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NASTECH PHARMACEUTICAL CO INC | DITTY PROPERTIES LIMITED PARTNERSHIP

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Title: LEASE
Governing Law: Washington Date: 7/26/2006
Industry: Biotechnology and Drugs Law Firm: Pyror Cashman Sherman & Flynn LLP

LEASE, Parties: nastech pharmaceutical co inc , ditty properties limited partnership

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH A SERIES OF THREE ASTERISKS IN BRACKETS [***], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.]

EXHIBIT 10.1

LEASE

BETWEEN

DITTY PROPERTIES LIMITED PARTNERSHIP

LANDLORD

AND

NASTECH PHARMACEUTICAL COMPANY, INC.

TENANT

DATED: MARCH 1, 2006

TABLE OF CONTENTS


		PAGE
1.	BASIC LEASE TERMS		1
2.	PREMISES		4
3.	TERM		6
4.	DELIVERY OF PREMISES		8
5.	RENT		9
6.	PREPAID RENT AND LETTER OF CREDIT		10
7.	USE OF PREMISES		11
8.	ADDITIONAL RENT FOR OPERATING EXPENSES		12
9.	LANDLORD’S MAINTENANCE AND SERVICES OBLIGATIONS		15
10.	STRUCTURAL MAINTENANCE AND REPAIRS		17
11.	UTILITIES		17
12.	LIMITS ON LANDLORD’S LIABILITY		18
13.	IMPROVEMENTS AND ALTERATIONS		19
14.	INSURANCE; INDEMNITY		19
15.	DESTRUCTION		22
16.	CONDEMNATION		23
17.	ASSIGNMENT AND SUBLETTING		24
18.	DEFAULT		27
19.	REMEDIES IN DEFAULT		29
20.	ACCESS		31
21.	HOLD-OVER TENANCY		31
22.	COMPLIANCE WITH LAWS		31
23.	RULES AND REGULATIONS		32
24.	PARKING		32
25.	ESTOPPEL CERTIFICATES		32
26.	SUBORDINATION		33
27.	SURRENDER; REMOVAL OF PROPERTY		33
28.	PERSONAL PROPERTY TAXES		34
29.	NOTICES		34
30.	CONDITION OF PREMISES		34
31.	HAZARDOUS MATERIALS		34
32.	SIGNS		38
33.	GENERAL PROVISIONS		39
34.	ROOFTOP EQUIPMENT		41
35.	AUTHORITY		42
36.	FINANCIAL STATEMENTS		42
37.	COMMISSIONS		43
38.	USA PATRIOT ACT		43

LEASE

This Lease, dated as of March 1, 2006 (the “Effective Date”), is entered into by and between DITTY PROPERTIES LIMITED PARTNERSHIP, a Washington limited partnership (“Landlord”), and NASTECH PHARMACEUTICAL COMPANY, INC., a Washington corporation (“Tenant”).

1. Basic Lease Terms. This Section sets forth certain basic terms of this Lease for reference purposes. This Section is to be read in conjunction with the other provisions of this Lease.


A.	LEASED PREMISES (See Section 2)

	Business Park:	Quadrant Monte Villa Center

	Address:	3830 Monte Villa Parkway Bothell, WA 98021

	Rentable Square Feet (“RSF”):	An agreed area of 27,322 square feet containing 14,513 RSF of laboratory space and 12,809 RSF of office area


B.	TERM (See Section 3)

	“Commencement Date”:	The later of (a) February 17, 2006, or (b) the date Landlord tenders possession of the Premises to Tenant.

	“Expiration Date”:	February 29, 2016

	Length of Term:	Ten (10) years

	Extension Option:	One (1) option for five (5) years

C.	RENT; PREPAID RENT; SECURITY DEPOSIT (See Sections 5 and 6)

	“Base Monthly Rent” Schedule:


	Annual Rent per RSF of Laboratory	Annual Rent per RSF of Office
Applicable portion of the Term	Space (net of Operating Expenses)	Space (net of Operating Expenses)
Months 1-5	$0.00	$0.00
Months 6-12	Twenty-three and 25/100 Dollars ($23.25)	Eight and 75/100 Dollars ($8.75)
Months 13-24	Twenty-four and 10/100 Dollars ($24.10)	Nine and 75/100 Dollars ($9.75)
Months 25-36	Twenty-four and 95/100 Dollars ($24.95)	Ten and 75/100 Dollars ($10.75)


	Annual Rent per RSF of Laboratory	Annual Rent per RSF of Office
Applicable portion of the Term	Space (net of Operating Expenses)	Space (net of Operating Expenses)
Months 37-48	Twenty-five and 80/100 Dollars ($25.80)	Eleven and 75/100 Dollars ($11.75)
Months 49-60	Twenty-six and 65/100 ($26.65)	Thirteen and 75/100 Dollars ($13.75)
Months 61-72	Twenty-seven and 50/100 Dollars ($27.50)	Fourteen and 75/100 Dollars ($14.75)
Months 73-84	Twenty-eight and 35/100 Dollars ($28.35)	Fifteen and 75/100 Dollars ($15.75)
Months 85-96	Twenty-nine and 20/100 Dollars ($29.20)	Sixteen and 75/100 Dollars ($16.75)
Months 97-108	Thirty and 05/100 Dollars ($30.05)	Seventeen and 75/100 Dollars ($17.75)
Months 109-	Thirty and 90/100 Dollars ($30.90)	Nineteen and 75/100 Dollars ($19.75)
Expiration Date


Security Deposit:		$500,000
Prepaid Rent:		$74,917 (to be applied to rent for Months 6 and 7)

D.		PERMITTED USE (See Section 7)

		Tenant may use the Premises only for executive and general office use, laboratories and light-manufacturing uses [***]. All uses shall be consistent with Tenant’s current business model of developing and commercializing innovative pharmaceutical products based on active delivery molecules in order to effectively transport therapeutic drugs to their disease targets.

E.		OPERATING EXPENSES (See Section 8)

		Tenant’s Share: 44.74%

F.		CC&R’S (See Section 22)

		Declaration of Protective Covenants, Conditions, Restrictions , Easements and Agreements for Quadrant Monte Villa Center recorded in King County under Recording Number 9212220800 and any amendments, modifications or revisions thereto and any rules or regulations promulgated thereunder (the “CC&Rs”).

G.		PARKING (See Section 24)

Tenant shall have the non-exclusive right to use on an unreserved basis all parking spaces located on the Property provided that at no time shall Tenant and its employees, invitees and guests use more than Tenant’s Share of the parking spaces.


H.	ADDRESSES (See Section 29)

	Landlord’s Notice Address:	Rent Payment Address:
	Ditty Properties	Ditty Properties
	c/o Voldal Wartelle & Co.	c/o GVA Kidder Mathews
	13343 Bel-Red Road	Attn: Property Management Services
	Bellevue, WA 98005-2333	PO Box 34860
		Seattle, WA 98124-1860

	with a copy to:

	Ditty Properties
	c/o GVA Kidder Mathews
	Attn: Property Management Services
	500 — 108th Avenue NE, Suite 2400
	Bellevue, WA 98004

	Tenant’s Notice Address:

	Prior to commencing business in the Premises:	After commencing business in the Premises:
	3450 Monte Villa Parkway	3830 Monte Villa Parkway
	Bothell, WA 98021	Bothell, WA 98021
	Attn: Aaron Molksness	Attn: Aaron Molksness

	with a copy to: Pyror Cashman Sherman &
	Flynn LLP
	410 Park Avenue
	New York, NY 10022
	Attn: Lawrence Remmel, Esq.


I.	BROKERS (See Section 37)

	For Tenant:	The Staubach Company

	For Landlord:	CenturyPacific, L.P.

	2. Premises.

2.1 Agreement to Lease. Landlord agrees to lease to Tenant and Tenant agrees to lease from Landlord a portion of the first floor of the building described above (the “Building”) as depicted on the floor plan attached hereto as Exhibit A (the “Premises”) together with a non-exclusive license to use all common areas of the Building and the real property on which it is located (the “Property”) for their intended purposes, including all parking areas, accessways, driveways, and other improvements on the Property as provided by Landlord from time to time for the general use and enjoyment of tenants in the Building. Landlord reserves the right to alter or change the present configuration and capacity of the common areas from time to

time provided that no changes shall prevent Tenant’s access to or use of the Premises. The Premises, Building, and Property are part of Quadrant Monte Villa Center (the “Business Park”).

2.2 Measurement. Landlord and Tenant acknowledge and agree that as of the Effective Date the Premises are deemed to contain the number of RSF set forth in Section 1 above and such number shall be final and binding on the parties for all purposes under this Lease. Landlord and Tenant accept the foregoing calculation and no remeasurement shall be required or permitted hereunder; provided, however, that if a physical change in the size of the Premises or the Building occurs, Landlord may cause a non-affiliated third party architect selected by Landlord to remeasure the Premises and the Building in accordance with Landlord’s standard methodology employed in the Building and such calculation shall be binding on the parties. If Tenant objects to Landlord’s remeasurement calculation, Tenant may, at Tenant’s expense have an independent architect remeasure the Premises using the same methodology. If the two architects calculations differ then the parties shall work in good faith to resolve the dispute.

2.3 Right of First Refusal. If any space in the Building becomes available for lease (i.e., is vacant or reasonably expected to become vacant) at any time during the Term and Tenant is not then in default under this Lease beyond any applicable notice, grace or cure periods, Tenant shall have a continuing right of first refusal (“RFR”) to lease such space when it becomes available, subordinate to any rights that Ceptyr, Inc. or its successors or assigns may have to lease such space. Tenant’s RFR shall not apply to any space if the existing occupant of such space elects to renew or extend its lease at any time and Landlord shall not be required to offer any space to Tenant before entering into a renewal or extension with the existing occupant. Landlord shall give Tenant written notice when it determines that space in the Building has or will become available and Tenant shall have ten (10) Business Days after receipt of such notice to deliver irrevocable notice to Landlord of its intent to add such space to the Premises on the date the space becomes available. Tenant may only elect to exercise the RFR with respect to the entire increment of space offered to Tenant, provided that if Landlord thereafter decides to offer smaller increments of the space to potential tenants, Landlord shall provide a notice to Tenant and Tenant may elect to exercise its RFR with respect to such smaller increment within ten (10) days after the date of such notice from Landlord. If Tenant does not timely exercise its RFR, Landlord shall have the right to lease the space in question to any third party upon such terms and conditions as Landlord deems appropriate and shall not be required to offer the space to Tenant again until the subsequent tenant vacates the space.

If Tenant exercises its RFR then the RFR Space shall be added to the Premises upon all of the terms and conditions of this Lease except that (a) Landlord shall deliver the RFR Space as soon as such space is available for occupancy in its previously improved condition and shall have no obligation to make any improvements or alterations to the space (including but not limited to installation of multi-tenant corridors or common areas); (b) Landlord shall have no obligation to provide any free rent or abated rent or to pay any real estate commission on any such space; (c) the Base Monthly Rent applicable to such space shall be the then in effect office or laboratory (as applicable) rent rate set forth in Section 1 above; and (d) Tenant shall be entitled to an improvement allowance equal to Fifteen Dollars ($15.00) per square foot of RFR space multiplied by a fraction, the numerator of which is the number of months remaining in the Initial Term at the time the space is added to the Premises and the denominator of which is 120.

If Tenant exercises its right to include RFR Space in the Premises, Tenant’s Share shall be adjusted and upon Landlord’s request, Tenant shall execute an amendment to this Lease or other written confirmation documenting the new RSF in the Premises, Tenant’s Share of the Building and the applicable Base Monthly Rent for such space.

3. Term.

3.1 Initial Term. The initial term of this Lease (“Initial Term”) shall commence on the Commencement Date set forth in Section 1, provided that if Landlord is unable to deliver possession of the Premises to Tenant by March 30, 2006, for any reason not caused by force majeure or Tenant, Tenant may elect to terminate this Lease by written notice to Landlord within ten (10) days thereafter. Upon request by either party, the parties shall execute a written acknowledgement setting forth the actual Commencement Date and Expiration Date. Except as otherwise provided herein, all of the covenants and conditions of this Lease shall be binding on the parties as of the Effective Date of this Lease.

3.2 Expiration. The Initial Term shall expire on the Expiration Date set forth in Section 1, unless sooner terminated or extended as provided in this Lease. As used herein, “Term” shall mean the Initial Term and the Extended Term if Tenant validly exercises its Extension Option.

3.3 Option to Extend Term. Tenant shall have one (1) option (the “Extension Option”) to extend the Term of this Lease for an additional five (5) years immediately following the Initial Term (the “Extended Term”). The Extension Option may be exercised by Tenant only by irrevocable written notice of exercise delivered to Landlord no later than nine (9) months prior to the Expiration Date. If Tenant does not deliver a notice of exercise by such date then the Extension Option shall immediately terminate and be of no further force or effect and this Lease shall terminate at the end of the Initial Term. Tenant’s Extension Option shall be personal to Tenant and any Permitted Transferee (as defined in Section 17.3) and may not be exercised by or for the benefit of any other assignee or subtenant. Tenant may not exercise the Extension Option if on the date of such notice Tenant is in default (after any required notice and expiration of any applicable cure period) under this Lease. If Tenant becomes in default (after any required notice and expiration of any applicable cure period) under this Lease after exercise of the Extension Option but before the Expiration Date of the Initial Term, Landlord may, in addition to its other remedies under this Lease, elect to terminate such extension by notice in writing to Tenant, whereupon the Term shall expire without any such extension.

3.3.1 Upon Tenant’s valid exercise of the Extension Option, the parties shall be obligated under all the terms and conditions of this Lease through the Extended Term, except that (i) Base Monthly Rent shall be adjusted as provided in Section 3.3.2, (ii) Landlord shall have no obligation to alter the Premises or pay any tenant improvement or refurbishment allowance for the Extended Term, and (iii) Tenant shall not have any additional rights to extend the Term.

3.3.2 Base Monthly Rent during the Extended Term for any portion of the Premises built out for laboratory use shall be equal to Thirty-one and 83/100 Dollars

($31.83) per RSF in the first year of the Extended Term and shall increase annually during the Extended Term by three percent (3%) per year.

3.3.3 Base Monthly Rent during the Extended Term for any portion of the Premises built out for office use shall be equal to ninety-five percent (95%) of the then fair market rent (including periodic rent increases) for the office space in the Bothell market, determined in accordance with this Section. “Fair Market Rent” as of any date shall mean the per-square-foot rental rate for a direct lease for space comparable to the Premises, leased for a comparable term, with comparable uses, with comparable quality improvements and shell and core construction, in comparable Class A projects in the Bothell Market Area, taking into consideration: location in the Building or other building, extent of service provided or to be provided, the ownership of the comparable space, the time the particular rate under consideration became or is to become effective and any other relevant terms or conditions but excluding any consideration of Landlord’s transaction costs or savings.

3.3.4 Approximately six (6) months prior to the commencement of the Extended Term, Landlord shall propose a Base Monthly Rent schedule for the office space for the Extended Term. Failure on the part of Landlord to give such notice in a timely manner shall not vitiate the right to require adjustment of Base Monthly Rent, but such delay shall result in deferral of the adjustment to the date that is ninety (90) days after the date of such notice. The parties shall negotiate in good faith, but if they are unable to agree upon such Base Monthly Rent schedule within thirty (30) days after the delivery of Landlord’s proposal, Tenant may by written notice demand arbitration within thirty (30) days after receipt of notice from Landlord of Landlord’s determination of Fair Market Rent. If no arbitration demand is delivered, Tenant shall be deemed to have accepted the Fair Market Rent as determined by Landlord. If Tenant elects to arbitrate, then unless otherwise agreed in writing by the parties, the matter shall be submitted to arbitration in accordance with the terms of the following paragraphs. The date on which Tenant gives its demand for arbitration is referred to in this Lease as the “Arbitration Commencement Date”.

3.3.5 Within fifteen (15) days after the Arbitration Commencement Date, each party shall provide the other party with written notice (a “Rent Notice”) of its determination of Fair Market Rent. The matter shall then be submitted for decision to a single arbitrator or a panel of three (3) arbitrators selected in accordance with this Section 3.3.4. Each arbitrator appointed under this provision shall be an MAI certified appraiser with at least ten (10) years professional appraising experience (including recent experience in the Bothell market) who would qualify as an expert witness over objection to give testimony addressed to the issue in a court of competent jurisdiction and shall not have worked for or on behalf of either party during the three (3) year period ending on the Arbitration Commencement Date. If Landlord and Tenant are unable to agree on a single arbitrator within thirty (30) days after the Arbitration Commencement Date, then each party shall select an arbitrator who shall be qualified under the same criteria set forth above, and so notify the other party in writing within fifteen (15) days after the end of such thirty (30) day period. The two arbitrators so chosen by the parties shall then appoint a third arbitrator within fifteen (15) days after the date of the appointment of the last appointed arbitrator. If the two arbitrators so chosen by the parties are unable to agree on the third arbitrator within such fifteen (15) day period, the third arbitrator will be appointed by the director (or the equivalent) of the Seattle office of the American Arbitration Association upon the

application of either party. If either party fails to timely select its arbitrator and so notify the other party in writing within the foregoing fifteen (15) day period, and the other party timely selects its arbitrator, then the arbitrator selected by the other party shall be the sole arbitrator for determining Fair Market Rent. If a third arbitrator is selected, then the decision by a majority of the panel of three arbitrators shall determine Fair Market Rent pursuant to this Section 3.3.

3.3.6 Within thirty (30) days after the selection of the arbitrator pursuant to Section 3.3.4 above, the arbitrator or arbitrators shall determine Fair Market Rent by selecting either the Fair Market Rent stated in Landlord’s Rent Notice or the Fair Market Rent stated in Tenant’s Rent Notice. The determination of the arbitrator or arbitrators shall be limited to the sole issue of whether the Fair Market Rent specified in Landlord’s Rent Notice or Tenant’s Rent Notice is closest to the actual Fair Market Rent as determined by the arbitrator or arbitrators. The arbitrator or arbitrators shall have no power to average such amounts, modify the proposed rent schedules or to designate a Fair Market Rent other than that specified in either Landlord’s Rent Notice or Tenant’s Rent Notice.

3.3.7 Both parties may submit any information to the arbitrator or arbitrators for consideration, with copies to the other party. The arbitrator or arbitrators shall have the right to consult experts and competent authorities for factual information or evidence pertaining to the determination of Fair Market Rent or to conduct a hearing. The arbitrator or arbitrators shall render his, her or their decision by written notice to each party. The determination of the arbitrator or a majority of the panel of three (3) arbitrators shall be final and binding upon Landlord and Tenant. If there is only one arbitrator then each party shall pay fifty percent (50%) of the cost of the arbitration. If there are three arbitrators then each party shall pay the cost of its own arbitrator and fifty percent (50%) of the cost of the third arbitrator.

3.3.8 The award rendered in any such arbitration may be entered in any court having jurisdiction and shall be final and binding between the parties. The arbitration shall be conducted and determined in the City of Seattle, Washington, in accord with the then-prevailing commercial arbitration rules of the American Arbitration Association or its successor for arbitration of commercial disputes except that the procedures mandated by said rules shall be modified as set forth in this Section.

3.3.9 If Tenant elects to arbitrate and the arbitration is not concluded prior to the first day of the Extended Term, then Tenant shall pay Base Monthly Rent to Landlord commencing on the first day of the applicable Extended Term in an amount equal to the Fair Market Rent specified in Landlord’s Rent Notice. If the amount of Fair Market Rent as determined by arbitration is greater than or less than the Fair Market Rent specified in Landlord’s Rent Notice, then any adjustment required to correct the amount previously paid shall be made by payment by the appropriate party within ten (10) days after such determination of Fair Market Rent.

4. Delivery of Premises.

4.1 As-Is. Landlord shall deliver the Premises to Tenant in its current “as-is” condition with all faults promptly following execution of this Lease and receipt of the Prepaid Rent and Letter of Credit required under Section 6 below. Landlord shall not be required to

make any alterations or improvements to the Premises but shall pay the Allowance pursuant to Exhibit B attached hereto. Tenant shall be responsible for all construction or alterations of the Premises necessary to ready the Premises for Tenant’s use and occupancy (the “Tenant Improvements”). All Tenant Improvements shall be installed by Tenant in accordance with Exhibit B and Tenant shall not begin construction until the terms and conditions of Exhibit B have been satisfied. Tenant acknowledges that a portion of the Premises containing approximately 1,000 square feet has been leased to Acucela on a month to month basis. Landlord shall terminate the Acucela lease promptly after the Effective Date and shall deliver possession of that portion of the Premises to Tenant immediately upon surrender thereof by Acucela. Tenant shall not be required to pay rent on the Acucela space until Landlord has delivered possession thereof to Tenant.

4.2 Limited Representations. As of the Effective Date to Landlord’s actual knowledge, (a) the Building or the Premises or any equipment or systems located therein do not violate any applicable Laws which, with respect to building and land use codes, shall mean such Laws as they were interpreted and applied at the time of construction or installation; and (b) the Building and the Premises do not contain any Hazardous Materials (including asbestos and EMF radiation) in levels or amounts that exceed permissible levels under applicable Laws. As used herein, Landlord’s knowledge shall be limited to the current, actual knowledge of R. Kirk Mathewson without any duty to investigate.

4.3 Delayed Delivery. If Landlord for any reason cannot deliver possession of the Premises to Tenant on the Effective Date, this Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damage resulting therefrom, provided that the five (5)-month free rent period shall commence on the day Landlord delivers possession of the Premises to Tenant.

5. Rent.

5.1 Base Monthly Rent. Tenant shall pay to Landlord the annual Base Monthly Rent specified in Section 1 in equal monthly installments and the Additional Rent as set forth in Section 8 and elsewhere in this Lease (the Base Monthly Rent and the Additional Rent are collectively referred to as “Rent”). Rent shall be paid in advance, on or before the first day of each calendar month of the Term (except during the initial free rent period as provided in the rent schedule set forth in Section 1.C). Except as expressly permitted herein, Rent shall be paid without prior notice, demand, set off, counterclaim, deduction or defense and, except as otherwise expressly provided in this Lease, without abatement or suspension. As used herein, “Additional Rent” shall mean all sums payable by Tenant hereunder other than Base Monthly Rent.

5.2 Rent Commencement. Payment of Rent shall begin on the Commencement Date. Rent for any period during the Term that is less than one month shall be prorated for the actual number of days in such period.

5.3 Address for Payments. All Rent shall be paid to Landlord at the address for rent set forth in Section 1, in lawful money of the United States of America, or to such other person or at such other place as Landlord may from time to time designate in writing.

6. Prepaid Rent and Letter of Credit.

6.1 Prepaid Rent. Upon Tenant’s execution of this Lease, Tenant shall pay to Landlord the Prepaid Rent set forth in Section 1 which shall be applied to the first installments of Base Monthly Rent falling due hereunder.

6.2 Letter of Credit. Upon Tenant’s execution of this Lease, Tenant shall provide an irrevocable, fully assignable, and unconditional standby letter of credit, issued by a financial institution reasonably acceptable to Landlord, with a term continuing through the date that is sixty (60) days after the Expiration Date, or, upon approval by Landlord with a term of at least one (1) year with automatic renewal provisions, drawable by Landlord upon demand, and in form and substance reasonably satisfactory to Landlord (the “Letter of Credit”). The Letter of Credit shall be in an amount equal to Five Hundred Thousand Dollars ($500,000). The Letter of Credit shall secure the full and faithful performance of Tenant’s obligations under this Lease. Landlord may draw upon the Letter of Credit in whole or in part as provided herein. Landlord may draw upon the Letter of Credit without notice to Tenant if Tenant fails to deliver to Landlord a renewal or extension of the Letter of Credit, in substantially the same form or another form acceptable to Landlord in its sole discretion, for a term of not less than one (1) year at least thirty (30) days prior to the expiration date of the existing Letter of Credit. It shall be deemed reasonable for Landlord to reject a financial institution hereunder if such financial institution is not acceptable to Landlord’s lender. Tenant shall not assign or encumber, or attempt to assign or encumber, the Letter of Credit and neither Landlord nor its successors or assigns shall be bound by any such assignment, encumbrance, attempted assignment, or attempted encumbrance. Landlord shall not be required to exhaust its remedies against Tenant before having recourse to the Letter of Credit or any cash security held by Landlord. Recourse by Landlord to the Letter of Credit or other security shall not affect any remedies of Landlord which are provided in this Lease or which are available to Landlord in law or equity. In the event of a default by Tenant hereunder, Landlord may draw on the Letter of Credit in accordance with its terms. Landlord may (but shall not be required to) use all or any portion of the Letter of Credit or any proceeds thereof to cure any defaults on the part of Tenant or to compensate Landlord for any damage or costs Landlord incurs by reason of a default hereunder. In such event, and upon written notice from Landlord to Tenant specifying the amount so utilized by Landlord, Tenant shall immediately deposit with Landlord cash in such amount or shall provide an amendment to the Letter of Credit to return the Letter of Credit to the full amount required under this Lease. Within sixty (60) days after expiration of the Term or earlier termination of this Lease (or such longer period of time as is needed to confirm the existence of or cost to remedy any default), provided no default is then outstanding, the Letter of Credit proceeds (if Landlord has drawn on the Letter of Credit) shall be returned to Tenant, reduced by those amounts that may be required by Landlord to remedy defaults on the part of Tenant in the payment of Rent or otherwise, to repair damages to the Premises caused by Tenant and to restore the Premises to the condition required by this Lease. Landlord shall have no obligation to segregate the Letter of Credit proceeds from its general funds or to pay interest thereon. If Landlord conveys or transfers its interest in the Premises, and as a part of such conveyance or transfer, assigns its interest in this Lease, then Tenant shall take all steps necessary at Tenant’s expense to transfer the Letter of Credit to Landlord’s successor and Landlord shall be released and discharged from any further liability to Tenant with respect to the Letter of Credit or its proceeds.

6.3 Landlord’s Duty. Landlord’s obligations with respect to the Letter of Credit and its proceeds are those of a debtor and not a trustee. Landlord may maintain the proceeds separate from Landlord’s general funds or may commingle the proceeds with other funds of Landlord. No interest shall accrue for Tenant on the Letter of Credit proceeds.

7. Use of Premises.

7.1 Permitted Use. Tenant shall use and shall permit the use of the Premises only for the purpose set forth in Section 1. Tenant shall not use the Premises for any other purpose without Landlord’s written consent. Tenant acknowledges that it has determined to its satisfaction that the Premises can be used for those purposes. Tenant waives any right to terminate this Lease in the event the Premises cannot be used for such purposes during the Term.

7.2 Compliance With Insurance. Tenant shall not do or permit anything to be done in or about the Premises or bring or keep anything therein which will cause cancellation of any insurance policy covering the Building or any part thereof or any of its contents. If Tenant’s specific use increases the cost of insuring the Building then Tenant shall reimburse Landlord for the increased cost within ten (10) days after Tenant’s receipt of Landlord’s written request for reimbursement, which request shall be accompanied by reasonable evidence of such cost.

7.3 No Nuisance; Garbage Removal. Tenant shall not do or permit anything to be done in or about the Premises that will obstruct or interfere with the rights of other tenants or occupants of the Business Park or injure them or their property, or use or allow the Premises to be used for any unlawful purpose or in any way constituting a nuisance. Tenant may store garbage only in the Premises or in exterior dumpsters reasonably approved by Landlord until it its removed.

7.4 Tenant’s Repairs and Maintenance. Subject to Sections 15 and 16, Tenant agrees, at its sole cost, to repair and maintain the Premises, all parts thereof, all loading docks contiguous thereto and all Tenant’s signs in good order, condition and repair, ordinary wear and tear excepted, including keeping the inside of all glass in doors and windows of the Premises clean, promptly replacing any broken door or door closers and any cracked or broken glass with glass of like kind and quality. Tenant shall maintain, repair, and replace as and when necessary the mechanical systems or components thereof exclusively serving the Premises (including HVAC) and all utility lines within the Premises, including those within the exterior or demising walls, except to the extent such items are to be maintained, repaired or replaced by Landlord pursuant to Section 10.1. Tenant shall not permit any vibration and noise which may be transmitted beyond the Premises. When used in this Lease, the term “repair” shall include making all necessary replacements, renewals, alterations and additions. All repairs shall be at least equal in quality to the original work and shall be made by Tenant in accordance with all applicable laws, ordinances and regulations. Tenant shall provide its own janitorial service for the Premises in accordance with specifications reasonably approved by Landlord. If Tenant fails to perform any of its obligations under this Section 7.4, Landlord may, in addition to exercising any other remedies provided herein, perform such repairs or maintenance after notice to Tenant and expiration of the applicable cure period. Any sums expended by Landlord in performing such repairs or maintenance shall be due and payable as Additional Rent, within

ten (10) days after Tenant’s receipt of Landlord’s written request for reimbursement, which request shall be accompanied by reasonable evidence of such costs.

7.5 Liens. Tenant shall keep the Premises and the Property free from any liens arising out of any work performed, materials furnished or obligations incurred by Tenant. If any lien shall be filed or claim of lien made for work or materials furnished to Tenant, then Tenant shall, at its expense, within fifteen (15) days after the filing thereof either: (a) discharge the lien or claim; or (b) provide Landlord adequate security for the lien or claim and take steps to contest the lien or claim in good faith by appropriate proceedings that operate to stay its enforcement provided that Tenant must pay promptly any final adverse judgment entered in any such proceeding. If Tenant does not comply with these requirements, Landlord may discharge the lien or claim, and the amount paid, as well as Landlord’s reasonable attorneys’ fees and other expenses incurred by Landlord together with interest thereon, shall become additional rent payable by Tenant on demand.

7.6 Encumbrances. Tenant shall not cause or suffer to be placed, filed or recorded against the title to the Premises (including any leasehold improvements, alterations, additions, or improvements thereto), the Building or the Property or any part thereof, any mortgage, deed of trust, security agreement, financing statement or other encumbrance. Tenant shall not grant any security agreement or financing statement covering the Premises or any part thereof nor any leasehold improvements, alterations, additions, or improvements thereto except that Tenant may pledge Tenant’s interest in any trade fixtures, appliances and equipment which are not, and which do not become, a part of the Premises. The form of any security agreement or financing statement which includes a legal description of the Premises or the Project or the address thereto, shall be subject to Landlord’s prior written approval, which approval shall be subject to such conditions as Landlord may deem appropriate in Landlord’s sole and absolute discretion. If Tenant files or permits the filing of any such document without Landlord’s approval, Tenant shall cause such statement to be terminated immediately upon request and shall indemnify and hold Landlord harmless from any costs, losses or damages incurred by reason of such filing.

7.7 [***]

8. Additional Rent for Operating Expenses.

8.1 Tenant Payment. Beginning on the Commencement Date, Tenant shall pay, as Additional Rent, all Operating Expenses. Operating Expenses shall be payable on or before the first day each calendar month of the Term in the same manner as Base Monthly Rent.

8.2 Accounting. “Tenant’s Share” as of the Effective Date is set forth in Section 1 above. Tenant’s Share shall be calculated by dividing the total RSF of the Premises by the total RSF of the Building. An accounting period is a calendar year, except the first accounting period shall commence on the Commencement Date and end on December 31 of the same calendar year. The last accounting period shall end on the Expiration Date of the Term. Annualized Operating Expenses shall be prorated on a per diem basis for any accounting period that is less than a full calendar year. If the average occupancy level of the

Building for any accounting period is not at full occupancy, then Operating Expenses that vary with occupancy levels shall be adjusted by Landlord to reflect those costs that would have been incurred had the Building been fully occupied during such accounting period. Operating Expenses that do not vary with occupancy levels (such as insurance and costs of operating that portion of the HVAC system that serves the entire building) shall not be adjusted.

8.3 Adjustment. Landlord may reasonably adjust the Operating Expenses at the commencement of each new accounting period throughout the Term, whereupon Tenant’s Additional Rent shall be adjusted accordingly. Annually, Landlord shall furnish Tenant a written statement of the reasonably estimated monthly Operating Expenses for the coming calendar year. Landlord may, by written notice to Tenant, revise its estimate of Operating Expenses from time to time.

8.4 Reconciliation. By each April 30th, or as soon thereafter as practicable, Landlord shall deliver to Tenant a written statement setting forth the actual Operating Expenses during the preceding calendar year (or portion of such calendar year after the Commencement Date). To the extent actual Operating Expenses exceeded the estimated Operating Expenses paid by Tenant, Tenant shall pay Additional Rent to Landlord within thirty (30) days after receipt of such statement by Tenant and to the extent actual Operating Expenses were less than the estimated Operating Expenses paid by Tenant, Tenant shall receive a credit against its next payable Rent or such amount shall otherwise be refunded to Tenant as Landlord determines in its sole discretion; provided, however, that as to the last accounting period Tenant shall receive a refund at the time Landlord delivers such statement to Tenant.

8.5 Definition. “Operating Expenses” means all expenses and charges incurred by Landlord in the operation, maintenance, repair and replacement of the Building, Building systems, Property and common areas, as a first-class facility, including without limitation the following costs by way of illustration and not limitation: (i) all real property taxes, assessments and other general or special charges levied during the Term by any public, governmental or quasi-governmental authority against the real or personal property included in the Building or the Property, including without limitation Landlord’s personal property used in the maintenance, repair or operation of the Building or the Property, or any other tax on the leasing of the Building or on the rents from the Building (other than any federal, state or local income or franchise tax) and including any reasonable costs associated with contesting any tax assessment; (ii) any and all assessments, fees, charges and impositions Landlord must pay for the Building, Property or Common Areas pursuant to the CC&R’s, transportation or any other improvement monitoring or management plans, or any other covenant, condition or reciprocal easement agreements; (iii) electricity, gas and similar energy sources, refuse collection, water, sewer and other utilities services for the Building and the Property not exclusively serving a specific tenant; (iv) all licenses, permits and inspection fees; (v) all costs and expenses relating to the Maintenance Obligations (as defined in Section 9.1), the Services Obligations (as defined in Section 9.2) and Utility Systems Repairs (as defined in Section 10.2), or relating to repair, maintenance or replacement of the Specialized Equipment (as defined in Section 9.3); (vi) all costs of improvements or alterations to the Building and Property which are required by Laws, or which are intended to save labor or to reduce Operating Expenses (provided that all capital improvements shall be amortized over a reasonable period as determined by Landlord together with interest on the unamortized balance from time to time at a per annum interest rate equal to

the Prime Rate in effect on the date such costs are incurred plus four percent (4%)); (vii) all premiums and deductibles for liability, property damage, casualty, automobile, rental loss, compensation or other insurance maintained by Landlord relating to the Building or Property; (viii) the cost (amortized over a reasonable period as determined by Landlord together with interest at a per annum interest rate equal to the Prime Rate in effect on the date such costs are incurred plus four percent (4%) on the unamortized balance) of any capital improvements made to the Property or Building by Landlord for the replacement of any Building equipment needed to operate the Building at the same quality levels as prior to the replacement; (ix) costs incurred in the management or operation of the Building and Property (including supplies), wages and salaries of employees engaged in the management, operation and maintenance thereof and payroll taxes and similar governmental charges with respect thereto which costs shall be appropriately prorated if such persons work on projects or properties other than the Property; (x) property management fees paid to independent or affiliated contractors or to Landlord; (xi) legal, accounting and other professional expenses directly related to the Building; (xii) landscaping and painting and parking lot repairs, maintenance and resurfacing; (xiii) any other expense or charge whether or not described above that in accordance with generally accepted accounting principles and commercial property management practices is properly an expense of maintaining, operating or repairing the Building or Property. Operating Expenses shall not include any of the following: (A) ground rent; (B) depreciation on the Building or equipment therein; (C) debt service, including interest and amortization of funds borrowed by Landlord for items other than capital improvements; (D) real estate broker’s commissions or other sale or leasing commissions; (E) advertising and promotional expenses, legal fees and other costs incurred in connection with procuring tenants or offering the Building and Property for sale; (F) the cost of tenant improvements, including space planning fees, design fees and other soft costs; (G) wages, bonuses and other compensation of Landlord’s employees above the grade of property manager; (H) costs of any items to the extent that Landlord is paid or reimbursed by insurance; (I) costs for utilities or services for which Landlord is reimbursed directly from, any tenant, including Tenant; or (J) charitable or political contributions or artworks or other building decorations not comparable to any existing decorations. Landlord shall not collect more than 100% of Operating Expenses and shall not recover any item of cost more than once. As used in this Section 8.5, “Prime Rate” shall mean the highest prime rate of interest published in the “Money Rates” column in The Wall Street JOURNAL during such calendar month. If The Wall Street Journal ceases publication of a prime rate, then the Prime Rate shall mean the highest prime rate of interest publicly announced during such month by Bank of America, N.A., or its successor (or if such bank ceases to exist then any national banking association selected by Landlord).

8.6 Taxes on Rent. The Rent provided for in this Lease is exclusive of any sales or other tax or charge upon, based upon or measured by rents payable to Landlord hereunder, or any tax or other charge based upon or measured by the number of employees of Tenant, or any other tax that is not currently in effect. If during the Term any such tax or other charge becomes payable by Landlord to any governmental authority, the Rent hereunder shall be deemed increased by such amount upon thirty (30) days written notice by Landlord to Tenant. The foregoing does not apply to federal, state or local income, gross receipts, inheritance, gift, succession or franchise taxes payable by Landlord.

8.7 Audit. Provided that Tenant is not in default under this Lease and pays any Operating Expenses billed by Landlord as and when due, Tenant or a qualified certified public accountant retained by Tenant who is experienced with accounting for operating expense recoveries in commercial leases, shall have the right to examine Landlord’s books and records relating to Operating Expenses upon reasonable prior notice given within ninety (90) days after receipt of Landlord’s annual reconciliation, during normal business hours at the place or places where such records are normally kept. Tenant’s representative shall be compensated on an hourly or project basis and not on (i) a contingent basis, (ii) the basis of a percentage of any savings or refund resulting from the audit, or (iii) in any other manner that makes such representative’s compensation for such audit in any way dependent on the results of the audit. Upon request, Tenant shall provide Landlord with a full copy of all correspondence, instructions between the accountant. Landlord’s calculation shall be final and binding on Tenant upon delivery thereof, except as to matters to which written objection is made by Tenant in accordance with this Section. Tenant may dispute specific items included in Operating Expenses or Landlord’s computation of Tenant’s Share of Operating Expenses, by sending notice specifying such objections and including support for such findings with specific reference to the relevant Lease provisions disqualifying such expenses to Landlord no later than one hundred and twenty (120) days after Tenant’s representative examines such records. If Landlord agrees with Tenant’s objections, appropriate rebates or charges shall be made to Tenant within a reasonable period of time thereafter. The results of any review of Operating Expenses hereunder shall be treated by Tenant, its accountant and each of their respective employees and agents as confidential, and shall not be discussed with nor disclosed to any third party. If Tenant objects to any matters as provided above, Landlord shall refer the matter to an independent certified public accountant selected by Landlord, whose certification as to the proper amount shall be final and binding on Landlord and Tenant. Tenant shall promptly pay the cost of such certification and all other costs incurred by Tenant to examine Landlord’s books and records. Pending resolution of any such exceptions in the foregoing manner, Tenant shall continue paying Tenant’s Share of Operating Expenses in the amounts determined by Landlord, subject to adjustment upon resolution of any objections by Tenant. If the certification determines that Landlord overstated Tenant’s Share of Operating Expenses, then Tenant shall receive a credit for the amount of such overpayment against the next installment(s) of Operating Expenses; provided, however, that if the Term has expired Landlord shall pay Tenant the excess within thirty (30) days after the certification is finalized. If the certification determines that Landlord understated Tenant’s Share of Operating Expenses, then Tenant shall pay such sum due with its next monthly installment of Rent. Landlord shall have the same rights with respect to Tenant’s nonpayment of Operating Expenses as it has with respect to any other nonpayment of Rent under this Lease.

9. Landlord’s Maintenance and Services Obligations.

9.1 Maintenance Obligations. Except as otherwise provided in Section 7.4, Landlord shall be responsible for maintenance and repairs to the exterior (including the exterior glazing and caulking) and structural portions of the Building, the roof and roof membrane, as well as all building systems and components not exclusively serving the Premises and repairs and maintenance to the Common Areas (“Maintenance Obligations”).

9.2 Services Obligations. Except as provided herein, Landlord shall provide or cause to be provided, all services to the Premises, Building and Property, including without limitation, janitorial service for common areas, garbage and recycling programs, property management, landscape and irrigation system maintenance, parking lot sweeping and maintenance, window washing, rubbish removal, a preventative maintenance program for the heating, ventilating, and air conditioning systems not exclusively serving the Premises, and other services provided by Landlord (collectively “Services Obligations”).

9.3 Specialized Equipment. During any period in which any other Building occupant has the right to the use or benefit of such equipment, Landlord shall be responsible for repair and maintenance of the equipment located in the following areas within the Premises, as shown on Exhibit A (the “Specialized Equipment”): (a) boiler room for 50-150 PSI steam, (b) de-ionized water, (c) compressed air and vacuum pump, and (d) mechanical/electrical room. All of the Specialized Equipment is located in the Premises and Landlord reserves from the Lease the right to access the Specialized Equipment as and when necessary to perform its obligations hereunder. All costs relating to the Specialized Equipment shall be paid by the Building occupants that have the right to the use or benefit of the Specialized Equipment and Landlord shall not be required to bear any costs relating to the Specialized Equipment. At any time when Tenant is the only party who has the right to the use or benefit of the Specialized Equipment, Tenant shall be responsible, at Tenant’s cost, for all repair and maintenance thereof, in accordance with standards acceptable to Landlord in its reasonable discretion.

9.4 No Landlord Default. Landlord shall perform the Maintenance and Service Obligations diligently and promptly as circumstances warrant, but Landlord shall not be liable for any failure to perform the Maintenance and Services Obligations unless such failure is solely due to Landlord’s gross negligence or intentional misconduct and continues for an unreasonable period of time after written notice from Tenant. In no event shall Landlord be liable to Tenant under this Lease or otherwise for any incidental, consequential or punitive damages (including but not limited to lost profits) and Tenant waives any right to claim such damages. If the need for repair results from the business activity being conducted within the Premises, or from the acts or omissions of Tenant, its officers, directors, employees, agents, contractors or invitees, Tenant shall reimburse Landlord for the costs incurred by Landlord in connection with such repair. Landlord shall have no liability for any damage or injury arising out of any condition or occurrence causing a need for repairs, unless the damage or injury was caused solely by Landlord’s gross negligence.

9.5 No Obligation to Alter. Except as specifically provided elsewhere in this Lease, Landlord shall have no obligation whatsoever to after, remodel, improve, repair, decorate, or paint the Building, the Premises or any part thereof. Tenant affirms that Landlord has made no representations to Tenant about the condition of the Premises or the Building, except as specifically herein set forth.

9.6 Tenant Waiver. Tenant waives the right to make repairs at Landlord’s expense under any law, statute, or ordinance now or hereafter in effect.

10. Structural Maintenance and Repairs.

10.1 Structural Repairs. Subject to the provisions of Section 15, Landlord shall, at Landlord’s expense, maintain, repair and replace the roof structure, all exterior and bearing walls, the floor slab and the foundation of the Building (“Structural Repairs”). Landlord shall give reasonable advance notice to Tenant of such repairs to the extent practical and feasible.

10.2 Utilities Repairs. Subject to the provisions of Section 15, Landlord shall maintain, repair and replace the underground electrical, water, sewer and plumbing utility systems serving the Building insofar as such utility systems are located outside the Building between the public right-of-way and the Building or inside the Building but not serving the Premises exclusively, and the conduits and pipes or wiring located therein and forming a part thereof, or Landlord shall cause the utility purveyor to maintain, repair and replace the underground electrical, water, sewer and plumbing utility systems serving the Building insofar as such utility systems are located outside the Building between the public right-of-way and the Building, and the conduits and pipes or wiring located therein and forming a part thereof (“Utility Systems Repairs”).

10.3 Tenant’s Responsibility. To the extent that any Structural Repairs or Utility Systems Repairs are necessitated in part or in whole by the act, neglect, fault, or omission of any duty by the Tenant, its agents, contractors, servants, or employees, Tenant shall pay to Landlord the reasonable costs of such Structural Repairs or Utility Systems Repairs, within thirty (30) days after Landlord’s submission of a reasonably detailed invoice for the same. Landlord shall not be liable for any failure to make any Structural Repairs or Utility Systems Repairs, unless such failure shall persist for an unreasonable time after Landlord’s receipt of written notice from Tenant.

11. Utilities.

11.1 Tenant Responsibility. In addition to all other sums Tenant is required to pay pursuant to this Lease, Tenant shall be solely responsible for and shall pay as additional rent prior to delinquency all charges for heat, light, water, sewer, electricity, gas and any other utilities used or consumed on the Premises from and after the date Tenant first takes possession of the Premises. For any of the foregoing utilities for which separate meters are provided by the utility service company, Tenant shall arrange for and cause such services to be provided, at Tenant’s expense and Tenant shall pay directly to the provider thereof and will pay any required deposits therefor. For any of the foregoing utilities and services for which separate meters are not installed, Landlord shall arrange for such service and either (a) the cost shall be included in Operating Expenses, or, (b) if Landlord reasonably determines based on demonstrable evidence that the amount of service or utility provided by Landlord (including use of the Specialized Equipment) and consumed by Tenant is materially different than Tenant’s Share of such utility or service, then Tenant shall pay to Landlord as Additional Rent, prior to delinquency, Tenant’s equitable share of the cost of such utility or service based on Landlord’s reasonable estimates of Tenant’s consumption (which may be based on submeter readings if Landlord installs submeters to measure consumption). Tenant shall arrange for and cause the following services to be provided to the Premises at Tenant’s expense: telecommunications

and data communications services, security, telephone service, cable television service, satellite transmission service, if any, and any computer cabling or wiring exclusively serving the Premises.

11.2 Interruption. If any utilities to the Premises are interrupted or discontinued due to failure in those portions of the systems to be maintained by Landlord pursuant to Section 10.2, Landlord shall use reasonable efforts to restore such utilities as soon as practically possible after learning of such interruption or discontinuance. No eviction of Tenant shall result from any such failure or interruption. Notwithstanding the foregoing, if an interruption or curtailment of any service required to be provided by Landlord under this Lease occurs (A) by reason of Landlord’s negligent act or negligent omission or due to a cause for which Landlord receives rent abatement insurance proceeds, (B) such interruption causes the Premises or a portion thereof to be untenantable, (C) Tenant ceases to use the Premises or the untenantable portion thereof for their intended purposes, and (D) Tenant has given Landlord notice of such interruption and such interruption is not corrected within three (3) days after the date of such notice, then, as Tenant’s exclusive remedy for such interruption on the fourth (4th) consecutive day following the date on which all of the foregoing conditions are satisfied, Base Monthly Rent shall abate (in whole or in part based on the number of square feet that are untenantable) until the Premises are rendered tenantable. Notwithstanding the foregoing, Tenant shall not be entitled to an abatement if the interruption was caused by the negligent act or negligent omission of Tenant or its employees, agents, contractors or invitees.

12. Limits on Landlord’s Liability. Landlord’s liability to repair and maintain portions of the Premises and Building and to provide utility services (collectively, “Repair and Service Obligations”) is subject to the following limitations:

12.1 Circumstances Beyond Landlord’s Control. Landlord shall not be liable for any failure of Repair and Service Obligations when such failure is caused by (i) strikes, lockouts or other labor disturbance or labor dispute of any character, (ii) governmental regulation, moratorium or other governmental action, (iii) inability despite the exercise of reasonable diligence to obtain electricity, water, fuel or other utilities from the providers thereof, (iv) acts of God, or (v) any other cause beyond Landlord’s reasonable control.

12.2 Landlord Liability. Landlord shall not be liable for any failure of Repair and Service Obligations, unless such failure shall persist for an unreasonable time after written notice of the need of such repairs or maintenance or of the interruption of services is given to Landlord by Tenant. Landlord shall not be liable for any injury to or interference with Tenant’s business arising from the making of any repairs, alterations, or improvements in or to any portion of the Building, the Premises, or the Property, or to fixtures, appurtenances, and equipment therein. Landlord shall not have any liability for any inconvenience, annoyance, or disturbance resulting from the performance by Landlord of its Repair and Service Obligations. Without limiting the generality of this Section 12, in no event shall Landlord have any liability for consequential damages resulting from any act or omission of Landlord in respect of its Repair and Service Obligations, even if Landlord has been advised of the possibility of such consequential damages. Landlord, its agents, employees or contractors, shall conduct its and their activities on the Premises in a reasonable manner and shall make reasonable efforts to minimize any inconvenience, annoyance or disturbance to Tenant and shall repair any

uninsured physical damage caused in doing such repair work. At Tenant’s request, Landlord shall perform its Repair and Service Obligations after Tenant’s normal business hours; provided, however, that Tenant shall pay all overtime and other costs incurred by Landlord in excess of the costs that would have been incurred by Landlord if Landlord had performed its Repair and Service Obligations during Tenant’s normal business hours.

12.3 Rent Abatement. Except as specifically provided in Sections 1,11, 15 and 16, there shall be no abatement of Rent in any circumstance under this Lease.

13. Improvements and Alterations.

13.1 Initial Tenant Improvements. Tenant, at Tenant’s sole cost and expense, shall install its initial tenant improvements in the Premises in accordance with the provisions of Exhibit B attached hereto and incorporated herein by this reference.

13.2 Alterations and Additions by Tenant. Following installation of the initial tenant improvements, Tenant shall not make any additional improvements or alterations to the Premises without the prior written consent of Landlord which, with respect to any alterations that do not impact Building systems or structure or reduce the value of the Building or reduce the RSF of the laboratory space, shall not be unreasonably withheld or delayed but may be subject to such reasonable conditions as Landlord deems necessary or desirable. Any repairs or new construction by Tenant shall be done (a) at Tenant’s sole cost and expense in conformity with plans and specifications approved by Landlord which approval shall not be unreasonably withheld (so long as the changes do not impact Building systems or structure) or delayed but may be subject to such reasonable conditions as Landlord deems necessary or desirable, (b) by contractors approved by Landlord which shall not be unreasonably withheld or delayed but may be subject to such reasonable conditions as Landlord deems necessary or desirable, and (c) subject to Landlord’s reasonable rules and regulations regarding such construction. All work performed shall be done lien-free in a good and workmanlike manner consistent with the overall quality of the Building and shall become the property of Landlord. Prior to commencing any work costing more than Fifty Thousand Dollars ($50,000) or the supply or furnishing of any labor, services and/or materials in connection with any such work, Landlord may require that Tenant provide to Landlord, at Tenant’s expense, a lien and completion bond in an amount equal to 120% of the estimated cost of any improvements, additions, or alterations in the Premises.

14. Insurance; Indemnity.

14.1 Tenant Waiver. Except as provided in Section 14.3, Landlord shall not be liable to Tenant, and Tenant hereby waives all claims against Landlord, for injury or damage to any person or property in or about the Premises, Building, Property or common areas by or from any cause whatsoever, including without limitation any acts or omissions of Landlord, Landlord’s property manager or any other tenants, licensees or invitees of the Building.

14.2 Tenant Indemnity. Tenant shall indemnify and defend (using legal counsel reasonably acceptable to Landlord) Landlord and hold Landlord harmless, from and against any and all loss, cost, damage, liability and expense (including reasonable attorneys’

fees) whatsoever that may arise out of or in connection with Tenant’s occupation, use or improvement of the Premises, or that of its employees, agents or contractors, or Tenant’s breach of its obligations under this Lease. To the extent necessary to fully indemnify Landlord from claims made by Tenant or its employees, this indemnity constitutes a waiver of Tenant’s immunity under the Washington Industrial Insurance Act, RCW Title 51. This indemnity shall survive the expiration or termination of the Term.

14.3 Landlord Responsibility. The exculpation, release and indemnity provisions of Sections 14.1 and 14.2 shall not apply if the subject claims thereunder were caused solely by Landlord’s gross negligence or willful misconduct. However, in no event shall Landlord be liable to Tenant for consequential damages. Landlord shall indemnify and defend (using legal counsel reasonably acceptable to Tenant) Tenant and hold Tenant harmless, from and against any and all loss, cost, damage, liability and expense (including reasonable attorneys’ fees) whatsoever to the extent arising solely out of the gross negligence or intentional misconduct of Landlord. To the extent necessary to fully indemnify Tenant from claims made by Landlord or its employees, this indemnity constitutes a waiver of Landlord’s immunity under the Washington Industrial Insurance Act, RCW Title 51. This indemnity shall survive the expiration or termination of the Term.

14.4 Tenant’s Insurance. Tenant shall procure and maintain throughout the Term at Tenant’s expense, the following insurance:

14.4.1 Commercial general liability insurance, insuring Tenant against liability arising out of the Lease and the use, occupancy, or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be in the amount of not less than $5,000,000 combined single limit for injury to or death of one or more persons in an occurrence, and for damage to tangible property (including loss of use) in an occurrence (or in such amount as Landlord determines in its reasonable discretion). Such policy shall include Products/Completed Operations coverage with an aggregate limit of no less than $2,000,000. Such policy shall insure Tenant’s contractual liability (covering the indemnity in Section 14.2) and shall: (i) name Landlord and its named principals, property manager and lender as additional insureds, (ii) provide a waiver of subrogation with respect to Landlord, and (iii) provide that it is primary and noncontributing with any insurance in force on behalf of Landlord.

14.4.2 “Causes of Loss — Special Form” property insurance (or comparable coverage acceptable to Landlord) insuring against the perils of fire, vandalism and malicious mischief and including extended coverage and coverage against sprinkler leakage. This insurance policy shall be upon all personal property for which Tenant is legally liable or that was installed at Tenant’s expense, and that is located in the Building or Premises, including without limitation all of Tenant’s furnishings, fixtures, furniture, personal property and equipment and all tenant improvements and alterations installed in the Premises at Tenant’s expense in an amount not less than the full replacement cost thereof on an agreed amount basis with no coinsurance. Tenant has been advised that it may be desirable to purchase insurance against risk of loss by earthquake provided that such insurance is available on commercially reasonable terms. Tenant’s property insurance policy(ies) shall name Landlord and any mortgagees of Landlord as insured parties, as their respective interests may appear. Tenant acknowledges that Landlord has recommended that Tenant purchase business interruption coverage, covering

direct or indirect loss of Tenant’s earnings attributable to Tenant’s inability to use fully or obtain access to the Premises or Building. Tenant may elect to purchase such insurance but in any event waives any claim against Landlord from any cause of loss that would be covered by insurance had Tenant purchased such coverage.

14.4.3 Worker’s Compensation and Employees Liability Insurance as required by state law.

14.4.4 Any other form or amount of insurance as Tenant or Landlord or any mortgagees of Landlord may reasonably require from time to time in form, in amounts and for insurance risks against which a prudent tenant would protect itself. As used in this paragraph, insurance shall be deemed to be reasonable if it is of the type and in such amounts as commercial landlords require in leases in the market area in which the premises are located for premises used for the uses similar to Tenant’s.

14.5 Policies. All policies of insurance to be obtained by Tenant hereunder shall be in a form satisfactory to Landlord and shall be issued by insurance companies holding a General Policyholder Rating of “A” and a Financial Rating of “X” or better in the most current issue of Best’s Insurance Guide. Tenant shall provide Landlord with certificates of such insurance on certificate forms acceptable to Landlord. No such policy shall be cancelable or reduced in coverage below that required under this Lease except after thirty (30) days prior written notice to Landlord. Tenant shall, within ten (10) days prior to the expiration of such policies, furnish Landlord with renewals or “binders” thereof, or, if Tenant has not done so, Landlord may order such insurance and charge the cost thereof to Tenant as Additional Rent.

14.6 Landlord’s Insurance. Landlord shall procure and maintain throughout the Term commercial general liability insurance with deductibles deemed appropriate by Landlord. Landlord shall also shall procure and maintain throughout the Term “Causes of Loss — Special Form” (or comparable) property insurance insuring against the perils of fire, vandalism and malicious mischief, and including extended coverage, covering the Building and all permanent fixtures and improvements therein on the Commencement Date in an amount not less than the full replacement cost thereof. Landlord may purchase insurance against risk of loss by earthquake provided that such insurance is available on commercially reasonable terms. Landlord shall also shall procure and maintain throughout the Term rent loss insurance in an amount equal to twelve (12) months Base Monthly Rent and Additional Rent. Landlord may also purchase any other amount or type of coverage Landlord (or its lender) deems necessary or desirable including coverage against terrorism or vandalism. The cost of all insurance purchased by Landlord and any related deductibles shall be an Operating Expense.

14.7 Proceeds. The proceeds of any insurance policies maintained by or for the benefit of Landlord shall belong to and be paid over to Landlord. Any interest or right of Tenant in any such proceeds shall be subject to Landlord’s interest and right in such proceeds. The proceeds of any insurance policies maintained by or for the benefit of Tenant shall belong to and be paid over to Tenant; provided, however, that if Landlord is required to, or elects to, restore the Premises or the Building pursuant to Section 15, then the proceeds of any property insurance covering permanent improvements to the Premises shall be paid over to Landlord.

14.8 Waiver of Subrogation. Landlord and Tenant release each other, and their respective directors, officers, partners, employees and agents, from, and waive their entire claim of recovery for, any claims for damage to the Premises and the Building and to Tenant’s improvements, alterations, furniture, fixtures, equipment and personal property that are caused by or result from fire, lightening or any other perils normally included in a “Causes of Loss - Special Form” property insurance policy whether or not such loss or damage is due to the negligence of Landlord, its directors, officers, partners, employees or agents, or of Tenant, or its directors, officers, partners, employees or agents. Landlord and Tenant shall cause each insurance policy obtained by it to provide that the insurance company waives all right of recovery by way of subrogation against either party in connection with any damage covered by any and all insurance policies maintained by either Landlord or Tenant under this Lease.

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