Exhibit 10.9


 


SECOND AMENDMENT TO LEASE


 


THIS SECOND AMENDMENT
TO LEASE (this "Second Amendment") is made as of April 4, 2011, by and between ARE-SEATTLE NO. 10, LLC,
a Delaware limited liability company ("Landlord"), and PHASERX INC., a Delaware corporation ("Tenant").


 


RECITALS


 


A.           Landlord
and Tenant entered into that certain Lease Agreement dated as of February 9, 2010, as amended by that certain First Amendment to
Lease dated as of July 1, 2010 (as amended, the "Lease"). Pursuant to the Lease, Tenant leases certain premises
consisting of approximately 11,291 rentable square feet ("Original Premises") in a building located at 410 West
Harrison, Seattle, Washington. The Premises are more particularly described in the Lease. Capitalized terms used herein without
definition shall have the meanings defined for such terms in the Lease.


 


B.        Tenant has elected to expand the Original Premises to include the Expansion Space (as defined in Section 39(a)).


 


C.         Landlord and Tenant desire,
subject to the terms and conditions set forth below, to amend the Lease to, among other things, expand the size of the Original
Premises by adding the Expansion Space consisting of approximately 6,236 rentable square feet.


 


NOW, THEREFORE,
in consideration of the foregoing Recitals, which are incorporated herein by this reference, the mutual promises and conditions
contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord and Tenant hereby agree as follows:


 


		1.	Expansion Space. In addition to the Original
Premises, commencing on the Expansion Space Commencement Date (as defined below), Landlord leases to Tenant, and Tenant leases
from Landlord, that certain portion of the Building consisting of approximately 6,236 rentable square feet, as shown on Exhibit
I attached to the Lease (the "Expansion Space").



 


		2.	Delivery. Landlord shall use reasonable
efforts to deliver the Expansion Space (“Delivery” or “Deliver”) to Tenant on or before
September 1, 2011 (“Target Expansion Space Commencement Date”). If Landlord fails to timely Deliver the Expansion
Space to Tenant, Landlord shall not be liable to Tenant for any loss or damage resulting therefrom, and this Second Amendment
shall not be void or voidable, other than by Tenant’s Termination Right. Notwithstanding the foregoing, Tenant shall receive
a credit against Operating Expenses payable under the Lease with respect to the Expansion Space equal to 2 times the per diem
amount of Operating Expenses payable by Tenant for the Expansion Space (2 x $226.37 = 452.74 per day) (“Opex Credit”)
for each day after the Target Expansion Space Commencement Date (as the same may be extended for Force Majeure delays) that Landlord
fails to Deliver the Expansion Space to Tenant. If Landlord is unable to Deliver the Expansion Space to Tenant on or before the
Target Expansion Space Commencement Date, Landlord shall endeavor to provide temporary laboratory and office space (“Temporary
Premises”) to Tenant in the Building or at a property owned by an affiliate of Landlord until the Expansion Space Commencement
Date pursuant to a separate written agreement acceptable to Tenant and Landlord (or Landlord’s affiliate), each in their
sole and absolute discretion. If Tenant occupies a Temporary Premises, (i) Tenant shall not pay Base Rent for the Temporary
Premises but shall pay the Operating Expenses only on such Temporary Premises for the period which Tenant occupies the Temporary
Premises, and (ii) Landlord shall reimburse Tenant, within a reasonable time after Tenant’s delivery of an invoice reasonably
acceptable to Landlord reflecting the costs incurred, for the reasonable moving expenses actually incurred by Tenant to move into
the Temporary Premises and to subsequently move from the Temporary Premises to the Expansion Space.



 




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Landlord
shall provide Tenant at least thirty (30) days advance notice of its proposed date of delivery of the Expansion Space (“Proposed
Delivery Date”). Tenant may elect, at Tenant’s sole cost and expense, to perform an environmental inspection of
the Expansion Space (“Environmental Inspection”) prior to the Proposed Delivery Date. Following Tenant’s
written notice to Landlord of its election to conduct the Environmental Inspection (“Inspection Notification”),
Landlord hereby agrees to permit Tenant access to the Expansion Space for such Environmental Inspection at least fifteen (15) days
prior to the Proposed Delivery Date (“Initial Access Date”). Landlord shall not be required to provide access
to the Expansion Space for the Environmental Inspection prior to August 15, 2011 so long as the Proposed Delivery Date is on or
after September 1, 2011. Such Environmental Inspection shall be coordinated with Landlord and shall comply with the Lease and all
other reasonable restrictions and conditions Landlord may impose. Tenant’s Inspection Notification shall include notification
to Landlord of the date upon which Tenant desires to commence the Environment Inspection of the Expansion Premises (“Desired
Access Date”); provided, however, that in no event shall the Desired Access Date be earlier than the Initial Access Date.
All such access shall be during normal business hours or at such other times as are reasonably designated by Landlord.


 


The "Expansion
Space Commencement Date" shall be the date Landlord actually delivers the Expansion Space to Tenant. Upon request of Landlord,
Tenant shall execute and deliver a written acknowledgment of the Expansion Space Commencement Date when the same is established
in a form substantially similar to the form of the "Acknowledgement of Commencement Date" attached to the Lease as Exhibit
D; provided, however, Tenant’s failure to execute and deliver such acknowledgment shall not affect Landlord’s
rights hereunder.


 


Except as set
forth in this Second Amendment, if applicable: (i) Tenant shall accept the Expansion Space in their condition as of the Expansion
Space Commencement Date; (ii) Landlord shall have no obligation for any defects in the Expansion Space; and (iii) Tenant’s
taking possession of the Expansion Space shall be conclusive evidence that Tenant accepts the Expansion Space and that the Expansion
Space were in good condition at the time possession was taken. As of the Expansion Space Commencement Date, the defined term “Premises”
in the Lease shall include the Expansion Space and the terms of the Lease including, without limitation, Landlord’s warranty
obligations under Sections 30(i) and 42, shall apply to the Expansion Space. Landlord shall, at Landlord’s
sole cost and expense, be responsible for the compliance of the Premises (including the Expansion Space) with Legal Requirements
as of the Commencement Date.


 


Except with
respect to the boiler serving the Building (any replacement of which shall be undertaken by Landlord as part of Operating Expenses),
commencing on the Expansion Space Commencement Date through December 31, 2012, Landlord shall, at its sole cost and expense (which
shall not constitute an Operating Expense), be responsible for any replacements that are required to be made to the mechanical,
plumbing and electrical systems serving the Expansion Space, except to the extent Tenant was responsible for the cause of such
replacement, in which case Tenant shall pay the cost. Any repairs and maintenance of the mechanical, plumbing and electrical systems
serving the Expansion Space shall be undertaken by Landlord as part of Operating Expenses.


 


Tenant agrees
and acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the condition
of all or any portion of the Expansion Space, and/or the suitability of the Expansion Space for the conduct of Tenant’s business
and Tenant waives any implied warranty that the Expansion Space are suitable for the Permitted Use.


 




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		3.	Definition of Premises. Commencing on the
Expansion Space Commencement Date, the defined term "Premises" on page 1 of the Lease is deleted in its entirety
and replaced with the following:



 


"Premises:
That portion of the Building containing approximately 17,527 rentable square feet, consisting of (i) the “Original
Premises” consisting of approximately 11,291 rentable square feet, and (ii) the “Expansion Space”
consisting of approximately 6,236 rentable square feet, all, as shown on Exhibit A. The Original Premises and the Expansion
Space shall be collectively referred to herein as the “Premises”.


 


As of the
Expansion Space Commencement Date, Exhibit A to the Lease shall be amended to include Exhibit I attached to the Lease.


 


		4.	Base Term. Commencing on the Expansion
Space Commencement Date, the defined term “Base Term” on page 1 of the Lease is deleted in its entirety and
replaced with the following:



 


“Base
Term: A term (i) beginning, with respect to the Original Premises, on the Commencement Date, and with respect the Expansion
Space on the Expansion Space Commencement Date, and (ii) ending, with respect to the entire Premises, on September 30, 2015.”


 


		5.	Base Rent. Tenant shall continue to pay
Base Rent for the Original Premises as provided for in the Lease. The “Expansion Space Rent Commencement Date”
shall be the earlier of: (i) the date Tenant conducts any business in the Expansion Space or any part thereof, or (ii) January
1, 2012; provided that Landlord delivers the Expansion Space to Tenant on or before January 1, 2012. If delivery of the Expansion
Space occurs after January 1, 2012, then the Expansion Space Rent Commencement Date shall be the actual delivery date. Commencing
on the Expansion Space Rent Commencement Date, Tenant shall pay Base Rent for the Expansion Space in the amount of $34.48 per
rentable square foot of the Expansion Space per annum which Base Rent shall be payable in equal monthly installments on or before
the first day of each calendar month during the Term. In no event shall Tenant’s mere occupancy of the Expansion Space for
storage purposes or for Tenant’s construction or installation of Expansion Space Tenant Improvements, Alterations, Tenant
Property or Removable Installations prior to January 1, 2012, cause the Expansion Space Rent Commencement Date to occur prior
to January 1, 2012. On May 1, 2012, Base Rent for the Expansion Space shall be increased to $35.51 per rentable square foot of
the Expansion Space per annum. Commencing on May 1, 2013, and continuing thereafter on May 1st of each year during
the Base Tern (each, an “Expansion Space Adjustment Date”), Base Rent for the Expansion Space shall be increased
by multiplying the Base Rent payable for the Expansion Space immediately before such Expansion Space Adjustment Date by the Rent
Adjustment Percentage of 3% and adding the resulting amount to the Base Rent payable for the Expansion Space immediately before
such Expansion Premises Adjustment Date.



 


		6.	Rentable Area of the Premises. Commencing
on the Expansion Space Commencement Date, the defined term "Rentable Area of the Premises" on page 1 of the Lease
is deleted in its entirety and replaced with the following:



 


"Rentable Area
of the Premises: 17,527 sq. ft."


 


		7.	Tenant’s Share of Operating Expenses.
Commencing on the Expansion Space Commencement Date, the defined term "Tenant’s Share of Operating Expenses"
on page 1 of the Lease is deleted in its entirety and replaced with the following:



 


"Tenant’s
Share of Operating Expenses of Building: 54.28%”


 




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Tenant shall continue to pay
Operating Expenses with respect to the Original Premises as provided for in the Lease. If the Expansion Space Commencement Date
occurs on or before December 31, 2011, Tenant shall commence paying Operating Expenses with respect to the Expansion Space on the
Expansion Space Commencement Date; provided, however, that commencing on such date through December 31, 2011, the Operating Expenses
payable by Tenant with respect to the Expansion Space shall be capped at $13.25 per rentable square foot of the Expansion Space
per annum. So long as the Expansion Space Commencement Date occurs on or before January 1, 2012, Tenant shall commence paying the
full amount of Operating Expenses payable with respect the Expansion Space on January 1, 2012. If the Expansion Space Commencement
Date occurs after January 1, 2012, Tenant shall commence paying the full amount of Operating Expenses payable with respect the
Expansion Space on the Expansion Space Commencement Date. Tenant’s Share of Operating Expenses of Building with respect to
the Expansion Space is 19.30%.


 


		8.	Security Deposit. If the Lease with respect
to the Expansion Space has not been terminated pursuant to Section 10 below, or as otherwise set forth in the Lease, Tenant
shall deliver an additional Security Deposit to Landlord in the amount of $27,500 on or before January 1, 2012, which additional
Security Deposit shall be in the form of a Letter of Credit.



 


		9.	Expansion Space TI Allowance. Upon the
earliest to occur of (i) the satisfaction of the Financing Contingency (as defined in Section 10 below), (ii) the date
Tenant delivers written notice to Landlord waiving its Termination Right, or (iii) the date that Tenant is deemed to have waived
its Termination Right pursuant to Section 10 below, Landlord shall make available to Tenant a tenant improvement allowance
of up to $15.00 per rentable square foot of the Expansion Space (the "Expansion Space TI Allowance") for the
design and construction of fixed and permanent improvements in the Expansion Space desired by and performed by Tenant and which
improvements shall be of a fixed and permanent nature (the "Expansion Space Tenant Improvements"). Except as
otherwise provided in this Section 9, the Expansion Space TI Allowance shall only be available for the design and
construction of Expansion Space Tenant Improvements. Tenant acknowledges that upon the expiration of the Term of the Lease, the
Expansion Space Tenant Improvements shall become the property of Landlord and may not be removed by Tenant. Notwithstanding anything
to the contrary contained herein, the Expansion Space TI Allowance shall not be used to purchase any furniture, personal property
or other non-Building system materials or equipment, including, but not limited to, Tenant's voice or data cabling, non-ducted
biological safety cabinets and other scientific equipment not incorporated into the Expansion Space Tenant Improvements. A portion
of the Expansion Space TI Allowance shall be paid to Landlord as an administration fee in an amount equal to 3% for monitoring
and inspecting the construction of the Expansion Space Tenant Improvements (which amount shall be paid in lieu of and not in addition
to any amounts payable to Landlord pursuant to the first paragraph of Section 12 in connection with Alterations). Except
for the Expansion Space TI Allowance, Tenant shall be solely responsible for all of the costs of the Expansion Space Tenant Improvements
and for any Tenant Property or Removable Installations that Tenant may install in the Expansion Space. Any and all installations
paid for by Tenant which are identified by Tenant as Removable Installations (as that term is defined in the Lease, and as may
be amended by Landlord and Tenant pursuant to the Lease) shall be Tenant’s Property. The Expansion Space Tenant Improvements
shall be treated as Alterations and shall be undertaken pursuant to Section 12 of the Lease. The contractor for the Tenant
Improvements shall be selected by Tenant, subject to Landlord's approval, which approval shall not be unreasonably withheld, conditioned
or delayed. Prior to the commencement of the Expansion Space Tenant Improvements, Tenant shall deliver to Landlord a copy of any
contract with Tenant’s contractors (including the architect), and certificates of insurance from any contractor performing
any part of the Expansion Space Tenant Improvements evidencing industry standard commercial general liability, automotive liability,
“builder’s risk”, and workers' compensation insurance. Tenant shall cause the general contractor to provide
a certificate of insurance naming Landlord, Alexandria Real Estate Equities, Inc., and Landlord’s lender (if any) as additional
insureds for the general contractor’s liability coverages required above.





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During the
course of design and construction of the Expansion Space Tenant Improvements, Landlord shall reimburse Tenant for the cost of the
Expansion Space Tenant Improvements once a month against a draw request in Landlord's standard form, containing evidence of payment
of the applicable costs and such certifications, lien waivers (including a conditional lien release for each progress payment and
unconditional lien releases for the prior month's progress payments), inspection reports and other matters as Landlord customarily
obtains, to the extent of Landlord's approval thereof for payment, no later than 30 days following receipt of such draw request.
Upon completion of the Expansion Space Tenant Improvements (and prior to any final disbursement of the Expansion Space TI Allowance)
Tenant shall deliver to Landlord the following items: (i) sworn statements setting forth the names of all contractors and
subcontractors who did work on the Expansion Space Tenant Improvements and final lien waivers from all such contractors and subcontractors;
and (ii) "as built" plans for the Expansion Space Tenant Improvements. The Expansion Space TI Allowance shall only be
available for use by Tenant for the construction of the Expansion Space Tenant Improvements in the Expansion Space for a period
of 12 months following the Expansion Space Rent Commencement Date and any portion of the Expansion Space TI Allowance for which
verifiable costs have not been incurred by Tenant on or before the expiration of such 12 month period shall be forfeited and shall
not be available for use by Tenant.


 


		10.	Early Termination. Notwithstanding anything
to the contrary contained in this Second Amendment, if Tenant does not receive net proceeds from the closing of Tenant’s
Series B financing of at least $30,000,000 on or before December 31, 2011 (“Financing Contingency”), Tenant
shall have the right to elect to terminate the Lease with respect to the Expansion Space only (“Termination Right”)
upon written notice to Landlord (“Termination Notice”), which Termination Notice must be delivered to Landlord
on or before December 31, 2011. If Tenant timely and properly exercises the Termination Right, Tenant shall vacate the Expansion
Space and deliver possession thereof to Landlord in the condition which the Expansion Space was delivered by Landlord to Tenant
on the Expansion Space Commencement Date or, in the event Tenant has made any changes to the Expansion Space, in the condition
required by the terms of this Lease on the date set forth in the Termination Notice to Landlord (“Termination Date”)
and Tenant shall have no further obligations under the Lease with respect to the Expansion Space except for those accruing prior
to the Termination Date and those which, pursuant to the terms of the Lease, survive the expiration or early termination of the
Lease. Notwithstanding anything to the contrary contained in this Second Amendment, if (i) Tenant does not deliver to Landlord
the Termination Notice within the time period provided for in this paragraph, or (ii) Landlord disburses any portion of the Expansion
Space TI Allowance pursuant to Section 9, Tenant shall be deemed to have waived its Termination Right.



 


		11.	Right to Expand. Section 39(a) of
the Lease is hereby deleted in its entirety and of no further force or effect.



 


		12.	Brokers. Landlord and Tenant each represents
and warrants that it has not dealt with any broker, agent or other person (collectively, "Broker") in connection
with the transaction reflected in this Second Amendment and that no Broker brought about this transaction. Landlord and Tenant
each hereby agrees to indemnify and hold the other harmless from and against any claims by any Broker claiming a commission or
other form of compensation by virtue of having dealt with Tenant or Landlord, as applicable, with regard to this leasing transaction.



 






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		13.	Miscellaneous.






 


a.           This
Second Amendment is the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior
and contemporaneous oral and written agreements and discussions. This Second Amendment may be amended only by an agreement in writing,
signed by the parties hereto.


 


b.           This
Second Amendment is binding upon and shall inure to the benefit of the parties hereto, their respective agents, employees, representatives,
officers, directors, divisions, subsidiaries, affiliates, assigns, heirs, successors in interest and shareholders.


 


c.           Tenant
acknowledges that it has read the provisions of this Second Amendment, understands them, and is bound by them. Time is of the essence
in this Second Amendment.


 


d.           This
Second Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute one and the same instrument. The signature page of any counterpart may be detached therefrom without
impairing the legal effect of the signature(s) thereon provided such signature page is attached to any other counterpart identical
thereto except having additional signature pages executed by other parties to this Second Amendment attached thereto.


 


e.           Except
as amended and/or modified by this Second Amendment, the Lease is hereby ratified and confirmed and all other terms of the Lease
shall remain in full force and effect, unaltered and unchanged by this Second Amendment. In the event of any conflict between the
provisions of this Second Amendment and the provisions of the Lease, the provisions of this Second Amendment shall prevail. Whether
or not specifically amended by this Second Amendment, all of the terms and provisions of the Lease are hereby amended to the extent
necessary to give effect to the purpose and intent of this Second Amendment.


 


[Signatures are on the next page]


 




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IN WITNESS WHEREOF,
the parties hereto have executed this Second Amendment as of the day and year first above written.


 


	 	TENANT:
	 	 
	 	PHASERX INC.,
	 	a Delaware corporation
	 	 	 
	 	By:	/s/ Robert W. Overell
	 	Its:	President & CEO
	 	 	 
	 	LANDLORD:
	 	 
	 	ARE-SEATTLE NO. 10, LLC, 
	 	a Delaware limited liability company
	 	 	 
	 	By:	ALEXANDRIA REAL ESTATE EQUITIES, L.P., 
	 	 	a Delaware limited partnership, 
	 	 	managing member
	 	 	 	 	 
	 	 	By:	ARE-QRS CORP., 
	 	 	 	a Maryland corporation, 
	 	 	 	general partner
	 	 	 	 	 
	 	 	 	By:	/s/ Jackie Clem
	 	 	 	Its:	Jackie Clem, VP Real Estate Legal Affairs


 




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