LEASE AGREEMENT

1. PARTIES

This Lease Agreement (the “Lease”) is executed as of the 8th day of March, 2005, by and between Millat Investments Ltd., an Ohio limited liability company (“Lessor”), and Alien Technology Corporation 18220 Butterfield Blvd. Morgan Hill California 95037 (“Lessee”) pursuant to the terms and conditions set forth herein.

2. USE

Lessor hereby leases to Lessee, and Lessee leases from Lessor the Premises.

3. SUBJECT

For the purpose of this Lease, the “Premises” shall mean: Being an area of 10,201 square feet of office and 11,180 square feet of warehouse space, known as “Site A” on the attached Exhibit A located at 3001 West Tech Road, Miamisburg, OH 45342 and all appurtenances thereto, within in a larger commercial building (the “Building”).

4. TERM

The term of this lease shall be for a period of Thirty Eight (38) months, commencing on the 14th day of March, 2005 and ending on the thirtieth day of April, 2008 (the “Initial Term”). Rent is abated for the first sixty (60) days. Notwithstanding anything to the contrary herein, Lessee shall have the right to terminate this Lease for convenience, without cost or penalty for such termination, by delivery of written notice to Lessor on or before June 15, 2005. In the event of termination by Lessee on or before June 15, 2005, Lessor shall within ten (10) days after the date of termination return to Lessee all prepaid but unaccrued Rent amounts.

5. RATE

Lessee shall pay, to Lessor the sum of $12,501 per month, on the first day of each calendar month during the Initial Term (the “Initial Rent”) except as otherwise provided herein. (For purposes of this Lease, “Rent” shall collectively refer to the Initial Rent, as defined above, and the First Renewal Term Rent, the Second Renewal Term Rent and the Third Renewal Term Rent, each as defined below). Rent shall be pro-rated for any partial month.

6. OPTION TO RENEW

Lessee shall have the options to renew this Lease for three (3) additional terms of two (2) years each (the “Renewal Terms”) on the same terms and conditions provided herein. The monthly rental amount for the first Renewal Term shall be $0.85 per square foot of useable office space and $0.425 per square foot of useable warehouse space (the “First Renewal Term Rent”), payable on the first day of each month during the first Renewal Term. The monthly rental amount for the second Renewal Term (the “Second Renewal Term Rent”) shall be equal to the First Renewal Term Rent increased by an amount equal to the First Renewal Term Rent multiplied by the lesser of: (a) the percentage increase in the United States’ Consumer Price Index as published by the Department of Labor (the “CPI”) during the twelve (12) month period ending on May 1, 2008; or (b) five percent (5%), and shall be payable of the first day of each month during the second Renewal Term. The monthly rental amount for the third Renewal Term (the “Third Renewal Term Rent”) shall be equal to the Second Renewal Term Rent increased by an amount equal to the Second Renewal Term Rent multiplied by the lesser of: (a) the percentage increase in the CPI during the twelve (12) month period ending on May 1, 2010; or (b) five percent (5%), and shall be payable of the first day of each month during the third Renewal Term. As used herein, CPI means the Consumer Price Index; Midwest Region All Items, 1982-1984=100 as published by the United States Bureau of Labor Statistics. Lessee shall elect to exercise any of the options to renew this Lease by giving Lessor written notice, at the address provided herein, of such election not less than ninety (90) days prior to the expiration of the then current Initial Term or Renewal Term, as applicable.

7. RENT ABATEMENT

Lessor acknowledges that in order to effectively operate its business from the Premises, Lessee must construct some improvements to the Premises. Lessee estimates that such improvements will be completed over a period of two (2) months, in exchange for Lessee’s expense in improving the Premises, Lessor hereby agrees to waive the first two (2) monthly rental payments during the Initial Term.

8. PENALTY

Lessor shall have the right to assess a late charge of one percent (1%) of the amount of any payment due from Lessee to Lessor hereunder, which is not paid within fifteen (15) days after Lessor notifies Lessor in writing that such payment is past due and has not been received. To reduce penalty charges, Lessor recommends payment of the rent through electronic funds transfer.

9. POSSESSION

Possession and occupancy of the Premises shall be given to Lessee upon the later of: (a) payment of the first month’s Rent (to be applied to the first Rents due hereunder) and execution of the Lease; and (b) March 14, 2005. Lessee shall have access to the Premises for inspections at all times after payment of the first month’s Rent (to be applied to the first Rents due hereunder) and execution of the Lease for purposes of inspections, tenant’s improvements, and preparing for business.

10. REAL ESTATE TAXES

Lessor shall be responsible for paying all real estate and other taxes, levies, licenses, and assessments and other public charges charged or imposed on the Premises and/or the Building.

11. PARKING SPACES

Lessee shall have the exclusive use of the parking spaces depicted with cross hatches on Exhibit “A” attached hereto - thirteen (13) spaces in front of the Building - ten (10) spaces on south side of the Building - twelve (12) spaces on west side of the Building.

12.  REPRESENTATIONS

Lessor hereby represents and warrants:

A.     The Premises and the Building (including without limitation the roof, foundation, and mechanical systems) is in good and sanitary order, condition, and repair;

B.     The Premises and the Building (including all common areas) are in compliance with all applicable federal, state, and local laws, codes, ordinances and regulations that relate to the condition, use or occupancy of the Premises and/or the Building; Lessor shall have the sole responsibility to remedy any non-compliance of the Premises unless the non-compliance results from Lessee’s specific use of the Premises or from Lessee’s actions or failure to act in breach of this Lease. Lessor shall indemnify, hold harmless, and defend Lessee against any costs, attorneys’ fees, expenses and liabilities incurred in the defense of any claim, action or liability, for failure of the Premises and/or Building, to comply with any federal, state or local law, statute, rule or regulation, including without limitation the disability access requirements under Title III of the Americans with Disability Act and regulations thereunder. This indemnity does not apply if the claim concerns noncompliance of the Premises and/or the Building resulting from acts or failure to act by Lessee in compliance with this Lease.

C.     Lessor shall pay any mortgage payments and any interest and penalties thereon that may become due related to the Building during the Initial Term or any Renewal Term, as applicable.

D.     Lessor shall abide by all laws, regulations, rules, and orders of any federal, state, or local governmental authority concerning the ownership of the Building, which may now or hereafter be in effect.

13. USES PROHIBITED

Lessee shall not commit, or suffer to be committed any waste upon the said Premises, or any nuisance, or other act or thing which may disturb the quiet enjoyment of the neighborhood or allow the Premises to be used for any unlawful purpose, or place any harmful liquids in the drainage system of the Building. No outside storage of any kind shall be permitted on the Premises except in compliance with all laws. Lessee shall not use, or permit said Premises, or any part thereof, to be used for any purpose other than whatever is permitted under local zoning laws.

14. ALTERATIONS & ADDITIONS

Lessee shall not make, or suffer to be made, any material alterations or additions to the Premises, without the advance consent of Lessor, which consent shall not be unreasonably withheld or delayed. Any changes shall be made in a workmanlike manner so as not to weaken the Building. Lessee will pay all the bills incurred for labor and materials for any such alterations, additions and improvements. All additions and improvements made by Lessee to the Premises shall become a part thereof and shall remain the property of Lessor.

15. MAINTENANCE

Lessee’s sole responsibility to maintain the Premises shall be to, at Lessee’s sole cost, keep and maintain the interior of the Premises (not including mechanical systems) in good and sanitary order, condition and repair, ordinary wear and tear excepted.

Except as set forth in the immediately preceding paragraph, Lessor shall, at Lessor’s sole cost, be responsible for the maintenance, repair and replacement of the Premises and the Building and shall keep the Premises and Building in good and sanitary order, condition and repair, including without limitation the following: (a) the roof, gutters, downspouts, foundation, and load bearing walls of the Building and the Premises; (b) the exterior doors, windows and walls of the Building; (c) all mechanical systems in or about the Premises and the Building, including without limitation, the plumbing, heating, air conditioning, and electrical; (d) water damage to the Premises from the exterior of the Premises; (e) drainage and sewer, gas pipe, and electric; (f) all common areas located on or near the Premises or the Building, including without limitation, the parking lot, walkways, driveways, signage, lighting, landscaping, and snow and ice removal; (g) all repairs necessary due to structural defects; and (h) any necessary repairs, alterations, maintenance or replacements to the Premises and Building (other than to the interior of the Premises) required by any law, ordinance, order or regulation of any public authority.

16. FIRE AND EXTENDED COVERAGE INSURANCE

Lessee shall at Lessee’s sole cost and expense, comply with any and all requirements, pertaining to the interior of the Premises, of any insurance organization or company necessary for the maintenance of reasonable fire and public liability insurance, covering the Premises. Lessee shall pay for an insurance policy for not less than $1,000,000 for property damage liability insurance to cover Lessor liability, naming Lessor as an additional insured and Lessee shall obtain a written obligation on the part of the insurer to notify Lessor in writing thirty (30) days prior to cancellation thereof. Lessee shall be responsible for providing insurance for Lessee’s personal property. Lessor shall keep the Premises, the Building and improvements insured against loss or damage by fire or other casualty insurable under standard special form, all risk coverage in an amount not less than an amount sufficient to have the insurance company waive co-insurance on partial losses.

17.  INDEMNIFICATION OF LESSOR AND LESSEE’S LIABILITY INSURANCE

Lessee, as a material part of the consideration to be rendered to Lessor, hereby waives all claims against Lessor for damages to goods, wares and merchandise, and all other personal property, in, upon or about the Premises and for injuries to persons in or about the Premises, from any cause arising at any time; and Lessee will hold Lessor exempt and harmless from any damage or injury to any person, or to the goods, wares and merchandise and all other personal property of any person arising from the use of the Premises by Lessee, from the failure of Lessee to keep the interior of the Premises in good condition and repair as herein provided. Lessee shall also secure and keep in force public liability insurance covering the Premises insuring the Lessee and naming Lessor as an additional insured. A copy of said policy shall be delivered to Lessor upon request and the minimum limits of coverage thereof shall be $3,000,000.00 and Lessee shall obtain a written obligation on the part of the insurer to notify Lessor in writing thirty (30) days prior to cancellation thereof.

18. LESSOR’S INDEMNIFICATION OF LESSEE

Lessor agrees to defend, indemnify and hold harmless Lessee from any and all claims, orders, demands, causes of action, proceedings, judgments, suits, liabilities, losses, fines, penalties, costs, expenses, and damages arising out of or related to: (i) the Premises arising on or before the beginning of the Initial Term, (ii) the Building, other than the Premises, (iii) events occurring on or before the beginning of the Initial Term, (iv) any forfeitures, fines, penalties, or other sanctions imposed as a result of noncompliance by any person or entity other than Lessee of any applicable rules, regulations, orders, laws or other requirements, (v) a breach by Lessor of any representation, warranty or covenant in this Lease, or (vi) any environmental claim other than environmental claims resulting directly from the negligence or intentional conduct of Lessee made by any person or entity including but not limited to, any claim arising out of, in any way relating to, or resulting from, directly or indirectly: (A) a release or threatened release of a hazardous substance at the Premises or the Building, (B) a violation or alleged violation of or noncompliance with or alleged noncompliance with any environ