Document:

EXHIBIT 10.5B
                                                                   -------------

                            FIRST AMENDMENT TO LEASE
                                AGREEMENT BETWEEN
                              THOMAS AND ELSIE KANE
                          AND PACIFIC BIOMETRICS, INC.

THE FIRST AMENDMENT TO THIS LEASE, made this 20th day of January, 1998 by and
between Thomas and Elsie Kane ("Landlord") and Pacific Biometrics Inc.
("Tenant") do hereby amend the LEASE AGREEMENT for the Premises (more
particularly described in Exhibit A of the Lease Agreement) dated 23rd day of
April, 1997.

1.   Section 1(b) entitled: Lease Commencement Date.
     Revise Lease as follows: The Lease shall commence on November 1, 1997.

2.   Section 1(c) entitled: Lease Termination Date.
     Revise Lease as follows: The Lease shall terminate on October 31, 2007.

3.   Section 1(d) entitled: Base Rent.
     The base monthly rent shall be in accordance with the revised Rent Rider
     attached to this FIRST AMENDMENT to Lease Agreement.

4.   RENT RIDER (Attachment to Lease):
     Revise BASE MONTHLY RENT SCHEDULE in the RENT RIDER attachment to the Lease
     to conform to the provisions of the amended schedule in this FIRST
     AMENDMENT to Lease Agreement.

THE LEASE AGREEMENT, dated April 23, 1997, shall remain in full force and effect
in accordance with and subject to all terms and conditions as set forth therein
except as revised and modified by this FIRST AMENDMENT to Lease, dated January
20, 1998 shall be binding upon and inure to the benefit of the respective heirs,
and assigns of the parties hereto.

THE PARTIES HERETO have executed this FIRST AMENDMENT to Lease Agreement in
multiple copies, each copy for the purposes being deemed an original the day and
year of execution.

     LANDLORD:                                  TENANT:
     ---------                                  -------

by:  /s/ Thomas Kane
     ---------------------                      Pacific Biometrics Inc.
     Thomas Kane

by:  /s/ Elsie Kane                         by: /s/ Paul Kanan
     ---------------------                      ---------------------
     Elsie Kane                                 Paul Kanan
                                                Its: President/CEO

<PAGE>

                               AMENDED RENT RIDER

Landlord and Tenant should complete only those provisions below which apply. Any
provision which is not completed shall not apply to the Lease.

1.   Base Monthly Rent Schedule. Tenant shall pay landlord base monthly rent
during the Lease Term according to the following schedule.

Lease Year (Stated in Years or Months)                 Base Monthly Rent Amount
                     Year 1                                 $20,027.05
                     Year 2                                 $20,027.05
                     Year 3                                 $20,335.80
                     Year 4                                 $20,644.55
                     Year 5                                 $20,953.30
                     Year 6                                 $21,262.05
                     Year 7                                 $21,570.80
                     Year 8                                 $18,525.00
                     Year 9                                 $19,019.00
                     Year 10                                $19,513.00EXHIBIT 10.5C
                                                                   -------------

                       SECOND AMENDMENT TO LEASE AGREEMENT

                        BETWEEN THOMAS AND ELSA KANE AND

                            PACIFIC BIOMETRICS, INC.

         THIS SECOND AMENDMENT to this Lease, made this 20th day of April, 2007,
by and between Thomas and Elsa Kane ("Landlord") and Pacific Biometrics, Inc.
("Tenant").

         R E C I T A L S:

         A. In accord with the terms of "Lease Agreement" of April 23, 1997 (as
amended by First Amendment to Lease Agreement of January 20, 1998) Landlord has
leased to Tenant the premises described in Exhibit A of the Lease Agreement. The
Lease presently expires October 31, 2007.

         B. Landlord and Tenant wish to extend the Lease until October 31, 2012
and also wish to grant to Tenant an option to extend for an additional five (5)
years thereafter.

         C. Landlord and Tenant wish to retain and reaffirm most of the
paragraphs of the Lease Agreement of April 23, 1997 with those retained
provisions controlling the Landlord Tenant relationship during the extended
period(s). The retained provisions are attached as Exhibit A to this Second
Amendment.

         NOW, THEREFORE, IT IS HEREBY AGREED as follows:

         1. The Lease of April 23, 1997 be and hereby is extended for a five (5)
year period and it will accordingly terminate at midnight on October 31, 2012.
It is agreed that during the extended period the provisions of the Lease
contained in Exhibit A attached will control.

         2. During the five (5) year extended term, the monthly rent will be:

         Year 1                          $20,361.00
         Year 2                          $21,000.00
         Year 3                          $21,639.00
         Year 4                          $22,278.00
         Year 5                          $22,917.00

         The above rental reflects an agreed reduction in rent by Landlord of
$38,325.00 as a rent allowance to Tenant for Landlord's contribution to cost of
improvements performed and to be performed by Tenant. In addition, Landlord
shall pay to Tenant an additional $38,325.00 in cash upon mutual execution of
this Second Amendment as

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<PAGE>

a cash allowance to Tenant for Landlord's contribution to cost of improvements
performed, and to be performed, by Tenant. These approved improvements are
scheduled on Exhibit B attached.

         3. Landlord grants to Tenant the exclusive option and privilege of
extending the term of this Lease for an additional five (5) year period
following October 31, 2012 upon the same terms and conditions in Exhibit A
attached hereto and incorporated herein. If Tenant decides to exercise this
option, Tenant shall give written notice to Landlord of its election not less
than sixty (60) days prior to October 31, 2012. Upon the giving of such notice,
the Lease shall be extended and shall continue for the additional five (5) year
period and the execution of a new lease or instrument of any kind shall not be
required, PROVIDED THAT the amount of rent for the period following October 31,
2012 shall be agreed by Landlord and Tenant or if unable to agree, in accord
with the following procedure: Within ten (10) days after the Notice of Election
to Exercise, Landlord and Tenant shall each appoint a commercial real estate
broker or appraiser with at least ten (10) years of experience with properties
similar to the Premises in the general geographical area in which the Premises
are located. The appraiser must be a licensed appraiser or a licensed real
estate broker who has not been regularly employed or retained as a consultant,
appraiser or agent for the appointing party.

         Within ten (10) days after both appraisers have been appointed, the
appraisers shall decide what the fair market rent for the extended term would be
and shall promptly notify Landlord and Tenant of their decision which shall be
final and binding. In the event the appraisers do not agree, they shall each
propose one (1) fair market value rent number in writing and shall then jointly
appoint a third appraiser, who, after consultation, shall select one (1) rent
number or the other as the fair market rent.

         4. Notwithstanding anything to the contrary in the Lease Agreement,
Tenant may, upon delivery of notice to Landlord, sublease all or part of the
Premises. Tenant's notice of intent to sublease must be delivered to Landlord at
least fourteen (14) days prior to the proposed date of sublease. Tenant's notice
must contain (1) the form of Sublease Agreement to be used; (2) the legal name
of the subtenant; (3) a description of the nature of subtenant's business; (4) a
summary of its business history; and (5) a brief financial summary of subtenant
(which Landlord shall treat as confidential) sufficient to inform Landlord with
regard to the subtenant's financial viability. As noted in the Lease Agreement,
any such assignment or sublease shall not release Tenant from Tenant's Lease
Agreement obligations. Landlord, after making a reasonable evaluation of items
(1) through (5) may refuse to consent to the sublease, if the proposed subtenant
would be unsatisfactory.

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<PAGE>

         5. NOTICE OF LANDLORD'S INTENTION TO LIST AND/OR SELL THE PROPERTY AND
TO PERMIT TENANT TO MAKE THE FIRST OFFER. Landlord agrees that if, at any time
during the term of this Lease, a decision is made to enter a listing agreement
and/or sell the property, Landlord will give written notice to Tenant that such
decision has been made thirty (30) days prior to signing a Listing Agreement
and/or contract to sell the property. Landlord agrees that, during the thirty
(30) day period, Landlord will neither accept nor consider any purchase offers
from any other party. Tenant shall thereby be entitled to make the first offer.

         6. Except as modified herein, the Lease Agreement shall remain in full
force and effect. IN WITNESS WHEREOF the parties have executed this Second
Amendment to Lease Agreement on the day and

year first above written.

LANDLORD:                              TENANT:

/s/ Thomas Kane                        PACIFIC BIOMETRICS, INC.
------------------------
Thomas Kane

/s/ Elsa Kane                          /s/ Ronald Helm
------------------------               -------------------------------
Elsa Kane                              By: Ronald Helm, President/CEO

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<PAGE>

STATE OF WASHINGTON                   )
                                      )  ss.
COUNTY OF KING                        )

         On this day personally appeared before me Thomas Kane and Elsa Kane, to
me known to be the individuals described in and who executed the within and
foregoing instrument, and acknowledged that they signed the same as their free
and voluntary act and deed, for the uses and purposes therein mentioned.

         GIVEN under my hand and official seal this 20th day of April, 2007.

                                      /s/ Cristyann Laxamana

                                      (Printed Name:  Cristyann Laxamana       )
                                                     --------------------------
                                      Notary Public for the State of Washington

                                      residing at:  23302 59th Pl. S
                                                   ----------------------------
                                      My commission expires:  June 20, 2010
                                                             ------------------

STATE OF WASHINGTON                   )
                                      )  ss.
COUNTY OF KING                        )

         On this 20th day of April, 2007, before me, the undersigned, a Notary
Public in and for the State of Washington, duly commissioned and sworn,
personally appeared Ronald Helm, to me known to be the President and CEO of
Pacific Biometrics, Inc., the corporation that executed the foregoing
instrument, and acknowledged the said instrument to be the free and voluntary
act and deed of said corporation, for the uses and purposes therein mentioned,
and on oath stated that he is authorized to execute the said instrument and that
the seal affixed is the corporate seal of said corporation.

         Witness my hand and official seal hereto affixed the day and year first
above written.

                                      /s/ Cristyann Laxamana

                                      (Printed Name:  Cristyann Laxamana       )
                                                     --------------------------
                                      Notary Public for the State of Washington

                                      residing at:  23302 59th Pl. S
                                                   ----------------------------
                                      My commission expires:  June 20, 2010
                                                             ------------------

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<PAGE>

                                    EXHIBIT A

                                 LEASE AGREEMENT

                 (Single Tenant for Entire Parcel - Triple Net)

This Has Been Prepared For Submission To Your Attorney For Review And Approval
Prior To Signing No Representation is Made By Licensee As To Its Legal
Sufficiency Or Tax Consequences

CBA Text Disclaimer. Text deleted try licensee indicated by strike. New text
inserted try licensee Indicated by small capital letters.

THIS LEASE AGREEMENT (the "Lease") is entered into this _____ day of
________________ between TOM KANE AND ELSA KANE ("Landlord"), and PACIFIC
BIOMETRICS, INC. ("Tenant"). Landlord and Tenant agree as follows:

1. LEASE SUMMARY.

     a. Leased Premises. The leased premises (the "Premises") consist of the
     real property legally described on attached Exhibit A, and all improvements
     thereon.

     b. Lease Commencement Date. The Lease shall commence on November 1, 2007,
     or such earlier or later date as provided in Section 3 (the "Commencement
     Date").

     c. Lease Termination Date. The Lease shall terminate at midnight on October
     31, 2012, or such earlier or later date as provided in Section 3 (the
     "Termination Date").

     d. Base Rent. The base monthly rent shall be (check one): [__] $_______, or
     [XX] according to the Rent Rider attached hereto. Rent shall be payable at
     Landlord's address shown in Section 1(h) below, or such other place
     designated in writing by Landlord.

     g. Permitted Use. The Premises shall be used only for GENERAL OFFICE AND
     TESTING LABORATORY and for no other purpose without the prior written
     consent of Landlord.

     h. Notice and Payment Addresses:

     Landlord:  810 WEST HIGHLAND DRIVE, SEATTLE, WA 98119 Fax No.: 206-298-2936
               -------------------------------------------

     Tenant:  220 WEST HARRISON, SEATTLE, WA 98119 Fax No.: 206-298-9838
             -------------------------------------

2.   PREMISES. Landlord leases to Tenant, and Tenant leases from Landlord the
     Premises upon the terms specified in this Lease.

3.   TERM.

     a. Commencement Date. The Lease shall commence on the date specified in
     Section 1(b).

4.   RENT. Tenant shall pay Landlord without demand, deduction or offset, in
     lawful money of the United States, the monthly rental stated in Section
     1(d) in advance on or before the first day of each month during the Lease
     Term, and any other additional payments due to Landlord (collectively the
     "Rent") when required under this Lease. Payments for any partial month at
     the beginning or end of the Lease term shall be prorated.

     If any sums payable by Tenant to Landlord under this Lease are not received
     by the TENTH (10TH) day of each month, Tenant shall pay Landlord in
     addition to the amount due, for the cost of collecting and handling such
     late payment, an amount equal to the greater of $100 or five percent (5%)
     of the delinquent amount. In addition, all delinquent sums payable by
     Tenant to Landlord and not paid within TEN (10) days of the due date shall,
     at Landlord's option, bear interest at the rate of twelve percent (12%) per
     annum, or the highest rate of interest allowable by law, whichever is less.
     Interest on all delinquent amounts shall be calculated from the original
     due date to the date of payment.

     Landlord's acceptance of less than the full amount of any payment due from
     Tenant shall not be deemed an accord and satisfaction or compromise of such
     payment unless Landlord specifically consents in writing to payment of such
     lesser sum as an accord and satisfaction or compromise of the amount which
     Landlord claims.

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<PAGE>

6.   USES. The Premises shall be used only for the use(s) specified in Section
     1(g) above (the "Permitted Use"), and for no other business or purpose
     without the prior written consent of Landlord. No act shall be done on or
     around the Premises that is unlawful or that will increase the existing
     rate of insurance on the Premises. Tenant shall not commit or allow to be
     committed any waste upon the Premises, or any public or private nuisance.

7.   COMPLIANCE WITH LAWS. Tenant shall not cause or permit the Premises to be
     used in any way which violates any law, ordinance, or governmental
     regulation or order. Landlord represents to Tenant that, to the best of
     Landlord's knowledge, with the exception of any Tenant's Work, as of the
     Commencement Date, the Premises comply with all applicable laws, rules,
     regulations, or orders, including without limitation, the Americans With
     Disabilities Act, if applicable, and Landlord shall be responsible to
     promptly cure any noncompliance which existed on the Commencement Date.
     Tenant shall be responsible for complying with all laws applicable to the
     Premises as a result of Tenant's particular use, such as modifications
     required by the Americans With Disabilities Act as a result of Tenant
     opening the Premises to the public as a place of public accommodation. If
     the enactment or enforcement of any law, ordinance, regulation or code
     during the Lease term requires any changes to the Premises during the Lease
     term, the Tenant shall perform all such changes at its expense, if the
     changes are required due to the nature of Tenant's activities at the
     Premises, or to alterations that Tenant seeks to make to the Premises;
     otherwise, Landlord shall perform all such changes at its expense.

8.   UTILITIES. Landlord shall not be responsible for providing any utilities to
     the Premises, but represents and warrants to Tenant that as of the
     Commencement Date electricity, water, sewer, and telephone utilities are
     available to the Premises. Tenant shall determine whether the available
     capacity of such utilities will meet Tenant's needs. Tenant shall install
     and connect, if necessary, and directly pay for all water, sewer, gas,
     janitorial, electricity, garbage removal, heat, telephone, and other
     utilities and services used by Tenant on the Premises during the Term, SO
     LONG AS such services are billed directly to Tenant.

9.   TAXES. Tenant shall pay all Taxes (defined below) applicable to the
     Premises during the Lease term. All payments for Taxes shall be made at
     least ten (10) days prior to their due date. Tenant shall promptly furnish
     Landlord with satisfactory evidence that Taxes have been paid. If any Taxes
     paid by Tenant cover any period of time before or after the expiration of
     the Term, Tenant's share of those Taxes paid will be prorated to cover only
     the period of time within the tax fiscal year during which this Lease was
     in effect, and Landlord shall promptly reimburse Tenant to the extent
     required. If Tenant fails to timely pay any Taxes, Landlord may pay them,
     and Tenant shall repay such amount to Landlord with Tenant's next rent
     installment.

     The term "Taxes" shall mean: (i) any form of real estate tax or assessment
     imposed on the Premises by any authority, including any city, state or
     federal government, or any improvement district, as against any legal or
     equitable interest of Landlord or Tenant in the Premises or in the real
     property of which the Premises are a part, or against rent paid for leasing
     the Premises; and (ii) any form of personal property tax or assessment
     imposed on any personal property, fixtures, furniture, tenant improvements,
     equipment, inventory, or other items, and all replacements, improvements,
     and additions to them, located on the Premises, whether owned by Landlord
     or Tenant. "Taxes" shall exclude any net income tax imposed on Landlord for
     income that Landlord receives under this Lease.

     Tenant may contest the amount or validity, in whole or in part, of any
     Taxes at its sole expense, only after paying such Taxes or posting such
     security as Landlord may reasonably require in order to protect the
     Premises against loss or forfeiture. Upon the termination of any such
     proceedings, Tenant shall pay the amount of such Taxes or part of such
     Taxes as finally determined, together with any costs, fees, interest
     penalties, or other related liabilities. Landlord shall cooperate with
     Tenant in contesting any Taxes, provided Landlord incurs no expense or
     liability in doing so.

10.  ALTERATIONS. Tenant may make alterations, additions or improvements to the
     Premises, including any Tenant's Work identified on attached Exhibit B
     ("Alterations"), with the prior written consent of Landlord WHICH CONSENT
     WILL NOT BE UNREASONABLY WITHHELD OR DELAYED. The term "Alterations" shall
     not include the installation of shelves, movable partitions, Tenant's
     equipment, and trade fixtures which may be performed without damaging
     existing improvements or the structural integrity of the Premises, and
     Landlord's consent shall not be required for Tenant's installation of those
     items. Tenant shall complete Alterations in compliance with all applicable
     laws and in accordance with plans and specifications approved by Landlord,
     and using contractors approved by Landlord. Landlord shall be deemed the
     owner of all Alterations except for those which Landlord requires to be
     removed at the end of the Lease term. Tenant shall remove all Alterations
     at the end of the Lease term unless Landlord conditioned its consent upon
     Tenant leaving a specified Alteration at the Premises, in which case Tenant
     shall not remove such Alteration. Tenant shall immediately repair any
     damage to the Premises caused by removal of Alterations.

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<PAGE>

11.  REPAIRS AND MAINTENANCE. Tenant shall, at its sole expense, maintain the
     Premises in good condition and promptly make all NON-STRUCTURAL repairs and
     replacements necessary to keep the Premises in safe operating condition,
     but excluding the roof, foundation and exterior walls, which Landlord shall
     maintain in good condition and repair at Landlord's expense. Tenant shall
     not damage any demising wall or disturb the structural integrity of the
     Premises and shall promptly repair any damage or injury done to any such
     demising walls or structural elements caused by Tenant or its employees,
     agents, contractors, or invitees. Notwithstanding anything in this Section
     to the contrary, Tenant shall not be responsible for any repairs to the
     Premises made necessary by the acts of Landlord or its agents, employees,
     contractors or invitees therein.

     Upon expiration of the Lease term, whether by lapse of time or otherwise,
     Tenant shall promptly and peacefully surrender the Premises, together with
     all keys, to Landlord in as good condition as when received by Tenant from
     Landlord or as thereafter improved, reasonable wear and tear and insured
     casualty excepted.

12.  ACCESS. After reasonable notice from Landlord (except in cases of
     emergency, where no notice is required), Tenant shall permit Landlord and
     its agents and employees to enter the Premises at all reasonable times for
     the purposes of repair or inspection. This Section shall not impose any
     repair or other obligation upon Landlord not expressly stated elsewhere in
     this Lease. After reasonable notice to Tenant, Landlord shall have the
     right to enter the Premises for the purpose of showing the Premises to
     prospective purchasers or lenders at any time, and to prospective tenants
     within 180 days prior to the expiration or sooner termination of the Lease
     term.

     NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS LEASE, LANDLORD RECOGNIZES
     THE WORK TO BE PERFORMED BY TENANT IS CONFIDENTIAL AND PROPRIETARY, AND
     LANDLORD WILL USE ITS BEST EFFORTS TO ENTER THE PREMISES, OR ALLOW ITS
     AGENTS AND EMPLOYEES TO ENTER THE PREMISES, ONLY WHEN ACCOMPANIED BY AN
     ESCORT PROVIDED BY TENANT. LANDLORD WILL BE LIABLE TO TENANT FOR ANY DAMAGE
     RESULTING FROM LANDLORD'S VIOLATION OF THIS SECTION 12.

13.  SIGNAGE. Tenant shall obtain Landlord's written consent before installing
     any signs upon the Premises WHICH CONSENT MAY NOT BE UNREASONABLY WITHHELD
     OR DELAYED. Tenant shall install any approved signage at Tenant's sole
     expense and in compliance with all applicable laws. Tenant shall not damage
     or deface the Premises in installing or removing signage and shall repair
     any injury or damage to the Premises caused by such installation or
     removal.

14.  DESTRUCTION OR CONDEMNATION.

     a. Damage and Repair. If the Premises are partially damaged but not
     rendered untenantable, by fire or other insured casualty, then Landlord
     shall diligently restore the Premises and this Lease shall not terminate.
     The Premises shall not be deemed untenantable if less than twenty-five
     percent (25%) of the Premises are damaged. If insurance proceeds are
     available to Landlord but are not sufficient to pay the entire cost of
     restoring the Premises, then Landlord may elect to terminate this Lease and
     keep the insurance proceeds, by notifying Tenant within sixty (60) days of
     the date of such casualty. LANDLORD MAY, HOWEVER, CARRY "FULL REPLACEMENT
     COST" INSURANCE.

     If the Premises are entirely destroyed, or partially damaged and rendered
     TOTALLY untenantable, by fire or other casualty, Landlord may, at its
     option: (a) terminate this Lease as provided herein, or (b) restore the
     Premises to their previous condition. If, within 60 days after receipt by
     Landlord from Tenant of written notice that Tenant REASONABLY deems the
     Premises untenantable, Landlord fails to notify Tenant of its election to
     restore the Premises, or if Landlord is unable to restore the Premises
     within six (6) months of the date of the casualty event, then Tenant may
     elect to terminate the Lease.

     If Landlord restores the Premises under this Section 14(a), Landlord shall
     proceed with reasonable diligence to complete the work, and the base
     monthly rent shall be abated in the same proportion as the untenantable
     portion of the Premises bears to the whole Premises, provided that there
     shall be a rent abatement only if the damage or destruction of the Premises
     did not result from, THE neglect of Tenant, or Tenant's officers,
     contractors, licensees, agents, servants, employees, guests, OR invitees.
     Provided, Landlord complies with its obligations under this Section, no
     damages, compensation or claim shall be payable by Landlord for
     inconvenience, loss of business or annoyance directly, incidentally or
     consequentially arising from any repair or restoration of any portion of
     the Premises. Landlord will not carry insurance of any kind for the
     protection of Tenant or any improvements paid for by Tenant or as provided
     in Exhibit B or on Tenant's furniture or on any fixtures, equipment,
     improvements or appurtenances of Tenant under this Lease, and Landlord
     shall not be obligated to repair any damage thereto or replace the same
     unless the damage is caused by Landlord's negligence.

     b. If the Premises are made untenantable by eminent domain, or conveyed
     under a threat of condemnation, this Lease shall automatically terminate as
     of the earlier of the date title vests in the condemning authority or the
     condemning authority first has possession of the Premises and all Rents and
     other payments shall be paid to that date. In case of taking of a part of
     the Premises that does not render the Premises untenantable, then this
     Lease shall continue in full force and effect and the base monthly rental
     shall be equitably reduced based on the proportion by which the floor area
     of any structures is reduced, such

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<PAGE>

     reduction in Rent to be effective as of the earlier of the date the
     condemning authority first has possession of such portion or title vests in
     the condemning authority. Landlord shall be entitled to the entire award
     from the condemning authority attributable to the value of the Premises and
     Tenant shall make no claim for the value of its leasehold. Tenant shall be
     permitted to make a separate claim against the condemning authority for
     moving expenses or damages resulting from interruption in its business,
     provided that in no event shall Tenant's claim reduce Landlord's award.

15.  INSURANCE.

     a. Liability Insurance. During the Lease term, Tenant shall pay for and
     maintain commercial general liability insurance with broad form property
     damage and contractual liability endorsements. This policy shall name
     Landlord as an additional insured, and shall insure Tenant's activities and
     those of Tenant's employees, officers, contactors, licensees, agents,
     servants, employees, guests, invitees or visitors with respect to the
     Premises against loss, damage or liability for personal injury or death or
     loss or damage to property with a combined single limit of not less than
     $1,000,000, and a deductible of not more than $5,000. The insurance will be
     noncontributory with any liability insurance carried by Landlord.

     b. Casualty Insurance. During the Lease term, Tenant shall pay for and
     maintain all-risk coverage casualty insurance for the Premises, in an
     amount sufficient to prevent Landlord or Tenant from becoming a co-insurer
     under the terms of the policy, and in an amount not less than the
     replacement cost of the Premises, with a deductible of not more than
     $5,000. The casualty insurance policy shall name Tenant as the insured and
     Landlord and Landlord's lender(s) as additional insureds, with loss payable
     to Landlord, Landlord's lender(s), and Tenant as their interests may
     appear. In the event of a casually loss on the Premises, Landlord may apply
     insurance proceeds under the casualty insurance policy in the manner
     described in Section 14(a).

     c. Miscellaneous. Insurance required under this Section shall be with
     companies rated A-XV or better in Best's Insurance Guide, and which are
     authorized to transact business in the State of Washington. No Insurance
     policy shall be canceled or reduced in coverage and each such policy shall
     provide that it is not subject to cancellation or a reduction in coverage
     except after thirty (30) days prior written notice to Landlord. Tenant
     shall deliver to Landlord upon commencement of the Lease and from time to
     time thereafter, copies or certificates of the insurance policies required
     by this Section. In no event shall the limit of such policies be considered
     as limiting the liability of Tenant under this Lease.

     d. Waiver of Subrogation. Landlord and Tenant hereby release each other and
     any other tenant, their agents or employees, from responsibility for, and
     waive their entire claim of recovery for any loss or damage arising from
     any cause covered by insurance required to be carried by each of them. Each
     party shall provide notice to the insurance carrier or carriers of this
     mutual waiver of subrogation, and shall cause its respective insurance
     carriers to waive all rights of subrogation against the other. This waiver
     shall not apply to the extent of the deductible amounts to any such
     policies or to the extent of liabilities exceeding the limits of such
     policies.

16.  INDEMNIFICATION. Tenant shall defend, indemnify, and hold Landlord harmless
     against all liabilities, damages, costs, and expenses, including attorneys'
     fees, arising from any negligent or wrongful act or omission of Tenant or
     Tenant's officers, contractors, licensees, agents, servants, employees,
     guests, OR invitees on or around the Premises as a result of any act,
     omission or negligence of Tenant, or Tenant's officers, contractors,
     licensees, agents, servants, employees, guests, invitees, or visitors, or
     arising from any breach of this Lease by Tenant. Tenant shall use legal
     counsel acceptable to Landlord in defense of any action within Tenant's
     defense obligation. Landlord shall defend, indemnify and hold Tenant
     harmless against all liabilities, damages, costs, and expenses, including
     attorneys' fees, arising from any negligent or wrongful act or omission of
     Landlord or Landlord's officers, contractors, licensees, agents, servants,
     employees, guests, invitees, or visitors on or around the Premises or
     arising from any breach of this Lease by Landlord. Landlord shall use legal
     counsel acceptable to Tenant in defense of any action within Landlord's
     defense obligation.

17.  ASSIGNMENT AND SUBLETTING. Tenant shall not assign, sublet, mortgage,
     encumber or otherwise transfer any interest in this Lease (collectively
     referred to as a "Transfer") or any part of the Premises, without first
     obtaining Landlord's written consent, which shall not be unreasonably
     withheld or delayed. No Transfer shall relieve Tenant of any liability
     under this Lease notwithstanding Landlord's consent to such transfer.
     Consent to any Transfer shall not operate as a waiver of the necessity for
     Landlord's consent to any subsequent Transfer.

     If Tenant is a partnership, limited liability company, corporation, or
     other entity, any transfer of this Lease by merger, consolidation,
     redemption or liquidation, or any change(s) in the ownership of, or power
     to vote, which singularly or collectively represents a majority of the
     beneficial interest in Tenant, shall constitute a Transfer under this
     Section.

     As a condition to Landlord's approval, if given, any potential assignee or
     sublessee otherwise approved by Landlord shall assume all obligations of
     Tenant under this Lease and shall be jointly and severally liable with
     Tenant and any guarantor, if

                                        4
<PAGE>

     required, for the payment of Rent and performance of all terms of this
     Lease. In connection with any Transfer, Tenant shall provide Landlord with
     copies of all assignments, subleases and assumption Instruments.

     NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS LEASE, IF TENANT IS A
     PUBLICLY OWNED COMPANY, TRANSFERS OF STOCK IN TENANT IN ANY AMOUNT WILL BE
     PERMITTED WITHOUT LANDLORD'S CONSENT.

18.  LIENS. Tenant shall keep the Premises free from any liens created by or
     through Tenant. Tenant shall indemnify and hold Landlord harmless from
     liability from any such liens including, without limitation, liens arising
     from any Alterations. If a lien is filed against the Premises by any person
     claiming by, through or under Tenant, Tenant shall, upon request of
     Landlord, at Tenant's expense, immediately furnish to Landlord a bond in
     form and amount and issued by a surety satisfactory to Landlord,
     indemnifying Landlord and the Premises against all liabilities, costs and
     expenses, including attorneys' fees, which Landlord could reasonably incur
     as a result of such lien(s).

19.  DEFAULT. The following occurrences shall each be deemed an Event of Default
     by Tenant:

     a. Failure To Pay. Tenant fails to pay any sum, including Rent, due under
     this Lease following THREE (3) days written notice from Landlord of the
     failure to pay.

     c. Insolvency. Tenant becomes insolvent, voluntarily or involuntarily
     bankrupt, or a receiver, assignee, or other liquidating officer is
     appointed for Tenant's business, provided that in the event of any
     Involuntary bankruptcy or other insolvency proceeding, the existence of
     such proceeding shall constitute an Event of Default only if such
     proceeding is not dismissed or vacated within 60 days after its institution
     or commencement.

     d. Levy or Execution. Tenant's interest in this Lease or the Premises, or
     any part thereof, is taken by execution or other process of law directed
     against Tenant, or is taken upon or subjected to any attachment by any
     creditor of Tenant, if such attachment is not discharged within 15 days
     after being levied.

     e. Other Non-Monetary Defaults. Tenant breaches any agreement, term or
     covenant of this Lease other than one requiting the payment of money and
     not otherwise enumerated in this Section, and the breach continues for a
     period of 10 days after notice by Landlord to Tenant of the breach.

     G. NOTWITHSTANDING ANYTHING IN THE LEASE TO CONTRARY, IF ANY BREACH OF THIS
     LEASE BY TENANT CANNOT REASONABLY BE CURED WITHIN THIRTY (30) DAYS, SUCH
     BREACH WILL NOT BE AN EVENT OF DEFAULT UNDER THIS LEASE SO LONG AS TENANT
     COMMENCES TO CURE THE BREACH WITHIN THE THIRTY (30) DAY PERIOD AND
     DILIGENTLY PURSUES TO CURE THE BREACH WITHIN A REASONABLE PERIOD OF TIME.

20.  REMEDIES.

     Landlord shall have the following remedies upon an Event of Default.
     Landlord's rights and remedies under this Lease shall be cumulative, and
     none shall exclude any other right or remedy allowed by law.

     a. Termination of Lease. Landlord may terminate Tenant's interest under the
     Lease, but no act by Landlord other than written notice from Landlord to
     Tenant of termination shall terminate this Lease. The Lease shall terminate
     on the date specified in the notice of termination. Upon termination of
     this Lease, Tenant will remain liable to Landlord for damages in an amount
     equal to the rent and other sums that would have been owing by Tenant under
     this Lease for the balance of the Lease term, less the net proceeds, if
     any, of any reletting of the Premises by Landlord subsequent to the
     termination, after deducting all Landlord's Reletting Expenses (as defined
     below). Landlord shall be entitled to either collect damages from Tenant
     monthly on the days on which rent or other amounts would have been payable
     under the Lease, or alternatively, Landlord may accelerate Tenant's
     obligations under the Lease and recover from Tenant: (i) unpaid rent which
     had been earned at the time of termination; (ii) the amount by which the
     unpaid rent which would have been earned after termination until the time
     of award exceeds the amount of rent loss that Tenant proves could
     reasonably have been avoided; (iii) the amount by which the unpaid rent for
     the balance of the term of the Lease after the time of award exceeds the
     amount of rent loss that Tenant proves could reasonably be avoided
     (discounting such amount by the discount rate of the Federal Reserve Bank
     of San Francisco at the time of the award, plus 1%); and (iv) any other
     amount necessary to compensate Landlord for all the detriment proximately
     caused by Tenant's failure to perform its obligations under the Lease, or
     which in the ordinary course would be likely to result from the Event of
     Default, including without limitation Reletting Expenses described in
     Section 20(b).

     b. Re-Entry and Reletting. Landlord may continue this Lease in full force
     and effect, and without demand or notice, re-enter and take possession of
     the Premises or any part thereof, expel the Tenant from the Premises and
     anyone claiming through or under the Tenant, and remove the personal
     property of either. Landlord may relet the Premises, or any part of them,
     in Landlord's or Tenant's name for the account of Tenant, for such period
     of time and at such other terms and conditions, as

                                        5
<PAGE>

     Landlord, in its discretion, may determine. Landlord may collect and
     receive the rents for the Premises. Re-entry or taking possession of the
     Premises by Landlord under this Section shall not be construed as an
     election on Landlord's part to terminate this Lease, unless a written
     notice of termination is given to Tenant. Landlord reserves the right
     following any re-entry or reletting, or both, under this Section to
     exercise its right to terminate the Lease. During the Event of Default,
     Tenant will pay Landlord the rent and other sums which would be payable
     under this Lease if repossession had not occurred, LESS PLUS the net
     proceeds, if any, after reletting the Premises, after deducting Landlord's
     Reletting Expenses. "Reletting Expenses" is defined to include all expenses
     incurred by Landlord in connection with reletting the Premises, including
     without limitation, all repossession costs, brokerage commissions,
     attorneys' fees, remodeling and repair costs, costs for removing and
     storing Tenant's property and equipment, and rent concessions granted by
     Landlord to any new Tenant, prorated over the life of the new lease.

     c. Waiver of Redemption Rights. Tenant, for itself, and on behalf of any
     and all persons claiming through or under Tenant, including creditors of
     all kinds, hereby waives and surrenders all rights and privileges which
     they may have under any present or future law, to redeem the Premises or to
     have a continuance of this Lease for the Lease term, as it may have been
     extended.

     d. Nonpayment of Additional Rent. All costs which Tenant agrees to pay to
     Landlord pursuant to this Lease shall in the event of nonpayment be treated
     as if they were payments of Rent and Landlord shall have all the rights
     herein provided for in case of nonpayment of Rent.

     e. Failure to Remove Property. If Tenant fails to remove any of its
     property from the Premises at Landlord's request following an uncured Event
     of Default, Landlord may, at its option, remove and store the property at
     Tenant's expense and risk. If Tenant does not pay the storage cost within
     five (5) days of Landlord's request, Landlord may, at its option, have any
     or all of such property sold at public or private sale (and Landlord may
     become a purchaser at such sale), in such manner as Landlord deems proper,
     without notice to Tenant. Landlord shall apply the proceeds of such sale:
     (i) to the expense of such sale, including reasonable attorneys' fees
     actually incurred; (ii) to the payment of the costs or charges for storing
     such property; (iii) to the sums of any other sums of money which may then
     be or thereafter become due Landlord from Tenant under any of the terms
     hereof; and (iv) the balance, if any, to Tenant. Nothing in this Section
     shall limit Landlord's right to sell Tenant's personal Property as
     permitted by law to foreclose Landlord's lien for unpaid rent.

     F. LANDLORD DEFAULT. LANDLORD WILL BE IN DEFAULT UNDER THIS LEASE IF
     LANDLORD FAILS TO PERFORM OR OBSERVE ANY OBLIGATION OF LANDLORD UNDER THIS
     LEASE IF THE FAILURE IS NOT CURED WITHIN THIRTY (30) DAYS AFTER WRITTEN
     NOTICE HAS BEEN GIVEN BY TENANT TO LANDLORD. IF THE DEFAULT CANNOT
     REASONABLY BE CURED WITHIN THIRTY (30) DAYS, LANDLORD WILL NOT BE IN
     DEFAULT IF LANDLORD COMMENCES TO CURE THE DEFAULT WITHIN THE THIRTY (30)
     DAY PERIOD AND DILIGENTLY PURSUES TO CURE THE DEFAULT WITHIN A REASONABLE
     PERIOD OF TIME. IF, HOWEVER, THE NATURE OF THE DEFAULT ADVERSELY IMPACTS
     TENANT'S ABILITY TO CONDUCT THEIR BUSINESS, THEN CURE PERIOD SHOULD BE NO
     MORE THAN FIVE (5) WORKING DAYS AFTER TENANT'S NOTICE. IF LANDLORD IS IN
     DEFAULT UNDER THIS LEASE, TENANT MAY (A) CURE LANDLORD'S DEFAULT AND OFFSET
     RENT PAYMENTS UNTIL TENANT HAS RECOVERED THE COST OF SUCH CURE OR (B)
     TERMINATE THIS LEASE, IN WHICH CASE THIS LEASE SHALL BE OF NO FURTHER FORCE
     OR EFFECT AND NEITHER PARTY SHALL HAVE ANY FURTHER OBLIGATION TO THE OTHER.

21.  MORTGAGE SUBORDINATION AND ATTORNMENT. This Lease shall automatically be
     subordinate to any mortgage or deed of trust created by Landlord which is
     now existing or hereafter placed upon the Premises including any advances,
     interest, modifications, renewals, replacements or extensions ("Landlord's
     Mortgage"), provided the holder of any Landlord's Mortgage or any person(s)
     acquiring the Premises at any sale or other proceeding under any such
     Landlord's Mortgage shall elect to continue this Lease in full force and
     effect. Tenant shall attorn to the holder of any Landlord's Mortgage or any
     person(s) acquiring the Premises at any sale or other proceeding under any
     Landlord's Mortgage provided such person(s) assume the obligations of
     Landlord under this Lease. Tenant shall promptly and in no event later than
     fifteen (15) days execute, acknowledge and deliver documents which the
     holder of any Landlord's Mortgage may reasonably require as further
     evidence of this subordination and attornment. Notwithstanding the
     foregoing, Tenant's obligations under this Section are conditioned on the
     holder of each of Landlord's Mortgage and each person acquiring the
     Premises at any sale or other proceeding under any such Landlord's Mortgage
     not disturbing Tenant's occupancy and other rights under this Lease, so
     long as no uncured Event of Default exists.

22.  NON-WAIVER. Landlord's waiver of any breach of any term contained in this
     Lease shall not be deemed to be a waiver of the same term for subsequent
     acts of Tenant. The acceptance by Landlord or Rent or other amounts due by
     Tenant hereunder shall not be deemed to be a waiver of any breach by Tenant
     preceding such acceptance.

23.  HOLDOVER. If Tenant shall, without the written consent of Landlord, hold
     over after the expiration or termination of the Term, such tenancy shall be
     deemed to be on a month-to-month basis and may be terminated according to
     Washington law.

                                        6
<PAGE>

     During such tenancy, Tenant agrees to pay to Landlord 125% of the rate of
     rental last payable under this Lease, unless a different rate is agreed
     upon by Landlord. All other terms of the Lease shall remain in effect.

24.  NOTICES. All notices under this Lease shall be in writing and effective (i)
     when delivered in person; (ii) three (3) days after being sent by
     registered or certified mail to Landlord or Tenant, as the case may be, at
     the Notice Addresses set forth in Section 1(h); or (iii) upon confirmed
     transmission by facsimile to such persons at the facsimile numbers set
     forth in Section 1(h) or such other addresses/facsimile numbers as may from
     time to time be designated by such parties in writing.

25.  COSTS AND ATTORNEYS' FEES. If Tenant or Landlord engage the services of an
     attorney to collect monies due or to bring any action for any relief
     against the other, declaratory or otherwise, arising out of this Lease,
     including any suit by Landlord for the recovery of Rent or other payments,
     or possession of the Premises, the losing party shall pay the prevailing
     party a reasonable sum for attorneys' fees in such suit, at trial and on
     appeal.

26.  ESTOPPEL CERTIFICATES. Tenant shall, from time to time, upon written
     request of Landlord, execute, acknowledge and deliver to Landlord or its
     designee a written statement specifying the following, subject to any
     modifications OR ADDITIONS necessary to make such statements true and
     complete: (i) the date the Lease term commenced and the date it expires;
     (ii) the amount of minimum monthly Rent and the date to which such Rent has
     been paid; (iii) that this Lease is in full force and effect and has not
     been assigned, modified, supplemented or amended in any way; (iv) that this
     Lease represents the entire agreement between the parties; (v) that all
     conditions under this Lease to be performed by Landlord have been
     satisfied; (vi) that there are no existing claims, defenses or offsets
     which the Tenant has against the enforcement of this Lease by Landlord;
     (vii) that no Rent has been paid more than one month in advance; and (viii)
     that no security has been deposited with Landlord (or, if so, the amount
     thereof). Any such statement delivered pursuant to this Section may be
     relied upon by a prospective purchaser of Landlord's interest or assignee
     of any mortgage or new mortgagee of Landlord's interest in the Premises. If
     Tenant shall fail to respond within ten (10) days of receipt by Tenant of a
     written request by Landlord as herein provided, Tenant shall be deemed to
     have given such certificate as above provided without modification and
     shall be deemed to have admitted the accuracy of any information supplied
     by Landlord to a prospective purchaser or mortgagee.

27.  TRANSFER OF LANDLORD'S INTEREST. This Lease shall be assignable by Landlord
     without the consent of Tenant. In the event of any transfer or transfers of
     Landlord's interest in the Premises, other than a transfer for security
     purposes only, upon the assumption of this Lease by the transferee,
     Landlord shall be automatically relieved of obligations and liabilities
     accruing from and after the date of such transfer, except for any retained
     security deposit or prepaid rent, and Tenant shall attorn to the
     transferee.

28.  RIGHT TO PERFORM. If Tenant shall fail to timely pay any sum or perform any
     other act on its part to be performed hereunder, Landlord may make any such
     payment or perform any such other act on Tenant's part to be made or
     performed as provided in this Lease. Tenant shall, on demand, reimburse
     Landlord for its expenses incurred in making such payment or performance.
     Landlord shall (in addition to any other right or remedy of Landlord
     provided by law) have the same rights and remedies in the event of the
     nonpayment of sums due under this Section as in the case of default by
     Tenant in the payment of Rent.

29.  HAZARDOUS MATERIAL. Landlord represents and warrants to Tenant that to the
     best of Landlord's knowledge, there is no "Hazardous Material" (as defined
     below) on, in, or under the Premises as of the Commencement Date except as
     otherwise disclosed to Tenant in writing before the execution of this
     Lease. LANDLORD DISCLOSES THAT THERE ARE CERTAIN AREAS OF THE BUILDING
     WHICH CONTAIN ASBESTOS. If there is any Hazardous Material on, in, or under
     the Premises as of the Commencement Date which has been or thereafter
     becomes unlawfully released through no fault of Tenant, then Landlord shall
     indemnify, defend and hold Tenant harmless from any and all claims,
     judgments, damages, penalties, fines, costs, liabilities or losses
     including without limitation sums paid in settlement of claims, attorneys'
     fees, consultant fees and expert fees, incurred or suffered by Tenant
     either during or after the Lease term as the result of such contamination.

     Tenant shall not cause or permit any Hazardous Material to be brought upon,
     kept, or used in or about, or disposed of on the Premises by Tenant, its
     agents, employees, contractors or invitees, except in strict compliance
     with all applicable federal, state and local laws, regulations, codes and
     ordinances. If Tenant breaches the obligations stated In the preceding
     sentence, then Tenant shall indemnify, defend and hold Landlord harmless
     from any and all claims, judgments, damages, penalties, fines, costs,
     liabilities or losses including, without limitation, diminution in the
     value of the Premises, damages for the loss or restriction on use of
     rentable or usable space or of any amenity of the Premises, or elsewhere,
     damages arising from any adverse impact on marketing of space at the
     Premises, and sums paid in settlement of claims, attorneys' fees,
     consultant fees and expert fees incurred or suffered by Landlord either
     during or after the Lease term. These indemnifications by Landlord and
     Tenant include, without limitation, costs incurred in connection with any
     investigation of site conditions or any clean-up, remedial, removal or
     restoration work, whether or not required by any federal, state or local
     governmental agency or political

                                        7
<PAGE>

     subdivision, because of Hazardous Material present in the Premises, or in
     soil or ground water on or under the Premises. Tenant shall immediately
     notify Landlord of any inquiry, investigation or notice that Tenant may
     receive from any third party regarding the actual or suspected presence of
     Hazardous Material on the Premises.

     Without limiting the foregoing, if the presence of any Hazardous Material
     brought upon, kept or used in or about the Premises by Tenant, its agents,
     employees, contractors or invitees, results in any unlawful release of
     Hazardous Material on the Premises or any other property, Tenant shall
     promptly take all actions, at its sole expense, as are necessary to return
     the Premises or any other property, to the condition existing prior to the
     release of any such Hazardous Material; provided that Landlord's approval
     of such actions shall first be obtained, which approval may be withheld at
     Landlord's sole discretion.

     As used herein, the term "Hazardous Material" means any hazardous,
     dangerous, toxic or harmful substance, material or waste including
     biomedical waste which is or becomes regulated by any local governmental
     authority, the State of Washington or the United States Government due to
     its potential harm to the health, safety or welfare of humans or the
     environment.

30.  RIGHT OF ENTRY. Landlord and its agents, employees and contractors shall
     have the right to enter the Premises at reasonable times for inspection, to
     make repairs, alterations, and improvements, to show the Premises to
     prospective purchasers and, within six (6) months prior to the expiration
     of the Lease term, to show the Premises to prospective tenants.

     NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS LEASE, LANDLORD RECOGNIZES
     THE WORK TO BE PERFORMED ON THE PREMISES BY TENANT IS CONFIDENTIAL AND
     PROPRIETARY, AND LANDLORD WILL USE ITS BEST EFFORTS TO ENTER THE PREMISES,
     OR ALLOW ITS AGENTS AND EMPLOYEES TO ENTER THE PREMISES, ONLY WHEN
     ACCOMPANIED BY AN ESCORT PROVIDED BY TENANT. LANDLORD WILL BE LIABLE TO
     TENANT FOR ANY DAMAGE RESULTING FROM LANDLORD'S VIOLATION OF THIS SECTION
     30.

31.  QUIET ENJOYMENT. So long as Tenant pays the Rent and performs all of its
     obligations in this Lease, Tenant's possession of the Premises will not be
     disturbed by Landlord or anyone claiming by, through or under Landlord, or
     by the holders of any Landlord's Mortgage or any successor thereto.

32.  GENERAL.

     a. Heirs and Assigns. This Lease shall apply to and be binding upon
     Landlord and Tenant and their respective heirs, executors, administrators,
     successors and assigns.

     b. Brokers' Fees. Tenant represents and warrants to Landlord that it has
     not engaged any broker, finder or other person who would be entitled to any
     commission or fees for the negotiation, execution, or delivery of this
     Lease. Tenant shall indemnify and hold Landlord harmless against any loss,
     cost, liability or expense incurred by Landlord as a result of any claim
     asserted by any such broker, finder or other person on the basis of any
     arrangements or agreements made or alleged to have been made by or on
     behalf of Tenant. This subparagraph shall not apply to brokers with whom
     Landlord has an express written brokerage agreement.

     c. Entire Agreement. This Lease contains all of the covenants and
     agreements between Landlord and Tenant relating to the Premises. No prior
     agreements or understanding pertaining to the Lease shall be valid or of
     any force or effect and the covenants and agreements of this Lease shall
     not be altered, modified or added to except in writing signed by Landlord
     and Tenant

     d. Severability. Any provision of this Lease which shall prove to be
     invalid, void or illegal shall in no way affect, impair or invalidate any
     other provision of this Lease.

     e. Force Majeure. Time periods for either party's performance under any
     provisions of this Lease (excluding payment of Rent) shall be extended for
     periods of time during which the party's performance is prevented due to
     circumstances beyond such party's control, including without limitation,
     fires, floods, earthquakes, lockouts, strikes, embargoes, governmental
     regulations, acts of God, public enemy, war or other strife.

     f. Governing Law. This Lease shall be governed by and construed in
     accordance with the laws of the State of Washington.

     g. Memorandum of Lease. This Lease shall not be recorded. However, Landlord
     and Tenant shall, at the other's request, execute and record a memorandum
     of Lease in recordable form that identifies Landlord and Tenant, the
     commencement and expiration dates of the Lease, and the legal description
     of the Premises as set forth on attached Exhibit A.

     h. Submission of Lease Form Not an Offer. One party's submission of this
     Lease to the other for review shall not constitute an offer to lease the
     Premises. This Lease shall not become effective and binding upon Landlord
     and Tenant until it has been fully signed by both Landlord and Tenant.

                                        8
<PAGE>

     i. Authority of Parties. Any individual signing this Lease on behalf of an
     entity represents and warrants to the other that such individual has
     authority to do so and, upon such individual's execution, that this Lease
     shall be binding upon and enforceable against the party on behalf of whom
     such individual is signing.

33.  EXHIBITS AND RIDERS. The following exhibits and riders are made a part of
     this Lease:

     Exhibit A - Legal Description
     Exhibit B - Tenant Improvement Schedule

     (Check the box for any of the, following that will apply. Any riders
     checked shall be effective only upon being initialed by the parties and
     attached to the Lease. Capitalized terms used in the Riders have the
     meanings given to them in the Lease.)

     [ ]  Retail Use Rider
     [ ]  Arbitration Rider

     [ ]  Guaranty of Tenant's Lease Obligations Rider
     [ ]  Option to Extend Rider

                                        9
<PAGE>

                    LIMITATION ON LANDLORD'S LIABILITY RIDER

Landlord and Tenant agree that Tenant's recourse against Landlord for any
obligations of Landlord under this Lease shall be limited to Tenant's execution
against Landlord's right, title and interest from time to time in the Premises.
Neither Landlord nor any of its partners, shareholders, members, officers,
directors, or other principals shall have any personal liability to Tenant as
the result of any breach or default by Landlord under this Lease.

/s/ JAK                    /s/ PJK
--------------------       ------------------
Landlord's Initials:       Tenant's Initials:

/s/ EK
--------------------       ------------------
Landlord's Initials:       Tenant's Initials:

                                       10
<PAGE>

STATE OF WASHINGTON            )
                               )  ss.
COUNTY OF KING                 )

I certify that I know or have satisfactory evidence that Elsie Kane is the
person who appeared before me and said person acknowledged that Elsie Kane
signed this instrument, on oath stated that Elsie Kane was authorized to execute
the instrument and acknowledged it as the landlord of said to be the free and
voluntary act of such party for the uses and purposes mentioned in the
instrument.

DATED: 5-12, 1997

(Seal or stamp)

                                      /s/ Holly Fergusa
                                      -----------------------------------------
                                      (Printed Name:  Holly Fergusa            )
                                                     --------------------------
                                      Notary Public for the State of Washington

                                      residing at:  Seattle
                                                   ----------------------------
                                      My commission expires:  2-27-98
                                                             ------------------

STATE OF WASHINGTON            )
                               )  ss.
COUNTY OF KING                 )

I certify that I know or have satisfactory evidence that Thomas Kane is the
person who appeared before me and said person acknowledged that Thomas Kane
signed this instrument, on oath stated that Thomas Kane was authorized to
execute the instrument and acknowledged it as the landlord of said to be the
free and voluntary act of such party for the uses and purposes mentioned in the
instrument.

DATED: 5-12, 1997

(Seal or stamp)

                                      /s/ Holly Fergusa
                                      -----------------------------------------
                                      (Printed Name:  Holly Fergusa            )
                                                     --------------------------
                                      Notary Public for the State of Washington

                                      residing at:  Seattle
                                                   ----------------------------
                                      My commission expires:  2-27-98
                                                             ------------------

                                       11
<PAGE>

                                    Exhibit A

                               [Legal Description]

Lot 7, 8 and South Half of Lot 9, Block 12, of D.T. Denny's North Seattle
Addition to the City of Seattle as recorded In Volume 1 of Plats, Page 41, King
County, Washington.

                                       12
<PAGE>

STATE OF WASHINGTON            )
                               )  ss.
COUNTY OF KING                 )

I certify that I know or have satisfactory evidence that Paul Kanan is the
person who appeared before me and said person acknowledged that Paul Kanan
signed this instrument, on oath stated that Paul Kanan was authorized to execute
the instrument and acknowledged it as the President & CEO of Pacific Biometrics,
Inc. to be the free and voluntary act of such party for the uses and purposes
mentioned in the instrument.

         DATED: May 14, 1997

(Seal or stamp)
                                      /s/ Max Mayer
                                      -----------------------------------------
                                      (Printed Name:  Max Mayer                )
                                                     --------------------------
                                      Notary Public for the State of Washington

                                      residing at:  Seattle
                                                   ----------------------------
                                      My commission expires:  Sept. 27, 2000
                                                             ------------------

STATE OF WASHINGTON            )
                               )  ss.
COUNTY OF __________           )

I certify that I know or have satisfactory evidence that ____________________ is
the person who appeared before me and said person acknowledged that
____________________ signed this instrument, on oath stated that
____________________ was authorized to execute the instrument and acknowledged
it as the ____________________ of ____________________ to be the free and
voluntary act of such party for the uses and purposes mentioned in the
instrument.

         DATED:______________________________.

(Seal or stamp)

                                      (Printed Name:                           )
                                                     --------------------------
                                      Notary Public for the State of Washington
                                      residing at:
                                                   ----------------------------
                                      My commission expires:
                                                             ------------------

                                       13
<PAGE>

IN WITNESS WHEREOF this Lease has been executed the date and year first above
written.

TOM KANE  /S/ THOMAS KANE            PACIFIC BIOMETRICS, INC.
         -----------------------                              ------------------
                LANDLORD:                                           TENANT:

ELSA KANE  /S/ ELSA KANE             /s/ Paul G. Kanan
          ----------------------     ------------------------------
             LANDLORD:                          TENANT:

                                     Paul G. Kanan
--------------------------------     ------------------------------
           By:                                   By:

                                     President & CEO
--------------------------------     ------------------------------
           Its:                                  Its:

                                       14
<PAGE>

                                    EXHIBIT B

6/23/2006

                            Pacific Biometrics, Inc.
                           Building Improvement Needs
<TABLE><CAPTION>
--------------------------------------- ----------- ---------- ----------- ------------ ------------
<S>                                      <C>         <C>          <C>          <C>          <C>
Building Improvements Listing            J / L / P   Estimate                               Blend
--------------------------------------- ----------- ---------- ----------- ------------ ------------
                                                         A         B            C            D
--------------------------------------- ----------- ---------- ----------- ------------ ------------
Window Replacement                       J / L / P                           $130,000
--------------------------------------- ----------- ---------- ----------- ------------ ------------
Painting Interior and Exterior           J / L / P    $39,230                              $39,250
--------------------------------------- ----------- ---------- ----------- ------------ ------------
Canopy Replacement                       J / L / P    $15,000                              $15,000
--------------------------------------- ----------- ---------- ----------- ------------ ------------
Rest rooms Renovation/Update             J / L / P    $ 9,800                              $ 9,800
--------------------------------------- ----------- ---------- ----------- ------------ ------------
Chemical Hood Move                       J / L / P    $11,750                              $11,750
--------------------------------------- ----------- ---------- ----------- ------------ ------------
Power Upgrade - Facility                 J / L / P                           $189,000
--------------------------------------- ----------- ---------- ----------- ------------ ------------
Short Term 200A Breaker & Circuit box    J / L / P               $30,000                   $30,000
--------------------------------------- ----------- ---------- ----------- ------------ ------------
Clear Boiler room                        J / L / P    $ 4,500                              $ 4,500
--------------------------------------- ----------- ---------- ----------- ------------ ------------
Locker Room Renovation                   J / L / P    $ 3,000                              $ 3,000
--------------------------------------- ----------- ---------- ----------- ------------ ------------
Project Management Area Renovation       J / L / P    $20,000                              $20,000
--------------------------------------- ----------- ---------- ----------- ------------ ------------
Resurface the parking lot surface???     J / L / P    $20,000                              $20,000
--------------------------------------- ----------- ---------- ----------- ------------ ------------
Alley way repair???                      J / L / P      ???
--------------------------------------- ----------- ---------- ----------- ------------ ------------
Total                                                $123,300    $30,000     $319,000     $153,300

--------------------------------------- ----------- ---------- ----------- ------------ ------------
Off Site Space Rental for Freezers
--------------------------------------- ----------- ---------- ----------- ------------ ------------
Freezer Storage Offsite (For 3 Yrs.)     J / L / P    $30,240
--------------------------------------- ----------- ---------- ----------- ------------ ------------
8 units per year cost                    J / L / P
--------------------------------------- ----------- ---------- ----------- ------------ ------------
Moving and setup                         J / L / P    $ 1,500
--------------------------------------- ----------- ---------- ----------- ------------ ------------
</TABLE>

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