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INDUSTRIAL LEASE

[Single Tenant - Triple Net]

BETWEEN

ZELMAN RENTON, LLC,

LANDLORD

AND

CUTTER & BUCK, INC.,

TENANT

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TABLE OF CONTENTS

 
   
  Page

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1.   BASIC LEASE TERMS   1 2.   PREMISES AND COMMON AREAS   2 3.   TERM   3 4.  
POSSESSION   3 5.   RENT   4 6.   OPERATING EXPENSES   5 7.   SECURITY DEPOSIT  
7 8.   USE   7 9.   NOTICES   8 10.   BROKERS   9 11.   SURRENDER; HOLDING OVER
  9 12.   TAXES   9 13.   ALTERATIONS   10 14.   REPAIRS   12 15.   LIENS   13
16.   ENTRY BY LANDLORD   14 17.   UTILITIES AND SERVICES   14 18.   ASSUMPTION
OF RISK AND INDEMNIFICATION   15 19.   INSURANCE   16 20.   DAMAGE OR
DESTRUCTION   18 21.   EMINENT DOMAIN   20 22.   DEFAULTS AND REMEDIES   20 23.
  LANDLORD'S DEFAULT   23 24.   ASSIGNMENT AND SUBLETTING   23 25.  
SUBORDINATION   26 26.   ESTOPPEL CERTIFICATE   27 27.   EASEMENTS   27 28.  
RULES AND REGULATIONS   27 29.   MODIFICATION AND CURE RIGHTS OF LANDLORD'S
MORTGAGEES AND LESSORS   27 30.   DEFINITION OF LANDLORD   28 31.   WAIVER   28
32.   PARKING   28 33.   FORCE MAJEURE   29 34.   SIGNS   29 35.   LIMITATION ON
LIABILITY   29 36.   FINANCIAL STATEMENTS   30 37.   QUIET ENJOYMENT   30 38.  
AUCTIONS   30 39.   MISCELLANEOUS   30 40.   EXECUTION OF LEASE   31

EXHIBITS:     A-I   Site Plan Showing Premises     A-II   Description of Plans
for the Building     B   Adjustments to Monthly Base Rent     C   Work Letter
Agreement     D   Notice of Lease Term Dates and Tenant's Percentage     E  
Definition of Operating Expenses     F   Estoppel Certificate     G   Rules and
Regulations     H   Hazardous Materials Questionnaire    

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INDUSTRIAL LEASE
[Single Tenant - Triple Net]

        This INDUSTRIAL LEASE ("Lease") is entered into as of the 16th day of
May, 2001, by and between ZELMAN RENTON, LLC, a Delaware limited liability
company ("Landlord"), and CUTTER & BUCK, INC., a Washington corporation
("Tenant").

        Landlord and Tenant previously entered into that certain Industrial
Lease [Single Tenant-Triple Net] dated May 27, 1999, amended by that certain
First Amendment to Lease (the "First Amendment") dated October 6, 1999, and that
certain Second Amendment to Industrial Lease dated concurrently herewith
(collectively, the "Existing Lease"), pursuant to which Landlord currently
leases to Tenant that certain building located at 4001 Oakesdale Avenue SW,
containing approximately 170,500 square feet (the "Existing Building"), more
particularly described in the Existing Lease. Landlord and Tenant hereby
acknowledge and agree that Tenant has exercised its Option to Extend and
Expansion Option under Paragraphs 41 and 42 of the Addendum attached to the
Existing Lease, respectively.

        Concurrently with the execution of this Lease, Tenant has entered into
an office lease (the "Office Lease") covering that certain office space (the
"Office Space") more particularly described in the Office Lease.

1.    BASIC LEASE TERMS.    For purposes of this Lease, the following terms have
the following definitions and meanings:

        (a)    Landlord's Address    (For Notices):

c/o Zelman Development Co., 707 Wilshire Blvd., Suite 3036,
Los Angeles, CA 90017 Attention: Paul Casey

or such other place as Landlord may from time to time designate by notice to
Tenant.

        (b)    Tenant's Address    (For Notices):

Cutter & Buck, Inc., 2701 First Avenue, Suite 500, Seattle, Washington 98121
Attention: Vice President—Operations

With a copy to: Cutter & Buck, Inc., 2701 First Avenue, Suite 500, Seattle,
Washington 98121
Attention: Chief Financial Officer

or such other place as Tenant may from time to time designate by notice to
Landlord.

        (c)    Development:    The parcel(s) of real property commonly known as
Oakesdale Business Campus and located in the City of Renton (the "City"), County
of King (the "County"), State of Washington ("State"), as shown on the site plan
attached hereto as Exhibit "A-1".

        (d)    Premises:    That certain building (the "Building") located at
4051 Oakesdale Avenue SW, which Building will contain approximately
234,489 square feet. The Premises are more particularly depicted on the Site
Plan shown on Exhibit "A-I" and the base specifications and plans for the
Building are more particularly described on Exhibit "A-II".

        (e)    Tenant's Percentage:    The square footage of the Building as
compared to the square footage of all buildings in the Development. The square
footage of the Building will be determined as described on Exhibit "B".

        (f)    Term:    Approximately Ten (10) years and Two (2) months.

        (g)    Estimated Commencement Date/Estimated Rent Commencement
Date:    October 1, 2001.

        (h)    Expiration Date:    November 30, 2011.

        (i)    Commencement Date/Rent Commencement Date:    Commencement Date -
The date on which the Term of this Lease will commence as determined in
accordance with the provisions of Exhibit "C", subject to the terms and
conditions of Paragraph 24 below; Rent Commencement Date—

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The date on which Monthly Base Rent (defined in Paragraph 5 below) will commence
as determined in accordance with the terms and conditions of Paragraph 5(a)
below.

        (j)    Initial Monthly Base Rent:    $335 per square foot of the
Building per month, plus an additional $65 per square foot of office space
within the Building per month, subject to adjustment as described on Exhibit "B"
and as otherwise provided in this Lease. By way of example, if the Building
contains 234,489 square feet, of which 10,000 square feet comprise office space,
the Initial Monthly Base Rent shall be equal to the sum of (A) $.335 X 234,489
(i.e., $78,553.82) plus (B) $.65 X 10,000 (i.e., $6,500.00), for a total Initial
Monthly Base Rent of $85,053.82.

        (k)    Security Deposit:    None

        (l)    Tenant Improvements:    All tenant improvements installed or to
be installed by Landlord or Tenant within the Premises to prepare the Premises
for occupancy pursuant to the terms of the Work Letter Agreement attached hereto
as Exhibit "C".

        (m)    Permitted Use:    Labeling, distribution, light manufacturing and
warehousing of non-Hazardous Materials and related office uses and no other use
without the express written consent of Landlord, which consent Landlord may
withhold in its reasonable discretion.

        (n)    Broker(s):    Kidder, Mathews & Segner

        (o)    Guarantor(s):    None

        (p)    Interest Rate:    Ten percent (10%) per annum

        (q)    Parking:    Not less than Two Hundred Twenty-Eight (228)
unreserved, in-common spaces within 150 feet of the Building as provided in
Paragraph 32 hereof.

        (r)    Exhibits:    A-I through H, inclusive, which Exhibits are
attached to this Lease and incorporated herein by this reference.

        (s)    Addendum Paragraph:    41, which Addendum Paragraph is attached
to this Lease and incorporated herein by this reference.

        This Paragraph 1 represents a summary of the basic terms and definitions
of this Lease. In the event of any inconsistency between the terms contained in
this Paragraph 1 and any specific provision of this Lease, the terms of the more
specific provision shall prevail.

2.    PREMISES AND COMMON AREAS    

        (a)    Premises.    Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord the Premises as improved or to be improved with the Tenant
Improvements described in the Work Letter Agreement, a copy of which is attached
hereto as Exhibit "C".

        (b)    Mutual Covenants.    Landlord and Tenant agree that the letting
and hiring of the Premises is upon and subject to the terms, covenants and
conditions contained in this Lease and each party covenants as a material part
of the consideration for this Lease to keep and perform their respective
obligations under this Lease.

        (c)    Tenant's Use of Common Areas.    During the Term of this Lease,
Tenant shall have the nonexclusive right to use in common with Landlord and all
persons, firms and corporations conducting business in the Development and their
respective customers, guests, licensees, invitees, subtenants, employees and
agents (collectively, "Development Occupants"), subject to the terms of this
Lease, the Rules and Regulations referenced in Paragraph 28 below and all
covenants, conditions and restrictions now or hereafter affecting the
Development (provided Tenant's use of the Premises as contemplated herein is not
materially and adversely impacted), the following common areas of the
Development (collectively, the "Common Areas"): the parking facilities of the
Development which serve the

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Building, loading and unloading areas, trash areas, roadways, sidewalks,
walkways, parkways, driveways, landscaped areas, and similar areas and
facilities situated within the Development and appurtenant to the Building which
are not reserved for the exclusive use of any Development Occupants. If Landlord
hereafter grants reserved parking to any other Development Occupants, then
Tenant may demand that Landlord grant to Tenant substantially similar reserved
parking rights for the Premises and any other space leased by Tenant pursuant to
this Lease.

        (d)    Landlord's Reservation of Rights.    Provided Tenant's use of and
access to the Premises is not interfered with in an unreasonable manner,
Landlord reserves for itself and for all other owner(s) and operator(s) of the
Common Areas and the balance of the Development, the right from time to time to:
(i) make changes to the design and layout of the Development, including, without
limitation, changes to buildings, driveways, entrances, loading and unloading
areas, direction of traffic, landscaped areas and walkways, parking spaces and
parking areas; and (ii) use or close temporarily the Common Areas, and/or other
portions of the Development while engaged in making improvements, repairs or
alterations to the Building, the Development, or any portion thereof.

3.    TERM.    The term of this Lease ("Term") will be for the approximate
period designated in Subparagraph 1(f), commence on the Commencement Date
designated in Subparagraph 1(i), and end on the Expiration Date designated in
Subparagraph 1(h) unless the Term of this Lease is extended pursuant to any
provision of this Lease or written agreement of the parties. Each consecutive
twelve (12) month period of the Term of this Lease, commencing on the
Commencement Date, will be referred to herein as a "Lease Year". Landlord's
Notice of Lease Term Dates ("Notice"), in the form of Exhibit "D" attached
hereto, will confirm the Commencement Date and the date upon which the Term of
this Lease shall end, and will be delivered to Tenant after Landlord delivers
possession of the C&B Premises (defined in Paragraph 4(a) below) to Tenant and a
punch-list has been prepared.

4.    POSSESSION    

        (a)    Delivery of Possession.    Landlord agrees to deliver possession
of the "C&B Premises" and the "Subleased Premises" (which together constitute
the Premises under this Lease) to Tenant in accordance with the terms of the
Work Letter Agreement attached hereto as Exhibit "C". For purposes of this
Lease, the "C&B Premises" shall be defined as all portions of the Building which
are not the Subleased Premises and the "Subleased Premises" shall be defined as
all portions of the Building subject to any Early Sublease (defined in
Paragraph 24(l) below). Notwithstanding the foregoing and except as provided in
Subparagraph 4(c) below, Landlord will not be obligated to make any portion of
the Premises available to Tenant until Landlord has received from Tenant all of
the following: (i) a copy of this Lease fully executed by Tenant; (ii) the first
installment of Monthly Base Rent on the portion of the Premises to be made
available (as contemplated in Paragraph 5(a) below); (iii) executed copies of
policies of insurance or certificates thereof as required under Paragraph 19 of
this Lease, (iv) copies of all governmental permits and authorizations, if any,
required in connection with Tenant's operation of its business within the
Premises; and (v) if Tenant is a corporation or partnership, such evidence of
due formation, valid existence and authority as Landlord may reasonably require,
which may include, without limitation, a certificate of good standing,
certificate of secretary, articles of incorporation, statement of partnership,
or other similar documentation.

        (b)    Condition of Premises.    Thirty (30) days following the Rent
Commencement Date and in accordance with the Work Letter Agreement attached
hereto as Exhibit "C", Landlord and Tenant will jointly conduct a walk-through
inspection of the C&B Premises and will jointly prepare a punch-list
("Punch-List") of items required to be installed by Landlord under the Work
Letter Agreement which require finishing or correction. The Punch-List will not
include any items of damage to the C&B Premises caused by Tenant's move-in or
early entry, if permitted, which damage will be corrected or repaired by
Landlord, at Tenant's expense or, at Landlord's election, by Tenant, at Tenant's
expense. Other than latent defects of which Landlord is notified within one (1)
year after the Rent Commencement Date, Landlord's obligations under Paragraph 14
of this Lease, and the items specified

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in the Punch-List, by taking possession of the C&B Premises, Tenant will be
deemed to have accepted the C&B Premises in its condition on the date of
delivery of possession, subject to all applicable zoning, municipal, county and
state laws, ordinances and regulations governing and regulating the use and
occupancy of the C&B Premises and to have acknowledged that the Tenant
Improvements have been installed as required by the Work Letter Agreement and
that there are no additional items needing work or repair by Landlord. Landlord
will cause all items in the Punch-List to be repaired or corrected within thirty
(30) days following the preparation of the Punch-List or as soon as practicable
after the preparation of the Punch-List. Tenant acknowledges that neither
Landlord nor any agent of Landlord has made any representation or warranty with
respect to the Premises, the Development or any portions thereof or with respect
to the suitability of same for the conduct of Tenant's business. The foregoing
inspection of the C&B Premises may hereinafter be referred to as the "Inspection
Process." Landlord and Tenant acknowledge and agree that the Inspection Process
shall be applicable to each portion of the Subleased Premises as such portions
are turned over to Tenant and the respective subtenants thereof in accordance
with the terms of this Lease.

        (c)    Early Entry.    Landlord hereby provides Tenant notice of the
substantial completion of the Building shell. Tenant may elect to enter upon the
Premises forty-five (45) days prior to the Rent Commencement Date in order to
install communications cable, fixtures and racking and the like, at Tenant's
sole cost and expense (collectively, "Tenant's Work"). Any such entry by Tenant
for the purpose of Tenant's Work will be subject to the following conditions:
(i) Tenant, together with its employees, agents, independent contractors,
suppliers and any other personnel under Tenant's control ("Tenant's Personnel")
entering the Premises, will cooperate with Landlord and Landlord's general
contractor; (ii) Tenant agrees that any such early entry is subject to all of
the terms and conditions of the Lease except for those relating to the payment
of Rent and other monetary obligations, which provisions will become applicable
in accordance with the terms of this Lease; (iii) Prior to any entry upon the
Premises by Tenant or Tenant's Personnel, Tenant agrees to pay for and provide
to Landlord certificates evidencing the existence and amounts of liability
insurance carried by Tenant, which coverage must comply with the provisions of
this Lease relating to insurance; (iv) Tenant and Tenant's Personnel agree to
comply with all applicable laws, regulations, permits and other approvals
required to perform Tenant's Work or by the early entry on the Premises by
Tenant and Tenant's Personnel; (v) Tenant agrees to indemnify, protect, defend
and save Landlord harmless from and against any and all liens, liabilities,
losses, damages, costs, expenses, demands, actions, causes of action and claims
(including, without limitation, attorneys' fees and legal costs) arising out of
the early entry, use, construction, or occupancy of the Premises by Tenant or
Tenant's Personnel; and (vi) Tenant shall have paid to Landlord the first full
monthly installment of Monthly Base Rent on the portion of the Premises to which
Tenant desires early entry. If, in Landlord's reasonable judgment, Tenant's
Personnel and/or the work that is being performed by Tenant's Personnel
interferes with Landlord's construction of the Tenant Improvements, or
detrimentally affects Landlord's ability to comply with its commitments for
completing its improvements on the Premises or cause labor difficulties,
Landlord will have the right to order Tenant's early entry to cease in the event
Tenant has not taken action to remedy such interference within forty-eight (48)
hours following Landlord's notice to Tenant of the existence of the same, and if
Landlord so requires in connection therewith because such items are interfering
with Landlord's Work, Tenant agrees to cause Tenant's Personnel to remove all
tools, equipment and materials from the Premises.

5.    RENT    

        (a)    Monthly Base Rent.    Tenant agrees to pay Landlord the Monthly
Base Rent for the entire Premises (subject to adjustment as hereinafter
provided) in advance on the first day of each calendar month during the Term
without prior notice or demand, except that Tenant agrees to pay to Landlord the
Monthly Base Rent on the respective portions of the Premises made available to
Tenant for the first full month of the Term (that is, the first full month
immediately following the Rent

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Commencement Date) on the earlier of being granted access thereto or the Rent
Commencement Date. For purposes of this Lease, the "Rent Commencement Date"
shall be deemed to be the earlier of October 1, 2001 or the date Tenant
commences the operation of its business within any portion of the C&B Premises.
If the Term of this Lease commences or ends on a day other than the first day of
a calendar month, then the rent for such period will be prorated in the
proportion that the number of days this Lease is in effect during such period
bears to the number of days in such month. All rent must be paid to Landlord,
without any deduction or offset, in lawful money of the United States of
America, at the address designated by Landlord or to such other person or at
such other place as Landlord may from time to time designate in writing. Monthly
Base Rent will be adjusted during the Term of this Lease as provided in
Exhibit "B".

        (b)    Additional Rent.    All amounts and charges to be paid by Tenant
hereunder, including, without limitation, payments for Operating Expenses, real
property taxes, insurance and repairs, will be considered additional rent for
purposes of this Lease, and the word "rent" as used in this Lease will include
all such additional rent unless the context specifically or clearly implies that
only Monthly Base Rent is intended.

        (c)    Late Payments.    Late payments of Monthly Base Rent and/or any
item of additional rent will be subject to interest and a late charge as
provided in Subparagraph 22(f) below.

6.    OPERATING EXPENSES    

        (a)    Operating Expenses.    In addition to Monthly Base Rent,
throughout the Term of this Lease, Tenant agrees to pay Landlord as additional
rent in accordance with the terms of this Paragraph 6, Tenant's Percentage of
Operating Expenses for the Development as defined in Exhibit "E" attached
hereto. Notwithstanding the foregoing, Landlord agrees that prior to the Rent
Commencement Date, Tenant's Percentage of Operating Expenses for the Development
shall be based upon that portion of the Building covered by any Early Sublease
(as defined in Paragraph 24(1) below), and not the entire Premises.

        (b)    Estimate Statement.    Prior to the Commencement Date and on or
about April 1st of each subsequent calendar year during the Term of this Lease,
Landlord will endeavor to deliver to Tenant a statement ("Estimate Statement")
wherein Landlord will estimate both the Operating Expenses and Tenant's
Percentage of Operating Expenses for the then current calendar year. Tenant
agrees to pay Landlord, as additional rent, one-twelfth (1/12th) of the
estimated Tenant's Percentage of Operating Expenses each month thereafter,
beginning with the next installment of rent due, until such time as Landlord
issues a revised Estimate Statement or the Estimate Statement for the succeeding
calendar year; except that, concurrently with the regular monthly rent payment
next due following the receipt of each such Estimate Statement, Tenant agrees to
pay Landlord an amount equal to one monthly installment of the estimated
Tenant's Percentage of Operating Expenses (less any applicable Operating
Expenses already paid) multiplied by the number of months from January, in the
current calendar year, to the month of such rent payment next due, all months
inclusive. If at any time during the Term of this Lease, but not more often than
quarterly, Landlord reasonably determines that Tenant's Percentage of Operating
Expenses for the current calendar year will be greater than the amount set forth
in the then current Estimate Statement, Landlord may issue a revised Estimate
Statement and Tenant agrees to pay Landlord, within thirty (30) days of receipt
of the revised Estimate Statement, the difference between the amount owed by
Tenant under such revised Estimate Statement and the amount owed by Tenant under
the original Estimate Statement for the portion of the then current calendar
year which has expired. Thereafter Tenant agrees to pay Tenant's Percentage of
Operating Expenses based on such revised Estimate Statement until Tenant
receives the next calendar year's Estimate Statement or a new revised Estimate
Statement for the current calendar year.

        (c)    Actual Statement.    By April 1st of each calendar year during
the term of this Lease, Landlord will also endeavor to deliver to Tenant a
statement ("Actual Statement") which states the

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actual Operating Expenses for the preceding calendar year. If the Actual
Statement reveals that Tenant's Percentage of the actual Operating Expenses is
more than the total Additional Rent paid by Tenant for Operating Expenses on
account of the preceding calendar year, Tenant agrees to pay Landlord the
difference in a lump sum within thirty (30) days of receipt of the Actual
Statement. If the Actual Statement reveals that Tenant's Percentage of the
actual Operating Expenses is less than the Additional Rent paid by Tenant for
Operating Expenses on account of the preceding calendar year, Landlord will
credit any overpayment toward the next monthly installment(s) of Monthly Base
Rent and Tenant's Percentage of the Operating Expenses due under this Lease.

        (d)    Miscellaneous.    Any delay or failure by Landlord in delivering
any Estimate Statement or Actual Statement pursuant to this Paragraph 6 will not
constitute a waiver of its right to require an increase in additional rent nor
will it relieve Tenant of its obligations pursuant to this Paragraph 6, except
that Tenant will not be obligated to make any payments based on such Estimate
Statement or Actual Statement until thirty (30) days after receipt of such
Estimate Statement or Actual Statement. Even though the Term has expired and
Tenant has vacated the Premises, when the final determination is made of
Tenant's Percentage of the actual Operating Expenses for the year in which this
Lease terminates, Tenant agrees to promptly pay any increase due over the
estimated expenses paid and, conversely, any overpayment made in the event said
expenses decrease shall promptly be rebated by Landlord to Tenant. Such
obligation will be a continuing one which will survive the expiration or
termination of this Lease. Prior to the expiration or sooner termination of the
Lease Term and Landlord's acceptance of Tenant's surrender of the Premises,
Landlord will have the right to estimate the actual Operating Expenses for the
then current calendar year and to collect from Tenant prior to Tenant's
surrender of the Premises, Tenant's Percentage of any excess of such actual
Operating Expenses over the estimated Operating Expenses paid by Tenant in such
calendar year.

        (e)    Audit Right.    In the event of any dispute as to the amount of
Tenant's Percentage of Operating Expenses, Tenant or an accounting firm selected
by Tenant and reasonably satisfactory to Landlord (billing hourly and not on a
contingency fee basis) will have the right, by prior written notice ("Audit
Notice") given within eighteen (18) months ("Audit Period") following receipt of
an Actual Statement and at reasonable times during normal business hours, to
audit Landlord's accounting records with respect to Operating Expenses relative
to the year to which such Actual Statement relates at the offices of Landlord's
property manager. In no event will Landlord or its property manager be required
to (i) photocopy any accounting records or other items or contracts, (ii) create
any ledgers or schedules not already in existence, (iii) incur any costs or
expenses relative to such inspection, or (iv) perform any other tasks other than
making available such accounting records as aforesaid. Tenant must pay its
Percentage of Operating Expenses when due pursuant to the terms of this Lease
and may not withhold payment of Operating Expenses or any other rent pending
results of the audit or during a dispute regarding Operating Expenses. The audit
must be completed within sixty (60) days of the date of Tenant's Audit Notice
and the results of such audit shall be delivered to Landlord within ninety (90)
days of the date of Tenant's Audit Notice. If Tenant does not comply with any of
the aforementioned time frames, then such Actual Statement will be conclusively
binding on Tenant. If such audit or review correctly reveals that Landlord has
overcharged Tenant and Landlord agrees with the results of such audit, then
within thirty (30) days after the results of such audit are made available to
Landlord, Landlord agrees to reimburse Tenant the amount of such overcharge. If
the audit reveals that Tenant was undercharged, then within thirty (30) days
after the results of the audit are made available to Tenant, Tenant agrees to
reimburse Landlord the amount of such undercharge. Tenant agrees to pay the cost
of such audit, provided that if the audit reveals that Landlord's determination
of Tenant's Percentage of Operating Expenses as set forth in the relevant Actual
Statement was in error in Landlord's favor by more than five percent (5%) of the
amount charged by Landlord to Tenant pursuant to such Actual Statement, then
Landlord agrees to pay the reasonable, third-party cost of such audit incurred
by Tenant. To the extent Landlord must pay the cost of such audit, such cost
shall not exceed a reasonable hourly charge for a reasonable amount of hours
spent by such third-party in

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connection with the audit, and in no event will exceed the amount of the error.
Tenant agrees to keep the results of the audit confidential and will cause its
agents, employees and contractors to keep such results confidential. To that
end, Landlord may require Tenant and its auditor to execute a confidentiality
agreement provided by Landlord.

7.    SECURITY DEPOSIT.    N/A

8.    USE    

        (a)    Tenant's Use of the Premises.    The Premises may be used for the
use or uses set forth in Subparagraph 1(m) only.

        (b)    Compliance.    At Tenant's sole cost and expense, Tenant agrees
to procure, maintain and hold available for Landlord's inspection, all
governmental licenses and permits required for the proper and lawful conduct of
Tenant's business from the Premises, if any. Tenant agrees not to use, alter or
occupy the Premises or allow the Premises to be used, altered or occupied in
violation of, and Tenant, at its sole cost and expense, agrees to use and occupy
the Premises and cause the Premises to be used and occupied in compliance with:
(i) any and all laws, statutes, zoning restrictions, ordinances, rules,
regulations, orders and rulings now or hereafter in force and any requirements
of any insurer, insurance authority or duly constituted public authority having
jurisdiction over the Premises now or hereafter in force, (ii) the requirements
of the Board of Fire Underwriters and any other similar body, (iii) the
Certificate of Occupancy issued for the Building, and (iv) any recorded
covenants, conditions and restrictions and similar regulatory agreements, if
any, which affect the use, occupation or alteration of the Premises. Tenant
agrees to comply with the Rules and Regulations referenced in Paragraph 28
below. Tenant agrees not to do or permit anything to be done in or about the
Premises which will in any manner obstruct or interfere with the rights of other
tenants or occupants of the Development, or injure or unreasonably annoy them,
or use or allow the Premises to be used for any unlawful or unreasonably
objectionable purpose. Tenant agrees not to cause, maintain or permit any
nuisance or waste in, on, under or about the Premises. Notwithstanding anything
contained in this Lease to the contrary, all transferable development rights
related in any way to the Development are and will remain vested in Landlord,
and Tenant hereby waives any rights thereto.

        (c)    Hazardous Materials; Tenant.    Except for ordinary and general
office supplies, such as copier toner, liquid paper, glue, ink and common
household cleaning materials and other supplies or materials (in customary
amounts) necessary for the operation of Tenant's business (some or all of which
may constitute "Hazardous Materials" as defined in this Lease), Tenant agrees
not to cause or knowingly permit any Hazardous Materials to be brought upon,
stored, used, handled, generated, released or disposed of on, in, under or about
the Premises, the Building, the Development or any portion thereof by Tenant,
its agents, employees, subtenants, assignees, licensees or contractors
(collectively, "Tenant's Parties"), without the prior written consent of
Landlord, which consent Landlord may withhold in its sole and absolute
discretion. Concurrently with the execution of this Lease, Tenant agrees to
complete and deliver to Landlord an Environmental Questionnaire in the form of
Exhibit "H" attached hereto. Upon the expiration or earlier termination of this
Lease, Tenant agrees to promptly remove from the Premises, at its sole cost and
expense, any and all Hazardous Materials, including any equipment or systems
containing Hazardous Materials which are installed, brought upon, stored, used,
generated or released upon, in, under or about the Premises, the Building, the
Development or any portion thereof by Tenant or any of Tenant's Parties. To the
fullest extent permitted by law, Tenant agrees to promptly indemnify, protect,
defend and hold harmless Landlord and Landlord's partners, officers, directors,
employees, agents, successors and assigns (collectively, "Landlord Indemnified
Parties") from and against any and all claims, damages, judgments, suits, causes
of action, losses, liabilities, penalties, fines, expenses and costs (including,
without limitation, clean-up, removal, remediation and restoration costs, sums
paid in settlement of claims, attorneys' fees, consultant fees and expert fees
and court costs) which arise directly or result directly from the release of
Hazardous

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Materials on, in, under or about the Premises, the Building or any other portion
of the Development and which are caused or knowingly permitted by Tenant or any
of Tenant's Parties. Tenant agrees to promptly notify Landlord of any release of
Hazardous Materials at the Premises, which Tenant becomes aware of during the
Term of this Lease, whether caused by Tenant or any other persons or entities.
In the event of any release of Hazardous Materials caused or permitted by Tenant
or any of Tenant's Parties, Landlord shall have the right, but not the
obligation, to cause Tenant to immediately take all steps Landlord deems
necessary or appropriate to remediate such release and prevent any similar
future release to the satisfaction of Landlord and Landlord's mortgagee(s). As
used in this Lease, the term "Hazardous Materials" shall mean and include any
hazardous or toxic materials, substances or wastes as now or hereafter
designated under any law, statute, ordinance, rule, regulation, order or ruling
of any agency of the State, the United States Government or any local
governmental authority, including, without limitation, asbestos, petroleum,
petroleum hydrocarbons and petroleum based products, urea formaldehyde foam
insulation, polychlorinated biphenyls ("PCBs"), and freon and other
chlorofluorocarbons. The term "Environmental Law" means any federal, state or
local law, statute, ordinance, regulation or order pertaining to health,
industrial hygiene, environmental conditions or Hazardous Materials. The
provisions of this Subparagraph 8(c) will survive the expiration or earlier
termination of this Lease.

        (d)    Hazardous Materials; Landlord.    Prospective Purchaser Consent
Decree Re:    Sternco Property, Renton, Washington (King County Cause
No. 97-2-1-17988-2SEA) ("Consent Decree"), entered on July 22, 1997, pursuant to
the Washington State Model Toxics Control Act (Chapter 70.105D RCW), requires
Landlord to complete the remediation of releases of certain Hazardous Materials
at a site consisting of approximately 45 acres, and including the legal parcel
on which the Premises are located. Landlord did not cause or contribute to the
release or threatened release of Hazardous Materials that required remediation
under the terms of the Decree. Landlord has completed all remediation activities
required under the terms of the Decree at the legal parcel on which the Premises
are located. Pursuant to the terms of the Decree, the Washington State
Department of Ecology has certified in writing that all clean-up activities
required under the terms of Decree at the legal parcel on which the Premises are
located have been completed and that no further action is necessary under the
terms of the Decree on such legal parcel, with the exception of continuing
groundwater monitoring and maintenance of institutional controls, which Landlord
shall undertake at Landlord's sole expense. The interest conveyed hereby is
subject to the effect of a Restrictive Covenant recorded in the public land
records as Document No. 97-2-17988-2SEA, in favor of, and enforceable by, the
State of Washington. Landlord shall promptly protect, indemnify, defend and hold
harmless Tenant and its directors, officers, employees, agents, parents,
subsidiaries, successors and assigns ("Tenant Indemnified Parties") from and
against any and all claims, judgments, suits, causes of action, penalties,
fines, loss, damage, cost, expense or liability (including without limitation,
clean-up, removal, remediation and restoration costs, sums paid in settlement of
claims, consultant fees and expert fees, attorneys' fees and costs) arising
directly out of, or resulting directly from, the presence at the Premises of
Hazardous Materials on, in, under or about the Building or the Development prior
to the date of this Lease or caused by Landlord or its agents, contractors or
employees. Nothing in this indemnity shall require Landlord to protect,
indemnify, defend or hold harmless Tenant or any Tenant Indemnified Parties from
any loss, damage, cost, expense or liability (including reasonable attorneys'
fees and costs) arising out of Tenant's release (or release by any of Tenant's
Parties) of Hazardous Materials and/or Tenant's violation (or the violation by
any of Tenant's Parties) of any Environmental Law. The provisions of this
Subparagraph 8(d) shall survive expiration or earlier termination of this Lease.

9.    NOTICES.    Any notice required or permitted to be given hereunder must be
in writing and may be given by personal delivery (including delivery by
overnight courier or an express mailing service) or by mail, if sent by
registered or certified mail. Notices to Tenant shall be sufficient if delivered
to Tenant at the address designated in Subparagraph 1(b) and notices to Landlord
shall be sufficient if

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delivered to Landlord at the address designated in Subparagraph 1(a). Either
party may specify a different address for notice purposes by written notice to
the other, except that the Landlord may in any event use the Premises as
Tenant's address for notice purposes.

10.    BROKERS.    Each party represents and warrants to the other, that, to its
knowledge, no broker, agent or finder, other than the broker stated in
Subparagraph 1(n) above, whose commission, if any, shall be payable by Landlord
in accordance with Landlord's separate agreement with said broker,
(a) negotiated or was instrumental in negotiating or consummating this Lease on
its behalf, and (b) is or might be entitled to a commission or compensation in
connection with this Lease. Landlord and Tenant each agree to promptly
indemnify, protect, defend and hold harmless the other from and against any and
all claims, damages, judgments, suits, causes of action, losses, liabilities,
penalties, fines, expenses and costs (including attorneys' fees and court costs)
resulting from any breach by the indemnifying party of the foregoing
representation, including, without limitation, any claims that may be asserted
by any broker, agent or finder undisclosed by the indemnifying party. The
foregoing mutual indemnity shall survive the expiration or earlier termination
of this Lease.

11.    SURRENDER; HOLDING OVER    

        (a)    Surrender.    The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not constitute a merger, and
shall, at the option of Landlord, operate as an assignment to Landlord of any or
all subleases or subtenancies. Upon the expiration or earlier termination of
this Lease, Tenant agrees to peaceably surrender the Premises to Landlord broom
clean and in a state of good order, repair and condition, ordinary wear and tear
and casualty damage (if this Lease is terminated as a result thereof pursuant to
Paragraph 20) excepted, together with all of Tenant's personal property and
Alterations (as defined in Paragraph 13) removed from the Premises to the extent
required under Paragraph 13 and all damage caused by such removal repaired as
required by Paragraph 13. The delivery of keys to any employee of Landlord or to
Landlord's agent or any employee thereof alone will not be sufficient to
constitute a termination of this Lease or a surrender of the Premises.

        (b)    Holding Over.    Tenant will not be permitted to hold over
possession of the Premises after the expiration or earlier termination of the
Term. If Tenant holds over after the expiration or earlier termination of the
Term, Landlord may, at its option, treat Tenant as a tenant at sufferance only,
and such continued occupancy by Tenant shall be subject to all of the terms,
covenants and conditions of this Lease, so far as applicable, except that the
Monthly Base Rent for any such holdover period shall be equal to one hundred
fifty percent (150%) of the Monthly Base Rent in effect under this Lease
immediately prior to such holdover, prorated on a daily basis. Acceptance by
Landlord of rent after such expiration or earlier termination will not result in
a renewal of this Lease. The foregoing provisions of this Paragraph 11 are in
addition to and do not affect Landlord's right of re-entry or any rights of
Landlord under this Lease or as otherwise provided by law. If Tenant fails to
surrender the Premises upon the expiration of this Lease in accordance with the
terms of this Paragraph 11 despite demand to do so by Landlord, Tenant agrees to
promptly indemnify, protect, defend and hold Landlord harmless from all claims,
damages, judgments, suits, causes of action, losses, liabilities, penalties,
fines, expenses and costs (including attorneys' fees and costs), including,
without limitation, costs and expenses incurred by Landlord in returning the
Premises to the condition in which Tenant was to surrender it and claims made by
any succeeding tenant founded on or resulting from Tenant's failure to surrender
the Premises. The provisions of this Subparagraph 11(b) will survive the
expiration or earlier termination of this Lease.

12.    TAXES    

        (a)    Payment of Taxes.    If the Premises are separately assessed,
Tenant agrees to pay all real property taxes, as defined in Paragraph 12(b)
below, applicable to the Premises during the term of this Lease. All such
payments shall be made at least ten (10) days prior to the due date of such
payment.

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Tenant agrees to promptly furnish Landlord with satisfactory evidence that such
real property taxes have been paid. If any such real property taxes paid by
Tenant shall cover any period of time prior to or after the expiration of the
term thereof, Tenant's share of such real property taxes is to be equitably
prorated to cover only the period of time within the tax fiscal year during
which this Lease shall be in effect, and Landlord will promptly reimburse Tenant
to the extent required. If Tenant fails to pay any such real property taxes,
Landlord will have the right to pay the same, in which case Tenant will repay
such amount to Landlord with Tenant's next rent installment together with
interest at the rate at the Interest Rate. In the event real property taxes are
billed to Landlord, Tenant shall pay its pro rata share as determined in
Paragraph 12(c) below of said taxes within thirty (30) days after billing by
Landlord.

        (b)    Definition of "Real Property Taxes".    As used herein, the term
"real property taxes" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed on or with respect to the Premises by any authority
having the direct or indirect power to tax, including any city, state or federal
government, or any school, agricultural, sanitary, fire, street, drainage or
other improvement district thereof, as against any legal or equitable interest
of Landlord in the Premises or in the real property of which the Premises are a
part, as against Landlord's right to rent or other income therefrom, and as
against Landlord's business of leasing the Premises. Assessments and improvement
bonds shall be amortized over the longest allowable period and Tenant shall be
responsible for only those portions coming due during the Term of this Lease.
The term "real property taxes" shall also include any tax, fee, levy, assessment
or charge (i) in substitution of, partially or totally, any tax, fee, levy,
assessment or charge herein above included within the definition of "real
property tax"; (ii) the nature of which was hereinabove included within the
definition of "real property tax"; (iii) which is measured by or reasonably
attributable to the cost or value of Tenant's equipment, fixtures or other
property located on the Premises or Tenant's leasehold improvements made in or
to the Premises, regardless of whether title to such improvements shall be in
Landlord or Tenant (except to the extent covered by Subparagraph 12(d) below);
(iv) upon or measured by the rent payable hereunder; and (v) upon or with
respect to the possession, leasing, operation, maintenance, management, repair,
use or occupancy of the Premises or any portion thereof.

        (c)    Joint Assessment.    If the Premises are not separately assessed,
Tenant's liability shall be an equitable proportion of the real property taxes
for all of the land and improvement included within the tax parcel assessed,
such proportion to be determined by Landlord from the respective valuations
assigned in the assessor's work sheets or such other information as may be
reasonably available.

        (d)    Personal Property Taxes.    Tenant agrees to pay prior to
delinquency all taxes assessed against and levied upon trade fixtures,
furnishings, equipment and all other personal property of Tenant contained in
the Premises or elsewhere. When possible, Tenant will cause said trade fixtures,
furnishings, equipment and all other personal property to be assessed and billed
separately from the real property of Landlord. If any of Tenant's personal
property is assessed with Landlord's real property, Tenant shall pay Landlord
the taxes attributable to Tenant within thirty (30) days after receipt of a
written statement setting forth the taxes applicable to Tenant's property.

13.    ALTERATIONS.    After installation of the initial Tenant Improvements for
the Premises pursuant to Exhibit "C", Tenant may, at its sole cost and expense,
make alterations, additions, improvements, "Utility Installations" and
decorations to the Premises (collectively, "Alterations") subject to and only
upon the following terms and conditions:

        (a)    Prohibited Alterations.    Tenant may not make any Alterations
which (i) affect any area outside the Premises; (ii) affect the Building's
structure, roof, equipment, services or systems, or the proper functioning
thereof, or Landlord's access thereto; (iii) affect the outside appearance or
character of the Building or affect the appearance, character or use of the
Common Areas; (iv) in the reasonable

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opinion of Landlord, lessen the value of the Building; or (v) will violate any
occupancy certificate applicable to the Premises. As used in this Paragraph 13,
the term "Utility Installations" means carpeting, window coverings, air lines,
power panels, electrical distribution systems, heating, ventilation and air
conditioning systems, plumbing systems, fencing, landscaping, or gas lines.

        (b)    Landlord's Approval.    Before proceeding with any Alterations
which are not prohibited in Subparagraph 13(a) above, Tenant must first obtain
Landlord's written approval of the plans, specifications and working drawings
for such Alterations, which approval Landlord will not unreasonably withhold or
delay; provided, however, Landlord's prior approval will be required for any
such Alterations which are not prohibited by Subparagraph 13(a) above and which
cost less than One Hundred Thousand Dollars ($100,000) per Lease Year as long as
(i) Tenant delivers to Landlord notice and a copy of any final plans,
specifications and working drawings for any such Alterations at least ten (10)
days prior to commencement of the work thereof, and (ii) the other conditions of
this Paragraph 13 are satisfied, including, without limitation, conforming to
Landlord's rules, regulations and insurance requirements which govern
contractors. Landlord's approval of plans, specifications and/or working
drawings for Alterations will not create any responsibility or liability on the
part of Landlord for their completeness, design sufficiency, or compliance with
applicable permits, laws, rules and regulations of governmental agencies or
authorities.

        (c)    Contractors.    Alterations may be made or installed only by
contractors and subcontractors which have been approved by Landlord, which
approval Landlord will not unreasonably withhold or delay. Before proceeding
with any Alterations, Tenant agrees to provide Landlord with ten (10) days'
prior written notice and Tenant's contractors must obtain and maintain, on
behalf of Tenant and at Tenant's sole cost and expense, all necessary
governmental permits and approvals for the commencement and completion of such
Alterations. Throughout the performance of any Alterations, Tenant agrees to
obtain, or cause its contractors to obtain, workers compensation insurance and
general liability insurance in compliance with the provisions of Paragraph 19 of
this Lease.

        (d)    Manner of Performance.    All Alterations must be performed:
(i) in accordance with the approved plans, specifications and working drawings;
(ii) in a lien-free and first-class and workmanlike manner; (iii) in compliance
with all applicable permits, laws, statutes, ordinances, rules, regulations,
orders and rulings now or hereafter in effect and imposed by any governmental
agencies and authorities which assert jurisdiction; (iv) in such a manner so as
not to interfere with the occupancy of any other tenant of the Development, nor
impose any additional expense upon Landlord; and (v) at such times, in such
manner, and subject to such rules and regulations as Landlord may from time to
time reasonably designate.

        (e)    Ownership.    The Tenant Improvements and all Alterations will
become the property of Landlord and will remain upon and be surrendered with the
Premises at the end of the Term of this Lease; provided, however, Landlord may,
by written notice delivered to Tenant concurrently with Landlord's approval of
the final working drawings for any Alterations, identify those Alterations which
Landlord will require Tenant to remove at the expiration or earlier termination
of this Lease. Landlord may also require Tenant to remove Alterations which
Landlord did not have the opportunity to approve as provided in this
Paragraph 13. If Landlord requires Tenant to remove any Alterations, Tenant, at
its sole cost and expense, agrees to remove the identified Alterations on or
before the expiration or earlier termination of this Lease and repair any damage
to the Premises caused by such removal (or, at Landlord's option, Tenant agrees
to pay to Landlord all of Landlord's costs of such removal and repair).

        (f)    Plan Review.    Tenant agrees to pay Landlord, as additional
rent, the reasonable costs of professional services and costs for general
conditions of Landlord's third party consultants if utilized by Landlord (but
not Landlord's "in-house" personnel) for review of all plans, specifications and
working

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drawings for any Alterations, within thirty (30) days after Tenant's receipt of
invoices either from Landlord or such consultants.

        (g)    Personal Property.    All articles of personal property owned by
Tenant or installed by Tenant at its expense in the Premises (including Tenant's
business and trade fixtures, furniture, movable partitions and equipment [such
as telephones, copy machines, computer terminals, refrigerators and facsimile
machines]) will be and remain the property of Tenant, and must be removed by
Tenant from the Premises, at Tenant's sole cost and expense, on or before the
expiration or earlier termination of this Lease. Tenant agrees to repair any
damage caused by such removal at its cost on or before the expiration or earlier
termination of this Lease.

        (h)    Removal of Alterations.    If Tenant fails to remove by the
expiration or earlier termination of this Lease all of its personal property, or
any Alterations identified by Landlord for removal, Landlord may, at its option,
treat such failure as a hold-over pursuant to Subparagraph 11(b) above, and/or
Landlord may (without liability to Tenant for loss thereof) treat such personal
property and/or Alterations as abandoned and, at Tenant's sole cost and expense,
and in addition to Landlord's other rights and remedies under this Lease, at law
or in equity: (a) remove and store such items; and/or (b) upon ten (10) days'
prior notice to Tenant, sell, discard or otherwise dispose of all or any such
items at private or public sale for such price as Landlord may obtain or by
other commercially reasonable means. Tenant shall be liable for all costs of
disposition of Tenant's abandoned property and Landlord shall have no liability
to Tenant with respect to any such abandoned property. Landlord agrees to apply
the proceeds of any sale of any such property to any amounts due to Landlord
under this Lease from Tenant (including Landlord's attorneys' fees and other
costs incurred in the removal, storage and/or sale of such items), with any
remainder to be paid to Tenant.

14.    REPAIRS    

        (a)    Tenant's Obligations.    Subject to Landlord's obligations under
Subparagraph 14(c) below, Tenant agrees to keep in good order, condition and
repair the Premises and every part thereof, including, without limiting the
generality of the foregoing, all plumbing, heating, ventilation, air
conditioning (notwithstanding the foregoing, Landlord shall procure and
maintain, at tenant's sole cost and expense, a heating ventilation and air
conditioning system maintenance contract and Tenant shall pay direct to
Landlord's contractor the actual and reasonable costs incurred in connection
therewith as additional rent under this Lease), electrical, lighting facilities
and equipment within the Premises, fixtures, walls (interior only), ceilings,
floors, windows, doors, plate glass and skylights located within the Premises,
dock levelers, dock bumpers, truck doors, interior pest control, and signs
located on the Premises. Tenant agrees to cause any mechanics' liens or other
liens arising as a result of work performed by Tenant or at Tenant's direction
to be eliminated as provided in Paragraph 15 below.

        (b)    Tenant's Failure to Repair.    If Tenant refuses or neglects to
repair and maintain the Premises properly as required hereunder to the
reasonable satisfaction of Landlord, Landlord, at any time following thirty (30)
days from the date on which Landlord makes a written demand on Tenant to effect
such repair and maintenance, may enter upon the Premises and make such repairs
and/or maintenance, and upon completion thereof, Tenant agrees to pay to
Landlord as additional rent, Landlord's costs for making such repairs plus an
amount not to exceed ten percent (10%) of such costs for overhead, within thirty
(30) days of receipt from Landlord of a written itemized bill therefor. Any
amounts not reimbursed by Tenant within such thirty (30) day period will bear
interest at the Interest Rate until paid by Tenant.

        (c)    Landlord's Obligations.    At Landlord's sole cost, Landlord
shall maintain and repair the structural roof, foundation and the structural
soundness of the exterior walls of the Building in good condition, ordinary wear
and tear and damage by fire or casualty, excepted; provided, however, to the
extent repairs to such items are required as a result of the negligent or
intentionally willful acts or omissions of Tenant or its employees, agents,
contractors or subtenants, such repairs plus an

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administration fee of ten percent (10%) shall be made by Landlord at the sole
cost of Tenant. As part of Operating Expenses, Landlord shall be responsible for
the landscaping, parking lot and driveway sweeping and repaving, exterior
painting, and nonstructural roof. Except for the obligations of Landlord in this
Paragraph 14 above, under Paragraph 20 relating to damage or destruction of the
Premises, or under Paragraph 21 relating to eminent domain, it is intended by
the parties that Landlord have no obligation of any kind whatsoever, (i) to
repair or maintain the Premises or any portion thereof or any equipment therein,
all of which obligations are intended to be Tenant's obligations, or (ii) to pay
any other cost or expense whatsoever directly or indirectly relating to the
ownership, management, lease, operation or use of the Premises. Except as
expressly provided in this Lease, Tenant waives the right to make repairs at
Landlord's expense under any law, statute, ordinance, rule, regulation, order or
ruling.

        (d)    Self-Help.    Notwithstanding anything to the contrary contained
in Paragraph 14(a) of this Lease, and in addition to any other available
remedies, if Landlord fails to perform any obligation under this Lease which it
is obligated to perform within the time periods set forth in Paragraph 23 of
this Lease following receipt of written notice from Tenant, and if Landlord does
not in good faith dispute that it is supposed to be performing such obligation
but fails to diligently attempt to do so, then Tenant shall be permitted to
perform such obligations on Landlord's behalf in the Premises, provided Tenant
first delivers to Landlord an additional two (2) business days prior written
notice that Tenant will be performing such obligations, and provided Landlord
fails to commence to perform such obligations within such additional two (2)
business day period. If the obligations to be performed by Tenant will affect
the structure of the Building or the Building's life safety, electrical,
plumbing, HVAC or sprinkler systems, then Tenant shall use only those
contractors used by Landlord in the Building for work thereon, provided Landlord
notifies Tenant of the names of such contractors upon Tenant's request (unless
such contractors are unwilling or unable to perform such work, in which event
Tenant may utilize the services of any other qualified contractor approved by
Landlord, which approval shall not be unreasonably withheld, conditioned or
delayed). All other contractors shall be subject to Landlord's reasonable
approval, and Landlord agrees to approve or reject any contractor proposed to be
used by Tenant within eight (8) business hours (i.e., between 8:00 a.m. and 6:00
p.m., Monday through Friday) of receipt of Tenant's second notice, provided that
if a proposed contractor is licensed and bonded and all requisite permits have
been obtained for the desired work, then Landlord agrees not to withhold its
approval of the proposed contractor. Any work performed by or on behalf of
Tenant shall be performed in accordance with provisions of clauses (ii), (iii)
and (iv) of Paragraph 13(d) of this Lease. Landlord agrees to promptly reimburse
Tenant following the receipt of a written statement of all reasonable and actual
costs incurred by Tenant in performing such obligations on behalf of Landlord
("Costs"). If Landlord disputes Tenant's entitlement to some or all of the Costs
and fails or refuses to reimburse such Costs to Tenant within thirty (30) days
after Tenant's written demand therefor, then Tenant may deduct the Costs from
rent due under this Lease after and only to the extent Tenant has been
authorized to do so by the arbitrator pursuant to and in accordance with the
terms of Paragraph 43 of the Addendum hereof.

15.    LIENS.    Tenant agrees not to permit any mechanic's, materialmen's or
other liens to be filed against all or any part of the Premises or the
Development, nor against Tenant's leasehold interest in the Premises, by reason
of or in connection with any repairs, alterations, improvements or other work
contracted for or undertaken by Tenant or any other act or omission of Tenant or
Tenant's agents, employees, contractors, licensees or invitees. At Landlord's
request, Tenant agrees to provide Landlord with enforceable, conditional and
final lien releases (or other evidence reasonably requested by Landlord to
demonstrate protection from liens) from all persons furnishing labor and/or
materials at the Premises. Landlord will have the right at all reasonable times
to post on the Premises and record any notices of non-responsibility which it
deems necessary for protection from such liens. If any such liens are filed,
Tenant will, at its sole cost, promptly cause such liens to be released of
record or bonded so that it no longer affects title to the Premises or the
Development. If Tenant fails to cause any such liens to be so released or bonded
within thirty (30) days after receiving notice of the filing

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thereof, such failure will be deemed a material breach by Tenant under this
Lease without the benefit of any additional notice or cure period described in
Paragraph 22 below, and Landlord may, without waiving its rights and remedies
based on such breach, and without releasing Tenant from any of its obligations,
cause such liens to be released by any means it shall deem proper, including
payment in satisfaction of the claims giving rise to such liens. Tenant agrees
to pay to Landlord within thirty (30) days after receipt of invoice from
Landlord, any sum paid by Landlord to remove such liens, together with interest
at the Interest Rate from the date of such payment by Landlord.

16.    ENTRY BY LANDLORD.    Landlord and its employees and agents will at all
times (during normal business hours and after at least 48 hours prior written
notice to Tenant, except in the case of emergency, in which event no prior
notice to Tenant shall be required) have the right to enter the Premises to
inspect the same, to show the Premises to prospective purchasers or, during the
last 180 days of the Term, to tenants, to post notices of nonresponsibility,
and/or to repair the Premises as permitted or required by this Lease. In
exercising such entry rights, Landlord will endeavor to minimize, as reasonably
practicable, the interference with Tenant's business, and will provide Tenant
with reasonable advance notice of any such entry (except in emergency
situations). Landlord may, in order to carry out such purposes, erect
scaffolding and other necessary structures where reasonably required by the
character of the work to be performed. Landlord will at all times have and
retain a key with which to unlock all doors in the Premises, excluding Tenant's
vaults and safes. Landlord will have the right to use any and all means which
Landlord may reasonably deem proper to open said doors in an emergency in order
to obtain entry to the Premises. Any entry to the Premises obtained by Landlord
by any of said means, or otherwise, will not be construed or deemed to be a
forcible or unlawful entry into the Premises, or an eviction of Tenant from the
Premises.

17.    UTILITIES AND SERVICES.    Tenant agrees to contract directly for and to
pay for all water, gas, heat, light, power, telephone, waste/trash removal,
sewer and other utilities and services supplied to the Premises, together with
any taxes thereon. If any such services are not separately metered to Tenant,
Tenant agrees to pay a reasonable proportion to be determined by Landlord of all
charges jointly metered with other Premises. Landlord will not be liable to
Tenant for any failure to furnish any of the foregoing utilities and services if
such failure is caused by all or any of the following: (i) accident, breakage or
repairs; (ii) strikes, lockouts or other labor disturbance or labor dispute of
any character; (iii) governmental regulation, moratorium or other governmental
action or inaction; (iv) inability despite the exercise of reasonable diligence
to obtain electricity, water or fuel; or (v) any other cause beyond Landlord's
reasonable control. In addition, in the event of any stoppage or interruption of
services or utilities, Tenant shall not be entitled to any abatement or
reduction of rent (except as expressly provided in Subparagraphs 20(f) or 21(b)
if such failure results from a damage or taking described therein), no eviction
of Tenant will result from such failure and Tenant will not be relieved from the
performance of any covenant or agreement in this Lease because of such failure.
Notwithstanding anything in this Lease to the contrary, if, as a result of the
negligent acts or omissions of Landlord or its agents, contractors or employees,
for more than three (3) consecutive business days following written notice to
Landlord, there is no elevator service to the Premises, or no HVAC or
electricity to the Premises, or such an interruption of other essential
utilities and building services, such as fire protection or water, so that any
portion of the Premises cannot be and is not used by Tenant, in Tenant's
judgment reasonably exercised, then Tenant's rent shall thereafter be abated
until the Premises are again usable by Tenant in proportion to the extent to
which Tenant's use of the Premises is interfered with; provided, however, that
if Landlord is diligently pursuing the repair of such utilities or services and
Landlord provides substitute services reasonably suitable for Tenant's purposes,
as for example, bringing in portable air-conditioning equipment, then there
shall not be an abatement of rent. This paragraph shall not apply in case of
damage to, or destruction of, the Building, which shall be governed by a
separate provision of this Lease. Notwithstanding the foregoing, Tenant may not
abate rent if Landlord disputes Tenant's right to abate or the amount thereof
until and only to the extent the

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arbitrator provides that Tenant may do so in accordance with and pursuant to the
terms of Paragraph 43 hereof.

18.    ASSUMPTION OF RISK AND INDEMNIFICATION.    

        (a)    Assumption of Risk.    Tenant, as a material part of the
consideration to Landlord, hereby agrees that neither Landlord nor any Landlord
Indemnified Parties (as defined in Subparagraph 8(c) above) will be liable to
Tenant for, and Tenant expressly assumes the risk of and waives any and all
claims it may have against Landlord or any Landlord Indemnified Parties with
respect to, (i) any and all damage to property or injury to persons in, upon or
about the Premises (except that resulting from the negligent or willful act or
omission of Landlord or its employees, agents or contractors), (ii) any such
damage caused by other tenants or persons in or about the Premises, or caused by
quasi-public work, (iii) any loss of or damage to property by theft or
otherwise, or (iv) any injury or damage to persons or property resulting from
any casualty, explosion, falling plaster or other masonry or glass, steam, gas,
electricity, water or rain, which may leak from any part of the Building or from
the pipes, appliances or plumbing works therein or from the roof, street or
subsurface or from any other place, or resulting from dampness (except to the
extent resulting from the negligent or willful act or omission of Landlord or
its employees, agents or contractors). Notwithstanding anything to the contrary
contained in this Lease, neither Landlord nor any Landlord Indemnified Parties
will be liable for consequential damages arising out of any loss of the use of
the Premises or any equipment or facilities therein by Tenant or any Tenant
Parties.

        (b)    Indemnification.    Tenant will be liable for, and agrees, to the
maximum extent permissible under applicable law, to promptly indemnify, protect,
defend and hold harmless Landlord and Landlord Indemnified Parties, from and
against, any and all claims, damages, judgments, suits, causes of action,
losses, liabilities, penalties, fines, expenses and costs, including attorneys'
fees and court costs (collectively, "Indemnified Claims"), arising or resulting
from (i) any negligent act or omission of Tenant or any Tenant Parties (as
defined in Subparagraph 8(c) above); (ii) the use of the Premises and conduct of
Tenant's business by Tenant or any Tenant Parties, or any other activity, work
or thing done, knowingly permitted or suffered by Tenant or any Tenant Parties,
in or about the Premises; and/or (iii) any default by Tenant of any obligations
on Tenant's part to be performed under the terms of this Lease. In case any
action or proceeding is brought against Landlord or any Landlord Indemnified
Parties by reason of any such Indemnified Claims, Tenant, upon notice from
Landlord, agrees to promptly defend the same at Tenant's sole cost and expense
by counsel approved in writing by Landlord, which approval Landlord will not
unreasonably withhold.

        (c)    Survival; No Release of Insurers.    Tenant's indemnification
obligations under Subparagraph 18(b) will survive the expiration or earlier
termination of this Lease. Tenant's covenants, agreements and indemnification
obligation in Subparagraphs 18(a) and 18(b) above, are not intended to and will
not relieve any insurance carrier of its obligations under policies required to
be carried by Tenant pursuant to the provisions of this Lease.

        (d)    Indemnity by Landlord.    Notwithstanding anything to the
contrary contained in Paragraph 18 of, or elsewhere in, this Lease, Tenant shall
not be required to indemnify and hold Landlord harmless from any Indemnified
Claims resulting from the negligence or willful misconduct of Landlord or
Landlord's agents, employees or contractors (except for damage to Tenant's
personal property, fixtures, furniture and equipment in the Premises, to the
extent Tenant is required to obtain insurance coverage therefor pursuant to the
terms of this Lease), and, subject to the limitations contained in (i) the
second to the last sentence of Paragraph 18(a) of this Lease, and (ii) Paragraph
35 of this Lease, Landlord agrees to indemnify and hold Tenant harmless from and
against any and all such Indemnified Claims and all Indemnified Claims arising
or resulting from (i) any negligent act or omission of Landlord or its
employees, agents or contractors, and/or (ii) any default by Landlord of any of
its obligations under this Lease. Landlord's indemnification obligations under
this paragraph will survive the expiration or earlier

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termination of this Lease and are not intended to and will not relieve any
insurance carrier of its obligations under policies required to be carried by
Landlord and/or by Tenant pursuant to the provisions of this Lease.

19.    INSURANCE    

        (a)    Tenant's Insurance.    On or before the date Tenant is permitted
any access to the Premises pursuant to this Lease (which may be prior to the
Commencement Date), and continuing throughout the entire Term hereof and any
other period of occupancy, Tenant agrees to keep in full force and effect, at
its sole cost and expense, the following insurance:

        (i)    "All Risks" property insurance including at least the following
perils: fire and extended coverage, smoke damage, vandalism, malicious mischief,
and sprinkler leakage. This insurance policy must be upon all property owned by
Tenant, for which Tenant is legally liable, or which is installed at Tenant's
expense, and which is located in the Premises including, without limitation, any
Alterations and all furniture, fittings, installations, fixtures and any other
personal property of Tenant, in an amount not less than the full replacement
cost thereof.

        (ii)  One (1) year insurance coverage for business interruption and loss
of income and extra expense insuring the same perils described in
Subparagraph 19(a)(i) above, in such amounts as will reimburse Tenant for any
direct or indirect loss of earnings attributable to any such perils including
prevention of access to the Premises, Tenant's parking areas or the Building as
a result of any such perils.

        (iii)  Commercial General Liability Insurance (on an occurrence form)
insuring bodily injury, personal injury and property damage, including the
following divisions and extensions of coverage: Premises and Operations; Owners
and Contractors protective; blanket contractual liability (including coverage
for Tenant's indemnity obligations under this Lease); and products and completed
operations. Such insurance must have the following minimum limits of liability:
bodily injury, personal injury and property damage—$5,000,000 each occurrence,
provided that if liability coverage is provided by a Commercial General
Liability policy the general aggregate limit shall apply separately and in total
to this location only (per location general aggregate).

        (iv)  Comprehensive Automobile Liability insuring bodily injury and
property damage arising from all owned, non-owned and hired vehicles, if any,
with minimum limits of liability of $1,000,000 per accident.

        (v)  Worker's Compensation or similar insurance as required by the laws
of the State.

        (vi)  Any other form or forms of insurance as Tenant or Landlord or any
mortgagees of Landlord may reasonably require from time to time in form, in
amounts, and for insurance risks against which, a prudent tenant would protect
itself, but only to the extent coverage for such risks and amounts are available
in the insurance market at commercially acceptable rates. Landlord makes no
representation that the limits of liability required to be carried by Tenant
under the terms of this Lease are adequate to protect Tenant's interests and
Tenant should obtain such additional insurance or increased liability limits as
Tenant deems appropriate.

        (b)    Supplemental Tenant Insurance Requirements.    All policies must
be in a form reasonably satisfactory to Landlord and issued by an insurer
admitted to do business in the State. All policies must be issued by insurers
with a minimum policyholder rating of "A-" and a financial rating of "VII" in
the most recent version of Best's Key Rating Guide. All policies must contain a
requirement to notify Landlord (and Landlord's property manager and any
mortgagees or ground lessors of Landlord who are named as additional insureds,
if any) in writing not less than thirty (30) days prior to any material change,
reduction in coverage, cancellation or other termination thereof. Tenant agrees
to deliver to Landlord, as soon as practicable after placing the required
insurance, but in any event within the time

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frame specified in Subparagraph 19(a) above, certificate(s) of insurance
evidencing the existence of such insurance and Tenant's compliance with the
provisions of Paragraph 19. Tenant agrees to cause replacement certificates to
be delivered to Landlord not less than thirty (30) days prior to the expiration
of any such policy or policies. If any such initial or replacement certificates
are not furnished within the time(s) specified herein, Tenant will be deemed to
be in material default under this Lease without the benefit of any additional
notice or cure period provided in Subparagraph 22(a)(iii) below, and Landlord
will have the right, but not the obligation, to procure such insurance as
Landlord deems necessary to protect Landlord's interests at Tenant's expense. If
Landlord obtains any insurance that is the responsibility of Tenant under this
Paragraph 19, Landlord agrees to deliver to Tenant a written statement setting
forth the cost of any such insurance and showing in reasonable detail the manner
in which it has been computed and Tenant agrees to promptly reimburse Landlord
for such costs as additional rent. General Liability and Automobile Liability
policies under Subparagraphs 19(a)(iii) and (iv) must name Landlord and
Landlord's property manager (and at Landlord's request, Landlord's mortgagees
and ground lessors of which Tenant has been informed in writing) as additional
insureds and must also contain a provision that the insurance afforded by such
policy is primary insurance and any insurance carried by Landlord and Landlord's
property manager or Landlord's mortgagees or ground lessors, if any, will be
excess over and non-contributing with Tenant's insurance.

        (c)    Building Insurance.    Landlord shall obtain, as an Operating
Expense, a policy or policies of insurance covering loss or damage to the
Premises, in the amount of the full replacement value thereof, as the same may
exist from time to time, but in no event less than the total amount required by
lenders having liens on the Premises, against all perils included within the
classification of fire, extended coverage, vandalism, malicious mischief, and
special extended perils ("All Risk" as such term is used in the insurance
industry), including twelve (12) months rent loss insurance. Landlord may also
elect to insure the perils of flood and/or earthquake. Said insurance shall
provide for payment of loss to Landlord, or to the holders of mortgages or the
beneficiaries under deeds of trust on the Premises. If such insurance coverage
has a deductible clause, the deductible amount shall not exceed Ten Thousand
($10,000) per occurrence, and Tenant will be liable for such deductible and
Tenant agrees to reimburse Landlord for the entire cost of such premiums within
thirty (30) days after demand therefor by Landlord. If the Premises are part of
a group of buildings owned by Landlord which are adjacent to the Premises, then
Tenant shall pay for any increase in the property insurance of such other
buildings if said increase is caused by Tenant's acts, omissions, use or
occupancy of the Premises.

        (d)    Tenant's Use.    Tenant will not keep, use, sell or offer for
sale in or upon the Premises any article which may be prohibited by any
insurance policy periodically in force covering the Premises. If Tenant's
occupancy or business in, or on, the Premises, whether or not Landlord has
consented to the same, results in any increase in premiums for the insurance
periodically carried by Landlord with respect to the Building or results in the
need for Landlord to maintain special or additional insurance, Tenant agrees to
pay Landlord the cost of any such increase in premiums or special or additional
coverage as additional rent within thirty (30) days after being billed therefor
by Landlord. In determining whether increased premiums are a result of Tenant's
use of the Premises, a schedule issued by the organization computing the
insurance rate on the Building showing the various components of such rate, will
be conclusive evidence of the several items and charges which make up such rate.
Tenant agrees to promptly comply with all reasonable requirements of the
insurance authority or any present or future insurer relating to the Premises.

        (e)    Cancellation of Landlord's Policies.    If any of Landlord's
insurance policies are canceled or cancellation is threatened or the coverage
reduced or threatened to be reduced in any way because of the use of the
Premises or any part thereof by Tenant or any assignee or subtenant of Tenant or
by anyone Tenant permits on the Premises and, if Tenant fails to remedy the
condition giving rise to such cancellation, threatened cancellation, reduction
of coverage, threatened reduction of coverage, increase in premiums, or
threatened increase in premiums, within forty-eight (48) hours after notice
thereof,

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Tenant will be deemed to be in material default of this Lease and Landlord may,
at its option, either terminate this Lease or enter upon the Premises and
attempt to remedy such condition, and Tenant shall promptly pay Landlord the
reasonable costs of such remedy as additional rent. If Landlord is unable, or
elects not to remedy such condition, then Landlord will have all of the remedies
provided for in this Lease in the event of a default by Tenant.

        (f)    Waiver of Claims.    Notwithstanding any provision of this Lease
to the contrary, whenever (a) any loss, cost, damage or expense (collectively,
"damage") resulting from fire, explosion or any other casualty is incurred by
either Landlord or by Tenant or by anyone claiming by, through or under Landlord
or Tenant in connection with the Premises, its contents, or the Development, and
(b) such party is covered in whole or in part by insurance with respect to such
damage or is required under this Lease to be so insured, then the party so
insured (or so required) hereby waives (on its own behalf and on behalf of its
insurer) any claims against and releases the other party from any liability said
other party may have on account of such damage. The foregoing is not intended to
release Tenant from liability for damage in connection with any such casualty up
to the amount of the insurance deductible as described in Paragraph 19(c) above.

        (g)    Waiver of Worker's Compensation Immunity.    The indemnification
obligations contained in this Lease shall not be limited by any worker's
compensation, benefit or disability laws, and each indemnifying party hereby
waives any immunity that said indemnifying party may have under the Industrial
Insurance Act, Title 51 RCW and similar worker's compensation, benefit or
disability laws.

        (h)    Provisions Specifically Negotiated.    LANDLORD AND TENANT
ACKNOWLEDGE BY THEIR EXECUTION OF THIS LEASE THAT EACH OF THE INDEMNIFICATION
PROVISIONS OF THIS LEASE (SPECIFICALLY INCLUDING BUT NOT LIMITED TO THOSE
RELATING TO WORKER'S COMPENSATION BENEFITS AND LAWS) WERE SPECIFICALLY
NEGOTIATED AND AGREED TO BY LANDLORD AND TENANT.

20.    DAMAGE OR DESTRUCTION    

        (a)    Partial Destruction.    If the Premises are damaged by fire or
other casualty to an extent not exceeding thirty-five percent (35%) of the full
replacement cost thereof, and Landlord's contractor reasonably estimates in a
writing delivered to Landlord and Tenant that the damage thereto may be
repaired, reconstructed or restored to substantially its condition immediately
prior to such damage within one hundred twenty (120) days from the date of such
casualty, and Landlord will receive insurance proceeds sufficient to cover the
costs of such repairs, reconstruction and restoration (including proceeds from
Tenant and/or Tenant's insurance which Tenant is required to deliver to Landlord
pursuant to Subparagraph 20(e) below to cover Tenant's obligation for the costs
of repair, reconstruction and restoration of any portion of any Alterations for
which Tenant is responsible under this Lease), then Landlord agrees to commence
and proceed diligently with the work of repair, reconstruction and restoration
and this Lease will continue in full force and effect.

        (b)    Substantial Destruction.    Any damage or destruction to the
Premises or the Building which Landlord is not obligated to repair pursuant to
Subparagraph 20(a) above will be deemed a substantial destruction. In the event
of a substantial destruction, Landlord may elect to either: (i) repair,
reconstruct and restore the portion of the Premises damaged by such casualty, in
which case this Lease will continue in full force and effect, subject to
Tenant's termination right contained in Subparagraph 20(d) below; or
(ii) terminate this Lease effective as of the date which is thirty (30) days
after the Tenant's receipt of Landlord's election to so terminate.

        (c)    Notice.    Under any of the conditions of Subparagraph 20(a) and
(b) above, Landlord agrees to give written notice to Tenant of its intention to
repair or terminate, as permitted in such paragraphs, within the earlier of
forty-five (45) days after the occurrence of such casualty, or fifteen (15) days
after Landlord's receipt of the estimate from Landlord's contractor (the
applicable time period to be referred to herein as the "Notice Period").

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        (d)    Tenant's Termination Rights.    If Landlord elects to repair,
reconstruct and restore pursuant to Subparagraph 20(b)(i) hereinabove, and if
Landlord's contractor estimates that as a result of such damage, Tenant cannot
be given reasonable use of and access to the Premises within two hundred ten
(210) days after the date of such damage, then Tenant may terminate this Lease
effective upon delivery of written notice to Landlord within ten (10) days after
Landlord delivers notice to Tenant of its election to so repair, reconstruct or
restore.

        (e)    Tenant's Costs and Insurance Proceeds.    In the event of any
damage or destruction of all or any part of the Premises, Tenant agrees to
immediately (i) notify Landlord thereof, and (ii) deliver to Landlord all
property insurance proceeds received by Tenant with respect to any Alterations,
but excluding proceeds for Tenant's furniture, fixtures, equipment and other
personal property, whether or not this Lease is terminated as permitted in this
Paragraph 20, and Tenant hereby assigns to Landlord all rights to receive
insurance proceeds. If, for any reason (including Tenant's failure to obtain
insurance for the full replacement cost of any Alterations from any and all
casualties), Tenant fails to receive insurance proceeds covering the full
replacement cost of any Alterations which are damaged, Tenant will be deemed to
have self-insured the replacement cost of such items, and upon any damage or
destruction thereto, Tenant agrees to immediately pay to Landlord the full
replacement cost of such items, less any insurance proceeds actually received by
Landlord from Landlord's or Tenant's insurance with respect to such items.

        (f)    Abatement of Rent.    In the event of any damage, repair,
reconstruction and/or restoration described in this Paragraph 20, rent will be
abated or reduced, as the case may be, in proportion to the degree to which
Tenant's use of the Premises is impaired during such period of repair until such
use is restored. Except for abatement of rent as provided hereinabove, Tenant
will not be entitled to any compensation or damages for loss of, or interference
with, Tenant's business or use or access of all or any part of the Premises or
for lost profits or any other consequential damages of any kind or nature, which
result from any such damage, repair, reconstruction or restoration.

        (g)    Inability to Complete.    Notwithstanding anything to the
contrary contained in this Paragraph 20, if Landlord is obligated or elects to
repair, reconstruct and/or restore the damaged portion of the Building or the
Premises pursuant to Subparagraph 20(a) or 20(b)(i) above, but is delayed from
completing such repair, reconstruction and/or restoration beyond the date which
is sixty (60) days after the date estimated by Landlord's contractor for
completion thereof by reason of any causes (other than delays caused by Tenant,
its subtenants, employees, agents or contractors or delays which are beyond the
reasonable control of Landlord as described in Paragraph 33), then either
Landlord or Tenant may elect to terminate this Lease upon ten (10) day's prior
written notice given to the other after the expiration of such sixty (60) day
period.

        (h)    Damage Near End of Term.    Landlord and Tenant shall each have
the right to terminate this Lease if any material damage to the Building occurs
during the last twelve (12) months of the Term of this Lease where Landlord's
contractor estimates in a writing delivered to Landlord and Tenant that the
repair, reconstruction or restoration of such damage cannot be completed within
sixty (60) days after the date of such casualty. If either party desires to
terminate this Lease under this Subparagraph (h), it shall provide written
notice to the other party of such election within ten (10) days after receipt of
Landlord's contractor's repair estimates.

        (i)    Waiver of Termination Right.    Landlord and Tenant agree that
the foregoing provisions of this Paragraph 20 are to govern their respective
rights and obligations in the event of any damage or destruction and supersede
and are in lieu of the provisions of any applicable law, statute, ordinance,
rule, regulation, order or ruling now or hereafter in force which provide
remedies for damage or destruction of leased premises.

        (j)    Termination.    Upon any termination of this Lease under any of
the provisions of this Paragraph 20, the parties will be released without
further obligation to the other from the date

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possession of the Premises is surrendered to Landlord except for items which
have accrued and are unpaid as of the date of termination and matters which are
to survive any termination of this Lease as provided in this Lease.

21.    EMINENT DOMAIN    

        (a)    Substantial Taking.    If the whole of the Premises or a material
portion thereof or of the parking areas for the Premises is taken for any public
or quasi-public purpose by any lawful power or authority by exercise of the
right of appropriation, condemnation or eminent domain, or sold to prevent such
taking, either party will have the right to terminate this Lease effective as of
the date possession is required to be surrendered to such authority. For
purposes of the preceding sentence, a "material" portion of the Premises or of
the parking areas for the Premises is deemed to be any portion without which
Tenant can no longer viably operate its business in the Premises.

        (b)    Partial Taking; Abatement of Rent.    In the event of a taking of
a portion of the Remedies which does not constitute a material taking under
Subparagraph 21(a) above, then, neither party will have the right to terminate
this Lease and Landlord will thereafter proceed to make a functional unit of the
remaining portion of the Premises (but only to the extent Landlord receives
proceeds therefor from the condemning authority), and rent will be abated in
proportion to percentage of parking or the floor area of the Premises which
Tenant is deprived of on account of such taking: provided, however, there will
be no abatement of rent if the only area taken is that which does not have a
building or parking area used by Tenant located thereon.

        (c)    Condemnation Award.    In connection with any taking of all or
any portion of the Premises, Landlord will entitled to receive the entire amount
of any award which may be made or given in such taking or condemnation, without
deduction or apportionment for any estate or interest of Tenant, it being
expressly understood and agreed by Tenant that no portion of any such award will
be allowed or paid to Tenant for any so-called bonus or excess value of this
Lease, and such bonus or excess value will be the sole property of Landlord.
Tenant agrees not to assert any claim against Landlord or the taking authority
for any compensation because of such taking (including any claim for bonus or
excess value of this Lease); provided, however, if any portion of the Premises
is taken, Tenant will have the right to recover from the condemning authority
(but not from Landlord) any compensation as may be separately awarded or
recoverable by Tenant for the taking of Tenant's furniture, fixtures, equipment
and other personal property within the Premises, for Tenant's relocation
expenses, and for any other damage to Tenant's business by reason of such
taking.

        (d)    Temporary Taking.    In the event of taking of the Premises or
any part thereof for temporary use, (i) this Lease will remain unaffected
thereby and rent will equitably abate for the duration of the taking, and (ii)
Landlord will be entitled to receive such portion or portions of any award made
for such use with respect to the period of the taking, provided that if such
taking remains in force at the expiration or earlier termination of this Lease,
Tenant will then pay to Landlord a sum equal to the reasonable cost of
performing Tenant's obligations under Paragraph 11 with respect to surrender of
the Premises and upon such payment Tenant will be excused from such obligations.
For purpose of this Subparagraph 21(d), a temporary taking shall be defined as a
taking for a period of ninety (90) days or less.

22.    DEFAULTS AND REMEDIES    

        (a)    Defaults.    The occurrence of any one or more of the following
events will be deemed a default by Tenant:

        (i)    The abandonment of the Premises by Tenant.

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        (ii)  The failure by Tenant to make any payment of rent or additional
rent or any other payment required to be made by Tenant hereunder as and when
due where such failure continues for a period of ten (10) days after written
notice thereof from Landlord to Tenant.

        (iii)  The failure by Tenant to observe or perform any of the express
covenants or provisions of this Lease to be observed or performed by Tenant,
other than as specified in Subparagraph 22(a)(i) or (ii) above, where such
failure continues for a period of thirty (30) days (or such shorter or longer
period of time as may otherwise be specified in this Lease as to any particular
provision hereof) after written notice thereof from Landlord to Tenant. If the
nature of Tenant's default is such that more than thirty (30) days are
reasonably required for its cure, then Tenant will not be deemed to be in
default if Tenant commences such cure within such thirty (30) day period and
thereafter diligently prosecutes such cure to completion.

        (iv)  (A) The making by Tenant of any general assignment for the benefit
of creditors; (B) the filing by or against Tenant of a petition to have Tenant
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless, in the case of a petition filed against
Tenant, the same is dismissed within sixty (60) days); (C) the appointment of a
trustee or receiver to take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease, where possession
is not restored to Tenant within thirty (30) days; or (D) the attachment,
execution or other judicial seizure of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease where such seizure
is not discharged within thirty (30) days.

        (v)  any event of default by Tenant under the Existing Lease.

        (b)    Landlord's Remedies; Termination.    In the event of any default
by Tenant, in addition to any other remedies available to Landlord at law or in
equity under applicable law, Landlord will have the immediate right and option
to terminate this Lease and all rights of Tenant hereunder. If Landlord elect to
terminate this Lease then, to the extent permitted under applicable law,
Landlord may recover from Tenant: (i) the worth at the time of award of any
unpaid rent which had been earned at the time of such termination; plus (ii) 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 proves could have been reasonably avoided; plus (iii)
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 proves could be reasonably avoided; plus (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under this Lease or which, in the
ordinary course of things, results therefrom including, but not limited to:
attorneys' fees and costs; brokers' commissions; the costs of refurbishment,
alterations, renovation and repair of the Premises, and removal (including the
repair of any damage caused by such removal) and storage (or disposal) of
Tenant's personal property, equipment, fixtures, Alterations and any other items
which Tenant is required under this Lease to remove but does not remove, as well
as the unamortized value of any free or reduced rent or any tenant improvement
allowance or other costs or economic concessions provided, paid, granted or
incurred by Landlord pursuant to this Lease. The unamortized value of such
concessions shall be determined by taking the total value of such concessions
and multiplying such value by a fraction, the numerator of which is the number
of months of the Lease Term not yet elapsed as of the date on which this Lease
is terminated, and the denominator of which is the total number of months of the
Lease Term.

        As used in Subparagraph 22(b)(i) and (ii) above, the "worth at the time
of award" is computed by allowing interest at the Interest Rate. As used in
Subparagraph 22(b)(iii) above, the "worth at the time of award" is computed by
discounting such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%).

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        (c)    Landlord's Remedies; Re-Entry Rights.    In the event of any
default by Tenant, in addition to any other remedies available to Landlord under
this Lease, at law or in equity, Landlord will also have the right, with or
without terminating this Lease, to re-enter the Premises and remove all persons
and property from the Premises; such property may be removed and stored in a
public warehouse or elsewhere and/or disposed of at the sole cost and expense of
and for the account of Tenant in accordance with the provisions of Subparagraph
13(h) of this Lease or any other procedures permitted by applicable law. No
re-entry or taking possession of the Premises by Landlord pursuant to this
Subparagraph 22(c) will be construed as an election to terminate this Lease
unless a written notice of such intention is given to Tenant or unless the
termination thereof is decreed by a court of competent jurisdiction.

        (d)    Landlord's Remedies; Re-Letting.    In the event of the vacation
or abandonment of the Premises by Tenant or in the event that Landlord elects to
re-enter the Premises or takes possession of the Premises pursuant to legal
proceeding or pursuant to any notice provided by law, then if Landlord does not
elect to terminate this Lease, Landlord may from time to time, without
terminating this Lease, either recover all rent as it becomes due or relet the
Premises or any part thereof on terms and conditions as Landlord in its
reasonable discretion may deem advisable with the right to make alterations and
repairs to the Premises in connection with such reletting. If Landlord elects to
relet the Premises, then rents received by Landlord from such reletting will be
applied: first, to the payment of any indebtedness other than rent due hereunder
from Tenant to Landlord; second, to the payment of any cost of such reletting;
third, to the payment of the cost of any alterations and repairs to the Premises
incurred in connection with such reletting; fourth, to the payment of rent due
and unpaid hereunder and the residue, if any, will be held by Landlord and
applied to payment of future rent as the same may become due and payable
hereunder. Should that portion of such rents received from such reletting during
any month, which is applied to the payment of rent hereunder, be less than the
rent payable during that month by Tenant hereunder, then Tenant agrees to pay
such deficiency to Landlord immediately upon demand therefor by Landlord. Such
deficiency will be calculated and paid monthly.

        (e)    Landlord's Remedies; Performance for Tenant.    All covenants and
agreements to be performed by Tenant under any of the terms of this Lease are to
be performed by Tenant at Tenant's sole cost and expense and without any
abatement of rent. If Tenant fails to pay any sum of money owed to any party
other than Landlord, for which it is liable under this Lease, or if Tenant fails
to perform any other act on its part to be performed hereunder, and such failure
continues for thirty (30) days after written notice thereof by Landlord,
Landlord may, without waiving or releasing Tenant from its obligations, but
shall not be obligated to, make any such payment or perform any such other act
to be made or performed by Tenant. Tenant agrees to reimburse Landlord upon
demand for all sums so paid by Landlord and all necessary incidental costs,
together with interest thereon at the Interest Rate, from the date of such
payment by Landlord until reimbursed by Tenant. This remedy shall be in addition
to any other right or remedy of Landlord set forth in this Paragraph 22.

        (f)    Late Payment.    If Tenant fails to pay any installments of rent
within five (5) days of when due or if Tenant fails to make any other payment
for which Tenant is obligated under this Lease within five (5) days of when due,
such late amount will accrue interest at the Interest Rate and Tenant agrees to
pay Landlord as additional rent such interest on such amount from the date such
amount becomes due until such amount is paid. In addition, Tenant agrees to pay
to Landlord concurrently with such late payment amount, as additional rent, a
late charge equal to five percent (5%) of the amount due to compensate Landlord
for the extra costs Landlord will incur as a result of such late payment. The
parties agree that (i) it would be impractical and extremely difficult to fix
the actual damage Landlord will suffer in the event of Tenant's late payment,
(ii) such interest and late charge represents a fair and reasonable estimate of
the detriment that Landlord will suffer by reason of late payment by Tenant, and
(iii) the payment of interest and late charges are distinct and separate in that
the payment of

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interest is to compensate Landlord for the use of Landlord's money by Tenant,
while the payment of late charges is to compensate Landlord for Landlord's
processing, administrative and other costs incurred by Landlord as a result of
Tenant's delinquent payments. Acceptance of any such interest and late charge
will not constitute a waiver of the Tenant's default with respect to the overdue
amount, or prevent Landlord from exercising any of the other rights and remedies
available to Landlord. If Tenant incurs a late charge more than three (3) times
in any period of twelve (12) months during the Lease Term, then, notwithstanding
that Tenant cures the late payments for which such late charges are imposed,
Landlord will have the right to require Tenant thereafter to pay all
installments of Monthly Base Rent quarterly in advance throughout the remainder
of the Lease Term. Notwithstanding anything to the contrary in this subparagraph
(f), with respect to the first delinquent installment of Monthly Base Rent in
each calendar year, no interest shall accrue and no late charge shall be payable
provided that Tenant pays to Landlord such delinquent installment of Monthly
Base Rent within five (5) days after Landlord's delivery of written notice that
such installment is past due.

        (g)    Rights and Remedies Cumulative.    All rights, options and
remedies of Landlord contained in this Lease will be construed and held to be
cumulative, and no one of them will be exclusive of the other, and Landlord
shall have the right to pursue any one or all of such remedies or any other
remedy or relief which may be provided by law or in equity, whether or not
stated in this Lease. Nothing in this Paragraph 22 will be deemed to limit or
otherwise affect Tenant's indemnification of Landlord pursuant to any provision
of this Lease.

23.    LANDLORD'S DEFAULT.    Landlord will not be in default in the performance
of any obligation required to be performed by Landlord under this Lease unless
Landlord fails to perform such obligation within thirty (30) days after the
receipt of written notice from Tenant specifying in detail Landlord's failure to
perform; provided however, that if the nature of Landlord's obligation is such
that more than thirty (30) days are required for performance, then Landlord will
not be deemed in default if it commences such performance within such thirty
(30) day period and thereafter diligently pursues the same to completion. Upon
any default by Landlord, Tenant may exercise any of its rights provided at law
or in equity, subject to the limitations on liability set forth in Paragraph 35
of this Lease.

24.    ASSIGNMENT AND SUBLETTING.    

        (a)    Restriction on Transfer.    Except as expressly provided in this
Paragraph 24, Tenant will not, either voluntarily or by operation of law, assign
or encumber this Lease or any interest herein or sublet the Premises or any part
thereof, or permit the use or occupancy of the Premises by any other party other
than Tenant (any such assignment, encumbrance, sublease or the like will
sometimes be referred to as a "Transfer"), without the prior written consent of
Landlord, which consent Landlord will not unreasonably withhold. Notwithstanding
the foregoing, under no circumstances may Tenant sublease (whether in one or
more transactions) more than fifty percent (50%) of the Premises in the
aggregate.

        (b)    Corporate and Partnership Transfers.    For purposes of this
Paragraph 24, if Tenant is a corporation, partnership or other entity, any
transfer, assignment, encumbrance or hypothecation of fifty percent (50%) or
more (individually or in the aggregate) of any stock or other ownership interest
in such entity, and/or any transfer, assignment, hypothecation or encumbrance of
any controlling ownership or voting interest in such entity, will be deemed a
Transfer and will be subject to all of the restrictions and provisions contained
in this Paragraph 24. Notwithstanding the foregoing, the immediately preceding
sentence will not apply to any transfers of stock of Tenant if Tenant is a
publicly-held corporation and such stock is transferred publicly over a
recognized security exchange or over-the-counter market.

        (c)    Permitted Controlled Transfers.    Notwithstanding the provisions
of this Paragraph 24 to the contrary, Tenant may assign this Lease or sublet the
Premises or any portion thereof ("Permitted Transfer"), without Landlord's
consent, to any parent, subsidiary or affiliate entity which controls, is
controlled by or is under common control with Tenant, or to any entity resulting
from a merger or

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consolidation with Tenant, or to any person or entity which acquires
substantially all the assets of Tenant's business as a going concern, provided
that: (i) at least ten (10) days prior to such assignment or sublease, Tenant
delivers to Landlord the financial statements and other financial and background
information of the assignee or sublessee described in Subparagraph 24(d) below;
(ii) if an assignment, the assignee assumes, in full, the obligations of Tenant
under this Lease (or if a sublease, the sublessee of a portion of the Premises
or Term assumes, in full, the obligations of Tenant with respect to such
portion); (iii) the financial net worth of the assignee or sublessee immediately
after the effective date of the proposed assignment or sublease is sufficient to
fulfill the obligations imposed by the Transfer and this Lease; (iv) Tenant
remains fully liable under this Lease; and (v) the use of the Premises under
Paragraph 8 remains unchanged.

        (d)    Transfer Notice.    If Tenant desires to effect a Transfer, then
at least fifteen (15) days prior to the date when Tenant desires the Transfer to
be effective (the "Transfer Date"), Tenant agrees to give Landlord a notice (the
"Transfer Notice"), stating the name, address and business of the proposed
assignee, sublessee or other transferee (sometimes referred to hereinafter as
"Transferee"), reasonable information (including references) concerning the
character, ownership, and financial condition of the proposed Transferee, the
Transfer Date, any ownership or commercial relationship between Tenant and the
proposed Transferee, and the consideration and all other material terms and
conditions of the proposed Transfer, all in such detail as Landlord may
reasonably require. If Landlord reasonably requests additional detail, the
Transfer Notice will not be deemed to have been received until Landlord receives
such additional detail, and Landlord may withhold consent to any Transfer until
such information is provided to it.

        (e)    Landlord's Options.    Within ten (10) days of Landlord's receipt
of any Transfer Notice, and any additional information requested by Landlord
concerning the proposed Transferee's financial responsibility, Landlord will
elect to do one of the following: (i) consent to the proposed Transfer; (ii)
refuse such consent, which refusal shall be on reasonable grounds including,
without limitation, those set forth in Subparagraph 24(f) below; or (iii)
terminate this Lease and recapture the Premises for reletting by Landlord.

        (f)    Reasonable Disapproval.    Landlord and Tenant hereby acknowledge
that Landlord's disapproval of any proposed Transfer pursuant to Subparagraph
24(e) will be deemed reasonably withheld if based upon any reasonable factor,
including, without limitation, any or all of the following factors: (i) the
proposed Transferee is a governmental entity; (ii) the portion of the Premises
to be sublet or assigned is irregular in shape with inadequate means of ingress
and egress; (iii) the use of the Premises by the Transferee (A) is not permitted
by the use provisions in Paragraph 8 hereof, or (B) poses a risk of increased
liability to Landlord; (iv) the Transferee does not have the financial
capability to fulfill the obligations imposed by the Transfer and this Lease, or
(v) the Transferee poses a business or other economic risk which Landlord deems
unacceptable.

        (g)    Additional Conditions.    A condition to Landlord's consent to
any Transfer of this Lease will be the delivery to Landlord of a true copy of
the fully executed instrument of assignment, sublease, transfer or
hypothecation, and , in the case of an assignment, the delivery to Landlord of
an agreement executed by the Transferee in form and substance reasonably
satisfactory to Landlord, whereby the Transferee assumes and agrees to by bound
by all of the terms and provisions of this Lease and to perform all of the
obligations of Tenant hereunder. As a condition to Landlord's consent to any
sublease, such sublease must provide that in the event of termination of this
Lease for any reason, including without limitation a voluntary surrender by
Tenant, or in the event of any reentry or repossession of the Premises by
Landlord, Landlord may, at its option, either (i) terminate the sublease, or
(ii) take over all of the right, title and interest of Tenant, as sublessor,
under such sublease, in which case such sublessee will attorn to Landlord, but
that nevertheless Landlord will not (1) be liable for any previous act or
omission of Tenant under such sublease, (2) be subject to any defense or offset
previously accrued in favor of the sublessee against Tenant, or (3) be bound by
any previous

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modification of any sublease made without Landlord's written consent, or by any
previous prepayment by sublessee of more than one month's rent.

        (h)    Excess Rent.    If Landlord consents to any assignment of this
Lease, Tenant agrees to pay to Landlord, as additional rent, fifty percent (50%)
of all sums and other consideration payable to and for the benefit of Tenant by
the assignee on account of the assignment, as and when such sums and other
consideration are due and payable by the assignee to or for the benefit of
Tenant (or, if Landlord so requires, and without any release of Tenant's
liability for the same, Tenant agrees to instruct the assignee to pay such sums
and other consideration directly to Landlord). If for any sublease, Tenant
receives rent or other consideration, either initially or over the term of the
sublease, in excess of the rent fairly allocable to the portion of the Premises
which is subleased based on square footage, Tenant agrees to pay to Landlord as
additional rent fifty percent (50%) of the excess of each such payment of rent
or other consideration received by Tenant promptly after its receipt. In
calculating excess rent or other consideration which may be payable to Landlord
under this paragraph, Tenant will be entitled to deduct commercially reasonable
third party brokerage commissions and attorneys' fees and other amounts
reasonably and actually expended by Tenant in connection with such assignment or
subletting if acceptable written evidence of such expenditures is provided to
Landlord. Tenant acknowledges and agrees that this Subparagraph 24(h) is not
applicable to any Early Sublease Rents (defined in Subparagraph 24(i) below)
collected by Tenant prior to the Rent Commencement Date under this Lease.

        (i)    Termination Rights.    If Tenant requests Landlord's consent to
any assignment of this Lease, Landlord will have the right, as provided in
Subparagraph 24(e), to terminate this Lease effective as of the date Tenant
proposes to assign. Landlord will exercise such termination right, if at all, by
giving written notice to Tenant within ten (10) days of receipt by Landlord of
the financial responsibility information required by this Paragraph 24. Tenant
understands and acknowledges that the option, as provided in this Paragraph 24,
to terminate this Lease rather than approve the assignment, is a material
inducement for Landlord's agreeing to lease the Premises to Tenant upon the
terms and conditions herein set forth.

        (j)    No Release.    No Transfer will release Tenant of Tenant's
obligations under this Lease or alter the primary liability of Tenant to pay the
rent and to perform all other obligations to be performed by Tenant hereunder.
Landlord may require that, while Tenant is in default under this Lease, any
Transferee remit directly to Landlord on a monthly basis, all monies due Tenant
by said Transferee. However, the acceptance of rent by Landlord from any other
person will not be deemed to be a waiver by Landlord of any provision hereof.
Consent by Landlord to one Transfer will not be deemed consent to any subsequent
Transfer. In the event of default by any Transferee of Tenant or any successor
of Tenant in the performance of any of the terms hereof, Landlord may proceed
directly against Tenant without the necessity of exhausting remedies against
such Transferee or successor. Landlord may consent to subsequent assignments of
this Lease or sublettings or amendments or modifications to this Lease with
assignees of Tenant, without notifying Tenant, or any successor of Tenant, and
without obtaining its or their consent thereto and any such actions will not
relieve Tenant of liability under this Lease.

        (k)    Administrative and Attorneys' Fees.    If Tenant effects a
Transfer or requests the consent of Landlord to any Transfer (whether or not
such Transfer is consummated), with the exception of any Early Sublease (defined
in subparagraph (1) below), then, upon demand, Tenant agrees to pay Landlord a
non-refundable administrative fee of Two Hundred Fifty Dollars ($250.00), plus
any reasonable attorneys' and paralegal fees (not to exceed $1,000 for each such
Transfer) incurred by Landlord in connection with such Transfer or request for
consent (whether attributable to Landlord's in-house attorneys or paralegals or
otherwise.) Acceptance of the Two Hundred Fifty Dollar ($250.00) administrative
fee and/or reimbursement of Landlord's attorneys' and paralegal fees will in no
event obligate Landlord to consent to any proposed Transfer.

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        (l)    Subleases Entered into Prior to Estimated Commencement
Date.    Notwithstanding anything to the contrary contained within this
Paragraph 24, Landlord and Tenant agree that Tenant may sublease up to fifty
percent (50%) of the Premises whereby a subtenant may be allowed to commence
business operations in a portion of the Premises prior to the Estimate Rent
Commencement Date (i.e., October 1, 2001) so long as Tenant receives Landlord's
prior written consent as required under the terms of this Paragraph 24 and
Tenant pays to Landlord the "Early Sublease Rents" (defined herein) in
accordance with this Subparagraph (1) (any such sublease shall be referred to
herein as an "Early Sublease"). Tenant shall pay to Landlord as additional rent
under the terms of this Lease fifty percent (50%) of all effective rent accruing
prior to the Rent Commencement Date under this Lease (the "Early Sublease
Rents") as and when such rent would be due as contemplated in this paragraph
below. Landlord and Tenant acknowledge and agree that the Early Sublease Rents
due Landlord under this Subparagraph 24(1) shall be calculated in accordance
with the following: (i) fifty percent (50%) of all rent and other consideration
attributable to the period of time prior to the Rent Commencement Date under
this Lease minus (ii) fifty percent (50%) of any brokerage commissions paid by
Tenant with respect to said subleases attributable to the same period of time.
For example, if Tenant enters into a five (5) year sublease commencing August 1,
2001 at a rental rate equal to $5,000.00 per month, with a four percent (4%)
brokerage commission, and the Rent Commencement Date under this Lease is
October 1, 2001, Landlord shall be entitled to fifty percent of $10,000.00
(sublease rent for the months of August and September, 2001) minus fifty percent
(50%) of the total brokerage commission (i.e., 4% of $300,000.00 = $12,000.00)
applicable to the months of August and September, 2001 (i.e., $12,000.00/60 =
$200 per month), for a total of $4,800.000. Notwithstanding the foregoing, if
Tenant enters into any Early Sublease whereby Tenant grants free rent or any
similar rental concession or early occupancy to any subtenant during any period
of time prior to the Rent Commencement Date under this Lease, the Early Sublease
Rents shall be calculated on an effective basis using the monthly average of all
rent and other consideration to be payable from such subtenant during the entire
period of occupancy under the Early Sublease rather than just that rent and
other consideration payable prior to the Rent Commencement Date under this Lease
in accordance with clause (i) above; provided, however, normal rent escalations
not in excess of four percent (4%) per annum shall not alone trigger the
determination of Early Sublease Rents on an effective basis under this sentence.
Tenant further acknowledges that, for all purposes of this Lease, the
Commencement Date shall be deemed to be that date any subtenant occupies any
portion of the Premises (as applicable, the "Subleased Premises"), provided that
Tenant shall not be liable for any payments under this Lease (with the exception
of Monthly Base Rent [under Paragraph 5(a) of this Lease] and Tenant's
Percentage of Operating Expenses [under Paragraph 6(a) of this Lease] and
associated charges such as interest and/or late charges, if applicable) (unless
Tenant occupies any portion of the Premises) until the Rent Commencement Date
under this Lease.

25.    SUBORDINATION.    Without the necessity of any additional document being
executed by Tenant for the purpose of effecting a subordination, and at the
election of Landlord or any mortgagee of beneficiary with a deed of trust
encumbering the Premises, or any lessor of a ground or underlying lease with
respect to the Premises, this Lease will be subject and subordinate at all times
to: (i) all ground leases or underlying leases which may not exist or hereafter
be executed affecting the Premises; and (ii) the lien of any mortgage or deed of
trust which may now exist or hereafter be executed for which the Premises, or
Landlord's interest and estate in any of said items, is specified as security;
provided that Tenant receives a commercially reasonable non-disturbance
agreement from the respective lessor, mortgagee or beneficiary. Notwithstanding
the foregoing, Landlord reserves the right to subordinate any such ground lease
or underlying leases or any such liens to this Lease. If any such ground lease
or underlying lease terminates for any reason or any such mortgage or deed of
trust is foreclosed or a conveyance in lieu of foreclosure is made for any
reason, at the election of Landlord's successor in interest, Tenant agrees to
attorn to and become the tenant of such successor in which event Tenant's right
to possession of the Premises will not be disturbed as long as Tenant is not in

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default under this Lease. Tenant hereby waives its rights under any law which
gives or purports to give Tenant any right to terminate or otherwise adversely
affect this Lease and the obligations of Tenant hereunder in the event of any
such foreclosure proceeding or sale. Tenant covenants and agrees to execute and
deliver, upon demand by Landlord and in the form reasonably required by
Landlord, any additional documents evidencing the priority or subordination of
this Lease and Tenant's attornment agreement with respect to any such ground
lease or underlying leases or the lien of any such mortgage or deed of trust. If
Tenant fails to sign and return any such documents within ten (10) days of
receipt, Tenant will be in default hereunder.

26.    ESTOPPEL CERTIFICATE.    Within fifteen (15) days following any written
request which Landlord may make from time to time, Tenant agrees to execute and
deliver to Landlord a statement, in a form substantially similar to the form of
Exhibit "F" attached hereto or as may reasonably be required by Landlord's
lender, certifying: (i) the date of commencement of this Lease; (ii) the fact
that this Lease is unmodified and in full force and effect (or, if there have
been modifications, that this Lease is in full force and effect, and stating the
date and nature of such modifications); (iii) the date to which the rent and
other sums payable under this Lease have been paid; (iv) that, to the best of
Tenant's knowledge, there are no current defaults under this Lease by either
Landlord or Tenant except as specified in Tenant's statement; and (v) such other
matters reasonably requested by Landlord. Landlord and Tenant intend that any
statement delivered pursuant to this Paragraph 26 may be relied upon by any
mortgagee, beneficiary, purchaser or prospective purchaser of the Premises or
any interest therein. Tenant's failure to deliver such statement within such
time will be conclusive upon Tenant (i) that this Lease is in full force and
effect, without modification except as may be represented by Landlord, (ii) that
there are no uncured defaults in Landlord's performance, and (iii) that not more
than one (1) month's rent has been paid in advance. Without limiting the
foregoing, if Tenant fails to deliver any such statement within such fifteen
(15) day period, Landlord may deliver to Tenant an additional request for such
statement and Tenant's failure to delivery such statement to Landlord within
five (5) days after delivery of such additional request will constitute a
default under this Lease.

27.    EASEMENTS.    Landlord reserves to itself the right, from time to time,
to grant such easements, rights and dedications that Landlord deems necessary or
desirable, and to cause the recordation of parcel maps and restrictions, so long
as such easements, rights, dedications, maps and restrictions do not
unreasonably or materially interfere with the use of the Premises by Tenant.
Tenant shall sign any of the aforementioned documents upon request of Landlord
and failure to do so shall constitute a material breach of this Lease.

28.    RULES AND REGULATIONS.    Tenant agrees to faithfully observe and comply
with the "Rules and Regulations," a copy of which is attached hereto and
incorporated herein by this reference as Exhibit "G", and all reasonable and
nondiscriminatory modifications thereof and additions thereto from time to time
put into effect by Landlord.

29.    MODIFICATION AND CURE RIGHTS OF LANDLORD'S MORTGAGEES AND LESSORS.    If,
in connection with Landlord's obtaining or entering into any financing or ground
lease affecting the Premises, the lender or ground lessor requests modifications
to this Lease, Tenant, within twenty (20) days after request therefor, agrees to
execute an amendment to this Lease incorporating such modifications, provided
such modifications are acceptable to Tenant in the exercise of its reasonable
discretion. In no event will Tenant be required to modify the Lease to increase
the obligations of Tenant under this Lease or adversely affect the leasehold
estate created by this Lease. In the event of any such default on the part of
Landlord, Tenant will give notice by registered or certified mail to any
beneficiary of a deed of trust or mortgage covering the Premises or ground
lessor of Landlord whose address has been furnished to Tenant, and Tenant agrees
to offer such beneficiary, mortgagee or ground lessor the same opportunity to
cure the default as is provided to Landlord under this Lease.

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30.    DEFINITION OF LANDLORD.    The term "Landlord," as used in this Lease, so
far as covenants or obligations on the part of Landlord are concerned, means and
includes only the owner or owners, at the time in question, of the fee title of
the Premises or the lessees under any ground lease, if any. In the event of any
transfer, assignment or other conveyance or transfers of any such title (other
than a transfer for security purposes only), Landlord herein named (and in case
of any subsequent transfers or conveyances, the then grantor) will be
automatically relieved from and after the date of such transfer, assignment or
conveyance of all liability as respects the performance of any covenants or
obligations on the part of Landlord contained in this Lease thereafter to be
performed, so long as the transferee assumes in writing all such covenants and
obligations of Landlord arising after the date of such transfer. Landlord and
Landlord's transferees and assignees have the absolute right to transfer all or
any portion of their respective title and interest in the Premises, the
Building, the Development and/or this Lease without the consent of Tenant, and
such transfer or subsequent transfer will not be deemed a violation on
Landlord's part of any of the terms and conditions of this Lease.

31.    WAIVER.    The waiver by either party of any breach of any term, covenant
or condition herein contained will not be deemed to be a waiver of any
subsequent breach of the same or any other term, covenant or condition herein
contained, nor will any custom or practice which may develop between the parties
in the administration of the terms hereof be deemed a waiver of or in any way
affect the right of either party to insist upon performance in strict accordance
with said terms. The subsequent acceptance of rent or any other payment
hereunder by Landlord will 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 acceptance by Landlord of a lesser sum than the basic rent and
additional rent or other sum then due will be deemed to be other than on account
of the earliest installment of such rent or other amount due, nor will any
endorsement or statement on any check or any letter accompanying any check be
deemed an accord and satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of such installment
or other amount or pursue any other remedy provided in this Lease. The consent
or approval of Landlord to or of any act by Tenant requiring Landlord's consent
or approval will not be deemed to waive or render unnecessary Landlord's consent
or approval to or of any subsequent similar acts by Tenant.

32.    PARKING.    So long as this Lease is in effect and provided Tenant is not
in default hereunder, Landlord grants to Tenant and Tenant's customers,
suppliers, employees and invitees ("Tenant's Authorized Users") a non-exclusive
license to use up to the number of parking spaces designated in Paragraph 1(q)
hereof in the designated parking areas in the Common Areas. All visitor parking
will be on a non-exclusive, in common basis with all other visitors and guests
of the Development. Tenant will not use or allow any of Tenant's Authorized
Users to use any parking spaces which have been specifically assigned by
Landlord for other uses such as visitor parking or which have been designated by
any governmental entity as being restricted to certain uses. Landlord may assign
any unreserved and unassigned parking spaces and/or make all or any portion of
such spaces reserved, if Landlord reasonably determines that it is necessary for
orderly and efficient parking or for any other reasonable reason. Tenant and
Tenant's Authorized Users shall comply with all rules and regulations regarding
parking set forth in Exhibit "G" attached hereto and Tenant agrees to cause its
employees, subtenants, assignees, contractors, suppliers, customers and invitees
to comply with such rules and regulations. Landlord reserves the right from time
to time to modify and/or adopt such other reasonable and non-discriminatory
rules and regulations for the parking facilities as it deems reasonably
necessary for the operation of the parking facilities. Subject to Tenant's
compliance with laws, Landlord agrees that Tenant may park in the loading bay
areas for the Premises which are not being used as loading bays during the Lease
Term.

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33.    FORCE MAJEURE.    If either Landlord or Tenant is delayed, hindered in or
prevented from the performance of any act required under this Lease by reason of
strikes, lock-outs, labor troubles, inability to procure standard materials,
failure of power, riots, civil unrest or insurrection, war, fire, earthquake,
flood or other natural disaster, unusual and unforeseeable delay which results
from an interruption of any public utilities (e.g., electricity, gas, water,
telephone) or other unusual and unforeseeable delay not within the reasonable
control of the party delayed in performing work or doing acts required under the
provisions of this Lease (a "force majeure delay"), then performance of such act
will be excused for the period of the delay and the period for the performance
of any such act will be extended for a period equivalent to the period of such
delay. Except with regard to the initial build-out of the Premises as
contemplated in Exhibit "C", force majeure delays will also include restrictive
governmental laws, regulations or orders or governmental action or inaction
(including failure, refusal or delay in issuing permits, approvals and/or
authorizations which is not the result of the action or inaction of the party
claiming such delay). The provisions of this Paragraph 33 will not operate to
excuse Tenant from prompt payment of rent or any other payments required under
the provisions of this Lease.

34.    SIGNS.    Subject to Tenant's compliance with the terms of this
Paragraph 34, Tenant is hereby granted the right (i) to install on the Northeast
corner of the Building one Tenant identification sign and (ii) to install one
monument sign on the Premises and (iii) such other identification signs as
Tenant may deem necessary for the operation of its business and which are
approved by Landlord in advance in writing. Landlord and Tenant will mutually
determine the exact locations on the Premises for Tenant's signs. Tenant agrees
to have Landlord install and maintain Tenant's signs in such designated
locations in accordance with this Paragraph 34 at Tenant's sole cost and
expense. Tenant has no right to install Tenant identification signs in any other
location in, on or about the Premises or the Development in any interior or
exterior common areas. The size, design, color and other physical aspects of any
and all permitted sign(s) will be subject to (i) Landlord's written approval
prior to installation, which approval may be withheld in Landlord's reasonable
discretion, (ii) any covenants, conditions or restrictions governing the
Premises, and (iii) any applicable municipal or governmental permits and
approvals. Tenant will be solely responsible for all costs for installation,
maintenance, repair and removal of any Tenant identification sign(s). If Tenant
fails to remove Tenant's sign(s) upon termination of this Lease and repair any
damage caused by such removal, Landlord may do so at Tenant's sole cost and
expense. Tenant agrees to reimburse Landlord for all costs incurred by Landlord
to effect any installation, maintenance or removal on Tenant's account, which
amount will be deemed additional rent, and may include, without limitation, all
sums disbursed, incurred or deposited by Landlord including Landlord's costs,
expenses and actual attorneys' fees with interest thereon at the Interest Rate
from the date of Landlord's demand until paid by Tenant.

35.    LIMITATION ON LIABILITY.    In consideration of the benefits accruing
hereunder, Tenant on behalf of itself and all successors and assigns of Tenant
covenants and agrees that, in the event of any actual or alleged failure, breach
or default hereunder by Landlord: (a) tenant's recourse against Landlord for
monetary damages will be limited to Landlord's interest in the Premises
including, subject to the prior rights of any Mortgagee, Landlord's interest in
the rents of the Premises and any insurance proceeds payable to Landlord;
(b) except as may be necessary to secure jurisdiction of Landlord, no member or
partner of Landlord shall be sued or named as a party in any suit or action and
no service of process shall be made against any member or partner of Landlord;
(c) no member or partner of Landlord shall be required to answer or otherwise
plead to any service of process; (d) no judgment will be taken against any
member or partner of Landlord and any judgment taken against any member or
partner of Landlord may be vacated and set aside at any time after the fact;
(e) no writ of execution will be levied against the assets of any member or
partner of Landlord; (f) the obligations under this Lease do not constitute
personal obligations of the individual members, partners, directors, officers or
shareholders of Landlord, and Tenant shall not seek recourse against the
individual members, partners, directors, officers or shareholders of Landlord or
any of their personal assets for satisfaction of any

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liability in respect to this Lease; and (g) these covenants and agreements are
enforceable both by Landlord and also by any member or partner of Landlord.

36.    FINANCIAL STATEMENTS.    Prior to the execution of this Lease by Landlord
and at any time during the Term of this Lease upon ten (10) days prior written
notice from Landlord, Tenant agrees to provide Landlord with a current financial
statement for Tenant and any guarantors of Tenant and financial statements for
the two (2) years prior to the current financial statement year for Tenant and
any guarantors of Tenant. Such statements are to be prepared in accordance with
generally accepted accounting principles and, if such is the normal practice of
Tenant, audited by an independent certified public accountant.

37.    QUIET ENJOYMENT.    Landlord covenants and agrees with Tenant that upon
Tenant paying the rent required under this Lease and paying all other charges
and performing all of the covenants and provisions on Tenant's part to be
observed and performed under this Lease, Tenant may peaceably and quietly have,
hold and enjoy the Premises in accordance with this Lease without hindrance or
molestation by Landlord or its agents.

38.    AUCTIONS.    Tenant shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Landlord's prior written consent.

39.    MISCELLANEOUS    

        (a)    Conflict of Laws.    This Lease shall be governed by and
construed solely pursuant to the laws of the State, without giving effect to
choice of law principles thereunder.

        (b)    Successors and Assigns.    Except as otherwise provided in this
Lease, all of the covenants, conditions and provisions of this Lease shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns.

        (c)    Professional Fees and Costs.    If either Landlord or Tenant
should bring suit against the other with respect to this Lease, then all costs
and expenses, including without limitation, actual professional fees and costs
such as appraisers', accountants' and attorneys' fees and costs, incurred by the
party which prevails in such action, whether by final judgment or out of court
settlement, shall be paid by the other party, which obligation on the part of
the other party shall be deemed to have accrued on the date of the commencement
of such action and shall be enforceable whether or not the action is prosecuted
to judgment. As used herein, attorneys' fees and costs shall include, without
limitation, attorneys' fees, costs and expenses incurred in connection with any
(i) postjudgment motions; (ii) contempt proceedings; (iii) garnishment, levy,
and debtor and third party examination; (iv) discovery; and (v) bankruptcy
litigation.

        (d)    Terms and Headings.    The words "Landlord" and "Tenant" as used
herein shall include the plural as well as the singular. Words used in any
gender include other genders. The paragraph headings of this Lease are not a
part of this Lease and shall have no effect upon the construction or
interpretation of any part hereof.

        (e)    Time.    Time is of the essence with respect to the performance
of every provision of this Lease in which time of performance is a factor.

        (f)    Prior Agreement; Amendments.    This Lease constitutes and is
intended by the parties to be a final, complete and exclusive statement of their
entire agreement with respect to the subject matter of this Lease. This Lease
supersedes any and all prior and contemporaneous agreements and understandings
of any kind relating to the subject matter of this Lease. There are no other
agreements, understandings, representations, warranties, or statements, either
oral or in written form, concerning the subject matter of this Lease. No
alteration, modification, amendment or interpretation of this Lease shall be
binding on the parties unless contained in a writing which is signed by both
parties.

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        (g)    Separability.    The provisions of this Lease shall be considered
separable such that if any provision or part of this Lease is ever held to be
invalid, void or illegal under any law or ruling, all remaining provisions of
this Lease shall remain in full force and effect to the maximum extent permitted
by law.

        (h)    Recording.    Neither Landlord nor Tenant shall record this Lease
nor a short form memorandum thereof without the consent of the other.

        (i)    Counterparts.    This Lease may be executed in one or more
counterparts, each of which shall constitute an original and all of which shall
be one and the same agreement.

        (j)    Nondisclosure of Lease Terms.    Tenant acknowledges and agrees
that the terms of this Lease are confidential and constitute proprietary
information of Landlord. Disclosure of the terms could adversely affect the
ability of Landlord to negotiate other leases and impair Landlord's relationship
with other tenants. Accordingly, Tenant agrees that it, and its partners,
officers, directors, employees, agents and attorneys, shall not intentionally
and voluntarily disclose the terms and conditions of this Lease to any newspaper
or other publication or any other tenant or apparent prospective tenant of the
Building or other portion of the Development, or real estate agent, either
directly or indirectly, without the prior written consent of Landlord, provided,
however, that Tenant may disclose the terms to prospective subtenants or
assignees under this Lease.

40.    EXECUTION OF LEASE    

        (a)    Joint and Several Obligations.    If more than one person
executes this Lease as Tenant, their execution of this Lease will constitute
their covenant and agreement that (i) each of them is jointly and severally
liable for the keeping, observing and performing of all of the terms, covenants,
conditions, provisions and agreements of this Lease to be kept, observed and
performed by Tenant, and (ii) the term "Tenant" as used in this Lease means and
includes each of them jointly and severally. The act of or notice from, or
notice or refund to, or the signature of any one or more of them, with respect
to the tenancy of this Lease, including, but not limited to, any renewal,
extension, expiration, termination or modification of this Lease, will be
binding upon each and all of the persons executing this Lease as Tenant with the
same force and effect as if each and all of them had so acted or so given or
received such notice or refund or so signed.

        (b)    Tenant as Corporation or Partnership.    If Tenant executes this
Lease as a corporation or partnership, then Tenant and the persons executing
this Lease on behalf of Tenant represent and warrant that such entity is duly
qualified and in good standing to do business in California and that the
individuals executing this Lease on Tenant's behalf are duly authorized to
execute and deliver this Lease on its behalf, and in the case of a corporation,
in accordance with a duly adopted resolution of the board of directors of
Tenant, a copy of which is to be delivered to Landlord on execution hereof, if
requested by Landlord, and in accordance with the by-laws of Tenant, and, in the
case of a partnership, in accordance with the partnership agreement and the most
current amendments thereto, if any, copies of which are to be delivered to
Landlord on execution hereof, if requested by Landlord, and that this Lease is
binding upon Tenant in accordance with its terms.

        (c)    Examination of Lease.    Submission of this instrument by
Landlord to Tenant for examination or signature by Tenant does not constitute a
reservation of or option for lease, and it is not effective as a lease or
otherwise until execution by and delivery to both Landlord and Tenant.

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        IN WITNESS WHEREOF, the parties have caused this Lease to be duly
executed by their duly authorized representatives as of the date first above
written.

TENANT:   LANDLORD:
CUTTER & BUCK, INC.,
a Washington corporation
 
ZELMAN RENTON, LLC,
a Delaware limited liability company
By:
 
/s/  MARTIN MARKS      

--------------------------------------------------------------------------------

 
By:
 
ZIP Renton, LLC, a Delaware LLC     Print Name: Martin Marks

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      Its:   Managing Member     Title: President

--------------------------------------------------------------------------------

      By:   Zelman Industrial Partners, Inc.,
a California corporation,                   Its:   Managing Member
By:
 
/s/  S. LOWBER      

--------------------------------------------------------------------------------

 
 
 
 
 
By:
 
/s/  BEN REILING      

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    Print Name: S. Lowber               Ben Reiling      

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              Its:   President     Title: CFO

--------------------------------------------------------------------------------

                   

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STATE OF WASHINGTON   )         ) ss.     COUNTY OF KING   )    

        I certify that I now or have satisfactory evidence that Martin J. Marks
is the person who appeared before me, and said person acknowledged that he/she
was authorized to execute the instrument and acknowledged it as the President of
Cutter & Buck, Inc. to be the free and voluntary act of such party for the uses
and purposes mentioned in the instrument.

[NOTARY PUBLIC SEAL]
  
(Use this space for notarial stamp/seal)   Dated:   May 15, 2001

--------------------------------------------------------------------------------

        /s/ SUSAN M. CANNON

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        Notary Public           Print Name: Susan M. Cannon

--------------------------------------------------------------------------------

        My commission expires 04/06/03

STATE OF WASHINGTON   )         ) ss.     COUNTY OF KING   )    

        I certify that I now or have satisfactory evidence that Steve Lowber (S.
Lowber) is the person who appeared before me, and said person acknowledged that
he/she was authorized to execute the instrument and acknowledged it as the CFO
of Cutter & Buck, Inc. to be the free and voluntary act of such party for the
uses and purposes mentioned in the instrument.

[NOTARY PUBLIC SEAL]
  
(Use this space for notarial stamp/seal)   Dated:   May 15, 2001

--------------------------------------------------------------------------------

        /s/ SUSAN M. CANNON

--------------------------------------------------------------------------------

        Notary Public           Print Name: Susan M. Cannon

--------------------------------------------------------------------------------

        My commission expires 04/06/03

STATE OF CALIFORNIA   )         ) ss.     COUNTY OF LOS ANGELES   )    

        I certify that I now or have satisfactory evidence that Ben Reiling is
the person who appeared before me, and said person acknowledged that he/she was
authorized to execute the instrument and acknowledged it as the President of
Zelman Renton, LLC to be the free and voluntary act of such party for the uses
and purposes mentioned in the instrument.

[NOTARY PUBLIC SEAL]
  
(Use this space for notarial stamp/seal)   Dated:   May 16, 2001

--------------------------------------------------------------------------------

        /s/ SANDRA L. GARAY

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        Notary Public           Print Name: Sandra L. Garay

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        My commission expires 7-1-04

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ADDENDUM TO INDUSTRIAL LEASE

        THIS ADDENDUM TO INDUSTRIAL LEASE ("Addendum") is attached to and
constitutes a part of that certain Industrial Lease [Single Tenant - Triple Net]
between ZELMAN RENTON, LLC, a Delaware limited liability company ("Landlord"),
and CUTTER & BUCK, INC., a Washington corporation ("Tenant"). Landlord and
Tenant agree that, notwithstanding anything contained in the Lease to the
contrary, the provisions set forth in this Addendum will be deemed to be a part
of the Lease and will supersede any contrary provisions in the Lease and shall
prevail and control for all purposes. All references in the Lease and in this
Addendum to the defined term "Lease" are to be construed to mean the Lease as
amended and supplemented by this Addendum. Capitalized terms which are not
defined in this Addendum have the meanings given to them in the Lease. The
paragraph below is numbered consecutively with those of the Lease.

41.    OPTIONS TO EXTEND.    

        (a)    Extension Options.    Subject to the terms of this Paragraph 41
and Paragraph 42 below, Landlord hereby grants to Tenant two (2) options (the
"Extension Options") to extend the Term with respect to the entire Premises each
for an additional period of five (5) years (each, an "Option Term" and
collectively, the "Option Terms"), on the same terms, covenants and conditions
as provided for in this Lease during the initial Lease Term, except that
(i) Tenant shall have no further extension rights, and (ii) Monthly Base Rent
shall be established based on the "fair market rental rate" for the Premises for
the applicable Option Term as defined and determined in accordance with the
provisions of this Paragraph 41 below.

        (b)    Exercise of Extension Option.    Each Extension Option must be
exercised, if at all, by written notice ("Extension Notice") delivered by Tenant
to Landlord no later than the date which is two hundred ten (210) days, and no
earlier than the date which is one (1) year, prior to the expiration of the then
current Term of this Lease.

        (c)    Fair Market Rental Rate.    The term "fair market rental rate" as
used in this addendum shall mean the annual amount per rentable square foot,
projected during the relevant period, that a willing, comparable, non-equity,
renewal tenant (excluding sublease and assignment transactions) would pay, and a
willing institutional landlord of a comparable quality industrial building
located in the Renton, Tukwila and North Kent, Washington area North of 212th
Street ("Comparison Area") would accept, at arm's length (what Landlord is
accepting in current transactions for other buildings within the Development may
be considered), for space comparable in size and quality as the leased area at
issue taking into account the age, quality and layout of the existing
improvements in the leased area at issue and taking into account items that
professional real estate brokers customarily consider, including, but not
limited to, rental rates, industrial space availability, tenant size, tenant
improvement allowances, parking, loading, power, ceiling height, sprinkler
capacity, and any other economic matters then being charged by Landlord or the
lessors of such similar industrial buildings. In no event will Monthly Base Rent
decrease from that payable in the last year of the immediately preceding Lease
Term as a result of the fair market rental rate determination provided for in
this Paragraph 41. In no event will any consideration be given, in the fair
market rental rate determination, to any amounts to be paid by Tenant during the
Option term as repayment of the Above Standard Allowance described in
Paragraph 5(b) of the Work Letter Agreement.

        (d)    Tenant's Review Period.    Landlord's determination of fair
market rental rate shall be delivered to Tenant in writing not later than thirty
(30) days following Landlord's receipt of Tenant's Extension Notice. Tenant will
have thirty (30) days ("Tenant's Review Period") after receipt of Landlord's
notice of the fair market rental rate within which to accept such fair market
rental rate or to object thereto in writing. Tenant's failure to object to the
fair market rental rate submitted by Landlord in writing within Tenant's Review
Period will conclusively be deemed Tenant's approval and acceptance thereof. If
Tenant objects to the fair market rental rate submitted by Landlord within

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Tenant's Review Period, then Landlord and Tenant will attempt in good faith to
agree upon such fair market rental rate using their best good faith efforts. If
Landlord and Tenant fail to reach agreement on such fair market rental rate
within fifteen (15) days following the expiration of Tenant's Review Period (the
"Outside Agreement Date"), then each party's determination will be submitted to
appraisal in accordance with the provisions below.

        (e)    Appraisal    

        (i)    Landlord and Tenant shall each appoint one independent,
unaffiliated real estate broker (referred to herein as an "appraiser" even
though only a broker) who has been active over the five (5) year period ending
on the date of such appointment in the leasing of industrial space in the
Comparison Area. Each such appraiser will be appointed within thirty (30) days
after the Outside Agreement Date.

        (ii)  The two (2) appraisers so appointed will within fifteen (15) days
of the date of the appointment of the last appointed appraiser agree upon and
appoint a third appraiser who shall be qualified under the same criteria set
forth herein above for qualification of the initial two (2) appraisers.

        (iii)  The determination of the appraisers shall be limited solely to
the issue of whether Landlord's or Tenant's last proposed (as of the Outside
Agreement Date) new Monthly Base Rent for the Premises is the closest to the
actual new Monthly Base Rent for the Premises as determined by the appraisers,
taking into account the requirements of Paragraph 41(c) and this Paragraph 41(e)
regarding same.

        (iv)  The three (3) appraisers shall within thirty (30) days of the
appointment of the third appraiser reach a decision as to whether the parties
shall use Landlord's or Tenant's submitted new Monthly Base Rent, and shall
notify Landlord and Tenant thereof.

        (v)  The decision of the majority of the three (3) appraisers shall be
binding upon Landlord and Tenant and neither party will have the right to reject
the determination or undo the exercise of the Extension Option. The cost of each
party's appraiser shall be the responsibility of the party selecting such
appraiser, and the cost of the third appraiser (or arbitration, if necessary)
shall be shared equally by Landlord and Tenant.

        (vi)  If either Landlord or Tenant fails to appoint an appraiser within
the time period in Paragraph (e)(i) herein above, the appraiser appointed by one
of them shall reach a decision, notify Landlord and Tenant thereof and such
appraiser's decision shall be binding upon Landlord and Tenant and neither party
will have the right to reject the determination or undo the exercise of the
Extension Option.

        (vii) If the two (2) appraisers fail to agree upon and appoint a third
appraiser, both appraisers shall be dismissed and the matter to be decided shall
be forthwith submitted to binding arbitration under the provisions of the
American Arbitration Association.

        (viii)  In the event that the new Monthly Base Rent is not established
prior to end of the initial Term of the Lease, the Monthly Base Rent immediately
payable at the commencement of the Option Term shall be based on $0.46 per
square foot of the Building footprint (which includes office and non-office
portions of the Building) plus $0.85 per square foot of office space then in the
Premises (which rates shall not be considered a factor in determining the new
Monthly Base Rent). Notwithstanding the above, once the fair market rental is
determined in accordance with this section, the parties shall settle any under
or overpayment on the next Monthly Base Rent payment date falling not less than
thirty (30) days after such determination.

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42.    OPTIONS.    

        (a)  As used in this Paragraph 42, the word "Options" means the
Extension Options pursuant to Paragraph 41 herein.

        (b)  The Options are personal to the original Tenant executing this
Lease and may be exercised only by the original Tenant executing this Lease
while occupying the entire Premises and without the intent of thereafter
assigning this Lease or subletting the Premises and may not be exercised or be
assigned, voluntarily or involuntarily, by any person or entity other than the
original Tenant executing this Lease; provided, that the Options may be
exercised by the assignee (but not sublessee) of this Lease pursuant to a
Permitted Transfer in accordance with Paragraph 24(c). The Options are not
assignable separate and apart from this Lease, nor may any Option be separated
from this Lease in any manner, either by reservation or otherwise.

        (c)  Tenant shall have no right to exercise the Options, notwithstanding
any provision of the grant of either Option to the contrary, and Tenant's
exercise of any Option may be nullified by Landlord and deemed of no further
force or effect, if Tenant shall be in default of any monetary obligation or
material non-monetary obligation under the terms of this Lease as of Tenant's
exercise of the applicable Option or at the commencement of any Option event.

43.    ARBITRATION.    If any dispute referenced in the last sentence of either
Paragraph 14 or Paragraph 17 of this Lease arises ("Dispute"), and if no other
specific procedure is included in this Lease to resolve such Dispute, then such
Dispute, if timely demanded pursuant to Subparagraph (a) below, shall be
resolved and adjudicated by binding arbitration in accordance with this
Paragraph 41. The arbitrator shall be a neutral, disinterested retired judge
selected by the parties from a panel of retired judges available through the
Judicial Arbitration and Mediation Service ("JAMS") or, if JAMS or its successor
does not then exist, by any other arbitrator or retired judge affiliated with a
private, disinterested association providing arbitration services. Should the
parties fail to agree on the selection of a disinterested, neutral arbitrator
within twenty (20) days of written demand accompanied by written notice of the
Dispute by either party, either party may petition a Washington court of
competent jurisdiction and proper venue to appoint an arbitrator. The
arbitration shall be held within sixty (60) days after the selection of the
arbitrator. The parties hereby agree to allow the taking of depositions for
discovery purposes in the arbitration proceedings. Any hearings required for
purposes of the arbitration shall be in Seattle, Washington at the offices of
the arbitrator or such other place designated by the arbitrator. The arbitration
procedure shall be subject to the following:

        (a)  Any demand for arbitration shall be in writing and must be made and
served on the other party within a reasonable time after the Dispute has arisen
and in no event shall the demand for arbitration be made after the earlier of
the date which is (i) thirty (30) days after service by either party of summons
and complaint, the subject matter of which is essentially identical with the
subject matter of the demand for arbitration, or (ii) the date that institution
of legal or equitable proceedings based on such Dispute would be barred by the
applicable statute of limitations.

        (b)  The provisions of this Paragraph 43 are not intended to require
Landlord or Tenant to arbitrate any matters relating to any default under this
Lease, which matters shall be governed by the applicable provisions of this
Lease and/or applicable law.

        (c)  All proceedings involving the parties shall be reported by a
certified shorthand court reporter and written transcripts of the proceedings
shall be prepared and made available to the parties.

        (d)  The arbitrator shall prepare and deliver to the parties factual
findings in writing which shall include the reasons on which the decision of the
arbitrator is based. The arbitrator shall be bound by the provisions of this
Lease, and shall not add to, subtract from or otherwise modify such provisions.

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        (e)  Final decision by the arbitrator must be provided to the parties
within thirty (30) days from the date on which the matter is submitted to the
arbitrator.

        (f)    The prevailing party (as defined below) shall be awarded interest
on the amount awarded (at the Interest Rate), reasonable attorneys' fees, expert
and nonexpert witness costs and expenses (including without limitation the fees
and costs of the court reporter described in Subparagraph (c) above), and other
costs and expenses incurred in connection with the arbitration, unless the
arbitrator for good cause determines otherwise.

        (g)  As used herein, the term "prevailing party" shall mean the party,
if any, that the arbitrator determines is "clearly the prevailing party."

        (h)  Costs and fees of the arbitrator shall be borne by the
nonprevailing party, unless the arbitrator for good cause determines otherwise.
If there is no prevailing party, the parties shall bear their own fees and costs
and split the fees and costs of the arbitrator and court reporter.

        (i)    The award or decision of the arbitrator, which may include
equitable relief, shall be final and judgment may be entered on it in accordance
with applicable law in any court having jurisdiction over the matter. The
provisions of this Paragraph 43 are not intended to alter the applicable
provisions of law which provide the grounds on which a court may vacate an
arbitration award.

TENANT:   LANDLORD:
CUTTER & BUCK, INC.,
a Washington corporation
 
ZELMAN RENTON, LLC,
a Delaware limited liability company
By:
 
/s/  MARTIN MARKS      

--------------------------------------------------------------------------------

 
By:
 
ZIP Renton, LLC, a Delaware LLC     Print Name: Martin Marks

--------------------------------------------------------------------------------

      Its:   Managing Member     Title: President

--------------------------------------------------------------------------------

      By:   Zelman Industrial Partners, Inc.,
a California corporation,                   Its:   Managing Member
By:
 
/s/  S. LOWBER      

--------------------------------------------------------------------------------

 
 
 
 
 
By:
 
/s/  BEN REILING      

--------------------------------------------------------------------------------

    Print Name: S. Lowber               Ben Reiling      

--------------------------------------------------------------------------------

              Its:   President     Title: CFO

--------------------------------------------------------------------------------

                   

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STATE OF WASHINGTON   )         ) ss.     COUNTY OF KING   )    

        I certify that I now or have satisfactory evidence that Martin J. Marks
is the person who appeared before me, and said person acknowledged that he/she
was authorized to execute the instrument and acknowledged it as the President of
Cutter & Buck, Inc. to be the free and voluntary act of such party for the uses
and purposes mentioned in the instrument.

[NOTARY PUBLIC SEAL]
  
(Use this space for notarial stamp/seal)   Dated:   May 15, 2001

--------------------------------------------------------------------------------

        /s/ SUSAN M. CANNON

--------------------------------------------------------------------------------

        Notary Public           Print Name: Susan M. Cannon

--------------------------------------------------------------------------------

        My commission expires 04/06/03

STATE OF WASHINGTON   )         ) ss.     COUNTY OF KING   )    

        I certify that I now or have satisfactory evidence that Steve Lowber (S.
Lowber) is the person who appeared before me, and said person acknowledged that
he/she was authorized to execute the instrument and acknowledged it as the CFO
of Cutter & Buck, Inc. to be the free and voluntary act of such party for the
uses and purposes mentioned in the instrument.

[NOTARY PUBLIC SEAL]
  
(Use this space for notarial stamp/seal)   Dated:   May 15, 2001

--------------------------------------------------------------------------------

        /s/ SUSAN M. CANNON

--------------------------------------------------------------------------------

        Notary Public           Print Name: Susan M. Cannon

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        My commission expires 04/06/03

STATE OF CALIFORNIA   )         ) ss.     COUNTY OF LOS ANGELES   )    

        I certify that I now or have satisfactory evidence that Ben Reiling is
the person who appeared before me, and said person acknowledged that he/she was
authorized to execute the instrument and acknowledged it as the President of
Zelman Renton, LLC to be the free and voluntary act of such party for the uses
and purposes mentioned in the instrument.

[NOTARY PUBLIC SEAL]
  
(Use this space for notarial stamp/seal)   Dated:   May 16, 2001

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        /s/ SANDRA L. GARAY

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        Notary Public           Print Name: Sandra L. Garay

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        My commission expires 7-1-04

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EXHIBIT "A-I"

SITE PLAN SHOWING PREMISES

[SITE PLAN GRAPHIC]

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EXHIBIT "A-II"

BASE SPECIFICATIONS AND DESCRIPTION OF PLANS
FOR THE BUILDING

Base Specifications:

•234,489 Square Foot Footprint

•30' Minimum Clear Height

•50' × 45' Column spacing (57.5' at doors, see attached floor plan)

•ESFR Sprinkler System (Whse designed to NFPA 13, Pump Plan per NFPA 20, static
pressure 75 PSI, residual pressure 63 PSI, Flow=3879 GPM)

•Gas Heaters in the Warehouse Per Code @ 8BTU/Hr/Sq. Ft.

•2000 Amp Electrical Service @ 277/480 V.3 phase 4 wire

•Metal Halide Warehouse Lighting @15 Pc

•Asphalt Paving and Landscaping of Entire Site (Asphalt 3" over 6" crushed rock
in driveways and truck courts, 2" AC over 4" crushed rock in parking areas)

•44 – 9' × 10' Dock-High (48") Truck Doors with 4 ft Metal Canopy

•4 – 12' × 14' Truck Doors with Ramps into Building

•Site Lighting with Wall Pacs on Building

•Attractive Glass Entry (see brochure for rendering)

•Concrete Tilt-Up Exterior Walls (Painted)

•Wood Panelized Roof Structure with steel open web bar joists and girders

•6" Thick Reinforced Concrete Floor Slab (Flatness=1/8" in 10 ft, slab
reinforced with #3 rebar @ 24" o.c. each way, concrete=3000 PSI)

•Single Ply Roofing

•R-11 Min. Rigid Insulation on Roof Deck

•96 – 4' × 8' Smoke Vents/Skylights

Description of Plans:

Sheet Nos.

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  Prepared By

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  Date

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EXHIBIT "B"

ADJUSTMENTS TO MONTHLY BASE RENT

Time

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  Rate Per Square Foot
of the Building Per Month

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  Additional Rate Per Square Foot
of Office Space Per Month

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10/1/01* through 3/31/04   $ .335   $ .650 4/1/04 through 11/30/06   $ .360   $
.700 12/1/06 through 5/31/09   $ .400   $ .750 6/1/09 through 11/30/11   $ .431
  $ .800

        Prior to the Commencement Date, Landlord will cause its architect to
measure and certify in writing to Landlord the square footage of the Premises
and the office space within the Premises, following which time the Monthly Base
Rent and other figures based upon the square feet contained in the Premises and
the office space within the Premises shall be determined in accordance with the
rental rates set forth above. Except in the case of manifest error, the
certification from Landlord's architect shall be binding upon Landlord and
Tenant.

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*Tenant's obligation to pay Monthly Base Rent shall commence on the earlier of
October 1, 2001 or that date in which Tenant commences the operation of its
business within any portion of the C&B Premises.

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]]

EXHIBIT "C"

WORK LETTER AGREEMENT
[ALLOWANCE]
[LANDLORD BUILD]

        This WORK LETTER AGREEMENT ("Work Letter Agreement") is entered into as
of the 16th day of May, 2001 by and between ZELMAN RENTON, LLC, a Delaware
limited liability company ("Landlord"), and CUTTER & BUCK, INC., a Washington
corporation ("Tenant").

R E C I T A L S:

        A.    Concurrently with the execution of this Work Letter Agreement,
Landlord and Tenant have entered into a lease (the "Lease") covering certain
premises (the "Premises") more particularly described in the Lease. All terms
not defined herein have the same meaning as set forth in the Lease. To the
extent applicable, the provisions of the Lease are incorporated herein by this
reference.

        B.    In order to induce Tenant to enter into the Lease and in
consideration of the mutual covenants hereinafter contained, Landlord and Tenant
agree as follows:

1.    BUILDING SHELL; TENANT IMPROVEMENTS.    As used in this Work Letter
Agreement, the term "Building Shell" shall mean the industrial building to be
constructed by Landlord at Landlord's sole expense in accordance with the plans
and specifications described in Exhibit "A-II" to the Lease (collectively, the
"Building Plans"), which Building Plans have been approved by Landlord and
Tenant. As used in the Lease and this Work Letter Agreement, the term "Tenant
Improvements" or "Tenant Improvement Work" means collectively those items of
tenant improvement construction relating to the office portion of the Premises
("Office Improvements") shown on the Tenant's Final Plans (described in
Paragraph 4 below) and the Above-Standard Improvements (described in Paragraph 5
below).

2.    WORK SCHEDULE.    Within thirty (30) days after the execution of this
Lease, Landlord will deliver to Tenant, for Tenant's review and approval, a
schedule ("Work Schedule") which will set forth the timetable for the planning
and completion of the installation of the Tenant Improvements and the
Commencement Date of the Lease. The Work Schedule will set forth each of the
various items of work to be done or approval to be given by Landlord and Tenant
in connection with the completion of the Tenant Improvements. The Work Schedule
will be submitted to Tenant for its approval, which approval Tenant agrees not
to unreasonably withhold, and, once approved by both Landlord and Tenant, the
Work Schedule will become the basis for completing the Tenant Improvements. All
plans and drawings required by this Work Letter Agreement and all work performed
pursuant thereto are to be prepared and performed in accordance with the Work
Schedule. If Tenant fails to approve the Work Schedule, as it may be modified
after discussion between Landlord and Tenant within ten (10) business days after
the date the Work Schedule is first received by Tenant, the Work Schedule shall
be deemed to be approved by Tenant as submitted.

3.    CONSTRUCTION REPRESENTATIVES.    Landlord hereby appoints the following
person(s) as Landlord's representative ("Landlord's Representative") to act for
Landlord in all matters covered by this Work Letter Agreement: Paul Casey.

        Tenant hereby appoints the following person(s) as Tenant's
representative ("Tenant's Representative") to act for Tenant in all matters
covered by this Work Letter Agreement: Dennis Hilborn.

        All communications with respect to the matters covered by this Work
Letter Agreement are to made to Landlord's Representative or Tenant's
Representative, as the case may be, in writing in

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compliance with the notice provisions of the Lease. Either party may change its
representative under this Work Letter Agreement at any time by written notice to
the other party in compliance with the notice provisions of the Lease.

4.    TENANT IMPROVEMENT PLANS    

        (a)    Preparation of Space Plans.    In accordance with the Work
Schedule, Tenant agrees to meet with Landlord's architect and/or space planner
for the purpose of promptly preparing preliminary space plans for the interior
layout of the Premises ("Space Plans"). The Space Plans are to be sufficient to
convey the architectural design of the interior of the Premises and layout of
the interior of the Office Improvements therein and are to be submitted to
Landlord in accordance with the Work Schedule for Landlord's approval. If
Landlord reasonably disapproves any aspect of the Space Plans, Landlord will
advise Tenant in writing of such disapproval and the reasons therefor in
accordance with the Work Schedule. Tenant will then submit to Landlord for
Landlord's approval, in accordance with the Work Schedule, a redesign of the
Space Plans incorporating the revisions reasonably required by Landlord.

        (b)    Preparation of Tenant's Final Plans.    Based on the approved
Space Plans, and in accordance with the Work Schedule, Landlord's architect will
prepare complete architectural plans, drawings and specifications and complete
engineered mechanical, structural and electrical working drawings for all of the
Office Improvements for the Premises (collectively, the "Tenant's Final Plans").
The Tenant's Final Plans will show: (a) the subdivision (including partitions
and walls), layout, lighting, finish and decoration work (including carpeting
and other floor coverings) for the office portion of the Premises; (b) all
internal and external communications and utility facilities relating to the
office portion of the Premises which will require conduiting or other
improvements from the base Building Shell work and/or within common areas; and
(c) all other specifications for the Office Improvements. The Tenant's Final
Plans will be submitted to Tenant for signature to confirm that they are
consistent with the Space Plans. If Tenant reasonably disapproves any aspect of
the Tenant's Final Plans based on any inconsistency with the Space Plans, Tenant
agrees to advise Landlord in writing of such disapproval and the reasons
therefor within the time frame set forth in the Work Schedule (which shall be no
less than five (5) business days after Tenant's receipt of Tenant's Final
Plans). In accordance with the Work Schedule, Landlord will then cause
Landlord's architect to redesign the Tenant's Final Plans incorporating the
revisions reasonably requested by Tenant so as to make the Tenant's Final Plans
consistent with the Space Plans.

        (c)    Requirements of Tenant's Final Plans.    Tenant's Final Plans
will include locations and complete dimensions, and the Office Improvements, as
shown on the Tenant's Final Plans, will: (i) be compatible with the Building
Shell and with the design, construction and equipment of the Building;
(ii) comply with all applicable laws, ordinances, rules and regulations of all
governmental authorities having jurisdiction, and all applicable insurance
regulations; (iii) not require Building service beyond the level normally
provided to other tenants in the Development and will not overload the Building
floors; and (iv) be of a nature and quality consistent with the overall
objectives of Landlord for the Building, as determined by Landlord in its
reasonable but subjective discretion.

        (d)    Submittal of Tenant's Final Plans.    Once approved by Landlord
and Tenant, Landlord's architect will submit the Tenant's Final Plans to the
appropriate governmental agencies for plan checking and the issuance of a
building permit. Landlord's architect, with Tenant's cooperation, will make any
changes to the Tenant's Final Plans which are requested by the applicable
governmental authorities to obtain the building permit. After approval of the
Tenant's Final Plans no further changes may be made without the prior written
approval of both Landlord and Tenant, and then only after agreement by Tenant to
pay any excess costs resulting from the design and/or construction of changes
requested by Tenant. Tenant hereby acknowledges that any such changes will be
subject to the terms of Paragraph 9 below.

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        (e)    Changes to Shell of Building.    If the Tenant's Final Plans of
any amendment thereof or supplement thereto shall require changes in the
Building Plans and/or the Building Shell, the increased cost thereof will be
paid for by Tenant or charged against the "Allowances" described in Paragraph 5
below. Any changes to the Building Plans shall require the prior written
approval of Tenant and Landlord (not to be unreasonably withheld or delayed),
provided that Landlord shall not need the consent or approval of Tenant for
changes to the Building Plans that do not affect the Tenant Improvements and/or
the Premises or materially alter the character or the Building.

        (f)    Work Cost Estimate and Statement.    Prior to the commencement of
construction of any of the Office Improvements shown on the Tenant's Final Plans
and/or the Above-Standard Improvements, Landlord will submit to Tenant a written
estimate of the cost to complete the Tenant Improvement Work, which written
estimate will be based on the Tenant's Final Plans taking into account any
modification which may be required to reflect changes in the Tenant's Final
Plans required by the City or County in which the Premises are located (the
"Work Cost Estimate"). Tenant will either approve the Work Cost Estimate or
disapprove specific items and submit to Landlord revisions to the Tenant's Final
Plans to reflect deletions of and/or substitutions for such disapproved items.
Submission and approval of the Work Cost Estimate will proceed in accordance
with the Work Schedule. Upon Tenant's approval of the Work Cost Estimate (such
approved Work Cost Estimate to be hereinafter known as the "Work Cost
Statement"), Landlord will have the right to purchase materials and to commence
the construction of the items included in the Work Cost Statement pursuant to
Paragraph 6 hereof. If the total costs reflective in the Work Cost Statement
exceed the applicable Allowance described in Paragraph 5 below, Tenant agrees to
pay such excess, as additional rent, prior to the Commencement Date.

5.    PAYMENT FOR THE TENANT IMPROVEMENTS    

        (a)    Office Allowance.    Landlord hereby grants to Tenant a tenant
improvement allowance of Forty Dollars ($40.00) per square foot of the various
office portions of the Premises, not to exceed $400,000 (the "Office
Allowance"). The Office Allowance is to be used only for:

        (i)    Payment of the cost of preparing the Space Plans and the Tenant's
Final Plans, including mechanical, electrical, plumbing and structural, drawings
and of all other aspects necessary to complete the Tenant's Final Plans. The
Office Allowance will not be used for the payment of extraordinary design work
or for payments to any other consultants, designers or architects other than
Landlord's architect and/or Tenant's architect.

        (ii)  The payment of plan check, permit and license fees relating to
construction of the Office Improvements.

        (iii)  Construction of the Office Improvements, including, without
limitation, the following:

        (aa) Installation within the office portion of the Premises of all
partitioning, doors, floor coverings, ceilings, wall coverings and painting,
millwork and similar items;

        (bb) All electrical wiring, lighting fixtures, outlets and switches, and
other electrical work necessary for the office portion of the Premises;

        (cc) The furnishing and installation of all duct work, terminal boxes,
diffusers and accessories necessary for the heating, ventilation and air
conditioning systems within the office portion of the Premises, including the
cost of meter and key control for after-hour air conditioning;

        (dd) Any additional improvements to the office portion of the Premises
required by Tenant for Tenant's use of the Premises including, but not limited
to, odor control, special heating, ventilation and air conditioning, noise or
vibration control or other special systems or improvements;

3

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        (ee) All fire and life safety control systems such as fire walls,
sprinklers, halon, fire alarms, including piping, wiring and accessories,
necessary for the office portion of the Premises;

        (ff)  All plumbing, fixtures, pipes and accessories necessary for the
office portion of the Premises;

        (gg) Testing and inspection costs; and

        (hh) Fees for the contractor including, but not limited to, fees and
costs attributable to general conditions; plus a $25,000.00 fee for Landlord's
tenant improvement coordinator.

        (iv)  Other Costs.    All other costs to be expended by Landlord in the
construction of the Tenant Improvements, including those costs incurred by
Landlord for construction of elements of the Tenant Improvements in the
Premises, which construction was performed by Landlord prior to the execution of
the Lease by Landlord and Tenant and which construction is for the benefit of
tenants and is customarily performed prior the execution of leases for space in
the Building for reasons of economics (examples of such construction would
include, but not be limited to, the extension of mechanical [including heating,
ventilating and air conditioning systems] and electrical distribution systems
outside of the core of the Building, wall construction, column enclosures and
painting outside of the core of the Building, ceiling hanger wires and window
treatment).

        (b)    Above Standard Allowance.    Landlord hereby grants to Tenant an
additional allowance of One and 50/100 Dollars per square foot of the Premises,
i.e., $351,733.50 ("Above Standard Allowance") for the purchase, construction
and installation of the above-standard improvements described on Schedule "1" to
this Exhibit "C" ("Above-Standard Improvements"). The Office Allowance and the
Above-Standard Allowance are sometimes each individually referred to as an
"Allowance" and sometimes collectively referred to as the "Allowances." All
costs disbursed or expended by Landlord as part of the Above Standard Allowance
shall be fully amortized over the original Term, plus interest at a rate of
eleven percent (11%) per year, and the annual amortized amount shall be paid by
Tenant monthly, as additional rent under the Lease, in equal installments
throughout the Term until such excess costs have been fully repaid.

        (c)    Excess Costs.    The cost of each item referenced in Paragraphs
5(a) and 5(b) above shall be charged against the respective Allowance. If the
Work Cost for either the Office Improvements or the Above-Standard Improvements
exceeds the respective Allowance, Tenant agrees to pay to Landlord such excess
including reasonable fees for the contractor prior to the commencement of
construction (less any sums previously paid by Tenant for such excess pursuant
to the Work Cost Estimate). In no event will the Allowances be used to pay for
Tenant's furniture, artifacts, equipment, telephone systems or any other item of
personal property which is not affixed to the Premises.

        (d)    Changes.    If, after the Tenant's Final Plans have been prepared
and the Work Cost Statement has been established, Tenant requires any changes or
substitutions to the Tenant's Final Plans, any additional costs related thereto
including reasonable fees for the contractor are to be paid by Tenant to
Landlord prior to the Commencement Date. Any changes to the Tenant's Final Plans
will be approved by the Landlord and Tenant in the manner set forth in Paragraph
4 above and will, if necessary, require the Work Cost Statement to be revised
and agreed upon between Landlord and Tenant in the manner set forth in
Subparagraph 4(f) above. Landlord will have the right to decline Tenant's
request for a change to the Tenant's Final Plans if such changes are
inconsistent with the provisions of Paragraph 4 above, or if the change would
unreasonably delay construction of the Tenant Improvements and the Commencement
Date of the Lease.

        (e)    Unused Allowance Amounts.    Any unused portion of either
Allowance upon completion of the Tenant Improvements will not be refunded to
Tenant or be available to Tenant as a credit against any obligations of Tenant
under the Lease, provided, however, if Tenant constructs at least 10,000

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square feet of office space within the Premises and fails to use the entire
Office Allowance and if Tenant is not in default under the Lease, then Tenant
may, prior to December 31, 2001, apply such unused amount as a credit against
Monthly Base Rent due under the Lease and any remaining unused portion after
such date will not be refunded to Tenant or be available to Tenant as a credit
against any obligations of Tenant under the Lease and will be forfeited by
Tenant.

        (f)    Amendment to Lease.    Within fifteen (15) business days
following the Commencement Date (as defined in Paragraph 8(a) below), Landlord
and Tenant shall execute an amendment to the Lease setting forth a new rent
schedule which incorporates the amortization of any costs funded by Landlord
with respect to the Above Standard Allowance.

6.    CONSTRUCTION OF TENANT IMPROVEMENTS.    Until Tenant approves the Tenant's
Final Plans and Work Cost Statement, Landlord will be under no obligation to
cause the construction of any of the Tenant Improvements. Following Tenant's
approval of the Work Cost Statement described in Subparagraph 4(f) above,
Landlord's contractor will commence and diligently proceed with the construction
of the Tenant Improvements, subject to Tenant Delays (as described in Paragraph
9 below) and Force Majeure Delays (as described in Paragraph 10 below).

7.    CONSTRUCTION AND PAYMENT FOR THE BUILDING SHELL.    Landlord hereby agrees
to use its commercially reasonable efforts to cause the Building Shell to be
constructed in accordance with the Building Plans. Except as provided in
Paragraph 4(e) above, Landlord shall pay the cost of designing and constructing
the Building Shell in accordance with the Building Plans.

8.    COMMENCEMENT DATE AND SUBSTANTIAL COMPLETION    

        (a)    Commencement Date.    The Term of the Lease will commence on the
date (the "Commencement Date") which is the earlier of: (i) the date Tenant or
any subtenant of Tenant moves into the Premises to commence operation of its
business in all or any portion of the Premises; or (ii) the date the Building
Shell and the Tenant Improvements have been "substantially completed" (as
defined below); provided, however, that if substantial completion of the
Building Shell or the Tenant Improvements is delayed as a result of any Tenant
Delays described in Paragraph 9 below, then the Commencement Date as would
otherwise have been established pursuant to this Subparagraph 8(a)(ii) will be
accelerated by the number of days of such Tenant Delays. Notwithstanding the
foregoing, the Rent Commencement Date shall be determined in accordance with
Paragraph 5(a) of the Lease.

        (b)    Substantial Completion; Punch-List.    For purposes of
Subparagraph 8(a)(ii) above, the Building Shell and the Tenant Improvements
within the C&B Premises and each portion of the Subleased Premises will be
deemed to be "substantially completed" when Landlord's contractor certifies in
writing to Landlord and Tenant that Landlord: (a) is able to provide Tenant with
reasonable access to the Premises; (b) has substantially performed all of the
Tenant Improvement Work required to be performed by Landlord under this Work
Letter Agreement, other than decoration and minor "punch-list" type items and
adjustments which do not materially interfere with Tenant's access to or use of
the applicable portion of the Premises; and (c) has obtained a temporary
certificate of occupancy or other required equivalent approval from the local
governmental authority permitting occupancy of the applicable portion of the
Premises. Within thirty (30) days after receipt of such certificate from
Landlord's contractor, Tenant will conduct a walk-through inspection of the
applicable portion of the Premises with Landlord and provide to Landlord a
written punch-list specifying those decoration and other punch-list items which
require completion, which items Landlord will thereafter diligently complete.

        (c)    Delivery of Possession.    Landlord agrees to deliver possession
of each portion of the Premises to Tenant when the Building Shell and the Tenant
Improvements have been substantially completed in accordance with
Subparagraph (b) above. The parties estimate that Landlord will deliver
possession of each portion of the Premises to Tenant and the Term of this Lease
will commence on or

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before the estimated commencement date set forth in the Work Schedule delivered
to Tenant pursuant to Paragraph 2 above (the "Projected Commencement Date").
Landlord agrees to use its commercially reasonable efforts to cause each portion
of the Premises to be substantially completed on or before the Projected
Commencement Date. In the event Landlord fails to substantially complete
construction of the Tenant Improvements within any office portion of the
Premises within one hundred twenty (120) days after Tenant's Final Plans for
such office portion of the Premises have been approved by Landlord and Tenant,
and such failure is solely attributable to the fault of Landlord, Tenant's sole
remedy shall be the right to receive one (1) day's worth of Monthly Base Rent
credit applicable to such office portion of the Premises (Tenant still being
liable for any Monthly Base Rent due to Landlord on the Building Shell in
accordance with Exhibit "B" attached to the Lease) for every day past said one
hundred twenty (120) period that Landlord fails to substantially complete the
construction of said Tenant Improvements. Said one hundred twenty (120) day
period shall be extended day-for-day for each day of Tenant Delays and/or Force
Majeure Delays (as such terms are defined in Paragraphs 9 and 10 below) incurred
by Landlord during the construction of the Tenant Improvements.

9.    TENANT DELAYS.    For purposes of this Work Letter Agreement, "Tenant
Delays" means any delay in the completion of the Building Shell or the Tenant
Improvements resulting from any or all of the following: (a) Tenant's failure to
timely perform any of its obligations pursuant to this Work Letter Agreement,
including any failure to complete, on or before the due date therefor, any
action item which is Tenant's responsibility pursuant to the Work Schedule
delivered by Landlord to Tenant pursuant to this Work Letter Agreement;
(b) Tenant's changes to Space Plans or Tenant's Final Plans after Landlord's
approval thereof; (c) changes to the Building Plans resulting from changes to
the Tenant's Final Plans after Landlord's approval thereof; (d) Tenant's request
for materials, finishes, or installations which are not readily available or
which are incompatible with Landlord's standard specifications for tenant
improvements for the Development; (e) any delay of Tenant in making payment to
Landlord for Tenant's share of the Work Cost; or (f) any other act or failure to
act by Tenant, Tenant's employees, agents, architects, independent contractors,
consultants and/or any other person performing or required to perform services
on behalf of Tenant.

10.    FORCE MAJEURE DELAYS.    For purposes of this Work Letter, "Force Majeure
Delays" means any actual delay in the construction of the Tenant Improvements,
which is beyond the reasonable control of Landlord or Tenant, as the case may
be, as described in Paragraph 33 of the Lease.

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        IN WITNESS WHEREOF, the undersigned Landlord and Tenant have caused this
Work Letter Agreement to be duly executed by their duly authorized
representatives as of the date of the Lease.

TENANT:   LANDLORD:
CUTTER & BUCK, INC.,
a Washington corporation
 
ZELMAN RENTON, LLC,
a Delaware limited liability company
By:
 
/s/  MARTIN MARKS      

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By:
 
ZIP Renton, LLC, a Delaware LLC     Print Name: Martin Marks

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      Its:   Managing Member     Title: President

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      By:   Zelman Industrial Partners, Inc.,
a California corporation,                   Its:   Managing Member
By:
 
/s/  S. LOWBER      

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By:
 
/s/  BEN REILING      

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    Print Name: S. Lowber               Ben Reiling      

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              Its:   President     Title: CFO

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ABOVE-STANDARD IMPROVEMENTS

Item

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  Estimated Additional Cost

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R-21 Roof Insulation (for heating requirement)   $   R-11 Wall Insulation (for
heating requirement)   $   Dock Equipment (10 - 30,000 lb. Levelers/Lights)   $
  Warehouse Heating   $   Lighting Upgrade   $   Power Upgrade   $   Contractors
General Conditions/Supervision/Insurance   $   Washington State Sales Tax   $  
Architectural and Engineering Costs   $   Permits   $      

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  Total   $      

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EXHIBIT "D"

NOTICE OF LEASE TERM DATES
AND TENANT'S PERCENTAGE

    To:   Date:
Re:
 
Lease dated                        , 2001 (the "Lease"), between        ,
Landlord, and                                                 , Tenant,
concerning the building located at                                         
       (the "Premises").

To Whom It May Concern:

        In accordance with the subject Lease, we wish to advise and/or confirm
as follows:

        1.    That the Premises have been accepted by the Tenant as being
substantially complete in accordance with the subject Lease and that there is no
deficiency in construction except for latent defects as may be indicated on the
"Punch-List" prepared by Landlord and Tenant, a copy of which is attached
hereto.

        2.    That the Tenant has possession of the subject Premises and
acknowledges that under the provisions of the Lease the Commencement Date
is                        , and the Term of the Lease will expire
on                        .

        3.    That in accordance with the Lease, rent commenced to accrue
on                        .

        4.    If the Commencement Date of the Lease is other than the first day
of the month, the first billing will contain a pro rata adjustment. Each billing
thereafter will be for the full amount of the monthly installment as provided
for in the Lease.

        5.    Rent is due and payable in advance on the first day of each and
every month during the Term of the Lease. Your rent checks should be made
payable to                                                 at                 
                                                        .

        6.    The number of square feet within the Premises
is                        square feet as determined by Landlord's architect in
accordance with the terms of the Lease.

        7.    Tenant's Percentage, as adjusted based upon the number of square
feet within the Premises, is    %.

    LANDLORD:
 
 
ZELMAN RENTON, LLC,
a Delaware limited liability company
 
 
By:
 
ZIP Renton, LLC, a Delaware LLC         Its:   Managing Member
 
 
 
 
By:
 
Zelman Industrial Partners, Inc.,
a California corporation,             Its:   Managing Member
 
 
 
 
 
 
By:
 
                 

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Ben Reiling                 Its:   President

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EXHIBIT "E"

INDUSTRIAL LEASE
[Single Tenant - Triple Net]

DEFINITION OF OPERATING EXPENSES

        1.    Items Included in Operating Expenses.    The term "Operating
Expenses" as used in the Lease to which this Exhibit "E" is attached means: all
costs and expenses of operation and maintenance all buildings (exterior
maintenance costs) and Common Areas of the Development (as such terms are
defined in the Lease), as determined by generally accepted accounting practices,
including the following costs by way of illustration but not limitation, but
excluding those items specifically set forth in Paragraph 2 below: (a) real
property taxes (as defined in Paragraph 12 of the Lease); (b) any and all
assessments imposed with respect to the Building pursuant to any covenants,
conditions and restrictions affecting the Development, the Common Areas or the
Building amortized over the longest allowable period; (c) Common Area water
charges and other Common Area utilities; (d) utilities surcharges and any other
costs, levies or assessments resulting from statutes or regulations promulgated
by any government or quasi-government authority in connection with the use,
occupancy or alteration of the Building or the Premises or the parking
facilities serving the Building or the Premises; (e) costs of insurance
(including reasonable deductibles) obtained by Landlord pursuant to Paragraph 19
of the Lease; (f) repair and maintenance of storm drainage facilities;
(g) security (if deemed necessary by Landlord); (h) labor; (i) costs incurred in
the management of the Development, including, without limitation: (i) supplies,
(ii) Development management office rental, supplies, equipment and related
operating expenses, and (iii) a management/administrative fee determined as a
percentage of the annual gross revenues of the Development exclusive of the
proceeds of financing or a sale of the Development or any portion thereof, which
management/administrative fee shall not exceed three percent (3%) of such annual
gross revenues, and an administrative fee for the management of the Common Area
(not to exceed five percent (5%) of Common Area Operating Expenses);
(j) supplies, materials, equipment and tools including rental of personal
property used for maintenance; (k) repair and maintenance of the buildings
(including, without limitation, the exterior roofs) within the Development;
(l) maintenance, costs and upkeep of all parking and other Common Areas,
including sidewalks, curbs and drives; (m) depreciation on a straight line basis
and rental of personal property used in maintenance; (n) amortization on a
straight line basis over the useful life [together with interest at the Interest
Rate on the unamortized balance] of all capitalized expenditures which are:
(i) reasonably intended to produce a reduction in operating charges or energy
consumption; or (ii) required under any governmental law or regulation that was
not applicable to the Development at the time it was originally constructed; or
(iii) for replacement of any Development equipment needed to operate the
Development at the same quality levels as prior to the replacement; (o) costs
and expenses of gardening and landscaping; (p) maintenance of signs (other than
signs of tenants of the Development); (q) personal property taxes levied on or
attributable to personal property used in connection with the Common Areas;
(r) reasonable accounting, audit, verification, legal and other consulting fees;
(s) repair, maintenance and monitoring of fire protection systems; (t) exterior
pest control; (u) exterior window washing; and (v) costs and expenses of
repairs, resurfacing, repairing, maintenance, painting, exterior lighting,
cleaning, and similar items, including appropriate reserves.

        2.    Items Excluded From Operating Expenses.    Notwithstanding the
provisions of Paragraph 1 above to the contrary, "Operating Expenses" will not
include: (a) Landlord's federal or state income, franchise, inheritance or
estate taxes; (b) any ground lease rental; (c) costs incurred by Landlord for
the repair of damage to the extent that Landlord is reimbursed by insurance or
condemnation proceeds or by tenants, warrantors or other third persons;
(d) depreciation, amortization and interest payments, except as specifically
provided herein, and except on materials, tools, supplies and vendor-type
equipment purchased by Landlord to enable Landlord to supply services Landlord
might otherwise contract for with a third party, where such depreciation,
amortization and interest payments would

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otherwise have been included in the charge for such third party's services, all
as determined in accordance with generally accepted accounting practices;
(e) brokerage commissions, finders' fees, attorneys' fees, space planning costs
and other costs incurred by Landlord in leasing or attempting to lease space in
the Development; (f) costs of a capital nature, including, without limitation,
capital improvements, capital replacements, capital repairs, capital equipment
and capital tools, all as determined in accordance with generally accepted
accounting practices; provided, however, the capital expenditures set forth in
Subparagraph 1(n) above will in any event be included in the definition of
Operating Expenses; (g) interest, principal, points and fees on debt or
amortization on any mortgage, deed of trust or other debt encumbering the
Building or the Development; (h) costs, including permit, license and inspection
costs, incurred with respect to the installation of tenant improvements for
tenants in the Development (including the original Tenant Improvements for the
Premises), or incurred in renovating or otherwise improving, decorating,
painting or redecorating space for tenants or other occupants of the
Development, including space planning and interior design costs and fees;
(i) attorneys' fees and other costs and expenses incurred in connection with
negotiations or disputes with present or prospective tenants or other occupants
of the Development; provided, however, that Operating Expenses will include
those attorneys' fees and other costs and expenses incurred in connection with
negotiations, disputes or claims relating to items of Operating Expenses,
enforcement of rules and regulations of the Development, and such other matters
relating to the maintenance of standards required of Landlord under the Lease;
(j) except for the administrative/management fees described in Subparagraph 1(i)
above, costs of Landlord's general corporate overhead; (k) all items and
services for which Tenant or any other tenant in the Development reimburses
Landlord (other than through operating expense pass-through provisions);
(l) electric power costs for which any tenant directly contracts with the local
public service company; (m) costs arising from Landlord's charitable or
political contributions; and (n) any costs relating to the initial development
and construction of the Development.

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EXHIBIT "F"

ESTOPPEL CERTIFICATE

        The undersigned,                                          
                               ("Tenant"), hereby certifies
to                                                 , as follows:

        1.    Attached hereto is a true, correct and complete copy of that
certain lease dated                        , 200  ,
between                        ("Landlord") and Tenant (the "Lease"), regarding
the premises located at                                                 (the
"Premises"). The Lease is now in full force and effect and has not been amended,
modified or supplemented, except as set forth in Paragraph 4 below.

        2.    The Term of the Lease commenced on                        , 200  .

        3.    The Term of the Lease shall expire on                        ,
200  .

        4.    The Lease has: (Initial one)

        (        )        not been amended, modified, supplemented, extended,
renewed or assigned.

        (        )        been amended, modified, supplemented, extended,
renewed or assigned by the following described terms or agreements, copies of
which are attached hereto:

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          5.      Tenant has accepted and is now in possession of the Premises.

          6.      Tenant and Landlord acknowledge that Landlord's interest in
the Lease will be assigned to                                         
                   and that no modification, adjustment, revision or
cancellation of the Lease or amendments thereto shall be effective unless
written consent of                                         
                   is obtained, and that until further notice, payments under
the Lease may continue as heretofore.

          7.      The amount of Monthly Base Rent is
$                              .

          8.      The amount of Security Deposit (if any) is
$                              .

No other security deposits have been made except as follows:

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          9.      Tenant is paying the full lease rental which has been paid in
full as of the date hereof. No rent or other charges under the Lease have been
paid for more than thirty (30) days in advance of its due date except as
follows:

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          10.    All work is required to be performed by Landlord under the
Lease has been completed except as follows:

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          11.    To the best of Tenant's knowledge, there are no defaults on the
part of the Landlord or Tenant under the Lease except as follows:

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          12.    To the best of Tenant's knowledge, tenant has no defense as to
its obligations under the Lease and claims no set-off or counterclaim against
the other party except as follows:

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        13.    Tenant has no right to any concession (rental or otherwise) or
similar compensation in connection with renting the space it occupies other than
as provided in the Lease except as follows:

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All provisions of the Lease and the amendments thereto (if any) referred to
above are hereby ratified.

        The foregoing certification is made with the knowledge
that                                                 is about to fund a loan to
Landlord or                                                 is about to purchase
the Building from Landlord and that                        is relying upon the
representations herein made in funding such loan or in purchasing the Building.

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        IN WITNESS WHEREOF, this certificate has been duly executed and
delivered by the authorized officers of the undersigned as
of                        , 200  .

TENANT:
 
 

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,
 
  a                            

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By:
 
 
 
 
 
 
 
 
 
         

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            Print Name:                            

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            Title:                            

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SAMPLE ONLY
[NOT FOR EXECUTION]

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EXHIBIT "G"

RULES AND REGULATIONS

A.    General Rules and Regulations.    The following rules and regulations
govern the use of the Building and the Common Areas. Tenant will be bound by
such rules and regulations and agrees to cause Tenant's Authorized Users, its
employees, subtenants, assignees, contractors and suppliers to observe the same.

          1.  Except as specifically provided in the Lease to which these Rules
and Regulations are attached, no sign, placard, picture, advertisement, name or
notice may be installed or displayed on any part of the outside or inside of the
Building without the prior written consent of Landlord. Landlord will have the
right to remove, at Tenant's expense and without notice, any sign installed or
displayed in violation of this rule. All approved signs or lettering on doors
and walls are to be printed, painted, affixed or inscribed at the expense of
Tenant and under the direction of Landlord by a person or company designated or
approved by Landlord.

          2.  If Landlord objects in writing to any curtains, blinds, shades,
screens or hanging plants or other similar objects attached to or used in
connection with any window or door of the Premises, or placed on any windowsill,
which is visible from the exterior of the Premises, Tenant will immediately
discontinue such use. Tenant agrees not to place anything against or near glass
partitions or doors or windows which may appear unsightly from outside the
Premises.

          3.  Tenant will not obstruct any sidewalks, passages, exits or
entrances of the Development. The sidewalks, passages, exits and entrances are
not open to the general public, but are open, subject to reasonable regulations,
to Tenant's business invitees. Landlord will in all cases retain the right to
control and prevent access thereto of all persons whose presence in the
reasonable judgment of Landlord would be prejudicial to the safety, character,
reputation and interest of the Development and its tenants, provided that
nothing herein contained will be construed to prevent such access to persons
with whom any tenant normally deals in the ordinary course of its business,
unless such persons are engaged in illegal or unlawful activities. No tenant and
no employee or invitee of any tenant will go upon the roof of the Building.

          4.  Landlord expressly reserves the right to absolutely prohibit
solicitation, canvassing, sales and displays of products, goods and wares in all
portions of the Development except for such activities as may be expressly
requested by a tenant and conducted solely within such requesting tenant's
premises. Landlord reserves the right to restrict and regulate the use of the
Common Areas of the Development by invitees of tenants providing services to
tenants on a periodic or daily basis including food and beverage vendors. Such
restrictions may include limitations on time, place, manner and duration of
access to a tenant's premises for such purposes.

          5.  Landlord reserves the right to prevent access to the Development
in case of invasion, mob, riot, public excitement or other commotion by closing
the doors or by other appropriate action.

          6.  Tenant shall not alter any lock or install any new additional lock
or bolt on any door of the Premises. Tenant, upon the termination of its
tenancy, will deliver to Landlord the keys to all doors which have been
furnished to Tenant, and in the event of loss of any keys so furnished, will pay
Landlord therefor.

          7.  If Tenant requires telegraphic, telephonic, burglar alarm,
satellite dishes, antennae or similar services, it will first obtain Landlord's
approval, and comply with, Landlord's reasonable rules and requirements
applicable to such services.

          8.  No deliveries will be made which impede or interfere with other
tenants or the operation of the Development.

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          9.  Tenant will not permit or allow the Premises to be occupied or
used in a manner offensive or objectionable to Landlord or other occupants of
the Building by reason of noise, odors or vibrations, nor will Tenant bring into
or keep in or about the Premises any birds or animals.

        10.  The toilet rooms, toilets, urinals, wash bowls and other apparatus
will 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 therein. The
expense of any breakage, stoppage or damage resulting from any violation of this
rule will be borne by the tenant who, or whose employees or invitees, break this
rule.

        11.  Tenant will not sell, or permit the sale at retail of newspapers,
magazines, periodicals, theater tickets or any other goods or merchandise to the
general public in or on the Premises. Tenant will not make any
building-to-building solicitation of business from other tenants in the
Development. Tenant will not use the Premises for any business or activity other
than that specifically provided for in this Lease. Canvassing, soliciting and
distribution of handbills or any other written material, and peddling in the
Development are prohibited, and Tenant will cooperate with Landlord to prevent
such activities.

        12.  Tenant will not install any ratio or television antenna,
loudspeaker, satellite dishes or other devices on the roof(s) or exterior walls
of the Building or the Development without signing Landlord's license agreement
with respect thereto. Tenant will not interfere with radio or television
broadcasting or reception from or in the Development or elsewhere.

        13.  Tenant will not affix any floor covering to the floor of the
Premises in any manner except as approved by Landlord. Tenant shall repair any
damage resulting from noncompliance with this rule.

        14.  Landlord reserves the right to exclude or expel from the
Development any person who, in Landlord's judgment, is in violation of any of
the Rules and Regulations.

        15.  Tenant will store all its trash and garbage within its Premises or
in other facilities provided by Landlord. Tenant will not place in any trash box
or receptacle any material which cannot be disposed of in the ordinary and
customary manner of trash and garbage disposal. All garbage and refuse disposal
is to be made in accordance with directions issued from time to time by
Landlord.

        16.  The Premises will not be used for lodging nor shall the Premises be
used for any improper, immoral or objectionable purpose.

        17.  Tenant agrees to comply with all safety, fire protection and
evacuation procedures and regulations established by Landlord or any
governmental agency.

        18.  Tenant assumes any and all responsibility for protecting its
Premises from theft, robbery and pilferage, which includes keeping doors locked
and other means to entry to the Premises closed.

        19.  Tenant shall use at Tenant's cost such pest extermination and
control contractor(s) as Landlord may direct and at such intervals as Landlord
may reasonably require.

        20.  To the extent Landlord reasonably deems it necessary to exercise
exclusive control over any portions of the Common Areas for the mutual benefit
of the tenants in the Development, Landlord may do so subject to reasonable,
non-discriminatory additional rules and regulations (so long as the parking,
access and visibility of the Premises are not affected).

        21.  Tenant's requirements will be attended to only upon appropriate
application to Landlord's asset management office for the Development by an
authorized individual of Tenant. Employees of Landlord will not perform any work
or do anything outside of their regular duties unless under special instructions
from Landlord, and no employee of Landlord will admit any person (Tenant or
otherwise) to any office without specific instructions from Landlord.

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        22.  These Rules and Regulations are in addition to, and will not be
construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of the Lease. Landlord may waive any one or
more of these Rules and Regulations for the benefit of Tenant or any other
tenant, but no such waiver by Landlord will be construed as a waiver of such
Rules and Regulations in favor of Tenant or any other tenant, nor prevent
Landlord from thereafter enforcing any such Rules and Regulations against any or
all of the tenants of the Development.

        23.  Landlord reserves the right to make such other and reasonable and
non-discriminatory Rules and Regulations as, in its judgment, may from time to
time be needed for safety and security, for care and cleanliness of the
Development and for the preservation of good order therein. Tenant agrees to
abide by all such Rules and Regulations herein above stated and any additional
reasonable and non-discriminatory rules and regulations which are adopted.
Tenant is responsible for the observance of all of the foregoing rules by
Tenant's employees, agents and contractors.

B.    Parking Rules and Regulations.    The following rules and regulations
govern the use of the parking facilities which serve the Building. Tenant will
be bound by such rules and regulations and agrees to cause its employees,
subtenants, assignees, contractors and suppliers to observe the same:

          1.  Tenant will not permit or allow any vehicles that belong to or are
controlled by Tenant or Tenant's employees, subtenants, customers or invitees to
be loaded, unloaded or parked in areas other than those designated by Landlord
for such activities. No vehicles are to be left in the parking areas overnight
and no vehicles are to be parked in the parking areas other than normally sized
passenger automobiles, motorcycles and pick-up trucks. Trucks may park in
loading areas only during the time such trucks are being loaded or unloaded. No
extended term storage of vehicles is permitted.

          2.  Vehicles must be parked entirely within painted stall lines of a
single parking stall.

          3.  All directional signs and arrows must be observed.

          4.  The speed limit within all parking areas shall be five (5) miles
per hour.

          5.  Parking is prohibited:

        (a)  in areas not striped for parking;

        (b)  in aisles or on ramps;

        (c)  where "no parking" signs are posted;

        (d)  in cross-hatched areas; and

        (e)  in such other areas as may be designated from time to time by
Landlord or Landlord's parking operator.

          6.  Landlord reserves the right, without cost or liability to
Landlord, to tow any vehicle if such vehicle's audio theft alarm system remains
engaged for an unreasonable period of time.

          7.  Washing, waxing, cleaning or servicing of any vehicle in any area
not specifically reserved for such purpose is prohibited.

          8.  Landlord may refuse to permit any person to park in the parking
facilities who violates these rules with unreasonable frequency, and any
violation of these rules shall subject the violator's car to removal, at such
car owner's expense. Tenant agrees to use its best efforts to acquaint its
employees, subtenants, assignees, contractors, suppliers, customers with these
parking provisions, rules and regulations.

          9.  Parking stickers, access cards, or any other device or form of
identification supplied by Landlord as a condition of use of the parking
facilities shall remain the property of Landlord. Parking identification
devices, if utilized by Landlord, must be displayed as requested and may not be
mutilated

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in any manner. The serial number of the parking identification device may not be
obliterated. Parking identification devices, if any, are not transferable and
any device in the possession of an unauthorized holder will be void. Landlord
reserves the right to refuse the sale of monthly stickers or other parking
identification devices to Tenant or any of its agents, employees or
representatives who willfully refuse to comply with these rules and regulations
and all unposted city, state or federal ordinances, laws or agreements.

        10.  Loss or theft of parking identification devices or access cards
must be reported to the management office in the Development immediately, and a
lost or stolen report must be filed by the Tenant or user of such parking
identification device or access card at the time. Landlord has the right to
exclude any vehicle from the parking facilities that does not have a parking
identification device or valid access card. Any parking identification device or
access card which is reported lost or stolen and which is subsequently found in
the possession of an unauthorized person will be confiscated and the illegal
holder will be subject to prosecution.

        11.  Landlord is not responsible for damage by water or fire, or for the
acts or omissions of others, or for articles left in vehicles.

        12.  Landlord reserves the right, without cost or liability to Landlord,
to tow any vehicles which are used or parked in violation of these rules and
regulations.

        13.  Landlord reserves the right from time to time to modify and/or
adopt such other reasonable and non-discriminatory rules and regulations for the
parking facilities as it deems reasonably necessary for the operation of the
parking facilities.

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EXHIBIT "H"

OAKESDALE BUSINESS CAMPUS

TENANT ENVIRONMENTAL QUESTIONNAIRE

        The purpose of this form is to obtain information regarding the use or
proposed use of hazardous materials at the premises. Prospective tenants should
answer the questions in light of their proposed operations at the premises.
Existing tenants should answer the questions as they relate to ongoing
operations at the premises and should update any information previously
submitted. If additional space is needed to answer the questions, you may attach
separate sheets of paper to this form.

        Your cooperation in this matter is appreciated

1.   GENERAL INFORMATION
 
 
Name of Responding Company:

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    Check the Applicable Status: Prospective Tenant                 Existing
Tenant          Mailing Address:

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    Contact Person and Title:

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    Telephone Number: (      )                          Address of Leased
Premises:

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    Length of Lease Term:

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    Describe the proposed operations to take place on the premises, including
principal products manufactured or services to be conducted. Existing tenants
should describe any proposed changes to ongoing operations.
 
 

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2.
 
STORAGE OF HAZARDOUS MATERIALS
 
 
2.1
 
Will any hazardous materials be used or stored on-site?     Wastes       Yes    
  No                                    

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        Chemical Products       Yes       No                                    

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        2.2   Attach a list of any hazardous materials to be used or stored, the
quantities that will be on-site at any given time, and the location and method
of storage (e.g., 55-gallon drums on concrete pad).
3.
 
STORAGE TANKS AND SUMPS
 
 
3.1
 
Is any above or below ground storage of gasoline, diesel or other hazardous
substances in tanks or sumps proposed or currently conducted at the premises?  
      Yes       No                                    

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                            If yes, describe the materials to be stored, and the
type, size and construction of the sump or tank. Attach copies of any permits
obtained for the storage of such substances.
 
 
 
 

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    3.2   Have any of the tanks or sumps been inspected or tested for leakage?  
      Yes       No                                    

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                            If so, attach the results.

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    3.3   Have any spills or leaks occurred from such tanks or sumps?        
Yes       No                                    

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                            If so, describe.
 
 
 
 

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    3.4   Were any regulatory agencies notified of the spill or leak?        
Yes       No                                    

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                            If so, attach copies of any spill reports filed, any
clearance letters or other correspondence from regulatory agencies relating to
the spill or leak.
 
 
3.5
 
Have any underground storage tanks or sumps been taken out of service or
removed?         Yes       No                                    

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                            If yes, attach copies of any closure permits and
clearance obtained from regulatory agencies relating to closure and removal of
such tanks.
4.
 
SPILLS
 
 
4.1
 
During the past year, have any spills occurred at the premises?         Yes    
  No                                    

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                        If yes, please describe the location of the spill.
 
 
 
 

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    4.2   Were any agencies notified in connection with such spills?         Yes
      No                                    

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                            If yes, attach copies of any spill reports or other
correspondence with regulatory agencies.
 
 
4.3
 
Were any clean-up actions undertaken in connection with the spills?         Yes
      No                                    

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                            Attach copies of any clearance letters obtained from
any regulatory agencies involved and the results of any final soil or
groundwater sampling done upon completion of the clean-up work.
5.
 
WASTE MANAGEMENT
 
 
5.1
 
Has your company been issued an EPA Hazardous Waste Generator I.D. Number?      
  Yes       No                                    

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                        5.2   Has your company filed a biennial report as a
hazardous waste generator?         Yes       No                                
   

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                            If so, attach a copy of the most recent report
filed.
 
 
5.3
 
Attach a list of the hazardous wastes, if any, generated or to be generated at
the premises, its hazard class and the quantity generated on a monthly basis.
 
 
5.4
 
Describe the method(s) of disposal for each waste. Indicate where and how often
disposal will take place.             On-site treatment or recovery            

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            Discharged to sewer            

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            Transported and Disposal of off-site            

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            Incinerator            

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    5.5   Indicate the name of the person(s) responsible for maintaining copies
of hazardous waste manifests completed for off-site shipments of hazardous
waste.

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    5.6   Is any treatment of processing of hazardous wastes currently conducted
or proposed to be conducted at the premises:         Yes       No              
                     

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                            If yes, please describe any existing or proposed
treatment methods.
 
 
 
 

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    5.7   Attach copies of any hazardous waste permits or licenses issued to
your company with respect to its operations at the premises.
6.
 
WASTEWATER TREATMENT/DISCHARGE
 
 
6.1
 
Do you discharge wastewater to:             storm drain?       sewer?          
 

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                            surface water?       no industrial discharge        

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                    6.2   Is your wastewater treated before discharge?        
Yes       No                                    

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                            If yes, describe the type of treatment conducted.
 
 
 
 

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    6.3   Attach copies of any wastewater discharge permits issued to your
company with respect to its operations at the premises.
7.
 
AIR DISCHARGES
 
 
7.1
 
Do you have any filtration systems or stacks that discharge into the air?      
  Yes       No                                    

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                        7.2   Do you operate any of the following types of
equipment or any other equipment requiring an air emissions permit?            
Spray booth        

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                                            Dip tank        

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                                            Drying oven        

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                                            Incinerator        

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                                            Other (please describe)            

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            No equipment requiring air permits        

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                                    7.3   Are air emissions from your operations
monitored?         Yes       No                                    

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                            If so, indicate the frequency of monitoring and a
description of the monitoring results.
 
 
 
 

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    7.4   Attach copies of any air emissions permits pertaining to your
operations at the premises.
8.
 
HAZARDOUS MATERIALS DISCLOSURES
 
 
8.1
 
Does your company handle hazardous materials in a quantity equal to or exceeding
an aggregate of 500 pounds, 55 gallons, or 200 cubic feet per month?         Yes
      No                                    

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                        8.2   Has your company prepared a hazardous materials
management plan pursuant to any applicable requirements of a local fire
department or governmental agency?         Yes       No                        
           

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                            If so, attach a copy of the business plan.

3

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    8.3   Has your company adopted any voluntary environmental, health or safety
program?         Yes       No                                    

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                            If so, attach a copy of the program.
9.
 
ENFORCEMENT ACTIONS, COMPLAINTS
 
 
9.1
 
Has your company ever been subject to any agency enforcement actions,
administrative orders, or consent decrees?         Yes       No                
                   

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                            If so, describe the actions and any continuing
compliance obligations imposed as a result of these actions.
 
 
9.2
 
Has your company ever received requests for information, notice or demand
letters, or any other inquiries regarding its operations?         Yes       No  
                                 

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                        9.3   Have there ever been, or are there now pending,
any lawsuits against the company regarding any environmental or health and
safety concerns?         Yes       No                                    

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                        9.4   Has an environmental audit ever been conducted at
your company's current facility?         Yes       No                          
         

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                            If so, identify who conducted the audit and when it
was conducted.

4

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CUTTER & BUCK, INC.

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Company    
By:
 
/s/  MARTIN MARK      

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      Title:   President

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        Date:   5/15/01

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QuickLinks

TABLE OF CONTENTS
INDUSTRIAL LEASE [Single Tenant - Triple Net]
ADDENDUM TO INDUSTRIAL LEASE
EXHIBIT "A-I"
EXHIBIT "A-II"
EXHIBIT "B"
EXHIBIT "C"
ABOVE-STANDARD IMPROVEMENTS
EXHIBIT "D"
EXHIBIT "E"
DEFINITION OF OPERATING EXPENSES
EXHIBIT "F"
EXHIBIT "G"
EXHIBIT "H"