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Monsanto/Rosetta Inpharmatics Collaboration Agreement    
  

November 21, 2000  

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

  
 

    TABLE OF CONTENTS    
  

	1.	 	DEFINITIONS	 	1
	
2.	
 	

CONVEYANCE OF RIGHTS
 	
 	

4
	

 	
 	

2.1	
 	

Assignment to Monsanto	
 	

4
	 	 	2.2	 	Assignment to Rosetta	 	4
	 	 	2.3	 	License to Monsanto: Analytical Technology	 	4
	 	 	2.4	 	License to Conduct Project Plan	 	5
	 	 	2.5	 	Restrictions on licenses	 	5
	
3.	
 	

PROJECT PLAN	
 	

5
	

 	
 	

3.1	
 	

Project Plan	
 	

5
	 	 	3.2	 	Contribution of Monsanto	 	5
	 	 	3.3	 	Contribution of Rosetta	 	5
	 	 	3.4	 	Project Committee	 	5
	 	 	 	 	3.4.1	 	Executive Sponsors	 	5
	 	 	 	 	3.4.2	 	Project Managers	 	6
	 	 	 	 	3.4.3	 	Decision-making	 	6
	 	 	 	 	3.4.4	 	Meetings	 	6
	 	 	 	 	3.4.5	 	Gene Lead Determination	 	6
	 	 	3.5	 	Term and Termination of Funded Project	 	7
	 	 	 	 	3.5.1	 	Early Termination	 	7
	 	 	 	 	3.5.2	 	Early Termination—Other Reasons	 	7
	 	 	 	 	3.5.3	 	Surviving Paragraphs	 	7
	 	 	 	 	3.5.4	 	Exclusivity of Agreement	 	7
	 	 	 	 	3.5.5	 	Actions on Termination	 	7
	
4.	
 	

PAYMENTS	
 	

8
	

 	
 	

4.1	
 	

Project Funding	
 	

8
	 	 	 	 	4.1.1	 	Inducement Fee	 	8
	 	 	 	 	4.1.2	 	[*] Design Fee	 	8
	 	 	 	 	4.1.3	 	[*] Design Fee	 	8
	 	 	 	 	4.1.4	 	[*] Design Fee	 	8
	 	 	 	 	4.1.5	 	[*] Design Fee	 	8
	 	 	 	 	4.1.6	 	[*] Set Fee	 	8
	 	 	 	 	4.1.7	 	Other Payments	 	8
	 	 	4.2	 	Royalties and [*]—Licensed Products	 	9
	 	 	 	 	4.2.1	 	Royalty Calculation	 	9
	 	 	 	 	4.2.2	 	License or sublicense of DNA Patent Rights by Monsanto	 	9
	 	 	 	 	4.2.3	 	[*] Payments	 	9
	 	 	 	 	4.2.4	 	[*] Royalty and [*]	 	9
	 	 	 	 	4.2.5	 	Payment Reduction	 	10
	 	 	 	 	4.2.6	 	Royalty Stacking	 	10
	 	 	 	 	4.2.7	 	Monsanto Royalty Buy-Out	 	10
	 	 	4.3	 	Royalties—Rosetta Predictive Pattern Information	 	10
	 	 	 	 	4.3.1	 	Royalty Calculation	 	10
	 	 	 	 	4.3.2	 	[*] Payments	 	10

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

 

	
5.	
 	

RECORDS	
 	

10
	

 	
 	

5.1	
 	

Payments of Royalties	
 	

10
	 	 	5.2	 	Books and Records for Royalty Payments	 	11
	 	 	5.3	 	Late Payment of Royalties	 	11
	
6.	
 	

INTELLECTUAL PROPERTY	
 	

11
	

 	
 	

6.1	
 	

Ownership of Intellectual Property Other Than DNA Patent Rights and Analytical Technology	
 	

11
	 	 	6.2	 	Disclosure of Patentable Inventions	 	11
	 	 	6.3	 	Patent Prosecution and Maintenance; Joint Patents	 	11
	 	 	6.4	 	Cooperation	 	12
	 	 	6.5	 	Costs	 	12
	 	 	6.6	 	Patent Litigation: Right to Bring Suit	 	12
	 	 	6.7	 	Patent Litigation: Jointly Owned Patents	 	12
	 	 	6.8	 	Confidential Treatment	 	12
	
7.	
 	

CONFIDENTIALITY	
 	

13
	

 	
 	

7.1	
 	

Confidential Information	
 	

13
	 	 	7.2	 	Confidentiality and Limited Use	 	13
	 	 	 	 	7.2.1	 	Limited Use	 	13
	 	 	 	 	7.2.2	 	Protection for Monsanto DNA Information and Analytical Technology	 	13
	 	 	 	 	7.2.3	 	Exceptions to Disclosure of Confidential Information	 	13
	 	 	7.3	 	Exceptions to Classification as Confidential	 	13
	 	 	7.4	 	Specific Information	 	14
	 	 	7.5	 	Disclosures to Personnel	 	14
	 	 	7.6	 	Return of Confidential Information	 	14
	 	 	7.7	 	Confidential Status of Agreement	 	14
	 	 	7.8	 	Publications	 	14
	
8.	
 	

REPRESENTATION AND WARRANTIES; INDEMNIFICATION AND LIMITATION OF LIABILITY	
 	

15
	

 	
 	

8.1	
 	

Monsanto	
 	

15
	 	 	8.2	 	Rosetta	 	15
	 	 	8.3	 	Indemnification by Rosetta	 	15
	 	 	8.4	 	Indemnification by Monsanto	 	15
	 	 	8.5	 	Conditions and Limitations of Indemnification Obligation	 	16
	 	 	8.6	 	Limitation of Liability	 	16
	 	 	8.7	 	Risk of Failure; No Representations	 	16
	
9.	
 	

APPLICABLE LAW	
 	

16
	

 	
 	

9.1	
 	

Governing Law; Jurisdiction	
 	

16
	
10.	
 	

MISCELLANEOUS PROVISIONS	
 	

17
	

 	
 	

10.1	
 	

Notices	
 	

17
	 	 	10.2	 	Assignability	 	17
	 	 	10.3	 	Assignability of DNA Patent Rights	 	17

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

ii

 

	 	 	10.4	 	Dispute Resolution	 	18
	 	 	 	 	10.4.1	 	General	 	18
	 	 	 	 	10.4.2	 	Parties Shall Meet	 	18
	 	 	 	 	10.4.3	 	CEOs Shall Meet	 	18
	 	 	 	 	10.4.4	 	Arbitration Trigger	 	18
	 	 	 	 	10.4.5	 	Arbitration Rules	 	18
	 	 	 	 	10.4.6	 	Agreements to Agree	 	18
	 	 	10.5	 	Tax Reporting	 	19
	 	 	10.6	 	Severability	 	19
	 	 	10.7	 	Counterparts	 	19
	 	 	10.8	 	Headings	 	19
	 	 	10.9	 	Agreement references	 	19
	 	 	10.10	 	Appendices	 	19
	 	 	10.11	 	Export Control	 	19
	 	 	10.12	 	Force Majeure	 	20
	 	 	10.13	 	Negation of Agency	 	20
	 	 	10.14	 	Other Requests	 	20
	 	 	10.15	 	Amendment and Waiver	 	20

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

iii

 
    THIS IS AN AGREEMENT effective November 21, 2000, ("Effective Date of this Agreement") by and between Rosetta
Inpharmatics, Inc. a Delaware corporation having its principal place of business at 12040 - 115th Avenue Northeast, Kirkland, Washington
98034-6900 ("Rosetta") and Monsanto Company ("Monsanto"), a Delaware corporation, having a
principal place of business at 800 North Lindbergh Boulevard, St. Louis, Missouri 63167. 

    WHEREAS,  Monsanto has certain rights relating to genes which impart traits in plants and plants containing such genes, such rights
including possession of technical information and know-how relating to such plants and their use, and ownership of U.S. and foreign patent applications covering the plants, seeds, genes
and their use; 

    WHEREAS,
Rosetta has certain rights relating to the generation, analysis and comparison of data and the storage and retrieval thereof,
such rights including possession of technical information and know-how relating to the design, development and use of microarrays, the design, development and application of gene
expression databases and the identification of genes predictive of traits; and 

    WHEREAS,
Monsanto and Rosetta are establishing a research alliance to, among other
things, create proprietary intellectual property relating to the subject matter of this Agreement; 

    NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the parties agree as follows: 

1.  DEFINITIONS  

    Terms in this Agreement defined in the singular have the same meanings when used in the plural and vice versa.
For purposes of this Agreement, the following words and phrases shall have the following meanings: 

    1.1 "Affiliate" shall mean with respect to any person or entity, any other person or entity that directly or indirectly
controls, is controlled by or is under common control with such person or entity. A person or
entity shall be deemed to be "controlled" by any other person or entity if such other person or entity (i) possesses, directly or indirectly, power to direct or cause the direction of the
management and policies of such person or entity whether by contract or otherwise, (ii) has direct or indirect ownership of at least 50% (in the aggregate) of the voting power of all
outstanding shares entitled to vote at a general election of directors of the person or entity or (iii) has direct or indirect ownership of at least 50% of the equity interests in a partnership
or a limited liability company. 

    1.2 "Agreement" shall mean this collaboration agreement. 

    1.3 "Analytical Patent Rights" shall mean inventions related to Analytical
Technology developed by or for Monsanto (other than by Rosetta) in the course of
carrying out the Project Plan expressly excluding [*] related to  [*] or [*]
 and the  [*] of [*] of  [*]. 

    1.4 "Analytical Technology" shall mean algorithms and other analytical
techniques and methods, including, without limitation, methods of generating, storing, retrieving and analyzing data developed in the course of carrying out the Project
Plan. 

    1.5 "Average Net Benchmark Product Price" shall mean the average gross
invoiced sales price received by Monsanto and its Affiliates for the sale of a unit of  Benchmark Product, or
if no Benchmark Product is sold by  Monsanto or its Affiliates, all consideration received by a third party
for the  Benchmark Product, in each case, in arm's length sales to an independent third party, or if not an arm's length sale, the fair market value if it had
been an arm's length sale, in a particular country for the applicable period, after deduction of the following items, provided and to the extent such items are 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

1

 

actually incurred and documented and do not exceed reasonable and customary amounts in the market in which such sale occurred: (i) trade discounts actually allowed;
(ii) credits, rebates and returns; (iii) freight and duties paid for and separately identified on the invoice or other documentation maintained in the ordinary course of business;
(iv) taxes, duties and other compulsory payments to governmental authorities actually paid and separately identified on the invoice or other documentation maintained in the ordinary course of
business; and (v) dealer/distributor and seed service fees paid by Monsanto and its Affiliates.
All sales of Benchmark Products between Monsanto and any of its  Affiliates and sublicensees shall be
disregarded for purposes of computing Average Net Benchmark Product
Price. A "sale" shall include any transfer or other disposition for consideration, and Average Net Benchmark Product Price shall
include all consideration received by Monsanto or its Affiliates in respect of any sale of  Benchmark Products, whether such consideration is in cash, payment in kind, exchange or another form. 

    1.6 "Average Net Product Price" shall mean the average gross invoiced sales price received by  Monsanto and its Affiliates for
the sale of a unit of Licensed
Product in arm's length sales to an independent third party, or if not an arm's length sale, the fair market value if it had been an arm's length sale, in a particular country
for the applicable period, after deduction of the following items, provided and to the extent such items are actually incurred and documented and do not exceed reasonable and customary amounts in the
market in which such sale occurred: (i) trade discounts actually allowed; (ii) credits, rebates and returns; (iii) freight and duties paid for and separately identified on the
invoice or other documentation maintained in the ordinary course of business; (iv) taxes, duties and other compulsory payments to governmental authorities actually paid and separately
identified on the invoice or other documentation maintained in the ordinary course of business; and (v) dealer/distributor and seed service fees paid by  Monsanto and its Affiliates. All sales of Licensed
Products between Monsanto and any of its Affiliates and sublicensees shall be
disregarded for purposes of computing Average Net Product Price. A "sale" shall include any transfer or other disposition for consideration, and  Average Net Product
Price shall include all consideration received by Monsanto or its  Affiliates in respect of any sale of Licensed Product, whether such consideration is in cash, payment in
kind, exchange or another form. Average Net Product Price shall not be discounted due to any product "bundling" unless  Monsanto or its Affiliates does not offer the Licensed
Product outside of a "bundle". Subject to the foregoing, in the case of discounts on "bundles" of products or services which include Licensed
Products, Monsanto may with notice to Rosetta calculate the  Average Net Product Price by discounting the bona fide list price of a Licensed Product by no more than
the average percentage discount of all products of Monsanto and/or its Affiliates in a particular
"bundle", calculated as follows: 

	Average percentage

discount on a

particular "bundle"	 	=	 	(1 -A/B)x 100

where
A equals the total discounted price of a particular "bundle" of products, and B equals the sum of the un-discounted bona fide list prices of each unit of every product in such
"bundle". Monsanto shall provide Rosetta documentation, reasonably acceptable to  Rosetta, establishing such
average discount with respect to each "bundle". 

    1.7 "Benchmark Product" shall mean a product not covered by DNA Patent
Rights, but otherwise identical to a Licensed Product, or if no such product exists, substantially similar to a  Licensed Product,
but not covered by DNA Patent Rights, in each case, available in the same country
during the applicable time period. A Benchmark Product must be a commercial product sold by Monsanto or
its 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

2

 

Affiliates or a third party. If Monsanto or its  Affiliates do not sell such a Benchmark
Product, then the most suitable product that meets the above
definition sold by a third party in the applicable country during the applicable time period shall be used as the Benchmark Product. 

    1.8 "DNA" shall mean deoxyribonucleic acid or other compound conveying the same genetic information. 

    1.9 "DNA Patent Rights" shall mean inventions utilizing Monsanto DNA
Information developed by or for Rosetta in the course of carrying out the Project
Plan expressly excluding [*] and other  [*] and [*], including, without  [*] of [*] and  [*]. 

    1.10 "Effective Date of this Agreement" shall mean the date first written above. 

    1.11 "Gene Lead" shall mean any gene identified by Rosetta in connection
with its analysis of Monsanto DNA Information and which has been determined to be a Gene Lead pursuant
to Article 3.4.5. Each Gene Lead shall be included in Monsanto DNA Information. 

    1.12 "Joint Patents" shall have the definition provided in Article 6.1. 

    1.13 "Licensed Products" shall mean a particular product or a particular species of animals, plants, plant or animal
parts, animal progeny, seed of plants and products from any of the foregoing, or the process of making, modifying or modulating any of the foregoing or any phenotypic trait associated with any of the
foregoing, which, in the absence of a license, would infringe at least one (1) claim of an unexpired U.S. or foreign patent or one (1) pending claim of an unexpired published patent
application included within DNA Patent Rights which claims a Gene Lead. 

    1.14 "Monsanto DNA Information" shall mean (A) (i) DNA sequence
information provided by Monsanto to Rosetta (or  [*] by any [*] to  [*] in [*] this  Agreement) and (ii) RNA and tissue samples provided by Monsanto to  Rosetta, in each case in accordance with the terms and conditions of the Project Plan, and  [*] and [*] from
[*] of such [*], in  [*] by [*] from the  [*], and [*] and  [*] in [*]. 

    1.15 "Monsanto Patents" shall have the definition provided in Article 6.1. 

    1.16 "Net Predictive Pattern Revenues" shall mean the gross invoiced sales of Predictive Pattern
Technologies received by Monsanto or its Affiliates during the applicable period
in arm's length transactions after deduction of the following items, provided and to the extent such items are actually incurred and do not exceed reasonable and customary amounts in each market in
which such sales occurred: (i) trade and quantity discounts and rebates; (ii) credits or allowances made for rejection or return of previously sold Predictive
Pattern Technologies; (iii) any tax or government charge levied on the sale, such as value added tax (but not including income tax); and (iv) any charges for
freight or insurance. In the event that the Predictive Pattern Technologies is sold or otherwise transferred to a third party for a price lower than if
it had been sold to a third party in an arm's length transaction ("fair market value"), then Net Predictive Pattern Revenues shall be the fair market
value of the Predictive Pattern Technologies.

    1.17 "Rosetta Patents" shall have the definition provided in Article 6.1. 

    1.18 "Plant Transformation Vector" shall mean a  [*] a [*], an  [*] and
[*] and all  [*] to [*] that  [*] of the [*] containing the
[*] or [*] of the  [*] to [*] into the  [*] of a  [*].[*], when  [*] to [*] by  [*], such [*] may include  [*] in the [*]
 of  [*].

    1.19 "Predictive Pattern Information" shall mean information relating to one or more expression patterns that have been
developed or discovered by Rosetta in the course of carrying out the Project  

	[*]
	 Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been filed separately with the
Securities and Exchange Commission pursuant to Rule 406.  

3

 

Plan that can be used to [*] of  [*]. Such Predictive Pattern Information shall constitute
 Monsanto DNA Information. 

    1.20 "Predictive Pattern Technologies" shall mean a  [*] or [*] of  [*] or
[*] from any of the  [*], in the [*] of a  [*] at [*] of an  [*] or [*]. 

    1.21 "Product Sublicense Payments" shall mean  [*] and its [*] of  [*] in
[*] of any  [*] of [*] to  [*] or [*]
 or  [*] for the [*] of  [*] and [*]
pro rata deductions (based on the number of
technologies licensed to the licensee or sublicensee) for: (i) dealer/distributor and seed service fees actually paid by Monsanto and its  Affiliates,
and (ii) taxes, duties and other compulsory payments to governmental authorities actually paid and separately identified on the
invoice or the documentation maintained in the ordinary course of business. 

    1.22 "Project Committee" shall mean the committee established in Article 3.4. 

    1.23 "Project Plan" shall mean the plan attached as Appendix A, as amended from time to time by the  Project Committee pursuant to Article 3.4.1. 

    1.24 "Project Technology" shall mean any materials, know-how, information, discoveries or inventions that
are discovered or developed in the course of carrying out the Project Plan other than Monsanto DNA
Information and Analytical Technology. 

    1.25 "Term of this Agreement" shall be as stated in Article 3.5. 

    1.26 "Value Added" shall mean (i) the difference between the Average Net Product
Price of a Licensed Product as compared to the Average Net Benchmark Product
Price of the applicable Benchmark Product in the same country and time period, and (ii) any other identifiable value
(which is not merely speculative) attributable to the DNA Patent Right's contribution to any Licensed
Product sales, including, without limitation, increased market share of a Licensed Product and market share maintenance of a  Licensed
Product, in each case, as compared to the applicable Benchmark Product. It is understood and
agreed that "Value Added" shall include all incremental value which is identifiable (and not merely speculative) which  Monsanto and its Affiliates receives from customers of Licensed
Products. For Licensed Products where there is no Benchmark Product, the  Value Added
will equal the Average Net Product Price. 

2.  CONVEYANCE OF RIGHTS  

    2.1 Assignment
to Monsanto.

    Subject
to the terms and conditions of this Agreement and for the consideration as set forth in Article 4,  Rosetta agrees to assign and hereby assigns to
Monsanto Rosetta's right, title and interest to the
Monsanto DNA Information developed by Rosetta and DNA Patent Rights. 

    2.2 Assignment
to Rosetta.

    Subject
to the terms and conditions of this Agreement and for the consideration provided by  Rosetta's covenants and promises in this Agreement,  Monsanto agrees to assign and hereby assigns to Rosetta Monsanto's right, title and interest to the 
Analytical Technology developed by Monsanto and the Analytical Patent
Rights. 

    2.3 License
to Monsanto: Analytical Technology.

    Subject
to the terms and conditions of this Agreement and for the consideration as set forth in Article 4,  Rosetta hereby grants to Monsanto a  [*] license to [*], Analytical
Technology either 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

4

 

developed by Monsanto or by Rosetta following a material contribution to the
development thereof by Monsanto (other than the mere provision of Monsanto DNA Information by  Monsanto).
This license includes Monsanto's right to use such Analytical
Technology (i) to develop, make, have made, import, use, sell, have sold, and offer to sell Licensed Products and
(ii) in connection with a bona fide scientific collaboration between Monsanto and a third party under a written contract and research plan in a specific area. This license does not include  Monsanto's right to transfer, sell, or license such Analytical Technology. 

    2.4 License
to Conduct Project Plan. 

    Subject
to the terms and conditions of this Agreement, the parties agree to grant and hereby grant each other during the  Term of this Agreement a [*] license under any of their respective patents which
are necessary for such party's performance of its responsibilities under the Project Plan for the sole purpose of conducting the  Project Plan.

    2.5 Restrictions
on licenses. 

    Nothing
in this Agreement shall be construed as granting a license under any intellectual property or other rights other than intellectual property or other rights identified in this  Agreement, and in no event
shall anything in this Agreement be construed as granting a license under any
intellectual property or other right which any such party is as of the Effective Date of this Agreement prohibited, contractually or otherwise, from
granting. 

3.  PROJECT PLAN  

    3.1 Project
Plan. 

    Subject
to the terms and conditions set forth herein, each of Monsanto and Rosetta
shall conduct the collaboration pursuant to the Project Plan, as described herein or as amended by the Project
Committee. 

    3.2 Contribution
of Monsanto.

    Monsanto will supply to Rosetta the Monsanto DNA
Information described in Article 1.14(A) as provided in the Project Plan so as to allow  Rosetta to timely implement and
perform its responsibilities under the Project Plan.

    3.3 Contribution
of Rosetta.

    Rosetta shall use diligent efforts to conduct the Project Plan and deliver data as
described in the Project Plan to Monsanto. 

    3.4 Project Committee.

    The
Project Plan will be managed by a Project Committee consisting of one
(1) Executive Sponsor and one (1) Project Manager from each party. The Project Committee
will coordinate and expedite the design, development, and implementation of activities that fulfill the purposes of the collaboration. Each party may, in its sole discretion, replace the assigned
individuals at any time as necessary. 

3.4.1
Executive Sponsors. 

    The
initial Executive Sponsors shall be [*] of Monsanto and  [*] of Rosetta. The Executive Sponsors shall have the following specific
responsibilities: 

    (a) approving
the Project Plan and any amendments or changes thereto; 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

5

 

     (b) settling disputes or disagreements that cannot be resolved by the Project Managers; and  

     (c) performing such other functions as appropriate to further the purposes of the collaboration as agreed by the parties.  

3.4.2 Project Managers. 

    The
initial Project Managers shall be [*] of Monsanto and  [*] of Rosetta. The Project Managers shall have general responsibility for
preparation of the Project Plan and the design, development, and implementation of activities that will fulfill the objectives of the collaboration as
expeditiously as practicable. The Project Managers shall also have the following specific responsibilities: 

    (a) updating
and revising the Project Plan annually or as mutually agreed; 

    (b) monitoring
and reviewing the progress of research, development, and implementation of collaboration activities in order to ensure that satisfactory progress is
being made with respect to the execution of the Project Plan; 

    (c) discussing
and agreeing upon remedial measures if a Project Manager determines that the progress in respect of implementation of a Project
Plan activity is unsatisfactory; 

    (d) settling
disputes or disagreements related to the Project Plan; and 

    (e) performing
such other functions as appropriate to further the purposes of the collaboration as agreed by the parties. 

3.4.3
Decision-making. 

    Decisions
of the Project Managers shall be made by [*], with  [*] and [*]. If the  [*]
 on an [*], the  [*] to the [*] for  [*]. Other than the Project Plan, the Project
Committee may not modify this Agreement. Any decisions related to material changes in the scope or the budget for the  Project Plan
or related to changing the terms of this Agreement will require mutual consent of  Rosetta and Monsanto.

3.4.4
Meetings. 

    The
Project Committee shall meet quarterly, as agreed upon by the Project Committee,
but preferably at a location that alternates between Rosetta's corporate headquarters and Monsanto's
corporate headquarters. Responsibility for keeping the minutes of these meetings shall alternate between the parties. The Project Committee will prepare
quarterly science reports and the minutes of the meetings will be approved by both parties. 

3.4.5
Gene Lead Determination. 

    During
the Term of this Agreement, Monsanto shall maintain a written record of  Monsanto DNA Information which,
prior to the Effective Date of this Agreement and during the  Term of this Agreement, have been submitted by Monsanto (or any  Monsanto designee) for transformation into plants for phenotypic study, such record to include the date submitted for transformation. These records
shall be available for inspection by a mutually agreed third party at the request of Rosetta. During the Term of this
Agreement, Rosetta shall designate to the Project Committee potential  Gene Lead
candidates, such designation to include whether those candidates are initially intended to be a  [*] or [*], the  [*] the [*] or  [*] or [*] to  [*], and the [*]. If as of the date of such designation  [*] has [*] or on
[*] and [*] has  [*] or [*] of  [*]
, then such candidate shall be deemed a Gene Lead under this  Agreement. In the event Monsanto can demonstrate (as evidenced 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

6

 

by
the written records required hereby) that prior to the date of such designation by Rosetta [*] a  [*] has been [*] or on  [*] of [*] and such  [*] has been [*] or
 [*] the [*] had been  [*] or [*] the  
[*] had been [*] to a  [*] for [*] into  [*] for [*], in the
[*] of [*] with  [*] such [*], then the candidate shall not be
considered
a Gene Lead. Upon termination of this Agreement for any reason in accordance with Article 3.5 and
for a period of [*] days thereafter, Rosetta may with written notice to  Monsanto [*] the [*] of any  [*] as [*], as the case may be,  [*] shall in all events be
limited to [*] and  [*].
 

    3.5 Term
and Termination of Funded Project. 

    The
Term of this Agreement will be three (3) years after the Effective Date of this
Agreement with the possibility to extend the Agreement based upon the mutual agreement of both parties. 

3.5.1
Early Termination. 

    Each
of Monsanto and Rosetta will have the option to terminate this  Agreement prior to the expiration of the
three (3) year term if the other party fails to meet any material term of the
Project Plan. The breaching party will be given [*] days from receipt of such
written notice to initiate cure of the breach pursuant to this Article 3.5.1 prior to actual termination. If the breaching party is making a good faith effort to cure during the  [*] day period,
then the party will be given an additional  [*] days to complete the cure. If the breach is cured during either such period, the notice will have no force or effect. 

3.5.2
Early Termination—Other Reasons. 

    Either
party, at its option and without prejudice to any of its other legal and equitable rights and remedies, may terminate this  Agreement by reason of failure to cure a material breach by the other party,
other than a breach provided in Article 3.5.1, or upon bankruptcy,
insolvency, and dissolution or winding up of the other party. Any such termination will require written notice from the terminating party, specifying, in reasonable detail, the breach or other basis
of the termination. If capable of being cured, the breaching party will be given [*] days from receipt of such written notice to
cure the breach pursuant to this Article 3.5.2 prior to actual termination. If the breach is cured during such period, the notice will have no force or effect. 

3.5.3
Surviving Paragraphs. 

    Termination
of this Agreement for any reason shall not terminate the provisions set forth in Articles 2, 4, 5, 6, 7, 8, 9 and 10.4. The
rights and obligations of these Articles shall continue in full force and effect following any such termination. 

3.5.4
Exclusivity of Agreement.

    Rosetta agrees that it will not during the Term of this Agreement use, discover, characterize expression of or characterize expression
patterns of monocot genes other than in connection with this Agreement. 

3.5.5
Actions on Termination. 

    Upon
any termination of this Agreement, Rosetta agrees to return or permanently
destroy, at Monsanto's sole discretion, all Monsanto DNA Information.  Monsanto agrees to return or
permanently destroy, at Rosetta's sole discretion, all  Analytical Technology except that portion of Analytical
Technology licensed to  Monsanto under Article 2.3. 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

7

 

 4.  PAYMENTS  

    4.1 Project
Funding. 

    Monsanto agrees to fund the Project Plan as set forth below. All payments set forth in
this Article 4 shall be made in United States dollars. 

4.1.1
Inducement Fee. 

    As
an inducement to Rosetta to commit assets and personnel and undertake its obligations under the Project
Plan after [*], Monsanto agrees that it will be
obligated to pay Rosetta [*] on [*], such amount to be
paid within [*] of such date. The full amount of this inducement fee shall be guaranteed, non-refundable and
non-creditable and shall be paid directly to Rosetta. 

4.1.2
[*] Design Fee. 

    Upon
delivery of a [*] Design consisting of  [*] oligonucleotide probe sequences, as described in the Project Plan,
  Monsanto shall pay Rosetta a fee of
[*], which shall be paid within [*] of delivery. 

4.1.3
[*] Design Fee. 

    Upon
delivery of a [*] Design consisting of  [*] oligonucleotide probe sequences, as described in the Project Plan,
  Monsanto shall pay Rosetta a  [*], which shall be paid within [*] of delivery. 

4.1.4
[*] Design Fee. 

    Upon
delivery, [*], of a [*] Design
consisting of the [*] most useful oligonucleotide probe sequences, as described in the Project
Plan, Monsanto shall pay Rosetta a fee of  [*] and [*]
, which shall be paid within  [*] of delivery. 

4.1.5
[*] Design Fee. 

    Upon
delivery, no earlier than [*], of a  [*] Design consisting of the [*] most useful
oligonucleotide probe sequences, as described in the Project Plan, Monsanto shall pay  Rosetta a fee of
[*] and  [*], which shall be paid within [*] of delivery. 

4.1.6
[*] Set Fee. 

    Upon
delivery, no earlier than [*], of  [*] Sets consisting of [*] oligonucleotide probe
sequences each, as described in the Project Plan, Monsanto shall pay  Rosetta a fee of [*], which shall be paid within  [*] of delivery. 

4.1.7
Other Payments. 

    So
long as Rosetta is not in default of any of its material obligations under the Project
Plan, the remainder of the fees [*] shall be paid over the Term of this
Agreement in [*] installments beginning  [*] from the Effective Date of this Agreement, with the first  [*] of such installments to be in an amount equal to [*]
each, and the [*] and [*] installment to be in an amount
equal to [*]. In the event that Rosetta is in default of any of its material
obligations under the Project Plan, upon [*] days prior written notice to  Rosetta, Monsanto may suspend the  [*] payments required under this Article 4.1.7 until such time as Rosetta
is no longer in such default. Upon Rosetta's cure or other satisfaction of any such default, Monsanto
shall thereupon resume such [*] payments, with all suspended payments paid at the time payments are resumed. 

    4.2 Royalties and [*]—Licensed Products.

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

8

 
    In addition to the payments required under Article 4.1, Monsanto shall pay Rosetta on any Gene
Lead subject to and in accordance with the following conditions: 

4.2.1
Royalty Calculation. 

    For
Licensed Products containing primary Gene Lead,  Monsanto shall pay [*]
 of the total aggregate Value
Added of all such Licensed Products sold by Monsanto or its Affiliates or a
licensee of Monsanto (except in the case of a bare sublicense as provided in Article 4.2.2). 

4.2.2
License or sublicense of DNA Patent Rights by Monsanto. 

    If  Monsanto grants a license or sublicense of DNA Patent Rights to a third party
non-Affiliate without providing such licensee or sublicensee with a Licensed Product,
Monsanto shall pay Rosetta [*] of Product Sublicense
Payments received for such license or sublicense by Monsanto. 

4.2.3
[*] Payments. 

    In
addition to the royalty and other payments set forth in Article 4.2.1 and Article 4.2.2, for the [*] Licensed
Product containing a primary Gene Lead, Monsanto shall pay the following amounts
within [*] upon the occurrence of any of the following  [*]. 

4.2.3.1
Filing for regulatory approval in the United States. 

    Monsanto will pay Rosetta [*] of filing for regulatory approval
in the United States for the production and sale of the [*] containing such  [*], provided that if no regulatory approval shall be required in the United
States, such payment shall be  [*] upon the first commercial sale of such Licensed Product in the United
States. 

4.2.3.2
Receiving regulatory approval in the United States. 

    Monsanto
will pay Rosetta [*] at the time of receiving all regulatory approvals necessary for the  [*] and [*] in the
United States of the  [*], provided that if no regulatory approval shall be required in the United States, such payment shall be  [*] upon the first
commercial sale of such Licensed Product in the United States (such amount to be in addition to the amount
paid pursuant to Article 4.2.3.1. 

4.2.3.3
Receiving regulatory approval in Europe. 

    Monsanto
will pay Rosetta [*] at the time of receiving all necessary regulatory import and production approval
in the European Union for the [*] such [*] that  [*] shall be [*] in the  [*] upon the first commercial sale of such Licensed Product in the European Union 

4.2.3.4  [*] Payments for Other Major Crops. 

    For  [*] and [*] plants that are  Licensed Products containing a
primary Gene Lead, Monsanto shall pay Rosetta  [*] the amounts set forth above upon satisfaction of the first of each of said plants to satisfy the
applicable  [*]. For all other plants that are Licensed Products, no  [*] payments shall be due, but the
royalty payable with respect to the Gene Lead
associated therewith shall [*] the [*] after the first
commercial sale of the first of each of said plant species that are Licensed Products. 

4.2.4
[*] Royalty and [*]. 

    Royalties
and [*] shall be paid by Monsanto on a
product-by-product basis. [*] royalty and  [*] shall be due and payable to Rosetta by Monsanto
[*] of the [*] included in the DNA Patent  

	[*]
	 Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been filed separately with the
Securities and Exchange Commission pursuant to Rule 406.  

9

 

Rights
practiced by Monsanto and its Affiliates and sublicensees in connection with the production and
commercialization of a particular Licensed Product ([*] that  [*] to [*]
 that  [*] and [*] and  [*]). In the [*] a
[*], the [*] and  [*] for that particular [*] shall be 
[*] to the [*] in  [*]. 

4.2.5
Payment Reduction. 

    All
[*] payments and royalty payments made pursuant to this Article 4 shall be  [*] for [*], and 
[*] for [*]. 

4.2.6
Royalty Stacking. 

    In
the event that Monsanto is required to obtain a license to one or more patents or patent applications from one or more third party
non-Affiliates to make, have made, use, sell or have distributed Licensed Product, and the  [*] to
[*] and  [*] for the [*] of the Value
Added (not taking into account for these purposes any [*] payments associated with such  Licensed Product), then Monsanto shall provide written notification of such royalty stacking to
Rosetta, and [*] the  [*] hereunder to [*] by the 
[*], but in [*] the  [*] to [*] be  [*]
 than [*] to continue only for so long as such
royalty obligations to third party non-Affiliates continue. The [*]
of [*] to [*] shall  [*] on a [*] to the  [*] of [*] is  [*]. 

4.2.7
Monsanto Royalty Buy-Out.

    Monsanto shall have an option to negotiate with Rosetta with respect to  [*] payment to Rosetta with respect to each or all  Licensed Products in lieu of paying any further royalties on such products. The parties shall conduct such negotiation in good faith,
 but neither shall
be obligated to agree to any buy-out. 

    4.3 Royalties—Rosetta Predictive Pattern Information.

    During
the course of the Project Plan, Rosetta may develop Predictive Pattern
Information. [*] that [*] and  [*] for each such [*]
 to  [*] such [*] to  [*] to determine [*] or  [*] to [*] such a
[*]. In the event that [*] makes  [*] a [*] and if 
[*] is [*] or  [*] as a [*] to make the  [*]
: 

4.3.1
Royalty Calculation. 

    Monsanto shall pay Rosetta [*] of Net
Predictive Pattern Revenues associated with the sale of Predictive Pattern Technology by  Monsanto or its Affiliates or a licensee of Monsanto.
 

4.3.2
[*] Payments. 

    Monsanto will pay Rosetta [*] at the time of the first
commercial sale of each such Predictive Pattern Technology.

5.  RECORDS  

    5.1 Payments
of Royalties. 

    Within
ninety (90) days of the end of the applicable semi-annual period (either fiscal or calendar) following the first commercial sale of a  Licensed Product or Predictive Pattern
Technology, as the case may be, and within ninety
(90) days after the end of each six (6) months thereafter, Monsanto shall make a written report to  Rosetta setting forth the information,
including that of Affiliates and licensees or sublicensees,
necessary to permit Rosetta to calculate and confirm the royalty payment due Rosetta,  [*]. At the time each
report is made, Monsanto shall pay to  Rosetta the royalties shown by such report to be payable hereunder. Payments due on sales in foreign currency shall
be calculated in United States
 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

10

 

dollars on the basis of the rate of exchange in effect for purchase of dollars at Chase Manhattan Bank, New-York, New York, on the last business day of the
last-preceding June or December, whichever shall be later. Payments shall be without set off and free and clear of any taxes, duties, fees or charges other than withholding taxes, if any.
Payment shall be made by wire transfer to an account in the United States designated by Rosetta from time to time with prior, written notice. 

    5.2 Books
and Records for Royalty Payments. 

    Monsanto shall keep, and shall cause its Affiliates, licensees and sublicensees to
keep, books and records in such reasonable detail as will permit the reports provided for in this Article hereof to be made and the royalties payable hereunder to be determined.  Monsanto further agrees
to permit its and its Affiliates books and records to be inspected and audited
from time to time (but not more often than once annually) during reasonable business hours by an independent auditor, designated by Rosetta and approved
by Monsanto, which approval will not be unreasonably withheld, to the extent necessary to verify the reports provided for in this Article provided,
however, that such auditor shall indicate to Rosetta only whether the reports and royalties paid are correct, and if not, the reason why not. In the
event that such an audit results in additional royalties being owed to Rosetta, such royalties shall be paid within sixty (60) days from notice
of deficiency along with interest calculated as from the date the correct payment was due to the date of actual payment at an annual rate of five (5) percentage points above the prime rate
quoted by Chase Manhattan Bank, New York, New York, on the day payment was due, until paid; and if the original royalty payment was more than five percent (5%) less than it should have been, the cost
of the audit shall be reimbursed by Monsanto. 

    5.3 Late
Payment of Royalties. 

    If
any royalties owed under this Agreement are not paid when due, the unpaid amount shall bear interest, compounded annually, at an
annual rate of five (5) percentage points above the prime rate quoted by Chase Manhattan Bank of New York on the day payment was due, until paid or offset. 

6.  INTELLECTUAL PROPERTY  

    6.1 Ownership
of Intellectual Property Other Than DNA Patent Rights and Analytical
Technology. 

    Except
as set forth in this Agreement: (i) any Project Technology and any patent
applications and patents claiming any Project Technology first conceived or made by one or more employees of  Monsanto shall belong to Monsanto ("Monsanto Patents");
(ii) any Project Technology and any patent applications and patents claiming any Project
Technology first conceived or made by one or more employees of Rosetta shall belong to  Rosetta ("Rosetta
Patents"); and (iii) any Project
Technology and any patent applications and patents claiming any Project Technology first conceived or made jointly by one or
more employees of Monsanto and one or more employees of Rosetta shall belong jointly to  Monsanto and
Rosetta ("Joint Patents"). Each owner of
any Joint Patent shall be free to exploit its undivided interest in such Joint Patent. Inventorship
shall be determined in accordance with United States patent laws. 

    6.2 Disclosure
of Patentable Inventions. 

    In
addition to the disclosures otherwise required under this Agreement, each party shall submit a written report to the other within  [*] days of the end of
each calendar quarter summarizing any invention arising in the performance of the  Project Planduring the quarterly period immediately preceeding delivery of such report which it believes may be
patentable. 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

11

 

     6.3 Patent Prosecution and Maintenance; Joint Patents.

    The
parties shall agree upon an outside law firm who shall prepare, file, prosecute and maintain Joint Patents under the joint
instructions of the parties. All costs shall be [*]. In the event Rosetta or  Monsanto elects not to share or
continue to share such costs of prosecution of a filed application for a Joint
Patent or maintenance costs for an issued Joint Patent, it shall notify the other party not less than  [*] months before any
relevant deadline, and the other party shall have the right to assume sole control over the prosecution of
such filed application for a Joint Patent or maintenance of such issued Joint Patent. In such event, the
party which assumes such control shall have title to such Joint Patent and the other party agrees to execute the appropriate documents to assign such
patent to the other party. 

    6.4 Cooperation.

    Each
party agrees to cooperate with the other in preparing and executing any documents necessary or useful to obtain patent protection on any invention that is subject to this  Agreement in any country in the
world. 

    6.5 Costs. 

    Rosetta shall retain control over and bear all expenses associated with the filing, prosecution and maintenance of  Analytical Patent Rights and Rosetta patents and patents on inventions made by it before the  Effective Date of this Agreement. Monsanto shall retain
control over and bear all expenses associated
with the filing, prosecution and maintenance of DNA Patent Rights and Monsanto patents and patents on
inventions made by it before the Effective Date of this Agreement. 

    6.6 Patent
Litigation: Right to Bring Suit. 

    Each
party shall have the sole power to institute and prosecute at its own discretion and expense suits for infringement of their respective patent rights. Each party agrees to
cooperate with the other in any suit brought under this Article. All expenses in such suits will be borne entirely by the party bringing such suit and such party shall collect all judgments or awards
arising from these suits. 

    6.7 Patent
Litigation: Jointly Owned Patents. 

    In
the event that any Joint Patent is infringed or misappropriated by a third party,  Monsanto and Rosetta shall
discuss whether, and, if so, how, to enforce such  Joint Patent or defend such Joint Patent in an infringement action, declaratory judgment or other
proceeding. In the event only one party wishes to participate in such proceeding, it shall have the right to proceed alone, at its expense, and may retain any recovery; provided, at the request and
expense of the participating party, the other party agrees to cooperate and join in any proceedings in the event that a third party asserts that the co-owner of such  Joint Patent is necessary or
indispensable to such proceedings. 

    6.8 Confidential
Treatment. 

    All
information disclosed under this Article 6 shall be treated as Confidential Information under Article 7. 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

12

 

 7.  CONFIDENTIALITY  

    7.1 Confidential Information.

    It
is anticipated that it will be necessary, in connection with their obligations under this Agreement, for  Rosetta and Monsanto, and Affiliates of either party, to
disclose to each other confidential proprietary business and/or technical information ("Confidential Information") relating to their respective
businesses, products and technologies. The Confidential Information shall include information disclosed orally, in writing or other tangible form,
including samples of materials, that in each case are designated as confidential or proprietary. 

    7.2 Confidentiality
and Limited Use. 

7.2.1
Limited Use. 

    With
respect to all Confidential Information, both Rosetta and  Monsanto and their respective Affiliates agree as follows, it being understood that "recipient"
indicates the party receiving the confidential, proprietary information from the other "disclosing" party. Confidential Information disclosed to the
recipient shall, subject to the terms and conditions hereof, remain the property of the disclosing party and shall be maintained in confidence by the recipient and shall not be disclosed to third
parties by the recipient and, further, shall not be used except for purposes contemplated in this Agreement. All confidentiality and limited use
obligations with respect to the Confidential Information shall terminate [*]
years after the termination date of this Agreement. 

7.2.2
Protection for Monsanto DNA Information and Analytical Technology.

    Rosetta agrees that Monsanto DNA Information constitute highly  Confidential Information of Monsanto. Rosetta further
agrees that Monsanto cannot be adequately compensated with damages for the loss of confidential treatment for such Confidential
Information. Monsanto shall be entitled to injunctive relief if necessary and appropriate to prevent such loss. Any loss of
confidential treatment of such information caused by Rosetta shall constitute a material breach of this  Agreement by Rosetta. Monsanto agrees that  Analytical Technology developed by Rosetta
constitutes highly Confidential
Information of Rosetta. Monsanto further agrees that  Rosetta cannot be adequately
compensated with damages for the loss of confidential treatment for such Confidential
Information. Rosetta shall be entitled to injunctive relief if necessary and appropriate to prevent such loss. Any loss of
confidential treatment of such information caused by Monsanto shall constitute a material breach of this  Agreement by Monsanto. 

7.2.3
Exceptions to Disclosure of Confidential Information.

    Notwithstanding
any provision to the contrary, a party may disclose the Confidential Information of the other party: (i) in
connection with an order of a court or other government body or as otherwise required by or in compliance with law or regulations; provided that the disclosing party provides the other party with
notice and takes reasonable measures to obtain confidential treatment thereof; (ii) in confidence to attorneys, accountants, banks and financial sources and their advisors; or (iii) in
confidence, in connection with a license, sublicense, or acquisition, permitted by this Agreement. 

    7.3 Exceptions
to Classification as Confidential. 

    The
obligations of confidentiality and limited use shall not apply to any of the Confidential Information which 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

13

 

    7.3.1
Publicly Available: as of the date of disclosure is publicly available by publication or other documented means or later becomes likewise publicly available through no act or
fault of recipient; or 

    7.3.2
Already Known: is already known to recipient before receipt from the disclosing party, as demonstrated by recipient's written records; or 

    7.3.3
Third Party Disclosure: is made known to recipient by a third party who did not obtain it directly or indirectly from the disclosing party and who does not obligate recipient to
hold it in confidence. 

    7.4 Specific
Information. 

    Specific
information shall not be deemed to be within any of these exclusions merely because it is embraced by more general information falling within these exclusions. 

    7.5 Disclosures
to Personnel. 

    Recipient
agrees to advise those of its officers, directors, employees, associates, agents, consultants, and Affiliates who become
aware of the Confidential Information, of these confidentiality and limited use obligations and agrees, prior to any disclosure of  Confidential Information
to such individuals or entities, to make them bound by obligations of confidentiality and limited use of the same stringency as
those contained in this Agreement. 

    7.6 Return
of Confidential Information.

    Upon
termination of this Agreement, originals and copies of Confidential Information in
written or other tangible form will be returned to the disclosing party by recipient or destroyed by recipient, except to the extent that it is the subject of a continuing license or other right of
use. One copy of each document may be retained in the custody of the recipient's legal counsel solely to provide a record of what disclosures were made and to confirm compliance with the obligations
set forth in this Article 7. 

    7.7 Confidential
Status of Agreement. 

    The
terms and existence of this Agreement shall be deemed to be Confidential
Information and shall be dealt with according to the confidentiality requirements of this Article. Both parties agree, furthermore, that neither party will make public
disclosures concerning other specific terms of this Agreement without obtaining the prior written consent of the other party, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, at such time as Rosetta or Monsanto may request,
the parties shall mutually agree on a press release announcing the execution of this Agreement and the basic terms hereof. Once any written statement is
approved for disclosure by both parties, either party may make subsequent public disclosures of the contents of such statement without the further approval of the other party. 

    7.8 Publications. 

    It
is expected that each party may wish to publish the results of its research under this Agreement. Contributions by the other party
shall be acknowledged in any publication by the publishing party. In order to safeguard intellectual property rights, the party wishing to publish or otherwise publicly disclose material which
describes or otherwise discloses the other party's Confidential Information or Project Technology shall
first submit a draft of any proposed manuscript to the Project Committee for review, comment and consideration of appropriate patent application
preparation activity at least [*] days prior to any submission for publication or other public disclosure. The appropriate
member of the 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

14

 

Project Committee will advise the party seeking publication as to whether a patent application will be prepared and filed or
whether Confidential Information should be removed from the disclosure. The Project Committee will, in
cooperation with both parties, determine the appropriate timing and content of any such publications. The Project Committee can, in its discretion,
request that the publishing party delay publication for a reasonable time period for the purpose of preparation of an appropriate patent application(s). If the Project
Committee is no longer functioning, its responsibilities under this Article will be assigned to a committee consisting of one person designated by  Monsanto and one person
designated by Rosetta. 

8.  REPRESENTATION AND WARRANTIES; INDEMNIFICATION AND LIMITATION OF LIABILITY  

    8.1 Monsanto.

    Monsanto represents and warrants that it has the right to make conveyances and grants in accordance with the Articles hereof,
including, without limitation, the delivery of the Monsanto DNA Information. 

    8.2 Rosetta.

    Rosetta represents and warrants that it has the right to make conveyances and grants in accordance with the articles hereof, including,
without limitation, that Rosetta is free to conduct the Project Plan, and  Rosetta covenants that the methods
used in its development during the Term of this Agreement of the
Monsanto DNA Information described in Article 1.14(B) will not infringe the patent rights of any third party. 

    8.3 Indemnification
by Rosetta.

    Rosetta shall indemnify and hold harmless Monsanto, its  Affiliates, and all their officers, directors, employees and
agents, for any losses, claims, damages, judgments, assessments, costs and other
liabilities, including reasonable out-of-pocket costs and expenses as they are incurred by Monsanto in connection with any
demands, law suits and other legal actions by third parties against Monsanto arising from any gross negligence, willful misconduct or strict liability
by or of Rosetta, its Affiliates, agents or sublicensees, provided, however, for purposes of this
Article 8, neither gross negligence or willful misconduct shall be deemed to include conduct determined to be infringement of patent, copyright, trademark, trade name, other proprietary right
or an unauthorized use of trade secret. 

    8.4 Indemnification
by Monsanto.

    Monsanto shall, except to the extent caused by Rosetta's gross negligence or willful
misconduct, indemnify and hold harmless Rosetta, its Affiliates, and all their officers, directors,
employees and agents, for any losses, claims, damages, judgments, assessments, costs and other liabilities, including reasonable out-of-pocket costs and expenses as they are
incurred by Rosetta in connection with any demands, law suits and other legal actions by third parties against  Rosetta arising out of or alleged to arise
out of (i) the manufacture, use, distribution or sale by  Monsanto, any Monsanto Affiliate, or any Monsanto
licensee or sublicensee of any Licensed Product or any other product or service covered by DNA Patent
Rights claiming a Gene Lead or Predictive Pattern Technology or (ii) the
infringement or alleged infringement of any patent, trade secret or other intellectual property right of any third party as a result of the use of Monsanto DNA
Information in the Project Plan. 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

15

 
    8.5 Conditions and Limitations of Indemnification Obligation. 

    (a) In
order to maintain the right to be indemnified by the other party ("Indemnitor"), the party claiming
indemnification ("Indemnitee") must: 

     (i) notify
the Indemnitor promptly after learning of any legal action undertaken by a third party and related to the subject matter of this Article 8 (a
"Third Party Claim"); 

    (ii) allow
the Indemnitor to manage and control (by way of intervention or otherwise) the defense and settlement of any
such Third Party Claim against the Indemnitee; 

    (iii) cooperate
with the Indemnitor in the defense or the settlement negotiations of Third Party
Claims as reasonable required by the Indemnitor; and 

    (iv) abstain
from making any statements or taking any actions which damage the defense against a Third Party Claim
(including, without limitation, any statements against the interest of the Indemnitee or admissions of causation or guilt). 

    (b) The
Indemnitor shall not agree to any settlement that adversely affects the  Indemnitee's rights or interest without the Indemnitee's prior written approval (which approval shall
not be unreasonably withheld). 

    8.6 Limitation
of Liability. 

    SUBJECT
TO THE INDEMNIFICATION OBLIGATION SET FORTH HEREIN AND UNLESS OTHERWISE EXPRESSLY STATED IN THIS AGREEMENT, NEITHER PARTY WILL BE LIABLE TO THE OTHER WITH RESPECT TO THE
SUBJECT MATTER OF THIS AGREEMENT FOR ANY INCIDENTAL, INDIRECT, CONSEQUENTIAL, SPECIAL, OR
PUNITIVE DAMAGES, OR LOST PROFITS OR THE COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES REGARDLESS OF WHETHER ANY SUCH CLAIM FOR DAMAGES, LOST PROFITS OR OTHER COSTS IS BASED ON TORT,
WARRANTY, CONTRACT OR ANY OTHER LEGAL THEORY, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. 

    8.7 Risk
of Failure; No Representations. 

    [*] that [*] in the  [*] such as those [*] in this  Agreement and [*] this  [*].[*], subject to the
[*] to [*] provided in  [*] of [*], as the  [*] this Agreement to  [*] as [*] of the  [*]
 or [*] be  [*] be a [*] of this  Agreement. Other than as set forth in this Agreement, [*] OF  [*] FOR A [*]. 

9.  APPLICABLE LAW  

    9.1 Governing
Law; Jurisdiction. 

    THE
VALIDITY, INTERPRETATION AND PERFORMANCE OF THIS AGREEMENT AND ANY DISPUTE CONNECTED WITH THIS AGREEMENT SHALL BE GOVERNED BY AND DETERMINED IN ACCORDANCE WITH THE STATUTORY,
REGULATORY AND DECISIONAL LAW OF THE STATE OF [*] (EXCLUSIVE OF SUCH STATE'S CHOICE OR CONFLICTS OF LAWS RULES) AND, TO THE
EXTENT APPLICABLE, THE FEDERAL STATUTORY, REGULATORY AND DECISIONAL LAW OF THE UNITED STATES (EXCEPT FOR THE U.N. CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS, APRIL 10, 1980, U.N. DOC.
A/CONF. 97/18, 19 I.L.M. 668, 671 (1980) REPRINTED IN 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

16

 

PUBLIC NOTICE, 52 FED. REG. 662-80 (1987), WHICH IS HEREBY SPECIFICALLY DISCLAIMED AND EXCLUDED). 

10. MISCELLANEOUS PROVISIONS  

    10.1 Notices. 

    All
notices and other communications required or permitted under this Agreement shall be deemed to be properly given when in writing
and sent by registered or certified mail, postage prepaid or by reputable courier service providing evidence of delivery or by facsimile with receipt confirmation, to the other party at the address
set forth below, or at such other address as either party may be in writing designate from time to time for these purposes. 

	 	 	If to Rosetta:	 	Rosetta Inpharmatics, Inc.

12040-115th Avenue Northeast

Kirkland, Washington 98034-6900

Attention: Chief Operating Officer

Fax No. (425) 820-5757
	

 	
 	

 	
 	

Rosetta Inpharmatics, Inc.

12040-115th Avenue Northeast

Kirkland, Washington 98034-6900

Attention: Legal Affairs

Fax No. (425) 820-5757
	

 	
 	

If to Monsanto:	
 	

Monsanto Company

700 Chesterfield Parkway North

St. Louis, Missouri 63198

Attention: President

Fax No. (314) 694-1667
	

 	
 	

Copy to:	
 	

Monsanto Company

800 North Lindbergh Boulevard

St. Louis, Missouri 63167

Attention: Group Patent Counsel

Fax No. (636) 737-6047

    10.2 Assignability.

    The
rights and obligations acquired herein by the parties are not assignable, transferable or otherwise conveyable, in whole or part (by operation of law or otherwise) to any third
party without the consent of other party, which shall not be unreasonably withheld, except that either party may, without such consent, assign its rights and obligations to any purchaser of all or
substantially all of the assets of the party related to this Agreement or to any successor corporation resulting from any merger or consolidation of a
party. Any attempted assignment conflicting with this Article shall be null and void and without effect. 

    10.3 Assignability
of DNA Patent Rights.

    Monsanto shall be free to assign DNA Patent Rights to any third party, provided however
that any DNA Patent Rights which claims a Gene Lead or Predictive Pattern
Technology shall be assigned or 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

17

 

transferred to a third party subject to the third party assuming the royalty and [*] obligations set
forth in this Agreement.

    10.4 Dispute
Resolution. 

10.4.1
General. 

    All
disputes which may arise under, out of, or in connection with this Agreement shall be resolved as follows: 

10.4.2
Parties Shall Meet. 

    First,
the parties shall make all commercially reasonable efforts to resolve the dispute. If, after making all commercially reasonable efforts the parties cannot resolve the issue
within [*] months after written notice of the dispute from one party to the other, then the parties may appoint one or more
independent parties to assist in resolving the dispute through mediation ("mediation stage"). 

10.4.3
CEOs Shall Meet. 

    If
the mediation described above does not resolve the dispute, then the Chief Executive Officer of Monsanto or his designee and the
Chief Executive Officer of Rosetta or his designee shall meet to resolve the dispute. 

10.4.4
Arbitration Trigger. 

    In
the event such Chief Executive Officers shall not have resolved such matter within sixty [*] of written
request by one of such Chief Executive Officers for such a meeting, either party may initiate arbitration with respect to such dispute in accordance with Article 10.4.5 hereof. 

10.4.5
Arbitration Rules. 

    The
arbitration proceeding shall be conducted in the [*], United States of America, in accordance with the then
existing commercial rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The parties hereby
agree that service of any notices in the course of such arbitration at their respective addresses as provided for in Article 10.1 of this  Agreement shall be valid and sufficient. 

    In
any arbitration, the award shall be rendered by a majority of the members of a Board of Arbitration consisting of three (3) members, one of whom shall be appointed by  Monsanto, the second by
Rosetta, and the third by mutual agreement of the first two (2) said
arbitrators, and none of whom shall be affiliated with either party or its Affiliates. In the event of failure of said first two (2) arbitrators
to agree within sixty (60) days after commencement of the arbitration proceeding upon the appointment of the third member, the third arbitrator shall be appointed by the American Arbitration
Association in accordance with its then existing rules. Notwithstanding the foregoing, in the event that either such party shall fail to appoint an arbitrator within thirty (30) days after
commencement of the arbitration proceeding, such arbitrator and the third arbitrator shall be appointed by the American Arbitration Association in accordance with its then existing rules. For the
purposes of this paragraph, the "commencement of arbitration proceeding" shall be deemed to be the date upon which a written demand for arbitration is received by the American Arbitration Association
from one of the parties. 

10.4.6
Agreements to Agree. 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

18

 

    The
failure by the parties to agree on any matter expressed in this Agreement as a matter to be agreed upon by or determined by mutual agreement, decision, consent or approval of the
parties shall not constitute a basis for the initiation by either party of litigation or arbitration. Any court having jurisdiction under this Article or any arbitrator shall have no power to decide
any such matter to which such mutual agreement, decision or consent has not been obtained. 

    10.5 Tax
Reporting. 

    Monsanto and Rosetta shall treat all payments made by  Monsanto under Article 4.1 as amounts paid for qualified
research under section 41(b)(3) of the Internal Revenue Code of 1986. 

    10.6 Severability. 

    In
case any one or more of the provisions contained in this Agreement shall for any reason be held invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect any other provisions hereof, but this Agreement shall be construed as if
such invalid or illegal or unenforceable provisions had never been contained herein. 

    10.7 Counterparts.

    This
Agreement may be executed in two (2) counterparts, each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument. 

    10.8 Headings. 

    Headings
as to the contents of particular Articles are for convenience only and are in no way to be construed as part of this Agreement
or as a limitation of the scope of the particular Articles to which they refer. 

    10.9 Agreement
references. 

    All
Articles referred to herein are Articles of this Agreement. 

    10.10
Appendices. 

    The
appended Appendices form an integral part of this Agreement. 

    10.11
Export Control. 

    Notwithstanding
any other provisions of this Agreement, Rosetta agrees to make no
disclosure or use of any Monsanto information or Monsanto technology furnished or made known to  Rosetta
pursuant to this Agreement, and Monsanto agrees
to make no disclosure or use of any Rosetta information or Rosetta technology disclosed to  Monsanto pursuant
to this Agreement except in compliance with the laws and regulations of the United
States of America, including the Export Administration Regulations promulgated by the Office of Export Administration International Trade Administration, United States Department of Commerce; and in
particular, each party agrees not to export, directly or indirectly, either 

	•
	the
technical data furnished or made known to it by the other party pursuant to this Agreement; or

	•
	the
"direct product" thereof; or

	•
	any
commodity produced using such technical data 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

19

 

to any country or countries for which a validated license is required unless a validated license is first obtained pursuant to the Export Administration Regulations. The term
"direct product" as used above, is defined to mean the immediate product (including process and services) produced directly by the use of the technical data. 

    10.12
Force Majeure. 

    Except
for payments of money, neither of the parties shall be liable for any default or delay in performance of any obligation under this  Agreement or the Project Plan caused by any of the following: Act of God, war, riot, fire, explosion,
accident, flood, sabotage, compliance with governmental requests, laws, regulations, orders or actions, national defense requirements or any other event beyond the reasonable control of such party; or
labor trouble, strike, lockout or injunction (provided that neither of the parties shall be required to settle a labor dispute against its own best judgment). 

    The
party invoking this subparagraph shall give the other party written notice pursuant to Article 10.1 and full particulars of such force majeure event as soon as possible
after the occurrence of the cause upon which said party is relying. 

    Both
Monsanto and Rosetta shall use reasonable efforts to mitigate the effects of any
force majeure on their respective part. 

    10.13
Negation of Agency. 

    It
is agreed and understood by the parties hereto that each of Rosetta and Monsanto, in
its performance of its obligations and responsibilities under this Agreement, is an independent contractor and that nothing herein contained shall be
deemed to create an agency, partnership, joint venture or like relationship between the parties. The manner in which each of Rosetta and  Monsanto carries
out its performance under this Agreement is within each of  Rosetta's and Monsanto's sole discretion and
control. 

    10.14
Other Requests. 

    The
parties hereto agree that upon reasonable request of the other party, each such party shall execute and deliver such additional documents and  Agreements, and take such further actions, as may be
necessary in order to fulfill and give effect to the terms of this  Agreement. 

    10.15
Amendment and Waiver. 

    This
Agreement may be amended, modified, superseded or canceled, and any of the terms may be waived, only by a written instrument
executed by each party or, in the case of waiver, by the party or parties waiving compliance. The delay or failure of any party at any time or times to require performance of any provisions shall in
no manner affect the rights at a later time to enforce the same. No waiver by any party of any condition or of the breach of any term contained in this  Agreement, whether by conduct, or otherwise, in
any one or more instances, shall be deemed to be, or considered as, a further or continuing waiver of
any such condition or of the breach of such term or any other term of this Agreement. 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

20

 

    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the
Effective Date. 

	
ROSETTA INPHARMATICS, INC.	
 	

MONSANTO COMPANY
	

By	

 	

 	

 	

By	

 	

 
	

 	
 	

	
 	

 	
 	

	

Date	

 	

 	

 	

Date	

 	

 
	

 	
 	

	
 	

 	
 	

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

21

 
 

Appendix A—Project Plan    
  

Definitions 

Condition—[*] of  [*] to [*] that  [*]
 by the [*]. 

Monocot Proxy Oligo Set—[*] of a [*]. 

Oligo—[*] that will be  [*] on a [*] and  [*]. 

Probe—[*] from a  [*] or a [*]. 

[*] Oligo Set—[*] that can be  [*] of the [*]. 

Trait Module—[*].  

Trait Module Report—[*]. 

    The
terms in bold set forth in Appendices A, B and C, unless defined above or within an Appendix, have the same meaning as found in the  Agreement. 

Initiation Phase  

    All periods described in days in this Appendix A shall be business days. 

Sequence Delivery 

[*] will [*] and  [*].[*] shall be  [*]
 and/or [*] and  [*] as the [*]: 

[*]

Rosetta Inpharmatics

Manager, Collaborations

12040 115th Avenue NE

Kirkland, WA 98034 

Primary Oligonucleotide Design 

    From
the [*] will be [*] from the  [*] from the [*] no more 
[*]. 

    [*] for a [*] will  [*], which will [*] for  [*]
, and a [*] for which  [*] the [*] and  [*] to [*] for the
[*], which will [*] of this  [*] of the [*] and the 
[*] of an [*] of the  [*]. 

    [*]

    [*] will [*] for the  [*] will [*] will be  [*]
 from [*] and  [*] from [*] will be
[*] of [*], and  [*], to [*] the  [*]
 as [*] as an  [*] of the [*] from  [*] will [*] of  [*] the [*] on the  [*] in the
[*] of the  [*] to the [*]. 

    [*] the [*] of a  [*] from [*]. 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

 
 Table 1—Overview of [*]

	[*]	 	[*]
	approximately [*]	 	approximately [*]
	[*]	 	 
	[*]	 	[*]
	[*]	 	[*]
	[*]	 	[*]
	[*]	 	[*]
	[*]	 	[*]
	[*]	 	 

[*] Design 

    [*] will [*] in a  [*] to [*] after  [*]
 from [*]. Within  [*] of [*] the  [*]
of the [*] will send to  [*] for [*] the  [*] will
[*] at least  [*] for each [*] in
[*] will then be [*] the  [*] for each [*], which shall be
 [*] within [*] of the  [*]. Within [*] of the  [*] the [*], if  [*] on the [*] on the  [*]
, which will consist of a [*] and  [*] plus [*]. Within  [*]
 of receipt of this [*] will deliver to
[*] the [*] of each  [*] in the form of an [*] of the 
[*] of [*] as  [*]. The [*] of the  [*]
 shall be [*] by  [*] of the [*] from  [*] to [*]. 

    [*] shall provide a [*] of the  [*] from the [*] at  [*]. 

[*]  

    [*] the [*]
from the [*]. 

    [*] from the [*] will be  [*] of [*]. The  [*]
 the [*] will be
[*] of [*]. The  [*] will be [*] to  [*]
 to be [*] to the  [*].  

 [*]  

[*]  

    [*], the [*]
and [*] the [*]. 

    [*] will [*] and a  [*] than [*], that  [*]
 for any [*] in a  [*]. 

    [*] by the [*] and the  [*] by the [*] for a  [*]
 the [*] in  [*] have a [*] for
[*] the [*] and  [*]. 

    [*] and [*] the  [*] and [*] that could be  [*]
 with [*] for an  [*] which will [*] for each  [*]
 within [*]. 

    [*], the [*] be  [*]. [*] has not [*] will be  [*]
 with [*] and  [*] or other such [*]. 

    [*] will [*] and the  [*] for [*] the  [*].[*]
 will [*] the  [*]. [*] the  [*] or
[*].
[*] in the [*] or the  [*]. 

    [*] the [*], there will be a  [*] to [*] the  [*]
. [*] the  [*] of the [*], the  [*]
and the [*] that  [*] the [*] in  [*].
[*] for
[*] the [*] and  [*] in this [*].  [*]
 the [*], the  [*] the [*].  [*] that
have [*]. 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

2

  

 
 

2. Appendix B—Performance Criteria    
  

[*]

[*].
 [*] the [*]: 

[*].
 [*] of [*].
 [*].
 [*]
. 

[*] the [*] will be  [*], and [*] to an  [*]
. 

[*] will [*] the  [*] and [*] the  [*]
 for these [*] will be  [*].[*] than  [*] from a [*] of  [*] are [*] that  [*] are [*] and the
[*] of the [*] will be  [*]. 

[*] the [*], then the  [*] the [*]. 

[*] if a [*] the  [*].[*] this  [*]
 have the [*] to have the  [*] will [*] of the  [*]
 the [*].
 

The
[*] for the [*] of the  [*] of a [*]. 

[*]

The
[*] on the [*]. 

[*] into the [*] and  [*] in such a way as [*]. The  [*] are made for the [*] on a  [*] is [*] to a
[*]. 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

3

 
 Table 2—[*]  

	[*]	 	[*]
	
[*]	
 	

[*] on an [*] for the [*] to be [*] has not [*]
 to [*] or [*].
	
[*]	
 	

This [*] a [*] and [*].
	

 	
 	
[*] to [*] will be [*] across the [*].
[*] at an [*] of [*] and at [*] of [*]
, the [*] or [*] on an [*]. [*] where
the [*], the [*] at the [*] as the [*].
	

 	
 	
[*] will be [*]. [*] across the [*]. The
[*] where the [*] is at least [*].
	
[*]	
 	
[*] are within [*] of the [*]. [*] of
[*] and [*], and at [*] will be [*]. [*]
 and the [*] are not [*] with [*].
	
[*]	
 	

For [*] at an [*] and at a [*] of the [*] will be [*] of the [*].
	
[*]	
 	
[*]
	

 	
 	
[*]

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

4

 
  
 

    Appendix C—Data Security    
  

    Rosetta and Monsanto will work cooperatively to address the issues that  Monsanto's Data Security Team addressed in their
report to apply Monsanto standards to ensure that  Monsanto's intellectual property will be secure. 

	[*]
	Indicates that material has been omitted and confidential treatment has been requested therefor. All such omitted material has been
filed separately with the Securities and Exchange Commission pursuant to Rule 406.  

5

QuickLinks

Monsanto/Rosetta Inpharmatics Collaboration Agreement

TABLE OF CONTENTS

Appendix A—Project Plan

2. Appendix B—Performance Criteria

Appendix C—Data SecurityPrepared by MERRILL CORPORATION www.edgaradvantage.com

QuickLinks
 -- Click here to rapidly navigate through this document

 
 

OFFICE LEASE    
  

    THIS
OFFICE LEASE (this "Lease") is made as of September 30, 2000, by and between 

    "Landlord" Richard and Jacquelyne Doane, a married couple 

    and

    "Tenant" Rosetta Inpharmatics, Incorporated, a Washington corporation 

 
 

SECTION A: TABLE OF CONTENTS    
  

	SECTION 1:  DEFINITIONS	 	1
	

SECTION 2:  PREMISES AND TERM	
 	

3
	2.1	 	Lease of Premises	 	3
	2.2	 	Lease Term	 	3
	2.3	 	Plans and Specifications	 	3
	2.4	 	Commencement Date	 	3
	2.5	 	Tenant's Contribution to Tenant Improvement Costs	 	4
	2.6	 	Memorandum of Commencement Date	 	4
	2.7	 	Use and Conduct of Business	 	4
	2.8	 	Compliance with Governmental Requirements and Rules and Regulations	 	5
	

SECTION 3:  BASE RENT, ADDITIONAL RENT AND OTHER SUMS PAYABLE UNDER LEASE	
 	

5
	3.1	 	Payment of Rental	 	5
	3.2	 	Base Rent	 	5
	3.3	 	Security Deposit	 	5
	3.4	 	Additional Rent	 	6
	3.5	 	Utilities	 	7
	3.6	 	Holdover	 	7
	3.7	 	Late Charge	 	8
	3.8	 	Default Rate	 	8
	

SECTION 4:  GENERAL PROVISIONS	
 	

8
	4.1	 	Maintenance and Repair by Landlord	 	8
	4.2	 	Maintenance and Repair by Tenant	 	8
	4.3	 	Common Areas/Security	 	8
	4.4	 	Tenant Alterations	 	9
	4.5	 	Tenant's Work Performance	 	9
	4.6	 	Surrender of Possession	 	9
	4.7	 	Removal of Property	 	10
	4.8	 	Access	 	10
	4.9	 	Damage or Destruction	 	11
	4.10	 	Condemnation	 	11
	4.11	 	Parking	 	12
	4.12	 	Indemnification	 	12
	4.13	 	Tenant Insurance	 	12
	4.14	 	Landlord's Insurance	 	13
	4.15	 	Waiver of Subrogation	 	13
	4.16	 	Assignment and Subletting by Tenant	 	14
	4.17	 	Assignment by Landlord	 	16
	4.18	 	Estoppel Certificates	 	16
	4.19	 	Modification for Lender	 	16
	4.20	 	Hazardous Substances	 	17
	4.21	 	Access Laws	 	17

 

	4.22	 	Quiet Enjoyment	 	18
	4.23	 	Signs	 	18
	4.24	 	Subordination	 	19
	4.25	 	Workers Compensation Immunity	 	19
	4.26	 	Brokers	 	19
	4.27	 	Exculpation and Limitation of Liability	 	19
	4.28	 	ERISA Representations	 	19
	4.29	 	Mechanic's Liens and Tenant's Personal Property Taxes	 	19
	4.30	 	Landlord's Security Interest	 	20
	

SECTION 5:  DEFAULT AND REMEDIES	
 	

20
	5.1	 	Events of Default	 	20
	5.2	 	Remedies	 	21
	5.3	 	Right to Perform	 	22
	5.4	 	Landlord's Default	 	23
	

SECTION 6:  MISCELLANEOUS PROVISIONS	
 	

23
	6.1	 	Substitution Space	 	23
	6.2	 	Notices	 	23
	6.3	 	Attorney's Fees and Expenses	 	24
	6.4	 	No Accord and Satisfaction	 	24
	6.5	 	Successors; Joint and Several Liability	 	24
	6.6	 	Choice of Law	 	24
	6.7	 	No Waiver of Remedies	 	24
	6.8	 	Offer to Lease	 	25
	6.9	 	Force Majeure	 	25
	6.10	 	Landlord's Consent	 	25
	6.11	 	Severability; Captions	 	25
	6.12	 	Interpretation	 	25
	6.13	 	Incorporation of Prior Agreement; Amendments	 	25
	6.14	 	Authority	 	25
	6.15	 	Time of Essence	 	25
	6.16	 	Survival of Obligations	 	25
	6.17	 	Consent to Service	 	26
	6.18	 	Landlord's Authorized Agents	 	26
	6.19	 	Waiver of Jury Trial	 	26

LISTING OF EXHIBITS  

	Exhibit A	 	Legal Description of the Land
	Exhibit B	 	Drawing Showing Location of the Premises
	Exhibit C	 	Listing of Plans and Specifications for Tenant Improvements
	Exhibit D	 	Form of Memorandum of Commencement Date
	Exhibit E	 	Rules and Regulations
	Exhibit F	 	Renewal Option
	Exhibit G	 	Right Of First Refusal

ii

  

 
 

SECTION 1: DEFINITIONS    
  

	1.1
	Definitions. Each underlined term in this section shall have the meaning set forth next
to that underlined term.

	1.2
	Access Laws: The Americans With Disabilities Act of 1990 (including the Americans with Disabilities Act
Accessibility Guidelines for Building and Facilities) and all other Governmental Requirements relating to the foregoing.

	1.3
	Additional Rent: Defined in paragraph 3.4 captioned "Additional Rent".

	1.4
	Base Amount: Defined in paragraph 3.4 captioned "Additional Rent".

	1.5
	Base Rent: Base Rent shall be as follows: 

	 	 	Month 1 through Month 12;	 	$15,208.00 per month/NNN
	

 	
 	

Month 13 through Month 24;	
 	

$15,756.00 per month/NNN
	

 	
 	

Month 25 through Month 36;	
 	

$16,303.00 per month/NNN
	

 	
 	

Month 37 through Month 48;	
 	

$16,881.00 per month/NNN
	

 	
 	

Month 49 through Month 60	
 	

$17,490.00 per month/NNN

	1.6
	Brokers: Tenant was represented in this transaction by N/A. Landlord was represented in
this transaction by Trammell Crow Company, a licensed real estate broker.

	1.7
	Building: The building located on the Land at 12220—113th Avenue NE, Suite 210, Kirkland, WA
98034, commonly known as Evergreen Pharmaceutical Building and containing approximately 52,040 rentable square feet.

	1.8
	Business Day: Calendar days, except for Saturdays and Sundays and holidays when banks are closed in
Washington State.

	1.9
	Claims: An individual and collective reference to any and all claims, demands, damages, injuries,
losses, liens, liabilities, penalties, fines, lawsuits, actions, other proceedings and expenses (including attorneys' fees and expenses incurred in connection with the proceeding whether at trial or
on appeal).

	1.10
	Commencement Date:  February 1, 2001, or such other date deemed mutually acceptable to
both Landlord and Tenant.

	1.11
	Occupancy Date: Not less than 30 days prior to
Commencement Date.

	1.12
	Estimated Operating Costs Allocable to the Premises: Defined in paragraph captioned "Additional Rent".

	1.13
	Events of Default: One or more of those events or states of facts defined in the paragraph captioned
"Events of Default".

	1.14
	Governmental Agency: The United States of America, the state in which the Land is located, any county,
city, district, municipality or other governmental subdivision, court or agency or quasi-governmental agency having jurisdiction over the Land and any board, agency or authority associated with any
such governmental entity, including the fire department having jurisdiction over the Land.

	1.15
	Governmental Requirements: Any and all statutes, ordinances, codes, laws, rules, regulations, orders
and directives of any Governmental Agency as now or later amended.

	1.16
	Hazardous Substance(s): Asbestos, PCBs, petroleum or petroleum-based chemicals or substances, urea
formaldehyde or any chemical, material, element, compound, solution, mixture, substance or other matter of anykind whatsoever which is now or later defined, classified, listed, designated or regulated
as hazardous, toxic or radioactive by any Governmental Agency. 

1

 
	1.17
	Land: The land upon which the Building is located in King County, Washington State, as legally
described in Exhibit A attached to this Lease.

	1.18
	Landlord: Those named on the first page of this Lease, or its successors and assigns as provided in
paragraph captioned "Assignment by Landlord".

	1.19
	Landlord's Agents: Any and all partners, officers, agents, employees, trustees, investment advisors and
consultants of Landlord.

	1.20
	Lease Term: Commencing on the Commencement Date, and ending 60 months later.

	1.21
	Manager: Trammell Crow Company, or its replacement as specified by written notice from Landlord to
Tenant.

	1.22
	Manager's Address: 1687 114th Avenue S.E., Suite 250, Bellevue, WA 98004, which address may be changed
by written notice from Landlord to Tenant.

	1.23
	Operating Costs: Defined in paragraph captioned "Additional
Rent".

	1.24
	Operating Costs Allocable to the Premises: Defined in paragraph captioned
"Additional Rent".

	1.25
	Parking Ratio: Approximately 3 stalls per 1,000 rentable square feet of the Premises.

	1.26
	Permitted Use: Sales and Administrative business activities associated with biotechnology, so long as
such use is consistent with first-class buildings of the same or similar use as the Building and located in the metropolitan area in which the Building is located.

	1.27
	Plans and Specifications: (a) Those certain plans and specifications for the Tenant Improvements
as listed in Exhibit C and any modifications to them approved in writing by Landlord and Tenant; or (b) if Exhibit C does not include a listing of such plans and specifications,
then such plans and specifications shall be prepared by Connell Design Group a designer selected by
Tenant (the "Preparing Party") and delivered to Trammell Crow Company (Bellevue, WA) (the "Receiving Party") and approved by Landlord and Tenant
as set forth in the paragraph captioned "Plans and Specifications".

	1.28
	Prepaid Rent: $15,208.00, to be applied toward Base Rent for the first full calendar month of the Lease
Term.

	1.29
	Premises: The portion of the Building depicted on the plan attached to this Lease as Exhibit B~
containing approximately 7,300 rentable square feet.

	1.30
	Prime Rate: Defined in paragraph captioned "Default
Rate".

	1.31
	Property Taxes: (a) Any form of ad valorem real or personal property tax or assessment imposed
by any Governmental Agency on the Land, Building or any personal property owned by Landlord associated with the Building or Land; (b) any other form of tax or assessment, license fee, license
tax, tax or excise on rent or any other levy, charge, expense or imposition made or required by any Governmental Agency on any interest of Landlord in the Building or Land; (c) any fee for
services charged by any Governmental Agency for any services such as fire protection, street, sidewalk and road maintenance, refuse collection, school systems or other services  assessed against the Land or
Building provided or formerly provided to property owners and
residents within the general area of the Land; (d) any governmental impositions allocable to or measured by the area of any or all of the Building or Land or the amount of
any base rent, additional rent or other sums payable under any lease for any or all of the Land, including any tax on gross receipts or any excise tax or other charges levied by any Governmental
Agency with respect to the possession, leasing, operation, maintenance, alteration, repair, use or occupancy of any or all of the Land or Building or the rent earned by any part of or interest in the
Building or Land; (e) any impositions by any Governmental Agency on any transaction evidenced by a this lease of any
or all of the Building or Land or charge with respect to any document to which Landlord is a party creating or transferring an interest or an estate in any or all of the Building or Land; and
(f) any increase in any of the foregoing based upon construction of improvements that benefit Tenant, including on any common
areas change of ownership of any or all of the Land. Property Taxes shall not include taxes on 

2

 

Landlord's
net income or any inheritance, estate or gift taxes, or any business and occupation tax or real estate excise
tax.

	1.32
	Punch List Work: Minor items of repair, correction, adjustment or completion as such phrase is commonly
understood in the construction industry in the metropolitan area in which the Land is located.

	1.33
	Security Deposit: Tenant shall, prior to the Commencement Date, provide a letter of credit in the
amount of $20,500 in the event of Tenant's default under the terms of the Lease. The letter of credit shall be issued in a form, and by a financial institution, acceptable to Landlord.

	1.34
	Substantial Completion: The date that: (a) the Tenant Improvements have been completed
substantially in accordance with the Plans and Specifications, subject to Punchlist Work; and (b) that a certificate of occupancy has been issued for the Premises. If required by Landlord,
Tenant shall cooperate in obtaining issuance of the certificate of occupancy.

	1.35
	Tenant: The person or entity named on the first page of this Lease.

	1.36
	Tenant Alterations: Defined in paragraph captioned "Tenant
Alterations".

	1.37
	Tenant Improvement Allowance: The maximum amount to be expended by Landlord, if any, for the cost of
Tenant Improvements (including architectural, engineering, construction management, permitting and space planning fees).

	1.38
	Tenant Improvements: Those alterations or improvements to the Premises as appear and are depicted in
the Plans and Specifications.

	1.39
	Tenant's Agents: Any and all officers, contractors, subcontractors, licensees, agents, concessionaires,
subtenants, servants, employees, customers, guests, invitees or visitors of Tenant.

	1.40
	Tenant's Pro Rata Share is Fourteen and 00/100ths percent (14.00%).

	1.41
	Year: A calendar year commencing January 1 and ending December 31 during the Lease Term,
or the portion of such calendar year within the Lease Term. 

 
 

SECTION 2: PREMISES AND TERM    
  

2.1  Lease of Premises. Landlord leases the Premises to Tenant, and Tenant leases the Premises from
Landlord, upon the terms and conditions set forth in this Lease. 

2.2  Lease Term. The Lease Term shall be for the period stated in the definition of that term, unless
earlier terminated as provided in this Lease. 

2.3  Plans and Specifications. If clause (b) of the definition of Plans and Specifications is
applicable, then the Preparing Party shall deliver the plans and specifications for the Tenant Improvements to the Receiving Party. Upon receipt of the proposed plans and specifications, the Receiving
Party shall either (a) approve and return them to the Preparing Party within ten (10) Business Days after such receipt in which case such proposed plans and specifications shall be the
Plans and Specifications, or (b) if the Receiving Party disapproves of the plans and specifications, it shall provide the Preparing Party with notice of disapproval together with its specific
objections within such ten (10) Business Day period. If the Receiving Party disapproves of any portion of the proposed plans and specifications in accordance with the previous sentence, then
Landlord and Tenant shall use good faith efforts to reach mutually acceptable Plans and Specifications. If Landlord and Tenant are unable to reach mutually acceptable Plans and Specifications within
twenty (20) Business Days of the Preparing Party's receipt of the Receiving Party's notice of disapproval, then either party may terminate this Lease, without any liability to the other party,
upon five (5) Business Days' written notice. 

2.4  Commencement Date. February 1,
2001 shall establish the Commencement Date as specified in the definition of that term and the establishment of such fact upon the taking of possession.
Such 

3

 

taking of possession shall further establish that the Premises are in good and satisfactory condition when possession was so taken and the Commencement Date has occurred  subject to Landlord's obligation to repair and
maintain the Building as provided for in Section 4.1. Tenant
acknowledges that
no representations as to the condition of the Premises have been made by Landlord, unless such are expressly set forth in this Lease. In the event of any dispute as to whether Substantial Completion
has occurred, the certificate of Landlord's architect or general contractor shall be conclusive. If on the Commencement Date, Punch List Work remains to be completed, Landlord and Tenant shall agree
on such Punch List Work prior to occupancy by Tenant and Landlord will promptly complete it after the Commencement Date. In no event shall Tenant's refusal or failure to agree on the nature and extent
of Punch List Work or the existence of items of Punch List Work delay or postpone the occurrence of the Commencement Date provided that the Premises can be
reasonably used for their intended purpose. Tenant shall make no changes to the Plans and Specifications or the work reflected in the Plans and Specifications
without the consent of Landlord, which shall not be unreasonably withheld, conditioned or delayed.

2.5  Tenant's Contribution to Tenant Improvement Costs. If the cost of the Tenant
Improvements exceeds the Tenant Improvement Allowance, Tenant shall pay to Landlord such excess within ten (10) Business Days after demand by Landlord. If Tenant fails to pay to Landlord the
cost of any such excess Tenant Improvements as and when due, Landlord may elect to suspend work on the Tenant Improvements pending such timely payment, and the Commencement Date shall be deemed to
have occurred on the date that the Tenant Improvements would have achieved Substantial Completion absent such suspension of work. Upon the expiration or sooner termination of this Lease, all Tenant
Improvements and all additions or alterations to the Premises made by Tenant or performed by Landlord on Tenant's behalf, shall become the property of Landlord, subject only to Tenant's right to
remove property under the paragraph captioned "Tenant Alterations". At
Landlord's election and upon notice to Tenant, Tenant shall be required to remove all Tenant Improvements or Tenant Alterations upon the expiration or earlier termination of this Lease.
Tenant shall construct its tenant improvements in the Premises in accordance with the approved Plans and Specifications at its own cost and
expense using contractors selected by Tenant and approved by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed.

2.6  Memorandum of Commencement Date. At Landlord's election and request, Tenant shall execute a Memorandum
of Commencement Date in the form attached as Exhibit D. In no event shall Tenant record this Lease or the Memorandum of Commencement Date. 

2.7  Use and Conduct of Business. The Premises are to be used only for the Permitted Uses, and for no other
business or purpose without the prior consent of Landlord. Landlord makes no representation or warranty as to the suitability of the Premises for Tenant's intended use  except for general office use. Tenant shall, at its own cost and expense, obtain and maintain any and all licenses,
permits, and approvals necessary or appropriate for its use, occupation and operation of the Premises. Tenant's inability to obtain or maintain any such license, permit or approval necessary or
appropriate for its use, occupation or operation of the Premises shall not relieve it of its obligations under this Lease, including the obligation to pay Base Rent and Additional Rent. No act shall
be done in or about the Premises that is unlawful or that will increase the existing rate of insurance on any or all of the Land or Building. Tenant shall not commit or allow to be committed or exist:
(a) any waste upon the Premises, (b) any public or private nuisance, or (c) any act or condition which disturbs the quiet enjoyment of any
other tenant in the Building, violate any of Landlord's contracts affecting any or all of the Land or Building, create or contribute to any work stoppage, strike, picketing, labor disruption or
dispute, interfere in any way with the business of Landlord or any other tenant in the Building or with the rights or privileges of any contractors, subcontractors, licensees, agents, concessionaires,
subtenants, servants, employees, customers, guests, invitees or visitors or any other persons lawfully in and upon the Land or Building, or cause any impairment or reduction of the good will or
reputation of the Land 

4

 

or Building. Tenant shall not, without the prior consent of Landlord, use any apparatus, machinery or device in or about the Premises which will cause any substantial noise or vibration or any
increase in the normal consumption level of electric power. If any of Tenant's machines and equipment should disturb the quiet enjoyment of any other tenant in the Building, then Tenant shall provide,
at its sole cost and expense, adequate insulation or take other such action, including removing such machines and equipment, as may be necessary to eliminate the disturbance. 

2.8  Compliance with Governmental Requirements and Rules and Regulations. Tenant shall comply with all
Governmental Requirements relating to its use, occupancy and operation of the Premises and shall observe such reasonable  non-discriminatory rules and regulations as may be adopted and
published by Landlord from time to time
for the safety, care and cleanliness of the Premises and the Building, and for the preservation of good order in the Building, including the Rules and Regulations attached to this Lease as  Exhibit E. 

 
 

SECTION 3: BASE RENT, ADDITIONAL RENT AND OTHER SUMS PAYABLE UNDER LEASE    
  

3.1  Payment of Rental. Tenant agrees to pay Base Rent, Additional Rent and any other sum due under this
Lease to Landlord without demand, deduction, credit, adjustment or offset of any kind or nature, in lawful money of the United States when due under this Lease, at the offices of Manager at Manager's
Address, or to such other party or at such other place as Landlord may from time to time designate in writing. 

3.2  Base Rent. Tenant agrees to pay Base Rent to Landlord without demand, in advance on or before the first
day of each calendar month of the Lease Term. Base Rent for any partial month at the beginning or end of the Lease Term shall be prorated. On execution of this Lease, Tenant has paid to Landlord the
amount specified in the definition of Prepaid Rent for the month specified in the definition of that term. Base Rent for any partial month at the beginning of the Lease Term shall be paid by Tenant on
the Commencement Date. 

3.3  Security Deposit. As security for the full and faithful payment of all sums due under this Lease and
the full and faithful performance of every covenant and condition of this Lease to be performed by Tenant, Tenant agrees to pay to Landlord upon execution of this Lease the sum specified in the
definition of the term Security Deposit. If Tenant shall breach or default with respect to any payment obligation or other covenant or condition of this Lease, Landlord may apply all or any part of
the Security Deposit to the payment of any sum in default or any damage suffered by Landlord as a result of such breach or default, and in such event, Tenant shall, upon demand by Landlord, deposit
with Landlord the amount so applied so that Landlord shall have the full Security Deposit on hand at all times during the Lease Term. Landlord's use or application of all or any portion of the
Security Deposit shall not impair any other rights or remedies provided under this Lease or under applicable law and shall not be construed as a payment of liquidated damages. If Tenant shall have
fully complied with all of the covenants and conditions of this Lease, the Security Deposit shall be voided within ten (10) Business Days after the expiration of this Lease. Tenant may not
mortgage, assign, transfer or encumber the Security Deposit and any such act on the part of Tenant shall be without force or effect. In the event any bankruptcy, insolvency, reorganization or other
creditor-debtor proceedings shall be instituted by or against Tenant, the Security Deposit shall be deemed to be applied first to the payment of Base Rent, Additional Rent and all other sums payable
under this Lease to Landlord for all periods prior to the institution of such proceedings and the balance, if any, may be retained by Landlord and applied against Landlord's  actual damages.

5

 

3.4  Additional Rent. Definitions of certain terms used in this paragraph are set forth in subparagraph
3.4.5. Tenant agrees to pay to Landlord additional rent as computed in this paragraph (individually and collectively the "Additional Rent"): 

    3.4.1  Rental Adjustment for Estimated Operating Costs. Landlord shall
furnish Tenant a written statement of Estimated Operating Costs Allocable to the Premises for each Year and the amount payable monthly by Tenant for such Costs shall be computed as follows:
one-twelfth (1/12) of the amount, if any, by which the Estimated Operating Costs Allocable to the Premises exceeds the Base Amount shall be Additional Rent and shall be paid
monthly by Tenant for each month during such Year after the Commencement Date. If the Commencement Date occurs on a date other than the first day of the Year, the statement provided by Landlord to
Tenant and the computation of the monthly payment amount shall be determined based on a proration of the excess amount over a 360-day year. If such written statement (except the first
statement, which shall be prorated pursuant to the previous sentence) is furnished after the commencement of the Year, Tenant shall also make a retroactive lump-sum payment equal to the
amount of the monthly payment amount multiplied by the number of months during the Year after the Commencement Date for which no payment was paid. 

    3.4.2  Actual Costs. Within
180 days after the close of each Year, Landlord shall deliver to Tenant a written statement setting forth the Operating Costs Allocable to the Premises
during the preceding Year. If such costs for any Year exceed the Estimated Operating Costs Allocable to the Premises paid by Tenant to Landlord pursuant to subparagraph 3.4.1 for such Year, Tenant
shall pay the amount of such excess to Landlord within twenty (20) Business Days after receipt of such statement by Tenant. If such statement shows the Operating Costs Allocable to the Premises
to be less than the Estimated Operating Costs Allocable to the Premises paid by Tenant to Landlord pursuant to subparagraph 3.4.1, then the amount of such overpayment shall be paid by Landlord to
Tenant within twenty (20) Business Days following the date of such statement or, at Landlord's option, shall be credited toward the installment(s) of Additional Rent next
coming due from Tenant. 

    3.4.3  Determination. The determination of Operating Costs Allocable to the
Premises shall be made by Landlord acting reasonably. Any sums payable under this Lease pursuant to this paragraph shall be
Additional Rent and, in the event of nonpayment of such sums, Landlord shall have the same rights and remedies with respect to such nonpayment as it has with respect to nonpayment of the Base Rent due
under this Lease. 

    3.4.4  End of Term. If this Lease shall terminate on a day other than the
last day of a Year, the amount of any adjustment between Estimated Operating Costs Allocable to the Premises and Operating Costs Allocable to the Premises with respect to the Year in which such
termination occurs shall be prorated on the basis which the number of days from the commencement of such Year (to and including such termination date) bears to 360; and any amount payable by Landlord
to Tenant or Tenant to Landlord with respect to such adjustment shall be payable within twenty (20) Business Days after delivery of the statement of Operating Costs Allocable to the Premises
with respect to such Year. Landlord's and Tenant's obligations under this paragraph shall survive the expiration or other termination of this Lease. 

    3.4.5  Definitions. Each underlined term in this subparagraph shall have
the meaning set forth next to that underlined term: 

Base Amount: 0 

Estimated Operating Costs Allocable to the Premises: Landlord's estimate of Operating Costs allocable to the Premises for a
Year to be given by Landlord to Tenant pursuant to subparagraph 3.4.1. 

Operating Costs: All expenses paid or incurred by Landlord for maintaining, operating, owning and repairing any or all of
the Building and the personal property used in conjunction with such 

6

 

maintenance, operation, ownership and repair, including all expenses paid or incurred by Landlord for: (a) utilities, including electricity, water, gas, sewers, refuse collection, telephone
charges, cable television or other electronic or microwave signal reception, steam, heat, cooling or any other service which is now or in the future considered a utility and which are not payable
directly by tenants in the Building; (b) supplies; (C) cleaning and janitorial services (including window washing), landscaping and landscaping maintenance (including irrigating,
trimming, moving, fertilizing, seeding and replacing plants), snow removal and other services; (d) security services, if any; (e) insurance; (f) management fees;
(g) Property Taxes, tax consultant fees and expenses, and costs of appeals of any Property Taxes; (h) services of independent contractors; (i) compensation (including employment
taxes and fringe benefits) of all persons who perform duties in connection with any service, repair, maintenance, replacement or improvement or other work included in this subparagraph;
(j) license, permit and inspection fees; (k) assessments and special assessments due to deed restrictions, declarations or owners associations or other means of allocating costs of a
larger tract of which the Land is a part; (I) rental of any machinery or equipment; (m) audit fees and accounting services related to the Building, and charges for the computation of the
rents and charges payable by tenants in the Building (but only to the extent the cost of such fees and services are in addition to the cost of the management fee); (n) the cost of improvements,
repairs or replacements; (o) maintenance and service contracts; (p) legal fees and other expenses of legal or other dispute resolution proceedings  not related to tenant leases; (q)
 maintenance and repair of the roof and roof membranes, (r) costs incurred
by Landlord for compliance with Access Laws, as set forth in the paragraph entitled "Access Laws" (s) elevator service and repair, if any; and (t) any other expense or charge which in
accordance with generally accepted accounting and management principles would be considered an expense of maintaining, operating, owning or repairing the Building. Without limiting the foregoing,
Operating Costs shall include replacement of roofs and roof membranes; exterior painting; parking area resurfacing, resealing and restriping parking areas and driveways; upgrading of the HVAC systems
in the Building, and other capital improvements which are intended to reduce Operating Costs; provided that, such capital improvements, whether
installed before or after the Commencement Date, shall be amortized with market interest over their estimated useful lives as determined by Landlord and only the amortization installments and interest
attributable to the Lease Term shall be an Operating Cost under this Lease. 

    Operating
Costs shall not include any of the following: ground rent; interest and amortization of funds borrowed by Landlord for items other than capital improvements; leasing
commissions and advertising and legal or space planning expenses incurred in procuring tenants; and salaries, wages, or
other compensation paid to officers or executives of Landlord in their capacities as officers and executives. If less than one hundred percent (100%) of the net rentable area of the
Building is occupied by tenants at all times during any Year, then Operating Costs for such Year shall include all additional costs and expenses that Landlord reasonably determines would have been
incurred hod one hundred percent (100%) of the Building been occupied at all times during ouch Year by tenants. 

Operating Costs Allocable to the Premises: The product of Tenant's Pro Rata Share times Operating Costs. 

3.5  Utilities. Tenant shall contract directly and pay for all water, gas, heat, light, power, telephone,
sewer, sprinkler charges and other utilities used on or from the Premises together with any taxes, penalties, surcharges or similar charges relating to such utilities. If any such service is not
separately metered to the Premises, the cost therefor shall be an Operating Cost under this Lease. 

3.6  Holdover. If Tenant shall, without the prior consent of Landlord, hold over after the expiration or
termination of the Lease Term, Tenant shall be deemed to be occupying the Premises under a month-to-month tenancy, which tenancy may be terminated as provided by the laws of
the state in which the Premises are located. During such tenancy, Tenant agrees to pay to Landlord twice 125%
of the rate of Base Rent in effect on the expiration or termination of the Lease Term, plus all 

7

 

Additional Rent and other sums payable under this Lease, and to be bound by all of the other covenants and conditions specified in this Lease, so far as applicable. The preceding provisions shall not
be construed as consent for Tenant to hold over. 

3.7  Late Charge. If Tenant fails to make any payment of Base Rent, Additional Rent or other amount when due
under this Lease, Tenant shall also pay a late charge equal to five percent (5%) of the amount of any such payment. Landlord and Tenant agree that this charge compensates Landlord for the
administrative costs caused by the delinquency. The parties agree that Landlord's damage would be difficult to compute and the amount stated in this paragraph represents a reasonable estimate of such
damage. Assessment or payment of the late charge contemplated in this paragraph shall not excuse or cure any Event of Default or breach by Tenant under this Lease or impair any other right or remedy
provided under this Lease or under law. 

3.8  Default Rate. Any Base Rent, Additional Rent or other sum payable under this Lease which is not paid
when due shall bear interest at a rate equal to the maximum rate of  12% interest per annum permitted by applicable law (the
"Default Rate"), but the payment of such interest shall not excuse or cure any Event of Default or breach by Tenant under this Lease or impair any other
right or remedy provided under this Lease or under law. 

 
 

SECTION 4: GENERAL PROVISIONS    
  

	4.1
	Maintenance and Repair by Landlord. Subject to the paragraphs captioned "Damage
or Destruction" and "Condemnation", Landlord shall maintain the exterior,
structural public and common areas of the Building and all Building
systems in reasonably good order and condition which is comparable to their condition on the commencement of
this Lease, except for damage occasioned by the act or omission of Tenant or Tenant's Agents which shall be paid for entirely by Tenant upon
demand by Landlord, and ordinary wear and tear. In the event any or all of the Building becomes in need of maintenance or repair which Landlord is required to make under this Lease, Tenant shall
immediately give written notice to Landlord, and Landlord shall not be obligated in any way to commence such maintenance or repairs until a reasonable time elapses after Landlord's receipt of such
notice or otherwise learns of the need for such work.

4.2  Maintenance and Repair by Tenant. Except as is expressly set forth as Landlord's responsibility
pursuant to the paragraph captioned "Maintenance and Repair by Landlord," Tenant shall at Tenant's sole cost and expense keep and maintain the Premises
in good condition and repair, including interior painting, cleaning of the interior side of all exterior glass, plumbing and utility fixtures and installations, carpets and floor coverings, all
interior wall surfaces and coverings including tile and paneling, replacement of all broken windows (including without limitation any exterior windows), exterior and interior doors, roof penetrations
and membranes in connection with any Tenant installations on the roof including satellite dishes, light bulb replacement and interior preventative maintenance. If Tenant fails to maintain or repair
the Premises in accordance with this paragraph, then Landlord may, but shall not be required to, enter the Premises upon two (2) Business Days prior written notice to Tenant (or immediately
without any notice in the case of an emergency) to perform such maintenance or repair at Tenant's sole cost and expense. Tenant shall pay to Landlord the cost of such maintenance or repair within ten
(10) Business Days of written demand from Landlord. 

4.3  Common Areas/Security. The common areas of the Building shall be subject to Landlord's sole management
and control. Without limiting the generality of the immediately preceding sentence, Landlord reserves the exclusive right as it deems necessary or desirable to install, construct, remove, maintain and
operate lighting systems, facilities, improvements, equipment and signs on, in or to all parts of the common areas; change the number, size, height, layout, or locations of walks, driveways and
truckways or parking areas now or later forming a part of the Land or Building; make alterations or additions to the Building or common area; close temporarily all or any portion of the common areas
to make repairs, changes or to avoid public dedication; grant easements to which the Land will be subject, replat, subdivide, or make other changes to the Land; place, relocate and operate utility
lines 

8

 

through, over or under the Land and Building; and use or permit the use of all or any portion of the roofs of the Building. Landlord has no duty or obligation to provide any security services in, on
or around the Premises, Land or Building, and Tenant recognizes that security services, if any, provided by Landlord will be for the sole benefit of Landlord and the protection of Landlord's property
and under no circumstances shall Landlord be responsible for, and Tenant waives any rights with respect to, Landlord providing security or other protection for Tenant or Tenant's Agents or property
in, on or about the Premises, Land or Building. Landlord reserves the right to reallocate parking and driveway
locations and to build additional improvements in the common areas so long as Tenant's Parking Ratio is maintained. In exercising its rights and performing its
obligations under this Section, Landlord shall not (a) interfere with Tenant's available parking. In the event any such interference or reduction occurs then Tenant shall be entitled to a rent
abatement based on the degree of interference or reduction.

4.4  Tenant Alterations. Tenant shall not make any alterations, additions or improvements in or to the
Premises, or make changes to locks on doors, or add, disturb or in any way change any floor covering, wall covering, fixtures, plumbing or wiring (individually and collectively
"Tenant Alterations"), without first obtaining the consent of Landlord which may be withheld in Landlord's  reasonable discretion. Tenant shall
deliver to Landlord full and complete plans and specifications for any
proposed Tenant Alterations and, if consent by Landlord is given, all such work shall be performed at Tenant's expense by Landlord or by Tenant at Landlord's election. Without limiting the generality
of the foregoing, Landlord may require Tenant (if Landlord has elected to require Tenant to perform the Tenant Alterations), at Tenant's sole cost and expense, to obtain and provide Landlord with
proof of insurance coverage and a payment and performance bond, in forms, amounts and by companies acceptable to Landlord. All Tenant Alterations to the Premises, regardless of which party constructed
them, shall become the property of Landlord and shall remain upon and be surrendered with the Premises upon the expiration or earlier termination of this Lease, unless Landlord's consent to such
Tenant Alterations is conditioned upon Tenant removing the Tenant Alterations upon the expiration or earlier termination of this Lease. If Tenant fails to remove any such Tenant Alterations as
required by Landlord's consent, Landlord may do so and Tenant shall pay the entire cost thereof to Landlord within ten (10) Business Days after Tenant's receipt of Landlord's written demand
therefor. Tenant shall reimburse Landlord, upon receipt of demand therefor, for all out-of-pocket costs and expenses incurred by Landlord during its review of Tenant's plans
and specifications (regardless of whether Landlord approves Tenant's request) and Tenant's construction. Nothing contained in this paragraph or the paragraph captioned
"Tenant's Work Performance" shall be deemed a waiver of the provisions of the paragraph captioned "Mechanic's
Liens". 

4.5  Tenant's Work Performance. If Landlord elects to require Tenant to perform the Tenant
Alterations, then the Tenant Alterations shall performed by contractors employed by Tenant under one or more construction contracts, in form and content approved in advance in writing by Landlord.
Tenant's contractors, workers and suppliers shall work in harmony with and not interfere with workers or contractors of Landlord or other tenants of Landlord. If Tenant's contractors, workers or
suppliers do, in the opinion of Landlord, cause such disharmony or interference, Landlord's consent to the continuation of such work may be withdrawn upon written notice to Tenant. All Tenant
Alterations shall be (1) completed in accordance with the plans and specifications approved by Landlord; (2) completed in accordance with all Governmental Requirements;
(3) carried out promptly in a good and workmanlike manner; (4) of all new materials; and (5) free of defect in materials and workmanship. Tenant shall pay for all damage to the
Premises, Building and Land caused by Tenant or Tenant's Agents. Tenant shall indemnify, defend and hold harmless Landlord and Landlord's Agents from any Claims arising as a result of any defect in
design, material or workmanship of any Tenant Alterations. 

4.6  Surrender of Possession. Subject to Paragraphs 4.9, 4.10
and the last subparagraph of the paragraph captioned "Insurance", Tenant shall, at the expiration
or earlier termination of this Lease, 

9

 

surrender and deliver the Premises to Landlord in as good condition as when received by Tenant from Landlord or as later improved, reasonable use and wear excepted. 

4.7  Removal of Property. Upon expiration or earlier termination of this Lease, Tenant may remove its trade
fixtures, office supplies and moveable office furniture and equipment not attached to the Premises; provided that, (a) such removal is completed
prior to the expiration or earlier termination of this Lease; (b) Tenant is not in default of any covenant or condition of this Lease at the time of such removal; and (c) Tenant
immediately repairs all damage caused by or resulting from such removal. All other property in the Premises and any Tenant Alterations (including, wall-to-wall carpeting,
paneling, wall covering or lighting fixtures and apparatus) or any other article permanently affixed to the
floor, walls or ceiling of the Premises, shall become the property of Landlord and shall remain upon and be surrendered with the Premises unless removal of any such item was a condition of Landlord's
consent to any proposed Tenant Alteration. Tenant waives all rights to any payment or compensation for such Tenant Alterations. If Tenant shall fail to remove any of its property of any nature from
the Premises, Building or Land at the expiration or earlier termination of this Lease or when Landlord has the right of re-entry, Landlord may, at its option, remove and store such
property without liability for loss of or damage to such property, such storage to be for the account and at the expense of Tenant. If Tenant fails to pay the cost of storing any such property, after
it has been stored for a period of twenty (20) Business Days or more, Landlord may, at its option, after it has been stored for a period of twenty (20) Business Days or more, sell or
permit to be sold, any or all such property at public or private sale (and Landlord may become a purchaser at such sale), in such manner and at such times and places as Landlord in its sole discretion
may deem proper, without notice to Tenant, and Landlord shall apply the proceeds of such sale: first, to the cost and expense of such sale, including
reasonable attorney's fees actually incurred; second, to the payment of the costs or charges for storing any such property;  third, to the payment of any
other sums of money which may then be or later become due Landlord from Tenant under this Lease; and,  fourth, the balance, if any, to Tenant. 

4.8  Access. Tenant shall permit Landlord and Landlord's Agents to enter into the Premises at any time on at
least two (2) Business Days' notice (except in case of emergency), for the purpose of inspecting the same or for the purpose of repairing, altering or improving the Premises or the Building.
Nothing contained in this paragraph shall be deemed to impose any obligation upon Landlord not expressly stated elsewhere in this Lease. When reasonably necessary, Landlord may temporarily close
Building or Land entrances, Building doors or other facilities, without liability to Tenant by reason of such closure and without such action by Landlord being construed as an eviction of Tenant or as
relieving Tenant from the duty of observing or performing any of the provisions of this Lease, except that rent shall abate during any period in excess of
24 hours if Tenant's access to or use of the Premises is unreasonably curtailed. When Landlord enters the Premises it shall comply with Tenant's reasonable security
requirements. Landlord shall have the right to enter the Premises for the purpose of showing the Premises to prospective tenants within the period of
one-hundred twenty (1 20) Business Days prior
to the expiration or sooner termination of this Lease and to erect on the Premises a suitable sign indicating the Premises are available. Tenant shall give written notice to Landlord at least twenty
(20) Business Days prior to vacating the Premises and shall arrange to meet with Landlord for a joint inspection of the Premises prior to vacating. In the event of Tenant's failure to give such
notice or arrange such joint inspection, Landlord's inspection at or after Tenant's vacating the Premises shall be conclusively deemed correct for purposes of determining Tenant's responsibility for
repairs and restoration. Landlord shall not be permitted to enter the Premises except when accompanied by an employee of Tenant and Tenant shall make an employee
available to accompany Landlord on two (2) business days notice. Tenant shall have the right to install and maintain its own security systems and may change the locks on the Premises and shall
not be required to provide Landlord with a passkey but shall arrange for a key to be left in a lockbox outside the Premises for use by the fire department or other emergency
personnel. Landlord shall not be liable for the consequences of admitting by passkey, or refusing to admit to the
Premises, Tenant or any of Tenant's 

10

 

Agents, or other persons claiming the right of admittance. Tenant shall have access to the Premises 24 hours a day, seven days a week and Landlord shall
provide all building services (including water, HVAC and electricity) at all times on request. Tenant shall reimburse Landlord for its actual costs of providing such services on weekends and between
the hours of 6 p.m. and 7 a.m. HVAC service shall be provided to the Premises Monday through Friday from 7 a.m. to 6 p.m. as part of the Operating Costs reimbursable under
3.4.

4.9  Damage or Destruction. 

    4.9.1  If
the Premises are damaged by fire, earthquake or other casualty, Tenant shall give immediate written notice thereof to Landlord. If Landlord
estimates that the damage can be repaired within one hundred-twenty (120) Business Days after Landlord is notified by Tenant of such damage and if there are sufficient insurance proceeds
available to repair such damage, then Landlord shall proceed with reasonable diligence to restore the Premises to substantially the condition which existed prior to the damage and this Lease shall not
terminate. If, in Landlord's estimation, the damage cannot be repaired within such 120 Business Day period or if there are insufficient insurance proceeds available to repair such damage, Landlord may
elect in its absolute discretion to either: (a) terminate this Lease or (b) restore the Premises to "substantially the condition which existed prior to the damage and this Lease will
continue. If Landlord elects the option set forth in clause (b), then (1) the Lease Term shall be extended for the time required to complete such restoration, (2) Tenant shall pay
to Landlord, upon demand, Tenant's Pro Rata Share of any applicable deductible amount specified under Landlord's insurance and (3) Landlord shall not be required to repair or restore fixtures,
improvements or other property of Tenant. Base Rent, Additional Rent and any other sum due under this Lease during any reconstruction period shall Ret be abated. Tenant agrees to look to the provider
of Tenant's insurance for coverage for the loss of Tenant's use of the Premises and any other related losses or damages incurred by Tenant during any reconstruction period. 

    4.9.2  If
the Building is damaged by fire, earthquake or other casualty and more than fifty percent (50%) of the Building is rendered untenantable,
without regard to whether the Premises are affected by such damage, Landlord may in its absolute discretion and without limiting any other options available to Landlord under this Lease or otherwise,
elect to terminate this Lease by notice in writing to Tenant within forty (40) thirty
(30) Business Days after the occurrence of such damage. Such notice shall be effective twenty (20) Business Days after receipt by Tenant
unless a later date is set forth in Landlord's notice. 

    4.9.3  Notwithstanding
anything contained in this Lease to the contrary, if there is damage to the Premises, or Building and the holder of any
indebtedness secured by a mortgage or deed of trust covering any such property requires that the insurance proceeds be applied to such indebtedness, then Landlord shall have the right to terminate
this Lease by delivering written notice of termination to Tenant within fifteen (15) Business Days after such requirement is made by such holder. In the
event of any damage or casualty which (a) renders the Premises unsuitable for use by Tenant in Tenant's reasonable discretion or (b) occurs during the final two (2) years of the
Lease Term, Tenant may elect to terminate this Lease by written notice to Landlord.

4.10  Condemnation. If all of the Premises, or such portions of the Building as may be required for the
Tenant's reasonable use of the Premises, are taken by eminent domain or by conveyance in lieu thereof, this Lease shall automatically terminate as of the date the physical taking occurs, and all Base
Rent, Additional Rent and other sums payable under this Lease shall be paid to that date. In case of taking of a part of the Premises or a portion of the Building not required for the Tenant's
reasonable use of the Premises, then this Lease shall continue in full force and effect and the Base Rent shall be equitably reduced based on the proportion by which the floor area of the Premises is
reduced, such reduction in Base Rent to be effective as of the date the physical taking occurs. Additional Rent and all other sums payable under this Lease shall not be abated but Tenant's Pro Rata
Share may be redetermined as equitable under the circumstances. Landlord reserves all rights to damages or awards 

11

 

for any taking by eminent domain relating to the Premises, Building, Land and the unexpired term of this Lease. Tenant assigns to Landlord any right Tenant may have to such damages or award and Tenant
shall make no claim against Landlord for damages for termination of its leasehold interest or interference with Tenant's business. Tenant shall have the right, however, to claim and recover from the
condemning authority compensation for any loss to which Tenant may be entitled for Tenant's moving expenses or other relocation costs; provided that,
such expenses or costs may be claimed only if they are awarded separately in the eminent domain proceedings and not as a part of the damages recoverable by Landlord. 

4.11  Parking. Tenant shall have the nonexclusive privilege to use parking spaces on the Land in common with
other tenants of Landlord, but only in areas reasonably designated by Landlord. Tenant's parking
privileges shall be subject to the rules and regulations relating to parking adopted by Landlord from time to time. Landlord shall have the right to grant designated, reserved parking stalls to  Tenant
and other tenants in the Building on a
non-discriminatory basis. In no event shall the number of parking stalls used by Tenant and Tenant's Agents exceed the number of stalls allocated to
Tenant in the definition of the Parking Ratio. Landlord shall have no obligation whatsoever to monitor or police the use of the parking or other common areas. 

4.12  Indemnification. Tenant shall indemnify, defend and hold harmless Landlord and Landlord's Agents from
and against any and all Claims to the extent arising in whole or in part
out of (a) the possession, use or occupancy of the Premises or the business conducted in the Premises, (b) any act, omission or negligence of Tenant or Tenant's
Agents, or (C) any breach or default under this Lease by Tenant. Neither Landlord nor Landlord's Agents shall, to the extent permitted by law, have any liability to Tenant, or to Tenant's
Agents, for any Claims arising out of any cause whatsoever, including repair to any portion of the Premises; interruption in the use of the Premises or any equipment therein; any accident or damage
resulting from any use or operation by Landlord, Tenant or any person or entity of heating, cooling, electrical, sewerage or plumbing equipment or apparatus; termination of this Lease by reason of
damage to the Premises or Building; fire, robbery, theft, vandalism, mysterious disappearance or any other casualty; actions of any other tenant of the Building or of any other person or entity;
inability to furnish any service required of Landlord as specified in this Lease; or leakage in any part of the Premises or the Building from rain, ice or snow, or from drains, pipes or plumbing
fixtures in the Premises or the Building; except for Claims arising solely out of the gross negligence or willful
misconduct of Landlord or Landlord's breach of this Lease. in failing to repair or
maintain—the Building as required by this Lease after notice by Tenant as required by the paragraph captioned "Maintenance
and Repair by Landlord"; provided that, in no event shall Landlord be responsible for any interruption to Tenant's business or for any
indirect or consequential losses suffered by Tenant or Tenant's Agents. The obligations of this paragraph shall be subject to the paragraph entitled "Waiver
of Subrogation". Landlord shall indemnify, defend and hold harmless Tenant and Tenant's Agent's from and against any and all Claims to the
extent arising out of the act, omission, negligence or Landlord's breach of or default under this Lease.

4.13  Tenant Insurance. 

    4.13.1  Tenant
shall, throughout the Lease Term, at its own expense, keep and maintain in full force and effect: 

    (a) A
policy of comprehensive general liability insurance, including a contractual liability endorsement covering Tenant's obligations under the paragraph captioned
"Indemnification", insuring against claims of bodily injury and death or property damage or loss with a combined single limit at the Commencement Date
of this Lease of not less than Two Million Dollars ($2,000,000.00), which limit shall be reasonably increased during the Lease Term at Landlord's request to reflect both increases in liability
exposure arising from inflation as well as from changing use of the Premises or changing legal
liability standards, which policy shall be payable on an "occurrence" rather than a "claims made" basis, and which policy names Landlord and Manager 

12

 

and, at Landlord's request Landlord's mortgage lender(s) or investment advisors, as additional insureds; 

    (b) A
policy of extended property insurance (what is commonly called "all risk") covering Tenant's Improvements and Tenant's Alterations, furniture, fixtures,
equipment, inventory, and other personal property located on the Premises for one hundred percent (100%) of the current replacement value of such property; and 

    (c) Business
interruption insurance in an amount sufficient to cover costs, damages, lost income, expenses, Base Rent, Additional Rent and all other sums payable under
this Lease, should any or all of the Premises not be usable for a period of up to six (6) months. 

    4.13.2  All
insurance policies required under this paragraph shall be with companies reasonably approved by Landlord and each policy shall provide that
it is not subject to cancellation or reduction in coverage except after thirty (30) days' written notice to Landlord. Tenant shall deliver to Landlord and, at Landlord's request Landlord's
mortgage lender(s), prior to the Commencement Date and from time to time thereafter, certificates evidencing the existence and amounts of all such policies. 

    4.13.3  If
Tenant fails to acquire or maintain any insurance or provide any certificate required by this paragraph, Landlord may, but shall not be
required to, obtain such insurance or certificates and the costs associated with obtaining such insurance or certificates shall be payable by Tenant to Landlord on demand. 

4.14  Landlord's Insurance. Landlord shall, throughout the Lease Term, keep and maintain in full force and
effect: 

    (a)   A
policy of commercial general liability insurance, insuring against claims of bodily injury and death or property damage or loss with a combined
single limit at the Commencement Date of not less than Five Million Dollars ($5,000,000.00), which policy shall be payable on an "occurrence" rather than a "claims made" basis; and 

    (b)   A
policy of extended property insurance (what is commonly called "all risk") covering the Building and Landlord's personal property, if any,
located on the Property in the amount of one hundred percent (100%) of the current replacement value of such property. 

    Landlord
may, but shall not be required to, maintain property insurance coverage for earthquakes and floods in such amounts as Landlord deems appropriate. All deductibles under the
policies maintained by Landlord are Operating Costs. Such policies may be "blanket" policies which cover other properties owned by Landlord. 

4.15  Waiver of Subrogation. Notwithstanding anything in this Lease to the contrary, Landlord and Tenant
hereby each waive and release the other from any and all Claims or any loss or damage that may occur to the Land, Building, Premises, or personal property located therein, by reason of fire or other
casualty regardless of cause or origin, including the negligence or misconduct of Landlord, Tenant, Landlord's Agents or Tenant's Agents, but only to the extent of the insurance proceeds paid to such
releaser under its policies of insurance or that would have been paid to such releasor if it fails to maintain its policies of insurance. Each party to this Lease shall promptly give to its insurance
company written notice of the mutual waivers contained in this subparagraph, and shall cause its insurance policies to be properly endorsed, if necessary, to prevent the invalidation of any insurance
coverages by reason of the mutual waivers contained in this subparagraph. 

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4.16  Assignment and Subletting by Tenant.

    4.16.1  Tenant
shall not have the right to assign, transfer, mortgage or encumber this Lease in whole or in part, nor sublet the whole or any part of
the Premises, nor allow the occupancy of all or any part of the Premises by another, without first obtaining Landlord's consent which shall not be unreasonably
withheld, conditioned or delayed. Notwithstanding any permitted assignment or subletting, Tenant shall at all times remain directly, primarily and fully
responsible and liable for the payment of all sums payable under this Lease and for compliance with all of its other obligations as tenant under this Lease. Upon the occurrence of an Event of Default,
if the Premises or any part of the Premises are then subject to an assignment or subletting, Landlord, in addition to any other remedies provided in this Lease or by law, may at its option collect
directly from such assignee or subtenant all rents becoming due to Tenant under such assignment or sublease and apply such rents against any sums due to Landlord from Tenant under this Lease, and no
such collection shall be construed to constitute a novation or release of Tenant from the further performance of Tenant's obligations under this Lease. Tenant makes an absolute assignment to Landlord
of such assignments and subleases and any rent, security deposits and other sums payable under such assignments and subleases as collateral to secure the performance of the obligations of Tenant under
this Lease, Landlord, at its sole discretion, reserves the right to recapture the Premises in lieu of approving a sublease except that Landlord shall not have the
right to recapture the Premises if the sublease is for less than all of the remaining term or for less than all of the space in the Premises and, if Landlord does recapture the Premises, than Tenant
shall be fully and finally relieved of all obligations arising thereafter under this lease.

    4.16.2  In
the event Tenant desires to assign this Lease or to sublet all or any portion of the Premises, Tenant shall give written notice of such
desire to Landlord setting forth the name of the proposed subtenant or assignee, the proposed term, the nature of the proposed subtenant's or assignee's business to be conducted on the Premises, the
rental rate, and any other particulars of the proposed subletting or assignment that Landlord may reasonably request. Without limiting the preceding sentence, Tenant shall also provide Landlord with:
(a) such financial information as Landlord may reasonably request concerning the proposed subtenant or assignee, including recent financial statements certified as accurate
and complete by a certified public accountant and by the president, managing partner or other appropriate officer of the proposed subtenant or assignee; (b) proof
satisfactory to Landlord that the proposed subtenant or assignee will immediately occupy and thereafter use the entire Premises (or any sublet portion of the Premises) for the remainder of the Lease
Term (or for the entire term of the sublease, if shorter) in compliance with the terms of this Lease; and (c) a copy of the proposed sublease or assignment or letter of intent. At the same time
that Tenant provides Landlord with notice of its desire to assign or sublease, Tenant shall pay to Landlord the sum of $750  $500 as Landlord's fee for processing such proposed
assignment and sublease, including attorneys' fees incurred by Landlord
with respect to such processing. Receipt of such fee shall not obligate Landlord to approve the proposed assignment or sublease. 

    4.16.3  In
determining whether to grant or withhold consent to a proposed assignment or sublease, Landlord may consider, and weigh, any commercial
factor it reasonably deems relevant. Without limiting what may be construed as a factor considered by Landlord in good
faith, Tenant agrees that any one or more of the following will be proper grounds for Landlord's disapproval of a proposed assignment or sublease: 

    (a) intentionally
deleted; 

    (b) The
proposed assignee or subtenant does not, in Landlord's good faith judgment, have financial worth or creditworthiness equal to or greater than
that of Tenant as of the execution date of this Lease or sufficient financial worth to insure the full and timely performance under this Lease; 

    (c) Landlord
has received insufficient evidence of the financial worth or creditworthiness of the proposed assignee or subtenant to make the determination set forth in
clause (b); 

14

 

    (d) The proposed assignee or subtenant has a demonstrable reputation for disputes in
contractual relations, failure to observe and perform its contractual obligations in a timely and complete manner or for negative business relations in the business community for or otherwise as a
tenant of property; 

    (e) Landlord
has received from any prior lessor of the proposed assignee or subtenant a negative  written report concerning such prior lessor's experience with the proposed assignee or subtenant; 

    (f)  Landlord
has had prior negative leasing experience with the proposed assignee or subtenant; 

    (g) The
use of the Premises by the proposed assignee or subtenant will not be identical with the Permitted Uses;
permitted under current land use designation for the Building.

    (h) In
Landlord's reasonable judgment, the proposed assignee or subtenant is engaged in a
business, or the Premises or any part of the Premises will be used in a manner, that is not in keeping with the then standards of the Building, or that is not compatible with the businesses of other
tenants in the Building, or that is inappropriate for the Building, or that will violate any negative covenant as to use contained in any other lease of space in the Building; 

    (i)  The
use of the Premises by the proposed assignee or subtenant will violate any Governmental Requirement or create a violation of Access Laws; 

    (j)  Tenant
is in default of any obligation of Tenant under this Lease, or Tenant has defaulted under this Lease on three (3) or more occasions during the
twenty-four (24) months preceding the date that Tenant shall request such consent; 

    (k) Landlord
does not approve of any of the tenant improvements required for the proposed assignee or subtenant; or 

    (l)  Landlord
has had contact with the proposed assignee or subtenant, in the six (6) months preceding Tenant's request, regarding the leasing of space by such
proposed assignee or subtenant in the Building or any other buildings owned by Landlord in the metropolitan area in which the Land is located. 

    4.16.4  Within
fifteen (15) Business Days after Landlord's receipt of all required information to be supplied by Tenant pursuant to this
paragraph, Landlord shall notify Tenant of Landlord's approval or disapproval of any proposed assignment or subletting, or intention to recapture the Premises. Landlord shall have no obligation to
respond unless and until all required information has been submitted. In the event Landlord approves of any proposed assignment or subletting, Tenant and the proposed assignee or sublessee shall
execute and deliver to Landlord an assignment (or subletting) and assumption agreement in form and content satisfactory to Landlord. 

    4.16.5  Any
transfer, assignment or hypothecation of any of the stock or interest in, or the assets of, Tenant which is either: (a) greater than
fifty percent (50%) of such stock, interest or assets or (b) intended as a subterfuge denying Landlord the benefits of this paragraph, shall be deemed to be an assignment within the meaning and
provisions of this paragraph and shall be subject to the provisions of this paragraph. 

    4.16.6  If
Landlord consents to any assignment or sublease and Tenant receives rent or any other consideration, either initially or over the term of the
assignment or sublease, in excess of the Base Rent and Additional Rent (or, in the case of a sublease of a portion of the Premises, in excess of the Base Rent paid by Tenant on a square footage basis
under this Lease), Tenant shall pay to Landlord fifty percent (50%) of such excess; provided that, prior to splitting such excess, Tenant shall be entitled to recover one hundred percent (100%) of all
costs incurred by Tenant in connection with such assignment or subleasing (including all leasing commissions paid to unrelated parties). 

15

 

4.16  Notwithstanding the foregoing, Tenant may assign or transfer this Lease or sublet the Premises, without
Landlord's prior written consent, to: (i) an affiliate, parent or wholly-owned subsidiary, of Tenant; (ii) a successor corporation related to Tenant by merger, consolidation, or
reorganization, (iii) any entity that is controlled by, controls or is under common control with Tenant, or (iv) any successor in interest of all or substantially all of the assets,
stock or business of Tenant. "Control" for purposes of this paragraph shall mean ownership of a majority voting interest in any such entity or the possession, directly or indirectly of the power to
direct or cause-the direction of the day-to-day management of the controlled entity. In addition, notwithstanding any other provision of this Lease, a public
offering, sale or transfer of equity in the tenant entity, whether characterized as common or preferred stock or any other ownership interest conducted in accordance with the Securities Act of 1933,
as amended, shall not be deemed an assignment for the purposes of this Section.

4.17  Assignment by Landlord. Landlord shall have the right to transfer and assign, in whole or in part, its
rights and obligations under this Lease and in any and all of the Land or Building. If Landlord sells or transfers any or all of the Building, including the Premises, Landlord and Landlord's Agents
shall, upon consummation of such sale or transfer, be released automatically from any liability relating to obligations or covenants under this Lease to be performed or observed after the date of such
transfer, and in such event, Tenant agrees to look solely to Landlord's successor-in-interest with respect to such liability; provided
that, as to the Security Deposit and Prepaid Rent, Landlord shall not be released from liability therefor unless Landlord has delivered (by direct transfer or credit against
the purchase price) the Security Deposit or Prepaid Rent to its successor-in-interest. 

4.18  Estoppel Certificates. Tenant shall, from time to time, upon the written request of Landlord, execute,
acknowledge and deliver to Landlord or its designee a written statement stating: (a) the date this Lease was executed and the date it expires; (b) the date Tenant entered into occupancy
of the Premises; (c) the amount of monthly Base Rent and Additional Rent and the date to which such Base Rent and Additional Rent have been paid; and (d) certifying that (1) this
Lease is in full force and effect and has not been assigned, modified, supplemented or amended in any way (or specifying the date of the agreement so affecting this Lease);
(2) to the best of Tenant's knowledge, Landlord is not in breach of this Lease (or, if so, a description of each such breach) and that no event,
omission or condition has occurred which would result, with the giving of notice or the passage of time, in a breach of this Lease by Landlord; (3) this Lease represents the entire agreement
between the parties with respect to the Premises; (4) all required contributions by Landlord to Tenant on account of Tenant Improvements have been received;
(5) to the best of Tenant's knowledge, on the date of execution, there exist no defenses or offsets which the Tenant has against the enforcement
of this Lease by the Landlord; (6) no Base Rent, Additional Rent or other sums payable under this Lease have been paid in advance except for Base Rent and Additional Rent for the then current
month; (7) no security has been deposited with Landlord (or, if so, the amount of such security). It is intended that any such statement delivered pursuant to this paragraph may be relied upon
by a prospective purchaser or mortgagee of Landlord's interest or an assignee of any such mortgagee, and (8) such other information as may be reasonably
requested by Landlord. If Tenant fails to respond with ten (10) fifteen (15) Business Days of its receipt
of a written request by Landlord as provided in this paragraph, Tenant shall be deemed to have admitted the accuracy of any information supplied by Landlord to a prospective purchaser, mortgagee or
assignee on the written instrument submitted to Tenant for signature.

4.19  Modification for Lender. If, in connection
with obtaining construction, interim or permanent financing for the Building or Land, Landlord's lender, if any, shall request reasonable modifications to this Lease as a condition to such financing,
Tenant will not unreasonably withhold or delay its consent to such modifications; provided
that, such modifications do not increase the obligations of Tenant under this Lease or materially adversely affect Tenant's rights under
this Lease. 

16

 

4.20  Hazardous Substances.

Landlord and Tenant each agrees that neither
Tenant, any of Tenant's Agents nor any other person will store, place, generate, manufacture, refine, handle, or locate on, in, under or around the Land or Building any Hazardous Substance, except for
storage, handling and use of reasonable quantities and types of cleaning fluids and office supplies in the Premises in the ordinary course and the prudent conduct of Tenant's business in the Premises,  provided
that, (a) the storage, handling and use of such permitted Hazardous Substances must at all times conform to all Governmental
Requirements and to applicable fire, safety and insurance requirements; (b) the types and quantities of permitted Hazardous Substances which are stored in the Premises must be reasonable and
appropriate to the nature and size of Tenant's operation in the Premises and reasonable and appropriate for a first-class building of the same or similar use and in the same market areas as the
Building; (c) no Hazardous Substance shall be spilled or disposed of on, in, under or around the Land or Building or otherwise discharged from the Premises or any area adjacent to the Land or
Building; and (d) in no event will Tenant be permitted to store, handle or use on, in, under or around the Premises any Hazardous Substance which will increase the rate of fire or extended
coverage insurance on the Land or Building, unless: (1) such Hazardous Substance and the expected rate increase have been specifically disclosed in writing to Landlord; (2) Tenant has
agreed in writing to pay any rate increase related to each such Hazardous Substance; and (3) Landlord has approved in writing each such Hazardous Substance, which approval shall be subject to
Landlord's discretion. 

    4.20.1  Tenant
and Landlord shall each indemnify, defend and hold harmless
Landlord and Landlord's the other party and its Agents from and against any and all Claims arising out of any breach of any
provision of this paragraph, which expenses shall also include laboratory testing fees, personal injury claims, clean-up costs and environmental consultants' fees. Tenant agrees that
Landlord may be irreparably harmed by Tenant's breach of this paragraph and that a specific performance action may appropriately be brought by Landlord; provided
that, Landlord's election to bring or not bring any such
specific performance action shall in no way limit, waive, impair or hinder Landlord's other remedies against Tenant. 

    4.20.2  As
of the execution date of this Lease, Tenant represents and warrants to Landlord that, except as otherwise disclosed by Tenant to Landlord,
Tenant has no intent to bring any Hazardous Substances on, in or under the Premises except for the type and quantities authorized n the first paragraph of the section entitled
"Hazardous Substances." 

    4.20.4  Landlord represents and warrants to Tenant that to the best of its knowledge
after due investigation, there are no Hazardous Substances located in, on or under the Land or within the Premises and that no other user or occupant of the Land or Building is permitted to store,
place, generate, manufacture, refine, handle or locate in on or under the Land or Building any Hazardous Substances except in accordance with the restrictions comparable to those forth in
Section 4.20.1.

4.21  Access Laws. 

    4.21.1  Tenant
agrees to notify Landlord immediately if Tenant receives notification or otherwise becomes aware of: (1) any condition or
situation on, in, under or around the Land or Building which may constitute a violation of any Access Laws or (2) any threatened or actual lien, action or notice that the Land or Building is
not in compliance with any Access Laws. If Tenant is responsible for such condition, situation, lien, action or notice under this paragraph, Tenant's notice to Landlord shall include a statement as
the actions Tenant proposes to take in response to such condition, situation, lien, action or notice. Landlord to the best of its knowledge represents and
warrants that the Building and the Land currently comply with all Access Laws and Landlord shall be solely responsible for ensuring such compliance as of the Commencement
Date.

17

 

    4.21.2  Tenant shall not alter or permit any assignee or subtenant or any other person to alter the Premises in any manner which would violate any
Access Laws or increase Landlord's responsibilities for compliance with Access Laws, without the prior approval of the Landlord. In connection with any such approval, Landlord may
require a certificate of compliance with Access Laws from an architect, engineer or other person acceptable to Landlord. Tenant agrees to pay the reasonable fees incurred by such architect, engineer
or other third party in connection with the issuance of such certificate of compliance. Landlord's consent to any proposed Tenant Alteration shall (a) not relieve Tenant of
its obligations or indemnities contained in this paragraph or this Lease or (b) be construed as a warranty that such proposed alternation complies with any Access Law. 

    4.21.3  Tenant
shall be solely responsible for all costs and expenses relating to or incurred in connection with: (a) failure of  any improvements installed by Tenant in the Premises to comply with the
Access Laws; and (b) bringing the Building
and the common areas of the Building into compliance with Access Laws, if and to the extent such noncompliance arises out of or relates to: (1) Tenant's use of the Premises, including the
hiring of employees; (2) any Tenant Alterations to the Premises; or (3) any Tenant Improvements constructed in the Premises at the request of Tenant, regardless of whether such
improvements are constructed prior to or after the Commencement Date. 

    4.21.4  Landlord
shall be responsible for all costs and expenses relating to or incurred in connection with bringing the common areas of the Building
into compliance with Access Laws, unless such costs and expenses are Tenant's responsibility as provided in the preceding subparagraph. Any cost or expense paid or incurred by Landlord to bring the
Premises or common areas of the Building into compliance with Access Laws which is not Tenant's responsibility under the preceding subparagraphs shall be amortized over the useful economic life of the
improvements (not to exceed ten (10) years) using an amortization rate of twelve percent (12%) per annum, and shall be an Operating Cost for purposes of this
Lease, provided, however, that costs of complying with the current requirements of Access Laws may not be passed through to
Tenant. 

    4.21.5  Landlord and Tenant  each agrees to indemnify, defend and hold harmless Landlord and Landlord's  the other party
and its Agents from and against any and all Claims arising out of or relating to any failure of
Tenant or Tenant's the indemnifying party or its Agents to comply with
Tenant's its obligations under this paragraph. 

    4.21.6  The
provisions of this paragraph shall supersede any other provisions in this Lease regarding Access Laws, to the extent inconsistent with the
provisions of any other paragraphs. 

4.22  Quiet Enjoyment. Landlord covenants that Tenant, upon paying Base Rent, Additional Rent and all other
sums payable under this Lease and performing all covenants and conditions required of Tenant under this Lease shall and may peacefully have, hold and enjoy the Premises without hindrance or
molestation by Landlord. 

4.23  Signs. Subject to compliance with all Governmental Requirements, Tenant shall have the right to
install a signs on the Building exterior  and in the Building lobby as described in Exhibit F attached
to this
Lease. If Exhibit F does-net describe any signs, then none shall be allowed. The exact size, appearance and location of
such signs shall be subject to Landlord's prior written approval and shall be consistent with Landlord's existing sign criteria then in existence for the Building. Any and all costs in connection with
the permitting, fabrication, installation, maintenance and removal of Tenant's sign
(including the cost of removal of the sign and repair to the Building caused by such removal) shall be borne by Tenant. Tenant agrees to maintain any such sign, awning, canopy, decoration, lettering,
advertising matter or other thing as may be approved, in good condition at all times. Tenant shall not inscribe an inscription, or post, place, or in any manner display any sign, notice, picture,
placard or poster, or any advertising matter whatsoever, anywhere in or about the Land or Building at places visible (either directly or indirectly as an outline or shadow on a glass pane) from
anywhere outside the Premises without first obtaining Landlord's consent unless permitted in Exhibit-F. Any such consent by 

18

 

Landlord shall be upon the understanding and condition that Tenant shall remove the same at the expiration or sooner termination of this Lease. 

4.24  Subordination. Tenant subordinates this Lease and all rights of Tenant under this Lease to any
mortgage, deed of trust, ground lease or vendor's lien, or similar instrument which may from time to time be placed upon the Premises (and all renewals, modifications, replacements and extensions of
such encumbrances), and each such mortgage, deed of trust, ground lease or lien or other instrument shall be superior to and prior to this Lease; provided that, Landlord provides Tenant with a
commercially reasonable nondisturbance agreement on the standard form of the applicable executed by
the lender or ground lessor. Notwithstanding the foregoing, the holder or beneficiary of such mortgage, deed of trust, ground lease, vendor's lien or similar
instrument shall have the right to subordinate or cause to be subordinated any such mortgage, deed of trust, ground lease, vendor's lien or similar instrument to this Lease. Tenant further covenants
and agrees that if the lender or ground lessor acquires the Premises as a purchaser at any foreclosure sale or otherwise, and assumes and performs Landlord's
obligations under this Lease, Tenant shall recognize and attorn to such party as landlord under this Lease, and shall make all payments required hereunder to
such new landlord without deduction or set-off and, upon the request of such purchaser or other successor, execute, deliver and acknowledge documents confirming such attornment. Tenant
waives the provisions of any law or regulation, now or hereafter in effect, which may give or purport to give Tenant any right to terminate or otherwise adversely affect this Lease and the obligations
of Tenant hereunder in the event that any such foreclosure or termination or other proceeding is prosecuted or completed. 

4.25  Workers Compensation Immunity. If and to the extent that Tenant  or Landlord is obligated to indemnify, defend or hold harmless Landlord or
Landlord's the other's Agents from any Claims arising from its use of the Premises or any act or
failure to act by Tenant or Tenant's Agents or otherwise, Tenant expressly waives, to and in favor of Landlord and Landlord's Agents, its statutory workers compensation act employers immunity relative
to any injury to an employee or employees of Tenant. 

4.26  Brokers. Each party to this Lease shall indemnify, defend and hold harmless the other party from and
against any and all Claims asserted against such other party by any real estate broker, finder or intermediary relating to any act of the indemnifying party in connection with this Lease. 

4.27  Exculpation and Limitation of Liability. Landlord has executed this Lease by its
trustee signing solely in a representative capacity. Notwithstanding anything contained in this Lease to the contrary, Tenant confirms that the covenants of Landlord are made and intended, not as
personal covenants of the trustee, or for the purpose of binding the trustee personally, but solely in the exercise of the representative powers conferred upon the trustee by its
principal. Liability with respect to the entry and performance of this Lease by or on behalf of Landlord, however it may arise, shall be asserted and enforced only against the
Landlord's insurance policies, and its estate and interest in the Building and the
Land and the rents, profits and proceeds thereof and Landlord shall have no personal liability in the event of any claim against Landlord arising out of or in
connection with this Lease, the relationship of Landlord and Tenant or Tenant's use of the Premises. Further, in no event whatsoever shall any Landlord's Agent have any liability or responsibility
whatsoever arising out of or in connection with this Lease, the relationship of Landlord and Tenant or Tenant's use of the Premises. Any and all personal liability, if any, beyond that which may be
asserted under this paragraph, is expressly waived and released by Tenant and by all persons claiming by, through or under Tenant. 

4.28  Erisa. Intentionally deleted. 

4.29  Mechanic's Liens and Tenant's Personal Property Taxes. 

    4.29.1  Tenant
shall have no authority, express or implied, to create or place any lien or encumbrance of any kind or nature whatsoever upon, or in any
manner to bind, the interest of Landlord or Tenant in the Premises or to charge the rentals payable under this Lease for any Claims in 

19

 

favor of any person dealing with Tenant, including those who may furnish materials or perform labor for any construction or repairs. Tenant shall pay or cause to be paid all sums legally due and
payable by it on account of any labor performed or materials furnished in connection with any work performed on the Premises on which any lien is or can be validly and legally asserted against its
leasehold interest in the Premises and Tenant shall indemnify, defend and hold harmless Landlord from any and all Claims arising out of any such asserted Claims. Tenant agrees to give Landlord
immediate written notice of any such Claim. 

    4.29.2  Tenant
shall be liable for all taxes levied or assessed against personal property, furniture or fixtures placed by Tenant in the Premises. If
any such taxes for which Tenant is liable are levied or assessed against Landlord or Landlord's property and Landlord elects to pay them or if the assessed value of Landlord's property is increased by
inclusion of such personal property, furniture or fixtures
and Landlord elects to pay the taxes based on such increase Tenant shall reimburse Landlord for the sums so paid by Landlord, upon demand by Landlord. 

4.30  Landlord's Security Interest. In addition to
any statutory lien for rent in Landlord's favor, Landlord shall have and Tenant hereby grants to Landlord a continuing security interest for all Base Rent, Additional Rent and other sums becoming due
under this Lease from Tenant, upon all goods, wares, equipment, fixtures, furniture, inventory, accounts, intangibles, chattel paper and other personal property of Tenant situated in the Premises, and
such property shall not be removed therefrom without the consent of Landlord until all arrearages in Bane Rent, Additional Rant and other sums due under this Lease shall first have been paid and
discharged. On the occurrence of an Event of Default-, Landlord shall have, in addition to any other remedies provided herein or by law, all rights and remedies under the Uniform Commercial Code,
including, the right to sell the property described in this paragraph at public or private sale upon five (B) Business Days notice to Tenant. Tenant hereby agrees to execute such financing
statements and other instruments necessary or desirable in Landlord's discretion to perfect the security interest hereby created. Any statutory lien for rent is not waived, and the express contractual
lien granted in this paragraph constitutes a security agreement and is in addition and supplementary to such statutory lien. 

 
 

SECTION 5: DEFAULT AND REMEDIES    
  

5.1  Events of Default. 

    5.1.1  The
occurrence of any one or more of the following events shall constitute a material default and breach of this Lease by Tenant
("Event of Default"): 

    (a) vacation
or abandonment of all or any portion of the Premises unless prior written notice is provided to
Landlord; 

    (b) failure
by Tenant to make any payment of Base Rent, Additional Rent or any other sum payable by Tenant under this Lease within three (3) Business Days after
its due date; 

    (c) failure
by Tenant to observe or perform any covenant or condition of this Lease, other than the making of payments, where such failure shall continue for a period
of ten (10) Business Days after written notice from Landlord; 

    (d) (1)
the making by Tenant of any -general assignment or general arrangement for the benefit of creditors; (2) the filing by or against Tenant of a petition in
bankruptcy, including reorganization or arrangement, unless, in the case of a petition filed against Tenant, the same is dismissed within twenty (20) Business Days; (3) the appointment
of a trustee or receiver to take possession of substantially all of Tenant's assets located in the Premises or of Tenant's interest in this Lease; (4) any execution, levy, attachment or other
process of law against any property of Tenant or Tenant's interest in this Lease; (5) adjudication that Tenant is bankrupt; (6) the making 

20

 

by Tenant of a transfer in fraud of creditors; or (7) the failure of Tenant to generally pay its debts as they become due; or 

    (e) any
information furnished by or on behalf of Tenant to Landlord in connection with the entry of this Lease is determined to have been materially false, misleading
or incomplete when made. 

    5.1.2  Tenant
shall notify Landlord promptly of any Event of Default or any facts, conditions or events which, with the giving of
notice or passage of time or both, would constitute an Event of Default. 

    5.1.3  If
a petition in bankruptcy is filed by or against Tenant, and if this Lease is treated as an "unexpired lease" under
applicable bankruptcy law in such proceeding, then Tenant agrees that Tenant shall not attempt nor cause any trustee to attempt to extend the applicable time period within which this Lease must be
assumed or rejected. 

5.2  Remedies. If any Event of Default occurs, Landlord may at any time after such occurrence, with or
without notice or demand except as stated in this paragraph, and without limiting Landlord in the exercise of any right or remedy at law which Landlord may have by reason of such Event of Default,
exercise the rights and remedies, either singularly or in combination, as are specified or described in the subparagraphs of this paragraph. 

    5.2.1  Landlord
may terminate this Lease and all rights of Tenant under this Lease either immediately or at some later date by giving Tenant written
notice that this Lease is terminated. If Landlord so terminates this Lease, then Landlord may recover from Tenant the sum of: 

    (a) the
unpaid Base Rent, Additional Rent and all other sums payable under this Lease which have been earned at the time of termination; 

    (b) interest
at the Default Rate on the unpaid Base Rent, Additional Rent and all other sums payable under this Lease which have been earned at the time of termination;
plus 

    (c) the
amount by which the unpaid Base Rent, Additional Rent and all other sums payable under this Lease which would have been earned after termination until the time
of award exceeds the amount of such rental loss, if any, as Tenant affirmatively proves could have been reasonably avoided and interest on such excess at the Default Rate; plus 

    (d) the
amount by which the aggregate of the unpaid Base Rent, Additional Rent and all other sums payable under this Lease for the balance of the Lease Term after the
time of award exceeds the amount of rental loss, if any, as Tenant affirmatively proves could be reasonably avoided, with such difference being discounted to present value at the Prime Rate at the
time of award; plus 

    (e) any
other amount necessary to compensate Landlord for the detriment proximately caused by Tenant's failure to perform Tenant's obligations under this Lease or
which, in the ordinary course of things, would be likely to result from such failure, including, Tenant's share of leasing
commissions, tenant improvement costs, renovation costs and advertising costs; plus 

    (f)  all
such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable law. 

    5.2.2  Landlord
shall also have the right, with or without terminating this Lease, to re-enter the Premises and remove all persons and
property from the Premises. Landlord may cause property so removed from the Premises to be stored in a public warehouse or elsewhere at the expense and for the account of Tenant. 

21

 

    5.2.3  Landlord shall also have the right, without terminating this Lease, to accelerate and recover from Tenant the sum of all unpaid Base Rent,
Additional Rent and all other sums payable under the then remaining term of the Lease, discounting such amount to present value at the' Prime Rate. 

    5.2.4  If
Tenant vacates, abandons or surrenders the Premises without Landlord's consent, or if Landlord reenters the Premises as provided in
subparagraph 5.2.2 or takes possession of the Premises pursuant to legal proceedings or through any notice procedure provided by law, then, if Landlord does not elect to terminate this Lease, Landlord
may, from time to time, without terminating this Lease, either (a) recover all Base Rent, Additional Rent and all other sums payable under this Lease as they become due or (b) relet the
Premises or any part of the Premises on behalf of Tenant for such term or terms, at such rent or rents and pursuant to such other provisions as Landlord, in its sole discretion, may deem advisable,
all with the right, at Tenant's cost, to make alterations and repairs to the Premises and recover any deficiency from Tenant as set forth in subparagraph 5.2.5. 

    5.2.5  None
of the foregoing remedial actions, singly or in combination, shall be construed as an election by Landlord to terminate this Lease unless
Landlord has in fact given Tenant written notice that this Lease is terminated: an act by Landlord to maintain or preserve the Premises; any efforts by Landlord to relet the Premises; any repairs or
alterations made by Landlord to the Premises; re-entry, repossession or reletting of the Premises by Landlord pursuant to this paragraph; or the appointment of a receiver, upon the
initiative of Landlord, to protect Landlord's interest under this Lease. If Landlord takes any of the foregoing remedial action without terminating this Lease, Landlord may nevertheless at any time
after taking any such remedial action terminate this Lease by written notice to Tenant. 

    5.2.6  If
Landlord relets the Premises, Landlord shall apply the revenue from such reletting as follows:  first, to the payment of any indebtedness other than Base Rent, Additional Rent or any other sums payable
under this Lease by Tenant to Landlord;  second, to the payment of any cost of reletting (including finders' fees and leasing commissions);  third, to the
payment of the cost of any alterations, improvements, maintenance and repairs to the Premises; and  fourth, to the payment of Base Rent, Additional Rent and other sums due and payable and unpaid under
this Lease. Landlord shall hold and apply the
residue, if any, to payment of future Base Rent, Additional Rent and other sums payable under this Lease as the same become due, and shall deliver the eventual balance, if any, to Tenant. Should
revenue from letting during any month, after application pursuant to the foregoing provisions, be less than the sum of the Base Rent, Additional Rent and other sums payable under this Lease and
Landlord's expenditures for the Premises during such month. Tenant shall be obligated to pay such deficiency to Landlord as and when such deficiency arises. 

    5.2.7  Pursuit
of any of the foregoing remedies shall not preclude pursuit of any of the other remedies provided in this Lease or by law (all such
remedies being cumulative), nor shall pursuit of any remedy
provided in this Lease constitute a forfeiture or waiver of any Base Rent, Additional Rent or other sum payable under this Lease or of any damages accruing to Landlord by reason of the violation of
any of the covenants or conditions contained in this Lease. 

5.3  Right to Perform. If Tenant shall fail to pay any sum of money, other than Base Rent or Additional
Rent, required to be paid by it under this Lease or shall fail to perform any other act on its part to be performed under this Lease, and such failure shall continue for ten (10) Business Days
after notice of such failure by Landlord, or such shorter time if reasonable under the circumstances, Landlord may, but shall not be obligated to, and without waiving or releasing Tenant from any
obligations of Tenant, make such payment or perform such other act on Tenant's part to be made or performed as provided in this Lease. Landlord shall have (in addition to any other right or remedy of
Landlord) the same rights and remedies in the event of the nonpayment of sums due under this paragraph as in the case of default by Tenant in the payment of Base Rent. 

22

 

5.4  Landlord's Default. In the event that Landlord defaults under or breaches this Lease, Tenant shall
notify Landlord of such default or breach in writing, and Tenant shall not exercise any right or remedy which Tenant may have under this Lease or at law if Landlord commences to cure such default or
breach within twenty (20) Business Days after receipt of Tenant's notice and thereafter diligently prosecutes the cure to completion. 

 
 

SECTION 6: MISCELLANEOUS PROVISIONS    
  

6.1  Substitution Space.

    (a) Landlord
shall have the right at any time from the date hereof through the end of the term of this Lease
or any renewal or extension hereof, to substitute, instead of the leased Premises, other space (of approximately the same area as the leased Premises) hereinafter referred to as "Substitution Space,"
in the Building. 

    (b) If
Landlord desires to exercise such right, it shall give Tenant at least sixty (60) days prior
written notification that Tenant is to relocate to another space. Tenant shall then give Landlord written notice within ten (10) days of receipt of Landlord's notification whether Tenant agrees
to relocate, or whether
Tenant elects to terminate the Lease and vacate the Premises as of the sixtieth (60th) day following the date of Landlord's notification. Should
Tenant fail to give Landlord written notice within ten (10) days of receipt of Landlord's notification, then Tenant shall be doomed to have elected to terminate, and this Lease shall
automatically terminate sixty (60) days following the date of Landlord's notification. If Tenant shall retain possession of the Premises or any part thereof following the termination date,
Tenant shall be liable to Landlord, for each day of such retention, for double the amount of the daily rental for the last period prior to the date of such expiration or termination, subject to rent
adjustments as provided in Section 1.5, plus actual damages incurred by Landlord resulting from delay by Tenant in surrendering the Promises, Including without limitation any claims made
against Landlord by any succeeding Tenant to the Premises and Landlord's cost in taking any action at law, in equity or self help to evict Tenant from the Premises. 

    (c) If
Tenant elects to move to the Substitution Space, such move shall be at the sole cost of Landlord
including all costs and expenses related to improving the space with leasehold improvements equal to those then in Tenant's Premises, moving the furniture, office equipment and other contents of the
Premises to the new space, reinstating telecommunications equipment, printing of new stationary, business cards and other printed matter bearing the address of Tenant of the same quality and quantity
as Tenant's existing inventory and such other reasonable expenses as Tenant may incur, it being the intention of the parties that Tenant incur no costs-or expenses as a result of the move.
After such move, all terms, covenants, conditions, provisions, and agreements of -this Lease shall continue in full force and effect and shall apply to the Substitution Space except that
(a) if the then unexpired balance of the term of the Lease shall be less than one year, the term of this Lease shall be extended so that the unexpired balance of the term of this Lease shall be
one year from the date of the move and (b) if the Substitution Space contains more square footage than the presently leased Premises, the monthly rental shall be increased proportionately
(provided that such rental increase shall not be in excess of five percent (5%) of the rental immediately preceding such an increase). 

6.2  Notices. Any notice, request or written communication required or permitted to be delivered under this
Lease shall be: (a) in writing; (b) transmitted by personal delivery, express or courier service, United States Postal Service in the manner described below, or electronic means of
transmitting written material with electronic delivery confirmation; and (c) deemed to be delivered on the earlier
of the date received or four (4) Business Days after having been deposited in the United States Postal Service, postage prepaid. Such writings shall be addressed to Landlord or Tenant, as the
case may be, at the 

23

 

respective designated addresses set forth opposite their signatures, or at such other address(es) as they may, after the execution date of this Lease, specify by written notice delivered in accordance
with this paragraph, with copies to the persons at the addresses, if any, designated opposite each party's signature. Those notices which contain a notice of breach or default or a demand for
performance may be sent by any of the methods described in clause (b) above, but if transmitted by personal delivery or electronic means, shall also be sent concurrently by certified or
registered mail, return receipt requested. 

6.3  Attorney's Fees and Expenses. In the event either party requires the services of an attorney in connection with enforcing the terms
of this Lease, or in the event suit is brought for the recovery of Base Rent, Additional Rent or any other sums payable under this Lease or for the breach of any covenant or condition of this Lease,
or for the restitution of the Premises to Landlord or the eviction of Tenant during the Lease Term or after the expiration or earlier termination of this Lease, the non-breaching party
shall be entitled to a reasonable sum for attorney's and paralegal's fees incurred at the trial or appellate levels and for all costs and expenses associated with such levels. 

6.4  No Accord and Satisfaction. No payment by Tenant or receipt by Landlord of an amount less than the Base
Rent or Additional Rent or any other sum due and payable under this Lease shall be deemed to be other than a payment on account of the Base Rent, Additional Rent or other such sum, nor shall any
endorsement or statement on any check or any letter accompanying any check or payment be deemed an accord and satisfaction, nor preclude Landlord's right to recover the balance of any amount payable
or Landlord's right to pursue any other remedy provided in this Lease or at law. 

6.5  Successors; Joint and Several Liability. Except as provided in the paragraph captioned
"Exculpation and Limitation of Liability" and subject to the paragraph captioned "Assignment and Subletting by
Landlord", all of the covenants and conditions contained in this Lease shall apply to and be binding upon Landlord and Tenant and their respective heirs, executors,
administrators, successors and assigns. In the event that more than one person, partnership, company, corporation or other entity is included in the term "Tenant," then each such person, partnership,
company, corporation or other entity shall be jointly and severally liable for all obligations of Tenant under this Lease. 

6.6  Choice of Law. This Lease shall be construed and governed by the laws of the state in which the Land is
located. Tenant consents to Landlord's choice of venue for any legal proceeding brought by Landlord or Tenant to enforce the terms of this Lease. 

6.7  No Waiver of Remedies. The waiver by Landlord  either party of any covenant or condition contained in this Lease shall not be deemed to be
a waiver of any subsequent
breach of such covenant or condition nor shall any custom or practice which may develop between the parties in the administration of this Lease be construed to waive or lessen the rights of
Landlord either party to insist on the strict performance by
Tenant of all of the covenants and conditions of this Lease. No act or thing done by Landlord or Landlord's Agents during the Lease Term shall be deemed an acceptance or a
surrender of the Premises, and no agreement to accept a surrender of the Premises shall be valid unless made in writing and signed by Landlord. The mention in this Lease of any particular remedy shall
not preclude Landlord either party from any other remedy it might have, either under
this Lease or at law, nor shall the waiver of or redress for any violation of any covenant or condition in this Lease or in any of the rules or regulations attached to this Lease or later adopted by
Landlord, prevent a subsequent act, which would have originally constituted a violation, from having all the force and effect of an original
violation. The receipt by Landlord of Base Rent, Additional Rent or any other sum payable under this Lease with knowledge of a breach of any covenant or condition in this Lease shall not be deemed a
waiver of such breach except for any breach relating to the late payment of such sum. The failure of Landlord to enforce
any of the rules and regulations attached to this Lease or later adopted, against Tenant or any other tenant in the Building, shall not be deemed a waiver. Any waiver by Landlord must be in writing
and signed by Landlord to be effective. 

24

 

6.8  Offer to Lease. The submission of this Lease to Tenant or its broker or other agent does not constitute
an offer to Tenant to lease the Premises. This Lease shall have no force or effect until: (a) it is executed and delivered by Tenant to Landlord; and (b) it is executed and delivered by
Landlord to Tenant. 

6.9  Force Majeure. In the event that Landlord  either party shall be delayed, hindered in or prevented from the performance of any act or
obligation required under this
Lease by reason of acts of God, strikes, lockouts, labor troubles or disputes, inability to procure or shortage of materials or labor, failure of power or utilities, delay in transportation, fire,
vandalism, accident, flood, severe weather, other casualty, Governmental Requirements (including mandated changes in the Plans and Specifications or the Tenant Improvements resulting from changes in
pertinent Governmental Requirements or interpretations thereof), riot, insurrection, civil commotion, sabotage, explosion, war, natural or local emergency, acts or omissions of others, including
Tenant, or other reasons of a similar or dissimilar nature not solely the fault of, or under the exclusive control of, Landlord, then performance of such act shall be excused for the period of the
delay and the period for the performance of any such act shall be extended for the period equivalent to the period of such delay. 

6.10  Landlord's Consent. Unless otherwise provided in this Lease, whenever Landlord's consent, approval or
other action is required under the terms of this Lease, such consent, approval or action shall be subject to Landlord's reasonable judgment or discretion exercised in good faith and shall be delivered
in writing. 

6.11  Severability; Captions. If any clause or provision of this Lease is determined to be illegal, invalid,
or unenforceable under present or future laws, the remainder of this Lease shall not be affected by such determination, and in lieu of each clause or provision that is determined to be illegal,
invalid or unenforceable, there be added as a part of this Lease a clause or provision as similar in terms to such illegal, invalid or unenforceable clause or provision as may be possible and be
legal, valid and enforceable. Headings or captions in this Lease are added as a matter of convenience only and in no way define, limit or otherwise affect the construction or interpretation of this
Lease. 

6.12  Interpretation. Whenever a provision of this Lease uses the term (a) "include" or "including",
that term shall not be limiting but shall be construed as illustrative, (b) "covenant", that term shall include any covenant, agreement, term or provision, and (c) "at law", that term
shall mean at law or in equity, or both. This Lease shall be given a fair and reasonable interpretation of the words contained in it without any weight being given to whether a provision was drafted
by one party or its counsel. 

6.13  Incorporation of Prior Agreement; Amendments. This Lease contains all of the agreements of the parties
to this Lease with respect to any matter covered or mentioned in this Lease, and no prior agreement or understanding pertaining to any such matter shall be effective for any purpose. No provision of
this Lease may be amended or added to except by an agreement in writing signed by the parties to this Lease or their respective successors in interest. 

6.14  Authority. If Tenant is a partnership, company, corporation or other entity, each individual executing
this Lease on behalf of Tenant represents and warrants to Landlord that he or she is duly authorized to so execute and deliver this Lease and that all partnership, company, corporation or other entity
actions and consents required for execution of this Lease have been given, granted or obtained. If Tenant is a partnership, company, corporation or other business organization, it shall, within ten
(10) Business Days after demand by Landlord, deliver to Landlord satisfactory evidence of the due authorization of this Lease and the authority of the person executing this Lease on its behalf. 

6.15  Time of Essence. Time is of the essence with respect to the performance of every covenant and
condition of this Lease. 

6.16  Survival of Obligations. Notwithstanding anything contained in this Lease to the contrary or the
expiration or earlier termination of this Lease, any and all obligations of either party accruing prior to 

25

 

the expiration or termination of this Lease shall survive the expiration or earlier termination of this Lease, and either party shall promptly perform all such obligations whether or not this Lease
has expired or terminated. Such obligations shall include any and all indemnity obligations set forth in this Lease. 

6.17  Consent to Service. Tenant irrevocably consents to the service of process of any action or proceeding
at the address of the Premises. Nothing in this paragraph shall affect the right to serve process in any other manner permitted by law. 

6.18  Landlord's Authorized Agents. Notwithstanding anything contained in the Lease to the contrary,
including without limitation, the definition of Landlord's Agents, only Rick and Jacquelyne Doane are authorized to amend, renew or terminate this Lease, or to compromise any of Landlord's claims
under this Lease or to bind Landlord in any manner. Without limiting the effect of the previous sentence, no property manager or broker shall be considered an authorized agent of Landlord to amend,
renew or terminate this Lease or to compromise any of Landlord's claims under this Lease or to bind Landlord in any manner. 

6.19  Waiver of Jury Trial. Landlord and Tenant agree to waive trial by jury in any action, proceeding or
counterclaim brought by either against the other on any matter arising out of or relating in any way to this Lease. 

26

 

    IN WITNESS WHEREOF, this Lease has been executed the day and year first above set forth. 

	Designated Address for Landlord:	 	LANDLORD:
	Attn: Rick Doane	 	Rick and Jacquelyne Doane, a married couple
	P.O. Box 97030	 	 	 	 	 	 
	Kirkland, WA 98083-9730	 	 	 	Name:	 	/s/ Rick Doane

	Facsimile: 425-814-1856	 	 	 	Name:	 	/s/ Jacquelyne Doane

	with copy to Manager at:	 	 	 	 	 	 
	Trammell Crow Company
1687 114th Avenue S.E., Suite 250
 Bellevue, WA 98004
	 	 	 	 	 	 
	Designated Address for Tenant:	 	TENANT:
	 	 	 	 	 	 	ROSETTA INPHARMATICS, INC., a
	
	 	

	
	 	

	Facsimile:	 	
	 	By:	 	/s/ JOHN J. KING II

	 	 	 	 	 	 	Name:	 	JOHN J. KING II

	 	 	 	 	 	 	Its:	 	SR. VICE PRESIDENT, COO

27

 
 
 

TENANT ACKNOWLEDGEMENT (CORPORATION)    

	State of Washington	 	)

)ss.	 	 
	County of King	 	)	 	 

    On this 6th day of December,
199  , 2000, before me, a Notary Public in and for the State of Washington, personally
appeared John J. King II the Sr Vice President, COO of Rosetta Inpharmatics, Inc., the             
corporation that executed and within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said corporation for the uses and purposes therein
mentioned, and on oath stated that s/he/they was/were authorized to execute said instrument. 

    WITNESS
my hand and official seal hereto affixed the day and year first as above written. 

	 	 	/s/ Cheryl Brass

	[SEAL]	 	Name:	Cheryl Brass

	 	 	NOTARY PUBLIC in and for the State of Washington
	 	 	residing at	1011 97th Dr. SE, Everett, WA

	 	 	My appointment expires:	 	9/28/03

	

[NOTARIAL SEAL]	
 	

 	

 	

 	
 	

 

28

 
 
 

LANDLORD ACKNOWLEDGEMENT (INDIVIDUAL)    

	Seattle, WA
	 	)	 	 
	 	 	)ss.	 	 
	
	 	)	 	 

    On this 3rd day of January, 2000 2001,  before me, a Notary Public in and for the State of Washington, personally appeared
Richard Doane, to me known to be
the individual(s) described in and who executed the within and foregoing instrument, and acknowledged that s/he/they signed the same as his/her/their free and voluntary act and deed, for the uses and
purposes therein mentioned. 

    WITNESS
my hand and official seal hereto affixed the day and year first as above written. 

	 	 	/s/ Peter T. Crolius

	 	 	Name:	Peter T. Crolius

	 	 	NOTARY PUBLIC in and for the State of Washington
	 	 	residing at	Seattle, WA

	 	 	My appointment expires:	7/31/01

	

[NOTARIAL SEAL]	
 	

 	

 	

 	

 

 
 

LANDLORD ACKNOWLEDGEMENT (INDIVIDUAL)    

	Seattle, WA
	 	)	 	 
	 	 	)ss.	 	 
	
	 	)	 	 

    On this 3rd day of January, 2000 2001,  before me, a Notary Public in and for the State of Washington, personally appeared
Jacquelyne Doane, to me known to be
the individual(s) described in and who executed the within and foregoing instrument, and acknowledged that s/he/they signed the same as his/her/their free and voluntary act and deed, for the uses and
purposes therein mentioned. 

    WITNESS
my hand and official seal hereto affixed the day and year first as above written. 

	 	 	/s/ Peter T. Crolius

	 	 	Name:	Peter T. Crolius

	 	 	NOTARY PUBLIC in and for the State of Washington
	 	 	residing at	Seattle, WA

	 	 	My appointment expires:	7/31/01

	

[NOTARIAL SEAL]	
 	

 	

 	

 	

 

29

  

 
 

EXHIBIT A to Lease
  
    LEGAL DESCRIPTION    
  

    That portion of the southeast quarter of Section 29, Township 26 North, Range 5 East, W.M., described as follows: Lot 18 of Kirkland 405 Corporate
Center, a binding site plan, as per plat recorded in Volume 154, pages 58 through 64, records of King County; situate in the City of Kirkland, County of King, State of Washington. 

31

 
 
 

EXHIBIT B to Lease
  
    DRAWING SHOWING LOCATION OF THE PREMISES    
  

32

 
 
 

[FLOOR PLAN OF BUILDING]    
  

Second Floor Plan

NTS

	Kirkland 405 Corporate Center

Building T

12220 118th Ave. NE	 	Trammell Crow Company
	bldgF-flr1.dwg 03-24-00	 	Marketing Representative:

Telephone:

Fax:	 	Peter Crolius

(425-519-6348

(425) 454-7184
 

33

 
  
 

    EXHIBIT C to Lease
  LISTING OF PLANS AND SPECIFICATIONS FOR TENANT IMPROVEMENTS    
  

34

 
 
 

EXHIBIT D to Lease
  
    FORM OF MEMORANDUM OF COMMENCEMENT DATE    
  

    Rick and Jacquelyne Doane a married couple, as Landlord, and Rosetta lnpharmatics, lnc. as Tenant, executed that certain Net Lease Agreement dated as of
September 30, 2000 (the "Lease"). 

    The
Lease contemplates that upon satisfaction of certain conditions Landlord and Tenant will agree and stipulate as to certain provisions of the Lease. All such conditions precedent
to that stipulation have been satisfied. 

    Landlord
and Tenant agree as follows: 

    1.  The
Commencement Date of the Lease is             . 

    2.  The
Termination Date of the Lease is             . 

    3.  The
Premises consist of              rentable square feet. 

    4.  Base
Rent is as follows: 

            
through             ; $             per month 

            
through             ; $             per month 

            
through             ; $             per month 

            
through             ; $             per month 

    5.  Tenant's
Pro Rata Share is              percent (            %). 

    IN
WITNESS WHEREOF, the parties have caused this Memorandum to be duly executed as of             ,
199  . 

	LANDLORD:	 	TENANT
	Rick and Jacquelyne Doane, a married couple	 	 	 	 
	

By:	
 	

 	
 	

By:	
 	

 
	 	 	
	 	 	 	

	Name:	 	 	 	Name:	 	 
	 	 	
	 	 	 	

	Its:	 	 	 	Its:	 	 
	 	 	
	 	 	 	

35

 
 
 

EXHIBIT E to Lease
  
    RULES AND REGULATIONS    
  

    1.  No
sign, placard, picture, advertisement, name or notice shall be installed or displayed on any part of the outside or inside of the Building or Land without the
prior written consent of the Landlord. Landlord shall have the right to remove, at Tenant's expense and without notice, any sign installed or displayed in violation of this rule. All approved signs or
lettering on doors and walls shall be printed, painted, affixed or inscribed at the expense of Tenant by a person chosen by Landlord. 

    2.  If
Landlord objects in writing to any curtains, blinds, shades, screens or hanging plants or other similar objects attached to or used in connection with any window
or door of the Premises, Tenant shall immediately discontinue such use. No awning shall be permitted on any part of the Premises. Tenant shall not place anything against or near glass partitions or
doors or windows which may appear unsightly from outside the Premises. 

    3.  Tenant
shall not obstruct any sidewalk, halls, passages, exits, entrances, elevators, escalators-, or stairways of the Building. The halls, passages, exits,
entrances, elevators, escalators and stairways are not open to the general public. Landlord shall in all cases retain the right to control and prevent access to such areas of all persons whose
presence in the judgment of Landlord would be prejudicial to the safety, character, reputation and interest of the Land, Building and the Building's tenants; provided
that, nothing in this Lease contained shall be construed to prevent such access to persons with whom any Tenant normally deals in the ordinary course of its business, unless
such persons are engaged in illegal activities. Tenant shall not go upon the roof of the Building. 

    4.  The
directory of the Building will be provided exclusively for the display of the name and location of tenants only, and Landlord reserves the right to exclude any
other names therefrom. 

    5.  All
cleaning and janitorial services for the Building and the Premises shall be provided exclusively through Landlord, and except with the written consent of
Landlord, no person or persons other than those approved by Landlord shall be employed by Tenant or permitted to enter the Building for the purpose of cleaning the same. Cleaning and janitorial
services shall be provided five (5) days per week. Tenant shall not cause any unnecessary labor by carelessness or indifference to the good order and cleanliness of the Premises. Landlord shall
not in any way be responsible to any Tenant for any loss of property on the Premises, however occurring, or for any damage to any Tenant's property by the janitor, any of Landlord's Agents or any
other person. 

    6.  Landlord
will furnish Tenant, free of charge, two (2) keys to each door lock in the Premises. Landlord may make a reasonable charge for any additional keys.
Tenant shall not make or have made additional keys, and Tenant shall not alter any lock or install a new additional lock or bolt on any door of its Premises. Tenant, upon the termination of its
tenancy, shall deliver to Landlord the keys of all doors which have been furnished to Tenant, and in the event of loss of any keys so furnished, shall pay Landlord therefor. 

    7.  HVAC
service shall be provided to the Premises Monday through Friday from 7 a.m. to 6 p.m. 

    8.  If
Tenant requires telegraphic, telephonic, computer circuits, burglar alarm or similar services, it shall first obtain, and comply with, Landlord's instructions
for their installation, and shall pay the entire cost of such installation(s). 

    9.  Tenant
shall not place a load upon any floor of the Premises which exceeds the load per square foot which such floor was designed to carry and which is allowed by
Governmental Requirements. Landlord shall have the right to prescribe the weight, size and position of all equipment, materials, furniture or other property brought into the Building. Heavy objects
shall, if considered necessary by Landlord, stand on such platforms as determined by Landlord to be necessary to properly distribute the weight. Business machines and mechanical equipment belonging to
Tenant, which cause 

36

 

noise or vibration that may be transmitted to the structure of the Building or to any space in the Building or to any other tenant in the Building, shall be placed and maintained by Tenant, at
Tenant's expense, on vibration eliminators or other devices sufficient to eliminate noise or vibration. The persons employed to move such equipment in or out of the Building must be acceptable to
Landlord.
Landlord will not be responsible for loss of, or damage to, any such equipment or other property from any cause, and all damage done to the Building by maintaining or moving such equipment or other
property shall be repaired at the expense of Tenant. 

    10. Tenant
shall not use or keep in the Premises any kerosene, gasoline or inflammable or combustible fluid or material other than those limited quantities permitted by
the Lease. Tenant shall not use or permit to be used in the Premises any foul or noxious gas or substance, or permit or allow the Premises to be occupied or used in a manner offensive or objectionable
to Landlord or other occupants of the Building by reason of noise, odors or vibrations nor shall Tenant bring into or keep in or about the Premises any birds or animals. 

    11. Tenant
shall not use any method of heating or air-conditioning other than that supplied by Landlord. 

    12. Tenant
shall not waste any utility provided by Landlord and agrees to cooperate fully with Landlord to assure the most effective operation of the Building's heating
and air-conditioning and to comply with any governmental energy-saving rules, laws or regulations of which Tenant has actual notice. 

    13. Landlord
reserves the right, exercisable without notice and without liability to Tenant, to change the name and street address of the Building. 

    14. Landlord
reserves the right to exclude from the Building between the hours of 6 p.m. and 7 a.m. the following day, or such other hours as may be
established from time to time by Landlord, and on Sundays and legal holidays, any person unless that person is known to the person or employee in charge of the Building and has a pass or is properly
identified. Tenant shall be responsible for all persons for whom it requests passes and shall be liable to Landlord for all acts of such persons. Landlord shall not be liable for damages for any error
with regard to the admission to or exclusion from the Building of any person. Landlord reserves the right to prevent access to the Building in case of invasion, mob, riot, public excitement or other
commotion by closing the doors or by other appropriate action. 

    15. Tenant
shall close and lock the doors of its Premises and entirely shut off all water faucets or other water apparatus, and electricity, gas or air outlets before
Tenant and its employees leave the Premises. Tenant shall be responsible for any damage or injuries sustained by other tenants or occupants of the Building or by Landlord for noncompliance with this
rule. 

    16. Tenant
shall not obtain for use on the Premises ice, drinking water, food, beverage, towel or other similar services, except at such hours and under such
regulations as may be fixed by Landlord. 

    17. The
toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed and no foreign
substance of any kind whatsoever shall be deposited in them. The expenses of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by Tenant if it or its employees
or invitees shall have caused it. 

    18. Tenant
shall not sell, or permit the sale at retail, of newspapers, magazines, periodicals, theater tickets or any other goods or merchandise to the general public
in or on the Premises. Tenant shall not make any room-to-room solicitation of business from other tenants in the Building. Tenant shall not use the Premises for any business or
activity other than that specifically provided for in the Lease. 

37

 

    19. Tenant shall not install any radio or television antenna, loudspeaker or other device on the roof or exterior walls of the Building. Tenant shall not interfere with
radio or television broadcasting or reception from or in the Building or elsewhere. 

    20. Tenant
shall not mark, drive nails, screws or drill into the partitions, woodwork or plaster or in any way deface the Premises. Landlord reserves the right to
direct electricians as to where and how telephone and telegraph wires are to be introduced to the Premises. Tenant shall not cut or bore holes for wires. Tenant shall not affix any floor covering to
the floor of the Premises in any manner except as approved by Landlord. Tenant shall repair any damage resulting from noncompliance with this rule. 

    21. Tenant
shall not install, maintain or operate upon the Premises any vending machine without the written consent of Landlord. 

    22. Canvassing,
soliciting and distribution of handbills or any other written material, and peddling in the Building or Land are prohibited, and Tenant shall cooperate
to prevent the same. 

    23. Landlord
reserves the right to exclude or expel from the Building and Land any person who, in Landlord's judgment, is intoxicated, under the influence of liquor or
drugs or in violation of any of these Rules and Regulations. 

    24. Tenant
shall store all of its trash and garbage within the Premises. Tenant shall not place in any trash box or receptacle any material which cannot be disposed of
in the ordinary and customary manner of trash and garbage disposal. All garbage and refuse disposal shall be made in accordance with directions issued from time to time by Landlord. 

    25. The
Premises shall not be used for lodging or any improper or immoral or objectionable purpose. No cooking shall be done or permitted by Tenant, except that use by
Tenant of Underwriters' Laboratory approved equipment for brewing coffee, tea, hot chocolate and similar beverages shall be permitted; provided that, such equipment and its use is in accordance with
all Governmental Requirements. 

    26. Tenant
shall not use in the Premises or in the public halls of the Building any hand truck except those equipped with rubber tires and side guards or such other
material-handling equipment as Landlord may approve. Tenant shall not bring any other vehicles of any kind into the Building. 

    27. Without
the prior written consent of Landlord, Tenant shall not use the name of the Building in connection with or in promoting or advertising the business of
Tenant except as Tenant's address. 

    28. Tenant
shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency. 

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

    30. The
requirements of Tenant will be attended to only upon appropriate application to the Manager of the Building by an authorized individual. Employees of Landlord
are not required to perform any work or do anything outside of their regular duties unless under special instructions from Landlord, and no employee of Landlord is required to admit Tenant to any
space other than the Premises without specific instructions from Landlord. 

    31. Tenant
shall not park its vehicles in any parking areas designated by Landlord as areas for parking by visitors to the Building or Land. Tenant shall not leave
vehicles in the parking areas overnight nor
park any vehicles in the Building parking areas other than automobiles, motorcycles, motor driven or nonmotor driven bicycles or four-wheeled trucks. 

    32. Landlord
may waive any one or more of these Rules and Regulations for the benefit of Tenant or any other tenant, but no such waiver by Landlord shall be construed
as a waiver of such 

38

 

Rules and Regulations in favor of any other person, nor prevent Landlord from thereafter revoking such waiver and enforcing any such Rules and Regulations against any or all of the tenants of the
Building. 

    33. These
Rules and Regulations are in addition to, and shall not be construed to in any way modify or amend, in whole or in part, the covenants and conditions of any
lease of premises in the Building. If any provision of these Rules and Regulations conflicts with any provision of the Lease, the terms of the Lease shall prevail. 

    34. Landlord
reserves the right to make such other and reasonable Rules and Regulations as, in its judgment, may from time to time be needed for safety and security,
the care and cleanliness of the Building and Land and the preservation of good order in the Building. Tenant agrees to abide by all and Tenant's Agents. 

 
 

EXHIBIT F    
  

    Provided Tenant is in all other respects in compliance with the terms of the Lease, Tenant shall have the right to renew the Lease for two
(2) 12 month periods by providing Landlord with 120 days prior written notice. All terms and conditions of the Lease shall remain in effect other than Base Rent, which shall be
adjusted to then-current market rates for similar office buildings in the Kirkland/Eastside market. 

    The term "market rate" shall mean rent obtained for comparable space of similar size and location in comparable buildings in Kirkland or
comparable eastside areas as of the date such determination is made. Landlord and Tenant shall use good faith efforts to agree on the then-current market rate within thirty
(30) days after exercise by Tenant of its option to extend. If Landlord and Tenant cannot agree on the market rate, the parties shall submit the determination of market rate to be resolved by
arbitration, in accordance with the following procedure. Landlord and Tenant shall mutually agree to
appoint one (1) independent arbitrator. who shall be appointed within forty-five (45) days after exercise by Tenant of its option to extend. Failing such agreement, either
Landlord or Tenant shall have the right to petition for the appointment of the arbitrator by the Presiding Judge of the Superior Court of King County. The arbitrator shall be a licensed MAI appraiser
or a commercial real estate agent with at least five (5) years' experience in the Eastside commercial leasing market. Within ten (10) days after the appointment of the arbitrator, Tenant
and Landlord shall each submit to the arbitrator (and one another) their written opinion regarding market rate, as defined above. Within ten (10) days after the arbitrator's receipt of the last
such opinion, the arbitrator shall decide which of the two opinions most accurately reflects market rate. Such selected opinion shall be the market rate for purposes of this Lease and the selection by
the arbitrator shall be final and binding upon the Parties. The arbitrator must select one of the two alternative opinions and may not select any other alternatives. The cost of the arbitrator shall
be split equally between Landlord and Tenant.

39

 
 
 

EXHIBIT G    
  

    Provided Tenant is in all other respects in compliance with the terms of this Lease, Tenant shall have the Right of First Refusal on any additional space in
the Building that becomes available for lease under the same terms and conditions as the Lease with the exception of Base Rent, which shall be adjusted to then-current market rates for
similar buildings in the Kirkland/Eastside market. The Right of First Refusal shall terminate following the 48th month of the Lease Term. 

40

 
Trammell Crow Company  

January 3,
2001 

Mike
Mabrito

Rosetta Inpharmatics, Inc.

12040 115th Avenue NE

Kirkland, WA 98034 

Dear
Mike: 

Enclosed
for your files is one (1) fully-executed original Lease Agreement between R. Doane (et. al.) and Rosetta Inpharmatics, Inc. Please provide the letter of credit as soon as
possible. 

Please
call me if you have questions. Thank you for your assistance. 

Sincerely, 

/s/
Peter Crolius 

Peter
Crolius

Brokerage Services 

41

QuickLinks

OFFICE LEASE

SECTION A: TABLE OF CONTENTS

SECTION 1: DEFINITIONS

SECTION 2: PREMISES AND TERM

SECTION 3: BASE RENT, ADDITIONAL RENT AND OTHER SUMS PAYABLE UNDER LEASE

SECTION 4: GENERAL PROVISIONS

SECTION 5: DEFAULT AND REMEDIES

SECTION 6: MISCELLANEOUS PROVISIONS

TENANT ACKNOWLEDGEMENT (CORPORATION)

LANDLORD ACKNOWLEDGEMENT (INDIVIDUAL)

LANDLORD ACKNOWLEDGEMENT (INDIVIDUAL)

EXHIBIT A to Lease LEGAL DESCRIPTION

EXHIBIT B to Lease DRAWING SHOWING LOCATION OF THE PREMISES

[FLOOR PLAN OF BUILDING]

EXHIBIT C to Lease LISTING OF PLANS AND SPECIFICATIONS FOR TENANT IMPROVEMENTS

EXHIBIT D to Lease FORM OF MEMORANDUM OF COMMENCEMENT DATE

EXHIBIT E to Lease RULES AND REGULATIONS

EXHIBIT F

EXHIBIT G

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00022-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00022-of-00352.parquet"}]]