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Exhibit 10.2.1

RENEWAL OF GARDEN GROVE LEASE

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5410/31/01 MTIN
Revised 9/03
CALIFORNIA FORM

[STAMP]

LEASE

         CABOT INDUSTRIAL VENTURE A, LLC,
a Delaware limited liability company

Landlord,

and
DPAC TECHNOLOGIES CORP.,
a California corporation

Tenant

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TABLE OF CONTENTS

 
   
  Page

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1.   USE AND RESTRICTIONS ON USE   1 2.   TERM   3 3.   RENT   3 4.   RENT
ADJUSTMENTS   4 5.   SECURITY DEPOSIT   5 6.   ALTERATIONS   6 7.   REPAIR   7
8.   LIENS   8 9.   ASSIGNMENT AND SUBLETTING   8 10.   INDEMNIFICATION   10 11.
  INSURANCE   10 12.   WAIVER OF SUBROGATION   11 13.   SERVICES AND UTILITIES  
11 14.   HOLDING OVER   11 15.   SUBORDINATION   11 16.   RULES AND REGULATIONS
  12 17.   REENTRY BY LANDLORD   12 18.   DEFAULT   12 19.   REMEDIES   13 20.  
TENANT'S BANKRUPTCY OR INSOLVENCY   15 21.   QUIET ENJOYMENT   16 22.   CASUALTY
  16 23.   EMINENT DOMAIN   17 24.   SALE BY LANDLORD   17 25.   ESTOPPEL
CERTIFICATES   18 26.   SURRENDER OF PREMISES   18 27.   NOTICES   19 28.  
TAXES PAYABLE BY TENANT   19 29.   RELOCATION OF TENANT   19 30.   DEFINED TERMS
AND HEADINGS   19 31.   TENANT'S AUTHORITY   20 32.   FINANCIAL STATEMENTS AND
CREDIT REPORTS   20 33.   COMMISSIONS   20 34.   TIME AND APPLICABLE LAW   20
35.   SUCCESSORS AND ASSIGNS   20 36.   ENTIRE AGREEMENT   20          

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37.   EXAMINATION NOT OPTION   20 38.   RECORDATION   21 39.   LIMITATION OF
LANDLORD'S LIABILITY   22 EXHIBIT A—FLOOR PLAN DEPICTING THE PREMISES    
EXHIBIT A-1—SITE PLAN     EXHIBIT B—INITIAL ALTERATIONS     EXHIBIT B-1 INITIAL
ALTERATIONS MAP     EXHIBIT C—RULES AND REGULATIONS    

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MULTI-TENANT INDUSTRIAL NET LEASE
REFERENCE PAGES

BUILDING:
 
7321 - 7341 LINCOLN WAY
GARDEN GROVE, CA 92841
LANDLORD:
 
CABOT INDUSTRIAL VENTURE A, LLC,
a Delaware limited liability company
LANDLORD'S ADDRESS:
 
1630 S. Sunkist Street, Suite A
Anaheim, California 92806
WIRE INSTRUCTIONS AND/OR ADDRESS FOR RENT PAYMENT:
 
75 Remittance Drive
Suite 1414
Chicago, Illinois 60675-1414
LEASE REFERENCE DATE:
 
December 29, 2003
TENANT:
 
DPAC TECHNOLOGIES CORP.,
a California corporation
TENANT'S NOTICE ADDRESS:
 
7321-7331 Lincoln Way
Garden Grove, California 92841  
(a) As of beginning of Term:
 
7321-7331 Lincoln Way
Garden Grove, California 92841  
(b) Prior to beginning of Term (if different):
 
7321-7341 Lincoln Way
Garden Grove, California 92841
PREMISES ADDRESS:
 
7321-7331 Lincoln Way,
Garden Grove, California 92841
PREMISES RENTABLE AREA:
 
Approximately 27,857 sq. ft. (for outline of Premises see Exhibit A)
USE:
 
Warehouse and lab areas relating to the research and development, manufacture,
assembly and shipment of Tenant's products and general and administrative
offices, and for no other purpose.
COMMENCEMENT DATE:
 
February 1, 2004
TERM OF LEASE:
 
Approximately Three (3) years, Three (3) months, Zero (0) days beginning on the
Commencement Date and ending on the Termination Date.
TERMINATION DATE:
 
April 30, 2007

   

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Initials

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ANNUAL RENT and MONTHLY INSTALLMENT OF
RENT(Article 3):

Period

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from

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  through

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  Annual Rent

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  Monthly Installment
of Rent

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2/1/2004   4/30/2004   $ 0.00   $ 0.00     5/1/2004   1/31/2005   $ 277,453.56  
$ 23,121.13     2/1/2005   1/31/2006   $ 285,812.82   $ 23,817.74     2/1/2006  
4/30/2007   $ 294,169.92   $ 24,514.16    

TENANT'S PROPORTIONATE SHARE:
 
75.2%
SECURITY DEPOSIT:
 
$31,501.00 (see also Addendum to Lease—Security Deposit Transfer)
ASSIGNMENT/SUBLETTING FEE
 
$1,000.00
REAL ESTATE BROKER DUE COMMISSION:
 
In no event shall Landlord be obligated to pay any Brokerage Commission in
accordance with this Lease. Tenant shall indemnify Landlord with respect to any
broker(s) claiming they are owed a fee related to this transaction.

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        The Reference Pages information is incorporated into and made a part of
the Lease. In the event of any conflict between any Reference Pages information
and the Lease, the Lease shall control. This Lease includes Exhibits A through C
and Addendum Items 1 through 8, all of which are made a part of this Lease.

LANDLORD:   TENANT:
CABOT INDUSTRIAL VENTURE A, LLC, a Delaware limited liability company
 
DPAC TECHNOLOGIES CORP., a California corporation
By:
RREEF Management Company, a
Delaware corporation, its Property
Manager
 
 
 
By:
 
 
By:
   

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Name:
Scott Recknor
 
Name:
Richard Dadamo
Title:
District Manager
 
Title:
Chairman of the Board of Directors
Dated: ___________________, 2004
 
Dated: ___________________, 2004
 
 
 
By:
         

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Name:
William M. Stowell
 
 
 
Title:
Chief Financial Officer
 
 
 
Dated: ___________________, 2004

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LEASE

        By this Lease Landlord leases to Tenant and Tenant leases from Landlord
the Premises in the Building as set forth and described on the Reference Pages.
The Premises are depicted on the floor plan attached hereto as Exhibit A, and
the Building is depicted on the site plan attached hereto as Exhibit A-1. The
Reference Pages, including all terms defined thereon, are incorporated as part
of this Lease.

1.     USE AND RESTRICTIONS ON USE.

        1.1   The Premises are to be used solely for the purposes set forth on
the Reference Pages. Tenant shall not do or permit anything to be done in or
about the Premises which will in any way obstruct or interfere with the rights
of other tenants or occupants of the Building or injure, annoy, or disturb them,
or allow the Premises to be used for any improper, immoral, unlawful, or
objectionable purpose, or commit any waste. Tenant shall not do, permit or
suffer in, on, or about the Premises the sale of any alcoholic liquor without
the written consent of Landlord first obtained. Tenant shall comply with all
governmental laws, ordinances and regulations applicable to the use of the
Premises and its occupancy and shall promptly comply with all governmental
orders and directions for the correction, prevention and abatement of any
violations in the Building or appurtenant land, caused or permitted by, or
resulting from the specific use by, Tenant, or in or upon, or in connection
with, the Premises, all at Tenant's sole expense. Tenant shall not do or permit
anything to be done on or about the Premises or bring or keep anything into the
Premises which will in any way increase the rate of, invalidate or prevent the
procuring of any insurance protecting against loss or damage to the Building or
any of its contents by fire or other casualty or against liability for damage to
property or injury to persons in or about the Building or any part thereof.

        1.2   Tenant shall not, and shall not direct, suffer or permit any of
its agents, contractors, employees, licensees or invitees (collectively, the
"Tenant Entities") to at any time handle, use, manufacture, store or dispose of
in or about the Premises or the Building any (collectively "Hazardous
Materials") flammables, explosives, radioactive materials, hazardous wastes or
materials, toxic wastes or materials, or other similar substances, petroleum
products or derivatives or any substance subject to regulation by or under any
federal, state and local laws and ordinances relating to the protection of the
environment or the keeping, use or disposition of environmentally hazardous
materials, substances, or wastes, presently in effect or hereafter adopted, all
amendments to any of them, and all rules and regulations issued pursuant to any
of such laws or ordinances (collectively "Environmental Laws"), nor shall Tenant
suffer or permit any Hazardous Materials to be used, in any manner not fully in
compliance with all Environmental Laws, in the Premises or the Building and
appurtenant land or allow the environment to become contaminated with any
Hazardous Materials. Notwithstanding the foregoing, Tenant may handle, store,
use or dispose of products containing small quantities of Hazardous Materials
(such as aerosol cans containing insecticides, toner for copiers, paints, paint
remover and the like) to the extent customary and necessary for the use of the
Premises for general office purposes; provided that Tenant shall always handle,
store, use, and dispose of any such Hazardous Materials in a safe and lawful
manner and never allow such Hazardous Materials to contaminate the Premises,
Building and appurtenant land or the environment. Tenant shall protect, defend,
indemnify and hold each and all of the Landlord Entities (as defined in
Article 30) harmless from and against any and all loss, claims, liability or
costs (including court costs and attorney's fees) incurred by reason of any
actual or asserted failure of Tenant to fully comply with all applicable
Environmental Laws, or the presence, handling, use or disposition in or from the
Premises of any Hazardous Materials by Tenant or any Tenant Entity (even though
permissible under all applicable Environmental Laws or the provisions of this
Lease), or by reason of any actual or asserted failure of Tenant to keep,
observe, or perform any provision of this Section 1.2.

        1.3   Tenant and the Tenant Entities will be entitled to the
non-exclusive use of the common areas of the Building as they exist from time to
time during the Term, including the parking facilities, subject

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to Landlord's rules and regulations regarding such use. However, in no event
will Tenant or the Tenant Entities park more vehicles in the parking facilities
than Tenant's Proportionate Share of the total parking spaces available for
common use. The foregoing shall not be deemed to provide Tenant with an
exclusive right to any parking spaces or any guaranty of the availability of any
particular parking spaces or any specific number of parking spaces.

        1.4   Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation as to the condition of the Premises or the
suitability of the Premises for Tenant's intended use. Tenant hereby
acknowledges: (i) that it has satisfied itself with respect to the condition of
the Premises (including, but not limited to, the electrical and fire sprinkler
systems, security, environmental aspects, seismic and earthquake requirements),
and compliance with the Americans with Disabilities Act (the "ADA") and
applicable zoning, municipal, county, state and federal laws, ordinances and
regulations and any covenants or restrictions of record and the present and
future suitability of the Premises for Tenant's intended use, (ii) that it has
made such investigations as it deems necessary with reference to such matters,
is satisfied with reference thereto, and assumes all responsibility therefor as
the same relate to Tenant's occupancy of the Premises and/or the provisions of
this Lease and (iii) that it accepts the Premises in its "as-is" condition and
currently occupies the Premises under a prior lease. This Lease is not
contingent upon Tenant's ability to obtain any approvals and permits for its use
of the Premises from any other applicable governmental entities or owners
association. Landlord shall cooperate with Tenant in connection with Tenant
seeking such permits and approvals, but at no cost to Landlord. Tenant
acknowledges that it is obligated under this Lease even if all or part of its
permitted use is not permitted at the Premises.

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2.     TERM.

        2.1   The Term of this Lease shall begin on the date ("Commencement
Date") which shall be the Commencement Date as shown on the Reference Pages
Premises to Tenant, and shall terminate on the date as shown on the Reference
Pages ("Termination Date"), unless sooner terminated by the provisions of this
Lease.

        2.2   Tenant agrees that in the event of the inability of Landlord to
deliver possession of the Premises on the Scheduled Commencement Date for any
reason, Landlord shall not be liable for any damage resulting from such
inability, but Tenant shall not be liable for any rent until the time when
Landlord can, after notice to Tenant, deliver possession of the Premises to
Tenant. No such failure to give possession on the Scheduled Commencement Date
shall affect the other obligations of Tenant under this Lease, except that if
Landlord is unable to deliver possession of the Premises within one hundred
twenty (120) days after the Scheduled Commencement Date (other than as a result
of strikes, shortages of materials, holdover tenancies or similar matters beyond
the reasonable control of Landlord and Tenant is notified by Landlord in writing
as to such delay), Tenant shall have the option to terminate this Lease unless
said delay is as a result of: (a) Tenant's failure to agree to plans and
specifications and/or construction cost estimates or bids; (b) Tenant's request
for materials, finishes or installations other than Landlord's standard except
those, if any, that Landlord shall have expressly agreed to furnish without
extension of time agreed by Landlord; (c) Tenant's change in any plans or
specifications; or, (d) performance or completion by a party employed by Tenant
(each of the foregoing, a "Tenant Delay"). If any delay is the result of a
Tenant Delay, the Commencement Date and the payment of rent under this Lease
shall be accelerated by the number of days of such Tenant Delay.

        2.3   In the event Landlord permits Tenant, or any agent, employee or
contractor of Tenant, to enter, use or occupy the Premises prior to the
Commencement Date, such entry, use or occupancy shall be subject to all the
provisions of this Lease other than the payment of rent, including, without
limitation, Tenant's compliance with the insurance requirements of Article 11.
Said early possession shall not advance the Termination Date.

3.     RENT.

        3.1   Tenant agrees to pay to Landlord the Annual Rent in effect from
time to time by paying the Monthly Installment of Rent then in effect on or
before the fifth day of each full calendar month during the Term, except that
the first full month's rent shall be paid upon the execution of this Lease. The
Monthly Installment of Rent in effect at any time shall be one-twelfth (1/12) of
the Annual Rent in effect at such time. Rent for any period during the Term
which is less than a full month shall be a prorated portion of the Monthly
Installment of Rent based upon the number of days in such month. Said rent shall
be paid to Landlord, without deduction or offset and without notice or demand,
at the Rent Payment Address, as set forth on the Reference Pages, or to such
other person or at such other place as Landlord may from time to time designate
in writing. If an Event of Default occurs, Landlord may require by notice to
Tenant that all subsequent rent payments be made by an automatic payment from
Tenant's bank account to Landlord's account, without cost to Landlord. Tenant
must implement such automatic payment system prior to the next scheduled rent
payment or within ten (10) days after Landlord's notice, whichever is later.
Unless specified in this Lease to the contrary, all amounts and sums payable by
Tenant to Landlord pursuant to this Lease shall be deemed additional rent.

        3.2   Tenant recognizes that late payment of any rent or other sum due
under this Lease will result in administrative expense to Landlord, the extent
of which additional expense is extremely difficult and economically impractical
to ascertain, Tenant therefore agrees that if rent or any other sum is not paid
when due and payable pursuant to this Lease, a late charge shall be imposed in
an amount equal to the greater of: (a) Fifty Dollars ($50.00), or (b) six
percent (6%) of the unpaid rent or other payment. The amount of the late charge
to be paid by Tenant shall be reassessed and added to Tenant's obligation for

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each successive month until paid. The provisions of this Section 3.2 in no way
relieve Tenant of the obligation to pay rent or other payments on or before the
date on which they are due, nor do the terms of this Section 3.2 in any way
affect Landlord's remedies pursuant to Article 19 of this Lease in the event
said rent or other payment is unpaid after date due.

4.     RENT ADJUSTMENTS.

        4.1   For the purpose of this Article 4, the following terms are defined
as follows:

        4.1.1    Lease Year:    Each fiscal year (as determined by Landlord from
time to time) falling partly or wholly within the Term.

        4.1.2    Expenses:    All costs of operation, maintenance, repair and
management fees of the Building not exceeding 5% of Landlord's gross receipts
from the Building (including the amount of any credits which Landlord may grant
to particular tenants of the Building in lieu of providing any standard services
or paying any standard costs described in this Section 4.1.2 for similar
tenants), as determined in accordance with generally accepted accounting
principles, including the following costs by way of illustration, but not
limitation: water and sewer charges; insurance charges of or relating to all
insurance policies and endorsements deemed by Landlord to be reasonably
necessary or desirable and relating in any manner to the protection,
preservation, or operation of the Building or any part thereof; utility costs,
including, but not limited to, the cost of heat, light, power, steam, gas; waste
disposal; the cost of janitorial services; the cost of security and alarm
services (including any central station signaling system); costs of cleaning,
repairing, replacing and maintaining the common areas, including parking and
landscaping, window cleaning costs; labor costs; costs and expenses of managing
the Building including management fees not exceeding 5% of Landlord's gross
receipts from the Building; air conditioning maintenance costs; elevator
maintenance fees and supplies; material costs; equipment costs including the
cost of maintenance, repair and service agreements and rental and leasing costs;
purchase costs of equipment; current rental and leasing costs of items which
would be capital items if purchased; tool costs; licenses, permits and
inspection fees; wages and salaries; employee benefits and payroll taxes;
accounting and legal fees; any sales, use or service taxes incurred in
connection therewith. In addition, Landlord shall be entitled to recover, as
additional rent (which, along with any other capital expenditures constituting
Expenses, Landlord may either include in Expenses or cause to be billed to
Tenant along with Expenses and Taxes but as a separate item), Tenant's
Proportionate Share of: (i) an allocable portion of the cost of capital
improvement items which are reasonably calculated to reduce operating expenses;
(ii) the cost of fire sprinklers and suppression systems and other life safety
systems; and (iii) other capital expenses which are required under any
governmental laws, regulations or ordinances which were not applicable to the
Building at the time it was constructed; but the costs described in this
sentence shall be amortized over the reasonable life of such expenditures in
accordance with such reasonable life and amortization schedules as shall be
determined by Landlord in accordance with generally accepted accounting
principles, with interest on the unamortized amount at one percent (1%) in
excess of the Wall Street Journal prime lending rate announced from time to
time. Expenses shall not include depreciation or amortization of the Building or
equipment in the Building except as provided herein, loan principal payments,
costs of alterations of tenants' premises, leasing commissions, interest
expenses on long-term borrowings or advertising costs.

        4.1.3    Taxes:    Real estate taxes and any other taxes, charges and
assessments which are levied with respect to the Building or the land
appurtenant to the Building, or with respect to any improvements, fixtures and
equipment or other property of Landlord, real or personal, located in the
Building and used in connection with the operation of the Building and said
land, any payments to any ground lessor in reimbursement of tax payments made by
such lessor; and all fees, expenses and costs incurred by Landlord in
investigating, protesting, contesting or in any way seeking to reduce or avoid
increase in any assessments, levies or the tax rate pertaining to any

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Taxes to be paid by Landlord in any Lease Year. Taxes shall not include any
corporate franchise, or estate, inheritance or net income tax, or tax imposed
upon any transfer by Landlord of its interest in this Lease or the Building or
any taxes to be paid by Tenant pursuant to Article 28.

        4.2   Tenant shall pay as additional rent for each Lease Year Tenant's
Proportionate Share of Expenses and Taxes incurred for such Lease Year.

        4.3   The annual determination of Expenses shall be made by Landlord and
shall be binding upon Landlord and Tenant, subject to the provisions of this
Section 4.3. During the Term, Tenant may review, at Tenant's sole cost and
expense, the books and records supporting such determination in an office of
Landlord, or Landlord's agent, during normal business hours, upon giving
Landlord five (5) days advance written notice within sixty (60) days after
receipt of such determination, but in no event more often than once in any one
(1) year period, subject to execution of a confidentiality agreement acceptable
to Landlord, and provided that if Tenant utilizes an independent accountant to
perform such review it shall be one of national standing which is reasonably
acceptable to Landlord, is not compensated on a contingency basis and is also
subject to such confidentiality agreement. If Tenant fails to object to
Landlord's determination of Expenses within ninety (90) days after receipt, or
if any such objection fails to state with specificity the reason for the
objection, Tenant shall be deemed to have approved such determination and shall
have no further right to object to or contest such determination. In the event
that during all or any portion of any Lease Year or Base Year, the Building is
not fully rented and occupied Landlord shall make an appropriate adjustment in
occupancy-related Expenses for such year for the purpose of avoiding distortion
of the amount of such Expenses to be attributed to Tenant by reason of variation
in total occupancy of the Building, by employing consistent and sound accounting
and management principles to determine Expenses that would have been paid or
incurred by Landlord had the Building been at least ninety-five percent (95%)
rented and occupied, and the amount so determined shall be deemed to have been
Expenses for such Lease Year.

        4.4   Prior to the actual determination thereof for a Lease Year,
Landlord may from time to time estimate Tenant's liability for Expenses and/or
Taxes under Section 4.2, Article 6 and Article 28 for the Lease Year or portion
thereof. Landlord will give Tenant written notification of the amount of such
estimate and Tenant agrees that it will pay, by increase of its Monthly
Installments of Rent due in such Lease Year, additional rent in the amount of
such estimate. Any such increased rate of Monthly Installments of Rent pursuant
to this Section 4.4 shall remain in effect until further written notification to
Tenant pursuant hereto.

        4.5   When the above mentioned actual determination of Tenant's
liability for Expenses and/or Taxes is made for any Lease Year and when Tenant
is so notified in writing, then:

        4.5.1 If the total additional rent Tenant actually paid pursuant to
Section 4.3 on account of Expenses and/or Taxes for the Lease Year is less than
Tenant's liability for Expenses and/or Taxes, then Tenant shall pay such
deficiency to Landlord as additional rent in one lump sum within thirty
(30) days of receipt of Landlord's bill therefor; and

        4.5.2 If the total additional rent Tenant actually paid pursuant to
Section 4.3 on account of Expenses and/or Taxes for the Lease Year is more than
Tenant's liability for Expenses and/or Taxes, then Landlord shall credit the
difference against the then next due payments to be made by Tenant under this
Article 4, or, if the Lease has terminated, refund the difference in cash.

        4.6   If the Commencement Date is other than January 1 or if the
Termination Date is other than December 31, Tenant's liability for Expenses and
Taxes for the Lease Year in which said Date occurs shall be prorated based upon
a three hundred sixty-five (365) day year.

5.    SECURITY DEPOSIT.    Tenant shall deposit the Security Deposit with
Landlord upon the execution of this Lease. Said sum shall be held by Landlord as
security for the faithful performance by Tenant of all the terms, covenants and
conditions of this Lease to be kept and performed by Tenant and not as an
advance rental deposit or as a measure of Landlord's damage in case of Tenant's
default.

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If Tenant defaults with respect to any provision of this Lease, Landlord may use
any part of the Security Deposit for the payment of any rent or any other sum in
default, or for the payment of any amount which Landlord may spend or become
obligated to spend by reason of Tenant's default, or to compensate Landlord for
any other loss or damage which Landlord may suffer by reason of Tenant's
default. If any portion is so used, Tenant shall within five (5) days after
written demand therefor, deposit with Landlord an amount sufficient to restore
the Security Deposit to its original amount and Tenant's failure to do so shall
be a material breach of this Lease. Except to such extent, if any, as shall be
required by law, Landlord shall not be required to keep the Security Deposit
separate from its general funds, and Tenant shall not be entitled to interest on
such deposit. If Tenant shall fully and faithfully perform every provision of
this Lease to be performed by it, the Security Deposit or any balance thereof
shall be returned to Tenant at such time after termination of this Lease when
Landlord shall have determined that all of Tenant's obligations under this Lease
have been fulfilled. Notwithstanding anything to the contrary contained herein
or in Article 23 hereof, Tenant hereby waives the provisions of Section 1950.7
of the California Civil Code, or any similar or successor Regulations or other
laws now or hereinafter in effect.

6.     ALTERATIONS.

        6.1   Except for those, if any, specifically provided for in Exhibit B
to this Lease, Tenant shall not make or suffer to be made any alterations,
additions, or improvements, including, but not limited to, the attachment of any
fixtures or equipment in, on, or to the Premises or any part thereof or the
making of any improvements as required by Article 7, without the prior written
consent of Landlord. When applying for such consent, Tenant shall, if requested
by Landlord, furnish complete plans and specifications for such alterations,
additions and improvements. Landlord's consent shall not be unreasonably
withheld with respect to alterations which (i) are not structural in nature,
(ii) are not visible from the exterior of the Building, (iii) do not affect or
require modification of the Building's electrical, mechanical, plumbing, HVAC or
other systems, and (iv) in aggregate do not cost more than $5.00 per rentable
square foot of that portion of the Premises affected by the alterations in
question.

        6.2   In the event Landlord consents to the making of any such
alteration, addition or improvement by Tenant, the same shall be made by using
either Landlord's contractor or a contractor reasonably approved by Landlord, in
either event at Tenant's sole cost and expense. If Tenant shall employ any
contractor other than Landlord's contractor and such other contractor or any
subcontractor of such other contractor shall employ any non-union labor or
supplier, Tenant shall be responsible for and hold Landlord harmless from any
and all delays, damages and extra costs suffered by Landlord as a result of any
dispute with any labor unions concerning the wage, hours, terms or conditions of
the employment of any such labor. In any event Landlord may charge Tenant a
construction management fee not to exceed five percent (5%) of the cost of such
work to cover its overhead as it relates to such proposed work, plus third-party
costs actually incurred by Landlord in connection with the proposed work and the
design thereof, with all such amounts being due five (5) days after Landlord's
demand.

        6.3   All alterations, additions or improvements proposed by Tenant
shall be constructed in accordance with all government laws, ordinances, rules
and regulations, using Building standard materials where applicable, and Tenant
shall, prior to construction, provide the additional insurance required under
Article 11 in such case, and also all such assurances to Landlord as Landlord
shall reasonably require to assure payment of the costs thereof, including but
not limited to, notices of non-responsibility, waivers of lien, surety company
performance bonds and funded construction escrows and to protect Landlord and
the Building and appurtenant land against any loss from any mechanic's,
materialmen's or other liens. Tenant shall pay in addition to any sums due
pursuant to Article 4, any increase in real estate taxes attributable to any
such alteration, addition or improvement for so long, during the Term, as such
increase is ascertainable; at Landlord's election said sums shall be paid in the
same way as sums due under Article 4. Landlord may, as a condition to its
consent to any particular alterations or improvements, require Tenant to deposit
with Landlord the amount reasonably estimated

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by Landlord as sufficient to cover the cost of removing such alterations or
improvements and restoring the Premises, to the extent required under
Section 26.2

7.     REPAIR.

        7.1   Landlord shall have no obligation to alter, remodel, improve,
repair, decorate or paint the Premises, except as specified in Exhibit B if
attached to this Lease and except that Landlord shall repair and maintain the
structural portions of the roof, foundation and walls of the Building. By taking
possession of the Premises, Tenant accepts them as being in good order,
condition and repair and in the condition in which Landlord is obligated to
deliver them, except as set forth in the punch list to be delivered pursuant to
Section 2.1. It is hereby understood and agreed that no representations
respecting the condition of the Premises or the Building have been made by
Landlord to Tenant, except as specifically set forth in this Lease. Landlord
shall not be liable for any failure to make any repairs or to perform any
maintenance unless such failure shall persist for an unreasonable time after
written notice of the need of such repairs or maintenance is given to Landlord
by Tenant.

        7.2   Tenant shall at its own cost and expense keep and maintain all
parts of the Premises and such portion of the Building and improvements as are
within the exclusive control of Tenant in good condition, promptly making all
necessary repairs and replacements, whether ordinary or extraordinary, with
materials and workmanship of the same character, kind and quality as the
original (including, but not limited to, repair and replacement of all fixtures
installed by Tenant, water heaters serving the Premises, windows, glass and
plate glass, doors, exterior stairs, skylights, any special office entries,
interior walls and finish work, floors and floor coverings, heating and air
conditioning systems serving the Premises, electrical systems and fixtures,
sprinkler systems, dock boards, truck doors, dock bumpers, plumbing work and
fixtures, and performance of regular removal of trash and debris). Tenant as
part of its obligations hereunder shall keep the Premises in a clean and
sanitary condition. Tenant will, as far as possible keep all such parts of the
Premises from deterioration due to ordinary wear and from falling temporarily
out of repair, and upon termination of this Lease in any way Tenant will yield
up the Premises to Landlord in good condition and repair, loss by fire or other
casualty excepted (but not excepting any damage to glass). Tenant shall, at its
own cost and expense, repair any damage to the Premises or the Building
resulting from and/or caused in whole or in part by the negligence or misconduct
of Tenant, its agents, employees, contractors, invitees, or any other person
entering upon the Premises as a result of Tenant's business activities or caused
by Tenant's default hereunder.

        7.3   Except as provided in Article 22, there shall be no abatement of
rent and no liability of Landlord by reason of any injury to or interference
with Tenant's business arising from the making of any repairs, alterations or
improvements in or to any portion of the Building or the Premises or to
fixtures, appurtenances and equipment in the Building. Tenant hereby waives any
and all rights under and benefits of subsection 1 of Section 1932 and Sections
1941 and 1942 of the California Civil Code, or any similar or successor
Regulations or other laws now or hereinafter in effect.

        7.4   Tenant shall, at its own cost and expense, enter into a regularly
scheduled preventive maintenance/service contract with a maintenance contractor
approved by Landlord for servicing all heating and air conditioning systems and
equipment serving the Premises (and a copy thereof shall be furnished to
Landlord). The service contract must include all services suggested by the
equipment manufacturer in the operation/maintenance manual and must become
effective within thirty (30) days of the date Tenant takes possession of the
Premises. Should Tenant fail to do so, Landlord may, upon notice to Tenant,
enter into such a maintenance/service contract on behalf of Tenant or perform
the work and in either case, charge Tenant the cost thereof along with a
reasonable amount for Landlord's overhead.

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        7.5   Landlord shall coordinate any repairs and other maintenance of any
railroad tracks serving the Building and, if Tenant uses such rail tracks,
Tenant shall reimburse Landlord or the railroad company from time to time upon
demand, as additional rent, for its share of the costs of such repair and
maintenance and for any other sums specified in any agreement to which Landlord
or Tenant is a party respecting such tracks, such costs to be borne
proportionately by all tenants in the Building using such rail tracks, based
upon the actual number of rail cars shipped and received by such tenant during
each calendar year during the Term.

8.    LIENS.    Tenant shall keep the Premises, the Building and appurtenant
land and Tenant's leasehold interest in the Premises free from any liens arising
out of any services, work or materials performed, furnished, or contracted for
by Tenant, or obligations incurred by Tenant. In the event that Tenant fails,
within ten (10) days following the imposition of any such lien, to either cause
the same to be released of record or provide Landlord with insurance against the
same issued by a major title insurance company or such other protection against
the same as Landlord shall accept (such failure to constitute an Event of
Default), Landlord shall have the right to cause the same to be released by such
means as it shall deem proper, including payment of the claim giving rise to
such lien. All such sums paid by Landlord and all expenses incurred by it in
connection therewith shall be payable to it by Tenant within five (5) days
Landlord's demand.

9.     ASSIGNMENT AND SUBLETTING.

        9.1   Tenant shall not have the right to assign or pledge this Lease or
to sublet the whole or any part of the Premises whether voluntarily or by
operation of law, or permit the use or occupancy of the Premises by anyone other
than Tenant, and shall not make, suffer or permit such assignment, subleasing or
occupancy without the prior written consent of Landlord, such consent not to be
unreasonably withheld, and said restrictions shall be binding upon any and all
assignees of the Lease and subtenants of the Premises. In the event Tenant
desires to sublet, or permit such occupancy of, the Premises, or any portion
thereof, or assign this Lease, Tenant shall give written notice thereof to
Landlord at least sixty (60) days but no more than one hundred twenty (120) days
prior to the proposed commencement date of such subletting or assignment, which
notice shall set forth the name of the proposed subtenant or assignee, the
relevant terms of any sublease or assignment and copies of financial reports and
other relevant financial information of the proposed subtenant or assignee.

        9.2   Notwithstanding any assignment or subletting, permitted or
otherwise, Tenant shall at all times remain directly, primarily and fully
responsible and liable for the payment of the rent specified in this Lease and
for compliance with all of its other obligations under the terms, provisions and
covenants of this Lease. Upon the occurrence of an Event of Default, if the
Premises or any part of them are then assigned or sublet, Landlord, in addition
to any other remedies provided in this Lease or provided by law, may, at its
option, collect directly from such assignee or subtenant all rents due and
becoming due to Tenant under such assignment or sublease and apply such rent
against any sums due to Landlord from Tenant under this Lease, and no such
collection shall be construed to constitute a novation or release of Tenant from
the further performance of Tenant's obligations under this Lease.

        9.3   In addition to Landlord's right to approve of any subtenant or
assignee, Landlord shall have the option, in its sole discretion, in the event
of any proposed subletting or assignment, to terminate this Lease, or in the
case of a proposed subletting of less than the entire Premises, to recapture the
portion of the Premises to be sublet, as of the date the subletting or
assignment is to be effective. The option shall be exercised, if at all, by
Landlord giving Tenant written notice given by Landlord to Tenant within thirty
(30) days following Landlord's receipt of Tenant's written notice as required
above. However, if Tenant notifies Landlord, within five (5) days after receipt
of Landlord's termination notice, that Tenant is rescinding its proposed
assignment or sublease, the termination notice shall be void and the Lease shall
continue in full force and effect. If this Lease shall be terminated with
respect to the entire Premises pursuant to this Section, the Term of this Lease
shall end on the date stated in

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Tenant's notice as the effective date of the sublease or assignment as if that
date had been originally fixed in this Lease for the expiration of the Term. If
Landlord recaptures under this Section only a portion of the Premises, the rent
to be paid from time to time during the unexpired Term shall abate
proportionately based on the proportion by which the approximate square footage
of the remaining portion of the Premises shall be less than that of the Premises
as of the date immediately prior to such recapture. Tenant shall, at Tenant's
own cost and expense, discharge in full any outstanding commission obligation
which may be due and owing as a result of any proposed assignment or subletting,
whether or not the Premises are recaptured pursuant to this Section 9.3 and
rented by Landlord to the proposed tenant or any other tenant.

        9.4   In the event that Tenant sells, sublets, assigns or transfers this
Lease, Tenant shall pay to Landlord as additional rent an amount equal to one
hundred percent (100%) of any Increased Rent (as defined below), less the Costs
Component (as defined below), when and as such Increased Rent is received by
Tenant. As used in this Section, "Increased Rent" shall mean the excess of
(i) all rent and other consideration which Tenant is entitled to receive by
reason of any sale, sublease, assignment or other transfer of this Lease, over
(ii) the rent otherwise payable by Tenant under this Lease at such time. For
purposes of the foregoing, any consideration received by Tenant in form other
than cash shall be valued at its fair market value as determined by Landlord in
good faith. The "Costs Component" is that amount which, if paid monthly, would
fully amortize on a straight-line basis, over the entire period for which Tenant
is to receive Increased Rent, the reasonable costs incurred by Tenant for
leasing commissions and tenant improvements in connection with such sublease,
assignment or other transfer.

        9.5   Notwithstanding any other provision hereof, it shall be considered
reasonable for Landlord to withhold its consent to any assignment of this Lease
or sublease of any portion of the Premises if at the time of either Tenant's
notice of the proposed assignment or sublease or the proposed commencement date
thereof, there shall exist any uncured default of Tenant or matter which will
become a default of Tenant with passage of time unless cured, or if the proposed
assignee or sublessee is an entity: (a) with which Landlord is already in
negotiation; (b) is already an occupant of the Building unless Landlord is
unable to provide the amount of space required by such occupant; (c) is a
governmental agency; (d) is incompatible with the character of occupancy of the
Building; (e) with which the payment for the sublease or assignment is
determined in whole or in part based upon its net income or profits; or
(f) would subject the Premises to a use which would: (i) involve increased
personnel or wear upon the Building; (ii) violate any exclusive right granted to
another tenant of the Building; (iii) require any addition to or modification of
the Premises or the Building in order to comply with building code or other
governmental requirements; or, (iv) involve a violation of Section 1.2. Tenant
expressly agrees that for the purposes of any statutory or other requirement of
reasonableness on the part of Landlord, Landlord's refusal to consent to any
assignment or sublease for any of the reasons described in this Section 9.5,
shall be conclusively deemed to be reasonable.

        9.6   Upon any request to assign or sublet, Tenant will pay to Landlord
the Assignment/Subletting Fee plus, on demand, a sum equal to all of Landlord's
costs, including reasonable attorney's fees, incurred in investigating and
considering any proposed or purported assignment or pledge of this Lease or
sublease of any of the Premises, regardless of whether Landlord shall consent
to, refuse consent, or determine that Landlord's consent is not required for,
such assignment, pledge or sublease. Any purported sale, assignment, mortgage,
transfer of this Lease or subletting which does not comply with the provisions
of this Article 9 shall be void.

        9.7   If Tenant is a corporation, limited liability company, partnership
or trust, any transfer or transfers of or change or changes within any twelve
(12) month period in the number of the outstanding voting shares of the
corporation or limited liability company, the general partnership interests in
the partnership or the identity of the persons or entities controlling the
activities of such partnership or trust resulting in the persons or entities
owning or controlling a majority of such shares, partnership interests or
activities of such partnership or trust at the beginning of such period no
longer

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having such ownership or control shall be regarded as equivalent to an
assignment of this Lease to the persons or entities acquiring such ownership or
control and shall be subject to all the provisions of this Article 9 to the same
extent and for all intents and purposes as though such an assignment.

10.    INDEMNIFICATION.    None of the Landlord Entities shall be liable and
Tenant hereby waives all claims against them for any damage to any property or
any injury to any person in or about the Premises or the Building by or from any
cause whatsoever (including without limiting the foregoing, rain or water
leakage of any character from the roof, windows, walls, basement, pipes,
plumbing works or appliances, the Building not being in good condition or
repair, gas, fire, oil, electricity or theft), except to the extent caused by or
arising from the gross negligence or willful misconduct of Landlord or its
agents, employees or contractors. Tenant shall protect, indemnify and hold the
Landlord Entities harmless from and against any and all loss, claims, liability
or costs (including court costs and attorney's fees) incurred by reason of
(a) any damage to any property (including but not limited to property of any
Landlord Entity) or any injury (including but not limited to death) to any
person occurring in, on or about the Premises or the Building to the extent that
such injury or damage shall be caused by or arise from any actual or alleged
act, neglect, fault, or omission by or of Tenant or any Tenant Entity to meet
any standards imposed by any duty with respect to the injury or damage; (b) the
conduct or management of any work or thing whatsoever done by the Tenant in or
about the Premises or from transactions of the Tenant concerning the Premises;
(c) Tenant's failure to comply with any and all governmental laws, ordinances
and regulations applicable to the condition or use of the Premises or its
occupancy; or (d) any breach or default on the part of Tenant in the performance
of any covenant or agreement on the part of the Tenant to be performed pursuant
to this Lease. The provisions of this Article shall survive the termination of
this Lease with respect to any claims or liability accruing prior to such
termination.

11.   INSURANCE.

        11.1 Tenant shall keep in force throughout the Term: (a) a Commercial
General Liability insurance policy or policies to protect the Landlord Entities
against any liability to the public or to any invitee of Tenant or a Landlord
Entity incidental to the use of or resulting from any accident occurring in or
upon the Premises with a limit of not less than $1,000,000 per occurrence and
not less than $2,000,000 in the annual aggregate, or such larger amount as
Landlord may prudently require from time to time, covering bodily injury and
property damage liability and $1,000,000 products/completed operations
aggregate; (b) Business Auto Liability covering owned, non-owned and hired
vehicles with a limit of not less than $1,000,000 per accident; (c) insurance
protecting against liability under Worker's Compensation Laws with limits at
least as required by statute; (d) Employers Liability with limits of $1,000,000
each accident, $1,000,000 disease policy limit, $1,000,000 disease—each
employee; (e) All Risk or Special Form coverage protecting Tenant against loss
of or damage to Tenant's alterations, additions, improvements, carpeting, floor
coverings, panelings, decorations, fixtures, inventory and other business
personal property situated in or about the Premises to the full replacement
value of the property so insured, (f) Business Interruption Insurance for 100%
of the 12 months actual loss sustained, and (g) Excess Liability in the amount
of $5,000,000.

        11.2 The aforesaid policies shall (a) be provided at Tenant's expense;
(b) name the Landlord Entities as additional insureds (General Liability) and
loss payee (Property—Special Form); (c) be issued by an insurance company with a
minimum Best's rating of "A:VII" during the Term; and (d) provide that said
insurance shall not be canceled unless thirty (30) days prior written notice
(ten days for non-payment of premium) shall have been given to Landlord; a
certificate of Liability insurance on ACORD Form 25 and a certificate of
Property insurance on ACORD Form 27 shall be delivered to Landlord by Tenant
upon the Commencement Date and at least thirty (30) days prior to each renewal
of said insurance.

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        11.3 Whenever Tenant shall undertake any alterations, additions or
improvements in, to or about the Premises ("Work") the aforesaid insurance
protection must extend to and include injuries to persons and damage to property
arising in connection with such Work, without limitation including liability
under any applicable structural work act, and such other insurance as Landlord
shall require; and the policies of or certificates evidencing such insurance
must be delivered to Landlord prior to the commencement of any such Work.

12.    WAIVER OF SUBROGATION.    So long as their respective insurers so permit,
Tenant and Landlord hereby mutually waive their respective rights of recovery
against each other for any loss insured by fire, extended coverage, All Risks or
other insurance now or hereafter existing for the benefit of the respective
party but only to the extent of the net insurance proceeds payable under such
policies. Each party shall obtain any special endorsements required by their
insurer to evidence compliance with the aforementioned waiver.

13.    SERVICES AND UTILITIES.    Tenant shall pay for all water, gas, heat,
light, power, telephone, sewer, sprinkler system charges and other utilities and
services used on or from the Premises, together with any taxes, penalties, and
surcharges or the like pertaining thereto and any maintenance charges for
utilities. Tenant shall furnish all electric light bulbs, tubes and ballasts,
battery packs for emergency lighting and fire extinguishers. If any such
services are not separately metered to Tenant, Tenant shall pay such proportion
of all charges jointly metered with other premises as determined by Landlord, in
its sole discretion, to be reasonable. Any such charges paid by Landlord and
assessed against Tenant shall be immediately payable to Landlord on demand and
shall be additional rent hereunder. Tenant will not, without the written consent
of Landlord, contract with a utility provider to service the Premises with any
utility, including, but not limited to, telecommunications, electricity, water,
sewer or gas, which is not previously providing such service to other tenants in
the Building. Landlord shall in no event be liable for any interruption or
failure of utility services on or to the Premises.

14.    HOLDING OVER.    Tenant shall pay Landlord for each day Tenant retains
possession of the Premises or part of them after termination of this Lease by
lapse of time or otherwise at the rate ("Holdover Rate") which shall be One
Hundred Fifty Percent (150%) of the greater of (a) the amount of the Annual Rent
for the last period prior to the date of such termination plus all Rent
Adjustments under Article 4; and (b) the then market rental value of the
Premises as determined by Landlord assuming a new lease of the Premises of the
then usual duration and other terms, in either case, prorated on a daily basis,
and also pay all damages sustained by Landlord by reason of such retention. If
Landlord gives notice to Tenant of Landlord's election to such effect, such
holding over shall constitute renewal of this Lease for a period from month to
month or one (1) year, whichever shall be specified in such notice, in either
case at the Holdover Rate, but if the Landlord does not so elect, no such
renewal shall result notwithstanding acceptance by Landlord of any sums due
hereunder after such termination; and instead, a tenancy at sufferance at the
Holdover Rate shall be deemed to have been created. In any event, no provision
of this Article 14 shall be deemed to waive Landlord's right of reentry or any
other right under this Lease or at law.

15.    SUBORDINATION.    Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, this Lease
shall be subject and subordinate at all times to ground or underlying leases and
to the lien of any mortgages or deeds of trust now or hereafter placed on,
against or affecting the Building, Landlord's interest or estate in the
Building, or any ground or underlying lease; provided, however, that if the
lessor, mortgagee, trustee, or holder of any such mortgage or deed of trust
elects to have Tenant's interest in this Lease be superior to any such
instrument, then, by notice to Tenant, this Lease shall be deemed superior,
whether this Lease was executed before or after said instrument. Notwithstanding
the foregoing, Tenant covenants and agrees to execute and deliver within ten
(10) days of Landlord's request such further instruments evidencing such
subordination or superiority of this Lease as may be required by Landlord. At
Tenant's request,

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Landlord shall request a reasonable and customary non-disturbance letter from
its mortgagee, but the failure to obtain such non-disturbance letter shall not
be a breach of this Lease.

16.    RULES AND REGULATIONS.    Tenant shall faithfully observe and comply with
all the rules and regulations as set forth in Exhibit D to this Lease and all
reasonable and non-discriminatory modifications of and additions to them from
time to time put into effect by Landlord. Landlord shall not be responsible to
Tenant for the non-performance by any other tenant or occupant of the Building
of any such rules and regulations.

17.   REENTRY BY LANDLORD.

        17.1 Landlord reserves and shall at all times have the right to re-enter
the Premises to inspect the same, to show said Premises to prospective
purchasers, mortgagees or tenants, and to alter, improve or repair the Premises
and any portion of the Building, without abatement of rent, and may for that
purpose erect, use and maintain scaffolding, pipes, conduits and other necessary
structures and open any wall, ceiling or floor in and through the Building and
Premises where reasonably required by the character of the work to be performed,
provided entrance to the Premises shall not be blocked thereby, and further
provided that the business of Tenant shall not be interfered with unreasonably.
Landlord shall have the right at any time to change the arrangement and/or
locations of entrances, or passageways, doors and doorways, and corridors,
windows, elevators, stairs, toilets or other public parts of the Building and to
change the name, number or designation by which the Building is commonly known.
In the event that Landlord damages any portion of any wall or wall covering,
ceiling, or floor or floor covering within the Premises, Landlord shall repair
or replace the damaged portion to match the original as nearly as commercially
reasonable but shall not be required to repair or replace more than the portion
actually damaged. Tenant hereby waives any claim for damages for any injury or
inconvenience to or interference with Tenant's business, any loss of occupancy
or quiet enjoyment of the Premises, and any other loss occasioned by any action
of Landlord authorized by this Article 17.

        17.2 Landlord shall have the right to use any and all means which
Landlord may deem proper to open said doors in an emergency to obtain entry to
any portion of the Premises. Landlord is authorized to gain access by such means
as Landlord shall elect and the cost of repairing any damage occurring in doing
so shall be borne by Tenant and paid to Landlord within five (5) days of
Landlord's demand.

18.   DEFAULT.

        18.1 Except as otherwise provided in Article 20, the following events
shall be deemed to be Events of Default under this Lease:

        18.1.1 Tenant shall fail to pay when due any sum of money becoming due
to be paid to Landlord under this Lease, whether such sum be any installment of
the rent reserved by this Lease, any other amount treated as additional rent
under this Lease, or any other payment or reimbursement to Landlord required by
this Lease, whether or not treated as additional rent under this Lease, and such
failure shall continue for a period of five (5) days after written notice that
such payment was not made when due, but if any such notice shall be given, for
the twelve (12) month period commencing with the date of such notice, the
failure to pay within five (5) days after due any additional sum of money
becoming due to be paid to Landlord under this Lease during such period shall be
an Event of Default, without notice. The notice required pursuant to this
Section 18.1.1 shall replace rather than supplement any statutory notice
required under California Code of Civil Procedure Section 1161 or any similar or
successor statute.

        18.1.2 Tenant shall fail to comply with any term, provision or covenant
of this Lease which is not provided for in another Section of this Article and
shall not cure such failure within twenty (20) days (forthwith, if the failure
involves a hazardous condition) after written notice of such failure to Tenant
provided, however, that such failure shall not be an event of default if such

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failure could not reasonably be cured during such twenty (20) day period, Tenant
has commenced the cure within such twenty (20) day period and thereafter is
diligently pursuing such cure to completion, but the total aggregate cure period
shall not exceed ninety (90) days.

        18.1.3 Tenant shall fail to vacate the Premises immediately upon
termination of this Lease, by lapse of time or otherwise, or upon termination of
Tenant's right to possession only.

        18.1.4 Tenant shall become insolvent, admit in writing its inability to
pay its debts generally as they become due, file a petition in bankruptcy or a
petition to take advantage of any insolvency statute, make an assignment for the
benefit of creditors, make a transfer in fraud of creditors, apply for or
consent to the appointment of a receiver of itself or of the whole or any
substantial part of its property, or file a petition or answer seeking
reorganization or arrangement under the federal bankruptcy laws, as now in
effect or hereafter amended, or any other similar applicable law or statute of
the United States or any state thereof affecting creditors rights.

        18.1.5 A court of competent jurisdiction shall enter an order, judgment
or decree adjudicating Tenant bankrupt, or appointing a receiver of Tenant, or
of the whole or any substantial part of its property, without the consent of
Tenant, or approving a petition filed against Tenant seeking reorganization or
arrangement of Tenant under the bankruptcy laws of the United States, as now in
effect or hereafter amended, or any state thereof, and such order, judgment or
decree shall not be vacated or set aside or stayed within sixty (60) days from
the date of entry thereof.

19.   REMEDIES.

        19.1 Upon the occurrence of any Event or Events of Default under this
Lease, whether enumerated in Article 18 or not, Landlord shall have the option
to pursue any one or more of the following remedies without any notice (except
as expressly prescribed herein) or demand whatsoever (and without limiting the
generality of the foregoing, Tenant hereby specifically waives notice and demand
for payment of rent or other obligations and waives any and all other notices or
demand requirements imposed by applicable law):

        19.1.1 Terminate this Lease and Tenant's right to possession of the
Premises and recover from Tenant an award of damages equal to the sum of the
following:

        19.1.1.1 The Worth at the Time of Award of the unpaid rent which had
been earned at the time of termination;

        19.1.1.2 The Worth at the Time of Award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rent loss that Tenant affirmatively proves
could have been reasonably avoided;

        19.1.1.3 The Worth at the Time of Award of the amount by which the
unpaid rent for the balance of the Term after the time of award exceeds the
amount of such rent loss that Tenant affirmatively proves could be reasonably
avoided;

        19.1.1.4 Any other amount necessary to compensate Landlord for all the
detriment either proximately caused by Tenant's failure to perform Tenant's
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom; and

        19.1.1.5 All such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time under applicable law.

The "Worth at the Time of Award" of the amounts referred to in parts 19.1.1.1
and 19.1.1.2 above, shall be computed by allowing interest at the lesser of a
per annum rate equal to: (i) the greatest per annum rate of interest permitted
from time to time under applicable law, or (ii) the Prime Rate plus 5%. For
purposes hereof, the "Prime Rate" shall be the per annum interest rate publicly
announced as

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its prime or base rate by a federally insured bank selected by Landlord in the
State of California. The "Worth at the Time of Award" of the amount referred to
in part 19.1.1.3, above, shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus 1%;

        19.1.2 Employ the remedy described in California Civil Code § 1951.4
(Landlord may continue this Lease in effect after Tenant's breach and
abandonment and recover rent as it becomes due, if Tenant has the right to
sublet or assign, subject only to reasonable limitations); or

        19.1.3 Notwithstanding Landlord's exercise of the remedy described in
California Civil Code § 1951.4 in respect of an Event or Events of Default, at
such time thereafter as Landlord may elect in writing, to terminate this Lease
and Tenant's right to possession of the Premises and recover an award of damages
as provided above in Section 19.1.1.

        19.2 The subsequent acceptance of rent hereunder by Landlord shall not
be deemed to be a waiver of any preceding breach by Tenant of any term, covenant
or condition of this Lease, 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. No waiver by Landlord
of any breach hereof shall be effective unless such waiver is in writing and
signed by Landlord.

        19.3 TENANT HEREBY WAIVES ANY AND ALL RIGHTS CONFERRED BY SECTION 3275
OF THE CIVIL CODE OF CALIFORNIA AND BY SECTIONS 1174 (c) AND 1179 OF THE CODE OF
CIVIL PROCEDURE OF CALIFORNIA AND ANY AND ALL OTHER REGULATIONS AND RULES OF LAW
FROM TIME TO TIME IN EFFECT DURING THE TERM PROVIDING THAT TENANT SHALL HAVE ANY
RIGHT TO REDEEM, REINSTATE OR RESTORE THIS LEASE FOLLOWING ITS TERMINATION BY
REASON OF TENANT'S BREACH. TENANT ALSO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF OR
RELATING TO THIS LEASE.

        19.4 No right or remedy herein conferred upon or reserved to Landlord is
intended to be exclusive of any other right or remedy, and each and every right
and remedy shall be cumulative and in addition to any other right or remedy
given hereunder or now or hereafter existing by agreement, applicable law or in
equity. In addition to other remedies provided in this Lease, Landlord shall be
entitled, to the extent permitted by applicable law, to injunctive relief, or to
a decree compelling performance of any of the covenants, agreements, conditions
or provisions of this Lease, or to any other remedy allowed to Landlord at law
or in equity. Forbearance by Landlord to enforce one or more of the remedies
herein provided upon an Event of Default shall not be deemed or construed to
constitute a waiver of such Default.

        19.5 This Article 19 shall be enforceable to the maximum extent such
enforcement is not prohibited by applicable law, and the unenforceability of any
portion thereof shall not thereby render unenforceable any other portion..

        19.6 If more than one (1) Event of Default occurs during the Term or any
renewal thereof, Tenant's renewal options, expansion options, purchase options
and rights of first offer and/or refusal, if any are provided for in this Lease,
shall be null and void.

        19.7 If, on account of any breach or default by Tenant in Tenant's
obligations under the terms and conditions of this Lease, it shall become
necessary or appropriate for Landlord to employ or consult with an attorney or
collection agency concerning or to enforce or defend any of Landlord's rights or
remedies arising under this Lease or to collect any sums due from Tenant, Tenant
agrees to pay all costs and fees so incurred by Landlord, including, without
limitation, reasonable attorneys' fees and costs. TENANT EXPRESSLY WAIVES ANY
RIGHT TO: (A) TRIAL BY JURY; AND (B) SERVICE OF ANY NOTICE REQUIRED BY ANY
PRESENT OR FUTURE LAW OR

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ORDINANCE APPLICABLE TO LANDLORDS OR TENANTS BUT NOT REQUIRED BY THE TERMS OF
THIS LEASE.

        19.8 Upon the occurrence of an Event of Default, Landlord may (but shall
not be obligated to) cure such default at Tenant's sole expense. Without
limiting the generality of the foregoing, Landlord may, at Landlord's option,
enter into and upon the Premises if Landlord determines in its sole discretion
that Tenant is not acting within a commercially reasonable time to maintain,
repair or replace anything for which Tenant is responsible under this Lease or
to otherwise effect compliance with its obligations under this Lease and correct
the same, without being deemed in any manner guilty of trespass, eviction or
forcible entry and detainer and without incurring any liability for any damage
or interruption of Tenant's business resulting therefrom and Tenant agrees to
reimburse Landlord within five (5) days of Landlord's demand as additional rent,
for any expenses which Landlord may incur in thus effecting compliance with
Tenant's obligations under this Lease, plus interest from the date of
expenditure by Landlord at the Wall Street Journal prime rate.

20.   TENANT'S BANKRUPTCY OR INSOLVENCY.

        20.1 If at any time and for so long as Tenant shall be subjected to the
provisions of the United States Bankruptcy Code or other law of the United
States or any state thereof for the protection of debtors as in effect at such
time (each a "Debtor's Law"):

        20.1.1 Tenant, Tenant as debtor-in-possession, and any trustee or
receiver of Tenant's assets (each a "Tenant's Representative") shall have no
greater right to assume or assign this Lease or any interest in this Lease, or
to sublease any of the Premises than accorded to Tenant in Article 9, except to
the extent Landlord shall be required to permit such assumption, assignment or
sublease by the provisions of such Debtor's Law. Without limitation of the
generality of the foregoing, any right of any Tenant's Representative to assume
or assign this Lease or to sublease any of the Premises shall be subject to the
conditions that:

        20.1.1.1 Such Debtor's Law shall provide to Tenant's Representative a
right of assumption of this Lease which Tenant's Representative shall have
timely exercised and Tenant's Representative shall have fully cured any default
of Tenant under this Lease.

        20.1.1.2 Tenant's Representative or the proposed assignee, as the case
shall be, shall have deposited with Landlord as security for the timely payment
of rent an amount equal to the larger of: (a) three (3) months' rent and other
monetary charges accruing under this Lease; and (b) any sum specified in
Article 5; and shall have provided Landlord with adequate other assurance of the
future performance of the obligations of the Tenant under this Lease. Without
limitation, such assurances shall include, at least, in the case of assumption
of this Lease, demonstration to the satisfaction of the Landlord that Tenant's
Representative has and will continue to have sufficient unencumbered assets
after the payment of all secured obligations and administrative expenses to
assure Landlord that Tenant's Representative will have sufficient funds to
fulfill the obligations of Tenant under this Lease; and, in the case of
assignment, submission of current financial statements of the proposed assignee,
audited by an independent certified public accountant reasonably acceptable to
Landlord and showing a net worth and working capital in amounts determined by
Landlord to be sufficient to assure the future performance by such assignee of
all of the Tenant's obligations under this Lease.

        20.1.1.3 The assumption or any contemplated assignment of this Lease or
subleasing any part of the Premises, as shall be the case, will not breach any
provision in any other lease, mortgage, financing agreement or other agreement
by which Landlord is bound.

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        20.1.1.4 Landlord shall have, or would have had absent the Debtor's Law,
no right under Article 9 to refuse consent to the proposed assignment or
sublease by reason of the identity or nature of the proposed assignee or
sublessee or the proposed use of the Premises concerned.

21.    QUIET ENJOYMENT.    Landlord represents and warrants that it has full
right and authority to enter into this Lease and that Tenant, while paying the
rental and performing its other covenants and agreements contained in this
Lease, shall peaceably and quietly have, hold and enjoy the Premises for the
Term without hindrance or molestation from Landlord subject to the terms and
provisions of this Lease. Landlord shall not be liable for any interference or
disturbance by other tenants or third persons, nor shall Tenant be released from
any of the obligations of this Lease because of such interference or
disturbance.

22.   CASUALTY

        22.1 In the event the Premises or the Building are damaged by fire or
other cause and in Landlord's reasonable estimation such damage can be
materially restored within one hundred eighty (180) days, Landlord shall
forthwith repair the same at Landlord's expense subject to Article 4 and this
Lease shall remain in full force and effect, except that Tenant shall be
entitled to a proportionate abatement in rent from the date of such damage. Such
abatement of rent shall be made pro rata in accordance with the extent to which
the damage and the making of such repairs shall interfere with the use and
occupancy by Tenant of the Premises from time to time. Within forty-five
(45) days from the date of such damage, Landlord shall notify Tenant, in
writing, of Landlord's reasonable estimation of the length of time within which
material restoration can be made, and Landlord's determination shall be binding
on Tenant. For purposes of this Lease, the Building or Premises shall be deemed
"materially restored" if they are in such condition as would not prevent or
materially interfere with Tenant's use of the Premises for the purpose for which
it was being used immediately before such damage.

        22.2 If such repairs cannot, in Landlord's reasonable estimation, be
made within one hundred eighty (180) days, Landlord and Tenant shall each have
the option of giving the other, at any time within ninety (90) days after such
damage, notice terminating this Lease as of the date of such damage. In the
event of the giving of such notice, this Lease shall expire and all interest of
the Tenant in the Premises shall terminate as of the date of such damage as if
such date had been originally fixed in this Lease for the expiration of the
Term. In the event that neither Landlord nor Tenant exercises its option to
terminate this Lease, then Landlord shall repair or restore such damage, this
Lease continuing in full force and effect, and the rent hereunder shall be
proportionately abated as provided in Section 22.1.

        22.3 Landlord shall not be required to repair or replace any damage or
loss by or from fire or other cause to any panelings, decorations, partitions,
additions, railings, ceilings, floor coverings, office fixtures or any other
property or improvements installed on the Premises by, or belonging to, Tenant.
Any insurance which may be carried by Landlord or Tenant against loss or damage
to the Building or Premises shall be for the sole benefit of the party carrying
such insurance and under its sole control.

        22.4 In the event that Landlord should fail to complete such repairs and
material restoration within sixty (60) days after the date estimated by Landlord
therefor as extended by this Section 22.4, Tenant may at its option and as its
sole remedy terminate this Lease by delivering written notice to Landlord,
within fifteen (15) days after the expiration of said period of time, whereupon
the Lease shall end on the date of such notice or such later date fixed in such
notice as if the date of such notice was the date originally fixed in this Lease
for the expiration of the Term; provided, however, that if construction is
delayed because of changes, deletions or additions in construction requested by
Tenant, strikes, lockouts, casualties, Acts of God, war, material or labor
shortages, government regulation or control or other causes beyond the
reasonable control of Landlord, the period for restoration, repair or rebuilding
shall be extended for the amount of time Landlord is so delayed.

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        22.5 Notwithstanding anything to the contrary contained in this Article:
(a) Landlord shall not have any obligation whatsoever to repair, reconstruct, or
restore the Premises when the damages resulting from any casualty covered by the
provisions of this Article 22 occur during the last twelve (12) months of the
Term or any extension thereof, but if Landlord determines not to repair such
damages Landlord shall notify Tenant and if such damages shall render any
material portion of the Premises untenantable Tenant shall have the right to
terminate this Lease by notice to Landlord within fifteen (15) days after
receipt of Landlord's notice; and (b) in the event the holder of any
indebtedness secured by a mortgage or deed of trust covering the Premises or
Building requires that any insurance proceeds be applied to such indebtedness,
then Landlord shall have the right to terminate this Lease by delivering written
notice of tennination to Tenant within fifteen (15) days after such requirement
is made by any such holder, whereupon this Lease shall end on the date of such
damage as if the date of such damage were the date originally fixed in this
Lease for the expiration of the Term.

        22.6 In the event of any damage or destruction to the Building or
Premises by any peril covered by the provisions of this Article 22, it shall be
Tenant's responsibility to properly secure the Premises and upon notice from
Landlord to remove forthwith, at its sole cost and expense, such portion of all
of the property belonging to Tenant or its licensees from such portion or all of
the Building or Premises as Landlord shall request.

        22.7 Tenant hereby waives any and all rights under and benefits of
Sections 1932(2) and 1933(4) of the California Civil Code, or any similar or
successor Regulations or other laws now or hereinafter in effect.

23.    EMINENT DOMAIN.    If all or any substantial part of the Premises shall
betaken or appropriated by any public or quasi-public authority under the power
of eminent domain, or conveyance in lieu of such appropriation, either party to
this Lease shall have the right, at its option, of giving the other, at any time
within thirty (30) days after such taking, notice terminating this Lease, except
that Tenant may only terminate this Lease by reason of taking or appropriation,
if such taking or appropriation shall be so substantial as to materially
interfere with Tenant's use and occupancy of the Premises. If neither party to
this Lease shall so elect to terminate this Lease, the rental thereafter to be
paid shall be adjusted on a fair and equitable basis under the circumstances. In
addition to the rights of Landlord above, if any substantial part of the
Building shall be taken or appropriated by any public or quasi-public authority
under the power of eminent domain or conveyance in lieu thereof, and regardless
of whether the Premises or any part thereof are so taken or appropriated,
Landlord shall have the right, at its sole option, to terminate this Lease.
Landlord shall be entitled to any and all income, rent, award, or any interest
whatsoever in or upon any such sum, which may be paid or made in connection with
any such public or quasi-public use or purpose, and Tenant hereby assigns to
Landlord any interest it may have in or claim to all or any part of such sums,
other than any separate award which may be made with respect to Tenant's trade
fixtures and moving expenses; Tenant shall make no claim for the value of any
unexpired Term. Tenant hereby waives any and all rights under and benefits of
Section 1265.130 of the California Code of Civil Procedure, or any similar or
successor Regulations or other laws now or hereinafter in effect.

24.    SALE BY LANDLORD.    In event of a sale or conveyance by Landlord of the
Building, the same shall operate to release Landlord from any future liability
upon any of the covenants or conditions, expressed or implied, contained in this
Lease in favor of Tenant provided that purchaser or transferee of the Building
assumes this Lease in writing, and in such event Tenant agrees to look solely to
the responsibility of the successor in interest of Landlord in and to this
Lease. Except as set forth in this Article 24, this Lease shall not be affected
by any such sale and Tenant agrees to attorn to the purchaser or assignee. If
any security has been given by Tenant to secure the faithful performance of any
of the covenants of this Lease, Landlord may transfer or deliver said security,
as such, to Landlord's successor in interest and thereupon Landlord shall be
discharged from any further liability with regard to said security.

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25.    ESTOPPEL CERTIFICATES.    Within ten (10) days following any written
request which Landlord may make from time to time, Tenant shall execute and
deliver to Landlord or mortgagee or prospective mortgagee a sworn statement
certifying: (a) the date of commencement of this Lease; (b) the fact that this
Lease is unmodified and in full force and effect (or, if there have been
modifications to this Lease, that this lease is in full force and effect, as
modified, and stating the date and nature of such modifications); (c) the date
to which the rent and other sums payable under this Lease have been paid;
(d) the fact that there are no current defaults under this Lease by either
Landlord or Tenant except as specified in Tenant's statement; and (e) such other
matters as may be requested by Landlord. Landlord and Tenant intend that any
statement delivered pursuant to this Article 25 may be relied upon by any
mortgagee, beneficiary or purchaser, and Tenant shall be liable for all loss,
cost or expense resulting from the failure of any sale or funding of any loan
caused by any material misstatement contained in such estoppel certificate.
Tenant irrevocably agrees that if Tenant fails to execute and deliver such
certificate within such ten (10) day period Landlord or Landlord's beneficiary
or agent may execute and deliver such certificate on Tenant's behalf, and that
such certificate shall be fully binding on Tenant.

26.   SURRENDER OF PREMISES.

        26.1 Tenant shall arrange to meet Landlord for two (2) joint inspections
of the Premises, the first to occur at least thirty (30) days (but no more than
sixty (60) days) before the last day of the Term, and the second to occur not
later than forty-eight (48) hours after Tenant has vacated the Premises. In the
event of Tenant's failure to arrange such joint inspections and/or participate
in either such inspection, Landlord's inspection at or after Tenant's vacating
the Premises shall be conclusively deemed correct for purposes of determining
Tenant's responsibility for repairs and restoration.

        26.2 All alterations, additions, and improvements in, on, or to the
Premises made or installed by or for Tenant, including carpeting (collectively,
"Alterations"), shall be and remain the property of Tenant during the Term. Upon
the expiration or sooner termination of the Term, all Alterations shall become a
part of the realty and shall belong to Landlord without compensation, and title
shall pass to Landlord under this Lease as by a bill of sale. At the end of the
Term or any renewal of the Term or other sooner termination of this Lease,
Tenant will peaceably deliver up to Landlord possession of the Premises,
together with all Alterations by whomsoever made, in the same conditions
received or first installed, broom clean and free of all debris, excepting only
ordinary wear and tear and damage by fire or other casualty. Notwithstanding the
foregoing, if Landlord elects by notice given to Tenant at least ten (10) days
prior to expiration of the Term, Tenant shall, at Tenant's sole cost, remove any
Alterations, including carpeting, so designated by Landlord's notice, and repair
any damage caused by such removal. Tenant must, at Tenant's sole cost, remove
upon termination of this Lease, any and all of Tenant's furniture, furnishings,
movable partitions of less than full height from floor to ceiling and other
trade fixtures and personal property (collectively, "Personalty"). Personalty
not so removed shall be deemed abandoned by the Tenant and title to the same
shall thereupon pass to Landlord under this Lease as by a bill of sale, but
Tenant shall remain responsible for the cost of removal and disposal of such
Personalty, as well as any damage caused by such removal. In lieu of requiring
Tenant to remove Alterations and Personalty and repair the Premises as
aforesaid, Landlord may, by written notice to Tenant delivered at least thirty
(30) days before the Termination Date, require Tenant to pay to Landlord, as
additional rent hereunder, the cost of such removal and repair in an amount
reasonably estimated by Landlord.

        26.3 All obligations of Tenant under this Lease not fully performed as
of the expiration or earlier termination of the Term shall survive the
expiration or earlier termination of the Term Upon the expiration or earlier
termination of the Term, Tenant shall pay to Landlord the amount, as estimated
by Landlord, necessary to repair and restore the Premises as provided in this
Lease and/or to discharge Tenant's obligation for unpaid amounts due or to
become due to Landlord. All such amounts shall be

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used and held by Landlord for payment of such obligations of Tenant, with Tenant
being liable for any additional costs upon demand by Landlord, or with any
excess to be returned to Tenant after all such obligations have been determined
and satisfied. Any otherwise unused Security Deposit shall be credited against
the amount payable by Tenant under this Lease.

27.    NOTICES.    Any notice or document required or permitted to be delivered
under this Lease shall be addressed to the intended recipient, by fully prepaid
registered or certified United States Mail return receipt requested, or by
reputable independent contract delivery service furnishing a written record of
attempted or actual delivery, and shall be deemed to be delivered when tendered
for delivery to the addressee at its address set forth on the Reference Pages,
or at such other address as it has then last specified by written notice
delivered in accordance with this Article 27, or if to Tenant at either its
aforesaid address or its last known registered office or home of a general
partner or individual owner, whether or not actually accepted or received by the
addressee. Any such notice or document may also be personally delivered if a
receipt is signed by and received from, the individual, if any, named in
Tenant's Notice Address.

28.    TAXES PAYABLE BY TENANT.    In addition to rent and other charges to be
paid by Tenant under this Lease, Tenant shall reimburse to Landlord, upon
demand, any and all taxes payable by Landlord (other than franshise and net
income taxes) whether or not now customary or within the contemplation of the
parties to this Lease: (a) upon, allocable to, or measured by or on the gross or
net rent payable under this Lease, including without limitation any gross income
tax or excise tax levied by the State, any political subdivision thereof, or the
Federal Government with respect to the receipt of such rent; (b) upon or with
respect to the possession, leasing, operation, management, maintenance,
alteration, repair, use or occupancy of the Premises or any portion thereof,
including any sales, use or service tax imposed as a result thereof; (c) upon or
measured by the Tenant's gross receipts or payroll or the value of Tenant's
equipment, furniture, fixtures and other personal property of Tenant or
leasehold improvements, alterations or additions located in the Premises; or
(d) upon this transaction or any document to which Tenant is a party creating or
transferring any interest of Tenant in this Lease or the Premises. In addition
to the foregoing, Tenant agrees to pay, before delinquency, any and all taxes
levied or assessed against Tenant and which become payable during the term
hereof upon Tenant's equipment, furniture, fixtures and other personal property
of Tenant located in the Premises.

29.    RELOCATION OF TENANT.    Landlord, at its sole expense, on at least sixty
(60) days prior written notice, may require Tenant to move from the Premises to
other space of comparable size and decor in order to permit Landlord to
consolidate the space leased to Tenant with other adjoining space leased or to
be leased to another tenant. In the event of any such relocation, Landlord will
pay all expenses of preparing and decorating the new premises so that they will
be substantially similar to the Premises from which Tenant is moving, and
Landlord will also pay the expense of moving Tenant's furniture and equipment to
the relocated premises. In such event this Lease and each and all of the terms
and covenants and conditions hereof shall remain in full force and effect and
thereupon be deemed applicable to such new space except that revised Reference
Pages and a revised Exhibit A shall become part of this Lease and shall reflect
the location of the new premises.

30.    DEFINED TERMS AND HEADINGS.    The Article headings shown in this Lease
are for convenience of reference and shall in no way define, increase, limit or
describe the scope or intent of any provision of this Lease. Any indemnification
or insurance of Landlord shall apply to and inure to the benefit of all the
following "Landlord Entities", being Landlord, Landlord's investment manager,
and the trustees, boards of directors, officers, general partners,
beneficiaries, stockholders, employees and agents of each of them. Any option
granted to Landlord shall also include or be exercisable by Landlord's trustee,
beneficiary, agents and employees, as the case may be. In any case where this
Lease is signed by more than one person, the obligations under this Lease shall
be joint and several. The terms "Tenant" and "Landlord" or any pronoun used in
place thereof shall indicate and include the masculine or feminine, the singular
or plural number, individuals, firms or corporations, and their and

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each of their respective successors, executors, administrators and permitted
assigns, according to the context hereof. The term "rentable area" shall mean
the rentable area of the Premises or the Building as calculated by the Landlord
on the basis of the plans and specifications of the Building including a
proportionate share of any common areas. Tenant hereby accepts and agrees to be
bound by the figures for the rentable square footage of the Premises and
Tenant's Proportionate Share shown on the Reference Pages; however, Landlord may
adjust either or both figures if there is manifest error, addition or
subtraction to the Building or any business park or complex of which the
Building is a part, remeasurement or other circumstance reasonably justifying
adjustment. The term "Building" refers to the structure in which the Premises
are located and the common areas (parking lots, sidewalks, landscaping, etc.)
appurtenant thereto. If the Building is part of a larger complex of structures,
the term "Building" may include the entire complex, where appropriate (such as
shared Expenses or Taxes) and subject to Landlord's reasonable discretion.

31.    TENANT'S AUTHORITY.    If Tenant signs as a corporation, partnership,
trust or other legal entity each of the persons executing this Lease on behalf
of Tenant represents and warrants that Tenant has been and is qualified to do
business in the state in which the Building is located, that the entity has full
right and authority to enter into this Lease, and that all persons signing on
behalf of the entity were authorized to do so by appropriate actions. Tenant
agrees to deliver to Landlord, simultaneously with the delivery of this Lease, a
corporate resolution, proof of due authorization by partners, opinion of counsel
or other appropriate documentation reasonably acceptable to Landlord evidencing
the due authorization of Tenant to enter into this Lease.

32.    FINANCIAL STATEMENTS AND CREDIT REPORTS.    At Landlord's request, Tenant
shall deliver to Landlord a copy, certified by an officer of Tenant as being a
true and correct copy, of Tenant's most recent audited financial statement, or,
if unaudited, certified by Tenant's chief financial officer as being true,
complete and correct in all material respects. Tenant hereby authorizes Landlord
to obtain one or more credit reports on Tenant at any time, and shall execute
such further authorizations as Landlord may reasonably require in order to
obtain a credit report.

33.    COMMISSIONS.    Each of the parties represents and warrants to the other
that it has not dealt with any broker or finder in connection with this Lease,
except as described on the Reference Pages.

34.    TIME AND APPLICABLE LAW.    Time is of the essence of this Lease and all
of its provisions. This Lease shall in all respects be governed by the laws of
the state in which the Building is located.

35.    SUCCESSORS AND ASSIGNS.    Subject to the provisions of Article 9, the
terms, covenants and conditions contained in this Lease shall be binding upon
and inure to the benefit of the heirs, successors, executors, administrators and
assigns of the parties to this Lease.

36.    ENTIRE AGREEMENT.    This Lease, together with its exhibits, contains all
agreements of the parties to this Lease and supersedes any previous
negotiations. There have been no representations made by the Landlord or any of
its representatives or understandings made between the parties other than those
set forth in this Lease and its exhibits. This Lease may not be modified except
by a written instrument duly executed by the parties to this Lease.

37.    EXAMINATION NOT OPTION.    Submission of this Lease shall not be deemed
to be a reservation of the Premises. Landlord shall not be bound by this Lease
until it has received a copy of this Lease duly executed by Tenant and has
delivered to Tenant a copy of this Lease duly executed by Landlord, and until
such delivery Landlord reserves the right to exhibit and lease the Premises to
other prospective tenants. Notwithstanding anything contained in this Lease to
the contrary, Landlord may withhold delivery of possession of the Premises from
Tenant until such time as Tenant has paid to Landlord any security deposit
required by Article 5, the first month's rent as set forth in Article 3 and any
sum owed pursuant to this Lease.

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38.    RECORDATION.    Tenant shall not record or register this Lease or a short
form memorandum hereof without the prior written consent of Landlord, and then
shall pay all charges and taxes incident such recording or registration.

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39.    LIMITATION OF LANDLORD'S LIABILITY.    Redress for any claim against
Landlord under this Lease shall be limited to and enforceable only against and
to the extent of Landlord's interest in the Building. The obligations of
Landlord under this Lease are not intended to be and shall not be personally
binding on, nor shall any resort be had to the private properties of, any of its
or its investment manager's trustees, directors, officers, partners,
beneficiaries, members, stockholders, employees, or agents, and in no case shall
Landlord be liable to Tenant hereunder for any lost profits, damage to business,
or any form of special, indirect or consequential damages.

LANDLORD:   TENANT:
CABOT INDUSTRIAL VENTURE A, LLC, a Delaware limited liability company
 
DPAC TECHNOLOGIES CORP., a California corporation
By:
 
RREEF Management Company, a Delaware corporation, its Property Manager
 
 
 
 
By:
 
 
 
By:
 
     

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Name:   Scot Recknor   Name:   Richard Dadamo Title:   District Manager   Title:
  Chairman of the Board of Directors Dated:   , 2004

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  Dated:   , 2004

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By:
 
, 2004

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        Name:   William M. Stowell         Title:   Chief Financial Officer    
    Dated:                

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ADDENDUM TO LEASE

        attached to and made a part of Lease bearing the
Lease Reference Date of December 29, 2003, between
CABOT INDUSTRIAL VENTURE A, LLC, A DELAWARE LIMITED LIABILITY COMPANY,
as Landlord and DPAC TECHNOLOGIES CORP., a California corporation, as Tenant

        In the event of any conflict between the terms of this Addendum to Lease
and the Lease, the terms of this Addendum to Lease shall control.

1.     SCHEDULE OF RENTS.

        All additional rent shall be payable from the Commencement Date of the
Lease including, but not limited to, Insurance, Expenses, Taxes, etc. as defined
as in the Lease.

2.     TENANT'S PROPORTIONATE SHARE.

        Tenant's Proportionate Share is defined as the percentage obtained by
dividing the number of square feet in the Leased Premises by the total number of
leasable square feet at the Building. In the event that the number of square
feet in either the Leased Premises or the entire Building is modified, at
Landlord's option, Tenant's Proportionate Share shall thereafter be adjusted
accordingly. If any Expenses or Taxes are not separately assessed or charged to
the Building, Tenant's liability shall be an equitable proportion of such
Expenses or Taxes, such proportion to be determined by Landlord.

3.     MAINTANTENANCE OF AIR CONDITIONING AND HEATING UNITS.

        Notwithstanding anything in the Lease to the contrary, Landlord shall
maintain and repair the HVAC system ("HVAC") for the Premises. Landlord's actual
cost of such maintenance and repair shall be paid by Landlord and reimbursed by
Tenant to the Landlord as part of Expenses.

4.     ROOF MAINTENANCE.

        Notwithstanding anything in the Lease to the contrary, Landlord shall
maintain and repair the roof. The cost of such maintenance and repair shall be
paid by Landlord and reimbursed by Tenant as part of Expenses.

5.     SECURITY DEPOSIT TRANSFER.

        The Security Deposit in the amount of $31,501.00 held by Landlord under
that certain Lease Agreement dated June 19, 1995, as amended by that certain
First Amendment to Lease dated December 2000 shall be transferred in its
entirety to this Lease. The Security Deposit shall be subject to all of the
provisions of this Lease, including without limitation, Article 5.

6.     PARKING.

        During the term of the Lease and any agreed upon extension thereof,
Tenant, its authorized representatives and its invitees shall have the
non-exclusive right to use the parking facilities located at the Building,
jointly and in common with all others entitled to the use thereof. Tenant agrees
not to overburden the parking facilities located at the Building and agrees to
cooperate with Landlord and other tenants at the Building in the use of said
parking facilities. Landlord reserves the right, in the exercise of its sole and
absolute discretion, to determine whether Landlord's parking facilities at the
Building are becoming overcrowded and, in such event, to allocate parking spaces
among the various tenants in the Building or to designate a specific area or
areas within which Tenant, its authorized representatives and its invitees must
park. Tenant shall be entitled to use Sixty-seven (67) unreserved "In Common"
parking spaces at the Building. Tenant expressly agrees and understands that the
Sixty-seven (67) parking spaces are not reserved and that Landlord, in the
exercise of its sole and absolute discretion, may designate the area or areas of
the parking facilities located at the Building where said in common parking
spaces are to be located. Landlord shall have the right at any time to make

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changes to the location of driveways, entrances, exits, parking spaces, parking
areas, or the direction of the flow of traffic. All responsibility for damage
and theft to vehicles is assumed by Tenant and Tenant's employees, visitors and
customers. Tenant shall repair or cause to be repaired, at Tenant's sole cost
and expense, any and all damage to the Premises, Common Areas and Building
caused by Tenant, or Tenant's employees, visitors, or customers use of such
parking areas.

7.     VACATION OF PORTION OF BUILDING.

        The parties acknowledge that Tenant currently occupies the entire
Building pursuant to an earlier lease. Tenant agrees to vacate the portion of
the Building not covered by this Lease prior to the Commencement Date. Such
vacated portion of the Building shall be returned to Landlord in accordance with
the provisions of the prior lease covering such premises. If Tenant does not
vacate the portion of the Building not comprising the Premises prior to the
Commencement Date, Tenant shall pay rent on the entire Building at the rate of
$34,064.32 per month (plus Tenant's share of Expenses and Taxes) until such
space is vacated.

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8.     PREMISES CONDITION.

        Prior to vacating the Premises, it must be left in good, clean condition
with all systems in good working order, normal wear and tear excepted. Some of
the items that will be inspected by Landlord are listed below, but not limited
to the following:

1.Service and repair all heating and air conditioning equipment, exhaust fans
and hot water heater. Provide Landlord's office with a copy of the inspection
and service report provided by the mechanical contractor.

2.All lights in the office and warehouse must be working. Re-lamp and/or
re-ballast the fixtures as necessary.

3.Overhead doors must be serviced and repaired.

4.All exterior metal doors, including hardware should be serviced or replaced as
necessary.

5.Repair all damaged sheet rock in the office area and in the warehouse along
the demising walls.

6.Office and warehouse floors should be left in good, clean condition.

7.Any exterior signage must be removed; repair and repaint the fascia as
necessary.

8.The bathrooms and any janitors' sinks and closets must be cleaned with all
plumbing in good working order and condition, all lights and fans in good
working condition and all items removed from any cabinets.

9.All data and electrical wiring for Tenant's personal equipment and machinery
needs to be removed to the point of origin and any repairs from damage made.

LANDLORD:   TENANT:
CABOT INDUSTRIAL VENTURE A, LLC, a Delaware limited liability company
 
DPAC TECHNOLOGIES CORP., a California corporation
By:
 
RREEF Management Company,
a Delaware corporation, its Property Manager
 
 
 
 
By:
 
 
 
By:
 
     

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Name:   Scott Recknor   Name:   Richard Dadamo Title:   District Manager  
Title:   Chairman of the Board of Directors Dated:   , 2004

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  Dated:   , 2004

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By:
 

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        Name:   William M. Stowell         Title:   Chief Financial Officer    
    Dated:   , 2004            

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EXHIBIT A—FLOOR PLAN DEPICTING THE PREMISES

         attached to and made a part of Lease bearing the
Lease Reference Date of December 29, 2003 between
CABOT INDUSTRIAL VENTURE A, LLC a Delaware limited liability company, as
Landlord and
DPAC TECHNOLOGIES CORP., a California corporation, as Tenant

Exhibit A is intended only to show the general layout of the Premises as of the
beginning of the Term of this Lease. It does not in any way supersede any of
Landlord's rights set forth in Article 17 with respect to arrangements and/or
locations of public parts of the Building and changes in such arrangements
and/or locations. It is not to be scaled; any measurements or distances shown
should be taken as approximate.

GRAPHIC [g204644.jpg]

   

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EXHIBIT A-1—SITE PLAN

         attached to and made a part of Lease bearing the
Lease Reference Date of December 29, 2003 between
CABOT INDUSTRIAL VENTURE A, LLC, a Delaware limited liability company, as
Landlord and
DPAC TECHNOLOGIES CORP., a California corporation, as Tenant

Exhibit A-1 is intended only to show the general layout of the Premises as of
the beginning of the Term of this Lease. It does not in any way supersede any of
Landlord's rights set forth in Article 17 with respect to arrangements and/or
locations of public parts of the Building and changes in such arrangements
and/or locations. It is not to be scaled; any measurements or distances shown
should be taken as approximate.

GRAPHIC [g10746.jpg]

   

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EXHIBIT B—INITIAL ALTERATIONS

         attached to and made a part of Lease bearing the
Lease Reference Date of December 29, 2003 between
CABOT INDUSTRIAL VENTURE A, LLC, a Delaware limited liability company, as
Landlord and
DPAC TECHNOLOGIES CORP., a California corporation, as Tenant

Landlord, at Landlord's sole cost and expense, shall provide the following
Initial Alterations within a reasonable time after the Commencement Date:

•Demise the Premises in general accordance with Exhibit B-1 by closing up walls
and doorways to create a demising wall.

•Make minor modifications to the HVAC and electrical to properly separate
crossover between the two spaces.

All work to be performed will be done with standard materials used in the
Lincoln Tech Center. The surface of the demising wall facing into the Premises
shall be drywalled, sanded and painted with standard materials used in the
Lincoln Tech Center. Tenant shall be responsible to relocate any furniture,
equipment and fixtures to and from the areas in which the Landlord will be
making the above-described Initial Alterations. Said Initial Alterations shall
be made during regular (non-holiday) business hours on weekdays. Other than this
work, Tenant accepts the Premises in it's as-is condition and Landlord is not
obligated to perform any other Initial Alterations.

In no event shall Landlord be responsible for any other Initial Alterations work
other than as outlined above. Any Initial Alterations work other than as
outlined above shall be the sole responsibility of the Tenant and any and all
costs other than as outlined above shall be paid directly by Tenant.

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EXHIBIT B-1—INITIAL ALTERATIONS

         attached to and made a part of Lease bearing the
Lease Reference Date of December 29, 2003 between
CABOT INDUSTRIAL VENTURE A, LLC, a Delaware limited liability company, as
Landlord and
DPAC TECHNOLOGIES CORP., a California corporation, as Tenant

GRAPHIC [g70709.jpg]

   

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EXHIBIT C—RULES AND REGULATIONS
attached to and made a part of Lease bearing the
Lease Reference Date of December 29, 2003 between
CABOT INDUSTRIAL VENTURE A, LLC, a Delaware limited liability company, as
Landlord and
DPAC TECHNOLOGIES CORP., a California corporation, as Tenant

        1.     No sign, placard, picture, advertisement, name or notice
(collectively referred to as "Signs") shall be installed or displayed on any
part of the outside of the Building without the prior written consent of the
Landlord which consent shall be in Landlord's sole discretion. All approved
Signs shall be printed, painted, affixed or inscribed at Tenant's expense by a
person or vendor approved by Landlord and shall be removed by Tenant at Tenant's
expense upon vacating the Premises. Landlord shall have the right to remove any
Sign installed or displayed in violation of this rule at Tenant's expense and
without notice.

        2.     If Landlord objects in writing to any curtains, blinds, shades or
screens attached to or hung in or used in connection with any window or door of
the Premises or Building, Tenant shall immediately discontinue such use. No
awning shall be permitted on any part of the Premises. Tenant shall not place
anything or allow anything to be placed against or near any glass partitions or
doors or windows which may appear unsightly, in the opinion of Landlord, from
outside the Premises.

        3.     Tenant shall not alter any lock or other access device or install
a new or additional lock or access device or bolt on any door of its Premises
without the prior written consent of Landlord. Tenant, upon the termination of
its tenancy, shall deliver to Landlord the keys or other means of access to all
doors.

        4.     If Tenant requires telephone, data, burglar alarm or similar
service, the cost of purchasing, installing and maintaining such service shall
be borne solely by Tenant. No boring or cutting for wires will be allowed
without the prior written consent of Landlord. Landlord shall direct
electricians as to where and how telephone, data, and electrical wires are to be
introduced or installed. The location of burglar alarms, telephones, call boxes
or other office equipment affixed to the Premises shall be subject to the prior
written approval of Landlord.

        5.     Tenant shall not place a load upon any floor of its Premises,
including mezzanine area, if any, which exceeds the load per square foot that
such floor was designed to carry and that is allowed by law. Heavy objects shall
stand on such platforms as determined by Landlord to be necessary to properly
distribute the weight. Landlord will not be responsible for loss of or damage to
any such equipment or other property from any cause, and all damage done to the
Building by maintaining or moving such equipment or other property shall be
repaired at the expense of Tenant.

        6.     Tenant shall not install any radio or television antenna,
satellite dish, loudspeaker or other device on the roof or exterior walls of the
Building without Landlord's prior written consent which consent shall be in
Landlord's sole discretion.

        7.     Tenant shall not mark, drive nails, screw or drill into the
partitions, woodwork, plaster or drywall (except for pictures and general office
uses) or in any way deface the Premises or any part thereof. Tenant shall not
affix any floor covering to the floor of the Premises or paint or seal any
floors in any manner except as approved by Landlord. Tenant shall repair any
damage resulting from noncompliance with this rule.

   

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        8.     No cooking shall be done or permitted on the Premises, except
that Underwriters' Laboratory approved microwave ovens or equipment for brewing
coffee, tea, hot chocolate and similar beverages shall be permitted, provided
that such equipment and use is in accordance with all applicable federal, state
and city laws, codes, ordinances, rules and regulations.

        9.     Tenant shall not use any hand trucks except those equipped with
the rubber tires and side guards, and may use such other material-handling
equipment as Landlord may approve. Tenant shall not bring any other vehicles of
any kind into the Building. Forklifts which operate on asphalt areas shall only
use tires that do not damage the asphalt.

        10.   Tenant shall not use the name of the Building or any photograph or
other likeness of the Building in connection with or in promoting or advertising
Tenant's business except that Tenant may include the Building name in Tenant's
address. Landlord shall have the right, exercisable without notice and without
liability to any tenant, to change the name and address of the Building.

        11.   All trash and refuse shall be contained in suitable receptacles at
locations approved by Landlord. Tenant shall not place in the trash receptacles
any personal trash or material that cannot be disposed of in the ordinary and
customary manner of removing such trash without violation of any law or
ordinance governing such disposal.

        12.   Tenant shall comply with all safety, fire protection and
evacuation procedures and regulations established by Landlord or any governing
authority.

        13.   Tenant assumes all responsibility for securing and protecting its
Premises and its contents including keeping doors locked and other means of
entry to the Premises closed.

        14.   Tenant shall not use any method of heating or air conditioning
other than that supplied by Landlord without Landlord's prior written consent.

        15.   No person shall go on the roof without Landlord's permission.

        16.   Tenant shall not permit any animals, other than seeing-eye dogs,
to be brought or kept in or about the Premises or any common area of the
property.

        17.   Tenant shall not permit any motor vehicles to be washed or
mechanical work or maintenance of motor vehicles to be performed on any portion
of the Premises or parking lot.

        18.   These Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of any lease of any premises in the
Building. Landlord may waive any one or more of these Rules and Regulations for
the benefit of any tenant or tenants, and any such waiver by Landlord shall not
be construed as a waiver of such Rules and Regulations for any or all tenants.

        19.   Landlord reserves the right to make such other and reasonable
rules and regulations as in its judgment may from time to time be needed for
safety and security, for care and cleanliness of the Building and for the
preservation of good order in and about the Building. Tenant agrees to abide by
all such rules and regulations herein stated and any additional rules and
regulations which are adopted. Tenant shall be responsible for the observance of
all of the foregoing rules by Tenant's employees, agents, clients, customers,
invitees and guests.

   

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        20.   Any toilet rooms, toilets, urinals, wash bowls and other apparatus
shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown into
them. The expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose employees or
invitees, shall have caused it.

        21.   Tenant shall not permit smoking or carrying of lighted cigarettes
or cigars in areas reasonably designated by Landlord or any applicable
governmental agencies as non-smoking areas.

        22.   Any directory of the Building or project of which the Building is
a part ("Project Area"), if provided, will be exclusively for the display of the
name and location of tenants only and Landlord reserves the right to charge for
the use thereof and to exclude any other names.

        23.   Canvassing, soliciting, distribution of handbills or any other
written material in the Building or Project Area is prohibited and each tenant
shall cooperate to prevent the same. No tenant shall solicit business from other
tenants or permit the sale of any goods or merchandise in the Building or
Project Area without the written consent of Landlord.

        24.   Any equipment belonging to Tenant which causes noise or vibration
that may be transmitted to the structure of the Building or to any space therein
to such a degree as to be objectionable to Landlord or to any tenants in the
Building shall be placed and maintained by Tenant, at Tenant's expense, on
vibration eliminators or other devices sufficient to eliminate the noise or
vibration.

        25.   Driveways, sidewalks, halls, passages, exits, entrances and
stairways ("Access Areas") shall not be obstructed by tenants or used by tenants
for any purpose other than for ingress to and egress from their respective
premises. Access areas are not for the use of the general public and Landlord
shall in all cases retain the right to control and prevent access thereto by all
persons whose presence, in the judgement of Landlord, shall be prejudicial to
the safety, character, reputation and interests of the Building or its tenants.

        26.   Landlord reserves the right to designate the use of parking areas
and spaces. Tenant shall not park in visitor, reserved, or unauthorized parking
areas. Tenant and Tenant's guests shall park between designated parking lines
only and shall not park motor vehicles in those areas designated by Landlord for
loading and unloading. Vehicles in violation of the above shall be subject to
being towed at the vehicle owner's expense. Vehicles parked overnight without
prior written consent of the Landlord shall be deemed abandoned and shall be
subject to being towed at vehicle owner's expense. Tenant will from time to
time, upon the request of Landlord, supply Landlord with a list of license plate
numbers of vehicles owned or operated by its employees or agents.

        27.   No trucks, tractors or similar vehicles can be parked anywhere
other than in Tenant's own truck dock area. Tractor-trailers which must be
unhooked or parked with dolly wheels beyond the concrete loading areas must use
steel plates or wood blocks under the dolly wheels to prevent damage to the
asphalt paving surfaces. No parking or storing of such trailers will be
permitted in the parking areas or on streets adjacent thereto.

        28.   During periods of loading and unloading, Tenant shall not
unreasonably interfere with traffic flow and loading and unloading areas of
other tenants. All products, materials or goods must be stored within the
Tenant's Premises and not in any exterior areas, including, but not limited to,
exterior dock platforms, against the exterior of the Building, parking areas and
driveway areas. Tenant agrees to keep the exterior of the Premises clean and
free of nails, wood, pallets, packing materials, barrels and any other debris
produced from their operation.

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