Exhibit 10.76


 


LEASE


 


by and between


 


BMR-3450 MONTE VILLA PARKWAY LLC,


a Delaware limited liability company


 


and


 


AVI BIOPHARMA, INC.,


an Oregon corporation


 

















 


LEASE


 


THIS
LEASE (this “Lease”) is entered into as of this 24th day of July, 2009 (the “Execution Date”),
by and between BMR-3450 MONTE VILLA PARKWAY LLC, a Delaware limited liability
company (“Landlord”), and AVI BIOPHARMA, INC., an Oregon corporation (“Tenant”).


 


RECITALS


 


A.            WHEREAS, Landlord owns certain real
property described on Exhibit A-1 attached hereto (the “Property”)
and the improvements thereon located at 3450 Monte Villa Parkway in Bothell,
Washington, including the building located thereon (the “Building”) in
which the Premises (as defined below) are located; and


 


B.            WHEREAS, Landlord wishes to lease to
Tenant, and Tenant desires to lease from Landlord, certain premises (the “Premises”)
located in 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-2
attached hereto for use by Tenant in accordance with the Permitted Use (as
defined below) and no other uses.  The Property
and all landscaping, parking facilities and other improvements and
appurtenances related thereto, including, without limitation, 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, without limitation,
driveways, sidewalks, parking areas, landscaped areas, service corridors,
stairways, elevators, public restrooms and public lobbies, are hereinafter
referred to as “Common Area.”


 


1.2.          In addition, and for
no additional charge, Tenant shall have the right to access and use Tenant’s
Pro Rata Share (as defined below) of the roof area of the Building for
placement and installation of communication and satellite systems and antennas,
subject to (a) approval (if required by Applicable Laws (as defined
below)) and (b) Landlord’s reasonable approval of the actual location and
acceptable screening of the same for aesthetic purposes.  Notwithstanding the foregoing, Tenant may
only penetrate the roof membrane using a contractor acceptable to Landlord in
its sole and absolute discretion, and shall indemnify, save, defend and hold
Landlord harmless from and against any Claims (as defined below) arising out of
damage to the Building or a voiding of the roof warranty due to Tenant’s
activities.  To the extent that signals
from Tenant’s rooftop equipment conflict with signals of Landlord’s or other
tenants’ rooftop equipment, Tenant shall promptly modify at its sole cost and
expense such equipment so that any party


 

















 


whose
equipment was installed prior to Tenant’s (or if Tenant changes its signals or
frequency after initial installation, any party whose use of its signal or
frequency predates Tenant’s use of its altered signal or frequency) shall not
suffer interference from Tenant’s equipment. 
Tenant shall remove all such equipment from the roof upon the expiration
or earlier termination of this Lease, and shall promptly (and in any case prior
to such expiration or earlier termination) repair all damage resulting from
such removal.


 


1.3.          In addition, and for
no additional charge, Tenant shall have the right to exclusive use of up to two
(2) adjacent full-size parking stalls behind the rear of the Premises (the
location of such stalls to be subject to Landlord’s reasonable consent; and provided
that such stalls shall constitute part of, and not be in addition to, Tenant’s
Parking Share (as defined below)) for the purposes of Tenant installing a
temporary storage shed (at Tenant’s sole expense), in which Tenant may store
and secure its personal property at Tenant’s sole risk and in accordance with
Applicable Laws and this Lease, including without limitation barrels with
chemical waste.


 


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.


 


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 (as
defined below) are both subject to adjustment as provided in this Lease.


 




	
  Definition or Provision

  	
   

  	
  Means the Following (As of the Term

  Commencement Date)

  
	
  Rentable Area of Premises

  	
   

  	
  19,108 square feet

  
	
  Rentable Area of Building

  	
   

  	
  51,000 square feet

  
	
  Tenant’s Pro Rata Share of
  Building

  	
   

  	
  37.47 %

  






 


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


 


2

















 


	
  S.F. of Rentable Area

  	
   

  	
  Per S.F. of Rentable Area

  	
   

  	
  Total Monthly

  	
   

  	
  Total Annual

  
	
  19,108

  	
   

  	
  $27 annually

  	
   

  	
  $

  	
  42,993

  	
   

  	
  $

  	
  515,916

  
									



 


	
   

  	
   

  	
   

  
	
  2.4.

  	
   

  	
  Estimated
  Term Commencement Date:  September 1,
  2009

  
	
   

  	
   

  	
   

  
	
  2.5.

  	
   

  	
  Estimated
  Term Expiration Date:  November 30,
  2014

  
	
   

  	
   

  	
   

  
	
  2.6.

  	
   

  	
  Security
  Deposit: $85,986, subject to increase in accordance with the terms hereof

  
	
   

  	
   

  	
   

  
	
  2.7.

  	
   

  	
  Permitted
  Use:  General office and laboratory use
  in conformity with Applicable Laws (as defined below)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.8.

  	
   

  	
  Address for Rent
  Payment:

  	
   

  	
  BMR-3450 Monte Villa
  Parkway LLC

  
	
   

  	
   

  	
   

  	
   

  	
  P.O. Box
  511287

  
	
   

  	
   

  	
   

  	
   

  	
  Los
  Angeles, California 90051-7842

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.9.

  	
   

  	
  Address
  for Notices to Landlord:

  	
   

  	
  BMR-3450
  Monte Villa Parkway LLC

  
	
   

  	
   

  	
   

  	
   

  	
  17190
  Bernardo Center Drive

  
	
   

  	
   

  	
   

  	
   

  	
  San
  Diego, California 92128

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Vice President, Real Estate Counsel

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.10.

  	
   

  	
  Address
  for Notices to Tenant:

  	
   

  	
  The
  Premises

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  David Boyle, C.F.O.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  With
  a copy to Leslie Hudson, C.E.O.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Except prior to
  Commencement Date at:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  AVI
  BioPharma, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
  4575
  SW Research Way, Suite 200

  
	
   

  	
   

  	
   

  	
   

  	
  Corvallis,
  Oregon 97333

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  David Boyle, C.F.O.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  With a copy to Leslie Hudson, C.E.O.

  
							



 


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


 


Exhibit A-1                                     Property Legal
Description


Exhibit A-2                                     Premises Space
Plan


Exhibit B                                                 Work Letter


Exhibit C                                                 Acknowledgement
of Term Commencement Date and Term Expiration Date


Exhibit D                                                Form of
Access & Confidentiality Agreement


Exhibit E                                                  Form of
Letter of Credit


Exhibit F                                                  Rules and
Regulations


 


3

















 


Exhibit G                                                 Major Competitors


Exhibit H                                                Tenant’s
Personal Property


Exhibit I                                                     Form of
Estoppel Certificate


Exhibit J                                                    Form of
Consent to Sublease for Entire Premises


Exhibit K                                                Form of
Consent to Sublease for Portion of Premises


 


3.                                       Term.


 


3.1.          The actual term of this Lease shall be
approximately sixty-three (63) months (the “Term”), starting on the
actual Term Commencement Date (as defined in Section 4.1) and
ending on the dated that is the final day of the month in which the sixty-third
(63rd) monthly
anniversary of the Term Commencement Date occurs (such date, the “Term Expiration Date”), subject to
earlier termination of this Lease as provided herein.


 


3.2.          Tenant shall have
the one-time option to terminate this Lease (the “Termination Option”)
effective on the date (the “Permitted Early Termination Date”) that is
three (3) years after the Term Commencement Date (except for those
provisions that expressly survive the expiration or earlier termination of this
Lease) upon at least twelve (12) months’ prior written notice to Landlord (the “Termination
Notice”); provided that Tenant pay to Landlord at the time Tenant
delivers to Landlord the Termination Option a termination fee equal to Two Hundred Sixty-Six Thousand Two
Hundred Forty-Seven and 02/100 Dollars ($266,247.02), which Landlord
and Tenant agree equals the sum of (a) any unamortized TI Allowance, (b) any
unamortized broker fees or commissions and (c) one month of Base Rent at
the rate in effect at the time of Tenant’s exercise of the Termination Option
(collectively, the “Termination Fee”). 
Landlord and Tenant agree that the aforementioned Termination Fee is
correctly computed given the parties’ current knowledge, and shall not be
revised in the event that either party later asserts that the Termination Fee
was incorrectly calculated or based on knowledge that was incorrect or has
evolved.  Unamortized TI Allowance and
unamortized broker fees or commissions each shall be calculated on a straight
line amortization over the initial term of sixty (60) months.  For the sake of clarity, the Termination Fee
shall not be required to be paid in connection with any other early termination
right of Tenant under this Lease.


 


4.                                       Tenant
Improvements.


 


4.1.          The “Term
Commencement Date” shall be the earlier of (a) the Estimated Term
Commencement Date (subject to extensions for Force Majeure or Landlord’s Delay
(as those terms are defined below)) and (b) the day the Tenant
Improvements are Substantially Complete. 
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.  “Force Majeure” means 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 


 


4

















 


Tenant,
as the case may be; or governmental regulation, moratorium or other
governmental action, inaction or delay.  “Landlord’s
Delay” means Landlord’s inability, despite the exercise of reasonable
diligence or by any other cause, including Landlord’s negligence, to furnish
any utility or service, to (y) respond within the timeframes required by
this Lease (including the Work Letter) to (i) Tenant’s requests for
consent or approval in accordance with the Work Letter or (ii) Advance
Requests submitted in accordance with the Work Letter or (z) deliver the
Premises to Tenant upon the Execution Date. 
In addition, if Landlord fails to deliver possession of the Premises to
Tenant by October 1, 2009, for any reason (including Force Majeure), then
Tenant shall thereafter have the right to terminate this Lease (except for
those provisions that, by their express terms, survive the expiration or
earlier termination hereof) without paying any Termination Fee; provided
that Landlord shall have ten (10) days after receipt from Tenant of notice
of such failure to deliver possession of the Premises to Tenant to so deliver
the Premises, and if Landlord so delivers, Tenant shall have no right to
terminate the Lease pursuant to this Section.


 


4.2.          Landlord agrees that it shall permit
Tenant to enter upon the Premises upon the Execution Date and prior to the Term
Commencement Date for the purpose of installing improvements or the placement
of personal property and to use the office portion of the Premises for
operating Tenant’s business therefrom, Tenant shall furnish to Landlord
evidence satisfactory to Landlord that insurance coverages required of Tenant
under the provisions of Article 24 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 (as defined below)). 
To the extent that Landlord’s ability to fulfill its obligations under
this Lease (including, without limitation, with respect to the provision of
utilities and utility metering pursuant to Article 17) are
adversely affected by Tenant’s use or occupancy of the Premises pursuant to
this Section, Landlord shall not be deemed to be in breach of such obligations.


 


4.3.          Tenant shall cause
to be constructed the tenant improvements in the Premises (the “Tenant
Improvements”) pursuant to the Work Letter attached hereto as Exhibit B
(the “Work Letter”) at a cost to Landlord not to exceed (a) Three
Hundred Eighty-Two Thousand One Hundred Sixty Dollars ($382,160) (based upon Twenty
Dollars ($20) per rentable square foot) (the “TI Allowance”).  The TI Allowance may be applied to the costs
of (n) construction (including, without limitation, Tenant’s Signage (as
defined below) and the installation of utility meters in accordance with this
Lease), (o) project review by Landlord (for which Tenant shall pay
Landlord’s actual, out-of-pocket expenses reasonably incurred in connection
with Landlord’s plan review, coordination, scheduling, oversight and
supervision thereof, up to a maximum of three percent (3%) of the cost of the
Tenant Improvements, including the TI Allowance), (p) space planning,
architect, engineering and other related services performed by third parties
unaffiliated with Tenant, (q) building permits and other taxes, fees,
charges and levies by Governmental Authorities (as defined below) for permits
or for inspections of the Tenant Improvements, and (r) costs and expenses
for labor, material, equipment and fixtures. 
In no event shall the TI Allowance be used for (v) the cost of work
that is not authorized by the Approved Plans (as defined in the Work Letter) or
otherwise approved in writing by Landlord, (w) payments to Tenant or any
affiliates of Tenant, (x) the purchase of any furniture, personal property
or other non-building system equipment (other than utility meters installed in
accordance with this Lease and any other items specifically mentioned in the
Approved Plans (as


 


5

















 


defined
below), (y) costs resulting from any default by Tenant of its obligations
under this Lease or (z) costs actually recovered by Tenant from a third
party (e.g., insurers, warrantors, or tortfeasors); provided that Tenant
shall use commercially reasonable efforts to recover such costs from third
parties.  Notwithstanding the foregoing,
under no circumstances shall Tenant be required to construct any of the Tenant
Improvements, even if part of the Approved Plans, so long as such failure to
construct does not materially adversely affect the Tenant Improvements
constructed by Tenant.


 


4.4.          To the extent that
the total projected cost of the Tenant Improvements (as projected by Landlord)
exceeds the TI Allowance (such excess, the “Excess TI Costs”), Tenant
shall pay pari passu  with Landlord any Excess TI Costs.  If the actual Excess TI Costs are less than
the Excess TI Costs paid by Tenant pari passu with
Landlord, Landlord shall credit Tenant with the overage paid by Tenant against
Tenant’s Rent (as defined below) obligations, beginning after Landlord has
completed the final accounting for the Tenant Improvements.  In no event shall any unused TI Allowance
entitle Tenant to a credit against Rent payable under this Lease.  Tenant shall deliver to Landlord  (i) a certificate of occupancy for the
Premises suitable for the Permitted Use and (ii) a Certificate of
Substantial Completion in the form of the American Institute of Architects
document G704, executed by the project architect and the general contractor.


 


4.5.          Prior to entering
upon the Premises, Tenant shall furnish to Landlord evidence satisfactory to
Landlord that insurance coverages required of Tenant under the provisions of Article 24
are in effect, and such entry shall be subject to all the terms and conditions
of this Lease.


 


4.6.          Landlord and Tenant
shall mutually agree upon the selection of the architect, engineer, general
contractor and major subcontractors, and Landlord and Tenant shall each
participate in the review of the competitive bid process.  Landlord agrees that it cannot condition its
consent on a requirement that Tenant use union labor.  Landlord further acknowledges that it has
preapproved the contractors listed on Attachment 1 to the Work Letter.


 


4.8           Promptly after the Execution Date, Tenant shall install meters
for all water, gas, heat, light, power, telephone, internet service, cable
television, other telecommunications and other utilities supplied to the
Premises for use during Tenant’s construction of the Tenant Improvements and
until the Term Commencement Date, and Tenant shall pay all such utility
charges, together with any fees, surcharges and taxes thereon.  Tenant may use the TI Allowance for costs properly incurred in connection with the
installation of such meters.


 


5.                                       Condition of
Premises.  Tenant
acknowledges that 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 (a) it is fully
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) except as
otherwise agreed in this Lease, 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. 
Tenant’s taking of possession of the


 


6

















 


Premises
shall, except as otherwise agreed to in writing by Landlord and Tenant,
conclusively establish that the Premises, the Building and the Project were at
such time in good, sanitary and satisfactory condition and repair.  Notwithstanding anything in this Article to
the contrary, Landlord shall deliver the Premises to Tenant with Building
systems serving the Premises in good, operational condition.


 


6.                                       Sales Tax.


 


6.1.          Retail
sales tax otherwise applicable to portions of construction of the Building and
Tenant Improvements and other improvements made or requested by Tenant may be
eligible for deferral pursuant to RCW 82.63 (the “Sales Tax Deferral”)
as a result of the uses of the Premises
intended by Tenant. Landlord shall make application with the Washington State
Department of Revenue (the “Revenue Department”) for the Sales Tax
Deferral with respect to work to be performed and paid for by Landlord pursuant
to this Lease.  When the Revenue Department has
determined the final amount of the sales tax that Landlord may defer pursuant
to the Sales Tax Deferral program, Landlord shall provide Tenant with written
notice of such amount.  The Sales Tax
Deferral shall be credited to Tenant through the Base Rent, with Landlord
agreeing not to charge against the TI Allowance the amount of the Sales Tax
Deferral.


 


6.2.          Tenant agrees that if a subsequent
audit by the Revenue Department determines that (a) because Tenant’s use
of the Premises has changed or (b) for any other reason, any of the sales
tax previously deferred pursuant to the Sales Tax Deferral is due and owing to
the Revenue Department (except due to Landlord’s negligent acts or omissions or
willful misconduct), Tenant shall pay 
(including any penalties and interest thereon) directly to the Revenue
Department and provide evidence of such payment to  Landlord within ten (10) days following
the date Landlord notifies Tenant of any such determination by the Revenue
Department, ; provided that Tenant may conduct a good faith contest of
any such determination by the Revenue Department in accordance with appropriate
administrative procedures so long 
as  payment of the amount claimed
by the Revenue Department is stayed during the conduct of the contest.  If Tenant desires to dispute the amount
claimed by the Revenue Department to be due but payment of such amount is not
stayed during the conduct of the proceedings, Tenant shall pay the amount due
but may indicate it is paying such amount under protest.


 


6.3.          Landlord shall reasonably cooperate
with and assist Tenant in any challenges or audits to the Sales Tax Deferral
benefit, at no cost to Landlord. 
Landlord shall promptly notify Tenant of any such action of which
Landlord becomes aware, and shall promptly forward any correspondence regarding
any such challenge or audit.  Tenant
shall have the right to contest or review on its own behalf (but not on
Landlord’s behalf) any proceedings regarding the Sales Tax Deferral benefit
that may be instituted, either before, during or after the Term.  Landlord shall, on a timely basis, execute
all reasonably 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, with counsel engaged by Tenant and reasonably acceptable to
Landlord.


 


7

















 


7.                                       Rentable Area.


 


7.1.          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, Building or
Project, as applicable.


 


7.2.          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.


 


7.3.          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, but not limited to, that
portion of the Building devoted to corridors, equipment rooms, mechanical
equipment areas, restrooms, elevator lobby, atrium and mailroom.


 


8.                                       Rent.


 


8.1.          Tenant shall pay to Landlord as Base
Rent for the Premises, commencing on the date that is three (3) months
after the Term Commencement Date (the “Rent Commencement Date”), the
sums set forth in Section 2.3, subject to the rental adjustments
provided in Article 9 hereof. 
Base Rent shall be paid in equal monthly installments as set forth in Section 2.3,
subject to the rental adjustments provided in Article  9 hereof,
each in advance on the first day of each and every calendar month during the
Term.


 


8.2.          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 pro rata share, as set
forth in Section 2.2 (“Tenant’s Pro Rata Share”), of
Operating Expenses (as defined below) and (b) any other amounts that
Tenant assumes or agrees to pay under the provisions of this Lease that are
owed to Landlord, including, without limitation, 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.


 


8.3.          Base Rent and Additional Rent shall
together be denominated “Rent.” 
Rent shall be paid to Landlord, without abatement, deduction or offset,
except as otherwise expressly agreed upon 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


 


8

















 


on
the basis of a thirty (30) day month and shall be paid at the then-current rate
for such fractional month.


 


9.                                       Rent
Adjustments.  Base Rent
shall be subject to an annual upward adjustment of three percent (3%) of the
then-current Base Rent.  The first such
adjustment shall become effective commencing with that monthly rental
installment that is due on or after the first (1st) annual anniversary of the Term Commencement Date,
and subsequent adjustments shall become effective on every successive annual
anniversary for so long as this Lease continues in effect.


 


10.                                 Operating
Expenses.


 


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


 


(a)           Government impositions including,
without limitation, property tax costs consisting of real and personal property
taxes and installments of 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 installments of 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 taxes on parking, utilities surcharges or any other costs
levied, assessed or imposed by, or at the direction of, or resulting from
Applicable Laws (as defined below) 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, including the reasonable cost of attorneys
or experts, reasonably incurred by Landlord in seeking reduction by the taxing
authority of the applicable taxes (so long as such contests are reasonable and
in good faith), less tax refunds obtained as a result of an application for
review thereof.  For any taxes or
assessments that may be paid in installments, Landlord agrees that such shall
be paid over the longest permitted number of installments, and Tenant shall
only be liable for Tenant’s Pro Rata Share of those installments that were
applicable to the Term.  Operating Expenses shall not
include any net income, franchise, capital stock, gift, estate or inheritance
taxes, or taxes that are the personal obligation of Tenant or of another tenant
of the Project; or federal or state net income
tax imposed on Landlord’s income derived from rentals, gross receipts, or
otherwise; or any retroactive assessments to the extent imposed for periods
prior to the Term Commencement Date or other taxes, assessments or charges
applicable to any period prior to the Term Commencement Date; 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 only costs of repairs and replacements to
improvements within the Project as appropriate to maintain the Project as
required hereunder, but specifically excluding the costs of funding reasonable
reserves therefor; 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


 


9
















 


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 and used for the operation,
maintenance or repair of the Project or Building systems and equipment;
telephone, postage, stationery supplies and other expenses incurred and used
for the operation, maintenance or repair of the Project; accounting, legal and
other professional fees and expenses incurred in connection with the Project;
costs of furniture, draperies, carpeting, landscaping and other customary and
ordinary items of personal property provided by Landlord for use in Common
Areas; capital expenditures made during the Term, the cost of which shall be
amortized over their useful lives in accordance with generally accepted
accounting principles (but in no event longer than seven (7) years);
Project office rent or rental value and utilities for a commercially reasonable
amount of space, to the extent an office used for Project operations is
maintained in the Building; costs of complying with any federal, state,
municipal and local laws, codes, ordinances, rules and regulations of
Governmental Authorities, committees, associations, or other regulatory
committees, agencies or governing bodies having jurisdiction over the Property,
the Project, the Building, the Premises, Landlord or Tenant, including both
statutory and common law and hazard waste rules and regulations (“Applicable
Laws”); insurance premiums for insurance Landlord is required or permitted
to maintain under this Lease; portions of insured losses paid by Landlord as
part of the deductible portion of a loss pursuant to the terms of insurance
policies carried pursuant to this Lease; service contracts; costs of services
of independent contractors retained to do work of a nature referenced above;
and costs of valet or otherwise staffed parking (if such service is approved by
Tenant as set forth below); 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, without limitation, janitors, floor waxers, window washers,
watchmen, gardeners, sweepers and handymen, but excluding any employees of
Landlord above the level of property manager. 
The cost of providing janitorial services to the Premises shall be paid
by Tenant directly, not as part of Operating Expenses.


 


Notwithstanding
the foregoing, Operating Expenses shall not include any leasing commissions;
expenses that relate to preparation of rental space for a tenant or for
services rendered to other tenants but not made available to Tenant; expenses
of initial development, design and construction, including, but not limited to,
grading, paving, landscaping and decorating (as distinguished from maintenance,
repair and replacement of the foregoing);  legal expenses relating to other tenants;
other costs incurred for the account of specific tenants, including, without
limitation, such expenses that are separately billed to and paid by specific
tenants (but not as part of Operating Expenses); costs of repairs to the extent
reimbursed by payment of insurance proceeds received by Landlord; ground lease
payments; interest upon loans to Landlord or secured by a mortgage or deed of
trust covering the Project or a portion thereof (provided that interest
upon a government assessment or improvement bond payable in installments shall
constitute an Operating Expense under Section 10.1(a)); 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 in
regard thereto that are provided for in Section 10.1(b)); taxes
that are excluded from Operating Expenses by the last sentence of Section 10.1(a);
any fine, interest or


 


10

















 


penalties
incurred by Landlord (and attorneys’ fees relating thereto) as a result of
Landlord’s violation of any Applicable Laws; any cost to comply with Applicable
Laws to the extent Landlord was not in compliance as of the Term Commencement
Date; costs incurred due to the breach of this Lease by, or gross negligence or
willful misconduct of Landlord (including any attorneys’ fees related thereto;
the cost to remediate, remove or otherwise comply with Applicable Laws relating
to Hazardous Materials (as defined below), to the extent Landlord breached any
representations in this Lease related thereto, and to the extent Hazardous
Materials were present upon, in or about the Property prior to the Term
Commencement Date (other than by Tenant or its officers, assignees, subtenants,
concessionaires, licensees, invitees, agents, employees or contractors) or were
subsequently brought onto the Property by Landlord or its officers, assignees,
concessionaires, licensees, agents, employees or contractors; the cost to
restore or repair the Property, Building or the Premises following a casualty
or condemnation to the extent resulting from Landlord’s failure to maintain the
type and levels of insurance required under this Lease; and the cost of
specific services and equipment not being provided to and utilized by Tenant
(including janitorial services in the Premises, back-up power, vacuum system
and reverse osmosis water).  In addition,
Operating Expenses expressly exclude all of the following, which the parties
agree are incorporated in the Property Management Fee (as defined below):  costs of compensation (including employment
taxes and fringe benefits) of any persons employed by Landlord other than those
permitted by the preceding paragraph.


 


10.2.        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 Pro Rata Share of Operating Expenses with respect to the
Project for such month.  Notwithstanding
anything to the contrary herein, under no circumstances shall Landlord collect
as Operating Expenses, in the aggregate from all persons, whether directly or
indirectly (e.g., through a gross lease) more than one hundred percent
(100%) of Operating Expenses for the Project.


 


(x)            The “Property Management Fee”
shall equal three percent (3%) of the Base Rent due from Tenant.


 


(y)           Within ninety (90) days after the
conclusion of each calendar year (or such longer period as may be reasonably
required by Landlord (but in no event longer than one hundred twenty (120)
days), Landlord shall furnish to Tenant a statement showing in reasonable
detail the actual Operating Expenses and Tenant’s Pro Rata Share of Operating
Expenses for the previous calendar year. 
Landlord’s annual statement shall also be final and binding upon
Landlord unless Landlord, within nine (9) months after issuance of such
statement, issues an amended or corrected statement.  The nine (9) month periods stated in the
immediately prior sentences do not apply in cases of actionable fraud or
malfeasance, or where a retroactive adjustment is made or additional tax
imposed by a taxing authority.  Any
additional sum due from Tenant to Landlord shall be due and payable within
thirty (30) days after receipt of an invoice therefor.  If the amounts paid by Tenant pursuant to
this Section 10.2 exceed Tenant’s Pro Rata 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 Lease term has expired, Landlord shall accompany said statement
with payment for the amount of such difference. 
Any payments pursuant to this Section 10.2(y) shall be
due no later than thirty (30)


 


11

















 


days
after issuance of Landlord’s annual statement, with interest accruing
thereafter at a rate (the “Default Rate”) equal to the least of (a) the
prime rate plus five percent (5%), as reported by the Bank of America or its
successor, (b) the judgment rate for Washington State and (c) the
highest rate permitted by Applicable Laws, if any.


 


(z)            Any amount due under this Section 10.2
for any period that is less than a full month shall be prorated (based on a
thirty (30)-day month) for such fractional month.


 


10.3.        Landlord’s annual statement shall be
final and binding upon Tenant unless Tenant, within one hundred twenty (120)
days after Tenant’s receipt thereof, shall contest any item therein by giving
written notice to Landlord, specifying each item contested and the reasons
therefor.  If, during such one hundred
twenty (120) day period, Tenant reasonably and in good faith questions or
contests the correctness of Landlord’s statement of Tenant’s Pro Rata Share of
Operating Expenses, Landlord shall provide Tenant with reasonable access to
Landlord’s books and records to the extent relevant to determination of
Operating Expenses, and such information as Landlord reasonably determines to
be responsive to Tenant’s written inquiries. 
In the event that, after Tenant’s review of such information, Landlord
and Tenant cannot agree upon the amount of Tenant’s Pro Rata Share of Operating
Expenses, then Tenant shall have the right to have an independent public
accounting firm hired by Tenant (the “Independent Accountant”) on an
hourly basis and not on a contingent-fee basis (at Tenant’s sole cost and
expense, but subject to reimbursement pursuant to this paragraph) and approved
by Landlord (which approval Landlord shall not unreasonably withhold or delay)
audit and review such of Landlord’s books and records for the year in question
as directly relate to the determination of Operating Expenses for such year (the
“Independent Review”).  Landlord
shall make such books and records available at the location where Landlord
maintains them in the ordinary course of its business, although Landlord shall
send electronic copies to Tenant upon receipt of written request therefor from
Tenant.  Landlord need not provide copies
of any books or records, but shall permit Tenant or the Independent Accountant
to make copies at Tenant’s expense. 
Tenant shall commence the Independent Review within thirty (30) days
after the date Landlord has given Tenant access to Landlord’s books and records
for the Independent Review.  Tenant shall
complete the Independent Review and notify Landlord in writing of Tenant’s
specific objections to Landlord’s calculation of Operating Expenses (including
Tenant’s accounting firm’s written statement of the basis, nature and amount of
each proposed adjustment) prior to the expiration of the one hundred twenty
(120) day review period stated herein. 
Landlord shall review the results of any such Independent Review.  The parties shall endeavor to agree promptly
and reasonably upon Operating Expenses taking into account the results of such
Independent Review.  If, as of sixty (60)
days after Tenant has submitted the Independent Review to Landlord, the parties
have not agreed on the appropriate adjustments to Operating Expenses, then the
parties shall engage a mutually agreeable independent third party accountant
with at least ten (10) years’ experience in commercial real estate
accounting in the Bothell, Washington area (the “Accountant”).  If the parties cannot agree on the
Accountant, each shall within ten (10) days after such impasse appoint an
Accountant (different from the accountant and accounting firm that conducted
the Independent Review) and, within ten (10) days after the appointment of
both such Accountants, those two Accountants shall select a third (which cannot
be the accountant and accounting firm that conducted the Independent
Review).  If either party fails to timely
appoint an Accountant, then the Accountant the other party appoints shall be
the sole Accountant.  Within ten (10) days
after appointment of the Accountant(s), Landlord and Tenant shall each
simultaneously give the Accountants (with a copy to the other party) its
determination of Operating Expenses, with such supporting data or information
as each submitting party determines appropriate.  Within ten (10) days


 


12

















 


after
such submissions, the Accountants shall by majority vote select either Landlord’s
or Tenant’s determination of Operating Expenses.  The Accountants may not select or designate
any other determination of Operating Expenses. 
The determination of the Accountant(s) shall bind the parties.  If the parties agree or the Accountant(s) determine
that Tenant’s Pro Rata Share of Operating Expenses actually paid for the
calendar year in question exceeded Tenant’s obligations for such calendar year,
then Landlord shall, at Tenant’s option, either (a) credit the excess to
the next succeeding installments of estimated Additional Rent or (b) pay
the excess to Tenant within thirty (30) days after delivery of such
results.  If the parties agree or the
Accountant(s) determine that Tenant’s payments of Tenant’s Pro Rata Share
of Operating Expenses for such calendar year were less than Tenant’s obligation
for the calendar year, then Tenant shall pay the deficiency to Landlord within
thirty (30) days after delivery of such results.  If the parties agree or the Accountant(s) determine
that Tenant’s Pro Rata Share of Operating Expenses actually paid for the
calendar year in question exceeded Tenant’s obligations for such calendar year
by five percent (5%) or more, then Landlord shall pay the cost of the
Accountant and the cost for the Independent Review; otherwise, Tenant shall pay
the cost of the Accountant(s) and the Independent Review.  Landlord shall pay the cost of any accountant
or other professional (other than an Accountant) appointed solely by Landlord
(for instance, to select the Accountant(s) following an impasse with
Tenant or to review and/or challenge the Independent Review).


 


10.4.        Tenant shall not be responsible for
Operating Expenses attributable to the time period prior to the Term
Commencement Date; provided, however, that if Landlord shall permit
Tenant possession of the Premises prior to the Term Commencement Date, Tenant
shall be responsible for Operating Expenses from such earlier date of
possession.  Tenant’s responsibility for
Tenant’s Pro Rata Share of Operating Expenses shall continue to the latest of (a) the
date of termination of the Lease, (b) the date Tenant has fully vacated
the Premises or (c) if termination of the Lease is due to a default by
Tenant, the earliest of (i) the date of rental commencement of a
replacement tenant, (ii) the applicable termination date if Tenant pays
the Termination Fee and (iii) the date that would have been the Term
Expiration Date absent a Default.


 


10.5.        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 based on the number of
days when Tenant is responsible for Operating Expenses pursuant to this
Lease.  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 to the time period wherein Tenant has an
obligation to share in Operating Expenses.


 


10.6.        Where Tenant has incurred an expense
that it believes is Landlord’s duty to pay pursuant to this Lease, Tenant shall
submit to Landlord an invoice or, in the event an invoice is not available, an
itemized list, of all costs and expenses that (a) Tenant has incurred
(either internally or by employing third parties) during the prior month and (b) for
which Tenant reasonably believes it is entitled to reimbursements from Landlord
pursuant to the terms of this Lease


 


13

















 


or
that Tenant reasonably believes is the responsibility of Landlord pursuant to
this Lease or the Work Letter.  Any
payment due from Landlord to Tenant must be paid within thirty (30) days after
such submission, with interest accruing thereafter at the Default Rate.


 


11.                                 Taxes on Tenant’s
Property.


 


11.1.        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, but only to the extent Tenant is not
required to surrender such personal property and trade fixtures to Landlord
upon the expiration or earlier termination of the Term.


 


11.2.        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 or the Property is increased by
inclusion therein of a value attributable to Tenant’s personal property or
trade fixtures that constitute Tenant’s property under this Lease and that
Tenant has the right to remove upon the expiration or earlier termination of
this Lease, and if Landlord, after written notice to Tenant, pays the taxes
based upon any such increase in the assessed valued of the Building or the
Project, then Tenant shall, within thirty (30) days after demand therefor,
repay to Landlord the taxes so paid by Landlord.


 


12.                                 Security
Deposit.


 


12.1.        Tenant shall deposit
with Landlord on or before 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 this Lease.  If Tenant defaults with
respect to any provision of this Lease, including, but not limited to, 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 12 shall survive the
expiration or earlier termination of this Lease.


 


12.2.        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.


 


12.3.        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.


 


14

















 


12.4.        If Tenant shall fully
and faithfully perform every provision of this Lease to be performed by it,
then the Security Deposit, or any balance thereof, 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.


 


12.5.        [Intentionally omitted]


 


12.6.        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.


 


12.7.        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 during 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 sixty (60) days after the
then current Term Expiration Date, a letter of credit in the form of Exhibit E
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.  If any issuer of the L/C
Security shall become insolvent, 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 12.  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.  Tenant shall reimburse
Landlord’s legal costs (as estimated by Landlord’s counsel) in handling
Landlord’s acceptance of L/C Security or its replacement or extension.


 


(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.


 


15

















 


(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 forty-five
(45) 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) six (6) 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) the L/C Security
provides for automatic renewals, Landlord asks the issuer to confirm the
current L/C Security expiry date, and the issuer fails to do so within ten (10) business
days; (iv) Tenant fails to pay (when and as Landlord reasonably requires)
any bank charges for Landlord’s transfer of the L/C Security; or (v) 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.  This paragraph 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.  Tenant
acknowledges that the only effect of a wrongful draw would be to substitute a
cash Security Deposit for L/C Security, causing Tenant no legally recognizable
damage.  Landlord shall hold 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.


 


(e)           If Landlord transfers its interest in
the Premises, then Tenant shall at Tenant’s expense, within five (5) business
days after receiving a request from Landlord, deliver (and, if the issuer
requires, Landlord shall consent to) an amendment to the L/C Security naming
Landlord’s grantee as substitute beneficiary. 
If the required Security changes while 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.


 


13.                                 Use.


 


13.1.        Tenant shall use the Premises for the
purpose identified as the Permitted Use 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 Landlord
may withhold in its sole and absolute discretion.


 


13.2.        Tenant shall not use or occupy the
Premises in violation of Applicable Laws; zoning ordinances; or the certificate
of occupancy issued for the Building, 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.  Landlord
shall not, however, have the right to require Tenant to discontinue the use of
the Premises for the Permitted Use, unless required to do so by Applicable Laws.  If Landlord requires Tenant to discontinue
the use of the Premises due to a change in Applicable Laws after the Effective
Date, then Tenant shall


 


16

















 


have
the right, in its sole and absolute discretion, to (a) change the
Permitted Use to one that is permitted by Applicable Laws, subject to Landlord’s
reasonable consent, or (b) terminate this Lease and all unaccrued
obligations hereunder (except those that specifically survive the expiration or
earlier termination of this Lease), without the requirement that Tenant pay a
Termination Fee.  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.


 


13.3.        Landlord will not
voluntarily cause the zoning of the Building to be changed to a designation
that would prevent Tenant from conducting the Permitted Use in the Premises
without first obtaining a conditional use permit or other approval allowing the
continued use of the Premises for the Permitted Use.


 


13.4.        Tenant shall not 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 and 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 13.  Notwithstanding the foregoing, Landlord
agrees that, to its actual knowledge as of the Execution Date and without
inquiry, the Permitted Use will not implicate this Section or result in an
increased charge to Tenant pursuant to this Section.


 


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


 


13.6.        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.  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.


 


13.7.        Except with regard to the Tenant
Improvements, (a) no awnings or other projections shall be attached to any
outside wall of the Building, (b) 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, (c) neither
the interior nor exterior of any windows shall be coated or otherwise sunscreened
without Landlord’s prior written consent, which consent Landlord shall not
unreasonably withhold, condition or delay if such coating or sunscreening is
reasonably necessary for Tenant’s use of the Premises for the Permitted Use,
and (d) no bottles, parcels or other articles shall be placed on the
windowsills.


 


13.8.        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;  provided that Landlord
acknowledges that it has approved all Signage included in the Approved


 


17

















 


Plans.  Interior
signs on doors and the directory tablet shall be inscribed, painted or affixed
for Tenant by Landlord at Tenant’s sole cost and expense, and shall be of a
size, color and type and be located in a place acceptable to Landlord.  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.  Tenant shall have Signage
rights in the monument sign and Landlord acknowledges and agrees that (a) Landlord, at its sole expense, which shall not be
included in Operating Expenses or otherwise charged to Tenant, shall construct
a monument sign at the main entrance to the Property and (b) Tenant shall
have the right to Tenant’s Pro-Rata Share of signage on the monument sign and
to all other Signage within the Project, including any available
exterior Building and directory Signage. 
At Landlord’s option, Landlord may install any such Signage, and Tenant
shall pay all costs associated with such installation within thirty (30) days
after demand therefor.  Tenant, at its
option, may include costs incurred in connection with the Signage described in
this Section as costs covered by the TI Allowance.


 


13.9.        Tenant shall only place equipment within
the Premises with floor loading consistent with the structural design of the
Building without Landlord’s prior written approval, and such equipment shall be
placed in a location designed to carry the weight of such equipment.


 


13.10.      Tenant shall cause any office 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 Building.


 


13.11.      Tenant shall not (a) do or permit
anything to be done in or about the Premises that shall in any way obstruct or
interfere with the rights of other tenants or occupants of the Building or the
Project, or injure them, (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 Premises, the Building or 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.


 


13.12.      Notwithstanding any other provision herein
to the contrary, 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. (together
with regulations promulgated pursuant thereto, the “ADA”), and Tenant
shall indemnify, save, defend and hold Landlord harmless from and against any
loss, cost, liability or expense (including reasonable attorneys’ fees and
disbursements) relating to such failure of the Premises to comply with the
ADA.  The provisions of this Section 13.11
shall survive the expiration or earlier termination of this Lease.


 


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


 


14.1.        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 reasonable
discretion (the “Rules and Regulations”);


 


18

















 


provided that if there
is a conflict between a term in this Lease and the Rules and Regulations
(whether those attached as Exhibit F or those subsequently
promulgated), then this Lease shall control and Tenant shall not be required to
comply with such conflicting rule or regulation.  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
use commercially reasonable efforts to consistently and uniformly enforce the Rules and
Regulations.


 


14.2.        This Lease is not currently subject to (a) any recorded covenants, conditions or
restrictions on the Project or Property, to the extent copies
thereof were provided to Tenant prior to Tenant’s execution of this Lease, and (b) any
additions or amendments thereto of which Landlord provides a copy to Tenant and
that (i) are required by Applicable Laws or (ii) do not materially
adversely affect Tenant’s rights or obligations under this Lease and
(collectively, the “CC&Rs”).  Tenant shall comply with the CC&Rs.


 


14.3.        Tenant shall have a
non-exclusive, irrevocable license to use Tenant’s Parking Share (as defined
below) of parking facilities serving the Building in common on an unreserved
basis with other tenants of the Building and the Project during the Term,
twenty-four (24) hours per day on each day of the Term, condemnation and
casualty excepted.  So long as Tenant’s
Parking Share of the parking facilities is not reduced, Tenant acknowledges
that Landlord reserves the right to license the parking facilities (and common
areas) to third parties during non-business hours.


 


14.4.        “Tenant’s Parking Share” of
parking facilities during the Term shall equal approximately two and four
tenths spaces (2.4) per one thousand (1,000) rentable square feet.


 


14.5.        Tenant 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.  Upon such determination,
Landlord may reasonably allocate parking spaces among Tenant and other tenants
of the Building or the Project. 
Notwithstanding the foregoing, in no event shall such reallocation
reduce Tenant’s Parking Share below the amount stated in Section 14.4.  Nothing in this Section, however, is intended
to create an affirmative duty on Landlord’s part to monitor parking; provided
that (a) Landlord shall not lease more parking spaces in aggregate than
are available at the Project and (b) Landlord shall diligently respond to
notifications from Tenant that Tenant is not able to use Tenant’s Parking Share
by contacting those parties that are interfering with such use.


 


14.6.        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; provided such subdivision
shall not relieve Landlord of any of its obligations hereunder (including,
specifically, the obligation to provide Tenant with Tenant’s Parking
Share).  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.  Landlord confirms that restroom
facilities located within the Premises shall not


 


19
















 


constitute Common Areas
and that other tenants occupying the Project or the Property shall not have
access rights thereto.


 


15.                                 Project Control
by Landlord.


 


15.1.        Landlord reserves full control over the
Building and the Project to the extent not inconsistent with Tenant’s quiet
enjoyment of the Premises as provided by this Lease and its rights granted
hereunder, and not inconsistent with Landlord’s performance of all of its
obligations under this Lease.  This
reservation includes, without limitation, Landlord’s right to subdivide the
Project, convert the Building to condominium units, grant easements and
licenses to third parties (other than to the Premises), and maintain or
establish ownership of the Building separate from fee title to the Property.


 


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


 


15.3.        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
for the Permitted Use or otherwise adversely modifies any of Tenant’s rights or
obligations as agreed upon in this Lease.


 


15.4.        Subject to its adherence with the
procedure set forth in this Section 15.4, Landlord may 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 roof, 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.  At least two (2) business days prior
to entering the Premises, Landlord shall (x) give Tenant oral or written
notice of the times and dates it wishes to do so, (y) make arrangements
with Tenant to have a representative of Landlord be accompanied by a
representative of Tenant (the “Tenant Representative”) (provided
that Tenant shall make such representative reasonably available) and (z) cause each person accessing
the Premises at the request of Landlord (other than Landlord or its employees, Tenant any Tenant Representative, or any Governmental
Authority or agent thereof) to sign an Access & Confidentiality Agreement in the form of Exhibit D attached hereto (a “Confidentiality
Agreement”) or such other form reasonably acceptable to Landlord and
Tenant.  The advance notice agreed upon
shall not apply in the event of emergencies (i.e., situations posing an
imminent threat of bodily harm or substantial property damage); provided that
Landlord shall use commercially reasonable efforts to notify Tenant of Landlord’s
entry as soon as reasonably practicable (either before or after such
entry).  All access by Landlord into the
Premises shall be in accordance with Applicable Laws and this Lease.  Landlord further agrees that Tenant may in
every event and without exception deny access to any employee of a major competitor  identified on Exhibit G  attached hereto for so long as the Tenant occupies the Premises;  provided that Tenant may not
otherwise deny access to any person employed by a vendor that Landlord engages
to perform Landlord’s maintenance and other obligations under this Lease and that signs


 


20

















 


a Confidentiality
Agreement.  Tenant agrees that Landlord
shall have no liability for any breach of a Confidentiality Agreement by anyone
other than Landlord.  In connection with any such
alteration, improvement or repair as described in Subsection 15.4(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.  In no event shall
Tenant’s Rent abate as a result of Landlord’s activities pursuant to this Section 15.4;
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.  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; provided that Landlord
shall be liable for its gross negligence or willful misconduct in connection
with such entry or failure to secure the Premises in connection with such
entry; and provided further, that, notwithstanding the foregoing
proviso, Landlord shall not be liable for the acts or omissions of any
emergency personnel not employed by Landlord.


 


16.                                 Quiet Enjoyment.  So long as Tenant is not in default under
this Lease, Landlord covenants that Tenant shall have quiet occupation and
enjoyment of the Premises free from anyone acting through or under Landlord,
except as permitted by this Lease.


 


17.                                 Utilities and
Services.


 


17.1.        Landlord shall install submeters (and deduct the costs
thereof from the TI Allowance) for all heat, ventilation and air
conditioning; light; and
power supplied to the Premises after the Term Commencement Date, and Tenant
shall pay all charges for such utilities based on Tenant’s consumption of such
utilities, together with any fees, surcharges and taxes thereon.  Tenant shall arrange and pay for (the costs
of which may be paid from the TI Allowance) installation of equipment necessary
for all telephone,
internet service, cable television and other telecommunications supplied to the
Premises, and Tenant
shall pay all such related charges, together with any fees, surcharges and
taxes thereon.   If any utility is not
separately metered to Tenant, Tenant shall pay Tenant’s Pro Rata Share of all
charges of such utility jointly metered with other premises or the Building as
part of Tenant’s Pro Rata Share of Operating Expenses.


 


17.2.        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 Force Majeure, except to the
extent resulting from Landlord’s gross negligence or willful misconduct.  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 (except in each case unless such failure continues for more than
twenty-four (24) hours, in which case Tenant shall be entitled to abatement of
Base Rent and Operating Expenses (to the extent such failure resulted from
Landlord’s gross negligence or willful misconduct) for the period starting on
the date such failure occurs until the applicable utility or service is restored).


 


21

















 


17.3.        Notwithstanding anything to the contrary
in Section 17.2, Landlord shall provide back-up power to the
Project from the current one hundred twenty-five (125) kilowatt generator that
shall be used in common with other tenants and occupants of the Project.  Landlord shall service and maintain such
generator in a commercially reasonable manner and, notwithstanding anything in
this Lease to the contrary (including, without limitation, Article 10
hereof) the ongoing service, maintenance and capital repair and replacement
expenses related to supplying back-up power to the Premises shall be in
included in Operating Expenses.  If there
is a power interruption and the back-up power fails for more than four (4) hours
after Landlord’s receipt of email notice from Tenant in connection with the
same, then Tenant shall have the right, but not the obligation, to procure
back-up power from other means, and Landlord shall reimburse Tenant for its
reasonable, actual, out-of-pocket costs incurred in connection therewith,
within thirty (30) days after receipt of Tenant’s written request and
reasonable documentation relating thereto. 
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.


 


17.4.        Tenant shall not,
without Landlord’s prior written consent, use any device in the Premises
(including, without limitation, data processing machines) that will in any way (a) increase
the amount of ventilation, air exchange, gas, steam, electricity or water
beyond the existing capacity of the Building as proportionately allocated to
the Premises based upon Tenant’s Pro Rata Share as usually furnished or
supplied for the use set forth in Section 2.7 or (b) exceed
Tenant’s Pro Rata Share of the Building’s capacity to provide such utilities or
services.  Notwithstanding the foregoing,
Landlord agrees that any configuration included in the Approved Plans shall not
violate this Section 17.4, although
Landlord reserves its right to reasonably consent to any modifications thereto
or any subsequent alterations Tenant desires to make to the HVAC (defined
below) exclusively serving the Premises.


 


17.5.        Landlord shall demise
the existing laboratory gas piping and cap the same for use by Tenant, should
Tenant elect to install a laboratory gas system for the Premises.  Landlord shall provide compressed air to the
Premises, for which Tenant shall pay Tenant’s Pro Rata Share.


 


17.6.        Utilities and services provided by
Landlord to the Premises that are separately metered shall be paid by Tenant
directly to the supplier of such utility or service.


 


17.7.        Landlord shall provide water to the
Premises for lavatory purposes and for laboratory use.  Landlord shall demise the existing reverse
osmosis and de-ionized water piping and cap the same for use by Tenant, should
Tenant elect to install a reverse osmosis and de-ionized water system for the
Premises.  Tenant agrees to pay for water
consumed for reverse osmosis and de-ionized water purposes as shown on said
meter, as and when bills are rendered; provided that Tenant shall pay
Tenant’s Pro Rata Share of water for other purposes.  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.


 


22

















 


17.8.        Landlord reserves the right to stop
service of the elevator, plumbing, ventilation, air conditioning and electric
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 electric service when
prevented from doing so by Force Majeure or 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.  Notwithstanding the foregoing, Landlord shall
use commercially reasonable efforts to ensure that the Permitted Use does not
violate Applicable Laws solely due to Landlord’s temporary cessation of such
services.


 


17.9.        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 of
the Premises twenty-four (24) hours a day, 365 or 366 days a year.  Notwithstanding anything to the contrary in
this paragraph, Landlord shall have no liability, and Tenant shall have no
right or remedy, on account of any interruption or impairment in HVAC services, except to the extent
resulting from Landlord’s gross negligence or willful misconduct; provided
that Landlord diligently endeavors to cure any such interruption or impairment.


 


17.10.      This Article 17 relates to
interruptions in services and utilities arising in the ordinary course of
operation of the Building and the Project and any related facilities.  In the event of fire, earthquake, flood,
vandalism, war, terrorism, natural disaster or similar cause of damage or
destruction, Article 25 shall apply in lieu of this Article 17.


 


18.                                 Alterations.


 


18.1.        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 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 or record (only with
respect


 


23

















 


to
Alterations that involve connections to the Building structural system, modifications to the
Building envelope, non-structural penetrations in slabs or walls, and
modifications or tie-ins to life safety systems), work contracts,
requests for laydown areas and such other information concerning the nature and
cost of the Alterations as Landlord may reasonably request.  Notwithstanding the foregoing, Tenant shall
not be required to seek Landlord’s prior consent to cosmetic Alterations in the
Premises that cost less than Fifty Thousand Dollars ($50,000) in any one
instance (each, a “Minor Alteration”); provided, however, that in
the event any proposed Alteration adversely affects (x) any structural
portions of the Building, including exterior walls, roof, foundation or core of
the Building, (y) the exterior of the Building or (z) any Building
systems, including elevator, plumbing, air conditioning, heating, electrical,
security, life safety and power, then Tenant must obtain Landlord’s approval,
and Landlord may withhold such approval in its sole and absolute discretion.


 


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


 


18.3.        Tenant shall accomplish any work
performed on the Premises or the Building in such a manner as to permit any
fire sprinkler system and fire water supply lines to remain fully operable at
all times.


 


18.4.        Any work performed on the Premises or
the Building by Tenant or Tenant’s contractors shall be done at such times and
in such manner as Landlord may from time to time designate.  Landlord’s consent shall be deemed given if
Tenant uses any of the contractors listed on Attachment 1 to the Work Letter.  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.


 


18.5.        Before commencing any work, Tenant shall
give Landlord at least fourteen (14) days’ prior written notice of the proposed
commencement of such work.  At such time,
upon Tenant’s written request, Landlord shall notify Tenant whether such
Alteration (a) will become part of Landlord’s property pursuant to Section 19.6
below or (b) must be removed upon the expiration or earlier termination of
the Lease and shall, if required by Landlord, secure, at Tenant’s own cost and
expense, a completion and lien indemnity bond satisfactory to Landlord for said
work.  Landlord agrees that the bonds
described in the immediately prior sentence shall not be required for the
Tenant Improvements or Minor Alterations.


 


18.6.        Attached equipment,
decorations, fixtures, additions and improvements, subject to Section 18.8,
attached to (other
than in a de minimus manner)  or built into the Premises, made by either of
the Parties, including, without limitation, all floor and wall coverings,
built-in cabinet work and paneling, sinks and related plumbing fixtures, laboratory
benches, exterior venting


 


24

















 


fume
hoods, 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.  All trade fixtures and equipment attached to
the Building or the Premises (other than in a de minimus manner) and all Tenant
Improvements, Alterations installed by or under Tenant shall be the property of
Landlord.


 


18.7.        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.


 


18.8.        Except as to those items listed on Exhibit H
attached hereto, all trade fixtures, machinery and equipment, built-in
furniture and cabinets, together with all additions and accessories thereto attached to
the Building or the Premises (other than in a de minimus manner),
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
effects 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.


 


18.9.        Notwithstanding any other provision of
this Article 18 to the contrary, in no event shall Tenant remove
any improvement from the Premises as to which Landlord contributed payment,
including, without limitation, the Tenant Improvements made pursuant to the
Work Letter without Landlord’s prior written consent, which consent Landlord
may withhold in its sole and absolute discretion.


 


18.10.      Other than Minor Alterations, Tenant shall
reimburse Landlord its actual, out of pocket expenses reasonably incurred in
connection with Landlord’s plan review, coordination, scheduling and
supervision thereof, up to a maximum of three percent (3%) of Tenant’s
out-of-pocket costs for such Alterations. 
For purposes of payment of such sum, Landlord shall submit to Tenant
copies of all bills, invoices and statements covering the costs of such
charges, and Tenant shall reimburse Landlord for any such expenses within
thirty (30) days following receipt of such invoices and statements.  In addition, Tenant shall reimburse Landlord
for any extra, actual out-of-pocket expenses reasonably incurred by Landlord by
reason of faulty work done by Tenant or its contractors, or by reason of
inadequate clean-up.


 


18.11.      Within sixty (60) days after final
completion of the Tenant Improvements (or any other Alterations performed by
Tenant with respect to the Premises), Tenant shall submit to


 


25

















 


Landlord
documentation showing the amounts expended by Tenant with respect to such
Tenant Improvements (or any other Alterations performed by Tenant with respect
to the Premises), together with supporting documentation reasonably acceptable
to Landlord.


 


18.12.      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.


 


19.                                 Repairs and
Maintenance.


 


19.1.        Landlord shall repair and maintain the
structural and exterior portions and Common Areas of the Building and the
Project, including, without limitation, roofing and covering materials,
foundations, exterior walls, plumbing, fire sprinkler systems (if any),
heating, ventilating, air conditioning, elevators, and electrical systems
installed or furnished by Landlord.  Any
costs related to the repair or maintenance activities specified in this Section 19.1
shall be included as a part of Operating Expenses, unless such repairs or
maintenance is (a) specifically excluded from the definition of Operating
Expenses above, in which case Landlord shall not charge Tenant any portion
thereof, or (b) required in whole or in part because of any act, neglect,
fault or omissions of Tenant, its agents, servants, employees or invitees, in
which case Tenant shall pay to Landlord the cost of such repairs and
maintenance.


 


19.2.        Except for services of Landlord, if any,
required by Section 19.1, 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 and insured casualty
excepted.  Tenant shall, upon the
expiration or sooner termination of the Term, surrender the Premises to Landlord
in as good of a condition as when received, ordinary wear and tear and insured
casualty excepted; and shall, at Landlord’s request, remove all telephone and
data systems, wiring and equipment from and serving the Premises installed by
Tenant (collectively, the “Cabling”), 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 pursuant to the terms and provisions
of the Work Letter.


 


19.3.        [Intentionally omitted]


 


19.4.        Repairs under this Article 19
that are obligations of Landlord are subject to allocation among Tenant and
other tenants as Operating Expenses, except as otherwise provided in this Article 19
or as specifically excluded from the definition of Operating Expenses in Article 10.


 


19.5.        This Article 19 relates to
repairs and maintenance arising in the ordinary course of operation of the
Building and the Project and any related facilities.  In the event of fire, earthquake, flood,
vandalism, war, terrorism, natural disaster or similar cause of damage or
destruction, Article 25 shall apply in lieu of this Article 19.


 


26

















 


20.                                 Liens.


 


20.1.        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 pursuant with Applicable Laws within ten (10) business days
after Tenant’s receipt of notice of such filing at Tenant’s sole cost and
expense.


 


20.2.        Should Tenant fail to discharge or bond
against any lien of the nature described in Section 20.1, 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.


 


20.3.        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 Building 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) business days after Tenant is notified of the 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. 
Landlord hereby agrees to reasonably cooperate with Tenant and its
lenders (at no expense to Landlord) in connection with such financing, and to
confirm in writing within ten (10) business days of a request therefor
that the proposed collateral constitutes Tenant’s property under this Lease and
to afford such lenders reasonable access to the Premises during the Term to
remove such collateral during the Term upon written request to Landlord;
provided that Landlord shall not be required to act in any way or to execute
any documentation that modifies its rights or obligations under this Lease or
otherwise increases its liability.


 


21.                                 Estoppel
Certificate.  Tenant
shall, within ten (10) business days of receipt of 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
commercially reasonable form (unless such other form modifies Tenant’s rights
and obligations under this Lease or otherwise increases Tenant’s liability)
requested by a proposed lender, mortgagee or beneficiary (each, a “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


 


27

















 


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
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.  Tenant’s failure to deliver such statement
within the prescribed time shall, at Landlord’s option, constitute a default
under this Lease and, provided that Tenant does not cure such default
within five (5) business days after receipt of notice thereof from
Landlord, 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.


 


22.                                 Hazardous
Materials.


 


22.1.        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, its agents, employees, contractors or invitees.  Landlord’s consent shall not be required for
Tenant to bring, keep or use in or about the Premises, Building or the Project
Hazardous Materials for the Permitted Use as permitted by Applicable Laws; provided
that, if Landlord’s insurance carrier reasonably determines that any such
Hazardous Materials pose an unusual risk of damage or injury, Tenant shall
obtain such additional insurance coverage as Landlord’s insurance carrier
reasonably requests.  If Tenant breaches
such obligation, or if the presence of Hazardous Materials as a result of such
a breach results in contamination of the Premises, the Building, the Project or
any adjacent property, or if contamination of the Premises, the Building, the
Project or any adjacent property by Hazardous Materials otherwise occurs (other
than as caused by Landlord or its agents, employees or contractors) during the
Term or any extension or renewal hereof or holding over hereunder, then Tenant
shall indemnify, save, defend and hold Landlord, its agents and contractors
harmless from and against any and all claims, judgments, damages, penalties,
fines, costs, liabilities and losses (including, without limitation, diminution
in value of the Premises, the Building, the Project or any portion thereof;
damages for the loss or restriction on use of rentable or usable space or of
any amenity of the Premises or Project; damages arising from any adverse impact
on marketing of space in the Premises, the Building or the Project; and sums
paid in settlement of claims, attorneys’ fees, consultants’ fees and experts’
fees) that arise during or after the Term as a result of such breach or
contamination.  This indemnification does
not apply to any contamination to the extent arising from or relating to the
actions,  negligence or breach of this
Lease of Landlord or its agents, employees or contractors; nor to any
contamination present at the Premises prior to the Term Commencement Date
(unless caused by Tenant or its agents, employees, contractors or invitees).
This indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any
cleanup, 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 the Premises.  Without
limiting the foregoing, if the presence of any Hazardous Materials in, on,
under or about the Premises, the Building, the Project or any adjacent property
caused or permitted by Tenant results in any contamination of the Premises, the
Building, the Project or any adjacent property, then Tenant shall promptly take
all actions at its sole cost and expense as are necessary to return the
Premises, the Building, the Project and any


 


28

















 


adjacent
property to their 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, condition or delay; and provided, further, that it shall be
reasonable for Landlord to withhold its consent if such actions could have a
material adverse long-term or short-term effect on the Premises, the Building
or the Project.


 


22.2.        Landlord acknowledges
that it is not the intent of this Article 22 to prohibit Tenant
from operating its business as described in Section 2.7.  Tenant may operate its business according to
the custom of Tenant’s industry so long as the use or presence of Hazardous
Materials is strictly and properly monitored according to 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 on the Premises and
setting forth any and all governmental approvals or permits required in
connection with the presence of such Hazardous Material on the Premises (the “Hazardous
Materials List”); provided that Tenant may delay the delivery of the Hazardous
Materials List until after the Term Commencement Date, so long as Tenant
delivers it to Landlord prior to Tenant commencing business operations at the
Premises using Hazardous Materials.  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 are brought
onto the Premises.  Tenant shall deliver
to Landlord true and correct copies of the following documents (hereinafter
referred to as the “Documents”) relating to the handling, storage,
disposal and emission of Hazardous Materials prior to the Term Commencement
Date or, if unavailable at that time, concurrent with the receipt from or
submission to any Governmental Authority: 
permits; approvals; 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 or under the Premises, the
Building or 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 may withhold in its sole and absolute discretion
unless approved as part of the Tenant Improvements); and all closure plans or
any other documents required by any and all Governmental Authorities for any
storage tanks installed in, on or under the Premises, the Building or 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 that, in and of themselves, do not contain a reference to
any Hazardous Materials or activities related to Hazardous Materials.  Upon Landlord’s written request, Tenant
agrees that it shall enter into a written agreement with other tenants of the
Building and the Project concerning the equitable allocation of fire control
areas (as defined in the Uniform Building Code as adopted by the city or
municipality(ies) in which the Project is located (the “UBC”)) within
the Building and the Project for the storage of Hazardous Materials.  In the event that Tenant’s use of Hazardous
Materials is such that it utilizes fire control areas in the Building or the
Project in excess of Tenant’s Pro Rata Share of the Building or the Project, as
applicable, as set forth in Section 2.2, Tenant agrees that it
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 UBC 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


 


29

















 


of
the Building and the Project is not greater than Tenant’s Pro Rata Share of the
Building or the Project, as applicable.


 


22.3.        [Intentionally omitted]


 


22.4.        At any time, and from time to time,  prior to the expiration of the Term, subject
to Section 15.4, if Landlord has a good faith reasonable belief
that there has been a contamination of the Premises, or if required by a
Lender, Landlord shall have the right to conduct appropriate tests of the
Premises, the Building and the Project to demonstrate whether Hazardous
Materials are present or that contamination has occurred due to Tenant or
Tenant’s agents, employees or invitees. 
Unless Landlord has a good faith reasonable belief that there has been a
contamination of the Premises by Tenant, said testing shall not occur more than
once every two (2) years.  Tenant
shall not be liable for the costs of any tests required by any Lender, investor
or potential purchaser of Landlord’s interest in the Premises and shall not be
liable for the costs of Landlord’s testing unless a contamination in violation
of Applicable Laws by Tenant is established. 
Under no circumstances shall Landlord’s testing unreasonably interfere with
Tenant’s business operations from the Premises for the Permitted Use.


 


22.5.        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.


 


22.6.        Tenant’s obligations under this Article 22
shall survive the expiration or earlier termination of this 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 continue to pay Rent in
accordance with this Lease, which Rent shall be prorated daily.


 


22.7.        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.


 


22.8.        Landlord represents to Tenant that, to
Landlord’s actual knowledge, there are no Hazardous Materials on, in or about
the Property, the Building or the Premises in violation of Applicable Laws, and
Landlord further represents that it has not caused the generation, storage or
release of Hazardous Materials upon the Project in violation of Applicable
Laws.


 


23.                                 Odors and
Exhaust.  Tenant acknowledges that
Landlord would not enter into this Lease with Tenant unless Tenant assured
Landlord that under no circumstances will any other occupants of the Building
or Project (including persons legally present in any outdoor areas of the
Project) be subjected to odors or fumes (whether or not noxious), and that the
Building and Project will not be damaged by any exhaust, in each case from
Tenant’s operations.  Landlord and Tenant
therefore agree as follows:


 


30
















 


23.1.        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.


 


23.2.        If Landlord at any
time determines that any existing ventilation system is inadequate, or if no
ventilation system exists, Tenant shall in compliance with Applicable Laws vent
all fumes and odors from the Premises (and remove odors from Tenant’s exhaust
stream) as Landlord requires.  The
placement and configuration of all ventilation exhaust pipes, louvers and other
equipment shall be subject to Landlord’s approval.  Tenant acknowledges Landlord’s legitimate
desire to maintain the Project (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.


 


23.3.        Tenant shall, at
Tenant’s sole cost and expense, provide 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 reasonably remove, eliminate and abate any odors, fumes or other substances
in Tenant’s exhaust stream that, in Landlord’s judgment, emanate from Tenant’s
Premises.  Any work Tenant performs under
this paragraph shall constitute Alterations.


 


23.4.        Tenant’s
responsibility to remove, eliminate and abate odors, fumes and exhaust shall
continue throughout the Term.  Landlord’s
approval of the Tenant Improvements shall not preclude Landlord from 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.


 


23.5.        If Tenant fails to
initiate the installation of satisfactory odor control equipment within thirty
(30) days after Landlord’s demand made at any time or does not thereafter
diligently and reasonably prosecute to completion such installation, 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
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 thirty (30) 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.


 


24.                                 Insurance;
Waiver of Subrogation.


 


24.1.        Landlord shall maintain insurance for
the Building and the Project in amounts equal to full replacement cost
(exclusive of the costs of excavation, foundations and footings, and without
reference to depreciation taken by Landlord upon its books or tax returns) or
such lesser coverage as Landlord may elect, provided that such coverage
shall not be less than ninety percent (90%) of such full replacement cost or
the amount of such insurance Landlord’s Lender, if any, reasonably requires
Landlord to maintain, providing protection against any peril generally included
within the classification “Fire and Extended Coverage,” together with insurance
against


 


31

















 


sprinkler
damage (if applicable), vandalism and malicious mischief.  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 that constitute Tenant’s property under this
Lease, without regard to whether or not such are made a part of or are affixed
to the Building; provided that Landlord shall provide insurance for any
improvements installed by Tenant that constitute Landlord’s property under this
Lease.


 


24.2.        In addition, Landlord shall carry public
liability insurance with limits that will not be less than One Million Dollars
($1,000,000) for death or bodily injury, or property damage with respect to the
Project.  Such policy will include
additional insureds and contractual indemnity provisions or endorsements.  Prior to the Term Commencement Date, Landlord
shall deliver certificates evidencing such coverage to Tenant and Landlord
shall, at least twenty (20) days prior to the expiration of such policies,
furnish Tenant with new certificates evidencing the renewal thereof.


 


24.3.        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) comprehensive public liability insurance with limits
of not less than Two Million Dollars ($2,000,000) per occurrence for death or
bodily injury and not less than Two Million Dollars ($2,000,000) for property
damage with respect to the Premises (including $100,000 fire legal liability
(each loss)).


 


24.4.        The insurance
required to be purchased and maintained by Tenant pursuant to this Lease shall
name Landlord, BioMed Realty, L.P., BioMed Realty Trust, Inc., and their
respective officers, employees, agents, general partners, members,
subsidiaries, affiliates and Lenders (“Landlord Parties”) as additional
insureds.  Said insurance shall be with
companies having a rating of not less than policyholder rating of A and
financial category rating of at least Class XII 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.  No
such policy shall be cancelable or subject to reduction of coverage or other
modification or cancellation except after thirty (30) days’ prior written
notice to Landlord from the insurer (except in the event of non-payment of
premium, in which case ten (10) days written notice shall be given).  Tenant shall provide Landlord with written
notice of any reduction of coverage or other modification of Tenant’s insurance
at least thirty (30) days’ prior to the date that such reduction or other
modification becomes effective.  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, at least
twenty (20) days prior to the expiration of such policies, furnish Landlord
with certificates or binders evidencing renewals.  Tenant agrees that if Tenant does not take
out and maintain such insurance, Landlord may (but


 


32

















 


shall
not be required to) procure said insurance on Tenant’s behalf and at its cost
to be paid by Tenant as Additional Rent.


 


24.5.        Other than with respect to claims
arising from the gross negligence, intentional misconduct or breach of this
Lease by Landlord or its agents, employees, contractors or invitees, 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.  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.


 


24.6.        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 or the Project, (b) the
landlord under any lease whereunder Landlord is a tenant of the real property
upon which the Building is located 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.


 


24.7.        Landlord and Tenant each hereby waive
any and all rights of recovery against the other or against the officers,
directors, employees, agents and representatives of the other on account of
loss or damage occasioned by such waiving party or its property 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 have in place under this Lease).  Such waivers shall continue so long as their
respective insurers so permit.  Any
termination of such a waiver shall be by written notice to the other party,
containing a description of the circumstances hereinafter set forth in this Section 24.7.  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 such policies shall not be obtainable with such waiver or shall be so
obtainable only at a premium over that chargeable without such waiver, then the
party seeking such policy shall notify the other of such conditions, and the
party so notified shall have ten (10) days thereafter to either (a) procure
such insurance with companies reasonably satisfactory to the other party or (b) agree
to pay such additional premium (in Tenant’s case, in the proportion that the
area of the Premises bears to the insured area).  If the parties do not accomplish either (a) or
(b), then this Section 24.7 shall have no effect during such time
as such policies shall not be obtainable or the party in whose favor a waiver
of subrogation is desired refuses to pay the additional premium.  If such policies shall at any time be
unobtainable, but shall be subsequently obtainable, then neither party shall be
subsequently liable for a failure to obtain such insurance until a reasonable
time after notification thereof by the other party.  If the release of either Landlord or Tenant,
as set forth in the first sentence of this Section 24.7, 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.


 


33

















 


24.8.        Landlord may require insurance policy
limits required under this Lease to be raised to conform with requirements of
Landlord’s Lender or to bring coverage limits to levels then being required of
new tenants within the Project; provided such levels shall not be increased
more than once each year and in no event more than what is reasonably required
by institutional lenders and owners in the same geographic area as the Project.


 


24.9.        Any costs incurred by Landlord in
obtaining the insurance it is required to carry under this Article 24
or in otherwise performing its obligations under this Article 24
shall constitute a portion of Operating Expenses.


 


25.                                 Damage or
Destruction.


 


25.1.        In the event of a partial destruction of
the Building or the Project by fire or other perils covered by extended
coverage insurance not exceeding twenty-five percent (25%) of the full
insurable value thereof, and provided that (a) the damage thereto
is such that the Building or the Project may be repaired, reconstructed or
restored within a period of six (6) months from the date of the happening
of such casualty and (b) Landlord shall receive insurance proceeds
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), Landlord shall commence and proceed
diligently with the work of repair, reconstruction and restoration of the
Building or the Project, as applicable, and this Lease shall continue in full
force and effect.


 


25.2.        In the event of any damage to or
destruction of the Building or the Project other than as described in Section 25.1,
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, however, (a) Landlord
estimates (in its reasonable discretion) that such repairs cannot be completed
within twelve (12) months from the date of the happening of the casualty or (b) Landlord
elects not to repair the Building or the Project, as applicable, then Tenant
shall have the right to terminate this Lease (except for those provisions that,
by their express terms, survive the expiration or earlier termination hereof)
in whole or as to the equitable portion of the Premises and use of the Common
Areas affected by such damage or destruction, without any payment of a
Termination Fee, upon written notice to Landlord delivered no later than ten (10) business
days after Tenant receives Landlord’s notice of (y) the estimate of time
required to rebuild or (z) Landlord’s election not to rebuild, with such
termination to be effective as of the date of Landlord’s receipt of such
notice.


 


25.3.        Landlord shall give written notice to
Tenant within sixty (60) days following the date of damage or destruction of (a) whether
Landlord can and will complete repairs within the twelve (12) month period set
forth in Section 26.1 or (b) its election not to repair,
reconstruct or restore the Building or the Project, as applicable.


 


25.4.        Upon any termination of this Lease under
any of the provisions of this Article 25, 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) items
occurring


 


34

















 


prior
to the damage or destruction and (b) provisions of this Lease that, by
their express terms, survive the expiration or earlier termination hereof.


 


25.5.        In the event of repair, reconstruction
and restoration as provided in this Article 25, all Rent to be paid
by Tenant under this Lease shall be abated in proportion to the extent to which
Tenant’s use of the Premises for the Permitted Use is impaired during the
period of such repair, reconstruction or restoration, or is prohibited by
Applicable Laws, 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 for the Permitted Use.


 


25.6.        Notwithstanding anything to the contrary
contained in this Article 25, 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 Force Majeure (other than the Force Majeure event constituting
the original casualty), then the time for Landlord to commence or complete
repairs shall be extended on a day-for-day basis; provided, however,
that, at Landlord’s election, Landlord shall be relieved of its obligation to
make such repair, reconstruction or restoration.


 


25.7.        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 those portions of the Premises, the Building or the Project that were
originally provided at Landlord’s expense (including the Tenant
Improvements).  The repair,
reconstruction or restoration of improvements not originally provided by
Landlord or at Landlord’s expense is addressed in Section 25.9.


 


25.8.        Notwithstanding anything to the contrary
contained in this Article 25, if there is a casualty during the
last twenty-four (24) months of the Term or any extension hereof such that a
majority of the Premises is not usable for the Permitted Use, then either party
can elect to terminate this Lease in connection with such casualty (except for
those provisions that, by their express terms, survive the expiration or
earlier termination hereof), and Tenant shall have no obligation to pay a
Termination Fee in connection therewith, and Landlord shall not have any
obligation whatsoever to repair, reconstruct or restore the Premises.


 


25.9.        Landlord’s
obligation, should it elect or be obligated to repair or rebuild, shall be limited
to the Property, the Building and the Tenant Improvements; provided that
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 the Property
or the Building is 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.


 


26.                                 Eminent Domain.


 


26.1.        In the event the whole of the Premises,
or such part thereof as shall substantially interfere with Tenant’s use and
occupancy thereof, shall be taken for any public or quasi-public


 


35

















 


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 (except for those provisions that, by their
express terms, survive the expiration or earlier termination hereof) effective
as of the date possession is required to be surrendered to said authority.  If there is any taking of more than
twenty-five percent (25%) of the Premises, Tenant may terminate this Lease
(except for those provisions that, by their express terms, survive the
expiration or earlier termination hereof) effective as of the date possession
is required to be surrendered to the applicable Governmental Authority.


 


26.2.        In the event of a partial taking of the
Building or the Project, or of 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 for those provisions that, by their express
terms, survive the expiration or earlier termination hereof) as of such taking
if such taking is, in Landlord’s reasonable 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.


 


26.3.        Tenant shall be entitled to any award
that is specifically awarded as compensation for (a) the taking of Tenant’s
personal property 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.


 


26.4.        If, upon any taking of the nature
described in this Article 26, this Lease continues in effect, then
Landlord shall promptly proceed to restore the Premises, the Building and the
Project, as applicable, to substantially their same condition prior to such
partial taking.  To the extent such restoration is
feasible, as determined by Landlord in reasonable discretion, the Rent shall be decreased
proportionately to reflect the loss of any portion of the Premises no longer
available to Tenant for the Permitted Use.


 


27.                                 Surrender.


 


27.1.        At least ten (10) days prior to Tenant’s
surrender of possession of any part of the Premises, Tenant shall provide
Landlord with (a) either (i) a facility decommissioning and Hazardous
Materials closure plan for the Premises (“Exit Survey”) or (ii) a
Phase I environmental site assessment (“Phase I Report”) and (b) written evidence of all
appropriate governmental releases, if applicable, obtained by Tenant in accordance with
Applicable Laws, including, without limitation, 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 or Phase I Report (as applicable) and compliance with any recommendations
set forth in the Exit Survey or Phase I Report with respect to
matters for which Tenant is otherwise responsible pursuant to this Lease.  Tenant’s obligations under this Section 27.1 shall survive the expiration or earlier
termination of the Lease.


 


36

















 


27.2.        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.


 


27.3.        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 or the Property, unless
Landlord consents in writing, and shall, at Landlord’s option, operate as an
assignment to Landlord of any or all subleases.


 


27.4.        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 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.


 


28.                                 Holding Over.


 


28.1.        If, with Landlord’s prior written
consent, Tenant holds possession of all or any part of the Premises after the
Term, 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 8, as adjusted in accordance with Article 9,
and (b) any amounts for which Tenant would otherwise be liable under this
Lease if the Lease were still in effect, including, without limitation,
payments for Tenant’s Pro Rata Share of Operating Expenses.  Any such month-to-month tenancy shall be
subject to every other term, covenant and agreement contained herein.


 


28.2.        Notwithstanding the foregoing, if Tenant
remains in possession of the Premises after the expiration or earlier
termination of the Term 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, without limitation, any lost rent or
consequential, special and indirect damages.


 


28.3.        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.


 


28.4.        The foregoing provisions of this Article 28
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.


 


29.                                 Indemnification
and Exculpation.


 


29.1.        Tenant agrees to indemnify, save, defend
and hold Landlord harmless from and against any and all demands, claims,
liabilities, losses, costs, expenses, actions, causes of action, damages or
judgments, and all reasonable expenses (including, without limitation, reasonable
attorneys’ fees, charges and disbursements) incurred in investigating or
resisting the same


 


37

















 


(collectively,
“Claims”) arising from injury or death to any person or damage to any
property occurring within or about the Premises, the Building or the Property
arising out of Tenant’s or Tenant’s employees’, agents’ or guests’ 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 the willful
misconduct or gross negligence of Landlord or its employees or agents or a
breach or default by Landlord in the performance of any of its obligations
hereunder.


 


29.2.        Notwithstanding any provision of Section 29.1
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,
without limitation, 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, without limitation, broken water lines,
malfunctioning fire sprinkler systems, roof leaks or stoppages of lines),
unless any such loss is due to Landlord’s willful disregard of written notice
by Tenant of need for a repair that Landlord is responsible to make for an
unreasonable period of time or to the gross negligence or willful misconduct of
Landlord or any of Landlord’s employees, agents or contractors.  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 29.2.


 


29.3.        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 (other than Landlord’s
employees, agents or contractors).


 


29.4.        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. 
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.


 


29.5.        The provisions of this Article 29
shall survive the expiration or earlier termination of this Lease.


 


29.6.        Landlord agrees to indemnify, save,
defend and hold Tenant 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 or the Property to the extent arising out
of Landlord’s or Landlord’s employees’ gross negligence or willful misconduct,
except to the extent caused by Tenant or any of Tenant’s employees, agents,
contractors or invitees.


 


29.7.        The indemnities in this Article 29
are intended to specifically cover actions brought by the indemnifying party’s
own employees, with respect to acts or omissions during the term of this
Lease.  In that regard, with respect to
the other, each party waives any immunity it may have under Washington’s
Industrial Insurance Act, RCW Title 51, to the extent necessary to provide the
indemnified party with a full and complete indemnity from claims made by the
indemnifying party and its employees, to the extent of their negligence.  If losses, liabilities, damages, liens, costs
and expenses covered by an indemnity are caused by the sole negligence of the
indemnified party or by


 


38

















 


the
concurrent negligence of both Landlord and Tenant or their respective employees,
agents, invitees and licensees, then the indemnifying party shall indemnify the
other only to the extent of the indemnifying party’s own negligence or that of
its officers, agents, employees, guests or invitees.  LANDLORD AND TENANT ACKNOWLEDGE THAT THE
INDEMNIFICATION PROVISIONS OF THIS ARTICLE 29 WERE SPECIFICALLY
NEGOTIATED AND AGREED UPON BY THEM.


 


29.8.        Notwithstanding anything in this Lease
or any Confidentiality Agreement to the contrary entered into by Landlord or
any other party, in no event shall Landlord be liable to Tenant for special,
consequential, exemplary or punitive damages, of for lost profits or loss of
business opportunity.  This limitation
also applies to and supercedes anything to the contrary in any Confidentiality
Agreement.


 


30.                                 Assignment or
Subletting.


 


30.1.        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 consent Landlord may not
unreasonably withhold, condition or delay. 
Tenant shall have the right to Transfer without Landlord’s prior written
consent the Premises or any part hereof to any person 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 (“Tenant’s Affiliate”); provided that, to the extent
permitted by Applicable Laws, Tenant notifies Landlord in writing at least ten (10) days
prior to the effectiveness of such Transfer to Tenant’s Affiliate (an “Affiliate
Transfer”) and otherwise comply with the requirements of this Lease
regarding such Transfer (and if such prior notification is not permitted by
Applicable Laws, as soon as reasonably practicable).  In addition, Tenant may, without Landlord’s
prior written consent but upon prior written notice to Landlord, Transfer the Premises
in its entirety in connection with a merger or acquisition of Tenant by a
person other than a Tenant Affiliate; provided that, to the extent
permitted by Applicable Laws, Tenant notifies Landlord in writing at least ten (10) days
prior to the effectiveness of such Transfer (in sufficient detail to allow
Landlord’s tax counsel to determine whether the Transfer would be prohibited by
the last sentence of Section 30.3) and, if prior notice is not
permitted by Applicable Laws, within ten (10) days after the effectiveness
of such Transfer; and provided, further, that, if a Transfer
described in this sentence would be prohibited by the last sentence of Section 30.3
(as determined by Landlord’s tax counsel), then Landlord may either elect to (a) permit
the Transfer notwithstanding the last sentence of Section 30.3 or (b) upon
Landlord’s notice to Tenant (delivered no later than fourteen (14) days after
Tenant notifies Landlord of the Transfer pursuant to this Section), terminate
this Lease as of the date of the effectiveness of such Transfer (except for the
provisions hereof that expressly survive the expiration or earlier termination
hereof).  If Landlord terminates this
Lease pursuant to Subsection 30.1(b), then Tenant shall be liable to
Landlord for default damages equal to (i) the amounts described in Sections 32.5(a)-(c) plus (ii) the
then-unamortized amount of the items listed in Subsections 3.2(a)-(b) (provided
that, if such early termination occurs prior to the Permitted Early Termination Date, then, for
the sake of this sentence, the amounts calculated pursuant to Sections 32.5(b) and (c) shall be calculated using
the Permitted Early Termination Date).  For purposes of


 


39

















 


Affiliate
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.  An “Exempt
Transfer” means an Affiliate Transfer and any subleases, licenses any other
occupancy agreements that, in the aggregate, do not exceed twenty-five percent
(25%) of the Premises’ Rentable Area.  In
no event shall Tenant perform a 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; provided that the limitations in
this sentence shall not apply if the Tenant merges with such other tenant or
prospective tenant.


 


30.2.        In the event Tenant desires to effect a
Transfer, then, if permitted by Applicable Laws, at least thirty (30) days
prior  to the date when Tenant desires
the Transfer to be effective (the “Transfer Date”), Tenant shall provide
written notice to Landlord (the “Transfer Notice”) containing
information (including references) concerning the character of the proposed
transferee, assignee or sublessee; the Transfer Date; any ownership or
commercial relationship between Tenant and the proposed transferee, assignee or
sublessee, all in such detail as Landlord shall reasonably require (and if such
prior notification is not permitted by Applicable Laws, as soon as reasonably
practicable).


 


30.3.        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), (b) any change in use
from the Permitted Use that such transferee, assignee or sublessee proposes to
make in the use of the Premises and (c) Landlord’s desire to exercise its
rights under Section 30.8 to cancel this Lease.  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, (w) 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; (x) Tenant shall not furnish or render any services to an
occupant, assignee, manager or other transferee with respect to whom transfer
consideration is required to be paid, or manage or operate the Premises or any
capital additions so transferred, with respect to which transfer consideration
is being paid; (y) Tenant shall not 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.


 


40
















 


30.4.        As conditions precedent to Tenant
subleasing the Premises or to Landlord considering a request by Tenant to
Tenant’s transfer of rights or sharing of the Premises (for the sake of
clarify, Affiliate Transfers do not require Landlord’s consent), 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,
without limitation, evidence respecting the relevant business experience and
financial responsibility and status of the proposed transferee, assignee or sublessee;


 


(c)           Tenant shall reimburse Landlord for
Landlord’s actual costs and expenses, including, without limitation, reasonable
attorneys’ fees, charges and disbursements incurred in connection with the
review, processing and documentation of such request in an amount not to exceed
Two Thousand Dollars ($2,000) in any one instance;


 


(d)           If Tenant’s transfer of rights or
sharing of the Premises (except for Exempt Transfers) provides for the receipt
by, on behalf of or on account of Tenant of any consideration of any kind
whatsoever (including, without limitation, 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 all 
deductions for any out-of-pocket transaction costs incurred by Tenant,
including, without limitation, marketing expenses, tenant improvement
allowances actually provided by Tenant, alterations, cash concessions,
brokerage commissions, attorneys’ fees and free rent.  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 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 the form attached as Exhibit J (for a
sublease of the entire Premises) or Exhibit K (for a sublease of a
portion of the Premises) hereto;


 


(g)           Tenant shall not then be in Default
hereunder;


 


41

















 


(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, if any (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 22.7), 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 22.2.


 


30.5.        Any Transfer that is not in compliance
with the provisions of this Article 30 shall be void and shall, at
the option of Landlord, terminate this Lease (except for those provisions that,
by their express terms, survive the expiration or earlier termination hereof).


 


30.6.        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.


 


30.7.        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.


 


30.8.        Other than in connection with an Exempt
Transfer, if Tenant delivers to Landlord a Transfer Notice indicating a desire
to transfer this Lease to a proposed transferee, assignee or sublessee other
than as provided within Section 30.4, 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, as to the
portion of the Premises that is the subject of such Transfer Notice, 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 business (5)


 


42

















 


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 30.8,
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.


 


30.9.        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; provided
that, during the pendency of a Default (as defined below) by Tenant that
remains uncured after the expiration of any applicable notice and cure period,
Tenant shall have the right to collect such rent.


 


31.                                 Subordination
and Attornment.


 


31.1.        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; provided
that the Mortgagee (as defined below) agrees to recognize this Lease and not
disturb Tenant so long as Tenant is not in Default.


 


31.2.        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
Landlord is tenant as may be required by Landlord, so long as such instrument
includes the recognition and non-disturbance provisions of Section 31.1
above, and does not materially modify any of Tenant’s rights or obligations or
Landlord’s obligations under this Lease in a way adverse to Landlord.  If any such mortgagee, beneficiary or
landlord under a lease wherein Landlord is tenant (each, a “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.


 


31.3.        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 and not adversely modifying
Tenant’s rights and obligations hereunder, 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.


 


31.4.        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
at the election of the purchaser at such foreclosure or sale attorn to the


 


43

















 


purchaser
upon any such foreclosure or sale and recognize such purchaser as Landlord
under this Lease; provided such purchaser agrees to recognize this Lease
and not disturb Tenant so long as Tenant is not in Default.


 


31.5.        Landlord agrees to
obtain a subordination, nondisturbance and attornment agreement (“SNDA”)
from any Lenders of Landlord that have a lien on the Propject on such Lenders’
standard form, subject to commercially reasonable modifications requested by
Tenant; provided that Tenant
shall not be required to execute an SNDA that materially modifies Tenant rights
and obligations or Landlord’s obligations hereunder.


 


32.                                 Defaults and
Remedies.


 


32.1.        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, but are not limited to, 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 five (5) business
days after the date such payment is due, Tenant shall pay to Landlord an
additional sum of three percent (3%) of the overdue Rent as a late charge.  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. 
Notwithstanding the foregoing, Landlord agrees not to impose a late charge on the first delinquent payment of Base Rent or
any other payment constituting Rent which may occur during any given calendar year
of the Term, provided such delinquent payment is received by Landlord
within three (3) calendar days after Tenant’s receipt of Landlord’s
delinquency notice.


 


32.2.        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 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.


 


32.3.        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, 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 Tenant does cure such failure
within a reasonable time (which shall be no longer than five (5) business
days in the case of monetary defaults and thirty (30) days in the case of
non-monetary defaults) after Tenant’s receipt
of written notice of such default, which notice must specify the nature
of Tenant’s failure; provided, however, that if the nature of Tenant’s
obligation is such that more than thirty (30) days are required for its
performance related to a non-monetary default, then Tenant shall not be in
default


 


44

















 


if
Tenant commences performance within such thirty (30) day period and thereafter
diligently prosecutes the same to completion; or provided that such
failure by Tenant unreasonably interfered with the use of the Building by any
other tenant or with the efficient operation of the Building, 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 (but subject to Section 15.4).  In addition to the late charge described in Section 32.1,  Tenant shall pay to Landlord
as Additional Rent all sums so paid or incurred by Landlord, together with
interest thereon, from the date such sums were paid or incurred, at the Default
Rate.


 


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


 


(a)           If Tenant fails to maintain the
Premises as required by this Lease;


 


(b)           The failure by Tenant to make any
payment of Rent, as and when due, or to satisfy its obligations under Article 20,
where such failure shall continue for a period of five (5) business days
after written notice thereof from Landlord to Tenant;


 


(c)           The failure by Tenant to observe or
perform any obligation or covenant contained herein (other than described in Subsections
32.4(a) and 32.4(b)) to be performed by Tenant, where such
failure shall continue for a period of thirty (30) 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 thirty (30) days to cure,
Tenant shall not be deemed to be in Default if Tenant shall commence such cure
within said thirty (30) 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 and such action is not dismissed or vacated within one
hundred twenty (120) days;


 


(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 that is not
vacated within one hundred twenty (120) days of entry;


 


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


 


(h)           Failure to deliver an estoppel
certificate in accordance with Article 21, which is not cured
within five (5) business days from receipt of a default notice in
connection therewith;


 


45

















 


(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; or


 


Notices
given under this Section 32.4 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 inclusive 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.


 


32.5.        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 shall be entitled to terminate Tenant’s right to possession of the
Premises by any lawful means, in which case this Lease shall terminate (except
for those provisions that, by their express terms, survive the expiration or
earlier termination hereof) and 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,
without limitation:


 


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


 


(b)           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


 


(c)           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


 


(d)           Any other amount necessary to
compensate Landlord for all damages  caused by Tenant’s failure to perform its
obligations under this Lease; plus


 


(e)           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, but specifically excluding


 


46

















 


all
special, consequential, exemplary or punitive damages, or Claims for lost
profits or loss of business opportunity, unless specifically permitted by this Section 32.5.


 


As
used in Subsections 32.5(a) and 32.5(b), “worth at the time
of award” shall be computed by allowing interest at the Default Rate.  As used in Subsection 32.5(c), the “worth
at the time of the award” shall be computed by taking the present value of such
amount, using the Default Rate at the time of the award.


 


32.6.        In addition to any
other remedies available to Landlord at law or in equity and under this Lease
(but subject to the limitation in Section 32.5(e)), Landlord may
continue this Lease in effect after Tenant’s Default and recover Rent as it
becomes due.  In addition, Landlord shall
not be liable in any way whatsoever for its failure or refusal to relet the
Premises.  For purposes of this Section 32.6,
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, but not limited to, 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 (except for those provisions that, by their
express terms, survive the expiration or earlier termination hereof) and to
recover damages to which Landlord is entitled, unless Tenant has cured such Default
prior to the effective date of such termination.


 


32.7.        If Landlord does not
elect to terminate this Lease as provided in Section 32.5, 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 (except for those provisions that, by their
express terms, survive the expiration or earlier termination hereof) and to
recover damages to which Landlord is entitled.


 


32.8.        In the event Landlord elects to terminate
this Lease and relet the Premises, Landlord may execute any new lease in its
own name; provided that this Lease shall thereafter be deemed terminated
and Landlord’s remedies shall be limited to those stated in this Article 32.  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,
without limitation, 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


 


47

















 


(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.


 


32.9.        Except as stated in Section 32.5,
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.


 


32.10.      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.


 


32.11.      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.


 


32.12.      Landlord shall not be in default under
this Lease unless Landlord fails to perform obligations required of Landlord
within a reasonable time (which shall be no longer than five (5) business
days in the case of monetary defaults and thirty (30) days in the case of non-monetary
defaults) after Landlord’s receipt of written notice of such default, which notice must specify the nature of Landlord’s
failure; provided, however, that if the nature of Landlord’s obligation
is such that more than thirty (30) days are required for its performance
related to a non-monetary default, 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.  If Landlord
is in default and has not cured within the time periods set forth herein,
Tenant shall have all rights and remedies at law or in equity, including
without limitation (a) the right to proceed in equity or at law to compel
Landlord to perform its obligations or (b) to cure the underlying default
and have the right to be reimbursed for the sum it reasonably expends to effect
such cure, in which event Landlord shall reimburse Tenant within thirty (30)
days after Tenant’s written demand (along with supporting documentation
reasonably acceptable to Landlord) therefor (and such costs shall constitute
Operating Expenses), with interest accruing thereafter at the Default Rate.


 


32.13.      In the event of any default by Landlord,
Tenant shall give notice by nationally recognized overnight courier (e.g.,
Federal Express) or by registered or certified mail to any (a)


 


48

















 


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 the same cure period
afforded to Landlord; provided that Landlord shall furnish to Tenant in
writing, upon written request by Tenant, the names and addresses of all such
persons who are to receive such notices.


 


33.                                 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:


 


33.1.        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;


 


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


 


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


 


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


 


34.                                 Brokers.


 


34.1.        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 EDG Commercial Real Estate and CB Richard
Ellis (collectively, “Broker”), 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 Broker in relation to this Lease pursuant to a separate
agreement between Landlord and Broker.


 


34.2.        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.


 


34.3.        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
34.1 and 34.2.


 


49
















 


34.4.        Landlord and Tenant agree to indemnify, save, defend and hold the other harmless from any and all cost or
liability for compensation claimed by any broker or agent other than Broker
employed or engaged by it or claiming to have been employed or engaged by it.


 


35.                                 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 entire interest in this
Lease and in Landlord’s fee title to or leasehold interest in the entirety of
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 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, but agrees to give Tenant
prompt notice of such transfer.


 


36.                                 Limitation of
Landlord’s Liability.


 


36.1.        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 of which the Premises
are a part, (b) rent, proceeds or other income from such real property
receivable by Landlord or (c) 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 of which the
Premises are a part.


 


36.2.        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 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 except as may be necessary to secure jurisdiction
of the corporation.  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, except as may be necessary to secure
jurisdiction of the


 


50

















 


Landlord,
and no judgment shall be taken or writ of execution levied against the assets
of any partner, shareholder, director, employee or agent of Landlord.


 


36.3.        Each of the covenants and agreements of
this Article 36 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.


 


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


 


37.1.        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


 


37.2.        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, without limitation, 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.


 


38.                                 Authority.


 


38.1.        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 and (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.


 


38.2.        Landlord guarantees,
warrants and represents that (a) Landlord is duly incorporated or
otherwise established or formed and validly existing under the laws of its
state of incorporation, establishment or formation, (b) Landlord has and
is duly qualified to do business in the state in which the Property is located,
(c) Landlord has full corporate, partnership, trust, association or other
appropriate power and authority to enter into this Lease and to perform all
Landlord’s obligations hereunder and (d) each person (and all of the
persons if more than one signs) signing this Lease on behalf of Landlord is
duly and validly authorized to do so


 


39.                                 Confidentiality.  Tenant shall keep the terms and conditions of
this Lease confidential and shall not (a) disclose to any third party any
terms or conditions of this Lease or any other Lease-related document
(including, without limitation, 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).  Landlord shall not release to
any third party any non-public financial information or non-public information
about Tenant’s ownership structure that


 


51

















 


Tenant
gives Landlord.  Notwithstanding the
foregoing, confidential information under this Section may be released by
Landlord or Tenant under the following circumstances:  (x) if required by Applicable Laws (to
the extent and as determined by the releasing party’s legal counsel) or in any
judicial proceeding; provided that the releasing party has given the
other party reasonable notice of such requirement, if feasible, (y) to a
party’s attorneys, accountants, brokers and other bona fide consultants or
advisers; provided such third parties agree to be bound by this Section or
(z) to bona fide prospective assignees or subtenants of this Lease; provided
they agree in writing to be bound by this Section.


 


40.                                 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 or certified mail
(return receipt requested), shall be deemed delivered on the date of delivery
or date delivery is first refused.  Any
notices given pursuant to this Lease shall be addressed to Landlord or Tenant
at the addresses shown in Sections 2.9 and 2.10, respectively,
with a copy delivered to Tenant at the Premises.  Either party may, by notice to the other
given pursuant to this Section, specify additional or different street
addresses for notice purposes.


 


41.                                 Miscellaneous.


 


41.1.        Landlord reserves the right to change
the name of the Project or the Building in its sole discretion; provided that, during the Term,
Landlord shall not name the Project or the Building for any of Tenant’s major
competitors identified on Exhibit G attached hereto.  Such limitation shall not apply when (a) Tenant
is not occupying at least a portion of the Premises or (b) Tenant has
received notice of a default with regard to a monetary or material non-monetary
obligation under this Lease.


 


41.2.        To induce Landlord to enter into this
Lease, in the event that Tenant is no longer a publicly traded company, Tenant
agrees that it shall promptly furnish to Landlord, from time to time, upon
Landlord’s written request, the most recent audited year-end financial
statements reflecting Tenant’s current financial condition.  Tenant shall, within ninety (90) days after
the end of Tenant’s financial year, furnish Landlord with a certified copy of
Tenant’s audited (if otherwise prepared by Tenant) year-end financial
statements for the previous year.  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.


 


41.3.        Where applicable in this Lease, the
singular includes the plural and the masculine or neuter includes the
masculine, feminine and neuter.  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.


 


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 entitled to
have and


 


52

















 


recover
from the other party reasonable attorneys’ fees, charges and disbursements and
costs of suit.


 


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.  Neither party shall record this Lease.  Tenant 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 41.13
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.


 


41.15.      Each party guarantees,
warrants and represents 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


 


53

















 


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, the
Building or the Project; or any claim of injury or damage related to this Lease
or the Premises, the Building or the Project. 
The parties hereby consent to the jurisdiction of the courts in the
county in which the Premises are located, and agree that such venue is not now
and will not in the future be an inconvenient forum.


 


[REMAINDER OF THIS PAGE
INTENTIONALLY LEFT BLANK]


 


54

















 


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


 


LANDLORD:


 


BMR-3450 MONTE
VILLA PARKWAY LLC,


a Delaware limited
liability company


 


	
  By:

  	
  /s/ Kevin M. Simonsen

  	
   

  
	
  Name:

  	
  Kevin M. Simonsen

  	
   

  
	
  Title:

  	
  VP, Real Estate Counsel

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  TENANT:

  	
   

  
	
   

  	
   

  
	
  AVI
  BIOPHARMA, INC.,

  	
   

  
	
  an
  Oregon corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Leslie Hudson, Ph.D.

  	
   

  
	
  Name:

  	
  Dr. L. Hudson

  	
   

  
	
  Title:

  	
  President and CEO

  	
   

  



 
















 


EXHIBIT A-1


 


PROPERTY LEGAL DESCRIPTION


 


That
certain real property located in the City of Bothell, County of Snohomish,
State of Washington, legally described as Lot 7, Quadrant Monte Villa Center,
according to the plat thereof recorded in Volume 54 of Plats, pages 165
through 169, inclusive, records of Snohomish County, Washington.


 


A-1-1

















 


EXHIBIT A-2


 


PREMISES SPACE PLAN


 


 


A-2-1

















 


EXHIBIT B


 


WORK LETTER


 


This
Work Letter (this “Work Letter”) is made and entered into as of
the 24th day of July, 2009, by and between BMR-3450 MONTE
VILLA PARKWAY LLC, a Delaware
limited liability company (“Landlord”), and AVI
BIOPHARMA, INC., an Oregon corporation
(“Tenant”),
and is attached to and made a part of that certain Lease dated as of July 24, 2009 (as the same may be amended, amended and restated,
supplemented or otherwise modified from time to time, the “Lease”), by and between Landlord and Tenant for the Premises located
at 3450 Monte Villa Parkway in Bothell, Washington.  All capitalized terms used but not otherwise
defined herein shall have the meanings given them in the Lease.


 


1.                                       General
Requirements.


 


1.1.          Authorized Representatives.


 


(a)           Landlord designates, as Landlord’s authorized
representative (“Landlord’s Authorized Representative”), (a) Pico
Mina as the person authorized to initial plans, drawings and approvals pursuant
to this Work Letter and (b) John Bonanno as the person authorized to
initial plans, drawings, approvals and to sign change orders pursuant to this
Work Letter and any amendments to this Work Letter or the Lease.  Tenant shall not be obligated to respond to
or act upon any such item until such item has been initialed or signed (as
applicable) by the appropriate Landlord’s Authorized Representative.  Landlord may change either Landlord’s
Authorized Representative upon one (1) business day’s prior written notice
to Tenant.


 


(b)           Tenant designates Mark Reddish (“Tenant’s Authorized
Representative”) as the person authorized to initial and sign all plans,
drawings, change orders and approvals pursuant to this Work Letter.  Landlord shall not be obligated to respond to
or act upon any such item until such item has been initialed or signed (as
applicable) by Tenant’s Authorized Representative.  Tenant may change Tenant’s Authorized
Representative upon one (1) business day’s prior written notice to
Landlord.


 


1.2.          Schedule.  The
schedule for design and development of the Tenant Improvements (as hereinafter
defined), including, without limitation, the time periods for preparation and
review of construction documents, approvals and performance, shall be in
accordance with the schedule attached as Attachment 3 hereto (the “Schedule”).  The Schedule shall be subject to adjustment
as mutually agreed upon in writing by the parties, or as provided in this Work
Letter.


 


1.3.          Tenant’s Architects, Contractors and Consultants.  The architect, engineering consultants,
design team, general contractor and subcontractors responsible for the
construction of the Tenant Improvements shall be selected by Tenant and
approved by Landlord, which approval Landlord shall not unreasonably withhold,
condition or delay.  Landlord agrees that
it cannot condition its consent on a requirement that Tenant use union
labor.  All Tenant contracts related to
the Tenant Improvements shall provide that Tenant may assign such contracts to
Landlord and Landlord’s tenants at any time.


 


B-1

















 


2.                                       Tenant
Improvements.  All Tenant
Improvements shall be performed by Tenant’s contractor, at Tenant’s sole cost
and expense (subject to Landlord’s obligations with respect to any portion of
the TI Allowance and in accordance with the plans attached as Attachment 4
hereto (the “Construction Plans”), the Lease and this Work Letter.  Excess TI Costs shall be handled in
accordance with Section 4.4 of the Lease.  If Tenant fails to pay, or is late in paying,
any sum due to Landlord under Section 4.4 of the Lease or this Exhibit B,
then Landlord shall have all of the rights and remedies set forth in the Lease
for nonpayment of Rent (including, but not limited to, the right to interest
and the right to assess a late charge), and for purposes of any litigation
instituted with regard to such amounts the same shall be considered Rent.  All material and equipment furnished by
Tenant or its contractors as the Tenant Improvements shall be new or “like new;”
the Tenant Improvements shall be performed in a first-class, workmanlike
manner; and the quality of the Tenant Improvements shall be of a nature and
character not less than Landlord’s building standards.  Promptly after the Effective Date, two (2) copies
of such Construction Plans shall be initialed and dated by Landlord and Tenant,
and Tenant shall promptly submit such Construction Plans to all appropriate
Governmental Authorities for approval. 
The Landlord has approved the Construction Plans attached hereto.  The Construction Plans, as approved by the
Governmental Authorities, and all change orders specifically permitted by this
Work Letter, are referred to herein as the “Approved Plans.”


 


2.1.          Changes to the Tenant Improvements.  Any changes to the Construction Plans or the
Approved Plans (each, a “Change”) shall be requested and instituted in
accordance with the provisions of this Article 2 and shall be
subject to the written approval of the non-requesting party in accordance with
this Work Letter.


 


(a)           Change Request. 
Either Landlord or Tenant may request Changes after Landlord approves
the Construction Plans by notifying the other party thereof in writing in
substantially the same form as the AIA standard change order form (a “Change
Request”), which Change Request shall detail the nature and extent of any
requested Changes, including, without limitation, (a) the Change, (b) the
party required to perform the Change and (c) any modification of the
Construction Plans or the Approved Plans (as applicable) and the Schedule, as
applicable, necessitated by the Change. 
If the nature of a Change requires revisions to the Construction Plans
or the Approved Plans, then the requesting party shall be solely responsible
for the cost and expense of such revisions. 
Change Requests shall be signed by the requesting party’s Authorized Representative.


 


(b)           Approval of Changes.  All Change Requests shall be subject to the
other party’s prior written approval, which approval shall not be unreasonably
withheld, conditioned or delayed.  The
non-requesting party shall have five (5) business days after receipt of a
Change Request to notify the requesting party in writing of the non-requesting
party’s decision either to approve or object to the Change Request.  The non-requesting party’s failure to respond
within such five (5) business day period shall be deemed approval by the
non-requesting party.


 


2.2.          Preparation of
Estimates.  Tenant shall, before
proceeding with any Change, using its best efforts, prepare as soon as is
reasonably practicable (but in no event more than five (5) business days
after delivering a Change Request to Landlord or receipt of a Change Request)
an estimate of the increased costs or savings that would result from such
Change, as well as an estimate on such Change’s effects on the Schedule.  Landlord shall have five (5) business
days 


 


B-2

















 


after
receipt of such information from Tenant to (a) in the case of a
Tenant-initiated Change Request, approve or reject such Change Request in
writing, or (b) in the case of a Landlord-initiated Change Request, notify
Tenant in writing of Landlord’s decision either to proceed with or abandon the
Landlord-initiated Change Request.


 


3.                                       Completion of
Tenant Improvements.  Tenant, at
its sole cost and expense (except for the TI Allowance shall perform and
complete the Tenant Improvements in all respects (a) in substantial
conformance with the Approved Plans, (b) otherwise in compliance with
provisions of the Lease and this Work Letter and (c) in accordance with
Applicable Laws, the requirements of Tenant’s insurance carriers, the
requirements of Landlord’s insurance carriers (to the extent Landlord provides
its insurance carriers’ requirements to Tenant) and the board of fire
underwriters having jurisdiction over the Premises.  The Tenant Improvements shall be deemed
completed at such time as Tenant shall furnish to Landlord (v) evidence
satisfactory to Landlord that (i) all Tenant Improvements have been
completed and paid for in full (which shall be evidenced by the architect’s
certificate of completion and the general contractor’s and each subcontractor’s
and material supplier’s final unconditional waivers and releases of liens, each
in a form reasonably acceptable to Owner and complying with Applicable Laws), (ii) all
Tenant Improvements have been accepted by Landlord, (iii) any and all
liens related to the Tenant Improvements have either been discharged of record
(by payment, bond, order of a court of competent jurisdiction or otherwise) or
waived by the party filing such lien and (iv) no security interests
relating to the Tenant Improvements are outstanding, (w) all
certifications and approvals with respect to the Tenant Improvements that may
be required from any Governmental Authority and any board of fire underwriters
or similar body for the use and occupancy of the Premises, (x) certificates
of insurance required by the Lease to be purchased and maintained by Tenant, (y) an
affidavit from Tenant’s architect certifying that all work performed in, on or
about the Premises is in accordance with the Approved Plans and (z) complete
drawing print sets and electronic CADD files on disc of all contract documents
for work performed by their architect and engineers in relation to the Tenant
Improvements.  If the cost of the Tenant
Improvements is reasonably anticipated by Landlord to exceed the TI Allowance,
Tenant shall pay the Excess TI Costs pari passu with
Landlord.  If Tenant fails to pay, or is
late in paying, any sum due to Landlord under this Exhibit B, then
Landlord shall have all of the rights and remedies set forth in the Lease for
nonpayment of Rent (including, but not limited to, the right to interest and
the right to assess a late charge), and for purposes of any litigation
instituted with regard to such amounts the same shall be considered Rent.


 


4.                                       Insurance.


 


4.1.          Property
Insurance.  At all times during the
period beginning with commencement of construction of the Tenant Improvements
and ending with final completion of the Tenant Improvements and, Tenant shall
maintain, or cause to be maintained (in addition to the insurance required of
Tenant pursuant to the Lease), property insurance insuring Landlord and its
affiliates, agents and employees, as their interests may appear.  Such
policy shall, on a completed values basis for the full insurable value at all
times, insure against loss or damage by fire, vandalism and malicious mischief
and other such risks as are customarily covered by the so-called “broad form
extended coverage endorsement” upon all Tenant Improvements and the general
contractor’s and any subcontractors’ machinery, tools and equipment, all while
each forms a part of, or is 


 


B-3

















 


contained
in, the Tenant Improvements or any temporary structures on the Premises, or is
adjacent thereto.  Tenant agrees to pay any deductible, and Landlord
is not responsible for any deductible, for a claim under such insurance.  Said property insurance shall contain an
express waiver of any right of subrogation by the insurer against Landlord and
its affiliates, agents and employees, and shall name Landlord and its
affiliates as loss payees as their interests may appear.


 


4.2.          Workers’
Compensation Insurance.  At all times
during the period of construction of the Tenant Improvements, Tenant shall, or
shall cause its contractors or subcontractors to, maintain statutory workers’
compensation insurance as required by Applicable Laws.


 


4.3.          Bonding
Requirements.  Tenant’s contractors
performing the Tenant Improvements shall not be required to obtain completion
and lien indemnity bonds.


 


5.                                       Liability.  Tenant assumes sole responsibility and
liability for any and all injuries or the death of any persons, including
Tenant’s contractors and subcontractors and their respective employees, and for
any and all damages to property caused by, resulting from or arising out of any
act or omission on the part of Tenant, Tenant’s contractors or subcontractors,
or their respective employees in the prosecution of the Tenant
Improvements.  Tenant agrees to
indemnify, defend, protect and save free and harmless Landlord and Landlord’s
affiliates, agents and employees from and against all losses and expenses,
including reasonable attorneys’ fees and expenses, that Landlord may incur as
the result of claims or lawsuits due to, because of, or arising out of any and
all such injuries, death or damage, whether real or alleged, and Tenant and
Tenant’s contractors and subcontractors shall assume and defend at their sole
cost and expense all such claims or lawsuits; provided, however, that
nothing contained in this Work Letter shall be deemed to indemnify or otherwise
hold Landlord harmless from or against liability caused by Landlord’s gross
negligence or willful misconduct.  Any
deficiency in design or construction of the Tenant Improvements shall be solely
the responsibility of Tenant, notwithstanding the fact that Landlord may have
approved of the same in writing.


 


6.                                       TI Allowance.


 


6.1.          Application of TI Allowance.  Landlord shall contribute the TI Allowance
toward the costs and expenses incurred in connection with the performance of
the Tenant Improvements, in accordance with Article 4 of the
Lease.  If the entire TI Allowance is not
applied toward or reserved for the costs of the Tenant Improvements, then
Tenant shall not be entitled to a credit of such unused portion of the TI
Allowance.  Tenant may apply the TI
Allowance for the payment of construction and other costs in accordance with
the terms and provisions of the Lease.


 


6.2.          Approval of Budget for the Tenant Improvements.  The approved budget for the Tenant
Improvements (the “Approved Budget”) is attached as Attachment 5
hereto.  The TI Allowance may be applied
to the cost of installing temporary submeters for utilities serving the
Premises in accordance with the Lease, even if Tenant causes such work to be
done prior to agreement on the Approved Budget.


 


6.3.          Advance Requests. 
Upon submission by Tenant to Landlord of (a) a statement (an “Advance
Request”) setting forth the total amount of the TI Allowance requested, (b) a


 


B-4

















 


summary of the Tenant
Improvements performed using AIA standard form Application for Payment (G 702)
executed by the general contractor and by the architect and (c) lien
releases from the general contractor and each subcontractor and material
supplier with respect to the Tenant Improvements performed that correspond to
the Advance Request, then Landlord shall, within thirty (30) days following
receipt by Landlord of an Advance Request and the accompanying materials
required by this Section 6.3, pay to the applicable contractors,
subcontractors and material suppliers or to Tenant (for reimbursement for
payments made by Tenant prior to Landlord’s approval of the Approved Budget to
such contractors, subcontractors or material suppliers), as elected by
Landlord, the amount of  Tenant
Improvement costs set forth in such Advance Request; provided, however,
that Landlord shall not be obligated to make any payments under this Section 6.3
until the budget for the Tenant Improvements is approved in accordance with Section 6.2
above, and any Advance Request under this Section 6.3 shall be
subject to the payment limits set forth in Section 6.2 above and Article 4
of the Lease.


 


7.                                       Miscellaneous.


 


7.1.          Number; Headings.  Where applicable in this Work Letter, the
singular includes the plural and the masculine or neuter includes the
masculine, feminine and neuter.  The
section headings of this Work Letter are not a part of this Work Letter and
shall have no effect upon the construction or interpretation of any part
hereof.


 


7.2.          Attorneys’ Fees.  If either party commences an action against
the other party arising out of or in connection with this Work Letter, then the
substantially prevailing party shall be entitled to have and recover from the
other party reasonable attorneys’ fees, charges and disbursements and costs of
suit.


 


7.3.          Time of Essence.  Time is of the essence with respect to the
performance of every provision of this Work Letter in which time of performance
is a factor.


 


7.4.          Covenant and
Condition.  Each provision of this
Work Letter performable by Tenant shall be deemed both a covenant and a
condition.


 


7.5.          Withholding of
Consent.  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.


 


7.6.          Invalidity.  Any provision of this Work Letter 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 Work
Letter shall remain in full force and effect and shall be interpreted as if the
invalid, void or illegal provision did not exist.


 


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


 


7.8.          Successors.  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 


 


B-5

















 


respective
heirs; legatees; devisees; executors; administrators; and permitted successors,
assigns, sublessees.  Nothing in this Section shall
in any way alter the provisions of the Lease restricting assignment or
subletting.


 


7.9.          Governing Law.  This Work Letter 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.


 


7.10.        Power and
Authority.  Each of Landlord and
Tenant guarantees, warrants and represents to the other that the individual or
individuals signing this Work Letter on its behalf have the power, authority and
legal capacity to sign this Work Letter 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.


 


7.11.        Counterparts.  This Work Letter may be executed in one or
more counterparts, each of which, when taken together, shall constitute one and
the same document.


 


7.12.        Amendments; Waiver.  No provision of this Work Letter 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.


 


7.13.        Waiver of Jury
Trial.  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 Work Letter; the relationship between
Landlord and Tenant; Tenant’s use or occupancy of the Premises; or any claim of
injury or damage related to this Work Letter or the Premises.


 


IN WITNESS WHEREOF,
Landlord and Tenant have executed this Work Letter to be effective on the date
first above written.


 


LANDLORD:


 


BMR-3450 MONTE
VILLA PARKWAY LLC,


a Delaware limited
liability company


 


 


	
  By:

  	
  /s/ Kevin M. Simonsen

  	
   

  
	
  Name:

  	
  Kevin M. Simonsen

  	
   

  
	
  Title:

  	
  VP, Real Estate Counsel

  	
   

  



 


 


TENANT:


 


B-6

















 


AVI BIOPHARMA, INC.,


an Oregon corporation


 


	
  By:

  	
  /s/ Leslie Hudson, Ph.D.

  	
   

  
	
  Name:

  	
  Dr. L. Hudson

  	
   

  
	
  Title:

  	
  President and CEO

  	
   

  



 


B-7
















 


ATTACHMENT 1 TO EXHIBIT B


 


PRE-APPROVED PROFESSIONALS AND CONTRACTORS


 


1.          Mortenson


 


2.          BN Builders


 


3.          Turner


 


4.          Sierra


 


5.          Saba Architects


 


6.          Lease Crutcher
Lewis


 


7.          Rushing
Engineering


 


8.          Pacific
Alliance Construction


 


9.          PSF Mechanical, Inc.


 


B-1-1

















 


ATTACHMENT 2 TO EXHIBIT B


 


TENANT WORK PLANS


 


Architectural
Drawings


 


Engineering
Drawings


 


1.     Mechanical


 


2.     Plumbing


 


3.     Electrical


 


4.     Fire protection


 


5.     Civil engineering


 


Specifications – Required for
all disciplines listed above


 


B-2-2

















 


ATTACHMENT 3 TO EXHIBIT B


 


SCHEDULE


 


[See attached]


 


B-3-1

















 


ATTACHMENT 4 TO EXHIBIT B


 


CONSTRUCTION PLANS


 


[See attached]


 


B-4-1

















 


ATTACHMENT 5 TO EXHIBIT B


 


APPROVED BUDGET


 


[See attached]


 


B-5-1

















 


EXHIBIT C


 


ACKNOWLEDGEMENT OF TERM COMMENCEMENT DATE


AND TERM EXPIRATION DATE


 


THIS
ACKNOWLEDGEMENT OF TERM COMMENCEMENT DATE AND TERM EXPIRATION DATE is entered
into as of
[              ],
20[    ], with reference to that certain Lease (the “Lease”)
dated as of July 24, 2009, by AVI
BIOPHARMA, INC., an Oregon
corporation (“Tenant”), in favor of BMR-3450 MONTE VILLA PARKWAY LLC, a
Delaware limited liability company (“Landlord”).  All capitalized terms used herein without
definition shall have the meanings ascribed to them in the Lease.


 


Tenant
hereby confirms the following:


 


1.             Tenant accepted possession
of the Premises on
[              ],
20[    ].


 


2.             The Premises are in good
order, condition and repair.


 


3.             The Tenant Improvements
required to be constructed by Landlord under the Lease have been substantially
completed.


 


4.             All conditions of the Lease
to be performed by Landlord as a condition to the full effectiveness of the
Lease have been satisfied, and Landlord has fulfilled all of its duties in the
nature of inducements offered to Tenant to lease the Premises.


 


5.             In accordance with the
provisions of Section 4.1 of the Lease, the Term Commencement Date
is
[              ],
20[    ], and, unless the Lease is terminated prior to the
Term Expiration Date pursuant to its terms, the Term Expiration Date shall be
[              ],
20[    ].


 


6.             Tenant commenced occupancy
of the Premises for the Permitted Use on
[              ],
20[    ].


 


7.             The Lease is in full force
and effect, and the same represents the entire agreement between Landlord and
Tenant concerning the Premises[, except
[              ]].


 


8.             Tenant has no existing
defenses against the enforcement of the Lease by Landlord, and there exist no
offsets or credits against Rent owed or to be owed by Tenant.


 


9.             The obligation to pay Rent
is presently in effect and all Rent obligations on the part of Tenant under the
Lease commenced to accrue on
[              ],
20[    ].


 


10.           The undersigned Tenant has
not made any prior assignment, transfer, hypothecation or pledge of the Lease
or of the rents thereunder or sublease of the Premises or any portion thereof.


 


[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


 


C-1

















 


IN WITNESS WHEREOF, Tenant has executed this Acknowledgment of Term
Commencement Date and Term Expiration Date as of the date first written above.


 


TENANT:


 


[              ],


a
[              ]


 


	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 


C-2

















 


EXHIBIT D


 


FORM OF ACCESS &
CONFIDENTIALITY AGREEMENT


 


This
Access & Confidentiality Agreement (this “Agreement”) is
entered into as of
[              ],
20[    ] (the “Effective Date”), by and between AVI
BIOPHARMA, INC., an Oregon corporation (“AVI”), and
[              ]
(“Recipient” and, together with AVI, each a “Party” and,
together, the “Parties”).


 


In consideration of the mutual covenants expressed herein and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, agree as follows:


 


1.             Definitions. 
For purposes of this Agreement:


 


1.1           “Affiliate” of a Party means
employees, agents and entities controlled by such Party.


 


1.2           “Confidential Information” means
any business, marketing, technical or other information in tangible or
intangible form disclosed by AVI to Recipient or to which Recipient gains
access while in AVI’s business premises, only if, at the time of such
disclosure, such information is designated as confidential (or like
designation), including (without limitation) business plans, product concepts,
technical know-how, methods of and other information relating to operations,
development strategies, distribution arrangements, financial data, marketing
plans, and business practices, policies and objectives.


 


1.3           “Representative” means, with
respect to either Party, such Party’s members, managers, partners, Affiliates,
attorneys, advisors, potential lenders, potential co-investors, directors,
officers, employees, agents or representatives.


 


2.             Disclosure, Use Restrictions and
Proprietary Rights.


 


2.1           Disclosure and Use.


 


(a)           Except as expressly provided in this
Agreement, Recipient shall retain all Confidential Information in confidence
and shall not directly or indirectly disclose, reveal, divulge, publish or
otherwise make known to parties other than AVI any Confidential Information for
any reason or purpose whatsoever without AVI’s prior written consent, which may
be withheld in AVI’s sole discretion. 
Recipient shall take commercially reasonable steps to safeguard and
protect the Confidential Information from unauthorized access, use or
disclosure by or to others as a result of Recipient’s acts or omissions,
including (but not limited to) maintaining appropriate security measures.  The obligations of confidence set forth in
this Agreement shall extend to any of Recipient’s Representatives that may
receive Confidential Information from AVI or Recipient, and Recipient shall be
responsible for any breach of this Agreement by its Representatives if the
breach relates to improper disclosure of Confidential Information obtained by
Recipient from AVI or Recipient’s Representatives.


 


D-1

















 


(b)           In accordance with Section 2.4,
Recipient shall notify AVI promptly after discovery of any unauthorized use or
disclosure of Confidential Information by AVI or its Representative in
violation of this Agreement, and shall reasonably cooperate with AVI to assist
AVI to regain possession of the Confidential Information and prevent its
further unauthorized use or disclosure.


 


2.2           Exemptions. 
Recipient shall not be bound by the obligations restricting disclosure
and use set forth in this Agreement with respect to Confidential Information,
or any part thereof, that (a) was known by Recipient prior to disclosure, (b) was
lawfully in the public domain prior to its disclosure, or becomes publicly
available other than through a breach of this Agreement, (c) was disclosed
to the Recipient by a third party, provided such third party is not in breach
of any confidentiality obligation to AVI with respect to such information, (d) is
independently developed by Recipient or (e) is disclosed when such
disclosure is compelled pursuant to legal, judicial or administrative
proceedings, or otherwise required by law. The foregoing exemptions shall
extend to any Representatives that receive or have received Confidential
Information.


 


2.3           Proprietary Rights. 
Neither Recipient nor its Representatives shall acquire any rights,
express or implied, in the Confidential Information, except for the limited use
specified in this Agreement. The Confidential Information, including all right,
title and interest therein, remains the sole and exclusive property of
AVI.  This Section shall not apply
if Recipient independently develops the Confidential Information.


 


2.4           Compulsory Disclosure. 
If Recipient is legally compelled to disclose any of the Confidential
Information, Recipient shall promptly provide written notice to AVI to enable
AVI (at its sole cost and expense) to seek a protective order or other appropriate
legal remedy to avoid public or third party disclosure of its Confidential
Information.  If such protective order or
other appropriate legal remedy is not obtained, Recipient shall furnish only so
much of the Confidential Information as Recipient is legally compelled to
disclose, and shall exercise its commercially reasonable efforts (at AVI’s sole
cost and expense) to obtain reliable assurances that confidential treatment
will be accorded the Confidential Information. 
Recipient shall reasonably cooperate with and assist AVI (at AVI’s sole
cost and expense) in seeking any protective order or other relief requested by
AVI pursuant to this Section 2.4.


 


3.             Remedies. 
Recipient acknowledges and agrees that the Confidential Information is
special and unique, and that the breach or threatened breach of this Agreement
by the Recipient would cause AVI irreparable harm and that money damages would
not be an adequate remedy.  Recipient
agrees on behalf of itself and its Representatives that AVI shall be entitled
to equitable relief, including, without limitation, an injunction or
injunctions (without the requirements of posting a bond or other security or
any similar requirement or of proving any actual damages), to prevent breaches
or threatened breaches of this Agreement by Recipient or any of its
Representatives and to specifically enforce the terms and provisions of this
Agreement, such remedies being in addition to any other remedy to which AVI may
be entitled at law or in equity.


 


4.             Indemnification. 
Recipient shall indemnify and defend AVI and its Representatives and
each of their respective directors, officers, employees, managers, members,
partners, shareholders, agents and affiliates (collectively, the “Indemnified
Persons”) against and hold each 


 


D-2

















 


Indemnified Person
harmless from any and all liabilities, obligations, losses, damages, costs,
expenses, claims, penalties, lawsuits, proceedings, actions, judgments and
disbursements of any kind or nature whatsoever, interest, fines, settlements
and reasonable attorneys’ fees and expenses that the Indemnified Persons may
incur, suffer, sustain or become subject to arising out of, relating to, or due
to the breach of this Agreement by Recipient. 
The provisions of this Section 4 shall survive the
termination of this Agreement.


 


5.             Term of Obligation.


 


5.1           Term.  The
confidentiality obligations set forth in this Agreement shall continue with
regard to an item of information as long as that information continues to meet
the definition of “Confidential Information” and is not exempt under Section 2.2.


 


5.2           Return of Confidential Information. 
At any time upon written request by AVI, Recipient shall return or
destroy all documents or other materials embodying Confidential Information and
shall retain no copies thereof, unless necessary for Recipient to fulfill
duties or obligations pursuant to which Recipient first received the
Confidential Information.


 


6.             General.


 


6.1           Waiver.  The
failure of either Party to claim a breach of any term of this Agreement shall
not constitute a waiver of such breach or the right of such Party to enforce
any subsequent breach of such term.


 


6.2           Assignment.  This
Agreement shall be binding on and inure to the benefit of each Party and their
respective successors and assigns.


 


6.3           Severability. 
In the event that any provision of this Agreement is found to be
invalid, void or unenforceable, the Parties agree that, unless such provision
materially affects the intent and purpose of this Agreement, such invalidity,
voidability or unenforceability shall not affect the validity of this Agreement
nor the remaining provisions hereof.


 


6.4           Governing Law. 
This Agreement shall be governed by the laws of the State of Washington,
without regard to its conflict of law principles. The Parties agree that the
exclusive jurisdiction for any legal action shall be Snohomish County,
Washington.


 


6.5           Entire Agreement. 
This Agreement constitutes the entire agreement between the parties
regarding the subject matter hereof and supersedes all prior agreements,
communications and understandings of any nature whatsoever, oral or
written.  This Agreement may not be
modified or waived orally and may be modified only in a writing signed by a
duly authorized representative of both parties. 
Notwithstanding anything in the foregoing to the contrary, as between
AVI and BMR-3450 Monte Villa Parkway LLC (“BMR”), this Agreement shall
be subject to that certain Lease dated as of July 24, 2009, by and between
AVI and BMR, as the same may be amended, amended and restated, supplemented or
otherwise modified from time to time.


 


D-3

















 


IN WITNESS WHEREOF, the Parties have caused this
Agreement to be executed by their duly authorized representatives and to be
effective on the Effective Date.


 


	
  AVI:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 


 


	
  RECIPIENT:

  	
   

  	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
				



 


D-4
















 


EXHIBIT E


 


FORM OF LETTER OF CREDIT


 


[On letterhead or L/C letterhead of Issuer.]


 


LETTER OF CREDIT


 


Date:
              ,
200


 


(the “Beneficiary”)


 


Attention:


L/C. No.:


Loan No. :


 


Ladies and Gentlemen:


 


We
establish in favor of Beneficiary our irrevocable and unconditional Letter of
Credit numbered as identified above (the “L/C”) for an aggregate amount
of
$              ,
expiring at     :00 p.m. on
              
or, if such day is not a Banking Day, then the next succeeding Banking Day
(such date, as extended from time to time, the “Expiry Date”). “Banking
Day” means a weekday except a weekday when commercial banks in
                          
are authorized or required to close.


 


We
authorize Beneficiary to draw on us (the “Issuer”) for the account of
              
(the “Account Party”), under the terms and conditions of this L/C.


 


Funds
under this L/C are available by presenting the following documentation (the “Drawing
Documentation”): (a) the original L/C and (b) a sight draft
substantially in the form of Attachment 1, with blanks
filled in and bracketed items provided as appropriate. No other evidence of
authority, certificate, or documentation is required.


 


Drawing
Documentation must be presented at Issuer’s office at
                        
on or before the Expiry Date by personal presentation, courier or messenger
service, or fax. Presentation by fax shall be effective upon electronic
confirmation of transmission as evidenced by a printed report from the sender’s
fax machine. After any fax presentation, but not as a condition to its
effectiveness, Beneficiary shall with reasonable promptness deliver the
original Drawing Documentation by any other means.  Issuer will on request issue a receipt for
Drawing Documentation.


 


We
agree, irrevocably, and irrespective of any claim by any other person, to honor
drafts drawn under and in conformity with this L/C, within the maximum amount
of this L/C, presented 


 


E-1

















 


to
us on or before the Expiry Date, provided we also receive (on or before
the Expiry Date) any other Drawing Documentation this L/C requires.


 


We
shall pay this L/C only from our own funds by check or wire transfer, in
compliance with the Drawing Documentation.


 


If
Beneficiary presents proper Drawing Documentation to us on or before the Expiry
Date, then we shall pay under this L/C at or before the following time (the “Payment
Deadline”): (a) if presentment is made at or before noon of any
Banking Day, then the close of such Banking Day; and (b) otherwise, the
close of the next Banking Day.  We waive
any right to delay payment beyond the Payment Deadline. If we determine that
Drawing Documentation is not proper, then we shall so advise Beneficiary in
writing, specifying all grounds for our determination, within one Banking Day
after the Payment Deadline.


 


Partial
drawings are permitted. This L/C shall, except to the extent reduced thereby,
survive any partial drawings.


 


We
shall have no duty or right to inquire into the validity of or basis for any
draw under this L/C or any Drawing Documentation.  We waive any defense based on fraud or any
claim of fraud.


 


The Expiry Date shall automatically be extended by one year (but never
beyond            (the “Outside
Date”)) unless, on or before the date 90 days before any Expiry Date, we
have given Beneficiary notice that the Expiry Date shall not be so extended (a “Nonrenewal
Notice”). We shall promptly upon request confirm any extension of the
Expiry Date under the preceding sentence by issuing an amendment to this L/C,
but such an amendment is not required for the extension to be effective. We
need not give any notice of the Outside Date.


 


Beneficiary
may from time to time without charge transfer this L/C, in whole but not in
part, to any transferee (the “Transferee”).  Issuer shall look solely to Account Party for
payment of any fee for any transfer of this L/C.  Such payment is not a condition to any such
transfer. Beneficiary or Transferee shall consummate such transfer by
delivering to Issuer the original of this L/C and a Transfer Notice
substantially in the form of Attachment 2, purportedly signed by
Beneficiary, and designating Transferee. 
Issuer shall promptly reissue or amend this L/C in favor of Transferee
as Beneficiary.  Upon any transfer, all
references to Beneficiary shall automatically refer to Transferee, who may then
exercise all rights of Beneficiary. 
Issuer expressly consents to any transfers made from time to time in
compliance with this paragraph.


 


Any
notice to Beneficiary shall be in writing and delivered by hand with receipt
acknowledged or by overnight delivery service such as FedEx (with proof of
delivery) at the above address, or such other address as Beneficiary may
specify by written notice to Issuer. A copy of any such notice shall also be
delivered, as a condition to the effectiveness of such notice, to:
                      
(or such replacement as Beneficiary designates from time to time by written
notice).


 


E-2

















 


No
amendment that adversely affects Beneficiary shall be effective without
Beneficiary’s written consent.


 


This L/C is subject to and incorporates by reference: (a) the
Uniform Customs and Practice for Documentary Credits, International Chamber of
Commerce Publication No. 600 (the “UCP”); and (b) to the
extent not inconsistent with the UCP, Article 5 of the Uniform Commercial
Code of the State of New York.


 


Very truly yours,


 


[Issuer Signature]


 


E-3

















 


ATTACHMENT 1 TO EXHIBIT E


 


FORM OF SIGHT DRAFT


 


[BENEFICIARY LETTERHEAD]


 


TO:


 


[Name and Address of Issuer]


 


SIGHT DRAFT


 


AT SIGHT, pay to the Order of
                            ,
the sum of                             
United States Dollars
($                            ).
Drawn under [Issuer] Letter of Credit No.                             
dated
                            .


 


[Issuer is hereby directed to pay the
proceeds of this Sight Draft solely to the following account:
                                                  .]


 


[Name and signature block, with signature or
purported signature of Beneficiary]


 


	
  Date:

  	
   

  	
   

  



 


E-4

















 


ATTACHMENT 2 TO EXHIBIT E


 


FORM OF TRANSFER NOTICE


 


[BENEFICIARY LETTERHEAD]


 


TO:


 


[Name and Address of Issuer] (the “Issuer”)


 


TRANSFER NOTICE


 


By signing below, the undersigned,
Beneficiary (the “Beneficiary”) under Issuer’s Letter of Credit No.                             
dated
                            
(the “L/C”), transfers the L/C to the following transferee (the “Transferee”):


 


[Transferee Name and Address]


 


The original L/C is enclosed. Beneficiary
directs Issuer to reissue or amend the L/C in favor of Transferee as
Beneficiary. Beneficiary represents and warrants that Beneficiary has not
transferred, assigned, or encumbered the L/C or any interest in the L/C, which
transfer, assignment, or encumbrance remains in effect.


 


[Name and signature block, with signature or
purported signature of Beneficiary]


 


Date:
                                ]


 


E-5
















 


EXHIBIT F


 


RULES AND REGULATIONS


 


NOTHING
IN THESE RULES AND REGULATIONS (“RULES AND REGULATIONS”) SHALL SUPPLANT
ANY PROVISION OF THE LEASE.  IN THE EVENT
OF A CONFLICT OR INCONSISTENCY BETWEEN THESE RULES AND REGULATIONS AND THE
LEASE, THE LEASE SHALL PREVAIL.


 


1.             Except as specifically
provided in the Lease to which these Rules and Regulations are attached,
no sign, placard, picture, advertisement, name or notice shall be installed or
displayed on any part of the outside of the Premises or the Building without
Landlord’s prior written consent. 
Landlord shall have the right to remove, at Tenant’s sole cost and
expense and without notice, any sign installed or displayed in violation of
this rule.


 


2.             If Landlord objects in
writing to any curtains, blinds, shades, screens or hanging plants or other
similar objects attached to or used in connection with any window or door of
the Premises or placed on any windowsill, which window, door or windowsill is (a) visible
from the exterior of the Premises and (b) not included in plans approved
by Landlord, then Tenant shall promptly remove said curtains, blinds, shades,
screens or hanging plants or other similar objects at its sole cost and
expense.


 


3.             Tenant shall not obstruct
any sidewalks or entrances to the Building, or any halls, passages, exits,
entrances or stairways within the Premises, in any case that are required to be
kept clear for health and safety reasons.


 


4.             No deliveries shall be made
that impede or interfere with other tenants in or the operation of the Project.


 


5.             Tenant shall not place a
load upon any floor of the Premises that exceeds the load per square foot that (a) such
floor was designed to carry or (b) that is allowed by Applicable
Laws.  Fixtures and equipment that cause
noises or vibrations that may be transmitted to the structure of the Building
to such a degree as to be objectionable to other tenants shall be placed and
maintained by Tenant, at Tenant’s sole cost and expense, on vibration
eliminators or other devices sufficient to eliminate such noises and vibrations
to levels reasonably acceptable to Landlord and other tenants of the Building.


 


6.             Tenant shall not use any
method of heating or air conditioning other than that shown in the Tenant
Improvement plans.


 


7.             Tenant shall not install any
radio, television or other antenna, cell or other communications equipment, or
any other devices on the roof or exterior walls of the Premises except to the
extent shown on approved Tenant Improvements plans.  Tenant shall not interfere with radio,
television or other communications from or in the Premises or elsewhere.


 


E-1-1

















 


8.             Canvassing, peddling,
soliciting and distributing handbills or any other written material within, on
or around the Project (other than within the Premises) are prohibited, and
Tenant shall cooperate to prevent such activities.


 


9.             Tenant shall store all of
its trash, garbage and Hazardous Materials within its Premises or in designated
receptacles outside of the Premises.  Tenant
shall not place in any such receptacle any material that cannot be disposed of
in the ordinary and customary manner of trash, garbage and Hazardous Materials
disposal.


 


10.           The Premises shall not be
used for any improper, immoral or objectionable purpose.  No cooking shall be done or permitted on the
Premises; provided, however, that Tenant may use (a) equipment
approved in accordance with the requirements of insurance policies that
Landlord or Tenant is required to purchase and maintain pursuant to the Lease
for brewing coffee, tea, hot chocolate and similar beverages, (b) microwave
ovens for employees’ use and (c) equipment shown on Tenant Improvement
plans approved by Landlord; provided, further, that any such equipment
and microwave ovens are used in accordance with Applicable Laws.


 


11.           Tenant shall not, without
Landlord’s prior written consent, use the name of the Project, if any, in
connection with or in promoting or advertising Tenant’s business except as
Tenant’s address.


 


12.           Tenant shall comply with all
safety, fire protection and evacuation procedures and regulations established
by Landlord or any Governmental Authority.


 


13.           Tenant assumes any and all
responsibility for protecting the Premises from theft, robbery and pilferage,
which responsibility includes keeping doors locked and other means of entry to
the Premises closed.


 


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


 


15.           These Rules and
Regulations are in addition to, and shall not be construed to in any way modify
or amend, in whole or in part, the terms covenants, agreements and conditions
of the Lease.


 


16.           Landlord reserves the right
to make such other and reasonable rules and regulations as, in its
judgment, may from time to time be needed for safety and security, the care and
cleanliness of the Project, or the preservation of good order therein; provided,
however, that Landlord
shall provide written notice to Tenant of such rules and regulations prior
to them taking effect.  Tenant agrees to
abide by these Rules and Regulations and any additional rules and
regulations issued or adopted by Landlord.


 


17.           Tenant shall be responsible
for the observance of these Rules and Regulations by Tenant’s employees,
agents, clients, customers, invitees and guests.


 

















 


EXHIBIT G


 


MAJOR
COMPETITORS


 


·        Genzyme Corporation


 


·        Biomarin Pharmaceuticals Inc.


 


·        Prosensa Holding B.V.


 


·        Isis Pharmaceuticals Inc.


 


F-1

















 


EXHIBIT H


 


TENANT’S PERSONAL PROPERTY


 


Landlord
and Tenant agree to use good faith, commercially reasonable efforts to reach
agreement on the list for this Exhibit H prior to the Term Commencement
Date.


 


E-1-1

















 


EXHIBIT I


 


FORM OF ESTOPPEL CERTIFICATE


 


To:          BMR-3450
Monte Villa Parkway LLC


17190
Bernardo Center Drive


San
Diego, California  92128


Attention:
Vice President, Real Estate Counsel


 


BioMed
Realty, L.P.


17190
Bernardo Center Drive


San
Diego, California  92128


 


Re:          The Premises
(the “Premises”) located at 3450 Monte
Villa Parkway in Bothell, Washington (the “Property”)


 


The undersigned tenant (“Tenant”) hereby
certifies to you as follows:


 


1.             Tenant
is a tenant at the Property under a lease (the “Lease”) for the Premises
dated as of July 24, 2009. 
The Lease has not been cancelled, modified, assigned, extended or
amended [except as follows: 
[              ]],
and there are no other agreements, written or oral, affecting or relating to
Tenant’s lease of the Premises or any other space at the Property.  The lease term expires on
[              ],
20[    ].


 


2.             Tenant took
possession of the Premises, currently consisting of
[              ]
square feet, on
[              ],
20[    ], and commenced to pay rent on
[              ],
20[    ].  Tenant has
full possession of the Premises, has not assigned the Lease or sublet any part
of the Premises, and does not hold the Premises under an assignment or
sublease[, except as follows: 
[              ]].


 


3.             All base
rent, rent escalations and additional rent under the Lease have been paid
through
[              ],
20[    ].  There is
no prepaid rent[, except
$[              ]][,
and the amount of security deposit is
$[              ]
[in cash][in the form of a letter of credit]]. 
Tenant currently has no right to any future rent abatement under the
Lease.


 


4.             Base rent is
currently payable in the amount of
$[              ]
per month.


 


5.             Tenant is
currently paying estimated payments of additional rent of $[              ]
per month on account of real estate taxes, insurance, management fees and
common area maintenance expenses.


 


6.             To
Tenant’s actual knowledge, all work to be performed for Tenant under
the Lease has been performed as required under the Lease and has been accepted
by Tenant[, except
[              ]],
and all allowances to be paid to Tenant, including allowances for tenant
improvements, moving expenses or other items, have been paid.


 


7.             The Lease is
in full force and effect, and to Tenant’s
actual knowledge without investigation, free from
default and free from any event that could become a default under the 


 


G-1

















 


Lease,
and Tenant has no claims against the landlord or offsets or defenses against
rent, and there are no disputes with the landlord. Tenant has received no
notice of prior sale, transfer, assignment, hypothecation or pledge of the
Lease or of the rents payable thereunder[, except
[              ]].


 


8.             [Tenant has
the following expansion rights or options for the Property: 
[              ].][Tenant
has no rights or options to purchase the Property.]


 


9.             To Tenant’s actual
knowledge
without investigation, no hazardous wastes have been generated,
treated, stored or disposed of by or on behalf of Tenant in, on or around the
Premises or the Project in violation of any environmental laws.


 


10.           The
undersigned has executed this Estoppel Certificate with the knowledge and
understanding that [INSERT NAME OF LANDLORD, PURCHASER OR LENDER, AS APPROPRIATE]
or its assignee is acquiring the Property in reliance on this certificate and
that the undersigned shall be bound by this certificate.  The statements contained herein may be relied
upon by [INSERT NAME OF PURCHASER OR LENDER, AS APPROPRIATE], BMR-3450
Monte Villa Parkway LLC, BioMed Realty, L.P., BioMed Realty Trust, Inc.,
and any [other] mortgagee of the Property and their respective successors and
assigns.


 


Any
capitalized terms not defined herein shall have the respective meanings given
in the Lease.


 


Dated
this [        ] day of
[              ],
20[    ].


 


AVI BIOPHARMA, INC.,


an
Oregon corporation


 


 


	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 
















 


EXHIBIT J


 


FORM OF CONSENT TO SUBLEASE FOR ENTIRE PREMISES


 


This
CONSENT TO SUBLEASE (this “Consent”) is entered into as of this
         day of
[              ],
20[    ], by and between [              ],
a Delaware limited [liability company][partnership] (“Master Lessor”),
[as successor in interest to
[              ],]
[              ],
a [              ]
(“Sublessor”), and
[              ],
a
[              ]
(“Sublessee”).


 


RECITALS


 


A.            WHEREAS, Master Lessor and
Sublessor are parties to that certain Lease dated as of July 24, 2009 (as
the same may have been amended, amended and restated, supplemented or otherwise
modified from time to time, the “Master Lease”), whereby Sublessor
leases certain premises (the “Premises”) from Master Lessor at 3450 Monte
Villa Parkway in Bothell, Washington (the “Building”); and


 


B.            WHEREAS, Sublessor has
applied to Master Lessor for its consent to that certain [Sublease] dated as of
[              ],
20[    ] (the “Sublease”), by and between Sublessor
and Sublessee, whereby Sublessor subleases its interest in the Premises (the “Subleased
Premises”) to Sublessee.


 


AGREEMENT


 


NOW,
THEREFORE, Master Lessor hereby consents to the Sublease, subject to and upon
the following terms and conditions, to each of which Sublessor, Sublessee and
Master Lessor expressly agree:


 


1.             Nothing
contained in this Consent shall either:


 


(a)           operate as a
consent to or approval by Master Lessor of any of the provisions of the
Sublease or as a representation or warranty by Master Lessor, and Master Lessor
shall not be bound or estopped in any way by the provisions of the Sublease; or


 


(b)           be construed to
modify, waive or affect any of the provisions, covenants or conditions of, or
any rights or remedies of Master Lessor under, the Master Lease.  In the case of any conflict between the
provisions of this Consent and those of the Sublease, the provisions of this
Consent shall prevail.


 


2.             Sublessor
expressly assumes and agrees that during the term of the Sublease, Sublessor
shall perform and comply with each and every obligation of Sublessor under the
Master Lease.  Sublessee expressly
assumes and agrees that during the term of the Sublease, Sublessee shall
perform and comply with each and every obligation of Sublessor under the Master
Lease related to the Subleased Premises.


 


3.             Neither the
Sublease nor this Consent shall release or discharge Sublessor from any
liability under the Master Lease, and Sublessor shall remain liable and
responsible for the 


 


H-1

















 


full performance of all of the provisions, covenants and conditions set
forth in the Master Lease.  The
acceptance of rent by Master Lessor from Sublessee or from any other person
shall not be deemed a waiver by Master Lessor of any provisions of the Master
Lease.  Sublessor and Sublessee
understand and represent that by entering into the Sublease, Master Lessor’s
rights, remedies and liabilities under the Master Lease have not in any way
been modified.


 


4.             Sublessor and
Sublessee warrant that the attached Sublease represents the entire agreement
between them.  Sublessee further warrants
that there was no compensation or consideration paid to either party as a
condition of this Consent or the Sublease other than as stated herein or
therein.


 


5.             The Sublease
shall be subject and subordinate at all times to the Master Lease and all of
its provisions, covenants and conditions. 
In case of a conflict, the provisions of the Master Lease shall prevail.


 


6.             This Consent
shall not constitute a consent to any subsequent subletting or assignment of
the Master Lease, the Sublease or the Premises. 
This Consent may not be assigned by Sublessor or Sublessee in whole or
in part.


 


7.             Sublessor and
Sublessee shall protect, defend, indemnify, release, save and hold Master
Lessor and each of Master Lessor’s officers, directors, affiliates, employees,
agents, consultants and lenders (each, an “Indemnified Party”) harmless
from and against any and all Losses (as defined below) imposed upon or incurred
by or asserted against such Indemnified Party and directly or indirectly
arising out of or in any way relating to Sublessor’s or Sublessee’s failure to
perform or comply with any existing Master Lease obligations (in the case of
Sublessee, only to the maximum extent that Sublessee is liable to comply with
such obligations pursuant to the Sublease or this Consent, or that such
obligations relate to the Subleased Premises), and otherwise as set forth in
the Master Lease.  As used herein, the
term “Losses” includes any and all claims, suits, liabilities, actions,
proceedings, obligations, debts, damages, losses, costs, expenses, diminutions
in value, fines, penalties, charges, fees, expenses, judgments, awards, amounts
paid in settlement, punitive damages and foreseeable and unforeseeable
consequential damages of whatever kind or nature (including, without
limitation, attorneys’ fees and other costs of defense).


 


8.             In the event of
any default of Sublessor under the Master Lease, Master Lessor may proceed
directly against Sublessor, any guarantors, or anyone else liable under the
Master Lease or the Sublease without first exhausting Master Lessor’s remedies
against any other person or entity liable therefor to Master Lessor.


 


9.             In the event
that Sublessor defaults in its obligations under the Master Lease, Master
Lessor may, at its option and without being obligated to do so, require
Sublessee to attorn to Master Lessor with respect to the Subleased
Premises.  If Master Lessor elects to
require Sublessee to so attorn, then Master Lessor shall undertake the
obligations of Sublessor under the Sublease with respect to the Subleased
Premises from the time of the exercise of Master Lessor’s option under this Section until
termination of the Sublease; provided, however, that Master 


 


F-2

















 


Lessor
shall not be liable for any prepaid rents or any security deposit paid by
Sublessee, nor shall Master Lessor be liable for any other defaults of
Sublessor under the Sublease.


 


10.           If Master
Lessor brings about legal action or proceedings to enforce the terms and/or
conditions of the Master Lease or to declare its rights thereunder, Sublessor
and Sublessee agree that any attorneys’ fees, costs and expenses of such
proceeding shall be paid by the losing party as determined by the appropriate
court.


 


11.           This Consent (a) shall
be construed in accordance with the laws of the State of Washington, without
regard to its conflict of law principles, (b) contains the entire
agreement of the parties hereto with respect to the subject matter hereof and (c) may
not be changed or terminated orally or by any course of conduct.


 


12.           Sublessor
represents and warrants that it has dealt with no broker, agent or other person
in connection with this transaction and that no broker, agent or other person
brought about this transaction, [other than
[                  ],]
and Sublessor agrees to indemnify and hold Master Lessor and Sublessee harmless
from and against any claims by [this or] any [other] broker, agent or other
person claiming a commission or other form of compensation by virtue of having
dealt with Sublessor with regard to the Sublease.  The provisions of this Section shall
survive the expiration or earlier termination of this Consent or the Master
Lease.


 


13.           If any terms or
provisions of the Master Lease or this Consent, or the application thereof to
any person or circumstance, shall to any extent be held to be invalid or
unenforceable, then the remainder of the Master Lease, this Consent or the
application of such term or provision to persons or circumstances other than
those as to which they are held invalid or unenforceable shall not be affected
thereby, and each term and provision of the Master Lease and this Consent shall
be valid and enforceable to the fullest extent permitted by law.  Master Lessor’s rights and remedies provided
for in the Master Lease, this Consent or by law shall, to the extent permitted
by law, be cumulative.


 


14.           This Consent may be executed
in several counterparts, each of which counterparts shall be deemed an original
instrument and all of which together shall constitute a single Consent.


 


IN
WITNESS WHEREOF, Sublessor and Sublessee have affixed their respective
signatures hereto as evidence of understanding of and agreement to the above,
and Master Lessor has affixed its signature hereto to convey its consent to the
Sublease.


 


MASTER LESSOR:


 


[              ],


a
[              ]


 


 


	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 


F-3

















 


SUBLESSOR:


 


[              ],


a
[              ]


 


	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 


 


SUBLESSEE:


 


[              ],


a
[              ]


 


	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 


F-4

















 


EXHIBIT K


 


FORM OF CONSENT TO SUBLEASE FOR PORTION OF PREMISES


 


This
CONSENT TO SUBLEASE (this “Consent”) is entered into as of this
         day of
[              ],
20[    ], by and between [              ],
a Delaware limited [liability company][partnership] (“Master Lessor”),
[as successor in interest to
[              ],]
[              ],
a
[              ]
(“Sublessor”), and
[              ],
a
[              ]
(“Sublessee”).


 


RECITALS


 


A.            WHEREAS, Master Lessor and
Sublessor are parties to that certain Lease dated as of July 24, 2009 (as
the same may have been amended, amended and restated, supplemented or otherwise
modified from time to time, the “Master Lease”), whereby Sublessor
leases certain premises (the “Premises”) from Master Lessor at 3450
Monte Villa Parkway in Bothell, Washington (the “Building”); and


 


B.            WHEREAS, Sublessor has
applied to Master Lessor for its consent to that certain [Sublease] dated as of
[              ],
20[    ] (the “Sublease”), by and between Sublessor
and Sublessee, whereby Sublessor subleases its interest in a portion of the
Premises (such portion, the “Subleased Premises”) to Sublessee.


 


AGREEMENT


 


NOW,
THEREFORE, Master Lessor hereby consents to the Sublease, subject to and upon
the following terms and conditions, to each of which Sublessor, Sublessee and
Master Lessor expressly agree:


 


1.             Nothing contained in this
Consent shall either:


 


(a)           operate as a consent to or
approval by Master Lessor of any of the provisions of the Sublease or as a
representation or warranty by Master Lessor, and Master Lessor shall not be
bound or estopped in any way by the provisions of the Sublease; or


 


(b)           be construed to modify,
waive or affect any of the provisions, covenants or conditions of, or any
rights or remedies of Master Lessor under, the Master Lease.  In the case of any conflict between the
provisions of this Consent and those of the Sublease, the provisions of this
Consent shall prevail.


 


2.             Sublessor expressly assumes
and agrees that during the term of the Sublease, Sublessor shall perform and
comply with each and every obligation of Sublessor under the Master Lease.  Sublessee expressly assumes and agrees that
during the term of the Sublease, Sublessee shall perform and comply with each
and every obligation of Sublessor under the Master Lease related to the
Subleased Premises.


 


3.             Neither the Sublease nor
this Consent shall release or discharge Sublessor from any liability under the
Master Lease, and Sublessor shall remain liable and responsible for the full 


 


I-1

















 


performance
of all of the provisions, covenants and conditions set forth in the Master
Lease.  The acceptance of rent by Master
Lessor from Sublessee or from any other person shall not be deemed a waiver by
Master Lessor of any provisions of the Master Lease.  Sublessor and Sublessee understand and
represent that by entering into the Sublease, Master Lessor’s rights, remedies
and liabilities under the Master Lease have not in any way been modified.


 


4.             Sublessor and Sublessee
warrant that the attached Sublease represents the entire agreement between
them.  Sublessee further warrants that
there was no compensation or consideration paid to either party as a condition
of this Consent or the Sublease other than as stated herein or therein.


 


5.             The Sublease shall be
subject and subordinate at all times to the Master Lease and all of its
provisions, covenants and conditions.  In
case of a conflict, the provisions of the Master Lease shall prevail.


 


6.             This Consent shall not
constitute a consent to any subsequent subletting or assignment of the Master
Lease, the Sublease or the Premises. 
This Consent may not be assigned by Sublessor or Sublessee in whole or
in part.


 


7.             Sublessor and Sublessee
shall protect, defend, indemnify, release, save and hold Master Lessor and each
of Master Lessor’s officers, directors, affiliates, employees, agents,
consultants and lenders (each, an “Indemnified Party”) harmless from and
against any and all Losses (as defined below) imposed upon or incurred by or
asserted against such Indemnified Party and directly or indirectly arising out
of or in any way relating to Sublessor’s or Sublessee’s failure to perform or
comply with any existing Master Lease obligations (in the case of Sublessee,
only to the maximum extent that Sublessee is liable to comply with such
obligations pursuant to the Sublease or this Consent, or that such obligations
relate to the Subleased Premises), and otherwise as set forth in the Master
Lease.  As used herein, the term “Losses”
includes any and all claims, suits, liabilities, actions, proceedings,
obligations, debts, damages, losses, costs, expenses, diminutions in value,
fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in
settlement, punitive damages and foreseeable and unforeseeable consequential
damages of whatever kind or nature (including, without limitation, attorneys’
fees and other costs of defense).


 


8.             In the event of any default
of Sublessor under the Master Lease, Master Lessor may proceed directly against
Sublessor, any guarantors, or anyone else liable under the Master Lease or the
Sublease without first exhausting Master Lessor’s remedies against any other
person or entity liable therefor to Master Lessor.


 


9.             In the event that Sublessor
defaults in its obligations under the Master Lease, Master Lessor may, at its
option and without being obligated to do so, require Sublessee to attorn to
Master Lessor with respect to the Subleased Premises.  If Master Lessor elects to require Sublessee
to so attorn, then Master Lessor shall undertake the obligations of Sublessor
under the Sublease with respect to the Subleased Premises from the time of the
exercise of Master Lessor’s option under this Section until termination of
the Sublease; provided, however, that Master 


 


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Lessor
shall not be liable for any prepaid rents or any security deposit paid by
Sublessee, nor shall Master Lessor be liable for any other defaults of
Sublessor under the Sublease.


 


10.           If Master Lessor brings
about legal action or proceedings to enforce the terms and/or conditions of the
Master Lease or to declare its rights thereunder, Sublessor and Sublessee agree
that any attorneys’ fees, costs and expenses of such proceeding shall be paid
by the losing party as determined by the appropriate court.


 


11.           This Consent (a) shall
be construed in accordance with the laws of the State of
[              ],
without regard to its conflict of law principles, (b) contains the entire
agreement of the parties hereto with respect to the subject matter hereof and (c) may
not be changed or terminated orally or by any course of conduct.


 


12.           Sublessor represents and
warrants that it has dealt with no broker, agent or other person in connection
with this transaction and that no broker, agent or other person brought about
this transaction, [other than
[                  ],]
and Sublessor agrees to indemnify and hold Master Lessor and Sublessee harmless
from and against any claims by [this or] any [other] broker, agent or other
person claiming a commission or other form of compensation by virtue of having
dealt with Sublessor with regard to the Sublease.  The provisions of this Section shall
survive the expiration or earlier termination of this Consent or the Master
Lease.


 


13.           If any terms or provisions
of the Master Lease or this Consent, or the application thereof to any person
or circumstance, shall to any extent be held to be invalid or unenforceable,
then the remainder of the Master Lease, this Consent or the application of such
term or provision to persons or circumstances other than those as to which they
are held invalid or unenforceable shall not be affected thereby, and each term
and provision of the Master Lease and this Consent shall be valid and
enforceable to the fullest extent permitted by law.  Master Lessor’s rights and remedies provided
for in the Master Lease, this Consent or by law shall, to the extent permitted
by law, be cumulative.


 


14.           This Consent may be executed
in several counterparts, each of which counterparts shall be deemed an original
instrument and all of which together shall constitute a single Consent.


 


IN
WITNESS WHEREOF, Sublessor and Sublessee have affixed their respective
signatures hereto as evidence of understanding of and agreement to the above,
and Master Lessor has affixed its signature hereto to convey its consent to the
Sublease.


 


MASTER LESSOR:


 


[              ],


a
[              ]


 


	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 


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SUBLESSOR:


 


[              ],


a
[              ]


 


 


	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 


 


SUBLESSEE:


 


[              ],


a
[              ]


 


 


	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 


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