Exhibit 10.1

LEASE

by and between

BMR-201 ELLIOTT AVENUE LLC,

a Delaware limited liability company

and

OMEROS CORPORATION,

a Washington corporation

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LEASE

THIS LEASE (this “Lease”) is entered into as of this 27th day of January, 2012
(the “Execution Date”), by and between BMR-201 ELLIOTT AVENUE LLC, a Delaware
limited liability company (“Landlord”), and OMEROS CORPORATION, a Washington
corporation (“Tenant”).

RECITALS

A. WHEREAS, Landlord owns certain real property (the “Property”) and the
improvements on the Property located at 201 Elliott Avenue, Seattle, Washington,
including the building located thereon; and

B. WHEREAS, Landlord wishes to lease to Tenant, and Tenant desires to lease from
Landlord, certain premises (the “Premises”) located on the first (1st), fourth
(4th) and fifth (5th) floors of the building in which the Premises are located
(the “Building”), pursuant to the terms and conditions of this Lease, as
detailed below.

AGREEMENT

NOW, THEREFORE, Landlord and Tenant, in consideration of the mutual promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
agree as follows:

1. Lease of Premises.

1.1. Effective on the Term Commencement Date, Landlord hereby leases to Tenant,
and Tenant hereby leases from Landlord, the Premises, as shown on Exhibit A
attached hereto, including exclusive shafts (if any), cable runs, mechanical
spaces and rooftop areas, for use by Tenant in accordance with the Permitted Use
(as defined below) and no other uses. The Property and all landscaping, parking
facilities, private drives and other improvements and appurtenances related
thereto, including the Building, are hereinafter collectively referred to as the
“Project.” All portions of the Project that are for the non-exclusive use of
tenants of the Building, including driveways, sidewalks, parking areas,
landscaped areas, service corridors, stairways, elevators, public restrooms,
conference facilities, café, fitness center (unless Tenant elects, and Landlord
agrees, not to have the fitness center constructed), hazardous material storage
areas, glass wash areas, the Property’s loading dock, and public lobbies, are
hereinafter referred to as “Common Area.” Landlord hereby represents and
warrants that it is the fee owner of the Property.

2. Basic Lease Provisions. For convenience of the parties, certain basic
provisions of this Lease are set forth herein. The provisions set forth herein
are subject to the remaining terms and conditions of this Lease and are to be
interpreted in light of such remaining terms and conditions.

2.1. This Lease shall take effect upon the Execution Date and, except as
specifically otherwise provided within this Lease, each of the provisions hereof
shall be binding upon and inure to the benefit of Landlord and Tenant from the
date of execution and delivery hereof by all parties hereto.

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2.2. In the definitions below, each current Rentable Area (as defined below) is
expressed in rentable square footage. Rentable Area and “Tenant’s Pro Rata
Share” are both subject to adjustment as provided in this Lease.

 

Definition or Provision

  

Means the Following (As of the Term Commencement Date)

Approximate Rentable Area of Premises    64,483 square feet Approximate Rentable
Area of Project    151,194 square feet Tenant’s Pro Rata Share of Project   
42.65%*

 

* Notwithstanding the Pro Rata Share set forth above, Tenant’s Pro Rata Share of
the Project for Months 1-24 of the Term (as defined below) shall be 33.07%
(based upon Fifty Thousand (50,000) square feet of Rentable Area); provided,
however, that Tenant shall have full access to the entire Premises for the
Permitted Use.

2.3. Initial monthly and annual installments of Base Rent for the Premises
(“Base Rent”) as of the Term Commencement Date, subject to adjustment under this
Lease:

 

Months of
Term

  Square Feet of
Rentable Area     Annual Base Rent
per Square Foot of
Rentable Area     Monthly Base
Rent     Annual Base
Rent   1 – 12     64,483      $ 0.00      $ 0.00      $ 0.00    13 – 24    
64,483 *    $ 50.48      $ 210,327      $ 2,523,929    25 – 36     64,483      $
50.37      $ 270,684      $ 3,248,207    37 – 48     64,483      $ 51.53      $
276,880      $ 3,322,564    49 – 60     64,483      $ 52.71      $ 283,232     
$ 3,398,780    61 – 72     64,483      $ 53.92      $ 289,742      $ 3,476,902
   73 – 84     64,483      $ 55.16      $ 296,415      $ 3,556,976    85 – 96  
  64,483      $ 56.43      $ 303,254      $ 3,639,052    97 – 108     64,483   
  $ 57.74      $ 310,265      $ 3,723,180    109 – 120     64,483      $ 59.08
     $ 317,451      $ 3,809,411   

 

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121 – 132     64,483      $ 60.45      $ 324,817      $ 3,897,798    133 – 144  
  64,483      $ 61.85      $ 332,366      $ 3,988,395    145 – 156     64,483   
  $ 63.29      $ 340,105      $ 4,081,257    157 – 168     64,483      $ 64.77
     $ 348,037      $ 4,176,440    169 – 180     64,483      $ 66.28      $
356,167      $ 4,274,003   

 

* Base Rent for months 13-24 of the Term (as defined below) shall be calculated
based on Fifty Thousand (50,000) square feet of Rentable Area; provided,
however, that Tenant shall have full access to the entire Premises for the
Permitted Use.

2.4. Estimated Term Commencement Date: October 1, 2012

2.5. Estimated Term Expiration Date: September 30, 2027

2.6. Security Deposit: $562,500, subject to decrease in accordance with the
terms hereof

2.7. Permitted Use: Office, laboratory, research and vivarium use in conformity
with all federal, state, municipal and local laws, codes, ordinances, rules and
regulations of Governmental Authorities (as defined below), committees,
associations, or other regulatory committees, agencies or governing bodies
having jurisdiction over the Premises, the Building, the Property, the Project,
Landlord or Tenant, including both statutory and common law and hazardous waste
rules and regulations (“Applicable Laws”)

 

2.8. Address for Rent Payment:

   BMR-201 Elliott Avenue LLC       Unit M       P.O. Box 51918       Los
Angeles, California 90051-6218

2.9. Address for Notices to Landlord:

   BMR-201 Elliott Avenue LLC          17190 Bernardo Center Drive          San
Diego, California 92128          Attn: Vice President, Real Estate Counsel

2.10. Address for Notices to Tenant:

  

Prior to the Term Commencement Date:

   Omeros Corporation          1420 5th Avenue          Suite 2600         
Seattle, WA 98101          Attention: Chief Executive Officer          Email:
gdemopulos@omeros.com

 

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With a copy to:

 

  Omeros Corporation   1420 5th Avenue   Suite 2600   Seattle, WA 98101  
Attention: General Counsel   Email: mkelbon@omeros.com

Following the Term Commencement Date:

  At the Premises sent to the attention of the Chief Executive Officer and a
copy sent to the attention of the General Counsel

2.11. Address for Invoices to Tenant:

 

Prior to the Term Commencement Date:

  Omeros Corporation   1420 5th Avenue   Suite 2600   Seattle, WA 98101  
Attention: Accounts Payable

Following the Term Commencement Date:

 

At the Premises to the attention of Accounts Payable

2.12. The following Exhibits are attached hereto and incorporated herein by
reference:

 

Exhibit A

  Premises

Exhibit B

  Tenant Improvements

Exhibit C

  Acknowledgement of Term Commencement Date and Term Expiration Date

Exhibit D

  Vibration Standard

Exhibit E

  Form of Letter of Credit

Exhibit F

  Rules and Regulations

Exhibit G

  [Intentionally omitted]

Exhibit H

  [Intentionally omitted]

Exhibit I

  Form of Estoppel Certificate

Exhibit J

  [Intentionally omitted]

Exhibit K

  Signage

Exhibit L

  Shared Vivarium Space

Exhibit M

  Shared Vivarium Equipment

Exhibit N

  Building Common Areas to Be Constructed

2.13. Landlord shall, within ten (10) days after the Execution Date, pay to
Tenant up to a maximum of Two Hundred Twenty-Seven Thousand Four Hundred Ten
Dollars ($227,410) as reimbursement of the fees paid by Tenant to Perkins+Will,
Inc., for architectural services in connection with the Tenant Improvements. In
order to receive such reimbursement, Tenant shall

 

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submit a Fund Request as set forth in Section 4.6; provided, however, that such
reimbursement shall not be considered as part of or deducted from the Allowance
(as defined in Section 4.6). In the event that charges from Perkins+Will, Inc.
have been invoiced, but have not been paid, Landlord shall pay such invoices
directly to Perkins+Will, Inc.

3. Term. The actual term of this Lease (as the same may be extended pursuant to
Article 42 hereof, and as the same may be earlier terminated in accordance with
this Lease, the “Term”) shall commence on the actual Term Commencement Date (as
defined in Article 4) and end on the date that is one hundred eighty
(180) months after the actual Term Commencement Date (such date, the “Term
Expiration Date”), subject to earlier termination of this Lease as provided
herein.

4. Possession and Commencement Date.

4.1. Landlord shall use commercially reasonable efforts to tender possession of
the Premises to Tenant on the Estimated Term Commencement Date, with the work
(the “Tenant Improvements”) required of Landlord described on Exhibit B
Substantially Complete (as defined below). The Tenant Improvements shall be
performed by Landlord at its sole cost and expense. Tenant agrees that in the
event such work is not Substantially Complete on or before the Estimated Term
Commencement Date for any reason, then, except as set forth below, (a) this
Lease shall not be void or voidable, (b) Landlord shall not be liable to Tenant
for any loss or damage resulting therefrom, (c) the Term Expiration Date shall
be extended accordingly and (d) Tenant shall not be responsible for the payment
of any Base Rent or Tenant’s Share of Operating Expenses (as defined below)
until the actual Term Commencement Date as described in Section 4.2 occurs.
Notwithstanding anything to the contrary, if Landlord has not tendered
possession of the Premises to Tenant with the Tenant Improvements Substantially
Complete by the Estimated Term Commencement Date, then Landlord shall pay Tenant
within ten (10) business days after receipt of an invoice therefor the amount of
any holdover premiums actually paid by Tenant under its current leases set forth
in the table below (“Holdover Premiums”) for each day that Substantial
Completion is delayed; provided, however, that Landlord shall not be responsible
for any Holdover Premiums to the extent the delay is caused by either (m) Tenant
or its agents, employees, contractors or invitees or (n) Force Majeure (as
defined in Section 16.2). The delays described in the previous sentence are
referred to herein as “Excusable Delays.”

 

Lease

  

Holdover Premium

Suite 650 and Eckland Lease (1124 Columbia Street, Seattle)    100% of the sum
of base rent plus Tenant’s share of operating expenses plus all other amounts
payable by Tenant under the relevant lease Storage Lease (1124 Columbia Street,
Seattle)    100% of base rent under the relevant lease

 

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Annex Lease (1124 Columbia Street, Seattle)    50% of the sum of base rent plus
Tenant’s share of operating expenses plus all other amounts payable by Tenant
under the relevant lease Omeros Corporate Space Lease (1420 Fifth Avenue,
Seattle)    50% of the sum of base rent plus Tenant’s proportional share of
total operating expenses under the relevant lease

Notwithstanding anything to the contrary in this Section, the Holdover Premiums
shall not exceed (y) collectively, One Hundred Nineteen Thousand Eight Hundred
Twelve and 84/100 Dollars ($119,812.84) per month (or individually, Sixty-Six
Thousand Three Hundred Fifty-Four and 24/100 Dollars ($66,354.24) per month for
the Suite 650 and Eckland Lease; One Thousand One Hundred Thirty and 65/100
Dollars ($1,130.65) per month for the Storage Lease; Thirty-Five Thousand Three
Hundred Thirty-Four and 78/100 Dollars ($35,334.78) per month for the Annex
Lease; and Sixteen Thousand Nine Hundred Ninety-Three and 17/100 Dollars
($16,993.17) per month for the Omeros Corporate Space Lease) for the period from
October 2012 through December 2012 or (z) collectively, One Hundred Twenty-One
Thousand Seven Hundred Three and 48/100 ($121,703.48) per month (or
individually, Sixty-Seven Thousand Four Hundred Twenty-Seven and 73/100 Dollars
($67,427.73) per month for the Suite 650 and Eckland Lease; One Thousand One
Hundred Forty and 99/100 Dollars ($1,140.99) per month for the Storage Lease;
Thirty-Five Thousand Nine Hundred Twenty-Two and 32/100 Dollars ($35,922.32) per
month for the Annex Lease; and Seventeen Thousand Two Hundred Twelve and 43/100
($17,212.43) per month for the Omeros Corporate Space Lease) for the period from
January 2013 through June 2013. Notwithstanding the foregoing, if Landlord has
not tendered possession of the Premises to Tenant with the Tenant Improvements
Substantially Complete within six (6) months following the Estimated Term
Commencement Date, but subject to Excusable Delays (such date, as may be
extended pursuant to the terms of this Lease, the “Outside Date”), then Tenant
may deliver written notice to Landlord within ten (10) business days after the
Outside Date of Tenant’s intent to terminate this Lease as of such date. If
Tenant so notifies Landlord, then Landlord shall have an additional thirty
(30) days from receipt of such termination notice to Substantially Complete the
Tenant Improvements (subject to extension on a day-for-day basis for Excusable
Delays). If Landlord does not Substantially Complete the Tenant Improvements
within such thirty (30) day period (as the same may be so extended, the “Cure
Period”), then Tenant may terminate this Lease (except for those provisions
that, by their express terms, survive the expiration or earlier termination
hereof) by giving Landlord written notice thereof (the “Cure Period Expiration
Notice”) within ten (10) business days after the expiration of the Cure Period.
If Landlord Substantially Completes the Tenant Improvements within the Cure
Period or if Tenant does not timely deliver the Cure Period Expiration Notice,
then this Lease shall continue in full force and effect. The term “Substantially
Complete” or “Substantial Completion” means that the Tenant Improvements are
substantially complete in accordance with Exhibit B, except for minor punch list
items and Landlord has received a temporary or permanent certificate of
occupancy for the Premises.

 

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4.2. The “Term Commencement Date” shall be the later of (a) the Estimated Term
Commencement Date and (b) the day Landlord tenders possession of the Premises to
Tenant with the Tenant Improvements Substantially Complete; provided that
Landlord shall endeavor to Substantially Complete the Tenant Improvements prior
to the Estimated Term Commencement Date (but in no event shall Landlord be
obligated to incur additional costs, use different contractors or use substitute
materials to achieve such result) and, if Landlord is able to achieve such
earlier completion, then Tenant, at its option, may elect by written notice to
Landlord to receive possession of the Premises on a date prior to the Estimated
Term Commencement Date, and in such event, the Term Commencement Date shall be
such date that Tenant receives possession of the Premises. If possession is
delayed by action of Tenant, then the Term Commencement Date shall be the date
that the Term Commencement Date would have occurred but for such delay. Tenant
shall execute and deliver to Landlord written acknowledgment of the actual Term
Commencement Date and the Term Expiration Date within ten (10) days after Tenant
takes occupancy of the Premises, in the form attached as Exhibit C hereto.
Failure to execute and deliver such acknowledgment, however, shall not affect
the Term Commencement Date or Landlord’s or Tenant’s liability hereunder.
Failure by Tenant to obtain validation by any medical review board or other
similar governmental licensing of the Premises required for the Permitted Use by
Tenant shall not serve to extend the Term Commencement Date.

4.3. Landlord shall permit Tenant to enter upon the Premises during the sixty
(60) days prior to the Term Commencement Date for the purpose of installing
improvements, placing personal property and preparing Tenant’s Vivarium Space
(as defined in Section 12.13) for Tenant’s use; provided that such early entry
shall only be allowed to the extent and in a manner that does not interfere with
or delay Landlord’s performance of the Tenant Improvements. Tenant shall furnish
to Landlord evidence satisfactory to Landlord that insurance coverages required
of Tenant under the provisions of Article 23 are in effect, and such entry shall
be subject to all the terms and conditions of this Lease other than the payment
of Base Rent, Property Management Fee or Tenant’s Share of Operating Expenses
(as defined below); and provided, further, that if the Term Commencement Date is
delayed due to such early access, then the Term Commencement Date shall be the
date that the Term Commencement Date would have occurred but for such delay.

4.4. Landlord shall pay to Tenant, on March 30, 2012, Three Million Dollars
($3,000,000) (the “Cash Incentive”).

4.5. In addition to the Tenant Improvements, Landlord, at its sole cost and
expense, shall design and construct improvements to the Building in order to
protect Tenant’s Vivarium Space (as defined in Section 12.13) and other
sensitive laboratory areas, including the cell culture area and areas in which
liquid chromatography, mass spectrometry, nuclear magnetic resonance, robotic or
imaging equipment or other sensitive equipment is used (collectively with
Tenant’s Vivarium Space, the “Sensitive Areas”), as shown on Exhibit D attached
hereto, from excess vibrations as a result of trains using the adjacent railroad
tracks (“Vibration Work”). The Vibration Work shall be deemed complete once the
Sensitive Areas meet the specifications set forth on Exhibit D (the “Vibration
Standard”). Landlord shall (a) use commercially reasonable efforts to complete
the Vibration Work by the Term Commencement Date (provided that such obligation
shall be extended day-for-day for Excusable Delays) and (b) provide written
evidence to Tenant evidencing that the Vibration Standard has been satisfied. If
the Vibration Work is not

 

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complete by the Term Commencement Date (but subject to extension as set forth in
(a) above), then Tenant shall receive a proportionate share (such proportion
based upon a fraction, the numerator of which is the sum of the Rentable Area of
any impacted Sensitive Area(s) plus the Rentable Area of any associated portions
of the Premises that Tenant is unable to use due to the Vibration Work not being
complete in accordance with this Section in such impacted Sensitive Area(s)
(such associated area(s) are referred to as the “Impacted Associated Area(s)”),
and the denominator of which is the Rentable Area of the Premises) of three
(3) days of free Base Rent for each day after the Term Commencement Date (or
such later date, if applicable) that the Vibration Work remains incomplete. Any
such abatement shall be applied as a credit to the Rent next coming due. For
purposes of this Section, the Rentable Area of the Sensitive Areas and Impacted
Associated Areas are defined as follows:

 

Sensitive Areas

   Square Feet Rentable Area of
Sensitive Areas    Square Feet Rentable Area of
Impacted Associated Areas Tissue culture    3,571    6,987 Robotics    2,400   
1,024 Mass spectrometry    2,021    1,206 Nuclear magnetic resonance    626   
375 Vivarium    16,882    –

4.6. In addition to the Tenant Improvements, Landlord shall make available to
Tenant an allowance not to exceed Six Hundred Fifty Thousand Dollars ($650,000)
(the “Allowance”). The Allowance may be applied to the costs of purchasing or
installing fixtures, furniture and equipment in the Premises; moving expenses;
telecommunications expenses related to the Premises; and the cost to recalibrate
equipment moved to the Premises; provided that any work performed with the
Allowance shall be subject to the terms of this Lease. Any request by Tenant for
payment of the Allowance shall be accompanied by (a) a statement (a “Fund
Request”) setting forth the total amount of the Allowance requested,
(b) invoices from the general contractor and any subcontractors, material
suppliers and other parties requesting payment with respect to the amount of the
Allowance then being requested, (c) unconditional lien releases from the general
contractor and each subcontractor and material supplier that are entitled to
place a lien on the Property under Applicable Laws, with respect to previous
payments made by either Landlord or Tenant with respect to the Allowance in a
form reasonably acceptable to Landlord and complying with Applicable Laws and
(d) conditional lien releases from the general contractor and each subcontractor
and material supplier that are entitled to place a lien on the Property under
Applicable Laws, with respect to the work performed or items purchased or
installed that correspond to the Fund Request, each in a form reasonably
acceptable to Landlord and complying with Applicable Laws. Within thirty
(30) days following receipt by Landlord of a Fund Request and the accompanying
materials required by this Section, Landlord shall pay to the applicable
contractors, subcontractors and material suppliers or to Tenant, as elected by

 

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Landlord, the amount set forth in the Fund Request. Tenant shall have six
(6) months following the Term Commencement Date (the “Allowance Deadline”) to
expend the unused portion of the Allowance, after which date Landlord’s
obligation to fund such costs shall expire. In no event shall any unused
Allowance entitle Tenant to a credit against Rent payable under this Lease.

4.7. Sales Tax Deferral.

(a) Retail sales tax, use tax and local sales and use tax (collectively, “Sales
and Use Tax”) otherwise applicable to portions of construction of the Tenant
Improvements and all other improvements requested or performed by Tenant may be
eligible for deferral pursuant to RCW 82.63 (the “Tax Deferral”) based on
Tenant’s intended uses of the Premises (such eligible construction being
referred to hereinafter as the “Qualifying Investment”). Landlord shall apply
for (provided that Tenant completes and delivers to Landlord the completed
application) and seek the Tax Deferral and cooperate with Tenant for the same
(provided that Tenant shall promptly reimburse Landlord for the portion of any
reasonable out-of-pocket costs incurred by Landlord after the Execution Date as
a result thereof for benefits that relate to the Premises, as opposed to other
portions of the Project), and shall state, as part of such application, that the
economic benefit of such Tax Deferral has been passed to Tenant pursuant to this
Lease. Landlord and Tenant agree that the economic benefit of any actual Tax
Deferral will be passed to Tenant through Landlord’s construction of the Tenant
Improvements (which include increased scope as a result of the Tax Deferral).
Landlord and Tenant expect to receive a Tax Deferral equal to Seven Hundred
Fifty Thousand Dollars ($750,000) with respect to the Tenant Improvements. If,
prior to the Term Commencement Date, the State of Washington Department of
Revenue or other government tax authority(ies) (“DOR”) determines that the Tax
Deferral is less than Seven Hundred Fifty Thousand Dollars ($750,000) (such
determined amount being the “Actual Deferral”), then Tenant shall reimburse
Landlord for the difference between Seven Hundred Fifty Thousand Dollars
($750,000) and the Actual Deferral (the “Deferral Reimbursement”), with the
Deferral Reimbursement accruing interest at an annual interest rate of eight
percent (8%) over the period from the date of determination of the Deferral
Reimbursement through the date that Tenant takes occupancy of the Premises and
then being paid to Landlord as Additional Rent, with such Deferral Reimbursement
(and any accrued interest as set forth above) amortized at an annual interest
rate of eight percent (8%) over the initial Term commencing as of the date that
the first (1st) monthly payment of Base Rent is owing following the date of
determination of the Deferral Reimbursement; provided that Tenant may prepay the
Deferral Reimbursement at any time without penalty. Tenant or its representative
shall be entitled to review Landlord’s books and records related to the cost of
the Tenant Improvements in order to verify the applicable Tax Deferral.

(b) If, at any time during the Term and following Tenant’s receipt of the
benefit of the Actual Deferral, the DOR determines that any portion of the
Actual Deferral must be repaid (the “Deferral Shortfall”) and, after Tenant has
exhausted all associated administrative review and appeals (so long as repayment
of the tax is stayed during such review or appeal), Tenant shall promptly pay to
Landlord a portion of the Deferral Shortfall (“Tenant’s Repayment Portion”),
together with the corresponding portion of any penalties that are or become due
in connection therewith, to the DOR. Tenant’s Repayment Portion shall be
determined as follows: (i) if the Actual Deferral is greater than Seven Hundred
Fifty Thousand Dollars ($750,000), then Tenant’s Repayment Portion shall equal
the Applicable Percentage multiplied by the sum total of

 

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($750,000 minus the (sum of the Actual Deferral minus the Deferral Shortfall))
or (ii) if the Actual Deferral is Seven Hundred Fifty Thousand Dollars
($750,000) or less, Tenant’s Repayment Portion shall equal the Applicable
Percentage multiplied by the Deferral Shortfall. The Applicable Percentage shall
equal (A) one-hundred percent (100%) if the Repayment Amount is directly and
solely due to the fault of Tenant or (B) fifty percent (50%) in all other cases.

(c) Landlord shall timely file an application with the DOR prior to Landlord
being issued a building permit for and commencing construction of any work
comprising a part of the Qualifying Investment and shall request that such work
be performed in a commercially reasonable manner such that it may be separately
accounted for. Landlord will ensure that all vendors performing such work also
forward the sales and use tax deferral certificate to any vendors who perform
work for Landlord’s vendors. Tenant shall on an annual basis complete and file
the annual survey required by the DOR (with the understanding that the same
shall require Landlord to assist Tenant by providing information relevant to
such survey) and report to Landlord the nature of Tenant’s use of the Premises
and the extent to which such use does not qualify for the Tax Deferral. Tenant
shall report the non-qualifying use to the DOR and shall be responsible for
Tenant’s Repayment Portion of any tax resulting from the non-qualifying use in
accordance with the provisions of Section 4.7(b). The provisions of this
Section 4.7 shall survive the termination or expiration of this Lease.

(d) Notwithstanding anything else in this Section 4.7, in the event that there
is an economic benefit provided by RCW 82.63 that Landlord is obligated to pass
on to Tenant, and such benefit is not timely passed through, Landlord shall
promptly pass on such benefit to Tenant. If such benefit or related Tax Deferral
is lost, omitted, overlooked or otherwise wasted as a result of Landlord’s
failure to timely perform its obligations under this Section 4.7, then Tenant
shall have no obligation to Landlord for such late, lost foregone amounts,
Deferral Reimbursement, Deferral Shortfall or Tenant’s Repayment Portion.

(e) Landlord shall use reasonable efforts to cooperate with and assist Tenant in
any challenges or audits to the Tax Deferral benefit at no undue cost to
Landlord. Landlord and Tenant shall promptly notify the other of any such action
of which it becomes aware and will promptly forward to the other any
correspondence regarding such challenge or audit. Tenant shall have the right to
contest or review on its behalf (but not on Landlord’s behalf) any proceedings
regarding the Tax Deferral benefit (which may be instituted either during or
after the Term) so long as payment of any amount claimed by the DOR is stayed
during the conduct of the contest. If Tenant desires to dispute any amount
claimed by the DOR to be due, but payment of such amount is not stayed during
the conduct of the proceedings, then Tenant shall either (i) pay Tenant’s
Repayment Portion of the amount due to the DOR in accordance with Section 4.7(b)
(but may do so under protest in accordance with Applicable Laws) or (ii) pay
Landlord Tenant’s Repayment Portion of the amount due in accordance with
Section 4.7(b) but, at Tenant’s request, Landlord shall forward to the DOR the
amount claimed by the DOR under protest. Landlord shall furnish, on a timely
basis, such data, documents and information that are in Landlord’s possession,
as may be reasonably required by Tenant or the DOR, at no undue cost to
Landlord. Landlord will execute all necessary instruments in connection with any
such protest, appeal or other proceedings, at no cost to Landlord. If any
proceeding may only be instituted and maintained by Landlord, then Landlord
shall do so at Tenant’s cost upon the request of Tenant,

 

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unless Landlord reasonably objects. Neither Landlord nor Tenant shall settle any
appeal or other proceeding related to the Tax Deferral without obtaining the
other party’s prior written approval in each instance (not to be unreasonably
withheld, conditioned or delayed). Tenant shall not abandon any appeal or other
proceeding related to the Tax Deferral without first offering to Landlord the
right to prosecute such appeal or proceeding at Landlord’s expense. Tenant shall
be entitled to any resulting refund (obtained by reason of any such proceeding
or otherwise), whether obtained during or after the expiration of the Term and
whether obtained by Landlord or Tenant, but only to the extent that Tenant has
previously paid to Landlord or the DOR such refunded amount.

5. Condition of Premises. Tenant acknowledges that, except as otherwise set
forth in this Lease, neither Landlord nor any agent of Landlord has made any
representation or warranty with respect to the condition of the Premises, the
Building or the Project, or with respect to the suitability of the Premises, the
Building or the Project for the conduct of Tenant’s business. Tenant
acknowledges that, subject to Landlord’s representations, warranties, covenants
and obligations under this Lease, (a) it is familiar with the condition of the
Premises and agrees to take the same in its condition “as is” as of the Term
Commencement Date and (b) Landlord shall have no obligation to alter, repair or
otherwise prepare the Premises for Tenant’s occupancy or to pay for or construct
any improvements to the Premises, except with respect to the Tenant Improvements
and as otherwise specifically set forth in this Lease. Upon Substantial
Completion of the Tenant Improvements, the parties shall perform a walkthrough
of the Premises and mutually agree upon any items that should be added to the
punch list such that (y) the Tenant Improvements are in compliance with Exhibit
B and (z) Landlord’s delivery obligations in the following sentence and under
Section 4.5 shall be satisfied. Notwithstanding anything in this Lease to the
contrary, Landlord agrees that, as of the Term Commencement Date, the Premises
shall comply with all Applicable Laws and all Building systems shall be
operational and in good condition. To the extent the Premises do not comply with
Applicable Laws as of the Term Commencement Date or any Building systems are not
operational and in good condition, Landlord shall promptly correct the same at
its sole cost.

6. Rentable Area.

6.1. The term “Rentable Area” shall reflect such areas as reasonably calculated
by Landlord’s architect, as the same may be reasonably adjusted from time to
time by Landlord in consultation with Landlord’s architect to reflect changes to
the Premises, the Building or the Project, as applicable.

6.2. The Rentable Area of the Building is generally determined by making
separate calculations of Rentable Area applicable to each floor within the
Building and totaling the Rentable Area of all floors within the Building. The
Rentable Area of a floor is computed by measuring to the outside finished
surface of the permanent outer Building walls. The full area calculated as
previously set forth is included as Rentable Area, without deduction for columns
and projections or vertical penetrations, including stairs, elevator shafts,
flues, pipe shafts, vertical ducts and the like, as well as such items’
enclosing walls.

 

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6.3. The term “Rentable Area,” when applied to the Premises, is that area equal
to the usable area of the Premises, plus an equitable allocation of Rentable
Area within the Building that is not then utilized or expected to be utilized as
usable area, including that portion of the Building devoted to corridors,
equipment rooms, restrooms, elevator lobby, atrium and mailroom.

7. Rent.

7.1. Tenant shall pay to Landlord as Base Rent for the Premises, commencing on
the Term Commencement Date, the sums set forth in Section 2.3, subject to the
rental adjustments provided in Article 4 hereof. Base Rent shall be paid in
equal monthly installments as set forth in Section 2.3, each in advance on the
first day of each and every calendar month during the Term.

7.2. In addition to Base Rent, Tenant shall pay to Landlord as additional rent
(“Additional Rent”) at times hereinafter specified in this Lease (a) Tenant’s
Share (as defined below) of Operating Expenses (as defined below), (b) the
Property Management Fee (as defined below) and (c) any other amounts that Tenant
assumes or agrees to pay under the provisions of this Lease that are owed to
Landlord, including any and all other sums that may become due by reason of any
default of Tenant or failure on Tenant’s part to comply with the agreements,
terms, covenants and conditions of this Lease to be performed by Tenant, after
notice and the lapse of any applicable cure periods.

7.3. Base Rent and Additional Rent shall together be denominated “Rent.” Rent
shall be paid to Landlord, without abatement, deduction or offset, except as
otherwise set forth in this Lease, in lawful money of the United States of
America at the office of Landlord as set forth in Section 2.8 or to such other
person or at such other place as Landlord may from time designate in writing. In
the event the Term commences or ends on a day other than the first day of a
calendar month, then the Rent for such fraction of a month shall be prorated for
such period on the basis of a thirty (30) day month and shall be paid at the
then-current rate for such fractional month.

8. [Intentionally omitted]

9. Operating Expenses.

9.1. As used herein, the term “Operating Expenses” shall include:

(a) Government impositions including property tax costs consisting of real and
personal property taxes and assessments, including amounts due under any
improvement bond upon the Building or the Project, including the parcel or
parcels of real property upon which the Building and areas serving the Building
are located or assessments in lieu thereof imposed by any federal, state,
regional, local or municipal governmental authority, agency or subdivision
(each, a “Governmental Authority”) are levied; taxes on or measured by gross
rentals received from the rental of space in the Project; taxes based on the
square footage of the Premises, the Building or the Project, as well as any
parking charges, utilities surcharges or any other costs levied, assessed or
imposed by, or at the direction of, or resulting from Applicable Laws or
interpretations thereof, promulgated by any Governmental Authority in connection
with the use or occupancy of the Project or the parking facilities serving the
Project; taxes on this transaction or any document to which Tenant is a party
creating or transferring an interest in the Premises; any fee for a business
license to operate an office building; and any expenses,

 

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including the reasonable cost of attorneys or experts, reasonably incurred by
Landlord in seeking reduction by the taxing authority of the applicable taxes,
less tax refunds obtained as a result of an application for review thereof.
Operating Expenses shall not include any net income, franchise, capital stock,
estate or inheritance taxes, or taxes that are the personal obligation of Tenant
or of another tenant of the Project; and

(b) All other costs of any kind paid or incurred by Landlord in connection with
the operation or maintenance of the Building and the Project, including costs of
repairs and replacements to improvements within the Project as appropriate to
maintain the Project as required hereunder; costs of utilities furnished to the
Common Areas; sewer fees; cable television; trash collection; cleaning,
including windows; heating; ventilation; air-conditioning; maintenance of
landscaping and grounds; maintenance of drives and parking areas; maintenance of
the roof; security services and devices; building supplies; maintenance or
replacement of equipment utilized for operation and maintenance of the Project;
license, permit and inspection fees; sales, use and excise taxes on goods and
services purchased by Landlord in connection with the operation, maintenance or
repair of the Building or Project systems and equipment; telephone, postage,
stationery supplies and other expenses incurred in connection with the
operation, maintenance or repair of the Project; accounting, legal and other
professional fees and expenses incurred in connection with the Project but in no
event incurred or occurring prior to the Term Commencement Date; costs of
furniture, draperies, carpeting, landscaping and other customary and ordinary
items of personal property provided by Landlord for use in Common Areas or in
the Project office; Project office rent or rental value for a commercially
reasonable amount of space, to the extent an office used for Project operations
is maintained at the Project, plus customary expenses for such office; Permitted
Capital Expenditures (as defined below); costs of complying with Applicable Laws
(except to the extent such costs are incurred to remedy non-compliance as of the
Term Commencement Date with Applicable Laws); costs to keep the Project in
compliance with, or fees otherwise required under, any CC&Rs (as defined below);
costs and expenses incurred in connection with any reciprocal easement
agreements; insurance premiums, including premiums for public liability,
property casualty, earthquake, terrorism and environmental coverages; portions
of insured losses paid by Landlord as part of the deductible portion of a loss
pursuant to the terms of insurance policies (provided, however, that if and to
the extent Landlord incurs a deductible payment under Landlord’s policy of
earthquake coverage, any such deductible payment shall be treated in the same
manner as a Permitted Capital Expenditure for purposes of inclusion in Operating
Expenses (i.e., for avoidance of doubt, such deductible payment shall be
amortized over the life of the Building and not less than twenty (20) years in
accordance with generally accepted accounting principles, as determined by
Landlord, together with interest as described below with respect to Permitted
Capital Expenditures)); service contracts; costs of services of independent
contractors retained to do work of a nature referenced above; and costs of
compensation (including employment taxes and fringe benefits) of all persons who
perform regular and recurring duties connected with the day-to-day operation and
maintenance of the Project, its equipment, the adjacent walks, landscaped areas,
drives and parking areas, including janitors, floor waxers, window washers,
watchmen, gardeners, sweepers and handymen.

Notwithstanding the foregoing, Operating Expenses shall not include any leasing
commissions; expenses that relate to preparation of rental space for a tenant;
expenses of initial development and construction, including grading, paving,
landscaping and decorating (as

 

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distinguished from maintenance, repair and replacement of the foregoing); legal
expenses relating to other tenants; costs of repairs to the extent reimbursed by
payment of insurance proceeds received by Landlord; interest upon loans to
Landlord or secured by a mortgage or deed of trust covering the Project or a
portion thereof; salaries of executive officers of Landlord; depreciation
claimed by Landlord for tax purposes (provided that this exclusion of
depreciation is not intended to delete from Operating Expenses actual costs of
repairs and replacements that are provided for in Section 9.1(b)); taxes that
are excluded from Operating Expenses by the last sentence of Section 9.1(a);
costs related to the initial construction of any Building specialty areas, such
as Building conference facilities, cafés, fitness centers, loading docks,
outdoor meeting spaces/decks, and storage areas for Hazardous Materials;
advertising and promotional expenses and other costs incurred in procuring
tenants or in selling the Building or Project; legal fees incurred in connection
with contract disputes with suppliers; costs of renovating or otherwise
improving or decorating space for any tenant or other occupant of the Building
or Project, including Tenant, or relocating any tenant; financing costs,
including interest and principal amortization of debts and the costs of
providing the same; rent on ground leases or other underlying leases and the
costs of providing the same; wages, bonuses and other compensation of employees
above the grade of building manager and fringe benefits other than insurance
plans and tax qualified benefit plans; any liabilities, costs or expenses
associated with or incurred in connection with the removal, enclosure,
encapsulation or other handling of Hazardous Materials, and the cost of
defending against claims in regard to the existence or release of Hazardous
Materials at the Building or Project, provided that (i) such liabilities, costs,
expenses or claims result from (A) Landlord’s negligence or willful misconduct
or (B) Hazardous Materials which existed in the Building or on the Property
prior to the Execution Date (provided that any Hazardous Materials in the
Premises which are made Tenant’s responsibility pursuant to Article 21 below
shall remain Tenant’s direct obligation) and (ii) with respect to any other
Hazardous Materials-related costs not described in (i) above, Landlord first
exhausts any available insurance proceeds and uses good faith, commercially
reasonable efforts to pursue any third parties for reimbursement of any such
costs prior to including such amounts in Operating Expenses; costs of any items
for which, and to the extent, Landlord is paid or reimbursed by insurance;
increased insurance or taxes (to the extent included as Operating Expenses) to
the extent such are paid by any tenant of the Building or Project or to the
extent Landlord is reimbursed from any other tenant (other than as such tenant’s
share of operating expenses); charges for electricity, water or other utilities,
services or goods, together with applicable taxes, for which Tenant or any other
tenant, occupant, person or other party reimburses Landlord or that Tenant or
any other tenant, occupant, person or other party pays to third parties; costs
to remedy any violation of Applicable Laws to the extent that such violation
exists as of the Term Commencement Date; costs of any HVAC, janitorial or other
services provided to tenants on an extra cost basis after regular business hours
and for which such tenants reimburse Landlord; any costs, expenses, bonds,
assessments, subsidies or fees associated with the initial construction of the
Building or Project; costs of any work or services performed on an extra cost
basis for any tenant in the Building or Project to a materially greater extent
or in a materially more favorable manner than furnished generally to Tenant; any
costs representing an amount paid to a person, firm, corporation or other entity
related to Landlord that is materially in excess of the amount which would have
been paid in the absence of such relationship; any costs of painting or
decorating any interior parts of the Building or Project other than Common
Areas; Landlord’s general overhead and any other expense not directly
attributable to operation and management of

 

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the Building and Project (e.g., the activities of Landlord’s officers and
executives, or professional development expenditures); costs of initial cleaning
and rubbish removal from the Building or Project to be performed before final
completion of the base building or tenant space; costs of initial landscaping of
the Building or Project; attorneys’ fees, accounting fees and other expenditures
incurred in connection with negotiations, disputes and claims of other tenants
or occupants of the Building or Project or with other third parties, except as
specifically otherwise provided in this Lease; costs of initial stock of tools
and equipment for operation, repair and maintenance of the Building or Project;
capital expenses (except for Permitted Capital Expenditures); late fees or
charges incurred by Landlord due to late payment of expenses resulting from
Landlord’s negligence or willful misconduct; costs of acquiring, securing,
cleaning or maintaining sculptures, paintings and other works of art; taxes on
Landlord’s business (such as income, excess profits, franchise, capital stock,
estate, inheritance, etc.), as opposed to taxes on the Project; charitable or
political contributions; costs and expenses incurred in connection with
compliance with or the contesting or settlement of any claimed violation of
Applicable Laws; direct costs or allocable costs associated with parking
operations if there is a separate charge to Tenant, other tenants or the public
for parking; and all other items for which another party compensates or pays so
that Landlord shall not recover any item of cost more than once. To the extent
that Tenant uses more than Tenant’s Pro Rata Share of any item of Operating
Expenses, Tenant shall pay Landlord for such excess in addition to Tenant’s
obligation to pay Tenant’s Pro Rata Share of Operating Expenses (such excess,
together with Tenant’s Pro Rata Share, “Tenant’s Share”).

Furthermore, notwithstanding anything in this Lease to the contrary, Operating
Expenses shall not include the cost of capital expenditures, except that
Operating Expenses shall include Permitted Capital Expenditures. “Permitted
Capital Expenditures” are (y) costs incurred by Landlord after the Term
Commencement Date for any capital expenditures installed or paid for by Landlord
and required to comply with Applicable Laws (unless they are incurred to remedy
non-compliance as of the Term Commencement Date with Applicable Law), with such
capital expenditures amortized over their useful life according to generally
accepted accounting principles, as reasonably determined by Landlord and
(z) costs of any capital expenditures purchased or incurred as a labor-saving
measure or to affect other economics in the operation or maintenance of the
Building, with such costs amortized over their useful life according to
generally accepted accounting principles, as reasonably determined by Landlord;
provided, however, that in both (y) and (z), Landlord shall not be required to
amortize any capital expenditure that is less than Five Thousand Dollars
($5,000). Landlord shall provide Tenant with at least thirty (30) days written
notice prior to performing or incurring costs related to any Permitted Capital
Expenditure, except in the event of an emergency that poses an imminent threat
of harm to the Property or people or property on the Property, in which case no
such prior notice shall be required. Notwithstanding the foregoing, in the event
Tenant does not agree (in Tenant’s reasonable discretion) that Landlord should
perform any Permitted Capital Expenditure described in (z) above, Tenant shall
notify Landlord in writing of such disagreement prior to Landlord incurring the
cost of such Permitted Capital Expenditure and shall include in such notice
Tenant’s bona fide reasons for such disagreement and, in such event, such
Permitted Capital Expenditure shall be amortized over the greater of (i) its
useful life according to generally accepted accounting principles and
(ii) twenty (20) years and Tenant’s Share of Operating Expenses shall not
include more than Tenant’s Pro Rata Share of five percent (5%) of such Permitted
Capital Expenditure in any given calendar year during the Term.

 

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9.2. Tenant shall pay to Landlord on the first day of each calendar month of the
Term, as Additional Rent, (a) the Property Management Fee (as defined below) and
(b) Landlord’s estimate of Tenant’s Share of Operating Expenses with respect to
the Building and the Project, as applicable, for such month.

(x) The “Property Management Fee” shall equal two and one-half percent (2.5%) of
Base Rent due from Tenant. Tenant shall pay the Property Management Fee in
accordance with Section 9.2 with respect to the entire Term, including any
extensions thereof or any holdover periods.

(y) Within ninety (90) days after the conclusion of each calendar year (or such
longer period as may be reasonably required by Landlord), Landlord shall furnish
to Tenant a statement (the “Annual Statement”) showing in reasonable detail the
actual Operating Expenses and Tenant’s Share of Operating Expenses for the
previous calendar year. Any additional sum due from Tenant to Landlord shall be
promptly due and payable. If the amounts paid by Tenant pursuant to this Section
exceed Tenant’s Share of Operating Expenses for the previous calendar year, then
Landlord shall credit the difference against the Rent next due and owing from
Tenant; provided that, if the Term has expired, Landlord shall accompany said
statement with payment for the amount of such difference. The Annual Statement
shall be final and binding upon Tenant unless Tenant, within ninety (90) days
after Tenant’s receipt thereof (the “Review Period”), shall elect to review or
audit the same. Landlord’s books and records related to Operating Expenses shall
be kept in accordance with generally accepted accounting principles. Tenant
and/or an independent public accounting firm hired by Tenant (and reasonably
approved by Landlord) on an hourly basis and not on a contingent-fee basis, at
Tenant’s sole cost and expense (except as otherwise set forth below) shall have
the right, not more frequently than once per calendar year, after written notice
to Landlord and at reasonable times, to inspect and audit Landlord’s Operating
Expense records at the location where Landlord maintains such records in the
ordinary course of its business. Landlord need not provide copies of any books
or records. In the event Tenant was over-charged for any calendar year during
the Term, then Landlord shall credit Tenant the amount of such over-charge
toward the payments of Rent next coming due under the Lease; provided that if
the Term has expired, Landlord shall pay such amount to Tenant within thirty
(30) days after such determination. In the event Tenant has been under-charged,
Tenant shall pay Landlord such amount within thirty (30) days after such
determination. Tenant agrees to pay the cost of the audit, unless the audit
determines that Landlord’s calculation of Operating Expenses was in error by
more than five percent (5%), in which case Landlord shall reimburse Tenant for
the cost of the independent public accounting firm used in such audit within
thirty (30) days after receipt of an invoice for such costs. The foregoing
rights also shall apply with respect to verification of any amounts charged by
Landlord to Tenant for utility costs.

(z) Any amount due under this Section for any period that is less than a full
month shall be prorated (based on a thirty (30)-day month) for such fractional
month.

9.3. Landlord may, from time to time, modify Landlord’s calculation and
allocation procedures for Operating Expenses, so long as such modifications
(a) are consistently applied to all tenants of the Project (subject to the terms
of such tenants’ leases), (b) do not violate this Lease and (c) produce Dollar
results substantially consistent with Landlord’s then-current practice at the
Project. Notwithstanding anything to the contrary in this Lease, Tenant’s Share
of

 

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Operating Expenses that relate to Controllable Operating Expenses shall not
increase more than five percent (5%) on an annual basis from the previous
calendar year (the “Controllable Cap”). “Controllable Operating Expenses” means
all Operating Expenses other than taxes, utility costs, insurance costs, costs
and expenses incurred in connection with any reciprocal easement agreements, and
Permitted Capital Expenditures. Notwithstanding the foregoing, the Controllable
Cap shall not apply in the event that Tenant requests that Landlord provide a
different level of service with respect to any Controllable Operating Expense.

9.4. [Intentionally omitted]

9.5. Tenant shall not be responsible for Operating Expenses attributable to the
time period prior to the Term Commencement Date. Tenant’s responsibility for
Tenant’s Share of Operating Expenses shall continue to the latest of (a) the
date of termination of the Lease or (b) the date Tenant has fully vacated the
Premises.

9.6. Operating Expenses for the calendar year in which Tenant’s obligation to
share therein commences and for the calendar year in which such obligation
ceases shall be prorated on a basis reasonably determined by Landlord. Expenses
such as taxes, assessments and insurance premiums that are incurred for an
extended time period shall be prorated based upon the time periods to which they
apply so that the amounts attributed to the Premises relate in a reasonable
manner to the time period wherein Tenant has an obligation to share in Operating
Expenses.

9.7. [Intentionally omitted]

9.8. In the event that the Building or Project is less than fully occupied,
Tenant acknowledges that Landlord may extrapolate Operating Expenses that vary
depending on the occupancy of the Building or Project, as applicable, by
dividing (a) the total cost of Operating Expenses by (b) the Rentable Area of
the Building or Project (as applicable) that is occupied, then multiplying
(y) the resulting quotient by (z) ninety-five percent (95%) of the total
Rentable Area of the Building or Project (as applicable). Tenant shall pay
Tenant’s Share of the product of (y) and (z), subject to adjustment as
reasonably determined by Landlord; provided, however, that Landlord shall not
recover more than one hundred percent (100%) of Operating Expenses.

10. Taxes on Tenant’s Property.

10.1. Tenant shall pay prior to delinquency any and all taxes levied against any
personal property or trade fixtures placed by Tenant in or about the Premises.

10.2. If any such taxes on Tenant’s personal property or trade fixtures are
levied against Landlord or Landlord’s property or, if the assessed valuation of
the Building, the Property or the Project is increased by inclusion therein of a
value attributable to Tenant’s personal property or trade fixtures, and if
Landlord, after written notice to Tenant, pays the taxes based upon any such
increase in the assessed value of the Building, the Property or the Project,
then Tenant shall, upon demand, repay to Landlord the taxes so paid by Landlord.

10.3. If any improvements in or alterations to the Premises, whether owned by
Landlord or Tenant and whether or not affixed to the real property so as to
become a part thereof,

 

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are assessed for real property tax purposes at a valuation higher than the
valuation at which improvements conforming to Landlord’s building standards (the
“Building Standard”) in other spaces in the Building are assessed, then the real
property taxes and assessments levied against Landlord or the Building, the
Property or the Project by reason of such excess assessed valuation shall be
deemed to be taxes levied against personal property of Tenant and shall be
governed by the provisions of Section 10.2. Any such excess assessed valuation
due to improvements in or alterations to space in the Project leased by other
tenants at the Project shall not be included in Operating Expenses. If the
records of the County Assessor are available and sufficiently detailed to serve
as a basis for determining whether said Tenant improvements or alterations are
assessed at a higher valuation than the Building Standard, then such records
shall be binding on both Landlord and Tenant.

11. Security Deposit.

11.1. Tenant shall deposit with Landlord no later than ten (10) business days
after the Execution Date the sum set forth in Section 2.6 (the “Security
Deposit”), which sum shall be held by Landlord as security for the faithful
performance by Tenant of all of the terms, covenants and conditions of this
Lease to be kept and performed by Tenant during the period commencing on the
Execution Date and ending upon the expiration or termination of Tenant’s
obligations under this Lease. If a Default occurs with respect to any provision
of this Lease, including any provision relating to the payment of Rent, then
Landlord may (but shall not be required to) use, apply or retain all or any part
of the Security Deposit for the payment of any Rent or any other sum in default,
or to compensate Landlord for any other loss or damage that Landlord may suffer
by reason of Tenant’s default. If any portion of the Security Deposit is so used
or applied, then Tenant shall, within ten (10) days following demand therefor,
deposit cash with Landlord in an amount sufficient to restore the Security
Deposit to its original amount, and Tenant’s failure to do so shall be a
material breach of this Lease. The provisions of this Article shall survive the
expiration or earlier termination of this Lease.

11.2. In the event of bankruptcy or other debtor-creditor proceedings against
Tenant, the Security Deposit shall be deemed to be applied first to the payment
of Rent and other charges due Landlord for all periods prior to the filing of
such proceedings.

11.3. Landlord may deliver to any purchaser of Landlord’s interest in the
Premises the funds deposited hereunder by Tenant, and thereupon Landlord shall
be discharged from any further liability with respect to such deposit. This
provision shall also apply to any subsequent transfers.

11.4. The Security Deposit, or any balance thereof not applied or refunded in
accordance with this Article 11, shall be returned to Tenant (or, at Landlord’s
option, to the last assignee of Tenant’s interest hereunder) within thirty
(30) days after the expiration or earlier termination of this Lease.

11.5. If the Security Deposit shall be in cash, Landlord shall hold the Security
Deposit in an account at a banking organization selected by Landlord; provided,
however, that Landlord shall not be required to maintain a separate account for
the Security Deposit, but may intermingle it with other funds of Landlord.
Landlord shall be entitled to all interest and/or dividends, if any, accruing on
the Security Deposit. Landlord shall not be required to credit Tenant with any
interest for any period during which Landlord does not receive interest on the
Security Deposit.

 

 

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11.6. The Security Deposit may be in the form of cash, a letter of credit or any
other security instrument acceptable to Landlord in its sole discretion. Tenant
may at any time, except when Tenant is in Default (as defined below), deliver a
letter of credit (the “L/C Security”) as the entire Security Deposit, as
follows:

(a) If Tenant elects to deliver L/C Security, then Tenant shall provide
Landlord, and maintain in full force and effect throughout the Term and until
the date that is three (3) months after the then-current Term Expiration Date or
the earlier termination of this Lease, a letter of credit in the form of Exhibit
E or another commercially reasonable form substantially consistent with Exhibit
E that is issued by an issuer reasonably satisfactory to Landlord, in the amount
of the Security Deposit, with an initial term of at least one year. Landlord may
require the L/C Security to be re-issued by a different issuer at any time
during the Term if Landlord reasonably believes that the issuing bank of the L/C
Security is or may soon become insolvent; provided, however, Landlord shall
return the existing L/C Security to the existing issuer immediately upon receipt
of the substitute L/C Security. Landlord hereby approves either of US Bank and
Northern Trust as the issuing bank, subject to Tenant’s right to propose an
alternate issuer. If any issuer of the L/C Security shall become insolvent or
placed into FDIC receivership, then Tenant shall immediately deliver to Landlord
(without the requirement of notice from Landlord) substitute L/C Security issued
by an issuer reasonably satisfactory to Landlord, and otherwise conforming to
the requirements set forth in this Article. As used herein with respect to the
issuer of the L/C Security, “insolvent” shall mean the determination of
insolvency as made by such issuer’s primary bank regulator (i.e., the state bank
supervisor for state chartered banks; the OCC or OTS, respectively, for
federally chartered banks or thrifts; or the Federal Reserve for its member
banks). If, at the Term Expiration Date, any Rent remains uncalculated or
unpaid, then: (i) Landlord shall with reasonable diligence complete any
necessary calculations; (ii) Tenant shall extend the expiry date of such L/C
Security from time to time as Landlord reasonably requires; and (iii) in such
extended period, Landlord shall not unreasonably refuse to consent to an
appropriate reduction of the L/C Security.

(b) If Tenant delivers to Landlord satisfactory L/C Security in place of the
entire Security Deposit, Landlord shall remit to Tenant any cash Security
Deposit Landlord previously held. At any time that Landlord holds L/C Security,
Tenant may provide a cash Security Deposit and, upon receipt of the cash
Security Deposit, Landlord shall return the L/C Security to Tenant.

(c) Landlord may draw upon the L/C Security, and hold and apply the proceeds in
the same manner and for the same purposes as the Security Deposit, if: (i) an
uncured Default (as defined below) exists; (ii) as of the date thirty (30) days
before any L/C Security expires (even if such scheduled expiry date is after the
Term Expiration Date) Tenant has not delivered to Landlord an amendment or
replacement for such L/C Security, reasonably satisfactory to Landlord,
extending the expiry date to the earlier of (1) three (3) months after the
then-current Term Expiration Date or (2) the date one year after the
then-current expiry date of the L/C Security; (iii) Tenant fails to pay (when
and as Landlord reasonably requires) any bank

 

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charges for Landlord’s transfer of the L/C Security; or (iv) the issuer of the
L/C Security ceases, or announces that it will cease, to maintain an office in
the city where Landlord may present drafts under the L/C Security (and fails to
permit drawing upon the L/C Security by overnight courier or facsimile) and
Tenant fails to provide substitute L/C Security prior to such cessation. This
Section does not limit any other provisions of this Lease allowing Landlord to
draw the L/C Security under specified circumstances.

(d) Tenant shall not seek to enjoin, prevent, or otherwise interfere with
Landlord’s draw under L/C Security, even if it violates this Lease; provided,
however, that nothing contained in this Section shall be deemed to prohibit
Tenant from challenging the validity or amount of the draw after the draw
occurs. Landlord shall use the proceeds of any draw in the same manner and for
the same purposes as a cash Security Deposit. In the event of a wrongful draw,
the parties shall cooperate to allow Tenant to post replacement L/C Security
simultaneously with the return to Tenant of the wrongfully drawn sums, and
Landlord shall upon request confirm in writing to the issuer of the L/C Security
that Landlord’s draw was erroneous and shall reimburse Tenant for any reasonable
costs in connection with such wrongful draw.

(e) If Landlord transfers its interest in the Premises, then Landlord shall at
Tenant’s expense, transfer the L/C Security to the new owner. If the required
Security Deposit changes while the L/C Security is in force, then Tenant shall
deliver (and, if the issuer requires, Landlord shall consent to) a corresponding
amendment to the L/C Security.

11.7. In the event Tenant achieves a market capitalization of at least One
Billion Dollars ($1,000,000,000) and maintains such level of capitalization for
twelve (12) consecutive months, Tenant may decrease the Security Deposit to an
amount equal to one month of the then-current Base Rent. If, at any time
thereafter, Tenant’s market capitalization falls below One Billion Dollars
($1,000,000,000), the Security Deposit shall be restored to its initial amount.

12. Use.

12.1. Tenant shall use the Premises for the purpose set forth in Section 2.7,
and shall not use the Premises, or permit or suffer the Premises to be used, for
any other purpose without Landlord’s prior written consent, which consent shall
not be unreasonably withheld, conditioned or delayed. Landlord acknowledges
Tenant’s intent to handle and house research animals within the Building,
subject to Applicable Laws.

12.2. Tenant shall not use or occupy the Premises in violation of Applicable
Laws; zoning ordinances; or the certificate of occupancy issued for the Building
or the Project, and shall, upon five (5) days’ written notice from Landlord,
discontinue any use of the Premises that is declared or claimed by any
Governmental Authority having jurisdiction to be a violation of any of the
above, or that in Landlord’s reasonable opinion violates any of the above.
Tenant shall comply with any direction of any Governmental Authority having
jurisdiction that shall, by reason of the nature of Tenant’s use or occupancy of
the Premises, impose any duty upon Tenant or Landlord with respect to the
Premises or with respect to the use or occupation thereof.

 

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12.3. Tenant shall not knowingly do or permit to be done anything that will
invalidate or increase the cost of any fire, environmental, extended coverage or
any other insurance policy covering the Building or the Project, and shall
comply with all rules, orders, regulations and requirements of the insurers of
the Building and the Project, and Tenant shall promptly, upon demand, reimburse
Landlord for any additional premium charged for such policy by reason of
Tenant’s failure to comply with the provisions of this Article. Landlord hereby
confirms that the use of the Premises for the Permitted Use (as set forth in
Section 2.7) shall not result in an additional premium.

12.4. Tenant shall keep all doors opening onto public corridors closed, except
when in use for ingress and egress.

12.5. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by Tenant, nor shall any changes be made to existing locks or
the mechanisms thereof without Landlord’s prior written consent provided,
however, that (a) Tenant shall have the right to install a card key security or
lock system for the Premises, including Common Area stairways, provided that
such card key or lock system: (i) has been approved by Landlord, such approval
not to be unreasonably withheld, conditioned or delayed; (ii) does not limit
Landlord’s access rights under this Lease to any areas other than those
designated by Tenant as high security areas (“High Security Areas”) in the
Premises; (iii) does not prohibit others from accessing Common Areas, but only
prevents them from entering the Premises; and (iv) is installed and maintained
at Tenant’s expense in accordance with all Applicable Laws, and (b) Tenant shall
also have the right, at its election, to install its own locks and access
systems (without giving keys or codes to Landlord) in the Premises in High
Security Areas as Tenant designates, and restrict access to the High Security
Areas (provided that Tenant (i) notifies Landlord in writing of such High
Security Areas, (ii) is reasonable in its designation of such High Security
Areas, (iii) gives Landlord escorted entry into the High Security Areas upon
Landlord’s reasonable request (such request to be at least twenty-four
(24) hours in advance, except in an emergency, in which case no notice shall be
required) and (iv) maintains a reasonable system to allow immediate,
unrestricted access and entry into such High Security Areas by Landlord and
emergency personnel in the event of an emergency. Except for the High Security
Areas, Tenant shall give Landlord keys and access codes for the entire Premises.
Tenant shall, upon termination of this Lease, return to Landlord all keys to
offices and restrooms either furnished to or otherwise procured by Tenant. In
the event any key so furnished to Tenant is lost, Tenant shall pay to Landlord
the cost of replacing the same or of changing the lock or locks opened by such
lost key if Landlord shall deem it necessary to make such change.

12.6. No awnings or other projections shall be attached to any outside wall of
the Building. Unless Landlord otherwise consents (such consent not to be
unreasonably withheld, conditioned or delayed), no curtains, blinds, shades or
screens shall be attached to or hung in, or used in connection with, any window
or door of the Premises other than Landlord’s standard window coverings as set
forth in Exhibit B attached hereto, which shall be installed as of the Term
Commencement Date. Neither the interior nor exterior of any windows shall be
coated or otherwise sunscreened without Landlord’s prior written consent, which
shall not be unreasonably withheld, conditioned or delayed; nor shall any
bottles, parcels or other articles be placed on the windowsills. No equipment,
furniture or other items of personal property shall be placed on any exterior
balcony without Landlord’s prior written consent, which shall not be
unreasonably withheld, conditioned or delayed.

 

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12.7. Except as otherwise set forth in this paragraph, no sign, advertisement or
notice (“Signage”) shall be exhibited, painted or affixed by Tenant on any part
of the Premises or the Building without Landlord’s prior written consent, which
shall not be unreasonably withheld, conditioned or delayed. Signage shall
conform to Landlord’s design criteria and shall comply with Applicable Laws.
Subject to the foregoing requirements, as of the Term Commencement Date the
Building shall have a sign at the Project distinguishing the Building as “The
Omeros Building” and as a part of the Tenant Improvements, Landlord shall
(a) install Building-top Signage on the northeast, southeast and east sides of
the Building, as shown on Exhibit K attached hereto, (b) install exterior
signage on the helipad and monument sign, as shown on Exhibit K, (c) remove the
existing blade sign and artwork on the east side of the Building and (d) at
Tenant’s request, install mutually agreeable Building-top Signage on the west
side of the Building (the “West Signage”), as shown on Exhibit K, so long as
(i) Landlord (in its reasonable discretion) believes it has enough extra money
in the Tenant Improvement budget to cover the cost of the West Signage or
(ii) if Landlord does not believe it has extra money in the Tenant Improvement
budget to cover such cost, Tenant agrees to pay the cost of the West Signage.
Tenant shall, at Tenant’s own cost and expense, (y) acquire all permits for
Signage (except for the Signage set forth on Exhibit K but not including the
West Signage unless Landlord pays for such West Signage as set forth above) in
compliance with Applicable Laws and (z) design, fabricate, install (except for
the Signage set forth on Exhibit K but not including the West Signage unless
Landlord pays for such West Signage as set forth above) and maintain such
Signage in a first-class condition. Tenant shall be responsible for reimbursing
Landlord for costs incurred by Landlord in removing any of Tenant’s Signage upon
the expiration or earlier termination of the Lease. In addition, Landlord, as
part of the Tenant Improvements, shall provide Tenant with lobby and Building
directory signage no later than the Term Commencement Date. The directory tablet
shall be provided exclusively for the display of the name and location of
tenants only. Tenant shall not place anything on the exterior of the corridor
walls or corridor doors other than Landlord’s standard lettering.
Notwithstanding anything to the contrary in this Lease, Landlord confirms that
the exterior Signage and other Signage installed by Tenant pursuant to this
Section may, in Tenant’s discretion but subject to Landlord’s reasonable
approval, utilize Tenant’s name, business logo and design.

12.8. Tenant shall only place equipment within the Premises with floor loading
consistent with the Building’s structural design, and such equipment shall be
placed in a location designed to carry the weight of such equipment.

12.9. Tenant shall cause any equipment or machinery to be installed in the
Premises so as to reasonably prevent sounds or vibrations therefrom from
extending into the Common Areas or other offices in the Project.

12.10. Tenant shall not (a) do or permit anything to be done in or about the
Premises that shall in any way obstruct or unreasonably interfere with the
rights of other tenants or occupants of the Project, (b) use or allow the
Premises to be used for unlawful purposes, (c) cause, maintain or permit any
nuisance or waste in, on or about the Project or (d) take any other action that
would in Landlord’s reasonable determination in any manner adversely affect
other tenants’ quiet use and enjoyment of their space or adversely impact their
ability to conduct business in a professional and suitable work environment.

 

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12.11. Notwithstanding any other provision herein to the contrary, but subject
to Landlord’s representations, warranties and obligations under Article 5 and
Landlord’s obligations under Exhibit B, Tenant shall be responsible for all
liabilities, costs and expenses arising out of or in connection with the
compliance of the Premises with the Americans with Disabilities Act, 42 U.S.C. §
12101, et seq., and any state and local accessibility laws, codes, ordinances
and rules (collectively, and together with regulations promulgated pursuant
thereto, the “ADA”), and Tenant shall indemnify, save, defend (at Landlord’s
option and with counsel reasonably acceptable to Landlord) and hold Landlord and
its affiliates, employees, agents and contractors; and any lender, mortgagee or
beneficiary (each, a “Lender” and, collectively with Landlord and its
affiliates, employees, agents and contractors, the “Landlord Indemnitees”)
harmless from and against any demands, claims, liabilities, losses, costs,
expenses, actions, causes of action, damages or judgments, and all reasonable
expenses (including reasonable attorneys’ fees, charges and disbursements)
incurred in investigating or resisting the same (collectively, “Claims”) arising
out of any such failure of the Premises to comply with the ADA. The provisions
of this Section shall survive the expiration or earlier termination of this
Lease.

12.12. During the Term, Landlord shall provide two (2) on-site security guards
seven (7) days a week, twenty-four (24) hours a day. In the event Tenant
reasonably determines that an additional security guard(s) are necessary,
Landlord and Tenant shall use reasonable efforts to mutually agree upon an
acceptable solution; provided, however, that if Landlord hires additional
security for the Building, such costs shall not be considered a Controllable
Operating Expense for the purpose of Section 9.3. Landlord further agrees that,
as of the Term Commencement Date, the Building and its exterior shall be
(a) equipped with a reasonable number (as determined by Landlord) of fully
functioning security cameras monitoring the enclosed parking garage, the loading
docks, stairwells, elevator banks, all points of access to and from the
Building, and any other areas mutually identified by Landlord and Tenant as
requiring surveillance, and (b) monitored twenty-four (24) hours per day, seven
(7) days per week by one of the on-site security guards, who shall be stationed
at the front desk of the Building. The Tenant Improvements shall include
Tenant’s Pro Rata Share of the cost of purchasing and installing such security
system. Further, all security patrol and monitoring costs shall be included as
Operating Expenses.

12.13. As of the Term Commencement Date, the Building shall have a vivarium
space for use by Tenant and other tenants of the Building (the “Vivarium”), as
depicted on Exhibit L attached hereto. Landlord agrees, at its sole cost, to
construct certain Vivarium improvements and to install certain vivarium
equipment in such space, as set forth on Exhibit B attached hereto. Tenant shall
have the exclusive use of that portion of the Vivarium as shown on Exhibit L
(“Tenant’s Vivarium Space”). Tenant shall be entitled to make improvements or
alterations to Tenant’s Vivarium Space, pursuant to the terms of Article 17. In
the event another tenant leases a portion of the Vivarium, (a) access and use of
that certain portion of the vivarium shown on Exhibit L (the “Shared Vivarium
Space”) and the vivarium equipment listed on Exhibit M (the “Shared Vivarium
Equipment” and, together with the Shared Vivarium Space, the “Vivarium Common
Area”) shall be shared between Tenant and such other tenants using the Vivarium
and (b) Landlord (either directly or through one of its affiliates or its or its
affiliates’ vendors) shall maintain and repair the Shared Vivarium Equipment and
the Shared Vivarium Space. Prior to the date that another tenant leases a
portion of the Vivarium, Tenant shall maintain and repair the Shared Vivarium
Equipment and the Shared Vivarium Space. Landlord acknowledges, however,
Tenant’s need to maintain the quality of husbandry services for itself and other
potential users of

 

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the Vivarium in order to protect the health of Tenant’s research animals housed
in Tenant’s Vivarium Space, the quality of the research performed by Tenant and
for compliance with Applicable Laws, and agrees that the leases of other tenants
of the Building using space in the Vivarium shall require such tenants to comply
with Tenant’s standard operating procedures for husbandry services and the
maintenance and operation of the Vivarium. Tenant shall provide copies of its
then-current standard operating procedures to other tenants of the Building
using space in the Vivarium in accordance with a commercially reasonable
confidentiality agreement. Tenant may, at its option and if elected by another
tenant sharing space in the Vivarium, provide husbandry or other
Vivarium-related services to such other tenant(s), in which event Tenant shall
be entitled to receive one hundred percent (100%) of any fees collected for such
services. Landlord acknowledges that, due to the sensitive nature of the
activities in Tenant’s Vivarium Space, any construction or other improvement
work on or around the Vivarium by Landlord or other tenants must be done in a
manner that does not disturb Tenant’s research animals or research activities in
Tenant’s Vivarium Space or Tenant’s use of the Vivarium Common Area in
connection with the care of Tenant’s research animals and Tenant’s performance
of research activities.

12.14. Landlord shall, at its sole cost and expense, construct the Common Areas
of the Building, described in Exhibit N. Tenant shall be entitled to the use of
the Common Areas twenty-four (24) hours per day, seven (7) days per week (except
during reasonable closures for repairs or maintenance pursuant to the terms of
this Lease, or as the result of casualty or other circumstances beyond
Landlord’s control) free of any per use fee, but the cost of using, repairing
and maintaining such Common Areas shall be included in Operating Expenses.
Landlord and Tenant shall work together to select a mutually acceptable café
vendor to service the Building café, and Landlord will endeavor to accommodate
reasonable café design requests.

12.15. Landlord agrees that the Common Areas (other than the helipad (provided
that Landlord shall meet with the other party entitled to use of the helipad
pursuant to the applicable reciprocal easement agreement to determine whether
Landlord’s tenants may have exclusive use of the same)) shall be for the
exclusive use of the tenants of the Building.

13. Rules and Regulations, CC&Rs, Parking Facilities and Common Areas.

13.1. Tenant shall have the non-exclusive right, in common with others, to use
the Common Areas, subject to the rules and regulations adopted by Landlord and
attached hereto as Exhibit F, together with such other reasonable and
nondiscriminatory rules and regulations as are hereafter promulgated by Landlord
in its sole and absolute discretion (the “Rules and Regulations”). Tenant shall
faithfully observe and comply with the Rules and Regulations. Landlord shall not
be responsible to Tenant for the violation or non-performance by any other
tenant or any agent, employee or invitee thereof of any of the Rules and
Regulations; provided that Landlord shall not enforce the Rules and Regulations
discriminatorily against Tenant. Tenant shall not be liable, or incur any costs
under this Lease, for another tenant of the Building’s violation of any Rules
and Regulations.

13.2. This Lease is subject to any recorded covenants, conditions or
restrictions on the Project or Property (the “CC&Rs”), as the same may be
amended, amended and restated, supplemented or otherwise modified from time to
time; provided that any such amendments, restatements, supplements or
modifications do not materially modify Tenant’s rights or obligations hereunder.
Tenant shall comply with the CC&Rs.

 

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13.3. Parking.

(a) Tenant shall have a non-exclusive, irrevocable license to use, but shall not
be obligated to use, Tenant’s Pro Rata Share of parking facilities serving the
Building in common on an unreserved basis with other tenants of the Building
during the Term. Landlord shall not voluntarily reduce Tenant’s Pro Rata Share
of such parking facilities to less than one and 18/100 (1.18) parking spaces per
one thousand (1,000) square feet of Rentable Area of the Premises. The parking
set forth in this Section shall be free for the first sixty (60) months of the
Term. Thereafter, Tenant shall pay for each parking space that Tenant uses at
the then-prevailing market rate. Landlord shall not increase the parking cost
(a) more than once per year and (b) more than three percent (3%) on a year over
year basis. Tenant shall pay any parking costs simultaneously with payments of
Base Rent as Additional Rent. Landlord shall ensure that the Building’s
underground parking garage is gated and contains a card reader system.

(b) Tenant may, upon thirty (30) days’ prior written notice to Landlord, choose
to release its license to use any portion of Tenant’s Parking Pro Rata Share
(the “Released Spaces”). In such event, Tenant shall not be obligated to pay any
future parking fee for such Released Spaces, and Landlord, in its sole
discretion, may grant use of the Released Spaces to a third party. Tenant, upon
thirty (30) days’ prior written notice to Landlord, may request that Landlord
reinstate Tenant’s license to use the Released Spaces. In the event the Released
Spaces are or become available, Landlord shall reinstate Tenant’s license to use
such Released Spaces, and Tenant shall be obligated to pay the corresponding
parking fee as set forth in this Section 13.3.

(c) Tenant, at its option, may designate (i) a number of spaces in the uncovered
surface parking lot associated with the Building as visitor parking (“Visitor
Spaces”), which shall be for the exclusive use of Tenant’s visitors; and (ii) a
number of spaces in the covered parking garage associated with the Building as
employee or executive parking (“Executive Spaces”), which shall be for the
exclusive use of Tenant’s employees or executives, as elected by Tenant;
provided, however, that the sum of such Visitor Spaces and Executive Spaces will
not exceed fifteen (15) in total and shall be a part of (and not in addition to)
Tenant’s Pro Rata Share of parking. Prior to the Term Commencement Date,
Landlord shall label or otherwise mark the Visitor Spaces and Executive Spaces
for use only by Tenant’s visitors or employees/executives, respectively.
Landlord shall not be obligated to monitor or police the Visitor Spaces or the
Executive Spaces, but shall tow unauthorized vehicles if notified by Tenant that
such vehicles are unauthorized.

13.4. Tenant agrees not to unreasonably overburden the parking facilities and
agrees to cooperate with Landlord and other tenants in the use of the parking
facilities. Landlord reserves the right to determine that parking facilities are
becoming overcrowded and to limit Tenant’s use thereof; provided that Landlord
shall not voluntarily reduce Tenant’s allocation of parking spaces below the
ratio provided for in Section 13.3(a), except as provided for in
Section 13.3(b). Upon such determination, Landlord may reasonably allocate
parking spaces among Tenant and other tenants of the Building or the Project.
Nothing in this Section, however, is intended to create an affirmative duty on
Landlord’s part to monitor parking.

 

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13.5. Landlord reserves the right to modify the Common Areas, including the
right to add or remove exterior and interior landscaping and to subdivide real
property, so long as Tenant’s use and enjoyment of the Premises is not
materially adversely affected. Tenant acknowledges that Landlord specifically
reserves the right to allow the exclusive use of corridors and restroom
facilities located on specific floors to one or more tenants occupying such
floors; provided, however, that Tenant shall not be deprived of the use of the
corridors reasonably required to serve the Premises or of restroom facilities
serving the floor upon which the Premises are located.

13.6. Landlord shall endeavor to work with the City of Seattle to create a
northbound left turn lane from Elliott Avenue West/Western Avenue West into the
Building’s parking lot or, if such northbound left turn lane is not reasonably
achievable, a U-turn access at a more northern site, but as near the Building’s
parking lot as reasonably possible, on the same thoroughfare (“Turn Lane Work”);
provided, however, that Landlord shall not obligated to commence any Turn Lane
Work unless and until Landlord and Tenant have mutually agreed upon the cost
allocation for such Turn Lane Work.

14. Project Control by Landlord.

14.1. Landlord reserves full control over the Building and the Project to the
extent not inconsistent with Tenant’s enjoyment of the Premises as provided by
this Lease. This reservation includes, so long as the same does not materially
adversely affect Tenant’s use and enjoyment of the Premises, Landlord’s right to
subdivide the Project; convert the Building to condominium units; change the
size of the Project by selling all or a portion of the Project or adding real
property and any improvements thereon to the Project; grant easements and
licenses to third parties; maintain or establish ownership of the Building
separate from fee title to the Property; make additions to or reconstruct
portions of the Building and the Project; install, use, maintain, repair,
replace and relocate for service to the Premises and other parts of the Building
or the Project pipes, ducts, conduits, wires and appurtenant fixtures, wherever
located in the Premises, the Building or elsewhere at the Project; and alter or
relocate any other Common Area or facility, including private drives, lobbies
and entrances.

14.2. Possession of areas of the Premises necessary for utilities, services,
safety and operation of the Building is reserved to Landlord.

14.3. Tenant shall, at Landlord’s request, promptly execute such further
documents as may be reasonably appropriate to assist Landlord in the performance
of its obligations hereunder; provided that Tenant need not execute any document
that creates additional liability for Tenant or that deprives Tenant of the
quiet enjoyment and use of the Premises as provided for in this Lease.

14.4. Landlord may, at any and all reasonable times during non-business hours
(or during business hours if Tenant so requests), and upon at least one
(1) business day’s prior written or electronic notice (provided that no time
restrictions shall apply or advance notice be

 

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required if an emergency necessitates immediate entry), enter the Premises to
(a) inspect the same and to determine whether Tenant is in compliance with its
obligations hereunder, (b) supply any service Landlord is required to provide
hereunder, (c) show the Premises to prospective purchasers or tenants during the
final year of the Term, (d) post notices of nonresponsibility, (e) access the
telephone equipment, electrical substation and fire risers and (f) alter,
improve or repair any portion of the Building other than the Premises for which
access to the Premises is reasonably necessary. Notwithstanding anything to the
contrary in this Lease, with respect to any entry by Landlord into the Premises,
Landlord (x) shall comply with Tenant’s reasonable rules and regulations related
to such entry in order to address Tenant’s concerns regarding the safety of
visitors, the protection of Tenant’s confidential information and compliance
with regulatory requirements which may include the execution by any visitors
(other than brokers and investors) of a commercially reasonable nondisclosure
agreement, (y) shall be accompanied by a Tenant representative at all times
(except in an emergency that poses an imminent threat of harm to the Premises or
people or property within the Premises) and (z) acknowledges that Tenant may
prohibit the entry into its Premises of any party who Tenant reasonably believes
is a business competitor, unless such entry is during the final year of the Term
and such business competitor has signed a commercially reasonable nondisclosure
agreement. In connection with any such alteration, improvement or repair as
described in Subsection 14.4(f), Landlord may erect in the Premises or elsewhere
in the Project scaffolding and other structures reasonably required for the
alteration, improvement or repair work to be performed; provided that Landlord
shall use reasonable efforts not to interfere with Tenant’s use and enjoyment of
its Premises. In no event shall Tenant’s Rent abate as a result of Landlord’s
activities pursuant to this Section; provided, however, that all such activities
shall be conducted in such a manner so as to cause as little interference to
Tenant as is reasonably possible. Landlord shall at all times retain a key with
which to unlock all of the doors in the Premises. Notwithstanding the foregoing,
access to High Security Areas shall be limited as set forth in Section 12.5 and
Tenant, with respect to investor or broker tours, may further limit access to
areas of the Premises deemed to contain confidential information or processes,
in Tenant’s discretion. If an emergency necessitates immediate access to the
Premises, Landlord may use whatever force is necessary to enter the Premises,
and any such entry to the Premises shall not constitute a forcible or unlawful
entry to the Premises, a detainer of the Premises, or an eviction of Tenant from
the Premises or any portion thereof.

15. Quiet Enjoyment. So long as Tenant is not in Default under this Lease,
Landlord or anyone acting through or under Landlord shall not disturb Tenant’s
occupancy of the Premises, except as permitted by this Lease.

16. Utilities and Services.

16.1. Subject to the terms of this Article, Landlord shall provide to the
Premises, in quantities reasonably sufficient for office and laboratory/research
purposes, the following utilities and services: water (from the local municipal
or similar source), electricity, gas, vacuum, compressed air and deionized
water. Tenant shall pay for all water (including the cost to service, repair and
replace reverse osmosis, de-ionized and other treated water), gas, heat, light,
power, telephone, internet service, cable television, other telecommunications
and other utilities supplied to the Premises, together with any fees, surcharges
and taxes thereon. If any such utility is not separately metered to Tenant,
Tenant shall pay Tenant’s Share of all charges of

 

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such utility jointly metered with other premises as Additional Rent or, in the
alternative, Landlord may, at its option, monitor the usage of such utilities by
Tenant and charge Tenant with the cost of purchasing, installing and monitoring
such metering equipment, which cost shall be paid by Tenant as Additional Rent.
To the extent that Tenant uses more than Tenant’s Pro Rata Share of any
utilities, then Tenant shall pay Landlord Tenant’s Share of utilities to reflect
such excess. Tenant acknowledges that Landlord may extrapolate utility usage
that vary depending on the occupancy of the Building or Project, as applicable,
by dividing (a) the total cost of utility usage by (b) the Rentable Area of the
Building or Project (as applicable) that is occupied, then multiplying (y) the
resulting quotient by (z) ninety-five percent (95%) of the total Rentable Area
of the Building or Project (as applicable). Tenant shall pay Tenant’s Share of
the product of (y) and (z), subject to adjustment based on actual usage as
reasonably determined by Landlord; provided, however, that Landlord shall not
recover more than one hundred percent (100%) of such utility costs.

16.2. Except as otherwise set forth in this Section, Landlord shall not be
liable for, nor shall any eviction of Tenant result from, the failure to furnish
any utility or service, whether or not such failure is caused by accident;
breakage; repair; strike, lockout or other labor disturbance or labor dispute of
any character; act of terrorism; shortage of materials, which shortage is not
unique to Landlord or Tenant, as the case may be; governmental regulation,
moratorium or other governmental action, inaction or delay; or other causes
beyond Landlord’s control (collectively, “Force Majeure”) or Landlord’s
negligence. In the event of such failure, Tenant shall not be entitled to
termination of this Lease or any abatement or reduction of Rent, nor shall
Tenant be relieved from the operation of any covenant or agreement of this
Lease. Notwithstanding anything to the contrary in this Lease, if as a direct
result of Landlord’s gross negligence or willful misconduct, for more than five
(5) consecutive business days following written notice to Landlord (a) HVAC or
electricity services to all or a material portion of the Premises are
interrupted or are unable to support Tenant’s normal occupancy requirements for
the Permitted Use or (b) an interruption of other essential utilities and
Building services, such as fire protection or water, prevents the use or
occupancy of all or a material portion of the Premises for the Permitted Use,
then Tenant’s Base Rent and Operating Expenses (or an equitable portion of such
Base Rent and Operating Expenses based on the Rentable Area of the Premises
which are not usable) shall thereafter be abated until the Premises are again
usable by Tenant for the Permitted Use; provided, however, that if Landlord is
diligently pursuing the repair of such utilities or services and Landlord
provides substitute services that are reasonably suitable for Tenant’s continued
use and occupancy of the Premises for the Permitted Use, such as, bringing in
portable air conditioning equipment or potable water supplies, then there shall
not be an abatement of Base Rent or Operating Expenses. Except for Tenant’s
rights under Section 31.12 and Section 18.7, the foregoing provisions shall be
Tenant’s sole recourse and remedy against Landlord in the event of an
interruption of services to the Premises. The foregoing provisions shall not
apply in case of the actions of parties other than Landlord or in the case of
damage to or destruction of the Premises (which shall be governed by the
provisions of Article 24 of this Lease).

16.3. Tenant shall pay for, prior to delinquency of payment therefor, any
utilities and services that may be furnished to the Premises during or, if
Tenant occupies the Premises after the expiration or earlier termination of the
Term, after the Term, beyond those utilities provided by Landlord, including
telephone, internet service, cable television and other telecommunications,
together with any fees, surcharges and taxes thereon. Upon Landlord’s demand,
utilities and services provided to the Premises that are separately metered
shall be paid by Tenant directly to the supplier of such utilities or services.

 

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16.4. [Intentionally omitted]

16.5. If Tenant shall require utilities or services in excess of those usually
furnished or supplied for tenants in similar spaces in the Building or the
Project by reason of Tenant’s equipment or extended hours of business
operations, then Tenant shall first procure Landlord’s consent for the use
thereof, which consent Landlord shall not unreasonably withhold, condition or
delay but may reasonably condition upon (among other things) the availability of
such excess utilities or services, and Tenant shall pay as Additional Rent an
amount equal to the cost of providing such excess utilities and services to the
extent the same are not separately metered.

16.6. Upon Landlord’s demand, utilities and services provided to the Premises
that are separately metered shall be paid by Tenant directly to the supplier of
such utility or service.

16.7. Landlord shall provide water in Common Areas for lavatory purposes only,
which water shall be from the local municipal or similar source; provided,
however, that if Landlord determines that Tenant requires, uses or consumes
water for any purpose other than ordinary lavatory purposes, Landlord may
install a water meter and thereby measure Tenant’s water consumption for all
purposes. Tenant shall pay Landlord for the costs of such meter and the
installation thereof and, throughout the duration of Tenant’s occupancy of the
Premises, Tenant shall keep said meter and installation equipment in good
working order and repair at Tenant’s sole cost and expense. If Tenant fails to
so maintain such meter and equipment, Landlord may repair or replace the same
and shall collect the costs therefor from Tenant. Tenant agrees to pay for water
consumed, as shown on said meter, as and when bills are rendered. If Tenant
fails to timely make such payments, Landlord may pay such charges and collect
the same from Tenant. Any such costs or expenses incurred, or payments made by
Landlord for any of the reasons or purposes hereinabove stated, shall be deemed
to be Additional Rent payment by Tenant and collectible by Landlord as such.

16.8. Landlord reserves the right to stop service of the elevator, plumbing,
ventilation, air conditioning and other utility systems, when Landlord deems
necessary or desirable, due to accident, emergency or the need to make repairs,
alterations or improvements, until such repairs, alterations or improvements
shall have been completed, and Landlord shall further have no responsibility or
liability for failure to supply elevator facilities, plumbing, ventilation, air
conditioning or other utility service when prevented from doing so by Force
Majeure or Landlord’s negligence; a failure by a third party to deliver gas, oil
or another suitable fuel supply; or Landlord’s inability by exercise of
reasonable diligence to obtain gas, oil or another suitable fuel. Without
limiting the foregoing, it is expressly understood and agreed that any covenants
on Landlord’s part to furnish any service pursuant to any of the terms,
covenants, conditions, provisions or agreements of this Lease, or to perform any
act or thing for the benefit of Tenant, shall not be deemed breached if Landlord
is unable to furnish or perform the same by virtue of Force Majeure or
Landlord’s negligence; provided that this paragraph shall not diminish Tenant’s
rights under this Lease, including those set forth in Section 16.2, Section 18.7
or Section 31.12. Any service shutdown pursuant to this Section shall be
conducted only following at least two (2) business days’ prior written or
electronic notice to Tenant (except in an emergency, in which case no such prior
notice shall be required) and in such a manner so as to cause as little
interference to Tenant as is reasonably possible.

 

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16.9. Tenant shall have the right to use the back-up generator in the southwest
corner of the parking garage (the “Generator”) and connect the Generator to the
Premises’ emergency electrical panel. Landlord represents and warrants to Tenant
that the Generator has a nominal capacity of at least 350 kilowatts. Tenant
shall be entitled to exclusive use of all power from the Generator. Tenant, at
its sole cost and expense, shall maintain and repair the Generator. Landlord
expressly disclaims any warranties with regard to the Generator or the
connection thereof, including any warranty of merchantability or fitness for a
particular purpose. The provisions of Section 16.2 of this Lease shall apply to
the Generator. The Generator shall be in a good and operable condition as of the
Term Commencement Date. Landlord agrees that Tenant shall not be responsible for
any costs incurred by Landlord to install additional generators to service other
tenants. In the event that the Generator, in Landlord’s reasonable
determination, requires replacement during the Term and Tenant, in its sole
discretion, desires a replacement generator, Landlord shall replace the
Generator with a comparable generator and Tenant shall reimburse Landlord for
the cost of the same; provided that such cost shall be amortized over the useful
life of such replacement (in accordance with generally accepted accounting
principles, but in no event less than fifteen (15) years) and paid in equal
monthly installments at the same time as Tenant’s payment of Base Rent,
commencing with the first (1st) required payment of Base Rent due after
installation of the replacement generator and continuing for the remainder of
the Term. From and after the installation of any replacement generator, the term
“Generator” shall mean such replacement generator.

16.10. For the Premises, Landlord shall (a) maintain and operate the heating,
ventilating and air conditioning systems used for the Permitted Use only
(“HVAC”) and (b) subject to clause (a) above, furnish HVAC as reasonably
required (except as this Lease otherwise provides) for reasonably comfortable
occupancy and use of the Premises for the Permitted Use twenty-four (24) hours a
day, every day during the Term, subject to casualty, eminent domain or as
otherwise specified in this Article. Notwithstanding anything to the contrary in
this Section (except as provided in Section 16.2), Landlord shall have no
liability, and Tenant shall have no right or remedy, on account of any
interruption or impairment in HVAC services; provided that Landlord diligently
endeavors to cure any such interruption or impairment, unless such replacement
is needed as a result of Tenant’s negligence or willful misconduct, and provided
that any such cost shall be considered an Operating Expense if included in the
definition of Operating Expenses.

16.11. For any utilities serving the Premises for which Tenant is billed
directly by such utility provider, Tenant agrees to furnish to Landlord
(a) within thirty (30) days after Landlord’s written request (but no more
frequently than on a quarterly basis), copies of any invoices or statements for
such utilities, (b) within thirty (30) days after Landlord’s request, any other
utility usage information reasonably requested by Landlord, and (c) within
thirty (30) days after each calendar year during the Term, an ENERGY STAR®
Statement of Performance (or similar comprehensive utility usage report (e.g.,
related to Labs 21), if requested by Landlord) and any other information
reasonably requested by Landlord for the immediately preceding year. Tenant
shall retain records of utility usage at the Premises, including invoices and
statements from the utility provider, for at least sixty (60) months. Tenant
acknowledges that any utility information for the Premises, the Building and the
Project may be shared with third parties, including

 

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Landlord’s consultants and Governmental Authorities. In the event that Tenant
fails to comply with this Section, Tenant hereby authorizes Landlord to collect
utility usage information directly from the applicable utility providers.

17. Alterations.

17.1. Tenant shall make no alterations, additions or improvements in or to the
Premises or engage in any construction, demolition, reconstruction, renovation,
or other work (whether major or minor) of any kind in, at, or serving the
Premises (“Alterations”) without Landlord’s prior written approval, which
approval Landlord shall not unreasonably withhold; provided, however, that in
the event any proposed Alteration affects (a) any structural portions of the
Building, including exterior walls, roof, foundation, foundation systems
(including barriers and subslab systems), or core of the Building, (b) the
exterior of the Building or (c) any Building systems, including elevator,
plumbing, air conditioning, heating, electrical, security, life safety and
power, then Landlord may withhold its approval with respect thereto in its sole
and absolute discretion. Tenant shall, in making any such Alterations, use only
those architects, contractors, suppliers and mechanics of which Landlord has
given prior written approval, which approval shall not be unreasonably withheld,
conditioned or delayed. In seeking Landlord’s approval, Tenant shall provide
Landlord, at least fourteen (14) days in advance of any proposed construction,
with plans, specifications, bid proposals, certified stamped engineering
drawings and calculations by Tenant’s engineer of record or architect of record,
(including connections to the Building’s structural system, modifications to the
Building’s envelope, non-structural penetrations in slabs or walls, and
modifications or tie-ins to life safety systems), requests for laydown areas and
such other information concerning the nature and cost of the Alterations as
Landlord may reasonably request. In no event shall Tenant use or Landlord be
required to approve any architects, consultants, contractors, subcontractors or
material suppliers that Landlord reasonably believes could cause labor
disharmony. Notwithstanding the foregoing, Tenant may, from time to time, at its
own cost and expense and without the consent of Landlord, make strictly cosmetic
changes (“Cosmetic Alterations”); provided that (y) the cost of any Cosmetic
Alterations does not in any one instance exceed Seventy-Five Thousand and 00/100
Dollars ($75,000.00) and (z) such Cosmetic Alterations do not (i) require any
structural or other substantial modifications to the Premises, (ii) require any
changes to, or adversely affect, the Building systems, (iii) affect the exterior
of the Building or (iv) trigger any requirement under Applicable Laws that would
require Landlord to make any alteration or improvement to the Premises, the
Building or the Project. Tenant shall give Landlord at least ten (10) business
days’ prior written notice of any Cosmetic Alterations.

17.2. Tenant shall not construct or permit to be constructed partitions or other
obstructions that might materially interfere with free access to mechanical
installation or service facilities of the Building or with other tenants’
components located within the Building, or materially interfere with the moving
of Landlord’s equipment to or from the enclosures containing such installations
or facilities.

17.3. Tenant shall accomplish any work performed on the Premises or the Building
in such a manner as to permit any life safety systems to remain fully operable
at all times, unless a temporary shutdown is reasonably necessary in order to
perform certain work; provided that Tenant shall work in advance with Landlord
in order to coordinate any such temporary shutdown. Any such temporary shutdown
shall be done in Landlord’s sole but reasonable discretion.

 

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17.4. Any work performed on the Premises, the Building or the Project by Tenant
or Tenant’s contractors shall be done at such times and in such manner as
Landlord may from time to time reasonably designate. Tenant covenants and agrees
that all work done by Tenant or Tenant’s contractors shall be performed in full
compliance with Applicable Laws. Within thirty (30) days after completion of any
Alterations, Tenant shall provide Landlord with complete “as-built” drawing
print sets and electronic CADD files on disc (or files in such other current
format in common use as Landlord reasonably approves or requires) showing any
changes in the Premises.

17.5. Before commencing any Alterations, other than Cosmetic Alterations (for
which notice requirements are set forth in Section 17.1), Tenant shall give
Landlord at least fourteen (14) days’ prior written notice of the proposed
commencement of such work.

17.6. All Alterations, attached equipment, fixtures, additions and improvements,
subject to Sections 17.8 and 17.9, attached to or built into the Premises, made
by either of the Parties, including all floor and wall coverings, built-in
cabinet work and paneling, sinks and related plumbing fixtures, laboratory
benches, exterior venting fume hoods and walk-in freezers and refrigerators,
ductwork, conduits, electrical panels and circuits, shall (unless, prior to such
construction or installation, Landlord elects otherwise) become the property of
Landlord upon the expiration or earlier termination of the Term, and shall
remain upon and be surrendered with the Premises as a part thereof. The Premises
shall at all times remain the property of Landlord and shall be surrendered to
Landlord upon the expiration or earlier termination of this Lease.

17.7. Notwithstanding anything to the contrary in this Lease, Tenant shall not
be required to remove or restore any of the Tenant Improvements or, unless
otherwise required by Landlord at the time of any approval of future
Alterations, other Alterations performed by Landlord or Tenant to the Premises.
Tenant shall repair any damage to the Premises caused by Tenant’s removal of any
property from the Premises. During any such restoration period, Tenant shall pay
Rent to Landlord as provided herein as if said space were otherwise occupied by
Tenant. The provisions of this Section shall survive the expiration or earlier
termination of this Lease.

17.8. Except as set forth in Section 17.9, all business and trade fixtures,
machinery and equipment, built-in furniture and cabinets, together with all
additions and accessories thereto, installed in and upon the Premises shall be
and remain the property of Landlord and shall not be moved by Tenant at any time
during the Term. If Tenant shall fail to remove any of its personal property
from the Premises prior to termination of this Lease, then Landlord may, at its
option, remove the same in any manner that Landlord shall choose and store said
effects without liability to Tenant for loss thereof or damage thereto, and
Tenant shall pay Landlord, upon demand, any costs and expenses incurred due to
such removal and storage or Landlord may, at its sole option and without notice
to Tenant, sell such property or any portion thereof at private sale and without
legal process for such price as Landlord may obtain and apply the proceeds of
such sale against any (a) amounts due by Tenant to Landlord under this Lease and
(b) any expenses incident to the removal, storage and sale of said personal
property.

 

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17.9. Notwithstanding any other provision of this Article to the contrary, in no
event shall Tenant remove any improvement from the Premises as to which Landlord
contributed payment (excluding payment from Landlord used for moving or
installation costs), including the Tenant Improvements, without Landlord’s prior
written consent, which consent Landlord may withhold in its sole and absolute
discretion. Notwithstanding anything to the contrary in this Lease, Tenant shall
at all times be entitled to remove from the Premises any of the trade fixtures
or equipment that Tenant paid for at its sole cost, provided that Tenant
promptly restores any damage caused by such removal.

17.10. Tenant shall reimburse Landlord for any extra expenses incurred by
Landlord by reason of faulty work done by Tenant or its contractors, or by
reason of delays caused by such work, or by reason of inadequate clean-up.

17.11. Landlord shall not charge Tenant a construction management fee, project
management fee or other similar fee in relation to the Tenant Improvements or
any future Alterations performed by Tenant.

17.12. Tenant shall take, and shall cause its contractors to take, commercially
reasonable steps to protect the Premises during the performance of any
Alterations, including covering or temporarily removing any window coverings so
as to guard against dust, debris or damage.

17.13. Tenant shall require its contractors and subcontractors performing work
on the Premises to name Landlord and its affiliates and Lenders as additional
insureds on their respective insurance policies.

18. Repairs and Maintenance.

18.1. Landlord shall repair and maintain the structural and exterior portions
and Common Areas of the Building and the Project, including roofing and covering
materials; foundations; exterior walls; plumbing; fire sprinkler systems (if
any); heating, ventilating, air conditioning systems; elevators; and electrical
systems installed or furnished by Landlord.

18.2. Except for services of Landlord, if any, required by Section 18.1, Tenant
shall at Tenant’s sole cost and expense maintain and keep the Premises and every
part thereof in good condition and repair, damage thereto from ordinary wear and
tear excepted. Tenant shall, upon the expiration or sooner termination of the
Term, surrender the Premises to Landlord in as good a condition as when
received, ordinary wear and tear excepted; and shall, at Landlord’s request,
remove all telephone and data systems, wiring and equipment from the Premises,
and repair any damage to the Premises caused thereby. Landlord shall have no
obligation to alter, remodel, improve, repair, decorate or paint the Premises or
any part thereof, other than as described in Exhibit B or as specifically set
forth in this Lease.

18.3. Subject to Tenant’s rights under this Lease, Landlord shall not be liable
for any failure to make any repairs or to perform any maintenance that is an
obligation of Landlord unless such failure shall persist for thirty (30) days
following the date on which Tenant provides Landlord with written notice of the
need of such repairs or maintenance; provided, however, that if the nature of
such obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be liable for any failure to make any
repairs if Landlord

 

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commences performance of such repairs within such thirty (30) day period and
thereafter diligently prosecutes the same to completion; and provided further,
that this sentence does not modify Landlord’s obligations set forth in this
Lease regarding the delivery condition of the Premises, Building and Project.
Tenant waives its rights under Applicable Laws now or hereafter in effect to
make repairs at Landlord’s expense.

18.4. If any excavation shall be made upon land adjacent to or under the
Building, or shall be authorized to be made, Tenant shall afford to the person
causing or authorized to cause such excavation, license to enter the Premises
for the purpose of performing such work as said person shall deem necessary or
desirable to preserve and protect the Building from injury or damage and to
support the same by proper foundations, without any claim for damages or
liability against Landlord and without reducing or otherwise affecting Tenant’s
obligations under this Lease.

18.5. This Article relates to repairs and maintenance arising in the ordinary
course of operation of the Building and the Project. In the event of a casualty
described in Article 24, Article 24 shall apply in lieu of this Article. In the
event of eminent domain, Article 25 shall apply in lieu of this Article.

18.6. Costs incurred by Landlord pursuant to this Article shall constitute
Operating Expenses to the extent allowable under Article 9; provided that,
subject to Section 23.7, if such costs are incurred due in whole or in part to
any act, neglect, fault or omissions of Tenant or its employees, agents,
contractors or invitees, Tenant shall pay to Landlord the reasonable cost of
such repairs and maintenance.

18.7. Notwithstanding anything to the contrary in this Lease, in the event of an
emergency that poses an imminent threat of harm to the Premises or people or
property within the Premises, Tenant shall have the right, but not the
obligation, to take whatever action and perform whatever work is reasonably
necessary to repair any portion or component of the Premises affected by such
emergency. Prior to taking any such action or performing such work, Tenant shall
use commercially reasonable efforts to contact Landlord (via phone, if
necessary) and agrees not to take such action or perform such work if Landlord
commits and is able to perform the same in at least an expeditious manner as
Tenant is able to take such action or perform such work; provided, however, that
if the emergency situation poses imminent material harm to Tenant such that
advance notification to Landlord is not possible while still avoiding such harm,
notification of Landlord may proceed concurrently with Tenant’s taking such
repair action. Tenant shall use commercially reasonable efforts to minimize
interference with the rights of other tenants to use their respective premises
in the Building, and all work done in accordance herewith must be performed at a
reasonable and competitive cost and expense. To the extent the emergency
situation addressed by Tenant under this paragraph is due to the negligence or
intentional misconduct of Landlord or its agents, contractors or employees, or
if the work performed by Tenant to remedy such emergency situation is not
Tenant’s sole responsibility under the terms and conditions of this Lease, then
Landlord agrees to reimburse Tenant for such portion of the reasonable cost of
work performed by Tenant pursuant to this paragraph that is Landlord’s
responsibility under this Lease within thirty (30) days of invoice.

 

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19. Liens.

19.1. Subject to the immediately succeeding sentence, Tenant shall keep the
Premises, the Building and the Project free from any liens arising out of work
performed, materials furnished or obligations incurred by Tenant. Tenant further
covenants and agrees that any mechanic’s lien filed against the Premises, the
Building or the Project for work claimed to have been done for, or materials
claimed to have been furnished to, shall be discharged or bonded by Tenant
within ten (10) business days after the filing thereof, at Tenant’s sole cost
and expense.

19.2. Should Tenant fail to discharge or bond against any lien of the nature
described in Section 19.1, Landlord may, at Landlord’s election, pay such claim
or post a bond or otherwise provide security to eliminate the lien as a claim
against title, and Tenant shall immediately reimburse Landlord for the costs
thereof as Additional Rent. Tenant shall indemnify, save, defend (at Landlord’s
option and with counsel reasonably acceptable to Landlord) and hold the Landlord
Indemnitees harmless from and against any Claims arising from any such liens,
including any administrative, court or other legal proceedings related to such
liens.

19.3. In the event that Tenant leases or finances the acquisition of office
equipment, furnishings or other personal property of a removable nature utilized
by Tenant in the operation of Tenant’s business, Tenant warrants that any
Uniform Commercial Code financing statement shall, upon its face or by exhibit
thereto, indicate that such financing statement is applicable only to removable
personal property of Tenant located within the Premises. In no event shall the
address of the Premises, the Building or the Project be furnished on a financing
statement without qualifying language as to applicability of the lien only to
removable personal property located in an identified suite leased by Tenant.
Should any holder of a financing statement record or place of record a financing
statement that appears to constitute a lien against any interest of Landlord or
against equipment that may be located other than within an identified suite
leased by Tenant, Tenant shall, within ten (10) days after filing such financing
statement, cause (a) a copy of the Lender security agreement or other documents
to which the financing statement pertains to be furnished to Landlord to
facilitate Landlord’s ability to demonstrate that the lien of such financing
statement is not applicable to Landlord’s interest and (b) Tenant’s Lender to
amend such financing statement and any other documents of record to clarify that
any liens imposed thereby are not applicable to any interest of Landlord in the
Premises, the Building or the Project.

20. Estoppel Certificate. Tenant shall, within ten (10) business days of receipt
of both hard copy and e-mail written notice from Landlord, execute, acknowledge
and deliver a statement in writing substantially in the form attached to this
Lease as Exhibit I, or on any other form reasonably requested by a proposed
Lender or purchaser, (a) certifying that this Lease is unmodified and in full
force and effect (or, if modified, stating the nature of such modification and
certifying that this Lease as so modified is in full force and effect) and the
dates to which rental and other charges are paid in advance, if any,
(b) acknowledging that there are not, to Tenant’s knowledge, any uncured
defaults on the part of Landlord hereunder, or specifying such defaults if any
are claimed, and (c) setting forth such further information with respect to this
Lease or the Premises as may be reasonably requested thereon. Any such statement
may be relied upon by any prospective purchaser or encumbrancer of all or any
portion of the real property of which the Premises are a part such that Tenant
shall be estopped from arguing facts

 

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contrary to those set forth in the statement. If Tenant fails to provide such
statement within such ten (10) business day period, then Landlord shall provide
Tenant with a second hard copy and e-mail written notice requesting that Tenant
execute the certificate, provided that such second notice shall be delivered to
the notice recipients set forth in Section 2.10 and also to Tenant’s Associate
General Counsel, Corporate Finance and Governance (at the same notice address
set forth in Section 2.10 and e-mail asutter@omeros.com) and to Richard Moore
(at Socius Law Group, 601 Union Street, Suite 4950, Seattle, WA 98101, with
email rmoore@sociuslaw.com), and shall include a prominent, all capital legend
that failure to respond to such notice may result in Default under this Lease.
Tenant’s failure to deliver such statement within ten (10) business days
following the receipt of the second (2nd) notice shall, at Landlord’s option,
constitute a Default (as defined below) under this Lease, and, in any event,
shall be binding upon Tenant that the Lease is in full force and effect and
without modification except as may be represented by Landlord in any certificate
prepared by Landlord and delivered to Tenant for execution.

21. Hazardous Materials.

21.1. Subject to Section 21.2, Tenant shall not cause or permit any Hazardous
Materials (as defined below) to be brought upon, kept or used in or about the
Premises, the Building or the Project in violation of Applicable Laws by Tenant
or its employees, agents, contractors or invitees. If Tenant breaches such
obligation, or if the presence of Hazardous Materials as a result of such a
breach results in contamination of the Project, any portion thereof, or any
adjacent property, or if contamination of the Premises or any portion thereof
otherwise occurs during the Term or any extension of renewal hereof or holding
under hereunder, or if contamination of the remainder of the Project, any
portion thereof, or any adjacent property by Hazardous Materials otherwise
occurs during the Term or any extension or renewal hereof or holding over
hereunder due to Hazardous Materials brought onto the Project by Tenant or at
Tenant’s direction (other than if such contamination results from (a) migration
of Hazardous Materials from outside the Premises not caused by Tenant or its
employees, agents, contractors or invitees or (b) to the extent such
contamination is caused by Landlord’s negligence or willful misconduct), then
Tenant shall indemnify, save, defend (at Landlord’s option and with counsel
reasonably acceptable to Landlord) and hold the Landlord Indemnitees harmless
from and against any and all Claims, including (w) diminution in value of the
Project or any portion thereof, (x) damages for the loss or restriction on use
of rentable or usable space or of any amenity of the Project, (y) damages
arising from any adverse impact on marketing of space in the Project or any
portion thereof and (z) sums paid in settlement of Claims that arise during or
after the Term as a result of such breach or contamination. This indemnification
by Tenant includes costs incurred in connection with any investigation of site
conditions or any clean-up, remedial, removal or restoration work required by
any Governmental Authority because of Hazardous Materials present in the air,
soil or groundwater above, on or under or about the Project that Tenant is
responsible for according to the terms of this Lease. Without limiting the
foregoing, if the presence of any Hazardous Materials in, on, under or about the
Project, any portion thereof or any adjacent property caused or permitted by
Tenant results in any contamination of the Project, any portion thereof or any
adjacent property, then Tenant shall promptly take all actions at its sole cost
and expense as are necessary to return the Project, any portion thereof or any
adjacent property to its respective condition existing prior to the time of such
contamination; provided that Landlord’s written approval of such action shall
first be obtained, which approval Landlord shall not unreasonably withhold; and
provided, further, that it shall be reasonable for Landlord to

 

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withhold its consent if such actions could have a material adverse long-term or
short-term effect on the Project, any portion thereof or any adjacent property.
Notwithstanding the foregoing, Landlord shall indemnify, save, defend (at
Tenant’s option and with counsel reasonably acceptable to Tenant) and hold
Tenant and its affiliates, employees, agents and contractors harmless from and
against any and all Claims resulting from the presence of Hazardous Materials at
the Project in violation of Applicable Laws as of the Execution Date, unless
placed at the Project by Tenant or its affiliates, employees, agents or
contractors.

21.2. Landlord acknowledges that it is not the intent of this Article to
prohibit Tenant from operating its business for the Permitted Use. Tenant may
operate its business according to the custom of Tenant’s industry so long as the
use or presence of Hazardous Materials (including radioactive materials) is
strictly and properly monitored in accordance with Applicable Laws. As a
material inducement to Landlord to allow Tenant to use Hazardous Materials in
connection with its business, Tenant agrees to deliver to Landlord prior to the
Term Commencement Date a list identifying each type of Hazardous Material to be
present at the Project and setting forth any and all governmental approvals or
permits required in connection with the presence of such Hazardous Material at
the Project (the “Hazardous Materials List”). Tenant shall deliver to Landlord
an updated Hazardous Materials List on or prior to each annual anniversary of
the Term Commencement Date and shall also deliver an updated Hazardous Materials
List before any new Hazardous Materials that are classified as an extremely
hazardous substance under 40 CFR Part 355, Appendices A and B, and its
successors (“Extremely Hazardous Substances”), are brought to the Project;
provided, however, that if Tenant has already included any such Extremely
Hazardous Substances on a prior Hazardous Materials List, then Tenant shall only
be required to submit an updated Hazardous Materials List if the quantity of
such Extremely Hazardous Substances rises to the level that requires
notification of any applicable Governmental Authority. Tenant shall deliver to
Landlord true and correct copies of the following documents (hereinafter
referred to as the “Documents”), if applicable, relating to the handling,
storage, disposal and emission of Hazardous Materials prior to the Term
Commencement Date or, if unavailable at that time, concurrently with the receipt
from or submission to any Governmental Authority: permits; approvals;
governmental reports and correspondence; storage and management plans; notices
of violations of Applicable Laws; plans relating to the installation of any
storage tanks to be installed in, on, under or about the Project (provided that
installation of storage tanks shall only be permitted after Landlord has given
Tenant its written consent to do so, which consent Landlord shall not
unreasonably withhold, condition or delay); and all closure plans or any other
documents required by any and all Governmental Authorities for any storage tanks
installed in, on, under or about the Project for the closure of any such storage
tanks. Tenant shall not be required, however, to provide Landlord with any
portion of the Documents containing information of a proprietary nature, which
Documents, in and of themselves, do not contain a reference to any Hazardous
Materials or activities related to Hazardous Materials.

21.3. Landlord agrees to construct a separately ventilated Hazardous Materials
storage area in the Common Areas of the Building (at Landlord’s sole cost and
expense), and agrees that Tenant shall be entitled to use a portion of such area
free of any per use fee; provided that Tenant shall provide, at its sole cost
and expense, its own Hazardous Materials storage containers; and provided
further, that any maintenance and repair costs associated with such Hazardous
Materials storage area shall be included in Operating Expenses. Landlord shall
maintain the Hazardous Materials storage area in a good, clean and safe
condition, but shall not be responsible for Tenant’s or any other tenants’
Hazardous Materials in such storage area.

 

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21.4. At any time, and from time to time, prior to the expiration of the Term,
Landlord shall have the right to conduct appropriate tests of the Project or any
portion thereof to demonstrate that Hazardous Materials are present or that
contamination has occurred due to Tenant or Tenant’s employees, agents,
contractors or invitees. Tenant shall pay all reasonable costs of such tests if
such tests reveal that Hazardous Materials exist at the Project in violation of
this Lease. Prior to the Term Commencement Date, Landlord, at its sole cost and
expense, shall cause a baseline test (the “Baseline Test”) of the Premises to be
performed that shows that no Hazardous Materials are present in the Premises in
violation of Applicable Laws as of such date. Landlord shall provide Tenant with
a copy of the Baseline Test prior to the Term Commencement Date.

21.5. If underground or other storage tanks storing Hazardous Materials are
located on the Premises or are hereafter placed on the Premises by any party,
Tenant shall monitor the storage tanks, maintain appropriate records, implement
reporting procedures, properly close any underground storage tanks, and take or
cause to be taken all other steps necessary or required under the Applicable
Laws.

21.6. Tenant shall promptly report to Landlord any actual or suspected presence
of mold or water intrusion at the Premises.

21.7. Tenant’s obligations under this Article shall survive the expiration or
earlier termination of the Lease. During any period of time needed by Tenant or
Landlord after the termination of this Lease to complete the removal from the
Premises of any such Hazardous Materials, Tenant shall be deemed a holdover
tenant and subject to the provisions of Article 27 below.

21.8. As used herein, the term “Hazardous Material” means any hazardous or toxic
substance, material or waste that is or becomes regulated by any Governmental
Authority.

21.9. Notwithstanding anything to the contrary in this Lease, Landlord shall
have sole control over the equitable allocation of fire control areas (as
defined in the Seattle Building Code and Seattle Fire Code (the “SBC” and “SFC,”
respectively)) within the Project for the storage of Hazardous Materials.
Notwithstanding anything to the contrary in this Lease, the quantity of
Hazardous Materials allowed by this Section 21.9 is specific to Tenant and shall
not run with the Lease in the event of a Transfer (as defined in Article 29). In
the event of a Transfer, if the use of Hazardous Materials by such new tenant
(“New Tenant”) is such that New Tenant utilizes fire control areas in the
Project in excess of New Tenant’s Pro Rata Share of the Building or the Project,
as applicable, then New Tenant shall, at its sole cost and expense and upon
Landlord’s written request, establish and maintain a separate area of the
Premises classified by the SBC and SFC as an “H” occupancy area for the use and
storage of Hazardous Materials, or take such other action as is necessary to
ensure that its share of the fire control areas of the Building and the Project
is not greater than New Tenant’s Pro Rata Share of the Building or the Project,
as applicable.

 

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22. Odors and Exhaust.

22.1. Tenant shall not cause or permit (or conduct any activities that would
cause) any release of any odors or fumes of any kind from the Premises, except
as may be lawfully and properly exhausted through the ventilation system serving
the Premises (the “Ventilation System”) without unreasonable interference with
or nuisance to other tenants or third parties.

22.2. The parties agree that, as of the Term Commencement Date, the Premises
shall have the Ventilation System designed and constructed in accordance with
Exhibit B, which system Landlord and Tenant believe is adequate, suitable and
appropriate for the Permitted Use and to vent the Premises in a manner that does
not release odors affecting any indoor or outdoor part of the Project. Tenant
shall vent the Premises through such Ventilation System. Tenant shall be
entitled to Tenant’s Pro Rata Share of the use of the Ventilation System (to the
extent the Ventilation System is shared by other tenants of the Building), and
shall not be responsible for any costs to upgrade or otherwise change the
Ventilation System to the extent odors are caused by other tenants of the
Building.

22.3. If Landlord, at any time, reasonably determines that the Ventilation
System is operating correctly and is inadequate to eliminate odors emanating
from the Premises, then Tenant shall, at Tenant’s sole cost and expense, improve
the Ventilation System by providing odor eliminators and other devices (such as
filters, air cleaners, scrubbers and whatever other equipment may, in Landlord’s
reasonable judgment, be necessary or appropriate from time to time) to
completely remove, eliminate and abate any odors, fumes or other substances in
Tenant’s exhaust stream that, in Landlord’s reasonable judgment, emanate from
Tenant’s Premises. Any work Tenant performs under this Section shall constitute
Alterations. Tenant’s obligations under this Section shall continue throughout
the Term. Tenant acknowledges Landlord’s legitimate desire to maintain the
Project (both indoor and outdoor areas) in an odor-free manner, and Landlord may
require Tenant to abate and remove all odors in a manner that goes beyond the
requirements of Applicable Laws.

22.4. Provided Landlord delivers and maintains the Ventilation System in
accordance with its obligations under this Lease, Landlord’s approval and
construction of the Tenant Improvements shall not preclude Landlord from
reasonably requiring additional measures to eliminate odors, fumes and other
adverse impacts of Tenant’s exhaust stream (as Landlord may designate in
Landlord’s discretion). Tenant shall install additional equipment as Landlord
requires from time to time under the preceding sentence. Such installations
shall constitute Alterations.

22.5. If Tenant fails to perform its obligations under this Article within ten
(10) business days after Landlord’s demand, then Landlord may, without limiting
Landlord’s other rights and remedies, require Tenant to cease and suspend any
operations in the Premises that, in Landlord’s reasonable determination, cause
odors, fumes or exhaust. For example, if Landlord determines that Tenant’s
production of a certain type of product causes odors, fumes or exhaust, and
Tenant does not install satisfactory odor control equipment within ten
(10) business days after Landlord’s request, then Landlord may require Tenant to
stop producing such type of product in the Premises unless and until Tenant has
installed odor control equipment satisfactory to Landlord.

 

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23. Insurance; Waiver of Subrogation.

23.1. Landlord shall maintain insurance for the Building and the Project in
amounts equal to full replacement cost or the amount of such insurance
Landlord’s Lender, if any, requires Landlord to maintain, whichever is greater,
providing protection against any peril generally included within the
classification of “All Risks” coverage. Landlord, subject to availability
thereof, shall further insure, if Landlord deems it appropriate, coverage
against flood, environmental hazard, earthquake, loss or failure of building
equipment, rental loss during the period of repairs or rebuilding, workmen’s
compensation insurance and fidelity bonds for employees employed to perform
services. Notwithstanding the foregoing, Landlord may, but shall not be deemed
required to, provide insurance for any improvements installed by Tenant or that
are in addition to the standard improvements customarily furnished by Landlord,
without regard to whether or not such are made a part of or are affixed to the
Building.

23.2. In addition, Landlord shall carry commercial general liability insurance
with a single limit of not less than Five Million Dollars ($5,000,000) for death
or bodily injury, or property damage with respect to the Project.

23.3. Tenant shall, at its own cost and expense, procure and maintain in effect,
beginning on the Term Commencement Date or the date of occupancy, whichever
occurs first, and continuing throughout the Term (and occupancy by Tenant, if
any, after termination of this Lease) commercial general liability insurance
with limits of not less than Five Million Dollars ($5,000,000) per occurrence
for death or bodily injury and for property damage with respect to the Premises
(including $100,000 fire legal liability (each loss)).

23.4. The insurance required to be purchased and maintained by Tenant pursuant
to this Lease shall name Landlord, BioMed Realty, L.P., and BioMed Realty Trust,
Inc. and their respective officers, directors, employees, agents, general
partners, members, subsidiaries, affiliates and Lenders (“Landlord Parties”) as
additional insureds. Said insurance shall be with companies authorized to do
business in the State of Washington and having a rating of not less than
policyholder rating of A- and financial category rating of at least Class VII in
“Best’s Insurance Guide.” Tenant shall obtain for Landlord from the insurance
companies or cause the insurance companies to furnish certificates of coverage
to Landlord. All such policies shall be written as primary policies, not
contributing with and not in excess of the coverage that Landlord may carry.
Tenant’s policy may be a “blanket policy” that specifically provides that the
amount of insurance shall not be prejudiced by other losses covered by the
policy. Tenant shall, prior to the expiration of such policies, furnish Landlord
with a renewal certificate. Tenant agrees that if Tenant does not take out and
maintain such insurance, Landlord may (but shall not be required to) procure
said insurance on Tenant’s behalf and at its cost to be paid by Tenant as
Additional Rent.

23.5. Tenant assumes the risk of damage to any fixtures, goods, inventory,
merchandise, equipment and leasehold improvements, and Landlord shall not be
liable for injury to Tenant’s business or any loss of income therefrom, relative
to such damage, all as more particularly set forth within this Lease. Landlord
shall notify Tenant in writing no later than sixty (60) days after the Term
Commencement Date of the total amount expended by Landlord to perform the work
required by this Lease as part of preparing the Premises for occupancy by

 

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Tenant (except for items on the punch list) and Tenant shall have the right to
inspect documentation of all such amounts expended. Tenant shall, at Tenant’s
sole cost and expense, carry such insurance as Tenant desires for Tenant’s
protection with respect to personal property of Tenant or business interruption.

23.6. In each instance where insurance is to name Landlord Parties as additional
insureds, Tenant shall, upon Landlord’s written request, also designate and
furnish certificates evidencing such Landlord Parties as additional insureds to
(a) any Lender of Landlord holding a security interest in the Building, the
Property or the Project, (b) the landlord under any lease whereunder Landlord is
a tenant of the Property if the interest of Landlord is or shall become that of
a tenant under a ground lease rather than that of a fee owner and (c) any
management company retained by Landlord to manage the Project.

23.7. Landlord and Tenant each hereby waive any and all rights of recovery
against the other or against the officers, directors, employees, agents, general
partners, members, subsidiaries, affiliates and Lenders of the other on account
of loss or damage occasioned to the property of the waiving party or the
property of others under such waiving party’s control, in each case to the
extent that such loss or damage is insured against under any fire and extended
coverage insurance policy that either Landlord or Tenant may have in force at
the time of such loss or damage or is required to carry under this Lease,
whichever is greater. Landlord and Tenant, upon obtaining the policies of
insurance required or permitted under this Lease, shall give notice to the
insurance carrier or carriers that the foregoing mutual waiver of subrogation is
contained in this Lease. If the release of either Landlord or Tenant, as set
forth in the first sentence of this Section, shall contravene Applicable Laws,
then the liability of the party in question shall be deemed not released but
shall be secondary to the other party’s insurer.

23.8. [Intentionally omitted]

23.9. Any costs incurred by Landlord pursuant to this Article shall constitute a
portion of Operating Expenses to the extent allowable under Article 9.

24. Damage or Destruction.

24.1. In the event of any damage or destruction to (a) the Premises or
(b) Common Areas ((a) and (b) together, the “Affected Areas”) by casualty, fire
or other perils, and provided that (x) the damage thereto is such that the
Affected Areas may be repaired, reconstructed or restored within a period of
twelve (12) months from the date of the happening of such casualty, (y) Landlord
shall receive insurance proceeds (or would have received proceeds had Landlord
carried the insurance required by this Lease) sufficient to cover the cost of
such repairs (except for any deductible amount provided by Landlord’s policy,
which deductible amount, if paid by Landlord, shall constitute an Operating
Expense) and (z) such casualty was not intentionally caused by Tenant or its
employees, agents or contractors, then Landlord shall commence and proceed
diligently with the work of repair, reconstruction and restoration of the
Affected Areas and this Lease shall continue in full force and effect.

 

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24.2. In the event of any damage to or destruction of the Building or the
Project other than as described in Section 24.1, Landlord may elect to repair,
reconstruct and restore the Building or the Project, as applicable, in which
case this Lease shall continue in full force and effect. If Landlord elects not
to repair the Building or the Project, as applicable, then this Lease shall
terminate as of the date of such damage or destruction; provided, however, that
Landlord may not terminate this Lease if such damage or destruction occurs
solely within another tenant’s premises. Landlord shall give written notice to
Tenant within sixty (60) days following the date of damage or destruction of its
election not to repair, reconstruct or restore the Building or the Project, as
applicable.

24.3. In the event Landlord (a) is required to repair, reconstruct or restore
pursuant to Section 24.1 or (b) elects to repair pursuant to Section 24.2, then,
within sixty (60) days after the date of damage or destruction, Landlord shall
provide Tenant with written notice of Landlord’s reasonable estimate of the time
needed to complete such repair, reconstruction or restoration of the Building or
the Project (the “Repair Notice”). If Landlord’s estimate of the time required
to repair, reconstruct or restore the Building or the Project exceeds twelve
(12) months from the date of the Repair Notice, then Tenant shall have the right
to terminate this Lease as of the date of such damage or destruction, in which
case Tenant shall provide written notice thereof to Landlord within ten
(10) days after Tenant’s receipt of the Repair Notice. If Tenant does not timely
provide such termination notice, then Landlord shall proceed with such repair,
reconstruction or restoration of the Building or the Project and Tenant shall be
deemed to have not exercised its termination right. If Landlord does not
substantially complete such repair, reconstruction or restoration of the
Premises or Building within the estimated repair period as set forth in the
Repair Notice (subject to day-for-day extension due to Excusable Delays), Tenant
shall have the right to provide written notice to Landlord within five (5) days
after the expiration of the estimated repair period that Tenant intends to
terminate the Lease. If Tenant gives Landlord such termination notice, Landlord
shall have an additional thirty (30) days from receipt of such termination
notice to complete the repair, reconstruction or restoration. If Landlord does
not complete such repair, reconstruction or restoration within such thirty
(30) day period, then Tenant may terminate this Lease by giving Landlord written
notice at the expiration of such thirty (30) day period. If Landlord does
complete such repair, reconstruction or restoration within such thirty (30) day
period, then this Lease shall continue in full force and effect.

24.4. Upon any termination of this Lease under any of the provisions of this
Article, the parties shall be released thereby without further obligation to the
other from the date possession of the Premises is surrendered to Landlord,
except with regard to (a) matters occurring prior to the damage or destruction
and (b) provisions of this Lease that, by their express terms, survive the
expiration or earlier termination hereof.

24.5. In the event of repair, reconstruction and restoration as provided in this
Article, all Rent to be paid by Tenant under this Lease shall be abated
proportionately based on the extent to which Tenant’s Permitted Use of the
Premises is impaired during the period of such repair, reconstruction or
restoration, unless Landlord provides Tenant with other space during the period
of repair that, in Tenant’s reasonable opinion, is suitable for the temporary
conduct of Tenant’s business.

24.6. Notwithstanding anything to the contrary contained in this Article, should
Landlord be delayed or prevented from completing the repair, reconstruction or
restoration of the damage or destruction to the Premises after the occurrence of
such damage or destruction by

 

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Force Majeure, then the time for Landlord to commence or complete repairs shall
be extended on a day-for-day basis; provided, however, that if, at any point
during the repair, reconstruction or restoration, Landlord estimates that it
will take more than twelve (12) months from such time to complete the repair,
reconstruction or restoration, Landlord may terminate this Lease.

24.7. If Landlord is obligated to or elects to repair, reconstruct or restore as
herein provided, then Landlord shall be obligated to make such repair,
reconstruction or restoration only with regard to (a) those portions of the
Premises that were originally provided at Landlord’s expense and (b) the Common
Area portion of the Affected Areas. The repair, reconstruction or restoration of
improvements not originally provided by Landlord or at Landlord’s expense shall
be the obligation of Tenant. In the event Tenant has elected to upgrade certain
improvements from the Building Standard, Landlord shall, upon the need for
replacement due to an insured loss, provide only the Building Standard, unless
Tenant again elects to upgrade such improvements and pay any incremental costs
related thereto, except to the extent that excess insurance proceeds, if
received, are adequate to provide such upgrades, in addition to providing for
basic repair, reconstruction and restoration of the Premises, the Building and
the Project.

24.8. Notwithstanding anything to the contrary contained in this Article,
Landlord shall not have any obligation whatsoever to repair, reconstruct or
restore the Premises if the damage resulting from any casualty covered under
this Article occurs during the last twenty-four (24) months of the Term or any
extension hereof, or to the extent that insurance proceeds are not available
therefor.

24.9. Landlord’s obligation, should it elect or be obligated to repair or
rebuild, shall be limited to the Affected Areas. Tenant shall, at its expense,
replace or fully repair all of Tenant’s personal property and any Alterations
installed by Tenant existing at the time of such damage or destruction. If
Affected Areas are to be repaired in accordance with the foregoing, Landlord
shall make available to Tenant any portion of insurance proceeds it receives
that are allocable to the Alterations constructed by Tenant pursuant to this
Lease; provided Tenant is not then in default under this Lease, and subject to
the requirements of any Lender of Landlord.

25. Eminent Domain.

25.1. In the event the whole of all Affected Areas shall be taken for any public
or quasi-public purpose by any lawful power or authority by exercise of the
right of appropriation, condemnation or eminent domain, or sold to prevent such
taking, Tenant or Landlord may terminate this Lease effective as of the date
possession is required to be surrendered to said authority, except with regard
to (a) matters occurring prior to the taking and (b) provisions of this Lease
that, by their express terms, survive the expiration or earlier termination
hereof. In the event such part of the Affected Areas as shall substantially
interfere with Tenant’s use and occupancy of the Premises for the Permitted Use
shall be taken for any public or quasi-public purpose by any lawful power or
authority by exercise of the right of appropriation, condemnation or eminent
domain, or sold to prevent such taking, Tenant or Landlord may terminate this
Lease effective as of the date possession is required to be surrendered to said
authority, except with regard to (y) matters occurring prior to the taking and
(z) provisions of this Lease that, by their express terms, survive the
expiration or earlier termination hereof.

 

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25.2. In the event of a partial taking of (a) the Building or the Project or
(b) drives, walkways or parking areas serving the Building or the Project for
any public or quasi-public purpose by any lawful power or authority by exercise
of right of appropriation, condemnation, or eminent domain, or sold to prevent
such taking, then, without regard to whether any portion of the Premises
occupied by Tenant was so taken, Landlord may elect to terminate this Lease
(except with regard to (y) matters occurring prior to the taking and
(z) provisions of this Lease that, by their express terms, survive the
expiration or earlier termination hereof) as of such taking if such taking is,
in Landlord’s sole opinion, of a material nature such as to make it uneconomical
to continue use of the unappropriated portion for purposes of renting office or
laboratory space.

25.3. Tenant shall be entitled to any award that is specifically awarded as
compensation for (a) the taking of Tenant’s personal property (or other property
owned by Tenant pursuant to this Lease) that was installed at Tenant’s expense
and (b) the costs of Tenant moving to a new location. Except as set forth in the
previous sentence, any award for such taking shall be the property of Landlord.

25.4. If, upon any taking of the nature described in this Article, this Lease
continues in effect, then Landlord shall promptly proceed to restore the
Affected Areas to substantially their same condition prior to such partial
taking. To the extent such restoration is infeasible, as determined by Landlord
in its sole and absolute discretion, the Rent shall be decreased proportionately
to reflect the loss of any portion of the Premises no longer available to
Tenant.

26. Surrender.

26.1. At least ten (10) days prior to Tenant’s surrender of possession of any
part of the Premises, Tenant shall provide Landlord with (a) a facility
decommissioning and Hazardous Materials closure plan for the Premises (“Exit
Survey”) prepared by an independent third party reasonably acceptable to
Landlord, and (b) written evidence of all appropriate and necessary governmental
releases obtained by Tenant in accordance with Applicable Laws, including laws
pertaining to the surrender of the Premises. In addition, Tenant agrees to
remain responsible after the surrender of the Premises for the remediation of
any recognized environmental conditions set forth in the Exit Survey and
compliance with any recommendations set forth in the Exit Survey, to the extent
that such recognized environmental conditions or recommendations are related to
Hazardous Materials for which Tenant is responsible for under this Lease.
Tenant’s obligations under this Section shall survive the expiration or earlier
termination of the Lease.

26.2. No surrender of possession of any part of the Premises shall release
Tenant from any of its obligations hereunder, unless such surrender is accepted
in writing by Landlord.

26.3. The voluntary or other surrender of this Lease by Tenant shall not effect
a merger with Landlord’s fee title or leasehold interest in the Premises, the
Building, the Property or the Project, unless Landlord consents in writing, and
shall, at Landlord’s option, operate as an assignment to Landlord of any or all
subleases.

26.4. The voluntary or other surrender of any ground or other underlying lease
that now exists or may hereafter be executed affecting the Building or the
Project, or a mutual cancellation

 

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thereof or of Landlord’s interest therein by Landlord and its lessor shall not
effect a merger with Landlord’s fee title or leasehold interest in the Premises,
the Building or the Property and shall, at the option of the successor to
Landlord’s interest in the Building or the Project, as applicable, operate as an
assignment of this Lease.

27. Holding Over.

27.1. Tenant shall have the option to hold possession of the Premises after the
Term for a period of up to one hundred twenty (120) days upon providing Landlord
with at least one hundred twenty (120) days’ prior written notice (“Permitted
Holdover Period”); provided that such written notice shall set forth the exact
length of the Permitted Holdover Period. In such case Tenant shall continue to
pay (a) Base Rent in accordance with Article 7 and (b) any amounts for which
Tenant would otherwise be liable under this Lease if the Lease were still in
effect, including payments for Tenant’s Share of Operating Expenses. Any such
Permitted Holdover Period shall be subject to every other term, covenant and
agreement contained herein.

27.2. If, with Landlord’s prior written consent, Tenant holds possession of all
or any part of the Premises after the Term (or after the Permitted Holdover
Period, if applicable), Tenant shall become a tenant from month to month after
the expiration or earlier termination of the Term, and in such case Tenant shall
continue to pay (a) Base Rent in accordance with Article 7 and (b) any amounts
for which Tenant would otherwise be liable under this Lease if the Lease were
still in effect, including payments for Tenant’s Share of Operating Expenses.
Any such month-to-month tenancy shall be subject to every other term, covenant
and agreement contained herein.

27.3. Notwithstanding the foregoing, if Tenant remains in possession of the
Premises after the expiration or earlier termination of the Term (or the
Permitted Holdover Period, if applicable) without Landlord’s prior written
consent, (a) Tenant shall become a tenant at sufferance subject to the terms and
conditions of this Lease, except that the monthly rent shall be equal to one
hundred fifty percent (150%) of the Rent in effect during the last thirty
(30) days of the Term, and (b) Tenant shall be liable to Landlord for any and
all damages suffered by Landlord as a result of such holdover, including any
lost rent or consequential, special and indirect damages.

27.4. Acceptance by Landlord of Rent after the expiration or earlier termination
of the Term shall not result in an extension, renewal or reinstatement of this
Lease.

27.5. The foregoing provisions of this Article are in addition to and do not
affect Landlord’s right of reentry or any other rights of Landlord hereunder or
as otherwise provided by Applicable Laws.

28. Indemnification and Exculpation.

28.1. Subject to Section 23.7, Tenant agrees to indemnify, save, defend (at
Landlord’s option and with counsel reasonably acceptable to Landlord) and hold
the Landlord Indemnitees harmless from and against any and all Claims arising
from injury or death to any person or damage to any property occurring within or
about the Premises, the Building, the Property or the Project arising directly
or indirectly out of Tenant’s or Tenant’s employees’, agents’, contractors’

 

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or invitees’ use or occupancy of the Premises or a breach or default by Tenant
in the performance of any of its obligations hereunder, except to the extent
caused by Landlord’s negligence or willful misconduct. Subject to Sections 23.7,
28.2 and 31.12, Landlord agrees to indemnify, save, defend (at Tenant’s option
and with counsel reasonably acceptable to Tenant) and hold Tenant and its
employees, agents and contractors harmless from and against any and all Claims
arising from injury or death to any person or damage to any property occurring
within or about the Premises, the Building, the Property or the Project arising
out of Landlord’s gross negligence or willful misconduct.

28.2. Notwithstanding any provision of Section 28.1 to the contrary, Landlord
shall not be liable to Tenant for, and Tenant assumes all risk of, damage to
personal property or scientific research, including loss of records kept by
Tenant within the Premises and damage or losses caused by fire, electrical
malfunction, gas explosion or water damage of any type (including broken water
lines, malfunctioning fire sprinkler systems, roof leaks or stoppages of lines),
unless any such loss is due to Landlord’s grossly negligent or willful disregard
of written notice by Tenant of need for a repair that Landlord is responsible to
make for an unreasonable period of time. Tenant further waives any claim for
injury to Tenant’s business or loss of income relating to any such damage or
destruction of personal property as described in this Section.

28.3. Landlord shall not be liable for any damages arising from any act,
omission or neglect of any other tenant in the Building or the Project, or of
any other third party that is not an agent, consultant or contractor of
Landlord.

28.4. Tenant acknowledges that security devices and services, if any, while
intended to deter crime, may not in given instances prevent theft or other
criminal acts. Except to the extent of Landlord’s gross negligence or
intentional misconduct, but subject to Sections 23.7, 28.2 and 31.12, Landlord
shall not be liable for injuries or losses caused by criminal acts of third
parties, and Tenant assumes the risk that any security device or service may
malfunction or otherwise be circumvented by a criminal. If Tenant desires
protection against such criminal acts, then Tenant shall, at Tenant’s sole cost
and expense, obtain appropriate insurance coverage.

28.5. The provisions of this Article shall survive the expiration or earlier
termination of this Lease.

28.6. The indemnities from Tenant and Landlord in this Article are intended to
specifically cover actions brought by their respective employees, with respect
to acts or omissions during the term of this Lease. In that regard, each of
Landlord and Tenant waives with respect to the other party any immunity it may
have under Washington’s Industrial Insurance Act, RCW Title 51, to the extent
necessary to provide the other party with a full and complete indemnity from
claims made by the waiving party and its employees, to the extent of their
negligence. If losses, liabilities, damages, liens, costs and expenses covered
by a either party’s indemnity are caused by the sole negligence of the other
party or by the concurrent negligence of both parties, or their respective
employees, agents, contractors, invitees and licensees, then the indemnifying
party shall indemnify the other party only to the extent of the indemnifying
party’s own negligence or that of its employees, agents, contractors or
invitees. LANDLORD AND TENANT ACKNOWLEDGE THAT THE INDEMNIFICATION PROVISIONS OF
THIS ARTICLE WERE SPECIFICALLY NEGOTIATED AND AGREED UPON BY THEM.

 

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29. Assignment or Subletting.

29.1. Except as hereinafter expressly permitted, Tenant shall not, either
voluntarily or by operation of Applicable Laws, directly or indirectly sell,
hypothecate, assign, pledge, encumber or otherwise transfer this Lease, or
sublet the Premises (each, a “Transfer”), without Landlord’s prior written
consent, which shall not be unreasonably withheld, conditioned or delayed.
Notwithstanding the foregoing, Tenant shall have the right to Transfer without
Landlord’s prior written consent the Premises or any part thereof to the entity
with which or into which Tenant may merge, whether or not Tenant is the survivor
of such merger, or any party that as of the date of determination and at all
times thereafter directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with Tenant (each, a
“Permitted Transferee”), provided that, subject to Section 29.2, Tenant shall
notify Landlord in writing at least ten (10) days prior to the effectiveness of
such Transfer to a Permitted Transferee (an “Exempt Transfer”) and otherwise
comply with the requirements of this Lease regarding such Transfer. For purposes
of Exempt Transfers, “control” requires both (a) owning (directly or indirectly)
more than fifty percent (50%) of the stock or other equity interests of another
person and (b) possessing, directly or indirectly, the power to direct or cause
the direction of the management and policies of such person. In no event shall
Tenant perform a Transfer other than an Exempt Transfer to or with an entity
that is a tenant at the Project or that is in discussions or negotiations with
Landlord or an affiliate of Landlord to lease premises at the Project or a
property owned by Landlord or an affiliate of Landlord.

29.2. In the event Tenant desires to effect a Transfer (including an Exempt
Transfer), then, at least twenty (20) but not more than ninety (90) days prior
to the date when Tenant desires the assignment or sublease to be effective (the
“Transfer Date”), Tenant shall provide written notice to Landlord (the “Transfer
Notice”) containing information concerning the Transfer Date; any ownership or
commercial relationship between Tenant and the proposed transferee, assignee or
sublessee; and the consideration and all other material terms and conditions of
the proposed Transfer, all in such detail as Landlord shall reasonably require.
Notwithstanding the foregoing, Tenant shall not be required to provide Landlord
with advance notice of an Exempt Transfer if Tenant is prohibited by Applicable
Laws, in which case Tenant agrees to provide Landlord with written notice as
soon as possible pursuant to Applicable Laws, but in no event later than three
(3) business days after such Exempt Transfer.

29.3. Landlord, in determining whether consent should be given to a proposed
Transfer, may give consideration to (a) the financial strength of such
transferee, assignee or sublessee (notwithstanding Tenant remaining liable for
Tenant’s performance), and (b) any change in use that such transferee, assignee
or sublessee proposes to make in the use of the Premises. In no event shall
Landlord be deemed to be unreasonable for declining to consent to a Transfer to
a transferee, assignee or sublessee of poor reputation, lacking financial
qualifications or seeking a change in the Permitted Use, or jeopardizing
directly or indirectly the status of Landlord or any of Landlord’s affiliates as
a Real Estate Investment Trust under the Internal Revenue Code of 1986 (as the
same may be amended from time to time, the “Revenue Code”). Notwithstanding
anything contained in this Lease to the contrary, (x) no Transfer shall be
consummated on any basis such that the rental or other amounts to be paid by the
occupant, assignee, manager or other transferee thereunder would be based, in
whole or in part, on the income or profits derived by the business activities of
such occupant, assignee, manager or other transferee; (y) Tenant shall not

 

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consummate a Transfer with any person in which Landlord owns an interest,
directly or indirectly (by applying constructive ownership rules set forth in
Section 856(d)(5) of the Revenue Code); and (z) Tenant shall not consummate a
Transfer with any person or in any manner that could cause any portion of the
amounts received by Landlord pursuant to this Lease or any sublease, license or
other arrangement for the right to use, occupy or possess any portion of the
Premises to fail to qualify as “rents from real property” within the meaning of
Section 856(d) of the Revenue Code, or any similar or successor provision
thereto or which could cause any other income of Landlord to fail to qualify as
income described in Section 856(c)(2) of the Revenue Code.

29.4. As conditions precedent to Tenant performing an Exempt Transfer of the
Premises, subleasing the Premises or to Landlord considering a request by Tenant
to Tenant’s transfer of rights or sharing of the Premises, Landlord may require
any or all of the following:

(a) Tenant shall remain fully liable under this Lease during the unexpired Term;

(b) Tenant shall provide Landlord with evidence reasonably satisfactory to
Landlord that the value of Landlord’s interest under this Lease shall not be
diminished or reduced by the proposed Transfer. Such evidence shall include
evidence respecting the relevant business experience and financial
responsibility and status of the proposed transferee, assignee or sublessee. The
financial responsibility and status of the proposed transferee must be
reasonably satisfactory to Landlord;

(c) Tenant shall reimburse Landlord for Landlord’s actual costs and expenses,
including reasonable attorneys’ fees, charges and disbursements incurred in
connection with the review, processing and documentation of such request, not to
exceed Three Thousand Dollars ($3,000);

(d) If Tenant’s transfer of rights or sharing of the Premises provides for the
receipt by, on behalf of or on account of Tenant of any consideration of any
kind whatsoever (including a premium rental for a sublease or lump sum payment
for an assignment, but excluding Tenant’s reasonable costs in marketing and
subleasing the Premises) in excess of the rental and other charges due to
Landlord under this Lease, Tenant shall pay fifty percent (50%) of all of such
excess to Landlord, after making deductions for any reasonable marketing
expenses, tenant improvement funds expended by Tenant, alterations, cash
concessions, brokerage commissions, attorneys’ fees and free rent actually paid
by Tenant; provided, however, that Tenant shall not be required to pay Landlord
any such excess resulting from a transfer of Tenant’s Vivarium Space or any
portion thereof or from a Shared Services Sublease (as defined in
Section 29.10). If said consideration consists of cash paid to Tenant, payment
to Landlord shall be made upon receipt by Tenant of such cash payment;

(e) The proposed transferee, assignee or sublessee shall agree that, in the
event Landlord gives such proposed transferee, assignee or sublessee notice that
Tenant is in default under this Lease, such proposed transferee, assignee or
sublessee shall thereafter make all payments otherwise due Tenant directly to
Landlord, which payments shall be received by Landlord without any liability
being incurred by Landlord, except to credit such payment against

 

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those due by Tenant under this Lease, and any such proposed transferee, assignee
or sublessee shall agree to attorn to Landlord or its successors and assigns
should this Lease be terminated for any reason; provided, however, that in no
event shall Landlord or its Lenders, successors or assigns be obligated to
accept such attornment;

(f) Landlord’s consent to any such Transfer shall be effected on Landlord’s
commercially reasonable forms;

(g) Tenant shall not then be in default hereunder in any respect;

(h) Such proposed transferee, assignee or sublessee’s use of the Premises shall
be the same as the Permitted Use;

(i) Landlord shall not be bound by any provision of any agreement pertaining to
the Transfer, except for Landlord’s written consent to the same;

(j) Tenant shall pay all transfer and other taxes (including interest and
penalties) assessed or payable for any Transfer;

(k) Landlord’s consent (or waiver of its rights) for any Transfer shall not
waive Landlord’s right to consent to any later Transfer;

(l) Tenant shall deliver to Landlord one executed copy of any and all written
instruments evidencing or relating to the Transfer; and

(m) A list of Hazardous Materials (as defined in Section 21.7), certified by the
proposed transferee, assignee or sublessee to be true and correct, that the
proposed transferee, assignee or sublessee intends to use or store in the
Premises. Additionally, Tenant shall deliver to Landlord, on or before the date
any proposed transferee, assignee or sublessee takes occupancy of the Premises,
all of the items relating to Hazardous Materials of such proposed transferee,
assignee or sublessee as described in Section 21.2.

29.5. Any Transfer that is not in compliance with the provisions of this Article
shall be void and shall, at the option of Landlord, terminate this Lease.

29.6. The consent by Landlord to a Transfer shall not relieve Tenant or proposed
transferee, assignee or sublessee from obtaining Landlord’s consent to any
further Transfer, nor shall it release Tenant or any proposed transferee,
assignee or sublessee of Tenant from full and primary liability under this
Lease.

29.7. Notwithstanding any Transfer, Tenant shall remain fully and primarily
liable for the payment of all Rent and other sums due or to become due
hereunder, and for the full performance of all other terms, conditions and
covenants to be kept and performed by Tenant. The acceptance of Rent or any
other sum due hereunder, or the acceptance of performance of any other term,
covenant or condition thereof, from any person or entity other than Tenant shall
not be deemed a waiver of any of the provisions of this Lease or a consent to
any Transfer.

 

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29.8. If Tenant delivers to Landlord a Transfer Notice indicating a desire to
transfer this Lease to a proposed assignee other than an Exempt Transfer, then
Landlord shall have the option, exercisable by giving notice to Tenant at any
time within ten (10) days after Landlord’s receipt of such Transfer Notice, to
terminate this Lease as of the date specified in the Transfer Notice as the
Transfer Date, except for those provisions that, by their express terms, survive
the expiration or earlier termination hereof. If Landlord exercises such option,
then Tenant shall have the right to withdraw such Transfer Notice by delivering
to Landlord written notice of such election within five (5) days after
Landlord’s delivery of notice electing to exercise Landlord’s option to
terminate this Lease. In the event Tenant withdraws the Transfer Notice as
provided in this Section, this Lease shall continue in full force and effect. No
failure of Landlord to exercise its option to terminate this Lease shall be
deemed to be Landlord’s consent to a proposed Transfer.

29.9. Until the occurrence of a Default (as defined below) by Tenant, Tenant
shall have the right to collect rent under any subleases. Notwithstanding the
foregoing, if Tenant sublets the Premises or any portion thereof, Tenant hereby
immediately and irrevocably assigns to Landlord, as security for Tenant’s
obligations under this Lease, all rent from any such subletting, and appoints
Landlord as assignee and attorney-in-fact for Tenant, and Landlord (or a
receiver for Tenant appointed on Landlord’s application) may collect such rent
and apply it toward Tenant’s obligations under this Lease in the event of a
Default.

29.10. Tenant shall be permitted to enter into Shared Services Subleases
(defined below); provided that any such Shared Services Subleases (a) shall be
considered an Exempt Transfer, (b) shall be subject to this Article and
(c) shall not permit occupancy or use of more than ten percent (10%) of the
square footage of the Premises. A “Shared Services Sublease” is a sublease for
individual offices, lab benches or areas within the Premises which are not
segregated from the balance of Tenant’s space by demising walls and which may
involve the provision of other services to the transferee such as laboratory
services, reception services or use of equipment or conference rooms. The Shared
Services Sublease shall provide that the sublessee is bound by all of the terms
and provisions of this Lease and that, upon any termination of this Lease for a
default or otherwise, the sublease shall automatically terminate.

30. Subordination and Attornment.

30.1. This Lease shall be subject and subordinate to the lien of any mortgage,
deed of trust, or lease in which Landlord is tenant now or hereafter in force
against the Building or the Project and to all advances made or hereafter to be
made upon the security thereof without the necessity of the execution and
delivery of any further instruments on the part of Tenant to effectuate such
subordination. In the event that a mortgage or deed of trust is placed on the
Project or Landlord becomes a tenant under a ground lease during the Term,
Landlord shall use commercially reasonable efforts to obtain a subordination,
attornment and non-disturbance agreement (“SNDA”) from the holder of the
mortgage, deed of trust or lease (each, a “Mortgagee”).

30.2. Notwithstanding the foregoing, Tenant shall execute and deliver upon
demand such further commercially reasonable instrument or instruments evidencing
such subordination of this Lease to the lien of any such mortgage or mortgages
or deeds of trust or lease in which

 

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Landlord is tenant as may be required by Landlord. If any Mortgagee so elects,
however, this Lease shall be deemed prior in lien to any such lease, mortgage,
or deed of trust upon or including the Premises regardless of date and Tenant
shall execute a statement in writing to such effect at Landlord’s request. If
Tenant fails to execute any document required from Tenant under this Section
within ten (10) business days after written request therefor, Tenant hereby
constitutes and appoints Landlord or its special attorney-in-fact to execute and
deliver any such document or documents in the name of Tenant. Such power is
coupled with an interest and is irrevocable.

30.3. Upon written request of Landlord and opportunity for Tenant to review,
Tenant agrees to execute any Lease amendments not materially altering the terms
of this Lease, if required by a mortgagee or beneficiary of a deed of trust
encumbering real property of which the Premises constitute a part incident to
the financing of the real property of which the Premises constitute a part.

30.4. In the event any proceedings are brought for foreclosure, or in the event
of the exercise of the power of sale under any mortgage or deed of trust made by
Landlord covering the Premises, Tenant shall attorn to the purchaser upon any
such foreclosure or sale and recognize such purchaser as Landlord under this
Lease.

30.5. Landlord represents and warrants to Tenant that, as of the Execution Date,
there are no mortgages or ground leases encumbering the Property.

31. Defaults and Remedies.

31.1. Late payment by Tenant to Landlord of Rent and other sums due shall cause
Landlord to incur costs not contemplated by this Lease, the exact amount of
which shall be extremely difficult and impracticable to ascertain. Such costs
include processing and accounting charges and late charges that may be imposed
on Landlord by the terms of any mortgage or trust deed covering the Premises.
Therefore, if any installment of Rent due from Tenant is not received by
Landlord within three (3) business days after the date such payment is due
(provided that, with respect to the first (1st) late payment in any twelve
(12) month period, the following late charges shall not accrue until three
(3) business days after Landlord has provided written notice of such overdue
payment), Tenant shall pay to Landlord (a) an additional sum of five percent
(5%) of the overdue Rent as a late charge plus (b) interest at an annual rate
(the “Default Rate”) equal to the lesser of (a) twelve percent (12%) and (b) the
highest rate permitted by Applicable Laws. The parties agree that this late
charge represents a fair and reasonable estimate of the costs that Landlord
shall incur by reason of late payment by Tenant and shall be payable as
Additional Rent to Landlord due with the next installment of Rent or within five
(5) business days after Landlord’s demand, whichever is earlier. Landlord’s
acceptance of any Additional Rent (including a late charge or any other amount
hereunder) shall not be deemed an extension of the date that Rent is due or
prevent Landlord from pursuing any other rights or remedies under this Lease, at
law or in equity.

31.2. No payment by Tenant or receipt by Landlord of a lesser amount than the
Rent payment 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

 

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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 or in equity or at law.
If a dispute shall arise as to any amount or sum of money to be paid by Tenant
to Landlord hereunder, Tenant shall have the right to make payment “under
protest,” such payment shall not be regarded as a voluntary payment, and there
shall survive the right on the part of Tenant to institute suit for recovery of
the payment paid under protest.

31.3. If Tenant fails to pay any sum of money required to be paid by it
hereunder, or shall fail to perform any other act on its part to be performed
hereunder, in each case within the applicable cure period (if any) described in
Section 31.4, then Landlord may, without waiving or releasing Tenant from any
obligations of Tenant, but shall not be obligated to, make such payment or
perform such act; provided that such failure by Tenant unreasonably interfered
with the use of the Building or the Project by any other tenant or with the
efficient operation of the Building or the Project, or resulted or could have
resulted in a violation of Applicable Laws or the cancellation of an insurance
policy maintained by Landlord. Notwithstanding the foregoing, in the event of an
emergency, Landlord shall have the right to enter the Premises and act in
accordance with its rights as provided elsewhere in this Lease. In addition to
the late charge described in Section 31.1, Tenant shall pay to Landlord as
Additional Rent all sums so paid or incurred by Landlord, together with interest
at the Default Rate, computed from the date such sums were paid or incurred.

31.4. The occurrence of any one or more of the following events shall constitute
a “Default” hereunder by Tenant:

(a) [Intentionally omitted];

(b) Tenant fails to make any payment of Rent, as and when due, or to satisfy its
obligations under Article 19, where such failure shall continue for a period of
three (3) business days after written notice thereof from Landlord to Tenant;

(c) Tenant fails to observe or perform any obligation or covenant contained
herein (other than described in Subsections 31.4(a) and 31.4(b)) to be performed
by Tenant, where such failure continues for a period of twenty (20) days after
written notice thereof from Landlord to Tenant; provided that, if the nature of
Tenant’s default is such that it reasonably requires more than twenty (20) days
to cure, Tenant shall not be deemed to be in Default if Tenant commences such
cure within said twenty (20) day period and thereafter diligently prosecute the
same to completion;

(d) Tenant makes an assignment for the benefit of creditors;

(e) A receiver, trustee or custodian is appointed to or does take title,
possession or control of all or substantially all of Tenant’s assets;

(f) Tenant files a voluntary petition under the United States Bankruptcy Code or
any successor statute (as the same may be amended from time to time, the
“Bankruptcy Code”) or an order for relief is entered against Tenant pursuant to
a voluntary or involuntary proceeding commenced under any chapter of the
Bankruptcy Code;

 

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(g) Any involuntary petition is filed against Tenant under any chapter of the
Bankruptcy Code and is not dismissed within one hundred twenty (120) days;

(h) Tenant fails to deliver an estoppel certificate in accordance with Article
20; or

(i) Tenant’s interest in this Lease is attached, executed upon or otherwise
judicially seized and such action is not released within one hundred twenty
(120) days of the action.

Notices given under this Section shall specify the alleged default and shall
demand that Tenant perform the provisions of this Lease or pay the Rent that is
in arrears, as the case may be, within the applicable period of time, or quit
the Premises. No such notice shall be deemed a forfeiture or a termination of
this Lease unless Landlord elects otherwise in such notice. The foregoing notice
and cure provisions shall be in satisfaction of and not in addition to the
notices and cure periods provided for in RCW 59.12, as now or hereafter amended,
or any legislation in lieu or substitution thereof.

31.5. In the event of a Default by Tenant, and at any time thereafter, with or
without notice or demand and without limiting Landlord in the exercise of any
right or remedy that Landlord may have, Landlord has the right to do any or all
of the following:

(a) Halt any Tenant Improvements and Alterations and order Tenant’s contractors,
subcontractors, consultants, designers and material suppliers to stop work;

(b) Terminate Tenant’s right to possession of the Premises by written notice to
Tenant or by any lawful means, in which case Tenant shall immediately surrender
possession of the Premises to Landlord. In such event, Landlord shall have the
immediate right to re-enter and remove all persons and property, and such
property may be removed and stored in a public warehouse or elsewhere at the
cost and for the account of Tenant, all without service of notice or resort to
legal process and without being deemed guilty of trespass or becoming liable for
any loss or damage that may be occasioned thereby; and

(c) Terminate this Lease, in which event Tenant shall immediately surrender
possession of the Premises to Landlord. In such event, Landlord shall have the
immediate right to re-enter and remove all persons and property, and such
property may be removed and stored in a public warehouse or elsewhere at the
cost and for the account of Tenant, all without service of notice or resort to
legal process and without being deemed guilty of trespass or becoming liable for
any loss or damage that may be occasioned thereby. In the event that Landlord
shall elect to so terminate this Lease, then Landlord shall be entitled to
recover from Tenant all damages incurred by Landlord by reason of Tenant’s
default, including:

(i) The worth at the time of award of any unpaid Rent that had accrued at the
time of such termination; plus

(ii) The worth at the time of award of the amount by which the unpaid Rent that
would have accrued during the period commencing with termination of the Lease
and ending at the time of award exceeds that portion of the loss of Landlord’s
rental income from the Premises that Tenant proves to Landlord’s reasonable
satisfaction could have been reasonably avoided; plus

 

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(iii) The worth at the time of award of the amount by which the unpaid Rent for
the balance of the Term after the time of award exceeds that portion of the loss
of Landlord’s rental income from the Premises that Tenant proves to Landlord’s
reasonable satisfaction could have been reasonably avoided; plus

(iv) Any other amount necessary to compensate Landlord for all the detriment
caused by Tenant’s failure to perform its obligations under this Lease or that
in the ordinary course of things would be likely to result therefrom, including
the cost of restoring the Premises to the condition required under the terms of
this Lease, including any rent payments not otherwise chargeable to Tenant
(e.g., during any “free” rent period or rent holiday); plus

(v) At Landlord’s election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by Applicable Laws.

As used in Subsections 31.5(c)(i) and 31.5(c)(ii), “worth at the time of award”
shall be computed by allowing interest at the Default Rate. As used in
Subsection 31.5(c)(iii), the “worth at the time of the award” shall be computed
by taking the present value of such amount, using the discount rate of the
Federal Reserve Bank of San Francisco at the time of the award plus one
(1) percentage point.

31.6. In addition to any other remedies available to Landlord at law or in
equity and under this Lease, Landlord may continue this Lease in effect after
Tenant’s Default and abandonment and recover Rent as it becomes due. In
addition, subject to its obligation to use reasonable efforts to mitigate its
damages, Landlord shall not be liable in any way whatsoever for its failure or
refusal to relet the Premises. For purposes of this Section, the following acts
by Landlord will not constitute the termination of Tenant’s right to possession
of the Premises:

(a) Acts of maintenance or preservation or efforts to relet the Premises,
including alterations, remodeling, redecorating, repairs, replacements or
painting as Landlord shall consider advisable for the purpose of reletting the
Premises or any part thereof; or

(b) The appointment of a receiver upon the initiative of Landlord to protect
Landlord’s interest under this Lease or in the Premises.

Notwithstanding the foregoing, in the event of a Default by Tenant, Landlord may
elect at any time to terminate this Lease and to recover damages to which
Landlord is entitled.

31.7. If Landlord does not elect to terminate this Lease as provided in
Section 31.5, then Landlord may, from time to time, recover all Rent as it
becomes due under this Lease. At any time thereafter, Landlord may elect to
terminate this Lease and to recover damages to which Landlord is entitled.

 

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31.8. In the event Landlord elects to terminate this Lease and relet the
Premises, Landlord may execute any new lease in its own name. Tenant hereunder
shall have no right or authority whatsoever to collect any Rent from such
tenant. The proceeds of any such reletting shall be applied as follows:

(a) First, to the payment of any indebtedness other than Rent due hereunder from
Tenant to Landlord, including storage charges or brokerage commissions owing
from Tenant to Landlord as the result of such reletting;

(b) Second, to the payment of the costs and expenses of reletting the Premises,
including (i) alterations and repairs that Landlord deems reasonably necessary
and advisable and (ii) reasonable attorneys’ fees, charges and disbursements
incurred by Landlord in connection with the retaking of the Premises and such
reletting;

(c) Third, to the payment of Rent and other charges due and unpaid hereunder;
and

(d) Fourth, to the payment of future Rent and other damages payable by Tenant
under this Lease.

31.9. All of Landlord’s rights, options and remedies hereunder shall be
construed and held to be nonexclusive and cumulative. Landlord shall have the
right to pursue any one or all of such remedies, or any other remedy or relief
that may be provided by Applicable Laws, whether or not stated in this Lease. No
waiver of any default of Tenant hereunder shall be implied from any acceptance
by Landlord of any Rent or other payments due hereunder or any omission by
Landlord to take any action on account of such default if such default persists
or is repeated, and no express waiver shall affect defaults other than as
specified in said waiver. Notwithstanding any provision of this Lease to the
contrary, Landlord shall use reasonable efforts to mitigate its damages with
respect to any default by Tenant.

31.10. Landlord’s termination of (a) this Lease or (b) Tenant’s right to
possession of the Premises shall not relieve Tenant of any liability to Landlord
that has previously accrued or that shall arise based upon events that occurred
prior to the later to occur of (i) the date of Lease termination or (ii) the
date Tenant surrenders possession of the Premises.

31.11. To the extent permitted by Applicable Laws, Tenant waives any and all
rights of redemption granted by or under any present or future Applicable Laws
if Tenant is evicted or dispossessed for any cause, or if Landlord obtains
possession of the Premises due to Tenant’s default hereunder or otherwise.

31.12. Landlord shall not be in default or liable for damages under this Lease
unless Landlord fails to perform obligations required of Landlord within a
reasonable time, but in no event shall such failure continue for more than
thirty (30) days after written notice from Tenant specifying the nature of
Landlord’s failure (“Landlord Default”); provided, however, that if the nature
of Landlord’s obligation is non-monetary and such that more than thirty
(30) days are reasonably required for its performance, then Landlord shall not
be in default if Landlord commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion. Except as
otherwise set forth in this Lease, in no event shall Tenant have the right to
terminate or cancel this Lease or to withhold or abate rent or to set off any
Claims against Rent as a result of any default or breach by Landlord of any of
its covenants,

 

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obligations, representations, warranties or promises hereunder, except as may
otherwise be expressly set forth in this Lease. If a Landlord Default occurs,
Tenant may, without waiving any claim for damages for breach of agreement or any
other rights or remedies it may have under this Lease or at law, abate Base Rent
and Operating Expenses for the portion(s) of the Premises rendered unusable for
the Permitted Use until the same are rendered usable for the Permitted Use.

31.13. In the event of any Landlord Default, Tenant shall give notice by
registered or certified mail to any (a) beneficiary of a deed of trust or
(b) mortgagee under a mortgage covering the Premises, the Building or the
Project and to any landlord of any lease of land upon or within which the
Premises, the Building or the Project is located, and shall offer such
beneficiary, mortgagee or landlord a reasonable opportunity to cure the default,
including time to obtain possession of the Building or the Project by power of
sale or a judicial action if such should prove necessary to effect a cure;
provided that Landlord has furnished to Tenant in writing the names and
addresses of all such persons who are to receive such notices.

32. Bankruptcy. In the event a debtor, trustee or debtor in possession under the
Bankruptcy Code, or another person with similar rights, duties and powers under
any other Applicable Laws, proposes to cure any default under this Lease or to
assume or assign this Lease and is obliged to provide adequate assurance to
Landlord that (a) a default shall be cured, (b) Landlord shall be compensated
for its damages arising from any breach of this Lease and (c) future performance
of Tenant’s obligations under this Lease shall occur, then such adequate
assurances shall include any or all of the following, as designated by Landlord
in its sole and absolute discretion:

32.1. Those acts specified in the Bankruptcy Code or other Applicable Laws as
included within the meaning of “adequate assurance,” even if this Lease does not
concern a shopping center or other facility described in such Applicable Laws;

32.2. A prompt cash payment to compensate Landlord for any monetary defaults or
actual damages arising directly from a breach of this Lease;

32.3. A cash deposit in an amount at least equal to the then-current amount of
the Security Deposit; or

32.4. The assumption or assignment of all of Tenant’s interest and obligations
under this Lease.

33. Brokers.

33.1. Each of Landlord and Tenant represents and warrants that it has had no
dealings with any real estate broker or agent in connection with the negotiation
of this Lease other than Kinzer Real Estate Services and Pallis Realty Advisors
(the “Brokers”), and that it knows of no other real estate broker or agent that
is or might be entitled to a commission in connection with this Lease. Landlord
shall compensate Brokers in relation to this Lease pursuant to a separate
agreement between Landlord and Broker.

 

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33.2. Tenant represents and warrants that no broker or agent has made any
representation or warranty relied upon by Tenant in Tenant’s decision to enter
into this Lease, other than as contained in this Lease.

33.3. Tenant acknowledges and agrees that the employment of brokers by Landlord
is for the purpose of solicitation of offers of leases from prospective tenants
and that no authority is granted to any broker to furnish any representation
(written or oral) or warranty from Landlord unless expressly contained within
this Lease. Landlord is executing this Lease in reliance upon Tenant’s
representations, warranties and agreements contained within Sections 33.1 and
33.2.

33.4. Tenant agrees to indemnify, save, defend (at Landlord’s option and with
counsel reasonably acceptable to Landlord) and hold the Landlord Indemnitees
harmless from any and all cost or liability for compensation claimed by any
broker or agent, other than the Brokers, employed or engaged by Tenant or
claiming to have been employed or engaged by Tenant. Landlord agrees to
indemnify, save, defend (at Tenant’s option and with counsel reasonably
acceptable to Tenant) and hold Tenant harmless from any and all cost or
liability for compensation claimed by any broker or agent, other than the
Brokers, employed or engaged by Landlord or claiming to have been employed or
engaged by Landlord.

34. Definition of Landlord. With regard to obligations imposed upon Landlord
pursuant to this Lease, the term “Landlord,” as used in this Lease, shall refer
only to Landlord or Landlord’s then-current successor-in-interest. In the event
of any transfer, assignment or conveyance of Landlord’s interest in this Lease
or in Landlord’s fee title to or leasehold interest in the Property, as
applicable, Landlord herein named (and in case of any subsequent transfers or
conveyances, the subsequent Landlord) shall be automatically freed and relieved,
from and after the date of such transfer, assignment or conveyance, from all
liability for the performance of any covenants or obligations contained in this
Lease thereafter to be performed by Landlord so long as Landlord also transfers
the unapplied portion of the Security Deposit and, without further agreement,
the transferee, assignee or conveyee of Landlord’s in this Lease or in
Landlord’s fee title to or leasehold interest in the Property, as applicable,
shall be deemed to have assumed and agreed to observe and perform any and all
covenants and obligations of Landlord hereunder during the tenure of its
interest in the Lease or the Property. Landlord or any subsequent Landlord may
transfer its interest in the Premises or this Lease without Tenant’s consent.

35. Limitation of Landlord’s Liability.

35.1. If Landlord is in default under this Lease and, as a consequence, Tenant
recovers a monetary judgment against Landlord, the judgment shall be satisfied
only out of (a) the proceeds of sale received on execution of the judgment and
levy against the right, title and interest of Landlord in the Building and the
Project, (b) rent or other income from such real property receivable by
Landlord, (c) insurance proceeds or (d) the consideration received by Landlord
from the sale, financing, refinancing or other disposition of all or any part of
Landlord’s right, title or interest in the Building or the Project.

35.2. Landlord shall not be personally liable for any deficiency under this
Lease. If Landlord is a partnership or joint venture, then the partners of such
partnership shall not be personally liable for Landlord’s obligations under this
Lease, and no partner of Landlord shall be

 

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sued or named as a party in any suit or action, and service of process shall not
be made against any partner of Landlord except as may be necessary to secure
jurisdiction of the partnership or joint venture. If Landlord is a corporation,
then the shareholders, directors, officers, employees and agents of such
corporation shall not be personally liable for Landlord’s obligations under this
Lease, and no shareholder, director, officer, employee or agent of Landlord
shall be sued or named as a party in any suit or action, and service of process
shall not be made against any shareholder, director, officer, employee or agent
of Landlord. If Landlord is a limited liability company, then the members of
such limited liability company shall not be personally liable for Landlord’s
obligations under this Lease, and no member of Landlord shall be sued or named
as a party in any suit or action, and service of process shall not be made
against any member of Landlord except as may be necessary to secure jurisdiction
of the limited liability company. No partner, shareholder, director, employee,
member or agent of Landlord shall be required to answer or otherwise plead to
any service of process, and no judgment shall be taken or writ of execution
levied against any partner, shareholder, director, employee, member or agent of
Landlord.

35.3. Each of the covenants and agreements of this Article shall be applicable
to any covenant or agreement either expressly contained in this Lease or imposed
by Applicable Laws and shall survive the expiration or earlier termination of
this Lease.

36. Joint and Several Obligations. If more than one person or entity executes
this Lease as Tenant, then:

36.1. Each of them is jointly and severally liable for the keeping, observing
and performing of all of the terms, covenants, conditions, provisions and
agreements of this Lease to be kept, observed or performed by Tenant; and

36.2. The term “Tenant,” as used in this Lease shall mean and include each of
them, jointly and severally. The act of, notice from, notice to, refund to, or
signature of any one or more of them with respect to the tenancy under this
Lease, including any renewal, extension, expiration, termination or modification
of this Lease, shall be binding upon each and all of the persons executing this
Lease as Tenant with the same force and effect as if each and all of them had so
acted, so given or received such notice or refund, or so signed.

37. Representations. Tenant guarantees, warrants and represents that (a) Tenant
is duly incorporated or otherwise established or formed and validly existing
under the laws of its state of incorporation, establishment or formation,
(b) Tenant has and is duly qualified to do business in the state in which the
Property is located, (c) Tenant has full corporate, partnership, trust,
association or other appropriate power and authority to enter into this Lease
and to perform all Tenant’s obligations hereunder, (d) each person (and all of
the persons if more than one signs) signing this Lease on behalf of Tenant is
duly and validly authorized to do so and (e) neither (i) the execution, delivery
or performance of this Lease nor (ii) the consummation of the transactions
contemplated hereby will violate or conflict with any provision of documents or
instruments under which Tenant is constituted or to which Tenant is a party. In
addition, Tenant guarantees, warrants and represents that none of (x) it,
(y) its affiliates or partners nor (z) to the best of its knowledge, its
members, shareholders or other equity owners or any of their respective
employees, officers, directors, representatives or agents is a person or entity
with whom U.S.

 

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persons or entities are restricted from doing business under regulations of the
Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury
(including those named on OFAC’s Specially Designated and Blocked Persons List)
or under any statute, executive order (including the September 24, 2001,
Executive Order Blocking Property and Prohibiting Transactions with Persons Who
Commit, Threaten to Commit, or Support Terrorism) or other similar governmental
action.

38. Confidentiality. Except for legally required disclosures (including those
required under SEC regulations), Tenant shall keep the terms and conditions of
this Lease and any information provided to Tenant or its employees, agents or
contractors pursuant to Article 9 confidential and shall not (a) disclose to any
third party any terms or conditions of this Lease or any other Lease-related
document (including subleases, assignments, work letters, construction
contracts, letters of credit, subordination agreements, non-disturbance
agreements, brokerage agreements or estoppels) or (b) provide to any third party
an original or copy of this Lease (or any Lease-related document); provided,
however, that Tenant may disclose this Lease to investors and potential
investors subject to a nondisclosure agreement. Landlord shall not release to
any third party the economic terms of this Lease (including, Rent, Tenant
Improvement details and options to terminate, expand and extend), except to the
extent such information has been previously disclosed to the public by Tenant,
or any non-public financial information or non-public information about Tenant’s
ownership structure that Tenant gives Landlord. In addition, all non-public
information learned by or disclosed to Landlord with respect to Tenant’s
business or research, or non-public information disclosed or discovered during
an entry by Landlord into the Premises, shall be kept confidential by Landlord
and Landlord’s legal representatives, successors, assigns, employees, servants
and agents, and shall not be used (except for Landlord’s internal purposes) or
disclosed to others by Landlord or Landlord’s servants, agents, employees, legal
representatives, successors or assigns without the express prior written consent
of Tenant, which Tenant may withhold in its sole and absolute discretion.
Notwithstanding the foregoing, confidential information under this Section may
be released by Landlord or Tenant under the following circumstances: (w) if
required by Applicable Laws or in any judicial proceeding; provided that the
releasing party has given the other party reasonable notice of such requirement,
if feasible, (x) to a party’s attorneys, accountants, brokers and other bona
fide consultants or advisers (with respect to this Lease only); provided such
third parties agree to be bound by this Section, (y) to bona fide prospective
assignees or subtenants of this Lease; provided they agree in writing to be
bound by this Section or (z) in the form of aggregate leasing data provided to
Landlord’s investors in the normal course of business.

39. Notices. Any notice, consent, demand, bill, statement or other communication
required or permitted to be given hereunder shall be in writing and shall be
given by personal delivery, overnight delivery with a reputable nationwide
overnight delivery service, or certified mail (return receipt requested), and if
given by personal delivery, shall be deemed delivered upon receipt; if given by
overnight delivery, shall be deemed delivered one (1) day after deposit with a
reputable nationwide overnight delivery service; and, if given by certified mail
(return receipt requested), shall be deemed delivered three (3) business days
after the time the notifying party deposits the notice with the United States
Postal Service. Any notices given pursuant to this Lease shall be addressed to
Tenant at the Premises, or to Landlord or Tenant at the addresses shown in
Sections 2.9 and 2.10, respectively. Either party may, by notice to the other
given pursuant to this Section, specify additional or different addresses for
notice purposes.

 

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40. Rooftop Installation Area.

40.1. Tenant may use those portions of the Building designated as a “Rooftop
Installation Area” (the “Rooftop Installation Area”) solely to operate,
maintain, repair and replace rooftop antennae, mechanical equipment,
communications antennas and other equipment installed by Tenant in the Rooftop
Installation Area in accordance with this Article (“Tenant’s Rooftop
Equipment”). Tenant’s Rooftop Equipment shall be only for Tenant’s use of the
Premises for the Permitted Use.

40.2. Tenant shall install Tenant’s Rooftop Equipment at its sole cost and
expense, at such times, in such locations and in such manner as Landlord may
reasonably designate, and in accordance with this Article and the applicable
provisions of this Lease regarding Alterations. Tenant’s Rooftop Equipment and
the installation thereof shall be subject to Landlord’s prior written approval,
which approval shall not be unreasonably withheld. Among other reasons, Landlord
may withhold approval if the installation or operation of Tenant’s Rooftop
Equipment could reasonably be expected to damage the structural integrity of the
Building or to transmit vibrations or noise or cause other adverse effects
beyond the Premises to an extent not customary in first class laboratory
Buildings, unless Tenant implements measures that are acceptable to Landlord in
its reasonable discretion to avoid any such damage or transmission.

40.3. Tenant shall comply with any roof or roof-related warranties. Tenant shall
ensure that any Tenant work on the rooftop does not affect any such warranties.
Tenant, at its sole cost and expense, shall inspect the Rooftop Installation
Area at least annually, and correct any loose bolts, fittings or other
appurtenances and repair any damage to the roof caused by the installation or
operation of Tenant’s Rooftop Equipment. Tenant shall not permit the
installation, maintenance or operation of Tenant’s Rooftop Equipment to violate
any Applicable Laws or constitute a nuisance. Tenant shall pay Landlord within
thirty (30) days after demand (a) all applicable taxes, charges, fees or
impositions imposed on Landlord by Governmental Authorities as the result of
Tenant’s use of the Rooftop Installation Areas in excess of those for which
Landlord would otherwise be responsible for the use or installation of Tenant’s
Rooftop Equipment and (b) the amount of any increase in Landlord’s insurance
premiums as a result of the installation of Tenant’s Rooftop Equipment. Upon
Tenant’s written request to Landlord, Landlord shall use commercially reasonable
efforts to cause other tenants to remedy any interference in the operation of
Tenant’s Rooftop Equipment caused by any such tenants’ equipment installed after
the applicable piece of Tenant’s Rooftop Equipment; provided, however, that
Landlord shall not be required to request that such tenants waive their rights
under their respective leases. Landlord shall use commercially reasonable
efforts to prevent other tenants of the Building that execute leases after the
Execution Date from materially interfering with Tenant’s Rooftop Equipment.

40.4. If Tenant’s Equipment (a) causes physical damage to the structural
integrity of the Building, (b) interferes with any telecommunications,
mechanical or other systems located at or near or servicing the Building or the
Project that were installed prior to the installation of Tenant’s Rooftop
Equipment, (c) interferes with any other service provided to other tenants in
the Building or the Project by rooftop or penthouse installations that were
installed prior to the installation of Tenant’s Rooftop Equipment or
(d) interferes with any other tenant’s business, to the extent such tenant’s
business was existing prior to the installation of Tenant’s Rooftop

 

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Equipment, in each case in excess of that permissible under Federal
Communications Commission regulations, then Tenant shall cooperate with Landlord
to determine the source of the damage or interference and promptly repair such
damage and eliminate such interference, in each case at Tenant’s sole cost and
expense, within ten (10) days after receipt of notice of such damage or
interference (which notice may be oral; provided that Landlord also delivers to
Tenant written notice of such damage or interference within twenty-four
(24) hours after providing oral notice).

40.5. Landlord reserves the right to cause Tenant to relocate Tenant’s Rooftop
Equipment to comparably functional space on the roof or in the penthouse of the
Building by giving Tenant prior written notice thereof. Landlord agrees to pay
the reasonable costs thereof. Tenant shall arrange for the relocation of
Tenant’s Rooftop Equipment within sixty (60) days after receipt of Landlord’s
notification of such relocation. In the event Tenant fails to arrange for
relocation within such sixty (60)-day period, Landlord shall have the right to
arrange for the relocation of Tenant’s Rooftop Equipment in a manner that does
not unnecessarily interrupt or interfere with Tenant’s use of the Premises for
the Permitted Use.

41. Miscellaneous.

41.1. So long as Tenant is directly leasing and occupying no less than the
entire Premises (based upon the Rentable Area of the Premises as of the
Execution Date; but excluding any Shared Subleases and any sublease or license
of portions of Tenant’s Vivarium Space), Landlord shall not change the name of
the Building from “The Omeros Building” during the Term without Tenant’s advance
written consent, which may be granted or withheld in Tenant’s sole discretion.

41.2. To induce Landlord to enter into this Lease, Tenant agrees that it shall
promptly furnish to Landlord, from time to time but no more than once per
calendar year, upon Landlord’s written request, a certified copy of the most
recent year-end financial statements prepared in the ordinary course of business
reflecting Tenant’s current financial condition; provided that such financial
statements shall have been audited by a nationally recognized accounting firm.
Tenant represents and warrants that all financial statements, records and
information furnished by Tenant to Landlord in connection with this Lease are
true, correct and complete in all respects. If audited financials are not
otherwise prepared, unaudited financials complying with generally accepted
accounting principles and certified by the chief financial officer of Tenant as
true, correct and complete in all respects shall suffice for purposes of this
Section. Notwithstanding the foregoing, so long as Tenant is a publicly traded
company and is in compliance with all required financial filings with the SEC,
the financial information that is publicly available for Tenant online shall be
sufficient to satisfy Tenant’s reporting obligation under this Section.

41.3. Where applicable in this Lease, the singular includes the plural and the
masculine or neuter includes the masculine, feminine and neuter. The words
“include,” “includes,” “included” and “including” shall mean “‘include,’ etc.,
without limitation.” The section headings of this Lease are not a part of this
Lease and shall have no effect upon the construction or interpretation of any
part hereof.

 

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41.4. If either party commences an action against the other party arising out of
or in connection with this Lease, then the substantially prevailing party shall
be reimbursed by the other party for all reasonable costs and expenses,
including reasonable attorneys’ fees and expenses, incurred by the substantially
prevailing party in such action or proceeding and in any appeal in connection
therewith.

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

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

41.7. Each provision of this Lease performable by Tenant shall be deemed both a
covenant and a condition.

41.8. Whenever consent or approval of either party is required, that party shall
not unreasonably withhold such consent or approval, except as may be expressly
set forth to the contrary.

41.9. The terms of this Lease are intended by the parties as a final expression
of their agreement with respect to the terms as are included herein, and may not
be contradicted by evidence of any prior or contemporaneous agreement.

41.10. 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 all other provisions of this Lease shall remain in full force and effect and
shall be interpreted as if the invalid, void or illegal provision did not exist.

41.11. Landlord may, but shall not be obligated to, record a short form or
memorandum hereof without Tenant’s consent. Within ten (10) days after receipt
of written request from Landlord, Tenant shall execute a termination of any
short form or memorandum of lease recorded with respect hereto. Neither party
shall record this Lease. Any party requesting such recording shall be
responsible for the cost of recording any short form or memorandum of this
Lease, including any transfer or other taxes incurred in connection with said
recordation.

41.12. The language in all parts of this Lease shall be in all cases construed
as a whole according to its fair meaning and not strictly for or against either
Landlord or Tenant.

41.13. Each of the covenants, conditions and agreements herein contained shall
inure to the benefit of and shall apply to and be binding upon the parties
hereto and their respective heirs; legatees; devisees; executors;
administrators; and permitted successors, assigns, sublessees. Nothing in this
Section shall in any way alter the provisions of this Lease restricting
assignment or subletting.

41.14. This Lease shall be governed by, construed and enforced in accordance
with the laws of the state in which the Premises are located, without regard to
such state’s conflict of law principles.

 

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41.15. Each of Tenant and Landlord guarantees, warrants and represents to the
other that the individual or individuals signing this Lease on its behalf have
the power, authority and legal capacity to sign this Lease on behalf of and to
bind all entities, corporations, partnerships, limited liability companies,
joint venturers or other organizations and entities on whose behalf said
individual or individuals have signed.

41.16. This Lease may be executed in one or more counterparts, each of which,
when taken together, shall constitute one and the same document.

41.17. No provision of this Lease may be modified, amended or supplemented
except by an agreement in writing signed by Landlord and Tenant. The waiver by
Landlord of any breach by Tenant of any term, covenant or condition herein
contained shall not be deemed to be a waiver of any subsequent breach of the
same or any other term, covenant or condition herein contained.

41.18. To the extent permitted by Applicable Laws, the parties waive trial by
jury in any action, proceeding or counterclaim brought by the other party hereto
related to matters arising out of or in any way connected with this Lease; the
relationship between Landlord and Tenant; Tenant’s use or occupancy of the
Premises; or any claim of injury or damage related to this Lease or the
Premises.

42. Options to Extend Term. Tenant shall have two (2) options (each, an
“Option”) to extend the Term by five (5) years (each, an “Option Term”) each as
to the entire Premises (and no less than the entire Premises) upon the following
terms and conditions. Any extension of the Term pursuant to an Option shall be
on all the same terms and conditions as this Lease, except as follows:

42.1. Base Rent during an Option Term shall equal ninety-five percent (95%) of
the fair market rent for comparable existing and fully-improved laboratory and
office space in the Seattle market as of the commencement of such Option Term
(“FMR”), taking into account all market concessions (including the FMR
Considerations (as defined below)) and including fair market rent increases. If
Landlord and Tenant cannot agree on the FMR for an Option Term within thirty
(30) days after the date on which Tenant notifies Landlord that it is exercising
such Option, then, no later than an additional thirty (30) days thereafter (the
“Submission Period”), Landlord and Tenant shall each furnish to the other a
notice in writing (an “FMR Notice”) stating such party’s estimate of the FMR.
Such notices shall be accompanied by a statement from a qualified, licensed real
estate appraiser with at least ten (10) years’ experience in the Seattle area
(an “Appraiser”) stating such Appraiser’s opinion of FMR. If only one
(1) party’s Appraiser timely submits its opinion of FMR, such FMR shall be
binding on Landlord and Tenant. If, within twenty (20) days after expiration of
the Submission Period, Landlord and Tenant still cannot agree on the FMR, then
the two (2) Appraisers shall appoint a third qualified, licensed real estate
appraiser (the “Referee”) within seven (7) days. If the Appraisers are unable to
agree upon the selection of the Referee, then the Referee shall be selected
within ten (10) days thereafter from among the Seattle panel of qualified Real
Estate Industry Arbitrators of the American Arbitrator Association (the
“Association”) pursuant to the Real Estate Industry Arbitration rules of the
Association. The Referee shall, within thirty (30) days after appointment,
render the Referee’s decision as to the FMR, which opinion shall be strictly
limited to choosing one of the two

 

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determinations made by the Appraisers. The decision by the Referee shall be
binding upon Landlord and Tenant, and each shall pay for its own appraisal. The
cost of the Referee shall be shared equally by Landlord and Tenant. In
determining FMR, Landlord, Tenant and, if applicable, the Appraisers and Referee
shall each take into account all relevant factors (the “FMR Considerations”),
including (a) the size of the Premises and length of such Option Term, (b) rent
in comparable buildings in the relevant competitive market, including
concessions offered to new tenants, such as free rent, brokerage commissions,
tenant improvement allowances and moving allowances, (c) Tenant’s
creditworthiness and (d) the quality and location of the Building and the
Project.

42.2. An Option is not assignable separate and apart from this Lease.

42.3. An Option is conditional upon Tenant giving Landlord written notice of its
election to exercise such Option at least nine (9) months prior to the end of
the expiration of the then-current Term. Time shall be of the essence as to
Tenant’s exercise of an Option. Tenant assumes full responsibility for
maintaining a record of the deadlines to exercise an Option.

42.4. Notwithstanding anything contained in this Article to the contrary, Tenant
shall not have the right to exercise an Option:

(a) During the time commencing from the date Landlord delivers to Tenant a
written notice that Tenant is in default under any provisions of this Lease and
continuing until Tenant has cured the specified default to Landlord’s reasonable
satisfaction; or

(b) At any time after any Default as described in Article 31 of the Lease and
continuing until Tenant cures any such Default, if such Default is susceptible
to being cured.

42.5. The period of time within which Tenant may exercise an Option shall not be
extended or enlarged by reason of Tenant’s inability to exercise such Option
because of the provisions of Section 42.4.

43. Right of First Offer.

43.1. Tenant shall have a right of first offer (“ROFO”) as to any rentable
premises in the Building for which Landlord is seeking a tenant, except for all
first-generation rentable premises in the Building, which Tenant acknowledges
Landlord is currently marketing (“Available ROFO Premises”); provided, however,
that in no event shall Landlord be required to lease any Available ROFO Premises
to Tenant for any period past the date on which this Lease expires or is
terminated pursuant to its terms.

43.2. Landlord shall not grant any extension options, other than one (1) year
extension options (not to exceed two (2) such one (1) year extension options in
any given lease) that run successively (“Permitted Extension Options”), to
tenants leasing space in the Building after the Execution Date, and Landlord
shall not renew or extend a then-existing lease with any then-existing tenant of
any space (other than pursuant to any such one (1) year extension option), or
enter into a new lease with such then-existing tenant without first offering
such space to Tenant pursuant to the terms of this Article. Notwithstanding the
foregoing, for the ninety (90) days following the Execution Date, such
restriction on extension rights shall not apply to the entity

 

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with which Landlord is currently discussing potentially leasing a portion of the
Building, as set forth in that certain side letter from Landlord to Tenant dated
as of the Execution Date (the “Side Letter”).

43.3. In the event Landlord intends to market or otherwise make available for
lease Available ROFO Premises, Landlord shall provide written notice thereof to
Tenant (the “Notice of Marketing”). Within ten (10) business days following its
receipt of a Notice of Marketing, Tenant shall advise Landlord in writing
whether Tenant elects to lease all (rather than just a portion) of the Available
ROFO Premises. If Tenant fails to notify Landlord of Tenant’s election within
said ten (10) business day period, then Tenant shall be deemed to have elected
not to lease the Available ROFO Premises.

43.4. If Tenant timely notifies Landlord that Tenant desires to lease all or any
portion of the Available ROFO Premises (“Tenant’s Offer”), then Landlord and
Tenant shall use reasonable efforts for a period of forty-five (45) days
following Tenant’s receipt of a Notice of Marketing to mutually agree upon FMR
for the Available ROFO Premises. If the parties agree upon FMR during such
forty-five (45) day period, then Landlord and Tenant shall enter into an
amendment adding the Available ROFO Premises to this Lease, and such Available
ROFO Premises shall have a term that is coterminous with the Term.

43.5. If (a) Tenant notifies Landlord that Tenant elects not to lease the
Available ROFO Premises, (b) Tenant fails to notify Landlord of Tenant’s
election within the ten (10) business day period described in Section 43.3,
(c) Landlord and Tenant fail to agree upon the FMR for the Available ROFO
Premises within the forty-five (45) day period described in Section 43.4 or
(d) Landlord and Tenant agree upon the FMR within such forty-five (45) day
period but fail to execute and deliver an amendment adding the Available ROFO
Premises to this Lease within thirty (30) days after agreeing upon the FMR, then
as of such date (the “Triggering Date”) Landlord shall have the right to
commence marketing the Available ROFO Premises to third parties; provided that,
before entering into a lease with a third party for the Available ROFO Premises,
Landlord shall first offer the same again to Tenant pursuant to the ROFR (as
defined below). If Landlord does not lease the Available ROFO Premises within
one hundred eighty (180) days after the Triggering Date, or if such Available
ROFO Premises again become available for lease during the Term, then the ROFO
shall be fully reinstated, and Landlord shall not thereafter lease the Available
ROFO Premises without first complying with the procedures set forth in this
Article.

43.6. Notwithstanding anything in this Article to the contrary, Tenant shall not
exercise the ROFO during such period of time that Tenant is in monetary default
or any Default under any provision of this Lease. Any attempted exercise of the
ROFO during any such period of time shall be void and of no effect.

43.7. Notwithstanding anything in this Lease to the contrary, Tenant shall not
assign or transfer the ROFO, either separately or in conjunction with an
assignment or transfer of Tenant’s interest in the Lease, to other than a
Permitted Transferee, without Landlord’s prior written consent, which consent
Landlord may withhold in its sole and absolute discretion.

 

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43.8. If Tenant exercises the ROFO, Landlord does not guarantee that the
Available ROFO Premises will be available on the anticipated commencement date
for the Lease as to such Premises due to a holdover by the then-existing
occupants of the Available ROFO Premises or for any other reason beyond
Landlord’s reasonable control.

44. Right of First Refusal. Tenant shall have a right of first refusal (“ROFR”)
as to any rentable premises in the Building for which Landlord is seeking a
tenant (“Available ROFR Premises”); provided, however, that in no event shall
Landlord be required to lease any Available ROFR Premises to Tenant for any
period past the date on which this Lease expires or is terminated pursuant to
its terms.

44.1. Landlord shall not grant any extension options other than Permitted
Extension Options to tenants leasing space in the Building after the Execution
Date, and Landlord shall not renew or extend a then-existing lease with any
then-existing tenant of any space, other than pursuant to Permitted Extension
Options, or enter into a new lease with such then-existing tenant without first
offering such space to Tenant pursuant to the terms of this Article.
Notwithstanding the foregoing, for the ninety (90) days following the Execution
Date, such restriction on extension rights shall not apply to the entity with
which Landlord is currently discussing potentially leasing a portion of the
Building, as set forth in the Side Letter. In the event that Landlord intends to
lease Available ROFR Premises, Landlord shall provide written notice thereof to
Tenant (the “Notice of Offer”) specifying the terms and conditions of a proposed
lease to Tenant of the Available ROFR Premises.

44.2. Within ten (10) business days following its receipt of a Notice of Offer,
Tenant shall advise Landlord in writing whether Tenant elects to lease all
(rather than just a portion) of the Available ROFR Premises on the terms and
conditions set forth in the Notice of Offer. If Tenant fails to notify Landlord
of Tenant’s election within said ten (10) business day period, then Tenant shall
be deemed to have elected not to lease the Available ROFR Premises.

44.3. If Tenant timely notifies Landlord that Tenant elects to lease the
Available ROFR Premises on the terms and conditions set forth in the Notice of
Offer, then Landlord shall lease the Available ROFR Premises to Tenant upon the
terms and conditions set forth in the Notice of Offer.

44.4. If Tenant notifies Landlord that Tenant elects not to lease the Available
ROFR Premises on the terms and conditions set forth in the Notice of Offer, or
if Tenant fails to notify Landlord of Tenant’s election within the ten
(10) business day period described above, then Landlord shall have the right to
consummate the lease of the Available ROFR Premises on the same economic terms
(including, rental rate, term, options and concessions such as tenant
improvement allowances, free rent and brokerage commissions) as set forth in the
Notice of Offer following Tenant’s election (or deemed election) not to lease
the Available ROFR Premises. If Landlord does not lease the Available ROFR
Premises on the same economic terms and conditions set forth in the Notice of
Offer within one hundred eighty (180) days after Tenant’s election (or deemed
election) not to lease the Available ROFR Premises, or if Landlord desires to
lease the Available ROFR Premises according to economic terms different than
those set forth in the Notice of Offer, or if the Available ROFR Premises again
become available for lease after having been leased, then the ROFR shall be
fully reinstated and Landlord shall not thereafter lease the Available ROFR
Premises without first complying with the procedures set forth in this Article.

 

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44.5. Notwithstanding anything in this Article to the contrary, Tenant shall not
exercise the ROFR during such period of time that Tenant is in monetary default
or any other Default under any provision of this Lease. Any attempted exercise
of the ROFR during any such period of time shall be void and of no effect.

44.6. Notwithstanding anything in this Lease to the contrary, Tenant shall not
assign or transfer the ROFR, either separately or in conjunction with an
assignment or transfer of Tenant’s interest in the Lease to other than a
Permitted Transferee, without Landlord’s prior written consent, which consent
Landlord may withhold in its sole and absolute discretion.

44.7. If Tenant exercises the ROFR, Landlord does not guarantee that the
Available ROFR Premises will be available on the anticipated commencement date
for the Lease as to such Premises due to a holdover by the then-existing
occupants of the Available ROFR Premises or for any other reason beyond
Landlord’s reasonable control.

45. Expansion Options.

45.1. Subject to the conditions set forth in this Article, Tenant shall have the
ongoing right, but not the obligation, to expand the Premises pursuant to one or
more expansions (each, a “Third Floor Expansion Option”) to include all or any
portion (but in no event less than ten thousand (10,000) square feet of Rentable
Area, unless at least ten thousand (10,000) square feet of Rentable Area are not
available for lease, with respect to any Third Floor Expansion Option) of the
Rentable Area on the third (3rd) floor of the Building (all such Rentable Area
on the third (3rd) floor of the Building is referred to herein as the “Third
Floor Expansion Space”) according to the same terms and conditions of this Lease
as the original Premises (including the rate for Base Rent and the term, with
the term being coterminous with the Term), as further described in Section 45.3.

45.2. In the event that, prior to the Term Commencement Date, (a) Tenant
exercises one or more Third Floor Expansion Options and (b) corresponding
Amendments for such Third Floor Expansion Space are executed by the parties,
then, subject to the conditions set forth in this Article (and provided that the
Second Floor Expansion Space (as defined below) is available for lease), Tenant
shall have the right (but not the obligation) to expand the Premises (a “Second
Floor Expansion Option”) to include a portion of Rentable Area on the second
(2nd) floor of the Building, with such portion (the “Second Floor Expansion
Space”) derived by calculating a fraction, the numerator of which is the
Rentable Area of such Third Floor Expansion Space leased by Tenant, and the
denominator of which is the total Rentable Area of the third floor of the
Building. Tenant shall lease any Second Floor Expansion Space on the same terms
and conditions of this Lease as the original Premises (including the rate for
Base Rent and the term, with the term being coterminous with the Term), as
further described in Section 45.3. In no event shall any Second Floor Expansion
Option include less than ten thousand (10,000) square feet of Rentable Area,
unless at least ten thousand (10,000) square feet of Rentable Area are not
available for lease on the second (2nd) floor of the Building. A Third Floor
Expansion Option coupled with a Second Floor Expansion Option is referred to
herein as an “Expansion Option.”

 

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All available Third Floor Expansion Space and Second Floor Expansion Space are
collectively referred to herein as “Expansion Space.” Notwithstanding anything
to the contrary in this Article, Tenant shall not be entitled to a Second Floor
Expansion Option in the first ninety (90) days after the Execution Date with
respect to any Rentable Area subject to negotiations with the entity set forth
in the Side Letter.

45.3. Tenant may exercise an Expansion Option by providing Landlord with at
least nine (9) months’ prior written notice that Tenant has elected to exercise
an Expansion Option, and in such notice must indicate the amount of Rentable
Area Tenant desires to lease with such Expansion Option. Within ten (10) days
after exercising an Expansion Option, Tenant and Landlord shall enter into a
written amendment to the Lease (the “Amendment”), which Amendment shall provide,
unless otherwise agreed in writing, (a) the commencement date of the associated
Expansion Space, (b) that the Premises under this Lease shall be increased to
include the square feet of Rentable Area of the associated Expansion Space,
(c) the Base Rent (being the then-current rate set forth in Section 2.3),
(d) Tenant’s new Pro Rata Share of Operating Expenses based upon the addition of
the associated Expansion Space to the Premises, (e) the proportionate increase
to the Security Deposit (which increase shall be payable to Landlord upon
execution of the Amendment) and (f) the tenant improvement scope of work, which
shall, at Landlord’s sole cost, include finishes no lesser in quality to those
existing in the Premises as of the Term Commencement Date. In all other
respects, this Lease shall remain in full force and effect, and shall (except
with regard to the free rent period at the commencement of the initial Term)
apply to any Expansion Space.

45.4. Notwithstanding anything in this Article to the contrary, Tenant shall not
exercise an Expansion Option during such period of time that Tenant is in
monetary default or any other Default under any provision of this Lease. Any
attempted exercise of an Expansion Option during a period of time in which
Tenant is so in default shall be void and of no effect.

45.5. Notwithstanding anything in this Lease to the contrary, Tenant’s right to
any Expansion Option shall expire on the date that is thirty-six (36) months
following the Term Commencement Date (therefore, for purposes of clarity, any
notice to exercise an Expansion Option must be received by Landlord no later
than the date that is twenty-seven (27) months following the Term Commencement
Date).

45.6. Tenant may also request in its discretion during the Term to expand the
Premises into all or any portion of (a) the third (3rd) floor of the Building
(or any Second Floor Expansion Space, if applicable) after the date that is
thirty-six (36) months following the Term Commencement Date if such space is not
leased to Tenant or any other entity and is otherwise available for lease and
(b) any other portion of the Building not leased by Tenant or any other entity
and otherwise available for lease (the “Additional Expansion Space”) by
delivering to Landlord a written expansion request (an “Additional Expansion
Request”) describing the portion of the Additional Expansion Space into which
Tenant seeks to expand. Following receipt of an Additional Expansion Request,
and provided that Landlord desires to pursue such Additional Expansion Request,
Landlord and Tenant shall use reasonable efforts for a period of forty-five
(45) days to mutually agree upon the terms for the requested Additional
Expansion Space. If the parties agree upon such terms during such forty-five
(45) day period, then Landlord and Tenant shall enter into an amendment adding
the requested Additional Expansion Space to this Lease. For purposes of clarity,
Landlord shall be under no obligation to negotiate with Tenant for, or lease to
Tenant, the Additional Expansion Space.

 

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46. Landlord Efforts to Negotiate Short-Term Leases. Landlord shall endeavor to
negotiate short-term leases (or leases with Landlord termination clauses or
relocation clauses) for any available Rentable Area in the Building; provided,
however, that this Article shall not apply during the ninety (90) days following
the Execution Date with respect to Landlord’s negotiation of a lease with the
entity listed in the Side Letter.

47. Build-to-Suit Option. In the event that, at any time, the amount of Rentable
Area that Tenant leases plus the amount that Tenant has notified Landlord
pursuant to Article 45 that it desires to lease exceeds the Rentable Area of
space available for lease by Tenant in the Building, Landlord and Tenant shall
use reasonable efforts for a sixty (60) day period (commencing as of the end of
the ten (10) business day period set forth in Section 48.1(b)) to enter into a
build-to-suit lease in a location mutually acceptable to Landlord and Tenant and
on terms mutually acceptable to Landlord and Tenant, in each of their sole
discretion. The parties acknowledge that this sixty (60) day period shall run
concurrently with the twelve (12) month period of any Notice of Termination for
Failure to Accommodate Expansion (as defined below) that Tenant provides
pursuant to Section 48.1(c). Notwithstanding the foregoing, if the parties agree
on such build-to-suit lease, there shall be no termination penalty or charge for
the termination of this Lease, and no termination costs related to the
termination of this Lease shall be factored into the economics of the new
build-to-suit lease.

48. Termination Options.

48.1. Any written request by Tenant to expand the Premises during the Term of
this Lease through either (a) the exercise of its ROFO with respect to any
Available ROFO Premises by providing a Tenant’s Offer in accordance with Article
43 or (b) by delivery of an Additional Expansion Request for any Additional
Expansion Space in accordance with Section 45.6 shall be referred to as an
“Expansion Opportunity Request.”

(a) Any Expansion Opportunity Request seeking to expand the Premises by Rentable
Area equal to or greater than the lesser of (i) ten thousand (10,000) square
feet of Rentable Area and (ii) Rentable Area equal to twenty percent (20%) of
Tenant’s then-current Rentable Area leased pursuant to this Lease shall be
referred to as an “Expansion Requirement.”

(b) Landlord shall, within ten (10) business days after receipt from Tenant of
any Expansion Opportunity Request for an Expansion Requirement, notify Tenant in
writing whether Landlord can accommodate the Expansion Requirement by delivering
expansion space in the Building to Tenant that satisfies the Expansion
Requirement, with delivery of such space occurring within nine (9) months
(subject to extension for Excusable Delays) after full execution and delivery of
an amendment to this Lease adding such Expansion Requirement (as set forth in
Subsection 48.1(b)(ii)), which notification from Landlord shall include the
location of the proposed space, the proposed delivery date and the proposed
rental rate for such space. If, in response to an Expansion Requirement,
(i) Landlord notifies Tenant that it can accommodate the Expansion Requirement
in accordance with the requirements of this Section 48.1 and (ii) Landlord and
Tenant agree upon the terms for the Expansion Requirement, then the parties
shall, within forty-five (45) days following Landlord’s receipt of the Expansion
Opportunity Request, enter into an amendment to this Lease adding such Expansion
Requirement to the Premises.

 

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(c) If (i) Landlord is unable to accommodate an Expansion Requirement in
accordance with the requirements of this Article or (ii) the parties fail to
execute an amendment to this Lease adding such Expansion Requirement to the
Premises within the forty-five (45) day period referenced in Section 48.1(b),
then, beginning on the date that is sixty (60) months after the Term
Commencement Date, Tenant may terminate this Lease (except for those provisions
that, by their express terms, survive the expiration or earlier termination
hereof) by providing twelve (12) months’ prior written notice to Landlord
(“Notice of Termination for Failure to Accommodate Expansion”); provided,
however, that in order for Tenant to exercise such termination option, Tenant
must deliver the Notice of Termination for Failure to Accommodate Expansion
within sixty (60) days after (A) Landlord has delivered notice to Tenant that it
is unable to accommodate an Expansion Requirement or (B) the expiration of the
forty-five (45) day period referenced in Section 48.1(b) regarding the failure
to execute an amendment to this Lease adding such Expansion Requirement to the
Premises. For purposes of clarity, the earliest that Tenant could provide a
Notice of Termination for Failure to Accommodate Expansion under this Section is
the date that is forty-eight (48) months after the Term Commencement Date.

(d) For purposes of Section 48.1(c), Landlord shall be deemed to be unable to
accommodate an Expansion Requirement if the Expansion Requirement exceeds the
difference between (i) the square footage of the then-available Rentable Area
(i.e., not leased by Tenant or any other party and otherwise available for
lease, and exclusive of all Common Areas) in the Building and (ii) the sum of
all Rentable Area that Tenant sought to lease in all prior Expansion Opportunity
Requests that did not result in any amendment(s) to this Lease adding such
Rentable Area (excluding any such Rentable Area that was subsequently leased by
another tenant and that remains leased by another tenant as of the date of the
Expansion Requirement).

(e) Following any Notice of Termination for Failure to Accommodate Expansion,
Tenant and Landlord shall undertake negotiations to enter into a build-to-suit
lease in accordance with Article 47. Notwithstanding the foregoing, if Tenant
exercises any termination right under Section 48.1(c), Tenant shall have the
right to rescind its exercise of such termination right by providing written
notice to Landlord within ninety (90) days after Landlord’s receipt of the
Notice of Termination for Failure to Accommodate Expansion, and if Tenant so
rescinds its exercise of the termination, then this Lease shall continue in full
force and effect as if Tenant had not exercised such right of termination.

(f) In the event that Tenant terminates the Lease pursuant to Section 48.1(c),
Tenant shall not be required to pay any termination fee or penalty other than a
termination fee equal to one hundred percent (100%) of the unamortized portion
of the Cash Incentive (with the Cash Incentive accruing interest at an annual
interest rate of three percent (3%) over the period commencing as of the date
that the Cash Incentive is paid to Tenant through the last day of the twelfth
(12th) month of the Term, and then amortized over the remainder of the initial
Term at an annual interest rate of three percent (3%)). Such termination fee
shall be paid simultaneously with Tenant’s final scheduled payment of monthly
Base Rent.

 

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48.2. Tenant shall have an additional right to terminate this Lease at any time
and for any reason beginning on the date that is ninety-six (96) months after
the Term Commencement Date by providing Landlord with twelve (12) months’ prior
written notice (for the sake of clarity, the earliest that Tenant could provide
notice to terminate under this Section is the date that is eighty-four
(84) months after the Term Commencement Date). In the event that Tenant
terminates this Lease pursuant to this Section, Tenant shall be required to pay
a termination fee as set forth in the chart below. Such termination fee shall be
paid simultaneously with Tenant’s final scheduled payment of monthly Base Rent.

 

Termination Date

 

Termination Fee

Months 96 – 120   The sum of (a) the applicable amount set forth in the chart
below (the “Initial Termination Fee”) and (b) thirty percent (30%) of the
unamortized portion of the actual cost of any Expansion Space tenant
improvements* Months 121 – 180   The sum of (a) the applicable Initial
Termination Fee and (b) twenty percent (20%) of the unamortized portion of the
actual cost of any Expansion Space tenant improvements*

 

* For purposes of calculating the termination fee above, the cost of any
Expansion Space tenant improvements shall be amortized over the initial Term at
an annual interest rate of eight percent (8%).

 

Termination Month

  Initial Termination
Fee              96   $4,671,669              97   $4,626,593              98  
$4,581,301              99   $4,535,792             100   $4,490,064
            101   $4,444,116             102   $4,397,946             103  
$4,351,554

 

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            104    $4,304,938             105    $4,258,098             106   
$4,211,031             107    $4,163,736             108    $4,116,213
            109    $4,068,459             110    $4,020,475             111   
$3,972,257             112    $3,923,805             113    $3,875,119
            114    $3,826,195             115    $3,777,034             116   
$3,727,633             117    $3,677,991             118    $3,628,108
            119    $3,577,981             120    $3,527,609             121   
$2,735,321             122    $2,694,831             123    $2,654,159
            124    $2,613,303             125    $2,572,264

 

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            126    $2,531,039             127    $2,489,628             128   
$2,448,030             129    $2,406,244             130    $2,364,268
            131    $2,322,103             132    $2,279,746             133   
$2,237,197             134    $2,194,454             135    $2,151,518
            136    $2,108,385             137    $2,065,057             138   
$2,021,531             139    $1,977,806             140    $1,933,882
            141    $1,889,757             142    $1,845,430             143   
$1,800,900             144    $1,756,167             145    $1,711,228
            146    $1,666,082             147    $1,620,730

 

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            148    $1,575,169             149    $1,529,398             150   
$1,483,417             151    $1,437,223             152    $1,390,817
            153    $1,344,196             154    $1,297,360             155   
$1,250,307             156    $1,203,037             157    $1,155,547
            158    $1,107,837             159    $1,059,906             160   
$1,011,753             161    $ 963,375             162    $ 914,773
            163    $ 865,944             164    $ 816,888             165    $
767,602             166    $ 718,087             167    $ 668,341
            168    $ 618,362             169    $ 568,149

 

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            170    $  517,701                171    $  467,017   
            172    $  416,095                173    $  364,933   
            174    $  313,532                175    $  261,889   
            176    $  210,002                177    $  157,872   
            178    $  105,495                179    $ 52,872                180
   $ 0.00   

48.3. Upon any termination of this Lease pursuant to this Article, the parties
shall be released herefrom without further obligation to the other from the date
possession of the Premises is surrendered to Landlord in the condition required
by this Lease, except with regard to (a) payment of any termination fee,
(b) items occurring and Rent accrued prior to such surrender and (c) provisions
of this Lease that, by their express terms, survive the expiration or earlier
termination hereof.

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

 

LANDLORD:

BMR-201 ELLIOTT AVENUE LLC,

a Delaware limited liability company

 

By:   /s/ John Bonanno Name:   John Bonanno Title:  
Senior Vice President, Leasing and Development

 

TENANT:

OMEROS CORPORATION,

a Washington corporation

 

By:   /s/ Gregory A. Demopulos Name:   Gregory A. Demopulos, M.D. Title:  
Chairman and CEO