Document:

Exhibit 10.22

 

 

AGREEMENT OF LEASE

 

OLYMPIC BLOCK BUILDING

 

 

Between

 

 

FIRST & YESLER,
L.L.C., Landlord

 

 

and

 

 

OncoGenex, Inc.

 

 

September 15, 2005

 

 

CONTENTS

 

	
   

  	
  Page

  
	
  Section

  	
   

  
	
  1.

  	
  Basic Terms

  	
  1

  
	
  2.

  	
  Effect of Reference to Basic Terms

  	
  2

  
	
  3.

  	
  Lease of Premises

  	
  2

  
	
  4.

  	
  Completion by Landlord

  	
  2

  
	
  5.

  	
  Term

  	
  3

  
	
  6.

  	
  Use of Premises

  	
  3

  
	
  7.

  	
  Rent

  	
  4

  
	
  8.

  	
  Security Deposit

  	
  6

  
	
  9.

  	
  Insurance and Indemnification

  	
  6

  
	
  10.

  	
  Damage by Fire or Other Casualty; Casualty
  Insurance

  	
  9

  
	
  11.

  	
  Condemnation

  	
  10

  
	
  12.

  	
  Non-Abatement of Rent

  	
  11

  
	
  13.

  	
  Repairs and Maintenance

  	
  11

  
	
  14.

  	
  Utilities and Services

  	
  12

  
	
  15.

  	
  Governmental Regulations

  	
  14

  
	
  16.

  	
  Directory; Signs

  	
  14

  
	
  17.

  	
  Alterations and Additions

  	
  14

  
	
  18.

  	
  Landlord’s Right of Entry

  	
  15

  
	
  19.

  	
  Quiet Enjoyment

  	
  15

  
	
  20.

  	
  Assignment and Subletting

  	
  15

  
	
  21.

  	
  Subordination

  	
  17

  
	
  22.

  	
  Tenant’s Certificate

  	
  17

  
	
  23.

  	
  Surrender

  	
  18

  
	
  24.

  	
  Defaults - Remedies

  	
  18

  
	
  25.

  	
  Bankruptcy or Insolvency; Assumption;
  Adequate Protection

  	
  21

  
	
  26.

  	
  Reserved Rights

  	
  23

  
	
  27.

  	
  Americans With Disabilities Act

  	
  23

  
	
  28.

  	
  Notices

  	
  24

  
	
  29.

  	
  Limitation of Liability

  	
  24

  
	
  30.

  	
  Miscellaneous

  	
  24

  
	
  31.

  	
  Landlord Representations and Warranties

  	
  26

  

 

	
  EXHIBIT A

  	
  Floor Plans

  
	
  EXHIBIT B

  	
  Description of Property

  
	
  EXHIBIT C

  	
  Rules and Regulations

  
	
  EXHIBIT D

  	
  Tenant Improvements

  
	
  EXHIBIT E

  	
  Tenant Estoppel Certificate

  

 

 

AGREEMENT OF LEASE

 

OFFICE LEASE

 

THIS AGREEMENT OF LEASE, made as of the15th
day of September, 2005, by and between FIRST & YESLER, L.L.C. (“Landlord”),
and OncoGenex , Inc..(“Tenant”).

 

WITNESSETH:

 

1.                                      Basic
Terms.

 

(a)                                  Address of
Landlord:                                                                                                                              FIRST &
YESLER, L.L.C.

1100 Olive Way, Suite 340

Seattle, WA 98101

 

(b)                                 Address of Tenant:                                                                                                                                        101
Yesler Way

Seattle, WA 98104

 

(c)                                  Premises:                                              Suite 400
consisting of approximately 3,687 rentable square feet, as shown on Exhibit “A”
attached hereto, which premises are located in the Building.

 

(d)                                 Building:                                                The
Building located at 101 Yesler Way, Seattle, Washington, 98104. The legal
description of the parcel of land on which the Building is situated is attached
hereto as Exhibit “B”.

 

(e)                                  Property:                                               The
Building, the parcel of land upon which the Building is situated and any other
improvements thereon.

 

(f)                                    Lease
Term:                                Subject
to adjustment as provided in Paragraph 5 hereof, the term of this Lease shall
be for a period of (3) years, with one(1) three (3) year option
to renew at the then fair market value, commencing on the Commencement Date as
defined in Paragraph 5 hereof, and ending three (3) years following the
Commencement Date (the “Expiration Date”), unless this Lease shall be sooner
terminated as otherwise provided in this Lease.

 

(g)                                 Rent:                    All sums,
moneys, payments, costs and expenses required to be paid by Tenant to Landlord
pursuant to this Lease.

 

(h)                                 Annual Base Rent:                                                                                                                                            Year
1:                                                            $21.00/rsf

Year 2:                                                            $22.00/rsf

Year 3:                                                            $23.00/rsf

 

(i)                                     Monthly
Base Rent Installment:                                                                       Months
1-3:                                                                               $0

Months 4-12:                                                                         $6,452.25

Months 13-24:                                                                   $6,759.50

Months 25-36:                                                                   $7,066.75

 

(j)                                     Base Year:   2006

 

(k)                                  Tenant’s
Share of Annual Operating Costs:         5.22%,
which represents the proportion of the rentable square footage of the Premises
to the total rentable square footage of the Building.

 

(l)                                     Security
Deposit:    $50,000.00

 

(m)                               Permitted
Uses:             Tenant shall use and
occupy the Premises for general office use.

 

 

1

 

(n)                                 Lease
Year:                                   Each
consecutive period of twelve (12) months with the first Lease Year commencing
on the Commencement Date.

 

(o)                                 Parking:     Up to two stalls in the
Building parking garage at a rate of $225/stall. Landlord guarantees that one
parking stall shall be available to Tenant during the Lease Term. The second
parking stall shall be available to Tenant on a month to month basis.

 

2.                                      Effect
of Reference to Basic Terms.

 

Each reference in this Lease to any of Basic
Terms contained in Paragraph 1 shall be construed to incorporate into such
reference all of the definitions set forth in Paragraph 1.

 

3.                                      Lease
of Premises.

 

Landlord, in consideration of the Rent to be
paid and the covenants and agreements to be performed by Tenant, does hereby
lease unto Tenant the Premises, constructed in accordance with the lease plans
and specifications (the “Tenant Improvement Plans”) showing interior
improvements to be constructed by Landlord, which Tenant Improvement Plans are
attached as Schedule 1 to the Tenant Improvement Work Agreement attached
hereto as “Exhibit D” (the “Tenant Improvement Work Agreement”), together
with the non-exclusive right and easement to use the unreserved parking areas
and other common facilities in or on the Building and the Property (including,
without limitation, the driveways, sidewalks, loading and unreserved parking
areas, lobbies, and hallways) which may from time to time be furnished by
Landlord, in common with Landlord and the tenants and occupants of the
Building, and their respective agents, employees, customers and invitees. Tenant
agrees that Tenant’s consent shall not be required for any additions,
reductions or modifications of such common facilities including the
construction of free-standing buildings on any portions of the Property. Tenant
acknowledges and agrees that Landlord shall have the right to make reasonable rules and
regulations governing the location and use of all parking areas and common
facilities, and Tenant shall be governed thereby.

 

4.                                      Completion
by Landlord.

 

Prior to Tenants occupancy, Landlord shall
clean throughout the Premises, repair any damaged areas, if any exist, and test
all mechanical and electrical systems so that they are in good working order. All
necessary construction shall be commenced promptly and shall, subject to
Paragraph 5 hereof, be substantially completed and ready for use and occupancy
by Tenant on the Commencement Date; provided, however, that the time for
substantial completion of the Premises shall be extended for additional periods
of time equal to the time lost by Landlord or Landlord’s contractors,
subcontractors or suppliers due to strikes or other labor troubles not caused
by the Landlord, governmental restrictions and limitations, scarcity,
unavailability or delays in obtaining fuel, labor or materials, war or other
national emergency, accidents, floods, defective materials, fire damage or
other casualties, weather conditions, holdovers by any previous occupant of the
Premises, or any cause similar or dissimilar to the foregoing that is beyond
the reasonable control of Landlord. All construction shall be done in a good
and workmanlike manner by Landlord or Landlord’s contractors and shall comply
at the time of completion with all applicable laws, ordinances, regulations and
orders of the federal, state, county or other governmental authorities having
jurisdiction thereof. Tenant shall not interfere with or delay the work to be
performed hereunder by Landlord, or the contractors and workmen engaged in the
work to be performed hereunder by Landlord, and Tenant shall obtain Landlord’s
written consent prior to installing any of its furnishings or equipment. Tenant
will be responsible for all costs resulting from any additional work not
provided for in the Tenant Improvement Work Agreement, including but not
limited to architectural and engineering charges, which costs shall be paid by
Tenant on or before occupancy of the Premises, or as otherwise provided in the
Tenant Improvement Work Agreement. Tenant’s occupancy of the Premises shall
constitute acceptance of the work performed by Landlord pursuant to this
Paragraph 4.

 

2

 

5.                                      Term.

 

The Lease Term, as designated in Item (f) of
Basic Terms, shall commence five (5) days following delivery of written
notice to Tenant that the Premises and the improvements required to be
constructed by Landlord under Paragraph 4 hereof shall have been substantially
completed (meaning such state of completion as will allow Tenant to utilize the
Premises for their intended purpose, without material interference by reason of
final completion) (the “Commencement Date”); provided, however, that if there
is work left to be done on the scheduled completion date as a result of changes
or delays caused by Tenant, the Lease Term shall commence without regard to the
work that is incomplete. The Commencement Date shall not be extended as a
result of any work that Tenant is responsible for completing in order to
utilize the Premises for its intended purpose (ie: obtaining telephone and or
computer service) regardless of any lack of fault on the part of Tenant in
coordinating such work. Unless sooner terminated in accordance with the terms
hereof, the Lease Term shall end without the necessity for notice from either
party to the other at 12:01 a.m. local time on the Expiration Date. If
permission is given to Tenant to enter into possession of the Premises, or to
occupy premises other than the Premises prior to the Commencement Date, Tenant
agrees that such pre-Lease Term occupancy shall be deemed to be under all the
terms, conditions and provisions of this Lease, including payment of Rent and
no rental abatement otherwise in effect under this Lease shall apply to such
pre-Lease Term occupancy.

 

6.                                      Use
of Premises.

 

(a)                                  Use.                        Tenant
shall use and occupy the Premises only for the use set forth in Item (m) of
Basic Terms and for no other use or purpose. Tenant shall not use or permit the
Premises to be used for any residential, retail or wholesale use, or as a
medical or dental office or clinic, or as a vocational or educational school,
or as a governmental or quasi-governmental office, or for off-track betting or
other gambling use.

 

(b)                                 Environmental
Protection.      Tenant shall
not cause or permit to occur:

 

(i)                                     any violation of
any present or future federal, state or local law, ordinance or regulation
related to environmental conditions in or about the Premises, including, but
not limited to, improvements or alterations made to the Premises at any time by
Tenant, its agents or contractors, or

 

(ii)                                  the use, generation,
release, manufacture, refining, production, processing, storage or disposal of
any “Hazardous Substances” (as hereinafter defined) in or about the Premises,
or the transportation to or from the Premises of any Hazardous Substances.

 

Tenant, at its expense, shall comply with each
present and future federal, state and local law, ordinance and regulation
related to environmental conditions in or about the Premises or Tenant’s use of
the Premises, including, without limitation, all reporting requirements and the
performance of any cleanups required by any governmental authorities. Tenant
shall indemnify, defend and hold harmless Landlord and its employees from and
against all fines, suits, claims, actions, damages, liabilities, costs and
expenses (including attorney’s and consultant’s fees) asserted against or
sustained by any such person or entity and arising out of or in any way
connected with Tenant’s failure to comply with its obligations under this
Paragraph 6(b), which obligations shall survive the expiration termination of this
Lease.

 

(c)                                  Hazardous
Substances. As used in this Paragraph 6, “Hazardous Substances” shall
include, without limitation, flammables, explosives, radioactive materials,
asbestos containing materials (ACMs), polychlorinated biphenyls (PCBs),
chemicals known to cause cancer or reproductive toxicity, pollutants,
contaminants, hazardous wastes, toxic substances, petroleum and petroleum
products, chlorofluorocarbons (CFCs) and substances declared to be hazardous or
toxic under any present or future federal, state or local law, ordinance or
regulation.

 

(d)                                 Recycling. Tenant,
at its expense, agrees to comply with each present and future federal, state
and local law, ordinance and regulation regarding the collection, sorting,
separation and recycling of waste products, garbage, refuse and trash ( the “Wastes”
collectively) in or about

 

3

 

the Premises. Tenant shall sort and separate the Wastes into such
categories as required by law. Each separately sorted category of the Wastes
shall be placed in separate receptacles designated and approved by Landlord. Such
separate receptacles shall be removed from the Premises in accordance with a
collection schedule prescribed by law or as otherwise prescribed by
Landlord. Landlord reserves the right to refuse to collect or accept from
Tenant any Wastes that are not separate and sorted as required by law, and to
require Tenant to arrange for such collection at Tenant’s expense, utilizing a
contractor satisfactory to Landlord.

 

7.                                      Rent.

 

(a)                                  Annual Base Rent.
Tenant shall pay the Annual Base Rent designated in Item (h) of Basic
Terms in equal monthly installments, as designated in Item (i) of Basic
Terms, in advance, on the first day of each calendar month during the Lease
Term; provided, however, that the Base Rent for the first full month of the
Lease Term for which Base Rent is payable shall be paid upon the signing of
this Lease.

 

(b)                                 Additional Rent.

 

(i)                                     Annual
Operating Costs. As used herein, the term “Annual Operating Costs” shall
mean the costs to Landlord of operating, maintaining, repairing and replacing
the Property during each calendar year of the Lease Term. Such costs shall
include by way of example rather than limitation: All real estate taxes and
assessments, general or special, ordinary or extraordinary, imposed upon the
Property (including all improvements thereto), reasonable costs incurred in
protesting real estate taxes or assessments, reasonable legal fees, salaries,
wages, fringe benefits and union dues of workers and other on-site employees of
Landlord, all insurance premiums, fees, impositions, costs for repairs,
maintenance, service contracts, management fees, governmental permits, overhead
expenses, costs of furnishing water, sewer, gas, fuel, electricity and other
utility services, janitorial service, trash removal, and the costs of any other
items attributable to operating or maintaining any or all of the Property
excluding any costs which under generally accepted accounting principles are
capital expenditures; provided, however, that Annual Operating Costs shall also
include the annual amortization (over the anticipated useful life) of the cost
of a capital improvement, plus any interest or financing charges thereon,
falling within any of the following categories: (i) a labor-saving or
energy-saving device or improvement which eliminates any component of Annual
Operating Costs (or which reduces the amount or rate of increase of any
component of Annual Operating Costs) from the costs that would have been incurred
had such device or improvement not been installed; (ii) an installation or
improvement required by reason of any law, ordinance or regulation (including
environmental laws), which requirement did not exist on the date of this Lease
and is generally applicable to similar office buildings; or (iii) an
installation or improvement which directly enhances safety of tenants in the
Building generally. If Landlord shall receive an abatement of any real estate
taxes or assessments imposed upon the Property relating to any period for which
Tenant is obligated to pay Tenant’s Share of Annual Operating Costs under this
Paragraph 7, Landlord shall promptly pay or credit to Tenant an amount equal to
Tenant’s Share of the proceeds of such abatement, after deducting Landlord’s
cost in obtaining the same. If, due to a future change in the method of
taxation, any other tax, however designated (including, without limitation, any
rent tax), is imposed in substitution for or in addition to real estate taxes,
then such other tax shall be included within Annual Operating Costs. The cost
of all goods, services, labor and materials supplied or furnished by Landlord
at the request of Tenant solely for the benefit of Tenant and/or the Leased
Premises shall not be included within Annual Operating Costs and shall be paid
by Tenant promptly upon being billed therefor. Other exclusions to the Annual
Operating Costs shall include: (i) costs and expenses incurred in
connection with leasing space in the Building, such as leasing commissions,
allowances, space planner fees, advertising and promotional expenses, legal
fees for the preparation of leases, and rent payable with respect to any
leasing office, court costs and legal fees incurred to enforce the obligations
of other tenants under leases of portions of the Building, (ii) rental
concessions, lease buy-outs or the costs of relocating tenants within the
building, (iii) the costs of renovating or otherwise improving or
decorating, painting or redecorating any tenant’s space, (iv) any costs
representing an amount paid to any person or entity related to or affiliated
with Landlord which is material in excess of the amount which would have been
paid in the absence of such relationship, (v) overhead or profit paid to
Landlord, subsidiaries or affiliates of Landlord for services on or to the
Building or common areas if and to the extent the costs exceed competitive
costs for such

 

4

 

services in comparable first-class office buildings located within
five (5) miles of the Building where they are not so provided by Landlord
or a subsidiary or affiliate of Landlord, (vi) all costs for which Tenant
or any other tenant in the building is being charged other than pursuant to the
Annual Operating Costs reimbursement provisions of the Lease, (vii) the
cost of any items for which Landlord is reimbursed by insurance to the extent
of the reimbursement received, (viii) any interest or penalties incurred
by Landlord due to violations of or non-compliance of the Landlord or the
building or any part thereof with statutes, laws, regulations or
ordinances including without limitation the Americans with Disabilities Act
(for purposes of this provision only, collectively, “Laws”), and (ix) cost
incurred because of the gross negligence of the Landlord or due to breach of
the Landlord under any contractual obligation.

 

(ii)                                  Payments. Tenant
shall pay to Landlord annually, as additional Rent, the amount by which Tenant’s
Share of Annual Operating Costs exceeds the Base Year Actual Operating Costs
set forth in Item (j) of Basic Terms. If only part of any calendar year
shall fall within the Lease Term, or if only a portion of a calendar year is
included for computation of Tenant’s Share of Annual Operating Costs, the
amount computed as additional rent with respect to such calendar year under the
foregoing provisions shall be prorated in proportion to the portion of such
calendar year falling within the Lease Term. The expiration of the Lease Term
prior to the end of such calendar year shall not impair Tenant’s obligation to
pay such prorated portion as aforesaid. Notwithstanding the foregoing
provisions of this Paragraph 7 to the contrary, Landlord shall have the right,
at its option, to make from time to time during the Lease Term a reasonable
estimate of the additional Rent which may become due hereunder with
respect to any calendar year, and to require Tenant to pay Landlord, at the
time the monthly installments of Annual Base Rent are payable, the amount
obtained by dividing such estimate of additional Rent by the number of months
remaining in such year. Landlord shall cause the actual amount of Tenant’s
Share of the Annual Operating Costs in excess of the Base Year Actual Operating
Costs to be computed and certified to Tenant within one hundred and twenty
(120) days following the end of each calendar year (or as soon thereafter as may be
practicable), and Tenant shall within ten (10) days of receipt of the
certification thereof pay to Landlord the amount of any deficiency or Landlord
shall credit any overpayment to Tenant’s account for the following year, as the
case may be. No interest or penalties shall accrue on any amounts which
Landlord is obligated to credit or Tenant is obligated to pay by reason of this
Paragraph (unless such credit or payment itself is delinquent.)

 

(iii)                               Books and Records.
Tenant shall have the right to inspect the books and records used by Landlord
in calculating the Annual Operating Costs within sixty (60) days of receipt of
the certification during regular business hours after having given Landlord
written notice at least forty-eight (48) hours prior thereto; provided,
however, that Tenant shall make all payments of additional Rent without delay,
and that Tenant’s obligation to pay such additional Rent shall not be
contingent on any such right. Unless Tenant shall take written exception to any
statement of Annual Operating Costs within ninety (90) days after Tenant’s
receipt of same, such statement shall be considered as final and conclusively
binding upon Tenant.

 

(iv)                              Late Payment. If
Tenant shall fail to pay when the same is due and payable, any Annual Base Rent
or any additional Rent, or any other charges or payments required to be paid by
Tenant under this Lease, such unpaid amounts shall bear interest from the due
date thereof to the date of payment at the rate of twelve percent (12%) per
annum, but in no event at a rate which is higher than the legal limit. If any
installment of Rent is delinquent by more than five (5) days, Tenant shall
also pay to Landlord a late charge in an amount equal to five percent (5%) of
the amount of such delinquent installment, which late charge shall be
immediately due and payable without notice or demand from Landlord and which
itself shall bear interest at the rate provided above from the date due until
paid.

 

(v)                                 Real Estate Taxes.
All references herein to real estate taxes for a particular calendar year shall
be deemed to refer to real estate taxes payable in such calendar year without
regard to when such real estate taxes are levied, assessed or otherwise imposed.
If and to the extent the assessed valuation of the Property is increased by
reason of any special improvements which are made to the Premises (over and
above Building standard improvements) Tenant shall pay the full amount of all
real estate taxes thereafter payable during the Lease Term which are
attributable to such increased assessment.

 

5

 

(vi)                              No Decrease in Base
Rent. In no event shall the determination of any additional Rent owing
under this Paragraph 7 result in a decrease in or credit against any Base Rent
owing under this Lease.

 

(vii)                           Payment of Rent. Rent
shall be payable without demand, notice, offset or deduction, except as
otherwise specifically stated in this Lease. All Rent due under this Lease
shall be paid by checks payable to the order of “FIRST & YESLER,
L.L.C.”, which checks shall be mailed or delivered to Landlord at the address
designated in Item (a) of Basic Terms, or in such other manner or at such
other place as Landlord may from time to time designate to Tenant. Rent
will be prorated for partial months or partial years within the Lease Term (and
for partial months or partial years within periods for which same are payable).
Tenant’s covenant to pay Rent shall be independent of every other covenant in
this Lease.

 

8.                                      Security
Deposit.

 

At the time of signing this Lease Tenant
shall deposit with Landlord the sum set forth in Item (l) of Basic Terms, to be
retained by Landlord as a Security Deposit for the faithful performance and
observance by Tenant of the covenants, agreements and conditions of this Lease.
Tenant grants to Landlord a security interest in the Security Deposit to secure
the payment of all Rent owing under this Lease. This Lease shall constitute a
security agreement between Landlord and Tenant for the purpose of creating such
security interest. Upon request by Landlord at any time, Tenant shall execute
and deliver to Landlord UCC Financing Statements to further evidence and
perfect the security interest herein granted. If and to the extent permitted by
applicable law, Tenant shall not be entitled to any interest whatever on the
Security Deposit. Landlord may use, apply or retain the whole or any part of
the Security Deposit to the extent required for the payment of any Rent payable
hereunder as to which Tenant is in default or to the extent required for the
reimbursement to Landlord of any sum which Landlord may expend or may be
required to expend by reason of Tenant’s default with respect to any of the
covenants, agreements or conditions of this Lease. Upon notice by Landlord of
Landlord’s application of all or any portion of the security deposit as
aforesaid, Tenant shall replenish the security deposit in full by promptly paying
to Landlord the amount so applied. Notwithstanding anything in this Lease to
the contrary, provided that Tenant has not at any time been in default under
the Lease, Landlord and Tenant hereby agree that, starting on the first day of
the month commencing immediately following the first anniversary of the
Commencement Date, Landlord shall apply the Security Deposit against payment of
monthly Rent owing by the Tenant under this Lease, until the Security Deposit
is reduced to the final month’s Rent under the Lease Term, at which time Tenant
will resume payment of monthly Rent in accordance with the terms of this Lease
(including any residual Rent owing for the month in which the Security Deposit
is reduced to the last month’s Rent), and Tenant will have no obligation to
replenish the Security Deposit for Rent paid by reduction of the Security
Deposit pursuant to this sentence. If Tenant shall fully and faithfully comply
with all of the covenants, agreements and conditions of this Lease, the balance
of the Security Deposit shall be returned to Tenant after the Expiration Date
and surrender of the Premises to Landlord. If the Premises are sold to a bona
fide purchaser, Landlord shall have the obligation to transfer the Security
Deposit to such purchaser, by which transfer Landlord shall be released from
all liability for the return thereof, and Tenant shall look solely to the new
landlord for the return thereof.

 

9.                                      Insurance
and Indemnification.

 

(a)                                  Insurance by
Landlord. Landlord shall at all times during the Lease Term carry a policy
of insurance which insures the Building, including the Premises, against loss
or damage by fire or other casualty (namely, the perils against which insurance
is afforded by a standard fire insurance policy and extended coverage endorsement
including, without limitation, rental interruption coverage for all leased
space in the Building); provided, however, that Landlord shall not be
responsible for, and shall not be obligated to insure against, any loss of or
damage to any personal property of Tenant, or which Tenant may have in the
Building or the Premises or any trade fixtures installed by or paid for by
Tenant on the Premises or any additional improvements which Tenant may construct
on the Premises, and Landlord shall not be liable for any loss or damage to
such property, regardless of cause, including the negligence of Landlord and
its employees, agents, contractors, customers and invitees. If the tenant
finish improvements installed by Landlord for Tenant which are in excess of those
provided for in the Tenant Improvement Work Agreement or

 

6

 

any alterations or improvements made by Tenant pursuant to Paragraph 17
hereof result in an increase of the premiums charged during the Lease Term on
the casualty insurance carried by Landlord on the Building, then the cost of
such increase in insurance premiums shall be borne by Tenant, who shall
reimburse Landlord for the same as additional Rent after being separately
billed therefor. The annual cost of all such insurance maintained by Landlord
shall be considered as a part of the Annual Operating Costs of the
Property.

 

(b)                                 Insurance by Tenant.
Tenant shall, at all times during the Lease Term, at Tenant’s cost, obtain and
keep in effect the following insurance insuring Tenant, Landlord and all
mortgagees and any other person or entity designated by Landlord as having an
interest in the Property (as their interests may appear):

 

(i)                                     Insurance upon all
property situated in the Premises owned by Tenant or for which Tenant is
legally liable and on fixtures and improvements installed in the Premises by or
on behalf of Tenant. Such policies shall be for an amount of not less than one
hundred percent (100%) of the full replacement cost with coverage against at
least fire with standard extended coverage, vandalism, malicious mischief,
sprinkler leakage and water damage. If there is a dispute as to the replacement
cost amount, the decision of Landlord shall be conclusive;

 

(ii)                                  Business interruption
insurance in an amount sufficient to reimburse Tenant for direct or indirect
loss of earnings attributable to prevention of access to the Building or
Premises as a result of such perils;

 

(iii)                               Commercial General
Liability insurance including fire, legal liability and contractual liability
insurance coverage with respect to the Building and the Premises. The coverage
is to include activities and operations conducted by Tenant and any other
person in the Premises and Tenant and any other person performing work on
behalf of Tenant and those for whom Tenant is by law responsible in any other part of
the Building. Such insurance shall be written on a comprehensive basis with
inclusive limits of not less than Two Million Dollars ($2,000,000) for each
occurrence for bodily injury and property damage or such higher limits as
Landlord, acting reasonably, may require from time to time. The limit of
said insurance shall not, however, limit the liability of Tenant hereunder.
Landlord shall be named on all liability policies maintained by Tenant;

 

(iv)                              Worker’s Compensation
insurance for all Tenant’s employees working in the Premises in and amount
sufficient to comply with applicable laws or regulations; and

 

(v)                                 Any other form of
insurance as Tenant, Landlord or its mortgagee, may reasonably require
from time to time. Such insurance shall be in form, amounts and for the risks
which a prudent Tenant would insure.

 

All policies of insurance maintained by
Tenant shall be in a form acceptable to Landlord; issued by an insurer acceptable
to Landlord and licensed to do business in the state in which the Property is
located; and require at least thirty (30) days written notice to Landlord of
termination or material alteration and waive, to the extent available, any
right of subrogation against Landlord. All policies must contain a severability
of interest clause, a cross-liability clause and shall be primary and shall not
provide for contribution of any other insurance available to Landlord, its
mortgagee, or those named insureds designated by Landlord. If requested by
Landlord, Tenant shall, upon the Commencement Date, and thereafter within
fifteen (15) days prior to the expiration date of each such policy, promptly
deliver to Landlord certified copies or other written evidence of such policies
and written evidence satisfactory to Landlord that all premiums have been paid
and all policies are in effect. If Tenant fails to secure or maintain any
insurance coverage required by Landlord, or should insurance secured not be
approved by Landlord and such failure or approval not be corrected within 48
hours after written notice from Landlord, Landlord may without obligation,
purchase such required insurance coverage at Tenant’s expense. Tenant shall
promptly reimburse Landlord for any moneys so expended as additional Rent.

 

(c)                                  Tenant’s
Contractor’s Insurance. Tenant shall require any contractor of Tenant
permitted to perform work in, on or about the Premises to obtain and
maintain the following insurance coverage at no expense to Landlord:

 

7

 

(i)                                     Commercial General
Liability Insurance, including a Broad Form General Liability Endorsement,
in the amount of One Million Dollars ($1,000,000), naming Landlord and Tenant
as insured;

 

(ii)                                  Worker’s Compensation
insurance for all contractor’s employees working in the Premises in an amount
sufficient to comply with applicable laws or regulations;

 

(iii)                               Employers Liability
insurance in an amount not less than One Hundred Thousand Dollars ($100,000);
and

 

(iv)                              Any other insurance as
Tenant, Landlord or its mortgagee may require from time to time.

 

(d)                                 Indemnification.
To the extent permitted by law, Tenant, at Tenant’s sole cost and expense,
shall indemnify and hold harmless Landlord from all loss, claim, demand,
damage, liability or expense, including, without limitation, attorneys’ fees,
resulting from any injury to or death of any person or any loss of or damage to
any property caused by or resulting from any act, omission or negligence of
Tenant or any officer, employee, agent, contractor, licensee, guest, invitee or
visitor of Tenant in or about the Premises or the Property, but the foregoing
provision shall not be construed to make Tenant responsible for loss, damage,
liability or expense resulting from injuries to third parties caused by any
act, omission or negligence of Landlord or of any officer, employee, agent,
contractor, invitee or visitor of Landlord. Landlord shall not be liable for
any loss or damage to person, property or Tenant’s business sustained by
Tenant, or other persons, which may be caused by the Property or the
Premises, or any appurtenances thereto, being out of repair or by the bursting
or leakage of any water, gas, sewer or steam pipe, or by theft or by any act of
neglect of any tenant or occupant of the Property, or any other person. With
respect to any matters Tenant establishes in any action are within the scope of
RCW 4.24.115, Landlord shall be indemnified by Tenant for damages arising out
of bodily injury to persons or damage to property caused by or resulting from
the concurrent negligence of Landlord, its agents or employees, but only to the
extent of concurrent negligence of Tenant, its agents or employees. Tenant
agrees that the foregoing indemnity specifically covers actions brought by its
own employees. The indemnification provided for in this Section with
respect to act or omissions during the term of this Lease shall survive
termination or expiration of this Lease. In case of any action or proceeding
brought against Landlord by reason of any claim which Tenant is obligated to
indemnify Landlord, Tenant upon notice from Landlord shall defend same at
Tenant’s expense. WAIVER: IN CONSIDERATION OF LANDLORD’S EXECUTION OF THIS
LEASE TENANT HEREBY WAIVES ANY IMMUNITY TENANT MAY HAVE UNDER INDUSTRIAL
INSURANCE TITLE 51 RCW IN CONNECTION WITH THE FOREGOING INDEMNITY.

 

To the extent permitted by law, Landlord, at
Landlord’s sole cost and expense, shall indemnify and hold harmless Tenant from
all loss, claim, demand, damage, liability or expense, including, without
limitation, attorneys’ fees, resulting from any injury to or death of any
person or any loss of or damage to any property caused by or resulting from any
act, omission or negligence of Landlord or any officer, employee, agent,
contractor, licensee, guest, invitee or visitor of Landlord in or about the
Premises or the Property, but the foregoing provision shall not be construed to
make Landlord responsible for loss, damage, liability or expense resulting from
injuries to third parties caused by any act, omission or negligence of Tenant
or of any officer, employee, agent, contractor, invitee or visitor of Tenant. Tenant
shall not be liable for any loss or damage to person, property or Landlord’s
business sustained by Landlord, or other persons, which may be caused by
the Property or the Premises, or any appurtenances thereto, being out of repair
or by the bursting or leakage of any water, gas, sewer or steam pipe, or by
theft or by any act of neglect of any tenant or occupant of the Property, or
any other person. With respect to any matters Landlord establishes in any
action are within the scope of RCW 4.24.115, Tenant shall be indemnified by
Landlord for damages arising out of bodily injury to persons or damage to
property caused by or resulting from the concurrent negligence of Tenant, its
agents or employees, but only to the extent of concurrent negligence of
Landlord, its agents or employees. Landlord agrees that the foregoing indemnity
specifically covers actions brought by its own employees. The indemnification
provided for in this Section with respect to act or omissions during the
term of this Lease shall survive termination or expiration of this Lease. In case
of any action or proceeding

 

8

 

brought against Tenant by reason of any claim which Landlord is
obligated to indemnify Tenant, Landlord upon notice from Tenant shall defend
same at Landlord’s expense. WAIVER: IN CONSIDERATION OF TENANT’S EXECUTION OF
THIS LEASE LANDLORD HEREBY WAIVES ANY IMMUNITY LANDLORD MAY HAVE UNDER
INDUSTRIAL INSURANCE TITLE 51 RCW IN CONNECTION WITH THE FOREGOING INDEMNITY.

 

(e)                                  Waiver of
Subrogation. Landlord and Tenant each agree that neither Landlord nor
Tenant (and their successors and assignees) will have any claim against the
other for any loss, damage or injury which is covered by insurance carried by
either party and for which recovery from such insurer is made, notwithstanding
the negligence of either party in causing the loss. This release shall be valid
only if the insurance policy in question expressly permits waiver of
subrogation or if the insurer agrees in writing that such waiver of subrogation
will not affect coverage under said policy. Each party agrees to use
commercially reasonable efforts to obtain such an agreement from its insurer if
the policy does not expressly permit a waiver of subrogation.

 

(f)                                    Increase of
Premiums. Tenant will not do anything or fail to do anything which will
cause the cost of Landlord’s insurance to increase or which will prevent
Landlord from procuring policies (including but not limited to public liability
from companies and in a form satisfactory to Landlord). If any breach of
this Paragraph 9(f) by Tenant shall cause the rate of fire or other
insurance to be increased, Tenant shall pay the amount of such increase as
additional Rent promptly upon being billed therefor.

 

(g)                                 Tenant’s Additional
Insurance. Landlord makes no representation that the limits of liability
specified to be carried by Tenant under the terms of this Lease are adequate to
protect Tenant against Tenant’s undertaking under this Paragraph 9, and in the
event Tenant believes that any such insurance coverage called for under this
Lease is insufficient, Tenant shall provide, at its own expense, such
additional insurance as Tenant deems adequate.

 

10.                               Damage
by Fire or Other Casualty; Casualty Insurance.

 

(a)                                  Obligation to
Repair or Rebuild. If the Premises or the Building shall be damaged or
destroyed by fire or other casualty, Tenant shall promptly notify Landlord of
any damage or destruction to the Premises, and Landlord, subject to its
mortgagee’s consent and to the conditions set forth in this Paragraph 10, shall
repair, rebuild or replace such damage and restore the Premises and/or the Building,
subject to subparagraph (f) below, to substantially the same condition in
which they were immediately prior to such damage which is fully covered by its
fire and other extended coverage insurance policies.

 

(b)                                 Commencement and
Completion of Work. The work shall be commenced promptly and completed with
due diligence, taking into account the time required by Landlord to effect a
settlement with, and procure insurance proceeds from, the insurer, and for
delays beyond Landlord’s reasonable control.

 

(c)                                  Application of
Proceeds. The net amount of any insurance proceeds (excluding proceeds
received pursuant to the rental interruption coverage obtained by Landlord in
accordance with Paragraph 9(a) hereof), recovered by reason of the damage
or destruction of the Building in excess of the cost of adjusting the insurance
claim and collecting the insurance proceeds (such excess amount being
hereinafter called the “net insurance proceeds”) shall be applied towards the
reasonable cost of restoration. If in Landlord’s sole opinion the net insurance
proceeds will not be adequate to complete such restoration, Landlord shall have
the right to terminate this Lease and all the unaccrued obligations of the
parties hereto by sending a written notice of such termination to Tenant, the
notice to specify a termination date no less than ten (10) days after its
transmission; provided however, that if the damage relates only to the Premises
and occurs prior to the last two (2) years of the Lease Term, Tenant,
subject to subparagraph (f) below, may require Landlord to withdraw
the notice of termination by agreeing to pay the cost of restoration in excess
of the net insurance proceeds and by giving Landlord adequate security for such
payment prior to the termination date specified in Landlord’s notice of
termination. If the net insurance proceeds are more than adequate, the amount
by which the net insurance proceeds exceed the cost of restoration will be
retained by Landlord.

 

9

 

(d)                                 Tenant’s Fixtures
and Improvements. Landlord’s obligation or election to restore the Premises
under this Paragraph 10 shall not include the repair, restoration or
replacement of the fixtures, improvements, alterations, furniture or any other
property owned, installed, made by, or in the possession of Tenant.

 

(e)                                  Abatement of Rent.
Tenant will receive an abatement of Annual Base Rent and additional Rent to the
extent and during the time the Premises are rendered untenantable due to
casualty, such Rent to abate in such proportion as the part of the
Premises thus destroyed or rendered untenantable bears to the total Premises
while such repairs are being made and to be conditioned upon Tenant not
occupying such part of the Premises for the conduct of business. If the
Premises are so slightly damaged by such fire or other casualty as not to be
rendered untenantable, Landlord shall make the repairs it deems necessary with
reasonable promptness and the payment of such Rent shall not be affected
thereby. Landlord shall be the sole judge as to whether such destruction or
damage has caused the Building or the Premises to be untenantable or whether
the same cannot be rendered tenantable within the one hundred fifty (150) day
period set forth in subparagraph (f) below. Tenant shall, at its own cost
and expense, remove such of its furniture and furnishings and other belongings
from the Premises as Landlord shall require in order to repair and restore the
Premises.

 

(f)                                    Landlord’s
Option Not to Restore. Notwithstanding the foregoing provisions, if there
is substantial destruction of the Building, or if, in the sole judgment of
Landlord, any damage cannot be repaired and the Premises cannot be made
tenantable within on hundred fifty (150) days of such damage, Landlord shall have
the option not to restore, and may elect to terminate this Lease by
sending notice as referred to in subparagraph (c) above, without giving
Tenant the right to cause the notice of termination to be withdrawn. Landlord
shall notify Tenant in writing within forty-five (45) days after the date of
such damage or destruction of Landlord’s estimate of the period of time
required to repair and restore the Premises to a tenantable condition. If such
period of time exceeds one hundred fifty (150) days, Tenant shall also have the
right to terminate this Lease by written notification to Landlord of such
termination within fifteen (15) days of delivery of Landlord’s notice to
Tenant.

 

11.                               Condemnation.

 

(a)                                  Termination.                             (i) If
all of the Premises are covered by a condemnation; or (ii) if any part of
the Premises is covered by a condemnation and the remainder thereof is
insufficient for the reasonable operation therein of Tenant’s business; or, (iii) if
any of the Property is covered by a condemnation and, in Landlord’s sole
opinion, it would be impractical or the condemnation proceeds are insufficient
to restore the remainder of the Property; then, in any such event, this Lease
shall terminate and all obligations hereunder shall cease as of the date upon
which possession is taken by the condemnor and the Rent herein reserved shall
be apportioned and paid in full by Tenant to Landlord to that date and all Rent
prepaid for periods beyond that date shall forthwith be repaid by Landlord to
Tenant.

 

(b)                                 Partial
Condemnation. If there is a partial condemnation and this Lease has not
been terminated pursuant to subparagraph (a) hereof, Landlord shall
restore the Building and the improvements which are part of the Building
to a condition and size as nearly comparable as reasonably possible to the
condition and size thereof immediately prior to the date upon which possession
shall have been taken by the condemnor. If the condemnation proceeds are more
than adequate to cover the cost of restoration and Landlord’s expenses in collecting
the condemnation proceeds, any excess proceeds shall be retained by Landlord. If
there is a partial condemnation and this Lease has not been terminated by the
date upon which the condemnor shall have obtained possession, the obligations
of Landlord and Tenant under this Lease shall be unaffected by such
condemnation except that there shall be and equitable abatement of the Annual
Base Rent in direct proportion to the amount of the Premises so taken.

 

(c)                                  Award. In the
event of a condemnation affecting Tenant, Tenant shall have the right to make a
separate claim against the condemnor for removal and relocation costs and
expenses and the taking of Tenant’s tangible property; provided and to the
extent, however, that such claims or payments do not reduce the sums otherwise
payable by the condemnor to Landlord. Except as aforesaid, Tenant hereby waives
all claims against Landlord and against the condemnor, and Tenant

 

10

 

hereby assigns to Landlord all claims against the condemnor including,
without limitation, all claims for leasehold damages and diminution in value of
Tenant’s leasehold interest.

 

(d)                                 Temporary Taking.
If the condemnor should take only the right to possession of the Premises for a
fixed period of time or for the duration of an emergency or other temporary
condition, then, notwithstanding anything hereinabove provided, this Lease
shall continue in full force and effect without any abatement of Rent, but the
amounts payable by the condemnor with respect to any period of time prior to
the expiration or sooner termination of this Lease shall be paid by the
condemnor to Landlord and the condemnor shall be considered a subtenant of
Tenant. Landlord shall apply the amount received from the condemnor applicable
to the Rent due hereunder net of costs to Landlord for the collection thereof,
or as much thereof as may be necessary for the purpose, toward the amount
due from Tenant as Rent for that period; and Tenant shall pay to Landlord any
deficiency between the amount thus paid by the condemnor and the amount of the
Rent, or Landlord shall credit to future rental payments due from Tenant any
excess of the amount of the award over the amount of the Rent.

 

12.                               Non-Abatement
of Rent.

 

Except as otherwise expressly provided as to
damage by fire or by any other casualty in subparagraph (e) of Paragraph
10 and as to condemnation in subparagraphs (a) and (b) of Paragraph
11, there shall be no abatement or reduction of Rent payable hereunder for any
cause whatsoever, and this Lease shall not terminate, and Tenant shall not be
entitled to surrender or abandon the Premises.

 

13.                               Repairs
and Maintenance.

 

(a)                                  Tenant’s
Obligations. Tenant, at its sole cost and expense and throughout the Lease
Term and any renewals or extensions thereof, shall keep and maintain the
Premises in a neat, safe and orderly condition and shall make all necessary
non-structural repairs thereto and any repairs to non-Building standard
mechanical, HVAC, electrical and plumbing systems or components thereof in or
serving the Premises for which Landlord does not elect to itself make at Tenant’s
expense. Tenant shall not use or permit the use of any portion of the common
areas for other than their intended use. Upon the expiration of the Lease Term,
Tenant shall yield and deliver up the Premises in like condition as when taken,
reasonable use and wear thereof and repairs required to be made by Landlord
excepted. Anything hereinabove to the contrary notwithstanding, from and after
the date Tenant has taken occupancy of the Premises, any repairs, additions or
alterations to the Premises which are required by OSHA shall be promptly made
by Tenant, at its sole expense, if or to the extent that such repairs,
additions or alterations are required only with respect to the Premises, and
any such repairs, additions and/or alterations made by Tenant shall be subject
to the provisions of this Paragraph 13 and Paragraph 17 hereof.

 

(b)                                 Landlord’s
Obligations. Landlord, subject to subparagraph (c) below, throughout the
Lease Term and any renewals or extensions thereof, shall make all necessary
structural repairs to the Building and any necessary repairs to the Building
standard mechanical, HVAC, electrical and plumbing systems in or servicing the
Premises, excluding repairs to any such systems or components thereof which are
not Building standard; provided, however, that Landlord shall have the option
(but not the obligation) of making repairs to any or all of such systems or
components at Tenant’s sole expense; and further provided, however, that
Landlord shall have no responsibility to make any repairs unless and until
Landlord receives written notice of the need for such repair. Except as
otherwise provided herein, the cost of all such repairs shall be borne by Landlord
and included as part of Annual Operating Costs. Tenant shall at once
report in writing to Landlord any defective condition. Landlord shall not be
liable for any failure to make repairs or to perform any maintenance
unless such failure shall persist for any unreasonable time after written
notice of the need for such repairs or maintenance is received by Landlord from
Tenant. Landlord shall keep repaired and maintain all common areas of the
Property and any sidewalks, parking areas, curbs and access ways adjoining the
Property in a clean and orderly condition.

 

(c)                                  Interference with
Use of Premises; No Release from Obligations. In the event that Landlord
shall deem it necessary, or be required by any governmental authority, to
repair, alter, remove, reconstruct or improve any part of the Premises or
the Building (unless the same result

 

11

 

from Tenant’s act, neglect, default or mode of operation, in which
event Tenant, at its sole expense, shall make all such repairs, alterations and
improvements), then the same shall be made by Landlord with reasonable
dispatch, and should the making of such repairs, alterations or improvements
cause any interference with Tenant’s use of the Premises, such interference
shall not relieve Tenant from the performance of its obligations hereunder, nor
shall such interference be deemed and actual or constructive eviction or
partial eviction or result in an abatement of Rent. Notwithstanding the
foregoing, Tenant shall, at its own cost and expense, make all repairs and
provide all maintenance in connection with any alterations, additions or
improvements made by Tenant pursuant to Paragraph 17 hereof.

 

14.                               Utilities
and Services.

 

(a)                                  Utilities and
Services Furnished by Landlord. Provided Tenant is not in default
hereunder, Landlord agrees to furnish or cause to be furnished to the Premises,
the utilities and services described below, subject to the conditions and in
accordance with the standards set forth in the Paragraph 14.

 

(i)                                     Landlord shall
provide automatic elevator facilities Monday through Friday from 8 a.m. to
6 p.m., and on Saturdays from 9 a.m. to 1 p.m. At least one
elevator shall be available for use at all other times;

 

(ii)                                  Landlord shall
furnish heat or air conditioning Monday through Friday from 8 a.m. to 6 p.m.,
and on Saturdays from 9 a.m. to 1 p.m., when, in the judgment of
Landlord, it is required for the comfortable occupancy and use of the Premises.
Upon prior sufficient request, Landlord shall make available, at Tenant’s
expense, after-hours heat or air conditioning. The minimum use of after-hours
heat or air conditioning and the cost thereof shall be determined from time to
time by Landlord and confirmed in writing to Tenant;

 

(iii)                               Landlord shall furnish
to the Premises, subject to interruptions beyond Landlord’s control, such
electricity as is required for the use of the office lighting and electrical
outlets specified in the Building Standards designated in the Tenant
Improvement Work Agreement;

 

(iv)                              Landlord shall furnish
water for drinking, cleaning and lavatory purposes only; and

 

(v)                                 Landlord shall provide
cleaning and janitorial services to the Premises.

 

(b)                                 Special and
Additional Usage. Landlord may impose a reasonable charge for any
utilities and services, including without limitation, air conditioning,
electricity, and water, provided by Landlord by reason of: (i) any use of
the Premises at any time other than the hours set forth above; (ii) any
use beyond what Landlord agrees herein to furnish; or (iii) special
electrical, cooling and ventilating needs created by Tenant’s telephone
equipment, computers, electronic data processing equipment and other similar
equipment or uses. Landlord, at its option, may require installation of
metering devices, at Tenant’s expense, for the purpose of metering Tenant’s
utility consumption.

 

(c)                                  Cooperation;
Payment of Charges; Approval of Special Equipment Usage. Tenant agrees to
cooperate fully at all times with Landlord and to abide by all regulations and
requirements which Landlord may reasonably prescribe for the use of the
above utilities and services. Tenant agrees to pay any charge imposed by
Landlord pursuant to Paragraph (b) above and any failure to pay any excess
costs as described above shall constitute a breach of the obligation to pay
Rent under this Lease and shall entitle Landlord to the rights herein granted
for such breach and shall entitle Landlord to immediately discontinue providing
such additional or special service. Tenant’s use of electricity shall at no
time exceed the capacity of the service to the Premises or the electrical
risers or wiring installation. Tenant shall not install or use or permit the
installation of use of any computer or electronic data processing equipment on
the Premises, without the prior written consent of Landlord; provided however,
that Landlord’s consent shall not be required if Tenant is installing and using
computer and electronic data processing equipment that is reasonable and
customary for general office usage.

 

12

 

(d)                                 Failure, Stoppage or
Interruption of Service; No Release from Obligations. Landlord shall not be
liable for, and Tenant shall not be entitled to any abatement or reduction of
Rent by reason of, Landlord’s failure to furnish any of the foregoing services
when such failure is caused by accident, breakage, repairs, riots, strikes,
lockouts or other labor disturbance or labor dispute of any character,
governmental regulation, moratorium or other governmental action, inability by
exercise of reasonable diligence to obtain electricity, water or fuel, or by
any other cause beyond Landlord’s immediate control or for stoppages or
interruptions of any such services for the purpose of making necessary repairs
or improvements. Failure, stoppage or interruption of any such service
shall not be construed as an actual or constructive eviction or as a partial
eviction against Tenant, or release Tenant from the prompt and punctual
performance by Tenant of the covenants contained herein or operate to abate
Rent. Notwithstanding anything hereinabove to the contrary, Landlord reserves
the right from time to time to make reasonable and non-discriminatory
modifications to the above standards for utilities and services.

 

(e)                                  Limitations and
Unavailability of Service. Anything hereinabove to the contrary
notwithstanding, Landlord and Tenant agree that Landlord’s obligation to
furnish heat, electricity, air conditioning and/or water to the Premises shall
be subject to and limited by all laws, rules, and regulations of any
governmental authority affecting the supply, distribution, availability,
conservation or consumption of energy, including, but not limited to, heat,
electricity, gas, oil and/or water. Landlord shall abide by all such governmental
laws, rules and regulations and, in so doing, Landlord shall not be in
default in any manner whatsoever under the terms of this Lease, and Landlord’s
obligation to pay the full Rent set forth in this Lease.

 

(f)                                    Load Bearing
Capacity. 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 law. Landlord reserves the right to prescribe in a
reasonable manner the weight and position of all safes and heavy installations
which Tenant wishes to place in the Premises so as to properly distribute the
weight thereof. Any cost of structural analysis shall be borne by Tenant.

 

(g)                                 Unreasonable Noise
or Vibration. Business machines and mechanical equipment belonging to
Tenant which cause unreasonable noise or vibration that may be transmitted
to the structure of the Building or to any leased space to such a degree as to
be objectionable to Landlord or to any tenants in the Building shall be placed
and maintained by Tenant, at Tenant’s expense, on vibration eliminators or
other devices sufficient to eliminate such unreasonable noise or vibration.

 

(h)                                 Telephone. Subject
to applicable codes, Landlord has or will cause to be installed telephone riser
cables (collectively the “riser cables”) from the outside of the Building to
the telephone room serving the floor upon which the Premises are located. Subject
to Landlord’s supervision and approval, Tenant shall have the right to use the
riser cables by installing telephone lines (the “telephone lines”) from the
Premises to the telephone room located on the floor or floors on which the
Premises are located, if and to the extent such telephone lines are not now in
place. Landlord makes no representations or warranties with respect to the
capacity, suitability or design of the riser cables, telephone rooms or
telephone lines. If there is more than one tenant on a floor, Landlord shall
allocate hook-ups to the telephone room based on the proportion of
rentable square feet that each tenant occupies on the floor. The installation
and hook-up of telephone lines by Tenant shall be subject to all of the terms
and conditions of this Lease, including, without limitation, Paragraph 17 of
this Lease. At the expiration or termination of the Lease Term, Landlord shall
have the option of requiring Tenant to remove all of its telephone lines or
leave its telephone lines in place. All of the riser cables and telephone rooms
in the Building are and shall be the property of Landlord, and Tenant shall
have no rights or interest in same except as stated in this subparagraph (h). Landlord
shall not be liable for, and Tenant waives all claims with respect to, any
damages or losses sustained by Tenant or by any occupant of the Premises, including,
without limitation, any compensatory, property or consequential damages,
resulting from the operation or maintenance of the riser cables, telephone
rooms and telephone lines, including, without limitation, (i) any damage
to Tenant’s telephone lines, telephones or other equipment connected to the
telephone lines, (ii) interruption or failure of, or interference with,
telephone or other service coming through the telephone lines to the Premises,
or (iii) unauthorized eavesdropping or wiretapping.

 

13

 

15.                               Governmental
Regulations.

 

Tenant shall not violate any laws,
ordinances, notices, orders, rules, regulations or requirements, of any
federal, state or municipal government or any department, commission, board or
office thereof, or of the National Board of Fire Underwriters or any other body
exercising similar functions, relating to the Premises or to the use or manner
of use of the Property, nor shall Tenant perform any acts or carry on any
practices which may injure the Property or the Premises or be a nuisance,
disturbance or menace to any other tenants of the Building. Upon breach of this
Paragraph 15, Landlord shall have the right to terminate this Lease forthwith
and to re-enter and repossess the Premises, but Landlord’s right to damages
shall survive.

 

16.                               Directory;
Signs.

 

Landlord will place Tenant’s name and suite number
on the Building standard directory. Except for signs which are located wholly
within the interior of the Premises and which are not visible from the exterior
of the Premises, and except for signs on office doors with size, design,
lettering and text approved by Landlord, no signs shall be placed, erected,
maintained or painted by Tenant at any place upon the Premises or the Property.

 

17.                               Alterations
and Additions.

 

Tenant shall not do any painting or
decorating, erect any partitions, or make any alterations, additions, changes
or repairs (hereinafter referred to as “Alterations and Additions”) to Premises
without obtaining in each instance Landlord’s prior written consent. All
Alterations and Additions shall be performed at Tenant’s expense by Landlord or
Landlord’s contractors, or, with the prior written consent of Landlord, may be
performed by Tenant, at its expense, with contractors approved by Landlord and
under such rules and procedures as Landlord may prescribe. In the
event Alterations and Additions are not performed by Landlord or Landlord’s
contractors, Tenant shall pay to Landlord a reasonable fee, as determined by
Landlord, for its regulation of such Alterations and Additions. All Alterations
and Additions shall remain upon and be surrendered with the Premises, including
all electrical, phone, and computer cabling installed, unless, prior to or upon
the expiration or termination of this Lease, Landlord shall give written notice
to Tenant to remove the same, in which event Tenant will remove such
Alterations and Additions within ten (10) days after the expiration or
termination of this Lease, and repair and restore any damage to the Premises
caused by the installation or removal thereof. If Tenant does not remove said
Alterations and Additions within said ten (10) day period, Landlord may remove
the same and Tenant shall pay the cost of such removal to Landlord upon demand.
Tenant hereby agrees to protect, defend, indemnify and hold harmless Landlord,
its agents and employees, with regard to the Premises and the Property, from
any and all liabilities of every kind and description which may arise out
of or be connected in any way with said Alterations or additions. Any mechanic’s
lien filed against the Premises or the Property or any notice which is received
by either Landlord or Tenant for work claimed to have been furnished to Tenant,
and performed other than by Landlord or Landlord’s contractors, shall be
released and discharged within ten (10) days after such filing or receipt,
whichever is applicable, at Tenant’s expense. Alterations and Additions
permitted to be performed other than by Landlord or Landlord’s contractors shall
be performed in a manner so as not to annoy or disturb other tenants or
occupants of the building, and shall be performed only during such hours and
under such conditions as shall be designated by Landlord. Upon completion of
Alterations and Additions performed other than by Landlord or Landlord’s
contractors, Tenant shall furnish Landlord with contractors’ affidavits and
full and final waivers of lien and receipted bills covering all labor and
materials expended and used. All Alterations and Additions shall comply with
all insurance requirements and with all applicable laws, statutes, ordinances
and regulations. All Alterations and Additions shall be constructed in a good
and workmanlike manner and only first-class material shall be used. The
performance of any Alterations and Additions to the Premises by either Landlord
or Landlord’s contractors on behalf of Tenant shall not be deemed or construed
by the parties hereto, or by any third party, as creating the relationship of
principal and agent or of partnership, or of joint venture, by and between the
parties hereto, it being understood and agreed that no provision contained in
this Paragraph 17 or elsewhere in this Lease nor any acts of the parties hereto
shall be deemed to create any relationship other than the relationship of
Landlord and Tenant.

 

14

 

18.                               Landlord’s
Right of Entry.

 

(a)                                  Right of Entry; No
Release from Obligations. Tenant shall permit Landlord and the authorized
representatives of Landlord and of any mortgagee or any prospective mortgagee
to enter the Premises at all reasonable times upon reasonable written notice
(except in case of emergency), for the purpose of (i) inspecting the
Premises or (ii) making any necessary repairs thereto or to the Property
and performing any work therein. During the progress of any work on the
Premises or the Property, Landlord will attempt not to inconvenience Tenant,
but shall not be liable for inconvenience, annoyance, disturbance, loss of
business or other damage to Tenant by reason of making any repair or by
bringing or storing materials, supplies, tools and equipment in the Premises
during the performance of any work, and the obligations of Tenant under this
Lease shall not be thereby affected in any manner whatsoever.

 

(b)                                 Sale; Mortgage;
Prospective Tenants. Upon giving reasonable written notice to Tenant,
Landlord shall have the right at all reasonable times to enter and to exhibit the
Premises for the purpose of sale or mortgage, and, during the last nine (9) months
of the Lease Term, to enter and to exhibit the Premises to any prospective
tenant.

 

19.                               Quiet
Enjoyment.

 

Tenant, upon paying Rent and observing and
keeping all covenants, agreements and conditions of this Lease on its part to
be kept, shall quietly have and enjoy the Premises during the Lease Term
without hindrance or molestation by anyone claiming by or through Landlord,
subject, however, to the exceptions, reservations and conditions of this Lease.
Landlord hereby reserves the right to prescribe, at its sole discretion,
reasonable rules and regulations (herein called the “Rules and
Regulations”) having uniform applicability to all similarly situated
tenants of the Building and governing the use and enjoyment of the Premises and
the remainder of the Property; provided that the Rules and Regulations
shall not materially interfere with Tenant’s use and enjoyment of the Premises
in accordance with the provisions of this Lease for the permitted uses. Tenant
shall adhere to the Rules and Regulations and shall cause its agents,
employees, invitees, visitors and guests to do so. A copy of the rules and
Regulations in effect on the date hereof is attached hereto as Exhibit “C”.

 

20.                               Assignment
and Subletting.

 

(a)                                  Prohibitions. Tenant
for itself, its successors and assigns, expressly covenants that it shall not
by operation of law or otherwise assign, sublet hypothecate, encumber or
mortgage this Lease, or any part thereof, or permit the Premises to be
used by others without the prior written consent of Landlord in each instance,
which consent may not be unreasonably withheld, delayed or conditioned by
Landlord in its sole and absolute discretion. Any attempt by Tenant to assign,
sublet, encumber or mortgage this Lease without obtaining Landlord’s approval
shall be null and void. The consent by Landlord to any assignment, mortgage,
hypothecation, encumbrance, subletting or use of the Premises by others, shall
not constitute a waiver of Landlord’s right to withhold its consent to any
other or further assignment, subletting, mortgage, encumbrance or use of the
Premises by others. Without the prior written consent of Landlord, this Lease
and the interest therein of any assignee of Tenant herein, shall not pass by
operation or law or otherwise, and shall not be subject to garnishment or sale
under execution in any suit or proceeding which may be brought against or
by Tenant or any assignee of Tenant. The absolute and unconditional
prohibitions contained in this Paragraph 20 and Tenant’s agreement thereto are
material inducements to Landlord to enter into this Lease with Tenant and any
breach thereof shall constitute a material default hereunder permitting
Landlord to exercise all remedies provided for herein or by law or in equity on
a default of Tenant.

 

(b)                                 Recapture. If
Tenant requests Landlord’s consent to an assignment of this Lease or subletting
of all or any part of the Premises, Tenant shall submit to Landlord a
written notice (“Tenant’s Notice”) containing (i) the name of the proposed
assignee or subtenant; (ii) the terms of the proposed assignment or
subletting; (iii) the nature of business of the proposed assignee or
subtenant and its proposed use of the Premises; (iv) such information as
to the financial responsibility and general reputation of the proposed assignee
or subtenant that Landlord may require; and (v) a summary of plans
and specifications for revising the floor layout of the Premises.

 

15

 

Upon the receipt of a Tenant’s Notice from
Tenant, Landlord shall have the option, to be exercised in writing within
thirty (30) days after such receipt, to cancel and terminate this Lease if the
request is to assign this Lease of to sublet all of the Premises or, if the
request is to sublet a portion of the Premises only, to cancel and terminate
this Lease with respect to such portion, in each case as of the date set forth
in Landlord’s notice of exercise of such option. If Landlord shall cancel this
Lease, Tenant shall surrender possession of the Premises, or the portion of the
Premises which is the subject of the request, as the case may be, on the
date set forth in such Landlord’s notice in accordance with the provisions of
this Lease relating to surrender of the Premises. If this Lease shall be
canceled as to a portion of the Premises only, the Annual Base Rent and all
additional Rent payable by Tenant hereunder shall be abated proportionately
according to the ratio that the area of the portion of the Premises surrendered
(as computed by Landlord) bears to the area of the Premises immediately prior
to such surrender. If Landlord shall cancel this Lease, Landlord may relet
the Premises, or the applicable portion of the Premises, to any third party
tenant (including, without limitation, the proposed assignee or subtenant of
Tenant), without any liability to Tenant.

 

(c)                                  Consent to
Sublease. If Landlord does not exercise its option to cancel this Lease
pursuant to paragraph (b) above and Landlord consents in writing to the
proposed assignment of sublease, Tenant may then enter into the assignment
or sublease, as the case may be, specified in the Tenant’s Notice giving
rise to such cancellation option, in accordance with the following provisions. If
Tenant enters into such assignment or sublease it shall submit an executed copy
of the sublease or assignment to Landlord for consent not less than thirty (30)
days prior to the proposed effective date of assignment or the proposed
commencement date of the term of the sublease, as the case may be. In the
case of a sublease, the instrument shall expressly state that it is and shall
remain at all times subject and subordinate to this Lease and all of the terms,
covenants and agreements contained in this Lease. In the case of an assignment,
the instrument shall contain the assumption by the assignee of all of the
duties and obligations of the tenant under this Lease to be performed after the
effective date of assignment. No such assignment or sublease instrument shall
expressly or by implication impose upon Landlord any duties or obligations or
alter the provisions of this Lease. Landlord agrees to give Tenant written
notice within thirty (30) days after receipt by Landlord of Tenant’s proposed
assignment or sublease of Landlord’s consent to or rejection of same.

 

Tenant may not submit to Landlord for
consent any assignment or sublease on terms or conditions or with parties
different from those stated in the applicable Tenant’s Notice for such
assignment or sublease, nor may Tenant submit to Landlord for consent any
assignment or sublease later than the date which is sixty (60) days after the
expiration of the period for exercise by Landlord of the cancellation option
arising under paragraph (b) above by reason of such assignment or
sublease, without again complying with the provisions of paragraph (b) above
and affording Landlord the right to again exercise its cancellation option.

 

(d)                                 Profits. If
Landlord shall give its consent to any assignment of this Lease or to any
sublease pursuant to paragraph (c) above, Tenant shall in consideration
therefor pay to Landlord, as additional Rent, any costs incurred by Landlord
and any rent in excess of Tenant’s rent.

 

(i)                                     In the case of an
assignment, an amount equal to all sums and other considerations paid to Tenant
by the assignee for or by reason of such assignment (including, but not limited
to, sums paid for the sale of Tenant’s fixtures, leasehold improvements,
equipment, furniture, furnishings or other personal property less the then net
unamortized or undepreciated cost thereof determined on the basis of Tenant’s
federal income tax returns); and

 

(ii)                                  In the case of a
sublease, any rents, additional rents and other consideration payable under the
sublease to Tenant by the subtenant which are in excess of the Base Rent and
all additional Rent payable under this Lease in respect of the subleased space
(at the rate per square foot payable by Tenant hereunder) for the sublease term
(including, but not limited to, sums paid for the sale or rental of Tenant’s
fixtures, leasehold improvements, equipment, furniture, furnishings or other
personal property, less the then net unamortized or undepreciated cost thereof
determined on the basis of Tenant’s federal income tax returns).

 

16

 

The sums payable as set forth above shall be
paid to Landlord as additional Rent as and when paid by the assignee or
subtenant to Tenant.

 

(e)                                  No Release. In
no event shall any assignment or subletting to which Landlord may consent,
release or relieve Tenant from its obligations to fully observe or perform all
of the terms, covenants and conditions of this Lease on its part to be
observed or performed (including liability arising during any renewal term of
this Lease or with respect to any expansion space included in the Premises.)

 

(f)                                    Advertising.
Tenant agrees that all advertising by Tenant or on Tenant’s behalf with respect
to the assignment of this Lease or any sublease of all or any part of the
Premises must offer the space at a rental not less than that for which comparable
space in the Building is then being offered by Landlord for rent and must be
approved in writing by Landlord prior to publication.

 

(g)                                 Costs. Tenant
shall pay Landlord’s reasonable costs, charges and expenses, including attorney’s
fees, incurred in connection with its review of any proposed assignment or
proposed sublease, whether or not landlord approves such transfer of interest.

 

21.                               Subordination.

 

This Lease is and shall be expressly subject
and subordinate at all times to (a) any present or future ground,
underlying or operating lease of the Building or the Property, and all
amendments, renewals and modifications to any such lease, and (b) the lien
of any present or future mortgage or deed of trust encumbering fee title to the
Building, the Property and/or the leasehold estate under any such lease. If any
such mortgage or deed of trust be foreclosed, or if any such lease be
terminated, upon request of the mortgagee, beneficiary or lessor, as the case may be,
Tenant will attorn to the purchaser at the foreclosure sale or to the lessor
under such lease, as the case may be. The foregoing provisions are
declared to be self-operative and no further instruments shall be required to
effect such subordination and/or attornment; provided, however, that Tenant
agrees upon request by any such mortgagee, beneficiary, lessor or purchaser at
foreclosure, as the case may be, to execute such subordination and/or
attornment instruments as may be required any such person to confirm such
subordination and/or attornment on the form customarily used by such party.
Notwithstanding the foregoing to the contrary, any such mortgage, beneficiary
or lessor may elect to give the rights and interests of Tenant under this
Lease (excluding rights in and to insurance proceeds and condemnation awards)
priority over the lien of its mortgage or deed of trust or the estate of its
lease, as the case may be. In the event of such election and upon the
mortgagee, beneficiary or lessor notifying Tenant of such election, the rights
and interests of Tenant shall be deemed superior to and to have priority over
the lien of said mortgage or deed of trust or the estate of such lease, as the
case may be, whether this Lease is dated prior to or subsequent to the
date of such mortgage, deed of trust or lease. In such event, Tenant shall
execute and deliver whatever instruments may be required by such
mortgagee, beneficiary or lessor to confirm such superiority on the form customarily
used by such party. If Tenant fails to execute any instrument required to be
executed by Tenant under this Paragraph 21 within 10 days after request, Tenant
irrevocably appoints Landlord as its attorney-in-fact, in Tenant’s name, to
execute such instrument.

 

22.                               Tenant’s
Certificate.

 

Tenant, at any time and from time to time and
within ten (10) days after Landlord’s written request, shall execute,
acknowledge and deliver to Landlord a written instrument in recordable form certifying
that this Lease is unmodified and in full force and effect (or, if there have
been modifications, that it is in full force and effect as modified and stating
the modifications); stating that the improvements required by Paragraph 4
hereof have been completed; certifying that Tenant has accepted possession of
the Premises; stating the date on which the Lease Term commenced and the dates
to which Base Rent, additional rent and other charges have been paid in
advance, if any; stating that to the best knowledge of Tenant that Landlord is
not in default of this Lease (or if there are defaults alleged by Tenant,
setting forth in detail the nature of such alleged default); stating any other
fact or certifying any other condition reasonably requested by Landlord or
required by any mortgagee or prospective mortgagee or prospective mortgagee or
purchaser of the Property or any interest therein or by any assignee of
Landlord’s interest in this Lease or by any assignee of any mortgagee. The
foregoing instrument shall be addressed to Landlord and to any mortgagee,

 

17

 

prospective mortgagee, purchaser or other party specified by Landlord. Said
instrument shall be similar to the form of Exhibit “E” attached
hereto (or such other form then in use by the applicable mortgagee or
purchaser). If Tenant fails to execute any such instrument within said 10-day
period, Tenant irrevocably appoints Landlord as its attorney-in-fact, in Tenant’s
name, to execute such instrument.

 

23.                               Surrender.

 

(a)                                  Condition of
Premises. Subject to the terms of Paragraph 13 and subparagraph (d) of
Paragraph 10 hereof, at the expiration or earlier termination of the Lease
Term, Tenant shall promptly yield up, clean and neat, and in the same
condition, order and repair in which they are required to be kept throughout
the Lease Term, the Premises and all improvements, alterations and additions
thereto, and all fixtures and equipment servicing the building, ordinary wear
and tear excepted.

 

(b)                                 Holding Over. If
Tenant, or any person claiming through Tenant, shall continue to occupy the
Premises after the expiration or earlier termination of the Lease Term or any
renewal thereof, such occupancy shall be deemed to be under a month-to-month
tenancy under the same terms and conditions set forth in this Lease; except,
however, that the Monthly Base Rent Installments for each month during such
continued occupancy shall be double the amount set forth in Item (i) of
Basic Terms which is in effect as of the expiration or termination of this
Lease. Tenant shall indemnify, defend and hold harmless Landlord from and
against all claims, liabilities, actions, losses, damages and expenses
(including attorneys’ fees) asserted against or sustained by Landlord and
arising from or by reason of such continued occupancy, which obligation shall
survive the expiration or termination of this Lease. Anything to the contrary
notwithstanding, any holding over by Tenant without Landlord’s prior written
consent shall constitute a default hereunder and shall be subject to all the
remedies set forth in Paragraph 24 hereof.

 

24.                               Defaults
- Remedies.

 

(a)                                  Defaults. It
shall be an event of default: (i) If Tenant does not pay in full when due
and without demand any and all installments of Base Rent or additional Rent or
any other charges or payments; or (ii) If Tenant violates or fails to perform or
otherwise breaches any agreement, term, covenant or condition herein contained;
or (iii) If Tenant vacates or abandons any portion of the Premises, or
fails to occupy the Premises for a period of thirty (30) days or if
substantially all of Tenant’s assets in or on the Premises or Tenant’s interest
in this Lease is attached or levied upon under execution (and Tenant does not
discharge same within sixty (60) days thereafter); or if Tenant removes or
attempts to remove Tenant’s goods or property therefrom other than in the
ordinary course of business without having first paid to Landlord in full all
Rent that may have become due as well as all which will become due
thereafter; or (iv) If Tenant becomes insolvent or bankrupt in any sense
or makes an assignment for the benefit of creditors or offers a composition or
settlement to creditors, under any federal or state law, or if a petition in
bankruptcy or for reorganization or for an arrangement with creditors under any
federal or state law is filed by or against Tenant, or Tenant is adjudicated
insolvent pursuant to the provisions of any present or future insolvency law of
any state having jurisdiction, or a bill in equity or other proceeding for the
appointment of a receiver, trustee, liquidator, custodian, conservator or
similar official for any of Tenant’s assets is commenced, under any federal or
state law by reason of Tenant’s inability to pay its debts as they become due
or otherwise, or if Tenant’s estate by this Lease or any real or personal property
of Tenant shall be levied or executed upon by any sheriff, marshal or
constable; or by other process of law; provided, however, that any proceeding
brought by anyone other than the parties to this Lease under any bankruptcy,
reorganization, arrangement, insolvency, readjustment, receivership or similar
law shall not constitute a default until such proceeding, decree, judgment or
order has continued unstayed for more than sixty (60) consecutive days. If this
Lease is assigned to any person or entity pursuant to the provisions of the
Bankruptcy Code, or any similar provisions of any future federal bankruptcy
law, (the “Bankruptcy Code”), any and all moneys or other considerations
payable or otherwise to be delivered in connection with such assignment shall
be paid or delivered to Landlord, shall be and remain the exclusive property of
Landlord and shall not constitute property of Tenant or of the estate of Tenant
within the meaning of the Bankruptcy Code. Any and all moneys or other
considerations constituting Landlord’s property under the preceding sentence
not paid or delivered to Landlord shall be held in trust for the benefit of
Landlord and be promptly

 

18

 

paid to or turned over to Landlord; or (v) If any of the events
enumerated in this subparagraph (a) shall happen to any guarantor of this
Lease.

 

(b)                                 Landlord’s Default.
Landlord shall be in default under this Lease if Landlord fails to perform or
observe any provision of this Lease by it to be performed or observed if the
failure is not cured within thirty (30) days after notice has been given by
Tenant to Landlord. If the default cannot be reasonably cured within thirty
(30) days, Landlord shall not be in default if Landlord commences to cure the
default within the thirty (30) day period and diligently and in good faith
continues to cure the default within a reasonable period of time. In the event
that Landlord is in default under this Lease, Tenant may (a) cure
Landlord’s default and by independent action recover from Landlord the cost of
such cure or (b) terminate this Lease, in which case this Lease shall be
of no further force or effect and neither party shall have any further
obligation to the other.

 

(c)                                  Remedies. Upon
the occurrence of an event of default, and the expiration of the applicable
grace period as hereinafter provided, Landlord shall have the following rights:
(i) To accelerate the whole or any part of the Rent for the entire
unexpired balance of the Lease Term, and any Rent if so accelerated shall, in
addition to any and all installments of Rent already due and payable and in
arrears, be deemed due and payable as if, by the terms and provisions of this
Lease, such accelerated Rent was on that date payable in advance. For such
purposes, all items of Rent due hereunder, which are not then capable of
precise determination, shall be estimated by Landlord, in Landlord’s reasonable
judgment, for the balance of the then current Lease Term; (ii) To enter
the Premises and without further demand or notice proceed to distress and sale
of the goods, chattels and personal property there found, to levy the Rent, and
Tenant shall pay all costs and officers’ commissions which are permitted by
law, including watchmen’s wages and sums chargeable to Landlord, and further
including five percent (5%) commission(s) to the officer or other person making
the levy, and in such case all costs, officers’ commissions and other charges
shall immediately attach and become part of the claim of Landlord for
Rent, and any tender of Rent without said costs, commissions and charges made
after the issuance of a warrant of distress, shall not be sufficient to satisfy
the claim of Landlord; (iii) To re-enter the Premises, together with all
additions, alterations and improvements, and at the option of Landlord, remove
all persons and all or any property therefrom, either by summary dispossess
proceedings or by any suitable action or proceeding at law or by force or
otherwise, without being liable for prosecution or damages therefor, and
repossess and enjoy the Premises. Upon recovering possession of the Premises by
reason of or based upon or arising out of a default on the part of Tenant,
Landlord may, at Landlord’s option, either terminate this Lease or Tenant’s
right of possession, and in either such event, make such alterations and
repairs as may be necessary in order to relet the Premises and thereafter
relet the Premises or any part or parts thereof, either in Landlord’s name
or otherwise, for a term of terms which may, at Landlord’s option, be less than
or exceed the period which would otherwise have constituted the balance of the
Lease Term and at such rent or rents and upon such other terms and conditions
as in Landlord’s sole discretion may seem advisable and to such person or
persons as may in Landlord’s discretion seem best; upon each such
reletting all rents received by Landlord from such reletting shall be applied: first,
to the payment of any costs and expenses of such reletting, including brokerage
fees and attorneys’ fees and all costs of such alterations and repairs; second,
to the payment of any indebtedness other than Rent due hereunder from Tenant to
Landlord; third, to the payment of Rent due and unpaid hereunder; and the
residue, if any, shall be held by Landlord and applied in payment of future
Rent as it may become due and payable hereunder. If such rentals received
from such reletting during any month shall be less than that to be paid during
that month by Tenant, Tenant shall pay any such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. No such re-entry or taking
possession of the Premises or the making of alterations or improvements thereto
or the reletting thereof shall be construed as an election on the part of
Landlord to terminate this Lease unless written notice of such intention be
given to Tenant. Landlord shall in no event be liable in any way whatsoever for
failure to relet, for failure to collect the Rent thereof under such reletting.
Tenant, for Tenant and Tenant’s successors and assigns, hereby irrevocably
constitutes and appoints Landlord Tenant’s and their agent to collect the rents
due and to become due under all subleases of the Premises or any parts thereof
without in any way affecting Tenant’s obligation to pay any unpaid balance of
Rent due or to become due hereunder. Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect to terminate this
Lease for such previous breach; (iv) To terminate this Lease and the Lease
Term without any right on the part of Tenant to waive the forfeiture by
payment of any sum due or by other performance of any condition, term or
covenant broken,

 

19

 

whereupon Landlord shall be entitled to recover, in addition to any and
all sums and damages for violation of Tenant’s obligations hereunder in
existence at the time of such termination, damages for Tenant’s default in an
amount equal to the amount of the Rent reserved for the balance of the Lease
Term, discounted at the rate of six percent (6%) per annum to its then present
worth, less the fair market rental value (as determined by Landlord) of the
Premises for the remainder of the Lease Term (allowing for a reasonable period
of exposure on the open market before realization of such fair market rental
value and deducting the then fair market tenant concessions such as rent
abatements and improvement allowances), also discounted at the rate of six
percent (6%) per annum to its then present worth, plus the cost of making
Building standard improvements and a standard commission for releasing the
Premises, all of which amount shall be immediately due and payable from Tenant
to Landlord.

 

(d)                                 Non-Waiver. No
waiver by Landlord of any breach by Tenant or any of Tenant’s obligations,
agreements or covenants herein shall be a waiver of any subsequent breach or of
any obligation, agreement or covenant, nor shall any forbearance by Landlord to
seek a remedy for any breach by Tenant be a waiver by Landlord of any rights
and remedies with respect to such or any subsequent breach.

 

(e)                                  Tenant Cure Period.
Notwithstanding anything hereinabove stated, except in the case of emergency,
and except in the event of abandonment or vacation of the Premises by Tenant or
any default enumerated in subparagraphs (a)(iii), (iv) and (v) of
this Paragraph 24, and except if Tenant fails to timely execute and deliver any
instrument, certificate or agreement required under Paragraphs 21 or 22 of this
Lease, Landlord will not exercise any right or remedy provided for in this
Lease or allowed by law unless, with respect to any default by Tenant in the
payment of Rent, Tenant does not cure the default within three (3) days
after written demand for payment by Landlord or its authorized agent of such
Rent or unless, with respect to any other default by Tenant in the prompt and
full performance of any other provision of this Lease, Tenant does not cure
same within twenty (20) days after written demand by Landlord or its authorized
agent that the default be cured.

 

(f)                                    Rights and
Remedies Cumulative. No right or remedy herein conferred upon or reserved
to Landlord is intended to be exclusive of any other right or remedy provided
herein or by law, but each shall be cumulative and in addition to every other
right or remedy given herein or now or hereafter existing at law or in equity
or by statute.

 

(g)                                 Rights of Mortgagee.
In the event of any default by act or omission by Landlord which would give
Tenant the right to terminate this Lease or to claim a partial or total
eviction, Tenant shall not exercise any such right until it has notified in
writing the holder of any mortgage or deed of trust which at the time shall be
a lien on all or any portion of the Property (if the name and address of such
holder shall previously have been furnished by written notice to Tenant) of
such default, and until a reasonable period for curing such default shall have
elapsed following the giving of such notice, during which period the holder
shall have failed to commence and continue to cure such default or to cause the
same to be remedied or cured.

 

(h)                                 Curing Tenant’s
Default. If Tenant shall be in default in the performance of any of its
obligations hereunder, Landlord, without any obligation to do so, in addition
to any other rights it may have in law or equity, may elect (but
shall not be obligated) to cure such default on behalf of Tenant after written
notice (except in the case of emergency) to Tenant. Tenant shall reimburse
Landlord upon demand for 115% of any sums paid or costs incurred by Landlord in
curing such default, including interest thereon from the respective dates of
Landlord’s making the payments and incurring such costs, at the rate set forth
in subparagraph (b)(vi) of Paragraph 7, which sums and costs together with
interest thereon shall be deemed additional rent payable promptly upon being
billed therefor.

 

(i)                                     Attorneys’ Fees.
In the event a suit, action, arbitration or other proceeding of any nature
whatsoever is instituted, including without limitation any proceeding under the
U.S. Bankruptcy Code, or the services of an attorney are retained, to interpret
or enforce any provision of this Lease or with respect to any dispute relating
to this Lease, the prevailing or non-defaulting party shall be entitled to
recover from the losing or defaulting party its reasonable attorneys’,
paralegals’, accountants, and other experts’ fees and all other reasonable
fees, costs and expenses

 

20

 

actually incurred in connection therewith. In the event of suit,
action, arbitration, or other proceeding, the amount shall be determined by the
judge or arbitrator, shall include fees and expenses incurred on any appeal or
review, and shall be in addition to all other amounts provided by law.

 

25.                               Bankruptcy
or Insolvency; Assumption; Adequate Protection.

 

The following shall apply in the event of the
bankruptcy or insolvency of Tenant:

 

(a)                                  If a petition is
filed by, or an order for relief is entered against Tenant under Chapter 7 of
the Bankruptcy Code and the trustee of Tenant elects to assume this Lease for
the purpose of assigning it, the election or assignment, or both, may be
made only if all of the terms and conditions of subparagraphs (ii) and (iv) below
are satisfied. If the trustee fails to elect to assume this Lease for the
purpose of assigning it within sixty (60) days after his appointment, this
Lease will be deemed to have been rejected. To be effective, an election to
assume this Lease must be in writing and addressed to Landlord and, in Landlord’s
business judgment, all of the conditions hereinafter stated, which Landlord and
Tenant acknowledge to be commercially reasonable, must have been satisfied. Landlord
shall then immediately be entitled to possession of the Premises without
further obligation to Tenant or the trustee, and this Lease will be canceled. Landlord’s
right to be compensated for damages in the bankruptcy proceeding, however,
shall survive.

 

(b)                                 If Tenant files a
petition for reorganization under chapters 11 or 13 of the Bankruptcy Code or a
proceeding that is filed by or against Tenant under any other chapter of the
Bankruptcy Code is converted to a chapter 11 or 13 proceeding and Tenant’s
trustee or Tenant as a debtor-in-possession will be deemed to have rejected
this Lease. To be effective, an election to assume this Lease must be in
writing and addressed to Landlord and, in Landlord’s business judgment, all of
the following conditions, which Landlord and Tenant acknowledge to be
commercially reasonable, must have been satisfied:

 

(i)                                     The trustee or the
debtor-in-possession has cured or has provided to Landlord adequate assurance,
as defined in this subparagraph (ii), that:

 

(1)                                  The trustee will cure
all monetary defaults under this Lease within ten (10) days from the date
of the assumption; and

 

(2)                                  The trustee will cure
all non-monetary defaults under this Lease within thirty (30) days from the
date of the assumption.

 

(ii)                                  The trustee or the
debtor-in-possession has compensated Landlord, or has provided to Landlord
adequate assurance, as defined in this subparagraph (ii), that within ten (10) days
from the date of the assumption Landlord will be compensated for any pecuniary
loss it incurred arising from the default of Tenant, the trustee, or the
debtor-in-possession as recited in Landlord’s written statement of pecuniary
loss sent to the trustee or the debtor-in-possession.

 

(iii)                               The trustee or the
debtor-in-possession has provided Landlord with adequate assurance of the
future performance of each of Tenant’s obligations under the Lease; provided,
however, that:

 

(1)                                  The trustee or
debtor-in-possession will also deposit with Landlord, as security for the
timely payment of Rent, an amount equal to three months’ minimum rent and other
monetary charges accruing under this Lease.

 

(2)                                  If not otherwise
required by the terms of this Lease, the trustee or the debtor-in-possession
will also pay in advance, on each day that the minimum rent is payable,
one-twelfth of Tenant’s annual obligations under the lease for the Base Amount.

 

(3)                                  From and after the
date of the assumption of this Lease, the trustee or the debtor-in-possession
will pay the minimum Annual Rent payable under this Lease in advance in equal
monthly installments on each day that the Minimum Annual Rent is payable.

 

21

 

(4)                                  The obligations
imposed upon the trustee or the debtor-in-possession will continue for Tenant
after the completion of bankruptcy proceedings.

 

(iv)                              Landlord has determined
that the assumption of this Lease will not:

 

(1)                                  Breach any provision
in any other lease, mortgage, financing agreement, or other agreement by which
Landlord is bound relating to the Property; or

 

(2)                                  Disrupt, in Landlord’s
judgment, the tenant mix of the Building or any other attempt by Landlord to
provide a specific variety of tenants in the Building that, in Landlord’s
judgment, would be most beneficial to all of the tenants of the Building and
would enhance the image, reputation, and profitability of the Building.

 

(v)                                 For purposes of this
subparagraph (ii), “adequate assurance” means that:

 

(1)                                  Landlord will
determined that the trustee or the debtor-in-possession has, and will continue
to have, sufficient unencumbered assets after the payment of all secured obligations
and administrative expenses to assure Landlord that the trustee or the
debtor-in-possession will have sufficient funds to fulfill Tenant’s obligations
under this Lease and to keep the Premises properly staffed with sufficient
employees to conduct a fully operational, actively promoted business on the
Premises; and

 

(2)                                  An order will have
been entered segregating sufficient cash payable to Landlord and/or a valid and
perfected first lien and security interest will have been granted in property
of Tenant, trustee, or debtor-in-possession that is acceptable for value and
kind to Landlord, to secure to Landlord the obligation of the trustee or
debtor-in-possession to cure the monetary or nonmonetary defaults under this
Lease within the time periods set forth above.

 

(c)                                  In the event that
this Lease is assumed by a trustee appointed for Tenant or by Tenant as
debtor-in-possession under the provisions of subparagraph (ii) above and,
thereafter, Tenant is either adjudicated a bankrupt or files a subsequent petition
for arrangement under chapter 11 of the Bankruptcy Code, then Landlord may terminate,
at its option, this Lease and all Tenant’s rights under it, by giving written
notice of Landlord’s election to terminate.

 

(d)                                 If the trustee or the
debtor-in-possession has assumed the Lease, under the terms of subparagraph (i) or
(ii) above, and elects to assign Tenant’s interest under this Lease or the
estate created by that interest to any other person, that interest or estate may be
assigned only if Landlord acknowledges in writing that the intended assignee
has provided adequate assurance, as defined in this subparagraph (iv), of
future performance of all of the terms, covenants, and conditions of this Lease
to be performed by Tenant.

 

(i)                                     For the purposes
of this Paragraph 25, “adequate assurance” of future performance, means that
Landlord has ascertained that each of the following conditions has been
satisfied:

 

(1)                                  The assignee has
submitted a current financial statement, audited by a certified public accountant,
that shows a net worth and working capital in amounts determined by Landlord to
be sufficient to assure the future performance by the assignee of Tenant’s
obligations under this Lease;

 

(2)                                  If requested by
Landlord, the assignee will obtain guarantees, in form and substance
satisfactory to Landlord from one or more persons who satisfy Landlord’s
standards of creditworthiness;

 

(3)                                  Landlord has obtained
all consents or waivers from any third party required under any lease,
mortgage, financing arrangement, or other agreement by which Landlord is bound,
to enable Landlord to permit the assignment;

 

22

 

(4)                                  When, pursuant to the
Bankruptcy Code, the trustee or the debtor-in-possession is obligated to pay
reasonable use and occupancy charges for the use of all or part of the
Premises, the charges will not be less than the minimum rent as defined in this
Lease and additional rent and other monetary obligations of Tenant included
herein as Rent.

 

(e)                                  Neither Tenant’s
interest in the Lease nor any estate of Tenant created in the Lease will pass
to any trustee, receiver, assignee for the benefit of creditors, or any other
person or entity, or otherwise by operation of law under the laws of any state
having jurisdiction of the person or property of Tenant unless Landlord
consents in writing to the transfer. Landlord’s acceptance of Rent or any other
payments from any trustee, receiver, assignee, person, or other entity will not
be deemed to have waived, or waive, the need to obtain Landlord’s consent or
Landlord’s right to terminate this Lease for any transfer of Tenant’s interest
under this Lease without that consent.

 

26.                               Reserved
Rights.

 

Landlord reserves the following rights
exercisable without notice (except as expressly provided to the contrary) and
without the same being deemed an eviction or disturbance of Tenant’s use or
possession of the Premises or giving rise to any claim for set-off or abatement
of Rent: (a) To change the name or street address of the Building upon
thirty (30) days’ prior written notice to Tenant; (b) To install, affix
and maintain all signs on the exterior and/or interior of the Building
(excluding the interior of the Premises except for signs required by code); (c) To
designate and/or approve prior to installation, all types of signs, window
shades, blinds, drapes, awnings or other similar items, and all internal
lighting on or in the Premises that may be visible from the exterior of
the Premises; (d) To change the arrangement of entrances, doors,
corridors, elevators and stairs in the Building, provided that no such change
shall materially adversely affect access to the Premises; (e) To close the
Building after normal business hours, except that Tenant and its employees and
invitees shall be entitled to admission at all times under such regulations as
Landlord prescribes for security purposes; (f) To take any and all
reasonable measures, including inspections and repairs to the Premises or to
the Building, as may be necessary or desirable in the operation or
protection of the Building; (g) To retain at all times master keys or pass
keys to the Premises; (h) To install, operate and maintain security
systems which monitor, by closed circuit television or otherwise, all persons
entering and leaving the Building; (i) To install and maintain pipes,
ducts, conduits, wires and structural elements located in the Premises which
serve other parts or other tenants of the Building; (j) to make alterations,
improvements, repairs and replacements to the Building or any systems,
equipment or machinery located in, on or under the Building; and (k) To enter
the Premises at any time for purposes of making improvements or alterations to
other portions of the Building (including, without limitation, the build-out of
other tenant space), provided that prior reasonable notice is given to Tenant
and that Landlord agrees to use reasonable efforts to minimize disturbance to
Tenant’s business operations.

 

27.                               Americans
with Disabilities Act.

 

(a)                                  Landlord shall,
subject to reimbursement as part of the Building’s Annual Operating Costs,
be responsible for the acquisition of auxiliary aids for and any alterations,
modifications, or improvements to the common areas of the Building which are
required under Title III of the Americans With Disabilities Act of 1990 (“ADA”).

 

(b)                                 Tenant shall, at
Tenant’s sole cost and expense, be responsible for any alterations,
modifications, or improvements to the Premises and the acquisition of any
auxiliary aids required under the ADA, including all alterations,
modifications, or improvements required:

 

(i)                                     as a result of
Tenant (or any subtenant, assignee, or concessionaire) being a Public
Accommodation as defined in the ADA;

 

(ii)                                  as a result of the
Premises being a Commercial Facility as defined in the ADA;

 

(iii)                               a result of any
leasehold improvements made to the Premises (other than those provided for in
the Tenant Improvement Work Agreement) by or on behalf of Tenant or any
subtenant, assignee, or concessionaire whether or not Landlord’s consent
thereto was obtained; or

 

23

 

(iv)                              as a result of the
employment by Tenant (or any subtenant, assignee, or concessionaire) of any
individual with a disability.

 

The foregoing is not intended and shall not
be construed to obligate Tenant to pay for any of the improvements provided for
under the Tenant Improvement Work Agreement except as specifically provided
therein.

 

28.                               Notices.

 

All notices and other communications
hereunder (hereinafter collectively referred to as “notices”) required to be
given or which may be given hereunder shall be in writing and shall be
sent by (a) certified or registered mail, return receipt requested,
postage prepaid, or (b) national prepaid overnight delivery service, or (c) telecopy
or other facsimile transmissions (followed with “hard” copy sent by national
prepaid overnight delivery service), or (d) personal delivery with receipt
acknowledged in writing, directed as follows:

 

Landlord:                                                                                             The
Address designated in Item (a) of Basic Terms.

 

Tenant:                                                                                                       The
Address designated in Item (b) of Basic Terms.

 

Any notice so sent by certified or registered
mail shall be deemed given on the date of receipt or refusal as indicated on
the return receipt. Any notice sent by telecopy or other facsimile transmission
shall be deemed given when the “hard” copy sent by national prepaid overnight
delivery service is received or refused. All other notices shall be deemed
given when actually received or refused by the party to whom the same is directed.
A notice may be given either by a party or by such party’s attorney. Either
party may designate by notice given to the other in accordance with the
terms of this Paragraph 28, additional or substitute parties or addresses to
whom notices should be sent hereunder.

 

29.                               Limitation
of Liability.

 

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

 

30.                               Miscellaneous.

 

(a)                                  Binding Effect.
This Lease shall be binding upon and inure to the benefit of Landlord and
Landlord’s successors and assigns. This Lease shall be binding upon and inure
to the benefit of Tenant and Tenant’s heirs, legal representatives, successors
and permitted assigns.

 

(b)                                 Exhibits. All
Exhibits attached to this Lease are made a part of this Lease and
incorporated by this reference into this Lease.

 

(c)                                  Entire Agreement.
This Lease and the Exhibits and Rider (if any) attached to this Lease set forth
all the covenants, promises, assurances, agreements, representations,
conditions, warranties, statements and understandings (the “Representations”
collectively) between Landlord and Tenant concerning the Premises and the
Building, and there are no Representations, either oral or written, between
them other than those in this Lease. This Lease supersedes and revokes all
previous negotiations, arrangements, letters of intent, offers to lease,
reservations of space, lease proposals, brochures, Representations and
information conveyed, whether oral or in writing, between the parties or their
respective representatives or any other person purporting to represent Landlord
or Tenant. Tenant represents and warrants to Landlord that all financial
statements and financial information previously furnished by Tenant to Landlord
accurately reflects the financial condition of Tenant as of the dates stated in
such statements or information. Tenant acknowledges

 

24

 

that it has not been induced to enter into this Lease by any
Representations not set forth in this Lease, it has not relied on any such
Representations, no such Representations shall be used in the interpretation or
construction of this Lease and Landlord shall have no liability for any
consequences arising as a result of any such Representations. In particular,
Tenant acknowledges that it has not been induced to enter into this Lease by
any Representation regarding the current or projected Annual Operating Costs
for the Building. No subsequent alteration, amendment, change or addition to
this Lease shall be binding upon Landlord or Tenant unless in writing signed by
both parties.

 

(d)                                 Signing. The
signing of this Lease by Tenant and delivery of this Lease to Landlord or its
agent does not constitute a reservation of or option for the Premises or an
agreement to enter into a Lease and this Lease shall become effective only if
and when Landlord signs and delivers same to Tenant; provided, however, the
signing and delivery by Tenant of this Lease to Landlord or its agent or
property manager shall constitute an irrevocable offer by Tenant to lease the
Premises on the terms and conditions contained in this Lease, which offer may not
be withdrawn or revoked for thirty (30) days after such signing and delivery. If
Tenant is a corporation, it shall deliver to Landlord concurrently with the
delivery to Landlord of a signed Lease, certified resolutions of Tenant’s
directors authorizing the signing and delivery of this Lease and the
performance by Tenant of its obligations under this Lease.

 

(e)                                  No Accord. No
payment by Tenant or receipt by Landlord of a lesser amount than any
installment or payment of Rent due shall be deemed to be other than on account
of the amount due, and no endorsement or statement on any check or any letter
accompanying any check or payment of Rent shall be considered an accord and
satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord’s right to recover the balance of such installment or
payment of Rent or pursue any other remedies available to Landlord. No receipt
of money by Landlord from Tenant after the termination of this Lease or Tenant’s
right to possession of the Premises shall reinstate, continue or extend the
Term. Landlord may allocate payments received from Tenant to outstanding
account balances of Tenant under this Lease in the manner determined by
Landlord and Landlord shall not be bound by any allocations of such payments
made by Tenant by notation or endorsement on checks or otherwise.

 

(f)                                    Broker. The
leasing commissions of the Tenant’s Broker, Colliers International, and
Landlord’s Broker, shall be the sole responsibility of Landlord. Tenant agrees
to indemnify and hold harmless Landlord against and from any claims for any
brokerage commissions and all costs, expenses and liabilities in connection
therewith, including attorneys’ fees and expenses, arising out of any charge or
claim for a commission or fee by any broker not named in the preceding
sentence, on the basis of any agreements made or alleged to have been made by
or on behalf of Tenant.

 

(g)                                 Force Majeure. Landlord
shall not be considered in default of any of the terms, covenants and
conditions of this Lease or Landlord’s part to be performed, if Landlord
fails to timely perform same and such failure is due in whole or in part to
any strike, lockout, labor trouble (whether legal or illegal), civil disorder,
inability to procure materials, failure of power, restrictive governmental laws
and regulations, riots, insurrections, war, fuel shortages, accidents,
casualties, Acts of God, acts caused directly or indirectly by Tenant (or
Tenant’s agents, employees or invitees) or any other cause beyond the reasonable
control of Landlord.

 

(h)                                 No Waiver. The
receipt by Landlord of any Rent with knowledge of the breach of any covenant of
this Lease by Tenant shall not be deemed a waiver of such breach or any
subsequent breach of this Lease by Tenant and no provision of this Lease and no
breach of any provision of this Lease shall be deemed to have been waived by
landlord unless such waiver be in writing signed by Landlord.

 

(i)                                     Captions. Article and
Section captions in this Lease are inserted only as a matter of convenience
and in no way define, limit, construe or describe the scope or intent of such
Articles or Sections.

 

(j)                                     Applicable Law.
This Lease shall be construed in accordance with the laws of the State in which
the Premises are situated.

 

25

 

(k)                                  Time. Time is
of the essence of this Lease and the performance of all obligations under this
Lease.

 

(l)                                     Recording. Tenant
shall not record this Lease or a memorandum of this Lease in the Public Records
of the County where the Premises are located.

 

(m)                               Severability. If
any clause, phrase, provision or portion of this Lease or the application of
same to any person or circumstance shall be invalid or unenforceable under
applicable law, such event shall not affect, impair or render invalid or
unenforceable the remainder of this Lease, nor any other clause, phrase,
provision or portion of this Lease, nor shall it affect the application of any
clause, phrase, provision or portion of this Lease to other persons or
circumstances.

 

(n)                                 No Light and Air
Easement. The reduction or elimination of Tenant’s light, air or view will
not affect Tenant’s liability under this Lease nor will it create any liability
of Landlord to Tenant.

 

(o)                                 Joint and Several
Liability. If Tenant is comprised of more than one signatory, each
signatory shall be jointly and severally liable with each other signatory for
payment and performance according to this Lease.

 

(p)                                 No Construction
Against Preparer of Lease. This Lease has been prepared by Landlord and its
professional advisors and reviewed by Tenant and its professional advisors. Landlord,
Tenant and their separate advisors believe that this Lease is the product of
all of their efforts, that it expresses their agreement and that it should not
be interpreted in favor of either Landlord or Tenant or against either Landlord
or Tenant merely because of their efforts in preparing it.

 

(q)                                 Guarantee. In
the event a guarantee is executed in connection with this Lease, said guarantee
shall be deemed a part of this Lease.

 

31.                               Landlord
Representations and Warranties.

 

Landlord represents and warrants to Tenant as
follows: (a) Landlord has full power, authority and legal right to
execute, deliver, perform and observe the provisions of this Lease; (b) Landlord’s
execution, delivery, performance and observance of the provisions of this Lease
will not result in breach or violation of any (1) governmental law, rule or
regulation, (ii) any provision of Landlord’s organizational documents, (iii) any
court order, judgment or decree, or (iv) any material agreement or
instrument to which Landlord is a party; and (c) no additional consent,
approval or authorization is required for Landlord to enter into, deliver or
perform its obligations under this Lease.

 

Landlord also represents and warrants that to
the best of Landlord’s knowledge, it has not received notification of any kind
from any governmental agency regarding actual, potential or threatened
contamination of the Property by hazardous substances.

 

IN WITNESS WHEREOF, the parties have signed
triplicate counterparts hereof as of the date and year hereinabove set forth.

 

	
  LANDLORD:

  	
  TENANT:

  
	
   

  	
   

  
	
  FIRST & YESLER, L.L.C.

  	
  OncoGenex, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Tim O’Keefe

  	
   

  	
  By:

  	
  /s/ Scott Cormack

  	
   

  
	
   

  	
  Tim O’Keefe

  	
   

  	
   

  	
  Scott Cormack

  	
   

  
	
   

  	
  Its: Manager

  	
   

  	
   

  	
  Its:

  	
  President

  	
   

  
							

 

26

 

L.L.C.
ACKNOWLEDGEMENT

 

	
  STATE OF WASHINGTON

  	
  )

  
	
   

  	
  ) SS.

  
	
  COUNTY OF

  	
  )

  

 

On this      
, day of                 , 2005,
before me, the undersigned, a Notary Public in and for the State of Washington,
duly commissioned and sworn, personally appeared Tim O’Keefe to me known to be
the Manager of FIRST & YESLER, L.L.C., that executed the within and
foregoing instrument, and acknowledged the said instrument to be the free and
voluntary act and deed of said corporation and limited partnerships for the
uses and purposes therein mentioned, and on oath stated that he is authorized
to execute the said instrument.

 

WITNESS my hand and official seal hereto
fixed the day and year in this certificate above written.

 

	
   

  	
   

  
	
   

  	
   

  	
  (Print Name)

  
	
   

  	
  Notary Public in and for the State of
  Washington,

  
	
   

  	
  residing at

  	
   

  
	
   

  	
  My Commission Expires:

  	
   

  
					

 

ACKNOWLEDGEMENT

 

	
  Province of British Columbia

  	
  )

  
	
   

  	
  )SS.

  
	
  COUNTY OF Vancouver

  	
  )

  

 

On this 15, day of Sept., 2005, before me,
the undersigned, a Notary Public in and for the Province of British Columbia,
duly commissioned and sworn, personally appeared Scott Cormack to me known to
be the President of OncoGenex, Inc., that executed the within and
foregoing instrument, and acknowledged the said instrument to be the free and
voluntary act and deed of said corporation and limited partnerships for the
uses and purposes therein mentioned, and on oath stated that he is authorized
to execute the said instrument.

 

WITNESS my hand and official seal hereto
fixed the day and year in this certificate above written.

 

	
   

  	
  LEONARD M. COHEN

  Barrister & Solicitor / Notary Public

  #570-999 West Broadway

  Vancouver, B.C. V5Z 1K5

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Leonard Cohen

  
	
   

  	
   

  	
  (Print Name)

  
	
   

  	
  Notary Public in and for the Province of
  British

  
	
   

  	
  Columbia, residing at

  	
   

  
	
   

  	
  My Commission Continues as Solicitor

  
	
   

  	
   

  
	
   

  	
    Witnessed as to execution only

  
	
   

  	
    no advice given or sought

  
				

 

27

 

EXHIBIT A

 

Floor
Plans

 

28

 

 

 

 

 

 

 

 

 

EXHIBIT B

 

Description
of Property

 

That portion of Lots 7 and 8, Block 5, Town of Seattle, as laid out by
D.S. Maynard, commonly known as D.S. Maynard’s plat of Seattle, according to
plat recorded in Volume 1 of plats, page 23, in King County, Washington,
described as follows: Beginning at the intersection of the south line of
said Lot 8 with the east line of First Avenue South, formerly Commercial
Street, as widened pursuant to Ordinance Bo. 1106 of the City of Seattle, in
Territorial District Court Case No. 7094, (said point of intersection being
9 feet east of the original southwest corner of said Lot 8); thence north along
the east line of First Avenue South 90 feet; thence east at right angles west
111 feet to the point of beginning; also beginning at the southeast corner of
said Lot 7; thence south in the production of the cast line of said Lot 7, a
distance of 20.2 feet to the north line of King Street; thence westerly along
the north line of King Street, 110.73 feet to the east line of First Avenue
South; thence north along said east line of First Avenue South 19.995 feet to
the south line of said Lot 8; thence east along the south line of Lots 8 and 7
to the point of beginning, the area last described including a portion of what
is commonly known as the Mackintosh Strip and the portion of King Street
vacated by Ordinance No. 19076 of the City of Seattle; also a strip of
land 15 feet in width immediately adjacent to the above described properties to
the north.

 

29

 

EXHIBIT C

 

Rules and
Regulations

 

This Exhibit “C” is attached to and made
a part of the Agreement of Lease dated Sept. 15, 2005 (the “Lease”),
between FIRST & YESLER, L.L.C.(“Landlord”), (“Tenant”). Unless the
context otherwise requires, the terms used in this Exhibit that are
defined in the Lease shall have the same meaning as provided in the Lease.

 

The following rules and regulations have
been formulated for the safety and well-being of all tenants of the Building
and to insure compliance with governmental and other requirements. Strict
adherence to these rules and regulations is necessary to guarantee that
each and every tenant will enjoy a safe and undisturbed occupancy of its
premises in the Building. Any continuing violation of these rules and
regulations by Tenant shall constitute a default by Tenant under the Lease.

 

Landlord may, upon request of any tenant,
waive the compliance by such tenant of any of the following rules and
regulations, provided that (i) no waiver shall be effective unless signed
by Landlord’s authorized agent, (ii) any such waiver shall not relieve
such tenant from the obligation to comply with such rule or regulation in
the future unless otherwise agreed to by Landlord, (iii) no waiver granted
to any tenant shall relieve any other tenant from the obligation of complying
with these rules and regulations, unless such other tenant has received a
similar written waiver from Landlord, and (iv) any such waiver shall not
relieve such tenant from any liability to Landlord for any loss or damage
occasioned as a result of such tenant’s failure to comply.

 

1.                                       The
sidewalks, entrances, passages, courts, elevators, vestibules, stairways,
corridors, roof, halls and other parts of the Building not exclusively occupied
by any tenant shall not be obstructed or encumbered by any tenant or used for
any purpose other than ingress and egress to and from each tenant’s premises. Landlord
shall have the right to control and operate the public portions of the
Building, and the facilities furnished for common use of the tenants, in such
manner as Landlord deems best for the benefit of the tenants generally. No
tenant shall permit the visit to its premises of persons in such numbers or
under such conditions as to interfere with the use and enjoyment of the
entrances, corridors, elevators and other public portions or facilities of the
Building by other tenants.

 

2.                                       No
awnings or other projections shall be attached to the outside walls of the
Building without the prior written consent of Landlord. No drapes, blinds,
shades or screens shall be attached to or hung in, or used in connection with,
any window or door of the Premises, without the prior written consent of
Landlord. All awnings, projections, curtains, blinds, shades, screens and other
fixtures must be of a quality, type, design and color, and attached in the
manner approved by Landlord.

 

3.                                       No
showcases or other articles shall be put in front of or affixed to any part of
the exterior of the Building or any tenant’s premises, nor placed in the halls,
corridors or vestibules without the prior written consent of Landlord.

 

4.                                       The
water and wash closets and other plumbing fixtures shall not be used for any
purposes other than those for which they were constructed, and no debris,
rubbish, rags or other substances shall be thrown therein. All damage resulting
from any misuse of the fixtures shall be borne by the tenant who, or whose
servants, employees, agents, visitors or licensees, shall have caused the same.

 

5.                                       There
shall be no marking, painting, drilling into or defacement of the Building or
any part of any tenant’s premises that is visible from public areas of the
Building. Tenants shall not construct, maintain, use or operate within their
respective premises any electrical device, wiring or apparatus in connection
with a loud speaker system or other sound system, except as reasonably required
as part of a communication system approved prior to the installation
thereof

 

30

 

by Landlord. No such loud speaker or sound system shall be constructed,
maintained, used or operated outside the premises of any tenant.

 

6.                                       No
bicycles or vehicles and no animals, birds or pets of any kind shall be brought
into or kept in or about the Building or any tenant’s premises, except that
this rule shall not prohibit the parking of bicycles or vehicles in areas
specifically designated therefor by Landlord. No cooking or heating of food
shall be done or permitted by any tenant on its premises except for food
prepared in portable microwave ovens (provided that no odors are emitted). No
tenant shall cause or permit any unusual or objectionable odors to be produced
upon or permeate from its premises.

 

7.                                       No
space in the Building shall be used for the manufacture of goods for sale in
the ordinary course of business, or for the sale at auction of merchandise,
goods or property of any kind. Furthermore, the use of its premises by any
tenant shall not be changed without the prior approval of Landlord.

 

8.                                       No
tenant shall make any unseemly or disturbing noises or disturb or interfere
with the occupants of the Building or neighboring buildings or premises or
those having business with them, whether by the use of any musical instrument,
radio, talking machine, whistling, singing, or in any other way. No tenant
shall throw anything out of the doors or windows or into or down the corridors
or stairs of the Building.

 

9.                                       No
flammable, combustible or explosive fluid, chemical or substance shall be
brought into or kept upon the premises.

 

10.                                 No
additional locks or bolts of any kind shall be placed upon any of the doors or
windows by any tenant, nor shall any changes be made in any existing locks or
the locking mechanism therein, without Landlord’s approval. The doors leading
to the corridors or main halls shall be kept closed during business hours
except as they may be used for ingress or egress. Each tenant shall, upon
the termination of its tenancy, restore to Landlord all keys of stores,
offices, storage and toilet rooms either furnished to, or otherwise procured
by, such tenant, and in the event of the loss of any keys so furnished, such
tenant shall pay to Landlord the replacement cost thereof. Tenant’s key system
shall be separate from that for the rest of the Building.

 

11.                                 Landlord
reserves the right to inspect all freight to be brought into the Building and
to exclude from the Building all freight which violates any of these rules and
regulations of the Lease.

 

12.                                 No
tenant shall pay for any employees on its premises, except those actually
working for such tenant at the tenant’s premises.

 

13.                                 Landlord
reserve the right to exclude form the Building at all times any person who
is not known or does not properly identify himself or herself to the Building
management or watchman on duty. Landlord may, at its option, require all
persons admitted to or leaving the Building between the hours of 6:00 p.m.
and 7:00 a.m., Monday through Friday, and at any hour on Saturdays,
Sundays and legal holidays, to register. Each tenant shall be responsible for
all persons for whom it authorizes entry in the Building, and shall be liable
to Landlord for all acts or omissions of such persons.

 

14.                                 The
Premises shall not, at any time, be used for lodging or sleeping or for any
immoral or illegal purposes.

 

15.                                 Tenant
assumes full responsibility for protecting the Premises from theft, and each
tenant, before closing and leaving the Premises at any time, shall see that all
doors and windows are closed and locked, and all lights turned off.

 

16.                                 Landlord’s
employees shall not perform any work or do anything outside of their
regular duties, unless under special instruction from the management of the
Building. The requirements of tenants will be attended to only upon application
to Landlord, and any such special

 

31

 

requirements shall be billed to Tenant (and paid when the next
installment of rent is due) in accordance with the schedule of charges
maintained by Landlord from time to time or at such charge as is agreed upon in
advance by Landlord and Tenant.

 

17.                                 Canvassing,
soliciting and peddling in the Building and on the Property are prohibited and
each tenant shall cooperate to prevent the same. Peddlers, solicitors and beggars
shall be reported to the Building manager or as Landlord otherwise requests.

 

18.                                 There
shall not be used in any space, or in the public halls of the Building, either
by any tenant or by jobbers or others in the delivery or receipt of
merchandise, any hand trucks, except those equipped with rubber tires and side
guards. Tenant shall be responsible to Landlord for any loss or damage
resulting from any deliveries made by or for Tenant to the Building.

 

19.                                 Mats,
trash or other objects shall not be placed in the public corridors of the
Building.

 

20.                                 Landlord
does not maintain suite finishes which are nonstandard, such as kitchens,
bathrooms, wallpaper, special lights, etc. However, should the need arise for
repairs of items not maintained by Landlord, Landlord will arrange for the work
to be done at Tenant’s expense.

 

21.                                 Drapes
installed by Landlord for the use of Tenant or drapes installed by Tenant, with
Landlord’s approval, which are visible from the exterior of the Building, must
be cleaned by Tenant at least once a year, without notice, at the tenant’s own
expense.

 

22.                                 The
Building directory located in the Building lobby as provided by Landlord shall
be available to Tenant solely to display its name and location in the Building,
which display shall be as directed by Landlord.

 

23.                                 Tenant
shall not cause any unnecessary janitorial labor or services by reason of
Tenant’s carelessness or indifference in the preservation of good order and
cleanliness.

 

24.                                 Tenant
shall not install linoleum, tile, carpet or other floor covering so that the
same shall be affixed to the floor of the Premises in any manner except as
approved by Landlord.

 

25.                                 No
furniture, packages, supplies, equipment or merchandise will be received in the
Building or carried up or down in the elevators, except between such hours and
in such elevators and on such other conditions as shall be designated by
Landlord.

 

26.                                 Tenant
shall not waste heat or air-conditioning and shall cooperate fully with
Landlord to assure the most effective operation of the Building’s heating and
air conditioning, and shall refrain from attempting to adjust any controls
other than room thermostats installed for Tenant’s use.

 

27.                                 Landlord
shall have sole power and discretion to control the quantity, size, location, and
design of all tenant identification signage. No such signage shall be erected
without Landlord’s written consent.

 

28.                                 The
loading dock area is exclusively reserved for authorized traffic and Tenant
shall not use same for temporary parking.

 

29.                                 No
eating, drinking, sleeping, or loitering shall be permitted in the lobby areas.

 

30.                                 Landlord
may from time to time alter or amend these Rules and Regulations, and
Tenant shall comply with the Amended Rules and Regulations.

 

32

 

EXHIBIT D

 

TENANT IMPROVEMENT WORK AGREEMENT

 

BETWEEN:

 

FIRST & YESLER, L.L.C., having an office at 1100 Olive Way, Suite 340
Seattle, Washington, 98101

 

(“Landlord”)

 

AND:

 

ONCOGENEX, INC., a corporation incorporated in the State of Washington, 101 Yesler Way
Seattle, Washington, 98104

 

(the
“Tenant”)

 

WHEREAS:

 

The Landlord and Tenant has entered into an Agreement of
Lease dated September 15, 2005 whereby interior Improvements to the
Premises are to be constructed by the Landlord (all terms are defined in the
Agreement of Lease).

 

THE PARTIES AGREE TO THE FOLLOWING:

 

1.                                       The Landlord agrees to build the Improvements to the
Premises in accordance with the architectural and construction drawings
attached as Exhibit A, including the conference room core drill, at
its sole cost and expense.

 

2.                                       The Landlord will provide, at its sole cost and expense,
the following finishes, each of which have been agreed to by the Tenant:

 

(a)                                  Carpet:  Patcraft,
PDQ Vol. II Book II/Style – 10060/Colour – 60102 spiral;

(b)                                 Base:  Roppe, P109
Green Beige (TP 7P109);

(c)                                  VCT:  Armstrong
Standard Excelon (Imperial Texture), 51901 Taupe, 57916 Dutch Delft;

(d)                                 Plastic Laminate: 
Nevamar, Charcoal Fusion Textured FN 6001T (countertops) Wilsonart,
4637-60 Monterey Haze (vertical surfaces;

(e)                                  Dimmer lights installed in the conference room, together
with building standard blinds; and

(f)                                    Locks:  new lock
installed on front door and individual office locks sharing a uniform key.

 

3.                                       The Tenant will be responsible for providing, at its sole
cost and expense: furniture for use as a reception desk, phone and data cabling
and any appliances to be installed in the kitchen; after the Improvements have
been made to the satisfaction of the Tenant.

 

SIGNED BY THE PARTIES AS AN AGREEMENT
on
the 15th day of September, 2005.

 

FIRST & YESLER, L.L.C.

 

	
  /s/ Tim O’Keefe

  	
   

  
	
  Authorized Signatory

  
	
   

  
	
  Tim
  O’Keefe, MGR

  	
   

  
	
  Please
  print Name and Title of Signatory

  
	
   

  
	
  ONCOGENEX, INC.

  
	
   

  
	
  /s/ Scott Cormack

  	
   

  
	
  Authorized Signatory

  
	
   

  
	
  Scott Cormack, President

  	
   

  
	
  Please print Name and
  Title of Signatory

  

 

33

 

EXHIBIT E

 

Tenant
Estoppel Certificate

 

DO
NOT SIGN - SAMPLE ONLY

 

TO:

 

	
  RE:

  	
  Property Address:

  
	
   

  	
  Lease Date:

  
	
   

  	
  Between:

  	
  , Landlord

  
	
   

  	
  and

  	
  , Tenant

  
	
   

  	
  Rentable Area Leased:

  
	
   

  	
  Suite No:

  
	
   

  	
  Floor:

  

 

The undersigned, Tenant under the
above-referenced lease (“Lease”), certifies to                                                                      ,
the following:

 

1.                                       The
above-described Lease has not been canceled, modified, assigned, extended, or
amended except as follows:                                                                                                                                                                            .

 

2.                                       There
is no prepaid rent, except $                          and
the amount of security deposit is $                           .

3.                                       We
took possession of the Premises on                  and
commenced (or will commence) to pay Rent on                        in
the amount of $                     
Rent was last paid on               ,
20  , and has been paid through           

4.                                       The
Lease terminates on
                                               
and we have the following renewal option(s)
                                                                                                                 

5.                                       All
work to be performed for us under the Lease has been performed as required and
has been accepted by us, except 

 

6.                                       The
Lease is:

(a)                                  in full force and
effect;

(b)                                 free from default; and

(c)                                  we have no claims
against the Landlord or offsets against Rent.

7.                                       The
undersigned has received no notice of prior sale, transfer or assignment,
hypothecation or pledge of the Lease or of the Rent secured therein other than
to you, except,

 

8.                                       That
the Premises as let are being used for the purpose as described in the Lease.

 

If we are a corporation, the undersigned is a
duly appointed officer of the corporation signing this certificate and is the
incumbent in the office indicated under (his) (her) name.

 

In any event, the undersigned individual(s)
(is) (are) duly authorized to execute this certificate.

 

DATED this         day of                          ,
20    .

 

	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  	
   

  
					

 

34

 

AMENDMENT
TO LEASE

 

THIS AGREEMENT is entered into on this 16th day of
September, 2005, by and between FIRST & YESLER, L.L.C. (“Landlord”),
and OncoGenex, Inc., (“Tenant”) and provides for the amendment of that
certain lease dated 9-15, 2005, between FIRST & YESLER, L.L.C. (“Landlord”),
and Onco Genex, Inc., (“Tenant”)

 

RECITALS

 

A)          FIRST & YESLER, L.L.C. known as “Owner”
and OncoGenex, Inc. known as “Tenant”

B)            Landlord and Tenant wish to amend the Lease
to provide Tenant with an Expansion Option.

C)            Except as modified by
this Amendment, Landlord and Tenant hereby wish to reconfirm and reaffirm its
continuation in full force and effect.

 

AGREEMENT

 

1)              Landlord and Tenant
hereby agree as follows:

Expansion
Option: Tenant shall have first right of opportunity to Lease adjacent space to
the SOUTH of the premises, Suite 401, 2,842 sf. Tenant shall have three (3) business
days from receipt of notice and shall be at the terms and conditions of the
proposed new Tenants Lease but CO TERMINUS unless it is after 12 months of
Tenants start date, approximately September 2006. If it is after 12 months
from the commencement of Tenant’s lease then the term shall run as proposed in
the new tenants lease.

 

All terms and conditions of the lease dated 9-15-05 not expressly
modified by this amendment shall remain in full force and effect.

 

IN WITNESS WHEREOF, Landlord and Tenant hereto have executed this
Amendment to the lease on the day first above written.

 

	
  LANDLORD:

  	
  TENANT:

  
	
   

  	
   

  
	
  FIRST & YESLER, L.L.C.

  	
  OncoGenex, Inc.

  
	
   

  	
   

  
	
  By:

  	
  /s/ Tim O’Keefe

  	
   

  	
  By:

  	
  /s/ Scott Cormack

  	
   

  
	
   

  	
  Tim O’Keefe

  	
   

  	
   

  	
  Scott Cormack

  	
   

  
	
   

  	
  Its: Manager

  	
   

  	
   

  	
  Its: PresidentQuickLinks
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Exhibit 10.2  

 
 

AMENDMENT TO CONSULTING SERVICES AGREEMENT    
    

        THIS AMENDMENT TO CONSULTING SERVICES AGREEMENT ("Amendment") is made and entered into this 26th day of December, 1990, and effective as of
January 1, 1991, by and between Helmerich & Payne, Inc., ("H&P") and Walter H. Helmerich, III, ("WHH"). 

        Paragraph 3
of the Consulting Services Agreement dated December 30, 1990, is hereby deleted, with the following to be substituted therefor: 

        "3.
This Agreement shall be effective as of January 1, 1991, and shall be automatically renewed for subsequent one-year terms unless H&P or WHH shall terminate the
same upon thirty (30) days' prior written notice." 

        Except
as amended hereby, all the terms, conditions, and provisions of the Consulting Services Agreement shall remain valid and binding. 

        IN
WITNESS WHEREOF, the parties hereto have executed this Amendment in duplicate on the date first written above. 

	

 	
 	

 	
 	

"H&P"
	

 	
 	

HELMERICH & PAYNE, INC.
	

 	
 	

By:	
 	

 Steven R. Mackey

Vice President
	

 	
 	

 	
 	

"WHH"
	

 	
 	

 WALTER H. HELMERICH, III

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AMENDMENT TO CONSULTING SERVICES AGREEMENT

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