Preview | Agreement of Lease |

CONTENTS

		Page
Section
1.	Basic Terms	1
2.	Effect of Reference to Basic Terms	2
3.	Lease of Premises	2
4.	Completion by Landlord	2
5.	Term	3
6.	Use of Premises	3
7.	Rent	4
8.	Security Deposit	6
9.	Insurance and Indemnification	6
10.	Damage by Fire or Other Casualty; Casualty Insurance	9
11.	Condemnation	10
12.	Non-Abatement of Rent	11
13.	Repairs and Maintenance	11
14.	Utilities and Services	12
15.	Governmental Regulations	14
16.	Directory; Signs	14
17.	Alterations and Additions	14
18.	Landlords Right of Entry	15
19.	Quiet Enjoyment	15
20.	Assignment and Subletting	15
21.	Subordination	17
22.	Tenants Certificate	17
23.	Surrender	18
24.	Defaults - Remedies	18
25.	Bankruptcy or Insolvency; Assumption; Adequate Protection	21
26.	Reserved Rights	23
27.	Americans With Disabilities Act	23
28.	Notices	24
29.	Limitation of Liability	24
30.	Miscellaneous	24
31.	Landlord Representations and Warranties	26

EXHIBIT A	Floor Plans
EXHIBIT B	Description of Property
EXHIBIT C	Rules and Regulations
EXHIBIT D	Tenant Improvements
EXHIBIT E	Tenant Estoppel Certificate

AGREEMENT OF LEASE

OFFICE LEASE

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

WITNESSETH:

1. Basic Terms.

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

1100 Olive Way, Suite 340

Seattle, WA 98101

(b) Address of Tenant: 101 Yesler Way

Seattle, WA 98104

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

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

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

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

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

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

Year 2: $22.00/rsf

Year 3: $23.00/rsf

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

Months 4-12: $6,452.25

Months 13-24: $6,759.50

Months 25-36: $7,066.75

(j) Base Year: 2006

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

(l) Security Deposit: $50,000.00

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

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

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

2. Effect of Reference to Basic Terms.

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

3. Lease of Premises.

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

4. Completion by Landlord.

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

5. Term.

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

6. Use of Premises.

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

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

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

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

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

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

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

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

7. Rent.

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

(b) Additional Rent.

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

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

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

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

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

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

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

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

8. Security Deposit.

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

9. Insurance and Indemnification.

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

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

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

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