<PAGE>

                                                                   EXHIBIT 10.21

                                                            10/31/01 CALWESTMTIN
                                                            CALIFORNIA FORM 1/03

                                      LEASE

                        CALWEST INDUSTRIAL HOLDINGS, LLC,
                      A DELAWARE LIMITED LIABILITY COMPANY
                                    Landlord

                                       and

                             SCM MICROSYSTEMS, INC.,
                             A DELAWARE CORPORATION
                                     Tenant

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                           PAGE
<S>                                                                                                                        <C>
1.       USE AND RESTRICTIONS ON USE....................................................................................     1

2.       TERM...........................................................................................................     2

3.       RENT...........................................................................................................     3

4.       RENT ADJUSTMENTS...............................................................................................     4

5.       SECURITY DEPOSIT...............................................................................................     7

6.       ALTERATIONS....................................................................................................     7

7.       REPAIR.........................................................................................................     9

8.       LIENS..........................................................................................................    10

9.       ASSIGNMENT AND SUBLETTING......................................................................................    10

10.      INDEMNIFICATION................................................................................................    13

11.      INSURANCE......................................................................................................    13

12.      WAIVER OF SUBROGATION..........................................................................................    14

13.      SERVICES AND UTILITIES.........................................................................................    14

14.      HOLDING OVER...................................................................................................    14

15.      SUBORDINATION..................................................................................................    14

16.      RULES AND REGULATIONS..........................................................................................    15

17.      REENTRY BY LANDLORD............................................................................................    15

18.      DEFAULT........................................................................................................    16

19.      REMEDIES.......................................................................................................    17

20.      TENANT'S BANKRUPTCY OR INSOLVENCY..............................................................................    18

21.      QUIET ENJOYMENT................................................................................................    19

22.      CASUALTY.......................................................................................................    19

23.      EMINENT DOMAIN.................................................................................................    20

24.      SALE BY LANDLORD...............................................................................................    20

25.      ESTOPPEL CERTIFICATES..........................................................................................    20

26.      SURRENDER OF PREMISES..........................................................................................    21

27.      NOTICES........................................................................................................    21

28.      TAXES PAYABLE BY TENANT........................................................................................    22

29.      INTENTIONALLY OMITTED..........................................................................................    22

30.      DEFINED TERMS AND HEADINGS.....................................................................................    22

31.      TENANT'S AUTHORITY.............................................................................................    22

32.      FINANCIAL STATEMENTS AND CREDIT REPORTS........................................................................    22

33.      COMMISSIONS....................................................................................................    23

34.      TIME AND APPLICABLE LAW........................................................................................    23

35.      SUCCESSORS AND ASSIGNS.........................................................................................    23

36.      ENTIRE AGREEMENT...............................................................................................    23

37.      EXAMINATION NOT OPTION.........................................................................................    23
</TABLE>

                                        i

<PAGE>


<TABLE>
<S>                                                                                                                        <C>
38.      RECORDATION....................................................................................................    23

39.      LIMITATION OF LANDLORD'S LIABILITY.............................................................................    23

40.      RENEWAL OPTION.................................................................................................    23

41.      SIGNAGE........................................................................................................    23

42.      INTENTIONALLY OMITTED..........................................................................................    23

43.      ROOF RIGHTS FOR DEVICE.........................................................................................    23
</TABLE>

EXHIBIT A - FLOOR PLAN DEPICTING THE PREMISES

EXHIBIT A-1 - SITE PLAN DEPICTING THE PREMISES

EXHIBIT B - INITIAL ALTERATIONS

EXHIBIT C - COMMENCEMENT DATE MEMORANDUM

EXHIBIT D - RULES AND REGULATIONS

EXHIBIT E - SIGN SPECIFICATIONS

EXHIBIT F- FORM OF SUBORDINATION, NONDISTRUBANCE AND ATTORNMENT AGREEMENT

                                       ii

<PAGE>

                        MULTI-TENANT INDUSTRIAL NET LEASE

                                 REFERENCE PAGES

BUILDING:                            Scott Creek Business Park

LANDLORD:                            CALWEST INDUSTRIAL HOLDINGS, LLC,
                                     A DELAWARE LIMITED LIABILITY
                                     COMPANY

LANDLORD'S ADDRESS:                  5934 Gibraltar Drive, Suite 102
                                     Pleasanton, CA 94588

WIRE INSTRUCTIONS AND/OR ADDRESS     CalWest Industrial Holdings, LLC
FOR RENT PAYMENT:                    File #30077
                                     P.O. Box 60000
                                     San Francisco, CA 94160-0001

LEASE REFERENCE DATE:
                                     March 18, 2003
TENANT:                              SCM MICROSYSTEMS, INC.,
                                     A DELAWARE CORPORATION

TENANT'S NOTICE ADDRESS:

       (a) As of beginning of Term:  466 Kato Terrace
                                     Fremont, CA 94539
                                     Attention: Chief Financial Officer

       (b) Prior to beginning of     47211 Bayside Parkway
           Term (if different):      Fremont, CA 94538
                                     Attention: Chief Financial Officer

PREMISES ADDRESS:                    466 Kato Terrace, Fremont, California

PREMISES RENTABLE AREA:              approximately 18,322 sq. ft. (for outline
                                     of Premises see Exhibit A)

USE:                                 General office use, video software
                                     design, software engineering,
                                     laboratory, warehouse, engineering, sales
                                     and related uses in conformity with the
                                     municipal zoning requirements of the
                                     City of Fremont.

SCHEDULED COMMENCEMENT DATE:         April 15, 2003

TERM OF LEASE:                       Approximately thirty-six (36) months and
                                     sixteen (16) days beginning on the
                                     Commencement Date and ending on the
                                     Termination Date.

TERMINATION DATE:                    April 30, 2006

                                     -iii-

<PAGE>

ANNUAL RENT and MONTHLY INSTALLMENT OF RENT(Article 3)

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
        PERIOD             RENTABLE SQUARE       ANNUAL RENT                        MONTHLY INSTALLMENT
   FROM       THROUGH         FOOTAGE          PER SQUARE FOOT      ANNUAL RENT          OF RENT
-------------------------------------------------------------------------------------------------------
<S>          <C>           <C>                 <C>                  <C>             <C>
4/15/2003    4/30/2004         18,322              $8.40            $153,904.80          $12,825.40
-------------------------------------------------------------------------------------------------------
 5/1/2004    4/30/2005         18,322              $8.64            $158,302.08          $13,191.84
-------------------------------------------------------------------------------------------------------
 5/1/2005    4/30/2006         18,322              $8.88            $162,699.36          $13,558.28
-------------------------------------------------------------------------------------------------------
</TABLE>

INITIAL ESTIMATED MONTHLY INSTALLMENT   $  6,229.00
OF RENT ADJUSTMENTS (Article 4)

TENANT'S PROPORTIONATE SHARE:                  46.8%

SECURITY DEPOSIT:                       $ 20,000.00

ASSIGNMENT/SUBLETTING FEE               $  1,000.00

REAL ESTATE BROKER DUE COMMISSION:      Colliers International
                                        Cornish and Carey Commercial

TENANT'S SIC CODE:                             7372

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

LANDLORD:                                            TENANT:

CALWEST INDUSTRIAL HOLDINGS, LLC,                    SCM MICROSYSTEMS, INC.,
A DELAWARE LIMITED LIABILITY COMPANY                 A DELAWARE CORPORATION

By:  RREEF Management Company,
     a Delaware corporation, its Property Manager

By: ______________________________                By: _________________________

Name: Timothy DeGoosh                             Name: _______________________

Title: District Manager                           Title: ______________________

Dated: _______________________, 2003              Dated: _________________, 2003

                                       iv

<PAGE>


                                      LEASE

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

1.   USE AND RESTRICTIONS ON USE.

         1.1      The Premises are to be used solely for the purposes set forth
                  on the Reference Pages and for no other uses without
                  Landlord's prior written consent which may be withheld in
                  Landlord's sole discretion. Tenant shall not do or permit
                  anything to be done in or about the Premises which will in any
                  way obstruct or interfere with the rights of other tenants or
                  occupants of the Building or injure, annoy, or disturb them,
                  or allow the Premises to be used for any improper, immoral,
                  unlawful, or objectionable purpose, or commit any waste.
                  Tenant shall not do, permit or suffer in, on, or about the
                  Premises the sale of any alcoholic liquor without the written
                  consent of Landlord first obtained. Tenant shall comply with
                  all governmental laws, ordinances and regulations applicable
                  to the use of the Premises and its occupancy and shall
                  promptly comply with all governmental orders and directions
                  for the correction, prevention and abatement of any violations
                  in the Building or appurtenant land, caused or permitted by,
                  or resulting from the specific use by, Tenant, or in or upon,
                  or in connection with, the Premises, all at Tenant's sole
                  expense. Tenant shall not do or permit anything to be done on
                  or about the Premises or bring or keep anything into the
                  Premises which will in any way increase the rate of,
                  invalidate or prevent the procuring of any insurance
                  protecting against loss or damage to the Building or any of
                  its contents by fire or other casualty or against liability
                  for damage to property or injury to persons in or about the
                  Building or any part thereof. Landlord will, at Landlord's
                  expense, perform all acts required to comply with laws, rules
                  or regulations in effect as of the date of this Lease and as
                  interpreted and enforced in the county in which the Premises
                  is located, with respect to the foregoing as the same affect
                  the Premises and the Building. Landlord will perform all acts
                  required to comply with laws, rules or regulations in effect
                  after the date of this Lease with respect to the foregoing as
                  the same affect the Building and the common areas and such
                  costs shall be a part of Expenses as provided in Article 4 of
                  this Lease. Landlord will perform all acts required to comply
                  with laws, rules or regulations in effect after the date of
                  this Lease with respect to the foregoing as the same affect
                  the Premises and such costs shall be the sole responsibility
                  of Tenant. To the extent the foregoing is a cost that is the
                  responsibility of Tenant as provided herein, Tenant shall pay
                  to Landlord, within 10 days following Landlord's written
                  demand therefor, which demand shall be accompanied by
                  documented evidence reasonably acceptable to Tenant reflecting
                  all such costs, the costs and expenses related to such
                  compliance work, plus any and all third-party costs actually
                  incurred by Landlord in connection with such work.
                  Notwithstanding the foregoing, Landlord shall have the right
                  to contest any alleged violation of any laws, rule or
                  regulation in good faith, including, without limitation, the
                  right to apply for and obtain a waiver or deferment of
                  compliance, the right to assert any and all defenses allowed
                  by law and the right to appeal any decisions, judgments or
                  rulings to the fullest extent permitted by law. Landlord,
                  after the exhaustion of any and all rights to appeal or
                  contest, will make all repairs, additions, alterations or
                  improvements necessary to comply with the terms of any final
                  order or judgment, provided that if Landlord elects not to
                  contest any alleged violation, Landlord will promptly make
                  necessary all repairs, additions, alterations or improvements.
                  Notwithstanding anything to the contrary contained herein,
                  Tenant, not Landlord, shall be responsible for the correction
                  of any violations that arise out of or in connection with the
                  specific nature of Tenant's business in the Premises (other
                  than general office use), the acts or omissions of Tenant, its
                  agents, employees or contractors, Tenant's arrangement of any
                  furniture, equipment or other property in the Premises, any
                  repairs, alterations, additions or improvements performed by
                  or on behalf of Tenant and any design or configuration of the
                  Premises.

         1.2      Tenant shall not, and shall not direct, suffer or permit any
                  of its agents, contractors, employees, licensees or invitees
                  (collectively, the "Tenant Entities") to at any time handle,
                  use, manufacture, store or dispose of in or about the Premises
                  or the Building any (collectively "Hazardous Materials")
                  flammables, explosives, radioactive materials, hazardous
                  wastes or materials, toxic wastes or materials, or other
                  similar substances, petroleum products or derivatives or any
                  substance subject to regulation by or under any federal, state
                  and local laws and ordinances relating to the protection of
                  the environment or the keeping, use or disposition of
                  environmentally hazardous materials, substances, or wastes,
                  presently in effect or hereafter adopted, all amendments to
                  any of them, and all rules and regulations issued pursuant to
                  any of such laws or ordinances

<PAGE>

                  (collectively "Environmental Laws"), nor shall Tenant suffer
                  or permit any Hazardous Materials to be used in any manner not
                  fully in compliance with all Environmental Laws, in the
                  Premises or the Building and, if the same may affect or impact
                  the Building and/or the parcel of land upon which the Building
                  is located, or any portions of land benefiting the foregoing
                  by easement, license or other similar rights, any appurtenant
                  land, or allow the environment to become contaminated with any
                  Hazardous Materials if the same may affect or impact the
                  Building and/or the parcel of land upon which the Building is
                  located, or any portions of land benefiting the foregoing by
                  easement, license or other similar rights. Notwithstanding the
                  foregoing, Tenant may handle, store, use or dispose of
                  products containing small quantities of Hazardous Materials
                  (such as aerosol cans containing insecticides, toner for
                  copiers, paints, paint remover and the like) to the extent
                  customary and necessary for the use of the Premises for
                  general office purposes; provided that Tenant shall always
                  handle, store, use, and dispose of any such Hazardous
                  Materials in a safe and lawful manner and never allow such
                  Hazardous Materials to contaminate the Premises, Building and
                  appurtenant land or the environment. Tenant shall protect,
                  defend, indemnify and hold each and all of the Landlord
                  Entities (as defined in Article 30) harmless from and against
                  any and all loss, claims, liability or costs (including court
                  costs and attorney's fees) incurred by reason of any actual or
                  asserted failure of Tenant to fully comply with all applicable
                  Environmental Laws, or the presence, handling, use or
                  disposition in or from the Premises of any Hazardous Materials
                  by Tenant or any Tenant Entity (even though permissible under
                  all applicable Environmental Laws or the provisions of this
                  Lease), or by reason of any actual or asserted failure of
                  Tenant to keep, observe, or perform any provision of this
                  Section 1.2. As of the date hereof, Landlord has not received
                  notice from any governmental agencies that the Building is in
                  violation of any Environmental Laws. Further, to Landlord's
                  actual knowledge, there are no Hazardous Materials at the
                  Building other than small quantities of Hazardous Materials
                  (such as aerosol cans containing insecticides, toner for
                  copiers, paints, paint remover and the like) to the extent
                  customary and necessary for the use of the Premises for
                  general office purposes. For purposes of this Section,
                  "Landlord's actual knowledge" shall be deemed to mean and
                  limited to the current actual knowledge of Nicole Aamoth,
                  Property Manager for the Building, at the time of execution of
                  the Lease and not any implied, imputed, or constructive
                  knowledge of said individual or of Landlord or any parties
                  related to or comprising Landlord and without any independent
                  investigation or inquiry having been made or any implied duty
                  to investigate or make any inquiries; it being understood and
                  agreed that such individual shall have no personal liability
                  in any manner whatsoever hereunder or otherwise related to the
                  transactions contemplated hereby.

         1.3      Tenant and the Tenant Entities will be entitled to the
                  non-exclusive use of the common areas of the Building as they
                  exist from time to time during the Term, including the parking
                  facilities, subject to Landlord's reasonable rules and
                  regulations regarding such use. The rules and regulations
                  shall be generally applicable, and generally applied in the
                  same manner, to all tenants of the Building. However, in no
                  event will Tenant or the Tenant Entities park more vehicles in
                  the parking facilities than Tenant's Proportionate Share of
                  the total parking spaces available for common use. Landlord
                  hereby grants to Tenant and persons designated by Tenant a
                  license to use up to 73 non-reserved parking spaces in the
                  surface parking facility servicing the Building on a
                  nonexclusive basis. The foregoing shall not be deemed to
                  provide Tenant with an exclusive right to any parking spaces
                  or any guaranty of the availability of any particular parking
                  spaces or any specific number of parking spaces.

2.   TERM.

         2.1      The Term of this Lease shall begin on the date ("Commencement
                  Date") which shall be the later of the Scheduled Commencement
                  Date as shown on the Reference Pages and the date that
                  Landlord shall tender possession of the Premises to Tenant,
                  and shall terminate on the date as shown on the Reference
                  Pages ("Termination Date"), unless sooner terminated by the
                  provisions of this Lease. Notwithstanding the foregoing, if
                  the Termination Date, as determined herein, does not occur on
                  the last day of a calendar month, the Term shall be deemed
                  automatically extended by the number of days necessary to
                  cause the Termination Date to occur on the last day of the
                  last calendar month of the Term. Tenant shall pay the Monthly
                  Installment of Rent and Additional Rent proportionately
                  applicable to such additional days at the same rate payable
                  for the portion of the last calendar month immediately
                  preceding such extension. Landlord shall deliver possession of
                  the Premises to Tenant vacant and in broom-clean condition.
                  Except to the extent caused by Tenant, or any of Tenant's
                  related parties, agents, employees, invitees, customers or
                  contractors, as of the date Landlord delivers possession of
                  the Premises to Tenant, the base Building electrical, heating,
                  ventilation and air conditioning, mechanical and plumbing
                  systems servicing the Premises shall be in good order and
                  satisfactory condition. Tenant shall have sixty (60) days from
                  the date

                                        2

<PAGE>

                  Landlord delivers possession of the Premises to Tenant in
                  which to discover and notify Landlord of any latent defects in
                  the Premises. Except to the extent caused or exacerbated by
                  Tenant or any of Tenant's employees, invitees, agents,
                  licensees or contractors, Landlord shall be responsible for
                  the cost and correction of any such latent defects with
                  respect to which it received timely notice from Tenant. Tenant
                  shall, at Landlord's request, execute and deliver a memorandum
                  agreement provided by Landlord in the form of Exhibit C
                  attached hereto, setting forth the actual Commencement Date,
                  Termination Date and, if necessary, a revised rent schedule.
                  Should Tenant fail to do so within thirty (30) days after
                  Landlord's request, the information set forth in such
                  memorandum provided by Landlord shall be conclusively presumed
                  to be agreed and correct. Notwithstanding the foregoing, the
                  Commencement Date shall be extended beyond the Scheduled
                  Commencement Date only as a result of any actual delay in
                  Substantial Completion (as defined in Exhibit B to this Lease)
                  of the Improvements beyond the Scheduled Commencement Date
                  which delay results directly from an act or omission by
                  Landlord; provided, however, that Tenant shall provide to
                  Landlord prior written notice of such delay at the time it
                  occurs (but in no event later than two (2) business days
                  thereafter) and Landlord shall have one (1) business day after
                  its receipt of Tenant's notice to cure such delay prior to the
                  extension of the Commencement Date beyond the Scheduled
                  Commencement Date.

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

         2.3      In the event Landlord permits Tenant, or any agent, employee
                  or contractor of Tenant, to enter, use or occupy the Premises
                  prior to the Commencement Date, such entry, use or occupancy
                  shall be subject to all the provisions of this Lease other
                  than the payment of the Monthly Installment of Rent,
                  including, without limitation, Tenant's compliance with the
                  insurance requirements of Article 11. Said early possession
                  shall not advance the Termination Date. Tenant shall pay
                  Tenant's Proportionate Share of Expenses and Taxes during any
                  early entry upon the Premises prior to the Commencement Date.
                  Landlord hereby grants Tenant the right to enter the Premises,
                  at Tenant's sole risk, following execution of this Lease
                  solely for the purpose of construction of Tenant's
                  Improvements (as defined in Exhibit B).

3.   RENT.

         3.1      Tenant agrees to pay to Landlord the Annual Rent in effect
                  from time to time by paying the Monthly Installment of Rent
                  then in effect on or before the first day of each full
                  calendar month during the Term, except that the first Monthly
                  Installment of Rent and the Security Deposit shall be paid
                  upon the execution of this Lease. The Monthly Installment of
                  Rent in effect at any time shall be one-twelfth (1/12) of the
                  Annual Rent in effect at such time. Rent for any period during
                  the Term which is less than a full month shall be a prorated
                  portion of the Monthly Installment of Rent based upon the
                  number of days in such month. Said rent shall be paid to
                  Landlord, without deduction or offset and without notice or
                  demand, at the Rent Payment Address, as set forth on the
                  Reference Pages, or to such other person or at such other
                  place as Landlord may from time to time designate in writing.
                  If an Event of Default occurs three (3) times or more in any
                  twelve (12) month period during the Term, Landlord may require
                  that Tenant submit Base Rent and Tenant's Proportionate Share
                  of Expenses and Taxes to Landlord on a quarterly basis (due on
                  or before the first day of each calendar quarter) for the
                  following 12 month period. Unless specified in this

                                        3

<PAGE>

                  Lease to the contrary, all amounts and sums payable by Tenant
                  to Landlord pursuant to this Lease shall be deemed additional
                  rent.

         3.2      Tenant recognizes that late payment of any rent or other sum
                  due under this Lease will result in administrative expense to
                  Landlord, the extent of which additional expense is extremely
                  difficult and economically impractical to ascertain. Tenant
                  therefore agrees that if rent or any other sum is not paid
                  when due and payable pursuant to this Lease, a late charge
                  shall be imposed in an amount equal to the greater of: (a)
                  Fifty Dollars ($50.00), or (b) five percent (5%) of the unpaid
                  rent or other payment; provided that Tenant shall be entitled
                  to a grace period of 5 days for the first 1late payment of
                  rent or other sum due in a given calendar year. The amount of
                  the late charge to be paid by Tenant shall be reassessed and
                  added to Tenant's obligation for each successive month until
                  paid. The provisions of this Section 3.2 in no way relieve
                  Tenant of the obligation to pay rent or other payments on or
                  before the date on which they are due, nor do the terms of
                  this Section 3.2 in any way affect Landlord's remedies
                  pursuant to Article 19 of this Lease in the event said rent or
                  other payment is unpaid after date due.

4.   RENT ADJUSTMENTS.

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

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

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

                                        4

<PAGE>

                           interest expenses on long-term borrowings,
                           advertising costs including the cost of brochures and
                           marketing supplies, legal fees in negotiating and
                           preparing lease documents, and construction,
                           improvement and decorating costs in preparing space
                           for initial occupancy by a specific tenant.

         The following items are also excluded from Expenses and in no event
         shall Tenant have any obligation to perform, pay directly or reimburse
         Landlord for any of the following except to the extent expressly
         provided herein:

                           (a)      Sums paid to subsidiaries or other
                                    affiliates of Landlord for services on or to
                                    the Building and/or Premises, but only to
                                    the extent that the costs of such services
                                    exceed the competitive cost for such
                                    services rendered by persons or entities of
                                    similar skill, competence and experience.

                           (b)      Any fines, penalties or interest resulting
                                    from the negligence or willful misconduct of
                                    the Landlord or its agents, contractors, or
                                    employees.

                           (c)      Fines, costs or penalties incurred as a
                                    result and to the extent of a violation by
                                    Landlord or other tenants of the project of
                                    which Building is a part of any applicable
                                    laws.

                           (d)      Landlord's charitable and political
                                    contributions.

                           (e)      Ground lease rental.

                           (f)      Attorney's fees and other expenses incurred
                                    in connection with negotiations or disputes
                                    with prospective tenants or tenants or other
                                    occupants of the Building.

                           (g)      The cost or expense of any services or
                                    benefits provided generally to other tenants
                                    in the Building and not provided or
                                    available to Tenant.

                           (h)      All costs of purchasing or leasing major
                                    sculptures, paintings or other major works
                                    or objects of art (as opposed to decorations
                                    purchased or leased by Landlord for display
                                    in the common areas of the Building).

                           (i)      Any expenses for which Landlord has received
                                    actual reimbursement (other than through
                                    Expenses).

                           (j)      Costs incurred by Landlord in connection
                                    with the correction of defects in design and
                                    original construction of the Building.

                           (k)      Any cost or expense related to removal,
                                    cleaning, abatement or remediation of
                                    Hazardous Materials in or about the Building
                                    or the common areas, including, without
                                    limitation, hazardous substances in the
                                    ground water or soil, except to the extent
                                    such removal, cleaning, abatement or
                                    remediation is related to the general repair
                                    and maintenance of the Building and the
                                    common areas.

                           (l)      Costs incurred by Landlord in connection
                                    with the correction of defects in design and
                                    original construction of the Building.

                           (m)      Any costs, fines or penalties incurred due
                                    to violations by Landlord of any law, order,
                                    rule or regulations of any governmental
                                    authority which was in effect (and as
                                    interpreted and enforced) as of the date of
                                    this Lease.

                           (n)      Penalties, interest and other costs incurred
                                    by Landlord in connection with Landlord's
                                    failure to comply with conditions, covenants
                                    and restrictions applicable to the Building.

                           (o)      The cost of repairs and maintenance
                                    equitably allocated by Landlord to buildings
                                    other than the Building.

                           (p)      Principal payments of mortgage debt of
                                    Landlord.

                                        5

<PAGE>

                           (q)      Interest (except as provided in this Lease
                                    for the amortization of capital
                                    improvements).

                           (r)      Costs of capital improvements except to the
                                    extent expressly set forth in this Lease.

                           (s)      Expense reserves.

                  4.1.3    TAXES: Real estate taxes and any other taxes, charges
                           and assessments which are levied with respect to the
                           Building or the land appurtenant to the Building, or
                           with respect to any improvements, fixtures and
                           equipment or other property of Landlord, real or
                           personal, located in the Building and used in
                           connection with the operation of the Building and
                           said land, any payments to any ground lessor in
                           reimbursement of tax payments made by such lessor;
                           and all fees, expenses and costs incurred by Landlord
                           in investigating, protesting, contesting or in any
                           way seeking to reduce or avoid increase in any
                           assessments, levies or the tax rate pertaining to any
                           Taxes to be paid by Landlord in any Lease Year. Taxes
                           shall not include any corporate franchise, capital
                           levy, capital stock, gift, estate, inheritance or net
                           income tax, or tax imposed upon any transfer by
                           Landlord of its interest in this Lease or the
                           Building, any property taxes allocated to buildings
                           other than the Building and any taxes to be paid by
                           Tenant pursuant to Article 28. In the event that
                           Landlord may elect to pay a special assessment in one
                           payment or over a period of time, regardless of
                           Landlord's election, any such assessment shall be
                           included in Taxes only to the extent it would have
                           been due over time.

         4.2      Tenant shall pay as additional rent for each Lease Year
                  Tenant's Proportionate Share of Expenses and Taxes incurred
                  for such Lease Year. As of the date of this Lease, Landlord's
                  current estimate of Tenant's Proportionate Share of Expenses
                  and Taxes for the Building is $0.34 per rentable square foot
                  of the Premises.

         4.3      The annual determination of Expenses shall be made by Landlord
                  and shall be binding upon Landlord and Tenant, subject to the
                  provisions of this Section 4.3. During the Term, Tenant may
                  review, at Tenant's sole cost and expense, the books and
                  records supporting such determination in an office of
                  Landlord, or Landlord's agent, during normal business hours,
                  upon giving Landlord five (5) days advance written notice
                  within ninety (90) days after receipt of such determination,
                  but in no event more often than once in any one (1) year
                  period, subject to execution of a confidentiality agreement
                  acceptable to Landlord, and provided that if Tenant utilizes
                  an independent accountant to perform such review it shall be
                  one of national standing which is reasonably acceptable to
                  Landlord, is not compensated on a contingency basis and is
                  also subject to such confidentiality agreement. Tenant shall
                  be solely responsible for all costs, expenses and fees
                  incurred for such review. However, notwithstanding the
                  foregoing, if Landlord and Tenant determine that Expenses for
                  the Building for the year in question were less than stated by
                  more than 5%, Landlord, within 30 days after its receipt of
                  paid invoices therefor from Tenant, shall reimburse Tenant for
                  the reasonable amounts paid by Tenant to third parties in
                  connection with such review by Tenant. If Tenant fails to
                  object to Landlord's determination of Expenses within ninety
                  (90) days after receipt, or if any such objection fails to
                  state with specificity the reason for the objection, Tenant
                  shall be deemed to have approved such determination and shall
                  have no further right to object to or contest such
                  determination. In the event that during all or any portion of
                  any Lease Year or Base Year, the Building is not fully rented
                  and occupied Landlord shall make an appropriate adjustment in
                  occupancy-related Expenses for such year for the purpose of
                  avoiding distortion of the amount of such Expenses to be
                  attributed to Tenant by reason of variation in total occupancy
                  of the Building, by employing consistent and sound accounting
                  and management principles to determine Expenses that would
                  have been paid or incurred by Landlord had the Building been
                  at least ninety-five percent (95%) rented and occupied, and
                  the amount so determined shall be deemed to have been Expenses
                  for such Lease Year.

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

                                        6

<PAGE>

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

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

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

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

5.       SECURITY DEPOSIT. Tenant shall deposit the Security Deposit with
         Landlord upon the execution of this Lease. Landlord may commingle the
         Security Deposit with other funds and shall in no event be required to
         pay interest or any other charges or fees to Tenant with respect to the
         Security Deposit. Said sum shall be held by Landlord as security for
         the faithful performance by Tenant of all the terms, covenants and
         conditions of this Lease to be kept and performed by Tenant and not as
         an advance rental deposit or as a measure of Landlord's damage in case
         of Tenant's default. If Tenant defaults with respect to any provision
         of this Lease beyond the expiration of any applicable notice and cure
         periods, Landlord may use any part of the Security Deposit for the
         payment of any rent or any other sum in default, or for the payment of
         any amount which Landlord may spend or become obligated to spend by
         reason of Tenant's default, or to compensate Landlord for any other
         loss or damage which Landlord may suffer by reason of Tenant's default.
         If any portion is so used, Tenant shall within five (5) days after
         written demand therefor, deposit with Landlord an amount sufficient to
         restore the Security Deposit to its original amount and Tenant's
         failure to do so shall be a material breach of this Lease. Except to
         such extent, if any, as shall be required by law, Landlord shall not be
         required to keep the Security Deposit separate from its general funds,
         and Tenant shall not be entitled to interest on such deposit. If Tenant
         shall fully and faithfully perform every provision of this Lease to be
         performed by it, the Security Deposit or any balance thereof shall be
         returned to Tenant at such time after termination of this Lease when
         Landlord shall have determined that all of Tenant's obligations under
         this Lease have been fulfilled. If Tenant is not in default at the
         termination of this Lease, Landlord shall return any unapplied balance
         of the Security Deposit to Tenant within 30 days after Tenant
         surrenders the Premises to Landlord in accordance with this Lease. In
         addition to any other deductions Landlord is entitled to make pursuant
         to the terms hereof, Landlord shall have the right to make a good faith
         estimate of any unreconciled Expenses and/or Taxes as of the
         Termination Date and to deduct any anticipated shortfall from the
         Security Deposit. Such estimate shall be final and binding upon Tenant.
         Tenant hereby waives the provisions of Section 1950.7 of the California
         Civil Code, or any similar or successor Regulations or other laws now
         or hereinafter in effect to the extent the same conflicts with any of
         the terms and conditions of this Lease.

6.   ALTERATIONS.

         6.1      Except for those, if any, specifically provided for in Exhibit
                  B to this Lease, Tenant shall not make or suffer to be made
                  any alterations, additions, or improvements, including, but
                  not limited to, the attachment of any fixtures or equipment
                  in, on, or to the Premises or any part thereof or the making
                  of any improvements as required by Article 7, without the
                  prior written consent of Landlord. So long as the same do not
                  affect the structure of the Building or any of the Building
                  systems, Tenant may install non-attached trade fixtures in the
                  Premises without Landlord's prior consent but otherwise in
                  accordance with the terms of this Article 6. When applying for
                  such consent, Tenant shall, if requested by Landlord, furnish
                  complete plans and specifications for such alterations,
                  additions and improvements. Landlord's consent shall not be
                  unreasonably withheld with respect to alterations which (i)
                  are not structural in nature, (ii) are not visible from the
                  exterior of the Building, (iii) do not affect or require
                  modification of the Building's electrical, mechanical,
                  plumbing, HVAC or other systems, and (iv) in aggregate do not
                  cost more than $5.00 per rentable square foot of that portion
                  of the Premises affected by the alterations in question.
                  Notwithstanding the foregoing, Landlord's consent shall not be
                  required for any alteration that satisfies all of the
                  following criteria (a "Permitted Alteration"): (1) is not
                  reasonably visible from the exterior of the Premises or

                                        7

<PAGE>

                  Building; (2) will not affect the systems or structure of the
                  Building; (3) does not require work to be performed inside the
                  walls or above the ceiling of the Premises; and (4) all such
                  alterations cost less than $30,000.00 in the aggregate in any
                  12 month period during the Term. However, even though consent
                  is not required, the performance of Permitted Alterations
                  shall be subject to all the other provisions of this Article
                  6.

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

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

         6.4      Notwithstanding anything to the contrary contained herein, so
                  long as Tenant's written request for consent for a proposed
                  alteration or improvements contains the following statement in
                  large, bold and capped font "PURSUANT TO SECTION 6 OF THE
                  LEASE, IF LANDLORD CONSENTS TO THE SUBJECT ALTERATION,
                  LANDLORD SHALL NOTIFY TENANT IN WRITING (1) WHETHER OR NOT
                  LANDLORD WILL REQUIRE SUCH ALTERATION TO BE REMOVED AT THE
                  EXPIRATION OR EARLIER TERMINATION OF THE LEASE AND, (2) IF
                  SUCH REMOVAL IS REQUIRED, WHETHER OR NOT TENANT SHALL BE
                  REQUIRED TO DEPOSIT WITH LANDLORD THE AMOUNT REASONABLY
                  ESTIMATED BY LANDLORD AS SUFFICIENT TO COVER THE COST OF
                  REMOVING SUCH ALTERATIONS OR IMPROVEMENTS AND RESTORING THE
                  PREMISES AND, IF SO, SUCH ESTIMATED AMOUNT.", at the time
                  Landlord gives its consent for any alterations or
                  improvements, if it so does, Tenant shall also be notified (i)
                  whether or not Landlord will require that such alterations or
                  improvements be removed upon the expiration or earlier
                  termination of this Lease and, (ii) to the extent that such
                  removal is required, whether Landlord shall require Tenant to
                  deposit with Landlord the amount reasonably estimated by
                  Landlord as sufficient to cover the cost of removing such
                  alterations or improvements and restoring the Premises, to the
                  extent required under Section 26.2, and the estimated amount
                  thereof. Notwithstanding anything to the contrary contained in
                  this Lease, at the expiration or earlier termination of this
                  Lease and otherwise in accordance with Article 26 hereof,
                  Tenant shall be required to remove all alterations or
                  improvements made to the Premises except for any such
                  alterations or improvements which Landlord expressly indicates
                  or is deemed to have indicated shall not be required to be
                  removed from the Premises by Tenant. If Tenant's written
                  notice strictly complies with the foregoing and if Landlord
                  fails to so notify Tenant whether Tenant shall be required to
                  remove the subject alterations or improvements at the
                  expiration or earlier termination of this lease, Tenant is
                  entitled to deliver to Landlord a second written notice (the
                  "Second Notice") in compliance with the foregoing requirements
                  but also stating in large, bold and capped font the following:
                  "THIS IS TENANT'S SECOND NOTICE TO LANDLORD. LANDLORD FAILED
                  TO RESPOND TO TENANT'S FIRST NOTICE IN ACCORDANCE WITH THE
                  TERMS OF ARTICLE 6 OF THE LEASE. IF LANDLORD FAILS TO RESPOND
                  TO THIS NOTICE IN FIVE BUSINESS DAYS WITH RESPECT TO THE
                  DEPOSIT OF REMOVAL AND RESTORATION FUNDS, TENANT SHALL

                                        8

<PAGE>

                  HAVE NO OBLIGATION TO DEPOSIT WITH LANDLORD THE AMOUNT
                  REASONABLY ESTIMATED BY LANDLORD AS SUFFICIENT TO COVER THE
                  COST OF REMOVING SUCH ALTERATIONS OR IMPROVEMENTS AND
                  RESTORING THE PREMISES. IF LANLDORD FAILS TO REPSOND TO THIS
                  NOTICE IN FIVE BUSINESS DAYS WITH RESPECT TO TENANT'S
                  OBLIGATION TO REMOVE THE SUBJECT ALTERATION, TENANT SHALL HAVE
                  NO OBLIGATION TO REMOVE THE SUBJECT ALTERATION AT THE
                  EXPIRATION OR EARLIER TERMINATION OF ITS LEASE". If Landlord
                  fails to respond to the Second Notice within five business
                  days of Landlord's receipt thereof, it shall be assumed that,
                  with respect to Tenant's obligation to remove the subject
                  alterations or improvements, Landlord shall not require the
                  removal of the subject alterations or improvements. If
                  Landlord fails to respond to the Second Notice within five
                  business days of Landlord's receipt thereof, it shall be
                  assumed that, with respect to Tenant's obligation to deposit
                  sufficient funds with Landlord for the removal of the subject
                  alterations or improvements, Landlord shall not require any
                  such deposit from Tenant with respect thereto.

7.   REPAIR.

         7.1      Landlord shall have no obligation to alter, remodel, improve,
                  repair, decorate or paint the Premises except that Landlord
                  shall repair and maintain the following, the cost of which may
                  be included in Expenses as provided in Article 4 of this
                  Lease: the structural portions of the roof, the roof membrane,
                  the common areas, foundation and walls of the Building and the
                  Building mechanical, sprinkler/life safety systems, electrical
                  and plumbing systems servicing the project in general (not
                  specifically servicing the Premises, the repair and
                  maintenance of which shall be Tenant's responsibility
                  hereunder); provided, however, that, subject to the terms
                  hereof, Tenant, not Landlord shall repair and maintain the
                  heating, ventilating and air conditioning unit(s) servicing
                  the Premises. Notwithstanding the foregoing, Landlord's repair
                  and maintenance obligations with respect to the following
                  shall be at Landlord's sole cost and expense: the foundation
                  and the exterior walls of the Building. By taking possession
                  of the Premises, Tenant accepts them as being in good order,
                  condition and repair and in the condition in which Landlord is
                  obligated to deliver them except as otherwise expressly stated
                  in this Lease. It is hereby understood and agreed that no
                  representations respecting the condition of the Premises or
                  the Building have been made by Landlord to Tenant, except as
                  specifically set forth in this Lease. Landlord shall not be
                  liable for any failure to make any repairs or to perform any
                  maintenance unless such failure shall persist for an
                  unreasonable time after written notice of the need of such
                  repairs or maintenance is given to Landlord by Tenant.
                  Notwithstanding the foregoing, Landlord shall perform and
                  construct, and Tenant shall have no responsibility to perform
                  or construct, any repair, maintenance or improvements (a)
                  necessitated by the negligence or willful misconduct of
                  Landlord, and (b) which Landlord shall determine to be capital
                  improvement (the cost thereof may be an Expense pursuant to
                  Section 4.1.2 of this Lease).

         7.2      To the extent the same is not an express obligation of
                  Landlord pursuant to Section 7.1 above, Tenant shall at its
                  own cost and expense keep and maintain all parts of the
                  Premises and such portion of the Building and improvements as
                  are within the exclusive control of Tenant (including, without
                  limitation, electrical and plumbing systems servicing the
                  Premises) in good condition, promptly making all necessary
                  repairs and replacements, whether ordinary or extraordinary,
                  with materials and workmanship of the same character, kind and
                  quality as the original (including, but not limited to, repair
                  and replacement of all fixtures installed by Tenant, water
                  heaters serving the Premises, windows, glass and plate glass,
                  doors, exterior stairs, skylights, if any, any special office
                  entries, interior walls and finish work, floors and floor
                  coverings, heating and air conditioning systems serving the
                  Premises, electrical systems and fixtures, sprinkler systems,
                  dock boards, truck doors, dock bumpers, plumbing work and
                  fixtures, and performance of regular removal of trash and
                  debris). Tenant as part of its obligations hereunder shall
                  keep the Premises in a clean and sanitary condition. Tenant
                  will, as far as possible keep all such parts of the Premises
                  from falling temporarily out of repair, and upon termination
                  of this Lease in any way Tenant will yield up the Premises to
                  Landlord in good condition and repair, loss by fire or other
                  casualty excepted (but not excepting any damage to glass).
                  Subject to the waiver of subrogation provided in Section 12,
                  Tenant shall, at its own cost and expense, repair any damage
                  to the Premises or the Building resulting from and/or caused
                  in whole or in part by the negligence or misconduct of Tenant,
                  its agents, employees, contractors, invitees, or any other
                  person entering upon the Premises as a result of Tenant's
                  business activities or caused by Tenant's default hereunder

         7.3      Except as provided in Article 22, there shall be no abatement
                  of rent and no liability of Landlord by reason of any injury
                  to or interference with Tenant's business arising from the
                  making of any repairs, alterations or

                                        9

<PAGE>

                  improvements in or to any portion of the Building or the
                  Premises or to fixtures, appurtenances and equipment in the
                  Building. Tenant hereby waives any and all rights under and
                  benefits of subsection 1 of Section 1932 and Sections 1941 and
                  1942 of the California Civil Code, or any similar or successor
                  Regulations or other laws now or hereinafter in effect. Except
                  in emergency situations as determined by Landlord, Landlord
                  shall exercise reasonable efforts not to unreasonably
                  interfere with the conduct of the business of Tenant in the
                  Premises.

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

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

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

9.   ASSIGNMENT AND SUBLETTING.

         9.1      Tenant shall not have the right to assign or pledge this Lease
                  or to sublet the whole or any part of the Premises whether
                  voluntarily or by operation of law, or permit the use or
                  occupancy of the Premises by anyone other than Tenant, and
                  shall not make, suffer or permit such assignment, subleasing
                  or occupancy without the prior written consent of Landlord,
                  such consent not to be unreasonably withheld, and said
                  restrictions shall be binding upon any and all assignees of
                  the Lease and subtenants of the Premises. In the event Tenant
                  desires to sublet, or permit such occupancy of, the Premises,
                  or any portion thereof, or assign this Lease, Tenant shall
                  give written notice thereof to Landlord at least thirty (30)
                  days prior to the proposed commencement date of such
                  subletting or assignment, which notice shall set forth the
                  name of the proposed subtenant or assignee, the relevant terms
                  of any sublease or assignment and copies of financial reports
                  and other relevant financial information of the proposed
                  subtenant or assignee. To the extent reasonably necessary,
                  upon written request by Tenant, Landlord shall enter into a
                  commercially reasonable confidentiality agreement covering any
                  confidential information that is disclosed by Tenant with
                  respect to the financial reports and other relevant financial
                  information of the proposed subtenant or assignee.

         9.2      Notwithstanding any assignment or subletting, permitted or
                  otherwise, Tenant shall at all times remain directly,
                  primarily and fully responsible and liable for the payment of
                  the rent specified in this Lease and for compliance with all
                  of its other obligations under the terms, provisions and
                  covenants of this Lease. Upon the occurrence of an Event of
                  Default, if the Premises or any part of them are then assigned
                  or sublet, Landlord, in addition to any other remedies
                  provided in this Lease or provided by law, may, at its option,
                  collect directly from such assignee or subtenant all rents due
                  and becoming due to Tenant under such assignment or sublease
                  and apply such rent against any sums due to Landlord from
                  Tenant under this

                                       10

<PAGE>

                  Lease, and no such collection shall be construed to constitute
                  a novation or release of Tenant from the further performance
                  of Tenant's obligations under this Lease.

         9.3      In addition to Landlord's right to approve of any subtenant or
                  assignee, Landlord shall have the option, in its sole
                  discretion, in the event of any proposed assignment of this
                  Lease, or with respect to a subletting, (i) for a term which
                  is for more than 50% of the then remaining Term of this Lease
                  (as the same may have been extended) or (ii) of 30% or more of
                  the Premises, to terminate this Lease, or in the case of a
                  proposed subletting of less than the entire Premises, to
                  recapture the portion of the Premises to be sublet, as of the
                  date the subletting or assignment is to be effective. The
                  foregoing shall not apply to Permitted Transfers, Affiliated
                  Parties, and any Corporate Successors (as each such term is
                  defined in Paragraph 9.8 below). The option shall be
                  exercised, if at all, by Landlord giving Tenant written notice
                  given by Landlord to Tenant within twenty (20) days following
                  Landlord's receipt of Tenant's written notice as required
                  above. However, if Tenant notifies Landlord, within five (5)
                  days after receipt of Landlord's termination notice, that
                  Tenant is rescinding its proposed assignment or sublease, the
                  termination notice shall be void and the Lease shall continue
                  in full force and effect. If this Lease shall be terminated
                  with respect to the entire Premises pursuant to this Section,
                  the Term of this Lease shall end on the date stated in
                  Tenant's notice as the effective date of the sublease or
                  assignment as if that date had been originally fixed in this
                  Lease for the expiration of the Term. If Landlord recaptures
                  under this Section only a portion of the Premises, the rent to
                  be paid from time to time during the unexpired Term shall
                  abate proportionately based on the proportion by which the
                  approximate square footage of the remaining portion of the
                  Premises shall be less than that of the Premises as of the
                  date immediately prior to such recapture. Tenant shall, at
                  Tenant's own cost and expense, discharge in full any
                  outstanding commission obligation which may be due and owing
                  as a result of any proposed assignment or subletting, whether
                  or not the Premises are recaptured pursuant to this Section
                  9.3 and rented by Landlord to the proposed tenant or any other
                  tenant.

         9.4      In the event that Tenant sells, sublets, assigns or transfers
                  this Lease, Tenant shall pay to Landlord as additional rent an
                  amount equal to seventy-five percent (75%) of any Increased
                  Rent (as defined below), less the Costs Component (as defined
                  below), when and as such Increased Rent is received by Tenant.
                  As used in this Section, "Increased Rent" shall mean the
                  excess of (i) all rent and other consideration which Tenant is
                  entitled to receive by reason of any sale, sublease,
                  assignment or other transfer of this Lease, over (ii) the rent
                  otherwise payable by Tenant under this Lease at such time. For
                  purposes of the foregoing, any consideration received by
                  Tenant in form other than cash shall be valued at its fair
                  market value as determined by Landlord in good faith. The
                  "Costs Component" is that amount which, if paid monthly, would
                  fully amortize on a straight-line basis, over the entire
                  period for which Tenant is to receive Increased Rent, the
                  reasonable costs incurred by Tenant for legal fees, leasing
                  commissions and tenant improvements constructed by or on
                  behalf of Tenant and performed solely to bring about such
                  sublease, assignment or other transfer.

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

         9.6      Upon any request to assign or sublet, Tenant will pay to
                  Landlord the Assignment/Subletting Fee plus, on demand, a sum
                  equal to all of Landlord's costs, including reasonable
                  attorney's fees, incurred in investigating, considering
                  reviewing and documenting any proposed or purported assignment
                  or pledge of this Lease or sublease of any of the Premises
                  (the "Review Reimbursement" and together with the

                                       11

<PAGE>

                  Assignment/Subletting Fee, collectively, the "Total
                  Reimbursement"), regardless of whether Landlord shall consent
                  to, refuse consent, or determine that Landlord's consent is
                  not required for, such assignment, pledge or sublease. Except
                  as otherwise expressly provided herein, the Total
                  Reimbursement shall not exceed $1,000.00 (the "Cap"). Any
                  purported sale, assignment, mortgage, transfer of this Lease
                  or subletting which does not comply with the provisions of
                  this Article 9 shall be void. Landlord shall notify Tenant if
                  Landlord reasonably estimates that the Total Reimbursement
                  shall exceed the Cap and shall inform Tenant of the amount of
                  Landlord's reasonable estimate of the Total Reimbursement (the
                  "Estimated Fees"). If the Estimated Fees exceed the Cap, then
                  the Cap shall not apply and Tenant shall pay to Landlord the
                  amount of the Total Reimbursement up to an amount not to
                  exceed 120% of the amount of the Estimated Fees.

         9.7      If Tenant is a corporation, limited liability company,
                  partnership or trust, any transfer or transfers of or change
                  or changes within any twelve (12) month period in the number
                  of the outstanding voting shares of the corporation or limited
                  liability company, the general partnership interests in the
                  partnership or the identity of the persons or entities
                  controlling the activities of such partnership or trust
                  resulting in the persons or entities owning or controlling a
                  majority of such shares, partnership interests or activities
                  of such partnership or trust at the beginning of such period
                  no longer having such ownership or control shall be regarded
                  as equivalent to an assignment of this Lease to the persons or
                  entities acquiring such ownership or control and shall be
                  subject to all the provisions of this Article 9 to the same
                  extent and for all intents and purposes as though such an
                  assignment; provided, however, to the extent Tenant is a
                  corporation, the foregoing shall not apply to a single
                  transfer (or series of related transfers that are part of the
                  same general transaction and which proximately occur) of all
                  or substantially all of the capital stock of Tenant to one
                  recipient (whether an individual or an entity) so long as
                  there is no diminution of the Tenant's tangible net worth as a
                  result thereof.

         9.8      So long as Tenant is not entering into the Permitted Transfer
                  (as defined herein) for the purpose of avoiding or otherwise
                  circumventing the remaining terms of this Article 9, Tenant
                  may assign its entire interest under this Lease, without the
                  consent of Landlord, to (i) an affiliate, subsidiary, or
                  parent of Tenant, or a corporation, partnership or other legal
                  entity wholly owned by Tenant (collectively, an "Affiliated
                  Party"), or (ii) a successor to Tenant by purchase, merger,
                  consolidation or reorganization (a "Corporate Successor"),
                  provided that all of the following conditions are satisfied
                  (each such transfer a "Permitted Transfer"): (1) Tenant is not
                  in default under this Lease; (2) the Permitted Use does not
                  allow the Premises to be used for retail purposes; (3) Tenant
                  shall give Landlord written notice at least 15 days prior to
                  the effective date of the proposed Permitted Transfer;
                  provided, however, that to the extent that Tenant is
                  prohibited by any applicable law, rule, regulation, ordinance
                  of code from providing the foregoing notice, Tenant shall
                  provide notice to Landlord as soon as is reasonably possible
                  but in no event later than two (2) business days following the
                  effective date of any such Permitted Transfer; (4) with
                  respect to a proposed Permitted Transfer to an Affiliated
                  Party, the proposed transferee has a tangible net worth,
                  financial standing and financial resources, as evidenced by
                  current financial statements satisfactory to Landlord and
                  certified by an independent certified public accountant,
                  prepared in accordance with generally accepted accounting
                  principles that are consistently applied, reasonably
                  sufficient, taking into account all expected obligations of
                  the transferee with respect to the proposed transfer and all
                  of its other contingent and noncontingent obligations, to
                  service when due the obligations of the transferee with
                  respect to the proposed Permitted Transfer; and (5) with
                  respect to a purchase, merger, consolidation or reorganization
                  or any Permitted Transfer which results in Tenant ceasing to
                  exist as a separate legal entity, (a) Tenant's successor shall
                  own all or substantially all of the assets of Tenant, and (b)
                  Tenant's successor shall have a tangible net worth which is at
                  least equal to Ten Million Dollars ($10,000,000.00) as
                  evidenced by current financial statements satisfactory to
                  Landlord and certified by an independent certified public
                  accountant, prepared in accordance with generally accepted
                  accounting principles that are consistently applied. Tenant's
                  notice to Landlord shall include information and documentation
                  showing that each of the above conditions has been satisfied.
                  If requested by Landlord, Tenant's successor shall sign a
                  commercially reasonable form of assumption agreement. As used
                  herein, (A) "parent" shall mean a company which owns a
                  majority of Tenant's voting equity; (B) "subsidiary" shall
                  mean an entity wholly owned by Tenant or at least 51% of whose
                  voting equity is owned by Tenant; and (C) "affiliate" shall
                  mean an entity controlled, controlling or under common control
                  with Tenant. Notwithstanding the foregoing, if any parent,
                  affiliate or subsidiary to which this Lease has been assigned
                  or transferred subsequently sells or transfers its voting
                  equity or its interest under this Lease other than to another
                  parent, subsidiary or affiliate

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<PAGE>

                  of the original Tenant named hereunder, such sale or transfer
                  shall be deemed to be a transfer requiring the consent of
                  Landlord hereunder.

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

11.  INSURANCE.

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

         11.2     The aforesaid policies shall (a) be provided at Tenant's
                  expense; (b) name the Landlord Entities as additional insureds
                  (General Liability) and loss payee (Property--Special Form);
                  (c) be issued by an insurance company with a minimum Best's
                  rating of "A:VII" during the Term; and (d) provide that said
                  insurance shall not be canceled unless thirty (30) days prior
                  written notice (ten days for non-payment of premium) shall
                  have been given to Landlord; a certificate of Liability
                  insurance on ACORD Form 25 and a certificate of Property
                  insurance on ACORD Form 27 shall be delivered to Landlord by
                  Tenant upon the Commencement Date and at least twenty (20)
                  days prior to each renewal of said insurance.

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

         11.4     Landlord shall keep in force throughout the Term Commercial
                  General Liability Insurance and All Risk or Special Form
                  coverage insuring the Landlord and the Building, in such
                  amounts and with such deductibles

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<PAGE>

                  as Landlord determines from time to time in accordance with
                  sound and reasonable risk management principles. The cost of
                  all such insurance is included in Expenses.

12.      WAIVER OF SUBROGATION. Notwithstanding anything in this Lease to the
         contrary, Landlord and Tenant hereby waive, and shall cause their
         respective insurance carriers to waive, any and all rights of recovery,
         claim, action or causes of action against the other and their
         respective trustees, principals, beneficiaries, partners, officers,
         directors, agents, and employees, by subrogation, to the extent the
         same is insured against (or is required to be insured against under the
         terms hereof) for any loss or damage that may occur to Landlord or
         Tenant or any party claiming by, through or under Landlord or Tenant,
         as the case may be, with respect to Tenant's personal property, the
         Premises, the Building, the project of which the Building is a part,
         any additions or improvements to the Premises, the Building or the
         project of which the Building is a part, or any contents thereof,
         including all rights of recovery, claims, actions or causes of action
         arising out of the negligence of Landlord or any parties related to or
         comprising Landlord or the negligence of Tenant or parties related to
         or comprising Tenant, which loss or damage is (or would have been, had
         the insurance required by this Lease been carried and as if the All
         Risk or Special Form coverage insuring the Landlord and the Building
         and required to be carried by Landlord pursuant to Paragraph 12 above
         is carried at full replacement value) covered by property damage
         insurance.

13.      SERVICES AND UTILITIES. Tenant shall pay for all water, gas, heat,
         light, power, telephone, sewer, sprinkler system charges and other
         utilities and services used on or from the Premises, together with any
         taxes, penalties, and surcharges or the like pertaining thereto and any
         maintenance charges for utilities. Tenant shall furnish all electric
         light bulbs, tubes and ballasts, battery packs for emergency lighting
         and fire extinguishers. Landlord hereby represents to Tenant that the
         Premises as initially configured in this Lease is separately metered.
         Tenant will not, without the written consent of Landlord, contract with
         a utility provider to service the Premises with any utility, including,
         but not limited to, telecommunications, electricity, water, sewer or
         gas, which is not previously providing such service to other tenants in
         the Building. Landlord shall in no event be liable for any interruption
         or failure of utility services on or to the Premises.

         Notwithstanding the foregoing, if Tenant is prevented from using, and
         does not use, all or part of the Premises (the "Affected Area") as a
         result of a Essential Services Interruption Event as defined below, and
         the remaining portions of the Premises are not reasonably sufficient to
         allow Tenant to conduct its business in the Premises and if this
         Essential Services Interruption Event continues for three (3)
         consecutive business days after Landlord's receipt of notice from
         Tenant of the Essential Services Interruption Event (the "Eligibility
         Period"), the Rent payable under this Lease shall be abated after the
         expiration of the Eligibility Period for such time that Tenant
         continues to be prevented from using, and does not use, the Affected
         Area in the proportion that the rentable area of the Affected Area
         bears to the total rentable area of the Premises. If, however, Tenant
         reoccupies any portion of the Premises during this period, the Rent
         allocable to this reoccupied portion (based on the proportion that the
         rentable area of the reoccupied portion of the Premises bears to the
         total rentable area of the Premises) shall be payable by Tenant from
         the date on which Tenant reoccupies this portion of the Premises. An
         "Essential Services Interruption Event" shall mean the failure of or
         interruption in essential services required to be supplied by Landlord
         to the Premises during ordinary business hours of generally recognized
         business days which occurs solely as a result of Landlord's active
         negligence or willful misconduct. In the event of a stoppage or
         interruption of services, Landlord shall diligently attempt to resume
         such services as promptly as practicable.

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

15.      SUBORDINATION. Without the necessity of any additional document being
         executed by Tenant for the purpose of effecting a subordination, this
         Lease shall be subject and subordinate at all times to ground or
         underlying leases and to the lien of any mortgages or deeds of trust
         now or hereafter placed on, against or affecting the Building,

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<PAGE>

         Landlord's interest or estate in the Building, or any ground or
         underlying lease; provided, however, that if the lessor, mortgagee,
         trustee, or holder of any such mortgage or deed of trust elects to have
         Tenant's interest in this Lease be superior to any such instrument,
         then, by notice to Tenant, this Lease shall be deemed superior, whether
         this Lease was executed before or after said instrument.
         Notwithstanding the foregoing, Tenant covenants and agrees to execute
         and deliver within ten (10) days of Landlord's request such further
         instruments evidencing such subordination or superiority of this Lease
         as may be required by Landlord. As of the date hereof, a lien encumbers
         Landlord's interest in the Building in favor of LaSalle Bank N. A., as
         Trustee for the holders of Calwest Industrial Trust Commercial Mortgage
         Pass-Through Certificates Series 2002-CALW. At Tenant's cost, Landlord
         shall provide Tenant with a non-disturbance, subordination, and
         attornment agreement in favor of Tenant in the form attached hereto as
         Exhibit F (the "SNDA") within 45 days following Tenant's execution and
         delivery thereof to Landlord.

16.      RULES AND REGULATIONS. Tenant shall faithfully observe and comply with
         all the rules and regulations as set forth in Exhibit D to this Lease
         and all reasonable and non-discriminatory modifications of and
         additions to them from time to time put into effect by Landlord,
         provided that any such modification and/or additions shall not
         materially increase Tenant's obligations or decrease Tenant's rights or
         parking ratio as provided in this Lease. Landlord shall not be
         responsible to Tenant for the non-performance by any other tenant or
         occupant of the Building of any such rules and regulations. If there is
         a conflict between this Lease and any rules and regulations enacted
         after the date of this Lease, the terms of this Lease shall control.
         The rules and regulations shall be generally applicable, and generally
         applied in the same manner, to all tenants of the Building.

17.  REENTRY BY LANDLORD.

         17.1     Landlord reserves and shall at all times have the right to
                  re-enter the Premises to inspect the same, to show said
                  Premises to prospective purchasers or mortgagees, and to
                  alter, improve or repair the Premises and any portion of the
                  Building, and, during the last 9 months of the Term, to show
                  said Premises to prospective tenants, without abatement of
                  rent, and may for that purpose erect, use and maintain
                  scaffolding, pipes, conduits and other necessary structures
                  and open any wall, ceiling or floor in and through the
                  Building and Premises where reasonably required by the
                  character of the work to be performed, provided entrance to
                  the Premises shall not be blocked thereby, and further
                  provided that the business of Tenant shall not be interfered
                  with unreasonably. Except in emergencies, Landlord shall
                  provide Tenant with reasonable prior notice of entry into the
                  Premises, which may be given orally. During any entry by
                  Landlord to the Premises as provided herein, Landlord shall
                  comply with all reasonable security measures pertaining to the
                  Premises and of which Tenant has provided reasonable advance
                  written notice to Landlord. Landlord shall have the right at
                  any time to change the arrangement and/or locations of
                  entrances, or passageways, doors and doorways, and corridors,
                  windows, elevators, stairs, toilets or other public parts of
                  the Building and to change the name, number or designation by
                  which the Building is commonly known. Landlord shall use
                  reasonable efforts to give Tenant at least 60 days prior
                  notice with respect to a change in the Building's street
                  address that will prohibit Tenant from receiving mail at its
                  current address, and if Landlord fails to provide Tenant with
                  such prior notice, Landlord shall reimburse Tenant for the
                  cost of replacing all business stationery and business cards
                  on hand (not to exceed a 2 month supply) at the effective date
                  of such change. Landlord shall provide to Tenant at least 30
                  days prior notice before any change is made to the name,
                  number or designation by which the Building is commonly known.
                  In the event that Landlord damages any portion of any wall or
                  wall covering, ceiling, or floor or floor covering within the
                  Premises, Landlord shall repair or replace the damaged portion
                  to match the original as nearly as commercially reasonable but
                  shall not be required to repair or replace more than the
                  portion actually damaged. Tenant hereby waives any claim for
                  damages for any injury or inconvenience to or interference
                  with Tenant's business, any loss of occupancy or quiet
                  enjoyment of the Premises, and any other loss occasioned by
                  any action of Landlord authorized by this Article 17;
                  provided, however, that Tenant shall not be entitled to
                  receive any consequential, special or indirect damages based
                  upon a claim that Landlord violated the terms and conditions
                  of this Section 17.1. Instead, any such claim of Tenant shall
                  be limited to the foreseeable, direct and actual damages
                  incurred by Tenant.

         17.2     For each of the aforesaid purposes, Landlord shall at all
                  times have and retain a key with which to unlock all of the
                  doors in the Premises, excluding Tenant's vaults and safes or
                  special security areas (designated in advance), and Landlord
                  shall have the right to use any and all means which Landlord
                  may deem proper to open said doors in an emergency to obtain
                  entry to any portion of the Premises. As to any portion to
                  which access cannot be had by means of a key or keys in
                  Landlord's possession, Landlord is authorized to gain

                                       15

<PAGE>

                  access by such means as Landlord shall elect and the cost of
                  repairing any damage occurring in doing so shall be borne by
                  Tenant and paid to Landlord within five (5) days of Landlord's
                  written demand.

18.  DEFAULT.

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

                  18.1.1   Tenant shall fail to pay when due any sum of money
                           becoming due to be paid to Landlord under this Lease,
                           whether such sum be any installment of the rent
                           reserved by this Lease, any other amount treated as
                           additional rent under this Lease, or any other
                           payment or reimbursement to Landlord required by this
                           Lease, whether or not treated as additional rent
                           under this Lease, and such failure shall continue for
                           a period of five (5) days after written notice that
                           such payment was not made when due, but if any such
                           notice shall be given, more than two (2) times in
                           such twelve (12) month period commencing with the
                           date of such notice, the failure to pay within five
                           (5) days after due any additional sum of money
                           becoming due to be paid to Landlord under this Lease
                           the third (3rd) time during such period shall be an
                           Event of Default, without notice. So long as a notice
                           delivered to Tenant pursuant to this Section 18.1.1
                           is in compliance with California Code of Civil
                           Procedure Section 1161 or any successor statute, such
                           notice shall concurrently satisfy the statutory
                           requirement as well as the notice requirement of this
                           Lease described in this Section 18.1.1.

                  18.1.2   Tenant shall fail to comply with any term, provision
                           or covenant of this Lease which is not provided for
                           in another Section of this Article and shall not cure
                           such failure within thirty (30) days (forthwith, if
                           the failure involves a hazardous condition) after
                           written notice of such failure to Tenant provided,
                           however, that such failure shall not be an event of
                           default if such failure could not reasonably be cured
                           during such thirty (30) day period, Tenant has
                           commenced the cure within such thirty (30) day period
                           and thereafter is diligently pursuing such cure to
                           completion, but the total aggregate cure period shall
                           not exceed ninety (90) days.

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

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

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

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<PAGE>

19.  REMEDIES.

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

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

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

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

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

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

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

                  The "Worth at the Time of Award" of the amounts referred to in
                  parts 19.1.1.1 and 19.1.1.2 above, shall be computed by
                  allowing interest at the lesser of a per annum rate equal to:
                  (i) the greatest per annum rate of interest permitted from
                  time to time under applicable law, or (ii) the Prime Rate plus
                  5%. For purposes hereof, the "Prime Rate" shall be the per
                  annum interest rate publicly announced as its prime or base
                  rate by a federally insured bank selected by Landlord in the
                  State of California. The "Worth at the Time of Award" of the
                  amount referred to in part 19.1.1.3, above, shall be computed
                  by discounting such amount at the discount rate of the Federal
                  Reserve Bank of San Francisco at the time of award plus 1%;

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

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

         19.2     The subsequent acceptance of rent hereunder by Landlord shall
                  not be deemed to be a waiver of any preceding breach by Tenant
                  of any term, covenant or condition of this Lease, other than
                  the failure of Tenant to pay the particular rent so accepted,
                  regardless of Landlord's knowledge of such preceding breach at
                  the time of acceptance of such rent. No waiver by Landlord of
                  any breach hereof shall be effective unless such waiver is in
                  writing and signed by Landlord.

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

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                  HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
                  RIGHT TO TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF OR
                  RELATING TO THIS LEASE.

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

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

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

         19.7     Service of any statutory notices required in connection with
                  any rights of the parties hereto shall be completed in a
                  manner mandated by the applicable law, including California
                  Code of Civil Procedure Section 1162 or any similar or
                  successor statute.

20.  TENANT'S BANKRUPTCY OR INSOLVENCY.

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

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

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

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

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<PAGE>

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

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

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

22.  CASUALTY

         22.1     In the event the Premises or the Building are damaged by fire
                  or other cause and in Landlord's reasonable estimation such
                  damage can be materially restored within one hundred eighty
                  (180) days, Landlord shall forthwith repair the same and this
                  Lease shall remain in full force and effect, except that
                  Tenant shall be entitled to a proportionate abatement in rent
                  from the date of such damage. Such abatement of rent shall be
                  made in proportion to the extent to which the damage and the
                  making of such repairs shall interfere with the Permitted Use
                  and occupancy by Tenant of the Premises from time to time.
                  Within forty-five (45) days from the date of such damage,
                  Landlord shall notify Tenant, in writing, of Landlord's
                  reasonable estimation of the length of time within which
                  material restoration can be made, and Landlord's determination
                  shall be binding on Tenant. For purposes of this Lease, the
                  Building or Premises shall be deemed "materially restored" if
                  they are in a substantially similar condition as of the date
                  of this Lease, reasonable wear and tear excepted, and provided
                  that Landlord shall have no obligation to restore and/or
                  replace the Improvements or any alterations or other
                  improvements made to the Premises.

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

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

         22.4     In the event that Landlord should fail to complete such
                  repairs and material restoration within ninety (90) days after
                  the date estimated by Landlord therefor as extended by this
                  Section 22.4, Tenant may at its option and as its sole remedy
                  terminate this Lease by delivering written notice to Landlord,
                  within fifteen (15) days after the expiration of said period
                  of time, whereupon the Lease shall end on the date of such
                  notice or such later date fixed in such notice as if the date
                  of such notice was the date originally fixed in this Lease for
                  the expiration of the Term; provided, however, that if
                  construction is delayed because of changes, deletions or
                  additions in construction requested by Tenant, strikes,
                  lockouts, casualties, Acts of God, war, material or labor
                  shortages, government regulation or control or other causes
                  beyond the reasonable control of Landlord, the period for
                  restoration, repair or rebuilding shall be extended for the
                  amount of time Landlord is so delayed.

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<PAGE>

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

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

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

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

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

25.      ESTOPPEL CERTIFICATES. Within ten (10) days following any written
         request which Landlord may make from time to time, Tenant shall execute
         and deliver to Landlord or mortgagee or prospective mortgagee a sworn
         statement certifying: (a) the date of commencement of this Lease; (b)
         the fact that this Lease is unmodified and in full force and effect
         (or, if there have been modifications to this Lease, that this lease is
         in full force and effect, as modified, and stating the date and nature
         of such modifications); (c) the date to which the rent and other sums

                                       20

<PAGE>

         payable under this Lease have been paid; (d) the fact that there are no
         current defaults under this Lease by either Tenant or, to Tenant's
         actual knowledge, Landlord, except as specified in Tenant's statement;
         and (e) such other matters as may be reasonably requested by Landlord.
         Landlord and Tenant intend that any statement delivered pursuant to
         this Article 25 may be relied upon by any mortgagee, beneficiary or
         purchaser, and Tenant shall be liable for all loss, cost or expense
         resulting from the failure of any sale or funding of any loan caused by
         any material misstatement contained in such estoppel certificate.
         Tenant irrevocably agrees that if Tenant fails to execute and deliver
         such certificate within such ten (10) day period, such certificate as
         prepared by Landlord shall be deemed executed by Tenant and accordingly
         shall be fully binding on Tenant. The parties agree that Tenant's
         obligation to furnish such estoppel certificates in a timely fashion is
         a material inducement for Landlord's execution of this Lease, and shall
         be an Event of Default (without any cure period that might be provided
         under this Lease) if Tenant fails to fully comply or makes any material
         misstatement in any such certificate.

26.  SURRENDER OF PREMISES.

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

         26.2     All alterations, additions, and improvements in, on, or to the
                  Premises made or installed by or for Tenant, including
                  carpeting (collectively, "Alterations"), shall be and remain
                  the property of Tenant during the Term. Upon the expiration or
                  sooner termination of the Term, all Alterations shall become a
                  part of the realty and shall belong to Landlord without
                  compensation, and title shall pass to Landlord under this
                  Lease as by a bill of sale. At the end of the Term or any
                  renewal of the Term or other sooner termination of this Lease,
                  Tenant will peaceably deliver up to Landlord possession of the
                  Premises, together with all Alterations by whomsoever made, in
                  the same conditions received or first installed, broom clean
                  and free of all debris, excepting only ordinary wear and tear
                  and damage by fire or other casualty. Notwithstanding the
                  foregoing, and subject to the terms of Article 6 of this
                  Lease, if Landlord elects by notice given to Tenant at least
                  ten (10) days prior to expiration of the Term, Tenant shall,
                  at Tenant's sole cost, remove any Alterations, including
                  carpeting, so designated by Landlord's notice, and repair any
                  damage caused by such removal. Further, nothing contained in
                  this Section 26.2 shall increase Tenant's obligation to
                  remediate or remove Hazardous Materials as the same is
                  expressly provided in this Lease. Tenant must, at Tenant's
                  sole cost, remove upon termination of this Lease, any and all
                  of Tenant's furniture, furnishings, movable partitions of less
                  than full height from floor to ceiling and other trade
                  fixtures and personal property (collectively, "Personalty").
                  The Personalty shall be and remain the property of Tenant
                  during the Term. Personalty not so removed shall be deemed
                  abandoned by the Tenant and title to the same shall thereupon
                  pass to Landlord under this Lease as by a bill of sale, but
                  Tenant shall remain responsible for the cost of removal and
                  disposal of such Personalty, as well as any damage caused by
                  such removal. If Tenant fails to remove such alterations or
                  Tenant's trade fixtures or furniture or the Personalty,
                  Landlord may keep and use them or remove any of them and cause
                  them to be stored or sold in accordance with applicable law,
                  at Tenant's sole expense.

         26.3     All obligations of Tenant under this Lease not fully performed
                  as of the expiration or earlier termination of the Term shall
                  survive the expiration or earlier termination of the Term To
                  the extent Tenant has failed to do the same, upon the
                  expiration or earlier termination of the Term, Tenant shall
                  pay to Landlord the amount, as reasonably estimated by
                  Landlord, necessary to repair and restore the Premises as
                  provided in this Lease and/or to discharge Tenant's obligation
                  for unpaid amounts due or to become due to Landlord. All such
                  amounts shall be used and held by Landlord for payment of such
                  obligations of Tenant, with Tenant being liable for any
                  additional costs upon demand by Landlord, or with any excess
                  to be promptly returned to Tenant after all such obligations
                  have been determined and satisfied. Any otherwise unused
                  Security Deposit shall be credited against the amount payable
                  by Tenant under this Lease.

27.      NOTICES. Any notice or document required or permitted to be delivered
         under this Lease shall be addressed to the intended recipient, by fully
         prepaid registered or certified United States Mail return receipt
         requested, or by reputable independent contract delivery service
         furnishing a written record of attempted or actual delivery, and shall
         be deemed to be delivered when tendered for delivery to the addressee
         at its address set forth on the Reference

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         Pages, or at such other address as it has then last specified by
         written notice delivered in accordance with this Article 27, or if to
         Tenant at either its aforesaid address or its last known registered
         office or home of a general partner or individual owner, whether or not
         actually accepted or received by the addressee. Any such notice or
         document may also be personally delivered if a receipt is signed by and
         received from, the individual, if any, named in Tenant's Notice
         Address.

28.      TAXES PAYABLE BY TENANT. In addition to rent and other charges to be
         paid by Tenant under this Lease, Tenant shall reimburse to Landlord,
         upon demand, any and all taxes payable by Landlord (other than net
         income taxes) whether or not now customary or within the contemplation
         of the parties to this Lease: (a) upon or measured by the Tenant's
         gross receipts or payroll or the value of Tenant's equipment,
         furniture, fixtures and other personal property of Tenant or leasehold
         improvements, alterations or additions located in the Premises; or (b)
         upon this transaction or any document to which Tenant is a party
         creating or transferring any interest of Tenant in this Lease or the
         Premises. If due to a future change in the method of taxation, any
         franchise, income or profit or other tax shall be levied in
         substitution in whole or in part or in lieu of any tax which would
         otherwise constitute a part of Taxes under this Lease, such franchise,
         income, profit or other tax shall be deemed to be a part of Taxes for
         the purposes of this Lease. In addition to the foregoing, Tenant agrees
         to pay, before delinquency, any and all taxes levied or assessed
         against Tenant and which become payable during the term hereof upon
         Tenant's equipment, furniture, fixtures and other personal property of
         Tenant located in the Premises. In addition to and wholly apart from
         Tenant's obligation to pay Tenant's Proportionate Share of Expenses and
         Taxes, Tenant shall be responsible for and shall pay prior to
         delinquency any taxes or governmental service fees, possessory interest
         taxes, fees or charges in lieu of any such taxes, capital levies, or
         other charges imposed upon, levied with respect to or assessed against
         its fixtures or Personalty, on the value of any alterations or other
         improvements within the Premises, and on Tenant's interest pursuant to
         this Lease, or any increase in any of the foregoing based on such
         alterations and/or improvements.

29.      INTENTIONALLY OMITTED.

30.      DEFINED TERMS AND HEADINGS. The Article headings shown in this Lease
         are for convenience of reference and shall in no way define, increase,
         limit or describe the scope or intent of any provision of this Lease.
         Any indemnification or insurance of Landlord shall apply to and inure
         to the benefit of all the following "Landlord Entities", being
         Landlord, Landlord's investment advisors, and the trustees, boards of
         directors, officers, general partners, beneficiaries, stockholders,
         employees and agents of each of them. Any option granted to Landlord
         shall also include or be exercisable by Landlord's trustee,
         beneficiary, agents and employees, as the case may be. In any case
         where this Lease is signed by more than one person, the obligations
         under this Lease shall be joint and several. The terms "Tenant" and
         "Landlord" or any pronoun used in place thereof shall indicate and
         include the masculine or feminine, the singular or plural number,
         individuals, firms or corporations, and their and each of their
         respective successors, executors, administrators and permitted assigns,
         according to the context hereof. The term "rentable area" shall mean
         the rentable area of the Premises or the Building as calculated by the
         Landlord on the basis of the plans and specifications of the Building
         including a proportionate share of any common areas. Tenant hereby
         accepts and agrees to be bound by the figures for the rentable square
         footage of the Premises and Tenant's Proportionate Share shown on the
         Reference Pages; however, Landlord may adjust either or both figures if
         there is manifest error, addition or subtraction to the Building or any
         business park or complex of which the Building is a part, remeasurement
         or other circumstance reasonably justifying adjustment. The term
         "Building" refers to the structure in which the Premises are located
         and the common areas (parking lots, sidewalks, landscaping, etc.)
         appurtenant thereto. If the Building is part of a larger complex of
         structures, the term "Building" may include the entire complex, where
         appropriate (such as shared Expenses or Taxes) and subject to
         Landlord's reasonable discretion.

31.      TENANT'S AUTHORITY. If Tenant signs as a corporation, partnership,
         trust or other legal entity, Tenant represents and warrants that each
         of the persons executing this Lease on behalf of Tenant has been and is
         qualified to do business in the state in which the Building is located,
         that the entity has full right and authority to enter into this Lease,
         and that all persons signing on behalf of the entity were authorized to
         do so by appropriate actions.

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

                                       22

<PAGE>

         report. The foregoing shall not apply to the extent Tenant is a
         publicly traded entity on the "over-the-counter" market or any
         recognized national or international securities exchange and,
         accordingly, Tenant's audited financial statements are available to the
         public.

33.      COMMISSIONS. Each of the parties represents and warrants to the other
         that it has not dealt with any broker or finder in connection with this
         Lease, except as described on the Reference Pages. Tenant shall
         indemnify and hold Landlord and its employees and affiliates harmless
         from all claims of any other brokers claiming to have represented
         Tenant in connection with this Lease. Landlord agrees to indemnify and
         hold Tenant and its employees and affiliates harmless from all claims
         of any brokers claiming to have represented Landlord in connection with
         this Lease.

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

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

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

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

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

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

40.      RENEWAL OPTION. Tenant shall, provided the Lease is in full force and
         effect and Tenant is not in default under any of the other terms and
         conditions of the Lease at the time of notification or commencement,
         have one (1) option to renew this Lease for a term of three (3) years,
         for the portion of the Premises being leased by Tenant as of the date
         the renewal term is to commence, on the same terms and conditions set
         forth in the Lease, except as modified by the terms, covenants and
         conditions as set forth below:

         40.1     If Tenant elects to exercise said option, then Tenant shall
                  provide Landlord with written notice no earlier than the date
                  which is 365 days prior to the expiration of the then current
                  term of the Lease but no later than the date which is 180 days
                  prior to the expiration of the then current term of this
                  Lease. If Tenant fails to provide such notice, Tenant shall
                  have no further or additional right to extend or renew the
                  term of the Lease.

         40.2     The Annual Rent and Monthly Installment in effect at the
                  expiration of the then current term of the Lease shall be
                  increased to reflect the current fair market rental for
                  comparable space in the Building and in other similar
                  buildings in the same rental market as of the date the renewal
                  term is to commence, taking into account the specific
                  provisions of the Lease which will remain constant and, unless
                  it is not the case, taking into account that there will be no
                  free rent and no tenant improvement allowances or other
                  concessions.

                                       23

<PAGE>

                  Landlord shall advise Tenant of the new Annual Rent and
                  Monthly Installment for the Premises no later than thirty (30)
                  days after receipt of Tenant's written request therefor. Said
                  request shall be made no earlier than thirty (30) days prior
                  to the first date on which Tenant may exercise its option
                  under this Paragraph. Said notification of the new Annual Rent
                  may include a provision for its escalation to provide for a
                  change in fair market rental between the time of notification
                  and the commencement of the renewal term. If Tenant and
                  Landlord are unable to agree on a mutually acceptable rental
                  rate not later than one hundred eighty (180) days prior to the
                  expiration of the then current term, then either (i) Tenant
                  may, by providing written notice to Landlord on or before the
                  date which is one hundred seventy (170) days prior to the
                  expiration of the then current term, rescind its notice of
                  exercise of the renewal option, or (ii) Landlord and Tenant
                  shall each appoint a qualified MAI appraiser doing business in
                  the area, in turn those two independent MAI appraisers shall
                  appoint a third MAI appraiser and the majority shall decide
                  upon the fair market rental for the Premises as of the
                  expiration of the then current term. Landlord and Tenant shall
                  equally share in the expense of this appraisal except that in
                  the event the Annual Rent and Monthly Installment is found to
                  be within fifteen percent (15%) of the original rate quoted by
                  Landlord, then Tenant shall bear the full cost of all the
                  appraisal process. In no event shall the Annual Rent and
                  Monthly Installment for any option period be less than the
                  Annual Rent and Monthly Installment in the preceding period.

         40.3     Except with respect to Permitted Transfers and transfers to
                  Affiliated Parties and Corporate Successors which are approved
                  by Landlord at the time of such transfer in accordance with
                  Article 9 of this Lease, this option is not transferable; the
                  parties hereto acknowledge and agree that they intend that the
                  aforesaid option to renew this Lease shall be "personal" to
                  Tenant as set forth above and that in no event will any
                  assignee or sublessee have any rights to exercise the
                  aforesaid option to renew.

         40.4     As each renewal option provided for above is exercised, the
                  number of renewal options remaining to be exercised is reduced
                  by one and upon exercise of the last remaining renewal option
                  Tenant shall have no further right to extend the term of the
                  Lease.

41.      SIGNAGE. Tenant shall not place, install, affix, paint or maintain any
         signs, notices, graphics or banners whatsoever or any window decor
         which is visible in or from public view or corridors, the common areas
         or the exterior of the Premises or the Building, in or on any exterior
         window or window fronting upon any common areas or service area or upon
         any truck doors or man doors without Landlord's prior written approval
         which Landlord shall have the right to withhold in its absolute and
         sole discretion; provided that Tenant's name shall be included in any
         Building-standard door and directory signage, if any, in accordance
         with Landlord's Building signage program, including without limitation,
         payment by Tenant of any fee charged by Landlord for maintaining such
         signage, which fee shall constitute additional rent hereunder. Any
         installation of signs, notices, graphics or banners on or about the
         Premises approved by Landlord shall be subject to any applicable laws,
         codes, ordinances, rules, the Sign Specifications attached to this
         Lease as Exhibit E and to any other reasonable requirements imposed by
         Landlord. Tenant shall remove all such signs or graphics by the
         expiration or any earlier termination of this Lease. Such installations
         and removals shall be made in such manner as to avoid injury to or
         defacement of the Premises and the Building and any other improvements
         contained therein, and Tenant shall repair any injury or defacement
         including without limitation discoloration caused by such installation
         or removal.

42.      INTENTIONALLY OMITTED.

43.      ROOF RIGHTS FOR DEVICE.

         43.1     Tenant shall have the right, in consideration for payments of
                  $0 per month (the "Device Payments") for the initial Term of
                  this Lease, to lease space on the roof of the Building for the
                  purpose of installing (in accordance with the alterations
                  provision of the Lease), operating and maintaining one 18 inch
                  dish/antenna or other communication device approved by the
                  Landlord (the "Device"). Following the initial Term of this
                  Lease, Landlord shall have the right to charge and Tenant
                  shall pay Landlord the prevailing monthly charges established
                  from time to time for the leasing of space on the roof on the
                  Building, payable in advance, with Tenant's payment of the
                  Monthly Installment of Rent. The Device Payments, if any,
                  shall constitute Additional Rent under the terms of the Lease
                  and Tenant shall be required to make these payments in strict
                  compliance with the terms of the Lease. The exact location of
                  the space on the roof to be leased by Tenant shall be
                  designated by Landlord and shall not exceed 9 square feet (the
                  "Roof Space"). Landlord reserves the right to relocate the
                  Roof Space as reasonably necessary during the Term. Landlord's
                  designation shall take into account Tenant's use of the
                  Device. Notwithstanding the foregoing, Tenant's right to
                  install the Device shall be subject to the approval rights of
                  Landlord and Landlord's architect and/or engineer with

                                       24

<PAGE>

                  respect to the plans and specifications of the Device, the
                  manner in which the Device is attached to the roof of the
                  Building and the manner in which any cables are run to and
                  from the Device. The precise specifications and a general
                  description of the Device along with all documents Landlord
                  reasonably requires to review the installation of the Device
                  (the "Plans and Specifications") shall be submitted to
                  Landlord for Landlord's written approval no later than 20 days
                  before Tenant commences to install the Device. Tenant shall be
                  solely responsible for obtaining all necessary governmental
                  and regulatory approvals and for the cost of installing,
                  operating, maintaining and removing the Device. Tenant shall
                  notify Landlord upon completion of the installation of the
                  Device. If Landlord determines that the Device equipment does
                  not comply with the approved Plans and Specifications, that
                  the Building has been damaged during installation of the
                  Device or that the installation was defective, Landlord shall
                  notify Tenant of any noncompliance or detected problems and
                  Tenant immediately shall cure the defects. If the Tenant fails
                  to immediately cure the defects, Tenant shall pay to Landlord
                  upon demand the cost, as reasonably determined by Landlord, of
                  correcting any defects and repairing any damage to the
                  Building caused by such installation. If at any time Landlord,
                  in its reasonable discretion, deems it necessary, Tenant shall
                  provide and install, at Tenant's sole cost and expense,
                  appropriate aesthetic screening, reasonably satisfactory to
                  Landlord, for the Device (the "Screening").

         43.2     Landlord agrees that Tenant, upon reasonable prior written
                  notice to Landlord, shall have access to the roof of the
                  Building and the Roof Space for the purpose of installing,
                  maintaining, repairing and removing the Device, the
                  appurtenances and the Screening, if any, all of which shall be
                  performed by Tenant or Tenant's authorized representatives,
                  engineers or contractors, and authorized FCC (as defined
                  below) inspectors which shall be approved by Landlord, at
                  Tenant's sole cost and risk. Tenant further agrees to keep to
                  a minimum the number of people having access to the roof of
                  the Building and the Roof Space and the frequency of their
                  visits.

         43.3     It is further understood and agreed that the installation,
                  maintenance, operation and removal of the Device, the
                  appurtenances and the Screening, if any, is not permitted to
                  damage the Building or the roof thereof, or interfere with the
                  use of the Building and roof by Landlord. Tenant agrees to be
                  responsible for any damage caused to the roof or any other
                  part of the Building, which may be caused by Tenant or any of
                  its agents or representatives.

         43.4     Tenant agrees to install only equipment of types and
                  frequencies which will not cause unreasonable interference to
                  Landlord or existing tenants of the Building. In the event
                  Tenant's equipment causes such interference, Tenant will
                  change the frequency on which it transmits and/or receives and
                  take any other steps necessary to eliminate the interference.
                  If said interference cannot be eliminated within a reasonable
                  period of time, in the reasonable judgment of Landlord, then
                  Tenant agrees to remove the Device from the Roof Space.

         43.5     Tenant shall, at its sole cost and expense, and at its sole
                  risk, install, operate and maintain the Device in a good and
                  workmanlike manner, and in compliance with all Building,
                  electric, communication, and safety codes, ordinances,
                  standards, regulations and requirements, now in effect or
                  hereafter promulgated, of the Federal Government, including,
                  without limitation, the Federal Communications Commission (the
                  "FCC"), the Federal Aviation Administration ("FAA") or any
                  successor agency of either the FCC or FAA having jurisdiction
                  over radio or telecommunications, and of the state, city and
                  county in which the Building is located. Under this Lease, the
                  Landlord and its agents assume no responsibility for the
                  licensing, operation and/or maintenance of Tenant's equipment.
                  Tenant has the responsibility of carrying out the terms of its
                  FCC license in all respects. Neither Landlord nor its agents
                  shall be liable to Tenant for any stoppages or shortages of
                  electrical power furnished to the Device or the Roof Space
                  because of any act, omission or requirement of the public
                  utility serving the Building, or the act or omission of any
                  other tenant, invitee or licensee or their respective agents,
                  employees or contractors, or for any other cause beyond the
                  reasonable control of Landlord, and Tenant shall not be
                  entitled to any rental abatement for any such stoppage or
                  shortage of electrical power. Neither Landlord nor its agents
                  shall have any responsibility or liability for the conduct or
                  safety of any of Tenant's representatives, repair, maintenance
                  and engineering personnel while in or on any part of the
                  Building or the Roof Space.

         43.6     The Device, the appurtenances and the Screening, if any, shall
                  remain the personal property of Tenant, and shall be removed
                  by Tenant at its own expense at the expiration or earlier
                  termination of this Lease or Tenant's right to possession
                  hereunder. Tenant agrees that at all times during the Term, it
                  will keep the

                                       25

<PAGE>

                  roof of the Building and the Roof Space free of all trash or
                  waste materials produced by Tenant or Tenant's agents,
                  employees or contractors.

         43.7     Tenant must provide Landlord with prior written notice of any
                  such installation, removal or repair and coordinate such work
                  with Landlord in order to avoid voiding or otherwise adversely
                  affecting any warranties granted to Landlord with respect to
                  the roof. In the event the Landlord contemplates roof repairs
                  that could affect Tenant's Device, or which may result in an
                  interruption of the Tenant's telecommunication service,
                  Landlord shall formally notify Tenant at least 30 days in
                  advance (except in cases of an emergency) prior to the
                  commencement of such contemplated work in order to allow
                  Tenant to make other arrangements for such service.

         43.8     Tenant shall not use the Roof Space and/or Device to provide
                  communication services to an unaffiliated tenant, occupant or
                  licensee of another building, or to facilitate the provision
                  of communication services on behalf of another communication
                  services provider to an unaffiliated tenant, occupant or
                  licensee of the Building or any other building. Tenant
                  specifically acknowledges and agrees that the terms and
                  conditions of the Lease respecting Tenant's indemnity
                  obligation of Landlord and the waiver of subrogation shall
                  apply with full force and effect to the Roof Space and any
                  other portions of the roof accessed or utilized by Tenant, its
                  representatives, agents, employees or contractors.

         43.9     If Tenant defaults under any of the terms and conditions of
                  this Section or the Lease, and Tenant fails to cure said
                  default within the time allowed by the terms and conditions of
                  the Lease, Landlord shall be permitted to exercise all
                  remedies provided under the terms of the Lease, including
                  removing at tenant's sole cost and expense the Device, the
                  appurtenances and the Screening, if any, and, at tenant's sole
                  cost and expense, restoring the Building and the Roof Space to
                  the condition that existed prior to the installation of the
                  Device, the appurtenances and the Screening, if any.

IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day
and the year stated below.

LANDLORD:                                            TENANT:

CALWEST INDUSTRIAL HOLDINGS, LLC,                    SCM MICROSYSTEMS, INC.,
A DELAWARE LIMITED LIABILITY COMPANY                 A DELAWARE CORPORATION

By: RREEF Management Company,
    A Delaware corporation, its Property Manager

By: _______________________________                  By: _______________________

Name: Timothy DeGoosh                                Name: _____________________

Title: District Manager                              Title: ____________________

Dated: _______________________, 2003                 Dated: ______________, 2003

                                       26

<PAGE>

                  EXHIBIT A - FLOOR PLAN DEPICTING THE PREMISES

        ATTACHED TO AND MADE A PART OF LEASE BEARING THE LEASE REFERENCE
       DATE OF MARCH 18, 2003, BETWEEN CALWEST INDUSTRIAL HOLDINGS, LLC, A
            DELAWARE LIMITED LIABILITY COMPANY, AS LANDLORD, AND SCM
              MICROSYSTEMS, INC., A DELAWARE CORPORATION, AS TENANT

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

                   466 Kato Terrace, Fremont, California 94539
                        Approximately 18,322 square feet

                                                                       Initials

                                       A-1

<PAGE>

                             EXHIBIT A-1 - SITE PLAN

    ATTACHED TO AND MADE A PART OF LEASE BEARING THE LEASE REFERENCE DATE OF
  MARCH 18, 2003, BETWEEN CALWEST INDUSTRIAL HOLDINGS, LLC, A DELAWARE LIMITED
     LIABILITY COMPANY, AS LANDLORD AND SCM MICROSYSTEMS, INC., A DELAWARE
                             CORPORATION, AS TENANT

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

[SITE PLAN]

                   466 Kato Terrace, Fremont, California 94539
                        Approximately 18,322 square feet

                                                                       Initials

                                       A-2

<PAGE>

                            EXHIBIT B -- IMPROVEMENTS

    ATTACHED TO AND MADE A PART OF LEASE BEARING THE LEASE REFERENCE DATE OF
  MARCH 18, 2003, BETWEEN CALWEST INDUSTRIAL HOLDINGS, LLC, A DELAWARE LIMITED
     LIABILITY COMPANY, AS LANDLORD AND SCM MICROSYSTEMS, INC., A DELAWARE
                             CORPORATION, AS TENANT

a.       Landlord shall provide a leasehold improvement allowance for
improvement of the Premises in an amount not to exceed $45,000.00 (the
"Leasehold Improvement Allowance"). The Leasehold Improvement Allowance shall be
used for Tenant's costs incurred in the design and construction of the
Improvements (as hereinafter defined) in the Premises, including, without
limitation, (i) payment of the fees of any architect or engineers employed by
Tenant, (ii) the cost of construction of such Improvements, and (iii) the cost
to construct any permanent fixtures. Notwithstanding anything herein to the
contrary, Landlord shall not be obligated to disburse any portion of the
Leasehold Improvement Allowance during the continuance of an uncured default by
Tenant under the Lease, and Landlord's obligation to disburse shall only resume
when and if such default is cured.

b.       Tenant shall have no right to credit or otherwise offset any unused
portion of the Leasehold Improvement Allowance against any monthly installment
of Annual Rent, Additional Rent, or any other amounts payable by Tenant to
Landlord under this Lease. In no event shall the Leasehold Improvement Allowance
be used for the purchase of equipment, furniture or other items of personal
property of Tenant. If Tenant does not submit a request for payment of the
entire Allowance to Landlord in accordance with the provisions contained in this
Improvement Agreement by June 30, 2003, any unused amount shall accrue to the
sole benefit of Landlord, it being understood that Tenant shall not be entitled
to any credit, abatement or other concession in connection therewith. Tenant
shall be responsible for all applicable state sales or use taxes, if any,
payable in connection with the Improvements and/or Allowance.

c.       Tenant has inspected the Premises and, subject to the terms and
conditions of the Lease, agrees (i) to accept possession of the Premises in the
condition existing as of the Commencement Date of this Lease, "as is", (ii) that
neither Landlord nor Landlord's agents have made any representations or
warranties with respect to the Premises or the Building except as expressly set
forth herein, and (iii) except for the Leasehold Improvement Allowance, Landlord
has no obligation to perform any work, supply any materials, incur any expense
or make any alterations or improvements to the Premises for Tenant's occupancy.
This Section c. shall be subject to the provisions of Section h. below.

d.       All Improvements shall be constructed by a general contractor selected
by Tenant and approved by Landlord in Landlord's reasonable discretion (the
"General Contractor"). Landlord hereby approves Qualogy Construction, Inc. as
the General Contractor. Additionally, Landlord shall approve all subcontractors
employed by Tenant and/or its general contractor, which consent (except as to
any Major Subcontractor (as hereinafter defined)), shall not be unreasonably
withheld or delayed. Landlord's approval of any Major Subcontractor may be
withheld or conditioned in Landlord's sole and absolute discretion. "Major
Subcontractor" shall mean any subcontractor responsible for mechanical,
electrical, structural, sprinkler, fire, life and safety, or ACM, as designated
by Landlord.

e.       Tenant shall perform improvements to the Premises in accordance with
the plans prepared by Interior Architects, dated February 19, 2003 as Job Number
123103.00 (the "Final Plans"). The improvements to be performed by Tenant in
accordance with the Final Plans are hereinafter referred to as the
"Improvements." Tenant shall not be required to remove the Improvements at the
expiration or earlier termination of the Lease. All Final Plans shall comply
with all applicable statutes, ordinances, regulations, laws, and codes and with
the requirements of Landlord's fire insurance underwriters. Neither review nor
approval by Landlord of the Final Plans shall constitute a representation or
warranty by Landlord that such plans either (i) are complete or suitable for
their intended purpose, or (ii) comply with applicable laws, ordinances, codes,
regulations, or any insurance requirements. Tenant shall not make any changes in
the Final Plans without Landlord's prior written approval, which shall be either
reasonably approved or disapproved, in writing, within five (5) business days
following submission by Tenant.

f.       In the event Tenant desires to change the Final Plans, Tenant shall
deliver notice (the "Final Plans Change Notice") of the same to Landlord,
setting forth in detail the changes (the "Tenant Change") Tenant desires to make
to the Final Plans. Landlord shall, within five (5) business days of receipt of
the Final Plans Change Notice, either (i) approve the Tenant Change, or (ii)
disapprove the Tenant Change and deliver a notice to Tenant specifying in detail
the reasons for Landlord's disapproval' provided, however, that Landlord may
only disapprove of the Tenant Change if the Tenant Change contains a

                                                                       Initials

<PAGE>

Design Problem (as hereinafter defined). Any additional costs which arise in
connection with such Tenant Change in excess of the Leasehold Improvement
Allowance shall be paid by Tenant. For the purposes of this Section e., a
"Design Problem" shall mean a change in the Final Plans which has an adverse
affect on the exterior appearance of the Building, serves to create an
unreasonable burden upon one or more of the various Building systems, creates
excessive structural loads, or threatens the integrity of the roof.

g.       Tenant, at its sole cost and expense, shall file the Final Plans with
the governmental agencies having jurisdiction over the Improvements. Tenant
shall not commence the Improvements until the required governmental
authorizations for such work are obtained.

h.       All work performed by Tenant shall be performed with a minimum of
interference with other tenants and occupants of the Property and shall conform
to the Building rules and regulations attached to the Lease and those
reasonable, nondiscriminatory rules and regulations governing construction in
the Building as Landlord may impose. Tenant will take all reasonable and
customary precautionary steps to protect its facilities and the facilities of
others affected by the Improvements and to properly police same and Landlord
shall have no responsibility for any loss by theft or otherwise. Construction
equipment and materials are to be located in confined areas and delivery and
loading of equipment and materials shall be done at such reasonable locations
and at such time as Landlord shall direct so as not to burden the operation of
the Building or the Property. Landlord shall advise Tenant in advance of any
special delivery and loading dock requirements. Tenant shall at all times keep
the Premises and adjacent areas free from accumulations of waste materials or
rubbish caused by its suppliers, contractors or workmen. At the completion of
the Improvements, Tenant's contractors shall forthwith remove all rubbish and
all tools, equipment and surplus materials from and about the Premises and
Building. Any damage caused by Tenant's contractors to any portion of the
Building or to any property of Landlord or other tenants shall be repaired
forthwith after written notice from Landlord to its condition prior to such
damage by Tenant at Tenant's expense.

i.       The General Contractor shall assume responsibility for the prevention
of accidents to its agents and employees and shall take all reasonable safety
precautions with respect to the work to be performed and shall comply with all
reasonable safety measures initiated by the Landlord and with all applicable
laws, ordinances, rules, regulations and orders of any public authority for the
safety of persons or property. Tenant shall advise the Tenant's contractors to
report to Landlord any injury to any of its agents or employees and shall
furnish Landlord a copy of the accident report filed with its insurance carrier
within three (3) days of its occurrence. Tenant shall cause the General
Contractor to secure, pay for, and maintain during the performance of the
construction of the Improvements, insurance in the following minimum coverages
and limits of liability:

         (i)      Workers' Compensation and Employer's Liability Insurance as
                  required by law.

         (ii)     Comprehensive General Liability Insurance (including Owner's
and Contractors' Protective Liability) in an amount not less than One Million
Dollars ($1,000,000) per occurrence, whether involving bodily injury liability
(or death resulting therefrom) or property damage liability or a combination
thereof with a minimum aggregate limit of Two Million Dollars ($2,000,000), and
with umbrella coverage with limits not less than Five Million Dollars
($5,000,000). Such insurance shall provide for explosion and collapse, completed
operations coverage with a two-year extension after completion of the work, and
broad form blanket contractual liability coverage and shall insure Tenant's
contractors against any and all claims for bodily injury, including death
resulting therefrom and damage to the property of others and arising from its
operations under the contracts whether such operations are performed by Tenant's
contractors, or by anyone directly or indirectly employed by any of them.

         (iii)    Comprehensive Automobile Liability Insurance, including the
ownership, maintenance, and operation of any automotive equipment, owned, hired,
or non-owned in an amount not less than One Million Dollars ($1,000,000) for
each person in one accident, and One Million Dollars ($1,000,000) for injuries
sustained by two or more persons in any one accident and property damage
liability in an amount not less than One Million Dollars ($1,000,000) for each
accident. Such insurance shall insure Tenant's contractors against any and all
claims for bodily injury, including death resulting therefrom, and damage to the
property of others arising from its operations under the contracts, whether such
operations are performed by Tenant's contractors, or by anyone directly or
indirectly employed by any of them.

The Improvements shall be constructed in a first-class manner using only
first-class grades of material and in compliance with the Final Plans, all
insurance requirements, applicable laws and ordinances and rules and regulations
of governmental departments or agencies and the rules and regulations adopted by
Landlord for the Building. The Improvements shall be deemed to be "Substantially
Complete" on the date that the Improvements have been performed, other than any
details of

                                                                       Initials

                                       B-2

<PAGE>

construction, mechanical adjustment or any other similar matter, the
noncompletion of which does not materially interfere with Tenant's use of the
Premises.

j.       The Allowance may only be used for hard costs in connection with the
Improvements. The Allowance shall be paid to Tenant or, at Landlord's option, to
the order of the general contractor that performed the Improvements, within 30
days following receipt by Landlord of (1) receipted bills covering all labor and
materials expended and used in the Improvements; (2) a sworn contractor's
affidavit from the general contractor and a request to disburse from Tenant
containing an approval by Tenant of the work done; (3) full and final releases
and waivers of lien, in form and content satisfactory to Landlord, from all
persons and entities providing work or materials covered by such statement; (4)
as-built plans of the Improvements; and (5) the certification of Tenant and its
architect that the Improvements have been installed in a good and workmanlike
manner in accordance with the approved plans, and in accordance with applicable
laws, codes and ordinances and that the same are substantially complete. The
Leasehold Improvement Allowance shall be disbursed in the amount reflected on
the receipted bills meeting the requirements above. Landlord's obligation to
disburse the Leasehold Improvement Allowance shall be subject to verification
that the work described in the disbursement request has been completed in
accordance with the requirements of the Lease, as determined by Landlord's
construction manager; provided, however, that such verification shall not
constitute an acceptance of the work by Landlord or a waiver by Landlord of any
right against Tenant in the event the work has not been completed as required by
the terms of the Lease.

k.       Following Substantial Completion of the Improvements, Tenant shall
comply with the following: (i) Tenant shall obtain and deliver to Landlord a
copy of the certificate of occupancy for the Improvements from the governmental
agency having jurisdiction thereof; (ii) Tenant shall promptly cause a notice of
completion to be validly recorded for the Improvements; (iii) Tenant shall
furnish Landlord with unconditional waivers of lien in statutory form from all
parties performing labor and/or supplying equipment and/or materials in
connection with the Improvements, including Tenant's architect(s); (iv) Tenant
shall deliver to Landlord a certificate of Tenant's architect(s) certifying
completion of the Improvements in substantial accordance with the Final Plans;
(v) Tenant shall deliver to Landlord a certificate of Tenant's contractor(s)
certifying completion of the Improvements in substantial accordance with the
construction contract(s) approved by Landlord; (vi) Tenant shall deliver to
Landlord a full set of reproducible as-built drawings (signed and dated by the
General Contractor and each responsible subcontractor) for the Improvements; and
(vii) Tenant shall deliver to Landlord copies of all written construction and
equipment warranties related to the Improvements.

l.       Should Landlord fail to pay within sixty (60) days of Tenant's written
demand and Tenant's compliance with its obligations under the Lease and this
Improvement Agreement any portion of the Leasehold Improvement Allowance, Tenant
shall have the right, on ten (10) business days' notice, to deduct any and all
sums owing to Tenant (any portion of the Leasehold Improvement Allowance in
dispute not being a sum owing to Tenant) from the next due Monthly Installment
of Rent and each subsequent installment of Monthly Installment of Rent until
Tenant is fully reimbursed. This exercise of set-off shall not constitute an
election of remedies except any amounts so recovered shall not be subsequently
recovered from Landlord.

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                    EXHIBIT C - COMMENCEMENT DATE MEMORANDUM

      ATTACHED TO AND MADE A PART OF LEASE BEARING THE LEASE REFERENCE DATE
 OF MARCH 18, 2003, BETWEEN CALWEST INDUSTRIAL HOLDINGS, LLC, A DELAWARE LIMITED
     LIABILITY COMPANY, AS LANDLORD, AND SCM MICROSYSTEMS, INC., A DELAWARE
              CORPORATION, AS TENANT COMMENCEMENT DATE MEMORANDUM

         THIS MEMORANDUM, made as of _____, 2003 by and between CalWest
Industrial Holdings, LLC, a Delaware limited liability company ("Landlord") and
SCM Microsystems, Inc., a Delaware Corporation ("Tenant").

                                    Recitals:

         A.       Landlord and Tenant are parties to that certain Lease, dated
                  for reference March 18, 2003 (the "Lease") for certain
                  premises (the "Premises") consisting of approximately 18,322
                  square feet at the building commonly known as 466 Kato
                  Terrace, Fremont, California.

         B.       Tenant is in possession of the Premises and the Term of the
                  Lease has commenced.

         C.       Landlord and Tenant desire to enter into this Memorandum
                  confirming the Commencement Date, the Termination Date and
                  other matters under the Lease.

         NOW, THEREFORE, Landlord and Tenant agree as follows:

         1.       The actual Commencement Date is ___________, 20__.

         2.       The actual Termination Date is __________, 20__.

         3.       The schedule of the Annual Rent and the Monthly Installment of
Rent set forth on the Reference Pages is deleted in its entirety, and the
following is substituted therefor:

                             [INSERT RENT SCHEDULE]

         4.       Capitalized terms not defined herein shall have the same
meaning as set forth in the Lease.

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         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year first above written.

LANDLORD:                                          TENANT:

CALWEST INDUSTRIAL HOLDINGS, LLC,                  SCM MICROSYSTEMS, INC.,
A DELAWARE LIMITED LIABILITY COMPANY               A DELAWARE CORPORATION

By: RREEF Management Company,
    a Delaware corporation, its Property Manager

By: ______________________________                 By: _________________________

Name: Timothy DeGoosh                              Name: _______________________

Title: District Manager                            Title: ______________________

Dated: _______________________, 2003               Dated: ________________, 2003


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                        EXHIBIT D - RULES AND REGULATIONS

    ATTACHED TO AND MADE A PART OF LEASE BEARING THE LEASE REFERENCE DATE OF
  MARCH 18, 2003, BETWEEN CALWEST INDUSTRIAL HOLDINGS, LLC, A DELAWARE LIMITED
     LIABILITY COMPANY, AS LANDLORD AND SCM MICROSYSTEMS, INC., A DELAWARE
                             CORPORATION, AS TENANT

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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all persons whose presence, in the judgment of Landlord, shall be prejudicial to
the safety, character, reputation and interests of the Building or its tenants.

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

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

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

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                         EXHIBIT E - SIGN SPECIFICATIONS

    ATTACHED TO AND MADE A PART OF LEASE BEARING THE LEASE REFERENCE DATE OF
  MARCH 18, 2003, BETWEEN CALWEST INDUSTRIAL HOLDINGS, LLC, A DELAWARE LIMITED
     LIABILITY COMPANY, AS LANDLORD AND SCM MICROSYSTEMS, INC., A DELAWARE
                             CORPORATION, AS TENANT

Scott Creek Business Park shares the City of Fremont's concern that all signage
be harmonious with a building's architecture and done in a tasteful manner.
These guidelines address Primary Signs and Secondary Signs. All signage
installation must be approved by Landlord, as well as by the City of Fremont.

PRIMARY SIGN GUIDELINES

-    These signs shall be reserved for offering corporate identity to Scott
     Creek Business Park's major tenants, to be determined by Landlord.

-    These signs shall be located on the parapet wall at the top elevation of
     the building. No more than one (1) Primary Sign shall be allowed per
     building.

-    Sign shall be a maximum of 60 square feet, with maximum letter height shall
     be 18 inches. These sizes are maximums. The owner and the City of Fremont
     will ensure that each application is compatible with the architectural
     features and proportions of the building. These maximums may vary with each
     building.

-    The sign color will be the building standard black or dark grey / green (to
     match Benjamin Moore #1491).

-    These signs will be 1/2" thick solid routed acrylic letters, painted with
     acrylic polyurethane and will be flush-mounted to building face using VHB
     tape and silicone adhesive.

-    Tenant's corporate identity marks (logo mark or signature) shall be
     approved on a case-by-case basis by Landlord.

-    The above is presented as guidelines for signage. All signage plans must be
     submitted to the Landlord for approval prior to installation.

SECONDARY SIGN GUIDELINES

-    These signs are reserved for tenants only and are limited to one (1) per
     Lease.

-    These signs shall be located on the free standing wall in front of tenant
     entrances in the 2' high by 9' wide entry area painted Egret (white).

-    Letter font of the signage shall be Highway Gothic "D" (caps only).
     Exceptions may be approved by the Landlord, on a case-by-case basis, to use
     Highway Gothic "C" (lower and upper case letters).

-    These signs shall be a maximum of approximately 18 square feet, which will
     fit within the specified area. This is approximately 22 letters. If a sign
     has more than 22 letters, the overall sign size shall be reduced
     accordingly to fit within the specified area.

-    These signs will be 1/2" thick solid routed acrylic letters with a maximum
     size of 10" each, painted with acrylic polyurethane and will be
     flush-mounted to building face using VHB tape and silicone adhesive.

-    The sign color will be the building standard dark grey / green color (to
     match Benjamin Moore #1491).

-    Tenant's corporate identity marks (logo mark or signature) shall be
     approved on a case-by-case basis by Landlord.

-    The above is presented as guidelines for signage. All signage plans must be
     submitted to the Landlord for approval prior to installation.

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                                    EXHIBIT F

         FORM OF SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT

    ATTACHED TO AND MADE A PART OF LEASE BEARING THE LEASE REFERENCE DATE OF
  MARCH 18, 2003, BETWEEN CALWEST INDUSTRIAL HOLDINGS, LLC, A DELAWARE LIMITED
     LIABILITY COMPANY, AS LANDLORD AND SCM MICROSYSTEMS, INC., A DELAWARE
                             CORPORATION, AS TENANT

                     FORM OF SUBORDINATION, NON-DISTURBANCE
                            AND ATTORNMENT AGREEMENT

         THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this
"Agreement") made as of the [___] day of [______], 2003, by and among LASALLE
BANK NATIONAL ASSOCIATION, as Trustee for Calwest Industrial Trust Commercial
Pass-Through Certificates Series 2002-CALW, whose Servicer is Midland Loan
Services, Inc., whose mailing address is 10851 Mastin, Suite 300, Overland Park,
KS 66210 (together with its successors and assigns, the "Lender"), SCM
MICROSYSTEMS, INC., a Delaware corporation ("Tenant") and CALWEST INDUSTRIAL
HOLDINGS, LLC, a Delaware limited liability company ("Landlord").

                                   WITNESSETH:

         WHEREAS, Lender, as successor-in-interest to Secore Financial
Corporation ("Secore"), is the mortgagee or beneficiary under a mortgage or deed
of trust (the "Mortgage") of even date herewith made by Landlord to Lender
covering the land (the "Land") described on Exhibit A attached hereto and all
improvements (the "Improvements") now or hereafter located on the land (the Land
and the Improvements hereinafter collectively referred to as the "Property"),
which Mortgage secures all amounts payable by Landlord to Lender under that
certain Loan Agreement of even date herewith between Lender's
predecessor-in-interest, Secore, Landlord and CALWEST INDUSTRIAL HOLDINGS, LLC
(the "Loan Agreement"); and

         WHEREAS, by a lease dated as of March 18, 2003 (which lease, as the
same may have been amended and supplemented, is hereinafter called the "Lease"),
Landlord or Landlord's predecessor-in-interest leased to Tenant certain space
located in the Improvements (the "Premises"); and

         WHEREAS, the parties hereto desire to make the Lease subject and
subordinate to the Mortgage and the Loan Agreement;

         NOW, THEREFORE, the parties hereto, in consideration of the covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, hereby agree as follows:

         1.       The Lease, as the same may hereafter be modified, amended or
extended, and all of Tenant's right, title and interest in and to the Premises
and all rights, remedies and options of Tenant under the Lease, are and shall be
unconditionally subject and subordinate to the Mortgage and the lien thereof, to
all the terms, conditions and provisions of the Mortgage and the Loan Agreement,
to each and every advance made or hereafter made under the Loan Agreement, and
to all renewals, modifications, consolidations, replacements, substitutions and
extensions of the Mortgage and/or the Loan Agreement, so that at all times the
Mortgage shall be and remain a lien on the Property prior and superior to the
Lease for all purposes; provided, however, and Lender agrees, that so long as
(A) no event has occurred and no condition exists, which would entitle Landlord
to terminate the Lease or would cause, without further action of Landlord, the
termination of the Lease or would entitle Landlord to dispossess Tenant from the
Premises, (B) Tenant shall duly confirm its attornment to Lender or its
successor or assign by written instrument reasonably acceptable to Lender and
Tenant as set forth in Paragraph 3 hereof, and (C) then Tenant's leasehold
estate under the Lease shall not be terminated, Tenant's possession of the
Premises shall not be disturbed by Lender and Lender will accept the attornment
of Tenant.

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         2.       Notwithstanding anything to the contrary contained in the
Lease, Tenant hereby agrees that in the even of any act, omission or default by
Landlord or Landlord's agents, employees, contractors, licensees or invitees
which would give Tenant the rights, either immediately or after the lapse of a
period of time, to terminate the Lease, Tenant will not exercise any such right
(i) until it has given written notice of such act, omission or default to Lender
by delivering notice of such act, omission or default, in accordance with
Paragraph 8 hereof, and (ii) until a period of not less than thirty (30) days
for remedying such act, omission or default shall have elapsed following the
giving of such notice. Notwithstanding the foregoing, in the case of any default
of Landlord which cannot be cured within such thirty (30) day period, if Lender
shall within such period proceed promptly to cure the same (including such time
as may be necessary to acquire possession of the Premises if possession is
necessary to effect such cure) and thereafter shall prosecute the curing of such
default with diligence, then the time within which such default may be cured by
Lender shall be extended for such period as may be necessary to complete the
curing of the same with diligence (but in no event shall such period extend
beyond sixty (60) days following the giving of such notice). Lender's cure of
Landlord's default shall not be considered an assumption by Lender of Landlord's
other obligations under the Lease. If Lender or any successor or assign becomes
obligated to perform as Landlord under the Lease, such person or entity will be
released from those obligations when such person or entity assigns, sells or
otherwise transfers its interest in the Premises or the Property with respect to
obligations accruing after the date of such assignment, sale or other transfer.

         3.       In the event that Lender succeeds to the interest of Landlord
or any successor to Landlord, then subject to the provisions of this Agreement
including, without limitation, Paragraph 1 above, the Lease shall nevertheless
continue in full force and effect, Tenant's possession of the Premises shall not
be disturbed by Lender and Tenant shall and does hereby agree to attorn to and
accept Lender and to recognize Lender as its Landlord under the Lease for the
then remaining balance of the term thereof, and upon request of Lender, Tenant
shall execute and deliver to Lender an agreement of attornment reasonably
satisfactory to Lender and Tenant.

         4.       If Lender succeeds to the interest of Landlord or any
successor to Landlord, in no event shall Lender have any liability for any act
or omission of any prior landlord under the Lease which occurs prior to the date
Lender succeeds to the rights of Landlord under the Lease. In no event shall
Lender have any personal liability as successor to Landlord and Tenant shall
look only to the estate and property of Lender in the Land and the Improvements
for the satisfaction of Tenant's remedies for the collection of a judgment (or
other judicial process) requiring the payment of money in the event of any
default by Lender as Landlord under the Lease, and no other property or assets
of Lender shall be subject to levy, execution or other enforcement procedure for
the satisfaction of Tenant's remedies under or with respect to the Lease.

         5.       Tenant agrees that no prepayment of rent or additional rent
due under the Lease of more than one month in advance, and no amendment,
modification, voluntary surrender or voluntary cancellation of the Lease, and no
waiver or consent by Landlord under the terms of the Lease, shall be binding
upon or as against Lender, as holder of the Mortgage, and as Landlord under the
Lease if it succeeds to that position, unless consented to in writing by Lender
(which consent shall not be unreasonably withheld or delayed with respect to any
amendment or modification of the Lease). Tenant further agrees with Lender that
Tenant will not voluntarily subordinate the Lease to any lien or encumbrance
without Lender's prior written consent.

         6.       This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute and be construed as one and the same instrument.

         7.       All remedies which Lender may have against Landlord provided
herein, if any, are cumulative and shall be in addition to any and all other
rights and remedies provided by law and by other agreements between Lender and
Landlord or others. If any party consists of multiple individuals or entities,
each of same shall be jointly and severally liable for the obligations of such
party hereunder.

         8.       All notices to be given under this Agreement shall be in
writing and shall be deemed served upon receipt by the addressee if served
personally or, if mailed, upon the first to occur of receipt or the refusal of
delivery as shown on a return receipt, after deposit in the United States Postal
Service certified mail,

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postage prepaid, addressed to the address of Landlord, Tenant or Lender
appearing below, or, if sent by telegram, when delivered by or refused upon
attempted delivery by the telegraph office. Such addresses may be changed by
notice given in the same manner. If any party consists of multiple individuals
or entities, then notice to any one of the same shall be deemed notice to such
party.

         Lender's Address:

         Midland Loan Services, Inc.
         Asset Management Department
         10851 Mastin
         Suite 300
         Overland Park, KS 66210

         Landlord's Address:

         Calwest Industrial Holdings, LLC
         c/o Global Securitization Services
         103 Foulk Road
         Suite 205-11
         Wilmington, Delaware 19803
         Attention: Andrew L. Stidd
         Telecopier: (302) 652-8667

         With a copy to:

         RREEF Management Company
         6759 Sierra Court, Suite E
         Dublin, California 94568
         Attention: Eric Russell
         Telecopier: (925) 556-5590

         Tenant's Address:

         Name: _____________________________________________

         Address: __________________________________________

                  __________________________________________

                  __________________________________________

         Attention: ________________________________________

         9.       This Agreement shall be interpreted and construed in
accordance with and governed by the laws of the state in which the Property is
located.

         10.      This Agreement shall apply to, bind and inure to the benefit
of the parties hereto and their respective successors and assigns. As used
herein "Lender" shall include any subsequent holder of the Mortgage.

         11.      Tenant acknowledges that Landlord has assigned to Lender its
right, title and interest in the Lease and to the rents, issues and profits of
the Property and the Property pursuant to the Mortgage, and that Landlord has
been granted the license to collect such rents provided no Event of Default has
occurred under, and as defined in, the Mortgage. Tenant agrees to pay all rents
and other amounts due under the Lease directly to Lender

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upon receipt of written demand by Lender, and Landlord hereby consents thereto.
The assignment of the Lease to Lender, or the collection of rents by Lender
pursuant to such assignment, shall not obligate Lender to perform Landlord's
obligations under the Lease unless Lender succeeds to the interest of Landlord
under the Lease.

         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

                              Lender:

                              LaSalle Bank N. A., as Trustee for the holders of
                              Calwest Industrial Trust Commercial Mortgage
                              Pass-Through Certificates Series 2002-CALW, by and
                              through its Master Servicer and Attorney-in-fact,
                              Midland Loan Services, Inc., a Delaware
                              corporation

                              By:_______________________________________________
                                          Authorized Signatory

                              Landlord:

                              Calwest Industrial Holdings, LLC,
                              a Delaware limited liability company

                              By:_______________________________________________

                              Name:_____________________________________________

                              Its:______________________________________________

                              Tenant:

                              Tenant Name:______________________________________

                              By:_______________________________________________
                                          Authorized Signatory

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