such facts (if true) and
agreeing to such reasonable notice and cure provisions and other matters as the
addressee may reasonably require, including but not limited to the form attached
hereto as Exhibit F.

ARTICLE 11

Insurance

11.1 Landlord’s Property Insurance. Landlord shall maintain, or cause to be
maintained, a policy or policies of insurance with the premiums thereon fully
paid in advance, issued by and binding upon an insurance company of good
financial standing, insuring the Building against loss or damage by fire or
other insurable hazards (including earthquake loss if Landlord elects to
maintain such coverage) and contingencies for the full insurable value thereof
(or such minimum amount as shall be required to eliminate operation of
coinsurance provisions), exclusive of excavations and foundations, including
loss of rental income for a period of twelve (12) months. Landlord shall not be
obligated to insure any of Tenant’s Personal Property, or any Tenant Extra
Improvements or Alterations that Tenant may make upon the Premises. All
insurance proceeds payable under Landlord’s insurance carried hereunder shall be
payable solely to Landlord and Tenant shall have no interest therein.

11.2 Liability Insurance. Landlord shall maintain or cause to be maintained with
respect to the Building a policy or policies of commercial general liability
insurance with the premiums thereon fully paid in advance, issued by and binding
upon an insurance company of good financial standing meeting the requirements of
Section 11.3(e), such insurance to afford minimum protection of not less than
Five Million Dollars ($5,000,000.00), per occurrence, combined single limit, for
bodily injury (including death and property damage). The coverages required to
be carried shall be extended to include, but not to be limited to, blanket
contractual liability, personal injury liability (libel, slander, false arrest
and wrongful eviction), and broad form property damage liability. Landlord’s
liability insurance policy shall name Tenant and Tenant Parties as additional
insureds. Upon written request from Tenant no more than one time per year,
Landlord shall provide Tenant reasonable evidence that the insurance required to
be maintained hereunder by Landlord is in full force and effect. Landlord’s
liability insurance shall be primary with respect to Claims arising in the
Common Areas to the extent that the Claim is covered by such insurance, with any
other insurance available to Tenant being excess.

11.3 Tenant’s Insurance.

(a) Property Insurance. Tenant shall provide “all risk” insurance coverage
during the Term insuring against loss or damage by fire and such other risks as
are from time to time included in an ISO Special Form (ISO CP 10 30 or
equivalent) policy or any other comparable or better coverage (including without
limitation sprinkler leakage and water damage), insuring the full replacement
cost of any Tenant Extra Improvements, any Alterations and Tenant’s Personal
Property, as the same may exist from time to time, naming Landlord as the loss
payee with respect to the Tenant Extra Improvements and Alterations.

 

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(b) Liability Coverage. Tenant shall maintain or cause to be maintained a policy
or policies of commercial general liability and excess liability insurance with
the premiums thereon fully paid in advance, issued by and binding upon an
insurance company of good financial standing, such insurance to afford minimum
protection of not less than Five Million Dollars ($5,000,000.00), per
occurrence, combined single limit, for personal injury, bodily injury (including
death) and property damage, or such higher amounts as Landlord may form time to
time (but not more frequently than once every five (5) years) reasonably
designate by not less than ninety (90) days notice. The coverages required to be
carried shall be extended to include, but not to be limited to, blanket
contractual liability, personal injury liability (libel, slander, false arrest
and wrongful eviction), and broad form property damage liability. Tenant’s
contractual liability insurance shall apply to Tenant’s indemnity obligations
under this Lease and the certificate evidencing Tenant’s insurance coverage
shall state that the insurance includes the liability assumed by Tenant under
this Lease. Tenant’s policy shall be written on an occurrence basis. Tenant’s
liability insurance policy shall name Landlord and Landlord Parties as
additional insureds using the ISO CG 20 26 or its equivalent or such other form
required by Landlord from time to time. Tenant’s liability insurance shall be
primary with respect to Claims arising in the Premises to the extent that the
Claim is covered by such insurance, with any other insurance available to
Landlord being excess.

(c) Workers’ Compensation Insurance. Throughout the Lease Term, Tenant, at its
own expense, shall keep and maintain in full force and effect workers’
compensation insurance in an amount equal to at least the minimum statutory
amount then currently required in the State of Washington. In addition, Tenant
shall maintain Employer’s Liability Insurance with limits of at least One
Million Dollars ($1,000,000.00).

(d) Auto Liability Insurance. If Tenant operates any automobile or other motor
vehicle servicing the Premises, Tenant shall maintain insurance covering
liability arising out of the operation of any automobile or other motor vehicle,
including owned, hired and nonowned vehicles, with a limit of not less than One
Million Dollars ($1,000,000.00).

(e) Other. Such other form or forms of insurance as are generally required or
obtained for similar projects, as Landlord or any mortgagee of Landlord may
reasonably require from time to time, against the same or other insurable
hazards which at the time are commonly insured against in the case of premises
similarly situated, due regard being given to the height and type of buildings
thereon and their construction, use and occupancy. Landlord may not invoke its
rights under this clause more frequently that once every five (5) years.

(f) Policy Form. All policies required to be carried by Tenant, under this
Article 11 shall be written with financially responsible companies with a Best &
Company rating of “B+IX” or better and each insurer shall agree not to cancel or
alter the policy without at least thirty (30) days prior written notice to
Landlord and all named and additional insureds. Unless Tenant maintains a net
worth equal to at least one hundred million dollars ($100,000,000), any
deductible or self-insurance provisions under any property insurance policies
maintained by Tenant shall not exceed one hundred thousand dollars ($100,000)
without Landlord’s prior written approval.

(g) Certificates. Prior to commencement of the Term, and thereafter during the
Term, within fifteen (15) days prior to the expiration date of any such
coverage, Tenant shall deliver to Landlord copies of the insurance policies or a
certificate or certificates of the insurance required hereunder together with
copies of all endorsements required above. If Tenant fails to provide such proof
of insurance within ten (10) Business Days after Landlord’s written demand,
Landlord shall be authorized (but not required) to procure such coverage in the
amounts stated with all costs thereof to be charged to Tenant and paid upon
written invoice therefor as an Extra Service.

 

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11.4 Indemnity and Exoneration.

(a) Landlord shall not be liable to Tenant for any loss, damage or injury to
person or property caused by (i) theft, fire, vandalism, assault, battery, act
of God, acts of the public enemy, acts of terrorists or criminals, riot, strike,
insurrection, war, court order, requisition or order of governmental body or
authority, or (ii) the negligence or willful misconduct of Tenant or Tenant
Parties, or (iii) repair or alteration of any part of the Building or failure to
make any such repair except as expressly otherwise provided in this Lease. As
used in this Section 11.4, the term “negligence” shall mean the failure of a
party to perform in accordance with normal and prudent professional standards.

(b) Tenant shall indemnify, defend, protect and hold Landlord and Landlord
Parties harmless from and against any and all Claims arising out of or related
to claims of injury to or death of persons, damage to property to the extent
occurring or resulting directly or indirectly from the use or occupancy of the
Premises or activities of Tenant or Tenant Parties in or about the Premises, the
Building or the Real Property; provided, however, that the foregoing indemnity
shall not be applicable to claims to the extent arising by reason of the
negligence or willful misconduct of Landlord, unless such claims are or should
be covered by insurance required to be carried by Tenant under the terms of this
Lease, in which case such claims shall be subject to the terms of this
indemnity.

(c) Landlord shall indemnify, defend, protect and hold Tenant and Tenant Parties
harmless from and against any and all claims, judgments, damages, penalties,
fines, costs, expenses, liabilities or losses to the extent arising out the
negligence or willful misconduct of Landlord, unless such claims are or should
be covered by insurance required to be carried by Tenant under the terms of this
Lease, in which case such claims shall not be subject to the terms of this
indemnity; provided, however, that the foregoing indemnity shall not include
claims to the extent arising by reason of the negligence or willful misconduct
of Tenant or Tenant Parties unless such claims are or should be covered by
insurance required to be carried by Landlord under the terms of this Lease, in
which case such claims shall be subject to the terms of this indemnity.

(d) The foregoing indemnities shall survive expiration or termination of this
Lease. To the extent, but only to the extent, necessary to fully indemnify the
parties from claims made by the indemnifying party or its employees, the
indemnities herein constitute a waiver of the indemnifying party’s immunity
under the Washington Industrial Insurance Act, RCW Title 51, as between Landlord
and Tenant only.

(e) LANDLORD AND TENANT ACKNOWLEDGE BY THEIR INITIALS BELOW THAT EACH
INDEMNIFICATION PROVISION OF THIS LEASE (INCLUDING, BUT NOT LIMITED TO, THOSE
RELATING TO WORKER’S COMPENSATION BENEFITS AND LAWS) AND EACH WAIVER OF CLAIMS
HEREIN WAS SPECIFICALLY NEGOTIATED AND AGREED TO BY LANDLORD AND TENANT.

 

LOGO [g50236ex10-2_image003.jpg]

    

LOGO [g50236ex10-2_image004.jpg]

Tenant’s Initials      Landlord’s Initials

11.5 Indemnity for Liens. Tenant shall indemnify, defend and protect Landlord
and hold and save Landlord harmless of and from any and all loss, claims,
proceedings, cost, damage, injury, causes of action, liabilities or expense
arising out of or in any way related to any lien filed for work or labor
performed, materials or supplies furnished to or at the request of Tenant or in
connection with performance of any work done for the account of Tenant in the
Premises or the Building, other than that to be performed by Landlord at its
expense.

11.6 Waiver of Subrogation Rights. Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant each waive all rights of recovery, claim,
action or cause of action, against the other, Tenant Parties or Landlord
Parties, as applicable, for any loss or damage that may occur to the Premises,
or any improvements thereto, or the Building or Real Property or any personal
property of such party

 

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therein, by reason of fire, the elements, or any other cause to the extent that
such rights of recovery, claim, action or cause of action is or would be covered
by insurance required to be obtained pursuant to this Lease or that would be
covered but for any deductibles or self-insured retention permitted hereunder,
regardless of cause or origin, including negligence of the other party, Landlord
Parties or Tenant Parties, as applicable, and each party covenants that no
insurer shall hold any right of subrogation against such other party. Tenant
shall advise its insurers of the foregoing and such waiver shall be a part of
each policy maintained by Tenant that applies to the Premises, any part of the
Building or Real Property or Tenant’s use and occupancy of any part thereof.

ARTICLE 12

Casualty and Eminent Domain

12.1 Damage and Destruction. If a fire or other casualty in the Premises or the
Building occurs, each party shall promptly give notice thereof to the other. The
following provision shall apply to any fire or other casualty:

(a) If the damage is limited solely to the Premises and the Premises can, in the
reasonable opinion of Landlord, be made tenantable with all damage repaired
within six (6) months from the date of damage or destruction, then Landlord
shall give Tenant notice thereof promptly after such determination is made and
shall diligently rebuild the same; provided, however, that Landlord shall not be
obligated to expend for such repair an amount in excess of the insurance
proceeds recovered or recoverable as a result of such damage and any deductibles
and self-insured retentions reimbursed in full as part of Operating Costs.

(b) If portions of the Building outside the boundaries of the Premises are
damaged or destroyed (whether or not the Premises are also damaged or destroyed)
and (i) the Premises and the Building can both, in the reasonable opinion of
Landlord, be made tenantable with all damage repaired within six (6) months from
the date of damage or destruction, and (ii) Landlord determines that such
reconstruction is economically feasible, then Landlord shall give Tenant notice
thereof promptly after such determination is made and shall diligently rebuild
the same; provided, however, that Landlord shall not be obligated to expend for
such repair an amount in excess of the insurance proceeds recovered or
recoverable as a result of such damage and any deductibles and self-insured
retentions reimbursed in full as part of Operating Costs.

(c) If (i) the Premises should be materially damaged by any occurrence not
covered by Landlord’s insurance, or (ii) the Premises or the Building should be
damaged to the extent that the damage cannot, in Landlord’s reasonable opinion
be restored within six (6) months from the date of damage, or (iii) the Building
should be damaged to the extent of more than fifty percent (50%) of the cost of
replacement thereof, notwithstanding that the Premises may be undamaged, or
(iv) if the damage occurs during the last two (2) years of the Term and Tenant
does not exercise an Extension Option (if any Extension Options remain to be
exercised), Landlord may elect either to repair or rebuild the Premises or the
Building or to terminate this Lease upon giving notice in writing of such
election to Tenant within sixty (60) days after the happening of the event
causing the damage.

(d) During any period when the Premises are rendered untenantable because of any
casualty, Rent shall abate proportionately until such time as the Premises are
made tenantable as reasonably determined by Landlord, and no portion of the Rent
so abated shall be subject to subsequent recapture; provided, however, that
there shall be no such abatement for any period in excess of twelve (12) months.

(e) The proceeds from any insurance paid by reason of damage to or destruction
of the Building or any part thereof, the Building Standard Improvements or any
other element, component or property insured by Landlord shall belong to and be
paid to Landlord subject to the rights of any mortgagee of Landlord’s interest
in the Building or Real Property or the beneficiary of any deed of trust

 

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that constitutes an encumbrance thereon. If this Lease is terminated by either
party as a consequence of a casualty in accordance with any of the provisions of
this Section 12.1, all proceeds of insurance required to be maintained either by
Landlord or Tenant shall be paid to Landlord subject to the rights of any
mortgagee of Landlord’s interest in the Building or Real Property or the
beneficiary of any deed of trust that constitutes an encumbrance thereon;
provided, however, that Tenant shall be paid all proceeds of insurance payable
in connection with Tenant’s Personal Property.

(f) If the Premises, or any part thereof, or any portion of the Building
necessary for Tenant’s use of the Premises, are damaged or destroyed during the
last twelve (12) months of the Term, or any extension thereof, Landlord or
Tenant may terminate this Lease by giving written notice thereof to the other
party within thirty (30) days after the date of the casualty, in which case this
Lease shall terminate as of the later of the date of the casualty or the date of
Tenant’s vacation of the Premises.

(g) If Landlord rebuilds the Premises under any provision of this Article 12,
Landlord shall have no obligation to repair or restore Tenant’s Personal
Property, Tenant Extra Improvements or Alterations and Tenant shall repair and
restore Tenant Extra Improvements and any Alterations at Tenant’s expense so as
to restore the Premises to the condition existing prior to such damage or
destruction, or, at Landlord’s election, Landlord may repair and rebuild the
Tenant Extra Improvements or Alterations, at Tenant’s sole cost and expense in
accordance with Section 6.7 of this Lease.

(h) Notwithstanding any other provision of this Section 12.1, within a
reasonable period of time after the occurrence of any casualty but not to exceed
sixty (60) days, Landlord shall notify Tenant as to the expected period of time
needed to make any repair or restoration. If (A) Landlord estimates that it will
take more than one hundred eighty (180) days to complete the repair or
restoration after the date such estimate is finalized, and (B) the damage or
destruction renders a material portion of the Premises untenantable, then Tenant
may elect to terminate this Lease by giving Landlord written notice of
termination within twenty (20) days after receipt of Landlord’s notice. If
Tenant does not provide written notice within such time period, Tenant shall
have permanently waived its right to terminate this Lease pursuant to the prior
sentence. In addition, if Landlord has not completed any restoration within one
hundred twenty (120) days after the expiration of Landlord’s estimated period
for completion (as such period may be extended by any period of Force Majeure or
delay in receiving insurance proceeds), then Tenant may notify Landlord in
writing that Tenant wishes to terminate the Lease. If Landlord has not completed
restoration and delivered possession of the restored Premises to Tenant within
thirty (30) days after the date of such notice then this Lease shall terminate
and be of no further force and effect. If Landlord completes restoration and
delivers possession of the restored Premises to Tenant within thirty (30) days
after the date of such notice then this Lease shall continue in full force and
effect.

12.2 Condemnation.

(a) If such portion of the Premises or any portion of the Building or Real
Property shall be taken or condemned for any public purpose and the remainder of
the Premises are rendered untenantable, as reasonably determined by Landlord and
Tenant, this Lease shall, at the option of either party, terminate as of the
date of such taking. If this Lease is not terminated in its entirety then it
shall terminate only as to the portion of the Premises taken and Base Rent and
Tenant’s Proportionate Share shall be adjusted to reflect the new Net Rentable
Area of the Premises and/or the Building. If any portion of the Building or Real
Property shall be taken or condemned for any public purpose to such an extent as
to render the Building not economically viable in Landlord’s discretion, then
whether or not the Premises or any part thereof is taken or conveyed, Landlord
may by notice in writing to Tenant terminate this Lease, and the Base Rent and
other charges shall be paid or refunded as of the date of such taking.

(b) If during the Term of this Lease the entire Premises shall be taken by
eminent domain or destroyed by the action of any public or quasi-public
authority or in the event of conveyance in

 

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lieu thereof, this Lease shall terminate as of the day possession shall be taken
by such authority, and Tenant shall pay Rent up to that date with an appropriate
refund by Landlord of such rent as shall have been paid in advance for a period
subsequent to the date of the taking of possession.

(c) If a temporary taking of all or a portion of the Premises occurs, there
shall be no abatement of Rent and Tenant shall remain fully obligated for
performance of all of the covenants and obligations on its part to be performed
pursuant to the terms of this Lease. All proceeds awarded or paid with respect
thereto shall belong to Tenant.

(d) All compensation awarded for any such taking or conveyance whether for the
whole or a part of the Premises shall be the property of Landlord, whether such
damages shall be awarded as compensation for diminution in the value of the
leasehold or of the fee of or underlying leasehold interest in the Premises, and
Tenant waives all claims against Landlord and the condemning authority for
damages for termination of its leasehold interest or interference with its
business and hereby assigns to Landlord all of Tenant’s right, title and
interest in and to any and all such compensation; provided, however, that Tenant
shall be entitled to claim, prove and receive in the condemnation proceedings
such separate award as may under the laws of the State of Washington be
expressly allocated to Tenant’s personal property or relocation expenses,
provided that such award shall be made by the court in addition to and shall not
result in a reduction of the award made to Landlord.

ARTICLE 13

Default

13.1 Events of Default. The occurrence of any of the following shall constitute
an event of default (“Event of Default”) on the part of Tenant:

(a) Abandonment. Intentionally Omitted;

(b) Nonpayment of Rent. Failure to pay any installment of Base Rent, Operating
Costs or other items of Rent, upon the date when payment is due if such failure
is not cured within three (3) Business Days after written notice of such failure
provided, however, that Landlord shall not be required to give written notice of
non-payment more than three (3) times in any twelve (12) month period and the
fourth (4th) late payment in any twelve (12) month period shall be an immediate
Event of Default without notice;

(c) Other Obligations. Failure to perform any obligation, agreement or covenant
under this Lease other than those matters specified in Sections 13.1(a), 13.1(b)
and 13.1(i), such failure continuing for thirty (30) days after written notice
of such failure (or with respect to nonmonetary obligations only, such longer
period as is reasonably necessary to remedy such default, provided that Tenant
shall continuously and diligently pursue such remedy at all times until such
default is cured);

(d) General Assignment. A general assignment for the benefit of creditors by
Tenant;

(e) Bankruptcy. The filing of any voluntary petition in bankruptcy by Tenant, or
the filing of an involuntary petition by Tenant’s creditors, which involuntary
petition remains undischarged for a period of sixty (60) days;

(f) Receivership. The employment of a receiver to take possession of
substantially all of Tenant’s assets or the Premises, if such receivership
remains undissolved for a period of thirty (30) days after creation thereof;

(g) Attachment. The attachment, execution or other judicial seizure of all or
substantially all of Tenant’s assets or the Premises, if such attachment or
other seizure remains undismissed or undischarged for a period of thirty
(30) days after the levy thereof;

 

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(h) Insolvency. The admission by Tenant in writing of its inability to pay its
debts as they become due, the filing by Tenant of a petition seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute, law or regulation, if
within sixty (60) days after the commencement of any proceeding against Tenant
seeking any reorganization, or arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, such proceeding shall not have been dismissed; and

(i) Failure to Deliver. Failure to deliver any subordination or attornment
agreement or estoppel certificate within three (3) Business Days after written
notice that such document was not received when and as required under Article
10.

13.2 Remedies Upon Default.

(a) Termination. If an Event of Default is outstanding, Landlord shall have the
right, with or without notice or demand, immediately (after expiration of the
applicable grace periods specified herein) to terminate this Lease, and at any
time thereafter recover possession of the Premises or any part thereof and expel
and remove therefrom Tenant and any other person occupying the same, by any
lawful means, and again repossess and enjoy the Premises without prejudice to
any of the remedies that Landlord may have under this Lease, or at law or equity
by reason of Tenant’s default or of such termination.

(b) Continuation After Default. Even though Tenant has breached this Lease
and/or abandoned the Premises, this Lease shall continue in effect for so long
as Landlord does not terminate Tenant’s right to possession under
Section 13.2(a) hereof, and Landlord may enforce all of its rights and remedies
under this Lease, including (but without limitation) the right to recover Rent
as it becomes due. Acts of maintenance, preservation or efforts to lease the
Premises or the appointment of receiver upon application of Landlord to protect
Landlord’s interest under this Lease shall not constitute an election to
terminate Tenant’s right to possession. If Landlord does not terminate this
Lease, then, regardless of whether Tenant shall have abandoned the Premises, and
without demand or notice except as required by any applicable statute, Landlord
may re-enter and take possession of the Premises or any part thereof by any
lawful means, expel from the Premises Tenant and anyone claiming through or
under Tenant, and remove the personal property of either. Landlord may relet the
Premises, or any part of them, in Landlord’s or Tenant’s name for the account of
Tenant, for such period of time and at such other terms and conditions as
Landlord, in its sole discretion, may determine. Landlord may collect and
receive the rents from the Premises. Re-entry or taking possession of the
Premises by Landlord under this Section shall not be construed as an election on
Landlord’s part to terminate this Lease, unless a written notice of termination
is given to Tenant. Landlord reserves the right following any re-entry or
reletting, or both, under this Section to exercise its right to terminate the
Lease. During the Event of Default, Tenant will pay Landlord the Rent and other
sums that would be payable under this Lease if repossession had not occurred,
less the net proceeds, if any, after reletting the Premises, after deducting
Landlord’s Reletting Expenses. “Reletting Expenses” is defined to include all
reasonable expenses incurred by Landlord in connection with reletting the
Premises, including without limitation, all repossession costs, labor costs,
brokerage commissions, attorneys’ fees, remodeling and repair costs, costs for
removing and storing Tenant’s property and equipment and rent concessions
granted by Landlord to any new tenant, prorated over the life of the new lease.

(c) Cure. Landlord may cure such default or perform such obligation on Tenant’s
behalf and at Tenant’s expense as an Extra Service. Tenant shall reimburse
Landlord on demand pursuant to Section 5.4. Following any Event of Default,
Landlord shall make commercially reasonable efforts to mitigate its damages to
the extent required by applicable Laws, provided, however, that Landlord shall
not be required to give preference to re-leasing the Premises if Landlord has
any other space available to lease and shall not be required to enter into a new
lease with any party that is not satisfactory to Landlord in its sole
discretion.

 

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(d) Waiver of Redemption Rights. Tenant, for itself, and on behalf of any and
all persons claiming through or under Tenant, including creditors of all kinds,
hereby waives and surrenders all rights and privileges that they may have under
any present or future law, to redeem the Premises or to have a continuance of
this Lease for the Lease Term, as it may have been extended.

13.3 Damages Upon Termination. Should Landlord terminate this Lease pursuant to
the provisions of Section 13.2(a) hereof, Landlord shall have all the rights and
remedies of a landlord under applicable law and, in addition, Landlord shall be
entitled to recover from Tenant: (a) the worth at the time of award of the
unpaid Rent and other amounts which had been earned at the time of termination;
(b) the worth at the time of award of the amount by which the unpaid Rent which
would have been earned after termination until the time of award exceeds the
amount of such Rent loss that Tenant proves could have been reasonably avoided;
(c) the worth at the time of award of the amount by which the unpaid Rent for
the balance of the Term after the time of award exceeds the amount of such Rent
loss that the Tenant proves could be reasonably avoided; (d) all costs incurred
by Landlord in reletting the Premises, including without limitation, brokerage
commissions, attorneys’ fees, marketing and advertising expenses and expenses of
cleaning, restoring or remodeling the Premises prorated over the initial term of
the new lease; and (e) any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant’s failure to perform its obligations
under this Lease or which, in the ordinary course of things, would be likely to
result therefrom. The “worth at the time of award” of the amounts referred to in
(a) and (b) shall be computed with interest at fifteen percent (15%) per annum
or the highest lawful commercial interest rate, whichever is the lower. The
“worth at the time of award” of the amount referred to in (c) shall be computed
by discounting such amount at the “discount rate” of the Federal Reserve Bank of
San Francisco in effect as of time of award plus one percent (1%) and, where
rental value is a material issue, shall be based upon competent appraisal
evidence.

13.4 Computation of Rent for Purposes of Default. For purposes of computing
unpaid Rent that would have accrued and become payable under this Lease pursuant
to the provisions of Section 13.3, unpaid Rent shall consist of the sum of:

(a) the total Base Rent for the balance of the Term, plus

(b) a computation of the Operating Costs for the balance of the Term, the
assumed Operating Costs for the calendar year of the default and each future
calendar year in the Term to be equal to the Operating Costs for the calendar
year prior to the year in which default occurs compounded at a per annum rate
equal to the mean average rate of inflation for the preceding five (5) calendar
years as determined by reference to the Consumer Price Index - All Items for
Seattle-Tacoma-Bremerton, All Urban Consumers, published by the Bureau of Labor
Statistics of the United States Department of Labor (Base Year 1982-84=100), or
such successor index as may be established to provide a measure of the current
purchasing power of the dollar (provided, however, that if no successor index is
published by the United States Department of Labor, Landlord may select in its
reasonable discretion a substitute index or method of measuring inflation) (the
“CPI Index”); plus

(c) the total payments for Parking Passes required to be purchased by Tenant
pursuant to Section 14.23 for the balance of the Term; plus

(d) the total payments for Extra Services required as a result of Tenant Extra
Improvements for the balance of the Term.

13.5 Late Charge. Tenant acknowledges that late payment by Tenant of Rent will
cause Landlord to incur costs not contemplated by this Lease, the exact amount
of such costs being extremely difficult and impracticable to fix. Such costs
include, without limitation, processing and accounting charges, and late charges
that may be imposed on Landlord by the terms of any note secured by a Senior

 

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Instrument covering the Premises. Therefore, in addition to Landlord’s other
remedies, if any payment of Rent is not received by the third (3rd) Business Day
after the due date thereof, Tenant shall pay a late fee in an amount equal to
the greater of two percent (2%) of the delinquency, the parties agreeing that
such sum represents a reasonable estimate of Landlord’s costs. Notwithstanding
the foregoing, Tenant shall not be assessed a late fee on the first three
(3) late payments in any twelve (12) month period unless the payment is not
received by the tenth (10th) day of the month. In addition, any sums not paid by
Tenant when due shall bear interest from the due date until paid in full at an
annual interest rate of fifteen percent (15%) or the highest commercial interest
rate permitted by Law, if less. The provision for a late charge and interest and
collection of such late charge or interest by Landlord, shall not be deemed a
waiver of any breach or Event of Default by Tenant under this Lease. If Tenant
pays Rent more than five (5) days after the due date thereof more than two
(2) times in any twelve (12) month period then the next late payment shall
constitute a noncurable default and Landlord shall be entitled to reject such
late payment and exercise its remedies under Section 13.2. If any of Tenant’s
Rent checks is returned by the bank without payment then Tenant shall pay a
bounced check charge of seventy-five dollars ($75.00).

13.6 Remedies Cumulative. All of the remedies permitted or available to Landlord
under this Lease, or at law or in equity, shall be cumulative and not
alternative and invocation of any such right or remedy shall not constitute a
waiver or election of remedies with respect to any other permitted or available
right or remedy.

13.7 Tenant’s Remedies. Landlord shall not be in default unless Landlord fails
to cure a default by Landlord of its obligations under this Lease within thirty
(30) days after its receipt of notice thereof from Tenant, or if such default is
not capable of being cured within said thirty (30) day period, Landlord has
failed to commence such cure and diligently pursue such cure until completion.
In no event shall Landlord be liable for consequential damages. Tenant shall not
sue, seek any remedy or enforce any right against Landlord until (a) Tenant
gives written notice to all Senior Parties, and (b) a reasonable time for such
Senior Party, at its option, to remedy the act or omission has elapsed following
the giving of notice by Tenant to Senior Party required hereunder, including,
without limitation, time to obtain possession from Landlord by power of sale or
judicial foreclosure, it being agreed that the Senior Party shall have no
obligation to Tenant to cure or remedy any act or omission of Landlord. Tenant
shall look solely to Landlord’s interest in the Building and the rents, issues,
profits and proceeds therefrom (including insurance and sale proceeds) for
recovery of any judgment from Landlord whether from a breach hereof or from a
right created by statute or at common law. Landlord (except as noted) and
Landlord Parties shall not be personally liable for any such judgment. Except to
the extent of any distributions or payments made to partners or members of
Landlord that are transfers in fraud of creditors, Tenant agrees that no other
property or assets of Landlord or any partner or member of Landlord shall be
subject to levy, execution or other enforcement procedures for satisfaction of
any such judgment or decree; no partner or member of Landlord shall be sued or
named as a party in any suit or action (except as may be necessary to secure
jurisdiction over Landlord); no service of process shall be made against any
partner or member of Landlord (except as may be necessary to secure jurisdiction
over Landlord); no judgment shall be taken against partner or member of
Landlord; no writ of execution shall ever be levied against the assets of any
partner or member of Landlord; and these covenants, limitations and agreements
are enforceable both by Landlord and by any partner or member of Landlord. Any
lien obtained to enforce any such judgment and any levy of execution thereon
shall be subject and subordinate to any Senior Instrument.

ARTICLE 14

Miscellaneous

14.1 No Waiver. Failure of Landlord or Tenant to declare any default immediately
upon occurrence thereof, or delay in taking any action in connection therewith,
shall not waive such default, but Landlord or Tenant, as the case may be, shall
have the right to declare any such default at any time thereafter. No waiver by
Landlord of an Event of Default, or any agreement, term, covenant or condition

 

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contained in this Lease, shall be effective or binding on Landlord unless made
in writing and no such waiver shall be implied from any omission by Landlord to
take action with respect to such Event of Default or other such matter. No
express written waiver by Landlord of any Event of Default, or other such
matter, shall affect or cover any other Event of Default, matter or period of
time, other than the Event of Default, matter and/or period of time specified in
such express waiver. One or more written waivers by Landlord of any Event of
Default, or other matter, shall not be deemed to be a waiver of any subsequent
Event of Default, or other matter, in the performance of the same provision of
this Lease. Acceptance of Rent by Landlord hereunder, or endorsement of any
check, shall not, in and of itself, constitute a waiver of any breach or Event
of Default or of any agreement, term, covenant or condition of this Lease,
except as to the payment of Rent so accepted, regardless of Landlord’s knowledge
of any concurrent Event of Default or matter. Landlord may, at its election,
apply any Rent received from Tenant to the oldest obligation outstanding from
Tenant to Landlord, any endorsement or other statement of Tenant to the contrary
notwithstanding. No course of conduct between Landlord and Tenant, and no
acceptance of the keys to or possession of the Premises before the termination
of the Term by Landlord or any employee of Landlord shall constitute a waiver of
any such breach or of any term, covenant or condition of this Lease or operate
as a surrender of this Lease.

14.2 Holding Over. If Tenant (or anyone claiming under Tenant) remains in
possession after expiration or termination of this Lease without the written
consent of Landlord, Tenant shall comply with all terms and conditions of this
Lease except that Tenant shall pay Base Rent for each month or partial month of
occupancy thereafter at a rate equal to two hundred percent (200%) of the Base
Rent for the last month of the Term, together with such other amounts as may
become due hereunder. No occupancy or payment of Rent by Tenant after expiration
of the Term shall operate to renew or extend the Term. If Tenant remains in
possession after the expiration or termination of this Lease without Landlord’s
consent, in addition to the payment described in the first sentence of this
Section 14.2, Tenant shall indemnify, defend, protect and hold Landlord and
Landlord Parties harmless from and against any and all Claims for damages by any
other tenant or third person to whom Landlord may have leased or offered to
lease all or any part of the Premises effective on or after the termination of
this Lease, together with all loss, cost, expense, damages and liabilities in
connection with any such reletting, including, without limitation, attorneys’
fees and Landlord’s lost revenues. If Tenant holds over with the consent of
Landlord in writing Tenant shall thereafter occupy the Premises under this Lease
on a month-to-month basis and Base Rent shall be increased to the greater of
(a) one hundred twenty-five percent (125%) of the Rent for the last month of the
term, or (b) the then current fair market rent for the Premises as determined by
Landlord in its reasonable discretion. For purposes of this Section 14.2, the
term “remains in possession” shall include circumstances where Tenant has failed
to fully vacate the Premises or failed to fully complete all removal and
restoration work required under this Lease.

14.3 Attorneys’ Fees. If litigation arises in connection with the enforcement or
interpretation of this Lease, the prevailing party shall recover its reasonable
attorneys’ fees, court costs and any costs incurred to collect any sums due. As
used herein, “prevailing party” shall mean the party who substantially prevails
in the matter at issue, including without limitation, a party who dismisses an
action for recovery hereunder in exchange for payment of the sums allegedly due,
performance of covenants allegedly breached or consideration substantially equal
to the relief sought in the action.

14.4 Amendments. This Lease may not be altered, changed or amended, except by an
instrument in writing signed by both parties.

14.5 Transfers by Landlord. Landlord shall have the right to transfer and
assign, in whole or in part, all of its rights and obligations hereunder and in
the Building and Real Property. If Landlord sells or otherwise transfers the
Building, or if Landlord assigns its interest in this Lease, other than an
assignment solely for security purposes, such purchaser, transferee or assignee
thereof shall be deemed to have assumed Landlord’s obligations hereunder, and
Landlord shall thereupon be relieved of all liabilities hereunder arising
thereafter, but this Lease shall otherwise remain in full force and effect.
Landlord or any person or party succeeding to possession of the Building as a
successor to Landlord shall be subject to Landlord’s obligations hereunder only
during the period of such person’s or party’s ownership.

 

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14.6 Severability. If any term or provision of this Lease, or the application
thereof to any person or circumstances, shall to any extent be invalid or
unenforceable, the remainder of this Lease, or the application of such provision
to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each provision of this Lease
shall be valid and shall be enforceable to the extent permitted by law.

14.7 Notices. All notices, demands, consents and approvals that may or are
required to be given by either party to the other hereunder shall be in writing
and shall be deemed to have been given upon refusal of delivery or upon delivery
if sent by personal delivery or when deposited with a nationally recognized
overnight courier service or in the United States mail, certified or registered,
postage prepaid, and addressed to the party to be notified at the address for
such party specified on the Basic Lease Information Sheet, or to such other
place as the party to be notified may from time to time designate by at least
fifteen (15) days notice to the notifying party. Tenant shall deliver a copy of
any notice given to Landlord to (a) Landlord’s property manager, (b) any Senior
Party whose address is known to Tenant, and (c) 2800 Post Oak Boulevard, 50th
floor, Houston, Texas 77056-6118, Attention: C. Hastings Johnson.
Notwithstanding the foregoing, personal delivery of notices to Tenant may be
made by leaving a copy of the notice, addressed to Tenant, at the Premises.
Tenant appoints as its agent to receive service of all default notices and
notice of commencement of unlawful detainer proceedings the person in charge of
or apparently in charge of the Premises at the time, and, if there is no such
person, then such service may be made by attaching the same on the main entrance
of the Premises.

14.8 Building Planning. Intentionally Omitted.

14.9 No Option. Submission of this instrument for examination or signature by
Tenant does not constitute a reservation of or an option to lease, and it is not
effective as a lease or otherwise until execution and delivery by both Landlord
and Tenant. Landlord shall not be deemed to have made an offer to Tenant by
furnishing Tenant with a copy of this Lease with particulars inserted. No
contractual or other rights shall exist or be created between Landlord and
Tenant until all parties hereto have executed this Lease and until it has been
approved in writing by any Senior Party and fully executed copies have been
delivered to Landlord and Tenant.

14.10 Integration and Interpretation. The terms of this Lease are intended by
the parties as a final expression of their agreement with respect to such terms
as are included in this Lease and may not be contradicted by evidence of any
prior or contemporaneous agreement, arrangement, understanding or negotiation
(whether oral or written). The parties further intend that this Lease
constitutes the complete and exclusive statement of its terms, and no extrinsic
evidence whatsoever may be introduced in any judicial proceeding involving this
Lease. The language in all parts of this Lease shall in all cases be construed
as a whole and in accordance with its fair meaning and not construed for or
against any party, regardless of which party may have drafted the provision in
question, it being agreed that this is a negotiated agreement. The following
exhibits and schedules are attached hereto and incorporated by this reference as
if fully set forth herein:

 

Exhibit A    Floor Plan of the Premises Exhibit B    Legal Description of the
Real Property Exhibit C    Work Letter Exhibit D    Rules and Regulations
Exhibit E    Lease Commencement Certificate Exhibit F    Form of Estoppel
Certificate Exhibit G    Asbestos Disclosure Exhibit G-l    Asbestos Standards
Exhibit H    Form of SNDA Exhibit I    Janitorial Specifications

 

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14.11 Quitclaim. Intentionally Omitted.

14.12 No Easement for Light, Air and View. This Lease conveys to Tenant no
rights for any light, air or view. Except as set forth herein, no diminution of
light, air or view, or any impairment of the visibility of the Premises from
inside or outside the Building, by any structure or other object that may
hereafter be erected (whether or not by Landlord) shall entitle Tenant to any
reduction of Rent under this Lease, constitute an actual or constructive
eviction of Tenant, result in any liability of Landlord to Tenant, or in any
other way affect this Lease or Tenant’s obligations hereunder.

14.13 No Merger. The voluntary or other surrender or termination of this Lease
by Tenant, or a mutual cancellation thereof shall not work a merger, but, at
Landlord’s sole option, shall either terminate all existing subleases or
subtenancies or shall operate as an assignment to Landlord of all suchsubleases
or subtenancies.

14.14 Memorandum of Lease. Upon request of either party, the parties shall
execute and record a memorandum hereof in a form acceptable to both parties
(which shall not include any of the financial terms of this Lease) provided that
simultaneously with such execution, Tenant shall execute and deliver to Landlord
a recordable termination of the memorandum in a form acceptable to Landlord
which Landlord may record at any time following the Expiration Date or any
earlier termination of this Lease.

14.15 Survival. All of Tenant’s covenants and obligations contained in this
Lease shall survive the expiration or earlier termination of this Lease with
respect to those obligations that accrued prior to termination or that are
expressly stated herein to survive termination. No provision of this Lease
providing for termination in certain events shall be construed as a limitation
or restriction of Landlord’s rights and remedies at law or in equity available
upon a breach by Tenant of this Lease.

14.16 Financial Statements. If Landlord intends to sell all or any portion of
the Building or the Real Property (or any interest therein), or obtain a loan
secured by the Building or the Real Property (or any interest therein), then
Tenant shall, within fifteen (15) days of Landlord’s written request, furnish
Landlord with financial statements, dated no earlier than one (1) year before
such request, certified as accurate by Tenant, or, if available, audited
financial statements prepared by an independent certified public accountant with
copies of the auditor’s statement, reflecting Tenant’s then current financial
condition, or the financial condition of the individuals comprising Tenant, in
such form and detail as Landlord may reasonably request. Any financial
statements provided by Tenant to Landlord hereunder shall be treated as
confidential information by Landlord, except to the extent information contained
therein is otherwise publicly available. Landlord may share such financial
statements with its attorneys, brokers, consultants, financial advisors and any
lender or prospective lender, prospective purchaser, investor or partner
provided that each such party shall be informed of this confidentiality
obligation. Landlord may also disclose such information in response to any court
order.

14.17 No Joint Venture. This Lease shall not be construed to create a
partnership, joint venture or similar relationship or arrangement between
Landlord and Tenant hereunder.

 

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14.18 Successors and Assigns. Except as otherwise provided herein, this Lease
shall be binding upon and inure to the benefit of Landlord, its successors and
assigns; and shall be binding upon and inure to the benefit of Tenant, its
successors, and to the extent assignment may be approved by Landlord hereunder,
Tenant’s assigns.

14.19 Applicable Law. All rights and remedies of Landlord and Tenant under this
Lease shall be construed and enforced according to the laws of the State of
Washington. Any actions or proceedings brought under this Lease, or with respect
to any matter arising under or out of this Lease, shall be brought and tried
only in courts located in the County of King, Washington (excepting appellate
courts).

14.20 Time of the Essence; Force Majeure. Time is of the essence of each and
every covenant herein contained. If either party to this Lease, as the result of
any (i) strikes, lockouts, or labor disputes; (ii) failure of power or other
utilities; (iii) inability to obtain labor or materials or reasonable
substitutes therefor; (iv) war, governmental action, court order, condemnation,
civil unrest, riot, fire or other casualty; (v) extreme or unusual weather
conditions, acts of God or unforeseen soil conditions; (vi) holdover by any
prior tenant, or (vii) other conditions similar to those enumerated in this
Section beyond the reasonable control of the party obligated to perform (except
for financial inability) (collectively, “Force Majeure”) fails punctually to
perform any obligation on its part to be performed under this Lease, then such
failure shall be excused and not be a breach of this Lease by the party in
question but only to the extent occasioned by such event. If any right or option
of either party to take any action under or with respect to this Lease is
conditioned upon the same being exercised within any prescribed period of time
or at or before a named date, then such prescribed period of time and such named
date shall be deemed to be extended or delayed, as the case may be, for a period
equal to the period of the delay occasioned by any event described above.
Notwithstanding anything herein contained, however, the provisions of this
Section shall not be applicable to Tenant’s obligation to pay Rent under this
Lease or its obligations to pay any other sums, monies, costs, charges or
expenses required to be paid by Tenant hereunder.

14.21 Confidentiality. Intentionally Omitted.

14.22 Interpretation. Except as specifically provided otherwise in this Lease,
Landlord may act in its sole and absolute discretion when required to act
hereunder or when deciding to grant its approval of any Tenant act. The term,
“including” shall mean “including, without limitation.” All indemnities
contained herein shall survive termination of this Lease with respect to any
act, condition or event that is the subject matter of such indemnity and that
occurs prior to the Expiration Date. Notwithstanding anything herein to the
contrary, all provisions of this Lease which require the payment of money or the
delivery of property after the Expiration Date shall survive termination of the
Lease.

14.23 Parking. Tenant shall lease (1) parking pass per 1,500 square feet of Net
Rentable Area in the Premises (each a “Parking Pass”). Rent for each Parking
Pass (the “Parking Rent”) will be at the then prevailing rate for parking in the
Garage but in no event more than the Maximum Parking Rates set forth in the
Parking Rate Chart set forth below (the “Rate Chart”). Tenant shall only pay
fifty percent (50%) of the initial Parking Rent for the first twelve (12) months
following the first Floor Commencement Date. The Parking Rent shall increase on
July 1 of each year as set forth in the Rate Chart.

In addition to the Parking Passes described above, Tenant may lease one
(1) additional Parking Pass per 1,500 square feet of Net Rentable Area in the
Premises in the Building Garage (the “Supplemental Parking”) at the rates set
forth in the Rate Chart for unreserved spaces. If Tenant leases any Supplemental
Parking, the Supplemental Parking area and all of Tenant’s unreserved parking
shall be on the lowest level(s) of the Garage and all holders of Tenant’s
unreserved Parking Passes shall be required to park in the designated parking
area. Tenant acknowledges that in order to provide the Supplemental Parking
Landlord will in all likelihood need to institute parking management services
such as valet or tandem parking. Tenant shall pay all reasonable, out-of-pocket
costs associated with creating,

 

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operating, and or maintaining the Supplemental Parking including the cost for
any valet services required to achieve the Supplemental Parking (the “Valet
Parking”). So long as Tenant pays such costs then the Parking Rent for the
Supplemental Parking shall be reduced by twenty-four percent (24%). Tenant shall
also have the right to lease five (5) Parking Passes allowing Tenant to park in
reserved spaces in the Garage (the “Reserved Parking”) at the rate for
unreserved parking as set forth in the Rate Chart. In addition, Tenant shall
lease fifteen (15) additional Reserved Parking spaces at the Reserved Rate set
forth in the Parking Chart. Landlord shall mark five (5) of the Reserved Parking
stalls as reserved for Tenant’s customers. The initial Reserved Parking Rent
rate is Three Hundred Ninety Dollars ($390.00) per month per stall. This
Reserved Parking Rent rate shall increase annually as set forth in the Rate
Chart.

Parking Rate Chart

 

Year   Unreserved   Reserved   Supplemental
(with discount) 2006   $ 270   $ 390   $ 205 2007   $ 284   $ 410   $ 215 2008  
$ 298   $ 430   $ 226 2009   $ 313   $ 451   $ 238 2010   $ 328   $ 474   $ 249
2011   $ 345   $ 498   $ 262 2012   $ 362   $ 523   $ 275 2013   $ 380   $ 549  
$ 289 2014   $ 399   $ 576   $ 303 2015   $ 419   $ 605   $ 318 2016   $ 440   $
635   $ 334 2017   $ 462   $ 667   $ 351

All Parking Rent shall be payable in advance on the first day of the month
together with the payment of Base Rent and shall be prorated for partial months.
Except as provided herein to the contrary, each Parking Pass shall entitle the
vehicle on which the Parking Pass is presented to park in the parking garage
located beneath the Building (the “Garage”) on a nonpreferential and
nonexclusive basis. Landlord shall have exclusive control over the day-to-day
operations of the Garage. Except as provided above for Reserved Parking, no
specific spaces in the Garage shall be assigned to Tenant. Landlord may make,
modify and enforce reasonable nondiscriminatory rules and regulations relating
to the parking of vehicles in the Garage, and Tenant shall abide by such rules
and regulations to the extent not inconsistent with this Lease and shall direct
its employees and invitees to abide by such rules and regulations. In lieu of
providing parking stickers or cards, Landlord may use any reasonable alternative
means of identifying and controlling vehicles authorized to be parked in the
Garage. Landlord may designate areas within the Garage for short term or
nontenant parking only and Landlord may change such designations from time to
time. Landlord reserves the right to alter the size of the Garage and the
configuration of parking spaces and driveways therein. Landlord may assign any
unreserved and unassigned parking spaces and/or make all or a portion of such
spaces reserved or institute any other measures, including but not limited to
valet, assisted or tandem parking, that Landlord determines are necessary or
desirable for tenant requirements or orderly and efficient parking. No such
changes may alter Tenant’s rights under this Lease. On a temporary basis during
Garage repairs or maintenance, Landlord at any time may, with prior notice to
Tenant and to the extent required for such work, substitute for Tenant’s Parking
Passes an equivalent number of parking spaces in a parking structure or
subterranean parking facility or within a surface parking area located a
reasonable distance from the Building.

 

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Landlord may operate the Garage or, in its discretion, may arrange for the
Garage to be operated by a third party and, for purposes of this Section 14.23,
such operator shall be entitled to exercise any rights granted to Landlord under
this Section. Upon request, Tenant will execute and deliver a parking agreement
with the operator of the Garage on the operator’s standard form of agreement, so
long as it is not inconsistent with the terms hereof. If Landlord hires a third
party to operate the Garage then the monthly parking charges shall be paid to
such operator at such place as the operator may direct but the parking charges
shall be considered additional Rent hereunder.

14.24 Brokers. Tenant and Landlord each represent and warrant to the other that
it has had no dealing with any broker or agent other than the Broker(s)
identified in the Basic Lease Information Sheet as Item 15. Tenant and Landlord
shall each indemnify, defend and hold the other party harmless from and against
any and all liabilities for commissions or other compensation or charges claimed
by any other broker or agent based on dealings with the indemnifying party with
respect to this Lease. The foregoing indemnity shall survive termination or
earlier expiration of this Lease. Upon execution of this Lease by Landlord and
Tenant, Landlord shall pay Tenant’s Broker a commission equal to Seven Dollars
and 50/100 ($7.50) per square foot of Net Rentable Area.

14.25 USA Patriot Act Disclosures. Pursuant to United States Presidential
Executive Order 13224 (“Executive Order”), Landlord and Tenant are each required
to ensure that it does not transact business with persons or entities determined
to have committed, or to pose a risk of committing or supporting, terrorist acts
and those identified on the list of Specially Designated Nationals and Blocked
Persons (the “List”), generated by the Office of Foreign Assets Control of the
U.S. Department of the Treasury. The names or aliases of these persons or
entities (“Blocked Persons”) are updated from time to time. Each party
represents to the other that (i) neither it nor to its actual knowledge any
person or entity that directly owns 10% or greater equity interest in it nor any
of its officers, directors, or managing members (collectively the “Covered
Parties”) is a person or entity with whom U.S. persons or entities are
restricted from doing business under regulations of the Office of Foreign Asset
Control (“OFAC”) of the Department of the U.S. Treasury (including those named
on OFAC’s Specifically Designated and Blocked Persons List) or under Executive
Order 13224 (the “Executive Order”) signed on September 24, 2001, and entitled
“Blocking Property and Prohibiting Transactions with Persons Who Commit,
Threaten to Commit, or Support Terrorism,” or other governmental action, and
(ii) that throughout the term of this Lease, the party and each of the Covered
Parties shall comply with the Executive Order. At any time and from time-to-time
during the Term, Tenant shall deliver to Landlord, within ten (10) days after
receipt of a written request therefor, a written certification or such other
evidence reasonably acceptable to Landlord evidencing and confirming Tenant’s
compliance with this provision.

14.26 Bike Storage. Landlord shall provide Tenant with a designated area of
approximately two hundred (200) square feet on Level A of the Garage (or another
area selected by Landlord) for secured bike storage (the “Bike Storage Area”).
The build-out of the Bike Storage Area shall be performed by Tenant in
accordance with plans reasonably agreed upon by Landlord and Tenant. Tenant
shall pay for the build-out of the Bike Storage Area and shall be responsible
for all costs of securing and maintaining the Bike Storage Area. The Base Rent
for the Bike Storage Area shall be $1.00 per month per square foot (the “Storage
Rent”) and Tenant shall pay Landlord all Storage Rent concurrently with all Base
Rent hereunder.

14.27 Conference Center; Rooftop Deck. Landlord shall provide Tenant with
nonexclusive access to (a) a conference center in the Building with space to
accommodate up to fifty (50) people seated in a stadium seating arrangement (the
“Building Conference Center”), and (b) the rooftop heliport/deck area (the
“Rooftop Deck”) if and to the extent permitted by applicable Laws (which do not
permit the Rooftop Deck to be used as a heliport). Landlord shall not be
required to incur any expense to modify the

 

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Rooftop Deck to permit it to be used for any purpose. The Building Conference
Center and the Rooftop Deck shall be available for use by Building tenants,
including Tenant, in accordance with rates and procedures established by
Landlord from time to time. The size, location and design of and improvements in
the Building Conference Center, if any, shall be subject to Landlord’s sole
discretion. Costs associated with leasing, operating, and maintaining the
Building Conference Center and the Rooftop Deck shall be included in Operating
Costs for which Tenant shall pay Tenant’s Proportionate Share. Tenant shall have
the right to use the Building Conference Center for a reasonable period of time
in approximate proportion to Tenant’s Proportionate Share of the Building and
shall be entitled to the reasonable use thereof without charge for a time period
equal to one-half (1/2) hour per month for each fifteen thousand (15,000) square
feet of Net Rentable Area in the Premises. Any fees collected by Landlord for
use of the Building Conference Center and the Rooftop Deck shall be offset
against any Operating Costs.

14.28 Roof Access. Tenant shall have the nonexclusive right to use a portion of
the roof of the Building to install, maintain and repair a satellite dish or
antenna (the “Antenna”) for Tenant’s and its Affiliates general business
purposes (but not for use by any third party) at Tenant’s sole cost and expense.
Tenant may not grant any other party any right to use the Antenna for any
purpose whatsoever. The Antenna may not be used for commercial purposes such as
providing cellular phone service. The design, appearance, size, location and
method of installation of the Antenna and the use thereof shall be subject to
all applicable laws and regulations and Landlord’s prior approval which may be
withheld in Landlord’s reasonable discretion. Landlord makes no representation
or warranty whatsoever as concerns (i) the use of the roof by Tenant nor
(ii) the safety thereof nor (iii) that the installation of the Antenna will be
permitted under applicable laws or (iv) that such use or Antenna will function.
Tenant shall be solely responsible for designing any improvements to the roof
and the Antenna in a manner that complies with all laws and in a manner that is
compatible with the design of the Building and other equipment located on the
roof of the Building. If at any time Tenant’s use of the roof or the Antenna
ceases to be permitted under applicable laws, Tenant’s rights under this Section
shall terminate and be of no further force or effect. Upon termination of
Tenant’s rights under this Section or upon Lease termination, Tenant at its sole
cost and expense shall promptly remove any improvement installed by Tenant
including the Antenna and all related wiring and equipment from the Building and
shall restore the Building to its condition prior to such installation. Tenant
shall be solely responsible for installation and maintenance of any
improvements, including the Antenna installed by Tenant on the roof and shall
ensure that such installation and maintenance do not void or limit any warranty
Landlord may have on the roof or roof membrane. Tenant shall provide Landlord
with full plans and specifications for any intended improvements to the roof
related to the Antenna, for Landlord’s approval prior to installation thereof
and such plans shall include details regarding Tenant’s proposed method of
installation. Tenant shall be permitted to install, maintain, remove and replace
cables or lines within the Building outside the Premises (at locations
designated by Landlord) to connect any Antenna to the Premises. Prior to
commencement of any work under this Section, Tenant shall obtain and deliver to
Landlord all necessary governmental permits for any improvement, including the
Antenna and related equipment. Tenant shall indemnify and hold harmless Landlord
from any Claims arising out of or in connection with any use by Tenant of the
roof and in connection with the installation and use of any improvement,
including the Antenna and related equipment in the Building. Tenant acknowledges
and agrees that Landlord has not represented or warranted that Tenant will have
unlimited access to riser space or other space outside the Premises for the
purpose of telecommunications equipment serving the Premises and Landlord shall
have no obligation to construct or designate additional riser space or equipment
space to accommodate the telecommunications equipment. Tenant acknowledges that
riser space is a finite commodity and that Landlord may in its discretion limit
Tenant’s total use of such space to accommodate and take into account use of the
Building systems and the needs of other Building tenants.

14.29 Counterparts. This Lease may be executed in counterparts, all of which
executed counterparts shall be deemed an original, but all of which, together,
shall constitute one and the same instrument. Signature pages may be detached
from the counterparts and attached to a single copy of this document to
physically form one document.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day
and year first above written.

 

   LANDLORD:    NOP 1001 FOURTH LLC, a Delaware limited liability company,   
By:    NATIONAL OFFICE PARTNERS LIMITED PARTNERSHIP,
Its sole member       By:    Hines National Office Partners Limited Partnership,
Its General Partner          By:    Hines Fund Management, L.L.C.,
Its General Partner             By:    Hines Interests Limited Partnership,
Its sole member                By:    Hines Holdings, Inc.,
Its General Partner                   By:   

LOGO [g50236ex10-2_image005.jpg]

                    

James C. Buie, Jr.

Executive Vice-President

Landlord Acknowledgement

State of California

County of San Francisco

On May 22, 2006, before me, Andrea M. Terwilliger (Name of Notary Public)
personally appeared James C. Buie, Jr. (Name of signer).

x Personally known to me

To be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.

Witness my hand and official seal.

 

LOGO [g50236ex10-2_image006.jpg]

Signature of Notary

 

[Tenant signature on following page]    LOGO [g50236ex10-2_image007.jpg]

 

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TENANT: SAFECO INSURANCE COMPANY OF AMERICA
a Washington corporation By:  

LOGO [g50236ex10-2_image008.jpg]

Name:   Arthur Chong Title:   Executive Vice President

 

Tenant Acknowledgement       STATE OF WASHINGTON    )       ) ss.    COUNTY OF
KING    )   

On this 23 day of May, 2006, before me, a Notary Public in and for the State of
Washington, personally appeared Arthur Chong, personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person who executed this
instrument, on oath stated that he/she was authorized to execute the instrument,
and acknowledged it as the Executive Vice President of SAFECO INSURANCE COMPANY
OF AMERICA to be the free and voluntary act and deed of said corporation for the
uses and purposes mentioned in the instrument.

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

 

LOGO [g50236ex10-2_image009.jpg]
NOTARY PUBLIC in and for the State of Washington,
residing at Lynnwood, WA Mv appointment expires 6-27-2009 Print Name Karri J.
Harrington

 

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