AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

            STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE -- NET
                (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1.     Basic Provisions ("Basic Provisions").
     1.1  Parties: This Lease ("Lease"), dated for reference purposes only, July
1,  2003,  is  made  by  and between Laro Properties, L.P., a California Limited
Partnership ("Lessor") and I/OMagic Corporation, a Nevada Corporation ("Lessee")
(collectively  the  "Parties,"  or  individually  a  "Party").
     1.2  Premises:  That  certain  real  property,  including  all improvements
therein  or to be provided by Lessor under the terms of this Lease, and commonly
known  as  4  Marconi,  Irvine,  located  in  the  County  of  Orange,  State of
California,  and  generally  described  as  (describe  briefly the nature of the
property  and, if applicable, the "Project", if the property is located within a
Project)  an  approximate  52,000  square  foot  industrial/R  & D building (See
attached  plan  Exhibit  A)  ("Premises").  (See  also  Paragraph  2)
     1.3  Term: Three (3) years and zero (0) months ("Original Term") commencing
See  Addendum  paragraph  50  ("Commencement  Date")  and ending Three (3) years
thereafter  ("Expiration  Date").  (See  also  paragraph  3)
     1.4  Early Possession: See Addendum paragraph 51 ("Early Possession Date").
(See  also  Paragraphs  3.2  and  3.3)
     1.5  Base  Rent: $25,480.00 per month ("Base Rent"), payable on the 1st day
of  each  month  commencing  See  Addendum  paragraph 50. (See also Paragraph 4)
[X] If this box is checked, there are provisions in this Lease for the Base Rent
to  be  adjusted.
     1.6  Base  Rent Paid Upon Execution: $25,480.00 as Base Rent for the period
1st  month's  rent.
     1.7  Security Deposit: $27,032.00 ("Security Deposit"). (See also Paragraph
5)
     1.8 Agreed Use: Office, light manufacturing, warehousing of inventory using
a  racking  system  of  up  to  20',  and  distribution  (See also Paragraph 6).
     1.9 Insuring Party: Lessor is the "Insuring Party" unless other wise stated
herein.  (See  also  Paragraph  8)
     1.10  Real  Estate Brokers: (See also Paragraph 15) (a) Representation: The
following  real  estate  brokers  (collectively,  the  "Brokers")  and brokerage
relationships  exist  in  this  transaction  (check  applicable  boxes):

[X]  CB Richard Ellis, Inc. represents Lessor exclusively ("Lessor's Broker");
[X]  Voit Commercial represents Lessee exclusively ("Lessee's Broker"); or
or [ ] represents both Lessor and Lessee ("Dual Agency").

(b)     Payment to Brokers: Upon execution and delivery of this Lease by both
Parties, Lessor shall pay to the Broker the fee agreed to in their separate
written agreement (or if there is no such agreement, the sum of _________ % of
the total Base Rent for the brokerage services rendered by said Broker).
     1.11  Guarantor.  The  obligations of the Lessee under this Lease are to be
guaranteed  by  None  ("Guarantor").  (See  also  Paragraph  37)
     1.12  Addenda  and  Exhibits.  Attached  hereto  is  an Addendum or Addenda
consisting  of  Paragraphs  50  through  62  and  Exhibits  A-Site  Plan,  and
B-Workletter,  all  of  which  constitute  a  part  of  this  Lease.

2.     Premises.
     2.1  Letting. Lessor hereby leases to Lessee, and Lessee hereby leases form
Lessor,  the  Premises,  for the term, at the rental, and upon all of the terms,
covenants  and  conditions  set  forth  in this Lease. Unless otherwise provided
herein,  any  statement  of  size set forth in this Lease, or that may have been
used  in  calculating  rental,  is  an  approximation which the Parties agree is
reasonable  and  the  rental based thereon is not subject to revision whether or
not  the  actual  size  is  more  or  less.
     2.2  Condition. Lessor shall deliver the Premises to Lessee broom clean and
free  of  debris on the Commencement Date of the Early Possession Date whichever
first  occurs  ("Start  Date"),  and,  so long as the required service contracts
described  in  Paragraph 7.2 (b) below are obtained by Lessee within thirty (30)
days  following the Start Date, warrants that the existing electrical, plumbing,
fire  sprinkler,  lighting,  hearing,  ventilating  and air conditioning systems
("HVAC"),  loading  doors,  if any, and all other such elements in the Premises,
other  than those constructed by Lessee, shall be in good operating condition on
said date that the structural elements of the roof, bearing walls and foundation
of  any  buildings  on  the  Premises (the "Building") shall be free of material
defects.  If  a  non-compliance  with said warranty exists as of the Start Date,
Lessor shall, as Lessor's sole obligation with respect to such matter, except as
otherwise  provided in this Lease, promptly after receipt of written notice from
Lessee  setting  forth  with  specificity  the  nature  and  extent  of  such
non-compliance,  rectify  same  at  Lessor's  expense. If, after the Start Date,
Lessee  does  not  give  Lessor  written  notice of any non-compliance with this
warranty  within:  (i)  [deleted],  (ii)  six (6) months as to the HVAC systems,
(iii)  thirty  (30)  days  as to the remaining systems and other elements of the
Building, correction of such non-compliance shall be the obligation of Lessee at
Lessee's  sole  cost  and  expense.  See  Addendum  paragraph  60.

     2.3  *Compliance.  Lessor  warrants  that  the improvements on the Premises
comply  with  all applicable laws, covenants or restrictions of record, building
codes,  regulations  and ordinances ("Applicable Requirements") in effect on the
Start Date. Said warranty does not apply to the use to which Lessee will put the
Premises or to any Alterations or Utility Installations (as defined in Paragraph
7.3(a))  made  or  to  be  made  by  Lessee.  NOTE:  Lessee  is  responsible for
determining  whether or not the zoning is appropriate for Lessee's intended use,
and acknowledges that past uses of the Premises may no longer be allowed. If the
Premises  do  not  comply  with said warranty, Lessor shall, except as otherwise
provided,  promptly  after  receipt  of written notice from Lessee setting forth
with  specificity the nature and extent of such non-compliance, rectify the same
at  Lessor's  expense.  [deleted]  If  the Applicable Requirements are hereafter
changed  (as opposed to being in existence at the Start Date, which is addressed
in  Paragraph  6.2(e)  below) so as to require during the term of this Lease the
construction of an addition to or an alteration of the Building, the remediation
of  any Hazardous Substance, or the reinforcement or other physical modification
of  the  Building  ("Capital Expenditure"), Lessor and Lessee shall allocate the
cost  of  such  work  as  follows:

* See addendum Paragraph 62

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     (a)  Subject  to  Paragraph  2.3(c) below, if such Capital Expenditures are
required as a result of the specific and unique use of the Premises by Lessee as
compared  with uses by tenants in general, Lessee shall be fully responsible for
the cost thereof, provided, however that if such Capital Expenditure is required
during the last two (2) years of this Lease and the cost thereof exceeds six (6)
months'  Base  Rent,  Lessee  may  instead  terminate  this  Lease unless Lessor
notifies  Lessee,  in  writing,  within  ten (10) days after receipt of Lessee's
termination  notice  that  Lessor  has elected to pay the difference between the
actual cost thereof and the amount equal to six (6) months' Base Rent. If Lessee
elects termination, Lessee shall immediately cease the use of the Premises which
requires  such  Capital  Expenditure  and  deliver  to  Lessor  written  notice
specifying  a  termination  date  at  least  ninety  (90)  ninety [deleted] days
thereafter.  Such  termination  date shall, however, in no event be earlier than
the  last  day that Lessee could legally utilize the Premises without commencing
such  Capital  Expenditure.
     (b)  If  such  Capital  Expenditure  is  nor the result of the specific and
unique  use  of the Premises by Lessee (such as, governmentally mandated seismic
modifications),  then Lessor and Lessee shall allocate the obligation to pay for
such  costs  pursuant to the provisions of Paragraph 7.1 (c); provided, however,
that  if  such Capital Expenditure is required during the last two years of this
Lease or if Lessor reasonably determines that it is not economically feasible to
pay its share thereof, Lessor shall have the option to terminate this Lease upon
one  hundred twenty (120) [deleted] prior written notice to Lessee unless Lessee
notifies  Lessor,  in  writing,  within  ten (10) days after receipt of Lessor's
termination  notice that Lessee will pay for such Capital Expenditure. If Lessor
does  not  elect to terminate, and fails to tender its share of any such Capital
Expenditure,  Lessee may advance such funds and deduct same, with Interest, from
Rent  until  Lessor's  share  of  such  costs have been fully paid. If Lessee is
unable  to finance Lessor's share, or if the balance of the Rent due and payable
for  the  remainder of this Lease is not sufficient to fully reimburse Lessee on
an offset basis, Lessee shall have the right to terminate this Lease upon thirty
(30)  days  written  notice  to  Lessor.
     (c)  Notwithstanding  the  above,  the  provisions  concerning  Capital
Expenditures  are  intended  to apply only to non-voluntary, unexpected, and new
Applicable  Requirements.  If  the Capital Expenditures are instead triggered by
Lessee  as  a result of an actual or proposed change in use, change in intensity
of use, or modification to the Premises then, and in that event, Lessee shall be
fully  responsible  for the cost thereof, and Lessee shall not have any right to
terminate  this  Lease.
     2.4  Acknowledgements. Lessee acknowledges that: (a) it has been advised by
Lessor  and/or  Brokers  to  satisfy itself with respect to the condition of the
Premises  (including  but not limited to the electrical, HVAC and fire sprinkler
systems,  security,  environmental  aspects,  and  compliance  with  Applicable
Requirements),  and  their suitability for Lessee's intended use; (b) Lessee has
made such investigation as it deems necessary with reference to such matters and
assumes  all responsibility therefore as the same relate to its occupancy of the
Premises;  and  (c) neither Lessor, Lessor's agents, nor any Broker has made any
oral or written representations or warranties with respect to said matters other
than  as  set  forth  in this Lease. In addition, Lesssor acknowledges that: (a)
Broker  has  made no representations, promises or warranties concerning Lessee's
ability  to honor the Lease or suitability to occupy the Premises; and (b) it is
Lessor's  sole  responsibility  to  investigate  the financial capability and/or
suitability  of  all  proposed  tenants.
     2.5  Lessee  as  Prior  Owner/Occupant.  The  warranties  made by Lessor in
Paragraph  2  shall  be  of no force or effect if immediately prior to the Start
Date  Lessee  was  the  owner or occupant of the Premises. In such event, Lessee
shall  be  responsible for any necessary corrective work.
3. Term.
     3.1  Term. The Commencement Date, Expiration Date and Original Term of this
Lease  are  as  specified  in  Paragraph  1.3.
     3.2  Early Possession. If Lessee totally or partially occupies the Premises
prior  to the Commencement Date, the obligation to pay Base Rent shall be abated
for  the  period  of  such  early  possession.  All  other  terms  of this Lease
(including,  but  not limited to, the obligations to pay Real Property Taxes and
insurance  premiums  and  to maintain the Premises) shall, however, be in effect
during  such  period.  Any such early possession shall not affect the Expiration
Date.  3.3  DELAY  IN  Possession.  Lessor  agrees  to use its best commercially
reasonable  efforts  to  deliver  possession  of  the  Premises to Lessee by the
Commencement  Date.  If,  despite  said  efforts,  Lessor  is  unable to deliver
possession  as  agreed,  Lessor shall not be subject to any liability therefore,
nor  shall  such  failure  affect  the validity of this Lease. Lessee shall not,
however,  be  obligated  to  pay  Rent or perform its other obligations until it
receives  possession  of  the  Premises.  If  possession is not delivered within
thirty  (30)  [deleted]    days  after the Commencement Date, Lessee may, at its
option,  by  notice in writing within ten (10) days after the end of such thirty
(30)  [deleted]  day period, cancel this Lease, in which event the Parties shall
be  discharged  from  all  obligations  hereunder. If such written notice is not
received  by  Lessor  within  said ten (10) day period, Lessee's right to cancel
shall  terminate. Except as otherwise provided, if possession is not tendered to
Lessee by the Start Date and Lessee does not terminate this Lease, as aforesaid,
any  period of rent abatement that Lessee would otherwise have enjoyed shall run
from  the date of delivery of possession and continue for a period equal to what
Lessee  would  otherwise have enjoyed under the terms hereof, but minus any days
of  delay  caused  by  the  acts  or  omissions  of Lessee. If possession of the
Premises  is  not  delivered within four (4) months after the Commencement Date,
this  Lease  shall  terminate unless other agreements are reached between Lessor
and  Lessee,  in  writing.
     3.4 Lessee Compliance. Lessor shall not be required to tender possession of
the  Premises  to  Lessee  until  Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee
shall  be  required  to perform all of its obligations under this Lease from and
after  the  Start  Date, including the payment of Rent, notwithstanding Lessor's
election  to  withhold possession pending receipt of such evidence of insurance.
Further,  if  Lessee  is  required  to  perform any other conditions prior to or
concurrent  with the Start Date, the Start Date shall occur but Lessor may elect
to  withhold  possession  until  such  conditions  are  satisfied.
4.     Rent.
     4.1.  Rent  Defined. All monetary obligations of Lessee to Lessor under the
terms  of  this  Lease  (except  for the Security Deposit) are deemed to be rent
("Rent").
     4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in
lawful  money  of  the  United  States,  without  offset or deduction (except as
specifically  permitted in this Lease), on or before the day on which it is due.
Rent  for  any period during the term hereof which is for less than one (1) full
calendar  month  shall  be prorated based upon the actual number of days of said
month.  Payment  of Rent shall be made to Lessor at its address stated herein or
to  such  other  persons  or  place as Lessor may from time to time designate in
writing.  Acceptance  of  a payment which is less than the amount then due shall
not  be  a  waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's  endorsement  of  any  check  so  stating.
     5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof
the  Security  Deposit  as  security  for  Lessee's  faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under  this  Lease,  Lessor  may use, apply or retain all or any portion of said
Security  Deposit  for  the  payment of any amount due Lessor or to reimburse or
compensate  Lessor  for  any liability, expense, loss or damage which Lessor may
suffer  or incur by reason thereof. If Lessor uses or applies all or any portion
of  said  Security  Deposit,  Lessee  shall  within  ten (10) days after written
request therefore deposit monies with Lessor sufficient to restore said Security
Deposit  to  the  full amount required by this Lease. If the Base Rent increases
during  the  term of this Lease, Lessee shall, upon written request from Lessor,
deposit  additional  monies with Lessor so that the total amount of the Security
Deposit  shall  at all times bear the same proportion to the increased Base Rent
as the initial Security Deposit bore to the initial Base Rent. Should the Agreed
Use  be amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security  Deposit  to  the extent necessary, in Lessor's reasonable judgment, to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such  change  the  financial  condition  of  Lessee  is,  in Lessor's reasonable
judgment,  significantly  reduced,  Lessee  shall deposit such additional monies
with  Lessor  as  shall  be  sufficient to cause the Security Deposit to be at a
commercially  reasonable  level  based  on  said  change in financial condition.
Lessor  shall  not  be  required  to keep the Security Deposit separate from its
general  accounts. Within fourteen (14) days after the expiration or termination
of  this  Lease,  if  Lessor elects to apply the Security Deposit only to unpaid
Rent, and otherwise within thirty (30) days after the Premises have been vacated
pursuant  to  Paragraph  7.4(c)  below,  Lessor shall return that portion of the
Security  Deposit not used or applied by Lessor. No part of the Security Deposit
shall  be  considered  to be held in trust, to bear interest or to be prepayment
for  any  monies  to  be  paid  by  Lessee  under  this  Lease.
6. Use.
     6.1  Use. Lessee shall use and occupy the Premises only for the Agreed Use,
or  any other legal use which is reasonably comparable thereto, and for no other
purpose. Lessee shall not use or permit the use of the Premises in a manner that
is unlawful, creates damage, waste or a nuisance, or that disturbs owners and/or
occupants  of,  or  causes  damage  to  neighboring properties. Lessor shall not
unreasonably  withhold  or  delay  its  consent  to  any  written  request for a
modification  of  the  Agreed  Use,  so  long  as  the  same will not impair the
structural  integrity  of  the improvements on the Premises or the mechanical or
electrical  systems  therein,  is  not  significantly  more  burdensome  to  the
Premises.  If  Lessor  elects  to withhold consent, Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall  include  an  explanation  of  Lessor's  objections  to the change in use.

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     6.2  Hazardous  Substances.  (a)  Reportable Uses Require Consent. The term
"Hazardous  Substance"  as used in this Lease shall mean any product, substance,
or waste whose presence, use, manufacture, disposal, transportation, or release,
either  by  itself or in combination with other materials expected to' be on the
Premises,  is  either: (i) potentially injurious to the public health, safety or
welfare,  the  environment  or  the Premises, (ii) regulated or monitored by any
governmental  authority,  or  (iii) a basis for potential liability of Lessor to
any  governmental  agency  or third party under any applicable statute or common
law  theory.  Hazardous  Substances  shall  include,  but  not  be  limited  to,
hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products
or  fractions  thereof.  Lessee  shall  not  engage in any activity in or on the
Premises  which constitutes a Reportable Use of Hazardous Substances without the
express  prior  written  consent  of  Lessor  and timely compliance (at Lessee's
expense)  with  all Applicable Requirements. "Reportable Use" shall mean (i) the
installation  or  use  of  any  above  or  below  ground  storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a Hazardous
Substance  that  requires  a  permit  from,  or  with respect to which a report,
notice,  registration  or  business  plan  is  required  to  be  filed with, any
governmental authority, and/or (iii) the presence at the Premises of a Hazardous
Substance  with  respect  to  which  any Applicable Requirements requires that a
notice  be  given  to  persons entering or occupying the Premises or neighboring
properties.  Notwithstanding  the  foregoing,  Lessee  may  use any ordinary and
customary  materials  reasonably required to be used in the normal course of the
Agreed  Use,  so  long  as  such  use  is  in  compliance  with  all  Applicable
Requirements,  is  not  a  Reportable  Use,  and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or expose
Lessor to any liability therefore. In addition, Lessor may condition its consent
to  any  Reportable  Use  upon  receiving  such  additional assurances as Lessor
reasonably  deems  necessary  to protect itself, the public, the Premises and/or
the  environment  against  damage,  contamination,  injury  and/or  liability,
including,  but not limited to, the installation (and removal on or before Lease
expiration  or  termination)  of  protective  modifications  (such  as  concrete
encasements)  and/or  increasing  the  Security  Deposit.
     (b)  Duty  to  Inform  Lessor.  If Lessee knows, or has reasonable cause to
believe,  that  a  Hazardous  Substance  has come to be located in, on, under or
about  the  Premises,  other  than  as previously consented to by Lessor, Lessee
shall immediately give written notice of such fact to Lessor, and provide Lessor
with  a  copy  of  any report, notice, claim or other documentation which it has
concerning  the  presence  of  such  Hazardous Substance. Lessee will be storing
propane  for  its  fork  lift  in  accordance  with  current  codes.
     (c)  Lessee  Remediation.  Lessee  shall  not cause or permit any Hazardous
Substance  to  be  spilled  or  released  in,  on,  under, or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly, at
Lessee's  expense,  take  all  investigatory  and/or  remedial action reasonably
recommended, whether or not formally ordered or required, for the cleanup of any
contamination  of,  and  for  the maintenance, security and/or monitoring of the
Premises or neighboring properties, that was caused or materially contributed to
by  Lessee,  or  pertaining to or involving any Hazardous Substance brought onto
the  Premises  during  the  term  of  this Lease, by or for Lessee, or any third
party.
     (d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor,
its  agents,  employees,  lenders  and  ground Lessor, if any, harmless from and
against  any  and  all  loss  of  rents  and/or damages, liabilities, judgments,
claims, expenses, penalties, and attorneys' and consultants' fees arising out of
or involving any Hazardous Substance brought onto the Premises by or for Lessee,
or any third party (provided, however, that Lessee shall have no liability under
this  Lease  with  respect  to  underground migration of any Hazardous Substance
under  the  Premises  from  adjacent  properties).  Lessee's  obligations  shall
include,  but  not  be limited to, the effects of any contamination or injury to
person,  property or the environment created or suffered by Lessee, and the cost
of  investigation, removal, remediation, restoration and/or abatement, and shall
survive  the  expiration  or  termination  of  this  Lease.  No  termination,
cancellation  or  release  agreement  entered  into  by  Lessor and Lessee shall
release  Lessee  from its obligations under this Lease with respect to Hazardous
Substances,  unless  specifically  so agreed by Lessor in writing at the time of
such  agreement.
     (e)  Lessor  Indemnification.  Lessor  and its successors and assigns shall
indemnify,  defend,  reimburse  and  hold  lessee,  its  employees  and lenders,
harmless  from and against any and all environmental damages, including the cost
of  remediation,  which  existed  as  a  result  of  Hazardous Substances on the
Premises  prior to the Start Date or which are caused by the gross negligence or
willful  misconduct of Lessor, its agents or employees. Lessor's obligations, as
and  when  required  by  the  Applicable Requirements, shall include, but not be
limited  to, the cost of investigation, removal, remediation, restoration and/or
abatement,  and  shall  survive  the  expiration  or  termination of this lease.
     (f) Investigations and Remediations. Lessor shall retain the responsibility
and  pay for any investigations or remediation measures required by governmental
entities  having  jurisdiction  with  respect  to  the  existence  of  Hazardous
Substances  on  the  Premises  prior  to the Start Dale, unless such remediation
measure  is  required  as  a result of lessee's use (including "Alterations", as
defined  in Paragraph 7.3(a) below) of the Premises, in which event lessee shall
be  responsible  for  such  payment.  Lessee  shall  cooperate fully in any such
activities  at  the  request  of  Lessor, including allowing Lessor and Lessor's
agents to have reasonable access to the Premises at reasonable times in order to
carry  out  Lessor's  investigative  and  remedial  responsibilities.
     (g)  Lessor  Termination  Option. If a Hazardous Substance Condition occurs
during  the  term  of this lease, unless lessee is legally responsible therefore
(in  which  case  lessee  shall  make  the investigation and remediation thereof
required  by  the  Applicable Requirements and this lease shall continue in full
force  and  effect,  but  subject  to Lessor's rights under Paragraph 6.2(d) and
Paragraph  13),  Lessor  may,  at  Lessor's  option,  either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as reasonably
possible  at Lessor's expense, in which event this lease Sl1311 continue in full
force  and  effect,  or  (ii)  if the estimated cost to remediate such condition
exceeds  twelve  (12) times the then monthly Base Rent or $100,000, whichever is
greater, give written notice to lessee, within thirty (30) days after receipt by
Lessor  of knowledge of the occurrence of such Hazardous Substance Condition, of
Lessor's  desire to terminate this Lease as of the date one hundred twenty (120)
[deleted]  days following the date of such notice. In the event Lessor elects to
give  a  termination  notice,  Lessee may, within ten (10) days thereafter, give
written  notice  to Lessor of Lessee's commitment to pay the amount by which the
cost  of the remediation of such Hazardous Substance Condition exceeds an amount
equal  to twelve (12) times the then monthly Base Rent or $100,000, whichever is
greater.  Lessee  shall provide Lessor with said funds or satisfactory assurance
thereof  within  thirty (30) days following such commitment. In such event, this
Lease  shall continue in full force and effect, and Lessor shall proceed to make
such  remediation  as  soon  as reasonably possible after the required funds are
available. If Lessee does not give such notice and provide the required funds or
assurance thereof within the time provided, this Lease shall terminate as of the
date  specified  in  Lessor's  notice  of  termination.
     6.3  Lessee's  Compliance with Applicable Requirements. Except as otherwise
provided  in  this  lease,  lessee  shall,  at  Lessee's  sole  expense,  fully,
diligently  and  in  a  timely  manner,  materially  comply  with all Applicable
Requirements,  the  requirements of any applicable fire insurance underwriter or
rating  bureau, and the recommendations of Lessor's engineers and/or consultants
which  relate  in  any  manner to the Premises, which [deleted] become effective
after  the  Start  Date.  Lessee  shall,  within  ten (10) days after receipt of
Lessor's  written  request,  provide Lessor with copies of all permits and other
documents,  and  other  information  evidencing  lessee's  compliance  with  any
Applicable Requirements specified by Lessor, and shall immediately upon receipt,
notify  Lessor  in  writing  (With  copies  of  any  documents  involved) of any
threatened  or  actual  claim,  notice,  citation,  warning, complaint or report
pertaining  to or involving the failure of lessee or the Premises to comply with
any  Applicable  Requirements.
     6.4 Inspection; Compliance. Lessor and Lessor's "lender" (as defined in
Paragraph  30 below) and consultants shall have the right to enter into Premises
at any time, in the case of an emergency, and otherwise at reasonable times, for
the  purpose  of  inspecting  the  condition  of  the Premises and for verifying
compliance  by lessee with this Lease. The cost of any such inspections shall be
paid  by  Lessor,  unless  a  violation  of  Applicable  Requirements,  or  a
contamination  is  found to exist or be imminent, or the inspection is requested
or  ordered by a governmental authority. In such case, lessee shall upon request
reimburse Lessor for the cost of such inspections, so long as such inspection is
reasonably  related  to  the  violation  or  contamination.
7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations.
     7.1 Lessee's Obligations. See Addendum Paragraph 60
     (a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3
(Compliance),  6.3  (Lessee's  Compliance  with  Applicable  Requirements),  7.4
(Lessor's Obligations), 9 (Damage or Destruction), and 14 (Condemnation), lessee
shall,  at  Lessee's sole expense, keep the Premises, Utility Installations, and
Alterations  in  good order, condition and repair (whether or not the portion of
the  Premises  requiring  repairs,  or  the  means  of  repairing  the same, are
reasonably or readily accessible to Lessee, and whether or not the need for such
repairs  occurs  as a result of Lessee's use, any prior use, the elements or the
age  of  such  portion  of  the  Premises),  including,  but not limited to, all
equipment  or  facilities,  such  as  plumbing,  heating,  ventilating,
air-conditioning,  electrical,  lighting  facilities, boilers, pressure vessels,
fire  protection  system,  fixtures,  walls  (Interior  and  exterior),[deleted]
ceilings, [deleted] floors, windows, doors, plate glass, skylights, landscaping,
driveways,  parking lots, fences, retaining walls, signs, sidewalks and parkways
located  In, on, or adjacent to the Premises. Lessee, in keeping the Premises in
good  order,  condition  and repair, shall exercise and perform good maintenance
practices, specifically including the procurement and maintenance of the service
contracts required by Paragraph 7.1(b) below. Lessee's obligations shall include
restorations,  replacements  or renewals when necessary to keep the Premises and
all improvements thereon or a part thereof in good order, condition and state of
repair.  Lessee  shall,  during  the  term  of  this  Lease,  keep  the exterior
appearance  of  the  Building  in  a  first-class  condition consistent with the
exterior

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appearance of other similar facilities of comparable age and size in
the vicinity [deleted]
     (b)  Service  Contracts. Lessee shall, at Lessee's sole expense procure and
maintain  contracts, with copies to Lessor, in customary form and substance for,
and  with  contractors  specializing  and  experienced in the maintenance of the
following  equipment  and  improvements,  if  any;  if and when installed on the
Premises:  (i)  HVAC  equipment,  (ii)  boiler, and pressure vessels, (iii) fire
extinguishing  systems,  including  fire  alarm  and/or  smoke  detection,  (iv)
landscaping and irrigation systems, (v) roof covering and drains, (vi) driveways
and parking lots, (vii) clarifiers (viii) basic utility feed to the perimeter of
the  Building,  and  (ix) any other equipment, if reasonably required by Lessor.
     (c) Replacement. Subject to Lessee's indemnification of Lessor as set forth
in Paragraph 8.7 below, and without relieving Lessee of liability resulting from
Lessee's  failure  to  exercise  and  perform good maintenance practices, if the
Basic Elements described in Paragraph 7.1 (b) cannot be repaired other than at a
cost  which  is  in  excess of 50% of the cost of replacing such Basic Elements,
then such Basic Elements shall be replaced by Lessor, and the cost thereof shall
be  prorated between the Parties and Lessee shall only be obligated to pay, each
month  during the remainder of the term of this Lease, on the date on which Base
Rent  is  due,  an  amount  equal to the product of multiplying the cost of such
replacement by a fraction, the numerator of which is one, and the denominator of
which  is  the  number  of months of the useful life of such replacement as such
useful  life  is  specified  pursuant  to  Federal  income  tax  regulations  or
guidelines  for  depreciation  thereof  (including  interest  on the unamortized
balance  as  is  then  commercially  reasonable  in  the  judgment  of  Lessor's
accountants),  with  Lessee  reserving the right to prepay its obligation at any
time.
     7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 9 (Damage or Destruction) and 14 (Condemnation),
it is intended by the Parties hereto that Lessor have no obligation, in any
manner whatsoever, to repair and maintain the Premises, or Ute equipment
therein, all of which obligations are intended to be that of the Lessee. It is
the intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the Premises, and
they expressly waive the benefit of any statute now or hereafter in effect to
the extent it is inconsistent with the terms of this Lease. See Addendum
paragraph 60 and 62.  /s/BL  /s/GS
     7.3  Utility  Installations;  Trade  Fixtures;  Alterations.
     (a)  Definitions; Consent Required. The term "Utility Installations" refers
to  all  floor  and  window  coverings,  air  lines,  power  panels,  electrical
distribution,  security  and  fire  protection  systems,  communication systems,
lighting  fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The  term  "Trade Fixtures" shall mean Lessee's machinery and equipment that can
be removed without doing material damage to the Premises. The term "Alterations"
shall  mean  any  modification  of  the  improvements,  other  than  Utility
Installations  or Trade Fixtures, whether by addition or deletion. "Lessee Owned
Alterations  and/or  Utility  Installations"  are  defined as Alterations and/or
Utility  Installations  made by Lessee that are not yet owned by Lessor pursuant
to  Paragraph  7.4(a).  Lessee  shall  not  make  any  Alterations  or  Utility
Installations  to  the  Premises  without Lessor's prior written consent. Lessee
may,  however,  make non-structural Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor, as
long  as  they  are  not  visible  from  the outside, do not involve puncturing,
relocating  or  removing the roof or any existing walls, and the cumulative cost
thereof  during  this  Lease  as  extended  does  not  exceed  $20,000
in any one year.
     (b)  Consent.  Any  Alterations  or Utility Installations that Lessee shall
desire to make and which require the consent of the Lessor shall be presented to
Lessor  in written form with detailed plans. Consent shall be deemed conditioned
upon  Lessee's:  (i)  acquiring  all  applicable  governmental  permits,  (ii)
furnishing  Lessor  with  copies  of  both  the  permits  and  the  plans  and
specifications  prior to commencement of the work, and (iii) compliance with all
conditions  of  said  permits  and other Applicable Requirements in a prompt and
expeditious  manner. Any Alterations or Utility Installations shall be performed
in  a  workmanlike  manner  with  good  and  sufficient  materials. Lessee shall
promptly  upon completion furnish Lessor with as-built plans and specifications.
For work which costs an amount equal to the greater of one month's Base Rent, or
$20,000,  Lessor  may  condition  its  consent  upon Lessee providing a lien and
completion  bond in an amount equal to one and one-half times the estimated cost
of  such  Alteration  or  Utility  Installation  and/or upon Lessee's posting an
additional  Security  Deposit  with  Lessor.
     (c)  Indemnification.  Lessee  shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or for
use  on  the  Premises,  which claims are or may be secured by any mechanic's or
materialmen's  lien  against  the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work  in,  on  or  about  the  Premises, and Lessor shall have the right to post
notices  of non-responsibility. If Lessee shall contest the validity of any such
lien, claim or demand, then Lessee shall, at its sole expense defend and protect
itself, Lessor and the Premises against the same and shall pay 3,'ld satisfy any
such  adverse  judgment  that  may  be  rendered  thereon before the enforcement
thereof.  If  Lessor  shall  require,  Lessee  shall furnish a surety bond in an
amount  equal to one and one-half times the amount of such contested lien, claim
or  demand, indemnifying Lessor against liability for the same. If Lessor elects
to participate in any such action, Lessee shall pay Lessor's attorneys' fees and
costs.
     7.4  Ownership;  Removal;  Surrender;  and  Restoration.
     (a)  Ownership.  Subject  to  Lessor's  right  to  require removal or elect
ownership  as  hereinafter  provided,  all Alterations and Utility installations
made  by  Lessee  shall  be the property of Lessee, but considered a part of the
Premises.  Lessor  may,  at any time, elect in writing to be the owner of all or
any  specified  part  of the Lessee Owned Alterations and Utility Installations.
Unless  otherwise  instructed  per  Paragraph  7  .4(b) hereof, all Lessee Owned
Alterations and Utility Installations shall, at the expiration or termination of
this  Lease, become the property of Lessor and be surrendered by Lessee with the
Premises.
     (b)  REMOVAL.  By  delivery  to  Lessee  of  written notice from Lessor not
earlier than ninety (90) and not later than thirty (30) days prior to the end of
the  term  of  this  Lease,  Lessor  may  require  that  any or all Lessee Owned
Alterations or Utility Installations be removed by the expiration or termination
of  this  Lease. Lessor may require the removal at any time of alter any part of
any  Lessee Owned Alterations or Utility Installations made without the required
consent.
     (c)  Surrender/Restoration.  Lessee  shall  surrender  the  Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof broom clean and free of debris, and in good operating
order, condition and state of repair, ordinary wear and tear excepted. "Ordinary
wear and tear" shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Lessee shall repair any damage
occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee
Owned Alterations and/or Utility Installations, furnishings, and equipment as
well as the removal of any storage tank installed by or for Lessee, and the
removal, replacement, or remediation of any soil, material or groundwater
contaminated by Lessee. Trade Fixtures shall remain the property of Lessee and
shall be removed by Lessee. The failure by Lessee to timely vacate the Premises
pursuant to this Paragraph 7.4(c) without the express written consent of Lessor
shall constitute a holdover under the provisions of Paragraph 26 below.
8. Insurance; Indemnity.
     8.1  Payment  For  Insurance.  Lessee  shall pay for all insurance required
under  Paragraph  8  except  to the extent of the cost attributable to liability
insurance  carried  by Lessor under Paragraph 8.2(b) in excess of $2,000,000 per
occurrence.  Premiums for policy periods commencing prior to or extending beyond
the  Lease term shall be prorated to correspond to the Lease term. Payment shall
be  made  by  Lessee  to  Lessor  within  ten  (10) days following receipt of an
invoice.
     8.2  Liability  Insurance.
     (a)  Carried  by Lessee. Lessee shall obtain and keep in force a Commercial
General  Liability  Policy  of  Insurance  protecting  Lessee and Lessor against
claims  for  bodily  injury,  personal  injury and property damage based upon or
arising  out of the ownership, use, occupancy or maintenance of the Premises and
all  areas  appurtenant  thereto. Such insurance shall be on an occurrence basis
providing  single  limit  coverage  in  an  amount  not less than $2,000,000 per
occurrence  with  an  "Additional  Insured-Managers  or  Lessors  of  Premises
Endorsement"  and contain the "Amendment of the Pollution Exclusion Endorsement"
for  damage caused by heat, smoke or fumes from a hostile fire. The Policy shall
not  contain  any  intra-insured  exclusions  as  between  insured  persons  or
organizations, but shall include coverage for liability assumed under this Lease
as  an  'insured contract' for the performance of Lessee's indemnity obligations
under  this  Lease.  The  limits of said insurance shall not, however, limit the
liability  of  Lessee  nor  relieve  Lessee  of  any  obligation  hereunder. All
insurance  carried  by  Lessee shall be primary to and not contributory with any
similar  insurance carried by Lessor, whose insurance shall be considered excess
insurance  only.
     (b)  Carried  by  Lessor.  Lessor  shall  maintain  liability  insurance as
described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance
required  to be maintained by Lessee. Lessee shall not be named as an additional
insured  therein.  Lessor  to  provide  a  copy  of  the  certificate.
     8.3  Property  Insurance  -  Building,  Improvements  and  Rental  Value.
(a) Building and Improvements. The Insuring Party shall obtain and keep in force
a  policy  or  policies  in the name of Lessor, with loss payable to Lessor, any
groundlessor,  and to any Lender(s) insuring loss or damage to the Premises. The
amount  of  such  insurance  shall  be  equal  to  the  full

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replacement  cost of the Premises, as the same shall exist from time to time, or
the  amount  required by any Lenders, but in no event more than the commercially
reasonable  and  available  insurable  value  thereof. If Lessor is the Insuring
Party,  however,  Lessee  Owned  Alterations  and  Utility  Installations. Trade
Fixtures,  and  Lessee's  personal  property  shall  be  insured by Lessee under
Paragraph  8.4  rather  than  by  Lessor.  If  the  coverage  is  available  and
commercially appropriate, such policy or policies shall insure against all risks
of  direct physical loss or damage (except the perils of flood and/or earthquake
unless  required  by  a  Lender),  including coverage for debris removal and the
enforcement  of any Applicable Requirements requiring the upgrading, demolition,
reconstruction  or replacement of any portion of the Premises as the result of a
covered  loss.  Said  policy  or policies shall also contain an agreed valuation
provision  in  lieu  of  any  coinsurance  clause,  waiver  of  subrogation, and
inflation  guard protection causing an increase in the annual property insurance
coverage  amount  by  a  factor of not less than the adjusted U.S. Department of
Labor Consumer price Index for All Urban Consumers for the city nearest to where
the  Premises  are  located. If such insurance coverage has a deductible clause,
the  deductible  amount shall not exceed $1,000 per occurrence, and Lessee shall
be  liable  for  such  deductible  amount  in  the  event  of  an  Insured Loss.
     (b)  Rental  Value.  The  Insuring  Party  shall obtain and keep in force a
policy  or  policies  in  the name of Lessor with loss payable lo Lessor and any
Lender,  insuring  the  loss  of  the full Rent for one (1) year. Said insurance
shall  provide that in the event the Lease is terminated by reason of an insured
loss,  the  period  of  indemnity for such coverage shall be extended beyond the
date of the completion of repairs or replacement of the Premises, to provide for
one  full  year's  loss  of  Rent from the date of any such loss. Said insurance
shall  contain  an agreed valuation provision in lieu of any coinsurance clause,
and  the  amount of coverage shall be adjusted annually to reflect the projected
Rent  otherwise payable by Lessee, for the next twelve (12) month period, Lessee
shall  be  liable  for  any  deductible  amount  in  the  event  of  such  loss.
     (c) Adjacent Premises. If the Premises are part of a larger building, or of
a  group  of  buildings  owned by Lessor which are adjacent to the Premises, the
Lessee  shall pay for any increase in the premiums for the property insurance of
such  building  or  buildings  if  said  increase  is  caused  by Lessee's acts,
omissions,  use  or  occupancy  of  the  Premises.
     8.4  Lessee's  Property/Business  Interruption  Insurance.
     (a) Property Damage. Lessee shall obtain and maintain insurance coverage on
all  of Lessee's personal property, Trade Fixtures, and Lessee Owned Alterations
and  Utility  Installations.  Such  insurance  shall  be  full  replacement cost
coverage with a deductible of not to exceed $5,000 [deleted] per occurrence. The
proceeds  from any such insurance shall be used by Lessee for the replacement of
personal  property,  Trade  Fixtures  and  Lessee  Owned Alterations and Utility
Installations.  Lessee  shall  provide  Lessor  with  written evidence that such
insurance  is  in  force.
     (b)  Business Interruption. Lessee shall obtain and maintain loss of income
and  extra  expense  insurance in amounts as will reimburse Lessee for direct or
indirect loss of earnings attributable to all perils commonly insured against by
prudent  lessees  in  the  business  of  Lessee or attributable to prevention of
access  to  the  Premises  as  a  result  bf  such  perils.
     (c)  No Representation of Adequate Coverage. Lessor makes no representation
that  the limits or forms of coverage of insurance specified herein are adequate
to cover Lessee's property, business operations or obligations under this lease.
     8.5  Insurance  Policies.  Insurance  required herein shall be by companies
duly  licensed  or admitted to 1ransact business in the state where the Premises
are  located,  and  maintaining  during the policy term a "General Policyholders
Rating"  of  at  least  B+, V, as set forth in the most current issue of "Best's
Insurance  Guide",  or  such other rating as may be required by a lender. Lessee
shall  not  do  or  permit  to  be  done anything which invalidates the required
insurance  policies.  Lessee  shall,  prior to the Start Date, deliver to Lessor
certified  copies  of  policies of such insurance or certificates evidencing the
existence  and  amounts  of  the  required  insurance.  No  such policy shall be
cancelable  or  subject  to  modification  except  after  thirty (30) days prior
written  notice  to Lessor. lessee shall, at least thirty (30) days prior to the
expiration  of  such  policies,  furnish  Lessor  with  evidence  of renewals or
"insurance  binders"  evidencing  renewal  thereof,  or  Lessor  may  order such
insurance  and  charge the cost thereof to Lessee, which amount shall be payable
by  Lessee  to Lessor upon demand. Such policies shall be for a term of at least
one  year.,  or  the  length  of the remaining term of this lessee, whichever is
less.  If either Party shall fail to procure and maintain the insurance required
to  be carried by it, the other Party may, but shall not be required to, procure
and  maintain  the  same.
     8.6  Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee  and  Lessor  each  hereby release and relieve the other, and waive their
entire  right to recover damages against the other, for loss of or damage to its
property arising out of or incident to the perils required to be insured against
herein.  The effect of such releases and waivers is not limited by the amount of
insurance  carried  or  required,  or  by any deductibles applicable hereto. The
Parties  agree to have their respective property damage insurance carriers waive
any  right to subrogation that such companies may have against Lessor or Lessee,
as  the  case  may  be,  so  long  as  the insurance is not invalidated thereby.
     8.7  Indemnity. Except for Lessor's gross negligence or willful misconduct,
lessee  shall  indemnify, protect, defend and hold harmless the Premises, Lessor
and its agents, Lessor's master or ground Lessor, partners and lenders, from and
against  any  and  all  claims,  loss of rents and/or damages, liens, judgments,
penalties, attorneys' and consultants' fees, expenses and/or liabilities arising
out  of,  involving,  or  in  connection  with  the  use and/or occupancy of the
Premises  by  lessee.  If  any action or proceeding is brought against Lessor by
reason of any of the foregoing matters, Lessee shall upon notice defend the same
at  Lessee's  expense  by  counsel  reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such  claim  in  order  to  be  defended  or  indemnified.
     8.8  Exemption  of  Lessor  from  Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee,  Lessee's  employees,  contractors,  invitees,  customers,  or any other
person  in  or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage,  obstruction  or  other  defects  of  pipes.  fire  sprinklers,  wires,
appliances,  plumbing,  HVAC  or  lighting  fixtures,  or  from any other cause,
whether  the  said  injury  or  damage  results from conditions arising upon the
Premises  or  upon  other  portions  of the Building of which the Premises are a
part,  or  from  other  sources  or  places.  Lessor shall not be liable for any
damages  arising  from  any  act  or  neglect  of  any  other  tenant of Lessor.
Notwithstanding  Lessor's negligence or breach of this Lease, Lessor shall under
no  circumstances  be  liable for injury to Lessee's business or for any loss of
income  or  profit  therefrom  subject to Lessor's obligations per paragraph 60.
9. Damage or Destruction.
     9.1  Definitions.
     (a)  "Premises  Partial  Damage"  shall  mean  damage or destruction to the
improvements  on  the  Premises, other than Lessee Owned Alterations and Utility
Installations,  which  can reasonably be repaired in six (6) months or less from
the  date  of  the  damage or destruction. Lessor shall notify Lessee in writing
within thirty (30) days from the date of the damage or destruction as to whether
or  not  the  damage  is  Partial  or  Total.
     (b)  "Premises  Total  Destruction" shall mean damage or destruction to the
Premises,  other  than  Lessee  Owned  Alterations and Utility Installations and
Trade  Fixtures,  which  cannot reasonably be repaired in six (6) months or less
from  the  date  of  the  damage  or  destruction. Lessor shall notify Lessee in
writing within thirty (30) days from the date of the damage or destruction as to
whether  or  not  the  damage  is  Partial  or  Total.
     (c)  "Insured Loss" shall mean damage or destruction to improvements on the
Premises,  other  than  Lessee  Owned  Alterations and Utility Installations and
Trade  Fixtures,  which  was  caused  by  an event required to be covered by the
insurance  described in Paragraph 8.3(a), irrespective of any deductible amounts
or  coverage  limits  involved.
     (d)  "Replacement  Cost"  shall  mean  the  cost  to  repair or rebuild the
improvements  owned  by  Lessor at the time of the occurrence to their condition
existing  immediately  prior  thereto,  including demolition, debris removal and
upgrading  required  by  the  operation  of Applicable Requirements, and without
deduction  for  depreciation.
     (e)  "Hazardous Substance Condition" shall mean the occurrence or discovery
of  a  condition  involving  the presence of, or a contamination by, a Hazardous
Substance  as  defined  in  Paragraph  6.2(a),  in,  on,  or under the Premises.
     9.2  Partial Damage - Insured Loss. If a Premises Partial Damage that is an
Insured  Loss occurs, then Lessor shall, at Lessor's expense, repair such damage
(but  not  Lessee's  Trade  Fixtures  or  Lessee  Owned  Alterations and Utility
Installations)  as  soon as reasonably possible and this Lease shall continue in
full  force  and  effect;  provided,  however,  that  Lessee  shall, at Lessor's
election,  make the repair of any damage or destruction the total cost to repair
of  which  is  $10,000  or  less,  and,  in  such  event,  Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose.  Notwithstanding  the  foregoing,  if the required insurance was not in
force  or  the  insurance proceeds are not sufficient to effect such repair, the
Insuring  Party shall promptly contribute the shortage in proceeds (except as to
the  deductible  which  is  Lessee's  responsibility)  as  and  when required to
complete  said repairs. In the event, however, such shortage was due to the fact
that,  by reason of the unique nature of the improvements, full replacement cost
insurance  coverage  was not commercially reasonable and available, Lessor shall
have  no  obligation  to  pay for the shortage in insurance proceeds or to fully
restore  the  unique  aspects of the Premises unless Lessee provides Lessor with
the  funds  to  cover  same, or adequate assurance thereof, within ten (10) days
following  receipt  of written notice of such shortage and request therefore. If
Lessor  receives  said  funds or adequate assurance thereof within said ten (10)
day  period, the party responsible for making the repairs shall complete them as
soon  as  reasonably  possible  and  this  Lease  shall remain in full force and
effect,  If  such  funds  or assurance are not received, Lessor may nevertheless
elect  by  written notice to Lessee within ten (10) days thereafter to: (i) make

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such restoration and repair as is commercially reasonable with Lessor paying any
shortage in proceeds, in which case this Lease shall remain in full force and
effect, or have this Lease terminate thirty (30) days thereafter. Lessee shall
not be entitled to reimbursement of any funds contributed by Lessee to repair
any such damage or destruction. Premises Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3, notwithstanding that there maybe
some insurance coverage, but the net proceeds of any such insurance shall be
made available for the repairs if made by either Party.
     9.3  Partial  Damage - Uninsured Loss. If a Premises Partial Damage that is
not  an  Insured  Loss  occurs,  unless  caused by a negligent or willful act of
Lessee  (in  which  event  Lessee  shall  make the repairs at Lessee's expense),
Lessor  may  either:  (i)  repair  such damage as soon as reasonably possible at
Lessor's  expense,  in  which  event this Lease shall continue in full force and
effect,  or  (ii) terminate this Lease by giving written notice 10 Lessee within
thirty  (30) days after receipt by Lessor of knowledge of the occurrence of such
damage.  Such  termination  shall  be  effective  one-hundred  twenty (120) days
following  the date of such notice. In the event Lessor elects to terminate this
Lease,  Lessee  shall  have  the right within ten (10) days after receipt of the
termination  notice  to  give written notice to Lessor of Lessee's commitment to
pay  for  the  repair  of  such damage without reimbursement from Lessor. Lessee
shall  provide  Lessor  with said funds or satisfactory assurance thereof within
thirty  (30)  days  after making such commitment. In such event this Lease shall
continue in full force and effect, and Lessor shall proceed to make such repairs
as soon as reasonably possible after the required funds are available. If Lessee
does not make the required commitment, this Lease shall terminate as of the date
specified  in  the  termination  notice.
     9.4  Total  Destruction.  Notwithstanding  any other provision hereof, if a
Premises  Total  Destruction  occurs, this Lease shall terminate sixty (60) days
following such Destruction. If the damage or destruction was caused by the gross
negligence  or  willful  misconduct  of  Lessee,  Lessor shall have the right to
recover  Lessor's  damages  from  Lessee,  except  as provided in Paragraph 8.6.
     9.5  Damage Near End of Term. If at any time during the last six (6) months
of  this  Lease  there  is damage for which the cost to repair exceeds three (3)
[deleted]  month's  Base  Rent,  whether  or  hot  an  Insured  Loss, Lessor may
terminate this Lease effective one-hundred twenty (120) [deleted] days following
the  date of occurrence of such damage by giving a written termination notice to
Lessee  within  thirty  (30)  days  after the date of occurrence of such damage.
Notwithstanding  the foregoing, if Lessee at that time has an exercisable option
to  extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease  by, (a) exercising such option and (b) providing Lessor with any shortage
in insurance proceeds (or adequate assurance thereof) needed to make the repairs
on  or  before  the  earlier  of  (i)  the date which is ten days after Lessee's
receipt  of  Lessor's written notice purporting to terminate this Lease, or (ii)
the  day  prior  to  the  date  upon  which  such option expires. If Lessee duly
exercises  such  option  during  such  period and provides Lessor with funds (or
adequate  assurance thereof) to cover any shortage in insurance proceeds, Lessor
shall,  at  Lessor's commercially reasonable expense, repair such damage as soon
as  reasonably  possible and this Lease shall continue in full force and effect.
If  Lessee  fails  to  exercise  such option and provide such funds or assurance
during such period, then this Lease shall terminate on the date specified in the
termination  notice  and  Lessee's  option  shall  be  extinguished.
     9.6  Abatement  of  Rent;  Lessee's  Remedies.
     (a)  Abatement.  In  the event of Premises Partial Damage or Premises Total
Destruction  or  a  Hazardous  Substance  Condition  for  which  Lessee  is  not
responsible under this Lease, the Rent payable by Lessee for the period required
for  the  repair,  remediation  or restoration of such damage shall be abated in
proportion  to the degree to which Lessee's use of the Premises is impaired, but
not  to  exceed the proceeds received from the Rental Value insurance. All other
obligations  of  Lessee hereunder shall be performed by Lessee, and Lessor shall
have  no  liability  for  any  such  damage, destruction, remediation, repair or
restoration  except  as  provided  herein.
     (b)  Remedies.  If  Lessor  shall  be  obligated  to  repair or restore the
Premises and does not commence, in a substantial and meaningful way, such repair
or  restoration  within  sixty  (60)  [deleted] days after such obligation shall
accrue,  Lessee  may,  at  any  time prior to the commencement of such repair or
restoration,  give  written  notice to Lessor and to any Lenders of which Lessee
has  actual  notice,  of Lessee's election to terminate this Lease on a date not
less  than  sixty (60) days following the giving of such notice. If Lessee gives
such  notice  and such repair or restoration is not commenced within thirty (30)
days  thereafter,  this  Lease  shall terminate as of the date specified in said
notice.  If the repair or restoration is commenced within said thirty (30) days,
this Lease shall continue in full force and effect. "Commence" shall mean either
the unconditional authorization of the preparation of the required plans, or the
beginning  of  the  actual  work  on  the  Premises,  whichever  first  occurs.
     9.7 Termination - Advance Payments. Upon termination of this Lease pursuant
to  Paragraph  6.2(g)  or  Paragraph  9,  an  equitable adjustment shall be made
concerning  advance  Base  Rent and any other advance payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security
Deposit  as  has  not  been,  or  is  not  then  required to be, used by Lessor.
     9.8  Waive  Statutes.  Lessor and Lessee agree that the terms of this Lease
shall  govern  the  effect  of any damage to or destruction of the Premises with
respect  to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.
     10.  Real  Property Taxes.
     10.1  Definition  of  "Real Property Taxes." As used herein, the term "Real
Property  Taxes"  shall  include  any  form of assessment; real estate, general,
special,  ordinary  or  extraordinary,  or  rental  levy  or  tax  (other  than
inheritance,  personal income or estate taxes); improvement bond; and/or license
fee  imposed upon or levied against any legal or equitable interest of Lessor in
the Premises, Lessor's right to other income therefrom, and/or Lessor's business
of  leasing,  by  any  authority  having the direct or indirect power to tax and
where  the  funds are generated with reference to the Building address and where
the  proceeds  so generated are to be applied by the city, county or other local
taxing  authority  of  a jurisdiction within which the Premises are located. The
term  "Real Property Taxes" shall also include any tax, fee, levy, assessment or
charge,  or  any  increase therein, imposed by reason of events occurring during
the  term of this Lease, including but not limited to, a change in the ownership
of  the  Premises.
     10.2
     (a)  Payment  of Taxes. Lessee shall pay the Real Property Taxes applicable
to the Premises during the term of this Lease. Subject to Paragraph 10.2(b), all
such  payments  shall  be  made  at least ten (10) days prior to any delinquency
date.  Lessee shall promptly furnish Lessor with satisfactory evidence that such
taxes  have been paid. If any such taxes shall cover any period of time prior to
or  after  the  expiration  or termination of this Lease, Lessee's share of such
taxes shall be prorated to cover only that portion of the tax bill applicable to
the  period  that this Lease is in effect, and Lessor shall reimburse Lessee for
any  overpayment.  If Lessee shall fail to pay any required Real Property Taxes,
Lessor  shall  have the right to pay the same, and Lessee shall reimburse Lessor
therefore  upon  demand.
     (b)  Advance  Payment. In the event Lessee incurs a late charge on any Rent
payment,  Lessor  may,  at  Lessor's  option, estimate the current Real Property
Taxes,  and  require  that  such  taxes  be paid in advance to Lessor by Lessee,
either:  (i)  in a lump sum amount equal to the installment due, at least twenty
(20)  days  prior to the applicable delinquency date, or (ii) monthly in advance
with  the  payment of the Base Rent. If Lessor elects to require payment monthly
In  advance,  the  monthly payment shall be an amount equal to the amount of the
estimated  installment of taxes divided by the number of months remaining before
the  month  in which said installment becomes delinquent. When the actual amount
of  the  applicable  tax bill is known, the amount of such equal monthly advance
payments  shall  be  adjusted as required to provide the funds needed to pay the
applicable  taxes. If the amount collected by Lessor is insufficient to pay such
Real  Property  Taxes  when  due,  Lessee  shall  pay  Lessor, upon demand, such
additional  sums  as  are  necessary to pay such obligations. All monies paid to
Lessor  under this Paragraph may be intermingled with other monies of Lessor and
shall  not  bear interest. In the event of a Breach by Lessee in the performance
of  its  obligations  under this Lease, then any balance of funds paid to Lessor
under  the provisions of this Paragraph may, at the option of Lessor, be treated
as  an  additional  Security  Deposit.
     10.3  Joint  Assessment.  If  the  Premises  are  not  separately assessed,
Lessee's  liability  shall be an equitable proportion of the Real Property Taxes
for  all  of  the land and improvements included within the tax parcel assessed,
such  proportion  to  be  conclusively  determined by Lessor from the respective
valuations  assigned  in the assessor's work sheets or such other information as
may  be  reasonably  available.
     10.4  Personal  Property Taxes. Lessee shall pay, prior to delinquency, all
taxes  assessed  against  and  levied  upon  Lessee  Owned  Alterations, Utility
Installations,  Trade Fixtures, furnishings, equipment and all personal property
of  Lessee.  When  possible, Lessee shall cause such property to be assessed and
billed  separately  from  the  real  property of Lessor. If any of Lessee's said
personal  property  shall  be assessed with Lessor's real property, Lessee shall
pay  Lessor  the  taxes  attributable  to Lessee's property within ten (10) days
after  receipt  of  a  written  statement.
     11.  Utilities.  Lessee  shall  pay for all water, gas, heat, light, power,
telephone,  trash  disposal  and  other  utilities  and services supplied to the
Premises,  together  with  any  taxes  thereon.  If  any  such  services are not
separately  metered  to  Lessee, Lessee shall pay a reasonable proportion, to be
determined  by  Lessor,  of  all  charges  jointly  metered.
     12.  Assignment  and  Subletting.  See  Addendum  Paragraph  56
     12.1  Lessor's  Consent  Required.
     (a)  Lessee  shall not voluntarily or by operation of law assign, transfer,
mortgage or encumber (collectively, "assign or assignment") or sublet all or any
part  of  Lessee's  interest  in  this Lease or in the Premises without Lessor's
prior  written  consent.
     (b)  A  change  in  the  control  of  Lessee shall constitute an assignment
requiring  consent.  The transfer, on a cumulative basis, of twenty-five percent

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(25%)  or  more  of  the  voting  control of Lessee shall constitute a change in
control  for  this  purpose.
     (c)  The  involvement of Lessee or its assets in any transaction, or series
of  transactions  (by  way  of  merger,  sale, acquisition, financing, transfer,
leveraged  buy-out  or  otherwise),  whether  or  not  a  formal  assignment  or
hypothecation  of  this  lease  or Lessee's assets occurs, which results or will
result  In  a  reduction  of  the  Net Worth of Lessee by an amount greater than
twenty-five percent (25%) of such Net Worth as it was represented at the time of
the  execution  of  this  Lease  or at the time of the most recent assignment to
which  Lessor  has  consented,  or  as  it  exists  immediately  prior  to  said
transaction  or  transactions  constituting  such reduction, whichever was or is
greater,  shall  be  considered  an assignment of this lease to which Lessor may
withhold  its  consent. "Net Worth of Lessee" shall mean the net worth of Lessee
(excluding  any  guarantors)  established  under  generally  accepted accounting
principals.
     (d)  An assignment or subletting without consent shall, at Lessor's option,
be  a Default curable after notice per Paragraph 13.1(c), or a noncurable Breach
without  the necessity of any notice and grace period, If Lessor elects to treat
such  unapproved  assignment  or  subletting  as a noncurable Breach, Lessor may
either:  (i) terminate this Lease, or (ii) upon thirty (30) days written notice,
increase  the  monthly  Base  Rent to one hundred ten percent (110%) of the Base
Rent then in effect. Further, in the event of such Breach and rental adjustment,
(i)  the  purchase  price  of any option to purchase the Premises held by Lessee
shall  be subject to similar adjustment to one hundred ten percent (110%) of the
price  previously in effect, and (ii) all fixed and non-fixed rental adjustments
scheduled  during  the  remainder  of  the  Lease term shall be increased to One
Hundred  Ten  Percent  (110%)  of  the  scheduled  adjusted  rent.
     (e)  Lessee's  remedy  for  any breach of Paragraph 12.1 by Lessor shall be
limited  to  compensatory  damages  and/or  injunctive  relief.
     12.2  Terms  and  Conditions  Applicable  to  Assignment  and  Subletting.
     (a) Regardless of Lessor's consent, any assignment or subletting shall not:
(i)  be  effective  without  the  express written assumption by such assignee or
sublessee  of the obligations of Lessee under this Lease; (ii) release Lessee of
any  obligations  hereunder;  or (iii) alter the primary liability of Lessee for
the  payment  of  Rent  or  for  the  performance of any other obligations to be
performed  by  Lessee.
     (b)  Lessor may accept Rent or performance of Lessee's obligations from any
person  other  than  Lessee  pending  approval  or disapproval of an assignment.
Neither  a  delay  in  the  approval  or  disapproval of such assignment nor the
acceptance  of  Rent  or  performance  shall  constitute a waiver or estoppel of
Lessor's  right  to  exercise  its  remedies for Lessee's Default or Breach.
     (c) Lessor's consent to any assignment or subletting shall not constitute a
consent  to  any  subsequent  assignment  or  subletting.
     (d)  In  the  event  of any Default or Breach by Lessee, Lessor may proceed
directly  against  Lessee,  any  Guarantors  or  anyone else responsible for the
performance  of Lessee's obligations under this Lease, including any assignee or
sublessee,  without  first exhausting Lessor's remedies against any other person
or  entity  responsible  therefore  to  Lessor,  or any security held by Lessor.
     (e)  Each  request  for  consent to an assignment or subletting shall be in
writing, accompanied by information relevant to Lessor's determination as to the
financial  and  operational  responsibility  and appropriateness of the proposed
assignee  or  sublessee,  including  but  not limited to the intended use and/or
required  modification of the Premises. if any, together with a fee of $1,000 or
ten percent (10%) of .the current monthly Base Rent applicable to the portion of
the  Premises  which  is  the  subject  of  the proposed assignment or sublease,
whichever  is  greater, as consideration for Lessor's considering and processing
said  request.  Lessee  agrees  to  provide Lessor with such other or additional
information  and/or  documentation  as  may  be  reasonably  requested.
     (f)  Any  assignee  of,  or sublessee under, this Lease shall, by reason of
accepting  such  assignment  or  entering  into such sublease, he deemed to have
assumed  and  agreed  to  conform and comply with each and every term, covenant,
condition and obligation herein to be observed or performed by Lessee during the
term of said assignment or sublease, other than such obligations as are contrary
to  or inconsistent with provisions of an assignment or sublease to which Lessor
has  specifically  consented  to  in  writing.
     12.3  Additional  Terms  and  Conditions  Applicable  to  Subletting.  The
following terms and conditions shall apply to any subletting by Lessee of all or
any  part  of  the  Premises and shall be deemed included in all subleases under
this  Lease  whether  or  not  expressly  incorporated  therein:
     (a)  Lessee hereby assigns and transfers lo Lessor all of Lessee's interest
in  all Rent payable on any sublease, and Lessor may collect such Rent and apply
same toward Lessee's obligations under this Lease; provided, however, that until
a  Breach  shall  occur  in  the performance of Lessee's obligations, Lessee may
collect  said  Rent.  Lessor  shall  not,  by  reason  of  the  foregoing or any
assignment  of such sublease, nor by reason of the collection of Rent, be deemed
liable to the sublessee for any failure of Lessee to perform and comply with any
of  Lessee's obligations to such sublessee. Lessee hereby irrevocably authorizes
and  directs  any  such  sublessee, upon receipt of a written notice from Lessor
stating  that  a  Breach exists in the performance of Lessee's obligations under
this  Lease, to pay to Lessor all Rent due and to become due under the sublease.
Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to
Lessor  without  any  obligation  or  right to inquire as to whether such Breach
exists,  notwithstanding  any  claim  from  Lessee  to  the  contrary.
     (b)  In the event of a Breach by Lessee, Lessor may, at its option, require
sublessee  to  attorn  to  Lessor,  in  which  event  Lessor shall undertake the
obligations  of  the sublessor under such sublease from the time of the exercise
of  said  option  to  the expiration of such sublease; provided, however, Lessor
shall  not  be  liable  for  any  prepaid rents or security deposit paid by such
sublessee  to  such  sublessor  or  for  any  prior Defaults or Breaches of such
sublessor.
     (c)  Any  matter  requiring  the  consent of the sublessor under a sublease
shall  also  require  the  consent  of  Lessor.
     (d)  No  sublessee  shall  further  assign or sublet all or any part of the
Premises  without  Lessor's  prior  written  consent.
     (e)  Lessor  shall  deliver  a  copy  of any notice of Default or Breach by
Lessee  to the sublessee, who shall have the right to cure the Default of Lessee
within  the  grace period, if any, specified in such notice. The sublessee shall
have  a  right  of reimbursement and offset from and against Lessee for any such
Defaults  cured  by  the  sublessee.
     13.  Default;  Breach;  Remedies.
     13.1  Default; Breach. A "Default" is defined as a failure by the Lessee to
comply  with  or  perform any of the terms, covenants, conditions or rules under
this  Lease.  A  "Breach"  is  defined  as  the occurrence of one or more of the
following  Defaults,  and  the failure of Lessee to cure such Default within any
applicable  grace  period:
     (a)  The  abandonment  of  the  Premises;  or  the vacating of the Premises
without  providing  a  commercially  reasonable  level of security, or where the
coverage  of the property insurance described in Paragraph 8.3 is jeopardized as
a  result  thereof,  or  without  providing  reasonable  assurances  to minimize
potential  vandalism.
     (b)  The  failure  of  Lessee  to  make any payment of Rent or any Security
Deposit required to be made by Lessee hereunder, whether to Lessor or to a third
party,  when due, to provide reasonable evidence of insurance or surety bond, or
to  fulfill any obligation under this Lease which endangers or threatens life or
property,  where  such failure continues for a period of three (3) business days
following  written  notice  to  Lessee.
     (c)  The  failure  by  Lessee to provide (i) reasonable written evidence of
compliance  with  Applicable Requirements, (ii) the service contracts, (iii) the
rescission  of  an  unauthorized  assignment  or  subletting,  (iv)  a  Estoppel
Certificate,  (v)  a  requested  subordination,  (vi)  evidence  concerning  any
guaranty  and/or  Guarantor,  (vii)  any  document  requested under Paragraph 42
(easements),  or  (viii) any other documentation or information which Lessor may
reasonably  require  of  Lessee  under  the  terms of this Lease, where any such
failure  continues  for  a  period  of ten (10) days following written notice to
Lessee.
     (d)  A  Default  by  Lessee  as  to  the  terms,  covenants,  conditions or
provisions  of  this  Lease,  or of the rules adopted under Paragraph 40 hereof,
other  than  those  described in subparagraphs 13.1(a), (b) or (c), above, where
such  Default  continues  for a period of thirty (30) days after written notice;
provided, however, that if the nature of Lessee's Default is such that more than
thirty  (30)  days  are  reasonably  required for its cure, then it shall not be
deemed  to be a Breach if Lessee commences such cure within said thirty (30) day
period  and  thereafter  diligently  prosecutes  such  cure  to  completion.
     (e)  The  occurrence  of any of the following events: (i) the making of any
general  arrangement or assignment for the benefit of creditors; (ii) becoming a
"debtor"  as  defined in 11 U.S.C. 101 or any successor statute thereto (unless,
in  the  case  of  a petition filed against Lessee, the same is dismissed within
sixty  (60)  days);  (iii)  the  appointment  of  a  trustee or receiver to take
possession of substantially all of Lessee's assets located at the Premises or of
Lessee's  interest  in  this  Lease,  where possession is not restored to Lessee
within  thirty  (30)  days:  or (iv) the attachment, execution or other judicial
seizure  of  substantially  all of Lessee's assets located at the Premises or of
Lessee's  interest  in  this  Lease, where such seizure is not discharged within
thirty  (30)  days;  provided,  however, in the event that any provision of this
subparagraph 13.1 (e) is contrary to any applicable law, such provision shall be
of no  force or effect, and not affect the validity of the remaining provisions.
     (f)  The  discovery  that  any  financial  statement  of  Lessee  or of any
Guarantor  given  to  Lessor  was  materially  false.
     (g)  If  the  performance  of  Lessee's  obligations  under  this  Lease is
guaranteed:  (i) the death of a Guarantor; (ii) the termination of a Guarantor's
liability  with respect to this Lease other than in accordance with the terms of
such  guaranty;  (iii)  a  Guarantor's  becoming  insolvent  or the subject of a
bankruptcy  filing;  (iv)  a Guarantor's refusal to honor the guaranty; or (v) a
Guarantor's  breach  of  its  guaranty  obligation on an anticipatory basis, and
Lessee's  failure,  within  sixty (60) days following written notice of any such
event, to provide written alternative assurance or security, which, when coupled
with
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the then existing resources of Lessee, equals or exceeds the combined financial
resources of Lessee and the Guarantors that existed at the time of execution of
this Lease.
     13.2  Remedies. If Lessee fails to perform any of its affirmative duties or
obligations, within thirty (30) [deleted] days after written notice (or ill case
of  an  emergency, without notice), Lessor may, at its option, perform such duty
or  obligation on Lessee's behalf, including but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or  approvals. The costs and expenses of any such performance by Lessor shall be
due  and payable by Lessee upon receipt of invoice therefore. If any check given
to  Lessor  by  Lessee  shall not be honored by the bank upon which it is drawn,
Lessor,  at  its option, may require all future payments to be made by Lessee to
be  by  cashier's  check.  In the event of a Breach, Lessor may, with or without
further  notice  or  demand,  and without limiting Lessor in the exercise of any
right  or  remedy  which  Lessor  may  have  by  reason  of  such  Breach:
     (a)  Terminate  Lessee's  right to possession of the Premises by any lawful
means,  in  which  case  this Lease shall terminate and Lessee shall immediately
surrender  possession  to  Lessor.  In  such  event  Lessor shall be entitled to
recover  from  Lessee:  (i) the unpaid Rent which had been earned at the time of
termination;  (ii)  the  worth  at  the time of award of the amount by which the
unpaid  rent  which  would  have been earned after termination until the time of
award  exceeds  the amount of such rental loss that the Lessee proves could have
been  reasonably  avoided; (iii) the worth at the time of award of the amount by
which  the  unpaid  rent  for  the  balance  of the term after the time of award
exceeds  the  amount  of  such  rental  loss  that  the  Lessee  proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all  the  detriment  proximately  caused  by the Lessee's failure to perform its
obligations  under this Lease or which in the ordinary course of things would be
likely  to result therefrom, including but not limited to the cost of recovering
possession  of  the  Premises,  expenses  of  reletting,  including  necessary
renovation  and alteration of the Premises, reasonable attorneys' fees, and that
portion  of  any leasing commission paid by Lessor in connection with this Lease
applicable  to  the unexpired term of this Lease. The worth at the lime of award
of  the  amount  referred  to  in  provision  (iii) of the immediately preceding
sentence  shall  be  computed by discounting such amount at the discount rate of
the  Federal  Reserve Bank of the District within which the Premises are located
at  the  time  of  award  plus  one percent (1 %). Efforts by Lessor to mitigate
damages  caused  by Lessee's Breach of this Lease shall not waive Lessor's right
to  recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to  recover  in  such  proceeding any unpaid Rent and damages as are recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate  suit.  If  a notice and grace period required under Paragraph 13.1 was
not  previously given, a notice to pay rent or quit, or to perform or quit given
to  Lessee  under the unlawful detainer statute shall also constitute the notice
required  by  Paragraph 13.1. In such case, the applicable grace period required
by  Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the  failure  of  Lessee  to cure the Default within the greater of the two such
grace  periods  shall  constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.
     (b)  Continue  the  Lease  and Lessee's right to possession and recover the
Rent as it becomes due, in which event Lessee may sublet or assign, subject only
to  reasonable  limitations.  Acts  of maintenance, efforts to relet, and/or the
appointment  of  a  receiver  to  protect  the  Lessor's  interests,  shall  not
constitute  a  termination  of  the  Lessee's  right  10  possession.
     (c)  Pursue  any  other remedy now or hereafter available under the laws or
judicial decisions of the state wherein the Premises are located. The expiration
or  termination  of  this  Lease  and/or  the  termination  of Lessee's right to
possession  shall  not  relieve  Lessee  from  liability  under  any  indemnity
provisions  of  this  Lease  as to matters occurring or accruing during the term
hereof  or  by  reason  of  Lessee's  occupancy  of  the  Premises.
     13.3  Inducement  Recapture. Any agreement for free or abated rent or other
charges,  or  for the giving or paying by Lessor to or for Lessee of any cash or
other  bonus, inducement or consideration for Lessee's entering into this Lease,
all of which concessions are hereinafter referred to as "Inducement Provisions,"
shall  be  deemed conditioned upon Lessee's full and faithful performance of all
of  the terms, covenants and conditions of this Lease. Upon Breach of this Lease
by  Lessee,  any such Inducement Provision shall automatically be deemed deleted
from  this  Lease and of no further force or effect, and any rent, other charge,
bonus,  inducement  or consideration theretofore abated, given or paid by Lessor
under  such  an  Inducement  Provision  shall  be immediately due and payable by
Lessee  to Lessor, notwithstanding any subsequent cure of said Breach by Lessee.
The  acceptance  by Lessor of Rent or the cure of the Breach which initiated the
operation of this paragraph excluding Lessor's Work In paragraph 54 shall not be
deemed  a  waiver  by  Lessor  of  the  provisions  of  this  paragraph  unless
specifically  so  stated  in  writing  by Lessor at the time of such acceptance.
     13.4  Late  Charges. Lessee hereby acknowledges that late payment by Lessee
of  Rent  will  cause  Lessor to incur costs not contemplated by this Lease, the
exact  amount  of  which  will  be  extremely difficult to ascertain. Such costs
include,  but  are  not  limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall  not be received by Lessor within five (5) days after such amount shall be
due,  then,  without  any  requirement for notice to Lessee, Lessee shall pay to
Lessor  a  one-time  late charge equal to ten percent (10%) of each such overdue
amount.  The  Parties  hereby  agree that such late charge represents a fair and
reasonable  estimate  of  the  costs  Lessor  will  incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute a
waiver  of  Lessee's  Default or Breach with respect to such overdue amount, nor
prevent  the exercise of any of the other rights and remedies granted hereunder.
In  the event that a late charge is payable hereunder, whether or not collected,
for  three  (3)  consecutive installments of Base Rent, then notwithstanding any
provision  of  this  Lease to the contrary, Base Rent shall, at Lessor's option,
become  due  and  payable  quarterly  in  advance.
     13.5  Interest.  Any monetary payment due Lessor hereunder, other than late
charges, not received by Lessor, when due as to scheduled payments (such as Base
Rent)  or  within  thirty  (30)  days following the date on which it was due for
non-scheduled  payment,  shall  bear  interest  from  the  date  when due, as to
scheduled  payments,  or  the  thirty-first  (31st)  day  after it was due as to
non-scheduled  payments. The interest ("Interest") charged shall be equal to the
prime rate reported in the Wall Street Journal as published closest prior to the
date  when  due  plus  four  percent (4%), but shall not exceed the maximum rate
allowed  by  law.  Interest  is payable in addition to the potential late charge
provided  for  in  Paragraph  13.4.
     13.6  Breach  by  Lessor.
     (a)  Notice  of  Breach. Lessor shall not be deemed in breach of this Lease
unless  Lessor  fails within a reasonable time to perform an obligation required
to  be  performed  by  Lessor, For purposes of this Paragraph, a reasonable time
shall  in  no  event be less than thirty (30) days after receipt by Lessor I and
any  Lender  whose  name and address shall have been furnished Lessee in writing
for such purpose, of written notice specifying wherein such obligation of Lessor
has  not  been  performed;  provided,  however,  that  if the nature of Lessor's
obligation  is  such that more than thirty (30) days are reasonably required for
its  performance, then Lessor shall not be in breach if performance is commenced
within  such  thirty  (30)  day  period  and  thereafter  diligently  pursued to
completion.
     (b)  Performance  by  Lessee on Behalf of Lessor. In the event that neither
Lessor  nor  Lender  cures  said breach within thirty (30) days after receipt of
said  notice,  or if having commenced said cure they do not diligently pursue it
to completion, then Lessee may elect to cure said breach at Lessee's expense and
offset  from Rent an amount equal to the greater of one month's Base Rent or the
Security  Deposit, and to pay an excess of such expense under protest, reserving
Lessee's  right  to reimbursement from Lessor. Lessee shall document the cost of
said  cure  and supply said documentation to Lessor. See also Addendum paragraph
62  /s/BL  /s/  GS
14.  Condemnation.  If  the  Premises  or  any  portion  thereof are taken under
the  power  of  eminent  domain or sold under the threat of the exercise of said
power  (collectively  "Condemnation"), this Lease shall terminate as to the part
taken  as  of  the  date  the  condemning  authority  takes title or possession,
whichever  first occurs. If more than 'ten percent (10%) of any building portion
of the Premises, or more than twenty-five percent (25%) of the land area portion
of  the  Premises not occupied by any building, is taken by Condemnation, Lessee
may,  at  Lessee's option, to be exercised in writing within ten (10) days after
Lessor  shall have given Lessee written notice of such taking (or in the absence
of  such  notice, within ten (10) days after the condemning authority shall have
taken  possession)  terminate this Lease as of the date the condemning authority
takes  such  possession.  If  Lessee does not terminate this Lease in accordance
with  the  foregoing, this Lease shall remain in full force and effect as to the
portion of the Premises remaining, except that the Base Rent shall be reduced in
proportion  to  the  reduction  in  utility  of  the  Premises  caused  by  such
Condemnation.  Condemnation  awards  and/or  payments  shall  be the property of
Lessor, whether such award shall be made as compensation for diminution in value
of  the  leasehold,  the  value  of  the  part  taken, or for severance damages;
provided,  however,  that  Lessee  shall  be  entitled  to  any compensation for
Lessee's  relocation  expenses, loss of business goodwill and/or Trade Fixtures,
without  regard  to  whether  or  not  this  Lease is terminated pursuant to the
provisions  of this Paragraph. All Alterations and Utility Installations made to
the  Premises  by Lessee, for purposes of Condemnation only, shall be considered
the  property  of  the  Lessee  and  Lessee  shall  be  entitled  to any and all
compensation  which  is  payable  therefore, in the event that this Lease is not
terminated  by reason of the Condemnation, Lessor shall repair any damage to the
Premises  caused  by  such  Condemnation.
15.  Brokers'  Fee.
     15.1  [deleted]

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     15.2  [deleted]
     15.3  Representations  and  Indemnities of Broker Relationships. Lessee and
Lessor  each represent and warrant to the other that it has had no dealings with
any  person,  firm,  broker  or  finder  (other  than  the  Brokers,  if any) in
connection  with  this  Lease,  and that no one other than said named Brokers is
entitled  to  any  commission or finder's fee in connection herewith. Lessee and
Lessor  do  each  hereby  agree to indemnify, protect, defend and hold the other
harmless  from  and  against  liability for compensation or charges which may be
claimed  by  any such unnamed broker, finder or other similar party by reason of
any  dealings  or  actions  of  the  indemnifying  Party,  including  any costs,
expenses,  and/or  attorneys'  fees  reasonably  incurred  with respect thereto.
16. Estoppel Certificates.
     (a)  Each  Party  (as  "Responding Party") shall within ten (10) days after
written  notice  from  the  other  Party  (the  "Requesting  Party")  execute,
acknowledge  and deliver to' the Requesting Party a statement in writing in form
similar  to  the  then most current "Estoppel Certificate" Form published by the
American  Industrial  Real Estate Association, plus such additional information,
confirmation  and/or statements as may be reasonably requested by the Requesting
Party.
     (b)  If  the Responding Party shall fail to execute or deliver the Estoppel
Certificate  within  such  ten  day  period, the Requesting Party may execute an
Estoppel  Certificate  stating  that:  (i) the Lease is in full force and effect
without  modification except as may be represented by the Requesting Party, (ii)
there  are  no uncured defaults in the Requesting Party's performance, and (iii)
if  Lessor is the Requesting Party, not more than one month's Rent has been paid
in  advance.  Prospective  purchasers  and  encumbrancers  may  rely  upon  the
Requesting  Party's  Estoppel  Certificate,  and  the  Responding Party shall be
estopped  from  denying  the  truth  of the facts contained in said Certificate.
     (c)  If  Lessor desires to finance, refinance, or sell the Premises, or any
part thereof, Lessee and all Guarantors shall deliver to any potential lender or
purchaser  designated  by  Lessor such financial statements as may be reasonably
required  by  such  lender or purchaser, including, but not limited to, Lessee's
financial statements for the past three (3) years. All such financial statements
shall be received by Lessor and such lender or purchaser in confidence and shall
be  used  only  for  the  purposes  herein  set  forth.
17.  Definition of Lessor. The term "Lessor" as used herein shall mean the owner
or  owners at the time in question of the fee title to the Premises, or, if this
is  a  sublease,  of the Lessee's interest in the prior lease. In the event of a
transfer  of  Lessor's  title  or interest in the Premises or this Lease, Lessor
shall  deliver  to  the transferee or assignee (in cash or by credit) any unused
Security  Deposit held by Lessor. Except as provided in Paragraph 15, upon such,
transfer  or  assignment and delivery of the Security Deposit, as aforesaid, the
prior  Lessor shall be relieved of all liability with respect to the obligations
and/or  covenants  under  this  Lease  thereafter to be performed by the Lessor.
Subject  to  the foregoing, the obligations and/or covenants in this Lease to be
performed  by  the  Lessor  shall be binding only upon the Lessor as hereinabove
defined.  Notwithstanding  the above, and subject to the provisions of Paragraph
20  below,  the  original Lessor under this Lease, and all subsequent holders of
the  Lessor's  interest  in  this Lease shall remain liable and responsible with
regard to the potential duties and liabilities of Lessor pertaining to Hazardous
Substances  as  outlined  in  Paragraph  6  above.
18.  Severability.  The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other  provision  hereof.
19.  Days.  Unless  otherwise  specifically  indicated to the contrary, the word
"days"  as  used  in  this  Lease  shall  mean  and  refer  to  calendar  days.
20. Limitation on Liability. Subject to the provisions of Paragraph 17 above,
the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall look
to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against the individual partners of Lessor, or its or their individual partners,
directors, officers or shareholders, or any of their personal assets for such
satisfaction.
21.  Time  of Essence. Time is of the essence with respect to the performance of
all  obligations  to  be  performed or observed by the Parties under this Lease.
22.  No  Prior  or  Other Agreements; Broker Disclaimer. This Lease contains all
agreements  between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor  and Lessee each represents and warrants to the Brokers that it has made,
and  is  relying  solely  upon, its own investigation as to the nature, quality,
character  and  financial responsibility of the other Party to this Lease and as
to  the  nature,  quality  and  character  of  the  Premises.  Brokers  have  no
responsibility  with  respect  thereto  or with respect to any default or breach
hereof  by  either  Party.  The  liability (including court costs and Attorneys'
fees),  of  any  Broker  with  respect  to  negotiation,  execution, delivery or
performance  by  either  Lessor  or  Lessee under this Lease or any amendment or
modification hereto shall be limited to an amount up to the fee received by such
Broker  pursuant to this Lease; provided, however, that the foregoing limitation
on  each  Broker's  liability shall not be applicable to any gross negligence or
willful  misconduct  of  such  Broker.
23. Notices.
     23.1  Notice  Requirements. All notices required or permitted by this Lease
shall  be  in writing and may be delivered in person (by' hand or by courier) or
may  be  sent  by  regular,  certified or registered mail or U.S. Postal Service
Express  Mail,  with postage prepaid, or by facsimile transmission, and shall be
deemed  sufficiently given if served in a manner specified in this Paragraph 23.
The  addresses noted adjacent to a Party's signature on this Lease shall be that
Party's  address for delivery or mailing of notices. Either Party may by written
notice  to  the  other  specify a different address for notice, except that upon
Lessee's  taking  possession  of  the  Premises,  the  Premises shall constitute
Lessee's  address  for  notice.  A  copy  of  all  notices  10  Lessor  shall be
concurrently  transmitted  to  such party or parties at such addresses as Lessor
may  from  time  to  time  hereafter  designate  in  writing.
     23.2  Date  of  Notice.  Any  notice  sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by  regular  mail  the notice shall be deemed given forty-eight (48) hours after
the  same  is  addressed  as  required  herein  and mailed with postage prepaid.
Notices  delivered  by  United  States  Express  Mail  or overnight courier that
guarantee  next  day delivery shall be deemed given twenty-four (24) hours after
delivery  of  the same to the Postal Service or courier. Notices transmitter! by
facsimile transmission or similar means shall be deemed delivered upon telephone
confirmation of receipt, provided a copy is also delivered via delivery or mail.
If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed
received  on  the  next  business  day.
24.  Waivers. No waiver by Lessor of the Default or Breach of any term, covenant
or  condition  hereof  by  Lessee,  shall  be deemed a waiver or any other term,
covenant  or condition hereof, "Or of any subsequent Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof. Lessor's consent
to,  or  approval  of,  any  act  shall  not be deemed to render unnecessary the
obtaining  of Lessor's consent to, or approval of, any subsequent or similar act
by  Lessee, or be construed as the basis of an estoppel to enforce the provision
or  provisions  of  this Lease requiring such consent. The acceptance of Rent by
Lessor  shall not be a waiver of any Default or Breach by Lessee. Any payment by
Lessee  may  be  accepted  by Lessor on account or monies or damages due Lessor,
notwithstanding  any  qualifying  statements  or  conditions  made  by Lessee in
connection  therewith,  which  such  statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or  before  the  time  of  deposit  of  such  payment.
25.  Recording.  Either  Lessor  or  Lessee  shall,  upon  request of the other,
execute,  acknowledge  and  deliver to the other a short form memorandum of this
Lease  for  recording  purposes.  The  Party  requesting  recordation  shall  be
responsible  for  payment  of  any  fees  applicable  thereto.
26.  No  Right  To  Holdover.  Lessee  has  no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In  the  event  that Lessee holds over, then the Base Rent shall be increased to
one  hundred  fifty  percent (150%) of the Base Rent applicable during the month
immediately  preceding  the  expiration or termination. Nothing contained herein
shall  be  construed  as  consent  by  Lessor  to  any  holding  over by Lessee.
27.  Cumulative  Remedies.  No  remedy  or  election  hereunder  shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law  or  in  equity.
28.  Covenants and Conditions; Construction of Agreement. All provisions of this
Lease  to  be observed or performed by Lessee are both covenants and conditions.
In construing this Lease, all headings and titles are for the convenience of the
Parties only and shall not be considered a part of this Lease. Whenever required
by the context, the singular shall include the plural and vice versa. This Lease
shall  not  be  construed  as  if  prepared  by  one  of the Parties, but rather
according  to  its  fair meaning as a whole, as if both Parties had prepared it.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties,
their  personal  representatives,  successors and assigns and be governed by the
laws  of the State in which the Premises are located. Any litigation between the
Parties  hereto  concerning this Lease shall be initiated in the county in which

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the  Premises  are  located.
30. Subordination; Attornment; Non-Disturbance.
     30.1  Subordination.  This  Lease  and  any  Option granted hereby shall be
subject  and  subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation  or  security  device  (collectively,  "Security  Device"), now or
hereafter  placed  upon  the  Premises,  to  any  and  all advances made on the,
security  thereof,  and  to all renewals, modifications, and extensions thereof.
Lessee  agrees  that  the  holders  of  any such Security Devices (in this Lease
together referred to as "Lessor's Lender") shall have no liability or obligation
to  perform  any  of  the obligations of Lessor under this Lease, Any Lender may
elect  to  have this Lease and/or any Option granted hereby superior to the lien
of  its  Security  Device by giving written notice thereof to Lessee, where upon
this  Lease  and  such  Options  shall  be deemed prior to such Security Device,
notwithstanding  the relative dates of the documentation or recordation thereof.
     30.2  Attornment.  Subject  to  the non-disturbance provisions of Paragraph
30.3,  Lessee  agrees  to  attorn  to  a  Lender or any other party who acquires
ownership  of  the Premises by reason of a foreclosure of a Security Device, and
that  in  the event of such foreclosure, such new owner shall not: (if be liable
for  any act or omission of any prior Lessor or with respect to events occurring
prior  to  acquisition  of ownership; (ii) be subject to any offsets or defenses
which  Lessee  might  have  against  any  prior  Lessor;  or  (iii)  be bound by
prepayment  of  more  than  one  (1)  month's  rent.
     30.3  Non-Disturbance.  With  respect  to  Security Devices entered into by
Lessor  after  the execution of this Lease, Lessee's subordination of this Lease
shall  be  subject  to  receiving  a  commercially  reasonable  non-disturbance
agreement  (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement  provides  that  Lessee's  possession of the Premises, and this Lease,
including  any  options to extend the term hereof, will not be disturbed so long
as  Lessee  is  not  in  Breach  hereof  and  attorns to the record owner of the
Premises.  Further,  within  sixty  (60) days after the execution of this Lease,
Lessor shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement  from  the holder of any pre-existing Security Device which is secured
by  the  Premises.  In  the  event  that  Lessor  is  unable  to  provide  the
Non-Disturbance  Agreement  within  said  sixty  (60)  days, then Lessee may, at
Lessee's  option,  directly contact Lessor's lender and attempt to negotiate for
the  execution  and  delivery  of  a  Non-Disturbance  Agreement.
     30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be
effective  without  the  execution  of any further documents; provided, however,
that,  upon  written  request from Lessor or a Lender in connection with a sale,
financing  or  refinancing of the Premises, Lessee and Lessor shall execute such
further  writings  as  may  be  reasonably  required  to separately document any
subordination,  attornment and/or Non-Disturbance Agreement provided for herein.
31.  Attorneys'  Fees.  If  any  Party  or Broker brings an action or proceeding
involving  the  Premises  to  enforce  the  terms  hereof  or  to declare rights
hereunder,  the  Prevailing Party (as hereafter defined) in any such proceeding,
action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such
fees may be awarded in the same suit or recovered in a separate suit, whether or
not  such  action  or  proceeding  is pursued to decision or judgment. The term,
"Prevailing  Party"  shall  include,  without  limitation, a Party or Broker who
substantially  obtains or defeats the relief sought, as the case may be, whether
by  compromise,  settlement,  judgment, or the abandonment by the other Party or
Broker  of its claim or defense. The attorneys' fees award shall not be computed
in  accordance  with  any  court  fee  schedule,  but  shall be such as to fully
reimburse  all attorneys' fees reasonably incurred. In addition, Lessor shall be
entitled  to  rea6onable  attorneys'  fees,  costs  and expenses incurred in the
preparation  and  service  of notices of Default and consultations in connection
therewith, whether or not a legal action is subsequently commenced in connection
with  such  Default  or  resulting  Breach.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall
have  the  right to enter the Premises at any time, in the case of an emergency,
and  otherwise  at  reasonable  times  for  the  purpose  of showing the same to
prospective  purchasers,  lenders,  or  lessees,  and  making  such alterations,
repairs, improvements or additions to the Premises as Lessor may deem necessary.
All  such  activities shall be without abatement of rent or liability to Lessee.
Lessor  may  at any time place on the Premises any ordinary "For Sale" signs and
Lessor  may  during  the  last  six  (6)  months of the term hereof place on the
Premises  any  ordinary  "For  Lease"  signs. Lessee may at any time place on or
about  the  Premises  any  ordinary  "For  Sublease"  sign.
33.  Auctions, Lessee shall not conduct, nor permit to be conducted, any auction
upon  the  Premises  without  Lessor's  prior written consentLessor shall not be
obligated  lo  exercise any standard of reasonableness in determining whether to
permit  an  auction.
34.  Signs, Except for ordinary "For Sublease" signs, Lessee shall not place any
sign  upon  the Premises without Lessor's prior written consent . AII signs must
comply  with  all  Applicable  Requirements.  See  Addendum  paragraph  58.
35.  Termination;  Merger.  Unless  specifically  stated otherwise in writing by
Lessor,  the  voluntary  or  other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by  Lessee,  shall  automatically terminate any sublease or lesser estate in the
Premises;  provided,  however,  that  Lessor may elect to continue anyone or all
existing  subtenancies. Lessor's failure within ten (10) days following any such
event  to  elect  to  the  contrary  by written notice to the holder of any such
lesser  interest,  shall  constitute  Lessor's  election  to  have  such  event
constitute  the  termination  of  such  interest.
36.  Consents.  Except  as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall  not be unreasonably withheld or delayed. Lessor's actual reasonable costs
and expenses (including, but not limited lo, architects', attorneys', engineers'
and other consultants' fees) incurred in the consideration of, or response to, a
request  by  Lessee  for  any  Lessor  consent,  including,  but not limited to,
consents  to  an  assignment, a subletting or the presence or use of a Hazardous
Substance,  shall  be  paid  by Lessee upon receipt of an invoice and supporting
documentation  therefore.  Lessor's consent to any act, assignment or subletting
shall  not  constitute  an acknowledgment that no Default or Breach by Lessee of
this  Lease  exists,  nor  shall  such  consent  be  deemed a waiver of any then
existing  Default  or  Breach, except as may be otherwise specifically stated in
writing by Lessor at the time of such consent. The failure to specify herein any
particular  condition  to  Lessor's consent shall not preclude the imposition by
Lessor  at  the  time of consent of such further or other conditions as are then
reasonable  with  reference  to the particular matter for which consent is being
given.  In  the event that either Party disagrees with any determination made by
the  other hereunder and reasonably requests the reasons for such determination,
the  determining  party  shall  furnish its reasons in writing and in reasonable
detail  within  ten  (10)  business  days  following  such  request.
37. Guarantor.
     37.1  Execution.  The  Guarantors, if any, shall each execute a guaranty in
the  form  most  recently  published  by  the  American  Industrial  Real Estate
Association,  and  each such Guarantor shall have the same obligations as Lessee
under  this  Lease.
     37.2  Default. It shall constitute a Default of the Lessee if any Guarantor
fails  or refuses, upon request to provide: (a) evidence of the execution of the
guaranty,  including the authority of the party signing on Guarantor's behalf to
obligate  Guarantor,  and in the case of a corporate Guarantor, a certified copy
of  a  resolution  of  its  board  of  directors  authorizing the making of such
guaranty,  (b)  current  financial  statements,  (c) a Tenancy Statement, or (d)
written  confirmation  that  the  guaranty  is  still  in  effect.
38.  Quiet  Possession, Subject to payment by Lessee of the Rent and performance
of  all  of  the  covenants,  conditions  and  provisions on Lessee's part to be
observed  and performed under this Lease, Lessee shall have quiet possession and
quiet  enjoyment  of  the  Premises  during  the  term  hereof.
39. Options. See Addendum  paragraph  53.
     39.1  Definition.  "Option" shall mean: (a) the right to extend the term of
or  renew  this  Lease  or to extend or renew any lease that Lessee has on other
property  of  Lessor;  (b)  the  right  of first refusal or first offer to lease
either  the  Premises  or other property of Lessor; (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.
     39.2  Options Personal To Original Lessee. Each Option granted to Lessee in
this  Lease  is  personal  to  the  original  Lessee,  and cannot be assigned or
exercised  by anyone other than said original Lessee and only while the original
Lessee  is  in full possession of the Premises and, if requested by Lessor, with
Lessee  certifying  that  Lessee  has  no  intention  of thereafter assigning or
Subletting.
     39.3 Multiple Options. In the event that Lessee has any multiple Options to
extend  or renew this Lease, a later Option cannot be exercised unless the prior
Options  have  been  validly  exercised.
39.4 Effect of Default on Options.
     (a) Lessee shall have no right to exercise an Option: (i) during the period
commencing  with  the  giving of any notice of Default and continuing until said
Default  is  cured,  (ii)  during the period of time any Rent is unpaid (without
regard  to whether notice thereof is given Lessee), (iii) during [he time Lessee
is  in  Breach  of  this  Lease, or (iv) in the event that Lessee has been given
three  (3) or more notices of separate Default, whelt1er or not the Defaults are
cured, during the twelve (12) month period immediately preceding the exercise of
the  Option.
     (b) The period of time within which an Option may be exercised shall not be
extended  or  enlarged  by  reason  of  Lessee's inability to exercise an Option
because  of  the  provisions  of  Paragraph  39.4(a).
     (c)  An  Option  shall  terminate  and  be  of  no further force or effect,
notwithstanding  Lessee's  due and timely exercise of the Option, if, after such
exercise and prior to the commencement of the extended term, (i) Lessee fails to
pay  Rent  for a period of thirty (30) days after such Rent becomes due (without
any  necessity  of  Lessor  to give notice thereof), (ii) Lessor gives to Lessee
three  (3)  or  more  notices  of  separate Default during any twelve (12) month
period,  whether  or  not  the  Defaults are cured, or (iii) if Lessee commits a
Breach  of  this  Lease.

                              Page 10 of 12                 Initials /s/BL /s/GS

(C)1997 American Industrial Real Estate Association    Revised  Form STN-62/97E

<PAGE>

40.  Multiple  Buildings.  If  the  Premises  are a part of a group of buildings
controlled  by  Lessor,  Lessee agrees that it will observe all reasonable rules
and  regulations  which  Lessor  may  make from time to time for the management.
safety,  and  care of said properties, including the care and cleanliness of the
grounds  and  including the parking, loading and unloading of vehicles, and that
Lessee  will  pay  its  fair  share  of  common  expenses incurred in connection
therewith.
41.  Security  Measures.  Lessee  hereby acknowledges that the rental payable to
Lessor  hereunder  does  not include the cost of guard service of other security
measures,  and  that Lessor shall have no obligation whatsoever to provide same.
Lessee  assumes  all  responsibility for the protection of the Premises, Lessee,
its  agents  and  invitees  and  their  property from the acts of third parties.
42.  Reservations.  Lessor  reserves  to itself the right, from time to time, to
grant,  without  the  consent  or  joinder of Lessee, such easements, rights and
dedications  that Lessor deems necessary, and to cause the recordation of parcel
maps  and restrictions, so long as such easements, rights, dedications, maps and
restrictions  do  not  unreasonably  interfere  with  the use of the Premises by
Lessee.  Lessee  agrees  to sign any documents reasonably requested by Lessor to
effectuate  any  such  easement  rights,  dedication,  map  or  restrictions.
43.  Performance  Under  ProtestIf  at  any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have  the  right  to  make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said  Party  to institute suit for recovery of such sum. If it shall be adjudged
that  there was no legal obligation on the part of said Party to pay such sum or
any  part  thereof,  said Party shall be entitled to recover such sum or so much
thereof  as  it  was  not  legally  required  to  pay.
44. Authority. If either Party hereto is a corporation, trust, limited liability
company, partnership, or similar entity, each individual executing this Lease on
behalf  of such entity represents and warrants that he or she is duly authorized
to execute and deliver this Lease on its behalf. Each Party shall, within thirty
(30)  days  after  request,  deliver to the other Party satisfactory evidence of
such  authority.
45.  Conflict. Any conflict between the printed provisions of this Lease and the
typewritten  or handwritten provisions shall be controlled by the typewritten or
handwritten  provisions.
46.  Offer.  Preparation  of  this  Lease  by  either  Party  or their agent and
submission  of  same to the other Party shall not be deemed an offer to lease to
the  other  Party.  This  Lease is not intended to be binding until executed and
delivered  by  all  Parties  hereto.
47.  Amendments.  This  Lease  may  be  modified  only in writing, signed by the
Parties  in  interest  at  the  time of the modification. As long as they do not
materially  change  Lessee's  obligations  hereunder, Lessee agrees to make such
reasonable  non-monetary  modifications  to  this  Lease  as  may  be reasonably
required  by  a  Lender  in connection with the obtaining of normal financing or
refinancing  of  the  Premises.
48.  Multiple  Parties.  If  more  than  one person or entity is named herein as
either  Lessor  or  Lessee,  such  multiple Parties shall have joint and several
responsibility  to  comply  with  the  terms  of  this  Lease.
49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation
and/or the Arbitration of all disputes between the Parties and/or Brokers
arising out of this Lease [  ] is  [ X ]is not attached to this Lease.


LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINEG HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

ATTENTION:NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL
REAL ESTATE ASSOCIATION OR BY ANY' BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL
EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:

1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES. SAID INVESTIGATION SHOULD NCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES. THE STRUCTURAL
INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY
OF THE PREMISES FOR LESSEE'S INTENDED USE.

WARNING:IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES IS LOCATED.

The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.


Executed at: /s/ Santa Ana, California       Executed at:   /s/ Santa Ana
On: /s/ July 3, 2003                         on: /s/  7/3/03
By Lessor:                                   By Lessee:
Laro Properties, L.P., A California          I/OMagic Corporation, a Nevada
Limited Partnership                          Corporation
By:                                          By: /s/ Branch Lotspeich
Name Printed: Elle Properties, Inc.,         Name Printed: /s/Branch Lotspeich
a California Corporation
Title: Its: General Partner                  Title: /s/  V.P. Operations
By: /s/ Greg St. Clair                       By:
Name Printed: Greg St. Clair                 Name Printed:
Title: Vice President                        Title:
Address: 16633 Ventura Blvd., Suite 1300     Address:
Encino, CA 91436

                              Page 11 of 12                 Initials /s/BL /s/GS

(C)1997 American Industrial Real Estate Association    Revised  Form STN-62/97E

<PAGE>

                                    Exhibit A
                        (Diagram of Building Floor Plan)
                                    (omitted)

<PAGE>


Telephone: (818) 986-8890                    Telephone:
Facsimile: (818) 783-5624                    Facsimile:
Federal ID No.                               Federal ID No.

NOTE: These forms are often modified to meet the changing requirements of law
and industry needs. Always write or call to make sure you are utilizing the most
current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So. Flower
Street. Suite 600, Los Angeles, California 90017. (213) 687-8777. Fax No.
(213)687-8616

Haly-4 Marconi Sgl- Tnt Lse-Net

                              Page 12 of 12                 Initials /s/BL /s/GS

(C)1997 American Industrial Real Estate Association    Revised  Form STN-62/97E

<PAGE>

                                    Exhibit B-1
                        (Diagram of Preliminary Floor Plan, p.1)
                                    (omitted)

<PAGE>
                                    Exhibit B-1
                        (Diagram of Preliminary Floor Plan, p.2)
                                    (omitted)

<PAGE>
                                    Exhibit B-1
                        (Diagram of Preliminary Floor Plan, p.3)
                                    (omitted)

<PAGE>
                                    EXHIBIT B
                                  WORK LETTER

1 Approval ProcessforPlans.
---------------------------
     1.1 Delivery of Floor Plans and Preparation of Preliminary Plans.Lessor has
delivered  to  Lessee a full set Lessor's standard floor plan (the "Floor Plan")
showing  the  Premises.
     1.2  .Preliminary  Improvement  Plans.Attached  hereto  as exhibit B-1 is a
office  and  yard Improvements per paragraph 54 (Items A, B and C) of the Lease.
     1.2.2  Evidence  of  Approval.Lessor's  and  Lessee's  approval  of  the
Preliminary Plans shall be evidenced by their initialing and dating each page of
the  exhibits  attached  hereto.
     1.3  Permit  Drawings  -Office  Improvements.Upon  execution  of the Lease,
Lessor  shall  commence  with  permit  drawings  of  the office improvements per
paragraph  54  (Items  A  and B) of the Lease. Upon approval of the plans by the
City  of  Irvine,  Lessor  shall  provide  a full set of plans and a copy of the
permit  to  Lessee.
     1.4  Design-Build  of Yard Improvements.Upon execution of the Lease, Lessor
shall  commence  with the construction of the improvements to the yard areas per
paragraph  54  (Item  C)  of  the  Lease.  No further drawings shall be prepared
evidencing  these  improvements.
     1.5  Mechanical  Drawings  for Truck well Ventilation.Upon execution of the
Lease,  Lessor  shall commence with the mechanical drawings for any required air
circulation  necessitated  by  the  truck  well per paragraph 54 (Item E) of the
Lease.  Upon approval of the plans by the city of Irvine, Lessor shall provide a
full  set  of  said  plans to Lessee and shall complete the work as necessary to
comply  with  applicable  standards.
     1.6  Permit  Drawings-  Fire Sprinkler Upgrade.Upon execution of the Lease,
Lessor shall commence with the engineering design of the fire system upgrade per
paragraph  54  (Item  G) of the Lease. Upon approval of the plans by the City of
Irvine  and the Orange County Fire Authority, Lessor shall provide a full set of
plans  and  a  copy  of  the permit to Lessee for Lessee to design its warehouse
racking  system.  Lessor  sha11 also provide preliminary plans for the design of
the  fire  system  upgrade  to  Lessee  upon  execution of the Lease, or as soon
thereafter  as  they  become  available  to  Lessor.
     1.7  Change  Orders.In  the  event Lessee desires to change any item of the
Permit  Drawings  or the Preliminary Plans following approval by Lessor, Lessee,
and  City,  then Lessee shall submit a change order detailing the desired change
("Change  Order  Request")  to  Lessor  for  Lessor's approval. Within three (3)
business  days  after  receipt  of  the Change Order Request from Lessee, Lessor
shall  notify  Lessee  in  writing  if Lessor approves or disapproves the Change
Order  Request.  Upon  approval of the Change Order Request, Lessor shall notify
Lessee  in  writing  of  any  increase  in the construction cost related to said
Change  Order  Request.  Lessee  shall be responsible for the cost of any Change
Order  Requests  per  paragraph  2.3  below.
     1.8  Timely  Performance.  Lessor  and  Lessee  agree to timely perform its
obligations  hereunder.  Time  is  of  the  essence.
     1.9  Exculpation.Lessor's  space  planner  and  engineers  are  independent
contractors.  Lessor  may  introduce  Lessee  to  Lessor's  space  planner as an
accommodation to Lessee. Even if the Preliminary Plans, Permit Drawings, and any
changes  thereto  are  performed  by  Lessor's  space planner and engineers, and
notwithstanding  any advice or assistance which may be rendered to Lessee and/or
Lessor's  space planner and/or engineers by Lessor or employees or affiliates of
Lessor  or  affiliates  of  Lessor's  general  partners,  Lessor  shall  not  be
responsible  for  any  omissions  or  errors  contained  herein.

2 Payment for Tenant Improvement Work.
--------------------------------------
     2.1  Cost  of  Plans  and  Tenant Improvement Work:Lessor shall pay for all
costs  incurred  in  the construction of tenant improvements in the Premises and
the  design  and  preparation  of  the  Preliminary  Plans  and Permit Drawings,
including  but  not  limited to (i) revisions thereof as reasonably required for
approval  by Lessor, Lessee, and/or the City and (ii) all necessary printing and
distribution  costs  required  to  implement  the  purposes  of  this Exhibit B.
     2.2 Chance Orders Requested by City.Lessor shall make any necessary changes
to  the Permit Drawings required by the City. Any costs for changes in the scope
of  work  required  by the City shall be paid by Lessor during construction. See
also  Paragraph  62  of  Addendum  to  Lease
     2.3  Chance  Orders  Requested  by Lessee.The costs for any approved Change
Order Requests per paragraph 1.6 snail be paid by Lessee in full upon either (i)
the  commencement  of construction, or (2) the date of the approval by Lessor if
construction  is  already  in  progress.

3 Construction.
---------------
     3.1  Construction  by  Lessor.The  tenant improvement work set forth In the
Preliminary  Plans and Permit Drawings snail be performed in accordance with the
following:
     4.1.1  Lessor's improvements to the Premises shall be constructed in a good
and  workmanlike  manner. Lessee shall have the right to enter onto the premises
for  the  purposes  of preparing the premises for occupancy by Lessee during the
construction  of  Lessor's  improvements,  provided  that  Lessee  and  Lessee's
contractors  and  subcontractors shall not cause any delay or hinder the process
of  Lessor's  contractors  and
subcontractors.
     4.1.2  Lessee  shall  be  allowed  to  run  conduit  for  telephone  and
communication  lines  and install its telephone and data systems in the premises
during  the  construction  of  Lessor's  improvements  provided  that Lessee and
Lessee's  contractors and subcontractors snail not cause any delay or hinder the
process  of  Lessor's  contractors  and  subcontractors.
     3.1.3.  All  tenant, improvement work in the Premises shall be performed by
Lessor's contractors and subcontractors strictly in accordance with the approved
Preliminary  Plans  and  Permit  Drawings,  the  provisions  of  Title 24 of the
California  Administrative  Code,  the  Americans with Disabilities Act" and all
other  applicable laws and ordinances, and shall satisfy the requirements of all
carriers  of  insurance  on  the  Premises  and  the  Building, and the Board of
Underwriters  Fire  Rating  Bureau  or  similar  organization.
     3.1.4.  Lessor  shall  be  deemed  to  be  the  owner  of all of the tenant
improvements  constructed  by  Tenant  pursuant  to  this  Exhibits;  with  the.
exception  of  lessee's  trade fixtures which shall include, without limitation,
furnishings  and  equipment, any portable, free-standing partitions, and folding
partitions.
     3.1.5  At  the  time  of approval of the Permit Drawings, Lessor and Lessee
shall  agree  upon  any  non-standard  tenant  improvements  Installed  that are
specific to Lessee's use, which should be removed at the expiration of the Lease
term  pursuant  to  Paragraph  7.3.(a)  of  the  Lease.

4 Acceptance of Premises by Lessee.
------------------------------------
     4.1 Construction Schedule.Upon approval of the Permit Drawings Lessor shall
provide Lessee a written schedule for the completion of the improvements and the
anticipated  date  for  Lessee's  occupancy  of  the premises. Lessor shall also
coordinate  with  Lessee to allow Lessee ample time to provide written notice to
vacate  Lessee's  current  location.

Punch  List  Walk  of  Premises.Upon  completion of the improvements, Lessee and
Lessor  shall walk the premises and prepare a "Punch List" of items for Lessor's
contractor  to  complete.  Lessor  shall have its contractors and subcontractors
clear  the  Punch  list items in a timely manner, and shall deliver the premises
clean  of  all  construction  debris.

LARO PROPERTIES L.P.                        I/OMAGIC CORPORATION
By:   Elle Properties
Its:  General Partner

By:   /s/ Greg St. Clair                    By:  /s/ Branch Lotspeich
      Greg St. Clair

Its:  Vice President                        Its: /s/ V.P. Operations


                                      -B1-

<PAGE>

                      ADDENDUM TO THAT CERTAIN LEASE DATED
                                  JULY 1, 2003
                 BY AND BETWEEN LARO PROPERTIES, L.P. ("LESSOR")
                                       AND
                        I/OMAGIC CORPORATION, ("LESSSEE")
                               FOR THE PREMISES AT
                          4 MARCONI, IRVINE, CALIFORNIA


50.  COMMENCEMENT  DATE:  The  Lease  shall  commence  August  15,  2003 or upon
                          substantial  completion  of Lessor's  Work  as defined
                          in paragraph 54, whichever is later. Upon substantial
                          completion,  Lessor  shall  prepare  a  Commencement
                          Date  Memorandum  for both parties'  execution. It is
                          Understood that any punch list items will be completed
                          after  the  Lease  Commencement.

51. EARLY POSSESSION:     Lessee shall be granted early possession to the
                          Premises upon mutual lease execution, Lessor's receipt
                          of the first month's rent and security deposit, and
                          receipt of insurance binder per paragraph 8 of the
                          Lease, for the purpose of fixturing the Premises for
                          Lessee's use, provided Lessee does not interfere with
                          Lessor's work described in paragraph 54.

52. BASE RENTAL RATE:     The Base Rent for the initial year of the lease shall
                          be $25,480 per month.  Each anniversary thereafter
                          during base rent increase by three percent (3%) per
                          annum.  The Following shall be the schedule of base
                          rental rates:

                                     Year 1   $  25,480.00
                                     Year 2   $  26,244.00
                                     Year 3   $  27,032.00

53. OPTION  TO  EXTEND:   Lessee's  option  shall  be the right, no later than
                          six (6) month's before expiration  of  the current
                          term to provide written notice to Lessor ("Notice"),
                          to extend  the  Lease  for  one  (1)  additional three
                          (3) year period ("Option Period") from the lease
                          expiration date, provided Lessee shall not be in
                          default under  the  terms  of  the Lease.  The terms,
                          covenants, and conditions for said extended term shall
                          be the same as in the Lease and any Amendments thereto
                          except  that  the  Base Rent for the first year of the
                          Option Period shall be at the then prevailing market
                          ("MRV").  The rent in years two (2) through three (3)
                          of the Option Period shall increase at the rate of
                          three percent (3%) per annum.

                          In the event that Lessee and Lessor are unable to
                          agree upon the MRV within thirty (30) days of the
                          Notice, then: (a)Lessor and Lessee shall immediately
                          appoint a mutually acceptable appraiser or broker to
                          establish the new MRV within thirty (30) days.  Any
                          associated costs will be split equally between the
                          parties, or (b) both Lessor and Lessee shall each
                          immediately select and pay the appraiser or broker
                          of their choice to establish the MRV within thirty
                          (30) days.  If, for any reason, either one of the
                          appraisals is not completed within thirty (30) days
                          as stipulated, the completed appraisal shall become
                          the new MRV.  If both appraisals are completed and the
                          two appraisers/brokers cannot agree on a reasonable
                          average MRV, then they shall immediately select a
                          third mutually acceptable appraiser/broker to
                          establish a third MRV within the next thirty (30)days.
                          The average of the two appraisals closest in value

                                        1
                                                                    /s/ BL /s/GS
<PAGE>

                          shall then become the new MRV.  The cost of the third
                          appraisal shall be split between the parties.

54. LESSOR'S  WORK:       Prior to the Commencement Date, Lessor shall complete
                          improvements in accordance with  the terms of the
                          attached Exhibit "B" Workletter.  Said improvements
                          shall include  the  following:

                          (A)  Construct  offices  per  the  attached space
plan using building standard materials  similar  to
the  existing  ground floor offices.  Said offices
shall provide  a  single  sidelight  window  adjacent
to  each  door.
(B)  Install new carpet in the ground floor office
area and main entry stairwell using  carpet similar to
the existing carpet in the ground floor office area.
(C)  Remove  two  (2)  landscape  fingers, the trash
enclosure, and relocate the fire  hydrant, and install
bollards to protect the fire hydrant per attached plan.
(D)  Construct  one  (1)  or  two (2) openings in the
warehouse demising wall at locations to be stipulated
by  Tenant  during  construction.
(E)  Install  new  roof  vents (if necessary) to
accommodate truck and warehouse operation in compliance
with  Paragraph  2.2  and  2.3  of  the  Lease.
(F)  Lower  the  threshold  of  the  truck  well
approximately  6-8  inches  to accommodate  entry and
exit of a tractor-trailer system with up to a forty-eight
foot  trailer.  Modify  the  truck  well  roll-up  door
mechanism to insure full closure after such  modification
to  the  truck  well.
(G)  Install  sprinkler  system  designed  to  provide
minimum  density of 0.45 gallons  per minute per square
foot using 286 degrees Fahrenheit sprinkler heads over
design  area  of  3,000 square feet in compliance with
fire codes for warehouse storage of Class IV inventory
up  to  20  feet  high.
(H)  Install mutually agreed upon electric or hydraulic
load leveler mechanism at the back of the truck well.

55. LESSEE'S  WORK:       Lessee, at its sole cost and expense, shall install
                          two (2) dumpsters and one(1) trash compactor (5'x20')
                          at the rear of the building.

56. RIGHT  TO  SUBLEASE:  Notwithstanding the provisions of Paragraph 12, Lessee
                          shall have the right to  assign  or  sublease  all  or
                          a  portion of the Premises to a subsidiary of I/OMagic
                          Corporation by providing written notice of said
                          sublease or assignment to  Lessee.  Net  proceeds from
                          any sublease shall be split fifty-fifty (50/50)
                          between  Lessor  and  Lessee.  Net proceeds is defined
                          as the difference between the  sublease rent and base
                          rent, less the cost of subleasing (i.e., commission,
                          tenant  improvements).

                          All other  terms and provisions of paragraph 12 of the
                          Lease shall apply.

57. PARKING:              Lessee shall be granted exclusive use of all parking
                          spaces located adjacent to subject leased area.  Said
                          parking shall be free of charge.

58. SIGNAGE:              Lessee, at its sole cost and expense, shall be allowed
                          to erect a building sign/monument sign on the Property
                          subject to City of Irvine codes and Lessor's approval,
                          not to be unreasonably withheld.

                                        2
                                                                    /s/ BL /s/GS

<PAGE>

59. LESSEE FINANCIAL      Lessee shall provide Lessor with its quarterly and
    STATEMENTS:           annual 10Q and 10K filings during the term of this
                          lease and any options thereto.

60. STRUCTURAL COMPONENTS Notwithstanding paragraph 2 and 7 of the Lease,
    OF BUILDING AND ROOF: Lessor shall be responsible for the maintenance and
                          repair of the roof, and structural components of the
                          Building (i.e., slab, exterior walls) during the
                          Original Term and any Option Period, provided any
                          repair is not necessitated by Lessee's misuse.

61. LESSOR'S              Lessor hereby acknowledges and consents to:
    ACKNOWLEDGEMENT:
                          A)  Warehouse  office:  the Lessee's (i) construction
                              of an office within the warehouse  area  of  the
                              Leased Premises; and (ii) attachment to and use of
                              the Leased  Premises' current HVAC system for  the
                              operation  of such office at Lessee's  expense.
                          B)  Gate:  the Lessee's installation of a gate system
                              at the entrance of the side parking area on the
                              Leased Premises, at the Lessee's expense.

62 LESSOR'S OBLIGATIONS   Notwithstanding any other sections of the Lease,
   TO AND INDEMNIFICATION Lessor hereby further warrants that improvements on
   OF LESSEE              the Premises made by Lessor,as referenced in Paragraph
                          54 of this Lease ("Lessor's Tenant Improvements"),
                          comply with all applicable laws, convenants or
                          restrictions of records, building codes, regulations
                          and ordinances throughout the Term and any Option Term
                          of the Lease.  Notwithstanding any other sections of
                          the Lease, Lessor hereby agrees to indemnify, defend,
                          and hold Lessee, and Lessee's employees, agents, and
                          contractors harmless from all liability, penalties,
                          losses, damages, costs, expenses, causes of action,
                          claims, or judgments, including, but not limited to,
                          attorney fees and costs, arising out of, in connection
                          with, or by reason of Lessor's breach of said warranty
                          throughout the Term and any Option Term of the Lease.
                          If Lessor's Tenant Improvements do not comply with
                          said warranty, Lessor shall rectify the noncompliance
                          solely at Lessor's expense and liability.

                           A) In the event that Lessor's breach of said warranty
                              and/or Lessor's compliance with rectifying such
                              breach results in Lessee not being able to occupy
                              any part of the Premises for Lessee's normal
                              business operations, Lessee shall immediately be
                              able to offset its rent payment to Lessor by an
                              amount equal to the monthly rent per square foot
                              multiplied by the square footage that cannot be
                              occupied by Lessee and prorated by the number of
                              days the Premises cannot be occupied.


Lessor  Initials   /s/ GS            Lessee  Initials    /s/ BL


                                        3

<PAGE>