Document:

Prepared by MerrillDirect

EXHIBIT 10.18

Datakey,
Inc.

407 West Travelers Trail

Burnsville, MN  55337

Mr.
Ray Lipkin

Dear
Mr. Lipkin:

          Datakey and
you have recently arrived at an understanding under which you have agreed to
loan Datakey up to $1,000,000.  This
letter is intended to formalize this understanding as follows:

          1.       The maximum aggregate of any loans you
will make to Datakey under this Agreement will be $1,000,000.  The minimum loan amount will be $250,000.

          2.       The funding of a particular loan may be
effected by letter or fax, signed by Datakey’s CEO or CFO, requesting a
transfer of funds to a depository of Datakey’s choosing.  The transfer of funds will be conditional
upon your receipt of a promissory note as described in Paragraph 4 below.

          3.       No new funds may be borrowed after March
31, 2001, whether or not all of the $1,000,000 has been borrowed as of such
date.

          4.       Each loan will be evidenced by a separate
promissory note in the form attached to this letter.  The promissory note will be payable on demand six months after
any transfer of funds to Datakey has been completed, as set forth in Paragraph
2 above.  The promissory note may be
repaid at any time, but any repayment must be made in full, including accrued
interest to the date of repayment.

          5.       Interest will accrue at the annual rate
of 12% for the first three months during which any promissory note remains
outstanding.  If a promissory note
remains unpaid for more than three months, interest will accrue at an annual
rate of 15% until the promissory note is paid in full.

          6.       Any loan made pursuant to this letter
Agreement will be unsecured.

          7.       Each promissory note will contain
customary default provisions.  All
reasonable collection costs will be assumed and paid for by Datakey.

          8.       You may have been provided and/or you may
in the future be provided with material non-public information relating to
Datakey.  You should be aware that the
receipt of material non-public information may restrict your ability to trade
in Datakey stock.

          Accompanying
this letter is our written request to you to transfer $500,000 to the
depository described therein.  We are
also enclosing Datakey’s Promissory Note which incorporates those terms set
forth above.  The Promissory Note is
dated January 25, 2001, the anticipated date of the transfer.  Should the transfer not be effected on
January 25, we would ask that you destroy the Promissory Note and we will
messenger a new Promissory Note dated as of the date of the funds transfer.

          If the
foregoing is acceptable, please sign two copies of this letter and forward a
signed copy to me.

                                      
                                Very truly
yours,

 

                                      
                                /s/ Alan G.
Shuler

                                          
                            Alan G.
Shuler, Vice President and CFO

 

          I have read
the above letter and am agreeable to the terms set forth therein.

 

                                      
                                /s/ Raymond
A. Lipkin

                                          
                            Ray Lipkin

 

UNSECURED
PROMISSORY NOTE

	

$500,000

  	

January 26, 2001

  

          FOR VALUE RECEIVED, Datakey, Inc. (“Maker”)
promises to pay to Ray Lipkin, and his heirs, assigns and
successors (“Payee”), at such place as may be designated by Payee from time to
time, the principal sum of Five Hundred Thousand Dollars ($500,000), together
with interest accruing at an annual rate of twelve percent (12%) for the three
months ending April 25, 2001 and at an annual rate of fifteen percent (15%)
thereafter until this Promissory Note (“Note”) is paid in full.  The entire principal balance and any unpaid
accrued interest due on this Note shall be paid in full on or before July 25,
2001.

          Maker may prepay all or any portion of
the outstanding balance of this Note at any time and from time to time without
premium or penalty.

          The occurrence of any one or more the
following events constitutes an Event of Default under this Note:

          (a)      Maker
fails to pay this Note when due;

          (b)      Maker
(i) is unable to pay Maker’s debts as they mature or admits in writing Maker’s
inability to pay Maker’s debts as they mature; (ii) makes a general assignment
for the benefit of creditors; (iii) is adjudicated involuntarily bankrupt or
voluntarily files a petition for bankruptcy; (iv) applies for the appointment
of a receiver or a trustee for any of its property or assets or permits the
appointment of a receiver or trustee who is not discharged within a period of
thirty (30) days after such appointment; or (v) has entered against it an order
in a foreclosure, execution and levy, or similar proceeding involving a
substantial part of Maker’s assets; or

          (c)      Substantially
all of Maker’s assets or a controlling
equity interest in Maker is sold in a transaction or a number of related
transactions.

          Upon the occurrence of an Event of
Default hereunder, at the option of the Payee, Payee may (i) declare the
entire outstanding balance of this Note immediately due and payable; and (ii)
exercise any of its other rights and remedies under applicable law.  No act, omission or delay on the part of the
Payee to exercise any of Payee’s rights is a waiver of any of Payee’s rights,
unless such waiver is expressly made in a writing signed by Payee.  Maker agrees to pay all costs of collection,
including reasonable attorneys’ fees, in the event that this Note is not paid
when due, whether or not a lawsuit is commenced.  Presentment and demand for payment, notice of dishonor, protest
and notice of protest are hereby waived.

          IN WITNESS WHEREOF,
this Note has been duly executed by the undersigned, intending to be legally
bound, on the day and year first above written.

	 

  	
  DATAKEY, INC.

  

 

  
	 

  	

By

  	

/s/
  Alan Shuler

  
	 

  	 

  	

   Alan
  Shuler, Vice President and CFOPrepared by MerrillDirect

Exhibit 10.19

	

1.

  	

BASIC LEASE TERMS

  	 

  
	 

  	

a.

  	

DATE OF LEASE:

  	

October [3], 2000 

  
	 

  	

b.

  	

TENANT:

  	

Applied Microsystems Corporation, a Washington
  Corporation

  
	 

  	 

  	

Trade Name:

  	 

  
	 

  	 

  	

Address (Leased Premises):

  	

5020 148th Avenue NE, Redmond, WA 98052

  
	 

  	 

  	

Building/Unit

  	

Building A

  
	 

  	 

  	

Address (For Notices):

  	

5020 148th Avenue NE, Redmond, WA 98052

  
	 

  	 

  	

Facsimile:

  	 

  
	 

  	 

  	 

  	 

  
	 

  	

c.

  	

LANDLORD:

  	

Teachers Insurance & Annuity Association of
  America

  
	 

  	 

  	

Address (For Notices):

  	

c/o JSH Properties, Inc.

  10220 NE Points Drive, Suite 203

  Kirkland, WA 98033

  (425) 889-0600

  
	 

  	 

  	

Facsimile:

  	

(425) 889-0606

  
	 

  	 

  	 

  	 

  
	 

  	 

  	

with a copy to

  	

Teachers Insurance & Annuity

  Association of America

  Attn: 
  Legal Counsel

  730 Third Avenue

  New York, NY  10017

  
	 

  	 

  	

or to such other place as Landlord may from time to
  time designate by notice to Tenant.

  
	 

  	

d.

  	

TENANT'S USE OF PREMISES:

  	

Light manufacturing, distribution, wholesaling,
  warehouse of electronic equipment parts and ancillary office use. 

  
	 

  	 

  	 

  	 

  
	 

  	

e.

  	

PREMISES AREA:

  	

An agreed 53,159 Rentable Square Feet

  
	 

  	 

  	 

  	 

  
	 

  	

f.

  	

PROJECT AREA:

  	

An agreed 144,337 Rentable Square Feet 

  
	 

  	 

  	 

  	 

  
	 

  	

g.

  	

TERM OF LEASE:

  	

This Lease shall commence on June 1, 2001 (the
  "Commencement Date"), and shall terminate on May 31, 2007
  (the "Expiration Date")

  
	 

  	 

  	 

  	 

  
					

 

	 

  	

h.

  	

BASE MONTHLY RENT (months refer to period through applicable
  full calendar month):

  
	 

  	 

  	 

  	 

  	 

  	 

  	 

  
	 

  	 

  	 

  	

Period

  	 

  	

Monthly
  Rent

  	 

  
	 

  	 

  	 

  	

  

  	 

  
	 

  	 

  	 

  	

06/01/01
  – 05/31/02

  	 

  	

$84,168.42

  	 

  
	

06/01/02
  – 05/31/03

  	

$88,598.33

  
	

06/01/03
  – 05/31/04

  	

$93,028.25

  
	

06/01/04
  – 05/31/05

  	

$97,458.16

  
	

06/01/05
  – 05/31/06

  	

$101,888.08

  
	

06/01/06
  – 05/31/07

  	

$106,318.00

  
	 

  	 

  	 

  	 

  	 

  	 

  	 

  
	 

  	

i.

  	

PREPAID RENT (for months in addition to first month's
  rent):  $  N/A 

  	 

  
	 

  	

j.

  	

SECURITY DEPOSIT / LETTER OF CREDIT:

  	 

  	 

  	 

  	 
	 

  	 

  	 

  	

Retained Security Deposit:          

  	

$  48,008.00

  	 

  	 
	 

  	 

  	 

  	

Letter of Credit: 

  	

$325,000.00

  	 

  	 
	 

  	 

  	 

  	 

  	 

  	 

  	 
	 

  	

k.          

  	

BROKER(S):         

  	

Tenant’s Broker:

  Landlord’s Broker:

  	

N/A

  JSH Properties,

  Inc

  	 

  	 
	 

  	 

  	 

  	 

  	 

  	 

  	 
	 

  	

l.

  	

GUARANTOR(S):

  	

N/A

  	 

  	 

  	 
	 

  	 

  	 

  	 

  	 

  	 

  	 
	 

  	

m.

  	

EXHIBITS:

  	

Exhibit A –The Premises

  Exhibit B – The Project

  Exhibit C – Work Letter Agreement

  Exhibit D – Rules and Regulations

  Exhibit E – Letter of Credit

  	 

  
	 

  	 

  	 

  	 

  	 

  	 

  	 

  
																	

2.       PREMISES/COMMON AREAS/PROJECT.

a.       Premises.  Landlord leases to Tenant the premises
described in Section 1 and in Exhibit A (the "Premises"), located in
this project described on Exhibit B (the "Project").  By entry on the Premises, Tenant
acknowledges that it has examined the Premises and accepts the Premises in
their present condition, subject to any Landlord's Work required under this
Lease.  Landlord's Work shall consist of
such work, if any, as is specifically identified as Landlord's responsibility
under Exhibit C.  Unless otherwise
identified in written notice from Tenant to Landlord prior to the dates
specified below, Landlord's Work shall be deemed approved
by Tenant in all respects on the earlier of (a) the date Tenant commences
construction or installation of any Tenant's Work, or (b) the date Tenant
begins to move its personal property into the Premises.  Tenant
represents and warrants that it agrees with the square footage specified for
the Premises and the Project in Section 1 and will not hereafter challenge such
determination and agreement.

b.       Common Areas.  As used in this Lease, "Common Areas" shall mean all
portions of the Project not leased or demised for lease to specific
tenants.  During the Lease Term, Tenant
and its licensees, invitees, customers and employees shall have the non–exclusive
right to use the public portions of the Common Areas, including all parking
areas, landscaped areas, entrances, lobbies, elevators, stairs, corridors, and
public restrooms in common with Landlord, other Project tenants and their
respective licensees, invitees, customers and employees, subject to Tenant’s
rights under the license granted in Section 11.  Landlord shall at all times have exclusive control and management
of the Common Areas and no diminution thereof shall be deemed a constructive or
actual eviction or entitle Tenant to compensation or a reduction or abatement
of rent, subject to Tenant’s rights under the license granted in Section 11.  Landlord in its discretion may increase,
decrease or change the number, locations and dimensions of any Common Areas and
other improvements shown on Exhibit A which are not within the Premises,
subject to Tenant’s rights under the license granted in Section 11.

c.       Project. 
Landlord reserves the right in its sole discretion to modify or alter
the configuration or number of buildings in the Project, provided only that
upon such modification or alteration, the Project Area as set forth in Section
1(f) shall be adjusted to reflect such modification or alteration.

3.       TERM. 
This Lease shall be for a term (the “Lease Term”) beginning on the
Commencement Date and ending on the Expiration Date, as set forth in Article
1(g), unless extended or sooner terminated in accordance with the terms of this
Lease.

4.       RENT 

a.       Base Monthly Rent. 
Tenant shall pay Landlord monthly base rent in the initial amount in
Section 1 which shall be payable monthly in advance on the first day of each
and every calendar month ("Base Monthly Rent").

          For purposes of Section 467 of
the Internal Revenue Code, the parties to this Lease hereby agree to allocate
the stated Rents, provided herein, to the periods which correspond to the
actual Rent payments as provided under the terms and conditions of this
agreement.

b.       Expenses. 
The purpose of this Section 4(b) is to ensure that Tenant bears a share
of all Expenses related to the use, maintenance, ownership, repair or
replacement, and insurance of the Project. 
Accordingly, beginning on the Commencement Date, Tenant shall each month
pay to Landlord one-twelfth (1/12) of Tenant's Share of Expenses related to the
Project. As used in this Lease, "Tenant's Share" shall mean the
Premises Area, as defined in Section 1(e), divided by the Project Area, as defined
in Section 1(f), and "Tenant's Share of Expenses" shall mean the
total Expenses for the Project for the applicable calendar year multiplied by
Tenant's Share.  Landlord may specially
allocate individual expenses where and in the manner necessary, in Landlord's
reasonable discretion and upon prior written notice to Tenant, to appropriately
reflect the consumption of the expense or service.  For example where some but not all premises in the Project have
HVAC, Landlord may reallocate Project Expenses for HVAC to all premises
utilizing HVAC to be apportioned on a per square foot basis, or could allocate
to each premises utilizing HVAC the cost of maintaining that space's individual
unit.  In the event the average occupancy
level of the Project for any year is less than ninety five percent (95%), the
actual Expenses for such year shall be proportionately adjusted to reflect
those costs which Landlord estimates would have been incurred, had the Project
been ninety five percent (95%) occupied during such year.

1)       Expenses Defined.  The term "Expenses" shall mean all costs and expenses
of the ownership, operation, maintenance, repair or replacement, and insurance
of the Project, including without limitation, the following costs:

(a)      All supplies, materials, labor,
equipment, and utilities used in or related to the operation and maintenance of
the Project,

(b)      All maintenance, janitorial,
legal, accounting, insurance, service agreement and management (including
on-site management office) costs related to the Project;

(c)      All maintenance, replacement and
repair costs relating to the areas within or around the Project, including,
without limitation, air conditioning systems, sidewalks, landscaping, service
areas, driveways, parking Areas (including resurfacing and restriping parking
areas), walkways, building exteriors (including painting), signs and
directories, repairing and replacing roofs, walls, etc.  These costs may be included either based on
actual expenditures or the use of an accounting reserve based on past cost
experience for the Project.

(d)        Amortization (along with
reasonable financing charges) of capital additions or improvements made to the
Project which may be required by any government authority or which will improve
the operating efficiency of the Project (provided, however, that the amount of
such amortization for improvements not mandated by government authority shall
not exceed in any year the amount of costs reasonably determined by Landlord in
its sole discretion to have been saved by the expenditure either through the
reduction or minimization of increases which would have otherwise occurred).

(e)        Real Property Taxes including
all taxes, assessments (general and special) and other impositions or charges
which may be taxed, charged, levied, assessed or imposed upon all or any
portion of or in relation to the Project or any portion thereof, any leasehold
estate in the Premises or measured by Rent from the Premises, including any
increase caused by the transfer, sale or encumbrance of the Project or any
portion thereof.  "Real Property
Taxes" shall also include any form of assessment, levy, penalty, charge or
tax (other than estate, inheritance, net income, or franchise taxes) imposed by
any authority having a direct or indirect power to tax or charge, including,
without limitation, any city, county, state federal or any improvement or other
district, whether such tax is (1) determined by the value of the Project or the
Rent or other sums payable under this Lease; (2) upon or with respect to any legal
or equitable interest of Landlord in the Project or any part thereof;
(3) upon this transaction or any document to which Tenant is a party
creating a transfer in any interest in the Project, (4) in lieu of or as a
direct substitute in whole or in part of or in addition to any real property
taxes on the Project, (5) based on any parking spaces or parking facilities
provided in the Project, 6) in consideration for services, such as police
protection, fire protection, street, sidewalk and roadway maintenance, refuse
removal or other services that may be provided by any governmental or quasi-­governmental
agency from time to time which were formerly provided without charge or with
less charge to property owners or occupants, or (7) otherwise based on the operation
of the Project (such as transit, carpooling or environmental facilities.

(f)         Landlord agrees that Expenses
as defined in Section 4(b) shall not include leasing commissions; payments of
principal and interest on any mortgages, deeds of trust or other encumbrances
upon the Project; depreciation of the capital cost of capital additions or
improvements except as provided at 4(b)(1)(d); Landlord's executive salaries,
management fees in excess of market rates; costs resulting from defective
design or construction of the Project; costs incurred in connection with
entering into new leases; costs of disputes under existing leases; any
cost or expense incurred by reason of the remediation or cleanup of any
contamination of the Premises or Project, or the soils or ground water
underlying the Premises or Project, by hazardous materials or toxic substances
existing as of the Commencement Date (except such materials as were brought
thereon by Tenant prior to the Commencement Date, including but not limited to during
Tenant’s occupancy pursuant to the prior lease dated February 27, 1989) or
brought on to the Premises or Project after the Commencement Date by Landlord,
its agents or contractors. In no event
shall Expenses include any charge for which Landlord receives reimbursement
from insurance or from another Tenant, nor shall any item of Expense be counted
more than once, nor shall Landlord collect more than one hundred percent (100%)
of Expenses.

2)       Annual Estimate of Expenses.  Upon the Commencement Date, Landlord shall
estimate Tenant's Share of Expenses for the remainder of the calendar year, and
at the commencement of each calendar year thereafter, Landlord shall provide
Tenant with an estimate of Tenant's Share of Expenses for the ensuing calendar
year.

3)       Monthly Payment of Expenses.  Tenant shall pay to Landlord, monthly in
advance, as Additional Rent, one-twelfth (1/12) of the Annual Estimate of
Tenant's Share of Expenses beginning on the Commencement Date.  As soon as practical following each calendar
year, Landlord shall prepare an accounting of actual Expenses incurred during
the prior calendar year and such accounting shall reflect Tenant's Share of
Expenses.  If the Additional Rent paid
by Tenant under this Section 4(b)(3) during the preceding calendar year was
less than the actual amount of Tenant's Share of Expenses, Landlord shall so
notify Tenant and Tenant shall pay such amount to Landlord within 30 days of
receipt of such notice.  Such amount
shall be deemed to have accrued during the prior calendar year and shall be due
and payable from Tenant even though the term of this Lease has expired or this
Lease has been terminated prior to Tenant's receipt of this notice.  Tenant shall have ninety (90) days from receipt
of such notice to contest the amount due, failure to so notify Landlord shall
represent final determination of Tenant's Share of Expenses.  In the event that Tenant so contests the
amount due, Landlord will provide Tenant with supporting records in sufficient
detail such that Tenant may audit Tenant’s Share of Expenses with respect to
the applicable Lease Year to verify actual Expenses. Tenant may not use a
property manager or developer (or an affiliate of a property manager or
developer) to conduct such an audit.  If
Tenant's payments were greater than the actual amount, then such overpayment
shall be credited by Landlord to Tenant's Share of Expenses due under this
Section 4(b)(3) or, if such determination is after termination of the Lease,
then returned to Tenant, after deduction of any other sums due from Tenant to
Landlord.

c.       Rent Without Offset and Late Charge.  As used herein, "Rent" shall mean
all monetary sums due from Tenant to Landlord. 
All Base Monthly Rent shall be paid by Tenant to Landlord without prior
notice or demand in advance on the first day of every calendar month, at the
address shown in Section 1, or such other place as landlord may designate in
writing from time to time.  Whether or
not so designated, all other sums due from Tenant under this Lease shall
constitute Additional Rent, payable without prior notice or demand when
specified in this Lease, but if not specified, then within ten (10) days of
demand.  All Rent shall be paid without
any deduction or offset whatsoever.  All
Rent shall be paid in lawful currency of the United States of America.  Proration of Rent due for any partial month
shall be calculated by dividing the number of days in the month for which Rent
is due by the actual number of days in that month and multiplying by the
applicable monthly rate.  Tenant
acknowledges that late payment by Tenant to Landlord of any Rent or other sums
due under this Lease will cause Landlord to incur costs not contemplated by
this Lease, the exact amount of such cost being extremely difficult and
impracticable to ascertain.  Such costs
include, without limitation, processing and accounting charges and late charges
that may be imposed on Landlord by the terms of any encumbrance or note secured
by the Premises.  Therefore, if any Rent
or other sum due from Tenant is not received within ten (10) days after the
date due, Tenant shall pay to Landlord an additional sum equal to 10% of such
overdue payment.  Landlord and Tenant
hereby agree that such late charge represents an agreed estimate of the costs
that Landlord will incur by reason of any such late payment and that the late
charge is in addition to any and all remedies available to the Landlord and
that the assessment and/or collection of the late charge shall not be deemed a
waiver of any other default. 
Additionally, all such delinquent Rent or other sums, plus this late
charge, shall bear interest at the rate of 18 percent per annum.  If the interest rate specified in this Lease
is higher than the rate permitted by law, the interest rate is hereby decreased
to the maximum legal interest rate permitted by law.  Any payments of any kind returned for insufficient funds will be
subject to an additional handling charge of $25.00, and thereafter, Landlord
may require Tenant to pay all future payments of Rent or other sums due by
money order or cashier's check.

5.       PREPAID RENT. {INTENTIONALLY
DELETED}

6.       DEPOSIT. 
On or before the Commencement Date, Tenant shall deposit with Landlord a
security deposit as set forth in Section 1(j) (which is an amount separate
from the Letter of Credit that may also be applied in the same manner as the
Security Deposit).  This deposit may be
accomplished by roll over of any security deposit then held by Landlord under
Tenant's prior lease.  If Tenant is in
default, Landlord can use the Security Deposit or any portion of it to cure the
default or to compensate Landlord for any damages sustained by Landlord
resulting from Tenant's default.  Upon
demand, Tenant shall immediately pay to Landlord a sum equal to the portion of
the Security Deposit expended or applied by Landlord to restore the Security
Deposit to its full amount.  In no event
will Tenant have the right to apply any part of the Security Deposit to any
Rent or other sums due under this Lease.  If Landlord transfers its interest in the Premises, Landlord
shall transfer the Security Deposit to its successor in interest, whereupon
Landlord shall be automatically released from any liability for the return of
the Security Deposit.  If, at the end of
the Lease Term, Tenant has fully complied with all obligations under this
Lease, then the remaining Security Deposit shall be returned to Tenant after
Landlord has verified that Tenant has fully vacated the Premises, removed all
of its property and surrendered the Premises in the condition required under
this Lease; provided that Landlord may hold back a portion of the Security
Deposit until final determination of Tenant’s share of Common Expenses,
whereupon a final adjustment shall be made and any remaining Security Deposit
shall be returned to Tenant.  Landlord's obligations with respect to the
Security Deposit are those of a debtor and not of a trustee, and Landlord can
commingle the Security Deposit with Landlord's general funds.  Landlord shall not be required to pay Tenant
interest on the deposit. Each time the Base Monthly Rent is increased, Tenant
shall deposit additional funds with Landlord sum sufficient to increase the
Security Deposit to an amount which bears the same relationship to the adjusted
Base Monthly Rent as the initial Security Deposit bore to the initial Base
Monthly Rent.

7.       USE OF PREMISES AND PROJECT FACILITIES.  Tenant shall use the Premises solely for the
purposes set forth in Section 1 and for no other purpose whatsoever without
obtaining the prior written consent of Landlord, which consent shall not be
unreasonably withheld for uses then being allowed by Landlord for other tenants
in the Project.  Tenant acknowledges
that neither Landlord nor any agent of Landlord has made any representation or
warranty with respect to the Premises or with respect to the suitability of the
Premises or the Project for the conduct of Tenant's business, nor has Landlord
agreed to undertake any modification, alteration or improvement to the Premises
or the Project, except as provided in writing in this Lease.  Tenant acknowledges that Landlord may from
time to time, at its sole discretion, make such modifications, alterations,
deletions or improvements to the Project as Landlord may deem necessary or
desirable, without compensation or notice to Tenant.  Tenant shall promptly comply with all laws, ordinances, orders
and regulations affecting the Premises and the Project, including, without
limitation, the rules and regulations attached hereto as Exhibit D and any
reasonable modifications to these rules and regulations as Landlord may adopt
from time to time.  Tenant acknowledges
that, except for Landlord's obligations pursuant to Section 13, Tenant is
solely responsible for ensuring that the Premises comply with any and all
governmental regulations applicable to Tenant's conduct of business on the
Premises, and that Tenant is solely responsible for any alterations or
improvements that may be required by such regulations, now existing or
hereafter adopted.  Tenant shall not do
or permit anything to be done in or about the Premises or bring or keep
anything in the Premises that will in any way increase the premiums paid by
Landlord on its insurance related to the Project or which will in any way
increase the premiums for fire or casualty insurance carried by other tenants
in the Project.  Tenant will not perform
any act or carry on any practices that may injure the Premises or the Project;
that may be a nuisance or menace to other tenants in the Project; or that shall
in any way interfere with the quiet enjoyment of such other tenants.  Tenant shall not use the Premises for
sleeping, washing clothes, cooking or the preparation, manufacture or mixing of
anything that might emit any objectionable odor, noises, vibrations or lights
onto such other tenants.  If sound
insulation is required to muffle noise produced by Tenant on the Premises,
Tenant at its own cost shall provide all necessary insulation.  Tenant shall not do anything on the premises
which will overload any existing parking or service to the Premises.  Pets and/or animals of any type shall not be
kept on the Premises.

8.       HAZARDOUS SUBSTANCES; DISRUPTIVE
ACTIVITIES

a.       Hazardous
Substances.

                    (1)  Presence and Use of Hazardous Substances.
As used in this Lease, "Hazardous Substances" shall mean
anything which may be harmful to persons or property, including, but not
limited to, materials designated as a "Hazardous Substance" pursuant
to Section 101 of the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as now or hereafter amended, 42 USC 9601, et seq.,
or as a Hazardous Substance, Hazardous Household Substance, Moderate Risk Waste
or Hazardous Waste under RCW 70.105.010, or which is regulated by any federal,
state, or local law, statute, ordinance or regulation pertaining to health,
industrial hygiene or the environment.  Tenant shall not, without Landlord's prior
written consent, keep on or around the Premises, Common Areas or Building, for
use, disposal, treatment, generation, storage or sale, any Hazardous Substances
except such Hazardous Substances as are commonly used in general administrative
office operations plus such incidental Hazardous Substances as may be used in
the light electronic manufacturing specified in Tenant’s Use of Premises.  With respect to any Hazardous Substance,
Tenant shall:

                              (i)  Comply promptly, timely, and completely with
all governmental requirements for reporting, keeping, and submitting manifests,
and obtaining and keeping current identification numbers;

                              (ii)  Submit to Landlord true and correct copies
of all reports, manifests, and identification numbers at the same time as they
are required to be and/or are submitted to the appropriate governmental
authorities;

                              (iii)  Within five (5) days of Landlord's request,
submit written reports to Landlord regarding Tenant's use, storage, treatment,
transportation, generation, disposal or sale of Hazardous Substances and
provide evidence satisfactory to Landlord of Tenant's compliance with the
applicable government regulations;

                              (iv)  Allow Landlord or Landlord's agent or
representative to come on the premises at all times to check Tenant's
compliance with all applicable governmental regulations regarding Hazardous
Substances;

                              (v)  Comply with minimum levels, standards or
other performance standards or requirements which may be set forth or
established for certain Hazardous Substances (if minimum standards or levels
are applicable to Hazardous Substances present on the Premises, such levels or
standards shall be established by an on-site inspection by the appropriate
governmental authorities and shall be set forth in an addendum to this Lease);
and

                              (vi)  Comply with all applicable governmental
rules, regulations and requirements regarding the proper and lawful use, sale,
transportation, generation, treatment, and disposal of Hazardous Substances.

                    (2)  Any and all costs reasonably incurred by
Landlord and associated with Landlord's monitoring of Tenant's compliance with
this Section 8, including Landlord's reasonable attorneys' fees and costs,
shall be Additional Rent and shall be due and payable to Landlord within ten
(10) days of written demand by Landlord.

          b.       Cleanup Costs, Default and Indemnification.

                    (1)  Tenant shall be fully and completely liable
to Landlord for any and all cleanup costs, and any and all other charges, fees,
penalties (civil and criminal) imposed by any governmental authority with
respect to Tenant's use, disposal, transportation, generation and/or sale of
Hazardous Substances, in or about the Premises, Common Areas, or Building.

                    (2)  Tenant shall indemnify, defend and save
Landlord and Landlord's lender, if any, harmless from any and all of the costs,
fees, penalties and charges assessed against or imposed upon Landlord (as well
as Landlord's and Landlord's lender's attorneys' fees and costs) as a result of
Tenant's use, disposal, transportation, generation and/or sale of Hazardous
Substances.

                    (3)  Upon Tenant's material default under this
Section 8, in addition to the rights and remedies set forth elsewhere in this
Lease, Landlord shall be entitled to the following rights and remedies:

                              (i)  At Landlord's option, to terminate this
Lease immediately; and/or

                              (ii)  To recover any and all damages associated
with the default, including, but not limited to cleanup costs and charges,
civil and criminal penalties and fees, loss of business and sales by Landlord
and other tenants of the Building, any and all damages and claims asserted by
third parties and Landlord's attorneys' fees and costs.

          c.       Disposal of Waste

                    (1)  Refuse Disposal.  Tenant shall not keep any trash, garbage, waste or other refuse
on the Premises except in sanitary containers and shall regularly and
frequently remove same from the Premises. 
Tenant shall keep all incinerators, containers or other equipment used
for storage or disposal of such materials in a clean and sanitary condition.

                    (2)  Sewage Disposal.  Tenant shall properly dispose of all sanitary sewage and shall
not use the sewage disposal system (a) for the disposal of anything except sanitary
sewage or (b) in excess of the lesser amount (i) reasonably contemplated by the
uses permitted under this Lease or (ii) permitted by any governmental
entity.  Tenant shall keep the sewage
disposal system free of all obstructions and in good operating condition.

                    (3)  Disposal of Other Waste.  Tenant shall properly dispose of all other
waste or other matter delivered to, stored upon, located upon or within, used
on, or removed from, the Premises, in compliance with all laws.

          d.       Disruptive Activities. 
Tenant shall not:

                    (1)  Produce, or permit to be produced, any
intense glare, light or heat except within an enclosed or screened area and
then only in such manner that the glare, light or heat shall not, outside the
Premises, be materially different that the light or heat from other sources
outside the Premises;

                    (2)  Create, or permit to be created, any sound
pressure level which will interfere with the quiet enjoyment of any real
property outside the Premises, or which will create a nuisance or violate any
governmental law, rule, regulation or requirement;

                    (3)  Create, or permit to be created, any ground
vibration that is materially discernible outside the Premises;

                    (4)  Transmit, receive or permit to be
transmitted or received, any electromagnetic, microwave or other radiation
which is harmful or hazardous to any person or property in, or about the
Project; or

                    (5)  Create, or permit to be created, any noxious
odor that is disruptive to the business operations of any other tenant in the
Project.

9.       SIGNAGE.  All
signing shall comply with rules and regulations set forth by Landlord as may be
modified from time to time.  Current
rules and regulations relating to signs are described on Exhibit D. Tenant
shall place no window covering (e.g., shades, blinds, curtains, drapes,
screens, or tinting materials), stickers, signs, lettering, banners or
advertising or display material on or near exterior windows or doors if such
materials are visible from the exterior of the Premises, without Landlord's prior
written consent.  Similarly, Tenant may
not install any alarm boxes, foil protection tape or other security equipment
on the Premises without Landlord's prior written consent.  Any material violating this provision may be
destroyed by Landlord without compensation to Tenant.

10.     PERSONAL PROPERTY TAXES.  Tenant shall pay before delinquency all taxes,
assessments, license fees and public charges levied, assessed or imposed upon
its business operations as well as upon all trade fixtures, leasehold improvements,
merchandise and other personal property owned by Tenant in or about the
Premises.

11.     PARKING.  Landlord grants to Tenant and Tenant's
customers, suppliers, employees and invitees, a non-exclusive license to use
the designated parking areas in the Project for the use of motor vehicles
during the term of this Lease.  Landlord
reserves the right at any time to grant similar non-exclusive use to other
tenants, to promulgate rules and regulations relating to the use of such
parking areas, including reasonable restrictions on parking by tenants and
employees, to designate specific spaces for the use of any tenant, to make
changes in the parking layout from time to time, and to establish reasonable
time limits on parking.  Overnight
parking is prohibited and any vehicle violating this or any other vehicle
regulation adopted by Landlord is subject to removal at the owner's expense.

Tenant shall have the right to use up to one hundred fifty nine (159)
unassigned parking spaces in the Project during the initial Lease Term and
during the Extended Term, which use shall be without charge during the Initial
Term.  Tenant’s  parking ratio shall not be reduced below
three stalls per 1,000 square feet of rentable area except as may be needed to
accomplish compliance with changes in governmental regulations.

12.     UTILITIES; SERVICES.

          Landlord shall furnish the Premises with electricity for office use,
including lighting and low power usage for office machines and water for
restroom facilities.  From 7:00 a.m. to
6:00 p.m. on weekdays and 9:00 a.m. to 1:00 p.m. on Saturday, excluding legal
holidays (“Normal Business Hours”), Landlord shall furnish the Premises with
heat and air conditioning services as required, in Landlord's judgment, for the
comfortable use and occupancy of the Premises. 
If requested by Tenant, Landlord shall furnish heat and air conditioning
services at times other than Normal Business Hours, and Tenant shall pay for
the actual cost of such services either by direct payment to the utility
provider or as Additional Rent to Landlord.

The mechanical system is designed to accommodate heating loads generated by the
types and quantities of lights and equipment commonly found in suburban office
park general administrative offices. 
Before installing lights and equipment in the Premises which in the
aggregate exceed such amount (e.g. devoting the Premises to high density
computer work station operations) or require a voltage other than 120 volts
single phase, Tenant shall obtain the written permission of Landlord.  Landlord may refuse to grant such permission
unless Tenant agrees to pay Landlord’s costs of installing any supplementary
air conditioning or electrical systems required by such equipment or lights.  In addition, Tenant shall pay Landlord in
advance, as additional rent, on the first day of each month during the Term,
the amount estimated by Landlord as the cost of furnishing electricity for the
operation of such equipment or lights and the amount estimated by Landlord as
the cost of operating and maintaining supplementary air conditioning units
necessitated by Tenant's use of such equipment or lights.  Landlord shall be entitled to install and
operate, at Tenant's cost, a monitoring/metering system in the Premises to
measure the added demands on electricity and the HVAC systems resulting from
such equipment and lights, and from Tenant's HVAC requirements during other
than Normal Business Hours.  Tenant
shall comply with Landlord's instruction for the use of drapes, blinds and
thermostats.  Tenant acknowledges that
Landlord shall have sole control over the determination of what utility
providers serve the Project, and Landlord shall have no obligation to give
access or easement rights or otherwise allow onto the Project any utility
providers except those approved by Landlord in its discretion. .  If, for any reason, Landlord permits Tenant
to purchase utility services from a provider other than Landlord's designated
compan(ies), such provider shall be considered a contractor of Tenant and
Tenant shall indemnify defend and hold Landlord harmless from such provider's
acts and omissions while in, or in connection with their services to, the
Building or Project in accordance with the terms and conditions of Article
15.  In addition, Tenant shall allow
Landlord to purchase such utility service from Tenant's provider at Tenant's
rate or at such lower rate as can be negotiated by the aggregation of
Landlord's tenants' requirements for such utility.

Except for the costs of above-building
standard and/or after-hours services, which shall be paid directly by Tenant,
the costs of all utilities and services provided pursuant to this Section 12
shall be Expenses allocated to Tenant as part of Tenant’s Share of Expenses
pursuant to Section 4(b). above.  Tenant
shall pay when due and directly to the service provider any telephone or other
services metered, chargeable or provided to the Premises and not charged as
part of Tenant’s Share of Expenses.

Landlord does not warrant that any utilities or services will be free
from interruption including by reason of accident, repairs, alterations or
improvements and including by reason of computer programming weaknesses known
generally as the “Year 2000” problem. 
No utility interruption shall be deemed an eviction or disturbance of
Tenant, or render Landlord liable to Tenant for damages, or relieve Tenant from
the full and complete performance of all of Tenant's obligations under this
Lease.

Landlord shall provide such security for the Project as it deems
appropriate.  During other than Normal
Business Hours, Landlord may restrict access to the Project in accordance with
the Project’s security system.  Landlord
shall not be liable to Tenant for injury to its agents, employees, customers or
invitees, or for losses due to theft or burglary, or for damages done by
unauthorized persons in the Project.

Landlord shall provide two keys for the corridor door entering the Premises,
and additional keys at a charge by Landlord on an order signed by Tenant.  All such keys shall remain the property of
Landlord.  No additional locks shall be
allowed on any door of the Premises without Landlord's written permission, and
Tenant shall not make, or permit to be made, any duplicate keys, except those
furnished by Landlord.  Upon termination
of this Lease, Tenant shall surrender to Landlord all keys to the Premises.

13.     MAINTENANCE.  Landlord
shall maintain, in good condition, the structural parts of the Premises, which
shall include only the foundations, bearing and exterior walls (excluding
glass), subflooring and roof (excluding skylights), the unexposed electrical,
plumbing and sewerage systems, including those portions of the systems lying
outside the Premises, gutters and downspouts on the Building and the heating,
ventilating and air conditioning system servicing the Premises; provided,
however, the cost of all such maintenance shall be considered
"Expenses" for purposes of Section 4(b) except maintenance
necessitated by the gross negligence of the Landlord, Landlord’s agents,
employees or invitees.  Except as
provided above, Tenant shall maintain and repair the Premises in good
condition, including, without limitation, maintaining and repairing all walls,
storefronts, floors, ceilings, interior and exterior doors, exterior and
interior windows and fixtures and interior plumbing as well as damage caused by
Tenant, its agents, employees or invitees. 
Upon expiration or termination of this Lease, Tenant shall surrender the
Premises to Landlord in the same condition as existed at the commencement of
the term, except for reasonable wear and tear or damage caused by fire or other
casualty for which Landlord has received all funds necessary for restoration of
the Premises from insurance proceeds.

14.     ALTERATIONS.  Tenant
shall not make any alterations to the Premises, or to the Project, including
any changes to the existing landscaping, without Landlord's prior written
consent, provided that Landlord's consent shall not be required, but Tenant
shall notify Landlord in advance of, alterations costing less than $10,000 that
are not affixed to the Premises and do not affect building structure or
building systems.  Tenant may, at
the time of requesting Landlord's consent to alterations, further request in
writing that Landlord elect, at the time of granting consent, whether such
alterations must be removed upon termination of the Lease.  If Tenant so requests, Landlord shall make
such election at the time of granting consent to the alteration (or if no
consent is required, then within fifteen days of Tenant's request).  Failure of Landlord to respond to Tenant's
request shall be deemed an election that the alteration need not be removed on
termination of this Lease.  Landlord may post notices of non-responsibility
in accordance with the laws of the state in which the premises are
located.  Any alterations made shall
remain on and be surrendered with the Premises upon expiration or termination
of this Lease, except that Landlord may, within 30 days before or 30 days after
expiration of the term, elect to require Tenant to remove any alterations which
Tenant may have made to the Premises (including any alterations made during the
term of Tenant’s initial occupancy of the Premises pursuant to the Lease dated
February 27, 1989) excepting only such alterations as Tenant has received
consent to leave as provided above.  If
Landlord elects to require removal of an alteration, at its own cost Tenant
shall restore the Premises to the condition designated by Landlord in its
election, before the last day of the term or within 30 days after notice of its
election is given, whichever is later.

Should Landlord consent in writing to Tenant's alteration of the Premises (or
where no consent is required), Tenant shall contract with a contractor approved
by Landlord for the construction of such alterations, shall secure all
appropriate governmental approvals and permits, and shall complete such
alterations with due diligence in compliance with plans and specifications
approved by Landlord.  All such construction
shall be performed in a manner which will not interfere with the quiet
enjoyment of other tenants of the Project. 
Tenant shall pay all costs for such construction and shall keep the
Premises and the Project free and clear of all mechanics' liens which may
result from construction by Tenant. Tenant shall not use any portion of
the common areas in connection with an alteration without the prior written
consent of Landlord.

15.     RELEASE AND INDEMNITY.

a.       Indemnity. 
Tenant shall indemnify, defend (using legal counsel reasonably
acceptable to Landlord) and save Landlord and its property manager harmless
from all claims, suits, losses, damages, fines, penalties, liabilities and
expenses (including Landlord's personnel and overhead costs and attorneys fees
and other costs incurred in connection with claims, regardless of whether such
claims involve litigation) resulting from any actual or alleged injury
(including death) of any person or from any actual or alleged loss of or damage
to, any property arising out of or in connection with (i) Tenant's
occupation, use or improvement of the Premises, or that of its employees,
agents or contractors, (ii) Tenant's breach of its obligations hereunder,
or (iii) any act or omission of Tenant or any subtenant, licensee,
assignee or concessionaire of Tenant, or of any officer, agent, employee, guest
or invitee of Tenant, or of any such entity in or about the Premises.  Tenant agrees that the foregoing indemnity
specifically covers actions brought by its own employees.  This indemnity with respect to acts or omissions
during the term of this Lease shall survive termination or expiration of this
Lease.  The foregoing indemnity is
specifically and expressly intended to, constitute a waiver of Tenant's
immunity under Washington's Industrial Insurance Act, RCW Title 51, to the
extent necessary to provide Landlord with a full and complete indemnity from
claims made by Tenant and its employees, to the extent provided herein.  Tenant shall promptly notify Landlord of
casualties or accidents occurring in or about the Premises.  LANDLORD AND TENANT ACKNOWLEDGE THAT THE
INDEMNIFICATION PROVISIONS OF SECTION 8 AND THIS SECTION 15 WERE
SPECIFICALLY NEGOTIATED AND AGREED UPON BY THEM.

b.       Release. 
Tenant hereby fully and completely waives and releases all claims
against Landlord for any losses or other damages sustained by Tenant or any
person claiming through Tenant resulting from any accident or occurrence in or
upon the Premises, including but not limited to:  any defect in or failure of Project equipment; any failure to make
repairs; any defect, failure, surge in, or interruption of Project facilities
or services; any defect in or failure of Common Areas; broken glass; water
leakage; the collapse of any Building component; or any act, omission or
negligence of co–tenants, licensees or any other persons or occupants of
the Building, provided only that the release contained in this Section 15(b)
shall not apply to claims for actual damage to persons or property (excluding
consequential damages such as lost profits) resulting directly from Landlord's
breach of its express obligations under this Lease which Landlord has not cured
within a reasonable time after receipt of written notice of such breach from
Tenant. Notwithstanding any other provision of this Lease, and to the fullest
extent permitted by law, Tenant hereby agrees that Landlord shall not be liable
for injury to Tenant's business or any loss of income therefrom, whether such
injury or loss results from conditions arising upon the Premises or the
Project, or from other sources or places including, without limitation, any
interruption of services and utilities or any casualty, or from any cause
whatsoever, including, Landlord's negligence, and regardless of whether the
cause of such injury or loss or the means of repairing the same is inaccessible
to Landlord or Tenant.  Tenant may
elect, at its sole cost and expense, to obtain business interruption insurance
with respect to such potential injury or loss.

c.       Limitation on Indemnity. 
In compliance with RCW 4.24.115 as in effect on the date of this
Lease, all provisions of this Lease pursuant to which Landlord or Tenant (the
"Indemnitor") agrees to indemnify the other (the
"Indemnitee") against liability for damages arising out of bodily
injury to Persons or damage to property relative to the construction,
alteration, repair, addition to, subtraction from, improvement to, or
maintenance of, any building, road, or other structure, project, development,
or improvement attached to real estate, including the Premises, (i) shall not
apply to damages caused by or resulting from the sole negligence of the
Indemnitee, its agents or employees, and (ii) to the extent caused by or
resulting from the concurrent negligence of (a) the Indemnitee or the
Indemnitee's agents or employees, and (b) the Indemnitor or the
Indemnitor's agents or employees, shall apply only to the extent of the
Indemnitor's negligence; PROVIDED, HOWEVER, the limitations on indemnity set
forth in this Section shall automatically and without further act by either
Landlord or Tenant be deemed amended so as to remove any of the restrictions
contained in this Section no longer required by then applicable law.

d.       Definitions.  As used in any Section establishing indemnity or release of
Landlord, "Landlord" shall include Landlord, its partners, officers,
agents, employees and contractors, and "Tenant" shall include Tenant
and any person or entity claiming through Tenant.

16.     INSURANCE. Tenant shall, throughout the term of this Lease and
any renewal hereof, at its own expense, keep and maintain in full force and
effect, a policy of commercial general liability (occurrence form) insurance,
including contractual liability (including Tenant's indemnification obligations
under this Lease) insuring Tenant's activities upon, in or about the Premises
or the Project, against claims of bodily injury or death or property damage or
loss with a combined single limit of not less than One Million Dollars
($1,000,000) per occurrence and Four Million Dollars ($4,000,000) in the
aggregate, with such increases in limits as Landlord may from time to time
require consistent with insurance requirements of institutional landlords in
similar projects in the area.  If Tenant
manufactures on the Premises consumer goods using any materials supplied
by  Landlord (including but not limited
to water supplied as part of utilities to the Premises), Tenant's insurance
shall include products liability insurance in the amounts specified for the
commercial general liability insurance.

Tenant shall further, throughout the term of this Lease and any renewal
thereof, at its own expense, keep and maintain in full force and effect, what
is commonly referred to as “Special Cause of Loss” or “Special” coverage
insurance (excluding earthquake and flood) on 
tenant's leasehold improvements in an amount equal to one hundred
percent (100%) of the replacement value thereof with a coinsurance waiver. The
proceeds from any such policy shall be used by Tenant for the restoration of
Tenant's improvements or alterations. 
As used in this Lease, “tenant’s leasehold improvements” shall mean any
alterations, additions or improvements installed in or about the Premises by or
with Landlord’s permission or otherwise permitted by this Lease, whether or not
the cost thereof was paid for by Tenant.

All insurance required to be provided by Tenant under this Lease: (a) shall be
issued by Insurance companies authorized to do business in the state in which
the premises are located with a financial rating of at least an A+X status as
rated in the most recent edition of Best's Insurance Reports; (b) shall be
issued as a primary policy; shall be on an occurrence basis; (c) name Landlord
and Landlord's property manager as additional insured; and (d) shall contain an
endorsement requiring at least 30 days prior written notice of cancellation to
Landlord and Landlord's lender, before cancellation or change in coverage,
scope or amount of any policy.  Tenant
shall deliver a certificate or copy of such policy together with evidence of
payment of all current premiums to Landlord within 30 days of execution of this
Lease and at the time of all renewals thereof. 
If Tenant fails at any time to maintain the insurance required by this
Lease, and fails to cure such default within five (5) business days of written
notice from Landlord then, in addition to all other remedies available under
this Lease and applicable law, Landlord may purchase such insurance on Tenant's
behalf and the cost of such insurance shall be Additional Rent due within ten
(10) days of written invoice from Landlord to Tenant.

Tenant hereby releases Landlord, and waives its entire right of recovery
for loss or damage to property located within or constituting a part or all of
the Building or the Project to the extent that the loss or damage is covered by
(a) Tenant's insurance, or (b) the insurance Tenant is required to carry under
this Article 16, whichever is greater. 
This waiver applies whether or not the loss is due to the negligent acts
or omissions of Landlord or Tenant, or their respective officers, directors,
employees, agents, contractors, or invitees. 
Tenant shall have its insurers endorse the applicable insurance policies
to reflect the foregoing waiver of claims, provided however, that the endorsement
shall not be required if the applicable policy of insurance permits the named
insured to waive rights of subrogation on a blanket basis, in which case the
blanket waiver shall be acceptable

17.     DESTRUCTION.  If
during the term, the Premises or Project are more than 30% destroyed from any
cause, or rendered inaccessible or unusable from any cause, Landlord may, in
its sole discretion, terminate this Lease by delivery of notice to Tenant
within 30 days of such event without compensation to Tenant.  If in Landlord's estimation, the Premises cannot
be restored within 90 days following such destruction, the Landlord shall
notify Tenant and Tenant may terminate this Lease by delivery of notice to
Landlord within 30 days of receipt of Landlord's notice.  If neither Landlord nor Tenant terminates this
Lease as provided above, then Landlord shall commence to restore the Premises
in compliance with then existing laws and shall complete such restoration with
due diligence.  In such event, this
Lease shall remain in full force and effect, but there shall be an abatement of
Base Monthly Rent and Tenant's Share of Expenses between the date of
destruction and the date of completion of restoration, based on the extent to
which destruction interferes with Tenant's use of the Premises.

18.     CONDEMNATION.

a.       Taking. 
If all of the Premises are taken by Eminent Domain, this Lease shall
terminate as of the date Tenant is required to vacate the Premises and all Base
and Additional Rent shall be paid to that date.  The term "Eminent Domain" shall include the taking or
damaging of property by, through or under any governmental or statutory
authority, and any purchase or acquisition in lieu thereof, whether the
damaging or taking is by government or any other person.  If a taking of any part of the Premises by
Eminent Domain renders the remainder thereof unusable for the business of
Tenant (or the cost of restoration of the Premises is not commercially
reasonable), the Lease may, at the option of either party, be terminated by
written notice given to the other party not more than thirty (30) days after
Landlord gives Tenant written notice of the taking, and such termination shall
be effective as of the date when Tenant is required to vacate the portion of
the Premises so taken.  If this Lease is
so terminated, all Base and Additional Rent shall be paid to the date of
termination.  Whenever any portion of
the Premises is taken by Eminent Domain and this Lease is not terminated,
Landlord shall at its expense proceed with all reasonable dispatch to restore,
to the extent of available proceeds and to the extent it is reasonably prudent
to do so, the remainder of the Premises to the condition they were in
immediately prior to such taking, and Tenant shall at its expense proceed with
all reasonable dispatch to restore its personal property and all improvements
made by it to the Premises to the same condition they were in immediately prior
to such taking.  The Base and Additional
Rent payable hereunder shall be reduced from the date Tenant is required to
partially vacate the Premises in the same proportion that the Rentable Area
taken bears to the total Rentable Area of the Premises prior to taking.

b.       Award. 
Landlord reserves all right to the entire damage award or payment for
any taking by Eminent Domain, and Tenant waives all claim whatsoever against
Landlord for damages for termination of its leasehold interest in the Premises
or for interference with its business. 
Tenant hereby grants and assigns to Landlord any right Tenant may now have
or hereafter acquire to such damages and agrees to execute and deliver such
further instruments of assignment as Landlord may from time to time
request.  Tenant shall, however, have
the right to claim from the condemning authority all compensation that may be
recoverable by Tenant on account of any loss incurred by Tenant in moving
Tenant's merchandise, furniture, trade fixtures and equipment, provided,
however, that Tenant may claim such damages only if they are awarded separately
in the eminent domain proceeding and not out of or as part of Landlord's
damages.

19.     ASSIGNMENT OR SUBLEASE.  Tenant shall not assign or
encumber its interest in this Lease or the Premises or sublease all or any part
of the Premises or allow any other person or entity (except a successor by
merger or acquisition which is continuing Tenant’s use, Tenant's authorized
representatives, employees, invitees, or guests) to occupy or use all or any
part of the Premises without first obtaining Landlord's consent which consent
shall not be unreasonably withheld for tenants meeting Landlord’s then existing
standards for creditworthiness and use. 
No assignment or sublease shall release Tenant from the obligation to
perform all obligations under this Lease. Any assignment, encumbrance or sublease
without Landlord's written consent shall be voidable and at Landlord's
election, shall constitute a default. 
If Tenant is a partnership, a withdrawal or change, voluntary,
involuntary or by operation of law of any partner, or the dissolution of the
partnership, shall be deemed a voluntary assignment.  If Tenant consists of more than one person, a purported
assignment, voluntary or involuntary or by operation of law from one person to
the other shall be deemed a voluntary assignment.  If Tenant is a corporation, any dissolution, merger, consolidation
or other reorganization of Tenant, or sale or other transfer of a controlling
percentage of the capital stock of Tenant, or the sale of at least 25% of the
value of the assets of Tenant shall be deemed a voluntary assignment.  The phrase "controlling
percentage" means ownership of and right to vote stock possessing at least
25% of the total combined voting power of all classes of Tenant's capital stock
issued, outstanding and entitled to vote for election of directors.  This Section 19 shall not apply to
corporations the stock of which is traded through an exchange or over the
counter.  All rent received by Tenant
from its subtenants in excess of the Rent payable by Tenant to Landlord under
this Lease shall be paid to Landlord (provided that Tenant may amortize the
costs of leasing commissions and improvements made for the new tenant over the
term of the assignment or sublease in equal monthly installments without
interest, and such amortization may be deducted from the excess rent otherwise
due Landlord), or any sums to be paid by an assignee to Tenant in consideration
of the assignment of this Lease shall be paid to Landlord.  In lieu of granting consent to any
proposed Transfer for which Tenant is required to obtain Landlord’s consent,
Landlord reserves the right to terminate this Lease or, in the case of
subletting of less than all the Premises, to terminate this Lease with respect
to such portion of the Premises, as of the proposed effective date of such
Transfer, in which event Landlord may enter into the relationship of landlord
and tenant with such proposed Transferee. 
Notwithstanding the foregoing, Landlord’s recapture right shall not
apply to a sublease if (a) the term of the sublease ends at least 1 year prior
to the end of the term of the Lease and contains no extension rights, and (b)
the total area subleased, including the sublease at issue, will be less than
80% of the Premises. If Tenant requests
Landlord to consent to a proposed assignment or subletting, Tenant shall pay to
Landlord, whether or not consent is ultimately given, $100 or Landlord's
reasonable attorney's fees incurred in connection with such request, whichever
is greater.

No interest of Tenant in this Lease shall be assignable by involuntary
assignment through operation of law (including without limitation the transfer
of this Lease by testacy or intestacy). 
Each of the following acts shall be considered an involuntary
assignment: (a) if Tenant is or becomes bankrupt or insolvent, makes an
assignment for the benefit of creditors, or institutes proceedings under the
Bankruptcy Act in which Tenant is the bankrupt; or if Tenant is a partnership
or consists of more than one person or entity, if any partner of the
partnership or other person or entity is or becomes bankrupt or insolvent, or
makes an assignment for the benefit of creditors; or (b) if a writ of
attachment or execution is levied on this Lease; or (c) if in any proceeding or
action to which Tenant is a party, a receiver is appointed with authority to
take possession of the Premises.  An
involuntary assignment shall constitute a default by Tenant and Landlord shall
have the right to elect to terminate this Lease, in which case this Lease shall
not be treated as an asset of Tenant.

20.     DEFAULT.  The
occurrence of any of the following shall constitute a default by Tenant: (a) a
failure to pay Rent or other charge when due, provided that Landlord shall not
exercise any of its rights under this Section 20(a) until Landlord has given
Tenant notice of such default and a cure period of ten (10) days from receipt
of such notice, and Tenant has failed to pay such rent or other charge within
such cure period; (b) abandonment and vacation of the Premises (failure to
occupy and operate the Premises for ten consecutive days while in monetary
default under this Lease shall be conclusively deemed an abandonment and
vacation); or (c) failure to perform any other provision of this Lease,
provided that Landlord shall not exercise any of its rights under this Section
20(c) until Landlord has given Tenant notice of such default and a cure period
of thirty (30) days from receipt of such notice, and Tenant has failed to cure
such default within such cure period, provided further that if more than thirty
(30) days are required to complete such performance, the cure period shall not
be deemed to have run so long as Tenant commences to cure such default within
the thirty (30) day period and thereafter diligently pursues its
completion.  The notice required by this
Section is intended to satisfy any and all notice requirements imposed by law
on Landlord and is not in addition to any such requirement

21.     LANDLORD'S REMEDIES. 
Landlord shall have the following remedies if Tenant is in
default and after providing Tenant with prior written notice and expiration of
all applicable cure periods to the extent and as required pursuant to Section
20. (These remedies are not exclusive; they are cumulative and in addition to
any remedies now or later allowed by law): Landlord may terminate Tenant's
right to possession of the Premises at any time.  No act by Landlord other than giving notice to Tenant shall
terminate this Lease.  Acts of
maintenance, efforts to relet the Premises, or the appointment of a receiver on
Landlord's initiative to protect Landlord's interest under this Lease shall not
constitute a termination of Tenant's right to possession.  Upon termination of Tenant's right to
possession, Landlord has the right to recover from Tenant: (1) the worth of the
unpaid Rent that had been earned at the time of termination of Tenant's right
to possession; (2) the worth of the amount of the unpaid Rent that would have
been earned after the date of termination of Tenant's right to possession less
the amount that Tenant proves Landlord should be able to earn during such
period net of all releasing costs; (3) any other amount, including but not
limited to, expenses incurred to relet the Premises, court, attorney and
collection costs, necessary to compensate Landlord for all detriment caused by
Tenant's default.

22.     ENTRY ON PREMISES.  Landlord and its authorized
representatives shall have the right to enter the Premises at all reasonable
times, with reasonable prior notice (except in an emergency, when no notice is
required), for any of the following purposes: (a) to determine whether the
Premises are in good condition and whether Tenant is complying with its
obligations under this Lease; (b) to do any necessary maintenance and to make
any restoration to the Premises or the Project that Landlord has the right or obligation
to perform; (c) to post "for sale" signs at any time during the term,
to post "for rent" or "for lease" signs during the last 90
days of the term, or during any period while Tenant is in default; (d) to show
the Premises to prospective brokers, agents, buyers, tenants or persons
interested in leasing or purchasing the Premises, at any time during the term;
or (e) to repair, maintain or improve the Project and to erect scaffolding and
protective barricades around and about the Premises but not so as to prevent
entry to the Premises and to do any other act or thing necessary for the safety
or preservation of the Premises or the Project.  Landlord shall not be liable in any manner for any inconvenience,
disturbance, loss of business, nuisance or other damage arising out of
Landlord's entry onto the Premises as provided in this Section 22.  Tenant shall not be entitled to an abatement
or reduction of Rent if Landlord exercises any rights reserved in this Section
22.  Landlord shall conduct his
activities on the Premises as provided herein in a commercially reasonable
manner so as to limit inconvenience, annoyance or disturbance to Tenant to the
maximum extent practicable.  For each of
these purposes, Landlord shall at all times have and retain a key with which to
unlock all the doors in, upon and about the Premises, excluding Tenant's vaults
and safes.  Tenant shall not alter any
lock or install a new or additional lock or bolt on any door of the Premises
without prior written consent of Landlord. 
If Landlord gives its consent, Tenant shall furnish Landlord with a key
for any such lock.

23.     SUBORDINATION; ESTOPPEL CERTIFICATE.

a.       Subordination. 
Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, and at the
election of Landlord or any mortgagee or any beneficiary of a Deed of Trust
with a lien on the Project or any ground lessor with respect to the Project,
this Lease shall be subject and subordinate at all times to (a) all ground
leases or underlying leases which may now exist or hereafter be executed
affecting the Project, and (b) the lien of any mortgage or deed of trust which
may now exist or hereafter be executed in any amount for which the Project,
ground leases or underlying leases, or Landlord's interest or estate in any of
said items is specified as security.  In
the event that any ground lease or underlying lease terminates for any reason
or any mortgage or Deed of Trust is foreclosed or a conveyance in lieu of
foreclosure is made for any reason, Tenant shall, notwithstanding any
subordination, attorn to and become the Tenant of the successor in interest to
Landlord, at the option of such successor in interest.  Tenant covenants and agrees to execute and
deliver, upon demand by Landlord and in the form requested by Landlord any
additional documents evidencing the priority or subordination of this Lease
with respect to any such ground lease or underlying leases or the lien of any
such mortgage or Deed of Trust.  Tenant
hereby irrevocably appoints Landlord as attorney-in-fact of Tenant to execute,
deliver and record any such document in the name and on behalf of Tenant.

b.       Estoppel Certificate. Tenant shall, within 15 days of demand,
execute and deliver to Landlord a written statement certifying:  (i) the commencement and the expiration
date of the Term; (ii) the amount of Base Rent and the date to which it
has been paid; (iii) that this Lease is in full force and effect and has
not been assigned or amended in any way (or specifying the date and terms of
each agreement so affecting this Lease) and that no part of the Premises has
been sublet (or to the extent such is not the case, a copy of any sublease);
(iv) that Landlord is not in default under this Lease (or if such is not
the case, the extent and nature of such default);  (v) on the date of such certification, there are no existing
defenses or claims which Tenant has against Landlord (or if such is not the
case, the extent and nature of such defenses or claims); (vi) the amount
of the Security Deposit held by Landlord; and (vii) any other fact or
representation that a mortgagee or purchaser may reasonably request.  It is intended that any such statement shall
be binding upon Tenant and may be relied upon by a prospective purchaser or mortgagee.  If Tenant fails to respond within 10 days of
receipt of a written request by Landlord therefor, (a) Tenant shall be deemed
to have given a certificate as above provided, without modification, and shall
be conclusively deemed to have admitted the accuracy of any information
supplied by Landlord to a prospective purchaser or mortgagee, and (b) Landlord
may impose a fee of $100 per day for each day of delay in providing the
statement by Tenant after the 10 day period.

24.     NOTICE. 
Any notice, demand or
request required hereunder shall be given in writing to the party's facsimile
number or address set forth in Section 1 hereof by any of the following
means: (a) personal service; (b) electronic communication, whether by
telex, telegram or facsimile with electronic confirmation; (c) overnight
courier; or (d) registered or certified, first class mail, return receipt
requested.  Such addresses may be
changed by notice to the other parties given in the same manner as above
provided.  Any notice, demand or request
sent pursuant to either subsection (a) or (b) hereof shall be deemed received
upon such personal service or upon dis­patch by electronic means with
electronic confirmation of receipt.  Any
notice, demand or request sent pursuant to subsection (c) hereof shall be
deemed received on the business day immediately following deposit with the
overnight courier and, if sent pursuant to subsection (d), shall be deemed
received forty-eight (48) hours following deposit in the U.S. mail.

25.     WAIVER.  No delay or
omission in the exercise of any right or remedy by Landlord shall impair such
right or remedy or be construed as a waiver. 
No act or conduct of Landlord, including without limitation, acceptance
of the keys to the Premises, shall constitute an acceptance of the surrender of
the Premises by Tenant before the expiration of the term.  Only written notice from Landlord to Tenant
shall constitute acceptance of the surrender of the Premises and accomplish
termination of the Lease.  Landlord's
consent to or approval of any act by Tenant requiring Landlord's consent or
approval shall not be deemed to waive or render unnecessary Landlord's consent
to or approval of any subsequent act by Tenant.  Any waiver by Landlord of any default must be in writing and
shall not be a waiver of any other default concerning the same or any other
provision of the Lease.  TENANT
SPECIFICALLY ACKNOWLEDGES AND AGREES THAT, WHERE TENANT HAS RECEIVED A NOTICE
TO CURE DEFAULT (WHETHER RENT OR NON-RENT), NO ACCEPTANCE BY LANDLORD OF RENT SHALL
BE DEEMED A WAIVER OF SUCH NOTICE, AND, INCLUDING BUT WITHOUT LIMITATION, NO
ACCEPTANCE BY LANDLORD OF PARTIAL RENT SHALL BE DEEMED TO WAIVE OR CURE ANY
RENT DEFAULT.  LANDLORD MAY, IN ITS
DISCRETION, AFTER RECEIPT OF PARTIAL PAYMENT OF RENT, REFUND SAME AND CONTINUE
ANY PENDING ACTION TO COLLECT THE FULL AMOUNT DUE, OR MAY MODIFY ITS DEMAND TO
THE UNPAID PORTION.  IN EITHER EVENT THE
DEFAULT SHALL BE DEEMED UNCURED UNTIL THE FULL AMOUNT IS PAID IN GOOD FUNDS.

26.     SURRENDER OF PREMISES; HOLDING OVER.  Upon expiration of the Term,
Tenant shall surrender to Landlord the Premises and all Tenant improvements and
alterations in good condition, except for ordinary wear and tear and
alterations Tenant has the right or is obligated to remove under the provisions
of Section 14 herein.  Tenant shall
remove all personal property including, without limitation, all data and phone
wires, wallpaper, paneling and other decorative improvements or fixtures and
shall perform all restoration made necessary by the removal of any alterations
or Tenant's personal property before the expiration of the term, including for
example, restoring all wall surfaces to their condition prior to the
commencement of this Lease.  Landlord
can elect to retain or dispose of in any manner Tenant's personal property not
removed from the Premises by Tenant prior to the expiration of the term.  Tenant waives all claims against Landlord
for any damage to Tenant resulting from Landlord's retention or disposition of
Tenant's personal property.  Tenant
shall be liable to Landlord for Landlord's cost for storage, removal or
disposal of Tenant's personal property.

If Tenant, with Landlord's consent, remains in possession of the
Premises after expiration or termination of the term, or after the date in any
notice given by Landlord to Tenant terminating this Lease, such possession by
Tenant shall be deemed to be a month-to-month tenancy terminable as provided
under Washington law, by either party. 
All provisions of this Lease, except those pertaining to term and Rent,
shall apply to the month-to-month tenancy. 
During any holdover term, Tenant shall pay Base Monthly Rent in an
amount equal to 150% of Base Monthly Rent for the last full calendar month
during the regular term plus 100% of Tenant's share of Expenses pursuant to
Section 4(b)(3).  If Tenant fails to
surrender possession of the Premises upon termination or expiration of this
Lease and if Tenant does not obtain Landlord’s written consent to Tenant’s
continued occupancy, then Tenant shall be deemed a trespasser and shall be
liable to Landlord for all damages sustained by Landlord as a result thereof,
together with Base Rate at a rate double the Latest Rate.

27.     LIMITATION OF LANDLORD'S LIABILITY. 
In consideration of the benefits accruing hereunder, Tenant
agrees that, in the event of any actual or alleged failure, breach or default
of this Lease by Landlord, Landlord's liability under this Lease shall be
limited to, and Tenant shall look only to Landlord interest in the Project and
the rents and proceeds thereof.

28.     BUILDING PLANNING.  If Landlord requires the Premises for use in
conjunction with another suite or for other reasons connected with the Project
planning program, upon notifying Tenant in writing at least sixty (60) days in
advance, Landlord shall have the right to move Tenant to other space in the
Project that is substantially the same in size, configuration and tenant
improvements, such move (including out-of-pocket ancillary costs such as
reprinting of stationary) to be at Landlord's sole cost and expense.  Upon such move, the terms and conditions of
the original Lease shall remain in full force and effect, save and excepting
that a revised Exhibit "A" shall become part of this Lease and shall
reflect the location of the new space and Section 1 of this Lease shall be
amended to include and state all correct data as to the new space.

29.     MISCELLANEOUS PROVISIONS.

a.       Time of Essence.  Time is of the essence of each
provision of this Lease.

b.       Successor.  This
Lease shall be binding on and inure to the benefit of the parties and their
successors, except as provided in Section 19 herein.

c.       Landlord's Consent. 
Any consent required by Landlord under this Lease must be
granted in writing and may be withheld or conditioned by Landlord in its sole
and absolute discretion.

d.       Commissions.  Each
party represents that it has not had dealings with any real estate broker,
finder or other person with respect to this Lease in any manner, except for the
broker(s) identified in Section 1, who shall be compensated by Landlord.  Landlord and Tenant recognize that it is
possible that they may hereafter make additional agreements regarding further
extension or renewal of this Lease or a new lease or leases for all or one or
more parts of the Premises or other space in the Project for a term or terms
commencing after the Commencement Date of this Lease.  Landlord and Tenant recognize that it is also possible that they
may hereafter modify this Lease to add additional space or to substitute space
as part of the Premises.  If any such
additional agreements, new leases or modifications to this Lease are made,
Landlord shall not have any obligation to pay any compensation to any real
estate broker or to any other third person engaged by Tenant to render services
to Tenant in connection with negotiating such matters, regardless of whether
under the circumstances such person is or is not regarded by the law as an
agent of Landlord.

e.       Other Charges. 
If either party commences any litigation against the other
party or files an appeal of a decision arising out of or in connection with the
Lease, the prevailing party shall be entitled to recover from the other party
reasonable attorney's fees and costs of suit. 
Tenant shall pay a charge of $75 to Landlord for preparation of a demand
for delinquent Rent.

f.        Force Majeure. 
Except for the obligation to pay Rent
and Additional Rent, neither Landlord nor Tenant shall be deemed in default
hereof nor liable for damages arising from its failure to perform its duties or
obligations hereunder if such is due to causes beyond its reasonable control,
including, but not limited to, acts of God, acts of civil or military
authorities, fires, floods, windstorms, earthquakes, strikes or labor
disturbances, civil commotion, delays in transportation, governmental delays or
war.

g.       Rules and Regulations.  Tenant shall faithfully observe and comply
with the "Rules and Regulations", a copy of which is attached hereto,
and all reasonable and nondiscriminatory modifications thereof and additions
thereto from time to time put into effect by Landlord.  Landlord shall not be responsible to Tenant
for the violation or non-performance by any other tenant or occupant of the
building or Project of said tenant or occupant's lease or of any of said Rules
and Regulations.

h.       Landlord's Successors.  In the event of a sale or conveyance by Landlord of
the Project, the same shall operate to release Landlord from any liability
under this Lease, and in such event Landlord's successor in interest shall be
solely responsible for all obligations of Landlord under this Lease.

i.        Interpretation.  This Lease shall be construed and interpreted in accordance with
the laws of the state in which the premises are located.  This Lease constitutes the entire agreement
between the parties with respect to the Premises and the Project, except for
such guarantees or modifications as may be executed in writing by the parties
from time to time.  When required by the
context of this Lease, the singular shall include the plural, and the masculine
shall include the feminine and/or neuter. 
"Party" shall mean Landlord or Tenant.  If more than one person or entity
constitutes Landlord or Tenant, the obligations imposed upon that party shall
be joint and several.  The
enforceability, invalidity or illegality of any provision shall not render the
other provisions unenforceable, invalid or illegal.

j.        Prior Understandings. Tenant acknowledges that neither Landlord
nor anyone representing Landlord has made statements of any kind whatsoever on
which Tenant has relied in entering into this Lease.  Tenant further acknowledges that Tenant has relied solely on its
independent investigation and its own business judgment in entering into this
Lease.  Landlord and Tenant agree
that:  this Lease supersedes all prior
and contemporaneous understandings and agreement; the provisions of this Lease
are intended by them as the final expression of their agreement; this Lease
constitutes the complete and exclusive statement of its terms; and no extrinsic
evidence whatsoever may be introduced in any judicial proceeding involving this
Lease.  No provision of this Lease may
be amended except by an agreement in writing signed by the parties hereto or
their respective successors in interest, whether or not such amendment is
supported by new consideration.

k.       Authority. 
If Tenant is a corporation, each individual executing this Lease on
behalf of said corporation represents and warrants that he/she is duly
authorized to execute and deliver this Lease on behalf of said corporation.  Concurrently with the execution of this
Lease, Tenant shall deliver to Landlord a certified copy of a resolution of the
Board of Directors of said corporation authorizing the execution of this Lease.  If Tenant is a partnership, each individual executing
this Lease on behalf of said partnership represents and warrants that he/she is
duly authorized to execute and deliver this Lease on behalf of said partnership
and that this Lease is binding upon said partnership in accordance with its
terms, and concurrently with execution of this Lease, Tenant shall deliver to
Landlord such evidence of authorization as Landlord may require.  If Tenant is a marital community, or a
member of a marital community, both members of the marital community shall
execute this Lease.  Where Tenant is
comprised of more than one person or entity, all covenants, agreements and
obligations of Tenant hereunder shall be the joint and several covenants,
agreements and obligations of each person or entity comprising

l.        Clean Air Act.  Tenant acknowledges that Landlord has not made any portion of the
Premises or the Building accessible for smoking in compliance with WAC
296-62-12000.  If Tenant wishes to make
any portion of the Premises accessible for smoking, Tenant shall make all improvements
necessary to comply with all applicable governmental rules and
regulations.  Tenant acknowledges that
the indemnity contained in Section 15 of the Lease includes, but is not limited
to claims based on the presence of tobacco smoke as a result of the activities
of Tenant, its employees, agents, or guests.

30.     LETTER OF CREDIT.  On or before the earlier of (i) ninety (90) days after mutual
execution of this Lease or (ii) the date on which Tenant wishes to obtain
disbursement of any portion of the T.I. Allowance, Tenant shall cause to be
delivered to Landlord an irrevocable, unconditional, transferable standby
Letter of Credit in the initial sum of $325,000.00 naming Landlord as
beneficiary, issued by a lender acceptable to Landlord and otherwise substantially
in the form of attached Exhibit E, provided that if the issuing bank does not
have a New York branch on which the letter may be drawn, then Tenant shall
further obtain from the Bank of New York a Confirmation Advice in the form
attached as Exhibit E-1 (collectively the “Letter of Credit”).  Tenant shall be required to maintain the
Letter of Credit through the Lease Term. 
The Letter of Credit shall be governed by the rules of the International
Standby Practices of 1998 or such later revision as may be published by the
Institute of International Banking Law and Practice.

If Tenant breaches any covenant or condition of this Lease, including
but not limited to the payment of rent or additional rent, and fails to cure
such breach within any cure period provided in this Lease, Landlord may draw on
the Letter of Credit and apply any sums so drawn to reimburse itself for any
damages or other amounts due from Tenant relating to such breach, regardless of
whether Landlord has previously taken any other action against Tenant.  Further, if Tenant fails to renew the Letter
of Credit at least ninety (90) days prior to its expiration during the Term of
this Lease, then such failure shall be deemed to be an immediate default
entitling Landlord to draw the entire Letter of Credit and hold it as a cash
security deposit.  Any payment to Landlord from the Letter of Credit shall
not be construed as a payment of liquidated damages for any default.

Provided that Tenant has not at any time been in default of any of its monetary
obligations under this Lease and has not been in material default of any other
obligations under this Lease, then as of June 1, 2003, Tenant may reduce the
Letter of Credit to $216,667 and subject to the same precondition may reduce
the Letter of Credit to $108,334 on June 1, 2005.  This right to reduce the Letter of Credit shall be subject to
(and conditioned on) Landlord's confirming in writing that Tenant has satisfied
such conditions.  Landlord shall
promptly respond to Tenant's request for such confirmation and, if Landlord
deems the conditions not met, shall specify the reasons for its conclusion

31.     OPTION TO RENEW.  Tenant is granted the right (the “Extension Right”) to extend the
term of this Lease beyond the expiration date of the initial term for one
period of seventy-two (72) months (the “Extended Term”).  Tenant may not exercise its Extension Right
if it is in default beyond any applicable cure period at the time Tenant
exercised its Extension Right, or if it has ever been in default beyond any
applicable cure period more than two (2) times in any twelve (12) month
period.  Tenant may exercise its
Extension Right by delivering written notice thereof to Landlord not later than
three hundred sixty five (365) days prior to the expiration of the initial
term.  In the Extended Term, all terms
and conditions of this Lease shall apply, except (i) Section 31 of this Lease
shall not apply, and (ii) the Base Monthly Rent for the Extended Term shall be
the then prevailing market rate for a similar lease and term for similarly
situated and improved space (“Fair Market Rent”), provided that in no event
shall the Base Monthly Rent plus Additional Rent for the Extended Term be less
than the Base Monthly Rent plus Additional Rent for the last month of the initial
term.  In the event Tenant exercises its
option, Landlord shall provide a tenant improvement allowance in an amount not
to exceed $4.00 per square foot.

Extension Rights shall apply to all of the Premises then under lease to
Tenant.  Tenant’s Extension Right is
personal and may not be exercised by any assignee or sublessee.

DATED as of the day and year first written above.

	
  LANDLORD:
  	
  TEACHERS INSURANCE & ANNUITY ASSOCIATION OF AMERICA 

  
	 
  	
  By:     /s/ James P.
  Garofalo_______________________
  
	 
  	
  Its:      [Assistant
  Secretary]_______________________
  
	 
  	 
  
	 
  	
  By:     _______________________________________
  
	 
  	
  Its:      _______________________________________
  
	 
  	 
  
	
  TENANT:
  	
  APPLIED MICROSYSTEMS CORPORATION

  
	 
  	
  By:     /s/ Robert C.
  Bateman_____________________
  
	 
  	
  Its:      [VP and CFO]___________________________
  
	 
  	 
  
	 
  	
  By:     _______________________________________
  
	 
  	
  Its:      _______________________________________

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