Exhibit 10.1

Parklands North Creek

OFFICE LEASE

Grosvenor International (Atlantic Freeholds) Limited,

a Nevada corporation and BBCAF-VRC, LLC,

a Delaware limited liability company

Landlord

and

OncoGenex Pharmaceuticals Inc.,

a Delaware corporation,

Tenant

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TABLE OF CONTENTS

 

     Page  

ARTICLE 1 DEFINITIONS

     2   

ARTICLE 2 PREMISES; CONSTRUCTION

     4   

ARTICLE 3 TERM

     8   

ARTICLE 4 RENT

     10   

ARTICLE 5 OPERATING EXPENSES

     11   

ARTICLE 6 TAXES

     15   

ARTICLE 7 LETTER OF CREDIT

     16   

ARTICLE 8 USE AND OPERATION

     17   

ARTICLE 9 SERVICES AND UTILITIES

     18   

ARTICLE 10 ALTERATIONS

     19   

ARTICLE 11 MAINTENANCE AND REPAIRS

     21   

ARTICLE 12 ASSIGNMENT AND SUBLETTING

     21   

ARTICLE 13 WAIVER AND INDEMNIFICATION

     25   

ARTICLE 14 DESTRUCTION OR DAMAGE

     26   

ARTICLE 15 INSURANCE

     27   

ARTICLE 16 ENTRY BY LANDLORD

     28   

ARTICLE 17 DEFAULT

     29   

ARTICLE 18 LANDLORD’S DEFAULT

     31   

ARTICLE 19 ATTORNEYS’ FEES

     31   

ARTICLE 20 HOLDING OVER

     31   

ARTICLE 21 WAIVER

     32   

ARTICLE 22 EMINENT DOMAIN

     32   

ARTICLE 23 SUBORDINATION

     32   

ARTICLE 24 NO MERGER

     33   

ARTICLE 25 SURRENDER OF PREMISES

     33   

ARTICLE 26 ESTOPPEL CERTIFICATE

     34   

ARTICLE 27 NO LIGHT, AIR OR VIEW EASEMENT

     34   

ARTICLE 28 NOTICES

     34   

ARTICLE 29 RELOCATION OF PREMISES; SUBDIVISION AND EASEMENTS; LANDLORD’S
RESERVED RIGHTS IN COMMON AREAS

     35   

ARTICLE 30 SALE BY LANDLORD; SUCCESSORS

     35   

ARTICLE 31 HEALTH EMERGENCIES

     35   

ARTICLE 32 ENVIRONMENTAL PERFORMANCE OBJECTIVE

     36   

ARTICLE 33 PARKING

     36   

ARTICLE 34 MISCELLANEOUS

     36   

 

Exhibit A      Floor Plan (showing Premises and Expansion Option Space) and
Project Site Plan Exhibit B      Form of Lease Confirmation Exhibit C     
Construction Rules and Regulations Exhibit C-1      Designated Contractors List
Exhibit D      Base Building Improvements Exhibit E      Rules and Regulations
Exhibit F      Form of Subordination and Nondisturbance Agreement Exhibit G     
Intentionally Deleted Exhibit H      Environmental Management Plan

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OFFICE LEASE

This lease is entered into by and between landlord and tenant specified in the
Basic Lease Information (hereinafter “Landlord” and “Tenant” respectively).

BASIC LEASE INFORMATION

 

Date:    February 11, 2015 Landlord:   

Grosvenor International (Atlantic Freeholds) Limited,

a Nevada corporation, and BBCAF-VRC, LLC, a

Delaware limited liability company

Tenant:   

OncoGenex Pharmaceuticals Inc.,

a Delaware corporation

Building:   

All land and improvements situated at

19820 North Creek Parkway, Bothell, WA 98011 as

more particularly described on Exhibit “A-1” and

commonly known as “Building E” in the office park

commonly known as Parklands North Creek

Project   

All land and improvements in the office park

commonly known as Parklands North Creek Tech

Campus 1 as shown on Exhibit “A-2”

Section

 

  2.1.    Premises:      A portion of the 2nd floor of the Building as shown on
Exhibit “A-2”      2.2.    Rentable Area of Building:      67,357 square feet   
  2.2.    Rentable Area of Premises:      Approximately 11,526 rentable square
feet      2.4    Construction Allowance:      $138,312      3.1.    Term
Commencement Date:      February 15, 2015      3.1.    Term Expiration Date:   
  April 30, 2018      3.2.    Option to Extend Term:      One approximately
3-year term      4.1.    Rent Commencement Date:      February 15, 2015   
  4.1.    Base Rent:              

Period

   Annual
Rent PSF      Annual Rent      Monthly Rent     
February 15, 2015-April 30, 2015    $ 0.00       $ 0.00       $ 0.00      
May 1, 2015-April 30, 2016    $ 18.75       $ 216,122.50       $ 18,009.38      
May 1, 2016-April 30, 2017    $ 19.75       $ 227,638.50       $ 18,969.88      
May 1, 2017-April 30, 2018    $ 20.75       $ 239,164.50       $ 19,930.38   

  4.2.

   Address for Payment of Rent:     

 

 

North Creek TIC

P.O. Box 396073

San Francisco, CA 94139-6073

  

  

  

  4.4.

   Advance Rent:      None      5.1.    Tenant’s Percentage Share:      17.11%
(subject to change as set forth in Article 2)   

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  7.1. Letter of Credit: Initially $190,000 (subject to change as set forth in
Section 7.1)   8.1. Use: General Office Purposes 28.1. Tenant’s Address for
Notices:

OncoGenex Technologies Inc.

1001 West Broadway, Suite 400

Vancouver, British Columbia

V6H 4BI Canada

Telephone: (604) 736-3678

Facsimile: (604) 736-3687

 

and

 

Fenwick & West, LLP

1191 Second Avenue, 10th Floor

Seattle, WA 98101

Telephone: (206) 389-4510

Facsimile: (206) 389-4511

28.1. Tenant’s Address Prior to Occupancy:

1522 217th Place SE Suite 100

Bothell, Washington 98021

Telephone: (425) 686-1500

Facsimile: (425) 686-1600

28.1. Landlord’s Address for Notices:

c/o Schnitzer West

818 Stewart Street, Suite 700

Seattle, Washington 98101

Telephone: (425) 452-3700

Facsimile: (425) 454-1505

With copies to:

Grosvenor Americas

One California Street, Suite 2500

San Francisco, CA 94111

Attn: Asset Manager – Parklands

 

and

 

Grosvenor Americas

One California Street, Suite 2500

San Francisco, CA 94111

Attn: President

35.19. Landlord’s Broker: Colliers International 35.19. Tenant’s Broker: Flinn
Ferguson

In the event of any conflict between the Basic Lease Information and the other
terms of this Lease, the other terms of this Lease shall control. All
capitalized terms not defined in a particular article or section shall have the
meanings set forth in the Basic Lease Information, or in Article 1, as
applicable.

Article 1

DEFINITIONS

Section 1.1. Definitions. The following terms used in this Lease shall have the
following meanings:

(a) “Additional Rent” shall mean all sums of money or other charges required to
be paid by the Tenant under this Lease other than Base Rent.

(b) “Applicable Law” shall mean all statutes, laws, codes, ordinances,
regulations, rules, orders, requirements, judgments and decrees of every duly
constituted governmental authority or agency (including any judicial or
administrative interpretation thereof) applicable from time to time, along with
all common law.

 

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(c) “Bankruptcy Code” shall mean Title 11 of the United States Code, as amended.

(d) “Building” shall mean the building identified in the Basic Lease
Information.

(e) “Business Days” shall mean all days other than Saturdays, Sundays and
Holidays.

(f) “Common Areas” shall mean, to the extent such facilities exist from time to
time, the lobby, plaza and sidewalk areas, parking areas, landscaping and the
areas on individual floors in the Building devoted to corridors, fire
vestibules, elevators, foyers, lobbies, electric and telephone closets,
restrooms, mechanical rooms, janitor’s closets, and other similar facilities for
the benefit of all tenants and invitees and shall also mean those areas of the
Building devoted to mechanical and service rooms servicing the Building.

(g) “Construction Rules” shall mean the rules, specifications, and procedures
for the design and construction of improvements and Alterations in and to the
Premises by the Tenant, as the same may be reasonably amended from time to time.
The Construction Rules in effect on the date of this Lease are attached hereto
as Exhibit “C”.

(h) “Environmental Laws” shall mean all Applicable Laws now or at any time
hereafter in effect, made or issued by any municipal, state or federal
government, or by any department, agency, tribunal, board or office thereof, or
any other agency or source whatsoever, (collectively, an “Authority”),
regulating, relating to or imposing liability or standards of conduct concerning
the protection of health from environmental hazards, Hazardous Substances, the
natural or human environment (including air, land, surface water, groundwater,
waste, real and personal property, moveable and immoveable property,
sustainability, building operations, recycling or resource consumption), public
or occupational health and safety and the manufacture, importation, handling,
use, reuse, recycling, transportation, storage, disposal, elimination and
treatment of a substance, hazardous or otherwise.

(i) “Environmental Management Plan” shall mean and refer to those provisions set
out in Exhibit “H” attached hereto.

(j) Intentionally Deleted.

(k) “Greenhouse Gases” shall mean any or all of CO2, methane (CH4), nitrous
oxide (N2O), Sulphur Hexafluoride (SF6), Perfluoromethane (CF4), Perfluoroethane
(C2F6), Hydrofluorocarbons (HFC’s), any substance designated as a greenhouse gas
by Applicable Laws.

(l) “Hazardous Substances” shall mean any hazardous or toxic waste, hazardous or
toxic substance, pollutant, contaminant, oil or petroleum product, or other
solid, liquid, or gaseous substance or product (i) that is currently or
hereafter listed, regulated, or designated as, or is determined to be (in whole
or in part), toxic or hazardous (or words of similar meaning and regulatory
effect), or with respect to which governmental regulatory obligations
(including, without limitation, recordkeeping, remedial or closure obligations)
may be imposed, under any Environmental Laws, or (ii) exposure to which would
pose a health or safety threat or hazard, and shall include, without limitation,
hazardous substances and materials described in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C.
Section 9601 et seq., the Resource Conservation and Recovery Act, as amended 42
U.S.C. Section 6901 et seq., any applicable state or local laws and the
regulations adopted under these acts.

(m) “Health Emergency” shall mean a situation in which Landlord reasonably
determines, based on advice from a medical professional, or a directive,
bulletin, notice or other form of communication from a public health authority,
that occupants, tenants, invitees or contractors working in the Building are or
may be exposed to imminent danger from a disease, virus or other biological or
physical agents that may be detrimental to human health including, by way of
example, Severe Acute Respiratory Syndrome (“SARS”) and Influenzavirus A strains
and subtypes such as Avian Flu (H5N1).

(n) “Health Emergency Plan” shall mean and refer to a plan prepared by or for
Landlord for managing the Building in response to a Health Emergency as it may
be amended from time to time.

(o) “Holiday” shall mean all federal holidays on which banks and the post office
are generally closed.

(p) “Landlord Parties” shall mean the partners or members comprising Landlord,
and the partners, members, shareholders, directors, officers or employees of any
of the foregoing.

(q) “Lease Year” shall mean the twelve (12)-month period commencing on the
Commencement Date and each period of twelve consecutive months thereafter.

 

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(r) “Major Repairs” shall mean any repairs in or to the walls, ceilings,
flooring or electrical or telephone/communication closets, or any other similar
major repairs.

(s) “Ordinary Business Hours” shall mean those hours set forth as “Ordinary
Business Hours” in the Building Rules and Regulations attached hereto as Exhibit
“E”.

(t) “Prime Rate” shall mean the prime rate (or base rate) reported in the Money
Rates column or section of The Wall Street Journal as being the base rate on
corporate loans at large U.S. money center commercial banks (whether or not such
rate has actually been charged by any such bank) on the first day on which The
Wall Street Journal is published in the month preceding the month in which the
subject costs are incurred.

(u) “Release” shall mean the escape, disposal or release of Hazardous
Substances.

(v) “Specified Rate” shall mean Prime Rate plus eight percent (8%) per annum, or
at the highest rate legally permitted, whichever is less.

(w) “Taxes” shall mean all taxes, assessments and charges (including costs and
expenses of contesting the amount or validity thereof or seeking a reduction by
appropriate administrative or legal proceedings) levied upon or with respect to
the Building or any personal property of Landlord used in connection with the
management and operation of the Project, or Landlord’s interest in the Project
or such personal property, including, without limitation, all real property
taxes, vault taxes and/or public space rentals, general and special assessments;
charges, fees, levies or assessments for transit, transit impact or mitigation,
housing, police, fire or other governmental services or purported benefits to
the Building such as, but not limited to, taxes related to any business
improvement district or arena/stadium taxes; service payments in lieu of taxes;
and any tax, fee or excise on the act of entering into this Lease or any other
lease of space in the Building, on the use or occupancy of the Building or any
part thereof, relating to transit impact and mitigation, or on the rent payable
under any lease or in connection with the business of renting space in the
Building, which may now or hereafter be levied or assessed against Landlord by
the United States of America, the State of Washington, or any political
subdivision, public corporation, district or other political or public entity,
and any other tax, fee or other excise, however described, that may be levied or
assessed as a substitute for, or as an addition to (in whole or in part) any
other property taxes, whether or not now customary or in the contemplation of
the parties on the date of this Lease; provided that, notwithstanding anything
to the contrary, Taxes shall exclude, without limitation, any income, franchise,
corporation, capital levy, excess profits, revenue, inheritance, gift, estate,
payroll or stamp tax, which at any time may be assessed against or become a lien
upon all or any part of the Premises or this leasehold.

(x) “Tenant Items” shall mean all of Tenant’s personal property and all
Alterations and other improvements in the Premises other than the Base Building
Improvements (whether initially constructed by Landlord or Tenant or any third
party),

(y) “Term” shall mean the period commencing on the “Term Commencement Date”
specified in the Basic Lease Information, and, unless sooner terminated as
herein provided, ending on the “Term Expiration Date” specified in the Basic
Lease Information. If any extension option provided in this Lease is properly
exercised, then the Term shall expire, unless sooner terminated as herein
provided, on the last day of the subject Option Term.

Article 2

PREMISES; CONSTRUCTION

Section 2.1. Premises.

(a) Initial Premises. Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, for the term and subject to the agreements, conditions and
provisions contained in the Basic Lease Information and hereinafter set forth,
to each and all of which Landlord and Tenant hereby mutually agree, the
Premises. Provided the Premises are delivered in the condition required by this
Lease, and subject to Landlord’s obligations under this Lease, Tenant’s
possession of the Premises shall be conclusive evidence of Tenant’s acceptance
thereof in good order and satisfactory condition. Tenant acknowledges that no
representations respecting the condition of the Premises or the suitability of
the Premises for Tenant’s intended use and no promises to decorate, alter,
repair or improve the Premises either before or after the execution hereof, have
been made by Landlord or its agents to Tenant unless the same are expressed in
this Lease. The vertical boundaries of the Premises shall extend from the
unfinished surface of the floor to and including the finished ceiling, except
that Tenant’s cabling, non-building standard lighting fixtures and special
heating, ventilating and air conditioning equipment located in and above the
finished ceiling shall be deemed part of the Premises. The area and description
of the Premises are contained in the Basic Lease Information. All parts (except
surfaces facing the interior of the Premises) of all walls, windows and doors
(including exterior Building walls, exterior core corridor

 

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walls, exterior doors and entrances), all balconies, terraces and roofs, all
space used for shafts, stacks, stairways, chutes, pipes, conduits, ducts, fan
rooms, heating, air cooling, plumbing and other mechanical facilities, service
closets and other Building facilities are not part of the Premises, and Landlord
shall have the use thereof, as well as access thereto through the Premises for
the purposes of operation, maintenance, alteration and repair. Exhibits “A-1”
and “A-2” are for informational purposes only and is not a warranty,
representation or agreement on the part of Landlord that the Building and/or any
of its components will be exactly as indicated on such exhibits.

(b) Expansion Option. As of the date of execution of this Lease, the two spaces
consisting of approximately 8,054 square feet in the aggregate and located
immediately adjacent to the Premises, as shown on Exhibit “A-2” (each an
“Expansion Option Space” and together the “Expansion Option Spaces”) are vacant.
Tenant shall have the right to lease either or both of the Expansion Option
Spaces commencing anytime on or before August 1, 2015 by giving unequivocal
written notice of the exercise of such right (“Option Exercise Notice”) to
Landlord at least forty-five (45) days prior to the commencement date desired by
Tenant. The commencement date with respect to the applicable Expansion Option
Space is herein called the “Expansion Commencement Date”. From the period
commencing on the date of the Option Exercise Notice and ending on the Expansion
Commencement Date, Tenant shall be entitled to occupy the Expansion Option Space
specified in the Option Exercise Notice for purposes of performing Improvements
and installing Tenant’s personal property, fixtures, cabling and equipment in
accordance with this Lease. Tenant shall not owe any Rent for the Expansion
Option Space during such period of early occupancy. Tenant shall commence paying
Rent for the applicable Expansion Option Space on the Expansion Commencement
Date. All of the terms and provisions of this Lease shall apply to the leasing
of an Expansion Option Space, provided, (i) the Base Rent payable for the
Expansion Option Space shall be at the Base Rent payable for the Premises as of
the Expansion Commencement Date and shall escalate as and when the Base Rent
escalates for the rest of the Premises, (ii) upon the expansion of the Premises,
Tenant’s Percentage Share shall be increased to reflect the rentable square
footage of the Expansion Space, (iii) Tenant shall take the Expansion Option
Space in its as-is condition (but subject to the same obligations of Landlord
related to the delivery of the initial Premises under this Lease), and shall be
responsible, at its sole cost and expense (subject to the provisions of
subsection (v) of this Section 2.1(b)), for performing all work required to
demise the Expansion Option Space and to incorporate the Expansion Option Space
into the existing Premises, including without limitation, creating common
corridors as reasonably required by Landlord and as required by Applicable Law,
demolishing existing improvements located within such common corridor areas,
finishing the newly-altered common corridor areas (including but not limited to
studs, drywall, doorways and doors, carpet and paint), creating entrances from
the common corridors into the Premises, complying with exiting requirements, and
performing any required mechanical, electrical and plumbing work required to
relocate and to re-distribute utilities serving the Premises and any space
created by the demising of the Expansion Option Space; and (iv) Tenant shall be
entitled to a tenant improvement allowance proportionate to the Allowance
payable with respect to the original Premises, i.e. $12.00 per rentable square
foot in the Expansion Option Space multiplied by a fraction, the numerator of
which is the number of days remaining in the initial 38-month Term starting on
the Expansion Commencement Date and the denominator of which is the number of
days in the initial 38-month Term. Notwithstanding anything to the contrary, if
Tenant exercises this Expansion Option, then Tenant shall also be entitled at
such time to exercise its Option to Extend (as set forth in Section 3.2 below)
and, upon such concurrent exercise, Tenant shall be entitled to a Tenant
Improvement Allowance for the Expansion Spaces in the amount of $12.00 per
rentable square foot in the applicable Expansion Option Space; provided,
however, that the Fair Market Rent (as such term is defined in Section 3.2
below) for the Option Term shall not be determined more than twelve (12) months
before the expiration of the Initial Term. Tenant shall further be entitled to
apply any portion of the Allowance (as defined below) that was not utilized in
performance of the initial Improvements under this Lease to the cost of
improvements to the Expansion Option Spaces. Notwithstanding the foregoing, if
Tenant is in default beyond applicable notice and cure periods on the date of
giving the Expansion Exercise Notice, then Tenant shall have no right to expand
the Premises until such time as such default has been cured, and only if, upon
curing the subject default, the outside date for exercise of the Expansion
Options (i.e. June 15, 2015) has not passed. The term of this Lease with respect
to the Expansion Space shall be coterminous with the term of this Lease for the
rest of the Premises. Within thirty (30) days of Tenant occupying the Expansion
Option Space, Landlord, at its cost, shall cause Landlord’s architect to measure
the Expansion Option Space using the “Standard Method of Measuring Floor Area in
Office Buildings” (1996) by BOMA International (“BOMA Standard’) to determine
the actual number of rentable square feet in the entire Premises. All provisions
of this Lease based upon the number of rentable square feet in the Premises
shall be appropriately adjusted based on such determination.

Section 2.2. Rentable Area. With respect to the Premises and not to any
Expansion Space(s), and only during the Initial Term of the Lease, the Rentable
Area of the Premises is agreed to be the number of square feet specified in the
Basic Lease Information; provided that Landlord warrants such measurement to be
according to the BOMA Standard. Landlord reserves the right to remeasure the
Building or any portion thereof (excluding the Premises, other than as
specifically set forth in Section 2.1)from time to time, but no more than one
(1) time during the Initial Term of this Lease, and to adjust Tenant’s
Percentage Share of Operating Expenses and Taxes based upon such remeasurement.

 

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Section 2.3. Common Areas. The Common Areas shall be subject to the exclusive
management and control of Landlord. Landlord shall have the right from time to
time to designate, relocate and limit the use of particular areas or portions of
the Common Areas, so long as the same does not materially and adversely
interfere with Tenant’s use and enjoyment of the Premises. Landlord shall also
have the right to (i) close all or any portion of the Common Areas as may, in
the sole discretion of Landlord, be necessary to prevent a dedication thereof or
the accrual of any rights in any person and (ii) to limit or control access to
the Building by third parties other than Tenant, its employees, customers and
patrons. Such limitation or control upon access may include, without limitation,
establishing procedures for deliveries by messengers and caterers, and access to
the Premises by Tenant’s invitees and employees.

Section 2.4. Construction of Tenant Improvements in the Premises.

(a) All references to “Premises” in this Section 2.4 shall apply to both the
Initial Premises and any Expansion Option Space. Tenant accepts the Premises in
an “as is” condition, subject to Landlord’s obligations under this Lease.
Subject to Landlord’s obligations under this Lease, it shall be Tenant’s
obligation to determine whether the Premises comply with the applicable
governmental regulations with regard to Tenant’s intended use. Except for
Landlord’s Work, and subject to Landlord’s obligations under this Lease, Tenant
acknowledges that (i) neither Landlord nor any of its employees or agents has
made any representations regarding the Premises or the suitability of the
Premises for any particular use or the condition thereof; and (ii) Landlord has
no obligation to perform any work, supply any materials, incur any expense or
make any alterations or improvements to prepare the Premises for Tenant’s
occupancy. Notwithstanding anything to the contrary in this Lease, Landlord
agrees to deliver the Premises to Tenant on the Term Commencement Date (i) in
compliance with all Applicable Laws, (ii) to Landlord’s actual knowledge without
duty of inquiry or investigation, free of Hazardous Substances (and, if any
Hazardous Substances are discovered during the making of the Improvements which
were not introduced by Tenant, Landlord shall remediate and/or remove such
Hazardous Substances); (iii) free of other tenants; (iv) broom clean and free of
personal property; and (v) with all systems and utilities in good working order.
Landlord shall not be in default under this Lease for any failure of the
Premises to comply with the delivery conditions set forth in the prior sentence
so long as Landlord shall with reasonable promptness remedy the same at its sole
cost and expense.

Subject to Landlord’s obligations under this Lease, Tenant shall make all
repairs, alterations and other renovations (collectively the “Improvements”) of
the Premises which are necessary to make the Premises fit for Tenant’s occupancy
and for the purposes described herein, including without limitation payment of
any sales taxes due with respect to or as a result of the Improvements at
Tenant’s sole cost and expense. Tenant shall make all Improvements and each and
every aspect thereof in compliance with all Applicable Laws.

(b) Tenant has engaged, and Landlord approves of, JPC Architects as the
architect engaged by Tenant for the preparation of the design drawings and plans
and specifications for the Improvements to the Premises. Landlord has further
approved of the plans and specifications prepared by JPC Architects for the
Improvements pursuant to that certain Letter Re: Proposed Tenant Improvement –
OncoGenex transmitted by Landlord to Tenant by email on December 22, 2014 (“JPC
Approved Plans”). The JPC Approved Plans shall not be materially modified by
Tenant without Landlord’s prior written consent, which shall not be unreasonably
withheld, conditioned or delayed.

(c) With respect to the improvement of any Option Expansion Space(s) only, any
architect engaged by Tenant with respect to Tenant’s Improvements to the
Expansion Option Space(s) shall be subject to Landlord’s prior written approval,
which shall not be unreasonably withheld, conditioned or delayed. Tenant shall
submit to Landlord two (2) sets of the working drawings and specifications
(collectively, the “Plans”) showing the desired design character and finishing
of the Premises and Option Expansion Space. The Plans shall set forth the
alteration and renovation requirements of Tenant including, without limitation,
the following:

(i) Architectural design of the space, plans, elevations, sections, material
selections and finishes.

(ii) Mechanical systems and equipment to be used and its position, duct
distribution system and diffuser locations.

(iii) Floor and reflected ceiling electrical plans showing outlets, type of
lighting fixtures, other electrical equipment contemplated and location of panel
board and switch gear.

 

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(d) Within five (5) Business Days after receipt of the Plans, Landlord shall
return to Tenant one set of prints of the Plans with its suggested modifications
and/or indication that Landlord has no objection to the Plans as submitted. If
Tenant, upon receipt of the Plans bearing Landlord’s comments, desires to take
exception thereto, Tenant may do so in writing within ten (10) days from the
date of receipt of Landlord’s comments. Unless Tenant responds within such ten
(10) day period, Tenant shall be deemed to have accepted all suggested
modifications. When Landlord has approved the Plans or revised Plans, as the
case may be, Landlord shall initial and return one (1) set of approved Plans to
Tenant, which set shall also show the date of Landlord’s approval. Tenant shall
not commence construction of the Improvements until Landlord has approved the
Plans. (The Plans, as approved by Landlord, are the “Approved Plans”). 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, except to the extent caused by Landlord’s
negligence or intentional misconduct.

(e) Construction of the Improvements shall: (a) be performed by a licensed
general contractor reasonably approved by Landlord; (b) be completed in
accordance with the Plans and in accordance with the Construction Rules; (c) be
carried out in a good, workmanlike and prompt manner, (d) comply with all
Applicable Laws; and (e) be subject to inspection and monitoring by Landlord.
Tenant shall obtain all permits and other governmental approvals required for
construction of the Improvements. Tenant shall commence construction of the
Improvements within a reasonable time after obtaining all such required permits
and governmental approvals and shall thereafter diligently proceed with
completion of construction of the Improvements in conformance with the Approved
Plans and the Construction Rules. Any material changes in the Improvements from
the Approved Plans shall be subject to Landlord’s prior consent, which shall not
be unreasonably withheld, conditioned or delayed. For Improvements affecting the
Building’s electrical, mechanical, plumbing and fire-life safety systems, Tenant
must use the contractors designated on Exhibit “C-1”. For improvements affecting
the Building’s exterior appearance and structure, Tenant must use contractors
designated by Landlord. Notwithstanding anything to the contrary, Landlord
hereby approves of BNB Builders as Tenant’s general contractor to perform the
Improvements subject to Landlord’s receipt of a contractor’s license or other
evidence of existence of a contractor’s license (e.g. a contractor’s license
number) and a signed copy of the Vendor Rules and Regulations.

(f) Prior to the commencement of construction of the Improvements, Tenant shall
provide Landlord with the following:

(i) A certificate showing evidence of all insurance required under the Lease.

(ii) A copy of all required building and/or special permits and approvals issued
by the appropriate governmental authorities for the Improvements.

(g) Tenant shall be responsible for trash removal during construction of the
Improvements. At Landlord’s direction, Tenant, at Tenant’s sole cost and
expense, shall provide a separate dumpster for disposal of its trash.

(h) Landlord shall perform commercially reasonable construction administration
services with respect to the Improvements, including without limitation,
attendance at construction progress meetings. As consideration therefor, Tenant
shall pay to Landlord a construction administration fee in an amount equal to
three percent (3%) of the cost of the Improvements (as hereinbelow defined),
which fee shall be deducted from the Construction Allowance. As used herein,
“cost of the Improvements” means all costs payable by Tenant in connection with
the Improvements, including without limitation sums payable to the general
contractor for the specific work of improvement, and all architects’ and
engineers’ fees, legal fees, permit application fees and any other fees paid to
any governmental entity in connection with the work of improvement.

(i) Within sixty (60) days following the date Tenant first occupies the Premises
for the conduct of its business, Tenant shall provide to Landlord (A) one
(1) set of “as built” computer-aided design (“CAD”) drawings and specifications
indicating all changes made from the Plans during construction of the
Improvements; (2) lien waivers from all contractors, subcontractors and material
suppliers; and (B) if applicable, a certificate of occupancy or permit approved
and executed by the City of Bothell for the Premises.

(j) Prior to occupying the Premises for the conduct of its business or entering
thereon for purposes of performing the Improvements, Tenant shall provide
Landlord with (i) if applicable, a copy of the a certificate of occupancy or a
permit approved and executed by the City of Bothell for the Premises; and
(ii) all insurance certificates required under the Lease.

 

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(k) Landlord shall pay to Tenant, provided (i) an Event of Default is not then
existing, amounts paid by Tenant to third-party providers in connection with the
Improvements but not more than the product of the number of rentable square feet
in the Premises and Twelve and no/100 Dollars ($12.00) (“Allowance”). The
Allowance may be used only for labor and materials in connection with the
Improvements, except that a portion of the Allowance, not exceeding the product
of $5.00 and the number of rentable square feet in the Premises, may be used for
architectural, space planning and engineering services, MEP drawings, permit
fees, low voltage cabling, construction management and interior wiring. The
Allowance shall be paid by Landlord to Tenant within thirty (30) days after
Tenant provides a written request for reimbursement and all of the following
conditions to payments have been satisfied:

 

  (a) The Improvements have been completed substantially in accordance with the
Plans as approved by Landlord;

 

  (b) Delivery to Landlord of copies of all applicable invoices included in the
reimbursement request for the Improvements;

 

  (c) Delivery to Landlord of a final waiver of lien from the general contractor
and each subcontractor performing services in connection with the Improvements
and whose contract price exceeded $10,000.00, and from each vendor or material
supplier supplying materials or personal property in connection with the
Improvements in excess of $10,000.00 in cost;

 

  (d) If applicable, delivery to Landlord of a certificate of occupancy (or
copies of permits approved and executed by the City of Bothell) for the
Premises;

 

  (e) Delivery to Landlord of the executed Lease Confirmation (defined in
Section 3.1); and

 

  (f) Tenant has commenced doing business in the Premises.

Tenant shall not be entitled to receive any portion of the Allowance not
actually expended by Tenant toward the cost of the initial Improvements or
improvements to the Expansion Option Spaces, nor shall Tenant have any right to
apply any unexpended portion of the Allowance as a credit against rent or any
other obligation of Tenant under the Lease. Any amount of the Allowance which
has not been requested for reimbursement from Landlord by Tenant for the cost of
Improvements (as defined herein above) as of December 31, 2015 shall be retained
by Landlord and Tenant shall have no further right to any portion thereof.
Notwithstanding the foregoing, any unused portion of the Allowance shall be made
available to Tenant as an additional Allowance to be used by Tenant for the
improvement of any Expansion Option Space.

Article 3

TERM

Section 3.1. Term; Early Access. This Lease shall be effective upon mutual
execution hereof. The term of the Lease shall commence on the Term Commencement
Date specified in the Basic Lease Information, and unless terminated earlier, or
extended, as provided herein, shall expire on the Term Expiration Date specified
on the Basic Lease Information. However, Landlord shall deliver possession of
the Premises to Tenant as of the date of mutual execution and delivery of this
Lease (“Delivery Date”). From the period commencing on the Delivery Date and
ending on the Term Commencement Date, Tenant shall be entitled to occupy the
Premises for purposes of performing the Improvements and installing Tenant’s
personal property, fixtures, cabling and equipment. Tenant shall not owe any
Rent for the Premises during period of early occupancy. If Landlord does not
tender possession of the Premises to Tenant on or before the Delivery Date, for
any reason whatsoever, Landlord shall not be liable for any damage thereby and
this Lease shall not be rendered void or voidable thereby, but Tenant shall not
be liable for any rent (and Tenant’s three (3) months of abated rent shall not
begin to run) until such time as Landlord does tender possession of the Premises
to Tenant. No failure to tender possession of the Premises on or before the Term
Commencement Date shall in any way affect any other obligations of Tenant
hereunder; provided, if Landlord has failed to tender the Premises to Tenant on
or before the thirtieth (30th) day following the Term Commencement Date and such
failure is not attributable to a Tenant Delay or to other delays beyond the
reasonable control of Landlord, Tenant shall have the right to terminate this
Lease at any time prior to Landlord’s tender of the Premises. Upon delivery of
the Premises to Tenant, Landlord and Tenant shall execute an acknowledgement of
the Term Commencement Date and other matters in the form of Exhibit “B” attached
hereto (the “Lease Confirmation”). The Lease Confirmation shall be binding upon
Tenant unless Tenant objects to the notice in writing delivered to Landlord
within ten (10) days of Tenant’s receipt of said Lease Confirmation.

 

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Section 3.2. Option to Extend Term.

(a) Subject to Section 2.1 hereof, Tenant shall have the option to extend (the
“Option to Extend”) the initial 38-month term hereof (the “Initial Term”), on
all the provisions contained in this Lease excluding the provisions of this
Section 3.2, for one (1) additional consecutive three (3) year period (“Option
Term”) following expiration of the Initial Term by giving irrevocable and
unconditional written notice of exercise of such option (“Option Notice”) to
Landlord not less than twelve (12) months and not more than fifteen (15) months
before the expiration of the Initial Term; provided, (i) Tenant shall have no
right to extend the Initial Term if any person or entity other than Tenant is
then physically or legally occupying a portion equal to or greater than thirty
percent (30%) of the rentable square footage of the Premises; and (ii) (A) if a
material Event of Default exists on the date of giving the Option Notice
(“Notice Date”) or (B) Landlord has delivered to Tenant two (2) or more notices
of a material default at any time prior to the Notice Date, then Tenant shall
have no right to extend the Term until any and all such matters are cured, and
if not so cured prior to the expiration of the Initial Term, then the Option
Term shall not commence and this Lease shall expire at the end of the Initial
Term. The Base Rent for the first year of the Option Term shall be an amount
equal to the Fair Market Rent (as hereinafter defined) of the Premises at the
commencement of the Option Term (“Option Adjustment Date”). The Option to Extend
is personal to Tenant and any Permitted Transferee (as hereafter defined) and
shall be null and void in the event of an assignment of this Lease to any party
other than a Permitted Transferee.

(b) “Fair Market Rent” shall mean the rate (including annual increases) being
charged to tenants renewing leases for comparable space in comparable buildings
in the Bothell, Washington commercial office market with similar amenities,
taking into consideration all relevant factors. The Base Rent for the Option
Term shall initially be determined by Landlord with written notice (the
“Landlord’s Rent Notice”) given to Tenant within thirty (30) days after
Landlord’s receipt of the Option Notice. Tenant’s exercise of the Option shall
be deemed irrevocable, but if Tenant disputes the Base Rent set forth in
Landlord’s Rent Notice, then the parties shall attempt to resolve any such
dispute first through good-faith negotiations within thirty (30) days following
delivery of Landlord’s Rent Notice to Tenant (the “Negotiation Period”). If any
such dispute is not resolved within the Negotiation Period, then the dispute
shall be resolved by arbitration if and so long as Tenant demands arbitration by
notice to Landlord when and as provided in below. If Tenant does not elect to
arbitrate, the Base Rent for the Option Term shall be the amount(s) set forth in
Landlord’s Rent Notice. Should Tenant elect to arbitrate and should the
arbitration not have been concluded prior to the Option Adjustment Date, then
Tenant shall pay Base Rent in the amount of Base Rent payable for the month
immediately preceding the month in which the Option Adjustment Date occurs
(“Option Term Rent Floor”). If the amount of the Base Rent for the Option Term
derived from the arbitration is greater than such Option Term Rent Floor, then
any adjustment required to adjust the amount previously paid shall be made by
adjustment in the next payment by Tenant of Base Rent.

(i) If Tenant disputes the amount claimed by Landlord as Base Rent for the
Option Term, and Tenant timely demands that that such dispute be settled by
arbitration as hereinafter provided, then the arbitration shall be conducted and
determined in the City of Bothell in accordance with the then prevailing rules
of the American Arbitration Association or its successor for arbitration of
commercial disputes, except that the procedures mandated by such rules shall be
modified as follows:

(1) Tenant shall make demand for arbitration in writing within ten (10) days
after the end of the Negotiation Period, specifying therein the name and address
of the person to act as the arbitrator on Tenant’s behalf. The arbitrator shall
be a real estate broker licensed in the State of Washington, having no less than
ten (10) years experience in the leasing of office space in the City of Bothell,
and recognized as reputable and ethical in his or her field. Failure on the part
of Tenant to make the timely and proper demand for such arbitration shall
constitute a waiver of the right thereto. Within ten (10) Business Days after
the service of the demand for arbitration, Landlord shall give notice to Tenant
specifying the name and address of the person designated by Landlord to act as
arbitrator on its behalf, which arbitrator shall be similarly qualified. If
Landlord fails to notify Tenant of the appointment of its arbitrator, within or
by the time specified, then the arbitrator appointed by Tenant shall be the
arbitrator to determine the Fair Market Rent for the Premises.

(2) If two arbitrators are chosen, the arbitrators so chosen shall meet within
ten (10) Business Days after the second arbitrator is appointed and shall
appoint a third arbitrator, who shall be a competent and impartial person with
qualifications similar to those required of the first two arbitrators. If they
are unable to agree upon such appointment within five (5) Business Days after
expiration of such ten- (10-) day period, the third arbitrator shall be selected
by the parties themselves. If the parties do not agree on the third arbitrator

 

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within five (5) Business Days after expiration of the foregoing five- (5-)
Business-Day period, then either party, on behalf of both, may request
appointment of such a qualified person by the then president of the local
association of realtors. The three arbitrators shall decide the dispute, if it
has not been previously resolved, by following the procedures set forth below.
Each party shall pay the fees and expenses of its respective arbitrator and both
shall share the fees and expenses of the third arbitrator. Attorneys’ fees and
expenses of counsel and of witnesses for the respective parties shall be paid by
the respective party engaging such counsel or calling such witnesses.

(3) The Base Rent shall be fixed by the three arbitrators in accordance with the
following procedures. Each of the arbitrators selected by the parties shall
state, in writing, his or her determination of the Fair Market Rent supported by
the reasons therefor and shall make counterpart copies for each of the other
arbitrators. The arbitrators shall arrange for a simultaneous exchange of such
proposed resolutions within ten (10) Business Days after appointment of the
third arbitrator. If either arbitrator fails to deliver to the other arbitrators
his or her determination within such ten- (10-) Business-Day period, then the
determination of the other arbitrator shall be final and binding upon the
parties. The role of the third arbitrator shall be to select which of the two
proposed resolutions most closely approximates his or her determination of Fair
Market Rent. The third arbitrator shall have no right to propose a middle ground
or any modification of either of the two proposed resolutions. The resolution he
or she chooses as that most closely approximating his or her determination of
the Fair Market Rent shall constitute the decision of the arbitrators and shall
be final and binding upon the parties. If either party fails to pay its share of
the fees of the third arbitrator within five (5) Business Days after receipt of
an invoice, or fails to execute and deliver any documents reasonably required by
the third arbitrator within five (5) Business Days after receipt thereof, then
the Fair Market Rent shall be determined solely by the arbitrator selected by
the other party.

(4) In the event of a failure, refusal or inability of any arbitrator to act,
his or her successor shall be appointed by him or her, but in the case of the
third arbitrator, his or her successor shall be appointed in the same manner as
that set forth in this Lease with respect to the appointment of the original
third arbitrator. The arbitrators shall attempt to decide the issue within ten
(10) Business Days after the appointment of the third arbitrator. Any decision
in which the arbitrator appointed by Landlord and the arbitrator appointed by
Tenant concur shall be binding and conclusive upon the parties, except that such
arbitrators shall not attempt by themselves to mutually ascertain the Fair
Market Rent and any such determination, in a manner other than that provided for
in this Lease, shall not be binding on the parties.

(5) The arbitrators shall have the right to consult experts and competent
authorities for factual information or evidence pertaining to a determination of
Fair Market Rent, but any such consultation shall be made in the presence of
both parties with full right on their part to cross-examine. The arbitrators
shall render the decision and award in writing with counterpart copies to each
party. Except for their determination of the Base Rent in accordance with this
Section 3.2, the arbitrators shall have no power to modify the provisions of
this Lease.

Article 4

RENT

Section 4.1. Base Rent. Commencing on the Rent Commencement Date specified in
the Basic Lease Information, Tenant shall pay to Landlord for the use of the
Premises, in lawful money of the United States, Annual Base Rent in the amount
specified in the Basic Lease Information, payable without notice or demand in
equal monthly installments in advance, beginning on the Rent Commencement Date
and thereafter on the first day of each calendar month thereafter during the
Term in the sum specified in the Basic Lease Information as the “Monthly Base
Rent”.

Section 4.2. Payment. All payments required to be made by Tenant under this
Lease shall be made without any setoff, deduction or counterclaim whatsoever,
except as otherwise set forth in this Lease, and shall be made payable to and
delivered to Landlord at the address specified in the Basic Lease Information
for payment of rent.

Section 4.3. Partial Months. If the Rent Commencement Date is a day other than
the first day of a calendar month or if the Term expires or is terminated on a
day other than the last day of a calendar month, then the Monthly Base Rent for
the first and last fractional months of the Term shall be prorated on the basis
of a thirty (30) day month.

Section 4.4. Advance Rent. Upon execution of this Lease, Tenant shall pay to
Landlord the sum specified in the Basic Lease Information as “Advance Rent,” The
Advance Rent shall be applied to Tenant’s obligation to pay Monthly Base Rent,
Operating Expenses, and Taxes for the first month or months for which Monthly
Base Rent Operating Expenses and Taxes are due.

 

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Article 5

OPERATING EXPENSES

Section 5.1 Operating Expenses.

(a) Commencing on the Rent Commencement Date, Tenant shall pay an amount equal
to Tenant’s Percentage Share of all Operating Expenses paid or incurred by
Landlord during each calendar year of the Term and allocated to the Building.
Landlord shall have the right, from time to time during the Term, to reasonably
allocate Operating Expenses and Taxes to different cost pools, depending on the
nature of the expense incurred. Tenant’s Percentage Share of Operating Expenses
shall be determined based on the ratio of the number of rentable square feet in
the Premises to the number of rentable square feet in the Building from time to
time.

(b) Operating Expenses which vary with occupancy and which are attributable to
any part of the Term in which the average occupancy of the Building is less than
one hundred percent (100%) shall be adjusted by Landlord to the amount which
Landlord reasonably believes would have been incurred if one hundred percent
(100%) of the Rentable Area of the Building had been so occupied. If during all
or any part of any calendar year Landlord does not furnish any particular item
of work or service to portions of the Building due to the fact that such item of
work or service is not required or desired by the tenant of such space, or such
tenant is itself obtaining and providing such item of work or service, or for
any other reason, then for the purpose of computing Operating Expenses for such
calendar year, the Operating Expenses shall be increased by an amount equal to
the additional operating and maintenance expenses which would reasonably have
been incurred by Landlord during such period if it had furnished such item of
work or service to such portions of the Building. Similarly, in the event that
Tenant self performs any particular item of work or service, or pays directly
for the same, then Operating Expenses shall not include the cost of such
particular item for any portion of the Building or Project.

(c) Landlord may, at or after the start of any calendar year notify Tenant of
the amount which Landlord estimates will be Tenant’s Percentage Share for such
calendar year, and one-twelfth (1/12) of the amount thereof shall be paid
monthly in advance along with the Monthly Base Rent payments required to be made
by Tenant in such year. 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. A Statement (the “Statement”) of the Operating Expenses payable
by Tenant for each year shall be given to Tenant within a reasonable period of
time after the end of each calendar year. If Tenant’s Percentage Share of
Operating Expenses as shown on such Statement is greater or less than the total
amounts actually paid by Tenant during the year covered by such Statement, then
within fifteen (15) days after receipt of the Statement, Tenant shall pay any
sums owed Landlord or, if applicable, Tenant shall receive a credit against any
rent next accruing for any sum owed Tenant. The amount of Operating Expenses
payable by Tenant for any calendar year in which the Term is less than a full
calendar year shall be prorated on the basis which the number of days in the
Term in such calendar year bears to 365. Following expiration of the calendar
year in which this Lease expired or was terminated, Landlord shall give a final
Statement to Tenant for such calendar year. If Tenant’s Percentage Share of any
Operating Expenses as shown on the final Statement is greater or less than the
total amount of Operating Expenses actually paid by Tenant with respect to the
year covered by the final Statement, then within fifteen (15) days after receipt
of the Statement, the appropriate party shall pay to the other party any sums
owed. Anything herein to the contrary notwithstanding. Landlord’s failure to
deliver (or delay in delivery of) any estimate of Operating Expenses or any
annual Statement shall not negate Landlord’s right to collect the amount
otherwise due to Landlord hereunder.

(d) “Operating Expenses” as used in this Lease, shall include all reasonable
costs, charges and expenses incurred from time to time in the course of
ownership, management, operation, repair, maintenance and replacement of the
Project, the Building, the Premises and the Common Areas, including, without
limitation:

(i) Wages, salaries and other compensation and benefits, and reimbursement of
expenses incurred by, employees, independent contractors and agents of Landlord
to the extent actually performing services for the Project.

(ii) Costs of operating, maintaining, repairing, replacing, lighting, cleaning,
sweeping, painting, gardening and landscaping the Building and the Project,
janitorial service, costs of removing snow and ice, trash removal, repair,
restriping and resurfacing the parking areas, pest extermination, and including
the cost of service contracts for the foregoing.

 

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(iii) Supervised fire sprinkler alarm systems contract and costs of purchasing
or renting mechanical equipment, supplies, tools, materials, and uniforms.

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

(v) Premiums and other charges (including costs of claims adjustments and
deductible amounts not exceeding $25,000) for commercial general liability and
property insurance, and such other insurance coverage, in such amounts, as
Landlord, in its sole discretion, elects to maintain, including, without
limitation, workers’ compensation, earthquake, loss of rents, terrorism and
civil commotion coverage.

(vi) Costs of providing electricity, water, gas, steam, sewer, telephone,
communication and other utility services.

(vii) Sales, use and excise taxes on goods and services purchased by Landlord.

(viii) License, permit and inspection fees.

(ix) Dues, fees and assessments levied by any P.U.D., B.I.D. or neighborhood or
owners’ association.

(x) Reasonable fees for property management, administration and accounting
services and costs incidental thereto, whether provided by an independent
management company, Landlord, or an affiliate of Landlord and imputed rent not
to exceed the fair market rental value of the square footage of the Project’s
fitness center (if any) and management office; provided, however, during the
first three (3) years of the Term of the Lease property management fees shall
not exceed five percent (5%) of gross revenues from the Project.

(xi) Operating costs incurred by Landlord to comply with governmentally-mandated
green building operations laws, rules and regulations, such as, but not limited
to, separation of recycling materials, recording and reporting the government
electrical usage or other sustainability efforts, composting and the like.

(xii) Except as otherwise expressly set forth herein, the costs of any capital
improvements, equipment or devices installed or paid for by Landlord
(i) required or desired for the health and safety of tenants and occupants,
(ii) to conform with any laws, rules, regulations or requirements of any
governmental or quasi-governmental authority having jurisdiction in any case
first applicable to the Building or Project after the Effective Date or of the
board of fire underwriters or similar insurance body, (iii) to effect a labor
saving energy saving or other economy, reduce utility consumption and/or
greenhouse emissions or, (iv) reasonably designed to improve the operating
efficiency of the Building, amortized over the useful life of such capital
improvement, equipment or device (as reasonably determined by Landlord), as well
as interest on the unamortized balance at the Specified Rate on the date the
costs are incurred or such higher rate as may have been paid by Landlord on
borrowed funds.

(xiii) Assessments made on or with respect to the Project 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.

(xiv) The costs of (i) window coverings provided by Landlord, (ii) carpeting and
wall coverings in the Common Areas, and (iii) other furnishings in Common Areas
which, as a result of normal use, require periodic replacement, amortized over
the useful life of such improvements (as determined by Landlord), as well as
interest on the unamortized balance at the Prime Rate on the date the costs are
incurred or such higher rate as may have been paid by Landlord on borrowed
funds, if more than thirty-five percent (35%) of the window coverings, wall
coverings, carpeting or furnishings are replaced during any calendar year. If
thirty-five percent (35%) or less of the window coverings, wall coverings,
carpeting or furnishings are replaced during any calendar year then the entire
cost of replacing such window coverings, wall coverings, carpeting or
furnishings shall be an Operating Expense in the calendar year the cost is
incurred.

 

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(xv) Compliance with air, water and noise quality and/or control statutes, laws,
codes, rules and regulations including, without limitation, statutes, laws,
codes, rules and regulations relating to toxic substances or hazardous wastes;
other than with respect to any violations in existence as of the Delivery Date.

(xvi) Fees for local civic organizations, dues for professional and trade
associations, and costs and expenses of third-party training for on-site
management staff.

(xvii) Costs of minor capital improvements or expenditures where such
improvement or expenditure costs less than Twenty Thousand Dollars ($20,000) in
any given calendar year.

(xviii) Costs of providing, installing, modifying and upgrading energy and water
conservation equipment and systems, life safety and emergency response systems,
materials and procedures and telecommunication and broadband systems and
equipment if any.

(xix) Costs of auditing, accounting, legal and other professional and consulting
fees and disbursements incurred in connection with the maintenance, repair,
replacement, operation, administration, supervision and management of the
Project.

(xx) Costs of re-commissioning for the purpose of verifying and documenting all
of the systems and assemblies of the Building and Common Area are planned,
designed, installed, tested, operated and maintained to operate as efficiently
as possible, provide a safe and comfortable work environment, and optimize
overall building performance.

(xxi) Costs incurred by Landlord prior to the commencement of the term of the
Lease, if such amounts have been amortized by Landlord and included in Operating
Expenses over a period of years, a portion of which is within the term of the
Lease.

(e) Notwithstanding anything to the contrary, Operating Expenses shall not
include:

(i) Leasing commissions, attorneys’ fees, costs, and disbursements and other
expenses incurred in connection with negotiations or disputes with tenants,
other occupants, or prospective tenants or other occupants.

(ii) Expenses incurred in construction of tenant improvements or otherwise in
improving or decorating space for tenants or other occupants of vacant space.

(iii) Landlord’s costs of electricity and other services sold or provided to
tenants in the Building for which Landlord is reimbursed as a separate
additional charge over and above the basic rent or escalation payment payable
under the lease with any tenant.

(iv) Costs incurred by Landlord for alterations which are considered capital
improvements and replacements under generally accepted accounting principles
consistently applied, and all other costs of a capital nature including, but not
limited to, capital improvements, capital repairs, capital equipment and capital
tools, all in conformity with generally accepted accounting principles
consistently applied, except as expressly permitted pursuant to Section 5.l.

(v) Depreciation of the Building.

(vi) Costs incurred by Landlord to obtain LEED certification and recertification
for the Building.

(vii) Amounts paid to subsidiaries or other affiliates of Landlord (i.e.,
persons or companies controlled by, under common control with, or which control,
Landlord) for services in or to the Building, the land on which it is situated
or the Premises (or any portion of any of the foregoing) to the extent that the
cost of such services exceeds the competitive cost of such services were they
not so rendered by a subsidiary or other affiliate of Landlord.

(viii) Payments of principal, interest, late fees, prepayment fees or other
charges on any debt secured by a mortgage or mortgages covering the Building, or
rental payments under any ground or underlying lease or leases.

(ix) Landlord’s general administrative overhead expenses for services not
specifically performed for the Building, or salaries of any officer or employee
of Landlord (or any subsidiary or affiliate of Landlord) above the level of
building manager, or any other expenses not related to the Project.

 

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(x) Any compensation paid to clerks, attendants, or other persons in commercial
concessions operated by Landlord at a profit.

(xi) All items and services for which Tenant pays directly to third parties.

(xii) Advertising and promotional expenditures.

(xiii) Any costs, fines, or penalties incurred due to violations by Landlord of
any governmental rule or authority.

(xiv) Except for the cost of any insurance deductible (not to exceed $25,000),
the cost of which shall not be excluded from Operating Expenses, the cost of
repairs and the replacements incurred by Landlord by reason of fire or other
casualty covered by insurance, or caused by exercise of the right of eminent
domain.

(xv) Rent under a ground lease or master lease, if any.

(xvi) Advertising and promotion expenditures.

(xvii) Costs incurred in performing work or furnishing services to or for
individual tenants (including Tenant), at such tenant’s expense.

(xviii) Rental concessions and lease buy-outs.

(xix) Any costs related to the remediation or removal of any Hazardous
Substances from the Building or Project (unless brought thereon by Tenant) and
any costs, fees, fines or other expenses related to any failure of the Building
or Project to comply with any laws, codes, ordinances or regulations related to
Hazardous Substances.

(xx) Costs related to curing Landlord’s defaults or performing work resulting
from violation by Landlord of the terms of any lease for space in the Project or
any service contract at the Project.

(xxi) Costs related to curing any failure of the Building or Project to comply
with any applicable laws, codes, ordinances or regulations, except as set forth
above in Section 5.1.

Section 5.2. Statement of Operating Expenses. 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. Within ninety
(90) days after receipt of the Statement, upon five (5) days prior written
notice and during normal business hours, at Landlord’s office or such other
place as Landlord shall designate, to inspect and examine those books and
records of Landlord relating to the determination of Operating Expenses for the
immediately preceding calendar year only. Any third party engaged by Tenant to
inspect or examine the books and records shall be a certified public accountant
from a nationally or regionally recognized accounting firm and such accountant
shall not be compensated on a contingency fee or similar basis. If, after
inspection and examination of such books and records, Tenant disputes the
amounts of Operating Expenses charged by Landlord, Tenant may, by written notice
to Landlord, request an independent audit of such books and records. The
independent audit of the books and records shall be conducted by a certified
public accountant (“CPA”) acceptable to both Landlord and Tenant, who shall not
be compensated on a contingency fee or similar basis. If, within thirty
(30) days after Landlord’s receipt of Tenant’s notice requesting an audit,
Landlord and Tenant are unable to agree on the CPA to conduct such audit, then
Landlord may designate a nationally recognized accounting firm not then employed
by Landlord or Tenant to conduct such audit. The audit shall be limited to the
determination of the amount of Operating Expenses for the subject calendar year.
If the audit discloses that the amount of Operating Expenses billed to Tenant
was incorrect, the appropriate party shall pay to the other party the deficiency
or overpayment, as applicable. All costs and expenses of the audit shall be paid
by Tenant unless the audit shows that Landlord overstated Operating Expenses for
the subject calendar year by more than five percent (5%), in which case Landlord
shall pay all costs and expenses of the audit. Tenant shall keep any information
gained from such audit confidential and shall not disclose it to any other
party. The exercise by Tenant of its audit rights hereunder shall not relieve
Tenant of its obligation to timely pay all sums due hereunder, including,
without limitation, the disputed Operating Expenses. Tenant and its auditor
shall comply with such reasonable rules and regulations as Landlord may
promulgate in connection with such inspection, examination and/or audit.
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.

 

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Article 6

TAXES

Section 6.1. Taxes.

(a) Commencing on the Rent Commencement Date, Tenant shall pay an amount equal
to Tenant’s Percentage Share of all Taxes paid or incurred by Landlord during
each calendar year of the Term and allocated to the Building. Tenant’s
Percentage Share of Taxes shall be determined based on the ratio of the number
of rentable square feet in the Premises to the number of rentable square feet in
the Building from time to time.

(b) Landlord may, at or after the start of any calendar year notify Tenant of
the amount which Landlord estimates will be Tenant’s Percentage Share of Taxes
for such calendar year, and one-twelfth (1/12) of the amount thereof shall be
added to the Monthly Base Rent payments required to be made by Tenant in such
year. Statements of the Taxes payable by Tenant for each year shall be given to
Tenant within a reasonable period of time after the end of each calendar year.
If Tenant’s Percentage Share of Taxes as shown on such Statement is greater or
less than the total amounts actually paid by Tenant during the year covered by
such Statement, then within fifteen (15) days after receipt of the Statement,
Tenant shall pay any sums owed Landlord or, if applicable, Tenant shall receive
a credit against any rent next accruing for any sum owed Tenant; provided, If
the Term Expiration Date has occurred any such amount shall be paid by Landlord
to Tenant within thirty (30) days after receipt by Landlord.

(c) If Landlord reasonably contests the amount or validity of any Taxes or
otherwise seeks a reduction in or refund of Taxes and as a result Taxes are
reduced or refunded, Landlord shall be reimbursed for its actual, reasonable
costs incurred in connection with such contest or challenge. Tenant’s Percentage
Share of the balance of any refund or credit shall, at Landlord’s election, be
refunded to Tenant or credited against Taxes next accruing, provided, if there
remains a credit due to Tenant upon the expiration of the Term, the remaining
credit shall be refunded to Tenant. Tenant shall only share in such refund or
credit if the tax year with respect to which the refund or credit is issued was
during the Term and the amount to be refunded or credited shall in no event
exceed the Taxes actually paid by Tenant with respect to such year.

(d) The amount of Taxes payable by Tenant for any calendar year in which the
Term is less than a full calendar year shall be prorated on the basis which the
number of days in the Term in such calendar year bears to 365. Following the
expiration or termination of this Lease, Landlord may deliver to Tenant an
estimate of the final statement for such partial calendar year. If Tenant’s
Percentage Share of Taxes for such partial calendar year as shown on such
estimated statement is greater than the total amount of Taxes actually paid by
Tenant during such partial calendar year, Landlord shall have the right to
deduct the amount of the deficiency from any Deposit held by Landlord pursuant
to Section 7.1 of this Lease. If there is no Deposit, or if all of such Deposit
has previously been applied by Landlord, Tenant shall, within fifteen (15) days
after receipt of such estimated final statement, pay to Landlord the amount of
the deficiency. Whether or not Landlord has delivered to Tenant an estimated
statement at the end of the Term, following expiration of the calendar year in
which the Lease expired or was terminated, Landlord shall give a final statement
of Taxes for such calendar year. If Tenant’s Percentage Share of any Taxes as
shown on such final statement is greater or less than the total amounts of Taxes
actually paid by Tenant during the year covered by the statement, then within
fifteen (15) days thereafter the appropriate party shall pay to the other party
any sums owed.

Section 6.2. Other Taxes. Tenant shall reimburse Landlord upon demand for any
and all taxes, surcharges, levies, assessments, fees and charges payable by
Landlord, whether or not now customary or within the contemplation of the
parties hereto: (a) upon, measured by or reasonably attributable to the cost or
value of Tenant’s equipment, furniture, fixtures and other personal property
located in the Premises, or the cost or value of any leasehold improvements (but
only to the extent such leasehold improvements are separately assessed),
regardless of whether title to such improvements shall be in Tenant or Landlord;
(b) upon or measured by any rent payable hereunder, including, without
limitation, any gross income or gross receipts, tax or excise tax levied by the
city and/or county where the Building is located, the State of Washington, the
federal government of the United States or any other governmental body with
respect to the receipt of such rent; (c) upon or with respect to the possession,
leasing, operation, management, maintenance, alteration, repair, use or
occupancy by Tenant of the Premises or any portion thereof; or (d) upon this
transaction or any document to which Tenant is a party creating or transferring
an interest or an estate in the Premises.

 

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Article 7

LETTER OF CREDIT

Section 7.1. Letter of Credit.

(a) Tenant shall deliver to Landlord, upon Tenant’s execution of this Lease, a
Letter of Credit (the “Letter of Credit”) in the face amount of One Hundred
Ninety Thousand and no/100 Dollars ($190,000.00). The Letter of Credit shall be
in the form of a clean, irrevocable, non-documentary letter of credit issued by
and drawable upon any commercial bank which is a member of the New York Clearing
House Association or other bank satisfactory to Landlord, trust company,
national banking association or savings and loan association with offices in the
City of Seattle (the “Issuing Bank”), which has outstanding unsecured, uninsured
and unguaranteed indebtedness, or shall have issued a letter of credit or other
credit facility that constitutes the primary security for any outstanding
indebtedness (which is otherwise uninsured and unguaranteed), that is then
rated, without regard to qualification of such rating by symbols such as “+” or
“-” or numerical notation, “Aa” or better by Moody’s Investors Service and
“BBB+” or better by Standard & Poor’s Rating Service, and has combined capital,
surplus and undivided profits of not less than $2,000,000,000. Notwithstanding
anything to the contrary, Landlord hereby approves of Silicon Valley Bank as an
Issuing Bank. The Letter of Credit shall (a) name Landlord as beneficiary,
(b) have a term of not less than one year, (c) permit multiple partial drawings,
(d) be fully transferable by Landlord without the payment of any fees or charges
by Landlord, and (e) otherwise be in form and content reasonably satisfactory to
Landlord. If upon any transfer of the Letter of Credit, any fees or charges
shall be so imposed, then such fees or charges shall be payable solely by Tenant
and the Letter of Credit shall so specify. The Letter of Credit shall not expire
prior to the 45th day following the expiration of the term of this Lease;
provided, if the Letter of Credit is issued for a period that expires prior to
the 45th day following the expiration of the term of this Lease, then it shall
expressly state that it will be deemed automatically renewed, without amendment,
for consecutive periods of one year (the last of which extensions shall end no
sooner than 45 days following the expiration of the term of this Lease) unless
the Issuing Bank sends a notice (the “Non-Renewal Notices”) to Landlord by
certified mail, return receipt requested, not less than 45 days next preceding
the then expiration date of the Letter of Credit stating that the Issuing Bank
has elected not to renew the Letter of Credit. The Issuing Bank shall agree with
all drawers, endorsers and bona fide holders that drafts drawn under and in
compliance with the terms of the Letter of Credit will be duly honored upon
presentation to the Issuing Bank at an office location in Santa Clara,
California. The Letter of Credit shall be subject in all respects to the
International Standby Practices 1998, International Chamber of Commerce
Publication No. 590. If (a) an Event of Default exists under the Lease, or
(b) Landlord receives a Non-Renewal Notice, Landlord shall have the right by
sight draft to draw, at its election, all or a portion of the face amount of the
Letter of Credit and thereafter hold, use, apply, or retain the whole or any
part of such proceeds, as the case may be, (x) to the extent required for the
payment of any Base Rent or any other sum as to which Tenant is in default
including (i) any sum which Landlord may expend or may be required to expend by
reason of Tenant’s default, and/or (ii) any damages to which Landlord is
entitled pursuant to this Lease, whether such damages accrue before or after
summary proceedings or other reentry by Landlord, and/or (y) as a cash security
deposit, unless and until, in the case of clause (b) above, Tenant delivers to
Landlord a substitute Letter of Credit which meets the requirements of this
Article 7. If Landlord applies or retains any part of the proceeds of the Letter
of Credit, Tenant, upon demand, shall deposit with Landlord the amount so
applied or retained so that Landlord shall have the full amount thereof on hand
at all times during the Term. If Tenant performs all of Tenant’s obligations
hereunder, the Letter of Credit, if applicable, shall be returned, without
payment of interest or other increment for its use, to Tenant (or, at Landlord’s
option, to the last assignee, if any, of Tenant’s interest hereunder) at the
expiration of the Term, and after Tenant has vacated the Premises.

(b) Provided Tenant has not been in material monetary default beyond applicable
notice and cure periods during the first (1st) Lease Year, the face amount of
the Letter of Credit shall be reduced to One Hundred Twenty-Five Thousand and
no/100 Dollars ($125,000) effective the first day of the second (2nd) Lease
Year, and provided Tenant has not been in material monetary default beyond
applicable notice and cure periods during the first two (2) Lease Years, the
face amount of the Letter of Credit shall be reduced to Sixty-Five Thousand and
no/100 Dollars ($65,000) effective the first day of the third (3rd) Lease Year.

(c) Anything herein to the contrary notwithstanding, if the Premises is expanded
to incorporate additional space pursuant to Section 2.1(b), and if Landlord
either provides Tenant with a construction allowance or pays a leasing
commission in connection with such expansion, or both, then as a condition to
the expansion becoming effective, Tenant shall increase the then-current face
amount of the Letter of Credit by an amount equal to the entire Allowance and
Leasing Commission payable in connection with such expansion (the “Incremental
Letter of Credit Amount”). In addition to any other reduction of the face amount
of the Letter of Credit provided herein, provided Tenant not been in material
monetary default beyond applicable notice and cure periods during the first
(1st) expansion space, the Incremental Letter of Credit Amount shall be reduced
by one-third (1/3) at the end of such twelve (12) month period, and provided
Tenant not been in material monetary default beyond applicable notice and

 

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cure periods during the first (1st) twenty-four (24) months following the date
rent commenced to be payable with respect to the subject expansion space, the
original Incremental Letter of Credit Amount shall be reduced by one-third
(1/3) at the end of such twenty-four (24) month period.

Article 8

USE AND OPERATION

Section 8.1. General.

(a) The Premises shall be used and occupied only for the purposes specified in
the Basic Lease Information. Tenant shall not use or permit the Premises to be
used for any other purpose without Landlord’s prior written consent, which
consent may be withheld in Landlord’s sole discretion. Landlord makes no
warranty, representation or agreement that the Building will be continuously
occupied throughout the Term or that the other tenants or occupants of the
Building, including, without limitation, any retail stores, which now occupy
space in the Building will remain occupants of the Building throughout the Term.

(b) Tenant shall operate its business at the Premises at all times in a first
class manner.

(c) Tenant shall not do or permit anything to be done in or about the Premises
which will in any way obstruct or interfere with the conduct of business of
other tenants or occupants of the Building or injure or annoy them or use or
allow the Premises to be used for any illegal, improper, immoral or
objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance
in, on, or about the Premises. Tenant shall not commit or suffer the commission
of any waste in, on, or about the Premises. 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. Notwithstanding the
foregoing, Landlord hereby represents and warrants to Tenant that the CC&R’s do
not prohibit Tenant’s use of the Premises for office purposes.

(d) Tenant shall not use the Premises or permit anything to be done in or about
the Premises which will in any way conflict with or violate any Applicable Law.
Tenant shall not do or permit anything to be done in or about the Premises or
bring or keep anything therein which will in any way increase the rate of fire
insurance upon the Building or any of its contents, and Tenant shall, at its
sole cost and expense, promptly comply with all Applicable Law now in force or
which may hereafter be in force, and with the requirements of any board of fire
underwriters or other similar body now or hereafter constituted relating to or
affecting the condition, use, or occupancy of the Premises, excluding structural
changes not related to or affected by Tenant’s alterations or improvements. The
judgment of any court of competent jurisdiction or the admission of Tenant in an
action against Tenant, whether Landlord be a party thereto or not, that Tenant
has so violated any Applicable Law shall be conclusive evidence of such
violation as between Landlord and Tenant.

(e) Tenant shall faithfully observe and comply with the rules and regulations of
the Building (the “Rules and Regulations”), a copy of which are attached hereto
as Exhibit “E”) and, after notice thereof, all reasonable modifications thereof
and additions thereto from time to time promulgated in writing by Landlord.
Landlord shall not be responsible to Tenant for the nonperformance by any other
tenant or occupant of the Building of any of the Rules and Regulations.

(f) Tenant shall comply with any practices or procedures that Landlord, acting
reasonably, may from time to time introduce to reduce or control Operating
Expenses and utility consumption, and shall pay, as Additional Rent, all costs,
as determined by Landlord, that may be incurred by Landlord as a result of any
non-compliance.

Section 8.2. Hazardous Substances.

(a) Tenant shall not cause or permit the escape, disposal or release of any
Hazardous Substances in the Project. Tenant shall not allow the storage or use
of Hazardous Substances in any manner not sanctioned by law or by the highest
standards prevailing in the industry for the storage and use of such substances
or materials, nor allow to be brought into the Building any such materials or
substances except to use in the ordinary course of Tenant’s business, and then
only after written notice is given to Landlord of the identity and amounts of
such substances or materials.

(b) If any lender or governmental agency requires testing to ascertain whether
there has been a Release upon, in or from the Premises, then the reasonable
costs thereof shall be reimbursed by Tenant to Landlord upon demand.

 

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(c) Tenant shall execute affidavits, representations and the like from time to
time at Landlord’s request concerning Tenant’s best knowledge and belief
regarding the presence of Hazardous Substances on the Premises.

(d) Tenant shall indemnify Landlord and its Building Manager, its and their
agents and employees from and against any and all clean-up costs and expenses,
losses, damages, claims, or liability for any damage to any property or injury,
illness or death of any person resulting from (i) any Release on the Premises
caused by Tenant or persons acting under Tenant, or (ii) any Release occurring
elsewhere during the Term of the Lease if caused by Tenant or persons acting
under Tenant. The covenants contained herein shall survive the expiration or
earlier termination of the Lease.

(e) Notwithstanding anything to the contrary, Landlord hereby warrants to Tenant
that as of the Delivery Date, to Landlord’s actual knowledge without duty of
inquiry or investigation, there shall be no Hazardous Substances in or about the
Premises.

Section 8.3. Alterations to Building. Landlord shall have the right from time to
time to make changes or alterations to any portion of the Building other than
the Premises (which may include, but are not limited to, repair or replacement
of the Building’s exterior facade, exterior window glass, elevators, electrical
systems, plumbing system, common hallways, restrooms and/or lobbies). Except to
the extent caused by Landlord’s negligence or intentional misconduct, Landlord
shall not be subject to any liability nor shall Tenant be entitled to any
compensation or any diminution or abatement of rent as a result of any noise,
dust, vibration or other disturbance to Tenant’s business at the Premises
(provided Tenant is not denied access to the Premises) arising out of the making
of such changes or alterations and such changes or alterations shall not be
deemed to be a constructive or actual eviction or a breach of Landlord’s
covenant of quiet enjoyment. Landlord shall use reasonable efforts to minimize
disruption of Tenant’s business during the making of any such changes or
alterations; provided, however, that Landlord shall not be obligated to employ
labor at overtime rates unless necessary to avoid unreasonable disruption of
Tenant’s business. If Landlord believes that any such changes or alterations are
reasonably likely to materially disrupt Tenant’s business in the Premises, then
Landlord shall provide Tenant with twenty-four (24) hours’ notice (either orally
or in writing) prior to conducting such changes or alterations.

Article 9

SERVICES AND UTILITIES

Section 9.1. General.

(a) Landlord shall furnish to the Premises (i) lines for electricity, domestic
water, and sewage disposal, (ii) HVAC and (iii) elevator service (with at least
one (1) elevator in operation at all times, except in the event of an emergency
or power outage), and other utility services serving the Building in such
quantities as Landlord, from time to time reasonably determines to constitute
normal use for tenants in the Building and comparable quality buildings, or as
may be specified in the Environmental Management Plan.

(b) Any rebalancing of the climate control system necessitated by the
installation of partitions, equipment or fixtures by Tenant or by any use of the
Premises not in accordance with the design standards of such system shall be
performed by Landlord at Tenant’s expense.

(c) Landlord shall replace Building standard and, at Landlord’s election, non
standard electric light fixtures, ballasts, tubes, starters, lamps, light bulbs
and controls in the Premises. In carrying out its obligations, Landlord may
adopt a system of periodic group re-lamping in accordance with sound building
management practices.

(d) Tenant consents to the use of water-saving appliances, such as waterless
urinals, and other equipment as may be otherwise consistent with the
Environmental Performance Objectives. Where use of potable water is not
necessary, Tenant acknowledges and consents to Landlord’s collection, treatment
and reuse of condensate water, rainwater, and graywater for use as flushing
water in washrooms and in other applications within and around the Building.

(e) Landlord shall provide janitorial service to the Premises on each weekday,
exclusive of Holidays, provided access is granted to the person or persons
employed or retained by Landlord to perform such work. Landlord shall not be
required to provide janitorial services for portions of the Premises which are
locked and inaccessible to Landlord, or which are designed specifically to allow
preparation of food or beverages, defined more or less as a kitchen or pantry
area (except for collecting trash, dusting and sweeping, and light wiping down),
for storage, or for private lavatories (excluding multi-stall Common Area
restrooms, which are cleaned and serviced by Landlord).

(f) Tenant shall pay Landlord, at the charges established by Landlord from time
to time, for all supplementary services requested by Tenant and provided by
Landlord or its agents to

 

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Tenant, which charges shall be payable by Tenant within thirty (30) days of
receipt of invoice. Such supplementary services shall include, without
limitation, maintenance, repair, janitorial, cleaning, HVAC and other services
requested by Tenant and provided during hours other than Ordinary Business
Hours.

(g) Landlord may provide security services for the Building, but Landlord shall
not be obligated to provide security services or be deemed to have warranted the
effectiveness of any security services that are provided or the personnel,
procedures or equipment used in connection therewith, and except to the extent
caused by Landlord’s gross negligence or intentional misconduct, Landlord shall
not be liable in any manner for the failure of any security services to prevent
personal injury or death or property damage or loss, or to apprehend any person
suspected of causing such injury, death, damage or loss.

(h) Except to the extent caused by Landlord’s negligence or intentional
misconduct, Landlord shall not be liable for any failure to provide access to
the Premises, to assure the beneficial use of the Premises or to furnish any
services or utilities when such failure is caused by natural occurrences, riots,
civil disturbances, insurrection, war, court order, public enemy, accidents,
breakage, strikes, lockouts, other labor disputes, the making of repairs,
alterations or improvements to the Premises or the Building, the inability to
obtain an adequate supply of fuel, gas, steam, water, electricity, communication
services, labor or other supplies or by any other condition beyond Landlord’s
reasonable control, and Tenant shall not be entitled to any damages resulting
from such failure, nor shall such failure relieve Tenant of the obligation to
pay all sums due hereunder or constitute or be construed as a constructive or
other eviction of Tenant. Notwithstanding the foregoing, if Tenant is prevented
from using the Premises for the conduct of its business for three
(3) consecutive business days (the “Eligibility Period”) as a result of an
interruption in utilities to the Premises caused by Landlord then, in any and
all such events, Tenant’s obligation to pay Rent shall be abated from and after
the first day following the last day of the Eligibility Period and continuing
for such time that Tenant continues to be so prevented from using the Premises
for the conduct of its business.

(i) If any governmental entity promulgates or revises any statute, ordinance or
building, fire or other code, or imposes mandatory controls or guidelines on
Landlord or the Building or any part thereof, relating to the use or
conservation of energy, water, light or electricity or the provision of any
other utility service provided with respect to this Lease, or if Landlord is
required to make alterations to the Building in order to comply with such
mandatory controls or guidelines, Landlord may, in its reasonable discretion,
comply with such mandatory or voluntary controls or guidelines, or make such
alterations to the Building. Neither such compliance nor the making of such
alterations shall in any event entitle Tenant to any damages, relieve Tenant of
the obligation to pay any of the sums due hereunder, or constitute or be
construed as a constructive or other eviction of Tenant.

(j) Landlord, at is sole cost and expense, shall provide a proportionate amount
of directory signage in the main lobby directory and Building standard suite
entry signage on the second (2nd) floor.

Section 9.2. Tenant’s Obligations.

(a) Tenant shall keep the corridors, hallways and other common areas of the
Building free of Tenant’s debris. In the event of damage to any part of the
Building resulting from Tenant’s removal of its refuse, Tenant shall, upon
demand, reimburse Landlord for the cost of repairs thereto.

(b) Tenant shall participate in the Building’s recycling, waste management,
energy efficiency, water conservation, and transportation management programs as
may be reasonably instituted by the Landlord from time to time.

(c) Tenant shall not introduce into the Building any substance which may
negatively affect the indoor air quality or add an undue burden to the cleaning
or maintenance of the Premises or the Building, and Tenant shall reimburse
Landlord for any cost incurred by Landlord resulting from Tenant’s failure to
comply with this provision.

Article 10

ALTERATIONS

Section 10.1. General.

(a) This Article 10 shall not apply to Tenant’s initial improvements to the
Premises, which are covered by Section 2.6. Tenant shall (i) not make or cause
to be made any alterations, additions or improvements including, without
limitation, any Major Repairs (collectively “Alterations”) in, on or to any
portion of the Building or the Common Areas outside of the interior of the
Premises, nor (ii) make or suffer to be made any Alterations in, on or to the
Premises or any part thereof without the

 

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prior written consent of Landlord, which consent will not be unreasonably
withheld, conditioned or delayed; provided, however, Landlord may withhold its
consent in its sole discretion if any proposed Alterations will adversely affect
the structure or safety of the Building or its communications, electrical,
plumbing, heating, mechanical or life safety systems. When applying for any such
consent, Tenant shall furnish complete plans and specifications for the desired
Alterations. Subsequent to obtaining Landlord’s consent and prior to
commencement of construction of the Alterations, Tenant shall deliver to
Landlord the building permit covering the Alterations. Tenant shall pay to
Landlord upon demand a review fee in the amount of three percent (3%) of the
construction cost of the Alterations to compensate Landlord for the cost of
review and approval of the plans and specifications and for additional
administrative costs incurred in monitoring the construction of the Alterations.
If Landlord consents to the making of any Alterations, the same shall be made by
Tenant at Tenant’s sole cost and expense, using contractors approved by
Landlord, which approval shall not be unreasonably withheld, conditioned or
delayed; provided that Tenant shall not be required to use contractors (i) who
are not reasonably available to commence the Alterations in a manner that will
not delay completion thereof or (ii) whose cost materially exceeds the cost
charged by each of three (3) other bids received by Tenant by contractors for
such Alterations. For Alterations affecting the Building’s exterior appearance,
structural, electrical, mechanical, plumbing or life safety systems, Tenant must
use contractors designated by Landlord. All Alterations shall be made in
compliance with the Construction Rules, and with the green construction
provisions set forth in Section 2.2 of the Environmental Management Plan so long
as such green construction provisions do not increase the cost of the
Alterations. Tenant shall require its contractor to maintain insurance in
amounts and in such form as Landlord may require. Any Alterations undertaken by
Tenant shall be completed in accordance with the plans and specifications
approved by Landlord, shall be carried out in a good, workmanlike and prompt
manner, shall comply with all Applicable Laws and the Construction Rules and
shall be subject to supervision or monitoring by Landlord or its employees,
agents or contractors. Without Landlord’s prior written consent Tenant shall not
use any portion of the Common Areas in connection with the making of any
Alterations. In making Alterations to the Premises, Tenant shall use only new
materials, or recycled materials approved by Landlord. Within thirty (30) days
after completion of construction of any Alterations, Tenant shall promptly
deliver to Landlord a full and complete set of “as built” drawings for such
Alterations. If the Alterations which Tenant causes to be constructed result in
Landlord being required to make any alterations and/or improvements to other
portions of the Building in order to comply with any Applicable Laws (e.g.
ordinances intended to provide full access to handicapped persons), then Tenant
shall reimburse Landlord upon demand for all costs and expenses incurred by
Landlord in making such alterations and/or improvements. Any Alterations made by
Tenant shall remain on and be surrendered with the Premises upon the expiration
or sooner termination of the Term, except as otherwise provided in Section 25.1.
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, except to the extent caused by Landlord’s
negligence or intentional misconduct and subject to Section 15.3 below.

(b) Tenant shall give Landlord at least fifteen (15) days prior written notice
of commencement of any Alteration in order to enable Landlord to post and record
notices of non-responsibility. Tenant shall keep the Premises, Common Areas,
Building and the real property upon which the Building is situated free from any
liens arising out of any work performed, materials furnished or obligations
incurred by Tenant. Within thirty (30) days after completion of any Alterations,
Tenant shall deliver to Landlord unconditional lien releases from each
contractor and subcontractor performing work in the Building.

(c) If any construction, alteration, addition, improvement or decoration of the
Premises by Tenant interferes with the harmonious labor relations in existence
in the Building, all such work shall be halted immediately by Tenant until such
time as construction can proceed without any such interference.

(d) Tenant shall indemnify, defend, and hold Landlord harmless against any and
all loss, cost, damage, injury and expense arising out of or in any way related
to claims for payment for work or labor performed, or materials or supplies
furnished, to or at the request of Tenant or in connection with performance of
any work done for the account of Tenant in the Premises, the Common Areas or the
Building, whether or not Tenant obtained Landlord’s permission to have such work
done, labor performed, or materials or supplies furnished, except to the extent
caused by Landlord’s negligence or intentional misconduct and subject to
Section 15.3 below.

 

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Article 11

MAINTENANCE AND REPAIRS

Section 11.1. Repairs.

(a) Except as otherwise provided in this Lease, Tenant shall take good care of
the Premises and shall make all repairs to the Premises and all improvements
therein, and all building systems, fixtures and utilities serving the Premises
on an exclusive basis, whether constructed by or at the direction of Landlord or
Tenant, in order to preserve the Premises in first-class and clean, safe and
good working order and condition. Landlord shall have no obligation to make any
repairs except as expressly provided herein (if any), nor until Landlord has
received written notice from Tenant of the need therefor. Landlord gives to
Tenant exclusive control of the Premises (subject to the terms hereof) and
Landlord shall be under no obligation to inspect the Premises. Tenant shall at
once report in writing to Landlord any defective conditions known to Tenant
which Landlord is required to repair. Tenant’s obligations under this Section
11.1(a) shall include, without limitation, the replacement of equipment,
fixtures and all plate glass located in the Premises (other than exterior
windows), the painting of the interior and replacement of floor coverings when
necessary in order to maintain at all times a clean and sightly appearance and
the repair of mechanical, plumbing and utility systems and fixtures wherever
located and whether or not concealed serving the Premises on an exclusive basis.

(b) Subject to ordinary wear and tear and the provisions of Section 11.1(a), and
except for damage by casualty and condemnation (which shall be controlled by
Articles 14 and 22, respectively), Landlord, at its cost (but subject to
reimbursement as provided in Article 5 or, as applicable Section 11.1(c)), shall
repair and maintain in good condition and working order, (i) the exterior and
structural portions of the Building, including without limitation the roof,
foundation, bearing and exterior walls and slab flooring, (ii) mechanical,
plumbing and utility systems that do not exclusively serve the Premises, (iii)
the fire/life safety system of the Building, if any, and (iv) the Common Areas,
Landlord shall have no obligation to maintain or repair any improvements or
equipment installed by or for Tenant, whether or not located within the
Premises.

(c) To the extent repairs are Tenant’s responsibility hereunder, if Tenant
refuses or neglects to make repairs and/or perform its maintenance obligations
in accordance with Tenant’s obligations under this Lease, Landlord shall have
the right, (i) immediately, in the event of an emergency (defined as something
needing to be done to protect the Building or its systems from damage or to
protect against personal injury, or (ii) in the event there is no emergency
involved, upon giving Tenant five (5) days’ written notice of its election to do
so, if Tenant does not commence to make such repairs and/or perform such
maintenance during such five (5) day period or such longer period of time as is
reasonably required to make such repairs provided Tenant commences repairs
promptly and thereafter diligently prosecutes the same to completion, to make
such repairs or perform such maintenance on behalf of and for the account of
Tenant. In such event, all work performed by Landlord shall be paid for by
Tenant as Additional Rent within thirty (30) days of receipt of an invoice
therefor (whether or not Landlord shall have given Tenant notice of the need
therefor).

(d) If Landlord believes that any repairs and/or maintenance to be made by
Landlord are reasonably likely to materially disrupt Tenant’s business in the
Premises, then Landlord shall provide Tenant with twenty-four (24) hours’ notice
(either orally or in writing) prior to conducting such repairs and/or
maintenance.

(e) Tenant shall, at the termination of this Lease, surrender the Premises to
Landlord in the condition described in Section 25.1.

(f) Subject to Section 15.3, the cost of repair of all damage or injury to the
Premises, the Building or any Building Systems caused directly or indirectly by
Tenant or by any person who may be in or upon the Premises, or the Building with
Tenant’s consent or at Tenant’s invitation, shall be paid for by Tenant.
Landlord shall not be liable to Tenant, and Tenant waives all claims against
Landlord, for any damage caused to property or injury or death caused to any
person, or any other loss or damage whatsoever caused by the actions or failure
to act of another tenant of the Building.

Article 12

ASSIGNMENT AND SUBLETTING

Section 12.1. General.

(a) Tenant shall not, without the prior written consent of Landlord, which
consent shall not be unreasonably withheld, conditioned or delayed: (a) assign,
mortgage, pledge, encumber or otherwise transfer this Lease, the term or estate
hereby granted, or any interest hereunder; (b) permit the Premises or any part
thereof to be utilized by anyone other than Tenant (whether as concessionaire,
franchisee, licensee, permittee or otherwise); or (c) except as hereinafter
provided, sublet or offer or

 

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advertise for subletting the Premises or any part thereof. Any assignment,
mortgage, pledge, encumbrance, transfer or sublease without Landlord’s consent
shall be voidable by Landlord and, at Landlord’s election, shall constitute a
default. If Tenant is a corporation, any dissolution, merger, consolidation or
other reorganization of Tenant, or the sale or other transfer of a controlling
percentage of the capital stock of Tenant or the sale of fifty percent (50%) or
more of the value of the assets of Tenant, shall be deemed an assignment of this
Lease by Tenant. The phrase “controlling percentage” shall mean the ownership
of, and the right to vote, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of Tenant’s capital stock issued,
outstanding, and entitled to vote for the election of directors. The preceding
two sentences shall not apply to corporations, the stock of which is traded
through an exchange or over the counter. If Tenant is a partnership, a
withdrawal or change, voluntary, involuntary, or by operation of law of any
partner or partners owning a total of fifty percent (50%) or more of the
partnership, or the dissolution of the partnership, shall be deemed an
assignment of this Lease by Tenant. If Tenant is a limited liability company, a
withdrawal or change, voluntary, involuntary, or by operation of law of any
member or members owning a total of fifty percent (50%) or more of the
membership interest, or any change in any managing member or the dissolution of
the company, shall be deemed an assignment of this Lease. If Tenant consists of
more than one person, a purported assignment, voluntary, involuntary, or by
operation of law, by any one of the persons executing this Lease shall be deemed
a voluntary assignment of this Lease by Tenant.

(b) Anything in this Lease to the contrary notwithstanding, Tenant shall have
the right, without Landlord’s consent or approval, to assign this Lease to
(i) any person or entity who or which controls, is controlled by, or is under
common control with, Tenant, (ii) any person or entity who or which acquires
substantially all of the assets of the business of Tenant operated on the
Premises or the capital stock of Tenant (or, if applicable, partnership or
membership interests in the business entity that constitutes Tenant); (iii) any
entity into or with which Tenant merges; or (iii) any successor to Tenant by
reorganization, so long as the merger, consolidation, reorganization or
acquisition of stock or assets or other assignment is not done principally for
the purpose of avoiding the restrictions on transferability set forth in this
Lease and provided further that (a) Tenant provides evidence to Landlord in
writing that such assignment or sublease complies with the criteria set forth in
(i), (ii) or (iii) above, (b) such assignee, subtenant or successor-in-interest
expressly assumes Tenants’ obligations and liabilities under this Lease; and
(c) the tangible net worth, debt/tangible net worth ratio, and cash flow from
operations of said assignee and Tenant after the transfer are equal to or better
than that of Tenant as reflected in Tenant’s fiscal year 2014 financial
statements. An assignee pursuant to the foregoing is referred to in this Lease
as “Permitted Assignee.”

Section 12.2. Notice and Procedure. If at any time or from time to time during
the Term, Tenant desires to assign or sublet all or any part of the Premises,
then at least fifteen (15) days, but not more than one hundred twenty
(120) days, prior to the date when Tenant desires the assignment or subletting
to be effective (the “Transfer Date”), Tenant shall give Landlord a notice (the
“Notice”) which shall set forth the name, address and business of the proposed
assignee or sublessee, information (including financial statements and
references) concerning the character of the proposed assignee or sublessee, a
detailed description of the space proposed to be assigned or sublet, which must
be a single, self-contained unit (the “Space”), any rights of the proposed
assignee or sublessee to use Tenant’s improvements and the like, the Transfer
Date, and the fixed rent and/or other consideration and all other material terms
and conditions of the proposed assignment or subletting, all in such detail as
Landlord may reasonably require. If Landlord reasonably requests additional
detail, the Notice shall not be deemed to have been received until Landlord
receives such additional detail. Landlord shall have the option, exercisable by
giving notice to Tenant at any time within fifteen (15) days after Landlord’s
receipt of the Notice to terminate this Lease as to the Space as of the Transfer
Date, in which event Tenant shall be relieved of all further obligations
hereunder as to the Space or the entire Premises, as applicable. No failure of
Landlord to exercise this option shall be deemed to be Landlord’s consent to the
assignment or subletting of all/or any portion of the Space or the Premises.
Provided Landlord has consented to such assignment or subletting, Tenant may
assign or sublet the Space to the transferee named in the Notice subject to the
following conditions:

(a) The assignment or sublease shall be on the same terms set forth in the
Notice given to Landlord;

(b) No assignment or sublease shall be valid and no assignee or sublessee shall
take possession of the Space until an executed counterpart of the assignment or
sublease has been delivered to Landlord; and

(c) No assignee or sublessee shall have a right to further assign this Lease or
sublet the Premises except in strict compliance with this Article 12.

 

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Section 12.3. Consent Not to be Unreasonably Withheld. Landlord shall be
permitted to consider any reasonable factor in determining whether to withhold
its consent to a proposed assignment or sublease. Without limiting the other
instances in which it may be reasonable for Landlord to withhold its consent to
an assignment or sublease Landlord may withhold its consent if:

(a) The proposed transferee is not at least as creditworthy as is Tenant as of
the date hereof, does not satisfy Landlord’s then-current reasonable credit
standards for tenants of the Building or does not have the financial strength
and stability to perform all obligations under this Lease to be performed by
Tenant;

(b) The proposed use of the Space by the transferee (i) does not comply with the
provisions of Article 8 hereof, (ii) is not consistent with the general
character of businesses carried on by tenants of a first-class suburban office
building, (iii) will increase the likelihood of damage or destruction, (iv) will
increase the density of occupancy of the Premises or increase the amount of
pedestrian and other traffic through the Building, (v) will be likely to cause
an increase in insurance premiums for insurance policies applicable to the
Building, (vi) will require new tenant improvements incompatible with
then-existing Building systems and components and (vii) will otherwise have or
cause a material adverse impact on the Premises, the Building or Landlord’s
interest therein;

(c) The portion of the Premises to be sublet or assigned is irregular in shape
or has inadequate means of ingress and egress.

(d) The proposed transfer involves a change of use of the Premises or would
violate any exclusive use covenant to which Landlord is bound;

(e) The transfer would likely result in significant increase in the use of the
parking areas by the transferee’s employees or visitors, and/or significantly
increase the demand upon utilities and services to be provided by Landlord to
the Premises;

(f) The transferee is not in Landlord’s reasonable opinion of reputable or good
character or consistent with Landlord’s desired tenant mix for the Building;

(g) The transferee’s use or operation would be inconsistent with the
Environmental Performance Objective.

(h) Intentionally deleted;

(i) The proposed transferee shall be a labor union, foreign or domestic
governmental entity, public utility company or other tax-exempt entity as
defined in the Internal Revenue Code of 1986, as amended;

(j) The proposed transferee shall be an existing tenant or occupant of the
Project or a person or entity with whom Landlord is then dealing, or with whom
Landlord has had any dealings within the previous three (3) months, with respect
to the leasing of space in the Project;

(k) Any ground lessor or mortgagee whose consent to such transfer is required
has not consented thereto;

(l) Any proposed subletting would result in more than two (2) subleases of
portions of the Premises being in effect at any one time during the Term;

(m) At the time of the request, an Event of Default under this Lease shall have
occurred and be continuing; and

Tenant shall have the burden of demonstrating that each of the foregoing
conditions has been satisfied.

Section 12.4. Continuing Liability of Tenant. No subletting or assignment shall
release Tenant from its obligations under this Lease or alter the primary
liability of Tenant to pay the rent and to perform all other obligations to be
performed by Tenant hereunder. The acceptance of rent by Landlord from any other
person shall not be deemed to be a waiver by Landlord of any provision hereof.
If this Lease is assigned, or if the underlying beneficial interest of Tenant is
transferred, or if the Premises or any part thereof is sublet or occupied by any
person or entity other than Tenant, Landlord may collect rent from the assignee,
subtenant or occupant and apply the net amount collected to the Rent herein
reserved. Consent to one assignment or subletting shall not be deemed consent to
any subsequent assignment or subletting. If any assignee of Tenant or any
successor of Tenant defaults in the performance of any of the terms hereof,
Landlord may proceed directly against Tenant without the necessity of exhausting
remedies against such assignee or successor. Landlord may consent to subsequent
assignments or subletting of this Lease or amendments or modifications to this
Lease with assignees of Tenant, without notifying Tenant, or any successor of
Tenant, and without obtaining its or their consent thereto, and such action
shall not relieve Tenant of its obligations under this Lease, provided Tenant
shall not be liable for any increased obligations pursuant to such amendment or
modification (e.g., an increase in length of the Term of the Lease or the size
of the Premises).

 

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Section 12.5. Miscellaneous. Each Transfer to which there has been consent shall
be by instrument in writing, in form reasonably satisfactory to Landlord, and
shall be executed by Tenant and the transferee, assignee, sublessee, licensee,
concessionaire, or mortgagee, who shall agree in writing for the benefit of
Landlord to assume and to bound by, the terms, covenants and conditions of this
Lease to be performed by Tenant, to the extent applicable. An executed copy of
such written instrument shall be delivered to Landlord within ten (10) days of
the date of execution.

Section 12.6. Bankruptcy. If a petition is filed by or against Tenant for relief
under the Bankruptcy Code, and Tenant (including for purposes of this
Section 12.6 Tenant’s successor in bankruptcy, whether a trustee or Tenant as
debtor in possession) assumes and proposes to assign, or proposes to assume and
assign, this Lease pursuant to the provisions of the Bankruptcy Code to any
person or entity who has made or accepted a bona fide offer to accept an
assignment of this Lease on terms acceptable to Tenant, then notice of the
proposed assignment setting forth (a) the name and address of the proposed
assignee, (b) all of the terms and conditions of the offer and proposed
assignment, and (c) the adequate assurance to be furnished by the proposed
assignee of its future performance under the Lease, shall be given to Landlord
by Tenant no later than twenty (20) days after Tenant has made or received such
offer, but in no event later than ten (10) days prior to the date on which
Tenant applies to a court of competent jurisdiction for authority and approval
to enter into the proposed assignment. Landlord shall have the prior right and
option, to be exercised by notice to Tenant given at any time prior to the date
on which the court order authorizing such assignment becomes final and
non-appealable, to receive an assignment of this Lease upon the same terms and
conditions, and for the same consideration, if any, as the proposed assignee,
less any brokerage commissions which may otherwise be payable out of the
consideration to be paid by the proposed assignee for the assignment of this
Lease. If this Lease is assigned pursuant to the provisions of the Bankruptcy
Code, Landlord: (i) may require from the assignee a deposit or other security
for the performance of its obligations under the Lease in an amount
substantially the same as would have been required by Landlord upon the initial
leasing to a tenant similar to the assignee; and (ii) shall receive, as
Additional Rent, the sums and economic consideration described in Sections 12.8
and 12.9. Any person or entity to which this Lease is assigned pursuant to the
provisions of the Bankruptcy Code shall be deemed, without further act or
documentation, to have assumed all of Tenant’s obligations arising under this
Lease on and after the date of such assignment. Any such assignee shall, upon
demand, execute and deliver to Landlord an instrument confirming such
assumption. No provision of this Lease shall be deemed a waiver of Landlord’s
rights or remedies under the Bankruptcy Code to oppose any assumption and/or
assignment of this Lease, to require a timely performance of Tenant’s
obligations under this Lease, or to regain possession of the Premises if this
Lease has neither been assumed nor rejected within sixty (60) days after the
date of the order for relief or within such additional time as a court of
competent jurisdiction may have fixed. Notwithstanding anything in this Lease to
the contrary, all amounts payable by Tenant to or on behalf of Landlord under
this Lease, whether or not expressly denominated as rent, shall constitute rent
for the purposes of Section 502(b)(6) of the Bankruptcy Code.

Section 12.7. Intentionally deleted.

Section 12.8. Sharing of Profits. Fifty percent (50%) of any sums or other
economic consideration received by Tenant as a result of such assignment or
subletting (after deducting reasonable leasing commissions, advertising costs
and legal fees incurred by Tenant in connection with such assignment or
subletting) whether denominated rent or otherwise, which exceed, in the
aggregate, the total sums which Tenant is obligated to pay Landlord under this
Lease (prorated as to any sublease to reflect obligations allocable to that
portion of the Premises subject to such sublease) shall be payable to Landlord
as Additional Rent under this Lease, without affecting or reducing any other
obligation of Tenant hereunder. Tenant shall deliver to Landlord a statement
within thirty (30) days after the end of each calendar year in which any part of
the Term occurs specifying as to such calendar year, and within thirty (30) days
after the expiration or earlier termination of the Term, specifying with respect
to the elapsed portion of the calendar year in which such expiration or
termination occurs, each sublease and assignment in effect during the period
covered by such statement and, (I) the date of its execution and delivery, the
number of square feet of the rentable area demised thereby, and the term
thereof; and (II) a computation in reasonable detail showing: (a) the amounts
(if any) paid and payable by Tenant to Landlord pursuant to this Section 12.8
with respect to such sublease or assignment for the period covered by such
statement and (b) the amounts (if any) paid and payable by Tenant to Landlord
pursuant to this Section 12.8 with respect to any payments received from a
sublessee or assignee during such period but which relate to an earlier period.

Section 12.9. Fees. Each request for consent to an assignment of the lease or
subletting of the Premises shall be accompanied by payment to Landlord in the
amount of $1,500.00, to offset Landlord’s costs in connection with such
assignment or sublease, including any investigations as to the acceptability of
the proposed transferee and all legal costs reasonably incurred in connection
with the review of any requested consent. Landlord shall have no obligation to
process any such request for consent unless such payment has been made.

 

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Article 13

WAIVER AND INDEMNIFICATION

Section 13.1. Waiver of Liability. In addition to the waiver of subrogation set
forth in Section 15.3, and except to the extent of Landlord’s negligence or
intentional misconduct, Landlord shall not be liable or responsible to Tenant,
and Tenant hereby waives all claims, whether in contract or tort, against
Landlord, its partners, members, shareholders, officers, directors, employees,
asset managers and property managers (collectively, “Landlord Parties”) for
(a) damages arising out of any death of or any injury to any person or damage to
any property, (b) any loss or damage due to theft or burglary, (c) any loss or
damage done by unauthorized persons in or on the Premises or the Building,
(d) any loss or damage caused by backups in the city sewers, explosion, fire, or
breakage, by sprinkler, drainage or plumbing systems, by failure for any cause
to supply adequate drainage, by the interruption of the telephone cable
distribution system, any public utility or service, by steam, gas, water, rain
or other substances leaking, issuing or flowing into any part of the Premises,
by natural occurrence, acts of the public enemy, riot, strike, insurrection,
war, court order, requisition or order of governmental body or authority,
(e) any damage or inconvenience which may arise through repair, maintenance,
construction or alteration of any part of the Building, or (f) any loss or
damage resulting from by anything done or omitted to be done by any tenant,
occupant or person in the Building. Notwithstanding the foregoing, Landlord
shall not be liable or responsible to Tenant for, and Tenant hereby waives all
claims against Landlord and Landlord Parties with respect to, any loss or damage
to personal property under any circumstances. Tenant acknowledges and agrees
that Landlord has no obligation to carry insurance on: (i) any loss or damage to
any Tenant Items and (ii) any loss suffered by Tenant due to interruption of
Tenant’s business, including without limitation any loss of earnings.

Section 13.2. Indemnity. To the fullest extent permitted by law, but subject to
the provisions of Section 15.3, Tenant shall protect, indemnify, defend and hold
Landlord, its partners, members, officers, shareholders, directors, employees,
asset managers and property managers harmless from and against any and all
losses, damages, claims, or liability for any damage to any property or injury,
illness or death of any person: (a) occurring in, on, or about the Premises, or
any part thereof, arising at any time and from any cause, except to the extent
caused by the negligence or intentional misconduct of Landlord, its employees,
asset managers or property managers; and (b) occurring in, on, or about any part
of the Building other than the Premises, when such damage, injury, illness or
death shall be caused in whole or in part by the negligence or intentional
misconduct of Tenant, its agents, servants, contractors, partners, officers,
employees, customers, guests, invitees or licensees. Tenant shall also protect,
indemnify, defend and hold Landlord, its partners, members, officers,
shareholders, directors, employees, asset managers and property managers
harmless from and against any and all losses, damages, claims and liability
resulting from Tenant’s breach of any of its obligations under this Lease,
including without limitation Tenant’s obligation to carry specified insurance,
and any damage to the Building’s telephone cable distribution system caused by
Tenant, its contractors, servants, agents, partners, officers, employees,
customers, guests, invitees or licensees. The provisions of this Section 13.2
shall not be limited by the insurance coverage carried or required to be carried
by Tenant pursuant to Article 15 and shall survive the expiration or termination
of this Lease with respect to any accident, event, damage, injury, illness or
death occurring prior to such termination.

Section 13.3. Limitation of Landlord’s Liability. None of the Landlord Parties
shall be liable for the performance of Landlord’s obligations under this Lease.
Tenant shall look solely to Landlord to enforce Landlord’s obligations
hereunder. The liability of Landlord for Landlord’s obligations under this Lease
shall not exceed and shall be limited to Landlord’s interest in the Project and
Tenant shall not look to the property or assets of any of the Landlord Parties
or to any other property of Landlord in seeking either to enforce Landlord’s
obligations under this Lease or to satisfy a judgment for Landlord’s failure to
perform such obligations.

Section 13.4. Waiver of Consequential Damages. Anything in this Lease to the
contrary notwithstanding, (i) Landlord shall not be liable to Tenant under or in
connection with this Lease for any consequential, special or punitive damages
and Tenant waives, to the full extent permitted by law, any claim for
consequential, special or punitive damages, and any claim for loss of business
or profits; and (ii) except as set forth in Section 20.1 hereof, Tenant shall
not be liable to Landlord under or in connection with this Lease for any
consequential, special or punitive damages and Landlord waives, to the full
extent permitted by law, any claim for consequential, special or punitive
damages, and any claim for loss of business or profits.

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,

 

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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 Article 13 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 Article 13 shall be limited to the extent of Landlord’s
negligence and that of Landlord’s officers, agents, employees, contractors or
licensees, including Landlord’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.

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 13. 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.

Article 14

DESTRUCTION OR DAMAGE

Section 14.1. Destruction or Damage. In the event of a fire or other casualty in
or to the Premises, Tenant shall immediately give notice thereof to Landlord.
Except as otherwise expressly provided below, determination as to the amount of
damage to the Premises or to the Building’s structure, the time required for
repair and other issues relating to damage and restoration shall be determined
by Landlord’s architect, whose determination shall be final and binding on
Tenant. The following provisions shall apply to fire, earthquake, act of God,
the elements or other casualty occurring in the Premises and/or the Building:

(a) Landlord shall not carry insurance on, and shall not be responsible for
restoration of damage to, any of the Tenant Items. Subject to the terms of this
Article 14. Landlord shall carry insurance on, and shall be responsible for
restoration of damage only to the Building, Premises and Base Building
Improvements (as hereinafter defined). For purposes of this Lease, the term
“Base Building Improvements” shall refer to those certain improvements described
on Exhibit “D” attached hereto and incorporated herein by reference.

(b) Subject to the provisions of Subsection 14.1(h), if the damage is to any of
the Tenant Items, then Tenant, at its cost, shall promptly repair such damage.

(c) If (i) the damage is limited solely to the Base Building Improvements in the
Premises, and (ii) all repairs to and restoration of damage or destruction to
the Premises can be Substantially Completed within twelve (12) months from the
date of damage or destruction, and provided that sufficient insurance proceeds
(with the exception of any deductible) are available to Landlord to complete
such repair and restoration obligations, then Landlord shall be obligated to
repair and restore the Bas Building Improvements in the Premises, and shall
proceed diligently to do so. If insurance proceeds sufficient to fund such
repairs and restoration are not available, then Landlord, in its sole
discretion, may contribute the excess of the (x) cost of such repairs and
restoration over (y) available insurance proceeds and may then undertake such
repairs and restoration, in which event this Lease shall remain in full force
and effect.

(d) If portions of the Building outside the boundaries of the Premises are
damaged or destroyed (whether or not the Premises are also damaged or destroyed)
and (i) the repairs to the Base Building Improvements in such portions of the
Building can be Substantially Completed within twelve (12) months from the date
of damage or destruction, (ii) Landlord deems it economically feasible so to
repair and restore the Building, and (iii) sufficient insurance proceeds are
available to Landlord to complete such repair and restoration obligations, then
Landlord shall be obligated to repair and restore such Base Building
Improvements. If Landlord determines it is economically feasible to undertake
such repair and restoration but that insurance proceeds sufficient to fund such
repairs and restoration are not available, then Landlord, in its sole
discretion, may contribute the excess of the (x) cost of such repairs and
restoration over (y) available insurance proceeds and may then undertake such
repairs and restoration, in which event this Lease shall remain in full force
and effect.

(e) 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 15, Landlord may terminate this Lease by written notice to Tenant given
within sixty (60)

 

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days after the date of notice to Landlord that said damage or destruction is not
so covered so long as Landlord terminates all other similarly situated leases.
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 this Article 14.

(f) If Landlord is not obligated to and does not elect to undertake repairs and
restoration pursuant to Subsection 14.1(c), or 14.1(d), Landlord shall so notify
Tenant within sixty (60) days after the date of such damage or destruction and
either Tenant or Landlord may terminate this Lease within thirty (30) days after
the date of such notice.

(g) If this Lease is not terminated as provided above, Landlord shall repair and
rebuild the Base Building Improvements in the Premises and Tenant shall repair
and replace the Tenant Items in a manner and to a condition at least equal to
that which existed prior to its damage or destruction. Except as herein
expressly provided to the contrary, this Lease shall not terminate nor shall
there be any abatement of Base Rent or Additional Rent as the result of a fire
or other casualty. Notwithstanding anything to the contrary, from the date of
any casualty that interferes with Tenant’s ability to use the Premises until the
date that is thirty (30) days after the Base Building Improvements are fully
repaired, all Rent owing under this Lease shall abate in proportion to the
interruption of Tenant’s use of the Premises.

(h) The proceeds from any insurance paid by reason of damage to or destruction
of the Premises or the Building or any part thereof insured by Landlord shall
belong and be paid to Landlord subject to the rights of any Mortgagee (as
hereinafter defined) of any Mortgage (as hereinafter defined).

(i) Anything in this Lease to the contrary notwithstanding, (i) Landlord shall
have no obligation to repair or restore any portion of the Premises or the
Building in the event of damage or destruction occurring during the last year of
the Term, and if Landlord elects not to make such repairs or perform such
restoration, Tenant may terminate this Lease within thirty (30) days of receipt
of notice from Landlord; and (ii) Tenant shall have no right to terminate this
Lease pursuant to this Article 14 if the damage otherwise affording Tenant such
right was caused by the negligence or intentional misconduct of Tenant, its
agents or employees, or resulted directly or indirectly from Tenant’s failure to
perform its obligations under this Lease.

(j) At all times during the Term and notwithstanding the parties’ obligations
under Article 14, Landlord shall be the sole owner of the Premises as existing
on the date of this Lease and any additions, alterations or improvements thereto
constructed prior to the expiration or earlier termination of the Term to the
extent funded by Landlord. At all times during the Term, Tenant shall be the
sole owner of any additions, alterations or improvements to the Premises
constructed by Tenant during the Term. At the expiration or earlier termination
of the Term, any additions, alterations or improvements owned by Tenant during
the Term pursuant to the foregoing shall become the property of Landlord and
remain upon and be surrendered by Tenant with the Premises, except as otherwise
provided in, or as Landlord may elect pursuant to, Section 25.1 hereof.

(k) Notwithstanding anything herein to the contrary, if the holder of any
indebtedness secured by a mortgage or deed of trust covering 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.

Article 15

INSURANCE

Section 15.1. Tenant’s Insurance.

(a) Tenant, at its cost, shall maintain commercial general liability insurance,
insuring against all liability arising out of or in connection with Tenant’s use
or occupancy of the Premises or the exercise of any rights of Tenant pursuant to
this Lease, utilizing the standard ISO Occurrence Form CG0001, or equivalent,
including contractual liability coverage, with minimum limits of Five Million
Dollars ($5,000,000.00) per occurrence and Five Million Dollars ($5,000,000.00)
annual aggregate. The amount of such liability insurance required to be
maintained by Tenant hereunder shall not be construed to limit Tenant’s
indemnity obligations in this Lease or other liability hereunder. Such insurance
shall name Landlord and its property manager and any Mortgagees and Lessors
whose names have been furnished to Tenant (collectively, the “Additional Insured
Parties”) as additional insureds (using the current equivalent of the former ISO
Form CG 2010 (11/85), or equivalent), and shall provide that it is primary
insurance and not “excess over” or contributory with any other valid, existing
and applicable insurance in force for or on behalf of Landlord. Tenant’s
liability policy shall not have a deductible in excess of Fifty Thousand Dollars
($50,000.00).

 

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(b) Tenant, at its cost, shall maintain on all of the Tenant Items property
insurance in the amount of one hundred percent (100%) of the insurable
replacement cost, from time to time, without a co-insurance penalty, utilizing
the ISO Causes of Loss-Special Form CP 1030, or equivalent (commonly referred to
as “Special Causes of Loss”). The proceeds from any such policy shall be used by
Tenant for the replacement of such Tenant Items. The “replacement cost” of the
improvements to be insured under this Article 15 shall be determined by the
company issuing the insurance policy at the time the policy is initially
obtained.

(c) Tenant, at its cost, shall maintain in full force workers’ compensation
insurance in compliance with the applicable laws of the state where the Premises
are located, and employer’s liability insurance in an amount of not less than
One Million Dollars ($1,000,000.00).

(d) On or prior to the Term Commencement Date and not less than ten (10) days
prior to the expiration of the term of such coverage, Tenant shall deliver to
Landlord a certification from Tenant’s insurance company on the forms currently
designated “Acord 28” (Evidence of Property Insurance) and “Acord 25-S”
(Certificate of Liability Insurance), or the equivalent, provided that attached
to the Acord 25-S is an endorsement naming the Additional Insured Parties as
additional insureds, which shall be binding on Tenant’s insurance company, and
which shall expressly provide that such certification conveys to the Additional
Insured Parties all the rights and privileges afforded under the policies as
primary insurance. All of Tenant’s insurance required hereunder shall be issued
by insurance companies authorized to do business in the state where the Premises
are located, with a Best’s Rating of not less than A- and a Financial Size
Category of not less than VII, as rated in the most recent edition of Best’s
Insurance Reports or such other financial rating as Landlord may notify Tenant
that Landlord at such time considers appropriate.

Section 15.2. Landlord’s Insurance. Landlord shall effect and maintain during
the Term: (a) liability insurance; (b) “Special Causes of Loss” property
insurance; (c) boiler and machinery insurance; and (d) such other insurance on
the Building and all property and interest of Landlord in the Building as
reasonably determined by Landlord, in each case, to the extent, with coverage
and in amounts as determined by Landlord from time to time. Tenant agrees that
notwithstanding that Tenant contributes to the cost of Landlord’s insurance with
respect to the Building, Tenant shall not have any insurable interest in, or any
right to recover any proceeds under any of Landlord’s insurance policies.

Section 15.3. Waiver of Subrogation. Tenant hereby waives and releases any and
all right of recovery, whether arising in contract or tort, against Landlord,
its employees and agents, arising during the Term for any and all loss or damage
to any property located within or constituting a part of the Building, (whether
or not the party suffering the loss or damage actually carries any insurance,
recovers under any insurance or self insures the loss or damage), and shall have
its insurance policies issued in such form as to waive any right of subrogation
which might otherwise exist. Tenant shall indemnity Landlord against any loss or
expense, including reasonable attorneys’ fees, resulting from Tenant’s failure
to obtain such waiver of subrogation.

Landlord hereby waives and releases any and all right of recovery, whether
arising in contract or tort, against Tenant, its employees and agents, arising
during the Term for any and all loss or damage to any property located within or
constituting a part of the Building or Project, (whether or not the party
suffering the loss or damage actually carries any insurance, recovers under any
insurance or self insures the loss or damage), and shall have its insurance
policies issued in such form as to waive any right of subrogation which might
otherwise exist. Landlord shall indemnity Tenant against any loss or expense,
including reasonable attorneys’ fees, resulting from Landlord’s failure to
obtain such waiver of subrogation.

Article 16

ENTRY BY LANDLORD

Section 16.1. Entry by Landlord. Landlord may enter the Premises at reasonable
hours and following at least one (1) business day’s prior oral notice to:
(a) inspect the same; (b) exhibit the same to prospective purchasers, lenders or
tenants; (c) determine whether Tenant is complying with all of its obligations
hereunder, (d) supply janitorial service and any other services to be provided
by Landlord to Tenant hereunder or to any other tenant of the Building; (e) post
notices of non-responsibility; (f) make repairs required of Landlord under the
terms hereof or make repairs to any adjoining space or utility services or make
repairs, alterations or improvements to any other portion of the Building; and
(g) measure the Premises, provided, however, that Landlord may enter the
Premises at any time without prior notice to Tenant in the event of an emergency
situation. All such work shall be done as promptly as reasonably possible and so
as to cause as little interference to Tenant as reasonably possible. 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 occasioned by such entry. Landlord shall at all
times have and retain a key, access codes and the like with which to unlock all
of the doors in, on or about the Premises (excluding Tenant’s vaults, safes and
similar areas

 

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agreed upon in writing by Tenant and Landlord). Landlord shall have the right to
use any and all means which Landlord may deem proper to open such doors in an
emergency in order to obtain entry to the Premises, and no entry to the Premises
obtained by Landlord by any of such means shall be construed or deemed to be a
forcible or unlawful entry into, or a detainer of, the Premises or an eviction,
actual or constructive, of Tenant from the Premises, or any portion thereof.

Article 17

DEFAULT

Section 17.1. Events of Default. The occurrence of any one or more of the
following events (“Events of Default”) shall constitute a breach of this Lease
by Tenant: (a) intentionally deleted; (b) failure by Tenant to pay any Base
Rent, Operating Expenses or Taxes, within five (5) days following receipt of a
written notice from Landlord regarding an overdue amount (provided that Landlord
shall not be required to provide more than two (2) such notices in any given
calendar year, and Tenant’s failure to pay any Base Rent, Operating Expenses or
Taxes after two (2) such notices have been previously been delivered shall
constitute an immediate Event of Default by Tenant without delivery of a written
notice thereof by Landlord); (c) failure by Tenant to pay any other sum when and
as the same becomes due and payable if such failure continues for more than five
(5) days after notice of such failure to pay from Landlord; (d) failure by
Tenant to comply with the Rules and Regulations, if such failure continues for
more than forty-eight (48) hours after notice thereof from Landlord and is
reasonably susceptible to cure in such forty-eight (48) hour period and, if not,
then Tenant commences diligently pursuing such cure within such forty-eight
(48) hour period and continues doing so until such non-compliance is fully
cured; (e) failure by Tenant to perform or observe any other obligations of
Tenant hereunder, if such failure continues for more than thirty (30) days after
notice thereof from Landlord, unless such default cannot reasonably be cured
within such thirty (30) day period and Tenant shall within such period commence
with due diligence and dispatch the curing of such default, and, having so
commenced, shall thereafter prosecute or complete with due diligence and
dispatch the curing of such default; (f) Tenant’s failure or refusal to executed
and deliver to Landlord any document or instrument that is required under the
terms of this Lease within the time period specified in this Lease; (g) the
making by Tenant of a general assignment for the benefit of creditors, or the
admission of its inability to pay its debts as they become due or the filing of
a petition, case or proceeding in bankruptcy, or the adjudication of Tenant as
bankrupt or insolvent, or the filing of a petition seeking any reorganization,
arrangement, composition, enforcement, readjustment, liquidation, dissolution or
similar relief under any present or future statute, law or regulation, or the
filing of an answer admitting or failing reasonably to contest the material
allegations of a petition filed against it in any such proceeding, or the
seeking or consenting to or acquiescence in the appointment of any trustee,
receiver or liquidator of Tenant or any material part of its properties; (h) the
failure to have any proceeding against Tenant seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, dismissed within
ninety (90) days after commencement, or the failure to have the appointment,
without the consent or acquiescence of Tenant, of any trustee, receiver or
liquidator of Tenant or of any material part of its properties vacated within
ninety (90) days after such appointment; or (i) the failure to have any levy
upon this Lease or any estate of Tenant hereunder pursuant to any attachment or
execution vacated within thirty (30) days after such attachment or execution.

Section 17.2. Bankruptcy Stay. Notwithstanding anything to the contrary set
forth in this Lease, Tenant’s failure to (i) pay any installment of Annual Rent,
Tenant’s share of Operating Expenses or Taxes or other sum payable under this
Lease, upon the date when payment is due, or (ii) observe, keep or perform any
of the other terms, covenants, agreements or conditions set forth in this Lease
shall constitute an Event of Default without the requirement of notice if, at
the time of such failure or at any time thereafter, Landlord is prevented by
injunction, stay or operation of law from giving to Tenant a notice of Tenant’s
failure to make such payment when due or observe, keep or perform such terms,
covenants, agreements or conditions, it is being agreed that the requirement of
notice to Tenant set forth in Section 17.1 or elsewhere in this Lease would not
have been agreed to by Landlord in the absence of this provision.

Section 17.3. Landlord’s Remedies.

(a) If an Event of Default occurs, Landlord, at any time thereafter, may give a
written termination notice to Tenant, and on the date specified in such notice,
Tenant’s right to possession shall terminate and this Lease shall terminate,
unless on or before such date all sums identified in such notice have been paid
by Tenant and all other breaches of this Lease by Tenant at the time existing
shall have been fully remedied. Upon such termination, in addition to any other
rights and remedies to which Landlord may be entitled under Applicable Law,
Landlord may recover from Tenant: (a) the worth at the time of award of the
unpaid rent which had been earned at the time of termination; (b) the worth at
the time of award of the amount by which the unpaid rent which would have been
earned after termination until the time of award exceeds the amount of such rent
loss that Tenant proves could have been reasonably avoided; (c) the worth at the
time of award of the amount by which the unpaid rent for the balance of the term
of this Lease after the time of award exceeds the amount of such rent loss that
Tenant

 

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proves could be reasonably avoided; and (d) any other amount necessary to
compensate Landlord for all the detriment proximately caused by Tenant’s failure
to perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom 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. The “worth at the time
of award” of the amounts referred to in clauses (a) and (b) above shall be
computed by allowing interest at the Specified Rate. The worth at the time of
award of the amount referred to in clause (c) above shall be computed by
discounting such amount at a rate equal to the discount rate of the Federal
Reserve Board of San Francisco at the time of award plus one percentage point.

(b) For purposes of computing unpaid rent for the balance of the Term pursuant
to subsection 17.3(a), unpaid rent shall consist of the sum of:

(i) the total Monthly Base Rent for the balance of the Term; plus

(ii) Tenant’s Percentage Share of Operating Expenses and Taxes for the balance
of the Term. For purposes of computing Operating Expenses and Taxes the
Operating Expenses and Taxes for the calendar year of the default and each
future calendar year in the Term shall be assumed to be equal to the Operating
Expenses and Taxes for the calendar year prior to the year in which default
occurs compounded at a rate equal to the mean average rate of inflation for the
three (3) calendar years preceding the calendar year of the default, as
determined by using the United States Department of Labor, Bureau of Labor
Statistics Consumer Price Index (All Urban Consumers, all items, 1982-84 equals
100) for the metropolitan area or region of which the City of Bothell,
Washington is a part. If such index is discontinued or revised, during the Term,
such other government index or computation with which it is replaced shall be
used in order to obtain substantially the same result as would be obtained if
the index had not been discontinued or revised. If no replacement index exists
then Landlord shall select as a replacement index that index which, in
Landlord’s opinion, is generally recognized as the successor index.

(c) Every installment of rent and every other payment due hereunder from Tenant
to Landlord which shall not be paid when due shall bear interest at the
Specified Rate, from the date that the same became due and payable until paid,
whether or not demand be made therefor.

(d) Tenant acknowledges that late payment by Tenant to Landlord of Monthly Base
Rent or Operating Expenses or Taxes will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of such costs being extremely
difficult and impracticable to fix. Such costs include, without limitation,
processing and accounting charges, and late charges that may be imposed on
Landlord by the terms of any note secured by an encumbrance covering the
Premises. Therefore, if any installment of Monthly Base Rent or Operating
Expenses or Taxes due from Tenant is not received by Landlord within five
(5) days following Tenant’s receipt of a written notice from Landlord regarding
an overdue amount, Tenant shall pay to Landlord on demand an additional sum
equal to five percent (5%) of the overdue amount as a late charge; provided that
Landlord shall not be required to provide more than two (2) such notices in any
given calendar year. The parties agree that this late charge represents a fair
and reasonable estimate of the costs that Landlord will incur by reason of such
late payment by Tenant. Acceptance of any late charge shall not constitute a
waiver of Tenant’s default with respect to the overdue amount, or prevent
Landlord from exercising any of the other rights and remedies available to
Landlord.

(e) If Tenant has breached this Lease and abandoned the Premises, Landlord may
continue this Lease in effect for so long as Landlord does not terminate
Tenant’s right to possession, and Landlord may enforce all its rights and
remedies under this Lease, including the right to recover the rent as it becomes
due under this Lease. Acts of maintenance or preservation or efforts to relet
the Premises or the appointment of a receiver upon initiative of Landlord to
protect Landlord’s interest under this Lease shall not constitute a termination
of Tenant’s right to possession.

(f) If this Lease is terminated upon the occurrence of an Event of Default, any
and all property owned by or in the custody of Tenant may be removed from the
Premises by Landlord and stored at the direction of Landlord at the risk, cost
and expense of Tenant, and Landlord shall in no event be responsible for the
value or preservation thereof. Tenant shall pay to Landlord, upon demand, any
and all expenses incurred in such removal and all storage charges against such
property. Any such property of Tenant not retaken by Tenant from storage within
thirty (30) days after removal shall, at Landlord’s option, be deemed conveyed
by Tenant to Landlord under this Lease as by a bill of sale without further
payment or credit by Landlord to Tenant.

(g) No re-entry, taking possession of the Premises by Landlord, or termination
of possession shall be considered as an election to terminate this Lease, nor
shall it cause a forfeiture of rent or other charges remaining to be paid during
the balance of the Term hereof unless a written notice of such intent is given
to Tenant or unless the termination hereof is decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Landlord
because of any default by Tenant, Landlord may at any time after such reletting
elect to terminate this Lease for any such default.

 

 

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(h) All agreements and provisions to be performed by Tenant under any of the
terms of this Lease shall be performed at Tenant’s sole cost and expense and
without any abatement of rent. If Tenant shall fail to pay any sum of money,
other than Monthly Base Rent, required to be paid by it hereunder or shall fail
to cure any default and such failure shall continue for ten (10) days after
notice thereof by Landlord, then Landlord may, but shall not be obligated so to
do, and without waiving or releasing Tenant from any obligations, make any such
payment or perform any such act on Tenant’s part. All sums so paid by Landlord
and all costs incurred by Landlord in taking such action shall be deemed
Additional Rent hereunder and shall be paid to Landlord on demand, and Landlord
shall have (in addition to all other rights and remedies of Landlord) the same
rights and remedies in the event of the non-payment thereof by Tenant as in the
case of default by Tenant in the payment of rent.

(i) In the event that during the Term of this Lease, Tenant commits more than
two (2) acts or omissions of default (whether or not such defaults are cured by
Tenant), Landlord may, at its option, 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.

Article 18

LANDLORD’S DEFAULT

Section 18.1. Landlord’s Default. Landlord shall not be in default hereunder
unless Landlord fails to perform the obligations required of Landlord within a
reasonable time, but in no event later than thirty (30) days after notice by
Tenant to Landlord and to the holder of any first mortgage or deed of trust
covering the Premises, whose name and address shall have theretofore been
furnished to Tenant, specifying wherein Landlord has failed to perform such
obligation; provided, however, that if the nature of Landlord’s obligation is
such that more than thirty (30) days are required for performance, then Landlord
shall not be in default if Landlord commences performance within such 30-day
period and thereafter diligently prosecutes the same to completion. In no event
shall Tenant have the right to terminate this Lease as a result of Landlord’s
default, and Tenant’s remedies shall be limited to monetary damages and
equitable relief. Nothing herein contained shall be interpreted to mean that
Tenant is excused from paying rent due hereunder as a result of any default by
Landlord.

Article 19

ATTORNEYS’ FEES

Section 19.1. Attorneys’ Fee. In the event of any litigation or other
proceeding, declaratory or otherwise, arising out of this Lease, including an
action to collect or enforce a judgment or order entered in any such litigation
or proceeding, the prevailing party will recover its attorneys’ fee from the
nonprevailing party, in an amount which will be fixed by the court. If Landlord
engages counsel to enforce the terms of this Lease (including, but not limited
to, for the purpose of preparing a delinquency notice), Tenant will reimburse
Landlord for all reasonable attorneys’ fees incurred before the subject default
is considered cured. Tenant will also indemnify, defend (with counsel reasonably
acceptable to Landlord), protect and hold harmless Landlord, its employees,
representatives, agents or successors (“Landlord Parties”) from and against all
claims Landlord or any of the other Landlord Parties incurs if Landlord or any
of the other Landlord Parties becomes or is made a party to any claim or action
(a) instituted by Tenant against, or instituted against Tenant by, any person
holding any interest in the Premises by, under or through Tenant; (b) for
foreclosure of any lien for labor or material furnished to or for Tenant or such
other person; or (c) otherwise arising out of or resulting from any act or
omission of Tenant or such other person. As used in this Lease, “attorneys’
fees” means all costs, damages and expenses, including attorneys’, paralegals’,
clerical and consultants’ respective fees and charges actually expended or
incurred in connection therewith, including for appeals.

Article 20

HOLDING OVER

Section 20.1. Holding Over. Tenant shall have no right to remain in the Premises
after the expiration or sooner termination of the Term. If Tenant remains in the
Premises after the expiration or sooner termination of the Term, Tenant shall do
so as a “tenant at sufferance”, and all of the provisions of this Lease shall
apply to such occupancy to the extent applicable, except that the Base Rent
payable by Tenant shall be equal to 150% of the Monthly Rent payable for the
last month of the Term. Tenant shall indemnify Landlord against any and all
claims, losses and liabilities for damages resulting from failure to surrender
possession, including, without limitation, any claims made by any succeeding
tenant.

 

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Article 21

WAIVER

Section 21.1. Waiver. The failure of Landlord or Tenant to exercise its rights
in connection with any breach or violation of any term, covenant or condition
herein contained shall not be deemed to be a waiver of such term, covenant or
condition or any subsequent breach of the same or any other term, covenant or
condition herein contained. The subsequent acceptance of rent hereunder by
Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of
any term, covenant or condition of this Lease other than the failure of Tenant
to pay the particular rent so accepted, regardless of Landlord’s knowledge of
such preceding breach at the time of acceptance of such rent. Deposit or cashing
by Landlord of any check received from Tenant shall not by itself constitute the
exercise of any right by Landlord under this Lease, nor waiver of any of
Landlord’s rights under this Lease.

Article 22

EMINENT DOMAIN

Section 22.1. Taking of Premises. If all or any part of the Premises is taken by
any public or quasi public authority as a result of the exercise of the power of
eminent domain, this Lease shall terminate as to the part so taken as of the
date of taking, and, in the case of a partial taking, either Landlord or Tenant
shall have the right to terminate this Lease as to the balance of the Premises
by written notice to the other within thirty (30) days after the date of such
taking, provided, however, that a condition to the exercise by Tenant of such
right to terminate shall be that the portion of the Premises taken shall, in
Landlord’s judgment, be of such extent and nature as substantially to handicap,
impede and impair Tenant’s use of the balance of the Premises. If a material
part of the Building or Project is condemned or taken or if substantial
alteration or reconstruction of the Building or Project shall, in Landlord’s
opinion, be necessary or desirable as a result of a partial condemnation or
taking, Landlord may terminate this Lease by written notice to Tenant within
thirty (30) days after the date of taking.

Section 22.2. Condemnation Award. Landlord shall be entitled to any and all
compensation, damages, income, rent, awards, and any interest therein whatsoever
which may be paid or made in connection with any taking, and Tenant shall have
no claim against Landlord for the value of any unexpired term of this Lease or
otherwise. In the event of a partial taking of the Premises which does not
result in a termination of this Lease, the Monthly Base Rent thereafter to be
paid shall be equitably reduced.

Section 22.3. Temporary Taking. If all of the Premises shall be temporarily
condemned or taken for governmental occupancy for a period of less than one
(1) year, this Lease shall remain in full force and effect and Tenant shall be
entitled to any and all compensation, damages, income, rent and awards in
connection therewith.

Article 23

SUBORDINATION

Section 23.1. Subordination of this Lease and Attornment.

(a) This Lease is subject and subordinate to all Mortgages and any Superior
Lease; provided that Landlord represents and warrants to Tenant that as of the
date of mutual execution and delivery of this Lease there are no Mortgages or
Superior Leases. “Mortgage(s)” means any mortgage, trust indenture or other
financing document which may now or hereafter affect the Building, or Landlord’s
interest or estate therein, or any Superior Lease, and all renewals, extensions,
supplements, amendments, modifications, consolidations and replacements thereof
or thereto, substitutions therefor, and advances made thereunder; “Superior
Lease” means any ground lease or underlying lease currently existing or which
may hereafter be executed affecting the Building and the leasehold interest
created thereby, and all renewals, extensions, supplements, amendments or
modifications thereof or thereto; “Mortgagee(s)” means any mortgagee, trustee or
other holder of a Mortgage and “Lessor(s)” means any lessor under any Superior
Lease.

(b) If a Mortgagee, Lessor or any other person or entity shall succeed to the
rights of Landlord under this Lease, whether through possession or foreclosure
action or the delivery of a deed or new Mortgage, then at the request of the
successor landlord and upon such successor landlord’s written agreement to
accept Tenant’s attornment and to recognize Tenant’s interest under this Lease,
Tenant shall be deemed to have attorned to and recognized such successor
landlord as Landlord under this Lease. The provisions of this Section 23.1 are
self-operative and require no further instruments to give effect hereto;
provided, however, that Tenant shall promptly execute and deliver any instrument
that such successor landlord may reasonably request evidencing such attornment
and containing such other terms and conditions as may be required by such
Mortgagee or Lessor, provided such terms and conditions do not increase the rent
payable under this Lease, increase Tenant’s obligations under this Lease in any
material respect or adversely affect Tenant’s rights under this Lease in any
material respect. Upon such attornment this Lease shall continue in full force
and effect as a direct lease between such successor landlord and Tenant upon all
of the terms, conditions and covenants set forth in this Lease except that such
successor landlord shall not be:

 

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(i) liable for any act or omission of Landlord (except to the extent such act or
omission is non-monetary and continues beyond the date when such successor
landlord succeeds to Landlord’s interest and Tenant gives notice of such act or
omission);

(ii) subject to any defense, claim, counterclaim, set-off or offsets which
Tenant may have against Landlord;

(iii) bound by any prepayment of more than one (1) month’s rent to any prior
landlord;

(iv) bound by any obligation to make any payment to Tenant which was required to
be made prior to the time such successor landlord succeeded to Landlord’s
interest;

(v) bound by any obligation to perform any work or to make improvements to the
Premises except for repairs and maintenance required to be made by Landlord
under this Lease, and repairs to the Premises as a result of damage by fire or
other casualty or a partial condemnation pursuant to the provisions of this
Lease, but only to the extent that such repairs can reasonably be made from the
net proceeds of any insurance or condemnation awards, respectively, actually
made available to such successor landlord;

(vi) bound by any modification, amendment or renewal of this Lease made without
such lender or successor landlord’s consent;

(vii) liable for the repayment of any security deposit or surrender of any
letter of credit, unless and until such security deposit actually is paid or
such letter of credit is actually delivered to such successor landlord; or

(viii) liable for the payment of any unfunded tenant improvement allowance,
refurbishment allowance or similar obligation.

(c) Tenant shall from time to time within twenty (20) days of request from
Landlord execute and deliver any documents or instruments that may be reasonably
required by any Mortgagee or Lessor to confirm any subordination, including,
without limitation, a subordination and nondisturbance agreement in the form
attached hereto as Exhibit “F”.

Section 23.2. Subordination of Mortgage. Notwithstanding anything to the
contrary set forth above, any Mortgagee may at any time subordinate its Mortgage
to this Lease in whole or in part, without any need to obtain Tenant’s consent,
by execution of a written document subordinating such Mortgage to this Lease to
the extent set forth in such document and thereupon this Lease shall be deemed
prior to such Mortgage to the extent set forth in such document without regard
to their respective dates of execution, delivery and/or recording. In that
event, to the extent set forth in such document, such Mortgage shall have the
same rights with respect to this Lease as would have existed if this Lease had
been executed, and a memorandum thereof, recorded prior to the execution,
delivery and recording of the Mortgage.

Article 24

NO MERGER

Section 24.1. No Merger. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at
the option of Landlord, terminate any or all existing subleases or subtenancies,
or operate as an assignment to Landlord of any or all of such subleases or
subtenancies.

Article 25

SURRENDER OF PREMISES

Section 25.1. Surrender of Premises. At the end of the Term or upon sooner
termination of this Lease, Tenant shall peaceably deliver up to Landlord
possession of the Premises, together with all improvements, alterations, or
additions upon or belonging to the same, by whomsoever made, in the same
condition as received, or first installed, reasonable wear and tear excepted.
Notwithstanding the foregoing, Tenant may, and, at the request of Landlord
shall, upon the termination of this Lease, remove all movable partitions of less
than full height from floor to ceiling, and all counters and other trade
fixtures installed by Tenant, and Tenant shall repair any damage caused by such
removal. Tenant shall, upon the termination of this Lease, remove from the
Premises all Hazardous Materials and all telecommunications, computer or data
cabling installed by or for Tenant, and shall repair any damage

 

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caused by such removal. Upon request by Landlord, Tenant, at its cost, shall
remove any or all permanent improvements or additions to the Premises installed
by Tenant and repair any damage resulting from such removal. Any personal
property not removed from the Premises at the end of the Term shall be deemed
abandoned by Tenant and title to the same shall thereupon pass to Landlord.
Notwithstanding anything to the contrary herein but subject to Tenant’s
obligation to deliver the Premises to Landlord in good condition, reasonable
wear and tear excepted, Tenant shall have no obligation to remove or restore any
of its initial Improvements.

Article 26

ESTOPPEL CERTIFICATE

Section 26.1. Estoppel Certificate. At any time and from time to time, but in
any event within ten (10) business days following written request by Landlord,
Tenant shall execute, acknowledge and deliver to Landlord a certificate
certifying: (a) that the copy of the lease attached to the certificate is a true
and complete copy of the Lease and all amendments thereto, (b) that Tenant has
accepted the Premises (or, if Tenant has not done so, that Tenant has not
accepted the Premises, and specifying the reasons therefor); (c) the
commencement and expiration dates of this Lease; (d) whether there are then
existing any defaults by Landlord in the performance of its obligations under
this Lease (and, if so, specifying the same); (e) that this Lease is unmodified
and in full force and effect (or, if there have been modifications, that this
Lease is in full force and effect, as modified, and stating the date and nature
of each modification); (f) the capacity of the person executing such
certificate, and that such person is duly authorized to execute the same on
behalf of Tenant; (g) the date, if any, to which rent and other sums payable
hereunder have been paid and whether (and if so, how much) Tenant has prepaid
any rent; (h) that no notice has been received by Tenant of any default which
has not been cured, except as to defaults specified in the certificate; (i) the
amount of any security deposit and prepaid rent; and (j) such other matters as
may be reasonably requested by Landlord. Any such certificate may be relied upon
by any prospective purchaser, mortgagee or beneficiary under any deed of trust
affecting the Building or any part thereof. In the event Tenant fails to deliver
such estoppel certificate within ten (10) Business Days following Landlord’s
request therefor, Landlord shall deliver a notice (the “Estoppel Certificate
Notice”) to Tenant demanding the return of such estoppel certificate, which
Estoppel Certificate Notice must include the following legend in capitalized and
bold type displayed prominently on the top of the first page of such notice:
“TENANT HAS FAILED TO DELIVER AN ESTOPPEL CERTIFICATE AS REQUIRED PURSUANT TO
THE PROVISIONS OF THE LEASE DATED FEBRUARY 11, 2015 BETWEEN LANDLORD AND TENANT
(THE “LEASE”). FAILURE OF TENANT TO DELIVER SUCH ESTOPPEL CERTIFICATE WITHIN
FIVE (5) BUSINESS DAYS FOLLOWING THIS NOTICE MAY CONSTITUTE AN EVENT OF DEFAULT
BY TENANT UNDER THE LEASE WITHOUT FURTHER NOTICE.” Tenant’s failure to deliver
said estoppel certificate within five (5) business days after delivery of the
Estoppel Certificate Notice by Landlord 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.

Article 27

NO LIGHT, AIR OR VIEW EASEMENT

Section 27.1. No Light, Air or View Easement. Any diminution or shutting off of
light, air or view by any structure which is now or may hereafter be erected on
lands adjacent to the Building shall in no way affect this Lease or impose any
liability on Landlord. Noise, dust or vibration or other incidents to new
construction of improvements on lands adjacent to the Building, whether or not
owned by Landlord, shall in no way affect this Lease or impose any liability on
Landlord.

Article 28

NOTICES

Section 28.1. Notices. All notices and demands which may or are required to be
given by either party to the other hereunder shall be in writing and shall be
(a) deposited in the United States mail, certified or registered, postage
prepaid, or (b) delivered to a reputable and reliable courier or (c) delivered
in person, in any event, addressed as follows: prior to the date on which Tenant
accepts possession of the Premises, at Tenant’s address prior to occupancy set
out in the Basic Lease Information, and thereafter to Tenant at the Premises or
at the address for Tenant set out in the Basic Lease Information, or to such
other place as Tenant may from time to time designate in a notice to Landlord;
and to Landlord at the address specified in the Basic Lease Information, or to
such other place as Landlord may from time to time designate in a notice to
Tenant. All notices sent in accordance with the foregoing shall be deemed to
have been given on the date of delivery or the intended recipient’s refusal to
accept delivery. Tenant hereby appoints as its agent to receive the service of
all dispossessory or distraint proceedings and notices thereunder the person in
charge of or occupying the Premises at the time, and if no person shall be in
charge of or occupying the same, then such service may be made by attaching the
same to the main entrance of the Premises.

 

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Article 29

RELOCATION OF PREMISES; SUBDIVISION AND EASEMENTS;

LANDLORD’S RESERVED RIGHTS IN COMMON AREAS

Section 29.1. Intentionally deleted.

Section 29.2. Subdivision and Easements. Landlord reserves the right to:
(a) subdivide the Project or the Property and transfer any portion thereof (and,
upon such transfer, the portion transferred shall be removed from the definition
of Project and/or Property, as applicable); (b) alter the boundaries of the
Project or the Property; and (c) grant easements on the Project or Property 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 or
parking rights. 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, to execute, acknowledge and deliver to Landlord, in
accordance with Landlord’s instructions, any and all commercially reasonable
documents, instruments, maps or plats necessary to effectuate Tenant’s consent
thereto.

Section 29.3. 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 so long as Tenant’s parking ratio is not affected; (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 provided, however,
that in exercising such rights, Landlord shall not materially and adversely
affect Tenant’s use and enjoyment of the Premises or Tenant’s parking rights and
shall maintain reasonable access to the Building during normal business hours.

Article 30

SALE BY LANDLORD; SUCCESSORS

Section 30.1. Sale by Landlord. A sale or conveyance by Landlord of the Building
shall operate to release Landlord from any liability upon any of the agreements,
obligations, covenants or conditions, express or implied, contained in this
Lease in favor of Tenant and accruing after the date of the sale or conveyance.
This Lease shall not be affected by any such sale, however, and Tenant agrees to
attorn to the purchaser or assignee, such attornment to be effective and
self-operative without the execution of any further instruments by any of the
parties to this Lease provided the provisions of this sentence shall not apply
to conveyances which are subject to the provisions of Article 23 of this Lease.

Section 30.2. Successors. All the terms, covenants, and conditions hereof shall
be binding upon and inure to the benefit of the heirs, executors,
administrators, successors, and assigns of the parties hereto, provided that
nothing in this Section 30.2 shall be deemed to permit any assignment,
subletting, occupancy or use by Tenant contrary to the provision of Article 12.

Article 31

HEALTH EMERGENCIES

Section 31.1. Health Emergencies. If a Health Emergency exists, Landlord may
amend, supplement or otherwise enforce any existing Health Emergency rules or
regulations in existence, may impose additional rules and regulations, and may
impose restrictions to mitigate or minimize the effects of the Health Emergency.
Without limiting the generality of the foregoing:

(i) During a Health Emergency, Landlord shall be entitled to restrict or limit
access to the Building to employees of Tenant only, and/or to prohibit entry by
visitors or invitees for a reasonable period of time during such event;

 

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(ii) Landlord shall have the right during a Health Emergency to require Tenant
to decontaminate all or any part of the Premises, failing which Landlord shall
be entitled to enter the Premises and do so at Tenant’s expense. Any steps that
Landlord may choose to take are in its sole and unfettered discretion and
nothing herein shall obligate Landlord to effect any such decontamination; and

(iii) Landlord shall be entitled during a Health Emergency to close all or any
part of the Building if it determines that it is not safe to continue to operate
the Building or certain parts of the Building.

Article 32

ENVIRONMENTAL PERFORMANCE OBJECTIVE

Section 32.1. Environmental Performance Objectives. The parties agree it is in
their mutual best interest that the Building and Premises be operated and
maintained in a manner that is environmentally responsible, fiscally prudent,
and provides a safe and productive work environment (collectively, the
“Environmental Performance Objective”), provided that it is not the intent of
the parties that such operation and maintenance shall increase Tenant’s costs
hereunder.

Article 33

PARKING

Section 33.1. Parking. Tenant shall have the right to park 3.5 automobiles in
the Building’s parking area for every 1,000 square feet of rentable area in the
Premises (the “Parking Facility”), at no charge. All parking rights provided to
Tenant hereunder 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 the Basic Lease Information 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 and persons authorized by Tenant to use Tenant’s parking
privilege (“Authorized Users”) shall comply with all rules and regulations for
the Parking Facility promulgated by Landlord from time to time. Landlord may
refuse to permit any person who violates the rules and regulations to park in
the Building, and any violation of the rules or regulations shall subject any
vehicle driven by or under the control of such person to removal by Landlord at
the sole cost, expense and risk of such person. In addition, Tenant shall comply
with any car-pooling or other traffic reduction policies adopted by Landlord at
the behest or requirement of any governmental authority, which may include
preferential parking for car-pool participants. All responsibility for damage to
cars is assumed by Authorized Users.

Article 34

MISCELLANEOUS

Section 34.1. Captions. The captions and headings of the Articles and Sections
in this Lease are for convenience only and shall not in any way limit or be
deemed to construe or interpret the terms and provisions hereof.

Section 34.2. Time of Essence. Time is of the essence of this Lease and of all
provisions hereof, except with respect to the delivery of possession of the
Premises at the commencement of the term hereof.

Section 34.3. Number and Gender. The words “Landlord” and “Tenant,” as used
herein, shall include the plural as well as the singular. Words used in the
masculine gender include the feminine and neuter. The use of the terms “hereof,”
“hereunder” and “herein” shall refer to this Lease as a whole, inclusive of the
exhibits and any riders, except when noted otherwise.

Section 34.4. Joint and Several Liability. If there is more than one Landlord or
Tenant, the obligations hereunder imposed upon Landlord and Tenant shall be
joint and several.

Section 34.5. Governing Law. This Lease shall be construed and enforced in
accordance with the laws of the State of Washington.

Section 34.6. Waiver of Trial by Jury. With respect to any litigation arising
out of this Lease, Landlord and Tenant hereby expressly waive the right to a
trial by jury. Tenant hereby waives the right to file any countersuit or
crossclaim against Landlord in any suit pursuant to which Landlord seeks to
recover possession of the Premises.

Section 34.7. Relationship of Parties. It is the intention of the parties to
create only the relationship of landlord and tenant, and no provision hereof, or
act of either party hereunder, shall ever be construed as creating the
relationship of principal and agent, partnership, joint venture or enterprise.

 

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Section 34.8. Financial Statements. Upon request by Landlord and so long as the
same are not available to Landlord online, Tenant shall deliver to Landlord
copies of Tenant’s most recent quarterly and annual financial statements,
including balance sheets, income statements, statement of cash flow, and
statements of net worth. Landlord may disclose the information (and may deliver
copies of the financial statements) to Landlord’s current and prospective
lenders and prospective purchaser(s).

Section 34.9. Objection to Statements. Tenant’s failure to object to any
statement, invoice or billing rendered by Landlord within a period of six (6)
months after receipt thereof shall be deemed to constitute Tenant’s acquiescence
with respect thereto and shall conclusively render such statement, invoice or
billing an account stated between Landlord and Tenant.

Section 34.10. Intentionally Deleted.

Section 34.11. Force Majeure. Each party hereto shall be excused from performing
any obligation or undertaking provided in this Lease, in the event and/or so
long as, the performance of any such obligation is prevented or delayed,
retarded or hindered by act of God, fire, earthquake, flood, explosion, action
of the elements, war, terrorism, invasion, insurrection, mob violence, sabotage,
inability to procure or general shortage of labor, equipment, facilities,
materials or supplies in the open market, failure of transportation, strike,
lockout, action of labor unions, condemnation, requisition, law, order of
government or civil or military or naval authorities, or any other cause whether
similar or dissimilar to the foregoing not within the reasonable control of such
party. Notwithstanding the foregoing, the lack of funds required to perform an
act or to pay for the material, workmen or other items required for such action
shall never be an excuse for non-payment.

Section 34.12. Mechanic’s Liens. Tenant shall keep the Premises, the Building,
the Project and the real property upon which the Premises, the Building and the
Project are situated free from any liens arising out of any work performed,
materials furnished or obligations incurred by Tenant. If such a lien is filed,
then Tenant shall, within ten (10) days after becoming aware of the filing of
same, either (1) pay the amount of the lien and cause the lien to be released of
record, or (2) diligently contest such lien and deliver to Landlord a bond or
other security reasonably satisfactory to Landlord. If Tenant fails to timely
take either such action, then Landlord may, but shall not be obligated to, pay
the claim giving rise to such lien, and any amounts so paid, including expenses
and interest, shall be paid by Tenant to Landlord within ten (10) days after
Landlord has invoiced Tenant therefor. Tenant shall defend, indemnify and hold
harmless Landlord and its agents and representatives from and against all
claims, demands, causes of action, suits, judgments, damages and expenses
(including attorneys’ fees) in any way arising from or relating to the failure
by Tenant or any of Tenant’s contractors to pay for any work performed,
materials furnished, or obligations incurred by or at the direction of Tenant.
This indemnity provision shall survive termination or expiration of this Lease.
Landlord shall have the right at all times to post and keep posted on the
Premises any notices permitted or required by law, or which Landlord shall deem
proper, for the protection of Landlord and the Premises, and any other party
having an interest therein, from mechanics’ and materialmen’s liens, and Tenant
shall give to Landlord at least five (5) business days prior written notice of
the expected date of commencement of any work in the Premises that could give
rise to a claim of lien. Upon completion of any such work, Tenant shall deliver
to Landlord final unconditional lien waivers from all contractors,
subcontractors and materialmen who performed such work.

Section 34.13. Patriot Act Compliance.

(a) Tenant represents and warrants to, and covenants with Landlord that neither
Tenant nor any of its respective affiliates currently are, or shall be at any
time during the Term hereof, in violation of any laws relating to terrorism or
money laundering (collectively, the “Anti-Terrorism Laws”), including without
limitation, Executive Order No. 13224 on Terrorist Financing, effective
September 24, 2001, and relating to Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(the “Executive Order”) and/or the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (Public Law 107-56) (the “USA Patriot Act”).

(b) Tenant covenants with Landlord that neither Tenant nor any of its respective
constituent affiliates is or shall be during the Term hereof a “Prohibited
Person,” which is defined as follows; (i) a person or entity that is listed in
the Annex to, or is otherwise subject to, the provisions of the Executive Order;
(ii) a person or entity owned or controlled by, or acting for or on behalf of,
any person or entity that is listed in the Annex to, or is otherwise subject to
the provisions of, the Executive Order; (iii) a person or entity with whom
Landlord is prohibited from dealing with or otherwise engaging in any
transaction by any Anti-Terrorism Law, including without limitation the
Executive Order and the USA Patriot Act; (iv) a person or entity who commits,
threatens or conspires to commit or support “terrorism” as defined in Section
3(d) of the Executive Order; (v) a person or entity that is named as a
“specially designated national and blocked person” on the then-most current list
published by the U.S. Treasury Department Office of Foreign Assets Control at
its official website, http://www.treas.gov/officeskotffc/ofac/hdn/tIlsdn.pdf, or
at any replacement website or other replacement official publication of such
list; and (vi) a person or entity who is affiliated with a person or entity
listed in items (i) through (v), above.

 

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(c) At any time and from time-to-time during the Term, Tenant shall deliver to
Landlord, within ten (10) days after receipt of a written request therefor, a
written certification or such other evidence reasonably acceptable to Landlord
evidencing and confirming Tenant’s compliance with this Section 34.13.

Section 34.14. 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.

Section 34.15. 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.

Section 34.16. Independent Services. This Lease is entirely separate and
distinct form 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.

Section 34.17. Mortgage Protection.

(a) Tenant agrees to give any mortgagee(s) and/or trust deed holder(s), by
certified or registered mail, postage prepaid, return receipt requested, a copy
of any notice of any failure by Landlord to fulfill any of its obligations under
this Lease, provided that prior to such notice Tenant has been notified in
writing (by way of notice of assignment of rents and leases, or otherwise) of
the addresses of such mortgagee(s) and/or trust deed holder(s). Tenant further
agrees that such mortgagee(s) and/or trust deed holder(s) shall have such time
as may be necessary to cure such failure as long as any mortgagee(s) and/or
trust deed holder(s) has/have commenced and is/are diligently pursuing the
remedies necessary to cure such failure (including, but not limited to, time to
take possession and/or commence foreclosure proceedings, if necessary, to effect
such cure). Notwithstanding anything herein to the contrary, so long as any
mortgagee(s) and/or trust deed holder(s) has/have commenced and is/are
diligently pursuing the remedies necessary to cure such failure (including, but
not limited to, taking possession and/or commencing foreclosure proceedings, if
necessary, to effect such cure), Tenant shall have no right to terminate this
Lease as a result of any such failure by Landlord.

(b) In the event that any trust or mortgage lender providing financing in
connection with the Building requires, as a condition of such financing, that
modifications to this Lease be obtained, and provided that such modifications
(i) are reasonable; (ii) do not adversely affect Tenant’s use of the Premises as
herein permitted or impose new duties or obligations on Tenant; and (iii) do not
increase the rent and other sums required to be paid by Tenant hereunder, then
Landlord may submit to Tenant a written amendment to this Lease incorporating
such required modifications, and Tenant shall execute and return to Landlord
such written amendment within seven (7) days after the amendment has been
submitted to Tenant.

Section 34.18. Cumulative Remedies. It is understood and agreed that the
remedies herein given to Landlord shall be cumulative and are in addition to any
other remedies available to Landlord at law or in equity, by statute or
otherwise, and the exercise of any one remedy by Landlord shall not be to the
exclusion of any other remedy.

Section 34.19. Entire Agreement. The terms of this Lease are intended by the
parties as a final expression of their agreement with respect to such terms as
are included in this Lease and may not be contradicted by evidence of any prior
or contemporaneous agreement. The parties further intend that this Lease
constitutes the complete and exclusive statement of its terms and that no
extrinsic evidence whatsoever may be introduced in any judicial proceedings, if
any, involving this Lease.

 

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Section 34.20. Construction of Lease. Tenant has read and understands all parts
of this Lease. In the construction and interpretation of the terms of this
Lease, the rule of construction that a document is to be construed most strictly
against the party who prepared the same shall not be applied, it being agreed
that both parties hereto have participated in the preparation of the final form
of this Lease.

Section 34.21. Invalidity. If any provision of this Lease or the application
thereof to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such provision
to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each provision of this Lease
shall be valid and be enforced to the full extent permitted by law.

Section 34.22. Authority. If Tenant signs as a corporation or a partnership,
each of the persons executing this Lease on behalf of Tenant does hereby
covenant and warrant that Tenant is a duly authorized and existing entity, that
Tenant has and is qualified to do business in the State of Washington, that
Tenant has full right and authority to enter into this Lease, and that each and
both of the persons signing on behalf of Tenant are authorized to do so.

Section 34.23. No Offer. No contractual or other rights shall exist between
Landlord and Tenant with respect to the Premises until both have executed and
delivered this Lease, and any Security Deposit has been received by Landlord.
The submission of this Lease to Tenant shall be for examination purposes only,
and does not and shall not constitute a reservation of or an option for Tenant
to lease, or otherwise create any interest by Tenant in the Premises or any
other Premises situated in the Building. Execution of this Lease by Tenant and
return to Landlord shall not be binding upon Landlord, notwithstanding any time
interval, until Landlord has in fact executed and delivered this Lease to
Tenant.

Section 34.24. No Representations or Warranties. Neither Landlord nor Landlord’s
agents or attorneys have made any representations or warranties with respect to
the Premises, the Building or this Lease, except as expressly set forth in this
Lease, and no rights, easements or licenses are or shall be acquired by Tenant
by implication or otherwise.

Section 34.25. No Light, Air or Access Rights. Nothing herein contained shall be
construed to grant to or create in Tenant any easements of light, air or access,
Tenant’s rights being limited to the use and occupancy of the Premises and the
license to use the Common Areas as they may exist from time to time, all subject
to the terms, covenants and conditions of this Lease.

Section 34.26. Brokers. Tenant represents that it has not incurred an obligation
to any broker in connection with this Lease, other than Landlord’s broker and
Tenant’s broker listed in the Basic Lease Information, and Tenant shall hold
Landlord harmless from and against any and all liability, loss, damage, expense,
claim, action, demand, suit or obligation arising out of or relating to a breach
by Tenant of this representation. Landlord will pay the commission due to
Landlord’s broker pursuant to a separate agreement, and any commission due to
Tenant’s broker will be paid by Landlord’s broker pursuant to a separate
agreement between Landlord’s broker and Tenant’s broker.

Section 34.27. Amendments. This Lease may not be altered, changed, or amended
except by an instrument in writing and signed by both parties hereto.

Section 34.28. Exhibits and Addendum. All of the exhibits attached hereto are
incorporated herein by this reference.

 

39

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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease in
quadruplicate on the dates set forth below and this Lease shall be effective as
of the latter of such dates.

 

TENANT: GROSVENOR INTERNATIONAL (AMERICAN FREEHOLDS) LIMITED,

OncoGenex Pharmaceuticals Inc.,

a Delaware corporation

a Nevada corporation By:

/s/ Scott Cormack

By:

/s/ Thomas D. Ohlson

Name: Scott Cormack Name: Thomas D. Ohlson Title: President & CEO Title: Senior
Vice President Date: February 11, 2015 By:

/s/ Steve O’Connell

Name: Steve O’Connell Title: Senior Vice President Date: 2-11-15 BBCAF-VRC, LLC,
a Delaware limited liability company By:

/s/ Richard L. Greene

Name: Richard L. Greene Title: Secretary By:

/s/ Graham Maloney

Name: Graham Maloney Title: Manager Date: 2/11/15

 

40

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STATE OF

Washigton

) ) ss: COUNTY OF

King

)

I certify that I know or have satisfactory evidence that Scott Cormack is the
person who appeared before me, and said person acknowledged that s/he signed the
instrument, on oath stated that s/he was authorized to execute this instrument
and acknowledged it as the President & CEO of OncoGenex Pharmaceuticals, a
Corp., to be the free and voluntary act of such party for the uses and purposes
mentioned in the instrument.

DATED: Feb. 11, 2015.

 

/s/ Shannon D. Law

 

Print Name:

Shannon D. Law

NOTARY PUBLIC in and for the State of

Washington, residing at 

Woodinville

My Appointment expires: 

Nov 22, 2017

 

 

41

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CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT CIVIL CODE § 1189

 

LOGO [g869086ex10_1pg044c.jpg]

A notary public or other officer completing this certificate verifies only the
identity of the Individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity of that document.

 

State of California ) County of

San Francisco

)

 

On 

        February 11, 2015         

before me,

Karen Fernandes, Notary Public

, Date Here Insert Name and Title of the Officer

 

personally appeared  

Tom Ohlson & Steve O’Connell

Name(s) of Signer(s) ,

 

 

who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) are subscribed to the within instrument and acknowledged to me that they
executed the same in their authorized capacity(ies), and that by their
signature(s) on the instrument the person(s), or the entity upon behalf of which
the person(s) acted, executed the instrument.

 

 

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct. WITNESS my hand and official
seal. Signature /s/ Karen Fernandes  

 

Signature of Notary Public

 

 

Place Notary Seal Above

 

OPTIONAL

 

 

 

 

Though this section is optional, completing this information can deter
alteration of the document or fraudulent reattachment of this form to an
unintended document.

 

Description of Attached Document Title or Type of Document:

 

Document Date:

 

Number of Pages:

 

    Signer(s) Other Than Named Above:

 

Capacity(ies) Claimed by Signer(s)

Signer’s Name:

 

¨ Corporate Officer — Title(s):

 

¨ Partner —    ¨ Limited    ¨ General ¨ Individual           ¨ Attorney in Fact
¨ Trustee                ¨ Guardian or Conservator

¨ Other:

 

Signer Is Representing:

 

 

 

Signer’s Name:

 

¨ Corporate Officer — Title(s):

 

¨ Partner —  ¨ Limited    ¨ General ¨ Individual            ¨ Attorney in Fact ¨
Trustee                ¨ Guardian or Conservator

¨ Other:

 

Signer Is Representing:

 

 

 

 

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©2014 National Notary Association — www.NationalNotary.org — 1-800-US NOTARY
(1-800-876-6827)    Item #5907

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A notary public or other officer completing this

certificate verifies only the identity of the

individual who signed the document to which this

certificate is attached, and not the truthfulness,

accuracy, or validity of that document.

STATE OF CALIFORNIA

COUNTY OF San Francisco

On February 11, 2015, before me, Irene Gunn, a Notary Public, personally
appeared Richard L. Greene, who proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

 

/s/ Irene Gunn    

 

Signature of the Notary Public

A notary public or other officer completing this

certificate verifies only the identity of the

individual who signed the document to which this

certificate is attached, and not the truthfulness,

accuracy, or validity of that document.

STATE OF CALIFORNIA

COUNTY OF San Francisco

On February 11, 2015, before me, Irene Gunn, a Notary Public, personally
appeared Graham Maloney, who proved to me on the basis of satisfactory evidence
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

 

/s/ Irene Gunn    

 

Signature of the Notary Public

 

43

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EXHIBIT A-1

LEGAL DESCRIPTION OF BUILDING

LOT 20A OF CITY OF BOTHELL BOUNDARY LINE ADJUSTMENT NO. 0004-98, RECORDED AUGUST
3, 1998 UNDER RECORDING NO. 9808039016, RECORDS OF KING COUNTY, WASHINGTON.

 

A-1

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EXHIBIT A-2

FLOOR PLAN AND PROJECT SITE PLAN

 

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A-2

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A-3

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EXHIBIT B

LEASE CONFIRMATION

This Lease Confirmation is made             , 20    , by                     , a
                     (“Tenant”), who agree as follows:

1. Landlord and Tenant entered into a lease dated             , 20    , in which
Landlord leased to Tenant and Tenant leased from Landlord the premises described
in Section 2.01 of said Lease (“Premises”). All capitalized terms herein are as
defined in the Lease.

2. Pursuant to the Lease, Landlord and Tenant agreed to and do hereby confirm
the following matters as of the Commencement of the Term:

a.             , 20     is the Commencement Date of the Term of the Lease;

b.             , 20     is the expiration date of the Term of the Lease;

3. Tenant confirms that:

a. It has accepted possession of the Premises as provided in the Lease;

b. The improvements required to be furnished by Landlord under the Lease have
been furnished (subject to any corrective work or punch list items of which
Tenant has notified Landlord in accordance with the Lease);

c. The Lease is in full force and effect and has not been modified, altered, or
amended, except as follows:

 

 

 

; and            

d. There are no setoffs or credits against Rent, and no Security Deposit or
prepaid rent has been paid except as provided by the Lease.

4. The provisions of this Lease Confirmation shall inure to the benefit, or
bind, as the case may require, the parties and their respective successors and
assigns, subject to the restrictions on assignment and subleasing contained in
the Lease.

 

Initials Landlord:

 

Tenant:

 

 

B-1

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EXHIBIT C

CONSTRUCTION RULES AND REGULATIONS

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Vendor/Contractor Rules & Regulations

Note: Any references to Schnitzer West or Building Management refer to the
Building Manager or Project Manager.

 

  1. All space plans, final drawings, design/build drawings, and modification
must be signed off by Building Management prior to commencement.

 

  2. Submission of construction permit copy, construction schedule, list of
subcontractors, and certificates of insurance which meet all the requirements of
the contract shall be on file with Building Management prior to commencement of
work.

 

  3. All costs which affect Schnitzer West will be approved by Schnitzer West.

 

  4. Any work which does not conform to industry standard, codes, or negatively
affects the building’s operation will be remedied by the Contractor at his/her
expense.

 

  5. The Contractor will hold the owner harmless from any claims of liens or
damages imposed by contractor’s employees or subcontractors.

 

  6. All subcontractors will be approved by the Building Management prior to
work commencement.

 

  7. No smoking is allowed in the Building.

 

  8. Access to tenant spaces is granted solely for the purpose of construction
activities. Use of any tenant’s equipment is strictly prohibited.

 

  9. All contractors and their employees will conduct themselves in a
presentable business-like manner while on site.

 

  10. Any direction given by Schnitzer West or Security Personnel will be
strictly adhered to.

 

  11. All materials which contain Hazardous Substances being used or brought
into the Building shall adhere to WISHA guidelines and shall have the
appropriate paperwork filed at the Building Management Office, posted at the
jobsite and a copy kept with the material.

 

  12. Any odor causing or noisy activities which affect tenants (i.e., core
drilling, use of powder actuated tools, spray painting, etc.) are expressly
prohibited during building hours (7:00 AM - 6:00 PM). After hours work must be
scheduled with Building Management in advance.

 

  13. The condition of all common areas must be maintained to the highest
standards at all times during construction. No materials or tools are to be
stored in the common area. Protection and clean up of existing finishes in
common and freight elevator areas will be done to the satisfaction of Building
Management. Contractor to provide adequate protection. Methods and times of
protection must be reviewed with Building Management.

 

  14. Any damage caused to the building and its systems by the contractor will
be repaired by the contractor immediately. Owner reserves the right to remedy
the defects at the Contractor’s expense if the work is not corrected in a timely
manner.

 

  15. Restroom use by trades people is restricted to the floor being improved.

 

  16. All closets (janitorial, electrical, and telephone) affected by the
improved space should be free from construction debris during construction.
Clean up of construction materials will be restricted to the janitor’s closets.
No paints, thinners, or hazardous materials will be poured down the drain.

 

  17. All work on building life safety systems (smoke detectors, fire pull
stations, fire doors) must be identified and discussed with the Chief Engineer
prior to all construction work and will be monitored by the building Engineers
and Security.

 

  18. Any work that may activate any smoke detector(s) shall require previous
notification to Building Management.

 

C-1

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  19. All stairwell doors will remain locked at all times. Do not prop stairwell
doors open at anytime.

 

  20. Building standard window covering will be protected from damage doing
construction. Remove window covering is applicable prior to construction and
reinstall upon completion.

 

  21. Mechanical, plumbing, sprinkler, and electrical as-built drawings must be
forwarded in one sepia and one blue line to the Building Office within 30 days
of completion. Final payment is dependent on this requirement.

 

  22. Provide complete HVAC start-up air balancing and commissioning services
after tenant move-in. Balance report to be provided with closeout documentation.

 

  23. Any work which presents a fire hazard (i.e. sweating copper, welding,
etc.) will require a suitable fire extinguisher to be kept in the immediate
vicinity. Also prior notification to the Building Management must be given
before performing any work.

 

  24. All construction areas are to be left In broom-clean condition,
straightened and secure at the end of every working shift.

 

  25. No radios permitted.

 

  26. No sexually explicit, political or religious magazines, calendars, posters
or materials shall be permitted on or in any job box.

 

  27. Shirts, pants, eyewear gloves, hardhat and shoes must be worn at all
times, as applicable.

 

  28. Final cleanup to include the complete cleaning of bathroom areas, interior
glazing, inside surface of exterior glazing, strip and resealing of VCT and
sheet vinyl, and all other floor coverings.

 

  29. The successful general contractor will be responsible for coordination
between mechanical, electrical, fire alarm, fire protection, security systems
and phone/data cabling contractors. The general contractor is to assure
mechanical, electrical, fire protection, security, and fire alarm systems will
be compatible for space and dimensional relationships and be sure that various
systems have interconnection when necessary or required by code.

 

  30. Contractors will be responsible to verify quantity and quality of existing
doors and hardware. Any requirements beyond what exists are to be included in
the bid proposal.

 

  31. Contractors to include only items of equipment and materials that can be
delivered and installed with the completion schedule as identified.

 

  32. Copies of mechanical, electrical and casework shop drawings are to be
submitted to the architect by no later than one (1) week after award of the
project. However, review of these submittals by the architect is not a condition
for completion of the work.

 

  33. Walls of IDF closets are to be lined with plywood for equipment and phone
backboards.

 

  34. Contractor shall use best efforts to prevent unnecessary power usage to
turn out all lights in work area at the end of each day.

 

  35. Contractor shall provide code acceptable seismic upgrade work to all
existing ceiling grid, lights, and HVAC equipment and ducting.

 

  36. Punch list to be completed within 7 days of substantial completion.

 

  37. Contractor must submit final (original) building permit to Schnitzer West
prior to occupancy and receipt of final payment.

AGREED AND ACCEPTED:

 

Signed:

 

Date:

 

Vendor/Contractor Acceptance Signature

Printed:

     

Title:

 

Print Name

Vendor/Contractor Name:

 

 

C-2

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EXHIBIT C-1

DESIGNATED CONTACTORS LIST

 

a) Electrical: SME Inc. of Seattle

Don Faulkner

O: 425-483-3603; C: 206-391-6855

 

b) Mechanical: Bellevue Mechanical

Larry Boyer

O: (425)453-2140

 

c) Plumbing: All Phase Plumbing

John Hart

O: (425) 417-6669

 

d) Fire Protection: Patriot Fire Protection, Inc.

 

e) General Contractor: BNBuilders

 

f) Electrical: Diamond Communications; Warner Telecom Group; and/or Webb
Electric

 

C-1-1

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EXHIBIT D

BASE BUILDING IMPROVEMENTS

For purposes of Article 14 of the Lease, the “Base Building Improvements” shall
be limited to the following:

1. Structural shell of the Building consisting of the foundations, slab floors,
columns, and the roof existing as of the date of the Lease.

2. Shell interiors in an unfinished condition. (Drywall areas, wall furring and
insulation and/or ceiling insulation as required by mechanical calculations.)

3. That portion of the fire sprinkler and smoke evacuation systems, if any,
existing on the date of the Lease consisting of the main supply line.
(Installation of sprinkler heads, sprinkler branch lines, drops, valves and
mains, as well as any safety, access controls, and security systems including,
without limitation, fire alarms, strobes, and exit lights are Tenant’s
responsibility.)

4. Bearing walls and roof structural framing existing on the date of the Lease.
(Any mezzanine structural framing is part of Tenant’s responsibility.)

5. Electrical service for lighting and power suitable for ordinary office use.
(All routing, electrical distribution, and any upgrades are Tenant’s
responsibility.)

6. Exiting for the Building shell as existing on the date of the Lease.

 

D-1

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EXHIBIT E

BUILDING RULES AND REGULATIONS

 

1. Sign. No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed, printed or affixed on or to any part of the outside or
inside of the Building, the Premises or the surrounding area without the written
consent of the Landlord being first obtained. If such consent is given by
Landlord, Landlord may regulate the manner of display of the sign, placard,
picture, advertisement, name or notice. Landlord shall have the right to remove
any sign, placard, picture, advertisement, name or notice which has not been
approved by Landlord or is being displayed in a non approved manner without
notice to and at the expense of the Tenant. Tenant shall not place anything or
allow anything to be placed near the glass of any window, door, partition or
wall which may appear unsightly from outside of the Premises.

 

2. Directory. The bulletin board or directory of the Building will be provided
exclusively for the display of the name and location of tenants and Landlord
reserves the right to exclude any other names therefrom.

 

3. Access. The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by any of the tenants or used by them for any
purpose other than for ingress to and egress from their respective Premises. The
halls, passages, entrances, exits, elevators, stairways, balconies and roof are
not for the use of the general public and the Landlord shall in all cases retain
the right to control thereof and prevent access thereto by all persons whose
presence in the judgment of the Landlord shall be prejudicial to the safety,
character, reputation and interests of the Building or its tenants; provided,
however, that nothing herein contained shall be construed to prevent access by
persons with whom the Tenant normally deals in the ordinary course of Tenant’s
business unless such persons are engaged in illegal activities, No Tenant and no
employees or invitees of any Tenant shall go upon the roof of the Building.

 

4. Locks. Tenant shall not alter any lock or install any new additional locks or
any bolts on any door of the Premises without the written consent of Landlord.

 

5. Restrooms. The toilet rooms, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were constructed and
no foreign substance of any kind whatsoever shall be thrown therein. The expense
of any breakage, stoppage or damage resulting from a violation of this rule
shall be borne by the Tenant who, or whose employees, sublessees, assignees,
agents, licensees, or invitees shall have caused it.

 

6. No Defacing Premises. Tenant shall not overload the floor of the Premises,
shall not mark on or drive nails, screw or drill into the partitions, woodwork
or plaster (except as may be incidental to the hanging of wall decorations), and
shall not in any way deface the Premises or any part thereof.

 

7. Safes and Heavy Equipment. No furniture, freight or equipment of any kind
shall be brought into the Building without the consent of Landlord and all
moving of the same into or out of the Building shall be done at such time and in
such manner as Landlord shall designate. Landlord shall have the right to
prescribe the times and manner of moving all heavy equipment in and out of the
Building. Landlord will not be responsible for loss of or damage to any such
safe or property from any cause and all damage done to the Building by moving or
maintaining any such safe or other property shall be repaired at the expense of
Tenant. There shall not be used in any Premises or in the public halls of the
Building, either by any tenant or others, any hand trucks except those equipped
with rubber tires and side guards. Elevators must be padded while moving freight
via the elevators. All such heavy equipment shall be subject to the requirements
of Rule 25 below.

 

8. Nuisance. Tenant shall not use, keep or permit to be used or kept any food or
noxious gas or substance in the Premises, or permit or suffer the Premises to be
occupied or used in a manner offensive or objectionable to the Landlord or other
occupants of the Building by reason of excessive noise, odors and/or vibrations,
or unreasonably interfere in any way with other tenants or those having business
in the Building. No animals or birds shall be brought in or kept in or about the
Premises or the Building. No Tenant shall make or permit to be made any
unreasonably disturbing noises or unreasonably disturb or interfere with
occupants of this or neighboring Buildings or Premises, or with those having
business with such occupants by the use of any musical instrument, radio,
phonograph, unusual noise, or in any other way. No Tenant shall throw anything
out of doors or down the passageways.

 

E-1

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9. Permitted Use. The Premises shall not be used for manufacturing or for the
storage of merchandise except as such storage may be incidental to the use of
the Premises for general office purposes. No Tenant shall occupy or permit any
portion of its Premises to be occupied for the manufacture or sale of liquor,
narcotics, or tobacco in any form, or as a medical office, or as a barber shop
or manicure shop except with prior written consent of Landlord. No Tenant shall
advertise for laborers giving an address at the Premises. The Premises shall not
be used for lodging or sleeping or for illegal purposes.

 

10. Hazardous Substances. Tenant shall not use or keep in the Premises or the
Building any kerosene, gasoline or inflammable or combustible fluid or material
or any Hazardous Materials as defined in Section 10.02 of the Lease or use any
method of heating or air conditioning other than that supplied by Landlord.

 

11. Telephones. Landlord will direct electricians as to where and how telephone
and telegraph wires are to be introduced. No boring or cutting for or stringing
of wires will be allowed without the consent of Landlord. The location of
telephones, call boxes and other office equipment affixed to the Premises shall
be subject to the approval of Landlord.

 

12. Keys. All keys to the Building, Premises, rooms and toilet rooms shall be
obtained from Landlord’s office and Tenant shall not from any other source
duplicate or obtain keys or have keys made. The Tenant, upon termination of the
tenancy, shall deliver to the Landlord the keys to the Building, Premises, rooms
and toilet rooms which shall have been furnished and shall pay the Landlord the
cost of replacing any lost key or of changing the lock or locks opened by such
lost key if Landlord deems it necessary to make such change.

 

13. Floor Covering. No Tenant shall lay linoleum, tile, carpet or other similar
floor coverings so that the same shall be affixed to the floor or the Premises
in any manner except as approved by the Landlord. The expense of repairing any
damage resulting from a violation of this rule or removal of any floor covering
shall be borne by the Tenant by whom, or by whose contractors, agents,
sublessees, licensees, employees or invitees, the floor covering shall have been
laid. It will be assumed that any floor covering within the space on the
Delivery Date is approved by Landlord.

 

14. Building Closure. During all hours on Saturdays, Sundays, legal holidays and
such other times as reasonably determined by Landlord from time to time, access
to the Building or to the halls, corridors, or stairways in the Building, or to
the Premises may be refused unless the person seeking access is known to any
person or employee of the Building in charge and has a pass or is properly
identified. The Landlord shall in no case be liable for damages for any error
with regard to the admission to or exclusion from the Building of any person. In
case of invasion, mob, riot, public excitement, or other commotion, the Landlord
reserves the right to prevent access to the Building during the continuance of
the same, by closing the doors or otherwise, for the safety of the tenants and
protection of the Building and property located therein. Anything to the
foregoing notwithstanding. Landlord shall have no duty to provide security
protection for the Building at any time or to monitor access thereto.

 

15. Premises Closure. Tenant shall see that the doors of the Premises are closed
and securely locked before leaving the Building and that all water faucets,
water apparatus and electricity are entirely shut off before Tenant or Tenant’s
employees leave the Building. Tenant shall be responsible for any damage to the
Building or other tenants caused by a failure to comply with this rule. Tenant
shall at all times keep the perimeter doors and windows to the Premises closed.

 

16. Disorderly Conduct. Landlord reserves the right to exclude or expel from the
Building any person who, in the judgment of Landlord, is intoxicated or under
the influence of liquor or drugs, or who shall in any manner do any act in
violation of any of the rules and regulations of the Building.

 

17. Tenant Requests. Any requests of Tenant will be considered only upon
application at the office of the Landlord. Employees of Landlord shall not be
requested to perform any work or do anything outside of their regular duties
unless under special instructions from the Landlord.

 

18. Vending Machines. No vending machine shall be installed, maintained or
operated upon the Premises without the written consent of the Landlord.

 

19. Building Name and Address. Landlord shall have the right, exercisable
without notice and without liability to Tenant, to change the name and the
street address of the Building of which the Premises are a part.

 

20. Emergency Regulations. Tenant agrees that it shall comply with all emergency
regulations that may be issued from time to time by Landlord and Tenant also
shall provide Landlord with the names of a designated responsible employee to
represent Tenant in all matters pertaining to emergency regulations.

 

E-2

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21. Tenant Advertising. Without the written consent of Landlord, Tenant shall
not use the name of the Building in connection with or in promotion or
advertising the business of Tenant except as Tenant’s address.

 

22. Emergency Information. Tenant must provide Landlord with names and telephone
numbers to contact in case of emergency. Tenant must fill out a tenant emergency
information sheet and return it to Landlord’s office within three (3) days of
occupancy.

 

23. Installation of Burglar and Informational Services. If Tenant requires
telegraphic, telephonic, burglar alarm or similar services, it shall first
obtain, and comply with, Landlord’s instructions in their installation.

 

24. Deliveries. The Building freight elevator shall be available for use by all
tenants in the Building, subject to such reasonable scheduling as Landlord, in
its discretion, shall deem appropriate. No equipment, materials, furniture,
packages, supplies, merchandise or other property will be received in the
Building or carried in the elevators except between such hours and in such
elevators as may be designated by Landlord. Tenant’s initial move in and
subsequent deliveries of bulky items, such as furniture, safes and similar items
shall, unless otherwise agreed in writing by Landlord, be made during the hours
of 6:00 p.m. to 6:00 a.m. or on Saturday or Sunday. Deliveries shall be limited
as set forth in the Lease. No deliveries shall be made which impede or interfere
with other tenants or the operation of the Building.

 

25. Floor Loads. Tenant shall not place a load upon any floor of the Premises
which exceeds the load per square foot, which such floor was designed to carry
and which is allowed by law. Landlord shall have the right to prescribe the
weight, size and position of all equipment, materials, furniture or other
property brought into the Building. Heavy objects shall, if considered necessary
by Landlord, stand on such platforms as determined by Landlord to be necessary
to properly distribute the weight, which platforms shall be provided at Tenant’s
expense. Business machines and mechanical equipment belonging to Tenant, which
cause noise or vibration that may be transmitted to the structure of the
Building or to any space therein to such a degree as to be objectionable to
Landlord or to any tenants in the Building, shall be placed and maintained by
Tenant, at Tenant’s expense, on vibration eliminators or other devices
sufficient to eliminate noise or vibration. The persons employed to move such
equipment in or out of the Building must be acceptable to Landlord. Landlord
will not be responsible for loss of, or damage to, any such equipment or other
property from any cause, and all damage done to the Building by maintaining or
moving such equipment or other property shall be repaired at the expense of
Tenant.

 

26. Energy Conservation. Tenant shall not waste electricity, water or air
conditioning and agrees to cooperate fully with Landlord to assure the most
effective operation of the Building’s heating and air conditioning and to comply
with any governmental energy-saving rules, laws or regulations of which Tenant
has actual notice, and shall refrain from attempting to adjust controls. Tenant
shall keep corridor doors closed.

 

27. No Antennas. Tenant shall not install any radio or television antenna,
loudspeaker or other devices on the roof or exterior walls of the Building.
Tenant shall not interfere with radio or television broadcasting or reception
from or in the Building or elsewhere.

 

28. No Soliciting. Canvassing, soliciting and distribution of handbills or any
other written material, and peddling in the Building are prohibited, and Tenant
shall cooperate to prevent such activities.

 

29. Prohibited Uses. The Premises shall not be used for any improper, immoral or
objectionable purpose. No cooking shall be done or permitted on the Premises
without Landlord’s consent, except that use by Tenant of Underwriters Laboratory
approved equipment for brewing coffee, tea, hot chocolate and similar beverages
or use of microwave ovens for employee use shall be permitted, provided that
such equipment and use is in accordance with all applicable federal, state,
county and city laws, codes, ordinances, rules and regulations.

 

30. Enforcement of Rules. Landlord may waive any one or more of these Rules and
Regulations for the benefit of Tenant or any other Tenant but no such waiver by
Landlord shall be construed as a waiver of such Rules and Regulations in favor
of Tenant, nor prevent Landlord from thereafter enforcing any such Rules and
Regulations against any or all of the tenants of the Building.

 

31. Lease. These Rules and Regulations are in addition to, and are made a part
of, the terms, covenants, agreements and conditions of Tenants Lease of its
Premises in the Building.

 

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32. Additional Rules. Landlord reserves the right to make such other Rules and
Regulations or amendments hereto as, in its reasonable judgment, may from time
to time be needed for safety and security, for care and cleanliness of the
Building and for the preservation of good order therein. Tenant agrees to abide
by all such Rules and Regulations hereinabove stated and any additional rules
and regulations which are adopted.

 

33. Observance of Rules. Tenant shall be responsible for the observance of all
of the foregoing rules by Tenant’s employees, agents, licensees, sublessees,
assigns, and invitees.

 

34. Maintenance of Fire Extinguishers. Tenant shall maintain in the Premises
during the entire Lease Term, not less than the minimum number of fire
extinguishers required by law and Tenant shall inspect all such fire
extinguishers not less frequently than once each month to assure that the same
are fully charged and in good operational condition. Annually the Tenant shall
have all fire extinguishers inspected by an authorized and qualified inspector
who shall certify that each such fire extinguisher complies with all applicable
requirements of the NFPA. If any such fire extinguishers fail to obtain such
certification, then within three (3) business days after such failure such fire
extinguishers shall be replaced, or repaired, and re-inspected and a
certification shall be issued certifying that all such fire extinguishers comply
with all applicable requirements of the NFPA.

 

35. Landlord Approval/Consent. Any consent or approval required of Landlord
under these Rules and Regulations shall not be unreasonably withheld,
conditioned or delayed by Landlord.

 

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EXHIBIT F

FORM OF SUBORDINATION AND NONDISTURBANCE AGREEMENT

Prepared By and

After Recordation Return To:

Greene Radovsky Maloney Share & Hennigh LLP

Four Embarcadero Center, Suite 4000

San Francisco, CA 94111

Attn: Davia M. Love

SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this “Agreement”)
is dated for reference purposes only             , 20    , and is by and between
                    , with a mailing address at                      (“Lender”)
and                     , a                      with its principal place of
business at                     (“Tenant”), and                     ,
a                     , with a mailing address at                    
(“Borrower”).

RECITALS:

A. Lender has made a loan (together with all advances and increases, the “Loan”)
to Borrower. The Loan is secured by the                     dated as
of             and recorded                     as Document
#                     in the official records of the                    
(together with all advances, increases, amendments or consolidations, the
“Mortgage”) and the Assignment of Rents and Leases dated as
of                     and recorded                     as Document
#                     In such official records (together with all amendments,
the “Assignment”), assigning to Lender the Lease and all rent, additional rent
and other sums payable by Tenant under the Lease (“Rent”). The Mortgage
encumbers the real property, improvements and fixtures located
at                    (the “Property”).

B. Borrower, as landlord, and Tenant have entered into a lease
dated                    (the “Lease”) pursuant to which Landlord leased to
Tenant and Tenant leased from Landlord certain premises on
the                     floors of the building at the Property (“Premises”).

IN CONSIDERATION of the mutual agreements contained in this Agreement, Lender
and Tenant agree as follows:

1. The Lease and all of Tenant’s rights under the Lease are and will remain
subject and subordinate to the lien of the Mortgage and the Assignment and all
of Lender’s rights under the Mortgage and the Assignment and Tenant will not
subordinate the Lease to any other lien against the Property without Lender’s
prior consent.

2. This Agreement constitutes notice to Tenant of the Mortgage and the
Assignment and, upon receipt of notice from Lender, Tenant will pay the Rent as
and when due under the Lease to Lender and the payments will be credited against
the Rent due under the Lease.

3. Tenant and Lender agree that if Lender exercises its remedies under the
Mortgage or the Assignment and if Tenant is not then in default beyond any
applicable grace and cure periods under the Lease:

(a) Lender will not name Tenant as a party to any judicial or non-judicial
foreclosure or other proceeding to enforce the Mortgage unless joinder is
required under applicable law but in such case Lender will not seek affirmative
relief against Tenant, the Lease will not be terminated and Tenant’s possession
of the Premises will not be disturbed;

(b) If Lender or any other entity (a “Successor Landlord”) acquires the Property
through foreclosure, by other proceeding to enforce the Mortgage or by
deed-in-lieu of foreclosure (a “Foreclosure”), Tenant’s possession of the
Premises will not thereby be disturbed and the Lease will continue in full force
and effect between Successor Landlord and Tenant; and

 

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(c) If, notwithstanding the foregoing, the Lease is terminated as a result of a
Foreclosure, a lease between Successor Landlord and Tenant will be deemed
created, with no further instrument required, on the same terms as the Lease
except that the term of the replacement lease will be the then unexpired term of
the Lease. Successor Landlord and Tenant will execute a replacement lease at the
request of either.

4. Upon Foreclosure, Tenant will recognize and attorn to Successor Landlord as
the landlord under the Lease for the balance of the term. Tenant’s attornment
will be self-operative with no further instrument required to effectuate the
attornment except that at Successor Landlord’s request, Tenant will execute
instruments reasonably satisfactory to Successor Landlord confirming the
attornment.

5. Successor Landlord will not be:

(a) liable for any act or omission of Landlord (except to the extent such act or
omission is non-monetary and continues beyond the date when such Successor
Landlord succeeds to Landlord’s interest and Tenant gives notice of such act or
omission to such Successor Landlord);

(b) subject to any defense, claim, counterclaim, set-off or offsets which Tenant
may have against Landlord;

(c) bound by any prepayment of more than one (1) month’s rent to any prior
landlord;

(d) bound by any obligation to make any payment to Tenant which was required to
be made prior to the time such Successor Landlord succeeded to Landlord’s
interest;

(e) bound by any obligation to perform any work or to make improvements to the
Premises except for repairs and maintenance required to be made by Landlord
under this Lease, and repairs to the Premises as a result of damage by fire or
other casualty or a partial condemnation pursuant to the provisions of this
Lease, but only to the extent that such repairs can reasonably be made from the
net proceeds of any insurance or condemnation awards, respectively, actually
made available to such successor landlord;

(f) bound by any modification, amendment or renewal of the Lease made without
the consent of Lender;

(g) liable for the repayment of any security deposit or surrender of any letter
of credit, unless and until such security deposit actually is paid or such
letter of credit is actually delivered to such Successor Landlord; or

(h) liable for the payment of any unfunded tenant improvement allowance,
refurbishment allowance or similar obligation.

6. In the event Landlord shall fail to perform or observe any of the terms,
conditions or agreements in the Lease, Tenant shall give written notice thereof
to Lender and Lender shall have the right (but not the obligation) to cure such
failure. Tenant shall not take any action with respect to such failure under the
Lease, including, without limitation, any action in order to terminate, rescind
or avoid the Lease or to withhold any rent thereunder, for a period of thirty
(30) days after receipt of such written notice by Lender, provided, however,
that in the case of any default which cannot with diligence be cured within said
30-day period, if Lender shall proceed promptly to cure such failure and
thereafter prosecute the curing of such failure with diligence and continuity,
the time within which such failure may be cured shall be extended for such
period as may be necessary to complete the curing of such failure with diligence
and continuity. Notwithstanding the foregoing, Lender shall have no obligation
to cure any such default, except as otherwise set forth herein.

7. Upon Tenant’s receipt of notice from Lender that Tenant is to commence the
payment of all Rent and/or Additional Rent to Lender until further notice,
Tenant shall commence the remittance of all Rent and Additional Rent to Lender,
and such payments by Tenant shall satisfy Tenant’s payment obligations under the
Lease. Notwithstanding the preceding sentence, Lender’s demand for payment of
Rent and Additional Rent and Tenant’s payment thereof, shall not create any
liability for Lender for the performance of Landlord’s obligations set forth
within the Lease.

8. The foregoing provisions shall be self operative and effective without the
execution of any further instrument on the part of either party hereto. However,
Tenant agrees to execute and deliver to Lender or any person to whom Tenant
herein agrees to attorn such other instrument as either shall request in order
to effectuate such provisions.

9. Tenant shall not, without obtaining the prior written consent of Lender,
(a) enter into any agreement amending, modifying or terminating the Lease,
(b) prepay any of the rents, additional rents or

 

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other sums due under the Lease for more than one (1) month in advance of the due
dates thereof, (c) voluntarily surrender the Premises or terminate the Lease
without cause or shorten the term thereof, or (d) assign the Lease or sublet the
premises demised under the Lease or any part thereof other than pursuant to the
provisions of the Lease; and any such amendment, modification, termination,
prepayment, voluntary surrender, assignment or subletting, without Lender’s
prior consent, shall not be binding upon Lender.

10. All notices, requests or consent required or permitted to be given under
this Agreement must be in writing and sent by certified mail, return receipt
requested or by nationally recognized overnight delivery service providing
evidence of the date of delivery, with all charges prepaid, addressed to the
appropriate party at the address set forth above.

11. Anything to the contrary contained herein or in the Lease notwithstanding,
in the event Lender shall succeed to the interest of Landlord under the Lease,
the liability of Lender under the Lease and this Agreement shall be limited to
the interest of Lender in and to the Mortgaged Premises, and no other assets of
Lender shall be subject to any action or proceeding for the enforcement of any
right or remedy of Tenant under the Lease or this Agreement.

12. This Agreement is governed by and will be construed in accordance with the
laws of the state or commonwealth in which the Property is located.

13. Lender and Tenant waive trial by jury in any proceeding brought by, or
counterclaim asserted by, Lender or Tenant relating to this Agreement.

14. If there is a conflict between the terms of the Lease and this Agreement,
the terms of this Agreement will prevail as between Successor Landlord and
Tenant.

15. This Agreement binds and Inures to the benefit of Lender and Tenant and
their respective successors, assigns, heirs, administrators, executors, agents
and representatives.

16. This Agreement contains the entire agreement between Lender and Tenant with
respect to the subject matter of this Agreement, may be executed in counterparts
that together constitute a single document and may be amended only by a writing
signed by Lender and Tenant.

IN WITNESS WHEREOF, this Agreement has been executed as of the date first above
written.

 

                    TENANT:                     LANDLORD:
                    LENDER:

[ALL SIGNATURES MUST BE NOTARIZED]

 

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EXHIBIT G

[INTENTIONALLY DELETED]

 

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EXHIBIT H

ENVIRONMENTAL MANAGEMENT PLAN

SECTION 1 ENVIRONMENTAL OBJECTIVES

1.1 Context

The provisions of this Environmental Management Plan have been designed to
encourage and promote the implementation of certain environmental objectives on
the part of each of Landlord and Tenant.

1.2 General Objectives

(a) Tenant acknowledges Landlord’s intention to operate the Building so as to
provide for (but not to increase costs to Tenant or adversely affect Tenant’s
use of the Premises because of):

 

  (i) a comfortable, productive and healthy indoor environment;

 

  (ii) energy use and production to promote efficiency and reduce, both direct
and indirect, Greenhouse Gases;

 

  (iii) use of potable and recycled water where appropriate;

 

  (iv) the effective diversion of construction, demolition, and land-clearing
waste from landfill and incineration disposal, and the recycling of tenant waste
streams;

 

  (v) the use of cleaning products certified in accordance with EcoLogoM
(Canada), Green Seal™ (United States) or equivalent standards;

(b) Landlord shall be entitled from time to time during the Term, at its sole
cost and expense, to seek LEED and/or such other and further building
certifications as may be reasonably necessary, in Landlord’s sole opinion, to
ensure the Building remains compliant with all Applicable Laws (including
expected enhancements thereto), as well as certifications prevalent in the
marketplace or necessary to attract leading tenants from time to time.

1.3 Regulatory Standards

Notwithstanding the provisions of Section 1.2 herein, in the event that any
governmental authority imposes a resource reduction target on the Building for
any utility or resource otherwise than as set out in Sections 1.2 above, then
the within Environmental Objectives shall be deemed to have been amended so as
to stipulate such resource reduction target and all changes required to be made
by Landlord to the Environmental Management Plan, or which are necessitated as a
result of such mandatory resource reduction target, shall be deemed to be
included and permitted, as the case may be, pursuant to the provisions of this
Section and this Lease; provided that any such amendment shall be limited to
such changes that are reasonably acceptable to Tenant and that do not adversely
affect Tenant’s use of the Premises.

SECTION 2 ENVIRONMENTAL MANAGEMENT PLAN IMPLEMENTATION

2.1 Tenant agrees to conduct its operations in the Building and within the
Premises in accordance with the following provisions so long as the same does
not increase Tenant’s costs or adversely affect Tenant’s use of the Premises:

(a) Comfortable, Healthy and Productive Indoor Environment

 

  (i) Landlord shall be entitled at any time and from time to time at its sole
cost and expense to undertake Greenhouse Gas production monitoring and testing,
including testing within the Premises, on reasonable notice to Tenant and
accompanied by a representative of Tenant if required, which representative
Tenant agrees to make available.

 

  (ii) Intentionally deleted.

 

  (iii)

Should Tenant be permitted to undertake its own cleaning of, or within, the
Premises, Tenant shall use reasonable efforts to endeavor to require that its
cleaning contractor shall use cleaning products certified in accordance with
EcoLogoM Green Seal™ or equivalent Landlord shall reserve the right to approve,
acting reasonably, any such Tenant cleaning contracts, but without liability.
Tenant shall use reasonable efforts to ensure that any cleaning

 

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  contracts entered into by it require the cleaning contractor to comply with
elements of the Environmental Management Plan applicable to it. Particularly,
with respect to any cleaning contracts let by Tenant in respect of specialized
green facilities, such as waterless urinals, Tenant shall use reasonable efforts
to ensure the cleaning contractor properly understands the maintenance of such
specialized green facilities.

(b) Reduce Indirect and Direct Energy Consumption and Greenhouse Gas Emissions

 

  (i) Tenant shall take reasonable steps to minimize its electrical consumption
within the Premises such as, by way of example only, adopting conservation
practices (e.g. reducing its use of lighting where unnecessary); the use of
Energy Star equipment, so long as the same does not increase Tenant’s costs or
adversely affect Tenant’s use of the Premises.

 

  (ii) Landlord shall be entitled at any time or from time to time to acquire
(A) all or part of the power for the Common Area; or (B) shared electrical
power, from sources with low Greenhouse Gas emissions, provided that the same
shall not increase Tenant’s costs. In addition to the foregoing, where it is
considered feasible to do so, Landlord may at its cost install onsite generation
capacity either to reduce peak load or to supplement base load requirements for
the Building from time to time. Without limiting the generality of the
foregoing, Tenant shall, where available on commercially reasonable terms and so
long as the same does not adversely affect Tenant’s use of the Premises, ensure
that equipment purchased for the Premises is Energy Star certified where
available.

 

  (iii) Tenant shall be entitled at any time or from time to time to specify in
writing that it wishes to have its electrical power consumption sourced or
offset from renewable energy sources, and if it shall elect to do so, the cost
of same shall be at Tenant’s sole cost and expense, either payable directly by
it to the supplier so chosen, or recoverable by Landlord as Additional Rent if
paid by Landlord.

 

  (iv) Landlord shall be entitled to benchmark itself against any building
rating system for electrical, natural gas, water or other resource consumption,
so long as the same does not increase Tenant’s costs or adversely affect
Tenant’s use of the Premises.

 

  (v) Landlord shall operate the Building Common Areas in accordance with, and
use its reasonable efforts to cause other tenants to operate in conformity with,
the Environmental Objectives.

(c) Reduce Water Consumption

 

  (i) Where potable water usage is not a necessity, Tenant acknowledges and
consents to the use of treated recycled or treated natural water in washrooms
and in other applications within and around the Building.

 

  (ii) Tenant consents to the use of water-saving appliances, such as waterless
urinals, and other equipment as may be otherwise consistent with the
Environmental Objectives, so long as the same does not increase Tenant’s costs
or adversely affect Tenant’s use of the Premises.

 

  (iii) Tenant shall use reasonable efforts to ensure that any fixtures
purchased for the Premises shall be certified by the United States’
Environmental Protection Agency’s Water Sense Program or a Canadian equivalent,
if any, provided the same does not increase Tenant’s costs or adversely affect
Tenant’s use of the Premises.

(d) Recycled Materials Usage

 

  (i) Tenant shall be entitled to use recycled materials in its improvements and
Alterations as may be approved to by Landlord, acting reasonably. Tenant agrees
to consider locally sourced materials where possible in the completion of
improvements.

 

  (ii) Tenant shall be entitled to use recycled furniture, fixtures and
equipment in the Premises to the extent consistent with the Environmental
Objectives.

 

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  (iii) Tenant agrees to recycle or cause its contractor to recycle as much as
reasonably possible any waste created in the demolition of existing improvements
or Alterations within the Premises so as to minimize the amount of waste ending
in landfill. Landlord reserves the right to monitor and measure the amount of
waste leaving the Building from the Premises and going to landfill from time to
time. If available, Landlord agrees to provide to Tenant a staging area for the
sorting and recycling of materials during construction.

 

  (iv) Landlord may refuse to collect or accept from Tenant’s Premises waste
that is not appropriately sorted into the appropriate recycling container.

(e) Tenant Certifications

 

  (i) Upon Tenant’s request, Landlord will use commercially reasonable efforts
to co-operate with Tenant, at Tenant’s sole cost, in the certification of the
Premises pursuant to any rating scheme, such as ASHRAE standard 189.11 LEED CI
standard or equivalent standard as Landlord may agree to, acting reasonably.

2.2 Tenant shall consider the following guidelines and provisions pertaining to
construction in the Premises:

Tenants should consider using environmentally friendly construction practices
and materials to the greatest extent possible. Below are Landlord recommended
minimum requirements for green building construction:

Recycling: All building occupants are encouraged to participate in on-site
recycling program. The building complex includes space and a program for
managing recycled materials such as paper, corrugated cardboard, glass, plastics
and metals. Tenant should include space (i.e. in copy rooms and pantries)
designated for short-term storage and sorting of recycled items. Individual
workspaces should be equipped with containers for small amounts of used copy
paper, plastics and aluminum.

Energy Use Reduction: Energy Star rated lighting should be used for at least 75%
of all permanent light fixtures within each tenant’s space and preferably for
all lighting. Each tenant space should include a lighting control system to
further energy efficiency and reduce wasted energy. Each individual office space
or other single use area should be equipped with an occupancy sensor to further
reduce energy consumption.

Recycled Content and Local Materials: All permanent gypsum wallboard partitions
should be constructed utilizing a minimum of 90% Post-Consumer Waste recycled
drywall on metal studs. Acoustic tiles for lay in ceilings should have a minimum
10% post-consumer waste recycled content. Consider using locally manufactured
products when possible.

Environmentally Preferable Products: All paints, coatings, and adhesives should
qualify as low-VOC (Volatile Organic Compounds) in accordance with the South
Coast Air Quality Management District (SCAQMD) Rule #1168, effective July 2005
(or latest edition). All carpeting should meet the testing and product
requirements of the Carpet and Rug Institutes Green Label Plus Program. All
carpet adhesives shall be limited in their VOC content to 50 g/L.

Water Efficiency: New restrooms should include high-efficiency water fixtures
that reduce water consumption. Improvements should include low-flow faucets with
automatic cut-off sensors, dual flush toilets, and low-flow or waterless
urinals.

Paper Products: Design of restrooms should utilize energy efficient wall mounted
hand dryers instead of paper towels in order to reduce paper consumption and
reduce the amount of trash produced during the operation of the building.

 

1  Note that this standard is, as of March 30th, 2009, a “draft” standard.

 

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