Document:

EXHIBIT 10.11

 

INDEMNIFICATION AGREEMENT

 

This
Indemnification Agreement (the “Agreement”) is made as of                           ,
2005, by and between iVOW, Inc., a Delaware corporation (the “Company”),
and                                          
(the “Indemnitee”).

 

RECITALS

 

The Company
and Indemnitee recognize the increasing difficulty in obtaining liability
insurance for directors, officers and key employees, the significant increases
in the cost of such insurance and the general reductions in the coverage of
such insurance. The Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers and
key employees to expensive litigation risks at the same time as the
availability and coverage of liability insurance has been severely limited. Indemnitee
does not regard the current protection available as adequate under the present
circumstances, and Indemnitee and agents of the Company may not be willing to
continue to serve as agents of the Company without additional protection. The
Company desires to attract and retain the services of highly qualified
individuals, such as Indemnitee, and to indemnify its directors, officers and
key employees so as to provide them with the maximum protection permitted by
law.

 

AGREEMENT

 

In
consideration of the mutual promises made in this Agreement, and for other good
and valuable consideration, receipt of which is hereby acknowledged, the
Company and Indemnitee hereby agree as follows:

 

1.                                       Indemnification.

 

(a)                                  Third Party Proceedings. The Company
shall indemnify Indemnitee if Indemnitee is or was a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Company) by reason of the fact that
Indemnitee is or was a director, officer, employee or agent of the Company, or
any subsidiary of the Company, by reason of any action or inaction on the part
of Indemnitee while an officer or director or by reason of the fact that
Indemnitee is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against Expenses, judgments, fines and amounts paid
in settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) actually and reasonably incurred
by Indemnitee in connection with such action, suit or proceeding if Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe Indemnitee’s
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or

 

 

upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that Indemnitee did not act in good faith and in a manner which Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, or, with respect to any criminal action or proceeding, that Indemnitee
had reasonable cause to believe that Indemnitee’s conduct was unlawful.

 

(b)                                 Proceedings By or in the Right of the Company.
The Company shall indemnify Indemnitee if Indemnitee was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or proceeding by or in the right of the Company or any subsidiary of the
Company to procure a judgment in its favor by reason of the fact that
Indemnitee is or was a director, officer, employee or agent of the Company, or
any subsidiary of the Company, by reason of any action or inaction on the part of
Indemnitee while an officer or director or by reason of the fact that
Indemnitee is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against Expenses and, to the fullest extent
permitted by law, amounts paid in settlement (if such settlement is approved in
advance by the Company, which approval shall not be unreasonably withheld), in
each case to the extent actually and reasonably incurred by Indemnitee in
connection with the defense or settlement of such action or suit if Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed to be in or
not opposed to the best interests of the Company and its stockholders, except that
no indemnification shall be made in respect of any claim, issue or matter as to
which Indemnitee shall have been finally adjudicated by court order or judgment
to be liable to the Company in the performance of Indemnitee’s duty to the
Company and its stockholders unless and only to the extent that the court in
which such action or proceeding is or was pending shall determine upon
application that, in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnity for such Expenses which such court
shall deem proper.

 

(c)                                  Mandatory Payment of Expenses. To the
extent that Indemnitee has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section 1(a) or
Section 1(b) or the defense of any claim, issue or matter therein,
Indemnitee shall be indemnified against Expenses actually and reasonably
incurred by Indemnitee in connection therewith.

 

(d)                                 Definition of Expenses. For purposes of
this Agreement, Expenses shall include, without limitation, attorneys’ fees,
retainers, court costs, transcripts, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, all other disbursements or out-of-pocket
expenses and reasonable compensation for time spent by Indemnitee for which
Indemnitee is otherwise not compensated by the Company.

 

2.                                       No Employment Rights. Nothing contained
in this Agreement is intended to create in Indemnitee any right to continued
employment.

 

2

 

3.                                       Expenses; Indemnification Procedure.

 

(a)                                  Advancement of Expenses. The Company
shall advance all Expenses incurred by Indemnitee in connection with the
investigation, defense, settlement or appeal of any civil or criminal action,
suit or proceeding referred to in Section l(a) or Section 1(b) hereof
(including amounts actually paid in settlement of any such action, suit or
proceeding). Indemnitee hereby undertakes to repay such amounts advanced only
if, and to the extent that, it shall ultimately be determined that Indemnitee
is not entitled to be indemnified by the Company as authorized hereby.

 

(b)                                 Notice/Cooperation by Indemnitee. Indemnitee
shall, as a condition precedent to his or her right to be indemnified under
this Agreement, give the Company notice in writing as soon as practicable of
any claim made against Indemnitee for which indemnification will or could be
sought under this Agreement, but any delay in providing notice to the Company
will not relieve it from any liability which it may have to Indemnitee under
this Agreement unless the Company is materially prejudiced by such delay in
notice. Notice to the Company shall be directed to the Chief Executive Officer
of the Company and shall be given in accordance with the provisions of Section
12(d) below. In addition, Indemnitee shall give the Company such information
and cooperation as it may reasonably require and as shall be within Indemnitee’s
power.

 

(c)                                  Procedure. Any indemnification and
advances provided for in Section 1 and this Section 3 shall be made
no later than thirty (30) days after receipt of the written request of
Indemnitee. If a claim under this Agreement, under any statute, or under any
provision of the Company’s Certificate of Incorporation or Bylaws providing for
indemnification, is not paid in full by the Company within thirty (30) days
after a written request for payment thereof has first been received by the
Company, Indemnitee may, but need not, at any time thereafter bring an action
against the Company to recover the unpaid amount of the claim and, subject to
Section 11 of this Agreement, Indemnitee shall also be entitled to be paid
for the Expenses of bringing such action. It shall be a defense to any such action
(other than an action brought to enforce a claim for Expenses incurred in
connection with any action, suit or proceeding in advance of its final
disposition) that Indemnitee has not met the standards of conduct which make it
permissible under applicable law for the Company to indemnify Indemnitee for
the amount claimed, but the burden of proving such defense shall be on the
Company and Indemnitee shall be entitled to receive interim payments of
Expenses pursuant to Section 3(a) unless and until such defense may be
finally adjudicated by court order or judgment from which no further right of
appeal exists. It is the parties’ intention that if the Company contests
Indemnitee’s right to indemnification, the question of Indemnitee’s right to
indemnification shall be for the court to decide, and neither the failure of
the Company (including its Board of Directors, any committee or subgroup of the
Board of Directors, independent legal counsel, or its stockholders) to have
made a determination that indemnification of Indemnitee is proper in the
circumstances because Indemnitee has met the applicable standard of conduct
required by applicable law, nor an actual determination by the Company
(including its Board of Directors, any committee or subgroup of the Board of
Directors, independent legal counsel, or its stockholders) that Indemnitee has
not met such applicable standard of conduct, shall create a presumption that
Indemnitee has or has not met the applicable standard of conduct.

 

3

 

(d)                                 Notice to Insurers. If, at the time of
the receipt of a notice of a claim pursuant to Section 3(b) hereof, the
Company has director and officer liability insurance in effect, the Company
shall give prompt notice of the commencement of such proceeding to the insurers
in accordance with the procedures set forth in the respective policies. The
Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of the Indemnitee, all amounts payable as a result
of such proceeding in accordance with the terms of such policies.

 

(e)                                  Selection of Counsel. In the event the
Company shall be obligated under Section 3(a) hereof to pay the Expenses of any
proceeding against Indemnitee, the Company, if appropriate, shall be entitled
to assume the defense of such proceeding, with counsel reasonably acceptable to
Indemnitee, upon the delivery to Indemnitee of written notice of its election
so to do. After delivery of such notice, approval of such counsel by Indemnitee
and the retention of such counsel by the Company, the Company will not be
liable to Indemnitee under this Agreement for any fees of counsel subsequently
incurred by Indemnitee with respect to the same proceeding, provided that
(i) Indemnitee shall have the right to employ counsel in any such
proceeding at Indemnitee’s expense; and (ii) if (A) the employment of
counsel by Indemnitee has been previously authorized by the Company,
(B) Indemnitee shall have reasonably concluded that there may be a conflict
of interest between the Company and Indemnitee in the conduct of any such
defense or (C) the Company shall not, in fact, have employed counsel to
assume the defense of such proceeding, then the fees and expenses of Indemnitee’s
counsel shall be at the expense of the Company.

 

4.                                       Additional Indemnification Rights; Nonexclusivity.

 

(a)                                  Scope. Notwithstanding any other
provision of this Agreement, the Company hereby agrees to indemnify the
Indemnitee to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of this
Agreement, the Company’s Certificate of Incorporation, the Company’s Bylaws or
by statute. In the event of any change, after the date of this Agreement, in
any applicable law, statute, or rule which expands the right of a Delaware
corporation to indemnify a member of its board of directors or an officer, such
changes shall be deemed to be within the purview of Indemnitee’s rights and the
Company’s obligations under this Agreement. In the event of any change in any
applicable law, statute or rule which narrows the right of a Delaware
corporation to indemnify a member of its board of directors or an officer, such
changes, to the extent not otherwise required by such law, statute or rule to
be applied to this Agreement shall have no effect on this Agreement or the
parties’ rights and obligations hereunder.

 

(b)                                 Nonexclusivity. The indemnification
provided by this Agreement shall not be deemed exclusive of any rights to which
Indemnitee may be entitled under the Company’s Certificate of Incorporation,
its Bylaws, any agreement, any vote of stockholders or disinterested members of
the Company’s Board of Directors, the General Corporation Law of the State of
Delaware, or otherwise, both as to action in Indemnitee’s official capacity and
as to action in another capacity while holding such office. The indemnification
provided under this Agreement shall continue as to Indemnitee for any action
taken or not taken while serving in an indemnified

 

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capacity even
though he or she may have ceased to serve in any such capacity at the time of
any action, suit or other covered proceeding.

 

5.                                       Partial Indemnification. If Indemnitee
is entitled under any provision of this Agreement to indemnification by the
Company for some or a portion of the Expenses, judgments, fines or penalties
actually or reasonably incurred in the investigation, defense, appeal or
settlement of any civil or criminal action, suit or proceeding, but not,
however, for the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses, judgments,  fines or penalties to which Indemnitee is
entitled.

 

6.                                       Mutual Acknowledgment. Both the Company
and Indemnitee acknowledge that in certain instances, Federal law or public
policy may override applicable state law and prohibit the Company from
indemnifying its directors and officers under this Agreement or otherwise. For
example, the Company and Indemnitee acknowledge that the Securities and
Exchange Commission (the “SEC”) has taken the position that
indemnification is not permissible for liabilities arising under certain
federal securities laws, and federal legislation prohibits indemnification for
certain ERISA violations. Indemnitee understands and acknowledges that the
Company has undertaken or may be required in the future to undertake with the
SEC to submit the question of indemnification to a court in certain
circumstances for a determination of the Company’s right under public policy to
indemnify Indemnitee.

 

7.                                       Officer and Director Liability Insurance. The
Company represents and warrants that it shall obtain and maintain insurance
providing the officers and directors of the Company with coverage for losses
from wrongful acts, or to ensure the Company’s performance of its
indemnification obligations under this Agreement. In all policies of director
and officer liability insurance, Indemnitee shall be named as an insured in
such a manner as to provide Indemnitee the same rights and benefits as are
accorded to the most favorably insured of the Company’s directors, if
Indemnitee is a director; or the Company’s officers, if Indemnitee is not a
director of the Company but is an officer; or of the Company’s key employees,
if Indemnitee is not an officer or director but is a key employee. Notwithstanding
the foregoing, the Company shall have no obligation to obtain or maintain such
insurance if the Company’s Board of Directors determines in good faith that
such insurance is not reasonably available, if the premium costs for such
insurance are disproportionate to the amount of coverage provided, if the
coverage provided by such insurance is limited by exclusions so as to provide
an insufficient benefit, or if Indemnitee is covered by similar insurance
maintained by a parent or subsidiary of the Company. Indemnitee shall be
immediately notified in the event the Company determines not to obtain or
maintain such insurance on behalf of Indemnitee.

 

8.                                       Severability. Nothing in this Agreement
is intended to require or shall be construed as requiring the Company to do or
fail to do any act in violation of applicable law. The Company’s inability,
pursuant to court order, to perform its obligations under this Agreement shall
not constitute a breach of this Agreement. The provisions of this Agreement
shall be severable as provided in this Section 8. If this Agreement or any
portion hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the
full extent permitted by any applicable portion of this

 

5

 

Agreement that
shall not have been invalidated, and the balance of this Agreement not so
invalidated shall be enforceable in accordance with its terms.

 

9.                                       Exceptions. Any other provision herein
to the contrary notwithstanding, the Company shall not be obligated pursuant to
the terms of this Agreement:

 

(a)                                  Claims Initiated by Indemnitee. To
indemnify or advance Expenses to Indemnitee with respect to proceedings or
claims initiated or brought voluntarily by Indemnitee and not by way of
defense, except with respect to proceedings brought to establish or enforce a
right to indemnification under this Agreement or any other statute or law or
otherwise as required under Section 145 of the Delaware General
Corporation Law, but such indemnification or advancement of Expenses may be
provided by the Company in specific cases if the Board of Directors finds it to
be appropriate;

 

(b)                                 Lack of Good Faith. To indemnify
Indemnitee for any Expenses incurred by Indemnitee with respect to any
proceeding instituted by Indemnitee to enforce or interpret this Agreement, if
a court of competent jurisdiction determines that each of the material
assertions made by Indemnitee in such proceeding was not made in good faith or
was frivolous;

 

(c)                                  Insured Claims. To indemnify Indemnitee
for Expenses or liabilities of any type whatsoever (including, but not limited
to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in
settlement) to the extent such Expenses or liabilities have been paid directly
to Indemnitee by an insurance carrier under a policy of officers’ and directors’
liability insurance maintained by the Company; or

 

(d)                                 Claims under Section 16(b). To
indemnify Indemnitee for Expenses or the payment of profits arising from the
purchase and sale by Indemnitee of securities in violation of
Section 16(b) of the Securities Exchange Act of 1934, as amended, or any
similar successor statute.

 

10.                                 Construction of Certain Phrases.

 

(a)                                  For
purposes of this Agreement, references to the “Company” shall include,
in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so
that if Indemnitee is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, Indemnitee
shall stand in the same position under the provisions of this Agreement with
respect to the resulting or surviving corporation as Indemnitee would have with
respect to such constituent corporation if its separate existence had
continued.

 

(b)                                 For
purposes of this Agreement, references to “other enterprises” shall
include employee benefit plans; references to “fines” shall include any
excise taxes assessed on Indemnitee with respect to an employee benefit plan;
and references to “serving at the request of

 

6

 

the Company”
shall include any service as a director, officer, employee or agent of the
Company which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and if Indemnitee acted in good faith and in a
manner Indemnitee reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to
have acted in a manner “not opposed to the best interests of the Company”
as referred to in this Agreement.

 

11.                                 Attorneys’ Fees. In the event that any
action is instituted by Indemnitee under this Agreement to enforce or interpret
any of the terms hereof, Indemnitee shall be entitled to be paid all court
costs and Expenses as incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous. In the event of an action
instituted by or in the name of the Company under this Agreement or to enforce
or interpret any of the terms of this Agreement, Indemnitee shall be entitled
to be paid all court costs and Expenses incurred by Indemnitee in defense of
such action (including with respect to Indemnitee’s counterclaims and
cross-claims made in such action), unless as a part of such action the court
determines that each of Indemnitee’s material defenses to such action were made
in bad faith or were frivolous.

 

12.                                 Miscellaneous.

 

(a)                                  Governing Law. This Agreement and all
acts and transactions pursuant hereto and the rights and obligations of the
parties hereto shall be governed, construed and interpreted in accordance with
the laws of the State of Delaware, without giving effect to principles of
conflict of law.

 

(b)                                 Entire Agreement; Enforcement of Rights. This
Agreement sets forth the entire agreement and understanding of the parties
relating to the subject matter herein and merges all prior discussions between
them. No modification of or amendment to this Agreement, nor any waiver of any
rights under this Agreement, shall be effective unless in writing signed by the
parties to this Agreement. The failure by either party to enforce any rights
under this Agreement shall not be construed as a waiver of any rights of such
party.

 

(c)                                  Construction. This Agreement is the
result of negotiations between and has been reviewed by each of the parties
hereto and their respective counsel, if any; 
accordingly, this Agreement shall be deemed to be the product of all of
the parties hereto, and no ambiguity shall be construed in favor of or against
any one of the parties hereto.

 

(d)                                 Notices. Any notice, demand or request
required or permitted to be given under this Agreement shall be in writing and
shall be deemed sufficient when delivered personally or sent by fax or 48 hours
after being sent by nationally-recognized courier or deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, and addressed to
the party to be notified at such party’s address or fax number as set forth
below or as subsequently modified by written notice.

 

7

 

(e)                                  Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one instrument.

 

(f)                                    Successors and Assigns. This Agreement
shall be binding upon the Company and its successors and assigns, and inure to
the benefit of Indemnitee and Indemnitee’s heirs, legal representatives and
assigns.

 

(g)                                 Subrogation. In the event of payment
under this Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of Indemnitee, who shall execute all
documents required and shall do all acts that may be necessary to secure such
rights and to enable the Company to effectively bring suit to enforce such
rights.

 

 

[Signature Page Follows]

 

8

 

The parties
hereto have executed this Agreement as of the day and year set forth on the
first page of this Agreement.

 

	
   

  	
  iVOW, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  11455 El
  Camino Real

  
	
   

  	
   

  	
  Suite 140

  
	
   

  	
   

  	
  San Diego, CA
  92130-2098

  
	
   

  	
   

  
	
   

  	
  Fax Number:
  (858) 847-4811

  
	
   

  	
   

  
	
  AGREED TO
  AND ACCEPTED:

  
	
   

  
	
   

  
	
  [Name]

  
	
   

  
	
   

  
	
   

  	
   

  
	
  (Signature)

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Fax Number:

  	
   

  	
   

  
								

 

9Exhibit
10.14

 

First Amendment

 

Amendment 1 to the Lease dated 28th day of April
2003

by and between OVERLAKE OFFICE BUILDING LLC (“Landlord”) and Sound

Health Solutions, Inc. (“Tenant”) for that certain space commonly known as
Suite

B-115 of the Overlake Office Building described below.

 

Legal
description:

Lots 4 A of Lot Line
Adjustment No. SS-83-13, according to the Lot Line Adjustment recorded under
Recording No. 8504100678, being a revision of Lot Line Adjustment recorded
under Recording No. 8501160598, situate in the City of Redmond, County of King,
State of Washington.

 

It is hereby agreed as
follows:

 

Additional Storage Space

 

Tenant hereby leases an
additional 410 rentable square feet, Suite B-8, in the basement as storage for
Tenant’s business on a month to month basis commencing May 1, 2005. The rental
structure for such storage space is as follows:

 

410 sq. ft.               $9.38/sf/yr             $320.48/mo.

 

All other terms and
conditions of the original Lease shall remain the same.

 

	
  /s/ Joe Yecich 

  	
  5/19/05

  	
   

  	
   

  	
   

  	
  /s/ Teresa Girolami

  	
   

  	
  5/19/05

  
	
  Overlake Office
  Building LLC

  	
  Date

  	
   

  	
   

  	
   

  	
  Sound Health Solutions

  	
   

  	
  Date

  
	
  Joe Yecich Manager

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

OFFICE
LEASE

 

15446
BEL-RED ROAD BUILDING LEASE

 

THIS LEASE is made this
28th day of April, 2003, by and between Overlake Office Building LLC
(“Landlord”), and Sound Health Solutions, Inc., a Washington State Corporation
(“Tenant”).

 

WITNESSETH:

 

In consideration of the
mutual covenants and agreements set forth below, Landlord and Tenant agree as
follows:

 

1.             Lease
Data; Exhibits. The following definitions shall apply, except as otherwise
specifically modified herein:

 

(a)           Building:  15446 Bel-Red Road Building, Suite #B-15,
Redmond, Washington situated on the Land described more particularly in Exhibit
A attached.

 

(b)           Land:  The real property legally described in Exhibit
A attached.

 

(c)           Premises:  Those certain premises with an agreed area of
6,771 net rentable square feet located on Building Floor(s) ground floor as
crosshatched on the floor plan(s) of the Building attached hereto as Exhibit
B.

 

(d)           Commencement
Date:  October 1, 2003 or such
earlier or later date as is provided in Section 3 hereof.

 

(e)           Termination
Date:  November 30, 2008.

 

(f)            Rent:  The following dollar amounts per month, as
base rent, payable on or before the first day of each month:

 

	
  10/1/2003 to
  11/30/2003 $-0-/mo.

  	
   

  	
  $-0-/yr.

  	
   

  	
  -0-/sq. ft.

  
	
  12/1/2003 to
  11/30/2004 $10,156.50/mo.

  	
   

  	
  $121,878.00/yr.

  	
   

  	
  18.00/sq. ft.

  
	
  12/1/2004 to
  11/30/2005 $10,579.69/mo.

  	
   

  	
  $126,956.25/yr.

  	
   

  	
  18.75/sq. ft.

  
	
  12/1/2005 to
  11/30/2006 $11,002.88/mo.

  	
   

  	
  $132,034.50/yr.

  	
   

  	
  19.50/sq. ft.

  
	
  12/1/2006 to
  11/30/2007 $11,454.28/mo.

  	
   

  	
  $137,451.30/yr.

  	
   

  	
  20.30/sq. ft.

  
	
  12/1/2007 to
  11/30/2008 $11,905.68/mo.

  	
   

  	
  $142,868.10/yr.

  	
   

  	
  21.10/sq. ft.

  

 

Tenant shall also
pay additional rent as provided below.

 

(g)           Security
Deposit:  $22,062.18 of which
$10,156.50 is a Minimum Rent Deposit to be applied to Monthly Minimum Rent for
the third month of the Lease Term and $11,905.68 is a Security Deposit.

 

(h)           Parking:  27 unassigned spaces.

 

(i)            Base
Year:  2003

 

(j)            Notice
Addresses:

 

Landlord:               Overlake
Office Building LLC

c/o Kauri
Investments

4014 Aurorn Avenue
North, Suite B

Seattle, WA  98103

 

1

 

Tenant:                  Before
Commencement of Lease:

Sound Health
Solutions, Inc.

14730 NE 8th
St., Suite 110

Bellevue, WA  98007

 

After Commencement
of Lease:

Sound Health
Solutions, Inc.

15446 Bel-Red
Road, Suite B-15

Redmond, WA  98052

 

(k)           Exhibits:  The following exhibits are made a part of
this Lease:

 

Exhibit A – Legal
Description of Land

Exhibit B – Floor
Plan of Premises

Exhibit C – Rider

Exhibit D – Tenant
Improvement Work

Exhibit E – Guaranty
of Lease

Exhibit F – Rules
& Regulations

 

(l)            Tenant’s
Share:  “Tenant’s Share” shall mean
the percentage determined by dividing the net rentable area of the Premises by
the net rentable area of the Building. If the net rentable area of the Premises
or Building is modified, Landlord shall adjust Tenant’s Share to reflect such
change. As used in this Lease, Landlord and Tenant agree that Tenant’s Share is
..1384 (13.84%).

 

(m)          Net
Rentable Area of the Building:  The
agreed Net Rentable Area of the Building is 48,906 square feet.

 

2.             Premises.

 

(a)           Definition.
Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, those
certain premises (the “Premises”) described in Section 1(c) above.

 

(b)           Changes
to Building. Tenant acknowledges that Landlord may in its discretion
increase, decrease or change the number, locations and dimensions of any
hallways, lobby areas, common areas and other improvements shown on Exhibit
B which are not within the Premises. Landlord reserves the right from time
to time to (i) install, use, maintain, repair, relocate and replace pipes,
ducts, conduits, wires and appurtenant meters and equipment for service to the
Premises or to other parts of the Building in areas above the suspended ceiling
surfaces, below the floor surfaces, within the walls and in the central core
areas of the Building within the Premises and elsewhere in the Building; (ii)
alter or expand the Building; and (iii) alter, relocate or substitute any of
the Common Areas referenced in Section 2(d) below.

 

(c)           Condition.
The Premises are leased by Landlord and accepted by Tenant “As Is” in their
present condition. Unless otherwise agreed to in writing by Landlord and
Tenant, Landlord shall have no obligation to make any alterations or
improvements to the Premises, provided Landlord will perform normal janitorial
cleaning services to the Premises prior to delivery of the Premises to Tenant.

 

(d)           Common
Areas:  During the lease term Tenant
and its licensees, invitees, customers and employees shall have the
non-exclusive right to use all entrances, lobbies and other public areas of
Building (the “Common Areas”) in common with Landlord, other Building tenants
and their respective licensees, invitees, customers and employees. Landlord
shall at all times have exclusive control and management of the Common Areas
and no diminution thereof shall be deemed a constructive or actual eviction or
entitle Tenant to compensation or a reduction or abatement of rent.

 

3.             Term.
The Term of this Lease shall commence on the first to occur of the following
events:(i) the Commencement Date set forth in Section 1(d) above or (ii) the
date on which Tenant takes possession or commences beneficial occupancy of the
Premises and shall end at midnight on the Termination Date, unless extended or
sooner terminated in accordance with the terms hereof. If Landlord for any
reason cannot deliver possession of the Premises to Tenant by the Commencement Date
specified in Section 1(d) above, this Lease shall not be void or voidable nor
shall Landlord be liable to Tenant for loss or damage resulting therefrom. In
such event, there shall be a proportionate reduction of all rent for the period
between the specified Commencement Date and the date when possession of the
Premises is in fact

 

2

 

tendered to Tenant. Notwithstanding
the above, if Landlord fails to deliver full possession of the Premises by
November 1, 2003, and after thirty (30) days notice by Tenant of Tenant’s
intent to terminate this Lease, this Lease shall automatically terminate unless
possession of the Premises has been delivered to Tenant. No such failure to
provide possession on the specified Commencement Date shall in any way extend
the term of this Lease.

 

4.             Rent.
Tenant shall pay to Landlord at the address specified by Landlord, without any
set-off or deduction whatsoever, in lawful money of the United States, as base
rent, the rent specified in Section 1(f) above per month or any part thereof,
in advance on or before the first day of each month of the Lease term. Rent for
partial months shall be prorated. In addition to base rent, all other sums to
be paid under Section 5 and Section 6 hereof and all sums to be paid or
reimbursed by Tenant to Landlord under this Lease, whether or not so
designated, shall be “additional rent” for the purposes of this Lease. If
Tenant defaults in the performance of any of its obligations hereunder,
Landlord may, but shall not be obligated to, perform such obligations, and the
cost thereof to Landlord shall also be additional rent. Unless otherwise
specifically provided herein, Tenant shall pay Landlord all additional rent
within ten (10) days of demand therefor.

 

5.             Tenant’s
Share of Building Operating Costs.

 

(a)           Amount.
Before the commencement of each calendar year during the Lease term, Landlord
will notify Tenant in writing of Landlord’s estimate of Tenant’s Share of
estimated “Building Operating Costs” (defined below) for such year to the
extent such Operating Costs exceed Operating Costs for the Base Year as defined
in Section 1(i). The term “Tenant’s Share” is defined in Section 1(l) of this
Lease. Tenant shall pay one-twelfth (1/12th) of Tenant’s Share of such excess
in advance on the first day of each month of such year. Following the end of
each year, or at the expiration or sooner termination of the Lease term,
Landlord will compute Tenant’s Share due under this Section for such year,
based on actual costs, and, if Tenant’s Share for such year is greater than
that already paid by Tenant for such year, Tenant shall pay Landlord the
deficiency within thirty (30) days of Tenant’s receipt of Landlord’s written
notice of the deficiency and the determination of Tenant’s share. If the total
amount paid for such year exceeds Tenant’s Share, then Landlord shall credit
such excess to the payment of Rent and additional rent which may thereafter
become due; provided, however, upon the expiration or sooner termination of the
Lease term, if Tenant has otherwise complied with all other terms and
conditions of this Lease, Landlord shall refund such excess to Tenant. If at
any time Landlord obtains additional information regarding expenses, Landlord
may at its election adjust the amount of the monthly installments due during
the balance of the year to reflect such additional information, by giving
Tenant written notice thereof, which notice shall also state the amount of the
deficiency, if any, in the prior monthly payments for the year. Tenant shall
pay any such deficiency within thirty (30) days of its receipt of the notice
and shall make the adjusted monthly payments for the remainder of the year.

 

(b)           Definitions.
For purposes of this Section 5, the following definitions shall apply:

 

(i)            “Operating
Costs” shall mean all costs and expenses of every kind and nature (including
reserves) paid or incurred by Landlord for maintaining, operating, repairing,
replacing and administering the Building and Land (including Common Areas and
any and all costs related to the Reciprocal Easement Agreement with the
adjacent property owner), and the personal property used in conjunction
therewith, together with a sum equal to fifteen percent (15%) of the cost
thereof as an administrative fee, including, without limitation, the costs of
refuse collection, water, sewer, electricity, heat, air conditioning, fuel,
light, fire protection and other utilities and services; supplies; janitorial
and cleaning services; window washing; snow, garbage and refuse removal;
security services and systems; landscape maintenance; services of independent
contractors; compensation (including employment taxes and fringe benefits) of
all persons who perform duties in connection with the operation, maintenance,
repair, replacement and administration of the Building and/or Land, its
equipment and common areas and facilities; Landlord’s overhead costs, to the
extent attributable to the Building and/or Land; insurance premiums for all
insurance carried by Landlord with respect to the Building and/or Land;
licenses, permits and inspection fees; subsidies and other payments required by
public bodies and costs incurred in connection with compliance with
governmental requirements including, but not limited to, public transportation
and parking; management and administrative service fees; legal and accounting
expenses and all other expenses

 

3

 

or charges whether
or not hereinabove described which, in accordance with generally accepted
accounting and management practices, would be considered an expense of
maintaining, operating, repairing, replacing and administering the Building,
Land and Common Areas.

 

(c)           Audit.
Tenant shall have the right to inspect Landlord’s books and records to audit
the determination and allocation of the Operating Costs identified in this
Section 5 and Section 6. If such audit discloses a difference in excess of five
percent (5%) of the Operating Costs computed by Landlord, or if Landlord’s
books and records improperly reflect the information needed for an accurate
determination of the Operating Costs and Real Property Taxes payable hereunder,
Landlord shall promptly pay to Tenant the cost of the audit and credit or
reimburse to Tenant any overpayment. Any information obtained by Tenant
pursuant to the provisions of this Section shall be treated as confidential,
except that Tenant may use such information as required for internal accounting
purposes and preparation of tax returns and disclose the same in connection
with any administrative or judicial proceedings in which Tenant is involved and
where Tenant may be required to divulge such information.

 

6.             Tenant’s
Share of Building Real Property Taxes.

 

(a)           Amount.
Before the commencement of each calendar year during the Lease term, Landlord
will notify Tenant in writing of Landlord’s estimate of Tenant’s Share of
estimated “Real Property Taxes” (defined below) for such year to the extent
such Real Property Taxes exceed Real Property Taxes for the Base Year as defined
in Section 1(i). the term “Tenant’s Share” is defined in Section 1(i) of this
Lease. Tenant shall pay one-twelfth (1/12th) of Tenant’s Share of such excess
in advance on the first day of each month of such year. Following the end of
each year, or at the expiration or sooner termination of the Lease term,
landlord will compute Tenant’s Share due under this Section for such year,
based on actual costs, and, if Tenant’s Share for such year is greater than
that already paid by Tenant for such year, Tenant shall immediately pay Landlord
the deficiency. If the total amount paid for such year exceeds Tenant’s Share,
then Landlord shall credit such excess to the payment of Rent and additional
rent which may thereafter become due; provided, however, upon the expiration or
sooner termination of the Lease term, if Tenant had otherwise complied with all
other terms and conditions of this Lease, Landlord shall refund such excess to
Tenant. If at any time Landlord obtains additional information regarding
expenses, Landlord may at its election adjust the amount of the monthly
installments due during the balance of the year to reflect such additional
information, by giving Tenant written notice thereof, which notice shall also
state the amount of the deficiency, by giving Tenant written notice thereof,
which notice shall also state the amount of the deficiency, if any, in the
prior monthly payments for the year. Tenant shall pay any such deficiency
within ten (10) days of its receipt of the notice and shall make the adjusted
monthly payments for the remainder of the year.

 

(b)           Definitions.
For purposes of this Section 6, the following definitions shall apply:

 

(i)            “Real
Property Taxes” shall mean all taxes and assessments of every kind and nature
on the Building and/or Land (including Common Areas) and on personal property
used in conjunction therewith, including all tenant improvements which are paid
for by Landlord and not reimbursed by tenants and taxes on property of tenants
in the Building which have not been paid by such tenants directly to the taxing
authority; surcharges and all surface water, local improvement, and other
assessments levied with respect to the Building and/or Land and all other
property of Landlord used in connection with the operation of the Building
and/or Land; and any taxes levied or assessed in addition to or in lieu of, in
whole or in part, such real or personal property taxes, or any other tax upon
leasing of the Building and/or Land or rents collected therefrom, other than
any federal or state income tax and costs and expenses paid or incurred by
Landlord (including but not limited to fees and expenses of consultants,
attorneys, appraisers, and experts) in connection with contesting or resisting
increased assessments or attempting to lower assessment levels.

 

7.             Late
Charge; Interest. If Tenant fails to pay any amount due hereunder within
ten (10) days of the due date, a late charge equal to five percent (5%) of the
unpaid amount shall be assessed and be immediately due and payable. Such late charge
shall be reimposed on the first day of each subsequent month that such payment
remains outstanding. In addition, interest shall accrue on any base or
additional rent which is not paid when due at the lesser of (a) the maximum
interest rate allowed by applicable law or (b) eighteen percent (18%) per annum.
If Tenant defaults in making any rent payment, Landlord shall have

 

4

 

the right to require that
subsequent rent payments be made by cashiers or certified check.

 

8.             Security
Deposit. Tenant has deposited with landlord the sum of $22,062.18 of which
$10,156.50 is a Minimum Rent Deposit to be applied to Monthly Minimum Rent for
the third month of the Lease Term and $11,905.68 is a Security Deposit. This sum
shall belong to Landlord and shall constitute partial consideration for the
execution of this Lease. Landlord shall pay Tenant the remaining balance
thereof, without any liability for interest thereon, within thirty (30) days
after the expiration or prior termination of the Lease term, or any extension
thereof, if and only if Tenant has fully performed all of its obligations under
the terms of this Lease. Landlord shall be entitled to withdraw from the
deposit the amount of any unpaid rent or additional rent or other charges not
paid to Landlord when due, and Tenant shall immediately redeposit an amount
equal to that so withdrawn.

 

9.             Tenant’s
Operations.

 

(a)           Use
of Premiums. Tenant shall use the Premiums exclusively for health care
management and related general office purposes during the Lease term. Tenant
shall not use or permit the use of the Premises for any other business or
purpose without Landlord’s prior written consent. Tenant shall promptly comply,
at its sole cost and expense, with the rules and regulations attached hereto as
Exhibit E and with such other rules and regulations relating to the use of the
Premises, Building and Common Areas as Landlord may from time to time
promulgate. Tenant shall maintain the Premises in a clean, orderly and neat
fashion to conform with the high standards of the Building, permitting no odors
to be emitted from the Premises and shall neither commit waste nor permit any
waste to be committed thereon. Tenant shall not permit any accumulation of
trash on or about the Premises. Tenant shall not create or contribute to the
creation of a nuisance in either the Premises or the Building and Tenant shall
not engage in or permit any action that will unreasonably disturb any other
tenant in the Building.

 

(b)           Unlawful
Use. Tenant shall not use or permit the Premises or any part thereof to be
used for any purpose in violation of any municipal, county, state or federal
law, ordinance or regulation, or for any purpose offensive to the standards of
the community of which the Building is a part. Tenant shall promptly comply, at
its sole cost and expense, with all laws, ordinances and regulations now in
force or hereafter adopted and with the requirements of any board of fire
underwriters or similar body relating to or affecting the condition, use or
occupancy of the Premises.

 

(c)           Liens
and Encumbrances. Tenant shall keep the Premises free and clear of all
liens and encumbrances arising or growing out of its use and occupancy of the
Premises. If any lien is filed against the Premises or Building as a result of
the action or inaction of Tenant, Tenant shall upon demand provide landlord
with cash or other security acceptable to Landlord in an amount equal to one
and one-half (1-1/2) times the amount of the claimed lien as security for its
prompt removal. If Tenant is not actively pursuing the removal of the lien,
Landlord shall have the right to disburse such security to cause the removal of
the lien if a judgment is entered against Tenant in the lien proceeding or if
such lien causes unreasonable difficulties for Landlord in connection with its
financing of the Building.

 

(d)           Hazardous
Materials.

 

(i)            “Hazardous
Material” shall mean any matter (whether gaseous, liquid or solid) which is or
may be harmful to persons or property, including but not limited to materials
now or hereafter designated as a hazardous or toxic waste or substance under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 USC 9601, et seq., or as a Hazardous Substance, Hazardous Household
Substance, Moderate Risk Waste or Hazardous Waste under the Hazardous Waste
Management Act, RCW Chapter 70.105, or as a hazardous substance under to Model
Toxics Control Act RCW Chapter 70.105D, all as now or hereafter amended, or
which may now or hereafter be regulated under any other federal, state, or
local law, statute, ordinance or regulation pertaining to health, industrial
hygiene or the environment, including without limitation, (i) any asbestos
and/or asbestos containing materials (collectively “ACMs”) regardless of
whether such ACMs are in a friable or non-friable state, or (ii) any matter
designated as a hazardous substance pursuant to Section 311 of the Federal
Water Pollution Control Act (33 USC 1317), or (iii) any matter defined as a
hazardous waste pursuant to Section 1004 of the Federal Resource Conservation
and Recovery Act, (42 USC 6901 et seq.) pertaining

 

5

 

to health or the
environment. “Hazardous Material” shall not include ordinary office cleaning
and maintenance products, and items used in the ordinary course of Tenant’s use
of the property as defined in Section 9(a) above which are used with due care
and in accordance with applicable law and the instructions of the manufacturer
of such products in the reasonable and prudent conduct of Tenant’s business on
the Premises.

 

(ii)           Tenant
shall not store, use, sell, release, generate or dispose of any Hazardous
Material in, on or about the Premises, Common Areas or any other part of the
Building or Land, without the prior written consent of Landlord. With respect
to any Hazardous Materials stored, used, generated or disposed of from the
Premises, Tenant shall promptly, timely and completely comply with all
governmental requirements for recording and record keeping; submit to Landlord
true and correct copies of all reports, manifests and identification numbers at
the same time as they are required to be and/or are submitted to the
appropriate governmental authority; within five (5) days of Landlord’s request,
provide evidence satisfactory to Landlord that Tenant’s compliance with all
applicable governmental rules, regulations and requirements; and comply with
all applicable governmental rules, regulations and requirements regarding the
use, sale, transportation, generation, treatment and disposal of Hazardous
Materials. Prior to the expiration and surrender of the Premises by Tenant,
Tenant shall remove any and all Hazardous Materials (including without
limitation ACMs) which Tenant, its employees, agents, contractors and/or
sublessees have brought onto the Premises, including without limitation
leasehold improvements, wall, flooring and ceiling materials. Tenant shall be
solely responsible for and shall defend (with counsel acceptable to Landlord),
indemnify and hold Landlord it agents, affiliates and employees harmless from
and against all claims, costs, damages, judgments, penalties, fines, losses,
liabilities and expenses, including attorneys’ fees, consultant fees, and
expert fees, and expert fees arising out of or in connection with Tenant’s
breach of its obligations contained in this Section 9(d) (including, without
limitation, diminution in value of the Premises or the Building, damages for
the loss or restriction on use of rentable or usable space or of any amenity of
the Premises or the Building, damages arising from any adverse impact on
marketing of space, loss of good reputation, and sums paid as settlement of
claims, attorneys’ fees, consultant fees, and expert fees, whether or not used
at trial or in a proceeding) which arise during or alter the Lease term as a
result of such contamination. Tenant shall be solely responsible for and shall
defend (with counsel acceptable to Landlord), indemnify and hold Landlord, its
agents, affiliates and employees harmless from and against any and all claims,
costs, damages, lawsuits, penalties, liens, losses and/or liabilities,
including attorneys’ fees and costs, arising out of or in connection with
removal, cleanup and restoration work and materials necessary to return the
Premises, Common Areas, Building and any other property of whatever nature to
the condition existing prior to the appearance of Tenant’s Hazardous Material
on a about the Premises, Common Areas or the Building; provided that Landlord’s
written approval of such actions and that of any Lender shall first be
obtained, which approval shall not be unreasonably withheld so long as the
actions would not potentially have any materiel adverse, long-term or
short-term effect on the Premises, Common Areas, or Building. Notwithstanding
anything else set forth herein, Tenant’s obligations under this Section 9(d)
shall survive the expiration of this Lease.

 

(iii)          Landlord
shall have the right in its sole discretion to conduct an environmental audit
utilizing a contractor of Landlord’s choice at the end of the Lease term, upon
the earlier termination of this Lease, upon Tenant’s default hereunder or if
Landlord reasonably believes that Hazardous Materials arc being stored, used,
sold, generated, released or disposed of from the Premises in violation of the
terms of this Section 9(d). The audit shall consist of such examinations,
tests, inspections, samples and reviews as Landlord or its consultants shall
reasonably determine to be advisable or necessary. Tenant shall be responsible
for the cost of the audit and any remedial or removal work if such audit
discloses the existence, storage, disposal or other presence of Hazardous
Materials occurring during the Lease term and attributable to Tenant, its employees,
agents, contractors or Sublessees. Failure of Landlord to conduct an
environmental audit or to detect conditions attributable to Tenant, its
employees, agents, contractors or sublessees, whether such audit is conducted
or not, shall not operate as a release of Tenant or its Guarantor, if any, of
its liability, as stated in this Lease or by operation of Law. Tenant’s

 

6

 

obligations herein shall
survive the expiration of this Lease.

 

(c)           Signs.
Tenant shall not erect or place, or permit to be erected or placed, or maintain
any signs of any nature or kind whatsoever on the exterior walls or windows of
the Premises or elsewhere in the Building, with the exception of a sign
identifying Tenant placed on or near the front door of the Premises, the size
style and location of which must first be approved in writing by Landlord.
Tenant agrees to abide by all signing rules and regulations, if any,
promulgated by Landlord and to install, at its sole expense, any signs required
thereby. Landlord will provide and install, at Landlord’s sole cost and
expense, Building standard directory signage specified to Landlord and Tenant’s
mutual approval.

 

10.           Utilities
and Services.

 

(a)           Tenant’s
Responsibility. Tenant shall be solely responsible for, and shall promptly
pay when due, all charges for telephone and all other utilities which are
separately metered and supplied to the Premises at Tenant’s request.

 

(b)           Services.
As long as Tenant is not in default under this Lease, Landlord shall cause the
Common Areas of the Building, such as lobbies, elevators, stairs, corridors and
restrooms, to be maintained in reasonably good order and condition, except for
damage occasioned by any act or omission of Tenant or Tenant’s officers,
contractors, agents, invitees, licensees or employees, the repair of which
shall be paid for by Tenant. Landlord shall furnish the Premises with
electricity for office use, including lighting and low power usage (110 volt)
office machines, water and elevator services. Landlord shall also provide
customary building janitorial service on weekdays, other than holidays. From
6:00 a.m. to 8:30 p.m., Monday through Friday, and 7:00 a.m. to 4:00 p.m. on
Saturday, excluding legal holidays observed by national banks with offices in
Redmond, Washington (“Normal Business Hours”), Landlord shall furnish the
Premises with heat and air conditioning services. If requested by Tenant,
Landlord shall furnish heat and air conditioning services at times other than
Normal Business Hours, and janitorial services on other days, and Tenant shall
pay for the cost of such services at rates established by Landlord, as
Additional Rent.

 

(i)            Janitorial.
If Tenant requires excessive or specialized janitorial services, Tenant shall
promptly pay Landlord for the additional costs and expenses incurred by
Landlord in providing such services as additional rent.

 

(ii)           Additional
Service. Landlord shall furnish the Premises with electricity for the
maintenance of building-standard fluorescent lighting. Landlord shall also
furnish the Premises with electricity for lighting other than building-standard
fluorescent lighting and/or the operation of general office machines which use
110 volt electric power and 20 amp circuits, such as electric typewriters,
dictating equipment, adding machines and calculators, and general service
non-production type office machines at no additional charge. Tenant shall not
use or permit in the Premises any electrical device which in Landlord’s opinion
will overload the Building’s electrical circuits. Further, Tenant shall not
without Landlord’s prior consent connect any additional items such as data
processing equipment, electrical heaters or other machines to the Building’s
electrical distribution system or make any alteration or addition to such
system. Landlord shall furnish adequate running water to the building, standard
water fountain, lavatories and toilets in the core area on each floor of the
Building, and shall keep all such plumbing in reasonably good order and repair.
Landlord shall have the right to terminate the furnishing of any and all
utilities and services required or permitted under this Section 10 at and for
any and all such time or times as Landlord shall deem reasonably necessary for
repairs, alterations or improvements. If Tenant requires excessive or
specialized electrical, lighting or heating or cooling services, Tenant shall
promptly pay the additional costs and expenses incurred by Landlord in
providing such services as additional rent.

 

(iii)          Interruption.
Landlord shall not be liable for any loss, injury or damage to person or
property caused by or resulting from any variation, interruption or failure of
such services due to any cause whatsoever, or from failure to make any repairs
or perform any maintenance. No temporary interruption or failure of such
services incidental to the making of repairs, alterations or improvements or
due to accident, strike or conditions or events beyond Landlord’s reasonable
control shall be deemed an eviction of Tenant or to relieve Tenant from any of
Tenant’s obligations hereunder or to give Tenant a right of action against
Landlord for damages.

 

7

 

11.           Licenses
and Taxes. Tenant shall be liable for, and shall pay throughout the term of
this Lease, all license and excise fees and occupation taxes covering the
business conducted on the Premises and all personal property taxes levied with
respect to all personal property located at the Premises. If any governmental
authority levies a tax or license fee on rents payable under this Lease, or
rents accruing from use of the Premises, or a tax or license fee in any form
against Landlord or Tenant because of, or measured by, or based upon, income
derived from the leasing or rental thereof or a transaction privilege tax, such
tax or license fee shall be paid by Tenant, either directly if required by law,
or by reimbursing Landlord for the amount thereof upon demand.

 

12.           Alterations
by Tenant. Tenant shall not make any alterations, additions or improvements
in or to the Premises without first submitting to Landlord
professionally-prepared plans and specifications for such work and obtaining
Landlord’s prior written approval. Tenant covenants that it will cause all such
alterations, additions and improvements to be performed at Tenant’s sole cost
and expense by a contractor approved by Landlord and in a manner which:  (a) is consistent with the Landlord-approved
plans and specifications and any conditions imposed by Landlord in connection
therewith, (b)  is in conformity, with
commercial standards; (c)  includes
acceptable insurance coverage for Landlord’s benefit; (d)  does not affect the structural integrity of
the Building; (e)  does not disrupt the
business or operations of adjoining tenants; and (f) does not invalidate or
otherwise affect the construction and systems warranties then in effect with
respect to the Building. Tenant shall secure all governmental permits and
approvals, as well as comply with all other applicable governmental
requirements and restrictions; shall reimburse Landlord for all reasonable
expenses incurred in connection therewith, and shall comply with the
requirements of Landlord’s general contractor imposed in connection therewith,
if such work is performed prior to completion of the Building. Tenant shall
indemnify, defend and hold Landlord harmless from and against all losses,
liabilities, damages, liens, costs, penalties and expenses (including attorneys’
fees, but without waiver of the duty to hold harmless) arising from or out of
the performance of such alterations, additions and improvements, including, but
not limited to, all which arise from or out of Tenant’s breach of its
obligations under terms of this Section 12. All alterations, additions and
improvements (expressly including all light fixtures, heating, ventilation and
air conditioning units and floor coverings), except Tenant’s trade fixtures and
appliances and equipment not affixed to the Premises, shall immediately become
the property of Landlord without any obligation on its part to pay therefor.
These improvements remain Landlord’s and Tenant shall not remove all or any
portion thereof on the termination of this Lease except as specifically
directed by Landlord in writing at the time the alteration, addition or
improvement was approved by the Landlord.

 

13.           Care
of Premises. Tenant shall take good care of the Premises and shall
reimburse Landlord for all damage done to the Building or Premises occasioned
by any act or omission of Tenant or Tenant’s officers, contractors. agents,
invitees, licensees or employees, including, but not limited to, cracking or
breaking of glass. If Tenant fails to take good care of the Premises, Landlord
may, at its option, do so, and in such event, upon receipt of written
statements from Landlord, Tenant shall promptly pay the entire cost thereof as
additional rent. Landlord shall have the right to enter the Premises for such
purposes. All normal repair, other than repairs to the Premises necessitated by
normal wear and tear, necessary to maintain the Premises and Building in good
order and repair, as reasonably determined by Landlord, shall be performed
under Landlord’s direction and at its expense except as otherwise provided
herein. Except as provided in Section 20, there shall be no abatement or
reduction of rent arising by reason of Landlord’s making of repairs,
alterations or improvements.

 

14.           Surrender
of Premises. At the expiration or sooner termination of this Lease Tenant
shall return the Premises to Landlord in the same condition in which received
(or, if altered, then the Premises shall be returned in such altered condition
unless otherwise directed by Landlord under terms of Section 12), reasonable
wear and tear excepted. Prior to such return, Tenant shall remove its trade
fixtures and appliances and equipment which have not been attached to the
Premises, and shall restore the Premises to the condition they were in prior to
the installation of said items. In no event shall Tenant remove floor
coverings; heating, ventilating and air conditioning equipment; lighting
equipment or fixtures; wall coverings, window coverings; or other operating
equipment or decorations unless specifically otherwise directed by Landlord in
writing. Tenant’s obligation to perform this covenant shall survive the
expiration or termination of this Lease. Tenant shall indemnify Landlord for
all damages and losses suffered as a result of Tenant’s failure to so redeliver
the Premises on a timely basis.

 

15.           Waiver,
Indemnity. Landlord shall not be liable for any injury to any person
(including death), or for any loss of or damage to any property (including
property of Tenant) occurring in or about

 

8

 

the Premises, except for
damages and/or injury arising out of the negligence or willful misconduct or
Landlord or Landlord’s agents. Tenant shall indemnify, defend and save
Landlord, its officers, agents, employees and contractors, and other tenants
and occupants of the Building harmless from all losses, damages, fines,
penalties, liabilities, claims and expenses (including Landlords personnel and
overhead costs and attorneys’ fees and other costs incurred in connection with
such claims, regardless of whether such claims involve litigation) resulting
from any actual or alleged injury (including death) to any persons or entity or
from any actual or alleged loss of or damage to any property alleged to be
attributable to (i) Tenants operation or occupation of the Premises; (ii)
Tenant’s breach of its obligations hereunder or applicable law, or (iii) any
act or omission of Tenant or any licensee, assignee or concessionaire of
Tenant, or of any officer, agent, employee, guest or invitee of Tenant, or of
any such person or entity in or about the Premises. Tenant agrees that the
foregoing indemnity specifically covers actions brought by its own employees
and agrees the foregoing expressly constitutes a waiver or Tenant’s immunity
under the Washington Industrial Insurance Act, RCW Title 51, to the extent
necessary to provide Landlord with the full and complete indemnity from claims
made by Tenant and its employees, to the extent of their negligence. The
indemnification provided for in this Section with respect to acts or omissions
during the term of this Lease shall survive termination or expiration of this
Lease. Landlord shall not be liable for interference with light, air or view or
for any latent defect in the Premises. Tenant shall promptly notify Landlord of
casualties or accidents occurring in or about the Premises.

 

16.           Insurance.
Tenant shall, at its own expense, maintain comprehensive or commercial general
liability insurance with broad form and stop gap endorsements with combined
single limits of One Million Dollars ($1,000,000) per occurrence and Two Million
Dollars ($2,000,000.00) annual aggregate for property damage and loss and for
personal injuries (including death), to indemnify both Landlord and Tenant
against claims, demands, losses, damages, liabilities and expenses. Landlord
shall have the right to periodically review the appropriateness of such limits
in view of inflation and/or changing industry conditions and to require an
increase in such limits upon ninety (90) days prior written notice. Landlord
and any lender designated in writing by Landlord (“Lender”) shall be named as
additional insureds and shall be furnished with a copy of such policy or
policies of insurance which shall bear an endorsement that the same shall not
be canceled or materially altered without thirty (30) days prior written notice
to such additional insureds. During the Lease term, Tenant shall also maintain
at its own expense insurance covering its furniture, fixtures, equipment and
inventory and all improvements which it makes to the Premises in an amount
equal to the full insurable value thereof, against fire and such other perils
as are covered by an all risk policy with plate glass endorsement, including
all glass on the Premises. All insurance required of Tenant under this Lease
shall (a) be issued by insurance companies authorized to do business in the
State of Washington and having a financial rating of at least A, Class X
status, as rated in the most recent edition of Best’s Insurance Reports, or
with companies otherwise acceptable to Landlord; (b) be issued as a primary
policy, or under the blanket policy, not contributing with and not in excess of
coverage which Landlord may carry, and (c) in the case of the liability policy,
contain a blanket contractual liability coverage endorsement covering Tenant’s
indemnification duty. If Tenant fails to maintain such insurance, Landlord may
do so, and Tenant shall reimburse Landlord for the full expense thereof upon
demand. Tenant shall not keep or use in or about the Premises any article which
is prohibited by Landlord’s insurance policy. Tenant shall pay immediately any
increase in Landlord’s premiums for insurance during the term or this Lease
which results from Tenant’s use of the Premises.

 

17.           Waiver
of Subrogation. To the fullest extent permitted by applicable law, neither
Landlord nor Tenant shall be liable to the other party or to any insurance
company (by way of subrogation or otherwise) insuring the other party for any
loss or damage to any building, structure or tangible personal property of the
other occurring in or about the Premises, even though such loss or damage might
have been occasioned by the negligence of such party, its agents or employees,
if such loss or damage is covered by insurance benefiting the party suffering
such loss or damage or was required to be covered by insurance under terms of
this Lease. Each party shall cause each insurance policy obtained by it to
contain the waiver of subrogation clause.

 

18.           Assignment
or Sublease. Tenant shall not sublet or encumber the whole or any part of
the Premises, nor shall this Lease or any interest thereunder be assignable or
transferable by operation of law or by any process or proceeding of any court
or otherwise without the prior written consent of Landlord. As a material
inducement to Landlord to execute and deliver this Lease, Tenant agrees it
shall be reasonable under this Lease and under applicable law for Landlord to
withhold consent to any proposed assignment, encumbrance or sublease if
Landlord determines that any one or more, or the following applies (without

 

9

 

limitation as to other
reasonable grounds for withholding consent): 
(a) Landlord is not reasonably assured that the proposed transferee will
fully, completely and promptly perform all obligations of Tenant under this
Lease, (b) the transferee proposes to use the Premises for any purpose other
than the permitted uses under this Lease, (c) the proposed transfer would cause
Landlord to be in violation of any other lease or agreement to which Landlord
is a party or would give any occupant of the Building either the right to
cancel its lease or to make a claim against Landlord, (d) the proposed
transferee fails to deliver to Landlord its written assumption for all of the
obligations to be performed by Tenant under the Lease in connection with the
portion of the Premises which is the subject of the proposed transferee, (e) if
Tenant and all guarantors will not continue to remain liable on this lease or
(f) the proposed transferee’s operating experience or reputation arc
inconsistent with those of other tenants in the Building. Consent by Landlord
to one assignment or subletting shall not operate as a waiver of the
limitations set forth in this Section 18 as to future assignments or subleases.
If Tenant requests Landlord’s consent to any assignment of this Lease or
subletting of the Premises or any portion thereof, Landlord, at its option, may
elect to terminate this Lease as to the portion of the Premises affected by the
action for which consent is requested and enter into a direct lease with the
proposed assignee or subtenant. Any assignment or sublease without Landlord’s
prior written consent shall, at Landlord’s option be void. No assignment or
sublease shall release Tenant from primary liability hereunder. Each assignment
and sublease shall be by an instrument in writing in form satisfactory to
Landlord. In addition Tenant agrees that if Tenant assigns its interest in this
Lease or sublets the Premises, Tenant shall pay to Landlord one half (1/2) of
any rent and any and all consideration received by Tenant for such assignment
or sublease received from the sublessee or assignee that exceeds the amount of
the Rent (the “Excess Rent”). Tenant may deduct from the Excess Rent all
reasonable expenses incurred by Tenant attributable to the sublease or
assignment. If Tenant is a corporation, then any transfer of this Lease by
merger, consolidation or liquidation, or any change in the ownership of, or
power to vote the majority of Tenant’s outstanding stock, shall constitute an
assignment for the purposes of this Lease. If Tenant is a partnership, then a
change in general partners or voting or decision-making control or the
partnership shall also constitute an assignment. Tenant shall also pay all
legal fees and other costs incurred by Landlord in connection with Landlord’s
consideration of Tenant’s request for approval of assignments or subleases,
including assignments for security purposes. Notwithstanding anything to the
contrary herein, a reorganization of or sale of shares between the existing
shareholders of Tenant at the time of execution of this Lease (“Existing
Shareholders”) shall not constitute an assignment for the purposes of this
Lease, nor shall a sale of up to 50% of the voting shares in the Tenant’s outstanding
stock to outside investors constitute an assignment for the purposes of this
Lease if the Existing Shareholders or any one of them, retain control of the
remaining 50% of the voting shares of stock. Notwithstanding anything above to
the contrary, if the Lease Guarantee Agreement (Exhibit E) has expired, and
Tenant wishes to sublease all of the Premises to an unrelated third party,
Landlord may consider the current assets or the tangible net worth (determined
in accordance with general accepted accounting principles, consistently applied
by Tenant’s and the proposed transferee’s respective independent certified
public accountants) of the proposed transferee and any guarantor, in
determining whether to grant or withhold Landlord’s consent to the sublease.

 

19.           Assignment
by Landlord. If Landlord sells or otherwise transfers the Building, or if
Landlord assigns its interest in this Lease, such purchaser, transferee or
assignee thereof shall be deemed to have assumed Landlord’s obligations
hereunder, and Landlord shall thereupon be relieved of all liabilities
hereunder arising thereafter, but this Lease shall otherwise remain in full
force and effect. Tenant shall attorn to Landlord’s successor.

 

20.           Destruction.
If the Premises are rendered partially or totally untenantable by fire or other
casualty, and if the damage is repairable within sixty (60) days from the date
of the occurrence, then if insurance proceeds are available to pay the full
cost of the repairs (less any deductible) Landlord shall repair the Premises
with due diligence so long as at least the then-unexpired term of this Lease is
at least one hundred eighty (180) days; otherwise Landlord may elect to
terminate this Lease by written notice to Tenant. During the repair or
construction of the Premises, the base rent shall be abated in the proportion
that the untenantable portion of the Premises bears to the whole thereof, as
determined by Landlord, for the period from the date of the casualty to the
completion of the repairs, unless the casualty results from the negligence of
Tenant or its officers, contractors, agents, invitees, guests or employees or
Tenant’s breach of the terms of this Lease. If the Building is destroyed or
materially damaged, then regardless of whether the Premises are damaged,
Landlord may terminate this Lease by written notice to Tenant. Landlord shall
advise Tenant of Landlord’s election to repair or terminate by giving notice to
Tenant thereof within thirty (30) days after the occurrence of the casualty. In
the event of damage by casualty, Tenant shall, at its sole cost and expense,
repair all damage to its own personal property and to all improvements which
Tenant has

 

10

 

made to the Premises. Landlord
shall not be liable to Tenant for damages, compensation or other sums for
inconvenience, loss of business or disruption arising from any repairs to or
restoration of any portion of the Building or Premises. If Landlord elects to
repair such damage to the Premises or the Building, such repair shall be
commenced and completed as soon as reasonably possible, subject to delays
resulting from circumstances beyond the reasonable control of Landlord.

 

21.           Eminent
Domain

 

(a)           Taking.
If all of the Premises arc taken by eminent domain, this Lease shall terminate
as of the date Tenant is required to vacate the Premises and all rentals shall
be paid to that date. The term “eminent domain” shall include the taking or
damaging of property by, through or under any governmental or statutory
authority, and any purchase or acquisition in lieu thereof, whether the
damaging or taking is by government or any other person. If a taking of any
part of the Premises by eminent domain renders the remainder thereof unusable
for the business of Tenant, in the reasonable judgment of Landlord, this Lease,
at the option of either party, may be terminated by written notice given to the
other party not more than thirty (30) days after Landlord gives Tenant written
notice of the taking, and such termination stall be effective as of the date
when Tenant is required to vacate the portion of the Premises so taken. If the
whole or any material part of the Building shall be taken by eminent domain,
Landlord, at its option, may terminate this Lease by written notice to Tenant. If
this Lease is so terminated, all rent shall be paid to the date of termination.
Whenever any portion of the Premises is taken by eminent domain and this Lease
is not terminated, Landlord shall at its expense proceed with all reasonable
dispatch to restore, to the extent of available condemnation or insurance
proceeds and to the extent it is reasonably prudent to do so, the remainder of
the Premises to the condition they were in immediately prior to such taking,
and Tenant shall at its expense proceed with all reasonable dispatch to restore
its personal property and all improvements made by it to the Premises to the
same condition they were in immediately prior to such taking. The base rent
payable hereunder shall be reduced from the date Tenant is required to
partially vacate the Premises in the same proportion that the rentable area
taken bears to the total rentable area of the Premises prior to taking.

 

(b)           Award.
Landlord reserves all right to the entire damage award or payment for any
taking by eminent domain or a transfer in lieu thereof, and Tenant waives all
claim whatsoever against Landlord for damages for termination of its leasehold
interest in the Premises or for interference with its business. Tenant hereby
grants and assigns to Landlord any right Tenant may now have or hereafter
acquire to such damages and agrees to execute and deliver such further
instruments of assignment as Landlord may from time to time request. Tenant
shall, however, have the right to claim from the condemning authority all
compensation that may be recoverable by Tenant on account of any loss incurred
by Tenant in removing Tenant’s merchandise, furniture, trade fixtures and
equipment, provided, however, that Tenant may claim such damages only if they
are awarded separately in the eminent domain proceeding and not as part of
Landlord’s damages.

 

22.           Default
by Tenant; Remedies. Time is of the essence of this Lease. If Tenant
violates or breaches or fails to keep or perform any covenant, term or
condition of this Lease, and if such default or violation continues for or is
not remedied within three (3) (or, if no default in the rent is involved,
within ten (10) days after notice in writing thereof given by Landlord to
Tenant specifying the matter claimed to be in default, then Landlord shall have
the following rights and remedies, at its option which shall not be exclusive,
but shall be cumulative and in addition and supplemental to any and all other
rights and/or remedies that Landlord may have at law or in equity:  (a) to declare the Lease term ended and to
reenter the Premises without notice to vacate (any right to which is hereby
waived by Tenant) and take possession of the Premises and remove all persons
therefrom, and Tenant shall have no further claim thereon or hereunder and
Landlord may recover from Tenant all rent then due or thereafter accruing and
such other damages as are caused by Tenant’s default; or (b) without declaring
this Lease terminated, to reenter the Premises without notice to vacate (any
right to which is hereby waived by Tenant) and occupy the whole or any part
thereof for and on account of Tenant and to collect any unpaid rentals and
other charges, which have become payable, or which may thereafter became
payable, all without being liable for forcible entry, trespass or other tort;
or (c) even though it may have reentered the Premises, to thereafter elect to
terminate this Lease and all of the rights of Tenant or to the Premises.

 

If Landlord reenters the
Premises under option (b) above, Landlord shall not be deemed to have
terminated this Lease or the liability of Tenant to pay any rental or other
charges thereafter accruing, or to

 

11

 

have terminated Tenant’s
liability for damages under any of the provisions hereof, by any such reentry
or by any action, in unlawful detainer or otherwise to obtain possession of the
Premises, unless Landlord shall have notified Tenant in writing that it has so
elected to terminate this Lease. In the event of any entry or taking possession
of the Premises, Landlord shall have the right, but not the obligation, to
remove therefrom all or any part of the personal property located therein and
may place the same in storage at a public warehouse at the expense and risk of
Tenant.

 

If Landlord elects to
terminate this Lease pursuant to the provisions of options (a) or (c) above,
Landlord may recover from Tenant as damages, the following:  (i) the worth at the time of award of any
unpaid rental which had been earned at the time of such termination; plus (ii)
the worth at the time of award of the amount by which the unpaid rental which
would have been earned after termination until the time of award exceeds the
amount of such rental loss Tenant proves could have been reasonably avoided;
plus (iii) the worth at the time of award of the amount by which the unpaid
rental for the balance of the term after the time of award exceeds the amount
of such rental loss that Tenant proves could be reasonably avoided; plus (iv)
any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrorn, including but not limited to, any costs or expenses incurred by
Landlord in (a) retaking possession of the Premises, including reasonable
attorneys’ fees therefor, (b) maintaining or preserving the Premises after such
default, (c) preparing the Premises for reletting to a new tenant, including
repairs or alterations to the Premises for such reletting (d) leasing
commissions, and (e) any other costs necessary or appropriate to relet the
Premises; plus (v) at Landlord’s election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time to time by the laws of
the State of Washington

 

As used in items (i) and
(ii) above, the “worth at the time of award” is computed by allowing interest
at the interest rate specified in Section 7 hereof. As used in item (iii)
above, the “worth at the time of award” is computed by using a discount rate of
four percent (4%).

 

For all proposes of this
Section 22 only, the term “rental” shall be deemed to be the base rental and
all additional rent and other sums required to be paid by Tenant pursuant to
the terms of this Lease. Finally, if Tenant vacates or abandons the Premises
and fails to reoccupy them within ten (10) days after Landlord (1) delivers a
notice to the Premises (which will be unoccupied) demanding such re-occupancy
and (2) mails by certified or registered mail a copy of the notice to any
forwarding address given by Tenant to Landlord in writing, Tenant shall be in
default under this Lease.

 

23.           Insolvency.
If a petition is filed under the United States Bankruptcy Act or other law to
have Tenant, or any guarantor of this Lease (‘Guarantor”) reorganized,
dissolved or liquidated, or if a trustee or receiver is appointed for Tenant’s
assets under the United States Bankruptcy Act or other law, or if a proceeding
is commenced to foreclose any mortgage or any other lien on Tenant’s interest
in the Premises or on personal property kept or maintained in the Premises, or
if Tenant or Guarantor makes an assignment for the benefit of its creditors,
then Tenant shall be deemed to be in default hereunder.

 

24.           Waiver.
Neither the acceptance of rent nor any other acts or omissions of Landlord at
any time or times after the happening of any event authorizing the cancellation
or forfeiture of this Lease shall operate as a waiver of any past or future
violation, breach or failure to keep or perform any covenant, agreement, term
or condition hereof or to deprive Landlord of its right to cancel or forfeit
this Lease, upon the written notice provided for herein, at any time that cause
for cancellation or forfeiture may exist, or be construed so as at any future
time to estop Landlord from promptly exercising any other option, right or
remedy that it may have under any term or provision of this Lease.

 

25.           Default
by Landlord; Lender Protection.

 

(a)           Landlord
shall not be in default unless Landlord fails to cure a default by Landlord of
its obligations under this Lease within thirty (30) days after its receipt of
notice thereof from Tenant, or if each default is not capable of being cured
within said thirty (30) day period, Landlord has failed to commence such cure
and diligently pursue such cure until completion.

 

(b)           In
the event of any uncured default on the part of Landlord, which default would
entitle Tenant to terminate this Lease, Tenant shall not terminate this Lease
or pursue any other remedy

 

12

 

unless Tenant has
notified Lender, at least sixty (60) days in advance of the proposed effective
date of such termination. During said sixty (60) day period Lender shall be
entitled to commence to cure the default. If the default is not susceptible of
cure with due diligence within said sixty (60) day period, the Lease shall not
be terminated if the Lender shall have commenced to cure the default within said
sixty (60) day period and shall pursue the cure with due diligence thereafter. If
the default is one which is not susceptible to cure by the Lender within said
sixty (60) day period because the Lender is not in possession of the Building
or Land, such sixty (60) day period shall be extended to include time needed to
obtain possession thereof by the Lender by power of sale, judicial foreclosure
or such other legal action required to recover possession provided that such
avenues are pursued with due diligence.

 

26.           Attorneys’
Fees. If Landlord retains the services of an attorney in connection with
enforcing the terms of this Lease, or if suit is brought for the recovery of
rent or additional rent due under this Lease or for the breach of any covenant
or condition of this Lease or for the restitution of the Premises to Landlord
and/or eviction of Tenant during the term of this Lease or after the expiration
thereof, Landlord will be entitled to recover from Tenant Landlord’s reasonable
attorneys’ fees, witness fees and other court costs incurred in connection
therewith and at trial and on appeal and whether in bankruptcy court or other
legal proceeding.

 

27.           Access
by Landlord. Landlord and its agents shall have the right to enter and to
grant licensees the right to enter the Premises at any time to examine the
same, and to show them to prospective purchasers, lenders or tenants, and to
make such repairs, alterations, improvements or additions as Landlord may deem
necessary or desirable. If Tenant is not personally present to permit entry and
an entry is necessary in an emergency, Landlord may enter the same by master
key or may forcibly enter the same, without rendering Landlord liable therefor.
Nothing contained herein shall be construed to impose upon Landlord any duty of
repair except as specifically provided for herein. Tenant shall not change the
locks to the Premises without first advising Landlord thereof and providing
Landlord with evidence that the new lock is keyed to Landlord’s master key
system for the Building.

 

28.           Holding
Over. Any holding over by Tenant after the expiration of the Lease term
shall not be deemed to be a renewal of this Lease but shall be deemed to create
a tenancy at will on the terms and conditions set forth herein, except base rent
shall be increased to two hundred percent (200%) of the base rent in effect
during the last month hereof, which tenancy may be terminated by either party
upon thirty (30) days written notice to the other party. If Tenant holds over
without Landlord’s consent, in addition to all other remedies at law or in
equity to which Landlord may be entitled, Tenant shall be liable for all
damages suffered by Landlord as a consequence of such holding over, including,
but not limited to, the loss of any new tenant for the Premises or Building as
a result of Tenant’s holding over and all amounts payable by Landlord to or for
such prospective tenant, including, without limitation, damages suffered by the
prospective tenant as a consequence of Tenant’s holding over.

 

29.           Lease
Subordinate in Mortgages. This Lease automatically shall be subordinate to
all of Landlord’s mortgages or deeds of trust which heretofore and which may
hereafter affect the Premises or Building, to any sale and leaseback, to any
and all advances made or to be made thereunder, to the interest on the
obligations secured thereby, and to all renewals, modifications,
consolidations, replacements or extensions thereof. This subordination shall be
self operative, and no further instrument of subordination shall be necessary
to effect such subordination; nevertheless, Tenant shall execute such
additional instrument of subordination as may be required by any Lender
provided only that such instrument of subordination shall provide that so long
as Tenant is not in default hereunder, Tenant shall have continued enjoyment of
the Premises free from any disturbance or interruption by reason of any
foreclosure of Lender’s deed of trust or mortgage. In the event of sale or
foreclosure of any such mortgage or deed of trust, or exercise of the power of
sale thereunder, or in the event of a transfer in lieu of foreclosure, Tenant
shall attorn to the purchaser (or transferee) of the Building at such
foreclosure or sale and recognize such purchaser (or transferee) as Landlord
under this Lease if so requested by such purchaser (or transferee). Such
attornment shall be self operative and no further instruments need be executed
to effect such attornment. If any Lender elects to have this Lease superior to
its mortgage or dead of trust and gives notice of its election to Tenant, then
this Lease shall thereupon become superior to the lien of such mortgage or deed
of trust, whether this Lease is dated or recorded before or after the mortgage
or deed of trust.

 

30.           Estoppel
and Other Certificates. Tenant shall, within ten (l0) days of Landlord’s
written request, acknowledge and deliver to Landlord (a) any subordination or
non-disturbance agreement or other

 

13

 

instrument that Landlord
may require to carry out the provisions of Section 29, and (b) any estoppel
certificate requested by Landlord from time to time in the standard form of
Landlord or any such mortgagee or beneficiary of such deed of trust certifying,
to the extent such be true, that (i) Tenant shall be in occupancy, (ii) this
Lease is unmodified and in full force and effect, or if there have been
modifications, that the same is in full force and effect as modified and
stating the modifications, (iii) rent and additional rent have been paid only
through a certain specified date, and (iv) there are no offsets or claims.

 

31.           Quiet
Enjoyment. Tenant, upon fully complying with and promptly performing all of
the terms, covenants and conditions of this Lease on its part to be performed,
shall have and quietly enjoy the Premises for the term set forth herein, if its
performance of such terms, covenants and conditions continues for such period,
subject, however, to matters of record on the day hereof and to those matters
to which this Lease may be subsequently subordinated.

 

32.           Notices.
Any notices required in accordance with any of the provisions herein shall be
in writing and telecopied, delivered or mailed by registered or certified mail,
return receipt requested, and, if mailed, shall be considered delivered three
(3) days after deposit in such mail. The address to be used in connection with
such correspondence and notices are the following, or such other address as a
party shall from time to time direct.

 

Landlord:               Overlake
Office Building LLC

c/o
Kauri Investments

4014 Aurora Avenue
North, Suite B

Seattle, WA  98103

 

Tenant:          Before
Commencement of Lease:

Sound Health
Solutions, Inc.

14730 NE 8th St.,
Suite 110

Bellevue, WA  98007

 

After Commencement of
Lease:

Sound Health
Solutions, Inc.

15446 Bel-Red
Road, Suite B-15

Redmond, WA  98052

 

33.           Successors
or Assigns. All of the terms, conditions, covenants and agreements of this
Lease shall extend to and be binding upon Landlord, Tenant and, subject to the
terms of Section 18 hereof, their respective heirs, administrators, executors,
successors and permitted assigns, and upon any person or persons coming into
ownership or possession or any interest in the Premises by operation of law or
otherwise, and shall be construed as covenants running with the land.

 

34.           Tenant
Defined. The word “Tenant” as used herein shall mean each and every person,
partnership or corporation who is mentioned as Tenant herein or who executes
this Lease as Tenant. If there shall be more than one Tenant, they shall all be
bound jointly and severally by the terms, covenants and agreements herein.

 

35.           Brokers’
Commission. Tenant agrees to indemnify and hold Landlord harmless from all
liabilities and claims for brokerage commissions or finder’s fees growing out
of agreements which Tenant has made with brokers or finders.

 

36.           Partial
Invalidity. If any term, covenant or condition of this Lease or the
application thereof to any person or circumstance is, to any extent, finally
adjudicated to be invalid or unenforceable, the remainder of this Lease, or the
application of such term, covenant or condition to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each other term, covenant or condition of this Lease shall
be valid and be enforced to the fullest extent permitted by law.

 

37.           Recording.
Tenant shall not record this Lease without the prior written consent of
Landlord. Upon Landlord’s request, both parties shall execute a memorandum of
this Lease, in a form

 

14

 

customarily used for such
purpose of recordation. The memorandum shall describe the parties, the Premises
and the term of this Lease and shall incorporate the other terms of this Lease
by reference.

 

38.           Liability
of Landlord. Tenant shall look solely to rents, issues and profits from the
Premises for the satisfaction of any judgment or decree against Landlord,
whether for breach of the terms hereof or arising from a right created by
statute or under common law. Tenant agrees that no other property or assets of
the Landlord shall be subject to levy, execution or other enforcement
procedures for satisfaction of any such judgment or decree;  no partner of Landlord shall be sued or named
as a party in any suit or action (except as may be necessary to secure
jurisdiction over the partnership); no service of process shall be made against
any partner of Landlord (except as may be necessary to secure jurisdiction over
the partnership) no judgment will be taken against partner of Landlord; no writ
of execution will ever be levied against the assets of any partner of Landlord;
and these covenants, limitations and agreements are enforceable both by
Landlord and by any partner of Landlord.

 

39.           Force
Majeure. Landlord shall not be deemed in default hereof nor liable for
damages arising from its failure to perform its duties or obligations hereunder
if such is due to causes beyond its reasonable control, including, but not
limited to, acts of God, acts of civil or military authorities, fires, floods,
windstorms, earthquakes, strikes or other labor disturbances, civil commotion
or war.

 

40.           Name
of Building. Landlord reserves the right to change the name of the Building.
Tenant agrees that such change shall not affect in any way its obligations
under this Lease, and that, except for the name change, all terms and
conditions of this Lease shall remain in full force and effect. Tenant agrees
further that such name change shall not require a formal amendment to this
Lease, but shall be effective upon Tenant’s receipt of written notification
from Landlord of said change.

 

41.           Financial
Statements. Within ten (10) days after Landlord’s request therefore, Tenant
shall deliver to Landlord a financial statement for Tenant’s prior quarter and
fiscal year. Tenant shall certify the accuracy of such statements. Landlord may
make these financial statements available to potential lenders or purchasers,
but shall otherwise preserve their confidentiality except in connection with
legal proceedings between the parties or as otherwise directed by court rule or
order.

 

42.           Parking.
Tenant shall have a license to use up to the number of parking spaces specified
in Section 1(h) on an unassigned basis, subject to such reasonable rules and
regulations as may be established from time to time therefor by Landlord. Tenant
may reduce the number of parking spaces licensed to it after giving Landlord
thirty (30) days prior written notice of the reduction; provided that no such
reduction shall be effective until Tenant surrenders to Landlord the key cards,
stickers or other identification materials, if any, used for access for parking
surrendered.

 

43.           Relocation.
Intentionally Deleted.

 

44.           Agency
Disclosure. Pursuant to WAC 308-124D-040, at the signing of this agreement
Tim Chin of Colliers International represented the Landlord exclusively at this
transaction and Rex Noffsinger of Colliers International represented the Tenant.
Each party signing this document confirms that prior oral and/or written
disclosure of agency was provided to them.

 

45.           Execution
by Landlord and Tenant. Landlord shall not be deemed to have made an offer
to Tenant by furnishing Tenant with a copy of this Lease with particulars
inserted. No contractual or other rights shall exist or be created between
Landlord and Tenant until all parties hereto have executed this Lease and fully
executed copies have been delivered to Landlord and Tenant.

 

46.           Entire
Agreement; Applicable Law. This Lease and the Exhibits attached hereto, and
by this reference incorporated herein, set forth the entire agreement of
Landlord and Tenant concerning the Premises, and there are no other agreements
or understandings, oral or written, between Landlord and Tenant concerning the
Premises. Any subsequent modification or amendment of this Lease shall be
binding upon Landlord and Tenant only if reduced to writing and signed by them.
This Lease shall be governed by, and construed in accordance with the laws of
the State of Washington.

 

IN WITNESS WHEREOF, the
parties hereto have executed this instrument the day and year indicated

 

15

 

below.

 

	
  Executed this      
  day

  	
  LANDLORD

  
	
  of                         ,
  20     

  	
   

  
	
   

  	
  Overlake Office
  Building LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
  James B. Potter

  
	
   

  	
  Its: Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  Executed this 29th day

  	
  TENANT

  
	
  of April, 2003

  	
   

  
	
   

  	
  Sound Health Solutions,
  Inc.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Teresa
  Girolami

  	
   

  
	
   

  	
   

  	
  Teresa M.
  Girolami, M.D.

  
	
   

  	
  Its: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Frances M. Gough

  	
   

  
	
   

  	
  Frances M. Gough,
  M.D.

  	
   

  
	
   

  	
  Its:

  	
  Director

  	
   

  
					

 

16

 

EXHIBIT A

 

LEGAL DESCRIPTION OF LAND

(15446 BEL-RED ROAD BUILDING)

 

Lots 4 A or Lot
Line Adjustment No. SS-83-13, according to the Lot Line Adjustment recorded
under Recording No. 8504100678, being a revision or Lot Line Adjustment
recorded under Recording No. 8501160598, situate in the City of Redmond, County
or King, State of Washington.

 

 

EXHIBIT B

 

FLOOR PLAN OF PREMISES

 

 

EXHIBIT C

 

RIDER

 

Option to Renew

Provided that
Tenant is not in default with any term, condition, or covenant of this lease,
Tenant shall have a one (1) time option to renew for a term of five (5) years
at the same general terms and conditions then in existence under the lease
except the base rental rate, which will be at the then current market rate.

 

The parties shall
negotiate in good faith to establish the current market rate. If the parties
are unable to agree on such rate within thirty (30) days after Tenant gives
Landlord its notice exercising the renewal option (the “Notice Date”), then an
arbitrator(s) shall be selected to determine the current market rent. The
number of arbitrators shall be one, unless the parties cannot agree on a single
arbitrator. If the parties cannot agree on a single arbitrator within forty
(40) days of the Notice Date, the parties shall each choose one arbitrator, and
these two arbitrators shall choose a third arbitrator who shall preside over
the proceedings. If the parties are unable to agree on a single arbitrator no
later than forty (40) days after the Notice Date, and a party fails to identify
its arbitrator within ten (10) business days of the first party’s
identification of their arbitrator, then the arbitrator appointed by the first
party shall be the arbitrator to determine the issue. Each party shall bear the
fees and expenses of retaining its arbitrator and the fees and expenses or the
third arbitrator (or the sole arbitrator as the case may be) and other expenses
of the arbitration shall be borne equally by the parties. The arbitrator’s
determination of current market rate shall be final and binding on the parties.
Judgment upon the determination of current market rate rendered by the
arbitrator may be entered into any court having jurisdiction over this matter.

 

If Tenant elects
to exercise this option, Tenant shall notify Landlord in writing at the Notice
address, at least one hundred eighty (180) days prior to the expiration of the
initial lease term.

 

 

EXHIBIT D

 

TENANT IMPROVEMENT WORK

 

Landlord shall provide
tenant improvements based on the proposed space plan, as attached in Exhibit B,
with building standard finishes. Landlord shall pay for all costs associated
with the initial space planning of Premises. Any additional architectural work
required by Tenant regarding modification of space plan or furniture/equipment
layout shall be at the sole cost of Tenant.

 

Tenant shall be
responsible for phone and data cabling

 

 

EXHIBIT E

 

LEASE GUARANTY AGREEMENT

 

THIS LEASE
GUARANTY AGREEMENT (this “Guaranty”) is made this 29th day of April, 2003 by Teresa
Girolami and Frances Gough (“Guarantor”), to and for the benefit of Overlake
Office Building LLC (“Landlord”).

 

RECITALS

 

Guarantor
acknowledges that the following recitals are true and accurate:

 

A.            Sound
Health Solutions Inc. a(n)           
(“Tenant”), and Landlord are parties to that certain Office Lease Agreement,
dated                
(the “Lease”), for certain premises described therein located at the 15446
Bel-Red Road Building, Redmond, Washington (the “Premises”).

 

B.            Guarantor
is the President and Director of Tenant.

 

C.            As
a condition to entering into the Lease, Landlord required Guarantor to execute
and deliver this Guaranty and guarantee Tenant’s performance of its duties and
obligations under the Lease.

 

D.            Guarantor
has determined that the Lease is for the mutual benefit of Tenant and Guarantor
and that Guarantor will derive benefit therefrom.

 

AGREEMENT

 

NOW,
THEREFORE, as an essential inducement to cause Landlord to enter into the Lease
and as part of Landlord’s consideration for doing so, Guarantor hereby
incorporates the Recitals and hereby agrees as follows:

 

In the
event of any default by Tenant in the performance of Tenant’s duties and
obligations under the Lease (the “Guaranteed Obligations”), Guarantor hereby
unconditionally guarantees for the first (3) years of the initial term of this
lease and promises to pay and perform the Guaranteed Obligations within five
(S) business days of receipt of written notice of Tenant’s default. Guarantor
further agrees this Guaranty is a guaranty of payment and not of collection and
that Landlord may proceed upon this Guaranty without first enforcing any rights
against Tenant.

 

Guarantor
expressly waives notice of acceptance of this Guaranty, renewal or extension of
any indebtedness or default in payment and agrees that Guarantor’s obligation
under this Guaranty shall be absolute and not subject to any reduction or
limitation resulting from any net or omission by Landlord to do so or delay in
doing any act or thing to preserve its right against Tenant or in any manner
resulting in any lack of proper authorization or invalid execution of this
Guaranty.

 

Guarantor
waives diligence, presentment and demand for performance, notice of
non-performance, protests, notice of protest, notice of dishonor, notice of the
creation or occurring of new or additional indebtedness of Tenant to Landlord,
and notice of acceptance of the Guaranty.

 

Guarantor
waives notice of any action taken or omitted by Landlord, and any requirement
that Landlord be diligent and prompt in making demands to Guarantor.

 

Until
the Guaranteed Obligations are fully paid and performed, and until each and all
of the terms, covenants and conditions of this Guaranty arc fully performed,
Guarantor shall not be released by any act or thing which might, but for the
provision of this Guaranty, be deemed a legal or equitable discharge. Guarantor
hereby expressly waives and surrenders

 

 

any defense to
liability hereunder based upon the foregoing.

 

Guarantor
waives any right to require Landlord to proceed against Tenant, to proceed
against any other person, firm, or corporation, or to pursue any other remedy
in Landlord’s power before Guarantor may be required to perform Guarantor’s
obligations hereunder. By making any demand against Guarantor, Landlord may,
but shall be under no obligation to, make a similar demand on Tenant, and any
failure by Landlord to make any such demand or to collect any payments from
Tenant shall not impair or affect the rights and remedies of Landlord against
Guarantor.

 

Guarantor
agrees to pay reasonable attorneys’ fees and all other costs and expenses which
may be incurred by Landlord in the enforcement of this Guaranty.

 

This
Guaranty shall be governed by the law of the State of Washington.

 

If the
person signing below is a married person, such persons spouse shall also sign
and be bound by the terms herein jointly and severally. If the person signing
below does not have a person sign as a spouse, the person signing represents
and warrants to Landlord that such person is unmarried.

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