Construction And Lease Agreement

Exhibit 10.2





ADDENDUM NO. 2



TO CONSTRUCTION AND LEASE AGREEMENT



THIS AGREEMENT, made and entered into effective the first day of __ June 8 ________, 2005, by and between the PORT OF WALLA WALLA, a municipal corporation of the State of Washington (hereinafter referred to as "Lessor"), and KEY TECHNOLOGY, INC., an Oregon corporation (hereinafter referred to as "Lessee"),



W I T N E S S E T H:



WHEREAS, Lessor and Lessee entered into a Construction and Lease Agreement (hereinafter the "Agreement") dated October 17, 1989 and recorded with the Walla Walla County Auditor under Auditor's File No. 9105334 regarding the construction and leasing of certain premises located on Avery Street in Walla Walla, Washington, and



WHEREAS, Lessor and Lessee entered into Addendum No. 1 to Construction and Lease Agreement (hereinafter the "Addendum No. 1") dated January 1, 2002 regarding the Lessor's reduction in the Lessee's monthly rent for the period of January 1, 2002 through December 31, 2002, and



WHEREAS, the parties desire to further amend certain provisions of the Agreement,



NOW, THEREFORE, in consideration of the Lessor's expansion of the Lessee's Avery Facility located at 150 Avery Street, Walla Walla, Washington, the parties agree as follows:



1. Section 3 of said Agreement, as amended by Addendum No. 1, is amended to read as follows:



"3. Term.



"This Lease shall be for a term of THIRTY (30) years, commencing at 12:01 a.m. effective on September 20, 1990 and terminating at 11:59 p.m. on September 19, 2020."



2. Section 4, Paragraph D of said Agreement, as amended by Addendum No. 1, is amended to read as follows:



"D. It is agreed by the parties that the rental due for the penultimate five (5) years of this Agreement (September 21, 2010 through September 20, 2015) shall be the sum of FIFTY SIX THOUSAND ONE HUNDRED SEVENTY FIVE DOLLARS AND THIRTEEN CENTS ($56,175.13) per month plus applicable leasehold tax. It is further agreed by the parties that the rental due for the last five (5) years of this Agreement (September 21, 2015 through September 20, 2020) shall be the sum of FIFTY SEVEN THOUSAND EIGHT HUNDRED SIXTY DOLLARS AND THIRTY EIGHT CENTS ($57,860.38) per month plus applicable leasehold tax."



Addendum No. 2 to Construction and Lease Agreement, P. 1

Port of Walla Walla ?Key Technology, Inc.






3. Section 4 of said Agreement is amended by adding new Paragraphs "E"and "F" thereto to read as follows:

". . . .

E. In addition to the rental hereinbefore provided to be paid to Lessor, Lessee agrees to pay additional monthly rent to the Lessor for the Lessor's construction of a 20,160 sq. ft. manufacturing bay expansion on the east side of Key's Avery facility, the construction of a 2,400 sq.ft. research and development area on the north side of said facility, the construction of an additional 62 stall parking lot adjacent to said facility, the installation of new carpeting in Key's administrative offices, and for certain other construction costs associated with the expansion project. The estimated project cost for said improvements is TWO MILLION EIGHT HUNDRED FOUR THOUSAND SEVEN HUNDRED FORTY NINE DOLLARS ($2,804,749). The estimated additional monthly rental commencing January 1, 2006 (subject to the issuance of a Certificate of Occupancy by the City of Walla Walla) shall be the sum of NINETEEN THOUSAND ONE HUNDRED TWENTY-SEVEN AND 03/100 DOLLARS ($19,127.03) per month plus applicable state leasehold tax, pursuant to the terms of the Letter of Authorization to Proceed executed by the Lessee and dated April 27, 2005 (attached hereto and incorporated herein as Exhibit 1). The additional monthly rental for said improvements shall be adjusted and finalized based on the final actual costs of construction. Any difference, positive or negative, between the actual final cost of the project and the current budget of $2,804,749 will result in an adjustment to the monthly lease cost by applying a 3% rate and a 15 year term in the same manner used in calculating the current expected lease rate as set forth in Exhibit 1. The parties shall confirm the amount of additional monthly rental in writing.



F. In consideration that Lessee's rental payments to Lessor are based in part on Lessor's total cost to construct the addition to the premises, the Lessee will receive the e ...