EXHIBIT 10.25

 

ELLIOTT BAY OFFICE PARK

OFFICE LEASE

 

THIS LEASE, made the 15th day of February, 2002, by and between SELIG REAL
ESTATE HOLDINGS SIX, a Washington general partnership, whose address is 1000
Second Avenue, Suite 1800, Seattle, Washington, 98104-1046, hereinafter referred
to as “Lessor” and NEORX CORPORATION INC., a Washington corporation, whose
address is 410 West Harrison Street, Seattle, Washington, 98119, hereinafter
referred to as “Lessee”.

 

1.             DESCRIPTION, Lessor in consideration of the agreements contained
in this lease, does hereby lease to Lessee, upon the terms and conditions
hereinafter set forth, Suite 500 consisting of approximately 20,764 rentable
square feet* (hereinafter referred to as “Premises”) situated on the 5th floor
level of the Elliott Bay Office Park, 300 Elliott Avenue West, City of Seattle,
State of Washington 98119, the legal description of which is:

 

Parcel A:  All of Block 9, D.T. Denny’s Waterfront Addition to the City of
Seattle, according to the plat recorded in Volume 2 of Plats, Page 61, in King
County, Washington.

 

Parcel B:  Block 161, Seattle Tidelands.

 

*Rentable square footage stated above is an estimate of the rentable square
footage and is based on the Building Owners and Managers Association Standard
Method for Measuring Area in Office Buildings (ANSI/BOMA Z65.1-1996).  For
purposes of this lease, the parties agree that the rentable square footage of
the Premises is 20,764.

 

2.             TERM,  The term of this lease shall be for a period of
eighty-four (84) months, commencing on that date which is five (5) business days
after Lessor has completed construction of the tenant improvements described in
Article 38 below (“Tenant Improvements”) and given notice to Lessee that the
Premises are ready for occupancy, except that the term shall not commence
earlier than June 1, 2002 without Lessee’s prior written consent.  The term
shall expire eighty-four (84) months after the commencement date.  Lessor will
use its best efforts to complete construction of all Tenant Improvements and
tender possession of the Premises to Lessee on or before June 1, 2002.  If the
term has not commenced by August 1, 2002, this lease will automatically
terminate without notice and be of no further force or effect.

 

The parties acknowledge that Lessee desires to negotiate an early termination of
its lease of premises at 501 Elliott Avenue West (the “Current Lease”) effective
June 1, 2002, and that if the Tenant Improvements are not substantially complete
and the Premises ready for occupancy on that date, Tenant may suffer damages as
a

 

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result of the delay.  Accordingly, the parties agree that if the Current Lease
has been terminated on June 1, 2002, and if the Tenant Improvements are not
substantially complete and ready for occupancy on June 1, 2002, then Lessor
shall assume and pay, and shall hold Lessee harmless from and against any and
all holdover costs that Lessee may incur under the Current Lease resulting from
Lessee having to hold over in the leased premises except to the extent that the
delay in completion of the Tenant Improvements is caused by events of Force
Majeure or Tenant Delay.  For purposes of this lease, the term Force Majeure
shall mean acts of God, strikes, lockouts, labor troubles, inability to procure
materials despite commercially reasonable efforts to do so, orders or directives
of governmental bodies, and other similar causes beyond a party’s reasonable
control.  The term Tenant Delay shall mean the failure of Lessee to provide
construction documents to Lessor on or before March 11, 2002, or any delay in
fact caused by a change requested by Lessee to the construction documents
approved by Lessor.

 

3.             RENT, Lessee covenants and agrees to pay Lessor rent each month
in advance on the first day of each calendar month.  Rent shall be computed at
the annual base rental rate of $26.00 per rentable square foot.  Rent for any
fractional calendar month, at the beginning or end of the term, shall be the pro
rated portion of the rent computed on an annual basis (assuming a 365-day
year).  Provided however, if Lessee is unable to terminate the Current Lease by
the commencement date of the term of this lease, and remains liable for payment
of rent pursuant to the terms of the Current Lease, then rent for the Premises
shall abate for so long as Lessee is obligated to pay rent under the Current
Lease through October 31, 2002.  However, for each of the months after the
commencement date and through October, 2002 that Lessee does not pay any rent to
Lessor, then the base rental rate set forth above shall be increased by 30¢ per
rentable square foot, e.g., if Lessee is required to pay rent at 501 Elliott
Avenue West for the months of June, July, August and September, and if Lessee
does not pay any rent to Lessor during those months, then Lessee’s annual rental
rate for the Premises shall be revised to the annual rental rate of $27.20
effective October 1, 2002, i.e., 30¢ x 4 months = $1.20 + $26.00 = $27.20.

 

4.             CONSIDERATION,  As consideration for the execution of this lease,
Lessee has this date paid to Lessor the sum of $44,988.67, receipt of which is
hereby acknowledged.  In the event Lessee fully complies with all the terms and
conditions of this lease, but not otherwise, an amount equal to such sum shall
be credited on the last month’s rental on the term of this lease.

 

5.             USES, Lessee agrees that Lessee will use and occupy said Premises
for general offices and related purposes and for no other purposes.

 

6.             RULES AND REGULATIONS,  Lessee and their agents, employees,
servants or those claiming under Lessee will at all times observe, perform and
abide by all of the Rules and Regulations printed on this instrument (if any),
and any reasonable rules and regulations applicable to all of the tenants in the
building that may be hereafter promulgated by Lessor, all of which it is
covenanted and agreed by the parties hereto shall be and are hereby made a part
of this lease.

 

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7.             CARE AND SURRENDER OF PREMISES,  Lessee shall take good care of
the Premises and shall promptly make all necessary repairs except those required
herein to be made by Lessor.  At the expiration or sooner termination of this
lease, Lessee, without notice, will immediately and peacefully quit and
surrender the Premises broom clean, in good order, condition and repair (damage
by reasonable wear, the elements, or fire excepted).  Lessee shall be
responsible for removal of all of Lessee’s personal property and fixtures from
the Premises, (excepting fixtures that are a part of the initial Tenant
Improvements and excepting any property of the Lessor) including, but not
limited to, the removal of Lessee’s communication and video cabling, telephone
equipment and moveable signage.  Lessee shall be responsible for repairing any
damage to the Premises caused by such removal.  If Lessee fails to remove and
restore the Premises at lease expiration, then Lessor shall have the right to
remove said property and restore the Premises and Lessee shall be responsible
for all costs associated therewith.  Lessee shall also be responsible for those
costs incurred by Lessor for removing debris Lessee may discard in the process
of preparing to vacate the Premises to the extent those costs exceed normal
costs of garbage removal upon cleaning the Premises and disposal of Lessee’s
personal property remaining in the Premises.

 

8.             ALTERATIONS, Lessee shall not make any alterations or
improvements in, or additions to (collectively, “Alterations”) said Premises
where the total cost of the project exceeds $15,000 without first obtaining the
written consent of Lessor, whose consent shall not be unreasonably withheld. 
Lessor’s consent shall also be required (and shall not be unreasonably withheld)
for any alterations to building electrical, plumbing or mechanical systems.  All
such Alterations shall be at the sole cost and expense of Lessee and shall
become the property of Lessor and shall remain in and be surrendered with the
Premises as a part thereof at the termination of this lease, without
disturbance, molestation or injury.  Lessee shall provide notice to Lessor of
any planned Alterations for which Lessor’s consent is not required, together
with a copy of the plans for those Alterations.  If Lessee makes any Alterations
that involve changes to building electrical, plumbing or mechanical systems,
Lessee shall use contractors approved by Lessor for any changes to those
systems.

 

9.             RESTRICTIONS, Lessee will not use or permit to be used in said
Premises anything that will increase the rate of insurance on said building or
any part thereof, nor anything that may be dangerous to life or limb; nor in any
manner deface or injure said building or any part thereof; nor overload any
floor or part thereof; nor permit any objectionable noise or odor to escape or
to be emitted from said Premises, or do anything or permit anything to be done
upon said Premises in any way tending to create a nuisance or to disturb any
other tenant or occupant of any part of said building.  Lessee, at Lessee’s
expense, will comply with all health, fire and police regulations respecting
said Premises, except that Lessee will not be responsible for the cost of
capital improvements that are required generally and not as a result solely of
Lessee’s use of the Premises.  The Premises shall not be used for lodging or
sleeping, and no animals or birds will be allowed in the building.

 

10.           WEIGHT RESTRICTIONS, Safes, furniture or bulky articles may be
moved in or out of said Premises only at such hours and in such manner as will
least inconvenience other tenants, which hours and manner shall be at the
reasonable

 

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discretion of Lessor.  No safe or other article of over 2,000 pounds shall be
moved into said Premises without the consent of Lessor, whose consent shall not
be unreasonably withheld, and Lessor shall have the right to locate the position
of any article of weight in said Premises if Lessor so desires.

 

11.           SIGN RESTRICTION, No sign, picture, advertisement or notice shall
be displayed, inscribed, painted or affixed to any of the glass or woodwork of
the building without the prior approval of Lessor.  Notwithstanding the
foregoing, Lessor shall provide building standard signage identifying Lessee on
the building lobby reader-board, and standard building signage identifying
Lessee in the elevator lobby on the 5th floor of the building.  Lessee shall
have the right to install and maintain a sign with its logo that is visible from
the 5th floor lobby in the reception area of the Premises.

 

12.           LOCKS, No additional locks shall be placed upon any doors of the
Premises, except that Lessee may install and maintain an electronic lock system
at the entry to the Premises that is compatible with the system at Lessee’s
other locations.  Keys will be furnished to each door lock.  At the termination
of the lease, Lessee shall surrender all keys to the Premises whether paid for
or not.

 

13.           KEY, SECURITY AND CONFIDENTIALITY, Lessor, his janitor, engineer
or other agents may retain a pass key to said Premises to enable him to examine
the Premises from time to time with reference to any emergency or to the general
maintenance of said Premises.  Notwithstanding the foregoing, Lessor shall be
entitled to have access to the Premises only when accompanied by a
representative of Lessee, and upon no less than twenty-four (24) hours’ prior
written notice specifying the purpose for the access and identifying by name and
business any persons other than Lessor who will accompany Lessor; provided,
however, that in the case of an emergency that gives rise to imminent danger to
persons or property, Lessor shall give Lessee such notice as may be practicable
under the circumstances.  Access by Lessor shall be strictly in accordance with
the security and confidentiality requirements that Lessee may impose from time
to time.  All information learned by or disclosed to Lessor with respect to
Lessee’s business, and all information disclosed or discovered during an entry
by Lessor into the Premises, shall be kept strictly confidential by Lessor,
Lessor’s legal representatives, successor, assigns, servants and agents, and
shall not be used (except for Lessor’s confidential internal purposes) or
disclosed to others by Lessor Lessor’s legal representatives, successors,
assigns, servants or agents without the express prior written consent of Lessee,
which Lessee may grant, withhold or condition in its sole and absolute
discretion.  In exercising its right of entry, Lessor shall not unreasonably
interfere with the conduct of Lessee’s business operations on the Premises.

 

14.           TELEPHONE SERVICE, If Lessee desires telephonic or any other
electric connection, Lessor will direct the electricians as to where and how the
wires are to be introduced, and without such directions no boring or cutting for
wires in installation thereof will be permitted.

 

15.           SERVICES, Lessor shall maintain Premises and the public and common
areas of building, such as lobbies, stairs, corridor and restrooms, in
reasonably good order and condition except for damage occasioned by the act of
Lessee.

 

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Lessor shall furnish Premises with electricity for lighting and operation of low
power usage office machines, heat, normal office air-conditioning, and elevator
services, during the ordinary business hours of the building, which shall not be
less than from 7 a.m. until 6 p.m., Mondays through Fridays, and 8 a.m. until
2 p.m. on Saturdays.  After-hours service shall be available to Lessee on
mutually agreeable terms.  Air-conditioning units and electricity therefore for
special air-conditioning requirements, such as for computer centers, shall be at
Lessee’s expense.  Lessor shall also provide lighting replacement for Lessor
furnished lighting, toilet room supplies, window washing with reasonable
frequency, and customary janitor service according to the schedule attached as
EXHIBIT C.  Lessor shall maintain the building and all public and common areas
to the standard of a first-class office building.

 

Lessor shall not be liable to Lessee for any loss or damage caused by or
resulting from any variation, interruption or any failure of said services due
to any cause whatsoever other than Lessor’s gross negligence.  No temporary
interruption or failure of such services incident to the making of repairs,
alterations, or improvements, or due to accident or strike or conditions or
events not under Lessor’s control shall be deemed as an eviction of Lessee or
relieve Lessee from any of Lessee’s obligations hereunder except that if any
interruption of utilities or services or any other cause renders the Premises
untenantable for their intended purposes for more than three (3) consecutive
business days, then Lessee’s obligation to pay rent shall abate from the end of
that three-day period for the remaining time that the Premises are untenantable.

 

In the event of any lack of attention on the part of Lessor and any
dissatisfaction with the service of the building, or any unreasonable annoyance
of any kind, Lessee is requested to make complaints at Lessor’s building office
and not to Lessor’s employees or agents seen within the building.  Lessee is
further requested to remember that Lessor is as anxious as Lessee that a high
grade service be maintained, and that the Premises be kept in a state to enable
Lessee to transact business with the greatest possible ease and comfort.  The
rules and regulations are not made to unnecessarily restrict Lessee, but to
enable Lessor to operate the building to the best advantage of both parties
hereto.  To this end Lessor shall have the right to waive from time to time such
part or parts of these rules and regulations as in his judgment may not be
necessary for the proper maintenance or operation of the building or consistent
with good service, and may from time to time make such further reasonable rules
and regulations as in his judgment may be needed for the safety, care and
cleanliness of the Premises and the building and for the preservation of order
therein.

 

16.           SOLICITORS, Lessor will make an effort to keep solicitors out of
the building, and Lessee will not oppose Lessor in his attempt to accomplish
this end.

 

17.           FLOOR PLAN, The floor plan and specifications for Lessee’s
occupancy shall be attached hereto and marked Exhibit “A” which shall be
approved by both Lessor and Lessee, both of whose approval shall not be
unreasonably withheld.

 

18.           ASSIGNMENT, Lessee will not assign this lease, or any interest
hereunder, without the prior written consent of Lessor, and this lease, or any
interest

 

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hereunder, shall not be assigned by operation of law.  Lessee will not sublet
said Premises or any part thereof and will not permit the use of said Premises
by others other than Lessee and the agents of Lessee without first obtaining the
written consent of Lessor, whose consent shall not be unreasonably withheld.  In
the event such written consent shall be given, no other or subsequent assignment
or subletting shall be made without the previous written consent of Lessor,
whose consent shall not be unreasonably withheld.  Notwithstanding the
foregoing, Lessee may assign this lease, in whole or in part, and may sublease
all or any part of the Premises, to (a) a parent or subsidiary of Lessee, the
entity with which or into which Lessee may merge, or an entity that is
controlled by, controls or is under common control with, Lessee, (b) the
purchaser of substantially all of the assets of Lessee.

 

During the term of any sublease Lessor shall not have the right to recapture the
subleased space and Lessee shall be entitled to retain 100% of any rent in
excess of the rent Lessee is paying under this lease.

 

In the event that Lessee desires to terminate its obligations under this lease
with respect to all or any portion of the Premises (other than in the manner
described in Article 41 below) and Lessor and Lessee agree upon a new tenant to
take possession of that portion of the Premises, and if Lessor and Lessee agree
to terminate this lease for that portion of the Premises, then any rent that is
in excess of the rent payable by Lessee herein with respect to that portion of
the Premises shall be shared equally between Lessor and Lessee.  Any costs
incurred in securing such a substitute tenant shall be shared between Lessor and
Lessee on a proportionate basis based on the length of the term of the lease
with such new tenant.  As an example, if Lessee has twenty-four (24) months
remaining on this lease and the lease with the new tenant is for sixty (60)
months, the transaction costs, including commissions, tenant improvements, etc.,
shall be distributed 40% (2/5) to Lessee and 60% (3/5) to Lessor.

 

19.           OPERATING SERVICES AND REAL ESTATE TAXES, The annual base rental
rate per rentable square foot in Paragraph 3 includes Lessee’s proportionate
share of Operating Services and Real Estate Taxes for the Base Year (as that
term is defined below) (“Base Year Costs”).  Only actual increases from these
Base Year Costs, if any, will be passed on to Lessee on a proportionate basis.

 

DEFINITIONS

 

Base Year

 

The Base Year shall be the calendar year 2003.

 

Comparison Year

 

The Comparison Year(s) shall be the calendar year(s) subsequent to the Base
Year.

 

Operating Services

 

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“Operating Services” include, but are not limited to, the charges incurred by
Lessor for:  building operation salaries, benefits, management fee (not to
exceed 5%) of gross income for the building, insurance, electricity, janitorial,
supplies, telephone, HVAC, repair and maintenance, window washing, water and
sewer, security, landscaping, disposal, elevator, and any other service or
supplies reasonably necessary to the maintenance and operation of the
premises.   Operating Services shall also include the amortization cost of
capital investment items and of the installation thereof, which are primarily
for the purpose of safety, saving energy or reducing operating costs, or which
may be required by governmental authority, (all such costs shall be amortized
over the reasonable life of the capital investment item, with the reasonable
life and amortization schedule being determined in accordance with generally
accepted accounting principles).  Notwithstanding anything to the contrary
contained herein, Operating Services shall not include any of the following:

 

(i)            real estate taxes

 

(ii)           legal fees, auditing fees, brokerage commissions, advertising
costs, or other related expenses incurred by Lessor in an effort to generate
rental income;

 

(iii)          repairs, alterations, additions, improvements, or replacements
made to rectify or correct any defect in the original design, materials or
workmanship of the building or common areas (but not including repairs,
alterations, additions, improvements or replacements made as a result of
ordinary wear and tear);

 

(iv)          damage and repairs attributable to fire or other casualty;

 

(v)           damage and repairs necessitated by the negligence or willful
misconduct of Lessor, Lessor’s employees, contractors or agents;

 

(vi)          executive salaries to the extent that such services are not in
connection with the management, operation, repair or maintenance of the
building;

 

(vii)         Lessor’s general overhead expenses not related to the building;

 

(viii)        legal fees, accountant’s fees and other expenses incurred in
connection with disputes with tenants or other occupants of the building or
associated with the enforcement of the terms of any leases with tenants or the
defense of Lessor’s title to or interest in the building or any part thereof
unless the outcome is to the financial benefit of all tenants;

 

(ix)           costs (including permit, license and inspection fees) incurred in
renovating or otherwise improving, decorating, painting or altering (1) vacant
space (excluding common areas) in the building or (2) space for tenants or other
occupants in the building and costs incurred in supplying any item or service to
less than all of the tenants in the building;

 

(x)            costs incurred due to a violation by Lessor or any other tenant
of the building of the terms and conditions of a lease;

 

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(xi)           cost of any specific service provided to Lessee or other
occupants of the building for which Lessor is reimbursed (but not including
Operating Services and Real Estate Tax increases above Base Year Costs to the
extent reimbursed to Lessor) or any other expense for which Lessor is or will be
reimbursed by another source (i.e., expenses covered by insurance or
warranties);

 

(xii)          costs and expenses which would be capitalized under generally
accepted accounting principles, with the exception of the capital investment
items specified hereinabove;

 

(xiii)         building management fees in excess of the management fees
specified hereinabove;

 

(xiv)        cost incurred with owning and/or operating the parking lot(s)
serving the building by independent parking operator(s).

 

(xv)         fees paid to Lessor or any affiliate of Lessor for goods or
services in excess of the fees that would typically be charged by unrelated,
independent persons or entities for similar goods and services;

 

(xvi)        rent called for under any ground lease or master lease;

 

(xvii)       principal and/or interest payments called for under any debt
secured by a mortgage or deed of trust on the building; and

 

Operating Services shall be adjusted for the Base Year and all Comparison
Year(s) to reflect the greater of actual occupancy or 95% occupancy.

 

Real Estate Taxes

 

Real Estate Taxes shall be the taxes paid by Lessor in the Base Year and each
respective Comparison Year.  Real Estate Taxes shall be a separate category and
shall be treated as such.

 

Proportionate Basis

 

Lessee’s share of Base Year and Comparison Year(s) Costs shall be a fraction,
the numerator of which shall be the number of rentable square feet contained in
the leased Premises (see Paragraph 1) and the denominator of which shall be the
number of rentable square feet in the building in which the leased Premises are
located (220,845/RSF).

 

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Computation of Adjustments to Base Year Costs

 

Any adjustment to Base Year Costs will commence to occur on January 1, 2004,
with subsequent adjustments commencing every twelve months of the lease term
thereafter.  Lessee shall be responsible for Lessee‘s proportionate share of any
increase in a Comparison Year’s Costs over the Base Year Costs.  These costs
shall be initially calculated based on estimated (projected) costs with
reconciliation to actual costs when annual audited numbers are completed.  For
the purpose of calculating projected increases to Base Year Costs, Lessor shall
review historical data to predict if any estimated increases would be
anticipated in a Comparison Year(s).  If they are, then commencing January 1,
2004, Lessor will assess a monthly charge to be paid together with monthly base
rent.  Once actual cost data for Comparison Year(s) Real Estate Taxes and
Operating Services for the entire building is formulated in accordance with
generally accepted accounting principles and adjusted to the greater of actual
occupancy or 95% occupancy, then Lessee’s estimated pass-through costs shall be
corrected with Lessee or Lessor, as appropriate, reimbursing the other for the
difference between the estimated and actual costs, at that time in a lump sum
payment.

 

Lessor shall provide to Lessee a reconciliation of actual costs of Operating
Services and Real Estate Taxes for each Comparison Year no later than May 15 of
the following calendar year.  Within one hundred twenty (120) days after receipt
of Lessor’s reconciliation statement, Lessee shall have the right during
business hours, and upon three (3) business days’ prior written notice, to
examine Lessor’s books and records with respect to Operating Services and Real
Estate Taxes for the Comparison Year in question at Landlord’s offices at the
address first set forth above.  If Lessee’s audit of the Operating Services and
Real Estate Taxes reveals an overcharge of more than three percent (3%) in the
aggregate, Lessor shall promptly reimburse Lessee for the ordinary and
reasonable costs of the audit including, but not limited to, Lessee staff billed
at the hourly payroll cost of those employees (including benefits) plus
reasonable travel costs.  If Lessee’s audit does not reveal an overcharge of
more than three percent (3%) in the aggregate, then Lessee shall bear all costs
of its audit.  Any overcharge or underpayment of costs of Operating Services and
Real Estate Taxes discovered as a result of Lessee’s audit shall be due from one
party to the other within thirty (30) days after the amount of the overcharge or
underpayment has been fixed.

 

Notwithstanding anything herein to the contrary, the costs of Operating Services
and Real Estate Taxes for any Comparison Year shall be final and not subject to
further review by either Lessor or Lessee on that date which is 180 days after
receipt by Lessee of any statement of reconciliation of actual costs for the
Comparison Year in question, or upon conclusion of any audit conducted by Lessee
for that Comparison Year pursuant to the foregoing paragraph, whichever occurs
later.

 

Upon termination of this lease, the amount of any corrected amount between
estimated and actual costs with respect to the final Comparison Year shall
survive the termination of the lease and shall be paid to Lessee or Lessor as
appropriate within thirty (30) days after final reconciliation.

 

Computation of or adjustment to Operating Services and/or Real Estate Taxes
pursuant to this paragraph or to rent pursuant to Paragraph 3 shall be computed
based on a three hundred sixty-five (365) day year.

 

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For an example, see Exhibit B attached hereto.

 

20.           ADDITIONAL TAXES OR ASSESSMENTS,  Should there presently be in
effect or should there be enacted during the term of this lease, any law,
statute or ordinance levying any assessments or any tax upon the rent paid under
this lease other than federal or state income, estate or gift taxes, Lessee
shall reimburse Lessor for Lessee’s proportionate share of said expenses at the
same time as rental payments.

 

21.           LATE PAYMENTS,  Any payment, required to be made pursuant to this
lease, not made on the date the same is due shall bear interest at a rate equal
to three percent (3%) above the prime rate of interest charged from time to time
by Bank of America, or its successor; provided, however, that the first time in
any calendar year that rent is paid late, interest shall not accrue until three
days after receipt by Lessee of written notice from Lessor that rent is overdue.

 

In addition to any interest charged herein, a late charge of five percent (5%)
of the payment amount shall be incurred for payments received more than five (5)
days late; provided, however, that no late charge will be imposed unless Lessee
fails to pay overdue amounts within five (5) days of receipt of notice from
Lessor, except that Lessor shall not be required to give notice more than twice
in any calendar year and once Lessor has given two notices in any calendar year,
no further notices shall be required in that calendar year before imposition of
the late charge.

 

22.           RISK,  All personal property of any kind or description whatsoever
in the demised Premises shall be at Lessee’s sole risk.  Lessor shall not be
liable for any damage done to or loss of such personal property or damage or
loss suffered by the business or occupation of the Lessee arising from any acts
or neglect of co-tenants or other occupants of the building, or of Lessor or the
employees of Lessor, or of any other persons, or from bursting, overflowing or
leaking of water, sewer or steam pipes, or from the heating or plumbing or
sprinklering fixtures, or from electric wires, or from gas, or odors, or caused
in any other manner whatsoever except in the case of negligence on the part of
Lessor, its employees, contractors or agents.  Lessee shall keep in force
throughout the term of this lease such casualty, general liability and business
interruption insurance as a prudent tenant occupying and using the Premises
would keep in force.

 

23.           INDEMNIFICATION,  Lessee will defend, indemnify and hold harmless
Lessor from any claim, liability or suit including reasonable attorney’s fees on
behalf of any person, persons, corporations and/or firm for any injuries or
damages occurring in or about the said Premises or on or about the sidewalk,
stairs, or thoroughfares adjacent thereto to the extent said damages or injury
was caused by the ordinary or gross negligence or intentional act of Lessee
and/or of Lessee’s agents, employees, or contractors.

 

24.           WAIVER OF SUBROGATION,  Lessee and Lessor do hereby release and
relieve the other, and waive their entire claim of recovery for loss, damage,
injury, and all liability of every kind and nature, whether by subrogation or
otherwise, which may arise out of, or be incident to, fire and extended coverage
perils, in, on, or about the Premises herein described, whether due to
negligence of either of said parties, their agents, or employees, or otherwise.

 

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25.           SUBORDINATION,  This lease and all interest and estate of Lessee
hereunder is subject to and is hereby subordinated to all present and future
mortgages and deeds of trust affecting the Premises or the property of which
said Premises are a part; provided, however, that the foregoing subordination
agreement is expressly subject to the condition that as long as Lessee performs
its obligations under this lease, no foreclosure of, deed given in lieu of
foreclosure of, or sale under any mortgage or deed of trust, and no steps or
procedures taken under any mortgage or deed of trust, shall disturb Lessee’s
peaceful possession of the Premises or otherwise affect Lessee’s rights under
this Lease.

 

Lessee agrees to execute at no expense to the Lessor, a commercially reasonable
subordination, nondisturbance and attornment agreement in order to further
effect the subordination of this lease to any such mortgage or deed of trust on
the terms described above.  In the event of a sale or assignment of Lessor’s
interest in the Premises, or in the event of any proceedings brought for the
foreclosure of, or in the event of exercise of the power of sale under any
mortgage or deed of trust made by Lessor covering the Premises, Lessee shall
attorn to the purchaser and recognize such purchaser as Lessor; provided,
however, that unless the purchaser assumes and agrees to perform Lessor’s
obligations under this lease Lessee does not release Lessor from any liability
under this Lease.  Lessor and Lessee each agree to execute, at no expense to the
other, any estoppel certificate in commercially reasonable form describing
accurately the status of this lease.

 

26.           CASUALTY,  In the event the leased Premises, or any portion of the
building that is reasonably necessary for the use and occupancy of the Premises,
are destroyed or injured by fire, earthquake or other casualty to the extent
that they are untenantable in whole or in part, and if the Premises or building
can reasonably be repaired and restored within 270 days of the date of the
casualty, then Lessor shall proceed with reasonable diligence to rebuild and
restore the said Premises or such part thereof as may be injured as aforesaid,
provided that during the period of such rebuilding and restoration the rent
shall be abated on the portion of the Premises that cannot be occupied for its
intended use.  During any period of abatement of rent due to casualty or
destruction of the Premises, Lessor shall use its best efforts to locate
comparable space for Lessee at the fair market rate not to exceed Lessee’s
rental rate hereunder.  Lessor shall not be liable for any consequential damages
by reason of inability, after use of its best efforts, to locate alternative
space comparable to the premises leased hereunder.

 

If fire or other casualty renders the whole or any material part of the Premises
untenantable, or if the building is damaged so that access and necessary
services cannot be provided to the Premises, and if the Premises or building
cannot reasonably be repaired and restored within 270 days of the date of the
casualty based upon a commercially reasonable standard, then this lease shall
terminate effective upon the date of the casualty.

 

27.           INSOLVENCY, If Lessee becomes insolvent, or makes an assignment
for the benefit of creditors, or a receiver is appointed for the business or
property of Lessee, or a petition is filed in a court of competent jurisdiction
to have Lessee adjudged

 

11

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bankrupt, then Lessor may at Lessor’s option terminate this lease.  Said
termination shall reserve unto Lessor all of the rights and remedies available
under Paragraph 28 (“Default”) hereof, and Lessor may accept rents from such
assignee or receiver without waiving or forfeiting said right of termination. 
As an alternative to exercising his right to terminate this lease, Lessor may
require Lessee to provide adequate assurances, including the posting of a cash
bond, of Lessee’s ability to perform its obligations under this lease.

 

28.           DEFAULT, It shall be a default by Lessee under this lease if
Lessee fails to make any payment of rent as and when due and such failure
continues for more than five days after Lessor notifies Lessee in writing, or if
Lessee fails to perform any of Lessee’s nonmonetary obligations under this lease
and the failure continues for a period of 30 days after Lessor notifies Lessee
in writing specifying the nature of the default (except if the failure cannot
reasonably be cured within 30 days, then if Lessee fails to commence to cure the
failure within that 30-day period and thereafter diligently prosecute the cure
to completion), or if Lessee vacates or abandons the Premises and fails to pay
rent..  In any of such events Lessor may with or without notice or demand, at
Lessor’s option, and without being deemed guilty of trespass and/or without
prejudicing any remedy or remedies which might otherwise be used by Lessor for
arrearages or preceding breach of covenant or condition of this lease, enter
into and repossess said Premises and expel the Lessee and all those claiming
under Lessee in accordance with applicable law.  In such event Lessor may eject
and remove from said Premises all goods and effects (forcibly if necessary). 
This lease if not otherwise terminated may immediately be declared by Lessor as
terminated.  The termination of this lease pursuant to this Article shall not
relieve Lessee of its obligations to make the payments required herein.  In the
event this lease is terminated pursuant to this Article, or if Lessor enters the
Premises without terminating this lease and Lessor relets all or a portion of
the Premises, Lessee shall be liable to Lessor for all the costs of reletting,
including necessary renovation and alteration of the leased Premises.  Lessee
shall remain liable for all unpaid rental which has been earned plus late
payment charges pursuant to Paragraph 21 and for the remainder of the term of
this lease for any deficiency between the net amounts received following
reletting and the gross amounts due from Lessee, or if Lessor elects, Lessee
shall be immediately liable for all rent and additional rent (Paragraph 19) that
would be owing to the end of the term, less any rental loss Lessee proves could
be reasonably avoided, which amount shall be discounted by the discount rate of
the Federal Reserve Bank, situated nearest to the Premises, plus one percent
(1%).  Waiver by the Lessor of any default, monetary or non-monetary, under this
lease shall not be deemed a waiver of any future default under the Lease. 
Acceptance of rent by Lessor after a default shall not be deemed a waiver of any
defaults (except the default pertaining to the particular payment accepted) and
shall not act as a waiver of the right of Lessor to terminate this lease as a
result of such defaults by an unlawful detainer action or otherwise.

 

29.           BINDING EFFECT, The parties hereto further agree with each other
that each of the provisions of this lease shall extend to and shall, as the case
may require, bind and inure to the benefit, not only of Lessor and Lessee, but
also of their respective heirs, legal representatives, successors and assigns,
subject, however, to the provisions of Paragraph 18 of this lease.

 

12

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It is also understood and agreed that the terms “Lessor” and “Lessee” and verbs
and pronouns in the singular number are uniformly used throughout this lease
regardless of gender, number or fact of incorporation of the parties hereto. 
The typewritten riders or supplemental provisions, if any, attached or added
hereto are made a part of this lease by reference.  It is further mutually
agreed that no waiver by Lessor of a breach by Lessee of any covenant or
condition of this lease shall be construed to be a waiver of any subsequent
breach of the same or any other covenant or condition.

 

30.           HOLDING OVER, If Lessee holds possession of the Premises after
term of this lease, Lessee shall be deemed to be a month-to-month tenant upon
the same terms and conditions as contained herein, except rent which shall be
revised to reflect the then current market rate.  During month-to-month tenancy,
Lessee acknowledges Lessor will be attempting to relet the Premises.  Lessee
agrees to cooperate with Lessor and Lessee further acknowledges Lessor’s
statutory right to terminate the lease with proper notice.

 

31.           ATTORNEY’S FEES, If any legal action is commenced to enforce any
provision of this lease, the prevailing party shall be entitled to an award of
reasonable attorney’s fees and disbursements.

 

32.           NO REPRESENTATIONS, The Lessor has made no representations or
promises except as contained herein or in some future writings signed by Lessor.

 

33.           QUIET ENJOYMENT, So long as Lessee pays the rent and performs the
covenants contained in this lease, Lessee shall hold and enjoy the Premises
peaceably and quietly, subject to the provisions of this lease.

 

34.           RECORDATION, Lessee shall not record this lease without the prior
written consent of Lessor.  However, at the request of Lessor, both parties
shall execute a memorandum or “short form” of this lease for the purpose of
recordation in a form customarily used for such purpose.  Said memorandum or
short form of this lease shall describe the parties, the Premises and the lease
term, and shall incorporate this lease by reference.

 

35.           MUTUAL PREPARATION OF LEASE, It is acknowledged and agreed that
this lease was prepared mutually by both parties.  In the event of ambiguity, it
is agreed by both parties that it shall not be construed against either party as
the drafter of this lease.

 

36.           GOVERNING LAW, This lease shall be governed by, construed and
enforced in accordance with the laws of the State of Washington.

 

37.           DESIGN SERVICES, Lessor shall be responsible for up to $1.50 per
rentable square foot for space planning, design, documentation and construction
documents in connection with all work to be done in the Premises in order to
prepare the Premises for Lessee’s effective occupancy.

 

13

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38.           FINISH WORK, Lessor shall construct, on a turn-key basis and at
Lessor’s sole cost and expense, all improvements to the Premises that are shown
on the space plan dated February 11, 2002, and scope of work prepared by
Collinswoermen and dated February 14, 2002 and attached to this lease as
EXHIBIT A.  The improvements will include but not be limited to the following: 
all partitioning, completely carpeted and air conditioned, ceiling in place,
lighting in place, all doors and jambs, all locks and hardware, kitchen sink,
counter and cabinets, all electrical wiring and outlets, all phone outlets,
Levolor blinds on all outside glass, and completely painted throughout.  Once
working drawings are completed and approved by both parties, they shall
supersede EXHIBIT A.

 

Notwithstanding the above, Lessor shall not be responsible for the payment,
including installation costs, of any of Lessee’s built-in furniture, fixtures,
signage or other “custom-made” improvements.  Lessor shall not be responsible
for the installation of telephone and computer equipment nor the wiring of the
same.

 

The Tenant Improvements shall be deemed to be complete when all construction and
installation is substantially completed (as that term is used in the industry)
but for minor and immaterial items of construction or decoration that do not
interfere in any material respect with Lessee’s use or occupancy of the
Premises.  Promptly after Lessor’s notice to Lessee that the Tenant Improvements
are substantially complete, Lessor and Lessee shall inspect the Premises and
prepare a list of punchlist items.  Lessor shall promptly and diligently
complete all punchlist items, but the existence of punchlist items will not
delay commencement of the lease term.

 

Lessor will allow Lessee to have timely access to the Premises during the
construction period for the sole purpose of installing Lessee’s furniture,
cabling, fixtures and equipment; provided however that Lessee shall coordinate
with Lessor’s contractor concerning the timing of access, and provided further
that without consent of Lessor’s contractor, furniture shall not be moved in
earlier than May 20, 2002.

 

39.           PARKING, Lessee shall be provided parking for seven (7) cars
inside the building garage and twenty (20) cars outside the building, all at
market rate and paid for by Lessee.  The current rates of parking stalls are
$120 per stall for building garage and $110 per stall for surface parking
stalls.  Lessee shall also be provided parking for three (3) additional cars
inside the building garage on a month-to-month basis until needed by Lessor. 
Lessor shall provide Lessee no less than thirty (30) days’ notice of any
termination of Lessee’s right to any of the three additional garage parking
stalls.

 

40.           REAL ESTATE COMMISSION, Lessor agrees to pay a real estate
commission equivalent to $5.00 per rentable square foot leased to Washington
Partners, Inc. for services in this lease transaction, payable one-half (1/2)
upon full execution of this lease and one-half (1/2) upon lease commencement. 
Lessee shall offset from the consideration due Lessor under Section 4 of this
lease the first one-half (1/2) commission due to Washington Partners, Inc. and
pay such amount directly to Washington Partners, Inc.  Payment to Washington
Partners, Inc. shall constitute payment to Lessor.  Should the balance of the
commission not be paid by Lessor when due, then the remaining amount shall be
paid directly by Lessee to Washington Partners, Inc. from the initial rents due
to Lessor and the amount so paid given to Lessee as a rent credit.

 

14

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41.           EARLY TERMINATION, Lessee shall have the option to cancel and
terminate this lease effective at any time after the expiration of the 24th
month of the lease term and before the expiration of the 48th month of the lease
term by giving Lessor nine (9) months prior written notice, and paying to Lessor
the unamortized portion (based on an 84-month amoritzation period) of the
architectural fees and tenant improvement costs paid by Lessor for design and
construction of the Tenant Improvements, and of the real estate commission paid
pursuant to Article 40 above.  Promptly after completion of the Tenant
Improvements, Lessor shall provide to Lessee a written statement in reasonable
detail showing all costs of the design and construction of the Tenant
Improvements and of the real estate commission, together with copies of
supporting documents.

 

42.           RIGHT OF FIRST REFUSAL, Subject only to prior rights granted
Holland America/Westours, Lessee shall have a first right of refusal to lease
any adjacent space on the 5th floor of the Elliott Bay Office Park Building that
becomes available for lease.  If Lessor has an interested party for that space,
Lessor will notify Lessee in writing and Lessee shall have ten (10) working days
from receipt of said notice to respond either way.  Lessee shall take the entire
area intended for lease to a third party and shall not be entitled to lease just
a portion thereof.  Rent for this space shall be at market rate.

 

43.           OPTION TO RENEW, Provided that at the time the option is exercised
there is no default by Lessee that remains uncured after such notice and
opportunity to cure as may be provided by the terms of this lease, Lessee shall
have the option to renew this lease for an additional period of five (5) years
on the same terms and conditions except the rent.  Base rent for the renewal
term shall be at market rate for renewal of a lease of comparable office space
in Seattle (exclusive, however, of any improvements paid for by Lessee.  The
term “market rate” mean the prevailing market rental rate on a level basis for
renewal of a lease for a tenant occupying an amount of space comparable to the
amount then leased by Lessee, taking into consideration any concessions (e.g.,
rent abatement, refurbishment, carpeting and other allowances) then being
offered by landlords to renewing tenants for comparable space, and excluding the
value of improvements made and paid for by Lessee.  Lessee agrees to give Lessor
notice of its intent to renew nine (9) months prior to the expiration of the
initial lease term.

 

Any dispute concerning base rent for the renewal term shall be resolved by
arbitration in the following manner.  If the parties are not able to agree on
the market rate within 90 days after Lessee gives Lessor its notice of intent to
renew (“Notice Date”), then each party shall appoint a disinterested,
independent appraiser who is a member of the American Institute of Real Estate
Appraisers (an “Appraiser”) and has at least ten years experience appraising
rental properties in the Seattle area.  If the Appraisers are unable to reach
agreement about market rent within one hundred twenty (120) days after the
Notice Date, then the two Appraisers shall together appoint a third Appraiser
having the same qualifications and the third Appraiser shall be the arbitrator. 
Once the arbitrator is appointed, each Appraiser promptly shall submit to the
arbitrator within seven days a written statement of his or her determination of
market rate, supported by the reasons for that determination, with counterpart
copies given to each party.  The role of the arbitrator will be to select which
of the two proposed determinations of market rate mostly closely

 

15

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approximates his or her own determination on the matter.  The arbitrator will
have no right to propose a middle ground or any modification of either of the
two determinations.  The arbitrator will determine the matter within 10 days
after his or her receipt of the written statement of each of the two
Appraisers.  The determination of the arbitrator will be final and binding on
all parties, and the market rate so determined shall be the base rent for the
renewal term.

 

Each party shall bear the expense of retaining its Appraiser.  The fees and
expenses of the arbitrator and other expenses of the arbitration shall be borne
equally by the parties.  The arbitrator’s determination of market rate shall be
final and binding on the parties.  Judgment upon the determination of market
rate rendered by the arbitrator may be entered in any court having jurisdiction.

 

44.           EXHIBITS.  The following exhibits are attached to this lease and
are by this reference made a part of it as though fully set forth above:

 

EXHIBIT A

 

Tenant Improvement Plans

EXHIBIT B

 

Example of Computation of Operative Services Rent

EXHIBIT C

 

Schedule of Janitorial Service

 

 

 

IN WITNESS WHEREOF, the parties hereof have executed this lease the day and year
first above written.

 

SELIG REAL ESTATE HOLDINGS SIX,
 a Washington general partnership 

 

 

NEORX CORPORATION, INC.

 

 

 

 

 

By:

Martin Selig

 

By:

 

Its:

General Partner

 

Its:

 

“Lessor”

 

 

“Lessee”

 

[Ellen, these acknowledgements are new, were not part of this draft. —ch]

 

STATE OF WASHINGTON

)

 

) ss.

COUNTY OF KING

)

 

On this ______ day of _________________, 2002, before me, the undersigned, a
Notary Public in and for the State of Washington, duly commissioned and sworn,
personally appeared _____________________________, to me known to be the person
who signed as ________________________ of SELIG REAL ESTATE HOLDINGS SIX, the
partnership that executed the within and foregoing instrument, and acknowledged
said instrument to be the free and voluntary act and deed of said partnership
for the uses and purposes therein mentioned, and on oath stated that ______ was
authorized to execute said instrument on behalf of the partnership.

 

16

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

 

 

 

 

(Signature of Notary)

 

 

 

 

 

(Print or stamp name of Notary)

 

 

 

NOTARY PUBLIC in and for the State of Washington, resident at

 

 

My appointment expires:

 

 

17

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STATE OF WASHINGTON

)

 

) ss.

COUNTY OF KING

)

 

On this ______ day of _________________, 2002, before me, the undersigned, a
Notary Public in and for the State of Washington, duly commissioned and sworn,
personally appeared _____________________________, to me known to be the person
who signed as ________________________ of NEORX CORPORATION, INC., the
corporation that executed the within and foregoing instrument, and acknowledged
said instrument to be the free and voluntary act and deed of said corporation
for the uses and purposes therein mentioned, and on oath stated that ______ was
duly elected, qualified and acting as said officer of the corporation, that
_____ was authorized to execute said instrument and that the seal affixed, if
any, is the corporate seal of said corporation.

 

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

 

 

 

 

(Signature of Notary)

 

 

 

 

 

(Print or stamp name of Notary)

 

 

 

 

 

NOTARY PUBLIC in and for the State of Washington, resident at

 

 

My appointment expires:

 

 

NEORX1030.01

 

Attachment

 

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EXHIBIT B

 

EXAMPLE

 

The intent is to include Lessee’s proportionate share of all Base Year Costs in
Lessee’s Annual Base Rental Rate.  It is further the intent to limit adjustments
to Lessee’s Base Year Costs to actual increases in cost.  The Operating Services
are adjusted to the greater of actual occupancy or 95% occupancy for the base
year to fairly establish the Base Year Costs at an equitable standard for
comparison purposes.  Comparison Years are similarly adjusted for purposes of
fairness and equality.  To prevent any confusion regarding computation of Base
Year Costs, Comparison Year Costs and the adjustment of those costs to 95%
occupancy, if necessary, we have set forth the following example.  It is
important to note that if adjustment to 95% occupancy is necessary, not all
Operating Services are adjusted.

 

Expenses requiring adjustment are those which are 100% dependent upon the change
in footage and adjust with the change in occupied footage.  This category
includes electricity, water/sewer, superintendent, disposal, management,
janitorial supplies, window washing, repair and maintenance, HVAC maintenance,
and janitorial labor.

 

Other expenses do not require adjustment nor are they dependent upon occupied
footage change.  These categories are the same whether the building is empty or
full.  They are, insurance, security, elevator, landscaping and telephone.

 

Real Estate Taxes are dependent upon independent assessment.  Real Estate Taxes
are not adjusted to 95%, but are established for each respective year based on
the actual tax paid whether for the respective Base Year or each subsequent
Comparison Year(s).

 

Please note the expenses noted below which are and are not adjusted and the
adjustment to each expense to achieve 95% occupancy, if necessary.  The method
of adjusting expenses depicted in the example will be followed when adjusting
actual Operating Service Expenses for both the Base Year and Comparison Year(s).

 

HYPOTHETICAL FACTS

 

Building Occupancy:

 

80

%

Actual Base Year Costs:

 

$

375,000

 

Grossed Base Year Costs to 95%:

 

$

440,000

 

Actual Comparison Year Costs: (see below)

 

$

405,440

 

Grossed Comparison Year Costs to 95%: (see below)

 

$

463,080

 

Tenant Premises:

 

10,000 RSF

 

Building RSF:

 

125,000 RSF

 

Tenant Proportionate Basis:

 

10,000 ¸ 125,000 = 8

%

 

EXAMPLE

 

Description

 

Actual
Expenses

 

Grossed
Expenses

 

Percent Occupied

 

80.00

%

95.00

%

Methodology

 

 

 

 

 

 

 

 

 

Real Estate Taxes

 

$

54,854

 

$

54,854

 

Actual Cost

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Insurance

 

$

26,595

 

$

26,595

 

Actual Cost

 

Electricity

 

$

69,358

 

$

82,363

 

Adjusts with occupancy

 

Water & Sewer

 

$

4,945

 

$

5,872

 

Adjusts with occupancy

 

Security

 

$

5,000

 

$

5,000

 

Actual Cost

 

Elevator

 

$

7,526

 

$

7,526

 

Actual Cost

 

Superintendent

 

$

82,869

 

$

98,407

 

Adjusts with occupancy

 

Landscaping

 

$

2,912

 

$

2,912

 

Actual Cost

 

Disposal

 

$

15,502

 

$

18,409

 

Adjusts with occupancy

 

Management

 

$

41,680

 

$

49,495

 

Adjusts with occupancy

 

Supplies

 

$

4,339

 

$

5,153

 

Adjusts with occupancy

 

Window Washing

 

$

1,527

 

$

1,813

 

Adjusts with occupancy

 

Repairs & Maintenance

 

$

24,333

 

$

28,895

 

Adjusts with occupancy

 

Telephone

 

$

1,144

 

$

1,144

 

Actual Cost

 

HVAC Maintenance

 

$

6,208

 

$

7,372

 

Adjusts with occupancy

 

Janitorial

 

$

56,648

 

$

67,270

 

Adjusts with occupancy

 

 

 

 

 

 

 

 

 

TOTALS:

 

$

405,440

 

$

463,080

 

 

 

 

 

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