lmi10k031509ex7.htm


    Exhibit 10.7


      FIRST
AMENDMENT TO

      QUADRANT
BUSINESS PARK

      STANDARD
FORM MULTI-TENANT LEASE

      


      THIS
FIRST AMENDMENT TO QUADRANT BUSINESS PARK STANDARD FORM MULTI-TENANT LEASE (this
"Amendment") is dated for reference purposes the 27th day of
June, 2006, by and between STERLING REALTY ORGANIZATION
CO., a Washington
corporation, successor in interest to F. H. Braillard, doing business as
The Quadrant Business Park ("Landlord"), and D3 TECHNOLOGIES, INC., a California
corporation ("Tenant").

       

      RECITALS

      


      A.           Landlord
and Tenant entered into that certain Quadrant Business Park Standard Form
Multi-Tenant Lease dated June 23, 2005 (the "Lease"), for the lease of certain
premises consisting of approximately 9,230 square feet located at Building F,
8217 44th Avenue West, Suite D, Mukilteo, Washington 98275 (the "Initial
Premises").

       

      B.           Landlord
and Tenant desire to amend the Lease on the terms and conditions set forth in
this Amendment.

       

      NOW,
THEREFORE, for valuable consideration, the receipt and sufficiency cit which is
hereby acknowledged, the parties agree as follows:

       

      1.           Defined Terms. Unless
otherwise defined in this Amendment, capitalized terms used herein shall have
the same meaning as they are given in the Lease.

      


      2.           Expansion of Premises.
Commencing on September 1, 2006 (the "Expansion Space Commencement Date"), the
Initial Premises shall be expanded by 8,824 square feet of space located in
Suite A of Building F, 8217 44th Avenue West, Mukilteo, Washington 98275 (the
"Expansion Space"). The floor plan showing the exact location of the Expansion
Space is attached hereto as Exhibit A. All terms and
conditions of the Lease, as amended by this Amendment, shall apply to Tenant's
lease of the Expansion Space.

      


      3.           Expansion Space Term. Tenant's
lease of the Expansion Space shall commence on the Expansion Space Commencement
Date and shall continue through December 31, 2011 (the "Expansion Space Term").
Tenant shall have the right to extend the Expansion Space Term on the same terms
and conditions as those set forth in the last two sentences of Section 3 of the
Lease.

       

      4.           Expansion Space Base Rent. Monthly Base Rent for
the Expansion Space for the Expansion Space Term shall be as
follows:

      


      
        	
                          Term:

                 

              	
                Base
      Rent:

              	
                Total
      Per Month:

              
	
                9/1/06
      – 12/31/06

              	
                $5,000.00

              	
                $5,000.00
      + CAM

                 

              
	
                1/1/07
      – 12/31/07

              	
                $9,706.00

              	
                $9,706.00
      + CAM

                 

              
	
                1/1/08
      – 12/31/08

              	
                $9,998.00

              	
                $9,998.00
      + CAM

                 

              
	
                1/1/09
      – 12/31/09

              	
                $10,298.00

              	
                $10,298.00
      + CAM

                 

              
	
                1/1/10
      – 12/31/10

              	
                $10,606.00

              	
                $10,606.00
      + CAM

                 

              
	
                1/11/11
      – 12/31/11

              	
                $10,925.00

              	
                $10,925.00
      + CAM

              


      

       

      5.           Improvements. Landlord shall,
at Landlord's expense and on a turnkey basis, complete the tenant improvements
to the Premises as depicted on the Floor Plan using the same finishes that were
used in the Initial Premises provided, however, Tenant shall be responsible for
paying for any specific Tenant upgrades (such as, without limitation, upgrades
to finishes. structure and building systems). Tenant shall reimburse Landlord
for the cost of any such upgrades within ten (10) days
after receipt of an invoice from Landlord for such cost. Except for the
improvements to be completed by Landlord, Tenant is leasing the Expansion Space
in its “as is” condition.

      


      6.           
Ratification. Except as
expressly set forth in this Amendment, the terms and conditions of the Lease
shall remain in full force and effect and are hereby ratified by Landlord and
Tenant.

      


      IN
WITNESS WHEREOF, the parties have executed this Amendment as of the date first
written above.

      


      TENANT:

      


      D3
TECHNOLOGIES, INC.

      


      


      By:___________________________

      Ed
Knowles, CFO

       

      LANDLORD:

      


      STERLING
REALTY ORGANIZATION CO.

      


      


      By:
___________________________

      David
Schooler, President



       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      QUADRANT
BUSINESS PARK

      


      STANDARD
FORM-MULTI-TENANT LEASE

      


      1.           PARTIES  This lease
is made this 23rd day of
June, 2005 between F. H. Braillard, owner, d.b.a. THE QUADRANT BUSINESS PARK,
“Landlord”, and D3 TECHNOLOGIES, “Tenant”

      


      2.           PREMISES   Landlord
agrees to lease to Tenant, “The Premises” described in Exhibit “A” and
consisting of approximately 9,230 S. F. (exact square feet to be determined
within 30 days of execution and adjustments to this lease as required), of
office space.  The Premises are a part of “The Building”, which
Building is located on the “Real Property” described in Exhibit
“B”.

      


      3.           TERM  The term of
this lease shall be 65 months commencing on the 1st day of
August, 2005, and terminating on the 31st day of
December, 2010, unless sooner terminated as provided herein; or extended
pursuant to Paragraph twenty-two (22) herein.  Tenant may extend this
lease for four (4), one (1) one year periods, at terms to be agreed
to.  Tenant must notify Landlord, in writing, on hundred and eighty
(180) days prior to each Lease Extension.

      


      4.           POSSESSION

      
        	
                 
      

              	
                a.

              	
                If
      the Landlord, for any reason whatsoever, cannot deliver possession of the
      Premises to the Tenant on the commencement date of the term hereof, this
      Lease shall not be void or voidable, nor shall Landlord be liable to
      tenant for any loss or damage resulting therefrom, but in that event all
      rent shall be abated during the period between the commencement of said
      term and the time when the Landlord delivers
  possession.

              


      

      


      
        	
                 
      

              	
                b.

              	
                The
      Landlord shall permit the Tenant to occupy the Premises on or before July
      25th,
      2005, such occupancy shall be subject to all the provisions of the Lease
      and shall not advance the termination date of this
  Lease.

              


      

      


      
        	
                 
      

              	
                c.

              	
                If
      Tenant should cause any delay in Landlord’s completion of the Premises,
      thereby delaying tenant’s occupancy of the Premises beyond the
      commencement date of this Lease, then the Landlord, may at it option
      require the Tenant to commence payment of rent on the stated commencement
      date as specified herein.

              


      

      


      5.           RENT   Without prior notice or demand, Tenant agrees to pay Landlord as monthly rent for the
Premises the sum of: (SEE SCHEDULE
BELOW) on or before the fifth (5th) day of
the first full calendar month of the term hereof and a like sum on or before the
fifth (5th)
day of each and every successive calendar month thereafter during the term
hereof.  Rent for any period during the term hereof which is for less
than one (1) month shall be a prorated portion of the monthly installment
herein, based upon a thirty (30) day month.  Rent shall be paid
to Landlord at the address to which notices to Landlord are to be given without
deduction or offset 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.  In addition to base rent stated here, Tenant shall
pay additional rent as their share of the Common Area Costs and Expenses,
pursuant to Paragraph 8.

      


      
        	
                Term

              	
                Base
      Rent

              	
                CAM

              	
                Total
      Per Month

                 

              
	
                July
      25-December 31, 2005

              	
                $5,000.00

              	
                $1,938.00

              	
                $6,938.00

                 

              
	
                January
      1-December 31, 2006

              	
                $9,230.00

              	
                Current
      CAM Charges

              	
                $9,350.00
      + CAM

                 

              
	
                January
      1-December 31, 2007

              	
                $9,500.00

              	
                Current
      CAM Charges

              	
                $9,630.00
      + CAM

                 

              
	
                January
      1-December 31, 2008

              	
                $9,790.00

              	
                Current
      CAM Charges

              	
                $9,920.00
      + CAM

                 

              
	
                January
      1-December 31, 2009

              	
                $10,085.00

              	
                Current
      CAM Charges

              	
                $10,215.00
      + CAM

                 

              
	
                January
      1-December 31, 20010

              	
                $10,388.00

              	
                Current
      CAM Charges

              	
                $10,524.00
      + CAM

              


      

      


      6.           PREPAID RENT  Upon
execution of this Lease, Tenant shall deposit with Landlord $6,964.00 (the
“deposit”) as prepaid rent and shall be allocated as follows:

      


      a.           Prepaid
Rent

      $     0      
of the Deposit shall be applied to monthly rent due for the first month of the
Lease term.

      b.            $   6,938.00  
of the Deposit shall e applied to monthly rent due for the last month of the
Lease term.

      


      7.           USE   Tenant
shall use the Premises for engineering and general business offices, and other
lawful purposes as may be incidental thereto and hereby agrees that it has
determined to its satisfaction that the Premises can be used for those
purposes.  The Premises may not be used for any other purposes without
Landlord’s written consent. Outside storage, including without limitation,
trucks and other vehicles, is prohibited Landlord’s written
consent.  Tenant shall at his own expense and cost obtain any and all
licenses and permits necessary for its use of the Premises, and shall promptly
comply with all governmental orders and directives including but not limited to
those regarding the correction, prevention and abatement of nuisances in or
upon, or connected with, the Premises, all at Tenant’s sole
expense.  Tenant shall not permit any objectionable odors smoke, dust,
gas, noise or vibrations to emanate from the premises, nor take any other action
which would constitute a nuisance or would disturb or endanger any other tenants
of the building or buildings on the Property, or unreasonably interfere with
their use of their respective Premises.  In additional to any other
remedies Landlord may have for a breach by Tenant of the terms of this Section
7, Landlord shall have the right ot have Tenant evicted from the Premises. 
Without Landlord’s prior written consent, Tenant shall not receive, store or
otherwise handle any product, material or merchandise which is explosive or
highly inflammable.

      


      With
respect to any release of toxic or hazardous substances or wastes or other
condition of the Premises occurring on or after the date of the Lease and caused
by or resulting from the negligent acts or omissions or willful misconduct of
Tenant, its employee’s, authorized agents or contractors, and which release or
other condition violates the provisions of, or necessitates any removal,
treatment, or other remedial action under, any past, present, or future federal,
state or local statute or ordinance or any regulation, directive, or requirement
of any governmental authority with jurisdiction relating to protection of the
environment, Tenant agrees to defend, indemnify, and hold harmless
Landlord, its partners, employees, agents, and contractors, from and against any
and all losses, claims, liabilities, damages, fines, costs, and expenses
(including reasonable attorney’s fees and legal expenses) arising out of or
resulting there from.  The provisions of this paragraph shall survive
the termination or expiration of this Lease and the surrender of the Premises by
tenant, with respect to releases, or conditions occurring prior to such
termination, expiration, or surrender.  With respect to any release of
toxic or hazardous substances, or wastes or other condition of the Premises
occurring prior to the date of this Lease and caused by or resulting from the
negligent acts or omissions or willful misconduct of Landlord, it's agents, or
contractors, and which release or condition violates the provisions of, or
necessitates any removal, treatment, or other remedial action under, any past,
present, or future federal, state, or local statute or ordinance or any
regulation requirement or directive of any governmental authority with
jurisdiction relating to protection of the environment, Landlord agrees to
defend, indemnify, and hold harmless Tenant from and against any and all losses,
liabilities, damages, demands, fines, costs and expenses (including reasonable
attorney’s fees and legal expenses) arising out of or resulting there
from.

       

      Tenant
shall remove any sumps and clarifiers and any related Hazardous Materials
(“Hazardous Material” shall mean any petroleum and petroleum products, asbestos,
and PCB’s and any “hazardous substances”, “hazardous materials” or “hazardous
substances” in the Comprehensive Environmental Response, Compensation and
Liability Act of 1908, as amended, the Hazardous Materials Transportation Act,
as amended, or the Resource Conservation and Recovery Act, as amended, those
substances, materials and wastes which are defined as “hazardous wastes” or as
“hazardous substances” in the Washington health and safety codes or labor codes,
and “hazardous” or “toxic” in the regulations adopted or publication promulgated
pursuant to any of said laws in or about the Premises and associated with
Tenant’s use and occupancy thereof upon the expiration or earlier termination of
the lease.

      Notwithstanding
anything to the contrary contained herein, Landlord agrees that the Tenant shall
not be responsible for, and Landlord shall hold Tenant harmless against any
costs of cleanup or removal arising from or associated with any hazardous
material existing in, on or throughout Premises, as of the date Tenant occupies
the premises pursuant to the terms of this Lease.

      


      Tenant
shall not do or permit anything to be done in or about the Premises or bring or
keep anything therein which will in any way increase the existing rate or affect
any fire or other insurance upon the Building of any of its contents, or cause
cancellation of Insurance Policy covering the Building or any part thereof of
any of its contents.

      


      Tenant
shall not do or permit anything to be done in or about the Premises to be used
for any improper, immoral, unlawful, or objectionable purpose.  Tenant
shall not commit or suffer to be committed any waste in or upon the
Premises.  Tenant shall not place upon or install in windows or other
openings or exterior sides of doors or walls of the Premises any signs, symbols,
drapes or other materials without written consent of the Landlord.

      


      Landlord
gives Tenant and its employees, authorized representatives, and business invites
a nonexclusive right to reasonable use and enjoyment of the Common Areas,
subject to Landlord’s rights set forth herein.

      


      8.           TENANT’S SHARE OF COMMON COSTS AND
EXPENSES   Tenant shall pay as additional rent their share of
the common costs and expense of the operation and maintenance of the
Property.  Tenant’s Share is estimated to be equal to $0.21 for each
square foot of the Premises for the first accounting period of the Lease term,
which is currently $1,938.00 per month.

      


      An
accounting period is a calendar year.  The first accounting period
shall commence on the date the Lease term commences, and the last accounting
period shall and on the date the Lease term expires.  The first
accounting period of the Lease term shall be the first full calendar year of the
Lease term.  Landlord may adjust the Estimated Common Costs and
Expenses at the commencement of each new accounting period throughout the Lease
term, whereupon Tenant’s share shall be adjusted accordingly.  If at
any time during any accounting period, Landlord determines that he actual Common
Costs and Expenses for the remainder of such accounting period will vary by more
than five percent (5%) from the Landlord’s original estimate, Landlord may, by
written notice to Tenant, adjust the Common Cots and Expenses for the remainder
of such accounting period, and, accordingly, Tenant’s Share to be paid
hereunder.  If the actual Tenant’s Share of the Common Area Costs and
Expenses exceeds Tenant’s payments made, Tenant shall pay to Landlord the
deficiency within thirty (30) days of Tenant’s receipt of such statement of
deficiency.  If Tenant’s payments made during the accounting period
exceed the actual Tenant’s Share, Landlord may, at Landlord’s sole discretion,
pay excess to Tenant at the time Landlord furnishes said statement to credit the
excess toward Tenant’s payments of the Tenant’s share of the next succeeding
accounting period.

      


      Common
Costs and Expenses shall include the “Property Taxes” and “Operating
Expenses”.  Property Taxes shall include, without limitation, all real
and personal taxes, charges and assessments imposed on the Premises, Building,
Property or Common Areas, and any other taxes, charges or assessments assessed
against the Landlord, Premises, Building, or Common Area in connection with the
use or occupancy of the Premises at any time during the term of this
Lease.  “Operating Expenses” shall mean the annual Operating Expenses
which include, without limitation, all operating costs incurred by Landlord or
on behalf of the Premises in maintaining, operating, and providing services to
and for the Building, Property, and Common Areas, including, without
limitations, the costs of maintenance, utilities, supplies, insurance, service
contracts, advertising, independent contractors, property management, a reserve
account for the replacement of capital items, compensation of all persons who
perform regular and recurring duties connected with the Building, Property, and
Common Areas, its equipment, utilities, sprinkler systems, and operation
thereof, and an allowance to Landlord or Landlord’s agent for supervision of
such maintenance, operation, services and repairs of the Building, Property, and
Common Areas and any and all assessments charges to Landlord or the property, in
connection with the operation, repair and maintenance of the Common
Areas.

      


      9.           REPAIR
RESPONSIBILITY

      a.           By
taking possession of the Premises, Tenant shall be deemed to have accepted the
Premises as being in good, sanitary order, condition, and
repair.  Tenant shall supply a punch list, within five (5) days of
possession that will describe any exception items for Landlord to repair at
Landlord’s expenses.  Tenant shall, when and if needed, at Tenant’s
sole expense, make repairs to the Premises and every part thereof including
electrical, plumbing, lighting, heating, and air conditioning.  Tenant
shall surrender the Premises to Landlord in good condition upon the expiration
or sooner termination of this Lease; provided however, that Tenant shall not be
held responsible for damage to the Premises from causes beyond the reasonable
control of Tenant, to the extent covered by Landlord’s fire and extended
coverage insurance policy, or for ordinary wear and tear.  Except as
specifically provided in an addendum, if any, to this Lease, Landlord shall have
no obligation whatsoever, to alter, remodel, improve, repair, redecorate or
paint the Premises or any part thereof and the parties hereto affirm that
Landlord has made no representations to Tenant respecting the condition of the
Premises or the Building except as specifically herein set forth.

      


      b.           Landlord,
at its option for the benefit of the Tenant and to assure proper maintenance of
the heating and air conditioning, may engage a maintenance firm to maintain the
heating, ventilation and air conditioning system (if any) servicing the
Premises.  Tenant shall pay to Landlord, or, at Landlord’s election,
directly to the maintenance firm, Tenant’s share of the cost of such
maintenance.

      


      c.           Except
as provided herein, Tenant shall, at its expense clean, maintain and keep in
good repair throughout the term of this Lease the entire Premises and
appurtenances, including without limitation, signs, windows, doors, skylights,
and trade fixtures including the cleaning of glass and woodwork on both sides of
the interior wall separating their Premises from the Interior Common area do the
Building.

      


      d.           Notwithstanding
the provisions of Article 9a. above, but subject to the provisions of Paragraph
15, Landlord shall repair and maintain the structural portions of the Building,
including the basic plumbing, air conditioning, heating, and electrical systems,
installed or furnished by Landlord only in so for as such heating, air
conditioning and electrical system provide service to the entire Building,
unless such maintenance and repairs are caused in part or in whole by the act,
neglect, fault or omission of any duty by the Tenant, its agents, servants,
employees or invitees, in which case Tenant shall pay to Landlord the reasonable
costs of such maintenance and repairs.  Landlord shall not be liable
for any failure to make any such repairs or to perform any maintenance unless
such failure shall persist for an unreasonable time after written of the need of
such repairs or maintenance is given to Landlord by Tenant.  Except as
provided in Articles 15 and 16 hereof, there shall be no abatement of rent and
no liability by Landlord by reason of any injury to or interference with
Tenant’s business arising from the making of any repairs or improvements in or
to any portion of the Building or the Premises or to fixtures, appurtenances and
equipment therein.  Tenant waives the right to make repairs at
Landlord’s expense under any law, statute, or ordinance now or hereafter in
effect.

       

      
        10.           MAINTENANCE AND
MANAGEMENT

      

      a.           Landlord
shall maintain the Common Areas in good condition at all times and shall have
the right to:

      
        	
                 
      

              	
                1.

              	
                Establish
      and enforce reasonable rules and regulations applicable to all tenants
      concerning the maintenance management, use and operation of the
      Building.

              


      

      
        	
                 
      

              	
                2.

              	
                Make
      changes, to the Common Areas including, without limitation, structural and
      decorating changes in interior common area, the location of entrances,
      exits and parking areas.

              


      

      


      b.           Common
Areas, as defined in this Lease, mean all parts of the interior and exterior of
the Building, and related land areas and facilities outside the individual
Premises but constituting a part of the Building.  Common Areas
include, without limitation:

      
        	
                 
      

              	
                1.

              	
                The
      property upon which the Premises are located, pedestrian walkways,
      landscaped areas, sidewalks, loading areas and roads located on the
      Property.

              


      

      
        	
                 
      

              	
                2.

              	
                The
      structural parts of the Building and other improvements in which the
      Premises are located, which structural parts include only the foundation,
      bearing and exterior walls (excluding glass and doors),

                subflooring,
      and roof (excluding skylights).

              


      

      
        	
                 
      

              	
                3.

              	
                The
      unexposed electrical, plumbing, and sewage systems lying outside the
      Premises.

              


      

      
        	
                 
      

              	
                4.

              	
                External
      window frames, gutters, and downspouts on the Building in which the
      Premises are located.

              


      

      
        	
                 
      

              	
                5.

              	
                Those
      cretin open areas, landscaped areas, and roadways, utility systems and
      facilities located outside the Premises and Building but constituting a
      party of the Property.

              


      

      


      c.           Landlord
shall not be liable, nor shall the rent be abated because of services caused by
accident, strike, necessity for repairs, or for any other reason beyond its
control.

      


      11.           UTILITIES.    Tenant
shall pay, prior to delinquency, for heat, light, water and other utility
services supplied to the Premises and will pay any required
deposits.  Water sewer and other utility charges for which separate
billings are not available shall be prorated by Landlord based on the ratio of
the number of square feet in the Building, provided, however, that Landlord may
increase Tenant’s prorata portion of any such charges to reflect unusual or
excessive utility system demands.  Separate charges may be made to
reflect unusual or excessive utility system demands where not separately
metered.

      


      12.           ALTERATIONS AND ADDITIONS BY
TENANT.    Tenant may make, at its sole expense, such
additional improvements or alterations to the Premises, which it may deem
necessary or desirable including altering and/or adding, relocating or removing
restrooms.  However, any repairs or new construction by Tenant shall
be done in conformity with plans and specifications approved in writing by
Landlord.  All work performed shall be done in a workmanlike manner
and with materials (where not specifically described in the specifications) of
the quality and appearance standard in the Building and shall become the
property of the Landlord.  Landlord may require Tenant to remove any
improvements or alterations at the expiration of the term, such removal to occur
at Tenant’s sole cost and expense.  At the end of the lease period,
all improvements made by Tenant shall become the property of the Landlord and
shall remain on the Premises.

      


      13.           LIENS.    Tenant
shall keep the Premises and the property in which the Premises are situated free
from all liens arising out of any work performed, materials furnished or
obligations incurred by Tenant.  Landlord may require, at Landlord’s
sole option, that Tenant shall provide to Landlord, at Tenant’s sole cost and
expense, a lien and completion bond in an amount equal to one and on-half (1
1/2) times any and all estimated cost of any improvements, additions, or
alterations to the Premises, to insure Landlord against any liability for
mechanics’ and materialmen’s liens and to insure completion of the
work.

      


      14.           INSURANCE.    Landlord
shall procure throughout the term of the lease fire and extended coverage
insurance in the amount of the full insurable value of the Building containing
the Premises.  Tenant assumes the risk of loss of its furnishings,
trade fixtures, equipment and supplies which shall not be insured under the
above policy.  Tenant agrees to procure and maintain throughout the
term of the Lease at Tenant’s sole cost and expense, liability insurance
underwritten by a form satisfactory to Landlord covering all persons and
property on Premises in connection with Tenant’s business in the following
amounts:

       

      
        	
                 
      

              	
                a.

              	
                $1,000,000
      combined Single Limit for Bodily Injury and Property Damage
    or

              


      

      
        	
                 
      

              	
                b.

              	
                $500,000/$1,000,000
      for Bodily Injury and $250,000 each occurrence for Property
      Damage.

              


      

      Landlord
shall be named as an additional insured and shall be furnished with a
certificate of insurance.  Such coverage shall be primary and
noncontributing with any insurance carried by the Landlord.  The
liability insurance policy shall contain endorsements requiring 90 days notice
to Landlord prior to and cancellation or any reduction in amount of the
coverage.  Tenant as a material part of the consideration to be
rendered to Landlord, hereby agrees to defend, indemnify and hold harmless
Landlord against any and all claims, costs and liabilities, including reasonable
attorney’s fees, arising from Tenant’s use of the Premises, or from the conduct
of Tenant’s business, or from any activity, work or things done, permitted of
suffered by Tenant’s agents, contractors or employees.

      


      15.           DESTRUCTION.    If
the Premises or the Building is destroyed or damaged by fire, earthquake or
other casualty to the extent that they are untentatable in whole or in part,
then at Landlord’s option, Landlord may proceed with reasonable diligence to
rebuild and restore the Premises or such part thereof, provide that within
thirty (30) days after such destruction or injury landlord shall notify Tenant
in writing of Landlord’s intention to do so.  During the period from
destruction or damage until restoration, the rent shall be abated in proportion
to the share of the Premises, which Landlord determines is unfit for
occupancy.  If damage is due to the fault or neglect of Tenant or its
agents, employees, invitees or licensees, there shall be not abatement of
rent.  If Landlord shall fail to notify Tenant, then this Lease shall,
at the expiration of the time for giving of notice as herein provided, be deemed
terminated and at an end.  Landlord shall not be required to repair
any injury or damage by fire or other cause, or to make any repairs or
replacements of any panels, decoration, office fixtures, paintings, floor
covering, partitions, or any other property installed in the Premises by
Tenant, Tenant’s personal property or any inconvenience or annoyance
occasioned by such damage, repair, reconstruction or restoration.

      


      16.           CONDEMNATION.     If
all or part of the Premises are taken under power of eminent domain, or sold
under the threat of the exercise of said power, this Lease shall terminate as to
the part so taken as of the date of the condemning authority takes
possession.  If more than 25% of the floor area of Premises is taken
by condemnation, Tenant may by written notice within ten (10) days after notice
of such taking, or absent of such notice, within ten (10) days after the
condemning authority takes possession terminate this Lease as of the date the
condemning authority takes possession.  If Tenant does not so
terminate, this lease shall remain in effect as to the portion of the Premises
remaining except that the rent shall be reduced in the proportion that the floor
area taken bears to the original total floor area, provided that circumstances
makes abatement based on the floor area unreasonable, the rent shall abate by a
reasonable amount to be determined by Landlord.  In the event Tenant
elects not to terminate the Lease with respect to any part of the Premises
remaining after condemnation, Landlord shall have no responsibility to restore
such part of the Premises to its condition prior to condemnation.  Any
award for the taken of all or a part of the Premises under the power of eminent
domain, including payment made under threat of the exercise of such power, shall
be the property of the Landlord, whether made as compensation for diminution in
value or the leasehold or for the taking of the fee or as severance damages,
provided that Tenant shall be entitled to such compenstion as may be separately
awarded or recoverable by Tenant in Tenant’s own right for the loss of or damage
to Tenant’s trade fixtures and removable personal property.  Landlord
shall not be liable to Tenant for the Loss of all or any part of the Premises
taken by condemnation.

       

      17.           ASSIGNMENT AND
SUBLETTING.     Tenant shall not assign, let or
sublet this Lease or any part thereof, either by operation of law or otherwise,
or permit any other party to occupy all or any part of the Premises without
first obtaining written consent of Landlord.  This Lease shall not be
assignable by operation of law.  Landlord shall not unreasonably
withhold approval of the proposed assignee whose credit worthiness is comparable
to that of Tenant.  Landlord shall not unreasonably withhold approval
of the proposed assignee whose credit worthiness is comparable to that of
Tenant.  Landlord reserves the right to recapture the Premises, or
applicable portion thereof, in lieu of giving its consent by notice given to
Tenant within twenty (20) days after receipt of Tenant’s written request for
assignment or subletting.  Such recapture shall terminate this Lease
as to the applicable space effective on the prospective date of assignment or
subletting, which shall be the last day of a calendar month and not earlier than
sixty (60) days after receipt of the Tenant’s request. If Landlord elects not to
recapture and thereafter gives its consent, Landlord and Tenant agree that
Landlord may charge Tenant a reasonable sum, not to exceed $500.00, to reimburse
Landlord for legal and administrative costs incurred in accommodating this
Assignment and/or Subletting.  Tenant and Landlord to share equally in
any rental and other proceeds paid to Tenant in excess of the rent to be paid to
Landlord under the terms of this Lease.  If Tenant is a corporation,
and transfer of this Lease from Tenant by merger, consolidation or liquidation
or any change in the ownership, or power to vote the majority of the outstanding
voting stock of Tenant, said transfer shall constitute an assignment for the
purposes of this section.  If Tenant is a partnership, any other
change in the individuals or entities of which the partnership is composed shall
constitute an assignment for purposes of this section.  Subject to the
provisions above, this Lease shall be binding upon and inure to the benefit of
the parties, and successors and assigns.

      


      18.           DEFAULT.     The
occurrence of any one or more of the following events shall constitute a
material default and breach of the Lease by the Tenant.

      


      1.           Vacation
or abandonment of any portion of the Premises.

      2.           Failure
by Tenant to make any payment required as and when due, where such failure shall
continue after five (5) business days written notice form
Landlord.


      3.           Failure
by Tenant to observe or perform any of the covenants, conditions or provisions
of this Lease, other than the making of any payment, where such failure shall
continue for a period of thirty (30) days after written notice form
Landlord.


      4.           a.
(I) the making of any general assignment or general arrangement for the benefit
of creditors, (II) the filing by or against Tenant of a petition in bankruptcy,
including reorganization or arrangement, unless, in the case of a petition filed
against Tenant, the same is dismissed within thirty (30) days; (III) the
appointment of a trustee or receiver to take this Lease; (IV) the seizure by any
department of any government or any officer thereof of the business or property
of Tenant; (V) adjudication that Tenant is bankrupt.

      
        	
                 
      

              	
                b.
      Notice by Tenant of Default.  Tenant shall notify Landlord
      promptly of any default not by its nature necessarily known to
      Landlord.

              


      

      
        	
                 
      

              	
                c.
      Default by Landlord.  Landlord shall not be
      in default unless Landlord fails to perform its obligations within thirty
      (30) days after notice by Tenant in writing specifying wherein Landlord
      has failed to perform; provided that if the nature of Landlord’s
      obligation is such that more than thirty (30) days are required for
      performance, Landlord shall not be in default if Landlord commences
      performance within thirty (30) days of Tenant’s notice and thereafter
      completes Landlord’s performance within a reasonable
  time.

              


      

       

      19.           REMEDIES IN
DEFAULT.     In event of any default or breach,
Landlord may, at any time without waiving or limiting any other right or remedy,
reenter and take possession of the premises or terminated this Lease, or pursue
any remedy allowed by law or equity.  Tenant agrees to pay Landlord
the cost of recovering possession of the Premises, the expenses or reletting,
and any other costs or damages arising out of Tenant’s default including,
without limitation, the costs of removing persons and property from the
Premises, the costs of preparing or altering the Premises for reletting,
broker’s commissions and legal fees not withstanding any reentry or termination,
the liability of Tenant for the rent provided for therein shall not be
extinguished for the balance of the term of this Lease, and Tenant covenants and
agrees to make good to the Landlord any deficiency arising form reletting the
Premises at a lesser rent than herein agreed to.  Tenant shall pay
such deficiency each month as the amount thereof as ascertained by the
Landlord.

      
20.           ACCESS.     Tenant
shall permit Landlord to enter the premises at reasonable times for any
reasonable purpose including but not limited to inspecting, altering and
repairing the Premises and ascertaining compliance with provisions thereof by
Tenant, but nothing herein shall be construed as imposing any obligation on
Landlord to perform any such work or duties.  Landlord may also show
the premises to prospective purchasers or tenants at reasonable times, provided
that Landlord shall not interfere with Tenant’s business operation.


       

      21.           WAIVER OF
SUBROGATION.     Tenant and Landlord each
releases and relieves the other and waives its entire right of recovery against
the other for loss or damage arising out of incident ot the perils covered by
fire and extended coverage, and liability insurance endorsements approved for
use in Washington which occur in, or about the Premises, weather caused by the
negligence of either party, their agents employees, or otherwise.

       

      Each party shall obtain from its insurer(s) provisions
permitting waiver of any claim against the other party for loss or damage within
the scope of the above insurance.  The release and waiver of recovery
contained herein shall be limited by, and shall be coextensive with; the waiver
provisions of the Insurance policies procured by and maintained by the parties
pursuant to this Lease, if either Landlord or Tenant is unable to obtain its
insurer’s permission to waiver of any claim against the other party, Landlord or
Tenant shall promptly notify the other party of such inability.

       

      22.           HOLDOVER
TENANCY.     If (without execution of a new
Lease or written extension) Tenant shall hold over after the expiration of the
term of this Lease with Landlord’s written consent, Tenant shall be deemed to be
occupying the premises as a Tenant form month to month which tenancy may be
terminated as provided by law.  If tenant shall hold over after
expiration of the term of the Lease without Landlord’s written consent, Tenant’s
rent payable hereunder shall be increased by fifty (50) percent over Tenant’s
rent required in the last month of the term of this Lease.  During any
such tenancy, Tenant agrees to be bound by all of the terms, covenants and
conditions as specified, in so far as applicable.

       

      23.           COMPLIANCE WITH
LAW.     Tenant shall not use Premises or permit
anything to be done in or about the Premises which will in any way conflict with
any law, statute, ordinance or governmental rule or regulation currently in
force or which may hereafter be enacted or promulgated.  Tenant shall,
at its sole cost and expense, promptly comply with all laws, statutes,
ordinances and governmental rules, regulations or requirements now in force or
which may hereafter be in force and with the requirements of any board of fire
insurance underwriters or other similar bodies now or hereafter constituted,
relating to, or affecting the conditions, use or occupancy of the Premises,
excluding structural changes not related to or affected by Tenant’s improvements
or acts.  The Judgment of any court of competent jurisdiction of the
admission of Tenant in any action against Tenant, whether Landlord be a party
thereto or not that Tenant has violated any law, statute, ordinance or
governmental rule, regulation or requirement, shall be conclusive of the fact as
between the Landlord and Tenant.

       

      24.           RULES AND
REGULATIONS.     Tenant shall faithfully observe
and comply with the rules and regulations that Landlord shall from time to time
promulgate.  Landlord reserves the right from time to time to make
reasonable modifications to said rules.  The additions to those rules
shall be binding upon delivery of a copy of them to Tenant.  Landlord
shall not be responsible to Tenant for the nonperformance of any said rules by
any other Tenants or occupants.  At this date June 23, 2005, there are
no written rules or regulations in effect.  The only rule in place is
that no Tenant may park any vehicle in front of any roll-up door that is not
part of there demised space.

       

      25.           PARKING.     Tenants
shall have the right to use, in common with other tenants and occupants of the
Building, the parking facilities of Building subject to the rules and
regulations and any charges of Landlord for such parking facilities which may be
established or altered by Landlord at any time or from time to time during the
term hereof.

       

      26.           MORTGAGES, DEEDS OF
TRUST, PURCHASERS (ESTOPPEL
STATEMENT).      It is understood and
agreed that Landlord may sell, mortgage or grant deeds of trust with respect to
the Premises, the Building or Property.  Tenant agrees to execute,
within twenty (20) days following Landlord’s request, such reasonable
certificates as may required by a mortgage or trust deed beneficiary stating
that the Lease is in full force and effect and the dates to which the rent and
charges have been paid.  Upon a foreclosure or conveyance in lieu or
foreclosure, and a demand by Landlord’s successor, Tenant shall attorn to and
recognize such successor as Landlord under this Lease.

       

      27.           SUBORDINATION.     Tenant
agrees that this Lease and all renewals and modifications, supplements,
consolidations and extensions therefore shall be subordinate to the Lien of any
mortgages or deeds of trust now or hereafter placed against the Property or
Building to which the Premises comprise a part, provided, however in the event
that any mortgagee or beneficiary shall so elect, Landlord reserves the right to
subordinate this Lease to said mortgage or deeds of trust upon the terms
required by such mortgagee or beneficiary.  Not withstanding the
above, so long as Tenant is not in default herein, this Lease shall remain in
full force and effect for the full term hereof.

       

      28.           TENANTS
PROPERTY.     Furnishings, trade fixtures and
equipment installed by Tenant shall be the property of the Tenant.  On
termination of the Lease, Tenant shall remove any such
property.  Tenant shall repair or reimburse Landlord for the cost of
repairing any damage to the Premises resulting from the installment or removal
of such property.

       

      29.           REMOVAL OF
PROPERTY.     All personal property of Tenant
remaining in the Premises after reentry or termination of this Lease shall
conclusively be deemed abandoned and may be removed by
Landlord.  Landlord may store such property in any place selected by
Landlord including but not limited to a public warehouse, at the expense and
risk of the owner thereof, with the right to sell stored property without notice
to Tenant.  The proceeds of such sale shall be applied first to the
costs of such sale, second to the payment of the cost of removal and storage, if
any and third to the payment of any other sums of money which may then be due
from Tenant to Landlord under any of the terms hereof, and balance if any to be
paid to Tenant.

       

      30.           PERSONAL PROPERTY
TAXES.     Tenant
shall pay, or cause to be paid, before delinquency, any and all personal
property taxes taxes levied or assessed, which become payable during
the term hereof upon Tenant’s leasehold improvements, equipment, furniture,
fixtures and personal property located in the Premises.  In the event
any or all of the Tenaors Leasehold improvements, equipment, furniture, fixtures
and personal property shall be assessed and taxed with the Building, Tenant
shall pay to Landlord its share of such taxes within ten (10) days after
delivery to Tenant by Landlord of a statement in writing setting forth the
amount of such taxes.

      
         

        31.           NOTICES.     All
notices under this Lease shall be in writing and shall be effective when mailed
or delivered to Landlord, c/o:

        


        F. H.
Braillard QUADRANT

        BUSINESS
PARK

        P.O. Box
1000 Muldteo, WA

        98276
Phone 425-366-8048

        


        Or to
Tenant at the following address, or to such other address as either party may
designate to the other in writing from time to time.

        


        D-3
Technologies

        4838
Ronson Court

        San
Diego, CA

        92111
Phone 868-

        671-1686

        


        32.           GENERAL
PROVISIONS.

        a.           Plats
and Riders.  Clauses, plats and riders, if any signed by Landlord and
Tenant and endorsed on or affixed to this lease are part Thereof.

        


        b.           Waiver.  The
waiver by either party to any term covenant or condition herein contained shall
not be deemed to be a waiver of such term covenant or condition on any
subsequent breach of the same or any other term covenant or condition herein
contained.  The subsequent acceptance of rent hereunder by Landlord
shall not be deemed to be a waiver of any breach by Tenant to any term, covenant
or condition of this Lease, other than the failure of the Tenant to pay the
particular rental so accepted, regardless of Landlord’s knowledge of such
preceding breach at the time of acceptance of rent.  No covenant, term
or condition of this Lease shall be deemed to have been waived by Landlord
unless such waiver shall be in writing and signed by Landlord’s duly authorized
representative.

        


        c.           Joint
Obligation.  If there be more than on Tenant the obligation hereunder
imposed upon Tenants shall be Joint and several.

        


        d.           Marginal
Headings.  The marginal headings and section titles in the Sections of
this Lease are not part of this Lease and shall have no effect upon the
construction or interpretation of any part hereof.

        


        e.           Time.
Time is of the essence of this Lease and each and all of its provisions in which
performance is a factor.

        


        f.           Recordation.  Tenant
shall not record this Lease or a short form memorandum hereof without the prior
written consent of the Landlord.

        


        g.           Late
Charges.  Tenant acknowledges that late payment by Tenant to Landlord
of rent or other sums due hereunder will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of which would be extremely
difficult and impractical to ascertain.  Such costs include, but are
not limited to, processing and accounting charges, and late charges which may be
imposed on Landlord by the terms of any mortgage or trust deed covering the
Premises; therefore, in the event Tenant should fail to pay any Installment of
rent or any other sum due hereunder within five (5) days after such amount is
due, Tenant shall pay to Landlord as additional rent a late charge equal to 5%
of each installment or the sum of $50.00 per month, whichever is
greater.  Tenant will pay a $25.00 charge to Landlord for each
returned check.  In addition, any sums due to Landlord under terms of
this Lease which is not paid when due shall bear interest at the rate of 18%
from the date the same becomes due and payable until paid.

        


        h.           Prior
Agreements.  This Lease contains all the agreements of the parties
hereto with respect to any matter covered or mentioned in this Lease, and no
prior agreements or understandings pertaining to any matters shall be effective
for any purpose.  No provision of this lease may be amended or added
to except by an agreement in writing signed by the parties hereto or their
respective successors in Interest.  This Lease shall not be effective
or binding on any party until fully executed by both parties
hereto.

        


        i.           Inability
to Perform.  This Lease and the obligations of the Tenant hereunder
shall not be affected impaired because the Landlord is unable to fulfill any of
its obligations hereunder, or is delayed in doing so, if such inability is
caused by reason of strike, labor trouble, acts of God or any other cause beyond
the reasonable control of the Landlord.

        


        j.           Attorney’s
Fees.  If either party requires the services of an attorney in
connection with enforcing the terms of this Lease or in the event suit is
brought for the recovery of any rent due under this Lease or for the breach of
any covenant or condition of this Lease, or for the restitution of said Premises
to Landlord and/or eviction of Tenant during said term or after the expiration
thereof, the prevailing party will be entitled to reasonable sum for attorney’s
fees, witness fees and court costs, including costs of appeal.

         

        k.           Sale
of Property.  In the event of any sale of the Building or Property, or
any assignment of this Lease by Landlord, Landlord shall be and hereby entirely
freed and retieved of all liability under any and aU of Its covenants and
obligations contained in or derived from this Lease arising out of an act,
occurrence, or omission accruing after the consummation of such sale or
assignment; and the purchaser or assignee of such sale or assignment or any
subsequent sale or assignment; and the purchaser or assignee of such sale or
assignment or any subsequent sale or assignment of Lease, the Property or
Building, shall be deemed, without any further agreement between the parties or
their successors in Interest or between the parties and any such purchaser or
assignee have assumed and agreed to carry out any and all of the covenants and
obligations of the Landlord under this Lease.

        


        l.           Name.  Tenant
shall not use the name of the Building or of the development of which
the Building is situated for any purpose other than as an address of the
business to be conducted by the Tenant in the Premises.

        


        m.           Severability.  Any
provision of this Lease which shall prove invalid, void or Illegal shall in no
way affect, Impair or invalidate any other provision here of and such other
provisions shall remain in full force and effect.

        


        n.           Cumulative
Remedies.  No remedy or election hereunder shall be deemed exclusive
but shall, wherever possible, be cumulative with all other remedies at Jaw or en
equity.

        


        o.           Choice
of Law.  The laws of the State of Washington shall govern this
Lease.

        


        p.           Light,
Air and VieW.  Landlord does not guarantee the continued present
status of light, air, or view over any improvements adjoining or in the vicinity
of the Building.

        


        q.           Interpretation.  This
Lease has been submitted to the scrutiny of all parties hereto and their
counsel, if desired, and shall be given a fair and reasonable interpretation in
accordance with the words hereof, without consideration or weight being given to
its having been drafted by any party hereto or its counsef.

        


        r.           Keys.  Upon
termination of this Lease, Tenant shall surrender all keys to the Premises to
Landlord at the place then fixed for payment of rent.  Tenant shall
inform Landlord of all combination locks, safes and vaults, if any in the
Premises.

      

       

      33.           SIGNS.     Signage
is allowed per individual suites and must be approved in writing by Landlord
prior to installation.

       

      34.           NORMAL BUSINESS
HOURS.     If use defined under section 7 is a
retail activity, Tenant agrees to maintain normal business hours consisted with
similar retail business in the area.  Failure to maintain normal
business hours shall be deemed a default under the terms of this
Lease.

      


      35.           AUTHORITY OF
PARTIES.

      a.           Corporate
Authority.  If Tenant is a corporation each individual executing this
Lease on behalf of said corporation represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of said corporation, in
accordance with a duly adopted resolution of the board of directors of said
corporation or in accordance with the by-laws of said corporation, and that this
Leas is binding upon said corporation and all its officers in accordance with
its terms.

      


      b.           Limited
Partnerships.  If the Landlord herein is a Limited partnership, it is
understood and agreed that any claims by tenant ion Landlord shall be limited to
the assets of the limited partnership, and furthermore, Tenant expressly waives
any and all rights to proceed against the individual partners or the officers,
directors or shareholders of any corporate partner, except to the extent of
their interest in said limited partnership.

      


      36.           RELOCATION.      To
accommodate the changing needs of the tenants in the park, Tenant agrees, if
requested, to cooperate with Landlord in relocating to different premises within
the park to help Landlord meet those changing space needs.  Any
relocation will be done so as to minimize the impact on the Tenant, and the
costs of said relocation would be the responsibility of the
Landlord.  Tenant agrees if requested to cooperate with landlord in
evaluating proposals to relocate to different premises within the park to help
Landlord meet those changing space needs. Tenant agrees not to unreasonably
decline any such requests to relocate.  However, Tenant reserves the
right to decline any such request when the proposed relocation will, in the
opinion of Tenant, have a negative impact upon the conduct of its
business.

      


      37.           COMMISSIONS.     No
commissions are payable in connection with this transaction.

      


      38.           PERSONAL
GUARENTEE.     This lease is entered into by the
Landlord conditioned upon an in reliance upon the personal guarantee of the
terms and conditions contained herein by the persons identified as Personal
grantors on the signature page attached hereto.

      


      39.           EXHIBITS.    A-The
Premises, B-Legal Description, C-Landlord Provided Tenant
Improvements.

      


      THIS
LEASE IS SUBJECT TO ACCEPTANCE BY THE LANDLORD.

      


      IN
WHITNESS HEREOF, the parties hereto have executed this Lease the date and year
above written.

      


      
        	
                Landlord

                 

              	
                Tenant

              
	
                F.
      H. Braillard

              	
                D-3
      Technologies

              
	
                QUADRANT
      BUSINESS PARK

              	
                4838
      Ronson Court

              
	
                PO
      Box 1000

              	
                San
      Diego, CA

              
	
                Mukilteo,
      WA  98275

              	
                92111

              
	
                Phone
      425-355-9048

                 

              	 
      
	
                __________________________________

              	
                ________________________________

              
	
                LANDLORD

              	
                TENANT

              
	
                Date:
      6/24/05

              	
                Date:
      27, June 2005