LEASE

The foregoing Basic Lease Information is incorporated into and made a part of the Lease identified above. If any conflict exists between any Basic Lease Information and the Lease, then the Lease shall control.

TABLE OF CONTENTS

THIS LEASE AGREEMENT (the "Lease") is made and entered into as of the 19 day of October, 2000, by and between WIREDZONE PROPERTY, L.P. ("Landlord") and COMBIMATRIX CORPORATION, a Delaware corporation ("Tenant").

1.        Definitions and Basic Provisions. The definitions and basic provisions set forth in the Basic Lease Information (the "Basic Lease Information") executed by Landlord and Tenant contemporaneously herewith are incorporated herein by reference for all purposes. The additional terms defined below shall have the respective meanings stated when used elsewhere in this Lease, and such terns and the following basic provisions constitute an integral part of this Lease:

(a)   "Normal Business Hours": From 7:00 a.m. until 6:00 p.m. on weekdays (except Holidays, as defined on Exhibit "C" attached hereto and made a part hereof for all purposes) and 7:00 a.m. until 12:00 p.m. on Saturdays (except Holidays). Tenant shall have access to the Building and its Common Facilities (including, without limitation, the freight elevators, shipping and receiving docks, cafeteria and fitness room) on a 24 hours per day, 7 days a week basis; subject, however, to reasonable limitations resulting from Landlord's access control systems implemented for security purposes. Note that Tenant shall also have access to the Building's conference room facilities on a reservation and cost basis on the same terns available to other tenants as established by Landlord in Landlord's reasonable discretion.

(b)   "Rentable Space" : (per BOMA 1996 standards) (i) in the case of a single tenancy floor, all floor area measured at the floor from the inside surface of the outer glass line of the Building to the inside surface of the opposite outer glass line excluding only the areas (the "Service Areas") used for Building stairs, fire towers, elevator shafts, flues, vents, stacks, major pipe shafts and vertical ducts (which Service Areas shall be measured from the outside face of wall is enclosing such Service Areas), but including any such Service Areas which are for the specific use of the particular tenant such as special stairs or elevators, plus an allocation of the square footage of the Building's elevator machine rooms, mechanical and electrical rooms, and public lobbies, and (ii) in the case of a floor to be occupied by more than one tenant, all floor areas within the inside surface of the outer glass walls enclosing the Premises and measured to either (A) the mid-point of the walls separating areas leased by or held for lease to other tenants and/or (B) to the tenant's side of walls adjacent to corridors, elevator foyers, restrooms, mechanical rooms, janitor closets, vending areas and other similar facilities for the use of all tenants on the particular floor (hereinafter sometimes called the "Common Areas"), but including a proportionate part of the Common Areas located on such floor based upon the ratio which the tenant's rentable space (excluding Common Areas) on such floor bears to the aggregate rentable space (excluding Common Areas) on such floor, or other reasonable basis mutually agreed to by Landlord and Tenant, plus an allocation of the square footage of the Building's elevator machine rooms, mechanical and electrical rooms, and public lobbies. No deductions from Rentable Space shall be made for columns or projections necessary to the Building. The Rentable Space in the Premises has been calculated on the basis of the foregoing definition and is hereby stipulated for all purposes hereof to be as stated in the Basic Lease Information, whether the same should be more or less as a result of minor variations resulting from actual construction and completion of the Premises for occupancy so long as such work is done in substantial accordance with the tens and provisions hereof. Notwithstanding anything to the contrary contained herein, the standard of measurement utilizes a load factor of 15%.

(c)   "Rider" : Collectively, Rider No(s). 101, 102, 103, 104 and 106, which are attached hereto, contain additional provisions of this Lease, and are hereby incorporated in, and made a part of, this Lease.

(d)   "Exhibits" : The following Exhibits are attached to and trade a part of this Lease for all purposes:

A - Land

B - Floor Plan of Premises

C - Holidays

D - Leasehold Improvements Agreement

E - Acceptance of Premises Memorandum

F - Building Rules and Regulations

2.        Lease of Premises. In consideration of the obligation of Tenant to pay rent as herein provided and in consideration of the other terms, covenants, and conditions hereof, Landlord hereby demises and leases to Tenant, and Tenant hereby leases and takes from Landlord, the Premises, together with the right to use in common with others the Common Areas, for the Lease Term specified herein, all upon and subject to the terms and conditions set forth herein. This Lease and the obligations of Landlord hereunder are conditioned upon faithful performance by Tenant of all of the agreements and covenants herein set out and agreed to by Tenant. Tenant agrees and acknowledges that there is excluded from Tenant's use of the Premises (whether the Premises are or include one or more full floors within the Building) and Landlord hereby expressly reserves for its sole and exclusive use, any and all mechanical, electrical, telephone and singular rooms, janitor closets, elevator, pipe and other vertical shafts and ducts, flues, stairwells, any area above the acoustical ceiling, and any other areas not specifically shown on Exhibit "B" as being part of the Premises. Landlord acknowledges that Paragraph 56 of this Lease identifies certain special installations by Tenant that shall require access to some of the aforementioned Service Areas and to the extent such special installations are approved as part of Tenant's Approved Working Drawings and Section 56 of this Lease, Tenant shall also have access to such areas on a non-exclusive basis and in coordination with Landlord's on-site property manager.

3.         Services by Landlord.   Landlord agrees to furnish the following services to the Premises, as long as Tenant is not in default of a material obligation under this Lease, all of such services to be at Landlord's cost and expense except as specifically provided to the contrary elsewhere in this Lease:

(a)   Cold water (at the normal temperature of the supply of water to the Building) for Tenant's laboratory use and lavatory, water fountain and toilet purposes, and hot water (from the regular Building supply at prevailing temperatures) for lavatory purposes, all of such water service to be supplied from the regular supply of water to the Building at points of supply provided for general use of tenants of the Building through fixtures installed by Landlord or by Tenant with Landlord's consent which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, nothing contained herein shall require Landlord to furnish hot water to any kitchen, bar or other such lavatory facility in the Premises. Tenant acknowledges that to the extent Tenant's laboratory use results in an excessive level of water being used by Tenant as compared to other tenants in the Building, that Landlord may require the Premises ^' water consumption to be separately metered, at Tenant's cost, and for Tenant to thereafter reimburse Landlord directly for Tenant's water usage in the Premises.

(b)   Heated and refrigerated air conditioning in season during Normal Business Hours, and at such temperature and in such amounts as are reasonably considered by Landlord to be standard. Such services at all other times shall be furnished only at the request of Tenant, who shall bear the entire cost thereof. Whenever machines or equipment that generate abnormal heat and affect the temperature otherwise maintained by the air conditioning system are used in the Premises, Landlord shall have the right to install supplemental air conditioning units in the Premises, and the cost thereof, including the cost of installation, operation, use and maintenance, shall be paid by Tenant to Landlord from time to time promptly on demand. The hourly charge for heating, ventilation and air conditioning ("HVAC") overtime usage shall be an amount equal to the actual cost associated with providing such overtime HVAC plus an administrative charge of 15%. Notwithstanding the foregoing, Tenant shall not be charged for HVAC overtime usage while and to the extent either the existing 80-ton chiller is (1) operating during Normal Business Hours or (2) dedicated solely for Tenant's use. Tenant shall have a four (4) month option period following the Commencement Date in which to request that Landlord dedicate for Tenant's sole use the existing 80-ton chiller in connection with Tenant's activities on the second floor of the Building and upon demonstrating reasonable basis for such need, Landlord shall use its best efforts to so dedicate the chiller; provided, however, Tenant shall be solely responsible for the costs associated with using, maintaining and repairing same. Tenant shall reimburse Landlord on a monthly basis for all such costs associated therewith and Tenant acknowledges that Landlord will perform. such maintenance and repair obligations. Tenant acknowledges that the costs associated with using, maintaining and repairing any of the HVAC systems related to all of Tenant's "clean room" facilities shall be Tenant ^' s sole cost and responsibility.

(c)   Operatorless passenger elevator service in common with other tenants for ingress and egress from the Premises, provided that Landlord may reasonably limit the number of elevators to be in operation at times other than Normal Business Hours, and service elevator(s) in common with other tenants but only when scheduled through the management of the Building.

(d)   Such janitorial cleaning services as may, in the reasonable judgment of Landlord, be standard for office use.

(e)   Electric current in the manner and to the extent deemed by Landlord to be standard for the Building, but in no event less than 7 watts per square foot (i.e., 5 watts for power and 2 watts for Building standard lighting).

(f)   Security services which shall consist of two security personnel during Normal Business Hours and one security person at all other times, with such personnel to be primarily stationed in the main entrance of the Building's lobby.

(g)   Food services in the Building's common cafeteria at such time as either (1) the Building is 75% occupied or (2) Tenant and other tenants at the Building have, in the aggregate, over 500 employees located at the Building. Prior to such time, Landlord will use its good faith efforts to provide or facilitate lunch catering services to Tenant.

            Except as provided hereinbelow, failure to any extent to furnish or any stoppage of these defined utilities and services resulting from any cause whatsoever shall not render Landlord liable in any respect for damages to either person, property or business, nor be construed as an eviction of Tenant, nor entitle Tenant to any abatement of rent, nor relieve Tenant from fulfillment of any covenant or agreement contained herein. Except as provided hereinbelow should any malfunction of the Building improvements or facilities (which by definition do not include any improvements or facilities of Tenant) occur for any reason, Landlord shall use reasonable diligence to repair same promptly, but Tenant shall have no claim for rebate or abatement of rent or damages on account of such malfunction or of any interruptions in service occasioned thereby or resulting therefrom. Notwithstanding the foregoing, in the event such stoppage or interruption of utilities or services exists for more than seven (7) consecutive days and is the result of a cause other than (i) a fire or casualty which shall be controlled by Section 22 of this Lease, (ii) the actions of Tenant or its agents, servants, contractors, employees, business invitees or guests, or (iii) force majeure as described in Section 46 of this Lease, Tenant's rental (including Base Rental and Additional Rental, as defined below) shall abate to the extent any portion of the Premises is rendered untenantable (for purposes hereof untenantable shall include lack of HVAC services, electrical services and elevator service which materially interferes with Tenant's enjoyment of the Premises). In addition, notwithstanding anything to the contrary contained herein, following such seven (7) consecutive day period (but as limited by clauses (i), (ii) and (iii) above), Tenant shall also be entitled to pursue a suit for specific performance and/or damages against Landlord. Notwithstanding anything to the contrary contained herein, in the event of stoppage or interruption of utilities or services, or the malfunction of Building improvements (other than improvements installed by Tenant) or facilities, as more fully described above (but as limited by clauses (i), (ii) and (iii) above), which shall continue for seven (7) consecutive days, Tenant shall have all rights and remedies available and provided under the laws of the State of Washington.

4.         Additional Rental.

(a)   In addition to Base Rental, Tenant shall during the Lease Term, pay an amount per square foot of Rentable Space within the Premises ("Tenant's Additional Rental") equal to Tenant's Proportionate Share of the Operating Expenses. Prior to the commencement of each calendar year of Tenant's occupancy, Landlord may make a good faith estimate of the anticipated amount of Tenant ^' s Additional Rental ("Tenant's Forecast Additional Rental") and Tenant agrees to pay Tenant's Forecast Additional Rental in equal monthly installments in advance and without demand on the first day of each calendar month during and throughout the Lease Term and any renewal or extension thereof, subject to adjustment of Tenant's Forecast Additional Rental pursuant to any audit conducted pursuant to Paragraph 4(c) hereof.

         (b) Within one hundred fifty (150) days after the end of each calendar year during the Lease Term and any renewal or extension thereof, or as soon as reasonably possible thereafter, Landlord shall provide Tenant a statement showing the Operating Expenses for said calendar year and a statement prepared by Landlord comparing Tenant's Forecast Additional Rental theretofore paid by Tenant with Tenant's Additional Rental.   In the event that Tenant's Forecast Additional Rental paid by Tenant exceeds Tenant's Additional Rental for said calendar year, Landlord, at Landlord's option, shall either pay Tenant an amount equal to such excess by direct payment to Tenant within thirty (30) days of the date of such statement, or credit such excess payment against the next accruing installment(s) of Tenant's Forecast Additional Rental. In the event that the Tenant's Additional Rental exceeds Tenant's Forecast Additional Rental for said calendar year, Tenant shall pay Landlord, within thirty (30) days of receipt of the statement, an amount equal to such difference. Such obligation of Landlord to refund and of Tenant to pay shall survive expiration or termination of this Lease. Subject to the right of Tenant to audit set forth in Section 4(c) below, Landlord's statement showing Operating Expenses shall be conclusive and binding for all purposes on Tenant as to any and all items contained therein to which Tenant has not objected in writing to Landlord within thirty (30) days after Tenant's receipt of such statement, which writing shall specify each item objected to and the detailed reason for each such objection.

(c)   Tenant at its sole expense shall have the right during the Lease Term, but no more frequently than once per calendar year following prior written notice to Landlord, to audit Landlord's books and records relating to Operating Expenses, or at Landlord's sole election, Landlord will provide at Tenant's reasonable expense a copy of such audit prepared by an independent certified public accountant.

(d)   The term "Operating Expenses" shall mean all costs of management, operation (specifically including the cost of electricity to the common areas of the Building and related improvements but not to any tenants' premises which are submetered), and maintenance of the Land, the Building, and all other improvements on the Land and any and all appurtenances thereto (the "Common Facilities"), all accrued and based on an annual period consisting of a calendar year. By way of illustration but not limitation, Operating Expenses shall include expenditures for maintenance and repairs not otherwise paid for by tenants; amortization of any capital expenditures in accordance with generally accepted accounting practices and principles which are incurred by Landlord to (i) attempt to effect a reduction in the Operating Expenses of the Building, or (ii) keep the Building in compliance with all applicable governmental rules and regulations from time to time, which the Building is not otherwise in compliance with; assessments and governmental charges (including taxes on rents or services); ad valorem property taxes with respect to the Land and/or the Building or any part of either thereof, charges for water, sewerage, and gas; cleaning, including supplies, janitorial services and pest control; licenses, permits and inspection fees; fiber connectivity and related telecommunications charges (but not the cost for upgrading of such for the benefit of new tenants at the Building after the Commencement Date); refuse collection; security services; insurance; costs and expenses related to the maintenance and operation of the Building's freight elevator, shipping and receiving areas, common cafeteria (or the alternative catering services described above), fitness facilities and conference facilities; administrative expenses relating to the Building, including salaries, benefits, taxes and other expenses for labor and management, office equipment, telephone, and supplies; management fees payable by Landlord with respect to the Land, Building and Common Facilities; fire protection; snow and ice removal; landscape maintenance; professional services (including legal, property-related consulting and accounting expenses); and security services. The following shall be excluded from Operating Expenses: depreciation; capital expenditures other than those referenced in the previous sentence; cost of Building alterations or renovations for other tenants in the Building; advertising; commissions or fees paid for leasing; cost of repairs occasioned by fire, windstorm, or other casualty (but only to the extent reimbursed by insurance proceeds); and wages, salaries, or other compensation paid to any executive above the grade of building manager; interest on debt or amortization payments on any mortgage or mortgages or rental under any ground or underlying leases or lease, if any; all services for which any tenant of the Building specifically reimburses Landlord or for which Tenant pays directly to third persons; and costs (including penalties, fines and associated legal expenses) incurred due to the violation by Landlord for the terms and conditions of the Lease, or any applicable federal, state and local governmental laws, ordinances, orders, rules and regulations, which costs would not have been incurred but for such violation by Landlord.

5.        Electricity. Tenant shall be solely responsible for the costs of electrical consumption within the Premises ("Electricity") and will reimburse Landlord on a monthly basis (at the actual cost for such service without mark-up by Landlord following Landlord's reading of such meters) for such electrical consumption. Without in any way limiting Tenant's responsibility for Electricity, Tenant shall not without the express prior written consent of Landlord use electric current in excess of the capacity of the feeders or lines to the Building or the Premises. Tenant shall be responsible for all costs associated with separate metering of Electricity for the Premises, including, but not limited to, the cost of installing, maintaining, repairing and reading the separate metering devices and subpanels. Tenant acknowledges that the cost to provide, install and maintain submeters shall be at Tenant's sole expense.

6.         Payments and Performance . Tenant agrees to pay all rents and sums provided to be paid by Tenant hereunder at the times and in the manner herein provided, without any setoff, deduction or counterclaim whatsoever except as may otherwise be provided in Section 3 above. Should this Lease commence on a day other than the first day of a calendar month or terminate on a day other than the last day of a calendar month, the rent for such partial month shall be proportionately reduced. The Base Rental for the first partial month, if any, shall be payable at the beginning of said period or as Prepaid Rental. The obligation of Tenant to pay such rent is an independent covenant, and except as provided in Section 3 above, no act or circumstance whatsoever, whether such act or circumstance constitutes a breach of covenant by Landlord or not, shall release Tenant from the obligation to pay rent. Time is of the essence in the performance of all of Tenant's and Landlord's obligations hereunder. Any amount that becomes owing by Tenant to Landlord hereunder shall bear interest at the rate of 15% per annum from the due date until paid. In addition, at Landlord's option, but only to the extent allowed by applicable law and not in excess of the amount allowed by applicable law, Tenant shall pay a late charge in the amount (as solely determined by Landlord) of five percent (5%) of any installment of rental hereunder which is not paid within five (5) days of the date on which it is due in order to compensate Landlord for the additional expense involved in handling delinquent payments.

7.         Tenant Plans and Specifications - Installation of Improvements.   Tenant shall install or cause to be installed in the Premises substantially all of the improvements shown on the Approved Working Drawings (as defined in  Exhibit "D" attached hereto) upon the terms and conditions set forth in the Leasehold Improvements Agreement attached hereto as Exhibit "D" and made a part hereof (subject, however, to the change order provisions set forth therein).

8.         Completion of Improvements and Commencement of Rent. By moving into the Premises or taking possession thereof, Tenant accepts the Premises as suitable for the purposes for which the same are leased and accepts the Building and every appurtenance thereof, and waives any and all defects therein (other than latent defects) and on request from Landlord, Tenant shall promptly execute and deliver to Landlord an Acceptance of Premises Memorandum in the form attached hereto as Exhibit   "E" and made a part hereof for all purposes.

9.         Relocation of Premises. [Intentionally Deleted]

10.       Repairs and Reentry. Tenant will, at Tenant's own cost and expense, maintain and keep the Premises and any alterations and additions thereto in sound condition and good repair, and shall pay for the repair of any damage or injury done to the Building or any part thereof (not otherwise covered by the property insurance to be maintained by Landlord on the Building, excluding Tenant's Premises) by Tenant or Tenant's agents, employees and invitees; provided, however, that Tenant shall make no repairs to the Premises without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, in the event Landlord's property insurance is used to repair any damage or injury done to the Building (excluding Tenant's Premises for which Tenant's property insurance shall be used) by Tenant or Tenant ^' s agents, employees and invitees, Tenant shall (i) pay the deductible associated with such repairs, (ii) pay all amounts in excess of insurance proceeds available for such repairs, and (iii) pay for any increase Landlord incurs in its premium for such coverage as a direct result of insurance proceeds being used to fund Tenant's repair obligations. The performance by Tenant of its obligation to maintain and make repairs shall be conducted only by contractors approved by Landlord after plans and specifications therefor have been approved by Landlord. Tenant will not commit or allow any waste or damage to be committed on any portion of the Premises, and upon the termination of this Lease by lapse of time or otherwise, Tenant shall deliver up the Premises to Landlord in as good condition as at date of possession, ordinary wear and tear excepted. Upon such termination of this Lease, Landlord shall have the right to reenter and resume possession of the Premises. Notwithstanding the foregoing provisions of this Paragraph 10, any repairs to the Premises or the Building that are necessitated because of any damage caused by fire or other casualty shall be governed by the provisions of Paragraph 22 below. Landlord shall be responsible for maintenance to the exterior, structural and Common Areas of the Building (e.g., the structural roof, roof membrane, walls and foundation and utilities serving the Building and/or located outside Tenant's Premises). Notwithstanding the foregoing, Landlord may, as provided in Section 4(d) of this Lease, include the cost of normal repair and maintenance items in the Building's Operating Expenses and shall be reimbursed for same to the extent of Tenant's Proportionate Share. Landlord represents and warrants that to the best of its knowledge as of the date hereof, all Building systems (i.e., HVAC system, elevators, electrical system, plumbing system, fire prevention system), structural components of the Building, roofs and foundations are in good working order as of the Commencement Date of this Lease.

11.         Assignment and Subletting. In the event that Tenant desires to encumber this Lease, assign this Lease or sublet all or any part of the Premises or grant any license, concession or other right of occupancy of any portion of the Premises, Tenant shall notify Landlord in writing and shall state the name of the proposed assignee, sublessee or other transferee and the terms of the proposed assignment, sublease or transfer. Tenant shall also provide financial information and state and provide information requested by Landlord as to the nature and character of the business of the proposed assignee, sublessee or transferee. Tenant shall not assign or mortgage this Lease or any right hereunder or interest herein, and Tenant shall not sublet the Premises in whole or in part or grant any license, concession or other right of occupancy of any portion of the Premises, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, delayed or conditioned based upon Landlord's reasonable determination of the creditworthiness and nature and character of the business of the proposed assignee, sublessee or transferee. Any such assignment, mortgage or subletting without such consent shall be void and shall, at the sole option of Landlord, be deemed an event of default by Tenant under this Lease. Notwithstanding any assignment or subletting consented to by Landlord, Tenant and any guarantor of Tenant's obligations under this Lease and each assignee shall at all times remain jointly and severally fully responsible and liable for the payment of the rent herein specified and for compliance with all of Tenant's other covenants and obligations under this Lease. No consent to any assignment or mortgage of this Lease or any subletting of the Premises shall constitute a waiver of the provisions of this Paragraph except as to the specific instance covered thereby. In the event that the monthly rental per square foot of space subleased which is payable by any sublessee to Tenant shall exceed the monthly rental per square foot for the same space payable for the same month by Tenant to Landlord (including any bonuses or any other consideration paid directly or indirectly by the sublessee to Tenant), Tenant shall be obligated to pay fifty percent (50%) of the amount of such excess to Landlord as additional rent hereunder within five (5) days of the date it is received by Tenant from the sublessee. In the event Tenant shall receive any consideration from an assignee other than the assumption by the assignee of Tenant's obligations hereunder, Tenant shall be obligated to pay fifty percent (50%) of the amount of such consideration to Landlord as additional rent hereunder on the same date it is received by Tenant. Landlord, at Landlord's option, may elect to require that rental payable by any sublessee be paid directly to Landlord and offset Tenant's rent obligations accordingly. At no time during the Lease Term shall Tenant be entitled to (i) advertise the Premises for sublease without the prior written consent of Landlord, such consent not to be unreasonably withheld, (ii) market the Premises for sublease to another tenant of the Building or person or entity with whom Landlord is negotiating to lease space in the Building, and (iii) market the Premises for sublease at a rate less than the fair market value of the Premises. Any transfer by operation of law shall also constitute an assignment prohibited by this Paragraph 11. Tenant shall reimburse Landlord, on demand, for its reasonable attorneys ^' fees and other expenses incurred in connection with considering any request for Landlord's consent to an assignment or sublease of the Premises.

Notwithstanding anything to the contrary hereinabove, Tenant may assign or sublet the Premises to a subsidiary or affiliate under common ownership or control of Tenant, or to any entity merging with or into Tenant (collectively, "Affiliated Assignment"), without any further action by Landlord and such action shall be deemed a permitted assignment or subletting subject to the provisions hereunder so long as (i) the original Tenant and the transferee tenant shall be jointly and severally liable for the performance of the Lease obligations and (ii) the Permitted Use, creditworthiness and business character of the transferee tenant following such transfer or merger is comparable with Tenant's use, business character and creditworthiness prior to such transfer or merger. In addition, the following types of transactions shall not be deemed assignments or transfers for purposes of this Paragraph 11 for which Landlord's prior written consent must be obtained; provided, however, that the limitations set forth in clauses (i) and (ii) above shall still be applicable: (a) the sale or issuance of stock or other securities of the Tenant to a new investor or investors, even if such sales or issuance results in a change of control and/or a change in management; (b) the sale or other transfer by Tenant's present parent corporation of all or any portion of the stock of Tenant, even if such sale or transfer results in a change of control and/or a change in management; or (c) the sale or issuance of stock or other securities of the Tenant in a public offering or as a part of a private placement to raise additional capital or create liquidity for investors.

12.         Alterations and Additions by Tenant. Tenant shall make no alterations in or additions to the Premises without the prior written consent of Landlord which shall not be unreasonably withheld, conditioned or delayed. All alterations, additions, and improvements made to or fixtures or improvements placed in or upon the Premises by either party (except only moveable trade fixtures of Tenant) if not otherwise identified within thirty (30) days of installation by Tenant as removable upon execution of the Lease (or otherwise required to be removed by Landlord as a condition to its consent to such alteration or addition) shall be deemed a part of the Building and the property of Landlord at the time they are placed in or upon the Premises, and they shall remain upon and be surrendered with the Premises as a part thereof at the termination of this Lease, unless Landlord shall elect otherwise, whether such termination shall occur by the lapse of time or otherwise. In the event Landlord shall elect that certain alterations, additions and improvements made by Tenant in the Premises shall be removed by Tenant, Tenant shall remove them and Tenant shall restore the Premises to its original condition, at Tenant's own cost and expense, prior to the termination of the Lease Term. Alterations and additions to the Premises will be performed by Landlord (unless otherwise designated by Landlord) at Tenant's cost and expense. Tenant acknowledges that Landlord's approval of any alterations or additions shall not be a representation by Landlord that such alterations, additions or improvements comply with applicable laws. The initial alterations and additions to the Premises by Tenant shall be controlled by the terms and conditions of the Leasehold Improvements Agreement attached hereto. In connection with such initial improvements, Tenant shall have the right to pursue Landlord's permission to construct certain special installations as more particularly described in Paragraph 56 below.

13.         Legal Use, Violations of Insurance Coverage; Nuisance. Tenant will not occupy or use any portion of the Premises for any purpose other than the Sole Permitted Use or for any purpose which is unlawful or which, in the reasonable judgment of Landlord, is unduly hazardous due to risk of fire, explosion or other casualty, nor permit anything to be done which will in any way (i) increase the rate of fire and casualty insurance on the Building or its contents, or (ii) create unreasonable elevator loads or otherwise interfere with standard Building operations, or (iii) affect the structural integrity or design capabilities of the Building or (iv) result in the storage of any hazardous materials or substances at the Building except as permitted by law and the express terms and conditions of this Lease. In the event that, by reason of any act or conduct of business of Tenant, there shall be any increase in the rate of insurance on the Building or its contents created by Tenant's acts or conduct of business, then Tenant hereby agrees to pay Landlord the amount of such increase on demand. Tenant shall not erect, place, or allow to be placed any sign, advertising matter, stand, booth or showcase in, upon or visible from the vestibules, halls, corridors, doors, outside walls, outside windows or pavement of the Building or the Land without the prior written consent of Landlord. Tenant will conduct its business, and use commercially reasonable efforts to control its agents, employees, and invitees in such a manner as not to create any nuisance or interfere with, materially annoy or disturb other tenants or Landlord in the management of the Building.

14.         Laws and Regulations. Tenant at its sole expense will maintain the Premises in a clean, safe and healthful condition and will comply with all laws, ordinances, orders, rules and regulations of any governmental authority having jurisdiction over the use, conditions or occupancy of the Premises.

15.         Indemnity, Liability and Loss or Damage.

(a) Landlord shall not be liable to Tenant or Tenant's agents, employees, contractors, guests, invitees or any person claiming by, through or under Tenant for any injury to person, loss of or damage to property, or for loss of or damage to Tenant ^' s business, occasioned by or through the acts or omissions of Landlord, or by any cause whatsoever except to the extent arising from or out of Landlord's negligence or willful wrongdoing. Except to the extent arising from or out of Landlord's negligence or willful wrongdoing, Landlord shall not be liable for, and Tenant shall defend and indemnify Landlord and save it harmless from, all suits, actions, damages, liability and expense in connection with loss of life, bodily or personal injury or property damage arising from or out of any occurrence in, upon, at or from the Premises (except for any pre-existing

circumstances, conditions or occurrences in the Premises) or the occupancy or use by Tenant of the Premises or any part thereof, or occasioned wholly or in part by any action or omission of Tenant, its agents, contractors, employees, invitees, or licensees. If Landlord shall be made a party to any action commenced by or against Tenant, Tenant shall protect and hold Landlord harmless therefrom and on demand shall pay all costs, expenses, and reasonable attorney's fees incurred by Landlord in connection therewith. The indemnification obligations contained in this Paragraph 15 shall not be limited by any worker's compensation, benefit or disability laws, and each indemnifying party hereby waives any immunity that said party may have under the Washington Industrial Insurance Act, Title 51 RCW, and similar worker's compensation, benefit or disability laws. LANDLORD AND TENANT ACKNOWLEDGE BY THEIR EXECUTION OF THIS LEASE THAT EACH INDEMNIFICATION PROVISION OF THIS LEASE (INCLUDING, BUT LIMITED TO, THOSE RELATING TO WORKER'S COMPENSATION, BENEFITS AND LAWS) WAS SPECIFICALLY NEGOTIATED AND AGREED TO BY LANDLORD AND TENANT).

(b) Tenant shall not be liable to Landlord or Landlord's agents, employees, contractors, guests, invitees or any person claiming by, through or under Landlord for any injury to person, loss of or damage to property, or for loss of or damage to Landlord's business, occasioned by or through the acts or omissions of Tenant, or by any cause whatsoever except to the extent arising from or out of Tenant's negligence or willful wrongdoing. Except to the extent arising from or out of Tenant's negligence or willful wrongdoing, Tenant shall not be liable for, and Landlord shall defend and indemnify Tenant and save it harmless from, all suits, actions, damages, liability and expense in connection with loss of life, bodily or personal injury or property damage arising from or out of any occurrence in, upon, at or from the Premises or the Building or any part thereof, or occasioned wholly or in part by any action or omission of Landlord, its agents, contractors, employees, invitees, or licensees. If Tenant shall be made a party to any action commenced by or against Landlord, Landlord shall protect and hold Tenant harmless therefrom and on demand shall pay all costs, expenses, and reasonable attorney's fees incurred by Tenant in connection therewith. The indemnification obligations contained in this Paragraph 15 shall not be limited by any worker ^' s compensation, benefit or disability laws, and each indemnifying party hereby waives any immunity that said party may have under the Washington Industrial Insurance Act, Title 51 RCW, and similar worker's compensation, benefit or disability laws. LANDLORD AND TENANT ACKNOWLEDGE BY THEIR EXECUTION OF THIS LEASE THAT EACH INDEMNIFICATION PROVISION OF THIS LEASE (INCLUDING, BUT LIMITED TO, THOSE RELATING TO WORKER'S COMPENSATION, BENEFITS AND LAWS) WAS SPECIFICALLY NEGOTIATED AND AGREED TO BY LANDLORD AND TENANT).

16.         Rules of the Building. Tenant will comply fully, and will use reasonable efforts to cause Tenant's agents, employees, and invitees to comply fully with all Rules and Regulations of the Building which are attached hereto as Exhibit "F" and made a part hereof as though fully set out herein. As more particularly provided therein, Landlord shall at all times have the right to change such Rules and Regulations or to amend them in such reasonable manner as Landlord may deem advisable for the safety, protection, care and cleanliness-of the Building and appurtenances and for preservation of good order therein, all of which Rules and Regulations, changes and amendments will be forwarded to Tenant in writing and shall be complied with and observed by Tenant and Tenant's agents, contractors, employees and invitees.

17.         Entry for Repairs and Inspection. Landlord and its agents and representatives shall have the right following 24 hours prior notice to enter into and upon any and all parts of the Premises at all reasonable hours (or, in an emergency, at any hour without prior notice) to inspect same or clean or make repairs or alterations or additions to the Building and the Premises (whether structural or otherwise) as Landlord may deem necessary, and during the continuance of any such work, Landlord may temporarily close doors, entryways, public spaces and corridors and interrupt or temporarily suspend Building services and facilities, and subject to the terms and conditions of Paragraph 3 above, Tenant shall not be entitled to any abatement or reduction of rent by reason thereof. During the Lease Term, Landlord may exhibit the Premises to prospective purchasers and lenders at reasonable hours and upon 24 hours' prior notice to Tenant. Furthermore, during the one-year period prior to the expiration date of this Lease, Landlord and Landlord's agents may exhibit the Premises to prospective tenants during Normal Business Hours and upon 24 hours' prior notice to Tenant.

18.         Condemnation. If all of the Premises, or so much thereof as would materially interfere with Tenant's use of the remainder, shall be taken or condemned for any public use or purpose by right of eminent domain, with or without litigation, or be transferred by agreement in connection with or in lieu of or under threat of condemnation, then the Lease Term and the leasehold estate created hereby shall terminate as of the date title shall vest in the condemnor or transferee. If all or any portion of the Building or a material portion of the Land required for the Building's operation is taken or condemned or transferred as aforesaid, Landlord or Tenant shall have the option to terminate this Lease effective as of the date title shall vest in the condemnor or transferee. Landlord shall receive the entire award from any taking or condemnation (or the entire compensation paid because of any transfer by agreement), and Tenant shall have no claim thereto; provided, however, Tenant shall be entitled to recover in a separate action against such condemning authority, an award for relocation benefits, if any, and an award with respect to Tenant's above Building standard finish-out at the Premises.

19.         Landlord's Lien and Security Interest. Landlord shall not have a landlord's lien of any kind under this Lease.

20.         Abandoned Property. All personal property of Tenant remaining in the Premises later than ten (10) days after the termination or expiration of the Lease Term or after the abandonment of the Premises by Tenant may be treated by Landlord as having been abandoned by Tenant and Landlord may, at its option and election, thereafter take possession of such property and either (i) declare same to be the property of Landlord, or (ii) at the cost and expense of Tenant, store and/or dispose of such property in any manner and for whatever consideration that Landlord, in its sole discretion, shall deem advisable. Except as otherwise provided in a prior notification from Tenant to Landlord providing a reasonable explanation that Tenant is not abandoning the Premises, Tenant shall be presumed conclusively to have abandoned the Premises if the amount of Tenant's property removed by Tenant from the Premises is substantial enough to indicate a probable intent to abandon the Premises and such removal is not in the normal course of Tenant's business, or if Tenant removes any material amount of Tenant's personal property from the Premises at a time when Tenant is in default in the payment of rental due hereunder or in the performance of any other obligation of Tenant hereunder and such removal is not in the normal course of Tenant's business.

21.         Holding Over. Should Tenant continue to hold the Premises after this Lease terminates, whether by lapse of time or otherwise, such holding over shall, unless otherwise agreed by Landlord in writing, constitute and be construed as a tenancy from month to month at a rental equal to the greater of (i) 150% of the amount of the monthly rental payable during the last month prior to the termination of this Lease or (ii) 150% of the rate for which similar space in the Building is then being leased by Landlord, and upon and subject to all of the other terms and provisions set forth herein except any right to renew this Lease, expand the Premises or lease additional space. This provision shall not be construed, however, as permission by Landlord for Tenant to holdover. No payments of money by Tenant to Landlord after the termination of this Lease shall reinstate, continue, or extend the Lease Term and no extension of this Lease after the termination hereof shall be valid unless and until the same shall be reduced to writing and signed by both Landlord and Tenant. Tenant shall be liable to Landlord for all damage which Landlord shall suffer by reason of any holding over by Tenant, and Tenant shall indemnify and hold Landlord harmless against all claims made by any other tenant or prospective tenant against Landlord resulting from delay by Landlord in delivering possession of the Premises (or any portion thereof) to such other tenant or prospective tenant.

        22.       Fire and Casualty.

(a)   If the Premises are damaged by fire or other casualty and if such damage is not susceptible of repair within two hundred seventy (270) days (as estimated, as soon as reasonably practicable after the occurrence of such damage, by an architect of recognized good reputation selected by Landlord), then in such event this Lease, at the option of either Landlord or Tenant, exercised by giving written notice thereof to the other within thirty (30) days after receipt of such written estimate of the architect so selected, shall terminate as of the date of such loss, and Tenant shall pay the rent hereunder apportioned to the time of such loss and shall pay all other obligations of Tenant owing on the date of termination, and Tenant shall have no longer than thirty (30) days in which to surrender the Premises to Landlord.

(b)   If the damage described above is susceptible of repair within two hundred seventy (270) days, or if the damage is not susceptible of repair within two hundred seventy (270) days but Landlord and Tenant fail to exercise the option to terminate this Lease, and so long as Landlord does not elect to terminate this Lease pursuant to Subparagraph (c) below, Landlord shall enter and make the necessary repairs without affecting this Lease, but the rent hereunder shall be reduced or abated as shall be equitable, in the good faith judgment of Landlord, until such repairs are made, unless such damage has been so slight that Tenant's occupancy of the Premises is not materially interfered with, in which case the rent hereunder shall not be abated or reduced. Notwithstanding the foregoing, Landlord shall have the option to terminate this Lease and shall not be obligated to repair the Premises or the Building if the damage is not covered by insurance or if Landlord's mortgagee applies any portion of the insurance proceeds to the unpaid balance of its loan.

(c)   In the event the Building is so badly damaged or injured by fire or other casualty, even though the Premises may not be affected, that Landlord decides, within ninety (90) days after such damage, not to rebuild or repair the Building (such decision being vested exclusively in the discretion of Landlord), then in such event Landlord shall so notify Tenant in writing and this Lease shall terminate as of the date specified for termination in the notice from Landlord to Tenant, and Tenant shall pay rent hereunder apportioned to the date of such termination and shall pay all other obligations of Tenant owing on the date of termination, and Tenant shall have no longer than thirty (30) days in which to surrender the Premises to Landlord.

(d)   Notwithstanding the foregoing provisions of this Paragraph 22, Tenant agrees that if the Premises or any other portion of the Building is damaged by fire or other casualty resulting from the fault or negligence of Tenant or any of its agents, employees, or invitees, then the cost of restoring the property damage in excess of the policy limits of the property insurance proceeds which Landlord is required to maintain under this Lease shall be paid by Tenant within thirty (30) days following demand, and there shall be no abatement of rent before or during the repair of such damage.

23.         Entire Agreement and Amendment; No Representations or Warranties; No Memorandum of Lease.  This Lease contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes any and all prior and contemporaneous agreements, understandings, promises, and representations made by either party to the other concerning the subject matter hereof and the terms applicable hereto. It is expressly agreed by Tenant, as a material consideration to Landlord for the execution of this Lease, that there have been no representations, understandings, stipulations, agreements or promises pertaining to the Premises, the Building or this Lease not incorporated in writing herein. This Lease shall not be altered, waived, amended or extended, except by a written agreement signed by the parties hereto, unless otherwise expressly provided herein. LANDLORD'S DUTIES AND WARRANTIES ARE LIMITED TO THOSE SET FORTH IN THIS LEASE, AND SHALL NOT INCLUDE ANY IMPLIED DUTIES OR WARRANTIES, ALL OF WHICH ARE HEREBY DISCLAIMED BY LANDLORD AND WAIVED BY TENANT. LANDLORD AND TENANT EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY THAT THE PREMISES ARE SUITABLE FOR TENANT'S INTENDED COMMERCIAL PURPOSE, AND EXCEPT AS OTHERWISE PROVIDED IN PARAGRAPH 3, TENANT'S OBLIGATION TO PAY RENT HEREUNDER IS NOT DEPENDENT UPON THE CONDITION OF THE PREMISES OR THE PERFORMANCE BY LANDLORD OF ITS OBLIGATIONS HEREUNDER, AND, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, TENANT SHALL CONTINUE TO PAY THE RENT, WITHOUT ABATEMENT, SETOFF OR DEDUCTION, NOTWITHSTANDING ANY BREACH BY LANDLORD OF ITS DUTIES OR OBLIGATIONS HEREUNDER, WHETHER EXPRESS OR IMPLIED. Neither this Lease nor a memorandum of this Lease shall be recorded in the public records of the county in which the Building is located without the prior written consent of Landlord, which maybe withheld in Landlord's sole discretion. Notwithstanding anything to the contrary set forth in this Paragraph 23, Landlord hereby represents and warrants to Tenant as follows: (a) Landlord has fee simple title to the Land and the Building, (b) Landlord has been duly authorized to enter into this Lease, and (c) the persons signing this Lease on Landlord's behalf have been duly authorized to do so by appropriate resolution and consent.

24.         Transfer of Landlord's Rights. In the event Landlord transfers its interest in the Building, Landlord shall thereby automatically be released from any further obligations hereunder if Landlord transfers the Security Deposit to such transferee and such transferee agrees to expressly assume all obligations of Landlord hereunder, and Tenant agrees to look solely to the successor in interest of Landlord for the performance of such obligations.

25.         Default.

(a) The following events shall be deemed to be events of default (herein so called) by Tenant under this Lease:

(i)   Tenant shall fail to pay any rental or other sum payable by Tenant hereunder as and when such rental or other sum becomes due and payable; provided, however, that Tenant shall be entitled to receive, three (3) times each calendar year, a written notice of such failure from Landlord and a five (5) day period thereafter to cure such payment default;

(ii)   Tenant shall fail to comply with any other provision, condition or covenant of this Lease and any such failure is not cured within thirty (30) days after Landlord gives written notice of such failure to Tenant; provided, however, Tenant shall not be deemed to have failed to comply hereunder if such default cannot be cured within said thirty (30) days and Tenant is diligently proceeding to do so;

(iii)   Tenant shall desert or vacate any substantial portion of the Premises;

(iv)   Tenant shall assign this Lease or sublet all or any part of the Premises or grant any license, concession or other right of occupancy of any portion of the Premises, without the prior written consent of Landlord except as permitted by the terms of Paragraph 11 of this Lease;

(v)   Any petition shall be filed by or against Tenant or any guarantor of Tenant's obligations under this Lease pursuant to any section or chapter of the present federal Bankruptcy Act or under any future federal Bankruptcy Act or under any similar law or statute of the United States or any state thereof (which as to any involuntary petition shall not be and remain discharged or stayed within a period of thirty (30) days after its entry), or Tenant or any guarantor of Tenant's obligations under this Lease shall be adjudged bankrupt or insolvent in proceedings filed under any section or chapter of the present federal Bankruptcy Act or under any future federal bankruptcy act or under any similar law or statute of the United States or any state thereof;

(vi)   Tenant or any guarantor of Tenant's obligations under this Lease shall become insolvent or make a transfer in fraud of creditors;

(vii)   Tenant or any guarantor of this Lease shall make an assignment for the benefit of creditors; or

(viii)   A receiver or trustee shall be appointed for Tenant or any guarantor of this Lease or for any of the assets of Tenant or any guarantor of this Lease.

(b) Upon the occurrence of any event of default, Landlord shall have the option to do any one or more of the follo