EX-10.5 4 v15716exv10w5.txt EXHIBIT 10.5 EXHIBIT 10.5 INDUSTRIAL LEASE -MODIFIED NET- 1. PARTIES, This Lease, dated, for reference purposes only, July 17, 1984, is made by and between 801 Dexter Associates (herein called "Landlord") and Korry Electronics Co., a division of Criton Technologies (herein called "Tenant"). 2. PREMISES, Landlord hereby leases to Tenant and Tenant leases from Landlord for the term, at the rental, and upon all of the conditions set forth herein, that certain real property situated in the City of Seattle, County of King, State of Washington, commonly known as 801 Dexter Avenue North and described as The both floors consisting 60,000 Sq. Ft. +- of open area. This shall constitute, for purposes of allocation of property tax and insurance charges, the entire building. Said real property, including the land and all improvements thereon, is herein called "the Premises". 3. TERM. 3.1 TERM. The term of this Lease shall be for three (3) years, commencing on July 18, 1984 and ending on July 17, 1987 unless sooner terminated pursuant to any provision hereof. 3.2 DELAY IN COMMENCEMENT. Notwithstanding said commencement date, if for any reason Landlord cannot deliver possession of the Premises to Tenant on said date, Landlord shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or the obligations of Tenant hereunder or extend the term hereof, but in such case Tenant shall not be obligated to pay rent until possession of the Premises is transferred to Tenant; provided, however, that if Landlord shall not have delivered possession of the Premises within ninety (90) days from said commencement date, Tenant may, at Tenant's option, by notice in writing to Landlord within ten (10) days thereafter, cancel this Lease. If Landlord shall not have delivered possession of the Premises within one (1) year from said commencement date, Landlord may, by notice in writing to the Tenant within ten (10) days thereafter, cancel the Lease. If either party cancels as hereinabove provided. Landlord shall return any monies previously deposited by Tenant and the parties shall be discharged from all obligations hereunder. 3.3 EARLY POSSESSION. In the event that Landlord shall permit Tenant to occupy the premises prior to the commencement date of the term, such occupancy shall be subject to all of the provisions of this Lease. Said early possession shall not advance the termination date of this Lease. 3.4 DELIVERY OF POSSESSION. Tenant shall be deemed to have taken possession of the Premises when any of the following occur: (a) Landlord delivers possession of the premises to Tenant and a Certificate of Occupancy is granted by the proper governmental agency, or (b) upon a Certificate from the Landlord's architect or contractor that the Premises are ready for occupancy. 4. RENT. Tenant shall pay to Landlord as rent for the Premises equal monthly installments of Twenty Five Thousand Five Hundred Illegible And No/100's Dollars ($25,500.00) Dollars, in advance, on the first day of each month of the term hereof. Tenant shall pay Landlord upon the execution hereof the sum of Twenty One Thousand Illegible And No/100's Dollars ($21,000.00) Dollars as rent for First and Last months. Landlord will credit Tenant's rent $10,000 toward new carpet, and $25,000 for free rent agreed to under previous lease and not yet allocated. Rent for any period during the term hereof which is for less than one month shall be a pro rata portion of the monthly installment. Rent shall be payable without notice or demand and without any deduction, offset, or abatement in lawful money of the United States of America to Landlord at the address stated herein or to such other persons or at such other places as Landlord may designate in writing. 5. SECURITY DEPOSIT. Tenant shall deposit Landlord upon execution hereof the sum of _________________________________________________________ ($______) Dollars as security for Tenant's faithful performance of Tenant's obligations hereunder. If Tenant fails to pay rent or other charges due hereunder, or otherwise defaults with respect to any provision of this Lease, Landlord may use, apply or retain all or any portion of said deposit for the payment of any rent or other charge in default or for the payment of any other sum to which Landlord may become obligated by reason of Tenant's default, or to compensate Landlord for any loss or damage which Landlord may suffer thereby. If Landlord so uses or applies all or any portion of said deposit, Tenant shall within ten (10) days after written demand therefor deposit cash with Landlord in an amount sufficient to restore said deposit to the full amount hereinabove stated and Tenant's failure to do so shall be a breach of this Lease, and Landlord may at his option terminate this Lease. Landlord shall not be required to keep said deposit separate from its general accounts. If Tenant performs all of Tenant's obligations hereunder, said deposit or so much thereof as had nor therefore been applied by Landlord, shall be returned, without payment of interest or other increment for its use, to Tenant (or, at Landlords option, to the last assignee, if any, of Tenant's interest hereunder) within fifteen (15) days after the expiration of the term hereof, or after Tenant has vacated the Premises, whichever is later. 6. USE. 6.1 USE. The Premises shall be used an occupied only for Office & Manufacturing Purposes. 6.2 COMPLIANCE WITH LAW. Tenant shall, at Tenant's expense, comply promptly with all applicable statutes, ordinances, rules, regulations, orders and requirements in effect during the term or any part of the term hereof regulating the use by Tenant of the Premises. Tenant shall not use or permit the use of the Premises in any manner that will tend to create waste or a nuisance, or if there shall be more than one Tenant of the Building containing the Premises, which shall tend to unreasonably disturb such other tenants. 6.3 CONDITION OF PREMISES. Tenant hereby accepts the Premises in their condition existing as of the date of the possession hereunder, subject to all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use of the Premises, and accepts this Lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto. Tenant acknowledges that either Landlord nor Tenant's agent has made any representation or warranty as to the suitability of the Premises for the conduct of Tenant's business. 6.4 INSURANCE CANCELLATION. Notwithstanding the provisions of Article 6.1 hereinabove, no use shall be made or permitted to be made of the premises nor acts done which will cause the cancellation of any insurance policy covering said Premises or any building of which the Premises may be a part, and if Tenant's use of the Premises causes an increase in said insurance rates Tenant shall pay any such increase. 6.5 LANDLORD'S RULES AND REGULATIONS. Tenant shall faithfully observe and comply with the rules and regulations that Landlord shall from time (PAGE 1 - MODIFIED NET) to time promulgate. A copy of part rules and regulations is attached hereto Landlord reserves the right from time to time to make all reasonable modifications to land rules and regulations. The additions and modifications to those rules and reputations shall be burning upon Tenant upon delivery of a copy of them to Tenant. Landlord shall not be responsible to Tenant for the nonperformance of any of said rules and regulations by any other tenants or occupants. 7. MAINTENANCE, REPAIRS AND ALTERATIONS. 7.1 LANDLORD'S OBLIGATIONS. Subject to the provisions of Article 9 and except for damage caused by any negligent or international act or omission of Tenant. Tenant's agents, employees, or invitees, Landlord, at Landlord's expense, shall keep in good order, conditions and repair the foundations, interior walls and the exterior roof of the Premises. Landlord shall not, however be obligated to paint such exterior, nor shall Landlord be required to maintain the interior surface or exterior walls, windows, doors or plate glass. Landlord shall have no obligation to make repairs under this Article 7.1 until reasonable time after receipt or written notice of the need to such repairs. Tenant expressly wavies the benefits of any statue now or hereafter in effect which would otherwise allow the Tenant the right to make repairs at Landlord's expense or to terminate this Lease because of Landlord's failure to keep the Premises in good order, condition and repair. 7.2 TENANT'S OBLIGATIONS. Subject to the provisions of Article 7.1 and Article 9, Tenant, at Tenant's expense, shall keep in good order, condition and repair the Premises and every part thereof (regardless of whether the damaged portion of the Premises or the means of repairing the same are accessible to Tenant, including without limiting the generality of the foregoing, all plumbing, heating, air conditioning, ventilating, electrical and lighting facilities and equipment within the Premises, fixtures, interior walls, ceilings, windows, doors, plate glass and skylights, located within the Premises and all sidewalks, landscaping, driveways, parking lott, lences and signs located in the areas which are adjacent to and included with the Premises. 7.3 SURRENDER. On the last day of the term hereof, or on any sooner termination, Tenant shall surrender the Premises to Landlord in good condition, broom clean, ordinary wear and tear excepted. Tenant shall repair any damage to the Premises occasioned by its use thereof, or by the removal of Tenant's trade fixtures, furnishings and equipment pursuant to Article 7.5, which repair shall include the patching and filling of holes and repair of structural damage. 7.4 LANDLORD'S RIGHTS. If Tenant fails to perform Tenant's obligations under this Article 7, Landlord may at its option but shall not be required to enter upon Premises, after ten (10%) percent per annum shall become due and payable as additional rental to Landlord together with Tenant's next rental installment. 7.5 ALTERATIONS AND ADDITIONS. (a) Tenant shall not, without Landlord's prior written consent, make any alterations, improvements, or additions, in, on or about the Premises, except for non-structural alterations not exceeding $1,000 in cost. As a condition to giving such consent, Landlord may require that Tenant remove any such alterations, improments, additions or utility installations at the expiration of the term, and to restore the Premises to their prior condition. (b) Below commencing any work relating to alterations, additions and improvements affecting the Premises, Tenant shall notify Landlord in writing of the expected date of commencement thereof. Landlord shall then have the right at any time and from time to time to post and maintain on the Premises such notices as Landlord reasonably deems necessary to protect the Premises and Landlord from mechanics liens, materialmen's liens or any other liens. In any event, Tenant shall pay, when due, all claims for labor or materials furnished to or for Tenant at or for use in the Premises Tenant shall not permit any mechanics or materialmen's liens to be levied against the Premises for any labor or material furnished to Tenant or claimed to have been furnished to Tenant or to Tenant's agents or contractors in connection with work of any character performed or claimed to have been performed on the Premises by or at the direction of Tenant. (c) Unless Landlord requires the removal, as set forth in Article 7.5(a), all alterations, improvements or additions which may be made on the Premises, shall become the property of Landlord and remain upon and the surrendered with the Premises at the expiration of the term. Notwithstanding the provisions of this Article 7.5(c), Tenant's machinery, equipment and trade fixtures, other than that which is affected to the Premises so that it cannot be removed without material damage to the Premises, shall remain the property of Tenants and may be removed by Tenant subject to the provisions of Article 7.3. 8. INSURANCE INDEMNITY. 8.1 INSURING PARTY. As used in this Article 8, the term "insuring party landlord" shall mean the party who has the obligation to obtain the insurance required hereunder. The insuring party in this case shall be designated in Article 19. Whether the insuring party is the Landlord or the Tenant, Tenant shall, as additional rent for the Premises, pay the cost of all insurance required hereunder. If Landlord is the insuring party Tenant shall, within ten (10) days following demand by Landlord, reimburse Landlord for the cost of the insurance so obtained. 8.2 LIABILITY INSURANCE. The Tenant shall obtain and keep in force during the term of this lease a policy comprehensive public liability insurance insuring Landlord and Tenant against any liability arising out of the ownership, use occupancy or maintenance of the Premises and all areas appartenant thereto. Such insurance shall be in an amount of not less than $300,000 for injury to or death of one person in any one accident or occurence and in amount of not less than $500,000 for injury to or death of more than one person in any one accident or occurence. Such insurance shall further insure Landlord and Tenant against liability for property damage of at least $50,000. The limits of said insurance shall not, however, limit the liability of Tenant hereunder. In the event that the premises constitute a part of a larger property said insurance shall have a Landlord's Protective Liability endorsement attached thereto. If the tenant shall fail to procure and maintain said insurance the Landlord may, but shall not be required to, procure and maintain the same, but at the expense of Tenant. 8.3 PROPERTY INSURANCE. The insuring party shall obtain and keep in force during the term of this Lease a policy or policies of insurance covering loss or damage to the Premises, in the amount of the full replacement value thereof, providing protection against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, special extended perils (all risk) and spinkler leakage. Said insurance shall provide for payment for loss thereunder to Landlord or to the holder of a first mortgage or deed of trust the Premises. If the insuring the party shall fail to procure and maintain said insurance the other party may, but shall not be required to, procure and maintain the same, but at the expense of Tenant. 8.4 INSURANCE POLICIES. Insurance required hereunder shall be in companies rated A+ AAA or better in "Best's Insuarnce Guider". The insuring party shall deliver prior to possession to the other party copies of policies of such insurance or certificates evidencing the existence and amounts of such insurance with loss payable clauses satisfactory to Landlord. No such policy shall be cancellable or subject to reduction of coverage or other modification except after ten (10) days prior written notice to Landlord. If Tenant is the insuring party, Tenant shall, within ten (10) days prior to the expiration of such policies, furnish Landlord with renewals thereof, or Landlord may order such insurance and charge the cost thereof to Tenant, which amount shall be payable by Tenant upon demand. Tenant shall not do or permit to be done anything which shall invalidate the insurance policies referred to in Article 8.3. Tenant shall forthwith, upon Landlord's demand, reimburse Landlord for any additional premiums attributable to any act or omission or operation of Tenant causing such increase in the cost of insurance. If Landlord is the insuring party, and if the insurance policies maintained hereunder cover other improvements in addition to the Premises. Landlord shall deliver to Tenant a written setting forth the amount of any such cost increase and showing in reasonable detail the manner in which it has been computed. 8.5 WAIVER OF SUBROGATION. Tenant and Landlord each waivers any and all rights of recovery against the other, or against the others, employees, agents and representatives of the other, for loss or damage to such waiving party or its property or the property of others under its control, where such loss or damage is insured against under any insurance policy in force at the time of such loss or damage. Tenant and Landlord shall upon obtaining the policies of insurance required hereunder, give notice to the insurance carriers that the foregoing mutual waiver of subrogation is contained in this Lease. 8.6 HOLD HARMLESS. Tenant shall indemnify, defend and hold Landlord harmless from any and all claims arising from Tenant's use of the Premises or from the conduct of its business or from any activity, worth or things which may be permitted or suffered by Tenant in or about the Premises and shall further indemnify, defend and hold Landlord harmless from and against any and all claims arising from any breach or default in the performance of any obligation on Tenant's part to the performed under the provision of this Lease or arising from any negligence of Tenant or any of its agents, contractors, employees or invitees and from any and all costs attorneys fees, expenses and liabilities incurred in the defense of any such claim or any action or proceeding brought thereon. Tenant hereby assumes all risk of damage to property or injury to persons in or about the Premises from any cause, and Tenant hereby waives all claims in respect thereof against Landlord, excepting where said damage arises out of negligence of Landlord. 8.7 EXEMPTION OF LANDLORD FROM LIABILITY. Tenant hereby agrees that Landlord shall not be liable for injury to Tenant's business or any loss of income therefrom on for damage to the goods, wares, merchandise or other property of Tenant, Tenant's employees, invitees, customers, or any other person in or about the Premises, nor, unless through its negligence, shall Landlord be liable for injury to the person of Tenant, Tenant's employees, agents or contractors and invitees, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain or from breakage, leakage, obstruction or other defects of pipes, spinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, or from any other cause whether the said damage or inquiry results from conditions arising upon the Premises or upon other portions of the building of which the Premises are a part, or from other sources or places, and regardless of whether the cause of such damage or injury or the means of repairing the same is inaccessible to (PAGE 2 - MODIFIED NET) Landlord or Tenant, Landlord shall not be liable for any damages arising from any act of neglect of any other tenant, if any, of the building in which the Premises are located. 9. DAMAGE ON DESTRUCTION. 9.1 PARTIAL DAMAGE - Insured. Subject to the provisions of Article 9.1, if the Premises are damaged and such damage was caused by a casualty covered under an insurance policy required to be maintained pursuant to Article 8.3. Landlord shall at Landlord's expense repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. Notwithstanding the above, if the Tenant is the insuring party, and if the insurance proceeds received by Landlord are not sufficient to effect such repair. Landlord shall give notice to Tenant of the amount required in addition to the insurance proceeds to affect such repair. Tenant may, at Tenant's option, contribute the required amount, but upon failure to do so within thirty (30) days following such notice. Landlord's sole remedy shall be, at Landlord's option and with no liability to Tenant, to cancel and terminate this Lease. If Tenant shall contribute such amount to Landlord within said thirty (30) days period, Landlord shall make such repairs as soon as reasonably possible and this Lease shall continue in full force and effect. Tenant shall in no event have any right to reimbursement for nay such amount so contributed. 9.2 DAMAGE - Uninsured. In the event the Premises may be damaged or destroyed by a casualty which is not covered by fire and extended coverage insurance carried by Landlord, then Landlord shall restore same, provided that if the damage or destruction is to an extent greater than ten (10%) per cent of the then replacement cost of improvements on the Premises (exclusive of Tenant's trade fixtures and equipment and exclusive of foundations) then Landlord may elect not to restore and to terminate this Lease. Landlord must give Tenant written notice of its election not to restore within thirty (30) days from the date of damage and if, not given, Landlord shall be deemed to have elected to restore and in such event shall repair any damage as soon as reasonably possible. In the event Landlord elects to give such notice of Landlord's intention to cancel and terminate the Lease, Tenant shall have the right within ten (10) days after the receipt of such notice to give written notice to Landlord of Tenant's intention to repair such damage of Tenant's expense, without reimbursement from Landlord, in which event this Lease shall continue in full force and effect and Tenant shall proceed to make such repair as soon as reasonably possible. If Tenant does not give such notice within such ten (10) day period, this Lease shall be cancelled and terminated as of the date of the occurrence of such damage. 9.3 TOTAL DESTRUCTION. If at any time during the term hereof the Premises are totally destroyed from any cause whether or not covered by the insurance required to be maintained by Landlord pursuant to Article 8.3 (including any total destruction required by any authorized public authority) this Lease shall automatically terminate as of the date of such total destruction. 9.4 DAMAGE NEAR END OF TERM. If the Premises are partially destroyed or damaged during the last six (6) months of the term of this Lease, Landlord may, at Landlord's option, cancel and terminate this Lease as of the date of occurrence of such damage by giving written notice to Tenant of Landlord's election to do so within thirty (30) days after the date of occurrence of such damage. 9.5 ABATEMENT OF RENT. (a) If the Premises are partially destroyed or damaged and Landlord or Tenant repairs or restores them pursuant to the provisions of this Article 9, the rent payable hereunder for the period during which such damage, repair or restoration continues shall be abated in proportion to the degree to which Tenant's reasonable use of the Premises is impaired. Except for abatement of rent, if any, Tenant shall have no claim against Landlord for any damage suffered by reason of any such damage, destruction, repair or restoration. (b) If Landlord shall be obligated to repair or restore the Premises under the provisions of this Article 9 and shall not commence such repair or restoration within ninety (90) days after such obligations shall accrue. Tenant may at Tenant's option cancel and terminate this Lease by giving Landlord written notice of Tenant's election to do so at any time prior to the commencement of such repair or restoration. In such event this Lease shall terminate as of the date of such notice. Any abatement in rent shall be computed as provided in Article 9.5(a). 10. REAL PROPERTY TAXES. 10.1 PAYMENT OF TAXES. Tenant shall pay all real property taxes applicable to the Premises during the term of this Lease. All such payments shall be made at least ten (10) days prior to the delinquency date of such payment. Tenant shall promptly furnish Landlord with satisfactory evidence that such taxes have been paid. If any such taxes paid by Tenant shall cover any period of the time prior to or after the expiration of the term hereof. Tenant's share of such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Landlord shall reimburse Tenant to the extent required. If Tenant shall fail to pay any such taxes, Landlord shall have the right to pay the same, in which case Tenant shall repay such amount to Landlord with Tenant's next rent installment together with interest at the rate of ten (10%) percent per annum. 10.2 DEFINITION OF "REAL PROPERTY TAXES." As used herein, the term "real property tax" shall include any form of assessment, license fee, rent, tax, levy, penalty, or tax (other than inheritance or estate taxes), imposed by any authority having the direct or indirect power to tax, including any city, county, state or federal government, or any school, agricultural, lighting, drainage or other improvement distinct thereof, as against any legal or equitable interest of Landlord in the Premises or in the real property of which the Premises are a part, as against Landlord's right to rent or other income therefrom, or as against Landlord's business of leasing the Premises, and, Tenant shall pay and all charges and fees which may be imposed by the EPA or other similar government regulations or authorities. 10.3 JOINT ASSESSMENT. If the Premises are not separately assessed, Tenant's liability shall be an equitable proportion of the real property taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be determined by Landlord from the respective valuations assigned in the assessor's work sheets or such other information as may be reasonably available. Landlord's reasonable determination thereof, in good faith, shall be conclusive. 10.4 PERSONAL PROPERTY TAXES. (a) Tenant shall pay prior to delinquency all taxes assessed against and levied upon leasehold improvements, fixtures, furnishings, equipment and all other personal property of Tenant contained in the Premises or elsewhere. Tenant shall cause said leasehold improvements, trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Landlord. (b) If any of Tenant's said personal property shall be assessed with Landlord's real property, Tenant shall pay Landlord the taxes attributable to Tenant within ten (10) days after receipt of a written statement setting forth the taxes applicable to Tenant's property. 10.5 Notwithstanding the provisions of Article 10 hereinabove, Tenant shall pay any increase in "real property taxes" resulting from any and all improvement of any kind whatsoever placed on or in the Premises for the benefit of or at the request of Tenant regardless of whether said improvements were installed or constructed either by Landlord or Tenant, except those items included with the original Premises. 11. COMMON AREAS. When, in fact, there are Common Areas, then the following shall apply: 11.1 DEFINITIONS. The phrase "Common Areas" means all areas and facilities outside the Premises that are provided and designated for general use and convenience of Tenant and other tenants and their respective officers, agents and employees, customers, and invitees. Common Areas include (but are not limited to) pedestrian sidewalks, landscaped areas, roadways, parking areas and railroad tracks, if any. Landlord reserves the right from time to time to make changes in the shape, size, location, number, and extent of the Land and improvements constituting the Common Areas. Landlord may designate from time to time additional parcels of land for use as a part thereof; and any additional land so designated by Landlord for such use shall be included until such designation is revoked by Landlord. 11.2 MAINTENANCE. During the term of this Lease, Landlord shall operate, manage, and maintain the Common Areas so that they are clean and free from accumulations of debris, filth, rubbish and garbage. The manner in which such Common Areas shall be so maintained, and the expenditure for such maintenance, shall be at the sole discretion of Landlord, and the use of the Common Areas shall be subject to such reasonable regulations and changes therein as Landlord shall make from time to time, including (but not by way of limitations) the right to close from time to time, if necessary, all or any portion of the Common Areas to such extent or may be legally sufficient, in the opinion of Landlord's counsel, to prevent a dedication thereof or the accrual of rights of any person or of the public therein, or to close temporarily all or any portion of such Common Areas for such purposes. 11.3 TENANT'S RIGHTS AND OBLIGATIONS. Landlord hereby grants to Tenant, during the term of this Lease, the license to use, for the benefit of Tenant and its officers, agents, employees, customers, and invitees, in common with the others entitled to such use, the Common Areas as they from time to time exist, subject to the rights, powers, and privileges herein reserved to Landlord. Storage, either permanent or temporary, of any materials, supplies or equipment in the Common Areas is strictly prohibited. Should Tenant violate this provision of the Lease, than in such event, Landlord may, at his option either terminate this Lease or, without notice to Tenant, remove said materials, supplies or equipment from the Common Areas and place such items in storage, the cost thereof to be reimbursed by Tenant within (10) days from receipt of a statement submitted by Landlord. All subsequent costs in connection with the storage of said items shall be paid to the Landlord by Tenant as accrued. Failure of Tenant to pay these charges within ten (10) days from receipt of a statement shall constitute a breach of this Lease. Tenant and its officers, agents, employees, customers and invitees shall park their motor vehicles only in areas designated by Landlord for that purpose from time to time. Within five (5) days after request from Landlord, Tenant shall furnish to Landlord a list of the license numbers assigned to its motor vehicles and those of its officers, agents, and employees. Tenant shall not at any time park or permit the parking of motor vehicles, belonging to it or to others, so as to interfere with the pedestrian sidewalk, roadways and loading areas, or in any portion of the parking areas not designed by Landlord for such use by Tenant. Tenant agrees that receiving and shipping of goods and merchandise and all removal of refuse shall be made only by way of the loading areas constituting part of the Premises. Tenant shall repair, at its cost, all deteriorations or damages to the Common Areas, occasioned by its lack of ordinary care. (PAGE 3 - MODIFIED NET) 11.4 Construction Landlord, while engaged in constructing improvements or making repairs or alterations in or about the Premises or in their vicinity, shall have the right to make reasonable use of the common Areas. 12. UTILITIES. Tenant shall pay for all water, gas, heat, light, power, telephone and other utilities and services supplied in the Premises, together with any taxes thereon. If any such services are not separately metered to Tenant, Tenant shall pay a reasonable proportion to be determined by Landlord of all charges jointly metered with other premises. 13. ASSIGNMENT AND SUBLETTING. 13.1 LANDLORD'S CONSENT REQUIRED. Tenant shall not voluntarily or by operation of law assign, transfer, mortgage, sublet, or otherwise transfer or encumber all of any part of Tenant's interest in this Lease or in the Premises without Landlord's prior written consent, which Landlord shall not unreasonably withhold. Any attempted assignment, transfer, mortgage, encumbrance, or subletting without such consent shall be void and shall constitute a breach of the Lease. Any transfer of Tenant's interest in this Lease or in the Premises from Tenant by merger consolidation or liquidation or by any subsequent change in the ownership of thirty (30%) percent or more of the capital stock of Tenant shall be deemed a prohibited assignment within the meaning of this Article 13. 13.2 NO RELEASE OF TENANT. Regardless of Landlord's consent, no subletting or assignment shall release Tenant of Tenant's obligation to pay the rent and to perform all other obligations to be performed by Tenant hereunder for the term of this Lease. The acceptance of rent by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision hereof. Consent to one assignment or subletting shall not be deemed consent to any subsequent assignment or subletting. 13.3 ASSIGNMENT FEE. In the event that Landlord shall consent to a sublease or assignment under Article 13.1. Tenant shall pay Landlord reasonable fees not to exceed One Hundred and no/100th ($100,00) Dollars incurred in connection with giving such consent. 14. DEFAULTS; REMEDIES. 14.1 DEFAULTS. The occurrence of any one or more of the following events shall constitute a default and breach of this Lease by Tenant. (a) The vacating or abandonment of the Premises by Tenant. (b) The failure by Tenant to make any payment of rent or any other payment required to be made by Tenant hereunder, as and when due, where such failure shall continue for a period of three (3) days after written notice thereof from Landlord to Tenant. (c) The failure by Tenant to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Tenant, other than described in Paragraph (b) above, where such failure shall continue for a period of thirty (30) days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant's default is such that more than thirty (30) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commenced such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion. (d) (i) The making by Tenant of any general assignment, or general arrangement for the benefit of creditors; (ii) the filing by or against Tenant of a petition to have Tenant adjudged a bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed within sixty (60) days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where possession is not restored to Tenant within thirty (30) days; or (iv) the attachment, execution or other judicial seizure of substantially all of Tenant's assets located at the Premises or of Tenant's interest in this Lease, where such seizure is not discharged within thirty (30) days. 14.2 REMEDIES IN DEFAULT. In the event of any such default or breach by Tenant. Landlord may at any time thereafter, with or without notice or demand and without limiting Landlord in the exercise of any right or remedy which Landlord may have by reason of such default or breach. (a) Terminate Tenant's right to possession of the Premises by any lawful means in which case this Lease shall terminate and Tenant shall immediately surrender possession of the Premises to Landlord. In such event Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default including, but not limited to, the cost of recovering possession of the Premises expenses of reletting, including necessary renovation and alteration of the premises, reasonable attorney's fees, and any real estate commission actually paid: the worth at the time of award by the court having jurisdiction thereof of the amount by which the unpaid rent for the balance of the term after the time of such award exceeds the amount of such rental loss for the same period that Tenant proves could be reasonably avoided; and that portion of the leasing commission paid by Landlord applicable to the unexpired term of this Lease. Unpaid installments of rent or other sums shall bear interest from the date due at the rate of ten (10%) percent per annum. In the event Tenant shall have abandoned the Premises. Landlord shall have the option of (i) retaking possession of the Premises and recovering from Tenant the amount specified in this Article 14.2(a), or (ii) proceeding under Article 14.2(b). (b) Maintain Tenant's right to possession, in which case this Lease shall continue in effect whether or not Tenant shall have abandoned the Premises, in such event, Landlord shall be entitled to enforce all of Landlord's rights and remedies under this Lease, including the right to recover the rent as it becomes due hereunder. (c) Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the state in which the Premises are located. 14.3 DEFAULT BY LANDLORD. Landlord shall not be in default unless Landlord fails to perform obligations required of Landlord within a reasonable time, but in no event later than thirty (30) days after written notice by Tenant to Landlord and to the holder of any first mortgage or deed of trust covering the Premises whose name and address shall have theretofore been furnished to Tenant in writing, specifying wherein Landlord has failed to perform such obligation; provided, however, that if the nature of Landlord's obligation is such that more than thirty (30) days are required for performance then Landlord shall not be in default if Landlord commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion. 14.4 LATE CHARGES. Tenant hereby acknowledges that late payment by Tenant to Landlord of rent and other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to processing and accounting charges, and late charges which may be imposed on Landlord by the terms of any mortgage or trust deed covering the Premises. Accordingly, if any installment of rent or any other sum due from Tenant shall not be received by Landlord or Landlord's designee within ten (10) days after written notice that said amount is past due, then Tenant shall pay to Landlord a late charge equal to ten (10%) percent of such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the cost Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies granted hereunder. 15. CONDEMNATION. If the Premises or any portion thereof are taken under the power of eminent domain, or sold by Landlord under the threat of the exercise of said power (all of which is herein referred to as "condemnation"), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title of possession, whichever occurs first, if more than twenty-five (25%) percent of the floor area of any buildings on the Premises, or more than twenty-five (25%) percent of the land area of the Premises not covered with buildings, is taken by condemnation, either Landlord or Tenant may terminate this Lease as of the date the condemning authority takes possession by notice in writing of such election within twenty (20) days after Landlord shall have notified Tenant of the taking or, in the absence of such notice, then within twenty (20) days after the condemning authority shall have taken possession. If this Lease is not terminated by either Landlord or Tenant then it shall remain in full force and effect as to the portion of the Premises remaining, provided the rental shall be reduced in proportion to the floor area of the buildings taken within the Premises as bears to the total floor area of all buildings located on the Premises. In the event this Lease is not so terminated then Landlord agrees, at Landlord's sole cost, to as soon as reasonably possible restore the Premises to a complete unit of like quality and character as existed prior to the condemnation. All awards for the taking of any part of the Premises or any payment made under the threat of the exercise of power of eminent domain shall be the property of Landlord, whether made as compensation for diminution of value of the leasehold or for the taking of the fee or as severance damages; provided, however, that Tenant shall be entitled to any award for loss of or damage to Tenant's trade fixtures and removable personal property. 16. GENERAL PROVISIONS. 16.1 OFFSET STATEMENT. (a) Tenant shall at any time upon not less than ten (10) days' prior written notice from Landlord execute, acknowledge and deliver to Landlord a statement in writing (i) certifying that this Lease is unmodified and in full force and effect for, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect and the date to which the rent, security deposit, and other charges are paid in advance, if any and (b) acknowledging that there are not, to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder, or specifying such defaults, if any, which are claimed. Any such statement may be conclusively relied upon by any prospective purchaser or encumbrances of the premises. (b) Tenant's failure to deliver such statement within such time shall be conclusive upon Tenant (i) that this Lease is in full force and effect, without modification except as may be represented by Landlord, (ii) that there are no uncured defaults in Landlord's performance and (iii) that (PAGE 4 - MODIFIED NET) not more than one (1) month's rent has been paid in advance. (c) If Landlord desires to finance or refinance the Premises, or any part thereof, Tenant hereby agrees to deliver to any lender designated by Landlord such financial statements of Tenant as may be reasonably required by such lender. Such statements shall include the past three (3) years' financial statements of Tenant. All such financial statements shall be received by Landlord in confidence and shall be used only for the purposes herein set forth. 16.2 LANDLORD'S INTERESTS. The term "Landlord" as used herein shall mean only the owner or owners at the time in question of the title or a tenant's interest in a ground lease of the Premises. In the event of any transfer of such title or interest, Landlord herein named (and in case of any subsequent transfers the then grantor) shall be relieved from and after the date of such transfer of all liability as respects Landlord's obligations thereafter to be performed, provided that any funds in the hands of Landlord or the then grantor at the time of such transfer. In which Tenant has an interest, shall be delivered to the grantee. The obligations contained in this Lease to be performed by Landlord shall, subject as aforesaid, be binding on Landlord's successors and assigns, only during their respective periods of ownership. 16.3 SEVERABILITY. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof. 16.4 INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided, any amount due to Landlord not paid when due shall bear interest at ten (10%) percent per annum from the date due. Payment of such interest shall not excuse or cure any default by Tenant under this Lease. 16.5 TIME OF ESSENCE. Time is of the essence. 16.6 CAPTIONS. Article and paragraph captions are not a part hereof. 16.7 INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all agreements of the parties with respect to any master mentioned herein. No prior agreement or understanding pertaining to any such matter shall be effective. This Lease may be modified in writing only, signed by the parties in interest at the time of the modification. 16.8 WAIVERS. No waiver by Landlord of any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by Tenant of the same or any other provision. Landlord's consent to or approval of any act shall not be deemed to render unnecessary the obtaining of Landlord's consent to or approval of any subsequent act by Tenant. The acceptance of rent hereunder by Landlord shall not be a waiver of any preceding breach by Tenant of any provision hereof, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of acceptance of such rent. 16.9 RECORDING. Tenant shall not record this Lease. Any such recordation shall be a breach under this Lease. 16.10 HOLDING OVER. If Tenant remains in possession of the Premises or any part thereof after the expiration of the term hereof with the express written content of Landlord, such occupancy shall be a tenancy from month to month at a rental in the amount of the last monthly rental plus all other charges payable hereunder, and upon the terms hereof applicable to month-to-month tenancy. 16.11 CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed exclusive, but shall wherever possible, be cumulative with all other remedies at law or in equity. 16.12 COVENANTS AND CONDITIONS. Each provision of this Lease performable by Tenant shall be deemed both a covenant and a condition. 16.13 BINDING EFFECT; Choice of Law. Subject to any provisions hereof restricting assignment or subletting by Tenant and subject to the provisions of Article 16.2, this Lease shall bind the parties, their personal representatives, successors and assigns. This Lease shall be governed by the laws of the state where the Premises are located. 16.14 SUBORDINATION. (a) That Lease, at Landlord's option, shall be subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation for security now or hereafter placed upon the real property of which the Premises are a part and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof. Notwithstanding such subordination, Tenant's right to quiet possession of the Premises shall not be disturbed if Tenant is not in default and so long as Tenant shall pay the rent and observe and perform all of the provisions of this Lease, unless this Lease is otherwise terminated pursuant to its terms. If any mortgages, trustee or ground lesse shall elect to have this Lease prior to the lien of its mortgage, deed of trust or ground lease, and shall give written notice thereof to Tenant, this Lease shall be deemed prior to such mortgage, deed of trust, or ground lease, whether this Lease is dated prior or subsequent to the date of said mortgage, deed of trust or ground lease or the date of recording thereof. (b) Tenant agrees to execute any documents required to effectuate such subordination or to make this Lease prior to the lien of any mortgage, deed of trust or ground lease, as the case may be, and failing to do so within ten (10) days after written demand, does hereby make, constitute and irrevocably appoint Landlord as Tenant's attorney in fact and in Tenant's name, place and stead, to do so. 16.15 ATTORNEY'S FEES. If either party named herein brings an action to enforce the terms hereof or declare rights hereunder, the prevailing party in any such action, on trial or appeal, shall be entitled to his reasonable attorney's fees to be paid by the losing party as fixed by the court. 16.16 LANDLORD'S ACCESS. Landlord and Landlord's agents shall have the right to enter the Premises at reasonable times for the purpose of inspecting the same, showing the same to prospective purchasers, or tenders, and making such alterations, repairs, improvements or additions to the Premises or to the building of which they are a part as Landlord may deem necessary or desirable. Landlord may at any time place on or about the Premises any ordinary "For Sale" signs and Landlord may at any time during the last one hundred twenty (120) days of the term hereof place on or about the Premises any ordinary "For Sale or Lease" signs, all without rebate of rent or liability to Tenant. 16.17 AUCTIONS. Tenant shall not place any auction sign upon the Premises or conduct any auction thereon without Landlord's prior written consent. 16.18 MERGER. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Landlord, terminate all or any existing subtenancies or may, at the option of Landlord, operate as an assignment to Landlord of any or all of such subtenancies. 16.19 CORPORATE AUTHORITY. If Tenant is a corporation, each individual executing this Lease on behalf of said corporation represents and warrants that he is duly authorized to execute and deliver this Lease on behalf of said corporation in accordance with a duly adopted resolution of the Board of Directors of said corporation or in accordance with the Bylaws of said corporation, and that this Lease is binding upon said corporation in accordance with its terms. 16.20 LANDLORD'S LIABILITY. If Landlord is a limited partnership, the liability of the partners of the Landlord pursuant to this Lease shall be limited to the assets of the partnership; and Tenant, its successors and assigns hereby waive all rights to proceed against any of the parteners, or the officers, shareholders, or directors of any corporate partner of Landlord except to the extent of their interest in the partnership. The term "Landlord", as used in this Article, shall mean only the owner or owners at the time in question of the fee title or its interest in a ground lease of the Premises, and in the event of any transfer of such title or interest. Landlord herein named land in case of any subsequent transfers the then grantor shall be relieved from and after the date of such transfer of all liability as respects Landlord's obligations thereafter to be performed, provided that any funds in this hands of Landlord or the then grantor at the time of such transfer, in which Tenant has an interest, shall be delivered to the grantee. The obligations contained in this Lease to be performed by Landlord shall, subject as aforesaid, be binding on Landlord's successors and assigns, only during their respective periods of ownership. 17. PERFORMANCE BOND. At any time Tenant either desires to or is required to make any repairs, alterations, additions, improvements or utility installation thereon pursuant to Articles 7.5 or 9.2 herein, or otherwise, Landlord may at his sole option require Tenant, at Tenant's sole cost and expense, to obtain and provide to Landlord a lien and completion bond in an amount equal to one and one-half (1 1/2) times the estimated cost of such improvements, to insure Landlord against liability for mechanics' and materialmen's liens and to insure completion of the work. (PAGE 5 - MODIFIED NET) 18. BROKERS. The parties hereto acknowledge that Kidder, Mathews & Segner, Inc. were the real estate brokers that represented the parties herein, and that no other commissions are due to any brokers whatsoever, other than the above named brokers. 19. NOTICES. Whenever under this Lease provision is made for any demand, notice or declaration of any kind, or where it is deemed desirable or necessary by either party to give or serve any such notice, demand or declaration to the other party, it shall be in writing and served either personally or send by United States mail, postage prepaid, addressed at the addresses set forth hereinbelow. To Landlord at 801 Dexter Associates, 710 Cherry Street, Seattle, WA 98104 To Tenant at R.W. Stevenson, Criton Technologies 10800 N.E. 8th, Bellevue, WA 98004 Copy to: Bogle and Gates, Bank of California Center, Seattle, WA 98164 Attn: Michael Courtnage 20. INSURING PARTY. The insuring party under this Lease shall be the Landlord See Exhibit "A", Addendum to Lease, attached hereto and by this reference is made a part hereof. The parties hereto have executed this Lease at the place and on the dates specified immediately adjacent to their respective signatures. 801 Dexter Associates Executed at ------------------------- ---------------------------------------- on By /s/ Delton Bonds 7/18/84 ---------------------------------- ----------------------------- Delton Bonds, Its Managing Partner By ------------------------------------- "LANDLORD" Korry Electronics Company, A Division of Executed at Criton Technologies ------------------------- on By /s/ Lee Zuker 7/17/4 ---------------------------------- ------------------------------ Lee Zuker, President By ------------------------------------- "TENANT" If this Lease has been filled in it has been prepared for submission to your attorney for his approval. No representation or recommendation is made by the real estate broker or its agents or employees as to the legal sufficiency, legal effect, or tax consequences of this Lease or the transaction relating thereto. (PAGE 6 - MODIFIED NET) EXHIBIT "A" This is an Addendum to that Industrial Lease dated for reference purposes only July 17, 1984, between 801 Dexter Associates, as Landlord, and Korry Electronics Company, a division Criton Technologies, as Tenant. The Lease is amended as follows: 1. Lease Options. (a) Tenant will have option to extend this Lease for two (2) additional years under the same terms and conditions as written. Notification of each exercise must be made in writing to Landlord six (6) months before the then scheduled lease expiration. Any option not exercised cancels all subsequent options. Lease payment during this option period is $30,000 per month, (NNN). (b) If Tenant exercises the extension option referenced in 1(a) above, Tenant will also have the option to extend this Lease for an additional term of three (3) years, commencing at the end of the end of the two year extension. To exercise this option, Tenant must give Landlord written notice thereof not later than six (6) months prior to lease expiration. If this extension option is exercised, the Lease will continue on the same terms and conditions as written, except rent, which will be $30,000 per month, (NNN) plus CPI increase based on the CPI for Seattle metropolitan area over the prior twelve months period. 2. Parking Tenant will have access to and use of the roof top parking on the subject lease premises together with 6 stalls on the southern end of the subject building. 3. Purchase Option. 4. First Rights of Refusal. Landlord will not sell the Property during the term of this Lease without complying with the terms of this paragraph. Landlord agrees that if at any time during the term of this lease, as extended, Landlord receives a bona fide written offer (the "Offer") for the purchase of the Property which Landlord intends to accept, Landlord shall promptly advise tenant thereof in writing and provide Tenant with a copy of the Offer and any other information submitted by the offeror. Tenant shall have five (5) days from the receipt of such documentation within which to adivse Landlord whether Tenant is willing to purchase the Property on the terms and conditions stated in the Offer, subject to Tenant's receipt of approval from its Board. If Tenant so advises Landlord, and further advises Landlord of its board approval within ten (10) days thereafter, then Landlord shall be obligated to sell the Property to Tenant, and Tenant to purchase it from Landlord, on the terms and conditions stated in the Offer. If Tenant elects not to exercise this right of first refusal, Landlord may sell the Property to the offeror listed in the Offer, on the terms and conditions and at the time stated in the Offer, free from Tenant's right of first refusal. If the sale is not so closed with the offeror in accordance with the Offer, then Tenant's right of first refusal shall continue to be effective for the terms of this Lease, as extended. INDUSTRIAL LEASE Exhibit "A" Landlord: 801 Dexter Associates Tenant: Korry Electronics Company, A Division of Criton Technologies Date: July 17, 1984 Page Two 5. MODIFICATIONS TO STANDARD LEASE FORM 5.1 Paragraph 3.2 of Lease is deleted in its entirety. 5.2 Paragraph 6.3 of the Lease is modified to: (A) Add a warranty by Landlord that the Premises are zoned for the purposes for which they are leased to Tenant and in compliance with applicable law; and (B) Permit Tenant five (5) days from delivery of possession of the Premises to inspect corrections thereto performed by Landlord and to advise Landlord of any deficiencies therein. Landlord shall promptly correct any such deficiencies. 5.3 Paragraph 7.1 of lease is expanded to require Landlord, to maintain the parking area, ramp, heating ventilating, mechanical, electrical and plumbing systems; to require Landlord to act promptly to correct deficiencies; and to delete the last nineteen (19) words of that paragraph. Landlord will not be responsible, Tenant will be, for repairs due to neglect or abuse by Tenant or employees. Normal wear will be responsibility of Landlord. 5.4 Paragraph 7.2 of the Lease is modified to delete from Tenant's responsibilities the duty to maintain those items added to Landlord's responsibility under item 4 above and matters resulting from Landlord's failure to perform its leasehold obligations and to delete the last twenty-two (22) words of that paragraph. 5.5 Paragraph 7.3 of the Lease is modified to exclude damage due to casualty and structural repairs from Tenant's return obligations. 5.6 The paragraph 8.3 insurance shall be a policy which applies only to the Premises. 5.7 Paragraph 8.6 of the Lease is modified to exclude from Tenant's indemnification duty and risks assumed by its matters attributable to Landlord's negligence, willfull misconduct and breach of its leasehold obligations. 5.8 Paragraph 9.1 of the Lease is modified to give Tenant the right to terminate the Lease if the repairs will take more than sixty (60) days to accomplish. 5.9 Paragraph 9.5 of the Lease is modified to provide for abatement of rent from the date of the casualty until completion of the restoration. INDUSTRIAL LEASE Exhibit "A" Landlord: 801 Dexter Associates Tenant: Korry Electronics Company, A Division of Criton Technologies Date: July 17, 1984 Page Three 5.10 Paragraph 11 of the Lease is deleted in its entirety. 5.11 Paragraph 12 of the Lease is modified to provide for the allocation of non-metered utilities on the basis of the number of square feet of usable area on the first floor of the building to the number of square feet of usable area on both floors of the building. Utility, heating, and ventilating services shall be available to the Premises during such hours as may be designated by Tenant and during such hours such systems shall maintain the Premises at temperatures within the 68 degrees F - 78 degrees F range. 5.12 Paragraph 13 of the Lease shall not apply to transfers resulting from reorganizations of Criton Technologies. 5.13 Paragraph 14.3 of the Lease is modified to reduce the time period to two (2) days for curing defaults which deprive Tenant of the use of the Premises in part and to twelve (12) hours for curing defaults which wholly deprive Tenant of the uses of the Premises. 5.14 Paragraphs 16.1(b) and (c) of the Lease are deleted in their entirety. This Lease supercedes prior Lease between Landlord and Tenant executed May 21, 1984. By signature of both parties acknolwedged, prior Lease is null and void. IN WITNESS WHEREOF, the parties have executed this Addendum as of July _______, 1984 8O1 Dexter Associates By /s/ Delton Bonds 7-18-84 ------------------------------------- DATE Delton Bonds Its Managing Partner ("Landlord") K0RRY ELECTRONICS CO., A Division of CRITON TECHNOLOGIES By /s/ Lee Zuker ------------------------------------- DATE Lee Zuker President ("Tenant") FIRST AMENDMENT TO LEASE THIS AGREEMENT, entered into as of this 10th day of May, 1985, between 801 DEXTER ASSOCIATES, a Washington general partnership ("Landlord"), and KORRY ELECTRONICS CO., a Division of Criton Technologies ("Tenant"), RECITALS A. Tenant and Landlord are parties to a Lease dated July 17, 1984 with respect to certain premises located at 801 Dexter Avenue North, Seattle, Washington (the "801 Lease"), as described more particularly in the 801 Lease. B. The parties wish to extend and modify the 801 Lease. HOW, THEREFORE, the parties covenant and agree as follows: 1. The 801 Lease is modified as follows: 1.1 The basic Lease term is extended through August 31, 1990. 1.2 Paragraph 1 of Exhibit A to the 801 Lease is deleted in its entirety. Tenant shall have an option to extend the term of the 801 Lease for up to ten (10) consecutive two (2) year periods. To exercise a renewal option, Tenant must give Landlord written notice thereof not less than one hundred eighty (180) days prior to the end of the lease term then in effect. If Tenant fails to exercise a renewal option with respect to the 801 Lease, all subsequent renewal options with respect to the 801 Lease shall terminate. 1.3 If the first renewal option is exercised under the 801 Lease, then the monthly rent for the first renewal period shall be the monthly rent payable during the base period, increased by the percentage increase in the cost of living, as indicated by the Consumer Price Index for All Urban Consumers - All Items, for the Seattle Metropolitan Area, as published by the U.S. Department of Labor's Bureau of Labor Statistics (the "Index") during the immediately preceding twelve (12) month period, up to a maximum percentage increase of two and one-half percent (2-1/2%). If subsequent renewal options are exercised, then the monthly rent for each such renewal period shall be equal to the monthly rent payable during the prior renewal period, increased by the percentage increase in the Index during the prior two (2) year period, up to a maximum percentage increase of two and one-half percent (2-1/2%) in any one year and a maximum of five percent (5%) increase for the two-year period. (By way of illustration only, if the monthly rent under the 801 Lease were $20,000 for the September 1, 1990 - August 31, 1992 period and the Index increased four percent (4%) during the September 1, 1990 - August 31, 1991 period and one percent (1%) during the September 1, 1991 - August 31, 1992 period, then the monthly rent for the September 1, 1992 - August 31, 1994 period would be increased by three and one-half percent (3-1/2%), or Seven Hundred Dollars ($700.00), based on the 2-1/2% celling for the increase in the September 1, 1990 - August 31, 1991 period and the actual 1% increase during the following twelve-month period.) If the Index is discontinued, the parties shall substitute a comparable index of consumer prices. 2. Landlord shall promptly complete its repair work to the roof of the 801 Premises to prevent further leaks. -1- 3. This Lease is made expressly contingent upon Tenant and Dexter Avenue Associates executing a first amendment to their lease extending the terms thereof in the same manner as is described in paragraph 1 above. If such amendment has not been executed by May 15, 1985, then this Amendment shall terminate, unless Tenant waives such contingency. 4. The parties shall promptly execute and record a memorandum of the 801 Lease. 5. The 8O1 Lease shall otherwise continue in full force and effect as written. IN WITNESS WHEREOF, the parties have executed this First Amendment as of the day and year first above written. 801 DEXTER ASSOCIATES ("Landlord"} By /s/ Delton Bonds ------------------------------------- Delton Bonds, Its Managing Partner KORRY ELECTRONICS CO., a Division of Criton Technologies ("Tenant") By /s/ R.W. Stevenson ------------------------------------- Its V.P. Criton Technologies -2- STATE OF OF WASHINGTON ) ) ss. COUNTY OF King ) On this 14th day of May, 1985, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared Delton Bonds, to me known to be the Managing Partner of the general partnership that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said general partnership for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute the said instrument. WITNESS my hand and official seal hereto affixed the day and year first above written. /s/ Illegible ---------------------------------------- NOTARY PUBLIC, in and for the State of Washington, residing at Illegible STATE OF OF WASHINGTON ) ) ss. COUNTY OF King ) On this 10th day of May, 1985, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared R.W. Stevenson, to me known to be the Vice President of KORRY ELECTRONICS CO., A Division of Criton Technologies, the company that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said company for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute the said instrument. WITNESS my hand and official seal hereto affixed the day and year first above written. /s/ Illegible ---------------------------------------- NOTARY PUBLIC, in and for the State of Washington, residing at Redmond -3- SECOND AMENDMENT TO LEASE THIS AGREEMENT entered into as of this 20th day of June, 1986 between 801 DEXTER ASSOCIATES, a Washington general partnership ("Landlord") and KORRY ELECTRONICS CO., a division of Criton Technologies ("Tenant"): RECITALS A. Tenant and Landlord are parties to a lease dated July 17, 1984, as amended by First Amendment dated May l0th, 1985 (collectively the "Lease") with respect to certain premises located 801 Dexter Avenue North, Seattle, Washington, as described more particularly in the Lease. B. The parties wish to modify the Lease in certain respects. NOW, THEREFORE, the parties covenant and agree as follows: 1. The basic term of the Lease is extended through July 31, 1991. 2. This Lease is made expressly contingent upon Tenant and Dexter Avenue Associates executing a Second Amendment to that Dexter Avenue Associates Lease extending the term thereof in the same manner as is described in paragraph 1 above. If such Amendment has not been executed by June 23, 1986, then this Amendment shall terminate unless Tenant waives such contingency. 3. If Landlord fails to perform its obligations under the Lease as required thereunder, Tenant may elect to do so on Landlord's behalf and offset the cost thereof against rents next coming due under the Lease or pursue any other remedy available to it at law or in equity for Landlord's default. 4. The Lease shall otherwise continue in full force and effect as written. -1- IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the day and year first above written. 801 DEXTER ASSOCIATES ("Landlord") By /s/ Delton Bonds ------------------------------------- Delton Bonds Its Managing Partner KORRY ELECTRONICS CO., a Division of Criton Technologies ("Tenant") By /s/ Illegible ------------------------------------- Its President -2- STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) On this 20th day of June, 1986, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn personally appeared DELTON BONDS, known to me to be the Managing Partner of 801 DEXTER ASSOCIATES, the partnership that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said partnership, for the purposes therein mentioned, and on oath stated that he was authorized to execute said instrument. WITNESS my hand and official seal hereto affixed the day and year in the certificate above written. /s/ Illegible ---------------------------------------- NOTARY PUBLIC in and for the State of Washington, residing at Illegible. My commission expires 6-1-86. STATE OF WASHINGTON ) ) ss. COUNTY OF KING ) On this 20th day of June, 1986, before me, the undersigned, a Notary Public in and for the State of Washington, duly commissioned and sworn personally appeared A. LEE ZUKER, known to me to be the PRESIDENT of KORRY ELECTRONICS CO., the company that executed the foregoing instrument, and acknowledged the said instrument to be the free and voluntary act and deed of said company, for the purposes therein mentioned, and on oath stated that he was authorized to execute said instrument. WITNESS my hand and official seal hereto affixed the day and year in the certificate above written. /s/ Illegible ---------------------------------------- NOTARY PUBLIC in and for the State of Washington, residing at Illegible. My commission expires 6-1-88. -3- THIRD LEASE AMENDMENT AGREEMENT (8O1) THIS AGREEMENT is made this 1st day of September, 1987 by and between Korry Electronics Co. ("Korry"), a division of Criton Technologies, a New York general partnership, and 801 Dexter Associates, a Washington general partnership referred to herein as the "Partnership." RECITALS A. Korry and 801 Dexter Associates entered into an Industrial Lease on or about July 17, 1984 for certain commercial premises located in King County, Washington, which premises is commonly known as "801 Dexter Avenue North." Said Industrial Lease was subsequently amended by First and Second Lease Amendment agreements dated May 10, 1985 and June 20, 1986, respectively. Said Industrial Lease and the First and Second Lease Amendment agreements shall be collectively referred to herein as the "801 Lease." B. The parties now desire to amend the 801 Lease in certain material respects as set forth herein. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. The Partnership shall immediately contract for the installation of additional new HVAC equipment to be installed on the building located at 801 Dexter Avenue North, which HVAC equipment shall upgrade the current HVAC system to a level where it will have sufficient heating and cooling capacity to maintain 801 Dexter Avenue North at temperatures of between 68 degrees F. and 78 degrees F. at all times during normal business hours and such additional hours as may be designated by Korry but in no event shall the new HVAC equipment have less performance capability than or be of lesser quality than the HVAC equipment described in Exhibit A attached hereto. The new HVAC equipment and its installation shall comply with all applicable federal, state and local regulations. The new HVAC equipment shall be fully installed and fully operational no later than October 17, 1987. The failure to so install the new HVAC equipment by October 17, 1987 shall be a material breach of the Lease by Landlord and shall render Section 2 of this Third Lease Amendment null and void, unless the failure to so install the new HVAC equipment is caused by events beyond Landlord's control and Landlord continues installation as soon as possible. 2. In return for the agreement of 801 Dexter Associates listed above, Korry agrees that the Landlord's maintenance and replacement obligations under the 801 Lease shall hereafter be limited to (1) the maintenance of the utilities located outside of the leased premises, the foundations, the Page 1 exterior side of the roofs, and the exterior side of the exterior walls and (2) heat pump/compressor replacement costs in excess of Five Thousand Dollars ($5,000.00) per calendar year. 3. Korry represents and acknowledges to the Partnerships that (i) the right of first refusal provisions as contained in Section 4 of Exhibit A to the Lease shall not apply to the proposed exchange transaction with Michael J. Maloney ("Maloney"), as that transaction has been described to Korry; (ii) said right of first refusal provisions as existing and as modified below, shall not and do not extend to the air rights over and above the 801, 901 and 925 Dexter Avenue North premises or the parking lot used by Korry and located immediately to the north of the 945 Dexter Avenue North premises ("Air Rights"); and (iii) Korry shall not take any action to enforce said right of first refusal provisions against the Partnership or Maloney to the extent they may apply to the proposed exchange transaction with Maloney, as that transaction has been described to Korry; provided, however, the Lease shall be and is hereby amended to substitute the following right of first refusal provision for the right of first refusal provisions contained in Section 4 of Exhibit A to the Lease, which new provision shall be applicable, according to its terms, to all future proposed purchase and exchange transactions excluding the proposed exchange transaction with Maloney, as that transaction has been described to Korry, and any proposed transactions concerning any of the Air Rights: Landlord shall not sell or exchange the Property at any time during the term of this Lease, including any extensions thereof, without first complying with the terms of this paragraph. If at any time during the term of this Lease (including any extensions thereof), Landlord receives any bona fide offer for the purchase or exchange of the Property, which Landlord intends to accept, (an "Offer"), Landlord shall promptly advise Tenant of the receipt and acceptability of the Offer and provide to Tenant a copy of all documents pertaining to said sale or exchange and information on all the material terms and conditions thereof. Tenant shall have ten (10) business days following the receipt of all such documents and information within which to advise Landlord whether Tenant is willing to purchase the Property on the same terms and conditions as the Offer, subject to receipt of the approval of its governing Board or if Tenant is a corporation, its Board of Directors. If Tenant so notifies Landlord of Tenant's decision to purchase the Property, and further advises Landlord of its Board's approval within ten (10) business days thereafter, then Landlord shall sell the Property to Tenant, and Tenant shall purchase the Property from Landlord, on the same terms and conditions as the Offer; provided, however, that in the case of an Page 2 exchange transaction described in Section 1031(a) or (b) of the Internal Revenue Code of 1986 (an "Exchange" and the "Code," respectively, Tenant shall have the right to purchase the Property for cash consideration equal to the total of the sum of the appraised fair market value of the real property to be received by Landlord, the appraised fair market value of any other consideration or property to be received by Landlord as part of the Exchange and an amount equal to the Tax Benefits which would be realized by Landlord because the transaction is an Exchange and not a sale. For purposes hereof, the term "Tax Benefits" means an amount equal to the product of (i) the total taxable gain realized by Landlord not recognizable pursuant to Subsection (a) or (b) (as applicable) of Code Section 1031 and (ii) the highest marginal Federal income tax rate then applicable to individuals. If Tenant elects not to exercise its right of first refusal, Landlord may sell the Property to the party making the Offer on the terms and conditions stated in the Offer. If the sale or exchange transaction is not closed within ninety (90) days in accordance with the terms and conditions of the Offer, then Landlord must again notify Tenant as provided herein. This right of first refusal shall run with the Property during the term of this Lease, including any extensions thereof. 4. All other terms, conditions and covenants of the Lease shall otherwise remain in full force and effect. Dated this 1st day of September, 1987. KORRY ELECTRONICS CO By /s/ R.W. Stevenson ------------------------------------- Sr. VP of Crinton Technologies 801 DEXTER ASSOCIATES By /s/ Delton J. Bonds ------------------------------------- Delton J. Bonds Managing Partner STATE OF WASHINGTON ) ) ss COUNTY OF KING ) ON this 1st day of September, 1987, before me, a Notary Public in and for the State of Washington, duly Page 3 commissioned and sworn, personally appeared R.W. Stevenson, to me known to be the Sr. V. P. of Criton Technologies named in and which executed the foregoing instrument; and he acknowledged to me that he signed the same as the free and voluntary act and deed of said corporation for the uses and purposes thereing mentioned, being authorized so to do, and that the corporate seal affixed thereto is the seal of said corporation. WITNESS my hand and official seal the day and year in this certificate above written. /s/ Penelope B. Brenton ---------------------------------------- (SEAL) Notary Public in and for the State of Washington, residing at Illegible. My commission expires Sept 9, 1989 STATE OF WASHINGTON ) ) ss COUNTY OF KING ) ON this 1st day of September, 1987, before me, a Notary Public in and for the State of Washington, duly commissioned and sworn, personally appeared Delton J. Bonds, to me known to be the Managing Partner of 801 Dexter Associates, the Partnership named in and which executed the foregoing instrument; and he acknowledged to me that he signed the same as the free and voluntary act and deed of said partnership for the uses and purposes thereing mentioned, being authorized so to do, and that the partnership seal, if any, affixed thereto is the seal of said partnership. WITNESS my hand and official seal the day and year in this certificate above written. /s/ Penelope B. Brenton ---------------------------------------- (SEAL) Notary Public in and for the State of Washington, residing at Illegible. My commission expires Sept 9, 1989 Page 4 (CRITON LOGO) (KORRY LOGO) CRITON TECHNOLOGIES KORRY ELECTRONICS CO. Electronics and 301 Dexter Avenue North Defense Group Seattle, Washington 98109 206 281-1300 January 7, 1991 Mr. Michael Maloney P.O. Box 33007 Seattle, Washington 98133 Subject: Lease Renewal Dear Mr. Maloney: This letter is to notify you that Korry Electronics Company is exercising its option to renew its lease on facilities located at 801 Dexter Avenue North, Seattle, Washington, 98109, for the two year period beginning August 1, 1991. The Second Amendment to Lease, dated June 20, 1986, extends the basic period of the lease through July 31, 1991. The rental rate during the option period will be calculated in accordance with Paragraph 2.3 of the First Amendment to Lease, dated May 10, 1985, which was unchanged by subsequent amendments. Sincerely, KORRY ELECTONICS CO. /s/ Stephen R. Larson ------------------------------------ President SRL/cp cc: Bruce Benson Del Bond