Exhibit 10.1

SCHNITZER NORTH CREEK

LEASE AGREEMENT

S/I NORTH CREEK III, LLC
(Landlord)

and

LUMERA CORPORATION

(Tenant)

Dated: July 11, 2005

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TABLE OF CONTENTS

ARTICLE I: DEFINITIONS
4
1.01
Defined terms
4
ARTICLE II: PREMISES AND COMMON AREAS LEASED
6
2.01
Premises
6
2.02
Common Areas
7
ARTICLE III: IMPROVEMENTS
7
3.01
Premises Accepted "AS IS"
7
3.02
Tenant's Right to Make Improvements to Premises
7
ARTICLE IV: TERM
8
4.01
Term
8
4.02
Notice of Commencement Date
8
4.03
Option to Extend
9
ARTICLE V: RENT
10
5.01
Base Rent
10
5.02
Additional Rent
11
5.03
Late Payment
11
5.04
Security Deposit
11
5.05
Credit Enhancement/Letter of Credit
12
ARTICLE VI: ADDITIONAL RENT AND CHARGES
13
6.01
Operating Expenses
13
6.02
Tenant's Personal Property Taxes
17
ARTICLE VII: INSURANCE
17
7.01
Landlord's Insurance
17
7.02
Tenant’s Public Liability
18
7.03
Tenant's Property and Other Insurance
18
7.04
Form of Insurance/Certificates
18
7.05
Tenant's Failure
19
7.06
Waiver of Subrogation
19
7.07
Tenant's Properties and Fixtures
19
7.08
Indemnification
20
7.09
Damage to Tenant's Property
21
ARTICLE VIII: REPAIRS AND MAINTENANCE
22
8.01
Landlord Repairs and Maintenance
22
8.02
Utilities and Services
22
8.03
Tenant Repairs and Maintenance
22
8.04
Non-liability of Landlord
23
8.05
Inspection of Premises
23

 
 
 
 

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ARTICLE IX: FIXTURES, PERSONAL PROPERTY AND ALTERATIONS
23
9.01
Fixtures and Personal Property
23
9.02
Alterations
24
9.03
Liens
25
ARTICLE X: USE AND COMPLIANCE WITH LAWS
26
10.01
General Use and Compliance with Laws
26
10.02
Hazardous Materials
26
10.03
Signs
28
10.04
Exterior HVAC Unit
29
ARTICLE XI: DAMAGE AND DESTRUCTION
29
11.01
Reconstruction
29
11.02
Rent Abatement
29
11.03
Excessive Damage or Destruction
30
11.04
Uninsured Casualty
30
11.05
Waiver
30
11.06
Mortgagee's Right
30
11.07
Damage Near End of Term
31
ARTICLE XII: EMINENT DOMAIN
31
12.01
Eminent Domain
31
ARTICLE XIII: DEFAULT
31
13.01
Events of Default
31
13.02
Remedies
32
13.03
Landlord's Default
34
ARTICLE XIV: FILING OF PETITION
34
14.01
Tenant's Bankruptcy
34
ARTICLE XV: ASSIGNMENT AND SUBLETTING
36
15.01
Prohibition
36
15.02
Excess Rental
36
15.03
Scope
37
15.04
Waiver
37
15.05
Change in Control
37
ARTICLE XVI: ESTOPPEL CERTIFICATE, ATTORNMENT AND SUBORDINATION
37
16.01
Estoppel Certificates
37
16.02
Attornment
38
16.03
Subordination
38
16.04
Recording
38
ARTICLE XVII: MISCELLANEOUS
38
17.01
Notices
38
17.02
Successors Bound
39
17.03
Waiver
39
17.04
Subdivision and Easements
39

 
 
 
 

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17.05
Landlord's Reserved Rights in Common Areas
39
17.06
Accord and Satisfaction
40
17.07
Limitation of Landlord's Liability
40
17.08
Survival
40
17.09
Attorneys' Fees
40
17.10
Captions and Article Numbers
40
17.11
Severability
40
17.12
Applicable Law
41
17.13
Submission of Lease
41
17.14
Holding Over
41
17.15
Rules and Regulations
41
17.16
Parking
41
17.17
No Nuisance
42
17.18
Broker; Agency Disclosure
42
17.19
Landlord's Right to Perform
42
17.20
Assignment by Landlord
42
17.21
Entire Agreement
43
17.22
Financial Covenants
43
17.23
Consents
43
17.24
Conditions
43
17.25
Exhibits
43
17.26
Submission of Lease
43
17.27
Time
44
17.28
Prior Agreement or Amendment
44
17.29
Independently Provided Services
44
17.30
Authority to Bind Landlord
44
17.31
Authority to Bind Tenant
44
17.32
No Usury
44
17.33
Interpretation
45
17.34
Excused Delays
45
17.35
Roof Rights
45

 
 

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THIS LEASE ("Lease") dated as of the 11th day of July, 2005, is made by and
between S/I NORTH CREEK III, LLC, A WASHINGTON LIMITED LIABILITY COMPANY
("Landlord"), and LUMERA CORPORATION, a Delaware corporation ("Tenant”).

ARTICLE I: DEFINITIONS

1.01 Defined terms. The following terms shall have the meanings specified in
this Section, unless otherwise specifically provided. Other terms may be defined
in other parts of the Lease.

 
(a)
Landlord:
S/I NORTH CREEK III, LLC
         
(b)
Landlord's Address:
c/o Schnitzer Northwest
     
225 - 108th Avenue NE, Suite 400
     
Bellevue, Washington 98004
     
Telephone: (425) 452-3700
     
Facsimile: (425) 454-1505
           
With a Copy to:
Jameson Babbitt Stites &
     
Lombard, P.L.L.C.
     
999 Third Avenue, Suite 1900
     
Seattle, Washington 98104
     
Attn: Jennifer Cobb
     
Telephone: (206) 292-1994
     
Facsimile: (206) 292-1995
         
(c)
Tenant:
LUMERA CORPORATION
         
(d)
Tenant's Address:
19910 North Creek Parkway
     
Bothell, Washington 98011
         
(e)
Tenant's Use:
General office, bio-tech facility and related uses consistent with a Class A
office park and subject to compliance with Section 10.01.
         
(f)
Project:
Technology Campus I, including all buildings and Common Areas thereon and
related thereto as legally described in Exhibit “A” and depicted on the Project
Site Plan attached as Exhibit “B.”
 

 
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(g)
Property:
The real property described in Exhibit "A" and depicted on the Project Site Plan
attached as Exhibit "B."
         
(h)
Building:
That certain building designated as Building F on the Project Site Plan attached
hereto as Exhibit B.
         
(i)
Premises:
Approximately 32,172 rentable square feet, consisting of the entire rentable
area of the first floor of the Building, as depicted on the Floor Plan attached
as Exhibit "C."
         
(j)
Term:
Commencing upon the Commencement Date (as defined in Section 4.01) and expiring
on the date five (5) years (60 months) thereafter.
         
(k)
Commencement Date
April 7, 2006
         
(l)
Base Rent:
   

 

  Months    Annual Rate(psf)   Monthly Rental*                      
1-3:
 
00.00
 
$0.00
     
4-12:
 
$15.00
 
$40,215.00
     
13-24:
 
$15.50
 
$41,555.50
     
25-36:
 
$16.00
 
$42,896.00
     
37-48:
 
$16,50
 
$44,236.50
     
49-60:
 
$17.00
 
$45,577.00
   

 
(m)
Prepaid Rent:
$40,215 applicable to Month 1
         
(n)
Security Deposit:
$45,577
         
(o)
Tenant's Share of Building:
48%* (32,172 RSF ¸67,333 RSF)*
         
(p)
Tenant’s Share of Project:
10%* (32,172 RSF ¸ 325,850 RSF)*
         
(q)
Parking Spaces:
112 uncovered, unreserved surface parking spaces in the Project shall be
provided for the non-exclusive use of Tenant, its employees and visitors during
the Term and the Extended Term.
         
(r)
Broker(s):
CB Richard Ellis/Tim O’Keefe, representing Tenant (“Tenant’s Broker”)
 

 
 
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(s)
Guarantor(s) and Address(es):
N/A
         

(t)
Exhibits:
Exhibit A:
Legal Description of Project
   
Exhibit B:
Project Site Plan
   
Exhibit C:
Floor Plan Identifying Leased Premises
   
Exhibit D:
Form of Letter of Credit
   
Exhibit E
Multi-Tenant Lobby Plan
   
Exhibit F:
Lease Confirmation
   
Exhibit G:
Estoppel Certificate
   
Exhibit H:
Rules and Regulations
   
Exhibit I:
Form of SNDA

 
* Subject to adjustment upon measurement pursuant to Section 2.01(b).

ARTICLE II: PREMISES AND COMMON AREAS LEASED

2.01 Premises.

(a) Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord,
subject to the provisions of this Lease, certain premises described in
Subsection 1.01(i) above ("Premises") located within the building described in
Subsection 1.01(h) (the “Building") owned by Landlord, and which is a portion of
the "Project" identified in Subsection 1.01(f). The Site Plan for the Project
attached hereto as Exhibit B is attached for location reference purposes only
and shall not constitute a representation or warranty by Landlord to be the
final plan of the Project, or to require Landlord to build any improvements, or
to otherwise comply with the site plan or require Landlord to lease space to a
particular tenant or type of tenant.

(b) Upon completion of the Tenant Improvements, the Rentable Area of the
Premises shall be remeasured in accordance with BOMA publication ANSI Z65.1-1996
for a multi-tenant building without deduction of area associated with Tenant’s
special purpose HVAC shaft requirements. Further, second floor area lost to
specialty mechanical shafts serving the Premises will be added back into the
Rentable Area of the Premises. Upon completion of such remeasurement, the Base
Rent shall be adjusted to reflect the recalculated area of the Premises. Tenant
acknowledges that, except as otherwise expressly set forth in this Lease,
neither Landlord nor any agent, property manager or broker of Landlord has made
any representation or warranty with respect to the Premises, the Building, the
Common Areas or the Project or their suitability for the conduct of Tenant's
business and, that except only for any improvements that Landlord has expressly
agreed herein to construct and install, the Premises are leased in the “AS IS”
condition existing at the time of execution of this Lease.

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2.02 Common Areas. In addition to the Premises, Tenant shall have the
non-exclusive right to use in common with other tenants and/or occupants of the
Property and Project, the following areas appurtenant to the Building: parking
areas and facilities, roadways, sidewalks, walkways, parkways, plazas, levees,
driveways and landscaped areas and similar areas and facilities situated within
the exterior areas of the Property and Project and not otherwise designated for
the exclusive or restricted use by Landlord and/or individual tenants of other
buildings located within the Project (collectively, "Common Areas"). Tenant
acknowledges that, except as required by applicable law, Landlord shall have no
obligation to construct or complete any additional buildings within the Project
or improvements to the Common Areas. Tenant's right to utilize the Common Areas
shall at all times be subject to Landlord's reserved rights therein as described
in Section 17.05 hereof, the Rules and Regulations referred to in Section 17.15
hereof and all encumbrances, easements, ground leases, and covenants, conditions
and restrictions ("CC&Rs") now or hereafter affecting or encumbering the
Project.

ARTICLE III: PREMISES/IMPROVEMENTS

3.01 Premises Accepted “AS IS”. Tenant agrees and acknowledges that it is
currently in occupancy of a portion of the Premises and has inspected the
Premises and agrees to lease and possess the same in their existing AS-IS,
WHERE-IS condition and improvement, subject to its rights to make certain
improvements and alterations pursuant to 3.02 below. Notwithstanding the above,
Tenant acknowledges that Landlord will be required to alter and modify the first
floor of the Building to contemplate a multi-tenant building lobby, which shall
be completed in substantial accordance with the plan attached as Exhibit E.
Tenant shall allow Landlord access to the Premises in order for Landlord to
complete such alterations and waives any claims against Landlord for disruption
of Tenant’s use of the Premises in connection therewith.

3.02  Tenant’s Right to Make Improvements to Premises. Tenant may construct
improvements to the Premises (“Tenant Improvements”) pursuant to the following
procedures and conditions:

(a) Construction of the Tenant Improvements shall commence no later than the
date twelve (12) mont date twelve (12) months after the Commencement Date and
shall be completed no later than December 31, 2007 (subject to Excused Delays as
defined in Section 17.34 below).

(b) Tenant’s architect shall prepare preliminary and final working drawings and
specifications for the Tenant Improvements and submit the same to Landlord for
approval or comment, and such approval and/or consent will not be unreasonably
denied, delayed or conditioned. Such plans, when approved by Landlord, are
referred to herein as the “Tenant Improvement Plans”.

(c) Tenant shall use Pennon Construction, as its general contractor and SME
Electric, Holaday Parks and Patriot Fire Protection as the design/build
subcontractors, to complete the Tenant Improvements pursuant to the Tenant
Improvement Plans. Prior to commencing construction of the Tenant Improvements,
Tenant shall obtain all required permits and governmental improvements required
for construction of the Tenant Improvements.

 
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(d) Upon approval of the Tenant Improvement Plans, the execution by Tenant and
its contractor of a construction contract (which contract shall be subject to
Landlord’s approval, which approval shall not be unreasonably withheld), Tenant
shall cause its contractor to diligently pursue construction of the Tenant
Improvements pursuant to the Tenant Improvement Plans; provided, however,
construction of such improvements will not commence until after the Commencement
Date and shall be completed no later than December 31, 2007. Upon completion of
the Tenant Improvements, Tenant shall provide Landlord with “as-built” plans for
the Tenant Improvements. Except as otherwise required by this Section 3.02,
Tenant shall comply with the provisions of Sections 9.02 and 9.03 in completion
of the Tenant Improvements.

(e) Tenant shall pay all costs associated with the improvements to the Premises
pursuant to the Tenant Improvement Plans, subject to reimbursement by Landlord
of the allowance referred to below. Landlord will provide an allowance (the
"Tenant Improvement Allowance") of $12.00 per rentable square foot of the
Premises toward the cost of the Tenant Improvements as reflected in the
construction contract and changes thereto. Any costs for the Tenant Improvements
in excess of the Tenant Improvement Allowance, as reflected in the construction
contract, shall be paid and expended by Tenant prior to Landlord’s payment of
the Tenant Improvement Allowance (“Tenant Contribution”) and Tenant shall
provide Landlord with evidence of such funds prior to commencement of
construction. After Tenant has expended the full Tenant Contribution and
provided Landlord with evidence of the same, then upon Tenant's written request,
Landlord shall fund installments of the Tenant Improvements Allowance, for
amounts expended by Tenant in construction of the Tenant Improvements, not more
frequently than monthly within thirty (30) days of receipt by Landlord of
invoices or receipts for Tenant Improvement work completed together with lien
releases for such work to date. 

ARTICLE IV: TERM

4.01 Term. The Term shall commence on the Commencement Date set forth in Section
1.01(k) (the “Commencement Date”). If for any reason Landlord is unable to
deliver possession of the Premises to Tenant by the Commencement Date in Section
1.01(k), Landlord shall not be liable to Tenant for any loss or damage resulting
therefrom, but in that event Rent shall be abated until Landlord delivers
possession of the Premises to Tenant. The Term shall expire upon the date set
forth in Section 1.01(j), unless sooner terminated as hereinafter provided.

4.02 Lease Confirmation. After the Commencement Date, Landlord may deliver to
Tenant a written confirmation in the form attached hereto as Exhibit F ("Lease
Confirmation") of the Commencement Date and Tenant shall promptly execute and
return the same to Landlord. The Lease Confirmation shall be binding upon Tenant
unless Tenant objects to the notice in writing delivered to Landlord within five
(5) days of Tenant's receipt of said Lease Confirmation.

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4.03 Option to Extend. Subject to the terms and conditions set forth below,
Landlord hereby grants Tenant the right to extend the term of the Lease for one
additional period of five (5) years (such extended period is hereinafter
referred to as the "Extended Term") on the same terms and conditions contained
in the Lease, except that (i) Base Rent for the Extended Term shall be as set
forth hereinbelow, and (ii) no additional options to extend shall apply
following the expiration of the Extended Term. Written notice of Tenant's
exercise of its option to extend ("Option to Extend") the Term of this Lease for
the Extended Term must be given to Landlord no less than nine (9) months prior
to the date the Term of the Lease would otherwise expire. If an Event of Default
is then occurring under this Lease, Tenant shall have no right to extend the
Term of this Lease until such default is cured; provided, that the period of
time within which said Option to Extend may be exercised shall not be extended
or enlarged by reason of Tenant's inability to exercise said Option to Extend
because of a material default. In addition, Tenant’s right to exercise the
Option to Extend shall be conditioned upon Landlord’s review and approval of
Tenant’s credit at the time of exercise of said Option and, if required by
Landlord, Tenant’s posting and maintaining of a Letter of Credit or other
security satisfactory to Landlord during the Extended Term; provided, however,
in the event Tenant satisfies the financial criteria set forth in the last
paragraph of Section 5.05 at the time of exercise of Tenant’s Option to Extend,
the Letter of Credit required to be posted for the Extended Term shall not
exceed $700,000. Subject to the above conditions, in the event Tenant validly
exercises its Option to Extend the Term of this Lease as herein provided, Base
Rent shall be adjusted as of the commencement date of the Extended Term as
follows:

(a) Within thirty (30) days after exercise of its Option to Extend by Tenant,
Landlord shall provide Tenant with Landlord's determination of the fair market
Base Rent for the Extended Term, including periodic increases as dictated by the
current market ("Landlord's Determination of Base Rent for Extended Term").
Tenant shall provide notice to Landlord within ten (10) days after receipt of
such notice from Landlord as to whether Tenant accepts Landlord's Determination
of Base Rent for Extended Term. In the event Tenant does not agree to Landlord's
Determination of Base Rent for Extended Term, Landlord and Tenant shall attempt
to agree upon Base Rent for the Premises for the Extended Term, such rent to be
the fair market rental value of the Premises for the Extended Term, as defined
in Subsection (c) below. If the parties are unable to agree upon the Base Rent
for the Extended Term by the date six (6) months prior to the commencement of
the Extended Term, then within ten (10) days thereafter each party, at its own
cost and by giving notice to the other party, shall appoint a real estate
appraiser with at least five (5) years full-time commercial real estate
appraisal experience in the area in which the Premises are located to appraise
and set Base Rent for the Extended Term. If a party does not appoint an
appraiser within ten (10) days after the other party has given notice of the
name of its appraiser, the single appraiser appointed shall be the sole
appraiser and shall set Base Rent for the Extended Term. If each party shall
have so appointed an appraiser, the two appraisers shall meet promptly and
attempt to set the Base Rent for the Extended Term. If the two appraisers are
unable to agree within thirty (30) days after the second appraiser has been
appointed, they shall attempt to select a third appraiser meeting the
qualifications herein stated within ten (10) days after the last day the two
appraisers are given to set Base Rent. If the two appraisers are unable to agree
on the third appraiser within such ten (10) day period, either of the parties to
this Lease, by giving five (5) days notice to the other party, may apply to the
then presiding judge of the Superior Court of King County for the selection of a
third appraiser meeting the qualifications stated in this paragraph. Each of the
parties shall bear one-half (1/2) of the cost of appointing the third appraiser
and of paying the third appraiser's fee. The third appraiser, however selected,
shall be a person who has not previously acted in any capacity for either party.

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(b) Within thirty (30) days after the selection of the third appraiser, a
majority of the appraisers shall set Base Rent for the Extended Term. If a
majority of the appraisers are unable to set Base Rent within the stipulated
period of time, the three appraisals shall be added together and their total
divided by three (3). The resulting quotient shall be the Base Rent for the
Premises during the Extended Term. If, however, the low appraisal and/or the
high appraisal is/are more than ten percent (10%) lower and/or higher than the
middle appraisal, the low appraisal and/or the high appraisal shall be
disregarded. If only one (1) appraisal is disregarded, the remaining two (2)
appraisals shall be added together and their total divided by two (2), and the
resulting quotient shall be Base Rent for the Premises during the Extended Term.

(c) For purposes of the appraisal, the term "Fair Market Base Rent" shall mean
the price that a ready and willing tenant would pay, as of the Extended Term
commencement date, as a base rent to a ready and willing landlord of
office/bio-tech premises of comparable to the Premises, in terms of size and
quality in their then-improved state with new paint and carpet, for a comparable
term, if such premises were exposed for lease for a reasonable period of time in
the Bothell/Kirkland/Bellevue market; including any rent increases over the
Extended Term as dictated by the current market. In no event shall there be
deducted from such fair market rental the value of any concessions, including
without limitation, tenant improvements, commissions, free rent and/or
“down-time”. Notwithstanding anything above to the contrary, Base Rent for any
applicable Extended Term shall not be less than the Base Rent in effect during
the month immediately preceding the commencement of such Extended Term.
 

ARTICLE V: RENT

5.01 Base Rent. The Base Rent ("Base Rent") shall be as set forth in Section
1.01(l). The Base Rent shall be paid in advance on the first day of each and
every month during the Term to Landlord at the address set forth in Section
1.01(b) hereof or at such other place as Landlord may direct in writing, without
any prior notice or demand therefor and without any abatement, deduction, offset
or setoff whatsoever. If the Term commences on any day other than the first day
of a calendar month and/or ends on any day other than the last day of a calendar
month, Base Rent for the fraction(s) of a month at the commencement and/or upon
the expiration of the Term shall be prorated based upon the actual number of
days in such fractional month(s). On or before November 1, 2005, Tenant shall
deposit with Landlord the Prepaid Rent identified in Section 1.01(m), which sum
shall be applied by Landlord as indicated in said Section 1.01(m).

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5.02 Additional Rent. In addition to Base Rent, Tenant shall pay to Landlord all
sums of money or other charges required to be paid by the Tenant under this
Lease (other than Base Rent and the Prepaid Rent), including but not limited to
Tenant’s Share of Operating Expenses (as defined in Article VI hereof) (all such
sums being herein deemed "Additional Rent"), and whether or not the same are
designated "Additional Rent" the same shall be payable in lawful money of the
United States of America without deduction, set-off or abatement whatsoever. Any
Additional Rent provided for in this Lease shall become due with the next
monthly installment of Base Rent unless otherwise provided. The term "Rent", as
used in this Lease, shall refer collectively to "Base Rent" and "Additional
Rent."

5.03 Late Payment. If any payment of Rent is not received by Landlord within
five (5) business days after the same is due, Tenant shall pay to Landlord a
late payment charge equal to five percent (5%) of the amount of such delinquent
payment of Rent in addition to the installment of Rent then owing, regardless of
whether or not a notice of default has been given by Landlord. In addition,
Tenant shall pay interest on such late payment and late charge from the due date
of the late payment at a nominal annual interest rate equal to the higher of:
(a) twelve percent (12%) or (b) the prevailing prime (reference) rate as
published by Bank of America (or any successor bank) at its Seattle main branch
office, or any successor rate of interest, plus three (3) percentage points, but
in no event higher than the maximum rate permitted by applicable law (hereafter
the "Default Rate"), until such amounts are paid. Landlord and Tenant recognize
that the damages which Landlord will suffer as a result of Tenant's failure to
timely pay Rent are difficult or impracticable to ascertain, and agree that said
interest and late charge are a reasonable approximation of the damages which
Landlord will suffer in the event of Tenant's late payment. This provision shall
not relieve Tenant from payment of Rent at the time and in the manner herein
specified. Acceptance by Landlord of any such interest and late charge shall not
constitute a waiver of Tenant's default with respect to said overdue amount, nor
shall it prevent Landlord from exercising any other rights or remedies available
to Landlord.

5.04 Security Deposit. Tenant will, on or before November 1, 2005, deposit with
Landlord the sum specified in Section 1.01(n) of this Lease. This sum shall
belong to Landlord and shall constitute partial consideration for the execution
of this Lease. Landlord shall pay Tenant the remaining balance thereof, without
any liability for interest thereon, within thirty (30) days after the expiration
or prior termination of the Lease Term, or any extension thereof, if and only if
Tenant has fully performed all of its financial obligations under the terms of
this Lease. Landlord shall be entitled to withdraw from the deposit the amount
of any unpaid Base Rent, Additional Rent or other charges not paid to Landlord
when due, and Tenant shall immediately re-deposit an amount equal to that so
withdrawn within five (5) business days of demand.

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5.05 Credit Enhancement/Letter of Credit. Not later than January 5, 2006, Tenant
shall deliver to Landlord a site draft irrevocable letter of credit issued by a
bank acceptable to Landlord in its sole discretion, in the amount of $700,000.00
and in the form attached hereto as Exhibit D (the "LC"), as security for the
full and faithful performance of every provision of this Lease to be performed
by Tenant. The LC shall be (i) unconditional and irrevocable, (ii) permit
partial draws by Landlord at any time upon written notice by Landlord that an
Event of Default has occurred pursuant to Section 13.01 of this Lease, and (iii)
have a term of at least one year, which shall be renewable each year throughout
the Lease Term, and the Extended Term if the Option to Extend is exercised. Not
later than November 1, 2005, Tenant shall deliver to Landlord a letter from a
bank reasonably acceptable to Landlord confirming that such bank is prepared to
issue the LC as and when required above.

If Tenant defaults with respect to any provision of this Lease, including but
not limited to the provisions relating to the payment of Rent, the repair of
damage to the Premises caused by Tenant and/or cleaning the Premises upon
termination of this Lease, Landlord may draw on all or any part of the LC for
the payment of any Rent or any other sum in default and any and all other
amounts to which Landlord may be entitled under this Lease, including without
limitation Landlord’s remedies pursuant to Section 13.02. Upon any draw upon the
LC by Landlord, Tenant shall, upon demand by Landlord, restore the LC to its
original amount.
 
Tenant shall cause the LC to be renewed for each year of the Lease Term. If
Tenant shall fail to provide such LC by January 5, 2006, or fails to replace it
with an approved LC not less than thirty (30) days prior to the expiration date
of any such LC, then the Tenant shall be considered to be in default under the
terms of this Lease and Landlord shall have the right to exercise any of its
available remedies pursuant to Section 13.02 of this Lease and shall, in
addition, have the right to draw against the full amount of the LC and
thereafter hold the same as security for Tenant’s obligations under this Lease
for the entire Lease Term, which funds shall be refunded by Landlord to the LC
issuer or Tenant, as appropriate, if and only if Tenant posts a new LC from a
financial institution acceptable to Landlord and meeting the terms of this
Section 5.05 prior to the expiration date of the expiring LC, and Tenant is not
otherwise in default under the Lease. Landlord shall be entitled to withdraw
from such sums the amount of any unpaid Base Rent, Additional Rent or other
charges not paid to Landlord when due. Landlord shall pay Tenant the remaining
balance thereof, if any, without any liability for interest thereon, within
thirty (30) days after the expiration or prior termination of the Lease Term, if
and only if Tenant has fully performed all of its obligations under the terms of
this Lease.
 
Notwithstanding the above, in the event that as of the commencement of the 25th
month of the Lease Term, Tenant’s most recent 10Q financial statement shows that
Tenant has (a) a tangible net worth equal to or greater than $20,000,000; (b) a
current ratio (current assets divided by current liabilities) of 2.0 or greater,
and (c) a debt-to-equity ratio equal to or less than 1.0, then the Letter of
Credit amount may be reduced to $600,000. If the criteria set forth in (a)-(c)
above has not been met, the Letter of Credit shall be renewed in the amount of
$700,000.

In the event that as of the commencement of the 49th month of the Lease Term,
Tenant’s most recent 10Q financial statement shows that Tenant has (a) a
tangible net worth equal to or greater than $20,000,000; (b) a current ratio of
2.0 or greater, and (b) a debt-to-equity ration equal to or less than 1.0, then
the Letter of Credit amount may be reduced to $500,000. If the criteria set
forth in (a)-(c) above has not been met, the Letter of Credit shall be renewed
or replaced with a Letter of Credit in the amount of $700,000.

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ARTICLE VI: ADDITIONAL RENT AND CHARGES

6.01 Operating Expenses. In addition to Base Rent and other sums payable by
Tenant under this Lease, Tenant shall pay to Landlord, as Additional Rent,
Tenant's Share of the Operating Expenses (as such term is defined below).

(a)  Estimated Expenses; Annual Reconciliation.

(i) Upon the Commencement of the Lease Term, and thereafter prior to the
commencement of each calendar year occurring wholly or partially within the Term
or as soon thereafter as practical, Landlord shall estimate the annual Operating
Expenses payable by Tenant pursuant to this provision, and Tenant shall pay to
Landlord on the first day of each month in advance, one-twelfth (1/12th) of
Tenant's Share of such estimated amount. In the event that during any calendar
year of the Term, Landlord determines that the actual Operating Expenses for
such year will exceed the estimated Operating Expenses, Landlord may revise such
estimate by written notice to Tenant, and Tenant shall pay to Landlord,
concurrently with the regular monthly rent payment next due following the
receipt of the revised estimate, an amount equal to the difference between the
initial monthly estimate and the revised monthly estimate multiplied by the
number of months expired during such calendar year and shall also pay an amount
equal to the revised monthly estimate for the month of such payment. Subsequent
installments shall be payable concurrently with the regular monthly Base Rent
due for the balance of the calendar year and shall continue until the next
calendar year's estimate is rendered or Landlord next revises its estimate of
Operating Expenses, whichever occurs sooner.
 
(ii) Within one hundred twenty (120) days following the end of each year or a
reasonable time thereafter, Landlord shall provide Tenant with a written
statement of the actual total Operating Expenses for such year and there shall
be an adjustment made to account for any difference between Tenant's Share of
the actual and the estimated Operating Expenses for the previous year. If Tenant
has overpaid the amount of Operating Expenses owing pursuant to this provision,
Landlord shall, provided Tenant is not in default hereunder, credit such
overpayment to Tenant's account. If Tenant has underpaid the amount of Operating
Expenses owing pursuant to this provision, Tenant shall pay the total amount of
such deficiency to Landlord as Additional Rent with the next payment of Base
Rent due under this Lease following delivery of written notice of said
deficiency from Landlord to Tenant. Notwithstanding anything in this section
6.01 to the contrary, commencing with the second calendar year of the Lease
Term, Tenant’s Share of Controllable Operating Expenses, (defined as the cost of
landscaping, parking lot sweeping and snow removal, maintenance and other
controllable expenses associated with the physical upkeep of the Common Areas)
shall not increase by more than 6% per calendar year on a cumulative basis.

 
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(iii) In the event the average occupancy level of the Building or Project, as
the case may be, for any calendar year was or is not one hundred percent (100%)
of full occupancy, then the estimated Operating Expenses and actual Operating
Expenses for such year shall be proportionately adjusted by Landlord to reflect
those costs which have occurred had the Building and/or Project, as the case may
be, been one hundred percent (100%) occupied during such year.

(iv) Landlord shall keep its books of account and records concerning Operating
Expenses in compliance with generally accepted accounting principles and retain
the same for one (1) years after the calendar year for which they were prepared;
provided, however in the event Tenant has given written notice to Landlord of a
specified dispute or objection regarding Operating Expenses charged by Landlord
hereunder, Landlord will retain such books of account and records for the
applicable period until final resolution of the dispute or objection. Unless
Tenant objects in writing regarding specific discrepancies in the Operating
Expense calculations for any calendar year within ninety (90) days after receipt
of Landlord's final calculations for such calendar year, Tenant shall be deemed
to have approved the same and to have waived the right to object to such
calculations.

(b) Defined terms.

(i) Operating Expenses Inclusions. For purposes of this Lease, "Operating
Expenses" means an amount equivalent to the total of all expenses and costs
incurred in connection with the ownership, operation, management, maintenance,
repair and replacement of the Project, the Property, the Building, the Premises
and the Common Areas, including, but in no way limited to, the following:

A. The costs of operating, maintaining and repairing the Project, the Property,
the Building, the Premises and the Common Areas, including but not limited to:
janitorial services, gardening and landscaping; painting; lighting; sanitary
control; personal property taxes; public liability insurance and property damage
insurance; utilities for Common Areas; licenses and fees for Common Area
facilities; sweeping; removal of snow and ice, trash, rubbish, garbage and other
refuse; repairing, restriping and resurfacing of parking area; and maintenance
of and property taxes on personal property, machinery and equipment used in
Common Area maintenance.

B. All Real Property Taxes (as defined below) assessed against the Project, the
Building and/or the Common Areas, as applicable, including land, building(s)
(including the Building) and improvements thereon or thereto.

C. All premiums for liability, terrorism, fire, extended coverage and other
insurance the Landlord reasonably deems necessary and keeps in force on or with
respect to the Project, the Property, the Building of which the Premises are a
part and/or the Common Areas, as the case may be, and commercially reasonable
deductibles payable in connection therewith.

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D. The cost of operating, maintaining and repairing any electrical, mechanical,
automatic fire sprinkler and other utilities systems serving the Premises which
serve the Premises in common with the entire Building.

E. The cost of maintenance and repairof the structural and non-structural
portions of the roof, roof membrane, exterior walls, foundation, and other
exterior portions of the Project and Building, and reasonable reserves for the
same.

F. Reasonable property management charges not to exceeed current market rates,
together with the costs incurred in the operation of a management office
relating to the Project, including, but not limited to the cost of rent and
utilities with respect thereto.

G. Costs of replacements and improvements which are necessary to adequately
maintain or protect the Project, the Building and/or the Common Areas, as the
case may be, and/or which are required by law or governmental regulation enacted
after the date of this Lease, which are of a capital nature (as determined by
GAAP accounting) to the extent amortization over the useful life thereof with
interest at 11% per annum is applicable to the periods during the Lease Term,
and reasonable reserves for the same.

H. Any other costs levied, assessed or imposed by or at the direction of, or
resulting from statutes or regulations or interpretations thereof promulgated by
any federal or governmental authority in connection with the use or occupancy of
the Project.

I. Assessments made on or with respect to the Project made pursuant to any CC&Rs
, Public Utility District conditions, Local Improvement District conditions
and/or owner’s associations affecting the Project, or any portion thereof.

J. Reasonable reserves for replacement of improvements located in, on or under
the Project, Property or Common Areas.

K. Compensation (including wages and employer paid benefits and taxes ) of
employees and contractors engaged in the operation and maintenance of the
Project, Property and/or Building.

(ii) Operating Expense Exclusions. Notwithstanding the foregoing, Operating
Expenses to be reimbursed by Tenant shall not include:

A. Expenses which are separately metered or calculated for the Premises or other
leased area of the Project or the Building, as the case may be, which expenses
shall be billed separately to Tenant or such other tenant(s), as applicable.

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B. Costs incurred in connection with the initial construction or design of the
Building or to correct defects in the original construction or design of the
Building.

C. Depreciation.

D. Costs, fines or penalties incurred due to violation by Landlord of any
applicable law.

E. Expenses incurred by Landlord in respect of individual tenants and/or the
improvement or renovation of tenants' leasehold improvements, including leasing
commissions, attorneys' fees arising from lease disputes and other specific
costs incurred for the account of, separately billed to and paid by specific
tenants.

F. Repairs or replacements to the extent that the cost of the same is
recoverable by the Landlord pursuant to original construction warranties.

G. Interest on debt or capital retirement of debt, and costs of capital
improvements except as expressly provided above.

H. Legal fees and disbursements relating to legal matters other than such fees
and costs directly relating to Operating Expense issues in connection with the
Project, the Building, the Premises and/or the Common Areas.

I. Costs incurred due to the gross negligence of Landlord or breach by Landlord
of its obligations under any lease.

Additional Rent payable by Tenant which would not otherwise be due until after
the date of the expiration or earlier termination of the Lease shall, if the
exact amount is uncertain at the time this Lease expires or terminates, be paid
by Tenant to Landlord upon such expiration or termination in an amount to be
determined by Landlord, with an adjustment to be made once the exact amount is
known.

(iii) Tenant's Share. For purposes of this Lease, "Tenant's Share" means the
percentage, as set forth in Section 1.01(o) or Section 1.01(p), as appropriate,
and obtained by dividing the Rentable Area of the Premises by the aggregate
Rentable Area of all premises available for lease, whether leased or not, in the
Building or the Project, as applicable with respect to any specific Operating
Expense, subject to adjustment in the event of changes in Rentable Area of the
Project, Building and/or Premises. Notwithstanding the above, Landlord shall
have the right, but not the obligation, to equitably adjust Tenant's Share of
any specific Operating Expense so as to render such expense payable
proportionately by those tenants benefited by the same or otherwise in order to
appropriately allocate such Operating Expense to cover the area covered by such
Operating Expense.

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(iv) Real Property Taxes. For purposes of this Lease, "Real Property Taxes"
shall consist of all real estate taxes and all other taxes relating to the
Building, the Common Areas and/or the Project, as applicable, all other taxes
which may be levied in lieu of real estate taxes, all assessments, local
improvement districts, assessment bonds, levies, fees and other governmental
charges, including, but not limited to, charges for traffic facilities and
improvements, water service studies, and improvements or amounts necessary to be
expended because of governmental orders, whether general or special, ordinary or
extraordinary, unforeseen as well as foreseen, of any kind and nature for public
improvements, services, benefits, or any other purpose, which are assessed,
levied, confirmed, imposed or become a lien upon the Building or any portion of
the Project, the Property and/or the Common Areas, or become payable during the
Term (or which become payable after the expiration or earlier termination hereof
and are attributable in whole or in part to any period during the Term hereof),
together with all costs and expenses incurred by Landlord in successfully
contesting, resisting or appealing any such taxes, rates, duties, levies or
assessments. "Real Property Taxes" shall exclude any franchise, estate,
inheritance or succession transfer tax of Landlord, or any federal or state
income, profits or revenue tax or charge upon the net income of Landlord from
all sources; provided, however, that if at any time during the Term there is
levied or assessed against Landlord a federal, state or local tax or excise tax
on rent, or any other tax however described on account of rent or gross receipts
or any portion thereof, Tenant shall pay one hundred percent (100%) of the
Tenant's Share of any said tax or excise applicable to Tenant's Rent as
Additional Rent.

6.02 Tenant's Personal Property Taxes. Tenant shall pay or cause to be paid,
prior to delinquency, any and all taxes and assessments levied upon all trade
fixtures, inventories and other real or personal property placed or installed in
and upon the Premises by Tenant. If any such taxes on Tenant's personal property
or trade fixtures are levied against Landlord or Landlord's property or if the
assessed value of the Building is increased by the inclusion therein of a value
placed upon such real or personal property or trade fixtures of Tenant, and if
Landlord pays the taxes based upon such increased assessment, Tenant shall, upon
demand, repay to Landlord the taxes so levied or the portion of such taxes
resulting from such increase in the assessment.

ARTICLE VII: INSURANCE

7.01 Landlord's Insurance. During the Term, Landlord shall procure and maintain
in full force and effect with respect to the Building (i) a policy or policies
of property insurance (including, to the extent required, sprinkler leakage,
vandalism and malicious mischief coverage, and any other endorsements required
by the holder of any fee or leasehold mortgage and earthquake, flood and
terrorism insurance to the extent Landlord reasonably deems prudent and/or to
the extent required by any mortgagee); and (ii) a policy of commercial liability
insurance, in the form and content acceptable to Landlord, insuring Landlord’s
activities with respect to the Premises, the Common Areas and the Project for
loss, damage or liability for personal injury or death of any person or loss or
damage to property occurring in, upon or about the Premises, Common Areas or
Project in an amount of not less than Three Million Dollars ($3,000,000)
combined single limit. If the annual premiums charged Landlord for such casualty
and/or liability insurance exceed the standard premium rates because the nature
of Tenant's operations results in increased exposure, then Tenant shall, upon
receipt of appropriate premium invoices, reimburse Landlord for such increased
amount. Landlord shall have the right, at its option, to keep and maintain in
full force and effect during the Term such other insurance in such amounts and
on such terms as Landlord and/or any mortgagees or the beneficiary of any trust
deed against the Building, or all or a portion of the Project, may reasonably
require from time to time in form, in amounts and for insurance risks against
which a prudent Landlord would protect itself, including but not limited to
rental abatement, rental interruption, earthquake, flood and terrorism
insurance.

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7.02 Tenant’s Public Liability. Tenant shall, at its own cost and expense, keep
and maintain in full force during the Term and any other period of occupancy of
the Premises by Tenant, a policy or policies of commercial liability insurance,
written by a reputable insurance company authorized to do business in the State
of Washington in form and content acceptable to Landlord insuring Tenant's
activities with respect to the Premises, the Common Areas and the Project for
loss, damage or liability for personal injury or death of any person or loss or
damage to property occurring in, upon or about the Premises in an amount of not
less than Three Million Dollars ($3,000,000) combined single limit or such
larger amounts as may hereafter be reasonably requested by Landlord. The policy
shall insure the hazards of the Premises and Tenant's operations therein, shall
include independent contractor and contractual liability coverage (covering the
indemnity contained in Section 7.08 hereof) and shall (a) name Landlord.
Landlord’s managing agent and the Landlord’s mortgagee under a mortgage or
beneficiary under a deed of trust either having a first lien against the
Building or Project (the “Lender”) as an additional insured; (b) contain a
cross-liability provision and; (c) contain a provision that the insurance
provided hereunder shall be primary and non-contributing with any other
insurance available to Landlord.

7.03 Tenant's Property and Other Insurance. Tenant shall, at its own cost and
expense, keep and maintain in full force during the Term and any other period of
occupancy of the Premises, a policy or policies of standard form property
insurance insuring against the perils of fire, extended coverage, vandalism,
malicious mischief, special extended coverage and sprinkler leakage. This
insurance policy shall be upon all property owned by Tenant, for which Tenant is
legally liable or that was installed at Tenant's expense, and which is located
in the Premises, including without limitation, furniture, fittings,
installations, cabling, fixtures (other than the improvements installed by
Landlord), and any other personal property, in the amount of not less than one
hundred percent (100%) of the full replacement costs thereof. This insurance
policy shall also insure direct or indirect loss of Tenant's earning
attributable to Tenant's inability to use fully or obtain access to the
Premises.

7.04 Form of Insurance/Certificates. All policies shall be written in a form
satisfactory to Landlord and shall be taken out with insurance companies
licensed in the state in which the Building is located and holding a General
Policy Holder's Rating of "A-" and a financial rating of "X" or better, as set
forth in the most current issues of Best's Insurance Guide. Tenant shall furnish
to Landlord, prior to Tenant's entry into the Premises and thereafter within ten
(10) days prior to the expiration of each such policy, a certificate of
insurance (or renewal thereof) issued by the insurance carrier of each policy of
insurance carried by Tenant pursuant hereto and, upon request by Landlord, a
copy of each such policy of insurance. Said certificates shall expressly provide
that such policies shall not be cancelable or subject to reduction of coverage
below the minimum amounts required by this Lease or required by any lender
having an interest in the Building or otherwise be subject to modification
except after thirty (30) days prior written notice to the parties named as
insured in this Section 7.04.

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7.05 Tenant's Failure. If Tenant fails to maintain any insurance required in the
Lease, Tenant shall be liable for any loss or cost resulting from said failure,
and Landlord shall have the right to obtain such insurance on Tenant's behalf
and at Tenant's sole expense. This Section 7.05 shall not be deemed to be a
waiver of any of Landlord's rights and remedies under any other Section of this
Lease. If Landlord obtains any insurance which is the responsibility of Tenant
to obtain under this Article VII, Landlord shall deliver to Tenant a written
statement setting forth the cost of any such insurance and showing in reasonable
detail the manner in which it has been computed and Tenant shall promptly remit
said amount as Additional Rent to Landlord.

7.06 Waiver of Subrogation. Any all risk policy or policies of fire, extended
coverage or similar casualty insurance which either party obtains in connection
with the Building, the Premises or Tenant's personal property therein shall
include a clause or endorsement denying the insurer any rights of subrogation
against the other party to the extent rights have been waived by the insured
prior to the occurrence of injury or loss. Landlord and Tenant waive any rights
of recovery against the other for liability, injury or loss due to hazards
covered by insurance containing such a waiver of subrogation clause or
endorsement to the extent of the liability, injury or loss covered thereby.

7.07 Tenant's Properties and Fixtures. Tenant assumes the risk of damage to any
furniture, equipment, machinery, goods, supplies or fixtures which are or remain
the property of Tenant or as to which Tenant retains the right of removal from
the Premises, except to the extent due to the negligent act or omission, or
willful misconduct of Landlord. Tenant shall not do or keep anything in or about
the Premises (except those things Tenant presently does and keeps in connection
with the uses set forth in Section 10.01) which will in any way tend to increase
insurance rates paid by Landlord and maintained with respect to the Premises
and/or the Project unless Tenant pays directly to Landlord the increase cost of
the premiums. In no event shall Tenant carry on any activities which would
invalidate any insurance coverage maintained by Landlord. If Tenant's occupancy
or business in, or on, the Premises, whether or not Landlord has consented to
the same, results in any increase in premiums for the insurance carried by
Landlord with respect to the Building and/or the Project, Tenant shall pay any
such increase in premiums as Additional Rent within ten (10) days after being
billed therefore by Landlord. In determining whether increased premiums are a
result of Tenant's use of the Building, a schedule issued by the organization
computing the insurance rate on the Building and/or the Project showing the
various components of such rate shall be conclusive evidence of the several
items and charges which make up such rate. Tenant shall promptly comply with all
reasonable requirements of the insurance underwriters and/or any governmental
authority having jurisdiction thereover, necessary for the maintenance of
reasonable fire and extended insurance for the Building and/or the Project.

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7.08 Indemnification.

(a) (i) Except and to the extent as may arise out of the negligence or willful
misconduct of Landlord and/or its agents, employees or contractors, Tenant, as a
material part of the consideration to be rendered to Landlord, hereby
indemnifies and agrees to defend and hold Landlord, Landlord’s managing agent
and Lender, the Premises and the Project harmless for, from and against (i) any
and all liability, penalties, losses, damages, costs and expenses, demands,
causes of action, claims, judgments or appeals arising from any injury to any
person or persons or any damage to any property to the extent as a result of
Tenant's or Tenants' officers, employees, agents, assignees, subtenants,
concessionaires, licensees, contractors or invitees' use, maintenance,
occupation, operation or control of the Premises during the Term, or resulting
from any breach or default in the performance of any obligation to be performed
by Tenant hereunder or for which Tenant is responsible under the terms of the
Lease or pursuant to any governmental or insurance requirement, or to the extent
arising from any act, neglect, fault or omission of Tenant or any of Tenant's
officers, employees, agents, servants, subtenants, concessionaires, licensees,
contractors or invitees, and (ii) from and against all reasonable legal costs
and charges, including reasonable attorneys' and other reasonable professional
fees, incurred in and about any of such matters and the defense of any action
arising out of the same or in discharging the Project, the Property and/or
Premises or any part thereof from any and all liens, charges or judgments which
may accrue or be placed thereon by reason of any act or omission of the Tenant,

(ii) Landlord, as a material part of the consideration to be rendered to Tenant,
hereby indemnifies and agrees to defend and hold Tenant and the Premises
harmless from and against (i) any and all liability, penalties, losses, damages,
costs and expenses, demands, causes of action, claims, judgments or appeals
arising from any injury to any person or persons or any damage to any property
to the extent as a result of Landlord's or Landlord's' officers, employees,
agents, maintenance, occupation, operation or control of the Building, Common
Areas or Project during the Term, or contractors, negligence or willful
misconduct, or arising from any act, neglect, fault or omission of Landlord or
any of Landlord's officers, employees, agents, servants, subtenants,
concessionaires, licensees, contractors or invitees, and (ii) from and against
all reasonable legal costs and charges, including reasonable attorneys' and
other reasonable professional fees, incurred in and about any of such matters
and the defense of any action arising out of the same or in discharging Tenant
and/or Premises or any part thereof from any and all liens, charges or judgments
which may accrue or be placed thereon by reason of any act or omission of the
Landlord, except and to the extent as may arise out of the negligence or willful
misconduct of Tenant and/or its officers, agents, employees, assignees,
subtenants, concessionaires, licensees, contractors, or invitees.

(b) In the event of the concurrent negligence of Tenant, its sublessees,
assignees, invitees, agents, employees, contractors, or licensees on the one
hand and the negligence of Landlord, its agents, employees or contractors on the
other hand, which concurrent negligence results in injury or damage to persons
or property of any nature and howsoever caused, and relates to the construction,
alteration, repair, addition to, subtraction from, improvement to or maintenance
of the Common Areas or Premises such that RCW 4.24.115 is applicable, then (i)
Tenant's obligation to indemnify Landlord as set forth in this Section 7.08
shall be limited to the extent of Tenant's negligence and that of Tenant's
officers, sublessees, assignees, invitees, agents, employees, contractors or
licensees, including Tenant's proportional share of costs, reasonable attorneys'
fees and expenses incurred in connection with any claim, action or proceeding
brought with respect to such injury or damage; and (ii) Landlord’s obligation to
indemnify Tenant as set forth in this Section 7.08 shall be limited to the
extent of Landlord's negligence and that of Landlord’s officers, agents,
employees, contractors or licensees, including Tenant's proportional share of
costs, reasonable attorneys' fees and expenses incurred in connection with any
claim, action or proceeding brought with respect to such injury or damage.

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(c) LANDLORD AND TENANT HEREBY WAIVE AND AGREE THAT IT WILL NOT ASSERT ITS
INDUSTRIAL INSURANCE IMMUNITY UNDER TITLE 51 RCW IF SUCH ASSERTION WOULD BE
INCONSISTENT WITH THE RIGHT OF THE OTHER PARTY TO INDEMNIFICATION PURSUANT TO
THIS ARTICLE 7. THE PARTIES AGREE THAT THIS PROVISION WAS MUTUALLY NEGOTIATED
AND RELATES ONLY TO A WAIVER OF IMMUNITY WITH RESPECT TO THE OTHER PARTY AND NO
THIRD PARTY, INCLUDING BUT NOT LIMITED TO, ANY INJURED EMPLOYEE OF EITHER PARTY,
SHALL BE A THIRD PARTY BENEFICIARY OF THIS PROVISION.

(d) In no event shall Landlord, its agents, employees and/or contractors be
liable for any personal injury or death or property damage caused by other
lessees or persons unrelated to Landlord in or about the Premises, the Project
and/or the Building, as the case may be, or caused by public or quasi-public
work, or for consequential damages arising out of any loss of the use of the
Premises or any equipment or facilities therein by Tenant or any person claiming
through or under Tenant.

7.09 Damage to Tenant's Property. Notwithstanding the provisions of Section 7.08
to the contrary, except to the extent due to the negligence or willful
misconduct of Landlord, Landlord, its agents, employees and/or contractors shall
not be liable for (i) any damage to property entrusted to employees or security
officers of the Project, Building or the Property, (ii) loss or damage to any
property by theft or otherwise, or (iii) any injury or damage to persons or
property resulting from fire, explosion, falling substances or materials, steam,
gas, electricity, water or rain which may leak from any part of the Building,
the Common Areas, Project or the Property or from the pipes, appliances or
plumbing work therein or from the roof, street, or subsurface or from any other
place or resulting from dampness or any other cause, except to the extent
Landlord receives consideration for such damage or injury from a third party.
Neither Landlord nor its agents, employees or contractors shall be liable for
interference with light. Tenant shall give prompt notice to Landlord and
appropriate emergency response officials if Tenant is or becomes aware of fire
or accidents in the Building, the Common Areas or any other portion of the
Project or of defects therein in the fixtures or equipment.

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ARTICLE VIII: REPAIRS AND MAINTENANCE

8.01 Landlord Repairs and Maintenance. Subject to Landlord's right to
reimbursement from Tenant pursuant to Sections 6.01 and 8.03, to the extent
applicable, Landlord shall at its expense maintain in good condition and repair
the structural portions of the Building including without limitation the
foundation, roof and membrane and shall maintain in good condition the exterior
of the Building, utilities to their point of connection to the Premises and the
Common Areas of the Project. Landlord shall not be liable for any failure to
make any repairs or to perform any maintenance unless such failure shall persist
for an unreasonable time after written notice of the need for such repairs or
maintenance is given to Landlord by Tenant. There shall be no abatement of Rent
and, except for the gross negligence or willful misconduct of Landlord or its
employees, no liability of Landlord by reason of any injury to or interference
with Tenant's business arising from the making of any repairs, alterations or
improvement in or to any portion of the Premises or in or to fixtures,
appurtenances and equipment therein; provided, that Landlord, its employees,
agents and contractors use reasonable efforts not to unreasonably interfere with
Tenant's business in exercise of Landlord's rights or obligations hereunder.
Except as may otherwise be expressly set forth herein, Tenant affirms that (a)
neither Landlord nor any agent, employee or officer of Landlord has made any
representation regarding the condition of the Premises, the Building, the Common
Areas or the Project, and (b) Landlord shall not be obligated to undertake any
repair, alteration, remodel, improvement, painting or decorating.

8.02 Utilities and Services. Subject to reimbursement pursuant to Sections 6.01
and 8.03 hereof, to the extent applicable, Landlord shall furnish or cause to be
furnished to the Premises lines for water, electricity, sewage and telephone.
Tenant shall pay before delinquency, at its sole cost and expense, all charges
for water, heat, electricity, power, telephone service, sewer service charges
and other utilities or services charged or attributable to the Premises;
provided, however, that if any such services or utilities shall be billed to
Landlord and are not separately billed to the Premises, Tenant shall pay to
Landlord as Additional Rent, an amount equal to that proportion of the total
charges therefor which the Rentable Area of the Premises bears to the rentable
area of leased area covered by such charges. Notwithstanding the above, in the
event Tenant uses any such services during non-standard building hours, Tenant
shall pay the actual cost of such after-hours services used by Tenant.

8.03 Tenant Repairs and Maintenance. Except as otherwise set forth in Sections
8.01 and 8.02 above, Tenant shall, at Tenant's sole cost and expense, keep,
maintain and, to the extent reasonably required, replace the entire Premises,
including but not by way of limitation, all interior walls, doors, ceiling,
fixtures, furnishings, drapes, specialty lamps, light bulbs, starters and
ballasts, subfloors, carpets and floor coverings, and heating, ventilation,
air-conditioning and other utility and mechanical systems within the Premises to
the extent serving the Premises exclusively, in good repair and in a clean and
safe condition; provided that, upon five (5) days written notice to Tenant,
Landlord shall have the right to perform such work on behalf of Tenant in which
event Tenant shall reimburse Landlord for the cost thereof promptly upon demand
therefor. In addition, if any repair or maintenance is necessary or prudent
under Sections 8.01 or 8.02 as a result of an act or omission of Tenant or its
agents, employees or contractors, Tenant shall reimburse Landlord for the entire
cost of any such repair or maintenance immediately upon written demand therefor.
Upon expiration or earlier termination of the Term, Tenant shall surrender the
Premises to Landlord in the same condition as when leased, reasonable wear and
tear, permanent improvements existing in the Premises as of the Commencement
Date or thereafter approved by Landlord (except to the extent Landlord gives
notice to Tenant at the time of approval of any such future improvements
(including without limitation the improvements constructed by Tenant pursuant to
Section 3.02 above) that Tenant will be required to remove and restore the same
upon expiration or termination of this Lease), and damage by fire or other
casualty not required to be repaired by Tenant pursuant to this Lease excepted.

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8.04 Non-liability of Landlord. Notwithstanding anything to the contrary
contained in Sections 8.01 or 8.02 above or elsewhere in this Lease, Landlord
shall not be in default hereunder or be liable for any damages directly or
indirectly resulting from, nor shall the Rent herein reserved be abated or
rebated by reason of (a) the interruption or curtailment of the use of the
Premises as a result of the installation of any equipment in connection with the
Building or Project; or (b) any failure to furnish or delay in furnishing any
services required to be provided by Landlord, unless and to the extent such
failure or delay is caused by accident or any condition created by Landlord's
active gross negligence; or (c) the limitation, curtailment, rationing or
restriction of the use of water or electricity, gas or any other form of energy
or any other service or utility whatsoever serving the Premises or Project.

8.05 Inspection of Premises. Landlord may enter the Premises to complete
construction undertaken by Landlord on the Premises, to inspect, clean, improve
or repair the same, to inspect the performance by Tenant of the terms and
conditions hereof, show the Premises to prospective purchasers, tenants and
lenders and for all other purposes as Landlord shall reasonably deem necessary
or appropriate; provided, that Landlord shall use reasonable efforts not to
interfere with Tenant's business in exercise of Landlord's rights hereunder and
shall comply with any reasonable security procedures developed by Tenant and
conveyed in writing to Landlord; and provided, further that Landlord shall give
Tenant not less than 24-hours notice of its right to enter the Premises (except
in the event of an emergency). Tenant hereby waives any claim for damages for
any injury or inconvenience to or interference with Tenant's business, any loss
of occupancy or quiet enjoyment of the Premises and any other loss in, upon or
about the Premises, arising from exercise by Landlord of its rights hereunder
except as otherwise provided in Article XI hereof.

ARTICLE IX: FIXTURES, PERSONAL PROPERTY AND ALTERATIONS

9.01 Fixtures and Personal Property. Tenant, at Tenant's expense, may install
any necessary trade fixtures, equipment and furniture in the Premises, provided
that such items are installed and are removable without damage to the structure
of the Premises, including, but not limited to, damage to drywall, doors, door
frames and floors. Landlord reserves the right to approve or disapprove of any
interior improvements which are visible from outside the Premises or which
violate the CC&R's on wholly aesthetic grounds. Such improvements must be
submitted for Landlord's written approval prior to installation, or Landlord may
remove or replace such items at Tenant's sole expense. Said trade fixtures,
equipment, furniture, cabling and personal property shall remain Tenant's
property and shall be maintained in good condition while on the Premises and
removed by Tenant upon the expiration or earlier termination of the Lease except
as otherwise agreed by Landlord and Tenant. As a covenant which shall survive
the expiration or earlier termination of the Lease, Tenant shall repair, at
Tenant's sole expense, or, if Tenant fails to complete such repairs prior to
such expiration or termination date, then, at Landlord’s election, reimburse
Landlord for the cost to repair all damage caused by the installation or removal
of said trade fixtures, equipment, cabling, furniture, personal property or
temporary improvements; provided that, except as otherwise expressly provided by
this Lease, Tenant shall not be required to remove or restore any permanent
improvements which have been approved by Landlord (except to the extent Landlord
gives notice to Tenant at the time of approval that removal of any such
improvements will be required to be removed upon termination or expiration of
the Lease). If Tenant fails to remove the foregoing items prior to or upon the
expiration or earlier termination of this Lease, Landlord, at its option and
without liability to Tenant for loss thereof, may keep and use them or remove
any or all of them and cause them to be stored or sold in accordance with
applicable law, and Tenant shall, upon demand of Landlord, pay to Landlord as
Additional Rent hereunder all costs and expenses incurred by Landlord in so
storing and/or selling said items. In the event any such fixtures, equipment,
and/or furniture of Tenant are sold by Landlord, the proceeds of such sale shall
be applied, first, to all expenses of Landlord incurred in connection with
storage and sale; second, to any amounts owed by Tenant to Landlord under this
Lease or otherwise, and, third, the remainder, if any, shall be paid to Tenant.

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9.02 Alterations. Tenant shall not make or allow to be made any material
alterations, additions or improvements to the Premises (defined as alterations,
additions or improvements costing in excess of $10,000 individually or $25,000
in the aggregate with respect to separate items relating to the same improvement
or alteration, or alterations, additions or improvements which affect the
structure or exterior of the Building or any building, mechanical, electrical or
life safety system), either at the inception of the Lease or subsequently during
the Term, without obtaining the prior written consent of Landlord, that consent
may be withheld in Landlord’s sole discretion with respect to any alteration,
addition or improvement that affects the structure or exterior of the Building
or any building, mechanical, electrical or life safety systems. Tenant shall
deliver to Landlord the contractor's name, references and state license number,
a certificate of liability insurance naming Landlord and Landlord’s manager and
lender(s) as an additional insured, as well as full and complete plans and
specifications of all such alterations, additions or improvements, and any
subsequent modifications or additions to such plans and specifications, and no
proposed work shall be commenced or continued by Tenant until Landlord has
received and given its written approval of each of the foregoing. Landlord shall
either approve or disapprove any proposed alteration, addition or improvement on
or before twenty (20) days following receipt of all of the foregoing items.
Landlord does not expressly or implicitly covenant or warrant that any plans or
specifications submitted by Tenant are accurate, safe or sufficient or that the
same comply with any applicable laws, ordinances, building codes, or the like.
Further, Tenant shall indemnify, protect, defend and hold Landlord and
Landlord’s agents, employees and contractors and the Building harmless for, from
and against any loss, damage, liability, claims, cost or expense, including
attorneys' fees and costs, incurred as a result of any defects in design,
materials or workmanship resulting from Tenant's alterations, additions or
improvements to the Premises. All alterations, telephone or telecommunications
lines, cables, conduits and equipment and all other additions or improvements to
the Premises made by Tenant shall remain the property of Tenant until
termination of the Lease, at which time they shall, unless otherwise elected by
Landlord by written notice to Tenant, be and become the property of Landlord.
Landlord may, as a condition to approval of any such alterations, additions or
improvements, require Tenant to remove any partitions, counters, railings,
telephone and telecommunications lines, cables, conduits and equipment and/or
other improvements installed by Tenant during the Term, and Tenant shall repair
all damage resulting from such removal or, in the event Tenant fails to do so,
at Landlord's option, shall pay to Landlord all costs arising from such removal.
All repairs, alterations, additions and restorations by Tenant hereinafter
required or permitted shall be done in a good and workmanlike manner and in
compliance with the plans and specifications approved by Landlord and in
compliance with all applicable laws and ordinances, building codes, bylaws,
regulations and orders of any federal, state, county, municipal or other public
authority and of the insurers of the Premises and as-built plans and
specifications shall be provided to Landlord by Tenant upon completion of the
work. If required by Landlord, Tenant shall secure at Tenant's own cost and
expense a completion and lien indemnity bond or other adequate security,
including without limitation an indemnity agreement from Tenant's parent in form
and substance reasonably satisfactory to Landlord. Tenant shall reimburse
Landlord for Landlord's reasonable charges (including any professional fees
incurred by Landlord and a reasonable administrative fee as established by
Landlord from time to time) for reviewing and approving or disapproving plans
and specifications for any proposed alterations.

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9.03 Liens. Tenant shall promptly file and/or record, as applicable, all notices
of completion provided for by law, and shall pay and discharge all claims for
work or labor done, supplies furnished or services rendered at the request of
Tenant or at the request of Landlord on behalf of Tenant, and shall keep the
Premises, the Property and the Project free and clear of all mechanics' and
materialmen's liens in connection therewith. Landlord shall have the right, and
shall be given ten (10) business days written notice by Tenant prior to
commencement of the work, to post or keep posted on the Premises, or in the
immediate vicinity thereof, any notices of non-responsibility for any
construction, alteration, or repair of the Premises by Tenant. If any such lien
is filed, Tenant shall cause same to be discharged of record within ten (10)
days following written notice thereof, or if Tenant disputes the correctness or
validity of any claim of lien, Landlord may, in its reasonable discretion,
permit Tenant to post or provide security in a form and amount acceptable to
Landlord to insure that title to the Project remains free from the lien claimed.
If said lien is not timely discharged Landlord may, but shall not be required
to, take such action or pay such amount as may be necessary to remove such lien
and Tenant shall pay to Landlord as Additional Rent any such amounts expended by
Landlord, together with interest thereon at the Default Rate (as defined in
Section 5.03 hereof), within five (5) days after notice is received from
Landlord of the amount expended by Landlord.

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ARTICLE X: USE AND COMPLIANCE WITH LAWS

10.01 General Use and Compliance with Laws. Tenant shall only use the Premises
for offices related to Tenant's business described in Section 1.01(e) above, and
uses customarily incidental thereto and which are consistent with a Class A
office project, and for no other use without the prior written the consent of
Landlord. Tenant shall, at Tenant's sole cost and expense, comply with
applicable requirements of municipal, county, state, federal and other
applicable governmental authorities now or hereafter in force pertaining to
Tenant's business operations, alterations and/or specific use of the Premises
and/or the Project, and shall secure any necessary permits therefore and shall
faithfully observe in the use of the Premises and the Project, applicable
municipal, county, state, federal and other applicable governmental entities'
requirements which are now or which may hereafter be in force. Tenant, in
Tenant's use and occupancy of the Premises, shall not subject or permit the
Premises and/or the Project to be used in any manner which would tend to damage
any portion thereof, or which would increase the cost of any insurance paid by
Landlord with respect thereto, including without limitation exceeding maximum
legal or customary occupancy and density ratios. Tenant shall not do or permit
anything to be done in or about the Premises, the Common Areas and/or the
Project which will in any way obstruct or interfere with the rights of other
tenants or occupants of the Common Areas and/or the Project or use or allow the
Premises or any portion of the Project to be used for any improper, immoral,
unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit a
nuisance in, on or about the Premises, the Common Areas and/or the Project.
Tenant shall comply with all covenants and obligations in the CC&R's which
affect the use and operation of the Premises, the Common Areas and/or the
Project.

10.02 Hazardous Materials.

(a) Defined terms.

(i) “Hazardous Materials” means, among other things, any of the following, in
any amount: (a) any petroleum or petroleum derived or derivative product,
asbestos in any form, urea formaldehyde and polychlorinated biphenyls and
medical wastes; (b) any radioactive substance; (c) any toxic, infectious,
reactive, corrosive, ignitable or flammable chemical or chemical compound; and
(d) any chemicals, materials or substances, whether solid, liquid or gas,
defined as or included in the definitions of “hazardous substances,”“hazardous
wastes,”“hazardous materials,”“extremely hazardous wastes,”“restricted hazardous
wastes,”“toxic substances,”“toxic pollutants,”“solid waste,” or words of similar
import in any federal, state or local statute, law, ordinance or regulation or
court decisions now existing or hereafter existing as the same may be
interpreted by government offices and agencies.

(ii) “Hazardous Materials Laws” means any federal, state or local statutes,
laws, ordinances or regulations or court decisions now existing or hereafter
existing that control, classify, regulate, list or define Hazardous Materials or
require remediation of Hazardous Materials contamination.

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(b) Compliance with Hazardous Materials Laws. Tenant will not cause any
Hazardous Material to be brought upon, kept, generated or used on the Project in
a manner or for a purpose prohibited by or that could result in liability under
any Hazardous Materials Law; provided, however, in no event shall Tenant allow
any Hazardous Material to be brought upon, kept, generated or used on the
Project other than those Hazardous Materials which are disclosed in the Summary
Table (Maximum Quantity on Hand) Dated June 6, 2000 and the Hazardous Materials
Inventory Statement Dated June 6, 2000 or otherwise used by Tenant in the
ordinary course of its business and of which Tenant has given Landlord prior
written notice and received Landlord’s approval, all of which shall be used,
kept, maintained and disposed of in compliance with all applicable laws and
regulations (other than small quantities of cleaning or other/industrial
supplies as are customarily used by a tenant in the ordinary course in a general
office facility). Tenant, at its sole cost and expense, will comply with (and
obtain all permits required under) all Hazardous Materials Laws, groundwater
wellhead protection laws, storm water management laws, fire protection
provisions, and prudent industry practice relating to the presence, storage,
transportation, disposal, release or management of Hazardous Materials in, on,
under or about the Project that Tenant brings upon, keeps, generates or uses on
the Project (including, without limitation, but subject to this Section 10.2,
immediate remediation of any Hazardous Materials in, on, under or about the
Project that Tenant brings upon, keeps, generates or uses on the Project in
compliance with Hazardous Materials Laws) and in no event shall Tenant allow any
liens or encumbrances pertaining to Tenant’s use of Hazardous Materials to
attach to any portion of the Project. On or before the expiration or earlier
termination of this Lease, Tenant, at its sole cost and expense, will completely
remove from the Project (regardless whether any Hazardous Materials Law requires
removal), in compliance with all Hazardous Materials Laws, all Hazardous
Materials Tenant causes to be present in, on, under or about the Project. Tenant
will not take any remedial action in response to the presence of any Hazardous
Materials in on, under or about the Project, nor enter into (or commence
negotiations with respect to) any settlement agreement, consent decree or other
compromise with respect to any claims relating to or in any way connected with
Hazardous Materials in, on, under or about the Project, without first notifying
Landlord of Tenant’s intention to do so and affording Landlord reasonable
opportunity to investigate, appear, intervene and otherwise assert and protect
Landlord’s interest in the Project. Landlord shall have the right from time to
time to inspect the Premises to determine if Tenant is in compliance with this
Section 10.2.

(c) Notice of Actions. Tenant will notify Landlord of any of the following
actions affecting Landlord, Tenant or the Project that result from or in any way
relate to Tenant’s use of the Project immediately after receiving notice of the
same: (a) any enforcement, clean-up, removal or other governmental or regulatory
action instituted, completed or threatened under any Hazardous Materials Law;
(b) any claim made or threatened by any person relating to damage, contribution,
liability, cost recovery, compensation, loss or injury resulting from or claimed
to result from any Hazardous Material; and (c) any reports made by any person,
including Tenant, to any environmental agency relating to any Hazardous
Material, including any complaints, notices, warnings or asserted violations.
Tenant will also deliver to Landlord, as promptly as possible and in any event
within five (5) business days after Tenant first receives or sends the same,
copies of all claims, reports, complaints, notices, warnings or asserted
violations relating in any way to the Project or Tenant’s use of the Project.
Upon Landlord’s written request, Tenant will promptly deliver to Landlord
documentation acceptable to Landlord reflecting the legal and proper disposal of
all Hazardous Materials removed or to be removed from the Premises. All such
documentation will list Tenant or its agent as a responsible party and the
generator of such Hazardous Materials and will not attribute responsibility for
any such Hazardous Materials to Landlord or Landlord’s property manager, except
to the extent Landlord or Landlord’s property manager or any of their respective
employees, agents or contractors were responsible for such Hazardous Materials
on the Premises.

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(d) Disclosure and Warning Obligations. Tenant acknowledges and agrees that all
reporting and warning obligations required under Hazardous Materials Laws
resulting from or in any way relating to Tenant’s use of the Premises or Project
are Tenant’s sole responsibility, regardless whether the Hazardous Materials
Laws permit or require Landlord to report or warn.

(e) Indemnification. Tenant releases and will indemnify, defend (with counsel
reasonably acceptable to Landlord), protect and hold harmless the Landlord and
Landlord’s agents, employees and contractors for, from and against any and all
claims, liabilities, damages, losses, costs and expenses whatsoever arising or
resulting, in whole or in part, directly or indirectly, from the presence,
treatment, storage, transportation, disposal, release or management of Hazardous
Materials in, on, under, upon or from the Project (including water tables and
atmosphere) that Tenant brings upon, keeps, generates or uses on the Premises or
the Project. Tenant’s obligations under this Section include, without limitation
and whether foreseeable or unforeseeable, (a) the costs of any required or
necessary repair, clean-up, detoxification or decontamination of the Project;
(b) the costs of implementing any closure, remediation or other required action
in connection therewith as stated above; (c) the value of any loss of use and
any diminution in value of the Project, and (d) consultants’ fees, experts’ fees
and response costs. The Tenant’s obligations under this Section survive the
expiration or earlier termination of this Lease.

(f) Hazardous Materials Representation by Landlord. Landlord represents to
Tenant that, to its actual knowledge, Landlord has not caused the generation,
storage or release of Hazardous Materials upon the Premises, except in
accordance with Hazardous Materials Laws and prudent industry practices
regarding construction of the Premises.

(g) Environmental Site Assessments. Upon request by Landlord during the Term of
this Lease, prior to the exercise of any renewal Term and/or prior to vacating
the Premises, Tenant will obtain and submit to Landlord an environmental site
assessment from an environmental consulting company reasonably acceptable to
Landlord.

10.03 Signs. The Tenant shall not paint, display, inscribe, place or affix any
sign, picture, advertisement, notice, lettering, or direction on any part of the
outside of the Building or the Project or visible from the outside of the
Premises, the Building or the Project, except as first approved by Landlord or
as may be set forth in the Tenant Improvement Plans. Landlord shall provide
initial building standard identification of Tenant on the Building directory,
elevator lobby and suite location. Tenant shall have a non-exclusive right to
install a non-illuminated sign on the Building exterior in the same location as
the existing “Microvision” sign and to place its identification on the Building
monument sign. All signage shall be in compliance with North Creek Signage &
Design Guidelines and shall be subject to approval by Landlord, the North Creek
Owner’s Association and the City of Bothell.

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10.04 Exterior HVAC Unit. Tenant shall have the right to install pad-mounted
exterior HVAC equipment subject to the provisions of this Section 10.04. The
equipment shall be located on the east side of Building. Review and approval
shall be at the reasonable discretion of Landlord and Landlord may require that
the mechanical equipment be screened and sound attenuated, consistent with other
installations in the Project, that the landscaping be installed around the
equipment to soften its mass and such other conditions as reasonably required by
Landlord. Additionally, to the extent the mechanical improvements cause a
reduction in the project’s parking count, the Tenant’s parking stall count shall
be reduced by one stall for every stall displaced by the mechanical
improvements. All costs associated with the mechanical equipment installation
and maintenance shall be at the sole cost of Tenant. Tenant shall be liable for
and shall indemnify Landlord with respect to, any contamination resulting from
the location, installation, use, operation or maintenance of the proposed
mechanical equipment. Tenant shall retain ownership to the additional pad
mounted exterior HVAC equipment and shall have the right to remove the equipment
at any time during the lease Term. Tenant shall provide Landlord written notice
no later than twelve (12) months prior to expiration of the initial Term if
tenant intends to so remove the equipment. If Tenant does not so elect to remove
the equipment, then, at Landlord’s option, (a) the equipment shall become the
property of the Landlord upon expiration of the Term, or (b) by written election
to Tenant no later than six (6) months prior to lease expiration, Landlord may
require Tenant to remove the mechanical equipment and restore the affected
landscape and parking areas upon expiration of the lease Term. Tenant shall have
the right to install a nitrogen tank, in a location approved by Landlord and
Tenant, which will be maintained by Air Products, Byrne Specialty Gases or other
professional in the industry approved by Landlord. Tenant shall obtain all
required local, state and/or federal permits and installation of nitrogen tank
shall be maintained in compliance with all applicable local, state and/or
federal regulations.

ARTICLE XI: DAMAGE AND DESTRUCTION

11.01 Reconstruction. If the Building is damaged or destroyed during the Term,
Landlord shall, except as hereinafter provided, diligently repair or rebuild it
to substantially the condition in which it existed immediately prior to such
damage or destruction. If Landlord is obligated or elects to repair or restore
as herein provided, Landlord shall be obligated to make repair or restoration of
only those portions of the Premises which were initially provided at Landlord's
expense or as part of the original installation by Landlord for Tenant and the
repair and/or restoration of other items within the Premises shall be the
obligation of the Tenant.

11.02 Rent Abatement. Rent due and payable hereunder shall be abated
proportionately during any period in which, by reason of any such damage or
destruction, there is substantial interference with the operation of Tenant's
business in the Premises. Such abatement shall continue for the period
commencing with such damage or destruction and ending with a substantial
completion by Landlord of the work of repair or reconstruction which Landlord is
obligated or undertakes to do. If it be determined that continuation of business
is not practical pending reconstruction, and if Landlord does not elect to or is
unable to provide alternative temporary space for continuation of such business,
then Rent due and payable hereunder shall abate, until reconstruction is
substantially completed or until business is totally or partially resumed,
whichever is the earlier. Tenant shall not be entitled to any claim,
compensation or damages for loss in the use in the whole or any part of the
Premises (including loss of business) and/or any inconvenience or annoyance
occasioned by such damage, repair, reconstruction or restoration.

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11.03 Excessive Damage or Destruction. If the Building or the Premises is
damaged or destroyed to the extent that it cannot within Landlord’s reasonable
discretion, with reasonable diligence, be fully repaired or restored by Landlord
within the earlier of (i) one hundred twenty (120) days after the date of the
damage or destruction, or (ii) the expiration of the Term hereof, Landlord may
terminate this Lease by written notice to Tenant within thirty (30) days of the
date of the damage or destruction. If Landlord does not terminate the Lease,
this Lease shall remain in full force and effect and Landlord shall diligently
repair and restore the damage as soon as reasonably possible.

11.04 Uninsured Casualty. Notwithstanding anything contained herein to the
contrary, in the event of damage to or destruction of all or any portion of the
Building, which damage or destruction is not fully covered by the insurance
proceeds received by Landlord under the insurance policies required under
Article 7.01 hereinabove, Landlord may terminate this Lease by written notice to
Tenant given within sixty (60) days after the date of notice to Landlord that
said damage or destruction is not so covered. If Landlord does not elect to
terminate this Lease, the Lease shall remain in full force and effect and the
Building shall be repaired and rebuilt in accordance with the provisions for
repair set forth in Section 11.01 hereinabove.

11.05 Waiver. With respect to any damage or destruction which Landlord is
obligated to repair or may elect to repair under the terms of this Article XI,
and to the extent permitted by law, Tenant hereby waives any rights to terminate
this Lease pursuant to rights otherwise accorded by law to tenants, except as
expressly otherwise provided herein.

11.06 Mortgagee's Right. Notwithstanding anything herein to the contrary, if the
holder of any indebtedness secured by a mortgage or deed of trust covering the
Property, the Building and/or the Project requires that the insurance proceeds
be applied to such indebtedness, then Landlord shall have the right to terminate
this Lease by delivering written notice of termination to Tenant within fifteen
(15) days after such requirement is made. Upon any termination of this Lease
under the provisions hereof, the parties shall be released without further
obligation to the other from date possession of the Premises is surrendered to
Landlord, except for items which are theretofore accrued and are then unpaid.

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11.07 Damage Near End of Term. Notwithstanding anything to the contrary
contained in this Article XI, in the event the Premises or the Building are
subject to excessive damage (as defined in Section 11.03) during the last twelve
(12) months of the Term or any applicable extension periods, Landlord may elect
to terminate this Lease by written notice to Tenant within thirty (30) days
after the date of such damage.

ARTICLE XII: EMINENT DOMAIN

12.01 Eminent Domain. In the event the whole of the Premises, Building, Project
and/or Common Areas, as the case may be, and/or such part thereof as shall
substantially interfere with Tenant's use and occupation thereof, shall be taken
for any public or quasi-public purpose by any lawful power or authority by
exercise of the right of appropriation, condemnation or eminent domain, or is
sold in lieu of or to prevent such taking, then Tenant shall have the right to
terminate this Lease effective as of the date possession is required to be
surrendered to said authority. In the event the whole of the Premises, Building,
Project and/or Common Areas, as the case may be, or such part thereof as shall
substantially interfere with Landlord’s use and occupation thereof, or if any
access points to adjoining streets, shall be taken for any public or
quasi-public purpose by any lawful power or authority by exercise of the right
of appropriation, condemnation or eminent domain, or is sold in lieu of or to
prevent such taking, then Landlord shall have the right to terminate this Lease
effective as of the date possession is required to be surrendered to said
authority. Except as provided below, Tenant shall not assert any claim against
Landlord or the taking authority for any compensation because of such taking,
and Landlord shall be entitled to receive the entire amount of any award without
deduction for any estate or interest of Tenant in the Premises. Nothing
contained in this Article 12 shall be deemed to give Landlord any interest in
any separate award made to Tenant for the taking of personal property and
fixtures belonging to Tenant or for Tenant's moving expenses. In the event the
amount of property or the type of estate taken shall not materially interfere
with the conduct of Tenant's business, Landlord shall be entitled to the entire
amount of the award without deduction for any estate or interest of Tenant,
Landlord shall promptly proceed to restore the Building to substantially their
same condition prior to such partial taking less the portion thereof lost in
such condemnation, and the Base Rent shall be proportionately reduced by the
time during which, and the portion of the Premises which, Tenant shall have been
deprived of possession on account of said taking and restoration.

ARTICLE XIII: DEFAULT

13.01 Events of Default. The occurrence of any of the following events shall
constitute an "Event of Default" on the part of the Tenant with or without
notice from Landlord:

(a) Tenant shall fail to pay on or before the due date any installment of Rent
or other payment required pursuant to this Lease with three (3) days after
receipt of written notice from Landlord (which notice shall be deemed to run
simultaneously with any notice required under applicable eviction or unlawful
detainer statutes);

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(b) Tenant shall abandon the Premises, whether or not Tenant is in default of
the Rent payments due under this Lease;

(c) Tenant shall fail to comply with any Term, provision, or covenant of this
Lease, other than the payment of Rent or other sums of money due hereunder, and
such failure is not cured within twenty (20) days after written notice thereof
to Tenant (said notice being in lieu of, and not in addition to, any notice
required as a prerequisite to a forcible entry and detainer or similar action
for possession of the Premises); provided that if the nature of such cure is
such that a longer cure period is necessary, Tenant shall only be in default if
Tenant shall have failed to commence such cure within said twenty (20) day
period and thereafter to have diligently prosecuted such cure to completion;

(d) Tenant shall file a petition or be adjudged a debtor or bankrupt or
insolvent under the United States Bankruptcy Code, as amended, or any similar
law or statute of the United States or any State; or a receiver or trustee shall
be appointed for all or substantially all of the assets of Tenant and such
appointment or petition, if involuntary, is not dismissed within sixty (60) days
of filing; or

(e)  
Tenant shall make an assignment for the benefit of creditors.

13.02 Remedies.

 
(a) Upon the occurrence of any Event of Default set forth in this Lease, in
addition to any other remedies available to Landlord at law or in equity,
Landlord shall have the immediate option to terminate this Lease and all rights
of Tenant hereunder. In the event that Landlord shall elect to so terminate this
Lease, then Landlord may recover from Tenant: (i) any unpaid rent which as been
earned at the time of such termination plus interest at the rates contemplated
by this Lease; plus (ii) the amount by which the unpaid rent which would have
been earned after termination until the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided plus interest
at the rates contemplated by this Lease; plus (iii) 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 rental loss that Tenant proves
could be reasonably avoided; plus (iv) the unamortized balance of the value of
any free Rent, tenant improvement costs, commissions and any other monetary
concessions provided to Tenant pursuant to this Lease, as amortized over the
initial Term of this Lease; plus (v) any other amount necessary to compensate
Landlord for all the damage proximately caused by Tenant's failure to perform
Tenant's obligation under this Lease or which in the ordinary course of things
would be likely to result therefrom, including, but not limited to, costs to
restore the Premises to good condition, costs to remodel, renovate or otherwise
prepare the Premises, or portions thereof, for a new tenant, leasing
commissions, marketing expenses, reasonable attorneys’ fees, and free rent,
moving allowances and other types of leasing concessions (“Costs of Reletting”).
As used in Subsections 13.02(a) (iii) above, the "worth at the time of award" is
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%).
Notwithstanding the above, if Landlord relets the Premises for a term (the
"Relet Term") that extends past the expiration date of this Lease, the Costs of
Reletting which may be included in Landlord’s damages under this Lease shall be
limited to a prorated portion of the Costs of Reletting, based on the percentage
that the length of the Term remaining on the date Landlord terminates this Lease
or Tenant's right to possession bears to the length of the Relet Term.

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(b) In the event of any such default by Tenant, Landlord shall also have the
right with or without terminating this Lease, to re-enter the Premises and
remove all persons and property from the Premises; such property may be removed
and stored in a public warehouse or elsewhere at the cost of and for the account
of the Tenant. No re-entry or taking possession of the Premises by Landlord
pursuant to this Section 13.02(b) shall be construed as an acceptance of a
surrender of the Premises or an election to terminate this Lease unless a
written notice of such intention is given to Tenant or unless the termination
thereof is decreed by a court of competent jurisdiction.

(c) In the event of the vacation or abandonment of the Premises by Tenant or in
the event that Landlord shall elect to re-enter as provided above or shall take
possession of the Premises pursuant to legal proceedings or pursuant to any
notice provided by law, then if Landlord does not elect to terminate this Lease
as provided above, Landlord may from time to time, without terminating this
Lease, either recover all Rent as it becomes due or relet the Premises or any
part thereof for the Term of this Lease on terms and conditions as Landlord at
its sole discretion may deem advisable with the right to make alterations and
repairs to the Premises.

(d) In the event that Landlord shall elect to so relet, the rents received by
Landlord from such reletting shall be applied: first to the payment of any
indebtedness other than Rent due hereunder from Tenant to Landlord; second to
the payment of any costs of such reletting; third, to the payment of the cost of
any alterations and repairs to the Premises; fourth, to the payment of Rent due
and unpaid hereunder; and the residual, if any, shall be held by Landlord and
applied to payment of future Rent as the same shall become due and payable
hereunder. Should that portion of such rents received from such reletting during
the month which is applied to the payment of Rent be less than the Rent payable
during that month by Tenant hereunder, then Tenant shall pay any such deficiency
to Landlord immediately upon demand therefor by Landlord. Such deficiency shall
be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as is
certain, any of the costs and expenses incurred by Landlord in such reletting or
in making such alterations and repairs not covered by the rents received from
such reletting.

(e) All rights, options and remedies of Landlord contained in this Lease shall
be construed and held to be cumulative, and no one of them shall be exclusive of
the other, and Landlord shall have the right to pursue any one or all of such
remedies or any other remedy or relief which may be provided by law, whether or
not stated in this Lease. No waiver of any default of Tenant hereunder shall be
implied from any acceptance by Landlord of any Rent or other payments due
hereunder or any omission by Landlord to take any action on account of such
default if such default persists or is repeated, and no express waiver shall
affect defaults other than as specified in said waiver. The consent or approval
of Landlord to or of any act by Tenant requiring Landlord's consent or approval
shall not be deemed to waive or render unnecessary Landlord's consent or
approval to or of any subsequent similar acts by Tenant.
 

 
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(f) In the event that in any twelve (12) month period during the Term of this
Lease, Tenant commits more than two (2) acts or omissions of default for which
default notices are given by Landlord pursuant to this Article XIII (whether or
not such defaults are cured by Tenant), Landlord may, at its option by written
notice to Tenant within three (3) months of such second act of default, elect to
terminate this Lease. Landlord’s election to exercise its early termination
rights shall be effective only upon written notice delivered to Tenant
specifying Landlord’s election to cause an early termination of this Lease. Such
early termination shall be in effect when such written notice is provided to
Tenant. Landlord’s right of early termination shall be in addition to all other
rights and remedies available to Landlord at law or in equity.
 
13.03 Landlord's Default. Landlord shall not be in default unless Landlord fails
to perform its obliga-tions under this Lease within thirty (30) days after
written notice by Tenant, or if such failure is not reasonably capable of being
cured within such thirty (30) day period, Landlord shall not be in default
unless Landlord has failed to commence the cure and diligently pursue the cure
to completion. In no event shall Tenant have the remedy to terminate this Lease
except upon final adjudication of competent jurisdiction authorizing such
default. In no event shall Landlord be liable to Tenant or any person claiming
through or under Tenant for consequential, exemplary or punitive damages.

ARTICLE XIV: FILING OF PETITION

14.01 Tenant's Bankruptcy.

Landlord and Tenant (as either debtor or debtor-in-possession) agree that if a
petition ("Petition") is filed by or against tenant under any chapter of Title
11 of the United States Code (the "Bankruptcy Code"), to the fullest extent
permitted by law, the following provisions shall apply:

(a) Adequate protection for Tenant's obligations accruing after filing of the
Petition and before this Lease is rejected or assumed shall be provided within
15 days after filing in the form of a security deposit equal to three months'
Base Rent and Additional Rent and other Lease charges, to be held by the court
or an escrow agent approved by Landlord and the court.

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(b) The sum of all amounts payable by Tenant to Landlord under this Lease
constitutes reasonable compensation for the occupancy of the Premises by Tenant.

(c) Tenant or Trustee shall give Landlord at least 30 days written notice of any
abandonment of the Premises or any proceeding relating to administrative claims.
If Tenant abandons without notice, Tenant or Trustee shall stipulate to entry of
an order for relief from stay to permit Landlord to reenter and relet the
Premises.

(d) If Tenant failed to timely and fully perform any of its obligations under
this Lease before the filing of the Petition, whether or not Landlord has given
Tenant written notice of that failure and whether or not any time period for
cure expired before the filing of the Petition, Tenant shall be deemed to have
been in default on the date the Petition was filed for all purposes under the
Bankruptcy Code.

(e) For the purposes of Section 365(b)(1) of the Bankruptcy Code, prompt cure of
defaults shall mean cure within 30 days after assumption.

(f) For the purposes of Section 365(b)(1) and 365(f)(2) of the Bankruptcy Code,
adequate assurance of future performance of this Lease by Tenant, Trustee or any
proposed assignee will require that Tenant, Trustee or the proposed assignee
deposit three months of Base Rent and Additional Rent into an escrow fund (to be
held by the court or an escrow agent approved by Landlord and the court) as
security for such future performance. In addition, if this Lease is to be
assigned, adequate assurance of future performance by the proposed assignee
shall require that: (i) the assignee have a tangible net worth not less than the
net worth of Tenant as of the Commencement Date or that such assignee's
performance be unconditionally guaranteed by a person or entity that has a
tangible net worth not less than the net worth of Tenant as of the Commencement
Date; (ii) the assignee demonstrate that it possesses a history of success in
operating a business of similar size and complexity in a similar market as
Tenant's business; and (iii) assignee assume in writing all of Tenant's
obligations relating to the Premises or this Lease.

(g) If Tenant or Trustee intends to assume and/or assign this Lease, Tenant or
Trustee shall provide Landlord with 30 days written notice of the proposed
action, separate from and in addition to any notice provided to all creditors.
Notice of a proposed assumption shall state the assurance of prompt cure,
compensation for loss and assurance of future performance to be provided to
Landlord. Notice of a proposed assignment shall state: (i) the name, address,
and federal tax identification and registration numbers of the proposed
assignee; (ii) all of the terms and conditions of the proposed assignment, and
(iii) the assignee's proposed adequate assurance of future performance to be
provided to Landlord.

(h) If Tenant is in default under this Lease when the Petition is filed,
Landlord shall not be required to provide Tenant or Trustee with services or
supplies under this Lease or otherwise before Tenant assumes this Lease, unless
Tenant compensates Landlord for such services and supplies in advance.

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ARTICLE XV: ASSIGNMENT AND SUBLETTING

15.01 Prohibition. Tenant shall have the right to assign, mortgage, pledge or
otherwise transfer or encumber this Lease, in whole or in part, and to sublet,
assign, or permit occupancy by any party other than Tenant of all or any part of
the Premises, only with the prior written consent of Landlord, which will not be
unreasonably withheld or conditioned. Tenant shall at the time the Tenant
requests the consent of Landlord, deliver to Landlord such information in
writing as Landlord may reasonably require respecting the proposed assignee or
subtenant including, without limitation, the name, address, nature of business,
ownership, financial responsibility and standing of such proposed assignee or
subtenant and Landlord shall have not less than ten (10) business days after
receipt of all required information to elect one of the following: (a) consent
to such proposed assignment, encumbrance or sublease, or (b) refuse such
consent, or (c) elect to terminate this Lease, in the case of a proposed
assignment, or, in the event of a cumulative sublease of more than 50% of the
Premises, elect to terminate the Lease with respect to the portion of the
Premises proposed to be subleased, as applicable. In addition, as a condition to
Landlord's consent to any assignment, sublease or encumbrance of this Lease
shall be the delivery to Landlord of a true copy of the fully executed
instrument of assignment, transfer or encumbrance and an agreement executed by
the assignee, sublessee or other transferee in form and substance satisfactory
to Landlord and expressly enforceable by Landlord, whereby the assignee assumes
and agrees to be bound by the terms and provisions of this Lease and perform all
the obligations of Tenant hereunder with respect to the assigned or subleased
portion of the Premises. No assignment or subletting by Tenant shall relieve
Tenant of any obligation under this Lease, including Tenant's obligation to pay
Base Rent and Additional Rent hereunder. Any purported assignment or subletting
contrary to the provisions hereof without consent shall be void. The consent by
Landlord to any assignment or subletting shall not constitute a waiver of the
necessity for such consent to any subsequent assignment of subletting. Tenant
shall pay Landlord’s reasonable processing costs and attorneys’ fees incurred in
reviewing any proposed Assignment or sublease. Notwithstanding anything herein
to the contrary, the parties agree that, in addition to other reasonable grounds
for withholding consent, it shall be reasonable for Landlord to withhold its
consent to any such assignment or sublease if in the event (a) Landlord or its
affiliates has existing vacant space in Schnitzer Northcreek (“Master Project”)
that could reasonably meet the needs of the proposed assignee or sublessee, and
(b) the rent for the proposed assignment or sublease for which Tenant is
requesting consent is under market rent by 10% or more, based on rates for
recent lease transactions for comparable space in the Master Project and/or the
Bothell/Kirkland/Bellevue submarket and/or current asking rates for vacant space
in the Master Project and/or the Bothell/Kirkland/Bellevue market. In the event
Landlord withholds consent based upon the rental rate being below market
pursuant to the preceding sentence, Landlord shall, upon request by Tenant,
provide Tenant with substantiation of such market rent determination.

15.02 Excess Rental. If pursuant to any assignment or sublease, Tenant receives
rent, either initially or over the Term of the assignment or sublease, in excess
of the Rent called for hereunder, or in the case of this sublease of a portion
of the Premises in excess of such Rent fairly allocable to such portion, after
appropriate adjustments to assure that all other payments called for hereunder
are appropriately taken into account, Tenant shall pay to Landlord, as
Additional Rent hereunder, fifty percent (50%) of the excess of each such
payment of rent received by Tenant after its receipt.

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15.03 Scope. The prohibition against assigning or subletting contained in this
Article XV shall be construed to include a prohibition against any assignment or
subletting by operation of law. If this Lease be assigned, or if the underlying
beneficial interest of Tenant is transferred, or if the Premises or any part
thereof be sublet or occupied by anybody other than Tenant, Landlord may collect
rent from the assignee, subtenant or occupant and apply the net amount collected
to the Rent herein reserved and apportion any excess rent so collected in
accordance with the terms of the immediately preceding paragraph, but no such
assignment, subletting, occupancy or collection shall be deemed a waiver of this
covenant, or the acceptance of the assignee, subtenant or occupant as tenant, or
a release of Tenant from the further performance by Tenant of covenants on the
part of Tenant herein contained. No assignment or subletting shall affect the
continuing primary liability of Tenant (which, following assignment, shall be
joint and several with the assignee), and Tenant shall not be released from
performing any of the terms, covenants and conditions of this Lease.

15.04 Waiver. Notwithstanding any assignment or sublease, or any indulgences,
waivers or extensions of time granted by Landlord to any assignee or sublessee
or failure of Landlord to take action against any assignee or sublease, Tenant
hereby agrees that Landlord may, at its option, and upon not less than ten (10)
days' notice to Tenant, proceed against Tenant without having taken action
against or joined such assignee or sublessee, except that Tenant shall have the
benefit of any indulgences, waivers and extensions of time granted to any such
assignee or sublessee.

15.05 Change in Control. If Tenant is a partnership or limited liability
company, a withdrawal of or change in general partners or members, in one or
more transfers, owning more than a fifty percent (50%) interest in the
partnership, shall constitute a voluntary assignment and shall be subject to the
provisions of this Article XV. If the Tenant is a corporation, a transfer of
fifty percent (50%) or more of the corporation's stock or assets in one or more
transfers to a single party and/or its affiliates, or a change in the control of
such company pursuant to a merger, consolidation, sale of assets or otherwise,
shall be deemed for the purposes hereof to be an assignment of this Lease, and
shall be subject to the provisions of this Article XV.

ARTICLE XVI: ESTOPPEL CERTIFICATE, ATTORNMENT AND SUBORDINATION

16.01 Estoppel Certificates. Within ten (10) business days after request
therefor by Landlord, or if on any sale, assignment or hypothecation by Landlord
of Landlord's interest in the Property, the Project and/or the Premises, or any
part thereof, an estoppel certificate shall be required from Tenant, Tenant
shall deliver a certificate in the form attached hereto as Exhibit G, or in such
other form as requested by Landlord, to any proposed mortgagee or purchaser, and
to Landlord, certifying (if such be the case) that this Lease is in full force
and effect, the date of Tenant's most recent payment of Rent, and that Tenant
has no defenses or offsets outstanding, or stating those claimed by Tenant, and
any other information contained in such Exhibit G or reasonably requested by
Landlord or such proposed mortgagee or purchaser. Tenant's failure to deliver
said statement within said period shall, at Landlord's option be an Event of
Default hereunder and shall in any event be conclusive upon Tenant that: (i)
this Lease is in full force and effect, without modification except as may be
represented by Landlord; (ii) there are no uncured defaults in Landlord's
performance and Tenant has no right to offset, counterclaim or deduction against
Rent hereunder; and (iii) no more than one period's Base Rent has been paid in
advance.

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16.02 Attornment. Tenant shall, in the event any proceedings are 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 Landlord, its successors or assigns,
encumbering the Building, or any part thereof or in the event of termination of
a ground lease, if any, and if so requested, attorn to the purchaser upon such
foreclosure or sale or upon any grant of a deed in lieu of foreclosure and
recognize such purchaser as Landlord under this Lease; provided, that such
purchaser recognizes Tenant's rights under this Lease and agrees not to disturb
Tenant's quiet possession of the Premises for so long as Tenant is not in
default hereunder.

16.03 Subordination. The rights of Tenant hereunder are and shall be, at the
election of any mortgagee or the beneficiary of a deed of trust encumbering the
Project (or the portion thereof on which the Building is located) and/or
Building, subject and subordinate to the lien of such mortgage or deed of trust,
or the lien resulting from any other method of financing or refinancing, now or
hereafter in force against the Project (or the portion thereof on which the
Building is located) and/or the Building, and to all advances made or hereafter
to be made upon the security thereof. If requested, Tenant agrees to execute
such documentation as may be required by Landlord or its lender to further
effect the provisions of this Article in the form attached hereto as Exhibit H
or in such other form as reasonably requested by Landlord or its Lender.

16.04 Recording. Tenant covenants and agrees with Landlord that Tenant shall not
record this Lease or any memorandum thereof without Landlord's prior written
consent. Notwithstanding the provisions of Section 16.03, in the event that
Landlord or its lender requires this Lease or a memorandum thereof to be
recorded in priority to any mortgage, deed of trust or other encumbrance which
may now or at any time hereafter affect in whole or in part the Building, the
Project (or the portion thereof on which the Building is located), and whether
or not any such mortgage, deed of trust or other encumbrance shall affect only
the Building, the Project (or the portion thereof on which the Building is
located), or shall be a blanket mortgage, deed of trust or encumbrance affecting
other premises as well, the Tenant covenants and agrees with Landlord that the
Tenant shall execute promptly upon request from Landlord any certificate,
priority agreement or other instrument which may from time to time be requested
to give effect thereto.

ARTICLE XVII: MISCELLANEOUS

17.01 Notices. All notices required to be given hereunder shall be in writing
and mailed postage prepaid by certified or registered mail, return receipt
requested, or by personal delivery or nationally recognized courier service, to
the appropriate address indicated in Section 1.01(b) or Section 1.01(d), as
appropriate, at such street address or street addresses (but not more than three
such addresses) as either Landlord or Tenant may, from time to time,
respectively, designate in a written notice given to the other. Notices shall be
deemed sufficiently served upon the earlier of actual receipt or the expiration
of three (3) days after the date of mailing thereof.

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17.02 Successors Bound. This Lease and each of its covenants and conditions
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective assignees, subject to the provisions hereof. Whenever in this
Lease a reference is made to Landlord, such reference shall be deemed to refer
to the person in whom the interest of Landlord shall be vested, and Landlord
shall have no obligation hereunder as to any claim arising after the transfer of
its interest in the Building. Any successor or assignee of the Tenant who
accepts an assignment of the benefit of this Lease and enters into possession or
enjoyment hereunder shall thereby assume and agree to perform and be bound by
the covenants and conditions thereof. Nothing herein contained shall be deemed
in any manner to give a right of assignment without the prior written consent of
Landlord pursuant to, or otherwise as provided in, Article XV hereof.

17.03 Waiver. No waiver of any default or breach of any covenant by either party
hereunder shall be implied from any omission by either party to take action on
account of such default if such default persists or is repeated, and no express
waiver shall affect any default other than the default specified in the waiver
and said waiver shall be operative only for the time and to the extent therein
stated. Waivers of any covenant, term or condition contained herein by either
party shall not be construed as a waiver of any subsequent breach of the same
covenant, term or condition. The consent or approval by either party to or of
any act by either party requiring further consent or approval shall not be
deemed to waive or render unnecessary their consent or approval to or of any
subsequent similar acts.

17.04 Subdivision and Easements. Landlord reserves the right to: (a) subdivide
the Project; (b) alter the boundaries of the Project; and (c) grant easements on
the Project and dedicate for public use portions thereof; provided, however,
that no such grant or dedication shall materially interfere with Tenant's use of
the Premises. Tenant hereby consents to such subdivision, boundary revision,
and/or grant or dedication of easements and agrees from time to time, at
Landlord's request and expense, to execute, acknowledge and deliver to Landlord,
in accordance with Landlord's instructions, any and all documents, instruments,
maps or plats necessary to effectuate Tenant's consent thereto.

17.05 Landlord's Reserved Rights in Common Areas. Landlord reserves the right
from time to time, provided that Tenant's use and enjoyment of the Premises is
not materially and adversely affected thereby, to: (a) install, use, maintain,
repair and replace pipes, ducts, conduits, wires and appurtenant meters and
equipment for service to other parts of the Building above the ceiling surfaces,
below the floor surfaces, within the walls and in the central core areas, and to
relocate any pipes, ducts, conduit, wires and appurtenant meters in the Building
which are so located or located elsewhere outside the Building; (b) make changes
to the Common Areas and/or the parking facilities located thereon, including,
without limitation, changes in the location, size, shape and number of
driveways, entrances, parking spaces, parking areas, loading and unloading
areas, ingress, egress, direction of traffic, landscaped areas and walkways; (c)
close temporarily all or any portion of the Common Areas and/or the Building in
order to perform any of the foregoing or any of Landlord's obligations under
this Lease, so long as reasonable access to the Building remains available
during normal business hours; and (d) alter, relocate or expand, and/or to add
additional structures and improvements to, or remove same from, all or any
portion of the Common Areas or other portions of the Project. Landlord shall, to
the extent possible, give Tenant at least five (5) business days prior advanced
notice of any such alterations, closures, relocations or other work which would
be reasonably anticipated to cause any interference with Tenant’s access to or
use of the Premises.

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17.06 Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a
lesser amount than the Rent herein stipulated shall be deemed to be other than
on account of the Rent, nor shall any endorsement or statement on any check or
any letter accompanying any check or payment as Rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without prejudice to
Landlord's right to recover the balance of such Rent or pursue any other remedy
provided in this Lease.

17.07 Limitation of Landlord's Liability. The obligations of Landlord under this
Lease do not constitute personal obligations of the individual partners,
directors, officers, members, employees or shareholders of Landlord or its
partners, and Tenant shall look solely to the Building, and the rents and
profits therefrom, for satisfaction of any liability in respect of this Lease
and will not seek recourse against the individual partners, directors, officers,
members, employees or shareholders of Landlord or its partners or any of their
personal assets for such satisfaction.

17.08 Survival. The obligations and liabilities of each party which are incurred
or accrue prior to the expiration of this Lease or the termination of this Lease
or of Tenant’s right of possession shall survive such expiration or termination,
as shall all provisions by which a party is to provide defense and indemnity to
the other party, all provisions waiving or limiting the liability of Landlord,
and all attorneys’ fees provisions.

17.09 Attorneys' Fees. In the event either party requires the services of an
attorney in connection with enforcing the terms of this Lease or in the event
suit is brought for the recovery of any Rent due under this Lease or the breach
of any covenant or condition of this Lease, or for the restitution of the
Premises to Landlord and/or eviction of Tenant during the Term of this Lease, or
after the expiration thereof, the substantially prevailing party will be
entitled to a reasonable sum for attorneys' fees, witness fees and other court
costs, both at trial and on appeal.

17.10 Captions and Article Numbers. The captions, article, paragraph and Section
numbers and table of contents appearing in this Lease are inserted only as a
matter of convenience and in no way define, limit, construe or describe the
scope or intent or such Sections or articles of this Lease nor in any way affect
this Lease.

17.11 Severability. If any Term, covenant, condition or provision of this Lease,
or the application thereof to any person or circumstance, shall to any extent be
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the terms, covenants, conditions or provisions of this Lease,
or the application thereof to any person or circumstance, shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.

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17.12 Applicable Law. This Lease, and the rights and obligations of the parties
hereto, shall be construed and enforced in accordance with the laws of the state
in which the Building is located.

17.13 Submission of Lease. The submission of this document for examination and
negotiation does not constitute an offer to lease, or a reservation of or option
for leasing the Premises. This document shall become effective and binding only
upon execution and delivery hereof by Landlord and Tenant. No act or omission of
any officer, employee or agent of Landlord or Tenant shall alter, change or
modify any of the provisions hereof.

17.14 Holding Over. Should Tenant, or any of its successors in interest, hold
over the Premises or any part thereof after the expiration or earlier
termination of this Lease without Landlord's prior written consent, such holding
over shall constitute and be construed as tenancy at sufferance only, at a
monthly rent equal to one hundred fifty percent (150%) of the Base Rent owed
during the final month of the Term of this Lease and otherwise upon the terms
and conditions in the Lease, so far as applicable. Should Tenant, or any of its
successors in interest, hold over the Premises or any part thereof after the
expiration or earlier termination of this Lease with Landlord's prior written
consent, such holding over shall constitute and be construed as a tenancy from
month to month only, at a fair market monthly rent as agreed by Landlord and
Tenant and otherwise upon the terms and conditions of this Lease, so far as
applicable. The acceptance by Landlord of Rent after such expiration or early
termination shall not result in a renewal or extension of this Lease. The
foregoing provisions of this Section 17.14 are in addition to and do not affect
Landlord's right of re-entry or any other rights of Landlord hereunder or as
otherwise provided by law. If Tenant fails to surrender the Premises on the
expiration of this Lease and/or to remove all Tenant's fixture and/or personal
property pursuant to Section 9.01 hereof, Tenant shall indemnify and hold
Landlord harmless for, from and against all claims, damages, loss or liability,
including without limitation, any claim made by any succeeding tenant resulting
from such failure to surrender by Tenant and any attorneys' fees and costs
incurred by Landlord with respect to any such claim.

17.15 Rules and Regulations. At all times during the Term, Tenant shall comply
with Rules and Regulations for the Building and the Project, as set forth in
Exhibit H attached hereto, together with such amendments thereto as Landlord may
from time to time reasonably adopt and enforce in a non-discriminatory fashion.

17.16 Parking. Unless Tenant is in default hereunder, Tenant shall be entitled
to the number of unreserved vehicle parking spaces designated in Section 1.01(q)
hereof for the non-exclusive use of Tenant, its employees, visitors and
customers. All parking spaces shall be available for the common use of the
tenants, subtenants and invitees of the Project on a non-exclusive basis,
subject to any reasonable restrictions from time to time imposed by Landlord.
Tenant shall not use or permit its officers, employees or invitees to use more
than the number of spaces designated in Section 1.01(q) or any spaces which have
been specifically reserved by Landlord to other tenants or for such other uses
as have been designated by appropriate governmental entities as being restricted
to certain uses. Tenant shall at all times comply and cause its officers,
employees and invitees to comply with any parking Rules and Regulations as
Landlord may from time to time reasonably adopt.

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17.17 No Nuisance. Tenant shall conduct its business and control its agents,
employees, invitees and visitors in such a manner as not to create any nuisance,
or interfere with, annoy or disrupt any other tenant or Landlord in its
operation of the Building or Project.

17.18 Broker; Agency Disclosure.

(a) Each of Tenant and Landlord warrant that it has had no discussions,
negotiations and/or other dealings with any real estate broker or agent in
connection with the negotiation of this Lease other than the Broker(s)
identified in Section 1.01(r) ("Brokers"), and that it knows of no other real
estate broker or agent who is or may be entitled to any commission or finder's
fee in connection with this Lease. Landlord shall pay Brokers a commission
pursuant to separate agreements. Brokers shall be obligated to pay any
co-brokers a portion of the commission received by such Broker. Each Tenant and
Landlord agrees to indemnify the other and hold the other harmless from and
against any and all claims, demands, losses, liabilities, lawsuits, judgments,
costs and expenses (including without limitation, attorneys' fees and costs)
with respect to any leasing commission or equivalent compensation alleged to be
owing on account of such party's discussions, negotiations and/or dealings with
any real estate broker or agent. This Section 17.18 is not intended to benefit
any third parties and shall not be deemed to give any rights to brokers or
finders. No commission(s) or finders fee(s) shall be paid to Tenant, employee(s)
of Tenant or any unlicensed representative of Tenant.

17.19 Landlord's Right to Perform. Upon Tenant's failure to perform any
obligation of Tenant hereunder after notice from Landlord pursuant to Section
13.01 above (if notice is required pursuant to Section 13.01 above), including
without limitation, the Tenant’s failure to pay Tenant's insurance premiums,
charges of contractors who have supplied materials or labor to the Premises,
etc., Landlord shall have the right to perform such obligation of Tenant on
behalf of Tenant and/or to make payment on behalf of Tenant to such parties.
Tenant shall reimburse Landlord the reasonable cost of Landlord's performing
such obligation on Tenant's behalf, including reimbursement of any amounts that
may be expended by Landlord, plus interest at the Default Rate, as Additional
Rent.

17.20 Assignment by Landlord. In the event of a sale, conveyance, or other
transfer by Landlord of the Building, the Project, or portion thereof on which
the Building is located, or the Project or in the event of an assignment of this
Lease by Landlord, the same shall operate to release Landlord from any further
liability upon any of the covenants or conditions, express or implied, herein
contained on the part of Landlord, and from any and all further liability,
obligations, costs and expenses, demands, causes of action, claims or judgments
arising out of this Lease from and after the effective date of said release. In
such event, Tenant agrees to look solely to the successor in interest of
transferor. If any Security Deposit is given by Tenant to secure performance of
Tenant's covenants hereunder, Landlord may transfer such Security Deposit to any
purchaser and thereupon Landlord shall be discharged from any further liability
in reference thereto. Notwithstanding anything in this Lease to the contrary,
however, (i) in no event shall Landlord’s lender, who may have succeeded to the
interest of Landlord by foreclosure, deed in lieu of foreclosure, or any other
means, have any liability for any obligation of Landlord to protect, defend,
indemnify or hold harmless Tenant or any other person or entity except for those
matters arising from the lender’s breach of the terms of this Lease after the
date of such foreclosure, deed in lieu of foreclosure or any other means, and
(ii) such succeeding lender shall have no liability for any representations or
warranties of the Landlord contained herein except for those matters arising
from the lender’s breach of the terms of this Lease after the date of such
foreclosure, deed in lieu of foreclosure or any other means.
 
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17.21 Entire Agreement. This Lease sets forth all covenants, promises,
agreements, conditions and understandings between Landlord and Tenant concerning
the Building and the Project, and there are no covenants, promises, agreements,
conditions or understandings, either oral or written, between Landlord and
Tenant other than as are herein set forth. No subsequent alteration, amendment,
change or addition to the Lease shall be binding upon Landlord or Tenant unless
reduced to writing and signed by Landlord and Tenant.

17.22 Financial Covenants. At Landlord’s request, Tenant shall provide Landlord
with current annual audited financial statements and quarterly unaudited
financial statements (all such statements shall be prepared in compliance with
GAAP standards) setting forth Tenant’s financial condition. Notwithstanding
anything to the contrary set forth herein, Tenant shall not be obligated to
comply with the foregoing sentence so long as, (a) Tenant is a publicly held
entity and (b) Tenant’s financial information is readily available in the public
domain.

17.23 Consents. Whenever the approval or consent of Landlord or Tenant is
required under the terms of this Lease, such consent shall not be unreasonably
withheld or delayed unless a different standard of approval is specifically set
forth in the particular Section containing that particular consent requirement.

17.24 Conditions. Landlord’s obligations under this Lease are conditioned upon
approval of this Lease by Landlord’s board of directors on or before August 1,
2005. In the event the above condition is not met or waived by the specified
date, this Lease shall terminate at the election of Landlord, in which event
neither party shall have any further rights or obligations hereunder.

17.25 Exhibits. Exhibits A through I are attached to this Lease after the
signatures and by this reference incorporated herein.

17.26 Submission of Lease. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for lease,
and it is not effective as a lease or otherwise until execution and delivery to
both Landlord and Tenant.

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17.27 Time. Time is of the essence with respect to the performance of every
provision of this Lease in which time of performance is a factor.

17.28 Prior Agreement or Amendment. This Lease contains all of the agreements of
the parties hereto with respect to any matter covered or mentioned in the Lease,
and no prior agreement or understanding pertaining to any such matter shall be
effective for any purpose. No provisions of this Lease may be amended or added
to except by an agreement in writing signed by the parties hereto or their
respective successors-in-interest.

17.29 Independently Provided Services.

(a) This Lease is entirely separate and distinct from and independent of any and
all agreements that Tenant may at any time enter into with any third party for
the provision of services, which include, but are not limited to,
telecommunications, office automation, repair, maintenance services, computer,
and photocopying (“Independent Services”). Tenant acknowledges that Landlord has
no obligation of any type concerning the provision of Independent Services, and
agrees that any cessation or interruption of Independent Services or any other
act or neglect by the third party providing the Independent Services shall not
constitute a default or constructive eviction by Landlord.

(b) Tenant agrees, except to the extent of the negligence of Landlord, its
partners, employees, agents and/or assigns, to hold harmless and defend
Landlord, its partners, employees, agents and assigns from any claim Tenant may
have arising in any way out of the provision (or lack thereof) of the
Independent Services which Tenant has contracted to receive from the third
parties.

17.30 Authority to Bind Landlord. The individuals signing this Lease on behalf
of Landlord hereby represent and warrant that they are empowered and duly
authorized to bind Landlord to this Lease.

17.31 Authority to Bind Tenant. The individuals signing this Lease on behalf of
Tenant hereby represent and warrant that they are empowered and duly authorized
to bind Tenant to this Lease. If Tenant is a corporation, limited liability
company or limited or general partnership, each individual executing this Lease
on behalf of Tenant represents and warrants that he or she is duly authorized to
execute and deliver this Lease on behalf of Tenant, in accordance with a duly
adopted resolution or consents of all appropriate persons or entities required
therefor and in accordance with the formation documents of tenant, and that this
Lease is binding upon Tenant in accordance with its terms. Simultaneously with
execution of this Lease, Tenant shall deliver to Landlord a copy of the
appropriate resolution or consent, certified by an appropriate officer, partner
or manager of Tenant, authorizing or ratifying the execution of this Lease.

17.32 No Usury. No interest charged, or chargeable by Landlord under this Lease
(including but not limited to the interest chargeable under Section 5.03 and/or
any late charge, fee or other sum charged or withheld by Landlord and which is
deemed to be interest) shall exceed the maximum amount of interest permitted by
any applicable law. If any such interest, fee or charge would exceed such
maximum, then such interest, fee or charge shall be automatically reduced to the
maximum amount allowed by law and any sums already collected in excess of such
maximum amount shall be refunded by Landlord in cash or by granting Tenant a
credit in the applicable amount which credit shall be applied against the next
Base Rent coming due.

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17.33 Interpretation. The parties hereto specifically acknowledge and agree that
the terms of this Lease have been mutually negotiated and the parties hereby
specifically waive the rule or principle of contract construction which provides
that any ambiguity in any term or provision of a contract will be interpreted or
resolved against the party which drafted such term or provision.

17.34 Excused Delays. Except as otherwise set forth in this Section 17.34,
neither party shall have liability to the other on account of the following acts
(each of which is an “Excused Delay” and jointly all of which are “Excused
Delays”)” which shall include: (a) the inability to fulfill, or delay in
fulfilling, any obligations under this Lease by reason of strike, lockout, other
labor trouble, dispute or disturbance; (b) governmental regulation, moratorium,
action, preemption or priorities or other controls; (c) shortages of fuel,
supplies or labor; (d) any failure or defect in the supply, quantity or
character of electricity or water furnished to the Premises by reason of any
requirement, act or omission of the public utility or others furnishing the
Building with electricity or water; or (e) for any other reason, whether similar
or dissimilar to the above, or for act of God beyond a party’s reasonable
control. If this Lease specifies a time period for performance of an obligation
of a party, that time period shall be extended by the period of any delay in the
party’s performance caused by any of the events of Excused Delay described
herein; provided, that notwithstanding anything to the contrary above, no
payment of money (whether as Base Rent, Tenant’s Share of Operating Expenses, or
any other payment due under this Lease) shall be postponed, delayed or forgiven
by reason of any of the foregoing events of Excused Delay.

17.35 Roof Rights.

(a) General. Tenant shall have the right, at Tenant’s sole cost, to use a
portion of the roof of the Building for the installation, maintenance, repair
and replacement of one or more satellite dish(s) or antenna(e) and related
equipment, including but not limited to computer wires, cables and related
devices (collectively, the "Antenna Equipment") which is used in or serving the
Premises. The size, quantity, location, design, screening and weight of such
Antenna Equipment shall be approved by Landlord, which approval shall not be
unreasonably withheld and as required by the any governmental authority having
jurisdiction thereof. Any request for consent hereunder shall contain detailed
plans, drawings and specifications identifying all work to be performed, the
time schedule for completion of the work, the identity of the entity that will
provide service to the Antenna Equipment and the identity of the entity that
will perform the proposed work (which entity shall be subject to Landlord's
reasonable approval, and such approval shall be deemed granted if not denied
within ten (10) business days following written request). Landlord shall have
ten (10) business days in which to evaluate the request after it is submitted by
Tenant, and failure to deny such request with such ten (10) day business period
shall be deemed consent. The Landlord shall have the right to grant others the
right to use the roof of the Building so long as such use does not materially
and adversely affect the rights of the Tenant.
 
 
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(b) No Warranty. Landlord's approval of, or requirements concerning, the Antenna
Equipment or any equipment related thereto, the plans, specifications or designs
related thereto, the contractor or subcontractor, or the work performed
hereunder, shall not be deemed a warranty as to the adequacy thereof, and
Landlord hereby disclaims any responsibility or liability for the same. Landlord
disclaims all responsibility for the condition or utility of the intra-building
network cabling ("INC"), if any, and makes no representation regarding the
suitability of the INC for Tenant's intended use.

(c) Tenant’s Obligations. If Landlord consents to Tenant's proposal, Tenant
shall (i) pay all costs in connection therewith (including all costs related to
new Antenna Equipment); (ii) undertake and all work related to the particular
proposal, and the installation, maintenance, repair and replacement of the
Antenna Equipment throughout the Lease Term, and the removal of the Antenna
Equipment at the expiration, or earlier termination, of the Lease in a good and
workmanlike manner at Tenant’s sole cost and expense without liens; (iii) use,
maintain and operate the Antenna Equipment and related equipment in accordance
with and subject to all laws governing the Antenna Equipment; (iv) repair and
restore the roof (including structural and non-structural portions thereof) and
the roof membrane which are damaged or penetrated in the installation,
maintenance, repair, replacement or removal of the Antenna Equipment; and (v)
not use or operate any Antenna Equipment which unreasonably interferes with the
satellite dish or antenna reception of any other party using the roof of the
Building. Tenant shall be responsible to cause (I) Tenant's contractor to comply
with the provisions of this Section and Landlord's reasonable requirements
governing any work performed; (II) Tenant's contractor to provide all reasonable
insurance required by Landlord; (III) any work performed to comply with all
applicable statutes, ordinances and governmental rules and regulation; and (IV)
"as-built" drawings to be delivered to the Landlord promptly upon completion of
any work. The Tenant shall contract with, and use, the Landlord’s roof
contractor (or a roof contactor approved by Landlord if Landlord has no roof
contractor) with respect to all work relating to the roof, including but not
limited to roof penetrations. All contractors used for the installation,
maintenance, repair, replacement and/or removal of the Antenna Equipment must be
approved by Landlord in advance.

(d) No Landlord Liability. Except to the extent arising from causes within the
reasonable control of Landlord or Landlord's agents, contractors or employees,
Landlord shall have no liability for damages arising from, and Landlord does not
warrant that the Tenant's use of any Antenna Equipment will be free from the
following (collectively called "Line Problems"): (A) any shortages, failures,
variations, interruptions, disconnections, loss or damage caused by the
installation, maintenance, or replacement, use or removal of communications
equipment by or for other tenants or occupants at the Shopping Center and/or
Building, by any failure of the environmental conditions or the power supply for
the Shopping Center and/or Building to conform to any requirement of the Antenna
Equipment or any associated equipment, or any other problems associated with any
Antenna Equipment by any other cause; (B) any failure of any Antenna Equipment
to satisfy Tenant's requirements; or (C) any eavesdropping or wire-tapping by
unauthorized parties. Landlord in no event shall be liable for damages by reason
of loss of profits, business interruption or other consequential damage arising
from any Line Problems. Under no circumstances shall any Line Problems be deemed
an actual or constructive eviction of Tenant, render Landlord liable to Tenant
for abatement of Rent, or relieve Tenant from performance of Tenant's
obligations under this Lease.

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IN WITNESS WHEREOF, the parties have executed this Lease as of the date first
above written.
 

"Landlord"   "Tenant"       S/I NORTH CREEK III, LLC   LUMERA CORPORATION      
By:  /s/ Michael C. Nelson   By:  /s/ Thomas D. Mino Its: Senior Investment
Director       Its: Chief Executive Officer  

 
 
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