EXHIBIT 10.4

	THIS LEASE (hereinafter "Agreement" or "Lease"), is made andentered into as of this 1st day of June, 2002, by and between SCIENTIFICTECHNOLOGY, INC., a California corporation (hereinafter referred to as"Landlord") and SCIENTIFIC TECHNOLOGIES, INC., Automation Sensors Division, anOregon corporation (hereinafter referred to as "Tenant").

 

RECITALS:

	A. Landlord is the owner of that certain real property more fullydescribed on Exhibit "A", attached hereto and by this reference incorporatedherein.

	B. The Property is located at 1025 W. 1700 N., Logan, Cache County, Utahand consists of ground and improvements, including a newly constructed buildingcontaining 25,000 square feet. The land and improvements are collectively calledthe "Property" herein.

	C.	Tenant is desirous of leasing the Property from Landlord, andLandlord is desirous of leasing the Property to the Tenant.

	D. Landlord and Tenant have communicated to one another the above-described circumstances, and have heretofore negotiated the terms of thisAgreement and desire to memorialize the same by this instrument.

	NOW, THEREFORE, in consideration of the above premises, the covenants andpromises hereinafter set forth, and other good and valuable consideration, thereceipt and sufficiency of which is hereby acknowledged, the Landlord and Tenanthereby agree as follows:

 

ARTICLE I - LEASE

	1.01. Lease of Property. In consideration of the rents, covenantsand agreements hereinafter set forth, Landlord hereby leases to Tenant andTenant hereby rents from Landlord, the Property, together with all improvementsand fixtures presently associated therewith. 

	1.02. Term. The term of this Lease shall be for a total period offive (5) years, commencing on the date of this Agreement and ending five yearsfrom the date hereof, plus any additional periods that the parties may agreeupon pursuant to Paragraph 1.03, below.

	1.03. Additional Periods. Tenant and Landlord shall have the rightto negotiate for additional periods or extensions of this Lease on termsagreeable to the parties. 

	1.04. Lease Payments. Tenant agrees to pay, and Landlord agrees toaccept as lease payments $10,500.00 on June 1, 2002 and $10,500.00 on the 1stday of each month thereafter throughout the lease term. This represents$.42/square foot/month based on the 25,000 square foot building.

	1.05. Rent Increase. The monthly rent described in paragraph 1.04shall be increased, effective on the first day of the next month, by thepercentage increase, if any, which has occurred in the Consumer Price Indexbetween June 1, 2002 and November 30, 2004. Such percentage increase shall bedetermined by using the Consumer Price Index (CPI) for All Urban Consumers asissued by the Bureau of Labor Statistics of the United States Department ofLabor, or its successor, published for "All Items" "U.S. City Average" (1982-84= 100). The index numbers to be used for the purposes of this Section shall bethose in effect for the dates described above and if such Index shall beconverted to a different standard reference base or shall otherwise be revised,the percentage increase shall be made with the use of such conversion factors,formula or tables as may be published for such purpose. Each one (point) percent(1%) in the CPI shall result in a one percent (1%) increase in the rental amountdue.

	1.06. Delinquent Payment. On any payment due hereunderwhich is not made on the due date thereof or within fifteen (15) daysthereafter, the Tenant agrees to pay a late charge of five percent (5%) of theunpaid amount of such installment to cover the additional expense of handlingand processing such delinquent payment or payments. Said late charge shall bepaid at the time the delinquent amount is paid in addition to and as a conditionto Landlord accepting such delinquent payment. In addition, such unpaid amountshall bear interest at the rate of one percent (1%) per month from the datedelinquent until paid.

ARTICLE II - RIGHTS AND DUTIES OF TENANT

	2.01. Use Of The Leased Property. 

	a. Tenant may use the Property for any legal use so long as such use doesnot waste or pollute the Property.

	b. The Tenant shall not do or permit anything to be done in or about, orbring or keep anything in the Property which will, in any way or to any extentadversely affect any fire, liability or other insurance policy carried withrespect to the building, conflict with or violate any law, statute, ordinance,rule, regulation or requirement of any governmental unit, agency or authority(whether existing or enacted as promulgated in the future, known or unknown,foreseen or unforeseen) or damage the structural soundness of the Building, orany part thereof.

	c. Tenant will keep the Property and every part thereof in a clean, neat,and orderly condition, free of objectionable noise, odors, or nuisances, will inall respects and at all times fully comply with all health and policyregulations, and will not suffer, permit, or commit any waste. 

	2.02. Improvements by Tenant. All repairs to and improvements onthe Property shall be made by the Tenant at the Tenant's expense. The Tenantshall not make any alterations or improvements in or to the Property without theprior written consent of the Landlord, which consent shall not be unreasonablywithheld. All fixed alterations and improvements made or added to the Property,such as carpets, cabinets and other attached equipment and fixtures (excludingtrade fixtures, phone system and related accessories and other equipment used inTenant's business or subleased) shall belong to the Landlord at the expirationor termination of this Lease. 

	2.03. Repair and Maintenance. 

	a. Subject to 2.03e below, tenant hereby accepts the Property in thecondition it is in at the beginning of this Lease. Tenant shall at all timesduring the term hereof, and any extensions thereof, keep the Property in goodrepair and condition, ordinary wear and tear excepted. 

	b. The Landlord shall not be liable for any damage or injury by water,which may be sustained by Tenant or other person or for any other damage orinjury resulting from the carelessness, negligence, or improper conduct on thepart of any other Tenant or agents, or employees, or by reason of the breakage,leakage or obstruction of the water or sewer, pipes, or other leakage in orabout the said building or caused by weight of snow or ice or any other damagecaused by the elements.

	c. Except as specifically otherwise provided, Tenant is responsible forall upkeep on the Property and is solely responsible for glass breakage,regardless of cause. Tenant must provide all snow removal.

	d. Tenant agrees to keep and maintain at its own expense in goodcondition and repair all heating, air conditioning, plumbing and electricalservices and equipment.

	e. The parties acknowledge that with a new building there may be some"punch list" items or other problems requiring correction. Landlord agrees todiligently complete and/or remedy or correct any such problems so that thebuilding and its services operate as intended.

	2.04.  Utility Costs and License.  Tenantagrees to pay all utility charges, including, but not limited to, electricity,gas, water, and telephone, and to pay for fire and general hazard insurance onall property belonging to Tenant on the Property and to pay all license fees andother costs of operation of its business. In the event of a default by theTenant in this covenant, the Landlord shall have the right to pay and dischargeany obligations on which Tenant remains in default for more than thirty (30)days, and the amount so paid by the Landlord shall be payable to Landlord ondemand and shall bear interest from the date paid until reimbursed to theLandlord at the rate of one percent (1%) per month. This is an optional remedywith Landlord, and the election of such remedy by Landlord shall not constitutea waiver by Landlord of Landlord's rights to proceed against Tenant for defaultas elsewhere herein provided. In the event Landlord elects this remedy, the actof default by Tenant shall be Tenant's failure to pay on demand.

	2.05. Assignment and Subletting. Tenant may sublet all or any partof the Property for any legal use as permitted in this Lease, with the priorwritten consent of Landlord. Tenant must provide written notice to Landlord ofany subtenants, the nature of their use and duration of their tenancy within ten(10) days of signing a sublease or granting possession, whichever firstoccurs.

	2.06. Regulations. Tenant covenants and agrees to make no unlawfuluse of the Property and to comply with all of the statutes, ordinances, rules,orders, regulations and requirements of federal, state and municipal or othergovernmental authorities, and to acquire, at its own expense, all necessarylicenses and permits in connection with the Property and Tenant's businessactivities thereon.	

	2.07. Insurance and Indemnity.

	a. Landlord shall not at any time or to any extent whatsoever be liable,responsible, or in any way accountable for any loss, injury, death, or damage topersons or property, from any cause or causes whatsoever except for Landlord'sor Landlord's agent's negligence, which at any time may be suffered or sustainedby Tenant or by any person whosoever at any time using, occupying or visitingthe Property or be in, on or about the same or the sidewalks and drivewaysadjacent and Tenant agrees to indemnify and save Landlord harmless from any andall claims, liabilities, losses, damages, costs, and expenses whatsoever arisingout of any such loss, injury, death, or damage.

	b. Tenant shall, at all times during the term of this Agreement, maintainin full force and effect, and pay all premiums for, public liability insurancewith a reputable insurance company or companies acceptable to Landlord coveringTenant's activities on the Property. The general liability limits of said policyor policies shall not be less than $1,000,000.00 per person and per occurrence.Said insurance shall name the Landlord as an additional insured. 

	c. All insurance policies of Tenant shall be issued by companies and informs satisfactory to Landlord and shall expressly provide that the insurancecompany shall notify the Landlord in writing at least thirty (30) days prior toany lapse or cancellation. Each such policy or a duplicate or appropriateevidence shall be delivered to Landlord. Tenant agrees if Tenant does notprocure such insurance and keep the same in full force and effect, Landlord, atits option and subject to its right of reimbursement, may take out the necessaryinsurance and pay the premium. Tenant waives its right of subrogation againstLandlord for any reason whatsoever, and any insurance policies herein requiredto be procured by Tenant shall contain an express waiver of any right ofsubrogation by the insurer against Landlord. 

	d.	Tenant shall be responsible to provide fire and casualty insuranceon Tenant's personal property.

	e. Tenant shall procure insurance insuring the Landlord against loss ordamage to the Property, and improvements and fixtures belonging to Landlord byreason of fire and other casualties (Broad Form) with a qualified insurancecompany or companies qualified in an amount and of such coverage as aresatisfactory to and approved by Landlord. The proceeds of such insurance in caseof loss or damage shall be paid to Landlord to be applied on account of theobligation of Landlord to repair and/or rebuild the building pursuant to Article5.03. Any proceeds not required for such purpose shall be the sole property ofLandlord.

	2.08. Subordination. Upon request of Landlord, Tenant willsubordinate its rights to the lien of any mortgage or mortgages, or lien orother security interest resulting from any other method of financing orrefinancing, now or hereafter in force against the land and/or building. Theprovisions of this paragraph notwithstanding, so long as Tenant is not indefault, this Lease shall remain in full force and effect for the full term andshall not be terminated as a result of any foreclosure or sale or transfer inlieu of such proceedings pursuant to a mortgage or other instrument to whichTenant has subordinated its right.

	2.09. Amendment. Tenant agrees that from time to time it shall, ifso requested by Landlord and if doing so will not substantially and adverselyaffect Tenant's economic interests under this Lease, join with Landlord inamending the terms of this Lease so as to meet the reasonable needs orrequirements of any lender which is considering furnishing or which hasfurnished any of the financing for the property.

	2.10. Tenant's Certificate. Tenant shall, within fifteen (15) daysafter the date of this Lease, and thereafter at Landlord's request, execute anddeliver to Landlord a written declaration which shall: (1) ratify this Lease;(2) express the beginning date and termination date hereof; (3) certify thatthis Lease is in full force and effect and has not been assigned, modified,supplemented or amended (except by such writings as shall be stated); (4) statethat all conditions under this Lease to be performed by Landlord have beensatisfied, or state which conditions remain unsatisfied; (5) state that thereare no defenses or offsets against the enforcement of this Lease by theLandlord, or stating those claimed by Tenant; (6) state the amount of advancerental, if any, (or none if such is the case) paid by Tenant; (7) state the dateto which rental has been paid; (8) state the amount of security deposited withLandlord; and (9) state such other information as Landlord may reasonablyrequest. Landlord's mortgage lenders and/or purchasers shall be entitled to relyupon such declaration.

	2.11. Landlord's Certificate. Landlord shall, within fifteen (15)days after the date of this Lease, and thereafter at Tenant's request, executeand deliver to Tenant a written declaration which shall: (1) ratify this Lease;(2) express the beginning date and termination date hereof; (3) certify thatthis Lease is in full force and effect and has not been assigned, modified,supplemented or amended (except by such writings as shall be stated); (4) statethat all conditions under this Lease to be performed by Tenant have beensatisfied, or state which conditions remain unsatisfied; (5) state that thereare no defenses or offsets against the enforcement of this Lease by the Tenant,or stating those claimed by Landlord; (6) state the amount of advance rental, ifany, (or none if such is the case) paid by Tenant; (7) state the date to whichrental has been paid; (8) state the amount of security deposited with Landlord;and (9) state such other information as Tenant may reasonably request. Tenant'slenders and/or purchasers shall be entitled to rely upon such declaration.

	2.12. Attornment. In the event of the sale or assignment ofLandlord's interest in the Property, or in the event of any proceedings broughtfor the foreclosure of, or in the event of exercise of the power of sale under,any mortgage or other security instrument made by Landlord covering theProperty, Tenant shall attorn to the assignee or purchaser and recognize suchpurchaser as Landlord under this Lease.

	2.13. Hazardous Substances. Tenant shall not cause or permit anyHazardous Substances to be used, stored, generated or disposed of in, on orabout the Property. Tenant shall indemnify and hold harmless Landlord from anyand all claims, damage, fines, judgments, penalties, costs, expenses orliabilities (including, without limitation, any and all sums paid for settlementof claims, attorneys' fees, consultant and expert fees) arising during or afterthe Term, if any, from or in connection with the use, storage, generation ordisposal of hazardous substances in, on or about the Property. Theindemnification contained herein shall survive any expiration or termination ofthe Term. As used herein, "Hazardous Substances" means any substance which istoxic, ignitable, reactive, or corrosive or which is regulated by EnvironmentalLaws.

 

			ARTICLE III - EMINENT DOMAIN

	3.01. Total Taking. If the whole of the Property shall betaken or condemned by any competent authority for any public use or purpose orif so much thereof shall be taken so that Tenant would be unable to continuenormal business operations, then the Lease term hereby granted shall cease onthe day prior to the vesting of title in such authority and lease paymentshereunder shall be paid and adjusted as of that date; any prepaid rental shallbe prorated as of the date of such termination and returned to Tenant.

	3.02. Partial Taking. If a portion of the Property shall be takenand, as a result thereof, there shall be such a major change in the character ofthe Property as to prevent Tenant from using the same in substantially the samemanner as theretofore used, then and in that event Tenant, within fifteen (15)days after the date of such vesting of title, may either cancel and terminatethis Agreement as of the date when that part of the Property so taken shall berequired for such public purpose, or said Tenant may continue to occupy theremaining portion. In the event Tenant shall remain in possession and occupancyof the remaining portion of the Property, all the terms and conditions of thisAgreement shall remain in full force and effect with respect to such remainingportion, except that the lease payments reserved to be paid hereunder shall beequitably adjusted according to the amount and value of such remaining space;and provided, further, that Landlord shall, at Landlord's own expense, promptlyand with all reasonable diligence, do such work as to make the remainder of theProperty usable by Tenant and this Agreement shall continue for the balance ofits term, subject to the terms and conditions herein stated. 

	3.03. Condemnation Award. The entire award of damages orcompensation for the Property taken via eminent domain, or the amount paidpursuant to private purchase in lieu thereof, whether such condemnation or salebe total or partial, shall belong to Landlord, except that damages awarded forany loss of Tenant's shall belong to Tenant. Tenant may interpose and prosecute,in any condemnation proceeding, a claim for the value of any trade fixturesinstalled in the Property by Tenant, and in the case of a partial condemnationof the Property, the cost, loss or damages sustained by Tenant as the result ofthe alterations, modifications or repairs which may reasonably be required byTenant in order to place the remaining portion of the Property, not socondemned, in a suitable condition for Tenant's further occupancy. 

 

ARTICLE IV - EVENTS OF DEFAULT; REMEDIES

	4.01. Default by Tenant. Upon the occurrence of any of thefollowing events Landlord shall have the remedies set forth in paragraph4.02.

	

	A. Tenant fails to pay any rental or any other sum due hereunder withinfifteen (15) days after the same shall be due.

	B. Tenant fails to perform any other term, condition, or covenant to beperformed by it pursuant to this Agreement within thirty (30) days after thewritten notice of such default shall have been given to Tenant by Landlord.

	C. Tenant shall become bankrupt or insolvent or file any debtorproceedings or have taken against such party in any court pursuant to state orfederal statute, a petition in bankruptcy or insolvency, reorganization, orappointment of a receiver or trustee; and such proceeding shall not bedismissed, discontinued or vacated within thirty (30) days from the filing orappointment; or Tenant suffers this Lease to be taken under writ ofrestitution.

	D. The doing, or permitting to be done, by Tenant of any act whichcreates a mechanic's lien or claim against the Ground or Building on theProperty if not released or otherwise provided for by indemnificationsatisfactory to Landlord within thirty (30) days after written notice of suchfrom Landlord. 

	4.02.  Remedies on Default.  

	a. If Tenant shall fail to cure any default underparagraph 4.01 within the time provided therein, or if a receiver be appointedfor Tenant, or if Tenant for any reason be insolvent, or if a Tenant vacates orabandons the leased property, then Landlord, besides other rights or remedies itmay have, shall have the immediate right of re-entry and may remove all personsand property from the property without liability to any person for damagessustained by reason of such removal. Such property may be removed and stored ina public warehouse or elsewhere at the cost of and for the account ofTenant;

	b. Should Landlord elect to re-enter as herein provided,or should it take possession pursuant to legal proceedings or pursuant to anynotice provided for by law, it may either terminate this Lease to the sameextent and with all the legal incidents as if the term had expired by efflux oftime, or it may from time to time relet the property for such term or terms(which may be for a term extending beyond the term of this Lease) and at suchrental and upon such other terms and conditions as Landlord, in its solediscretion, may deem advisable, with the right to make alterations and repairsto said Property; 

	c. Upon such re-letting (1) Tenant shall be immediatelyliable to pay to Landlord, in addition to any rent or other sums then due andunpaid hereunder, the cost of expense of such re-letting and of such reasonablealterations and repairs incurred by Landlord and the amount, if any, by whichthe rent reserved in this Lease for the period of such re-letting (up to but notbeyond the term of this Lease) exceeds the sum agreed to be paid as rent for theproperty for such period on such reletting; or (2) at the option of Landlord,rents received by Landlord from such re-letting shall be applied first to thepayment of any indebtedness other than rent due hereunder from Tenant toLandlord; second to the payment of any costs and expenses of such re-letting andof such alterations and repairs; third to the payment of rent due and unpaidhereunder; and the residue, if any, shall be held by Landlord and applied inpayment of future rent as the same may become due and payable hereunder. IfTenant has been credited with any rent to be received by such re-letting underoption (1) and such rent shall not be promptly paid to Landlord by the newTenant, during any month be less than that to be paid during that month byTenant hereunder, Tenant shall pay any such deficiency to Landlord. Suchdeficiency shall be calculated and paid monthly, or at Landlord's option thedeficiency amount may be accelerated to the end of the lease term and declaredimmediately due and payable;

	d. No such re-entry or taking possession of the propertyby Landlord shall be construed as an election on its part to terminate thisLease unless a written notice of such intention be given to Tenant or unless thetermination be decreed by a court of competent jurisdiction. Notwithstanding anysuch re-letting without termination, Landlord may at any time thereafter electto terminate this Lease for such previous breach;

	e. Should Landlord at any time terminate this Lease forany breach, in addition to any other remedies it may have, it may recover fromTenant all damages it may incur by reason of such breach, including the cost ofrecovering the property and including the worth at the time of such terminationof the excess, if any, of the amount of rent and charges equivalent to rentreserved in this Lease for the remainder of the stated term of the thenreasonable rental value of the property for the remainder of the stated term,all of which amounts shall be immediately due and payable from Tenant toLandlord;

 

ARTICLE V - RIGHTS AND DUTIES OF LANDLORD 

	5.01. Quiet Enjoyment. Landlord warrants and represents that itshall place and maintain Tenant in the peaceful and undisturbed possession ofthe Property throughout the entire term of this Agreement (including anyextensions thereof) so long as Tenant pays the lease payments and performs allof its covenants as specified herein. 

	5.02.  Taxes and Other Assessments.  Tenantshall pay all real property taxes and assessments of any kind and nature whichare or which may be assessed against the Property during the term of this Lease.

	5.03.  Fire And Other Casualty. In the event thebuilding is rendered untenantable by fire or other casualty during said term sothat the same may be rebuilt within 120 days thereafter, then Landlord mayrebuild said building and the rental hereunder shall abate during such period ofrebuilding. If said rebuilding cannot be made and completed within 120 days thenLandlord or Tenant shall have the right and option to terminate this Lease. Inthe event the building is rendered partially untenantable by fire or othercasualty during said term so that the same may be rebuilt within 120 daysthereafter, then Landlord shall rebuild said building and the rental hereundershall abate during such period of repair in the proportion that the portion ofthe leased building rendered untenantable bears to the entire leasedbuilding.

	5.04. Entry by Landlord. Landlord or its agents shall have theright to enter and inspect the Property upon reasonable notice to Tenant and atreasonable times and in such a manner so as not to interfere with Tenant'sbusiness, to examine the Property and to show the Property to prospectivepurchasers or lessees of the Property.

 

ARTICLE VI - MISCELLANEOUS

	6.01. Time. Time is and shall be of the essence ofthis Lease.

	6.02. Waiver. The waiver by Landlord of any breach of any term,covenants or condition herein contained shall not be deemed to be a waiver ofsuch term, condition or covenant, or any subsequent breach of the same, or anyother term, covenant or condition herein contained. 

	6.03. Entire Agreement. This Agreement contains the entireAgreement between the parties, and no representations, inducements, promises oragreements, oral or otherwise, between the parties not embodied herein shall beof any force and effect.

	6.04. Force Majeure. In the event that either party hereto shallbe delayed or hindered in, or prevented from, the performance of any actrequired hereunder, by reason of strikes, lockouts, labor trouble, inability toprocure materials, failure of power, restrictive governmental laws orregulations, riots, insurrections, war, natural disaster, or other reason of alike nature, not the fault of the party delayed in performing work or doing actsrequired under the term of this Agreement, then performance of such act shall beexcused for the period of the delay, and the period for the performance of anysuch act shall be extended for a period equivalent to the period of such delay.

	6.05. Delivery of Property. Tenant agrees to deliver up theProperty to Landlord at the expiration of this Agreement in as good a conditionas when the same was entered into by Tenant, reasonable wear and tearexcepted.

	6.06. Default. If either party defaults in any of the covenants oragreements contained herein, the defaulting party shall pay all costs andexpenses, including a reasonable attorney's fee, incurred by the other party inenforcing its rights arising under this Agreement.

	6.07. Notices. Any notices sent to the parties may be sent to themat the following addresses by certified or registered mail:

	Landlord: Scientific Technology, Inc.