Document:

Exhibit 10.17 Salary Continuation Agreement - Second Amendment

    
      

      

    

    Exhibit
      10.17

    SECOND
      AMENDMENT TO THE 

    TIB
      BANK OF THE KEYS

    SALARY
      CONTINUATION AGREEMENT

    

    THIS
      SECOND AMENDMENT executed on this ________ day of __________________, 2006,
      by
      and between the TIB BANK OF THE KEYS, a Florida banking corporation located
      in
      Key Largo, Florida (the “Company”), and __________________ (the
“Executive”).

     

    On
      __________________, the Company and the Executive executed the TIB BANK OF
      THE
      KEYS SALARY CONTINUATION AGREEMENT (the “Agreement”).

    

    The
      undersigned hereby amends, in part, said Agreement for the purpose of 1)
      changing the percentage of the Benefit Basis for purposes of determining the
      Normal Retirement Benefit and Change of Control Benefit, and 2) changing the
      discount rate used in calculating the accrual balance from a fixed rate to
      a
      rate that can change periodically in accordance with Generally Accepted
      Accounting Principles.
      Therefore,

    

    Section
      2.1.1 of the Agreement shall be added to the Agreement as
      follows:

    

    2.1.1
      Amount of Benefit.
      The
      annual benefit under this Section 2.1 is an amount equal to forty three percent
      (43.0%) of the Benefit Basis.

    

    Section
      2.4.1 of the Agreement shall be added to the Agreement as
      follows:

    

    2.4.1
      Amount of Benefit.
      The
      annual benefit under this Section 2.4 is an amount equal to forty three percent
      (43.0%) of Inflated Compensation.

    

    EXHIBIT
      I of the Agreement is hereby amended to replace any reference to a fixed
      discount rate to now be at a rate determined periodically to be in conformity
      to
      Generally Accepted Accounting Principles.

    

    Except
      as
      amended herein by this Second Amendment, the Agreement and the First Amendment
      remains in full force and effect.

    

    IN
      WITNESS OF THE ABOVE,
      the
      Executive and the Company have agreed to this Second Amendment.

     

     

    
      	 EXECUTIVE:	 	 	
              COMPANY:

              TIB
                BANK OF THE KEYS

               

            
	 	 	
               By  

            	 
	
              

            	 	
               

               

              ItsUnassociated Document

    Exhibit
      10.19

    

    THIRD
      AMENDMENT TO LEASE AGREEMENT

    

    

    This
      THIRD AMENDMENT TO LEASE AGREEMENT (this "Third
      Amendment")
      is
      executed to be effective as of February 1, 2007, by and between WIREDZONE
      PROPERTY, L.P., a Delaware limited partnership ("Landlord"),
      and
      COMBIMATRIX CORPORATION, a Delaware corporation ("Tenant").
      Unless otherwise defined herein, all capitalized terms used herein shall have
      the same meaning as ascribed to such terms in the Lease (as hereinafter
      defined).

    

    W
      I T N E S S E T H:

    

    WHEREAS,
      pursuant
      to the provisions of that certain Lease Agreement (the "Original
      Lease"),
      dated
      October 19, 2000, executed by Landlord and Tenant, as amended by that
      certain First Amendment to Lease Agreement (the "First
      Amendment")
      executed by Landlord and Tenant to be effective as of April 22, 2001, and as
      further amended by that certain Second Amendment to Lease Agreement (the
      "Second
      Amendment")
      executed by Landlord and Tenant to be effective as of May 1, 2002 (as amended,
      the "Lease"),
      Tenant leased the Premises; 

    

    WHEREAS,
      Landlord and Tenant desire (a) to reduce and relocate the Premises to consist
      of
      (i) approximately 5,500 square feet of Rentable Space located on the third
      (3rd)
      floor
      of the Building, as more particularly outlined on Exhibit
      "B-2"
      attached
      hereto (the "Third
      Floor Relocation Premises"),
      (ii)
      approximately 19,439 square feet of Rentable Space located on the second
      (2nd)
      floor
      of the Building, as more particularly outlined on Exhibit
      "B-2"
      attached
      hereto (the "2nd
      Floor Reduced Premises"),
      and
      (iii) approximately 5,785 square feet of Rentable Space located on the first
      (1st)
      floor
      and mezzanine level in the Building and identified as the "First Floor
      Additional Premises" in the First Amendment (collectively, the "Reduced
      Premises"),
      (b)
      to extend the term of the Lease with respect to the Reduced Premises on the
      same
      terms and conditions contained in the Lease, as amended hereby, and (c) to
      further modify the terms of the Leases, as provided herein.

    

    NOW,
      THEREFORE, for
      and
      in consideration of the premises, the agreements and covenants set forth herein
      and other good and valuable consideration, the receipt and sufficiency of which
      are hereby acknowledged and confessed, Landlord and Tenant do hereby expressly
      agree, covenant and acknowledge as follows:

    

    1.     Leased
      Premises. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    a. Effective
      as of February 28, 2007 (the "Third
      Floor Relocation Commencement Date"),
      Tenant shall vacate the portion of the Premises located on the third
      (3rd)
      floor
      of the Building (the "Third
      Floor Give-Back Space")
      and
      shall relocate to the Third Floor Relocation Premises, and all references in
      the
      Lease to the portion of the "Leased
      Premises"
      located
      on the third (3rd)
      floor
      of the Building shall thereafter be deemed to be references to the Third Floor
      Relocation Premises.

     

    b. Effective
      as of April 30, 2007 (the "Second
      Floor Reduced Premises Commencement Date"),
      Tenant shall vacate all portions of the Premises located on the second
      (2nd)
      floor
      of the Building, with the exception of the Second Floor Reduced Premises (that
      portion of the current Premises located on the second (2nd)
      Floor
      of the Building and not
      included
      within the Second Floor Reduced Premises is hereinafter referred to as the
      "Second
      Floor Give-Back Space").
      All
      references in the Lease to the portion of the "Leased Premises" located on
      the
      second (2nd)
      floor
      of the Building shall thereafter be deemed to be references to the Second Floor
      Reduced Premises.

     

    c. Tenant
      shall have the right to occupy the applicable portion of the current Premises
      through the day immediately preceding the Third Floor Relocation Commencement
      Date or the Second Floor Reduced Premises Commencement Date, as applicable,
      on
      the same terms and conditions set forth in the Lease. The applicable portion
      of
      the Leased Premises shall be surrendered to Landlord by Tenant on or before
      the
      Third Floor Relocation Commencement Date or the Second Floor Reduced Premises
      Commencement Date, as applicable, and Tenant shall fully comply with all
      provisions under the Lease with respect to the current Premises, including
      without limitation all provisions relating to the payment of Base Rental for
      the
      current Premises, the condition of the Current Premises and the removal of
      Tenant's personal property, if any, from the Current Premises.

     

    2.     Term.
      The
      Term of the Lease, as amended hereby (the "Extended
      Term"),
      shall
      expire on October 31, 2010 (the "Expiration
      Date").

     

    3.     Base
      Rental.
      

     

    a. The
      Base
      Rental for both the Third Floor Relocation Premises and the First Floor
      Additional Premises from and after February 1, 2007 shall be the amount per
      square foot of Rentable Space set forth in the following schedule:

    

      
        	 	
                Annual
                  Base Rental Rate

              
	
                Months

              	
                Per
                  Square Foot of Rentable Space

              
	 	 
	
                02/01/07*
                  - 10/31/08

              	
                $13.00

              
	
                11/01/08
                  - 10/31/09

              	
                $13.39

              
	
                11/01/09
                  - 10/31/10

              	
                $13.79

              

      

    

     

    *With
      respect to the calendar month of February 2007, the parties acknowledge that
      Tenant shall be required to pay Base Rental as to the Third Floor Relocation
      Premises only, and not
      as to
      the Third Floor Give-Back Space, notwithstanding that Tenant is not required
      to
      vacate the Third Floor Give-Back Space until February 28, 2007 pursuant to
      Section 1 above.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    b. The
      Base
      Rental for the Second Floor Reduced Premises from and after February 1, 2007
      shall be the amount per square foot of Rentable Space set forth in the following
      schedule:

    

      
        	 	
                Annual
                  Base Rental Rate

              
	
                Months

              	
                Per
                  Square Foot of Rentable Area

              
	 	 
	
                02/01/07**
                  - 10/31/08

              	
                $11.86

              
	
                11/01/08
                  - 10/31/09

              	
                $12.22

              
	
                11/01/09
                  - 10/31/10

              	
                $12.58

              

      

    

     

    **With
      respect to the period February 1, 2007 through April 30, 2007, the parties
      acknowledge that Tenant shall be required to pay Base Rental as to the Second
      Floor Reduced Premises only, and not
      as to
      the Second Floor Give-Back Space, notwithstanding that Tenant is not required
      to
      vacate the Second Floor Give-Back Space until April 30, 2007 pursuant to Section
      1 hereinabove. 

    

    4.     Tenant's
      Building Expense Percentage. 

     

    a. On
      February 1, 2007, Tenant's Proportionate Share shall be decreased to 17.4971%,
      which is the percentage obtained by dividing (i) the 91,999 square feet of
      Rentable Space in the current Premises less
      the
      33,426 square feet of Rentable Space in the Third Floor Give-Back Space, by
      (ii) the 334,758 square feet of Rentable Space in the Building (as limited,
      however, by the proviso set forth in the definition of Tenant's Proportionate
      Share).

     

    b. On
      May 1,
      2007, Tenant's Proportionate Share shall be further decreased to 9.1780%, which
      is the percentage obtained by dividing (i) the 30,724 square feet of
      Rentable Space in the Reduced Premises by (ii) the 334,758 square feet of
      Rentable Space in the Building (as limited, however, by the proviso set forth
      in
      the definition of Tenant's Proportionate Share).

     

    5.     Installation
      of Improvements to the Additional Premises.
      Landlord
      shall provide turn-key tenant finish improvements to the Third Floor Relocation
      Premises and the Second Floor Reduced Premises (collectively, the "Work")
      pursuant to the Leasehold Improvements Agreement attached hereto as Exhibit
      "D-2"
      and made
      a part hereof for all purposes. Except as set forth in this paragraph and in
      the
      Leasehold Improvements Agreement attached hereto as Exhibit
      "D-2",
      (i) the
      Reduced Premises are being provided to Tenant on an "as is, where is" basis,
      without any representations or warranties, whether express or implied, and
      subject to all faults and patent defects, and (ii) Tenant acknowledges and
      agrees that Landlord shall have no obligation beyond the obligations undertaken
      in this Third Amendment and the Leasehold Improvements Agreement to renovate
      the
      Reduced Premises, to construct or install tenant finish improvements in the
      Reduced Premises or to provide Tenant with a tenant finish allowance for the
      purpose of renovating the Reduced Premises or constructing or installing tenant
      finish improvements in the Reduced Premises.

     

    
      
         

      

      
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    6.     Moving
      Allowance.
      Landlord
      shall pay a moving allowance of $70,000 (the "Moving
      Allowance"),
      to
      reimburse Tenant for all third-party costs and expenses incurred in connection
      with relocating to the Reduced Premises, including installation of an exterior
      window. Tenant may seek reimbursement of such moving costs and expenses from
      time to time as they are incurred (but no more frequently than once per month),
      up to the maximum amount of the Moving Allowance, and Landlord shall reimburse
      same within thirty (30) days of receipt of each request for reimbursement
      including paid invoices or other documentation reasonably acceptable to Landlord
      evidencing payment of same; however, all requests for reimbursement must be
      submitted to Landlord by June 15, 2007.

     

    7.     Brokerage.
      Tenant
      warrants that it has not had any dealings with any broker or agent in connection
      with the negotiation or execution of this Third Amendment, except for Bill
      Benton of Newmark Knight & Frank, who represented Tenant in this transaction
      ("Tenant’s
      Broker")
      and
      who shall be paid a commission in connection herewith pursuant to a separate
      agreement with the Landlord. Tenant and Landlord each agree to indemnify and
      hold the other harmless from and against any claims by any other broker, agent
      or other person claiming a commission or other form of compensation by virtue
      of
      having dealt with the indemnifying party with regard to the transaction
      contemplated by this Third Amendment. The provisions of this paragraph shall
      survive the termination of the Lease, as amended hereby, or the termination
      of
      this Third Amendment.

     

    8.     Termination
      Option.
      Provided
      that that no uncured Event of Default then exists (both at the time of the
      giving of notice and at the scheduled termination date), then Tenant may
      terminate this Lease effective as of October 31, 2008 (the "Effective
      Termination Date"),
      by
      delivering written notice of such termination (the "Termination
      Notice")
      to
      Landlord on or before July 31, 2008. Landlord shall provide Tenant written
      notice of the amount of the Termination Fee (defined below), within ninety
      (90)
      days following the Commencement Date for the Initial Premises. Tenant shall
      pay
      the Termination Fee in cash or immediately available funds to Landlord
      concurrently with the delivery of the Termination Notice. The term "Termination
      Fee"
      shall
      mean an amount of money equal to the brokerage commission paid to Tenant's
      Broker in connection with this Third Amendment. The Termination Fee shall be
      fully earned by Landlord upon its delivery and shall be non-refundable to Tenant
      for any reason. Notwithstanding Tenant's early termination of this Lease
      pursuant to this paragraph, Tenant shall remain liable for all obligations
      which
      accrue under this Lease through and including the Effective Termination Date.
      Tenant's failure to timely notify Landlord of Tenant's election hereunder or
      to
      timely deliver the Termination Fee to Landlord shall automatically extinguish
      Tenant's right to terminate this Lease. The termination option hereby granted
      to
      Tenant is personal to Tenant, and any assignment or subletting by Tenant of
      the
      Lease, or any termination of the Lease not in accordance with this Section
      shall
      terminate the termination option of Tenant hereby granted.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    9.     Letter
      of Credit.
      Within
      two (2) weeks following satisfaction or waiver by Landlord of its condition
      precedent described in Section 22 below concerning the Boeing Lease defined
      therein, Tenant agrees to provide Landlord with a new letter of credit (the
      "Letter
      of Credit")
      issued by the financial institution that previously issued the existing letter
      of credit currently held by or on behalf of Landlord in connection with the
      Lease (the "Existing
      Letter of Credit"),
      or by
      such other financial institution that is reasonably acceptable to Landlord,
      and
      such Letter of Credit must otherwise be in form and substance that is either
      substantially the same as the Existing Letter of Credit, or is otherwise
      reasonably acceptable to Landlord. The Letter of Credit shall be in an amount
      equal to $1,000,000, and shall automatically decline by $40,000 on March 1,
      2007
      and by an additional $40,000 on the first (1st) day of each calendar month
      thereafter until it is reduced to $300,000. The Letter of Credit shall
      thereafter remain current at $300,000 and shall be kept in full force and effect
      until the expiration of the Term of the Lease, as amended hereby (including
      any
      renewals or extensions of the Term). Notwithstanding the foregoing, the Letter
      of Credit shall provide that no $40,000 monthly reduction shall be made or
      shall
      be effective at any time that Landlord has notified the issuer that an Event
      of
      Default has occurred under the Lease, as amended hereby. Upon Tenant's delivery
      of the Letter of Credit in compliance with this Section, Landlord shall
      surrender to Tenant the Existing Letter of Credit.

     

    10.     Late
      Fees.
      The last
      sentence of Paragraph 6 of the Original Lease is hereby deleted in its entirety
      and replaced with the following:

     

    In
      addition, at Landlord’s option, but only to the extent allowed by applicable law
      and not in excess of the amount allowed by applicable law, Tenant shall pay
      a
      late charge in the amount of ten percent (10%) of any installment of rental
      hereunder which is not paid within five (5) days of the date on which it is
      due
      in order to compensate Landlord for the additional expense involved in handling
      delinquent payments.

    

    11.     Deleted
      Provisions.
      Section
      3(g) of the Original Lease, and Rider Nos. 102, 103 and 104 to the Original
      Lease, are hereby deleted in their entirety.

     

    12.     Exhibits.
      Exhibit
      "B-2"
      and
Exhibit
      "D-2"
      attached
      hereto are hereby incorporated into the Lease, as amended hereby, as
Exhibit
      "B-2"
      and
Exhibit
      "D-2",
      respectively.

     

    13.     No
      Defenses; No Representations or Warranties;
      Ratification.
      Tenant
      hereby certifies to the personal and current knowledge of the undersigned
      authorized signatory, that, as of the date of this Third Amendment, no disputes
      exist between Landlord and Tenant, Landlord is not in default under the terms
      of
      the Lease and the Lease is in full force and effect. Except as expressly
      provided in the Lease and except for certain claims that Tenant may have
      concerning latent defects, Tenant hereby further certifies to the personal
      and
      current knowledge of the undersigned authorized signatory, as of the date of
      this Third Amendment, Tenant has no claims against Landlord and has no defenses
      or offsets to the full and timely performance by Tenant of each of its duties
      and obligations under the Lease, whether monetary or otherwise. All terms and
      conditions contained in the Lease concerning the condition of the Premises
      shall
      apply to the Reduced Premises. Without limiting Landlord's representations,
      if
      any, or any obligations in the Lease (including those relating to the condition
      of the Premises), Tenant represents and warrants to Landlord that Tenant has
      conducted all such investigations as are necessary or appropriate to confirm
      the
      acceptability of the physical condition and characteristics of the Reduced
      Premises, the size and dimensions of the Reduced Premises and the suitability
      of
      the Reduced Premises for Tenant's intended use, and that Tenant is not relying
      upon or otherwise basing its decision to lease the Reduced Premises on any
      representations or warranties as to such matters made by or on behalf of
      Landlord.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    14.     Severability
      of Provisions.
      A
      determination that any provision of this Third Amendment is unenforceable or
      invalid shall not affect the enforceability or validity of any other provision
      hereof, and any determination that the application of any provision of this
      Third Amendment to any person or circumstance is illegal or unenforceable shall
      not affect the enforceability or validity of such provision as it may apply
      to
      any other persons or circumstances.

     

    15.     Counterparts.
      This
      Third Amendment may be executed in any number of counterparts with the same
      effect as if all parties hereto had signed the same document. All such
      counterparts shall be construed together and shall constitute one instrument,
      but in making proof hereof it shall only be necessary to produce one such
      counterpart.

     

    16.     Governing
      Law.
      The
      terms and conditions of this Third Amendment shall be governed by the applicable
      laws of the State of Washington.

     

    17.     Interpretation.
      Within
      this Third Amendment, words of any gender shall be held and construed to include
      any other gender, and words in the singular number shall be held and construed
      to include the plural, unless the context otherwise requires. The section
      headings used herein are intended for reference purposes only and shall not
      be
      considered in the interpretation of the terms and conditions hereof. The parties
      acknowledge that the parties and their counsel have reviewed and revised this
      Third Amendment and that the normal rule of construction to the effect that
      any
      ambiguities are to be resolved against the drafting party shall not be employed
      in the interpretation of this Third Amendment or any exhibits or amendments
      hereto.

     

    18.     Amendment.
      The
      terms and conditions hereof may not be modified, altered or otherwise amended
      except by an instrument in writing executed by Tenant and Landlord.

     

    19.     Entire
      Amendment.
      This
      Third Amendment contains the entire agreement between the parties hereto with
      respect to the matters contained herein and fully supersedes all prior
      agreements and understandings between the parties pertaining to such subject
      matter.

     

    20.     Successors
      and Assigns.
      The
      terms and conditions of this Third Amendment shall be binding upon and shall
      inure to the benefit of the parties hereto, their successors and permitted
      assigns.

     

    21.     Confirmation
      of Lease; Construction.
      In the
      event of any ambiguity or uncertainty between any term or provision contained
      in
      the Lease and any term or provision contained in this Third Amendment, then
      in
      all such events the terms and provisions contained in this Third Amendment
      shall
      control.

     

    22.     Condition
      Precedent.
      Tenant
      acknowledges that Landlord is negotiating a lease (the "Boeing
      Lease")
      with
      The Boeing Company, a Delaware ("Boeing"),
      pursuant to which Boeing will lease space that is part of the Premises currently
      leased by Tenant. The execution and delivery of the Boeing Lease by Boeing
      and
      Landlord are
      conditions precedent to the effectiveness of this Third Amendment. If the
      foregoing conditions precedent are not either satisfied or waived in writing
      by
      Landlord by February 8, 2007, then this Third Amendment shall be automatically
      void, and neither party shall have any rights, duties, obligations, liabilities
      or remedies with respect to this Third Amendment.

    

    

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF,
      Landlord and Tenant have executed this Third Amendment to Lease Agreement to
      be
      effective as of February 1, 2007.

     

    

    LANDLORD:

    

    WIREDZONE
      PROPERTY, L.P.

    

    
      	 	
              By:

            	
              WiredZone
                Property GenPar, LLC,

            

    

    its
      general partner

    

    

    By: /s/
      Judson L. Pankey 

    Its: Managing
      Member 

    

    

    TENANT:

    

    COMBIMATRIX
      CORPORATION

    

    

    By: /s/
      Amit Kumar

    Title: CEO

     

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    STATE
      OF
      TEXAS                    
§

                                                           
      §

    COUNTY
      OF
      DALLAS             
§

    

    I
      certify
      that I know or have satisfactory evidence that ____Judson Pankey_____________
      is
      the person who appeared before me, and said person acknowledged that he/she
      signed this instrument, on oath stated that he/she was authorized to execute
      this instrument and acknowledged it as the ___Managing Member__________ of
      WiredZone Property GenPar, LLC, general partner of WIREDZONE PROPERTY, L.P.,
      to
      be the free and voluntary act of such party for the uses and purposes mentioned
      in this instrument.

    

    DATED:
      February _1_, 2007.

    

    

    
      	(use
              this space for notarial stamp/seal)	
              /s/
                Anne Marie Ryan    

              Print
                Name: Anne
                Marie Ryan   

              NOTARY
                PUBLIC in and for the State of Texas,

              residing
                at 5021 Middleton Cr. The Calvary, TX 75056

              My
                Appointment expires: 9/12/09

            

    

    

      

    

    

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    

     STATE
      OF _______________       
§

                                                                    
      §

    COUNTY
      OF _____________         
§

    

    I
      certify
      that I know or have satisfactory evidence that _______________________ is the
      person who appeared before me, and said person acknowledged that he/she signed
      this instrument, on oath stated that he/she was authorized to execute this
      instrument and acknowledged it as the _________________ of COMBIMATRIX
      CORPORATION, a Delaware corporation, to be the free and voluntary act of such
      party for the uses and purposes mentioned in this instrument.

    

    DATED:
      February __, 2007.

     

    

    
      	(use
              this space for notarial stamp/seal)	
              Print
                Name:_________________________

              NOTARY
                PUBLIC in and for the State of 

              
                _______________,
                  residing at ______________________

                My
                  Appointment
                  expires:__________________

              

            

     

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    EXHIBIT
      "B-2"

    

    Diagrams
      of Third Floor Relocation Premises

    and
      Second Floor Reduced Premises

    

    

    

    

    [See
      attached two (2) sheets.]

    

    
      
         

      

      
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    EXHIBIT
      "D-2"

    

    Leasehold
      Improvements Agreement

    

    

    This
      Leasehold Improvements Agreement (this "Agreement")
      is
      made and entered as of February 1, 2007, in connection with that certain Third
      Amendment to Lease Agreement (the "Third
      Amendment"),
      executed concurrently herewith by and between WIREDZONE PROPERTY, L.P
      ("Landlord")
      and
      COMBIMATRIX CORPORATION ("Tenant"),
      and
      constitutes the entire agreement of Landlord and Tenant with respect to the
      construction and completion of the Reduced Premises described in the Third
      Amendment. In the event of a conflict between the provisions of this Agreement
      and other provisions of the Third Amendment, the provisions of this Agreement
      will control. Terms defined in the Third Amendment, when used herein, shall
      have
      the same meanings as are ascribed to them in the Third Amendment.

     

    1. Since
      the
      Reduced Premises have been occupied by a previous tenant, Tenant hereby agrees
      to accept the Reduced Premises in its "as is" condition; provided, however,
      the
      portion of the Reduced Premises not currently occupied by Tenant shall be in
      broom-clean condition and all Building systems (including, without limitation,
      the structural roof, roof membrane, walls, foundations, existing HVAC and
      utility systems) shall be in good working order prior to the delivery of such
      portion of the Premises to Tenant.

     

    2. Landlord
      agrees to turn-key the Work (as defined herein) to the Reduced Premises based
      on
      the space plans attached hereto as Exhibit
      "B-2",
      from
      which will be prepared plans and drawings mutually agreeable to the parties
      (the
      "Approved
      Working Drawings"),
      which
      turn-key pricing includes the preparation of space plans, working documents,
      standard and above standard improvements, construction management fees, and
      compliance with all applicable governmental laws, codes, rules and regulations
      including ADA/TAS. As used herein, "Work"
      shall
      mean all improvements to be constructed in accordance with and as indicated
      on
      the Approved Working Drawings. Landlord's approval of the Approved Working
      Drawings shall not be a representation or warranty by Landlord that such
      drawings are adequate for any use, purpose, or condition, or that such drawings
      comply with any applicable law or code, but shall merely be the consent of
      Landlord to perform the Work. All changes in the Work for partition changes
      or
      other material or structural changes must receive the prior written approval
      of
      Landlord which approval shall not be unreasonably withheld, delayed or
      conditioned.

     

    3. Notwithstanding
      anything to the contrary contained herein, so long as Tenant does not request
      any changes to the Approved Working Drawings, as set forth above, no Excess
      (as
      defined herein) shall be charged to or payable by Tenant in connection with
      the
      construction of the Work.

     

    4. Landlord
      shall construct the Work accordance with the Approved Working Drawings. The
      cost
      of the Work for the purpose of billing shall equal the cost of planning,
      designing and constructing such Work (including any contractor's fee and
      Landlord's cost of supervision and coordination of the work in an amount equal
      to four percent (4%) of the actual cost to Landlord of the construction).

     

    5. All
      costs
      and expenses incurred in the design and construction of the Work shall be borne
      by Landlord; provided, however, that any costs and expenses (the "Excess")
      incurred as a result of changes to the Approved Working Drawing or change orders
      requested by Tenant which increase the cost of the Work shall be paid by Tenant,
      and shall be payable as follows:

     

    (a) Tenant
      shall pay to Landlord, within thirty (30) days from delivery of Landlord's
      invoice to Tenant therefor, an amount equal to one hundred percent (100%) of
      such Excess (as then estimated by Landlord); and

     

    (b) As
      soon
      as the final accounting is prepared and submitted to Tenant, and following
      the
      completion of all "punch list" items Tenant shall pay to Landlord, within thirty
      (30) days from delivery of Landlord's invoice to Tenant therefor, the entire
      unpaid balance, if any, of the actual Excess based on the final costs to
      Landlord as described in Paragraph 3 hereof.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    The
      amounts payable hereunder, if any, shall constitute rent due pursuant to the
      Lease, as amended, at the times specified therein and failure to make any such
      payments when due shall constitute an event of default under the Lease, as
      amended, entitling Landlord to all of its remedies thereunder as well as all
      remedies otherwise available to Landlord.

     

    6. If
      Tenant
      requests any changes in the Approved Working Drawings, Tenant shall present
      Landlord with revised drawings and specifications for Landlord's approval,
      which
      approval will not be unreasonably withheld (but may be withheld if Landlord
      believes that any changes could substantially delay the construction of the
      Work). If Landlord approves such changes, Landlord shall incorporate such
      changes in the Work following Landlord's receipt of a change order therefor
      executed by Tenant. 

     

    7. Should
      Landlord be delayed in substantially completing the Work as a result of (i)
      Tenant's requests for changes in the Approved Working Drawings which delay
      said
      Work or (ii) the performance of any Work contemplated herein by a contractor
      or
      agent employed by Tenant (any such contractor or agent being subject to the
      prior written approval of Landlord) or (iii) any other delay caused by Tenant,
      its agents or employees, then Tenant's obligation to pay Rent under the Lease,
      as amended, shall nevertheless commence on the applicable Commencement Date,
      unless such delays for which Tenant is responsible are in addition to delays
      for
      which Landlord is responsible, in which case the applicable Commencement Date
      and commencement of Rent under the Lease, as amended hereby, shall be extended
      for the period of delays for which Landlord was responsible.

     

    8. Landlord
      hereby agrees that to the extent it acts as contractor hereunder, Landlord
      will
      commence or cause the commencement of the construction of the Work as promptly
      as is reasonably possible, and will proceed with due diligence to perform or
      cause such work to be performed in a good and workmanlike manner.

     

    9. For
      the
      purposes of this Leasehold Improvements Agreement, the term "substantial
      completion"
      of the
      Work shall mean completion of such Work in all material respects excepting
      only
      minor "punch list" finish and touch-up work which does not interfere with the
      occupancy of the Reduced Premises by Tenant, as determined by Landlord's
      architect, and the issuance of a Certificate of Occupancy for the Reduced
      Premises to the extent required by the local building authority having
      jurisdiction over the Building. Tenant shall have until the thirtieth
      (30th)
      day
      following the applicable Commencement Date to submit a "punch list" to Landlord,
      and all such "punch list" items will be completed by Landlord within thirty
      (30)
      days of its receipt of such list.

     

    10. All
      sums
      payable by Tenant to Landlord under this Leasehold Improvements Agreement shall
      constitute additional rental under the Lease, as amended. In the event Tenant
      shall fail to pay any amount of such additional rental when due, and any such
      failure continues for a period of ten (10) days after written notice of such
      failure is issued by Landlord to Tenant, then such failure shall constitute
      an
      Event of Default under the Lease, as amended, and hereunder and Landlord shall
      have the right to exercise all of its rights and remedies under the Lease,
      as
      amended, and under applicable law. In no event shall any termination of the
      Lease, as amended, by Landlord relieve Tenant of Tenant's obligation to pay
      to
      Landlord the sums payable by Tenant hereunder.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    EXECUTED
      as of the day and year first above written.

     

    LANDLORD:

    

    WIREDZONE
      PROPERTY, L.P.

    

    By: 
      WiredZone
      Property GenPar, LLC,

    its
      general partner

    

    By: /s/
      Judson L. Pankey   

    Its: Managing
      Member   

    

    

    TENANT:

    

    COMBIMATRIX
      CORPORATION

    

    

    By: /s/
      Amit Kumar    

    Title: CEO

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