EXHIBIT 10.6
 
LEASE AGREEMENT

THIS LEASE AGREEMENT (this “Lease”) is dated as of the 14th day of August, 2009,
and is entered into by and between PACIFIC NORTHWEST RESEARCH INSTITUTE, a
Washington nonprofit corporation (“Landlord”), and Pacific Biometrics, Inc., a
Washington corporation (“Tenant”).

Landlord and Tenant agree as follows:

1.           Premises.  Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord upon the terms and conditions set forth herein the
Premises, together with nonexclusive rights of ingress and egress over common
areas in the Building.  The “Building” means the building commonly known as 720
Broadway Street, Seattle, Washington 98122.  The “Premises” means that space
consisting of an agreed area of eight hundred fifty (850) rentable square feet
on the 4th floor, Room 417, of the Building, as outlined on the floor plan
attached hereto as Exhibit A which is incorporated herein by this reference and
made a part of this Lease.
 
2.           Term, Commencement and Expiration Dates.  The initial term of this
Lease (the “Term”) shall be twenty-four (24) months, commencing on August 1st,
2009 (the “Commencement Date”), and expiring on August 31, 2011, unless earlier
terminated as provided herein.  Following the end of the initial term this lease
may be renewed for an additional twelve (12) months plus a 3% increase in basic
rent.  Tenant’s possession of the Premises prior to the Commencement Date shall
be subject to all the provisions of this Lease except that the Term and Tenant’s
obligation to pay Basic Rent shall not begin until the Commencement Date.
 
3.           Rent.  Tenant shall pay to Landlord basic rent for the Premises in
an amount equal to four thousand eight hundred forty five Dollars ($4,845.00)
per month (“Basic Rent”) for the initial term.  Tenant also shall pay as
additional rent all other sums due from Tenant to Landlord under this Lease
(“Additional Rent”).  Tenant shall pay Landlord without notice Basic Rent and
Additional Rent (collectively, “Rent”), without deduction or offset, in lawful
money of the United States of America in advance on or before the first day of
each month (or at other dates specified in this Lease with respect to payments
Additional Rent) during the Term at Landlord’s address set forth on the
signature page of this Lease, or to such other party or at such other place as
Landlord may hereafter from time to time designate to Tenant in writing.  Tenant
shall pay the first full monthly installment of Basic Rent in advance upon
execution of this Lease.  Rent for any partial month at the beginning or end of
the Term shall be prorated.
 
4.           Security Deposit.  Tenant shall deposit with Landlord on the date
of this Lease, as security for the performance of all of its obligations an
amount equal to one month’s installment of Basic Rent (the “Security
Deposit”).  The Security Deposit shall be held by Landlord as security for the
faithful performance by Tenant of all of Tenant’s obligations under this
Lease.  If Tenant fails to make any payment as and when due under this Lease, or
otherwise fails to perform any of its obligations under this Lease, Landlord may
(but shall not be obligated to) use, apply or retain all or any portion of the
Security Deposit:  (i) against any such payment(s) which Tenant failed to make;
(ii) for the payment of any other sum to which Landlord may become obligated by
reason of Tenant’s failure to perform; or (iii) to compensate Landlord for any
loss or damage which Landlord may suffer thereby; so long as the foregoing is
done in compliance with applicable law.  If Landlord so uses or applies all or
any portion of the Security Deposit, Tenant within five (5) business days after
written notice shall deposit cash with Landlord in an amount sufficient to
restore the Security Deposit to the full amount required above and Tenant’s
failure to do so shall constitute an Event of Default under this Lease.  The
Security Deposit, or so much thereof as has not theretofore been applied by
Landlord pursuant to the terms of this Lease, shall be returned, without payment
of interest, to Tenant (or, at Landlord’s option, to the last assignee, if any,
of Tenant’s interest under this Lease within a reasonable period of time after
the end of the Term.  Landlord shall not be required to keep the Security
Deposit separate from its general accounts, and no trust relationship is created
in this Lease between Landlord and Tenant with respect to the Security Deposit.

 
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5.           AS IS.  Tenant acknowledges that Tenant is leasing the Premises in
its current “as is” condition and Tenant acknowledges that, except to the extent
expressly set forth in this Lease, neither Landlord nor any agent of Landlord
has made any representation or warranty, express or implied, with respect to the
Premises or the Building and that Landlord has not agreed to modify the Premises
or to construct any improvements therein.  Tenant acknowledges that it has had
an opportunity to inspect the Premises to confirm the suitability thereof for
Tenant’s purposes.  The taking of possession or use of the Premises by Tenant
shall conclusively establish that the Premises and the Building were at such
time in satisfactory condition.
 
6.           Uses.
 
6.1           General Use.  The Premises shall be used only for laboratory
research and for general office purposes related thereto (“Permitted Use”) and
for no other business or other purpose without the prior written consent of
Landlord.  Tenant may use materials which are permitted in facilities designated
as BioSafety Level (“BSL”) 1, and will get approval from the Landlord prior to
the implementation of any experiment using BSL2 agents, as such classifications
are defined by the National Institute of Health and/or the Center for Disease
Control in the Premises, but Tenant not use or store any materials which may
only be used in BSL3 or BSL4 facilities and Landlord shall not be required to
consent to any use that involves use or storage of BSL3 or BSL4 materials.  No
act shall be done in or about the Premises that is unlawful, unsafe or that will
increase the then existing rate of insurance on the Building.
 
6.2           No Waste or Nuisance.  Tenant shall not commit or allow to be
committed any waste upon the Premises, or any public or private nuisance or
other act or thing in or about the Premises that disturbs the quiet enjoyment of
Landlord or any other tenant in the Building.  Tenant shall not, without the
prior written consent of Landlord, use, operate or maintain any apparatus,
machinery, equipment or device in or about the Premises that will cause any
significant noise, increase electrical loads or usage, vibration or fumes or
disturb the quiet enjoyment of Landlord or any other tenant in the Building, and
in the event of any such use or operation, then Tenant shall cease operating
such equipment until it has provided adequate insulation or taken such other
action as Landlord shall reasonably require to eliminate or minimize the
disturbance.
 
6.3           Compliance With Laws.  Tenant shall comply with all laws and
regulations relating to its use or occupancy of the Premises.  Tenant shall
comply with all rules and regulations concerning Tenant’s use or occupancy of
the Premises as may be adopted by Landlord from time to time.
 
6.4           Hazardous Materials.
 
6.4.1           Tenant shall not use or dispose of any Hazardous Materials in or
on the Premises, the Building, the Property, or any adjacent property, or in any
improvements thereto, except for such Hazardous Materials as are essential to
the Permitted Use, and then only in accordance with all applicable laws and
regulations.  Tenant shall ensure that all of Tenant’s officers, contractors,
subcontractors, licensees, agents, servants, employees, guests, invitees or
visitors, or any assignee or sublessee or other person for whom Tenant would
otherwise be liable (individually, a “Tenant Party” and collectively, “Tenant
Parties”) shall comply with all Environmental Laws (as defined below) in
connection with Tenant’s or any Tenant Party’s use, storage or disposal of any
Hazardous Materials (as defined below) on, under or about the Premises at
Tenant’s expense.  Tenant shall ensure that all Tenant Parties shall, at all
times follow industry standard research and medical and safety practices in
connection with the purchasing, handling, storage, shipment or disposal of any
Hazardous Material, including, but not limited, to any Medical Products (as
defined below), at Tenant’s expense.

 
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6.4.2           As used herein, the term “Hazardous Materials” means any Medical
Products, chemical, substance, material, controlled substance, object,
condition, waste, living organism or combination thereof which is or may be
hazardous to human health or safety or to the environment (whether potentially
injurious to persons and property and whether potentially injurious by
themselves or in combination with other materials) due to its radioactivity,
ignitability, corrosivity, reactivity, explosivity, toxicity, carcinogenicity,
mutagenicity, phytotoxicity, infectiousness or other harmful or potentially
harmful properties or effects, including, without limitation, petroleum and
petroleum products, asbestos, radon, polychlorinated biphenyls (PCBs) and all of
those chemicals, substances, materials, controlled substances, objects,
conditions, wastes, living organisms or combinations thereof which are now or
become in the future listed in the United States Department of Transportation
Hazardous Materials Table [49 C.F.R. § 172.101] or any other applicable
regulatory mandate, as amended from time to time, or listed, defined or
regulated in any manner by any Environmental Law.
 
6.4.3           As used herein, the term “Environmental Laws” means any and all
federal, state or local environmental, health and/or safety-related laws,
regulations, standards, decisions of courts, ordinances, rules, codes, orders,
decrees, directives, guidelines, permits or permit conditions, currently
existing and as amended, enacted, issued or adopted in the future relating to
the environment or governing or in any way relating to the generation, handling,
manufacturing, treatment, storage, use, transportation, spillage, leakage,
dumping, discharge or disposal (whether legal or illegal, accidental or
intentional) of any Hazardous Material (including, without limitation, The
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. § 9601, et seq.), The Washington Model Toxics Control Act (Ch. 70.105D
RCW) and The Washington Hazardous Waste Management Act (Ch. 70.105 RCW), which
are or become applicable to Tenant or the Premises.
 
6.4.4           As used herein, the term “Medical Products” means all
recombinant DNA agents and all regulated substances, chemicals, drugs, blood,
tissue, serums, waste and other materials related thereto and used in connection
with medical treatment, laboratory analysis or other biomedical research.
 
6.4.5           As used herein, the term “Environmental Condition” means any
release or spill of any Hazardous Materials into the environment, including
surface water, groundwater, drinking water supply, land, soil, surface or
subsurface strata or the ambient air, where such release or spill is potentially
in violation of Environmental Laws or is required to be reported to the
Washington State Department of Ecology or other appropriate governmental
authority.
 
6.4.6           Tenant shall deliver to Landlord prior to the Commencement Date
and on request during the Term a list specifying the type and quantity of all
Hazardous Materials used or stored or proposed to be used or stored by Tenant or
Tenant Parties on the Premises.  The list shall include copies of all permits,
licenses and approvals required in connection with the use or storage of such
materials, together with Tenant’s Hazardous Materials Inventory Statement and
Hazardous Materials and Management Plans (as required by the City of Seattle
Fire Department).  Tenant will provide additional documents or information with
respect to its Hazardous Materials upon request.

 
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6.4.7           Tenant shall promptly notify Landlord in writing of (i) any
notices of violation or potential or alleged violation of any Environmental Law
which are or have been in the past received by Tenant from any governmental
agency; (ii) any and all inquiry, investigation, enforcement, clean-up, removal
or other governmental or regulatory actions instituted or threatened relating to
Tenant or the Premises; and (iii) all claims made or threatened by any
third-party against Tenant or the Premises relating to any Hazardous
Materials.  If any Environmental Condition occurs that is or may be a result of
any Tenant’s or any Tenant Party’s actions during the Term, or if Tenant or any
Tenant Party has disposed of or caused a release of Hazardous Materials at, on
or about the Premises other than in accordance with Environmental Laws, Tenant
shall promptly prepare a remediation plan for Landlord’s review and approval,
which shall not be unreasonably withheld.  Tenant’s obligation to remediate any
Environmental Condition shall not be contingent on an enforcement action by any
governmental authority and shall be independent of any governmentally mandated
remediation.  If Landlord approves the plan, then Tenant shall execute the
remediation plan at Tenant’s sole cost and expense.  If the remediation plan is
not reasonably acceptable to Landlord or if Tenant fails to execute the
remediation plan within a reasonable period of time, then Tenant shall reimburse
Landlord, upon demand, for the cost to Landlord of performing rectifying
work.  The reimbursement shall be paid to Landlord in advance of Landlord’s
performing such work, based upon Landlord’s reasonable estimate of the cost
thereof; and upon completion of such work by Landlord, Tenant shall pay to
Landlord any shortfall within thirty (30) days after Landlord bills Tenant
therefor or Landlord shall within thirty (30) days refund to Tenant any excess
deposit, as the case may be.  To the extent reasonably requested by Landlord,
Tenant shall furnish Landlord with detailed reports concerning any Environmental
Condition which occurs on the Premises during the Term.  In addition, Tenant
shall comply, at its sole cost and expense, with such industry-standard
recommendations contained in any environmental assessment or report as Landlord
may reasonably require including without limitation, any recommended precautions
which should be taken with respect to activities on the Premises, and additional
testing and studies to detect the presence of Hazardous Materials.
 
6.4.8           After notice to Tenant and a reasonable opportunity for Tenant
to effect such compliance, Landlord may, but shall not be obligated to, enter
upon the Premises and take such actions and incur such costs and expenses to
effect such compliance as it deems advisable to protect its interest in the
Premises.  However, Landlord shall not be obligated to give Tenant notice and an
opportunity to effect compliance if (i) such delay might result in material
adverse harm to Landlord, the Premises, the Building or the property on which it
is located; (ii) Tenant has already had actual knowledge of the situation and a
reasonable opportunity to effect compliance, or (iii) Landlord reasonably
believes that an emergency exists.  Whether or not Tenant has actual knowledge
of the release of Hazardous Materials on the Premises, the Building, the
property or any adjacent property as the result of Tenant’s use of the Premises,
the Building or the property, Tenant shall reimburse Landlord for the full
amount of all costs and expenses incurred by Landlord relating to such Hazardous
Materials or in connection with such compliance activities.  Tenant shall notify
Landlord immediately of any release of any Hazardous Materials on the Premises
of which Tenant is aware.
 
6.4.9           Tenant agrees to indemnify, defend and hold harmless Landlord
against any and all losses, liabilities, suits, obligations, fines, damages
(including diminution in the value of the Premises or Building, loss or
restrictions on use of space in the Building or the property on which it is
located, and sums paid in settlement of claims), judgments, penalties, claims,
charges, cleanup costs, remedial actions, costs and expenses (including, without
limitation, attorneys’ and other professional fees and disbursements) that may
be imposed on, incurred or paid by, or asserted against Landlord, the Premises,
the Building, or the property by reason of, or in connection with (i) any
misrepresentation, breach of warranty or other default by Tenant or any Tenant
Party under this Section 6.4, or (ii) the acts or omissions of Tenant or any
Tenant Party resulting in the release of any Hazardous Materials.  All of
Tenant’s obligations and liabilities under this Section 6.4 shall survive
expiration or other termination of this Lease and shall be separately
enforceable by Landlord.  This indemnification is intended to constitute an
indemnity agreement within the meaning of Section 9607(e)(i) of The
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. § 9607(e)(i)).  Neither the written consent by Landlord to the presence
of Hazardous Materials on, under or about the Premises, nor the strict
compliance by Tenant with all Environmental Laws, shall excuse Tenant from
Tenant’s obligation of indemnification pursuant thereto.

 
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6.4.10        Upon expiration or early termination of this Term, Tenant shall at
its sole cost and expense undertake and complete a thorough wash and
decontamination of the Premises, including but not limited to scrubbing of all
surfaces, equipment, cabinets, fixtures and flume hood external surfaces in the
Premises, in order to remove all residues of Hazardous Materials (including
chemicals and biological material).  Upon completion of such wash and
decontamination, Tenant shall cause, at its sole cost and expense, an
environmental engineering company reasonably satisfactory to Landlord to perform
an environmental inspection of the Premises and prepare a written report for
delivery to Landlord and Tenant, certifying that the Premises are free from all
Hazardous Materials.
 
6.4.11        Landlord may monitor Tenant’s compliance with the requirements set
forth in this Section 6.4, including without limitation obtaining an
environmental assessment or investigation of the Premises from a qualified
environmental engineering company of Landlord’s selection, the cost of which
shall be paid by Landlord unless such assessment reveals a violation of this
Lease.  Any such environmental assessment shall be performed at a reasonable
time mutually acceptable to Landlord and Tenant.
 
7.           Personal Property Taxes.  Tenant shall pay, prior to delinquency,
all taxes payable with respect to all of Tenant’s personal property including
inventory, equipment, furniture and trade fixtures kept or used on or installed
in the Premises.
 
8.           Taxes on Rent.  The Rent provided for in this Lease is exclusive of
any sales or other tax or charge upon, based upon or measured by rents payable
to Landlord hereunder, or any tax or other charge based upon or measured by the
number of employees of Tenant, or any other tax that is not currently in
effect.  If during the Term any such tax or other charge becomes payable by
Landlord to any governmental authority, the Rent hereunder shall be deemed
increased by such amount.  The foregoing does not apply to federal, state or
local income, gross receipts, inheritance, gift, succession or franchise taxes
payable by Landlord.
 
9.           Services by Landlord.
 
9.1           Building Services.  Landlord shall provide elevator service,
Building access through the security system, electricity, cooling, heating and
ventilation (HVAC), water and sewer.  “Normal Business Hours” shall be from 6:00
a.m. to 6:00 p.m., Monday through Friday, excluding legal holidays.  Tenant may
have access to the building outside of these hours if required.  Landlord shall
provide a security card and key that will allow Tenant access to the Premises
and any replacement or additional devices shall be at Tenant’s expense.
 
9.2           Liability.  Landlord shall not be liable for any loss or damage
caused by or resulting from any variation, interruption or failure of such
services due to any cause whatsoever, and no temporary interruption or failure
of such services incident to the making of repairs, alterations or improvements
or due to accident or strike conditions shall be deemed an eviction of Tenant or
relieve Tenant from any of Tenant’s obligations hereunder.  For those services
within Landlord’s reasonable control, Landlord shall correct any interruption of
services as soon as practicable.
 
9.3           Electricity and Mechanical.  Before installing additional lights
or equipment in the Premises, Tenant shall obtain the written permission of
Landlord.  Landlord may refuse to grant such permission unless Tenant agrees to
pay Landlord’s costs to install supplementary air conditioning capacity or
electrical systems if the equipment or lights requested by Tenant will, in
Landlord’s reasonable judgment, overburden the Building’s structure or
mechanical system.  Tenant shall pay all costs of operating such equipment.

 
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9.4           Shared Facilities.  Tenant shall have the nonexclusive right to
use the restrooms, coffee room and dining room located on the fifth floor of the
Building provided that Tenant complies with any rules and regulations relating
to the use of such areas.  Tenant and its employees shall not enter any other
part of the Building except when accompanied by a member of Landlord’s
staff.  Tenant shall maintain the confidentiality of all nonpublic information
that it acquires as a result of or in connection with its entry into any portion
of the Building outside the Premises whether such confidential information is
obtained visually or orally or in any other manner (“Confidential
Information”).  No Confidential Information shall be used or disclosed by the
recipient except as permitted herein.  The obligations of this provision shall
not apply to:  (a) information that is in the public domain or comes into the
public domain through no fault of Tenant; (b) information learned by Tenant from
a third party entitled to disclose such information; (c) information developed
by Tenant independently of knowledge or information obtained from Landlord; (d)
information already known to Tenant before receipt from Landlord, as shown by
prior written records; (e) information released with the written consent of
Landlord; or (f) information which is required to be disclosed by law,
regulation or the order of a judicial or administrative authority; provided,
however, that prior to such disclosure, Tenant shall (i) give Landlord
sufficient advance written notice to permit it to seek a protective order or
other similar order with respect to such Confidential Information, and (ii)
thereafter disclose only the minimum Confidential Information required to be
disclosed in order to comply, whether or not a protective order or other similar
order is obtained by Landlord.  Tenant shall require each of its employees who
may enter into any portion of the Building outside the Premises to acknowledge
and agree to be bound by this confidentiality provision.  Landlord reserves the
right to deny access to any employee who does not so agree.  Tenant shall treat
a violation of this provision by any employee in the same manner as Tenant would
treat a violation of the employee’s obligations with respect to Tenant’s
confidential information.
 
9.4.1           Shared equipment.  Tenant shall have access to the shared
facilities and equipment listed in Addendum A.  All users of shared equipment
shall be trained by PNDRI staff before use and shall be responsible for supplies
of said equipment and liable for damages stemming from misuse or non-approved
use of said equipment.
 
9.5           Animal Facilities.  The use of any laboratory animals in the
Building is subject to approval by Landlord’s Institutional Animal Care and Use
Committee and all applicable laws, regulations and policies.  Landlord will
provide (at Tenant’s request) housing and care of laboratory rats and mice only
and technical assistance on a fee basis.  The fee is based on the Landlord’s
animal facility rate schedule for non PNDRI scientists.  The current rate
schedule is attached as Exhibit B.  Landlord may change the rate schedule from
time to time on thirty (30) days prior written notice.  Tenant shall pay all
fees on a monthly basis in arrears within ten (10) days after receipt of a
statement from Landlord.  Landlord shall provide the following services with
respect to the laboratory rodents:  veterinary care; maintaining any required
permits, accreditations or certifications necessary for the use thereof; animal
husbandry; feeding and watering, cleaning and maintaining cages; room cleaning
and monitoring and disposing of animal waste and dead animals.  Tenant shall
comply with any rules and regulations established by Landlord from time to time
with respect to the animal facility including any security measures adopted by
Landlord.  Access to the animal facility by Tenant shall be restricted to
authorized personnel, which shall include but not be limited to principal
investigators, investigators, and technicians approved by Landlord.  Landlord
may manage the animal care facility in its discretion and for its own
benefit.  Landlord may make repairs or alterations to the animal care facility
and may take any action in connection with the operation, maintenance or
preservation of thereof as Landlord deems necessary or desirable.  The parties
do not intend this Lease to create the relationship of bailor and bailee with
respect to the animals in the animal care facility.  If any of the equipment or
machinery in the animal care facility ceases to function properly or if service
is interrupted for any cause whatsoever, Landlord shall use reasonable diligence
to restore such service or facility within a reasonable period of time giving
due regard to the circumstances and Landlord shall not be liable for damages to
either person or property or for interruption or loss to Tenant’s business nor
shall any interruption relieve Tenant from any obligations under this
Lease.  Tenant shall assume the full risk of loss with respect to all of
Tenant’s property including but not limited to the animals in the animal care
facility and any intellectual property associated therewith and all risk of
personal injury or death to Tenant’s employees occurring in or around the animal
care facility or arising from use thereof by Tenant.  In no event shall Landlord
be liable for damages by reason of loss of profits, business interruption or
other consequential damage incurred by Tenant as a result of Tenant’s use of the
animal care facility.

 
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9.6           Other Services.  If Landlord provides any other services to Tenant
including any consultation or use of any instrumentation or equipment owned by
Landlord but not stipulated in this agreement, Tenant may be required to pay for
such services on demand.  If any consultation or use of Landlord’s equipment
results in or contributes to the creation of any intellectual property rights,
then such intellectual property shall be jointly owned by Landlord and Tenant.
 
10.           Assignment and Subletting.
 
10.1           Transfers Requiring Consent.  Tenant shall not cause or permit,
directly or indirectly, voluntarily or involuntarily, any of the following
events (individually and collectively, a “Transfer”) (or any amendment to the
instrument affecting the same) without in each case first obtaining Landlord’s
written consent:  (a) a sale, assignment, hypothecation, mortgage, encumbrance,
conveyance or other transfer of this Lease (or any interest therein); or (b) a
sublease of all or any portion of the Premises or (c) the use or occupancy of
the Premises or any portion thereof by anyone other than Tenant.  Any sale or
other transfer, whether voluntary or involuntary, by operation of law or
otherwise (including by consolidation, merger or reorganization), of a majority
of the voting stock of Tenant, if Tenant is a corporation, or of a majority of
the partnership interests in Tenant, if Tenant is a partnership, or a majority
of membership interests if Tenant is a limited liability company shall be deemed
to be a Transfer.  Landlord’s consent to one Transfer shall not be deemed to be
a consent to any subsequent Transfer, nor shall Landlord’s consent release
Tenant from any of its obligations under this Lease unless such consent
expressly so provides.  At the option of Landlord any Transfer without the
consent of Landlord shall be void and shall constitute an Event of Default
entitling Landlord to terminate this Lease and give rise to all other remedies
available to Landlord for breach of this Lease.
 
10.2           Recapture.  In addition to and without limitation upon, the other
rights of Landlord, in the event of a proposed Transfer by Tenant, Landlord may
elect, (by written notice delivered to Tenant within thirty (30) days following
Tenant’s submission to Landlord of a request for consent to a Transfer, to
terminate this Lease effective as of the date Tenant proposes to enter into such
Transfer (or in the case of a proposed Transfer of less than all of the
Premises, terminate this Lease as to the portion of the Premises to be
Transferred as of the date of such proposed Transfer).
 
10.3           Excess Rental.  If Landlord approves a Transfer under Section
10.1, then Tenant may enter into such Transfer and fifty percent (50%) of all
consideration received by Tenant from such Transfer in excess of the Basic Rent
attributable to the affected premises shall be paid promptly to Landlord as Rent
hereunder, after first deducting all reasonable and customary costs actually
incurred by Tenant to effect such Transfer (such as tenant improvements,
brokerage fees, advertising costs and the like).

 
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10.4           General.  Tenant shall promptly provide Landlord with any
additional information concerning the proposed transferee (including financial
information and detailed information regarding the proposed use of the Premises)
reasonably requested by Landlord.  Landlord may charge Tenant a reasonable sum
to reimburse Landlord for legal and administrative costs incurred in connection
with reviewing any proposed Transfer and Tenant shall provide Landlord with a
copy of the assignment or sublease agreement.  No Transfer shall relieve Tenant
of any liability under this Lease.  Landlord’s consent to any Transfer shall not
operate as a waiver of the necessity for consent to any subsequent Transfer.
 
10.5           Bankruptcy.  If this Lease is assigned pursuant to the provisions
of The Revised Bankruptcy Act, 11 U.S.C., Section 101, et seq., any and all
consideration paid or payable in connection with such assignment shall be
Landlord’s exclusive property and paid or delivered to Landlord, and shall not
constitute the property of Tenant or Tenant’s estate in bankruptcy.  Any person
or entity to whom the Lease is assigned pursuant to the Revised Bankruptcy Act
shall be deemed automatically to have assumed all of Tenant’s obligations under
this Lease.
 
11.           Care of Premises.  Tenant shall keep the Premises in a neat, clean
and sanitary condition and shall at all times preserve them in good condition
and repair, ordinary wear and tear or damage due to casualty or condemnation
excepted.  If Tenant shall fail to do so, Landlord may at its option, after
notice to Tenant (except in an emergency when no notice shall be required),
place the Premises into said condition and state of repair, and in such case
Tenant on demand shall pay or reimburse Landlord for the costs thereof.  Tenant
shall reimburse Landlord for the cost of replacing all broken glass with glass
of same or similar quality.
 
12.           Surrender of Premises; Removal of Property.  Subject to the terms
of Section 15 relating to damage and destruction, upon expiration or termination
of the Term, whether by lapse of time or otherwise (including any holdover
period), Tenant at its expense shall:  (a) remove all of Tenant’s moveable
personal property, goods and effects and those of all persons claiming under
Tenant from the Premises; (b) remove all telecommunications and computer
networking wiring and cabling installed by or on behalf of Tenant, to the extent
required by Landlord; (c) complete the clean up and decommissioning of the
Premises as required in Section 6.4.9 above; (d) repair and restore the Premises
to a condition as good as when received by Tenant from Landlord or as thereafter
improved, reasonable wear and tear excepted; and (e) promptly and peacefully
surrender the Premises to Landlord.  Any property left on the Premises after the
expiration or termination of the Term shall be deemed to have been abandoned and
to have become the property of Landlord to dispose of as Landlord deems
expedient, and Tenant shall be liable for all costs associated with the disposal
of such property.  Tenant hereby waives all claims for damages that may be
caused by Landlord’s reentering and taking possession of the Premises or
removing and storing Tenant’s property as herein provided, and Tenant shall
indemnify and hold harmless Landlord therefrom.  No such reentry shall be
considered or construed to be a forcible entry.

 
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13.           Alterations.  After the Commencement Date, Tenant shall not make
any additions, changes, alterations or improvements (“Alterations”) to the
Premises or the Building, without the prior written consent of Landlord.  All
Alterations shall be at Tenant’s sole cost and shall be performed in a good and
workmanlike manner and all materials used shall be of a quality comparable to
those in the Premises and the Building and shall be in accordance with plans and
specifications approved by Landlord.  All Alterations shall be performed in
accordance with reasonable requirements established by Landlord, including, upon
Landlord’s request, provision of a lien and completion bond in an amount equal
to 150% of the cost of the Alterations.  In any case, Tenant shall pay Landlord
a reasonable fee to cover Landlord’s costs incurred in reviewing Tenant’s plans
and specifications.  Tenant shall maintain a safe working environment, including
the continuation of all fire and security protection devices, if any, previously
installed in the Premises by Landlord.  All damages or injury done to the
Premises or the Building by Tenant or by any persons who may be in or upon the
Premises or the Building with the express or implied consent of Tenant,
including but not limited to the cracking or breaking of any glass of windows
and doors, shall be paid for by Tenant and Tenant shall pay for all damage to
the Building caused by acts or omissions of Tenant or Tenant’s officers,
contractors, subcontractors, agents, invitees, licensees, employees, successors
or assigns.  If Landlord consents to any Alterations by Tenant, the same shall
not be deemed a warranty as to the adequacy of the design, workmanship or
quality of materials, and Landlord hereby expressly disclaims any responsibility
or liability for the same.  Landlord shall under no circumstances have any
obligation to repair, maintain or replace any portion of any
Alterations.  Except as otherwise provided herein, all Alterations, except
Tenant’s moveable personal property that does not become a part of the Building
shall remain in and be surrendered with the Premises as a part thereof at the
expiration or sooner termination of this Lease.  Landlord may require Tenant to
remove any Alterations and to restore the Premises to its condition prior to the
completion of any Alterations at the expiration or termination of the Term, such
work to occur at Tenant’s expense and Tenant shall repair all damage to the
Premises or Building occurring as a result of such removal or restoration.  If
Tenant fails to remove any Alterations as required by Landlord or repair any
damage occurring during such removal, Landlord shall be entitled to remove any
Alterations or make such repairs, at Tenant’s expense.  Tenant shall comply with
all applicable laws, codes and regulations in connection with all Alterations.
 
14.           Entry and Inspection.  Landlord at all reasonable times and on
reasonable prior notice (which may be oral notice to Tenant’s facility manager)
(or without notice and at any time in case of emergency) may enter the Premises
for the purpose of inspection, cleaning, repairing, altering or improving the
Premises or the Building.  Nothing in this Section 14 shall impose upon Landlord
any obligation not expressly imposed elsewhere in this Lease.  Landlord shall
have the right at reasonable times and on reasonable prior notice (which may be
oral notice to Tenant’s facility manager) to enter the Premises for the purpose
of showing the Premises to any fee owners, ground lessors, holders of
encumbrances on the interest of Landlord and any prospective purchasers,
mortgagees, ground lessors or tenants of the Building or a portion thereof.  If
during the last month of the Term Tenant shall have removed substantially all of
Tenant’s property and personnel from the Premises, Landlord may enter the
Premises and repair, alter and redecorate the same without abatement of Rent and
without liability to Tenant, and such acts shall have no effect on this Lease.
 
15.           Damage or Destruction.
 
15.1           Damage and Repair.  In case of damage to the Premises by fire or
other casualty, Tenant shall notify Landlord immediately after Tenant’s learning
thereof.  If the Building is damaged by fire or any other cause Landlord may
elect to terminate this Lease by notice to Tenant.  In the event of such
election this Lease shall be deemed to terminate on the date set forth in such
notice, and Tenant shall surrender possession of the Premises within a
reasonable time thereafter, and the Rent shall be apportioned as of the date of
Tenant’s surrender and any Rent paid for any period beyond such date shall be
repaid to Tenant.  Alternately, if the Premises and/or the common areas of the
Building shall be damaged or destroyed by fire or casualty, Tenant shall have
the right to terminate this Lease, provided that notice thereof is given to the
other party not later than thirty (30) days after the date of such damage or
destruction and, said termination shall be effective as of the date of the
notice provided hereunder.
 
If Landlord or Tenant does not elect to terminate this Lease then Landlord shall
restore the Building and the Premises (to the extent of the improvements
originally provided by Landlord hereunder if such improvements can be legally
reconstructed under the relevant building codes applicable at the time of
rebuilding) with reasonable promptness, subject to delays beyond Landlord’s
control and delays in the making of insurance adjustments by Landlord.  To the
extent and for the period that the Premises are rendered untenantable, Rent
shall proportionally abate, unless such damage resulted from the act, fault or
neglect of Tenant, Tenant’s officers, contractors, subcontractors, agents,
employees, or licensees, in which case Rent shall abate only to the extent
Landlord receives proceeds from any rental income insurance policy to compensate
Landlord for a loss of Rent hereunder.

 
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15.2           Business Interruption.  No consequential or other damages,
compensation or claims shall be payable by Landlord for inconvenience, loss of
business or annoyance arising from any damage to or repair or restoration of any
portion of the Premises or the Building.
 
15.3           Property of Tenant.  Landlord will not carry insurance of any
kind on any property of Tenant, including inventory, equipment, furniture and
trade fixtures, and any Alterations and Landlord shall not be obligated to
repair any damage thereto or replace the same.
 
16.           Indemnification.  Tenant shall indemnify, hold harmless and defend
Landlord from and against all liabilities, damages, suits, obligations, fines,
losses, claims, actions, judgments, penalties, charges, costs, or expenses,
including, without limitation, attorneys’ and other professional fees and
disbursements, in conjunction with any loss of life, personal injury and/or
property damage arising out of or relating to the occupancy or use by Tenant or
any party claiming by or through Tenant of any part of the Premises or the
Building (including the animal facility) occasioned wholly or in part by any act
or omission of Tenant or its officers, contractors, subcontractors, licensees,
agents, servants, employees, guests, invitees or visitors, or any assignee or
sublessee or any other party for whom Tenant would otherwise be
liable.  Landlord shall not be liable for any loss or damage to persons or
property sustained by Tenant or other persons, which may be caused by theft, or
by any act or neglect of any tenant or occupant of the Building or any other
third parties, unless arising out of Landlord’s negligence or intentional
misconduct.  To the extent, but only to the extent, necessary to fully indemnify
Landlord from claims made by Tenant or its employees, this indemnity constitutes
a waiver of Tenant’s immunity under the Washington Industrial Insurance Act, RCW
Title 51 as between Landlord and Tenant only.
 
17.           Insurance.
 
17.1           Liability Insurance.  Throughout the Term Tenant, at its own
expense, shall keep and maintain in full force and effect a policy of commercial
general liability insurance including a contractual liability endorsement
covering Tenant’s obligations under Section 16, insuring Tenant’s activities
upon, in and about the Premises and the Building against claims of bodily injury
or death or property damage or loss with a limit of not less than Five Million
Dollars ($5,000,000) combined single limit per occurrence and in the aggregate
(per policy year).
 
17.2           Property Insurance.  Throughout the Term Tenant, at its own
expense, shall keep and maintain in full force and effect what is commonly
referred to as “Causes of Loss-Special Form” coverage insurance or its
equivalent (including riot and civil commotion, vandalism and malicious mischief
and earthquake) on all property of Tenant, including inventory, equipment,
floor, ceiling and wall coverings, furniture and trade fixtures, and any
Alterations to the Premises that are paid for by Tenant in an amount not less
than the then current replacement value thereof.
 
17.3           Workers’ Compensation Insurance.  Throughout the Term Tenant, at
its own expense, shall keep and maintain in full force and effect workers’
compensation insurance in an amount equal to at least the minimum statutory
amount then currently required in the State of Washington.
 
17.4           Other.  Tenant shall also obtain such other form or forms of
insurance as are generally required or obtained for similar projects, as
Landlord or any mortgagee of Landlord may reasonably require from time to time
against the same or other insurable hazards which at the time are commonly
insured against in the case of premises similarly situated, due regard being
given to the type of buildings thereon and their construction, use and
occupancy.

 
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17.5           Insurance Policy Requirements.  All insurance required under this
Section 17 shall be with companies rated AX or better in Best’s Insurance Guide
and who are qualified to do business in the State of Washington.  Tenant may
elect to have reasonable deductibles in connection with the policy required
pursuant to Section 17.2 above.  No insurance policy required under this Section
17 shall be cancelled or materially altered in coverage and each insurance
policy shall provide that it is not subject to cancellation, nonrenewal, or
material alteration in coverage except after thirty (30) days prior written
notice to Landlord.  Tenant shall deliver to Landlord prior to the Commencement
Date and from time to time thereafter, copies of policies of such insurance or
certificates evidencing the existence and amounts of same and, with the
exception of the policy required under Section 17.3, naming Landlord and
Landlord’s Mortgagee as additional insureds thereunder, and each policy or
certificate shall expressly provide that the interest of Landlord therein shall
not be affected by any breach by Tenant of any provision of such policy or the
policy for which such certificate evidences coverage.  Further, all certificates
shall expressly provide that the coverage evidenced thereby shall be primary and
that any policies carried by Landlord shall be excess and noncontributory with
such primary insurance.  The limits of any required insurance policy shall not
limit the liability of Tenant under this Lease.
 
17.6           Waiver of Subrogation.  Notwithstanding any other provision to
the contrary herein, Landlord and Tenant release each other, their agents and
employees from liability and waive all right of recovery against each other for
any loss from perils insured against under their respective policies for damage
caused by fire or other perils (including those covered by all risk extended
coverage) that are covered by insurance, regardless of any fault or
negligence.  Each party shall use reasonable efforts to cause its insurance
carriers to consent to the foregoing waiver of rights of subrogation against the
other party.  The waiver of subrogation provided herein shall apply to the full
extent, but only to the extent, that the same shall be valid and enforceable
without impairment of insurance coverage.
 
18.           Advertising and Signs.  Tenant shall not place on the Premises or
the Building, any sign or advertising matter and shall not place any decoration,
letter or other thing of any kind on the glass of any window or door of the
Premises visible from the exterior thereof (except as required by law), without
the prior written consent of Landlord.  Tenant may install approved signage in
the main lobby of the Building and adjacent to the entrance to the Premises on
the fifth floor.  With respect to any sign or advertising matter or decoration
approved by Landlord, Tenant at its sole cost and expense shall maintain the
same in good condition and repair at all times.  Landlord hereby reserves the
exclusive right to use for any purpose whatsoever the roof and exterior of the
walls of the Premises or the Building.  Landlord reserves the right to remove
temporarily Tenant’s signs during any period when Landlord repairs, restores,
constructs or renovates the Premises or the Building.  Upon the expiration or
sooner termination of this Lease, Tenant at Landlord’s request shall remove all
signs, advertising matters or decorations at Tenant’s sole cost and expense and
repair any resulting damage to the Premises and the Building.
 
19.           Insolvency and Liens.
 
19.1           Insolvency.  If Tenant becomes insolvent or voluntarily or
involuntarily bankrupt, or if a receiver, trustee or other liquidating officer
is appointed for the business of Tenant, Landlord at its option may terminate
this Lease and Tenant’s right of possession under this Lease and in no event
shall this Lease or any rights or privileges hereunder be an asset of Tenant in
any bankruptcy, insolvency or reorganization proceeding, or Landlord may treat
such insolvency as a default under Section 21 of this Lease and invoke any and
all remedies available thereunder.  In the event of an assumption or assignment
by operation of law under the Federal Bankruptcy Code or any state bankruptcy or
insolvency law and Landlord elects not to terminate this Lease (or is otherwise
prevented from electing to terminate this Lease), the trustee in assuming this
Lease or any assignee thereof shall (a) remedy Tenant’s prior default under this
Lease, (b) be bound by and assume all of the terms and conditions of this Lease,
(c) provide adequate assurances of future performance of all the terms,
conditions and covenants of this Lease, which shall include making the following
express covenants to the Landlord:  (1) there is sufficient capital to pay all
Rent due under the Lease for the entire Term, and (2) assumption of the Lease by
any assignee will not cause Landlord to be in violation or breach of any
provision of any other lease, finance agreement, security instrument or
operating agreement concerning the Building or the Property.

 
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19.2        Liens.  Tenant shall not permit any lien to be filed against the
Premises, the Building or the property on which it is located by reason of
obligations incurred by or on behalf of Tenant.  Tenant hereby indemnifies and
holds Landlord harmless from any liability from any such lien.  If any lien is
filed against the Premises, the Building or the property by any person claiming
by, through or under Tenant, Tenant shall upon request of Landlord, at Tenant’s
expense, immediately cause such lien to be released, or, at Landlord’s election,
furnish to Landlord a bond in form and amount and issued by a surety
satisfactory to Landlord, indemnifying Landlord, the Building and the property
against all liability, costs and expenses, including attorneys’ fees, which
Landlord may incur as a result thereof.  Provided that such bond has been
furnished to Landlord, Tenant, at its sole cost and expense and after written
notice to Landlord, may contest, by appropriate proceedings conducted in good
faith and with due diligence, any lien, encumbrance or charge against the
Premises arising from work done or materials provided to and for Tenant, if, and
only if, such proceedings suspend the collection thereof from Landlord, Tenant
and the Premises, and neither the Premises, the Building, the property nor any
part thereof or interest therein is or will be in any danger of being sold,
forfeited or lost.
 
20.        Condemnation.
 
20.1        Entire Taking.  If any of the Premises or all of the Building or
such portions of the Building as may be required for the reasonable use of the
Premises for the uses permitted hereunder, are taken by eminent domain or
conveyance in lieu thereof, this Lease shall automatically terminate as of the
date title vests in the condemning authority and all Rent shall be paid to that
date.
 
20.2        Partial Taking.  In the event of a taking of a part of the Building
other than the Premises or of a portion of the property, and if Landlord
determines that the Building should be restored in such a way as to alter the
Premises materially, Landlord may terminate this Lease and the term and estate
hereby granted by notifying Tenant of such termination within sixty (60) days
following the date of vesting of title; and this Lease and the term and estate
hereby granted shall expire on the date specified in the notice of termination,
not less than one hundred twenty (120) days after the giving of such notice, as
fully and completely as if such date were the date hereinbefore set forth for
the expiration of the Term, and the Rent hereunder shall be apportioned as of
such date.  Subject to the foregoing provisions of this Section 20, in case of
taking of a portion of the Building or the Property not required for the
reasonable use of the Premises for the conduct of Tenant’s business, then this
Lease shall continue in full force and effect.
 
20.3        Awards and Damages.  Landlord reserves all rights to damages to the
Premises and all tenant improvements, Alterations and attached personal
property, for any partial or entire taking by eminent domain, Tenant hereby
assigns to Landlord any right Tenant may have to such damages or award (except
for moveable personal property of Tenant) and Tenant shall make no claim against
Landlord or the condemning authority for damages for termination of the
leasehold interest.  Tenant shall have the right to claim and recover from the
condemning authority such compensation as may be separately awarded to Tenant
for any loss of its personal property and removable trade fixtures belonging to
Tenant, as well as Tenant’s relocation expenses and business interruption, but
only to the extent that such loss is awarded separately in the eminent domain
proceeding and not out of or as part of the damages recoverable by Landlord.

 
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21.          Default; Remedies.
 
21.1        Events of Default.  Each of the following shall be deemed a default
by Tenant and a material breach of this Lease:
 
21.1.1        Failure by Tenant to pay when due any Rent hereunder if such
failure shall continue for a period of three (3) days after written notice
thereof has been given to Tenant; or
 
21.1.2        Failure by Tenant to perform or observe any of the other terms,
covenants, conditions, agreements or provisions of this Lease if such failure
shall continue for a period of twenty (20) days after written notice thereof has
been given to Tenant; provided, however, that if any such failure cannot
reasonably be cured within such twenty (20) day period, then Tenant shall not be
deemed to be in default if Tenant commences to cure such failure within a
reasonable time not to exceed twenty (20) days and for as long as Tenant is
diligently prosecuting the cure thereof; or
 
21.1.3        Failure by Tenant to use and occupy the Premises for a period in
excess of sixty (60) days.
 
21.2        Landlord Remedies for Tenant Default.  If any default occurs
hereunder, and is continuing after notice from Landlord and the expiration of
any applicable cure period, Landlord may, at any time thereafter and without
waiving any other rights hereunder, do one or more of the following:
 
21.2.1        Landlord’s Reentry.  At its option, Landlord may enter the
Premises or any part thereof, either with or without process of law, and expel,
remove or put out Tenant or any other persons who may be thereon, together with
all personal property found therein; and Landlord may terminate this Lease, or
it may from time to time, without terminating this Lease and as agent of Tenant,
relet the Premises or any part thereof for such term or terms (which may be for
a term less than or extending beyond the term hereof), and at such rental or
rentals and upon such other terms and conditions as Landlord in its sole
discretion may deem advisable, with the right to repair, renovate, remodel,
redecorate, alter and change the Premises, Tenant remaining liable for any
deficiency computed as hereinafter set forth.  In the case of any default
reentry and/or disposition by summary proceedings or otherwise, all Rent shall
become due thereupon and be paid up to the time of such reentry or dispossession
together with such expenses as Landlord may incur for attorneys’ fees,
advertising expenses, brokerage fees and/or putting the Premises in the order in
which Tenant was required to surrender the Premises or preparing the same for
rerental, together with interest thereon as provided in Section 21.4 hereof,
accruing from the date of any such expenditure by Landlord.  No such reentry or
taking possession of the Premises shall be construed as an election on
Landlord’s part to terminate this Lease unless a written notice of such
intention is given to Tenant.
 
21.2.2        Reletting of Premises.  At the option of Landlord, any rents
received by Landlord from any reletting as described in Section 21.2.1 shall be
applied first to the payment of any indebtedness from Tenant to Landlord other
than Rent; second, to the payment of any costs and expenses of such reletting
and including, but not limited to, attorneys’ fees, advertising fees and
brokerage fees, and to the payment of any repairs, renovations, remodeling,
redecoration, alterations and changes in the Premises; third, to the payment of
Rent due and to become due hereunder, and, if after so applying said rents there
is any deficiency in the Rent to be paid by Tenant under this Lease, Tenant
shall pay any deficiency to Landlord monthly on the dates specified herein and
any payment made or suits brought to collect the amount of the deficiency for
any months shall not prejudice in any way the right of Landlord to collect the
deficiency for any subsequent month.  The failure or refusal of Landlord to
relet the Premises or any part or parts thereof shall not release or affect
Tenant’s liability hereunder, nor shall Landlord be liable for failure to relet,
or in the event of reletting, for failure to collect the rent thereof, but
Landlord shall use good faith efforts to mitigate its damages to the extent
required by law, and in no event shall Tenant be entitled to receive any excess
of net rents collected over sums payable by Tenant to Landlord hereunder.

 
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21.2.3        Termination.  Notwithstanding any reletting without termination as
described in Section 21.2.1, Landlord may at any time elect to terminate this
Lease for such previous breach and default.  Should Landlord at any time
terminate this Lease by reason of any default, in addition to any other remedies
it may have, Landlord may recover from Tenant the present value of the entire
amount of Rent reserved by this Lease for the balance of the Term, as it may
have been extended, over the then fair market rental value of the Premises for
the same period, plus all expenses, including court costs and attorneys’ fees,
incurred by Landlord in the collection of the same.
 
21.3        Cumulative Remedies.  All rights and remedies of Landlord herein
enumerated shall be cumulative, and none shall exclude any other right or remedy
allowed by law or equity.
 
21.4        Late Payments.  All Rent not paid on the due date shall bear
interest from the date due at the rate of fourteen percent (14%) per annum or
the maximum permitted by law, whichever is less.  In addition to any interest
that may be charged hereunder, if Tenant has been more than three (3) days late
in any payment of Rent, then Landlord, at its option, may collect from Tenant a
late charge for the collection in an amount equal to five percent (5%) of the
amount due.
 
22.        Subordination to Mortgage.  This Lease is and shall be subordinate to
any mortgage or deed of trust placed at any time on the Building or the Property
by Landlord and to any and all advances to be made thereunder and to interest
thereon and all modifications, renewals and replacements or extensions thereof
(“Landlord’s Mortgage”), and Tenant shall attorn to the holder of any Landlord’s
Mortgage or any person or persons purchasing or otherwise acquiring the
Building, the Property or the Premises at any sale or other proceeding under any
Landlord’s Mortgage.  If the holder or prospective holder of any Landlord’s
Mortgage wishes to have this Lease as a prior lien to the Landlord’s Mortgage,
it shall be so deemed upon the holder thereof so notifying Tenant.  Tenant shall
properly execute and deliver within ten (10) days after written notice any
documents Landlord or the holder of any Landlord’s Mortgage may reasonably
require to carry out the provisions of this Section.  If, in connection with
obtaining financing for the Property or the Building, any holder of a Landlord’s
Mortgage shall request reasonable modifications in this Lease as a condition to
such financing, Tenant shall not withhold, delay or defer its consent thereto,
provided that such modifications do not increase Tenant’s financial obligations
hereunder or materially increase Tenant’s other obligations or restrict Tenant’s
rights to use the Premises.
 
23.        Holdover.  If Tenant shall, with the written consent of Landlord,
hold over beyond the expiration of the Term, such tenancy shall be deemed a
month-to-month tenancy that may be terminated as provided by applicable state
law.  During such tenancy Tenant shall be bound by all the terms, covenants and
conditions as herein specified as far as applicable, except Basic Rent, which
shall be one hundred fifty percent (150%) of the Basic Rent due prior to the
expiration of the Term.
 
24.        Agent.  Landlord may at any time appoint an agent (“Agent”) in all
matters concerning this Lease, and Tenant, if so notified by Landlord in
writing, shall pay all Rent and give any notices hereunder to Agent at
Landlord’s Address set forth on the signature page of this Lease.  As long as
such agency shall exist, each and every term and provision of this Lease that is
in any way beneficial to Landlord, including every stipulation imposing or
limiting liability, shall inure to the benefit of Agent and its agents and shall
be applicable to Agent and its agents in the same manner as fully and with the
same effect as Landlord.

 
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25.        Notices.  All notices under this Lease shall be in writing and
delivered in person (by a party or by a messenger service that provides proof of
delivery), sent by nationally recognized overnight courier, or sent by
registered or certified mail, return receipt requested, postage prepaid to
Landlord and to Tenant at the addresses set forth on the signature page of this
Lease and to the holder of any Landlord’s Mortgage at such place as such holder
shall specify to Tenant in writing; or to such other addresses as may from time
to time be designated by any such party in writing (except that, after the
Commencement Date, any service of process may be served on Tenant at the
Premises).  Notices mailed as aforesaid shall be deemed given at the earlier of
three (3) business days after the date of such mailing or upon the date of
receipt or refusal of delivery.
 
26.        Costs and Attorneys’ Fees.  If Tenant or Landlord shall bring any
action or commence any arbitration proceeding arising out of this Lease, the
nonprevailing party in such action or arbitration shall reimburse the prevailing
party for all reasonable attorneys’ fees (including court costs and
disbursements) incurred in such suit or arbitration, at trial, arbitration and
on appeal, and such attorneys’ fees shall be deemed to have accrued on the
commencement of such action or arbitration.
 
27.        Estoppel Certificates.  Tenant, shall, from time to time, upon
written request of Landlord, execute, acknowledge and deliver to Landlord or its
designee a written statement certifying, representing and warranting:  (a) the
date this Lease was executed and the date it expires; (b) the Commencement Date
and the date Tenant accepted the Premises; (c) the amount of Basic Rent and any
then applicable Additional Rent and any other sums payable under the Lease and
date to which such rent and/or other sums have been paid; and (d) certifying to
the best of its knowledge:  (i) that this Lease is in full force and effect and
has not been assigned, supplemented or amended in any way (or specifying the
date and terms of any agreement so affecting this Lease); (ii) that this Lease
represents the entire agreement between the parties as to this tenancy (or
specifying the date and terms of any other agreements as to this tenancy); (iii)
that all conditions under this Lease to be performed by the Landlord have been
satisfied (or specifying any such unsatisfied conditions and the extent to which
such conditions are unsatisfied); (iv) that there are no existing claims,
defenses or offsets that the Tenant has against the enforcement of this Lease by
the Landlord (or specifying the nature and amount of any such claims, defenses
or offsets); (v) that no Rent has been paid more than one month in advance (or
specifying the amount and payment dates of any Rent that has been so paid); (vi)
the amount of the Security Deposit held by Landlord (if any); and (vii) any
other factual information or items reasonably requested by Landlord.  It is
intended that any such statement delivered pursuant to this Section 27 may be
relied upon by Landlord and any prospective purchaser of, or current or
prospective holder of any mortgage upon Landlord’s interest in, the Building
and/or the Property.  If Tenant shall fail to provide such estoppel certificate
within ten (10) days of receipt by Tenant of a written request by Landlord as
herein provided, Tenant shall be deemed to have given such certificate as above
provided without modification and shall be deemed to have admitted the accuracy
of any information supplied by Landlord to any prospective purchaser or
mortgagee and to have certified that this Lease is in full force and effect,
that there are no uncured defaults in Landlord’s performance, that the Security
Deposit is as stated in the Lease, and that not more than one month’s Rent has
been paid in advance.
 
28.        Limitation of Liability.  Notwithstanding any other Lease provision,
all covenants, undertakings and agreements herein made on the part of Landlord
are made and intended not as personal covenants, undertakings and agreements for
the purpose of binding Landlord personally or the assets of Landlord except
Landlord’s interest in the Building, but are made and intended for the purpose
of binding only the Landlord’s interest in the Building, as the same may from
time to time be encumbered.  No personal liability or personal responsibility is
assumed by, nor shall at any time be asserted or enforceable against Landlord or
its partners, shareholders, directors and officers or their respective heirs,
legal representatives, successors or assigns on account of this Lease or on
account of any covenant, undertaking or agreement of Landlord contained in this
Lease.

 
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29.        Transfer of Landlord’s Interest.  In the event of any transfer or
transfers of Landlord’s interest in the Premises or in the Building, other than
a transfer for security purposes only, the transferor shall be automatically
relieved of any and all obligations and liabilities on the part of Landlord
accruing from and after the date of such transfer.  Tenant agrees to attorn to
the transferee, such attornment shall be deemed to occur automatically without
further agreement of Tenant.
 
30.        Nonwaiver.  Waiver by Landlord of any term, covenant or condition
herein contained or any breach thereof shall not be deemed to be a waiver of
such term, covenant, or condition or of any subsequent breach of the same or any
other term, covenant or condition herein contained.  The subsequent acceptance
of any 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.
 
31.        Quiet Possession.  Landlord warrants that so long as Tenant is not in
default under this Lease beyond any applicable cure period, Tenant’s quiet
possession of the Premises during the Term shall not be disturbed by Landlord or
others claiming through Landlord.
 
32.        General.
 
32.1        Headings.  Titles or captions to sections of this Lease are not a
part of this Lease and shall have no effect upon the construction or
interpretation of any part hereof.
 
32.2        Successors and Assigns.  All of the covenants, agreements, terms and
conditions contained in this Lease shall inure to and be binding upon Landlord
and Tenant and their respective heirs, executors, administrators, successors and
permitted assigns, but this shall not be construed as permitting any assignment
by Tenant not otherwise permitted hereunder.
 
32.3        Brokers.  Tenant represents and warrants to Landlord that it has not
engaged any broker, finder or other person who would be entitled to any
commission or fees from Landlord in respect of the negotiation, execution or
delivery of this Lease, and Tenant shall indemnify and hold Landlord harmless
from and against any loss, cost, liability or expense incurred by Landlord as a
result of any claim asserted by any such broker, finder or other person based on
any arrangements or agreements made or alleged to have been made by or on behalf
of Tenant.
 
32.4        Entire Agreement.  This Lease, including the Exhibits attached
hereto, contains all covenants and agreements between Landlord and Tenant
relating in any manner to the leasing, use and occupancy of the Premises and
Tenant’s use of the Building and the Property and other matters set forth in
this Lease.  No prior agreements or understandings pertaining to the same shall
be valid or of any force or effect and the covenants and agreements of this
Lease shall not be altered, modified or added to except in writing signed by
Landlord and Tenant.
 
32.5        Severability.  Any provision of this Lease that shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate any other
provision hereof and the remaining provisions hereof shall remain in full force
and effect.
 
32.6        Force Majeure.  Time periods for Landlord’s or Tenant’s performance
under any provisions of this Lease shall be extended for periods of time during
which Landlord’s or Tenant’s performance is prevented due to circumstances
beyond such party’s control, including without limitation, strikes, embargoes,
shortages of labor or materials, governmental regulations, acts of God, war or
other strife.  Notwithstanding the foregoing, this provision shall not excuse or
delay the due date of any payment of Rent or other sum owed by either party
hereunder.

 
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32.7        Changes to Building.  Landlord may at its option make any repairs,
alterations, additions or improvements that Landlord may deem necessary or
advisable for the preservation, safety or improvement of the Building, so long
as Tenant has reasonable access to the Premises.  If the repairs, alterations,
additions or improvements involve work within the Premises then Landlord shall
notify Tenant prior to commencing such work (except in an emergency).  Landlord
shall have the right from time to time without thereby creating an actual or
constructive eviction or incurring any liability to Tenant, to renovate, repair,
replace, and/or change the arrangement or location of any of the
following:  sidewalks, terraces, landscaping, loading and/or delivery areas,
parking areas, lobbies, entrances, passageways, doors and doorways, corridors,
stairs, toilets and other common areas of the Building, mechanical, cooling,
heating, ventilation, security, electrical, lighting, plumbing and other systems
servicing the Building, and other similar common service portions of the
Building.  Landlord shall incur no liability to Tenant, nor shall Tenant be
entitled to any abatement of Rent on account of any noise, vibration, or other
disturbance to Tenant’s business in the Premises (provided that Tenant is not
denied access to the Premises) that shall arise out of the performance by
Landlord of any aforesaid improvements or renovations at or to the
Building.  Landlord may change the name of the Building at any time.
 
32.8        Governing Law.  This Lease shall be governed by and construed in
accordance with the laws of the State of Washington.
 
32.9        Authority.  The individual executing this Lease on behalf of Tenant
represents and warrants that he/she is duly authorized to execute and deliver
this Lease on behalf of the Tenant in accordance with a duly adopted resolution
of the board of directors of Tenant and in accordance with Tenant’s bylaws, and
that this Lease is binding upon Tenant in accordance with its terms.  Tenant
shall provide evidence of Tenant’s authority reasonably satisfactory to
Landlord.
 
32.10        Time of Essence.  Time is of the essence of this Lease.
 
32.11        Waiver of Jury Trial.  The parties hereto waive any right to a
trial by jury in any action or proceeding based upon, or related to, the subject
matter of this Lease.  This waiver is knowingly, intentionally and voluntarily
made by Tenant, and Tenant acknowledges that neither Landlord nor any person
acting on behalf of Landlord has made any representations of fact to induce this
waiver of trial by jury or in any way to modify or nullify its effect.  Tenant
further acknowledges that Tenant has been represented (or has had the
opportunity to be represented) in the signing of this Lease and in the making of
this waiver by independent legal counsel, selected of Tenant’s own free will,
and that Tenant has had the opportunity to discuss this waiver with
counsel.  Tenant further acknowledges that Tenant has read and understands the
meaning and ramifications of this waiver provision, and, as evidence of this
fact, signs its initials.
 
32.12        Execution in Counterparts.  This Lease may be executed in two or
more counterparts, each of which shall constitute an original and all of which
shall be one and the same agreement.
 
32.13        Binding on Landlord.  Submission of this Lease for examination,
even though executed by Tenant, shall not bind Landlord in any manner, and no
lease or other obligation on the part of Landlord shall arise until this Lease
is executed and delivered by Landlord to Tenant.
 
32.14        Recording.  Neither this Lease nor any memorandum hereof shall be
recorded except upon request by Landlord.

 
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32.15        Computation of Time.  The word “day” means “calendar day” herein
and the computation of time shall include all Saturdays, Sundays and holidays
for purposes of determining time periods specified herein.
 
33.         Parking.  There is no parking included with this lease.
 
34.         Representation.  Tenant represents and warrants that Tenant, all
persons and entities owning (directly or indirectly) an ownership interest in
Tenant and all guarantors of all or any portion of the Lease:  (i) are not, and
shall not become, a person or entity with whom Landlord is restricted from doing
business with under regulations of the Office of Foreign Asset Control (“OFAC”)
of the Department of the Treasury (including, but not limited to, those named on
OFAC’s Specially Designated and Blocked Persons list) or under any statute,
executive order (including, but not limited to, the September 24, 2001 Executive
Order Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism), or other governmental action; (ii)
are not knowingly engaged in, and shall not engage in, any dealings or
transaction or be otherwise associated with such persons or entities described
in (i) above; and (iii) are not, and shall not become, a person or entity whose
activities are regulated by The International Money Laundering Abatement and
Financial Anti-Terrorism Act of 2001 or the regulations or orders thereunder
 
IN WITNESS WHEREOF, the Landlord and the Tenant have executed this Lease as of
the day and year first above written.
 
LANDLORD:
PACIFIC NORTHWEST RESEARCH INSTITUTE,
 
a Washington nonprofit corporation
     
By
/s/ Carl Zhou
 
Its
Director of Facilities and IT

 
Address:
720 Broadway
   
Seattle, WA 98122
 
 
Attention:    Director of Finance
   
Telephone:  (206) 726-1220
   
Facsimile:     (206) 726-1217

TENANT:
Pacific Biometrics, Inc.,
 
a Washington corporation
     
By
/s  Michael P. Murphy, Ph.D.
 
Its
Senior Vice President, Operations

 
Address:
720 Broadway
   
Seattle, WA 98122
 
 
Attention:    John Jensen
   
Telephone:  (206) 298-0068 x201
   
Facsimile:     (206) 298-9838

 
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EXHIBIT A

SITE PLAN

[plan.jpg]

4th Floor, North side central.  Room 417, totaling 850 rentable square feet.

 
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ADDENDUM A
Shared equipment and facilities addendum

Included in this agreement is access to the following:
· Shared spaces:
o Two conference rooms
o Lunch room with refrigerator, sink, microwave and lockers
o Cold rooms
o Darkrooms
· Shared equipment:
o Gamma counter
o Scintillation counter
o Confocal microscope
o Ultracentrifuges
o Flow cytometer
o Sequencers
o Ice machines
o Various small equipment

Conference rooms and equipment shall be scheduled through PNDRI before
use.  Training on specialized equipment will be provided by PNDRI staff before
use by any employee or tenant.  Tenants are liable for any damages to equipment
caused by misuse or non-approved use by tenant.

 
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