**EXHIBIT
      10.1**


**LEASE
      AGREEMENT**





THIS
      LEASE AGREEMENT (this “ Lease ”)
      is
      dated as of the 14th day of August, 2008, and is entered into by and between
      PACIFIC NORTHWEST RESEARCH INSTITUTE, a Washington nonprofit corporation
      (“ Landlord ”),
      and
      Pacific Biometrics, Inc., a Washington corporation (“ Tenant ”).





Landlord
      and Tenant agree as follows:





**1.**  **Premises.** Landlord
      hereby leases to Tenant and Tenant hereby leases from Landlord upon the terms
      and conditions set forth herein the Premises, together with nonexclusive rights
      of ingress and egress over common areas in the Building. The “ Building ”
means
      the building commonly known as 720 Broadway Street, Seattle, Washington 98122.
      The “ Premises ”
means
      that space consisting of an agreed area of five hundred twenty two (522)
      rentable square feet on the 6th floor, north side central, of the Building,
      as
      outlined on the floor plan attached hereto as Exhibit A which is
      incorporated herein by this reference and made a part of this
      Lease.




**2.**  **Term,
      Commencement and Expiration Dates.** The term
      of this Lease (the “ Term ”)
      shall
      be twelve (12) months, commencing on September 1st, 2008 (the “ Commencement
      Date ”),
      and
      expiring on August 31, 2009, unless earlier terminated as provided herein.
      Following the end of the initial term this lease may be renewed for an
      additional twelve (12) months with a 3% increase in basic rent. Tenant’s
      possession of the Premises prior to the Commencement Date shall be subject
      to
      all the provisions of this Lease except that the Term and Tenant’s obligation to
      pay Basic Rent shall not begin until the Commencement Date.




**3.**  **Rent.** Tenant
      shall pay to Landlord basic rent for the Premises in an amount equal to three
      thousand two hundred sixty two Dollars ($3,262.00) per month (“ Basic
      Rent ”)
      for
      the initial term. Tenant shall pay as additional rent all other sums due from
      Tenant to Landlord under this Lease (“ Additional
      Rent ”).
      Tenant shall pay Landlord without notice Basic Rent and Additional Rent
      (collectively, “ Rent ”),
      without deduction or offset, in lawful money of the United States of America
      in
      advance on or before the first day of each month (or at other dates specified
      in
      this Lease with respect to payments Additional Rent) during the Term at
      Landlord’s address set forth on the signature page of this Lease, or to such
      other party or at such other place as Landlord may hereafter from time to time
      designate to Tenant in writing. Tenant shall pay the first full monthly
      installment of Basic Rent in advance upon execution of this Lease. Rent for
      any
      partial month at the beginning or end of the Term shall be
      prorated.




**4.**  **Security
      Deposit.** Tenant
      shall deposit with Landlord on the date of this Lease, as security for the
      performance of all of its obligations an amount equal to one month’s installment
      of Basic Rent (the “ Security
      Deposit ”).
      The
      Security Deposit shall be held by Landlord as security for the faithful
      performance by Tenant of all of Tenant’s obligations under this Lease. If Tenant
      fails to make any payment as and when due under this Lease, or otherwise fails
      to perform any of its obligations under this Lease, Landlord may (but shall
      not
      be obligated to) use, apply or retain all or any portion of the Security
      Deposit: (i) against any such payment(s) which Tenant failed to make;
      (ii) for the payment of any other sum to which Landlord may become
      obligated by reason of Tenant’s failure to perform; or (iii) to compensate
      Landlord for any loss or damage which Landlord may suffer thereby; so long
      as
      the foregoing is done in compliance with applicable law. If Landlord so uses
      or
      applies all or any portion of the Security Deposit, Tenant within five (5)
      business days after written notice shall deposit cash with Landlord in an amount
      sufficient to restore the Security Deposit to the full amount required above
      and
      Tenant’s failure to do so shall constitute an Event of Default under this Lease.
      The Security Deposit, or so much thereof as has not theretofore been applied
      by
      Landlord pursuant to the terms of this Lease, shall be returned, without payment
      of interest, to Tenant (or, at Landlord’s option, to the last assignee, if any,
      of Tenant’s interest under this Lease within a reasonable period of time after
      the end of the Term. Landlord shall not be required to keep the Security Deposit
      separate from its general accounts, and no trust relationship is created in
      this
      Lease between Landlord and Tenant with respect to the Security Deposit.


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**5.**  **AS
      IS.** Tenant
      acknowledges that Tenant is leasing the Premises in its current “as is”
condition and Tenant acknowledges that, except to the extent expressly set
      forth
      in this Lease, neither Landlord nor any agent of Landlord has made any
      representation or warranty, express or implied, with respect to the Premises
      or
      the Building and that Landlord has not agreed to modify the Premises or to
      construct any improvements therein. Tenant acknowledges that it has had an
      opportunity to inspect the Premises to confirm the suitability thereof for
      Tenant’s purposes. The taking of possession or use of the Premises by Tenant
      shall conclusively establish that the Premises and the Building were at such
      time in satisfactory condition.




**6.**  **Uses.**




**6.1**  **General
      Use.** The
      Premises shall be used only for laboratory research and for general office
      purposes related thereto (“ Permitted
      Use ”)
      and
      for no other business or other purpose without the prior written consent of
      Landlord. Tenant may use materials which are permitted in facilities designated
      as BioSafety Level (“ BSL ”)
      1, and
      will get approval from the Landlord prior to the implementation of any
      experiment using BSL2 agents, **** as
      such
      classifications are defined by the National Institute of Health and/or the
      Center for Disease Control in the Premises, but Tenant not use or store any
      materials which may only be used in BSL3 or BSL4 facilities and Landlord shall
      not be required to consent to any use that involves use or storage of BSL3
      or
      BSL4 materials. No act shall be done in or about the Premises that is unlawful,
      unsafe or that will increase the then existing rate of insurance on the
      Building.




**6.2**  **No
      Waste or Nuisance.** Tenant
      shall not commit or allow to be committed any waste upon the Premises, or any
      public or private nuisance or other act or thing in or about the Premises that
      disturbs the quiet enjoyment of Landlord or any other tenant in the Building.
      Tenant shall not, without the prior written consent of Landlord, use, operate
      or
      maintain any apparatus, machinery, equipment or device in or about the Premises
      that will cause any significant noise, increase electrical loads or usage,
      vibration or fumes or disturb the quiet enjoyment of Landlord or any other
      tenant in the Building, and in the event of any such use or operation, then
      Tenant shall cease operating such equipment until it has provided adequate
      insulation or taken such other action as Landlord shall reasonably require
      to
      eliminate or minimize the disturbance.




**6.3**  **Compliance
      With Laws.** Tenant
      shall comply with all laws and regulations relating to its use or occupancy
      of
      the Premises. Tenant shall comply with all rules and regulations concerning
      Tenant’s use or occupancy of the Premises as may be adopted by Landlord from
      time to time.




**6.4**  **Hazardous
      Materials** .




**6.4.1**  Tenant
      shall not use or dispose of any Hazardous Materials in or on the Premises,
      the
      Building, the Property, or any adjacent property, or in any improvements
      thereto, except for such Hazardous Materials as are essential to the Permitted
      Use, and then only in accordance with all applicable laws and regulations.
      Tenant shall ensure that all of Tenant’s officers, contractors, subcontractors,
      licensees, agents, servants, employees, guests, invitees or visitors, or any
      assignee or sublessee or other person for whom Tenant would otherwise be liable
      (individually, a “ Tenant
      Party ”
and
      collectively, “ Tenant
      Parties ”)
      shall
      comply with all Environmental Laws (as defined below) in connection with
      Tenant’s or any Tenant Party’s use, storage or disposal of any Hazardous
      Materials (as defined below) on, under or about the Premises at Tenant's
      expense. Tenant shall ensure that all Tenant Parties shall, at all times follow
      industry standard research and medical and safety practices in connection with
      the purchasing, handling, storage, shipment or disposal of any Hazardous
      Material, including, but not limited, to any Medical Products (as defined
      below), at Tenant’s expense.




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**6.4.2**  As
      used
      herein, the term “ Hazardous
      Materials ”
means
      any Medical Products, chemical, substance, material, controlled substance,
      object, condition, waste, living organism or combination thereof which is or
      may
      be hazardous to human health or safety or to the environment (whether
      potentially injurious to persons and property and whether potentially injurious
      by themselves or in combination with other materials) due to its radioactivity,
      ignitability, corrosivity, reactivity, explosivity, toxicity, carcinogenicity,
      mutagenicity, phytotoxicity, infectiousness or other harmful or potentially
      harmful properties or effects, including, without limitation, petroleum and
      petroleum products, asbestos, radon, polychlorinated biphenyls (PCBs) and all
      of
      those chemicals, substances, materials, controlled substances, objects,
      conditions, wastes, living organisms or combinations thereof which are now
      or
      become in the future listed in the United States Department of Transportation
      Hazardous Materials Table [49 C.F.R. § 172.101] or any other applicable
      regulatory mandate, as amended from time to time, or listed, defined or
      regulated in any manner by any Environmental Law.




**6.4.3**  As
      used
      herein, the term “ Environmental
      Laws ”
means
      any and all federal, state or local environmental, health and/or safety-related
      laws, regulations, standards, decisions of courts, ordinances, rules, codes,
      orders, decrees, directives, guidelines, permits or permit conditions, currently
      existing and as amended, enacted, issued or adopted in the future relating
      to
      the environment or governing or in any way relating to the generation, handling,
      manufacturing, treatment, storage, use, transportation, spillage, leakage,
      dumping, discharge or disposal (whether legal or illegal, accidental or
      intentional) of any Hazardous Material (including, without limitation, The
      Comprehensive Environmental Response, Compensation and Liability Act of 1980
      (42
      U.S.C. § 9601, *et
      seq.* ),
      The
      Washington Model Toxics Control Act (Ch. 70.105D RCW) and The Washington
      Hazardous Waste Management Act (Ch. 70.105 RCW), which are or become
      applicable to Tenant or the Premises.




**6.4.4**  As
      used
      herein, the term “ Medical
      Products ”
means
      all recombinant DNA agents and all regulated substances, chemicals, drugs,
      blood, tissue, serums, waste and other materials related thereto and used in
      connection with medical treatment, laboratory analysis or other biomedical
      research.




**6.4.5**  As
      used
      herein, the term “ Environmental
      Condition ”
means
      any release or spill of any Hazardous Materials into the environment, including
      surface water, groundwater, drinking water supply, land, soil, surface or
      subsurface strata or the ambient air, where such release or spill is potentially
      in violation of Environmental Laws or is required to be reported to the
      Washington State Department of Ecology or other appropriate governmental
      authority.




**6.4.6**  Tenant
      shall deliver to Landlord prior to the Commencement Date and on request during
      the Term a list specifying the type and quantity of all Hazardous Materials
      used
      or stored or proposed to be used or stored by Tenant or Tenant Parties on the
      Premises. The list shall include copies of all permits, licenses and approvals
      required in connection with the use or storage of such materials, together
      with
      Tenant’s Hazardous Materials Inventory Statement and Hazardous Materials and
      Management Plans (as required by the City of Seattle Fire Department). Tenant
      will provide additional documents or information with respect to its Hazardous
      Materials upon request.


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**6.4.7**  Tenant
      shall promptly notify Landlord in writing of (i) any notices of violation
      or potential or alleged violation of any Environmental Law which are or have
      been in the past received by Tenant from any governmental agency; (ii) any
      and all inquiry, investigation, enforcement, clean-up, removal or other
      governmental or regulatory actions instituted or threatened relating to Tenant
      or the Premises; and (iii) all claims made or threatened by any third-party
      against Tenant or the Premises relating to any Hazardous Materials. If any
      Environmental Condition occurs that is or may be a result of any Tenant’s or any
      Tenant Party’s actions during the Term, or if Tenant or any Tenant Party has
      disposed of or caused a release of Hazardous Materials at, on or about the
      Premises other than in accordance with Environmental Laws, Tenant shall promptly
      prepare a remediation plan for Landlord’s review and approval, which shall not
      be unreasonably withheld. Tenant’s obligation to remediate any Environmental
      Condition shall not be contingent on an enforcement action by any governmental
      authority and shall be independent of any governmentally mandated remediation.
      If Landlord approves the plan, then Tenant shall execute the remediation plan
      at
      Tenant’s sole cost and expense. If the remediation plan is not reasonably
      acceptable to Landlord or if Tenant fails to execute the remediation plan within
      a reasonable period of time, then Tenant shall reimburse Landlord, upon demand,
      for the cost to Landlord of performing rectifying work. The reimbursement shall
      be paid to Landlord in advance of Landlord’s performing such work, based upon
      Landlord’s reasonable estimate of the cost thereof; and upon completion of such
      work by Landlord, Tenant shall pay to Landlord any shortfall within thirty
      (30)
      days after Landlord bills Tenant therefor or Landlord shall within thirty (30)
      days refund to Tenant any excess deposit, as the case may be. To the extent
      reasonably requested by Landlord, Tenant shall furnish Landlord with detailed
      reports concerning any Environmental Condition which occurs on the Premises
      during the Term. In addition, Tenant shall comply, at its sole cost and expense,
      with such industry-standard recommendations contained in any environmental
      assessment or report as Landlord may reasonably require including without
      limitation, any recommended precautions which should be taken with respect
      to
      activities on the Premises, and additional testing and studies to detect the
      presence of Hazardous Materials.




**6.4.8**  After
      notice to Tenant and a reasonable opportunity for Tenant to effect such
      compliance, Landlord may, but shall not be obligated to, enter upon the Premises
      and take such actions and incur such costs and expenses to effect such
      compliance as it deems advisable to protect its interest in the Premises.
      However, Landlord shall not be obligated to give Tenant notice and an
      opportunity to effect compliance if (i) such delay might result in material
      adverse harm to Landlord, the Premises, the Building or the property on which
      it
      is located; (ii) Tenant has already had actual knowledge of the situation
      and a reasonable opportunity to effect compliance, or (iii) Landlord
      reasonably believes that an emergency exists. Whether or not Tenant has actual
      knowledge of the release of Hazardous Materials on the Premises, the Building,
      the property or any adjacent property as the result of Tenant’s use of the
      Premises, the Building or the property, Tenant shall reimburse Landlord for
      the
      full amount of all costs and expenses incurred by Landlord relating to such
      Hazardous Materials or in connection with such compliance activities. Tenant
      shall notify Landlord immediately of any release of any Hazardous Materials
      on
      the Premises of which Tenant is aware.




**6.4.9**  Tenant
      agrees to indemnify, defend and hold harmless Landlord against any and all
      losses, liabilities, suits, obligations, fines, damages (including diminution
      in
      the value of the Premises or Building, loss or restrictions on use of space
      in
      the Building or the property on which it is located, and sums paid in settlement
      of claims), judgments, penalties, claims, charges, cleanup costs, remedial
      actions, costs and expenses (including, without limitation, attorneys’ and other
      professional fees and disbursements) that may be imposed on, incurred or
      paid by, or asserted against Landlord, the Premises, the Building, or the
      property by reason of, or in connection with (i) any misrepresentation,
      breach of warranty or other default by Tenant or any Tenant Party under this Section 6.4 ,
      or
      (ii) the acts or omissions of Tenant or any Tenant Party resulting in the
      release of any Hazardous Materials. All of Tenant’s obligations and liabilities
      under this Section 6.4 shall
      survive expiration or other termination of this Lease and shall be separately
      enforceable by Landlord. This indemnification is intended to constitute an
      indemnity agreement within the meaning of Section 9607(e)(i) of The
      Comprehensive Environmental Response, Compensation and Liability Act of 1980
      (42
      U.S.C. § 9607(e)(i)). Neither the written consent by Landlord to the
      presence of Hazardous Materials on, under or about the Premises, nor the strict
      compliance by Tenant with all Environmental Laws, shall excuse Tenant from
      Tenant’s obligation of indemnification pursuant thereto.


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**6.4.10**  Upon
      expiration or early termination of this Term, Tenant shall at its sole cost
      and
      expense undertake and complete a thorough wash and decontamination of the
      Premises, including but not limited to scrubbing of all surfaces, equipment,
      cabinets, fixtures and flume hood external surfaces in the Premises, in order
      to
      remove all residues of Hazardous Materials (including chemicals and biological
      material). Upon completion of such wash and decontamination, Tenant shall cause,
      at its sole cost and expense, an environmental engineering company reasonably
      satisfactory to Landlord to perform an environmental inspection of the Premises
      and prepare a written report for delivery to Landlord and Tenant, certifying
      that the Premises are free from all Hazardous Materials.




**6.4.11**  Landlord
      may monitor Tenant’s compliance with the requirements set forth in this Section 6.4 ,
      including without limitation obtaining an environmental assessment or
      investigation of the Premises from a qualified environmental engineering company
      of Landlord’s selection, the cost of which shall be paid by Landlord unless such
      assessment reveals a violation of this Lease. Any such environmental assessment
      shall be performed at a reasonable time mutually acceptable to Landlord and
      Tenant.




**7.**  **Personal
      Property Taxes.** Tenant
      shall pay, prior to delinquency, all taxes payable with respect to all of
      Tenant’s personal property including inventory, equipment, furniture and trade
      fixtures kept or used on or installed in the Premises.




**8.**  **Taxes
      on Rent.** The Rent
      provided for in this Lease is exclusive of any sales or other tax or charge
      upon, based upon or measured by rents payable to Landlord hereunder, or any
      tax
      or other charge based upon or measured by the number of employees of Tenant,
      or
      any other tax that is not currently in effect. If during the Term any such
      tax
      or other charge becomes payable by Landlord to any governmental authority,
      the
      Rent hereunder shall be deemed increased by such amount. The foregoing does
      not
      apply to federal, state or local income, gross receipts, inheritance, gift,
      succession or franchise taxes payable by Landlord.




**9.**  **Services
      by Landlord.**




**9.1**  **Building
      Services.** Landlord
      shall provide elevator service, Building access through the security system,
      electricity, cooling, heating and ventilation (HVAC), water and sewer.
“ Normal
      Business Hours ”
shall
      be from 6:00 a.m. to 6:00 p.m., Monday through Friday, excluding legal
      holidays. Tenant may have access to the building outside of these hours if
      required. Landlord shall provide a security card and key that will allow Tenant
      access to the Premises and any replacement or additional devices shall be at
      Tenant’s expense.




**9.2**  **Liability.** Landlord
      shall not be liable for any loss or damage caused by or resulting from any
      variation, interruption or failure of such services due to any cause whatsoever,
      and no temporary interruption or failure of such services incident to the making
      of repairs, alterations or improvements or due to accident or strike conditions
      shall be deemed an eviction of Tenant or relieve Tenant from any of Tenant’s
      obligations hereunder. For those services within Landlord’s reasonable control,
      Landlord shall correct any interruption of services as soon as
      practicable.




**9.3**  **Electricity
      and Mechanical.** Before
      installing additional lights or equipment in the Premises, Tenant shall obtain
      the written permission of Landlord. Landlord may refuse to grant such permission
      unless Tenant agrees to pay Landlord’s costs to install supplementary air
      conditioning capacity or electrical systems if the equipment or lights requested
      by Tenant will, in Landlord’s reasonable judgment, overburden the Building’s
      structure or mechanical system. Tenant shall pay all costs of operating such
      equipment.


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**9.4**  **Shared
      Facilities.** Tenant
      shall have the nonexclusive right to use the restrooms, coffee room and dining
      room located on the fifth floor of the Building provided that Tenant complies
      with any rules and regulations relating to the use of such areas. Tenant and
      its
      employees shall not enter any other part of the Building except when accompanied
      by a member of Landlord’s staff. Tenant shall maintain the confidentiality of
      all nonpublic information that it acquires as a result of or in connection
      with
      its entry into any portion of the Building outside the Premises whether such
      confidential information is obtained visually or orally or in any other manner
      (“ Confidential
      Information ”).
      No
      Confidential Information shall be used or disclosed by the recipient except
      as
      permitted herein. The obligations of this provision shall not apply to: (a)
      information that is in the public domain or comes into the public domain through
      no fault of Tenant; (b) information learned by Tenant from a third party
      entitled to disclose such information; (c) information developed by Tenant
      independently of knowledge or information obtained from Landlord; (d)
      information already known to Tenant before receipt from Landlord, as shown
      by
      prior written records; (e) information released with the written consent of
      Landlord; or (f) information which is required to be disclosed by law,
      regulation or the order of a judicial or administrative authority; provided , however ,
      that
      prior to such disclosure, Tenant shall (i) give Landlord sufficient advance
      written notice to permit it to seek a protective order or other similar order
      with respect to such Confidential Information, and (ii) thereafter disclose
      only
      the minimum Confidential Information required to be disclosed in order to
      comply, whether or not a protective order or other similar order is obtained
      by
      Landlord. Tenant shall require each of its employees who may enter into any
      portion of the Building outside the Premises to acknowledge and agree to be
      bound by this confidentiality provision. Landlord reserves the right to deny
      access to any employee who does not so agree. Tenant shall treat a violation
      of
      this provision by any employee in the same manner as Tenant would treat a
      violation of the employee’s obligations with respect to Tenant’s confidential
      information.




**9.** 4.1  **Shared
      equipment. Tenant shall have access to the shared facilities and equipment
      listed in Addendum A. All users of shared equipment shall be trained by PNDRI
      staff before use and shall be responsible for supplies of said equipment and
      liable for damages stemming from misuse or non-approved use of said
      equipment.**




**9.5**  **Animal
      Facilities** .
      The use
      of any laboratory animals in the Building is subject to approval by Landlord's
      Institutional Animal Care and Use Committee and all applicable laws, regulations
      and policies. Landlord will provide (at Tenant’s request) housing and care of
      laboratory rats and mice only and technical assistance on a fee basis. The
      fee
      is based on the Landlord's animal facility rate schedule for non PNDRI
      scientists. The current rate schedule is attached as Exhibit
      B .
      Landlord may change the rate schedule from time to time on thirty (30) days
      prior written notice. Tenant shall pay all fees on a monthly basis in arrears
      within ten (10) days after receipt of a statement from Landlord. Landlord shall
      provide the following services with respect to the laboratory rodents:
      veterinary care; maintaining any required permits, accreditations or
      certifications necessary for the use thereof; animal husbandry; feeding and
      watering, cleaning and maintaining cages; room cleaning and monitoring and
      disposing of animal waste and dead animals. Tenant shall comply with any rules
      and regulations established by Landlord from time to time with respect to the
      animal facility including any security measures adopted by Landlord. **** Access
      to
      the animal facility by Tenant shall be restricted to authorized personnel,
      which
      shall include but not be limited to principal investigators, investigators,
      and
      technicians approved by Landlord. Landlord may manage the animal care facility
      in its discretion and for its own benefit. Landlord may make repairs or
      alterations to the animal care facility and may take any action in connection
      with the operation, maintenance or preservation of thereof as Landlord deems
      necessary or desirable. The parties do not intend this Lease to create the
      relationship of bailor and bailee with respect to the animals in the animal
      care
      facility. If any of the equipment or machinery in the animal care facility
      ceases to function properly or if service is interrupted for any cause
      whatsoever, Landlord shall use reasonable diligence to restore such service
      or
      facility within a reasonable period of time giving due regard to the
      circumstances and Landlord shall not be liable for damages to either person
      or
      property or for interruption or loss to Tenant’s business nor shall any
      interruption relieve Tenant from any obligations under this Lease. Tenant shall
      assume the full risk of loss with respect to all of Tenant's property including
      but not limited to the animals in the animal care facility and any intellectual
      property associated therewith and all risk of personal injury or death to
      Tenant's employees occurring in or around the animal care facility or arising
      from use thereof by Tenant. In no event shall Landlord be liable for damages
      by
      reason of loss of profits, business interruption or other consequential damage
      incurred by Tenant as a result of Tenant's use of the animal care facility.


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**9.6**  **Other
      Services.** If
      Landlord provides any other services to Tenant including any consultation or
      use
      of any instrumentation or equipment owned by Landlord but not stipulated in
      this
      agreement, Tenant may be required to pay for such services on demand. If any
      consultation or use of Landlord's equipment results in or contributes to the
      creation of any intellectual property rights, then such intellectual property
      shall be jointly owned by Landlord and Tenant.




**10.**  **Assignment
      and Subletting** .




**10.1**  **Transfers
      Requiring Consent.** Tenant
      shall not cause or permit, directly or indirectly, voluntarily or involuntarily,
      any of the following events (individually and collectively, a “ Transfer ”)
      (or
      any amendment to the instrument affecting the same) without in each case first
      obtaining Landlord’s written consent: (a) a sale, assignment,
      hypothecation, mortgage, encumbrance, conveyance or other transfer of this
      Lease
      (or any interest therein); or (b) a sublease of all or any portion of the
      Premises or (c) the use or occupancy of the Premises or any portion thereof
      by anyone other than Tenant. Any sale or other transfer, whether voluntary
      or
      involuntary, by operation of law or otherwise (including by consolidation,
      merger or reorganization), of a majority of the voting stock of Tenant, if
      Tenant is a corporation, or of a majority of the partnership interests in
      Tenant, if Tenant is a partnership, or a majority of membership interests if
      Tenant is a limited liability company shall be deemed to be a Transfer.
      Landlord’s consent to one Transfer shall not be deemed to be a consent to any
      subsequent Transfer, nor shall Landlord’s consent release Tenant from any of its
      obligations under this Lease unless such consent expressly so provides. At
      the
      option of Landlord any Transfer without the consent of Landlord shall be void
      and shall constitute an Event of Default entitling Landlord to terminate this
      Lease and give rise to all other remedies available to Landlord for breach
      of
      this Lease.




**10.2**  **Recapture.** In
      addition to and without limitation upon, the other rights of Landlord, in the
      event of a proposed Transfer by Tenant, Landlord may elect, (by written notice
      delivered to Tenant within thirty (30) days following Tenant’s submission to
      Landlord of a request for consent to a Transfer, to terminate this Lease
      effective as of the date Tenant proposes to enter into such Transfer (or in
      the
      case of a proposed Transfer of less than all of the Premises, terminate this
      Lease as to the portion of the Premises to be Transferred as of the date of
      such
      proposed Transfer).




**10.3**  **Excess
      Rental.** If
      Landlord approves a Transfer under Section 10.1 ,
      then
      Tenant may enter into such Transfer and fifty percent (50%) of all consideration
      received by Tenant from such Transfer in excess of the Basic Rent attributable
      to the affected premises shall be paid promptly to Landlord as Rent hereunder,
      after first deducting all reasonable and customary costs actually incurred
      by
      Tenant to effect such Transfer (such as tenant improvements, brokerage fees,
      advertising costs and the like).


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**10.4**  **General.** Tenant
      shall promptly provide Landlord with any additional information concerning
      the
      proposed transferee (including financial information and detailed information
      regarding the proposed use of the Premises) reasonably requested by Landlord.
      Landlord may charge Tenant a reasonable sum to reimburse Landlord for legal
      and
      administrative costs incurred in connection with reviewing any proposed Transfer
      and Tenant shall provide Landlord with a copy of the assignment or sublease
      agreement. No Transfer shall relieve Tenant of any liability under this Lease.
      Landlord’s consent to any Transfer shall not operate as a waiver of the
      necessity for consent to any subsequent Transfer.




**10.5**  **Bankruptcy.** If this
      Lease is assigned pursuant to the provisions of The Revised Bankruptcy Act,
      11
      U.S.C., Section 101, *et
      seq.* ,
      any and
      all consideration paid or payable in connection with such assignment shall
      be
      Landlord’s exclusive property and paid or delivered to Landlord, and shall not
      constitute the property of Tenant or Tenant’s estate in bankruptcy. Any person
      or entity to whom the Lease is assigned pursuant to the Revised Bankruptcy
      Act
      shall be deemed automatically to have assumed all of Tenant’s obligations under
      this Lease.




**11.**  **Care
      of Premises.** Tenant
      shall keep the Premises in a neat, clean and sanitary condition and shall at
      all
      times preserve them in good condition and repair, ordinary wear and tear or
      damage due to casualty or condemnation excepted. If Tenant shall fail to do
      so,
      Landlord may at its option, after notice to Tenant (except in an emergency
      when
      no notice shall be required), place the Premises into said condition and state
      of repair, and in such case Tenant on demand shall pay or reimburse Landlord
      for
      the costs thereof. Tenant shall reimburse Landlord for the cost of replacing
      all
      broken glass with glass of same or similar quality.




**12.**  **Surrender
      of Premises; Removal of Property.** Subject
      to the terms of Section 15 relating
      to damage and destruction, upon expiration or termination of the Term, whether
      by lapse of time or otherwise (including any holdover period), Tenant at its
      expense shall: (a) remove all of Tenant’s moveable personal property, goods
      and effects and those of all persons claiming under Tenant from the Premises;
      (b) remove all telecommunications and computer networking wiring and
      cabling installed by or on behalf of Tenant, to the extent required by Landlord;
      (c) complete the clean up and decommissioning of the Premises as required
      in Section 6.4.9 above;
      (d) repair and restore the Premises to a condition as good as when received
      by Tenant from Landlord or as thereafter improved, reasonable wear and tear
      excepted; and (e) promptly and peacefully surrender the Premises to
      Landlord. Any property left on the Premises after the expiration or termination
      of the Term shall be deemed to have been abandoned and to have become the
      property of Landlord to dispose of as Landlord deems expedient, and Tenant
      shall
      be liable for all costs associated with the disposal of such property. Tenant
      hereby waives all claims for damages that may be caused by Landlord’s reentering
      and taking possession of the Premises or removing and storing Tenant’s property
      as herein provided, and Tenant shall indemnify and hold harmless Landlord
      therefrom. No such reentry shall be considered or construed to be a forcible
      entry.


8


**13.**  **Alterations.** After
      the Commencement Date, Tenant shall not make any additions, changes, alterations
      or improvements (“ Alterations ”)
      to the
      Premises or the Building, without the prior written consent of Landlord. All
      Alterations shall be at Tenant’s sole cost and shall be performed in a good and
      workmanlike manner and all materials used shall be of a quality comparable
      to
      those in the Premises and the Building and shall be in accordance with plans
      and
      specifications approved by Landlord. All Alterations shall be performed in
      accordance with reasonable requirements established by Landlord, including,
      upon
      Landlord’s request, provision of a lien and completion bond in an amount equal
      to 150% of the cost of the Alterations. In any case, Tenant shall pay Landlord
      a
      reasonable fee to cover Landlord’s costs incurred in reviewing Tenant’s plans
      and specifications. Tenant shall maintain a safe working environment, including
      the continuation of all fire and security protection devices, if any, previously
      installed in the Premises by Landlord. All damages or injury done to the
      Premises or the Building by Tenant or by any persons who may be in or upon
      the
      Premises or the Building with the express or implied consent of Tenant,
      including but not limited to the cracking or breaking of any glass of windows
      and doors, shall be paid for by Tenant and Tenant shall pay for all damage
      to
      the Building caused by acts or omissions of Tenant or Tenant’s officers,
      contractors, subcontractors, agents, invitees, licensees, employees, successors
      or assigns. If Landlord consents to any Alterations by Tenant, the same shall
      not be deemed a warranty as to the adequacy of the design, workmanship or
      quality of materials, and Landlord hereby expressly disclaims any responsibility
      or liability for the same. Landlord shall under no circumstances have any
      obligation to repair, maintain or replace any portion of any Alterations. Except
      as otherwise provided herein, all Alterations, except Tenant’s moveable personal
      property that does not become a part of the Building shall remain in and be
      surrendered with the Premises as a part thereof at the expiration or sooner
      termination of this Lease. Landlord may require Tenant to remove any Alterations
      and to restore the Premises to its condition prior to the completion of any
      Alterations at the expiration or termination of the Term, such work to occur
      at
      Tenant’s expense and Tenant shall repair all damage to the Premises or Building
      occurring as a result of such removal or restoration. If Tenant fails to remove
      any Alterations as required by Landlord or repair any damage occurring during
      such removal, Landlord shall be entitled to remove any Alterations or make
      such
      repairs, at Tenant’s expense. Tenant shall comply with all applicable laws,
      codes and regulations in connection with all Alterations.




**14.**  **Entry
      and Inspection.** Landlord
      at all reasonable times and on reasonable prior notice (which may be oral notice
      to Tenant’s facility manager) (or without notice and at any time in case of
      emergency) may enter the Premises for the purpose of inspection, cleaning,
      repairing, altering or improving the Premises or the Building. Nothing in this Section 14 shall
      impose upon Landlord any obligation not expressly imposed elsewhere in this
      Lease. Landlord shall have the right at reasonable times and on reasonable
      prior
      notice (which may be oral notice to Tenant’s facility manager) to enter the
      Premises for the purpose of showing the Premises to any fee owners, ground
      lessors, holders of encumbrances on the interest of Landlord and any prospective
      purchasers, mortgagees, ground lessors or tenants of the Building or a portion
      thereof. If during the last month of the Term Tenant shall have removed
      substantially all of Tenant’s property and personnel from the Premises, Landlord
      may enter the Premises and repair, alter and redecorate the same without
      abatement of Rent and without liability to Tenant, and such acts shall have
      no
      effect on this Lease.




**15.**  **Damage
      or Destruction** .




**15.1**  **Damage
      and Repair.** In case
      of damage to the Premises by fire or other casualty, Tenant shall notify
      Landlord immediately after Tenant’s learning thereof. If the Building is damaged
      by fire or any other cause Landlord may elect to terminate this Lease by notice
      to Tenant. In the event of such election this Lease shall be deemed to terminate
      on the date set forth in such notice, and Tenant shall surrender possession
      of
      the Premises within a reasonable time thereafter, and the Rent shall be
      apportioned as of the date of Tenant’s surrender and any Rent paid for any
      period beyond such date shall be repaid to Tenant. Alternately, if the Premises
      and/or the common areas of the Building shall be damaged or destroyed by fire
      or
      casualty, Tenant shall have the right to terminate this Lease, provided that
      notice thereof is given to the other party not later than thirty (30) days
      after
      the date of such damage or destruction and, said termination shall be effective
      as of the date of the notice provided hereunder.




If
      Landlord or Tenant does not elect to terminate this Lease then Landlord shall
      restore the Building and the Premises (to the extent of the improvements
      originally provided by Landlord hereunder if such improvements can be legally
      reconstructed under the relevant building codes applicable at the time of
      rebuilding) with reasonable promptness, subject to delays beyond Landlord’s
      control and delays in the making of insurance adjustments by Landlord. To the
      extent and for the period that the Premises are rendered untenantable, Rent
      shall proportionally abate, unless such damage resulted from the act, fault
      or
      neglect of Tenant, Tenant’s officers, contractors, subcontractors, agents,
      employees, or licensees, in which case Rent shall abate only to the extent
      Landlord receives proceeds from any rental income insurance policy to compensate
      Landlord for a loss of Rent hereunder.


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**15.2**  **Business
      Interruption.** No
      consequential or other damages, compensation or claims shall be payable by
      Landlord for inconvenience, loss of business or annoyance arising from any
      damage to or repair or restoration of any portion of the Premises or the
      Building.




**15.3**  **Property
      of Tenant.** Landlord
      will not carry insurance of any kind on any property of Tenant, including
      inventory, equipment, furniture and trade fixtures, and any Alterations and
      Landlord shall not be obligated to repair any damage thereto or replace the
      same.




**16.**  **Indemnification.** Tenant
      shall indemnify, hold harmless and defend Landlord from and against all
      liabilities, damages, suits, obligations, fines, losses, claims, actions,
      judgments, penalties, charges, costs, or expenses, including, without
      limitation, attorneys’ and other professional fees and disbursements, in
      conjunction with any loss of life, personal injury and/or property damage
      arising out of or relating to the occupancy or use by Tenant or any party
      claiming by or through Tenant of any part of the Premises or the Building
      (including the animal facility) occasioned wholly or in part by any act or
      omission of Tenant or its officers, contractors, subcontractors, licensees,
      agents, servants, employees, guests, invitees or visitors, or any assignee
      or
      sublessee or any other party for whom Tenant would otherwise be liable. Landlord
      shall not be liable for any loss or damage to persons or property sustained
      by
      Tenant or other persons, which may be caused by theft, or by any act or neglect
      of any tenant or occupant of the Building or any other third parties, unless
      arising out of Landlord’s negligence or intentional misconduct. To the extent,
      but only to the extent, necessary to fully indemnify Landlord from claims made
      by Tenant or its employees, this indemnity constitutes a waiver of Tenant’s
      immunity under the Washington Industrial Insurance Act, RCW Title 51 as between
      Landlord and Tenant only.




**17.**  **Insurance** .




**17.1**  **Liability
      Insurance.** Throughout the Term Tenant, at its own expense, shall keep and maintain in
      full
      force and effect a policy of commercial general liability insurance including
      a
      contractual liability endorsement covering Tenant’s obligations under Section 16 ,
      insuring Tenant’s activities upon, in and about the Premises and the Building
      against claims of bodily injury or death or property damage or loss with a
      limit
      of not less than Five Million Dollars ($5,000,000) combined single limit per
      occurrence and in the aggregate (per policy year).




**17.2**  **Property
      Insurance.** Throughout the Term Tenant, at its own expense, shall keep and maintain in
      full
      force and effect what is commonly referred to as “Causes of Loss-Special Form”
coverage insurance or its equivalent (including riot and civil commotion,
      vandalism and malicious mischief and earthquake) on all property of Tenant,
      including inventory, equipment, floor, ceiling and wall coverings, furniture
      and
      trade fixtures, and any Alterations to the Premises that are paid for by Tenant
      in an amount not less than the then current replacement value
      thereof.




**17.3**  **Workers’
      Compensation Insurance.** Throughout the Term Tenant, at its own expense, shall keep and maintain in
      full
      force and effect workers’ compensation insurance in an amount equal to at least
      the minimum statutory amount then currently required in the State of
      Washington.




**17.4**  **Other.** Tenant
      shall also obtain such other form or forms of insurance as are generally
      required or obtained for similar projects, as Landlord or any mortgagee of
      Landlord may reasonably require from time to time against the same or other
      insurable hazards which at the time are commonly insured against in the case
      of
      premises similarly situated, due regard being given to the type of buildings
      thereon and their construction, use and occupancy.




10


**17.5**  **Insurance
      Policy Requirements.** All
      insurance required under this Section 17 shall be
      with companies rated AX or better in Best’s Insurance Guide and who are
      qualified to do business in the State of Washington. Tenant may elect to have
      reasonable deductibles in connection with the policy required pursuant to Section 17.2 above.
      No insurance policy required under this Section 17 shall be
      cancelled or materially altered in coverage and each insurance policy shall
      provide that it is not subject to cancellation, nonrenewal, or material
      alteration in coverage except after thirty (30) days prior written notice to
      Landlord. Tenant shall deliver to Landlord prior to the Commencement Date and
      from time to time thereafter, copies of policies of such insurance or
      certificates evidencing the existence and amounts of same and, with the
      exception of the policy required under Section 17.3 ,
      naming
      Landlord and Landlord’s Mortgagee as additional insureds thereunder, and each
      policy or certificate shall expressly provide that the interest of Landlord
      therein shall not be affected by any breach by Tenant of any provision of such
      policy or the policy for which such certificate evidences coverage. Further,
      all
      certificates shall expressly provide that the coverage evidenced thereby shall
      be primary and that any policies carried by Landlord shall be excess and
      noncontributory with such primary insurance. The limits of any required
      insurance policy shall not limit the liability of Tenant under this
      Lease.




**17.6**  **Waiver
      of Subrogation.** Notwithstanding any other provision to the contrary herein, Landlord and Tenant
      release each other, their agents and employees from liability and waive all
      right of recovery against each other for any loss from perils insured against
      under their respective policies for damage caused by fire or other perils
      (including those covered by all risk extended coverage) that are covered by
      insurance, regardless of any fault or negligence. Each party shall use
      reasonable efforts to cause its insurance carriers to consent to the foregoing
      waiver of rights of subrogation against the other party. The waiver of
      subrogation provided herein shall apply to the full extent, but only to the
      extent, that the same shall be valid and enforceable without impairment of
      insurance coverage.




**18.**  **Advertising
      and Signs.** Tenant
      shall not place on the Premises or the Building, any sign or advertising matter
      and shall not place any decoration, letter or other thing of any kind on the
      glass of any window or door of the Premises visible from the exterior thereof
      (except as required by law), without the prior written consent of Landlord.
      Tenant may install approved signage in the main lobby of the Building and
      adjacent to the entrance to the Premises on the fifth floor. With respect to
      any
      sign or advertising matter or decoration approved by Landlord, Tenant at its
      sole cost and expense shall maintain the same in good condition and repair
      at
      all times. Landlord hereby reserves the exclusive right to use for any purpose
      whatsoever the roof and exterior of the walls of the Premises or the Building.
      Landlord reserves the right to remove temporarily Tenant’s signs during any
      period when Landlord repairs, restores, constructs or renovates the Premises
      or
      the Building. Upon the expiration or sooner termination of this Lease, Tenant
      at
      Landlord’s request shall remove all signs, advertising matters or decorations at
      Tenant’s sole cost and expense and repair any resulting damage to the Premises
      and the Building.




**19.**  **Insolvency
      and Liens** .




**19.1**  **Insolvency.** If
      Tenant becomes insolvent or voluntarily or involuntarily bankrupt, or if a
      receiver, trustee or other liquidating officer is appointed for the business
      of
      Tenant, Landlord at its option may terminate this Lease and Tenant’s right of
      possession under this Lease and in no event shall this Lease or any rights
      or
      privileges hereunder be an asset of Tenant in any bankruptcy, insolvency or
      reorganization proceeding, or Landlord may treat such insolvency as a default
      under Section 21 of this
      Lease and invoke any and all remedies available thereunder. In the event of
      an
      assumption or assignment by operation of law under the Federal Bankruptcy Code
      or any state bankruptcy or insolvency law and Landlord elects not to terminate
      this Lease (or is otherwise prevented from electing to terminate this Lease),
      the trustee in assuming this Lease or any assignee thereof shall (a) remedy
      Tenant’s prior default under this Lease, (b) be bound by and assume all of
      the terms and conditions of this Lease, (c) provide adequate assurances of
      future performance of all the terms, conditions and covenants of this Lease,
      which shall include making the following express covenants to the Landlord:
      (1) there is sufficient capital to pay all Rent due under the Lease for the
      entire Term, and (2) assumption of the Lease by any assignee will not cause
      Landlord to be in violation or breach of any provision of any other lease,
      finance agreement, security instrument or operating agreement concerning the
      Building or the Property.


11




**19.2**  **Liens.** Tenant
      shall not permit any lien to be filed against the Premises, the Building or
      the
      property on which it is located by reason of obligations incurred by or on
      behalf of Tenant. Tenant hereby indemnifies and holds Landlord harmless from
      any
      liability from any such lien. If any lien is filed against the Premises, the
      Building or the property by any person claiming by, through or under Tenant,
      Tenant shall upon request of Landlord, at Tenant’s expense, immediately cause
      such lien to be released, or, at Landlord’s election, furnish to Landlord a bond
      in form and amount and issued by a surety satisfactory to Landlord, indemnifying
      Landlord, the Building and the property against all liability, costs and
      expenses, including attorneys’ fees, which Landlord may incur as a result
      thereof. Provided that such bond has been furnished to Landlord, Tenant, at
      its
      sole cost and expense and after written notice to Landlord, may contest, by
      appropriate proceedings conducted in good faith and with due diligence, any
      lien, encumbrance or charge against the Premises arising from work done or
      materials provided to and for Tenant, if, and only if, such proceedings suspend
      the collection thereof from Landlord, Tenant and the Premises, and neither
      the
      Premises, the Building, the property nor any part thereof or interest therein
      is
      or will be in any danger of being sold, forfeited or lost.




**20.**  **Condemnation** .




**20.1**  **Entire
      Taking.** If any
      of the Premises or all of the Building or such portions of the Building as
      may
      be required for the reasonable use of the Premises for the uses permitted
      hereunder, are taken by eminent domain or conveyance in lieu thereof, this
      Lease
      shall automatically terminate as of the date title vests in the condemning
      authority and all Rent shall be paid to that date.




**20.2**  **Partial
      Taking.** In the
      event of a taking of a part of the Building other than the Premises or of a
      portion of the property, and if Landlord determines that the Building should
      be
      restored in such a way as to alter the Premises materially, Landlord may
      terminate this Lease and the term and estate hereby granted by notifying Tenant
      of such termination within sixty (60) days following the date of vesting of
      title; and this Lease and the term and estate hereby granted shall expire on
      the
      date specified in the notice of termination, not less than one hundred twenty
      (120) days after the giving of such notice, as fully and completely as if
      such date were the date hereinbefore set forth for the expiration of the Term,
      and the Rent hereunder shall be apportioned as of such date. Subject to the
      foregoing provisions of this Section 20 ,
      in case
      of taking of a portion of the Building or the Property not required for the
      reasonable use of the Premises for the conduct of Tenant’s business, then this
      Lease shall continue in full force and effect.




**20.3**  **Awards
      and Damages.** Landlord
      reserves all rights to damages to the Premises and all tenant improvements,
      Alterations and attached personal property, for any partial or entire taking
      by
      eminent domain, Tenant hereby assigns to Landlord any right Tenant may have
      to
      such damages or award (except for moveable personal property of Tenant) and
      Tenant shall make no claim against Landlord or the condemning authority for
      damages for termination of the leasehold interest. Tenant shall have the right
      to claim and recover from the condemning authority such compensation as may
      be
      separately awarded to Tenant for any loss of its personal property and removable
      trade fixtures belonging to Tenant, as well as Tenant’s relocation expenses and
      business interruption, but only to the extent that such loss is awarded
      separately in the eminent domain proceeding and not out of or as part of the
      damages recoverable by Landlord.


12




**21.**  **Default;
      Remedies** .




**21.1**  **Events
      of Default** .
      Each of
      the following shall be deemed a default by Tenant and a material breach of
      this
      Lease:




**21.1.1**  Failure
      by Tenant to pay when due any Rent hereunder if such failure shall continue
      for
      a period of three (3) days after written notice thereof has been given to
      Tenant; or




**21.1.2**  Failure
      by Tenant to perform or observe any of the other terms, covenants, conditions,
      agreements or provisions of this Lease if such failure shall continue for a
      period of twenty (20) days after written notice thereof has been given to
      Tenant; provided , however ,
      that if
      any such failure cannot reasonably be cured within such twenty (20) day period,
      then Tenant shall not be deemed to be in default if Tenant commences to cure
      such failure within a reasonable time not to exceed twenty (20) days and for
      as
      long as Tenant is diligently prosecuting the cure thereof; or




**21.1.3**  Failure
      by Tenant to use and occupy the Premises for a period in excess of sixty (60)
      days.




**21.2**  **Landlord
      Remedies for Tenant Default.** If any
      default occurs hereunder, and is continuing after notice from Landlord and
      the
      expiration of any applicable cure period, Landlord may, at any time thereafter
      and without waiving any other rights hereunder, do one or more of the
      following:




**21.2.1**  **Landlord’s
      Reentry.** At its
      option, Landlord may enter the Premises or any part thereof, either with or
      without process of law, and expel, remove or put out Tenant or any other persons
      who may be thereon, together with all personal property found therein; and
      Landlord may terminate this Lease, or it may from time to time, without
      terminating this Lease and as agent of Tenant, relet the Premises or any part
      thereof for such term or terms (which may be for a term less than or extending
      beyond the term hereof), and at such rental or rentals and upon such other
      terms
      and conditions as Landlord in its sole discretion may deem advisable, with
      the
      right to repair, renovate, remodel, redecorate, alter and change the Premises,
      Tenant remaining liable for any deficiency computed as hereinafter set forth.
      In
      the case of any default reentry and/or disposition by summary proceedings or
      otherwise, all Rent shall become due thereupon and be paid up to the time of
      such reentry or dispossession together with such expenses as Landlord may incur
      for attorneys’ fees, advertising expenses, brokerage fees and/or putting the
      Premises in the order in which Tenant was required to surrender the Premises
      or
      preparing the same for rerental, together with interest thereon as provided
      in Section 21.4 hereof,
      accruing from the date of any such expenditure by Landlord. No such reentry
      or
      taking possession of the Premises shall be construed as an election on
      Landlord’s part to terminate this Lease unless a written notice of such
      intention is given to Tenant.




**21.2.2**  **Reletting
      of Premises.** At the
      option of Landlord, any rents received by Landlord from any reletting as
      described in Section 21.2.1 shall be
      applied first to the payment of any indebtedness from Tenant to Landlord other
      than Rent; second, to the payment of any costs and expenses of such reletting
      and including, but not limited to, attorneys’ fees, advertising fees and
      brokerage fees, and to the payment of any repairs, renovations, remodeling,
      redecoration, alterations and changes in the Premises; third, to the payment
      of
      Rent due and to become due hereunder, and, if after so applying said rents
      there
      is any deficiency in the Rent to be paid by Tenant under this Lease, Tenant
      shall pay any deficiency to Landlord monthly on the dates specified herein
      and
      any payment made or suits brought to collect the amount of the deficiency for
      any months shall not prejudice in any way the right of Landlord to collect
      the
      deficiency for any subsequent month. The failure or refusal of Landlord to
      relet
      the Premises or any part or parts thereof shall not release or affect Tenant’s
      liability hereunder, nor shall Landlord be liable for failure to relet, or
      in
      the event of reletting, for failure to collect the rent thereof, but Landlord
      shall use good faith efforts to mitigate its damages to the extent required
      by
      law, and in no event shall Tenant be entitled to receive any excess of net
      rents
      collected over sums payable by Tenant to Landlord hereunder.




13




**21.2.3**  **Termination.** Notwithstanding any reletting without termination as described in Section 21.2.1 ,
      Landlord may at any time elect to terminate this Lease for such previous breach
      and default. Should Landlord at any time terminate this Lease by reason of
      any
      default, in addition to any other remedies it may have, Landlord may recover
      from Tenant the present value of the entire amount of Rent reserved by this
      Lease for the balance of the Term, as it may have been extended, over the then
      fair market rental value of the Premises for the same period, plus all expenses,
      including court costs and attorneys’ fees, incurred by Landlord in the
      collection of the same.




**21.3**  **Cumulative
      Remedies.** All
      rights and remedies of Landlord herein enumerated shall be cumulative, and
      none
      shall exclude any other right or remedy allowed by law or equity.




**21.4**  **Late
      Payments.** All Rent
      not paid on the due date shall bear interest from the date due at the rate
      of
      fourteen percent (14%) per annum or the maximum permitted by law, whichever
      is
      less. In addition to any interest that may be charged hereunder, if Tenant
      has
      been more than three (3) days late in any payment of Rent, then Landlord, at
      its
      option, may collect from Tenant a late charge for the collection in an amount
      equal to five percent (5%) of the amount due.




**22.**  **Subordination
      to Mortgage.** This
      Lease is and shall be subordinate to any mortgage or deed of trust placed at
      any
      time on the Building or the Property by Landlord and to any and all advances
      to
      be made thereunder and to interest thereon and all modifications, renewals
      and
      replacements or extensions thereof (“ Landlord’s
      Mortgage ”),
      and
      Tenant shall attorn to the holder of any Landlord’s Mortgage or any person or
      persons purchasing or otherwise acquiring the Building, the Property or the
      Premises at any sale or other proceeding under any Landlord’s Mortgage. If the
      holder or prospective holder of any Landlord’s Mortgage wishes to have this
      Lease as a prior lien to the Landlord’s Mortgage, it shall be so deemed upon the
      holder thereof so notifying Tenant. Tenant shall properly execute and deliver
      within ten (10) days after written notice any documents Landlord or the holder
      of any Landlord’s Mortgage may reasonably require to carry out the provisions of
      this Section. If, in connection with obtaining financing for the Property or
      the
      Building, any holder of a Landlord’s Mortgage shall request reasonable
      modifications in this Lease as a condition to such financing, Tenant shall
      not
      withhold, delay or defer its consent thereto, provided that such modifications
      do not increase Tenant’s financial obligations hereunder or materially increase
      Tenant’s other obligations or restrict Tenant’s rights to use the
      Premises.




**23.**  **Holdover.** If
      Tenant shall, with the written consent of Landlord, hold over beyond the
      expiration of the Term, such tenancy shall be deemed a month-to-month tenancy
      that may be terminated as provided by applicable state law. During such tenancy
      Tenant shall be bound by all the terms, covenants and conditions as herein
      specified as far as applicable, except Basic Rent, which shall be one hundred
      fifty percent (150%) of the Basic Rent due prior to the expiration of the
      Term.




**24.**  **Agent.** Landlord
      may at any time appoint an agent (“Agent”) in all matters concerning this Lease,
      and Tenant, if so notified by Landlord in writing, shall pay all Rent and give
      any notices hereunder to Agent at Landlord’s Address set forth on the signature
      page of this Lease. As long as such agency shall exist, each and every term
      and
      provision of this Lease that is in any way beneficial to Landlord, including
      every stipulation imposing or limiting liability, shall inure to the benefit
      of
      Agent and its agents and shall be applicable to Agent and its agents in the
      same
      manner as fully and with the same effect as Landlord.


14




**25.**  **Notices.** All
      notices under this Lease shall be in writing and delivered in person (by a
      party
      or by a messenger service that provides proof of delivery), sent by nationally
      recognized overnight courier, or sent by registered or certified mail, return
      receipt requested, postage prepaid to Landlord and to Tenant at the addresses
      set forth on the signature page of this Lease and to the holder of any
      Landlord’s Mortgage at such place as such holder shall specify to Tenant in
      writing; or to such other addresses as may from time to time be designated
      by
      any such party in writing (except that, after the Commencement Date, any service
      of process may be served on Tenant at the Premises). Notices mailed as aforesaid
      shall be deemed given at the earlier of three (3) business days after the date
      of such mailing or upon the date of receipt or refusal of delivery.




**26.**  **Costs
      and Attorneys’ Fees.** If
      Tenant or Landlord shall bring any action or commence any arbitration proceeding
      arising out of this Lease, the nonprevailing party in such action or arbitration
      shall reimburse the prevailing party for all reasonable attorneys’ fees
      (including court costs and disbursements) incurred in such suit or
      arbitration, at trial, arbitration and on appeal, and such attorneys’ fees shall
      be deemed to have accrued on the commencement of such action or
      arbitration.




**27.**  **Estoppel
      Certificates.** Tenant,
      shall, from time to time, upon written request of Landlord, execute, acknowledge
      and deliver to Landlord or its designee a written statement certifying,
      representing and warranting: (a) the date this Lease was executed and the
      date it expires; (b) the Commencement Date and the date Tenant accepted the
      Premises; (c) the amount of Basic Rent and any then applicable Additional
      Rent and any other sums payable under the Lease and date to which such rent
      and/or other sums have been paid; and (d) certifying to the best of its
      knowledge: (i) that this Lease is in full force and effect and has not been
      assigned, supplemented or amended in any way (or specifying the date and terms
      of any agreement so affecting this Lease); (ii) that this Lease represents
      the entire agreement between the parties as to this tenancy (or specifying
      the
      date and terms of any other agreements as to this tenancy); (iii) that all
      conditions under this Lease to be performed by the Landlord have been satisfied
      (or specifying any such unsatisfied conditions and the extent to which such
      conditions are unsatisfied); (iv) that there are no existing claims,
      defenses or offsets that the Tenant has against the enforcement of this Lease
      by
      the Landlord (or specifying the nature and amount of any such claims, defenses
      or offsets); (v) that no Rent has been paid more than one month in advance
      (or specifying the amount and payment dates of any Rent that has been so paid);
      (vi) the amount of the Security Deposit held by Landlord (if any); and
      (vii) any other factual information or items reasonably requested by
      Landlord. It is intended that any such statement delivered pursuant to this Section 27 may be
      relied upon by Landlord and any prospective purchaser of, or current or
      prospective holder of any mortgage upon Landlord’s interest in, the Building
      and/or the Property. If Tenant shall fail to provide such estoppel certificate
      within ten (10) days of receipt by Tenant of a written request by Landlord
      as herein provided, Tenant shall be deemed to have given such certificate as
      above provided without modification and shall be deemed to have admitted the
      accuracy of any information supplied by Landlord to any prospective purchaser
      or
      mortgagee and to have certified that this Lease is in full force and effect,
      that there are no uncured defaults in Landlord’s performance, that the Security
      Deposit is as stated in the Lease, and that not more than one month’s Rent has
      been paid in advance.




**28.**  **Limitation
      of Liability.** Notwithstanding any other Lease provision, all covenants, undertakings and
      agreements herein made on the part of Landlord are made and intended not as
      personal covenants, undertakings and agreements for the purpose of binding
      Landlord personally or the assets of Landlord except Landlord’s interest in the
      Building, but are made and intended for the purpose of binding only the
      Landlord’s interest in the Building, as the same may from time to time be
      encumbered. No personal liability or personal responsibility is assumed by,
      nor
      shall at any time be asserted or enforceable against Landlord or its partners,
      shareholders, directors and officers or their respective heirs, legal
      representatives, successors or assigns on account of this Lease or on account
      of
      any covenant, undertaking or agreement of Landlord contained in this
      Lease.


15




**29.**  **Transfer
      of Landlord’s Interest.** In the
      event of any transfer or transfers of Landlord’s interest in the Premises or in
      the Building, other than a transfer for security purposes only, the transferor
      shall be automatically relieved of any and all obligations and liabilities
      on
      the part of Landlord accruing from and after the date of such transfer. Tenant
      agrees to attorn to the transferee, such attornment shall be deemed to occur
      automatically without further agreement of Tenant.




**30.**  **Nonwaiver.** Waiver
      by Landlord of any term, covenant or condition herein contained or any breach
      thereof shall not be deemed to be a waiver of such term, covenant, or condition
      or of any subsequent breach of the same or any other term, covenant or condition
      herein contained. The subsequent acceptance of any Rent hereunder by Landlord
      shall not be deemed to be a waiver of any preceding breach by Tenant of any
      term, covenant or condition of this Lease, other than the failure of Tenant
      to
      pay the particular Rent so accepted, regardless of Landlord’s knowledge of such
      preceding breach at the time of acceptance of such Rent.




**31.**  **Quiet
      Possession.** Landlord
      warrants that so long as Tenant is not in default under this Lease beyond any
      applicable cure period, Tenant’s quiet possession of the Premises during the
      Term shall not be disturbed by Landlord or others claiming through
      Landlord.




**32.**  **General** .




**32.1**  **Headings.** Titles
      or captions to sections of this Lease are not a part of this Lease and shall
      have no effect upon the construction or interpretation of any part
      hereof.




**32.2**  **Successors
      and Assigns.** All of
      the covenants, agreements, terms and conditions contained in this Lease shall
      inure to and be binding upon Landlord and Tenant and their respective heirs,
      executors, administrators, successors and permitted assigns, but this shall
      not
      be construed as permitting any assignment by Tenant not otherwise permitted
      hereunder.




**32.3**  **Brokers.** Tenant
      represents and warrants to Landlord that it has not engaged any broker, finder
      or other person who would be entitled to any commission or fees from Landlord
      in
      respect of the negotiation, execution or delivery of this Lease, and Tenant
      shall indemnify and hold Landlord harmless from and against any loss, cost,
      liability or expense incurred by Landlord as a result of any claim asserted
      by
      any such broker, finder or other person based on any arrangements or agreements
      made or alleged to have been made by or on behalf of Tenant.




**32.4**  **Entire
      Agreement.** This
      Lease, including the Exhibits attached hereto, contains all covenants and
      agreements between Landlord and Tenant relating in any manner to the leasing,
      use and occupancy of the Premises and Tenant’s use of the Building and the
      Property and other matters set forth in this Lease. No prior agreements or
      understandings pertaining to the same shall be valid or of any force or effect
      and the covenants and agreements of this Lease shall not be altered, modified
      or
      added to except in writing signed by Landlord and Tenant.




**32.5**  **Severability.** Any
      provision of this Lease that shall prove to be invalid, void or illegal shall
      in
      no way affect, impair or invalidate any other provision hereof and the remaining
      provisions hereof shall remain in full force and effect.




**32.6**  **Force
      Majeure.** Time
      periods for Landlord’s or Tenant’s performance under any provisions of this
      Lease shall be extended for periods of time during which Landlord’s or Tenant’s
      performance is prevented due to circumstances beyond such party’s control,
      including without limitation, strikes, embargoes, shortages of labor or
      materials, governmental regulations, acts of God, war or other strife.
      Notwithstanding the foregoing, this provision shall not excuse or delay the
      due
      date of any payment of Rent or other sum owed by either party
      hereunder.


16




**32.7**  **Changes
      to Building.** Landlord
      may at its option make any repairs, alterations, additions or improvements
      that
      Landlord may deem necessary or advisable for the preservation, safety or
      improvement of the Building, so long as Tenant has reasonable access to the
      Premises. If the repairs, alterations, additions or improvements involve work
      within the Premises then Landlord shall notify Tenant prior to commencing such
      work (except in an emergency). Landlord shall have the right from time to time
      without thereby creating an actual or constructive eviction or incurring any
      liability to Tenant, to renovate, repair, replace, and/or change the arrangement
      or location of any of the following: sidewalks, terraces, landscaping, loading
      and/or delivery areas, parking areas, lobbies, entrances, passageways, doors
      and
      doorways, corridors, stairs, toilets and other common areas of the Building,
      mechanical, cooling, heating, ventilation, security, electrical, lighting,
      plumbing and other systems servicing the Building, and other similar common
      service portions of the Building. Landlord shall incur no liability to Tenant,
      nor shall Tenant be entitled to any abatement of Rent on account of any noise,
      vibration, or other disturbance to Tenant’s business in the Premises (provided
      that Tenant is not denied access to the Premises) that shall arise out of
      the performance by Landlord of any aforesaid improvements or renovations at
      or
      to the Building. Landlord may change the name of the Building at any
      time.




**32.8**  **Governing
      Law.** This
      Lease shall be governed by and construed in accordance with the laws of the
      State of Washington.




**32.9**  **Authority.** The
      individual executing this Lease on behalf of Tenant represents and warrants
      that
      he/she is duly authorized to execute and deliver this Lease on behalf of the
      Tenant in accordance with a duly adopted resolution of the board of directors
      of
      Tenant and in accordance with Tenant’s bylaws, and that this Lease is binding
      upon Tenant in accordance with its terms. Tenant shall provide evidence of
      Tenant’s authority reasonably satisfactory to Landlord.




**32.10**  **Time
      of Essence.** Time is
      of the essence of this Lease.




**32.11**  **Waiver
      of Jury Trial.** The
      parties hereto waive any right to a trial by jury in any action or proceeding
      based upon, or related to, the subject matter of this Lease. This waiver is
      knowingly, intentionally and voluntarily made by Tenant, and Tenant acknowledges
      that neither Landlord nor any person acting on behalf of Landlord has made
      any
      representations of fact to induce this waiver of trial by jury or in any way
      to
      modify or nullify its effect. Tenant further acknowledges that Tenant has been
      represented (or has had the opportunity to be represented) in the signing
      of this Lease and in the making of this waiver by independent legal counsel,
      selected of Tenant’s own free will, and that Tenant has had the opportunity to
      discuss this waiver with counsel. Tenant further acknowledges that Tenant has
      read and understands the meaning and ramifications of this waiver provision,
      and, as evidence of this fact, signs its initials.




**32.12**  **Execution
      in Counterparts.** This
      Lease may be executed in two or more counterparts, each of which shall
      constitute an original and all of which shall be one and the same
      agreement.




**32.13**  **Binding
      on Landlord.** Submission of this Lease for examination, even though executed by Tenant, shall
      not bind Landlord in any manner, and no lease or other obligation on the part
      of
      Landlord shall arise until this Lease is executed and delivered by Landlord
      to
      Tenant.




**32.14**  **Recording.** Neither
      this Lease nor any memorandum hereof shall be recorded except upon request
      by
      Landlord.


17




**32.15**  **Computation
      of Time.** The word
“day” means “calendar day” herein and the computation of time shall include all
      Saturdays, Sundays and holidays for purposes of determining time periods
      specified herein.




**33.**  **Parking.** There is
      no parking included with this lease.




**34.**  **Representation.** Tenant
      represents and warrants that Tenant, all persons and entities owning (directly
      or indirectly) an ownership interest in Tenant and all guarantors of all or
      any
      portion of the Lease: (i) are not, and shall not become, a person or entity
      with whom Landlord is restricted from doing business with under regulations
      of
      the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury
      (including, but not limited to, those named on OFAC’s Specially Designated and
      Blocked Persons list) or under any statute, executive order (including, but
      not
      limited to, the September 24, 2001 Executive Order Blocking Property and
      Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
      Terrorism), or other governmental action; (ii) are not knowingly engaged in,
      and
      shall not engage in, any dealings or transaction or be otherwise associated
      with
      such persons or entities described in (i) above; and (iii) are not, and
      shall not become, a person or entity whose activities are regulated by The
      International Money Laundering Abatement and Financial Anti-Terrorism Act of
      2001 or the regulations or orders thereunder




IN
      WITNESS WHEREOF, the Landlord and the Tenant have executed this Lease as of
      the
      day and year first above written.


**LANDLORD:**
              PACIFIC
                  NORTHWEST RESEARCH INSTITUTEa
                  Washington nonprofit corporationBy
              /s/Its
              Director
                  of Facilites
  Address:
              720
                  BroadwaySeattle,
                  WA 98122Attention:
                  Director of FinanceTelephone:
                  (206) 726-1220Facsimile:
                  (206) 726-1217
  **TENANT:**
              Pacific
                  Biometrics, Inc,a
                  Washington corporationBy
              Ron
                  HelmIts
              CEO
  Address:
              720
                  BroadwaySeattle,
                  WA 98122Attention:
                  John JensenTelephone:
                  (206) 298-0068Facsimile:
                  (206) 298-9838




18


**EXHIBIT
      A**





**SITE
      PLAN**











6 th Floor,
      North side central. Lab space #1 and office, totaling 522 rentable square
      feet.


19


ADDENDUM
      A


Shared
      equipment and facilities addendum





Included
      in this agreement is access to the following:


•
Shared
      spaces:


o
            Two
                conference rooms


o
            Lunch
                room with refrigerator, sink, microwave and
                lockers


o
            Cold
                rooms


o
            Darkrooms


•
Shared
      equipment:


o
            Gamma
                counter


o
            Scintillation
                counter


o
            Confocal
                microscope


o
            Ultracentrifuges


o
            Flow
                cytometer


o
            Sequencers


o
            Ice
                machines


o
            Various
                small equipment





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




20