EXHIBIT
10.6


LEASE
AGREEMENT





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





Landlord
and Tenant agree as follows:





1.           Premises.  Landlord
hereby leases to Tenant and Tenant hereby leases from Landlord upon the terms
and conditions set forth herein the Premises, together with nonexclusive rights
of ingress and egress over common areas in the Building.  The “Building” means the
building commonly known as 720 Broadway Street, Seattle, Washington
98122.  The “Premises” means that
space consisting of an agreed area of eight hundred fifty (850) rentable square
feet on the 4th floor, Room 417, of the Building, as outlined on the floor plan
attached hereto as Exhibit A which is
incorporated herein by this reference and made a part of this
Lease.




2.           Term, Commencement and Expiration
Dates.  The initial term of this Lease (the “Term”) shall be
twenty-four (24) months, commencing on August 1st, 2009 (the “Commencement Date”),
and expiring on August 31, 2011, unless earlier terminated as provided
herein.  Following the end of the initial term this lease may be
renewed for an additional twelve (12) months plus a 3% increase in basic
rent.  Tenant’s possession of the Premises prior to the Commencement
Date shall be subject to all the provisions of this Lease except that the Term
and Tenant’s obligation to pay Basic Rent shall not begin until the Commencement
Date.




3.           Rent.  Tenant shall
pay to Landlord basic rent for the Premises in an amount equal to four thousand
eight hundred forty five Dollars ($4,845.00) per month (“Basic Rent”) for the
initial term.  Tenant also shall pay as additional rent all other sums
due from Tenant to Landlord under this Lease (“Additional
Rent”).  Tenant shall pay Landlord without notice Basic Rent
and Additional Rent (collectively, “Rent”), without
deduction or offset, in lawful money of the United States of America in advance
on or before the first day of each month (or at other dates specified in this
Lease with respect to payments Additional Rent) during the Term at Landlord’s
address set forth on the signature page of this Lease, or to such other party or
at such other place as Landlord may hereafter from time to time designate to
Tenant in writing.  Tenant shall pay the first full monthly
installment of Basic Rent in advance upon execution of this
Lease.  Rent for any partial month at the beginning or end of the Term
shall be prorated.




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


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




6.           Uses.




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




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




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




6.4           Hazardous
Materials.




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


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




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




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




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




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


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




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




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


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




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




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




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




9.           Services
by Landlord.




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




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




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


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




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




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


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




10.           Assignment
and Subletting.




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




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




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


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




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




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




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


8


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




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




15.           Damage
or Destruction.




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




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


9


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




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




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




17.           Insurance.




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




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




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




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


10


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




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




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




19.           Insolvency
and Liens.




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


11


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




20.Condemnation.




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




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




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


12





21.Default; Remedies.




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




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




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




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




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




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




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


13





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




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




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




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




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




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


14


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




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




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




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


15


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




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




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




32.General.




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




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




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




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




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




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


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




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




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




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




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




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




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




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


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




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




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




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




LANDLORD:
                  PACIFIC
      NORTHWEST RESEARCH INSTITUTE,a
      Washington nonprofit corporationBy
                  /s/ Carl ZhouIts
                  Director of Facilities and
    IT





Address:
                    720
      BroadwaySeattle,
      WA 98122Attention:Director of
      FinanceTelephone: 
      (206) 726-1220Facsimile:    
      (206)
726-1217





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





Address:
                    720
      BroadwaySeattle,
      WA 98122Attention:John
      JensenTelephone: 
      (206) 298-0068 x201Facsimile:    
      (206)
298-9838


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EXHIBIT
A





SITE
PLAN











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


19


ADDENDUM
A


Shared
equipment and facilities addendum





Included in this agreement
is access to the following:


· Shared
spaces:


o Two
conference rooms


o Lunch
room with refrigerator, sink, microwave and lockers


o Cold
rooms


o
Darkrooms


· Shared
equipment:


o Gamma
counter


o
Scintillation counter


o
Confocal microscope


o
Ultracentrifuges


o Flow
cytometer


o
Sequencers


o Ice
machines


o Various
small equipment





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


20