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       STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE -- MODIFIED NET
                 AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION


1.   BASIC PROVISIONS ("BASIC PROVISIONS").
     1.1     PARTIES: This Lease ("LEASE"), dated for reference purposes only, 
July 20, 1998, is made by and between 3002 Pennsylvania Avenue, LLC 
("LESSOR") and Mossimo, Inc., a Delaware corporation ("LESSEE"), 
(collectively the "PARTIES," or individually a "PARTY").
     1.2(a)  PREMISES: That certain portion of the Building, including all 
improvements therein or to be provided by Lessor under the terms of this 
Lease, commonly known by the street address of 3002 Pennsylvania Avenue, 
located in the City of Santa Monica, County of Los Angeles, State of 
California, with zip code 90404, as outlined on Exhibit A attached hereto 
("PREMISES"). The "BUILDING" is that certain building containing the Premises 
and generally described as (describe briefly the nature of the Building); A 
free standing, one (1) story, brick industrial building. Lessee shall occupy 
approximately 3,203 rentable square feet in addition to Lessee's rights to 
use end occupy the Premises as hereinafter specified, Lessee shall have 
non-exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) 
as hereinafter specified, but shall not have any rights to the roof, exterior 
walls or utility raceways of the Building or to any other buildings in the 
Industrial Center. The Premises, the Building, the Common Areas, the land 
upon which they are located, along with all other buildings and improvements 
thereon, are herein collectively referred to as the "INDUSTRIAL CENTER." 
(Also see Paragraph 2.)
     1.2(b)  PARKING: 0 unreserved vehicle parking spaces ("UNRESERVED PARKING 
SPACES"); and four (4) reserved vehicle parking spaces ("RESERVED PARKING 
SPACES"). (Also see Paragraph 2.6.)
     1.3     TERM: 5 years and 0 months ("ORIGINAL TERM") commencing November 
1, 1998 ("COMMENCEMENT DATE") and ending November 1, 2003 ("EXPIRATION DATE"). 
(Also see Paragraph 3.)
     1.4     EARLY POSSESSION: N/A ("EARLY POSSESSION DATE"). (Also see 
Paragraphs 3.2 and 3.3.)
     1.5     BASE RENT: $2.00 per rentable square foot per month ("BASE RENT"), 
payable on the 1st day of each month commencing November 1, 1998 (Also see 
Paragraph 4.)
/X/  If this box is checked, this Lease provides for the Base Rent to be 
adjusted per Addendum #1, attached hereto.
     1.6(a)  BASE RENT PAID UPON EXECUTION: $6,406 as Base Rent for the period 
first thirty (30) days.
     1.6(b)  LESSEE'S SHARE OF COMMON AREA OPERATING EXPENSES: fifty-one and 
sixty-four hundredths percent (51.64%) ("LESSEE'S SHARE") as determined by / / 
prorata square footage of the Premises as compared to the total square footage 
of the Building or / / other criteria as described in Addendum __________.
     1.7     SECURITY DEPOSIT: $10,000.00 ("SECURITY DEPOSIT"). (Also see 
Paragraph 5.)
     1.8     PERMITTED USE: office and warehouse use consistent with zoning 
 ("PERMITTED USE") (Also see Paragraph 6.)
     1.9     INSURING PARTY. Lessor is the "INSURING PARTY." (Also see 
Paragraph 8.)
     1.10(a) REAL ESTATE BROKERS. The following real estate broker(s) 
(collectively, the "BROKERS") and brokerage relationships exist in this 
transaction and are consented to by the Parties (check applicable boxes):

/ /  None represents Lessor exclusively ("LESSOR'S BROKER");

/ /  None represents Lessee exclusively ("LESSEE'S BROKER"); or

/ /  None See Addendum #1, paragraph #4 represents both Lessor and Lessee 
("DUAL AGENCY"). (Also see Paragraph 15.)
     1.10(b) PAYMENT TO BROKERS. Upon the execution of this Lease by both 
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate 
shares as they may mutually designate in writing, a fee as set forth in a 
separate written agreement between Lessor and said Broker(s) (or in the event 
there is no separate written agreement between Lessor and said Broker(s), the 
sum of $N/A) for brokerage services rendered by said Broker(s) in connection 
with this transaction.
     1.11    GUARANTOR. The obligations of the Lessee under this Lease are to 
be guaranteed by N/A ("GUARANTOR"). (Also see Paragraph 37.)
     1.12    ADDENDA AND EXHIBITS. Attached hereto is an Addendum or Addenda 
consisting of Paragraphs 49 through 59, and Exhibit A, all of which constitute 
a part of this Lease.
2.   PREMISES, PARKING AND COMMON AREAS.
     2.1     LETTING. Lessor hereby leases to Lessee, and Lessee hereby 
leases from 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 square footage set forth in this 
Lease, or that may have been used in calculating rental and/or Common Area 
Operating Expenses, is an approximation which Lessor and Lessee agree is 
reasonable and the rental and Lessee's Share (as defined in Paragraph 1.6(b)) 
based thereon is not subject to revision whether or not the actual square 
footage is more or less.
     2.2     CONDITION. Lessor shall deliver the Premises to Lessee clean and 
free of debris on the Commencement Date and warrants to Lessee that the 
existing plumbing, electrical systems, fire sprinkler system, lighting, air 
conditioning and heating systems, and loading doors, if any, in the Premises, 
other than those constructed by Lessee, shall be in good operating condition 
on the Commencement Date. It a non-compliance with said warranty exists as of 
the Commencement Date, Lessor shall, 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 Lessee does not give Lessor written notice of a 
non-compliance with this warranty within sixty (60) days after the 
Commencement Date, correction of that non-compliance shall be the obligation 
of Lessee at Lessee's sole cost and expense.
     2.3     COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE. Lessor
warrants that any improvements (other than those constructed by Lessee or at
Lessee's direction) on or in the Premises which have been constructed or
installed by Lessor or with Lessor's consent or at Lessor's direction shall
comply with all applicable covenants or restrictions of record and applicable
building codes, regulations and ordinances in effect on the Commencement Date,
including, without limitation, the Americans With Disabilities Act. Lessor
further warrants to Lessee that Lessor has no knowledge of any claim having been
made by any governmental agency that a violation or violations of applicable
building codes, regulations, or ordinances exist with regard to the Premises as
of the Commencement Date. Said warranties shall not apply to any Alterations or
Utility Installations (defined in Paragraph 7.3(a)) made or to be made by
Lessee. If the Premises do not comply with said warranties, Lessor shall, except
as otherwise provided in this Lease, promptly after receipt of written notice
from Lessee given within six (6) months following the Commencement Date and
setting forth with specificity the nature and extent of such non-compliance,
take such action, at Lessor's expense, as may be reasonable or appropriate to
rectify the non-compliance. Lessor makes no warranty that the Permitted Use in
Paragraph 1.8 is permitted for the Premises under Applicable

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Laws (as defined in Paragraph 2.4).
     2.4     ACCEPTANCE OF PREMISES. Lessee hereby acknowledges: (a) that it 
has been advised by the Broker(s) to satisfy itself with respect to the 
condition of the Premises (including, but not limited to, the electrical and 
fire sprinkler systems, security, environmental aspects, seismic and 
earthquake requirements, and compliance with the Americans with Disabilities 
Act and applicable zoning, municipal, county, state and federal laws, 
ordinances and regulations, and any covenants or restrictions of record 
(collectively, "APPLICABLE LAWS") and the present and future suitability of 
the Premises for Lessee's intended use; (b) that Lessee has made such 
investigation as it deems necessary with reference to such matters, is 
satisfied with reference thereto, and assumes all responsibility therefore as 
the same relate to Lessee's occupancy of the Premises and/or the terms of 
this Lease; and (c) that neither Lessor, nor any of Lessor's agents, has made 
any oral or written representations or warranties with respect to said 
matters other than as set forth in this Lease.
     2.5     LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by Lessor in 
this Paragraph 2 shall be of no force or effect if immediately prior to the 
date set forth in Paragraph 1.1 Lessee was the owner or occupant of the 
Premises. In such event, Lessee shall, at Lessee's sole cost and expense, 
correct any non-compliance of the Premises with said warranties.
     2.6     VEHICLE PARKING. Lessee shall be entitled to use the number of 
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph 
1.2(b) on those portions of the Common Areas designated from time to time by 
Lessor for parking. Lessee shall not use more parking spaces than said 
number. Said parking spaces shall be used for parking by vehicles no larger 
than full-size passenger automobiles or pick-up trucks, herein called 
"PERMITTED SIZE VEHICLES." Vehicles other than Permitted Size Vehicles shall 
be parked and loaded or unloaded as directed by Lessor in the Rules and 
Regulations (as defined in Paragraph 40) issued by Lessor. (Also see 
Paragraph 2.9.)
             (a)  Lessee shall not permit or allow any vehicles that belong 
to or are controlled by Lessee or Lessee's employees, suppliers, shippers, 
customers, contractors or invitees to be loaded, unloaded, or parked in areas 
other than those designated by Lessor for such activities.
             (b)  if Lessee permits or allows any of the prohibited 
activities described in this Paragraph 2.6, then Lessor shall have the right, 
without notice, in addition to such other rights and remedies that it may 
have, to remove or tow away the vehicle involved and charge the cost to 
Lessee, which cost shall be immediately payable upon demand by Lessor.
             (c)  Lessor shall at the Commencement Date of this Lease provide 
the parking facilities required by Applicable Law.
     2.7     COMMON AREAS - DEFINITION. The term "COMMON AREAS" is defined as 
all areas and facilities outside the Premises and within the exterior 
boundary line of the Industrial Center and interior utility raceways within 
the Premises that are provided and designated by the Lessor from time to time 
for the general nonexclusive use of Lessor, Lessee and other lessees of the 
Industrial Center and their respective employees, suppliers, shippers, 
customers, contractors and invitees, including parking areas, loading and 
unloading areas, trash areas, roadways, sidewalks, walkways, parkways, 
driveways and landscaped areas.
     2.8     COMMON AREAS - LESSEE'S RIGHTS. Lessor hereby grants to Lessee, 
for the benefit of Lessee and its employees, suppliers, shippers, contract 
customers and invitees, during the term of this lease, the non-exclusive 
right to use, in common with others entitled to such use, the Common Areas as 
they exist from time to time, subject to any rights, powers, and privileges 
reserved by Lessor under the terms hereof or under the terms of any rules and 
regulations or restrictions governing the use of the Industrial Center. Under 
no circumstances shall the right herein granted to use the Common Areas be 
deemed to include the right to store any property, temporarily or 
permanently, in the Common Areas. Any such storage shall be permitted only by 
the prior written consent of Lessor or Lessor's designated agent, which 
consent may be revoked at any time. In the event that any unauthorized 
storage shall occur then Lessor shall have the right, without notice, in 
addition to such other rights and remedies that it may have, to remove the 
property and charge the cost to Lessee, which cost shall be immediately 
payable upon demand by Lessor.
     2.9     COMMON AREAS - RULES AND REGULATIONS. Lessor or such other 
person(s) as Lessor may appoint shall have the exclusive control and 
management of the Common Areas shall have the right, from time to time, to 
establish, modify, amend and enforce reasonable Rules and Regulations with 
respect thereto in accordance with Paragraph 40. Lessee agrees to abide by 
and conform to all such Rules and Regulations, and to cause its employees, 
suppliers, shippers, customers, contractors and invitees to so abide and 
conform. Lessor shall not be responsible to Lessee for the non-compliance 
with said rules and regulations by other lessees of the Industrial Center.
     2.10    COMMON AREAS - CHANGES. Lessor shall have the right, in Lessor's 
sole discretion, from time to time so long as Lessee's rights hereunder are 
not impaired thereby.
             (a) To make reasonable changes to the Common Areas, including, 
without limitation, changes in the location, size, shape and number of 
driveways, entrances, parking spaces, parking areas, loading and unloading 
areas, ingress, egress, direction of traffic, landscaped areas, walkways and 
utility raceways;
             (b) To close temporarily any of the Common Areas for maintenance 
purposes so long as reasonable access to the Premises remains available;
             (c) To designate other land outside the boundaries of the 
Industrial Center to be a part of the Common Areas;
             (d) To add additional buildings and improvements to the Common 
Areas;
             (e) To use the Common Areas while engaged in making additional 
improvements, repairs or alterations to the Industrial Center, or any portion 
thereof; and
             (f) To do and perform such other acts and make such other 
changes in, to or with respect to the Common Areas and Industrial Center as 
Lessor may, in the exercise of sound business judgment, deem to be 
appropriate.
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 an Early Possession Date is specified in 
Paragraph 1.4 and if Lessee totally or partially occupies the Premises after 
the Early Possession Date but prior to the Commencement Date, the obligation 
to pay Base Rent shall be abated for the period of such early occupancy. All 
other terms of this Lease, however, (including, but not limited to, the 
obligations to pay Lessee's Share of Common Area Operating Expenses and to 
carry the insurance required by Paragraph 8) shall be in effect during such 
period. Any such early possession shall not affect nor advance the Expiration 
Date of the Original Term.
     3.3     DELAY IN POSSESSION. If for any reason Lessor cannot deliver 
possession of the Premises to Lessee by the Early Possession Date, if one is 
specified in Paragraph 1.4, or if no Early Possession Date is specified, by 
the Commencement Date, Lessor shall not be subject to any liability therefor, 
nor shall such failure affect the validity of this Lease, or the obligations 
of Lessee hereunder, or extend the term hereof, but in such case, Lessee 
shall not, except as otherwise provided herein, be obligated to pay rent or 
perform any other obligation of Lessee under terms of this Lease until Lessor 
delivers possession of the Premises to Lessee. If possession of the Premises is 
not delivered to Lessee within sixty (60) days after the Commencement Date, 
Lessee may, at its option, by notice in writing to Lessor within ten (10) 
days after the end of said sixty (60) day period, cancel this Lease, in which 
event the Parties shall be discharged from all obligations hereunder; provided 
further, however, that if such written notice of Lessee is not received by 
Lessor within said ten (10) day period, Lessee's right to cancel this Lease 
hereunder shall terminate and be of no further force or effect. Except as may 
be otherwise provided, and regardless of when the Original Term actually 
commences, if possession is not tendered to Lessee when required by this 
Lease and Lessee does not terminate this Lease, as aforesaid, the period of 
the obligation to pay Base Rent, if any, that Lessee would otherwise have 
enjoyed shall run from the date of delivery of possession and continue for a 
period equal to the period during which the Lessee would have otherwise 
enjoyed under the terms hereof, but minus any days of delay caused by the 
acts, changes or omissions of Lessee.
4.   RENT.
     4.1     BASE RENT. Lessee shall pay Base Rent and other rent or charges, 
as the same may be adjusted from time to time, to Lessor in lawful money of 
the United States, without offset or deduction, on or before the day on which 
it is due under the terms of this Lease. Base Rent and all other rent and 
charges for any period during the term hereof which is for less than one full 
month shall be prorated based upon the actual number of days of the month 
involved. Payment of Base Rent and other charges shall be made to Lessor at 
its address stated herein or to such other persons or at such other addresses 
as Lessor may from time to time designate in writing to Lessee.
     4.2     COMMON AREA OPERATING EXPENSES. Lessee shall pay to Lessor 
during the term hereof, in addition to the Base Rent, Lessee's Share (as 
specified in Paragraph 1.6(b)) of all Common Area Operating Expenses, as 
hereinafter defined, during each calendar year of the term of this Lease, in 
accordance with the following provisions:
             (a) "COMMON AREA OPERATING EXPENSES" are defined, for purposes 
of this Lease, as all costs incurred by Lessor relating to the ownership and 
operation of the Industrial Center, including, but not limited to, the 
following:
                 (i)   The operation, repair and maintenance, in neat, clean, 
good order and condition, of the following:
                       (aa) The Common Areas, including parking areas, loading 
and unloading areas, trash areas, roadways, sidewalks, walkways, parkways 
driveways, landscaped areas, striping, bumpers, irrigation systems, Common 
Area lighting facilities, fences and gates, elevators and roof.
                       (bb) Exterior signs and any tenant directories.
                       (cc) Fire detection and sprinkler systems.
                 (ii)  The cost of water and electricity to service the Common 
Areas.
                 (iii) Trash disposal, property management and the costs of 
any environmental inspections.


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               (vi) Real Property Taxes (as defined in Paragraph 10.2) to be 
                    paid by Lessor for the Building and the Common Areas under 
                    Paragraph 10 hereof.
               (vi) The costs of the premiums for the insurance policies 
                    maintained by Lessor under Paragraph 8 hereof.
              (vii) Any deductible portion of an insured loss concerning the 
                    Building or the Common Areas.
             (viii) Any other services to be provided by Lessor that are stated
                    elsewhere in this Lease to be a Common Area 0perating 
                    Expense.
             (b) Any Common Area Operating Expenses and Real Property Taxes 
that are specifically attributable to the Building or to any other building 
in the Industrial Center or to the operation, repair and maintenance thereof, 
shall be allocated entirely to the Building or to such other building. 
However, any Common Area operating Expenses and Real Property Taxes that are not
specifically attributable to the Building or to any other building or to the 
operation, repair and maintenance thereof, shall be equitably allocated by 
Lessor to all buildings in the Industrial Center.
             (c) The inclusion of the improvements, facilities and services 
set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation 
upon Lessor to either have said improvements or facilities or to provide 
those services unless the Industrial Center already has the same, Lessor 
already provides the services, or Lessor has agreed elsewhere in this Lease 
to provide the same or some of them.
             (d) Lessee's Share of Common Area Operating Expenses shall be 
payable by Lessee within twenty (20) days after a reasonably detailed 
statement of actual expenses is presented to Lessee by Lessor. At Lessor's 
option, however, an amount may be estimated by Lessor from time to time of 
Lessee's Share of annual Common Area Operating Expenses and the same shall be 
payable monthly or quarterly, as Lessor shall designate, during each 12-month 
period of the Lease term, on the same day as the Base Rent is due hereunder. 
Lessor shall deliver to Lessee within sixty (60) days after the expiration of 
each calendar year a reasonably detailed statement showing Lessee's Share of 
the actual Common Area Operating Expenses incurred during the preceding year. 
If Lessee's payments under this Paragraph 4.2(d) during said preceding year 
exceed Lessee's Share as indicated on said statement, Lessee shall be credited 
the amount of such overpayment against Lessee's Share of Common Area 
Operating Expenses next becoming due. If Lessee's payments under this 
Paragraph 4.2(d) during said preceding year were less than Lessee's Share as 
indicated on said statement, Lessee shall pay to Lessor the amount of the 
deficiency within twenty (20) days after delivery by Lessor to Lessee of said 
statement.
5.   SECURITY DEPOSIT. Lessee shall deposit with Lessor upon Lessee's 
execution hereof the Security Deposit set forth in Paragraph 1.7 as security 
for Lessee's faithful performance of Lessee's obligations under this Lease. If 
Lessee fails to pay Base Rent or other rent or charges due hereunder, or 
otherwise Defaults under this Lease (as defined in Paragraph 13.1), 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, cost, expense, loss or damage (including attorneys' fees) 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 twenty (20) days 
after written request therefor deposit monies with Lessor sufficient to 
restore said Security Deposit to the full amount required by this Lease. Any 
time the Base Rent increases during the term of this Lease, Lessee shall, upon 
written request from Lessor, deposit additional monies with Lessor as an 
addition to the Security Deposit so that the total amount of the Security 
Deposit shall at all times bear the same proportion to the then current Base 
Rent as the initial Security Deposit bears to the initial Base Rent set forth 
in Paragraph 1.5. Lessor shall not be required to keep all or any part of the 
Security Deposit separate from its general accounts. Lessor shall, at the 
expiration or earlier termination of the term hereof and after Lessee has 
vacated the Premises, return to Lessee (or, at Lessor's option, to the last 
assignee, if any, of Lessee's interest herein), that portion of the Security 
Deposit not used or applied by Lessor. Unless otherwise expressly agreed in 
writing by Lessor, no part of the Security Deposit shall be considered to be 
held in trust, to bear interest or other increment for its use, or to be 
prepayment for any monies to be paid by Lessee under this Lease.
6.   USE.
     6.1     PERMITTED USE.
             (a) Lessee shall use and occupy the Premises only for the 
Permitted Use set forth in Paragraph 1.8, 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 waste 
or a nuisance, or that disturbs owners and/or occupants of, or causes damage 
to the Premises or neighboring premises or properties. 
             (b) Lessor hereby agrees to not unreasonably withhold or delay 
its consent to any written request by Lessee, Lessee's assignees or 
subtenants, and by prospective assignees and subtenants of Lessee, its 
assignees and subtenants, for a modification of said Permitted Use, so long 
as the same will not impair the structural integrity of the improvements on 
the Premises or in the Building or the mechanical or electrical systems 
therein, does not conflict with uses by other lessees, is not significantly 
more burdensome to the Premises or the Building and the improvements thereon, 
and is otherwise permissible pursuant to this Paragraph 6. If Lessor elects 
to withhold such consent, Lessor shall within five (5) business days after 
such request give a written notification of same, which notice shall include 
an explanation of Lessor's reasonable objections to the change in use.
     6.2     HAZARDOUS SUBSTANCES.
             (a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS 
SUBSTANCE" as used in this Lease shall mean any product, substance, chemical, 
material or waste whose presence, nature, quantity and/or intensity of 
existence, use, manufacture, disposal, transportation, spill, release or 
effect, either by itself or in combination with other materials expected to be 
on the Premises, is either: (i) potentially materially injurious to the public 
health, safety or welfare, the environment, or the Premises; (ii) regulated or 
monitored by any governmental authority; or (iii) a reasonable basis for 
potential liability of Lessor to any governmental agency or third party under 
any applicable statute or common law. Hazardous Substance shall include, but 
not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any 
products or by-products thereof. Lessee shall not engage in any activity in or 
about the Premises which constitutes a Reportable Use (as hereinafter defined) 
of Hazardous Substances without the express prior written consent of Lessor 
and compliance in a timely manner (at Lessee's sole cost and expense) with all 
applicable requirements (as defined in Paragraph 6.3). "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 (iii) the presence in, on or about the 
Premises of a Hazardous Substance with respect to which any Applicable Laws 
require that a notice be given to persons entering or occupying the Premises 
or neighboring properties. Notwithstanding the foregoing, Lessee may, without 
Lessor's prior consent, but upon notice to Lessor and in compliance with all 
Applicable Requirements, use any ordinary and customary materials reasonably 
required to be used by Lessee in the normal course of the Permitted Use, so 
long as such use is not a Reportable Use and does not expose the Premises or 
neighboring properties to any meaningful risk of contamination or damage or 
expose Lessor to any liability therefor. In addition, Lessor may (but without 
any obligation to do so) condition its consent to any Reportable Use of any 
Hazardous Substance by Lessee upon Lessee's giving Lessor such additional 
assurances as Lessor, in its reasonable discretion, deems necessary to protect 
itself, the public, the Premises and the environment against damage, 
contamination or injury and/or liability therefor, including, not limited to, 
the installation (and, at Lessor's option, removal on or before Lease 
expiration or earlier termination) of reasonably necessary protective 
modifications to the Premises (such as concrete encasements) and/or the 
deposit of an additional Security Deposit under Paragraph 5 hereof.
             (b) DUTY TO INFORM LESSOR. If either party knows, or has 
reasonable cause to believe, that a Hazardous Substance has come to be 
located in, on, under or about the Premises or the Building, other than as 
previously consented to or notified to the other party, the first party shall 
immediately give the other party written notice thereof, together with a copy 
of any statement, report, notice, registration, application, permit, business 
plan, license, claim, action, or proceeding given to, or received from, any 
governmental authority or private party concerning the presence, spill, 
release, discharge of, or exposure to, such Hazardous Substance including, 
but not limited to, all such documents as may be involved in any Reportable 
Use involving the Premises. Neither party shall cause or permit any Hazardous 
Substance to be spilled or released in, on, under or about the Premises 
(including, without limitation, through the plumbing or sanitary sewer 
system).
             (c) INDEMNIFICATION. Lessee shall indemnify, protect, defend and 
hold Lessor, its agents, employees, lenders and ground lessor, if any, and 
the Premises, harmless from and against any and all damages, liabilities, 
judgments, costs, claims, liens, expenses, penalties, loss of permits and 
attorneys' and consultants' fees arising out of or involving any Hazardous 
Substance brought onto the Premises by or for Lessee or by anyone under 
Lessee's control. Lessee's obligations under this Paragraph 6.2(c) 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 (including consultants' and attorneys' fees and 
testing), removal, remediation, restoration and/or abatement thereof, or of 
any contamination therein involved, and shall survive the expiration or 
earlier 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.
     6.3     LESSEE'S COMPLIANCE WITH REQUIREMENTS. Lessee shall, at Lessee's 
sole cost and expense, fully, diligently and in a timely manner, comply with 
all "APPLICABLE REQUIREMENTS," which term is used in this Lease to mean all 
laws, rules, regulations, ordinances, directives, covenants, easements and 
restrictions of record, permits, the requirements of any applicable fire 
insurance underwriter or rating bureau, and the recommendations of Lessor's 
engineers and/or consultants, relating in any manner to Lessee's use of the 
Premises (including, but not limited to, matters pertaining to (i) industrial 
hygiene; (ii) environmental conditions on, in, under or about the Premises, 
including soil and groundwater conditions; and (iii) the use, generation, 
manufacture, production, installation, maintenance, removal, transportation, 
storage, spill, or release of any Hazardous Substance), now in effect or 
which may hereafter come into effect. Lessee shall, within five (5) days after

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receipt of Lessor's written request, provide Lessor with copies of all 
documents and information, including, but not limited to, permits, 
registrations, manifests, applications, reports and certificates, 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 failure by Lessee or 
the Premises to comply with any Applicable Requirements.
     6.4     INSPECTION; COMPLIANCE WITH LAW. Lessor, Lessor's agents, 
employees, contractors and designated representatives, and the holders of any 
mortgages, deeds of trust or ground Leases on the Premises ("Lenders") shall 
have the right to enter the Premises at any time in the case of an emergency, 
and otherwise at reasonable times after twenty-four (24) hours prior written 
notice, for the purpose of inspecting the condition of the Premises and for 
verifying compliance by Lessee with this Lease and all Applicable 
Requirements (as defined in Paragraph 6.3), and Lessor shall be entitled to 
employ experts and/or consultants in connection therewith to advise Lessor 
with respect to Lessee's activities, including but not limited to Lessee's 
installation, operation, use, monitoring, maintenance, or removal of any 
Hazardous Substance on or from the Premises. The costs and expenses of any 
such inspections shall be paid by the party requesting same, unless a Default or
Breach of this Lease by Lessee or a violation of Applicable Requirements or a 
contamination, caused or materially contributed to by Lessee, is found to 
exist or to be imminent, or unless the inspection is requested or ordered by 
a governmental authority as the result of any such existing or imminent 
violation or contamination. In such case, Lessee shall upon request reimburse 
Lessor or Lessor's Lender, as the case may be, for the costs and expenses of 
such inspections.
7.   MAINTENANCE, REPAIRS, UTILITY INSTALLATIONS, TRADE FIXTURES AND 
     ALTERATIONS.
     7.1     LESSEE'S OBLIGATIONS.
             (a) Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 
(Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor's 
Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, 
at Lessee's sole cost and expense and at all times, keep the Premises and 
every part thereof in good order, condition and repair (whether or not such 
portion of the Premises requiring repair, 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, without 
limiting the generality of the foregoing, all equipment or facilities 
specifically serving the Premises, such as plumbing, heating, air 
conditioning, ventilating, electrical, lighting facilities, boilers, fired or 
unfired pressure vessels, fire hose connections if within the Premises, 
fixtures, interior walls, interior surfaces of exterior walls, ceilings, 
floors, windows, doors, plate glass, and skylights, but excluding any items 
which are the responsibility of Lessor pursuant to Paragraph 7.2 below. 
Lessee, in keeping the Premises in good order, condition and repair, shall 
exercise and perform good maintenance practices. Lessee's obligations shall 
include restorations, replacements or renewals when necessary to keep the 
Premises and all improvements thereon or a part thereof in order, condition 
and state of repair.
             (b) Lessee shall, at Lessee's sole cost and expense, procure and 
maintain a contract, with copies to Lessor, in customary form and substance 
for and with a contractor specializing and experienced in the inspection, 
maintenance and service of the heating, air conditioning and ventilation 
system for the Premises. However, Lessor reserves the right, upon notice to 
Lessee, to procure and maintain the contract for the heating, air 
conditioning and ventilating systems, and if Lessor so elects, Lessee shall 
reimburse Lessor, upon demand, for the cost thereof.
             (c) If Lessee fails to perform Lessee's obligations under this 
Paragraph 7.1, Lessor may enter upon the Premises after thirty (30) days' 
prior written notice to Lessee (except in the case of an emergency, in which 
case no notice shall be required), perform such obligations on Lessee's 
behalf, and put the Premises in good order, condition and repair, in 
accordance with Paragraph 13.2 below.
     7.2     LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2 
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code), 
4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9 
(Damage or Destruction) and 14 (Condemnation), Lessor, subject to 
reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition 
and repair the foundations, exterior walls, structural condition of interior 
bearing walls, exterior roof, fire sprinkler and/or standpipe and hose (if 
located in the Common Areas) or other automatic fire extinguishing system 
including fire alarm and/or smoke detection systems and equipment, fire 
hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, 
signs and utility systems serving the Common Areas and all parts thereof, as 
well as providing the services for which there is a Common Area Operating 
Expense pursuant to Paragraph 4.2. Lessor shall be obligated to paint the 
exterior or interior surfaces of exterior walls but Lessor shall not be 
obligated to maintain, repair or replace windows, doors or plate glass of the 
Premises. Lessee expressly waives the benefit of any statute now or hereafter 
in effect which would otherwise afford Lessee the right to make repairs at 
Lessor's expense or to terminate this Lease because of Lessor's failure to 
keep the Building, Industrial Center or Common Areas in good order, condition 
and repair.
     7.3     UTILITY INSTALLATIONS, TRADE FIXTURES, ALTERATIONS. 
             (a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY 
INSTALLATIONS" is used in this Lease to refer to all air lines, power panels, 
electrical distribution, security, fire protection systems, communications 
systems, lighting fixtures, heating, ventilating and air conditioning 
equipment, plumbing, and fencing in, on or about the Premises. The term "TRADE 
FIXTURES" shall mean Lessee's furnishings, machinery and equipment, and other 
Installations of any kind whatsoever, which can be removed without doing 
material damage to the Premises. The term "ALTERATIONS" shall mean any 
modification of the improvements on the Premises which are provided by Lessor 
under the terms of this Lease, other than Utility installations or Trade 
Fixtures. "LESSEE-OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined 
as nonstructural 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 nor cause to be made any Alterations or Utility Installations in, on, 
under or about the Premises without Lessor's prior written consent. Lessee 
may, however, make non-structural Utility Installations or Alterations to the 
interior of the Premises (excluding the roof) without Lessor's consent but 
upon notice to Lessor, so long as they are not visible from the outside of the 
Premises, do not involve puncturing, relocating or removing the roof or any 
existing walls, or changing or interfering with the fire sprinkler or fire 
detection systems and the cost thereof during the term of this lease as 
extended does not exceed $5,000.00 as to any project, or $50,000.00 over any 
twelve (12) month period.
             (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 reasonably detailed plans. All 
consents given by Lessor, whether by virtue of Paragraph 7.3(a) or by 
subsequent specific consent, shall be deemed condition upon: (i) Lessee's 
acquiring all applicable permits required by governmental authorities; (ii) 
the furnishing of copies of such permits together with a copy of the plans 
and specifications for the Alteration or Utility Installation to Lessor prior 
to commencement of the work thereon; and (iii) the compliance by Lessee with 
all conditions of said permits in a prompt and expeditious manner. Any 
Alterations or Utility Installations by Lessee during the term of this Lease 
shall be done in a good and workmanlike manner, with good and sufficient 
materials, and be in compliance with all Applicable Requirements. Lessee 
shall promptly upon completion thereof furnish Lessor with as-built plans and 
specifications therefor. Lessor may (but without obligation to do so) 
condition its consent to any requested Alteration or Utility Installation that 
costs $5000.00 or more upon Lessee's providing Lessor with a lien and 
completion bond in an amount equal to one and one-half times the estimated 
cost of such Alteration or Utility Installation.
             (c) LIEN PROTECTION. Lessee pay when due all claims for Labor or 
materials furnished or alleged to have been furnished to or for Lessee at or 
for use 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 to the commencement of any 
work in, on, or about the Premises, and Lessor shall have the right to post 
notices of non-responsibility in or on the Premises as provided by law. If 
Lessee shall, in good faith, 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 and satisfy any such 
adverse judgment that may be rendered thereon before the enforcement thereof 
against the Lessor or the Premises. If Lessor shall require, Lessee shall 
furnish to Lessor a surety bond satisfactory to Lessor, in an amount equal to 
the amount of such contested lien claim or demand, indemnifying Lessor 
against liability for the same, or as otherwise required by law for the 
holding of the Premises free from the effect of such lien or claim. In 
addition, Lessor may require Lessee to pay Lessor's attorneys' fees and costs 
in participating in such action if Lessor shall decide it is to its best 
interest to do so.
     7.4     OWNERSHIP, REMOVAL, SURRENDER, AND RESTORATION.
             (a) OWNERSHIP. Subject to Lessor's right to require their 
removal and to cause Lessee to become the owner thereof as hereinafter 
provided in this Paragraph 7.4, all Alterations and Utility Installations 
made to the Premises by Lessee shall be the property of and owned by Lessee, 
but consider a part of the Premises. Lessor may, at any time and at its 
option, elect in writing to Lessee to be the owner of all or any specified 
part of the Lessee-Owned Alterations and Utility Installations. Unless 
otherwise instructed per Subparagraph 7.4(b) hereof, all Lessee-Owned 
Alterations and Utility Installations shall, at the expiration or earlier 
termination of this Lease, become the property of Lessor and remain upon the 
Premises and be surrendered with the Premises by Lessee.
             (b) REMOVAL. Unless otherwise agreed in writing, Lessor may 
require that any or all Lessee-Owned Alterations or Utility Installations be 
removed by the expiration or earlier termination of this Lease at the time 
that their installation may have been consented to by Lessor. Lessor may 
require the removal at any time of all or any part of any Alterations or 
Utility Installations made without the required consent of Lessor.
             (c) SURRENDER/RESTORATION. Lessee shall surrender the Premises by 
the end of the last day of the Lease term or any earlier termination date, 
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 or by Lessee performing all of its obligations under this 
Lease. Except as otherwise agreed or specified herein, the Premises, as 
surrendered, shall include the Alterations and Utility Installations. The 
obligation of Lessee shall include the repair of

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any damage occasioned by the installation, maintenance or removal of Lessee's 
Trade Fixtures, furnishings, equipment, and Lessee-Owned Alterations and 
Utility Installations, 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 ground water contaminated by Lessee, all as may then be required 
by Applicable Requirements. Lessee's Trade Fixtures shall remain the property 
of Lessee and may be removed by Lessee subject to its obligation to repair 
and restore the Premises per this Lease.
8.   INSURANCE; INDEMNITY.
     8.1     PAYMENT OF PREMIUMS. The cost of the premiums for the insurance 
policies maintained by Lessor under this Paragraph 8 shall be a Common Area 
Operating Expense pursuant to Paragraph 4.2 hereof. Premiums for policy 
periods commencing prior to, or extending beyond, the term of this Lease 
shall be prorated to coincide with the corresponding Commencement Date or 
Expiration Date.
     8.2     LIABILITY INSURANCE
             (a) CARRIED BY LESSEE. Lessee, at its expense, shall obtain and 
keep in force during the term of this Lease a Commercial General Liability 
policy of insurance protecting Lessee, Lessor and any Lender(s) whose names 
have been provided to Lessee in writing (as additional insureds) against 
claims for bodily injury, personal injury and property damage based upon, 
involving 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 
$1,000,000 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 required 
by this Lease or as carried by Lessee shall not, however, limit the liability 
of Lessee nor relieve Lessee of any obligation hereunder. All insurance to be 
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 also maintain liability 
insurance described in Paragraph 8.2(a) above at Lessor's cost, 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.
     8.3     PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE.
             (a) BUILDING AND IMPROVEMENTS. Lessor shall obtain and keep in 
force during the term of this Lease a policy or policies in the name of 
Lessor, with loss payable to Lessor and to any Lender(s), insuring against 
loss or damage to the Premises. Such insurance shall be for full replacement 
cost, as the same shall exist from time to time, or the amount required by 
any Lender(s), but in no event more than the commercially reasonable and 
available insurable value thereof if, by reason of the unique nature or age 
of the improvements involved, such latter amount is less than full 
replacement cost. Lessee-Owned Alterations and Utility Installations, Trade 
Fixtures and Lessee's personal property shall be insured by Lessee pursuant 
to Paragraph 8.4. If the coverage is available end commercially appropriate, 
Lessor's policy or policies shall insure against all risks of direct physical 
loss or damage (except the perils of flood and/or earthquake unless 
reasonably available and required by a Lender), including coverage for any 
additional costs resulting from debris removal and reasonable amounts of 
coverage for the enforcement of any ordinance or law regulating the 
reconstruction or replacement of any undamaged sections of the Building 
required to be demolished or removed by reason of the enforcement of any 
building, zoning, safety or land use laws as the result of a covered loss, 
but not including plate glass insurance. Said policy or policies shall also 
contain an agreed valuation provision in lieu of any co-insurance 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.
             (b) RENTAL VALUE. Lessor, at its sole expense, shall also obtain 
and keep in force during the term of this Lease a policy or policies in the 
name of Lessor, with loss payable to Lessor and any Lender(s), insuring the 
loss of the full rental and other charges payable by all lessees of the 
Building to Lessor for one year (including all Real Property Taxes, insurance 
costs, all Common Area Operating Expenses and any scheduled rental 
increases). Said insurance may 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 rental 
revenues from the date of any such loss. Said insurance shall contain an 
agreed valuation provision in lieu of any co-insurance clause, and the amount 
of coverage shall be adjusted annually to reflect the projected Rental 
Income, Real Property Taxes, insurance premium costs and other expenses, if 
any, otherwise payable, for the next 12-month period. Common Area Operating 
Expenses shall include any deductible amount in the event of such loss.
             (c) ADJACENT PREMISES. Lessee, at its sole expense, shall pay 
for any increase in the premiums for the property insurance of the Building 
and for the Common Areas or other buildings in the Industrial Center if said 
increase is caused by Lessee's acts, omissions, use or occupancy of the 
Premises.
             (d) LESSEE'S IMPROVEMENTS. Since Lessor is the insuring Party, 
Lessor shall not be required to insure Lessee-Owned Alterations and Utility 
Installations unless the item in question has become the property of Lessor 
under the terms of this Lease.
     8.4     LESSEE'S PROPERTY INSURANCE. Subject to the requirements of 
Paragraph 8.5, Lessee at its cost shall either by separate policy or, at 
Lessor's option, by endorsement to a policy already carried, maintain 
insurance coverage on all of Lessee's personal property, Trade Fixtures and 
Lessee-Owned Alterations and Utility Installations in, on, or about the 
Premises similar in coverage to that carried by Lessor as the Insuring Party 
under Paragraph 8.3(a). Such insurance shall full replacement cost coverage 
with a deductible not to exceed $1,000 per occurrence. The proceeds from any 
such insurance shall be used by Lessee for the replacement of personal 
property and the restoration of Trade Fixtures and Lessee-Owned Alterations 
and Utility Installations. Upon request from Lessor, Lessee shall provide 
Lessor with written evidence that such insurance is in force.
     8.5     INSURANCE POLICIES. Insurance required hereunder shall be in 
companies duly licensed to transact business in the state where Premises are 
located, and maintaining during the policy term A "GENERAL POLICYHOLDERS 
RATING" of at least B+, V, or such other rating as may be required by a 
Lender, as set forth in the most current issue of "BEST'S INSURANCE GUIDE." 
Lessee shall not do or permit to be done anything which shall invalidate the 
insurance policies referred to in this Paragraph 8. Lessee shall cause to be 
delivered to Lessor, within seven (7) days after the earlier of the Early 
Possession Date or the Commencement Date, certified copies of, or 
certificates evidencing the existence and amounts of, the insurance required 
under Paragraph 8.2(a) and 8.4. 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.
     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 (whether in contract or in tort) 
against the other, for loss or damage to their property arising out of or 
incident to the perils required to be insured against under Paragraph 8. The 
effect of such releases and waivers of the right to recover damages shall not 
be limited by the amount of insures carried or required, or by any 
deductibles applicable thereto. Lessor and Lessee agree to have their 
respective insurance companies issuing property damage insurance 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 negligence and/or breach of 
express warranties, 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, costs, liens, judgments, penalties, loss of permits, 
attorneys' and consultants' fees, expenses and/or liabilities arising out of, 
involving, or in connection with, the occupancy of the Premises by Lessee, 
the conduct of Lessee's business, any act, omission or neglect of lessee, its 
agents, contractors, employees or invites, and out of any Default or Breach 
by Lessee in the performance in a timely manner of any obligation on Lessee's 
part to be performed under this Lease. The foregoing shall include, but not 
be limed to, the defense or pursuit of any claim or any action or proceeding 
involved therein, and whether or not (in the case of claims made against 
Lessor) litigated and/or reduced to judgment. In case any action or 
proceeding be brought against Lessor by reason of any of the foregoing 
matters, Lessee, upon notice from Lessor, shall 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 so 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, invites, 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, air conditioning or lighting 
fixtures, or from any other cause, whether 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, from other sources or places, and 
regardless of whether the cause of such damage or injury or the means of 
repairing the same is accessible or not. Lessor shall not be liable for any 
damages arising from any act or neglect of any other lessee of Lessor nor 
from the failure by Lessor to enforce the provisions of any other lease in 
the Industrial Center. Except for Lessor's negligence, intentional harm 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.
9.   DAMAGE OR DESTRUCTION.
     9.1     DEFINITIONS.

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             (a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction 
to the Premises, other than Lessee-Owned Alterations Utility Installations, 
the repair cost of which damage or destruction is less than fifty percent 
(50%) of then Replacement Cost (as defined in Paragraph 9.1(d)) of the 
Premises (excluding Lessee-Owned Alterations and Utility Installations and 
Trade Fixtures) immediately prior to such damage or destruction.
             (b) "PREMISES TOTAL DESTRUCTION" shall mean damage or 
destruction to the Premises, other than Lessee-Owned Alterations and Utility 
Installations, the repair cost of which damage or destruction is fifty 
percent (50%) or more of the then Replacement Cost of the Premises (excluding 
Lessee-Owned Alterations and Utility Installations and Trade Fixtures) 
immediately prior to such damage or destruction. In addition, damage or 
destruction to the Building, other than Lessee-Owned Alterations and Utility 
installations and Trade Fixtures of any lessees of the Building, the cost of 
which damage or destruction is fifty percent (50%) or more of the then 
Replacement Cost (excluding Lessee-Owned Alterations and Utility 
Installations and Trade Fixtures of any lessees of the Building) of the 
Building shall, at the option of Lessor, be deemed to be Premises Total 
Destruction.
             (c) "INSURED LOSS" shall mean damage or destruction to 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 building codes, 
ordinances or laws, and without deduction for depreciation, as established by 
a duly licensed, reputable contractor or architect selected by, but 
independent of, Lessor.
             (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     PREMISES PARTIAL DAMAGE - INSURED LOSS. If 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. In the event, however, 
that there is a shortage of insurance proceeds and such shortage is due to 
the fact that, by reason of the unique nature of the improvements in the 
Premises, 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 use assurance thereof, within twenty (20) days following receipt of 
written notice of such shortage and request therefor. If Lessor receives said 
funds or adequate assurance thereof within said twenty (20) day period, 
Lessor shall complete them as soon as reasonably possible and this Lease 
shall remain in full force and effect. If Lessor does not receive such funds 
or assurance within said period, Lessor may nevertheless elect by written 
notice to Lessee within twenty (20) days thereafter to make 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. If 
Lessor does not receive such funds or assurance within such twenty (20) day 
period, and if Lessor does not so elect to restore and repair, then this 
Lease shall terminate sixty (60) days following the occurrence of the damage 
or destruction, unless Lessee elects to do such work at its own expense. 
Unless otherwise agreed, Lessee shall in no event have any right to 
reimbursement from Lessor for 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 rather than Paragraph 9.2, 
notwithstanding that there may be 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 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 and 
this Lease shall continue in full force and effect), Lessor may, at Lessor's 
option, 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) give written notice to Lessee within thirty (30) days after 
receipt by Lessor of knowledge of the occurrence of such damage of Lessor's 
desire to terminate this Lease as of the date sixty (60) days following the 
date of such notice. In the event Lessor elects to give such notice of 
Lessor's intention to terminate this Lease, Lessee shall have the right 
within twenty (20) days after the receipt of such notice to give written 
notice to Lessor of Lessee's commitment to pay for the repair of such damage 
totally at Lessee's expense and without reimbursement from Lessor. Lessee 
shall provide Lessor with the required funds or satisfactory assurance 
thereof within thirty (30) days following such commitment from Lessee. 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 give such notice and provide 
the funds or assurance thereof within the times specified above, this Lease 
shall terminate as of the date specified in Lessor's notice of termination.
     9.4     TOTAL DESTRUCTION. Notwithstanding any other provision hereof, 
if Premises Total Destruction occurs (including any destruction required by 
any authorized public authority), this Lease shall terminate sixty (60) days 
following the date of such Premises Total Destruction, whether or not the 
damage or destruction is an insured Loss or was caused by a negligent or 
willful act of Lessee. In the event, however, that the damage or destruction 
was caused by Lessee, Lessor shall have the right to recover Lessor's damages 
from Lessee except as released and waived in Paragraph 9.7.
     9.5     DAMAGE NEAR END OF TERM. If at any time during the last twelve 
(12) months of the term of this Lease there is damage for which the cost to 
repair exceeds one month's Base Rent, whether or not an Insured Loss, either 
Lessee or Lessor may, at its option, terminate this Lease effective sixty 
(60) days following the date of occurrence of such damage by giving written 
notice to the other party of its election to do so within thirty (30) days 
after the date of occurrence of such damage. Provided, however, 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 (10) 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 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 as of the date set forth in the first sentence of this Paragraph 
9.5.
     9.6     ABATEMENT OF RENT; LESSEE'S REMEDIES.
             (a) In the event of (i) Premises Partial Damage or (ii) 
Hazardous Substance Condition for which Lessee is not legally responsible, 
the Base Rent, Common Area Operating Expenses and other charges, if any, 
payable by Lessee hereunder for the period during which such damage or 
condition, its repair, remediation or restoration continues, shall be abated 
in proportion to the degree to which Lessee's use of the Premises is 
impaired, but not in excess of proceeds from insurance required to be carried 
under Paragraph 8.3(b). Except for abatement of Base Rent, Common Area 
Operating Expenses and other charges, if any, as aforesaid, all other 
obligations of Lessee hereunder shall be performed by Lessee, and Lessee 
shall have no claim against Lessor for any damage suffered by reason of any 
such damage, destruction, repair, remediation or restoration.
             (b) If Lessor shall be obligated to repair or restore the 
Premises under the provisions of this Paragraph 9 and shall not commence, in 
a substantial and meaningful way, the repair or restoration of Premises 
within ninety (90) 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 to 
Lessor and such Lenders end such repair or restoration is not commenced 
within thirty (30) days after receipt of such notice, this Lease shall 
terminate as of the date specified in said notice. If Lessor or a Lender 
commences the repair or restoration of the Premises within thirty (30} days 
after the receipt of such notice, this Lease shall continue in full force and 
effect. "Commence" as used in this Paragraph 9.6 shall mean either the 
preparation of the required plans, or the beginning of the actual work on the 
Premises, whichever occurs first.
     9.7     HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance 
Condition occurs, unless Lessee is legally responsible therefor (in which 
case Lessee shall make the investigation and remediation thereof required by 
Applicable Requirements and this Lease shall continue in full force and 
effect, but subject to Lessor's rights under Paragraph 6.2(c) 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 shall continue in 
full force end effect, or (ii) if the estimated cost to investigate and 
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 sixty (60) days following the date of such notice. In the 
event Lessor elects to give such notice of Lessor's intention to terminate 
this Lease, Lessee shall have the right within ten (10) days after the 
receipt of such notice to give written notice to Lessor of Lessee's 
commitment to pay for the excess costs of (a) investigation and remediation 
of such Hazardous Substance Condition to the extent required by Applicable 
Requirements, over (b) an amount equal to twelve (12) times the then monthly 
Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with 
the funds required of Lessee or satisfactory assurance thereof within thirty 
(30) days following said commitment by Lessee. In such event this Lease shall 
continue in full force and effect, and Lessor shall proceed to make such 
investigation and 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 period specified 
above, this Lease shall terminate as of the date specified in Lessor's notice 
of termination.
     9.8     TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease 
pursuant to this Paragraph 9, Lessor shall return to Lessee any advance 
payment made by Lessee to Lessor and so much of Lessee's Security Deposit as 
has not been, or is not then required to be, used by Lessor under the terms 
of this Lease.

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     9.9     WAIVER OF STATUTES. Lessor and Lessee agree that the terms of 
this lease shall govern the effect of any damage to or destruction of the 
Premises and the Building with respect to the termination of this Lease and 
hereby waive the provisions of any present or future statute to the extent it 
is inconsistent herewith.
10.  REAL PROPERTY TAXES.
     10.1    PAYMENT OF TAXES. Lessor shall pay the Real Property Taxes, as 
defined in Paragraph 10.2, applicable to the Industrial Center, and except as 
otherwise provided in Paragraph 10.3, any such amounts shall be included in 
the calculation of Common Area Operating Expenses in accordance with the 
provisions of Paragraph 4.2.
     10.2    REAL PROPERTY TAX DEFINITION. As used herein, the term "REAL 
PROPERTY TAXES" shall include any form of real estate tax or assessment, 
general, special, ordinary or extraordinary, and any license fee, commercial 
rental tax, improvement bond or bonds, levy or tax (other than inheritance, 
personal income or estate taxes) imposed upon the Industrial Center by any 
authority having the direct or indirect power to tax, including any city, 
state or federal government, or any school, agricultural, sanitary, fire, 
street, drainage, or other improvement district thereof, levied against any 
legal or equitable interest of Lessor in the Industrial Center or any portion 
thereof, Lessor's right to rent or other income therefrom, and/or Lessor's 
business of leasing the Premises. 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, or changes in Applicable Law taking 
effect, during the term of this Lease, including, but not limited to, a 
change in the ownership of the Industrial Center or in the improvements 
thereon, the execution of this Lease, or any modification, amendment or 
transfer thereof, and whether or not contemplated by the Parties. In 
calculating Real Property Taxes for any calendar year, the Real Property 
Taxes for any real estate tax year shall be included in the calculation of 
Real Property Taxes for such calendar year based upon the number of days 
which such calendar year and tax year have in common.
     10.3    ADDITIONAL IMPROVEMENTS. Common Area Operating Expenses shall 
not include Real Property Taxes specified in the tax assessor's records and 
work sheets as being caused by any sale or other transfer by Lessor or by 
additional improvements placed upon the Industrial Center by other lessees or 
by Lessor for the exclusive enjoyment of such other lessees. Notwithstanding 
Paragraph 10.1 hereof, Lessee shall, however, pay to Lessor at the time 
Common Area Operating Expenses are payable under Paragraph 4.2, the entirety 
of any increase in Real Property Taxes if assessed solely by reason of 
Alterations, Trade Fixtures or Utility Installations placed upon the Premises 
by Lessee or at Lessee's request.
     10.4    JOINT ASSESSMENT. If the Building is not separately assessed, 
Real Property Taxes allocated to the Building 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 determined by 
Lessor from the respective valuations assigned in the assessor's work sheets 
or such other information as may be reasonably available. Lessor's reasonable 
determination thereof, in good faith, shall be conclusive.
     10.5    LESSEE'S PROPERTY TAXES. Lessee shall pay prior to delinquency 
all taxes assessed against and levied upon Lessee-Owned Alterations and 
Utility Installations, Trade Fixtures, furnishings, equipment and all 
personal property of Lessee contained in the Premises or stored within the 
Industrial Center. When possible, Lessee shall cause its Lessee-Owned 
Alterations and Utility Installations, Trade Fixtures, furnishings, equipment 
and all other personal property to be assessed and billed separately from the 
real property of Lessor. If any of Lessee's said property shall be assessed 
with Lessor's real property, Lessee shall pay Lessor the taxes attributable 
to Lessee's property as reasonably determined by Lessee within twenty (20) 
days after receipt of a written statement setting forth the taxes applicable 
to Lessee's property.
11.  UTILITIES. Lessee shall pay directly for all utilities and services 
supplied to the Premises, including, but not limited to, electricity, 
telephone, security, gas and cleaning of the Premises, together with any 
taxes thereon. If any such utilities or services are not separately metered 
to the Premises or separately billed to the premises, Lessee shall pay to 
Lessor a reasonable proportion to be determined by Lessor of all such charges 
jointly metered or billed with other Premises in the Building, in the manner 
and within the time periods set forth in Paragraph 4.2(d).
12.  ASSIGNMENT AND SUBLETTING.
     12.1    LESSOR'S CONSENT REQUIRED.
             (a) Lessee shall not voluntarily or by operation of law assign, 
transfer, mortgage or otherwise transfer or encumber (collectively, "ASSIGN") 
or sublet all or any part of Lessee's interest in this Lease or in the 
Premises without Lessor's prior written consent given under and subject to 
the terms of Paragraph 36.
             (b) A change in the control of Lessee shall constitute an 
assignment requiring Lessor's consent. The transfer, on a cumulative basis, 
of fifty percent (50%) 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, 
refinancing, 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, as 
hereinafter defined, by an amount equal to or greater than fifty percent 
(50%) of such Net Worth of Lessee as it was represented to Lessor at the time 
of full execution end delivery 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, at 
whichever time said Net Worth of Lessee was or is greater, shall be 
considered an assignment of this Lease by Lessee to which Lessor may 
reasonably withhold its consent. "NET WORTH OF LESSEE" for purposes of this 
Lease shall be the net worth of Lessee (excluding any Guarantors) established 
under generally accepted accounting principles consistently applied.
             (d) An assignment or subletting of Lessee's interest in this 
Lease without Lessor's specific prior written consent shall, at Lessor's 
option, be a Default curable after notice per Paragraph 13.1, or a 
non-curable Breach without the necessity of any notice and grace period. If 
Lessor elects to treat such unconsented to assignment or subletting as a 
non-curable Breach, Lessor shall have the right to either: (i) terminate this 
Lease, or (ii) upon thirty (30) days' written notice ("LESSOR'S NOTICE"), 
increase the monthly Base Rent for the Premises to the greater of the then 
fair market rental value of the Premises, as reasonably determined by Lessor, 
or one hundred ten percent (110%) of the Base Rent then in effect. Pending 
determination of the new fair market rental value, if disputed by Lessee, 
Lessee shall pay the amount set forth in Lessor's Notice, with any 
overpayment credited against the next installment(s) of Base Rent coming due, 
and any underpayment for the period retroactively to the effective date of 
the adjustment being due and payable immediately upon the determination 
thereof. 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 the then fair market value as reasonably 
determined by Lessor (without the Lease being considered an encumbrance or 
any deduction for depreciation or obsolescence, and considering the Premises 
at its highest and best use and in good condition) or one hundred ten percent 
(110%) of the price previously in effect, (ii) any index-oriented rental or 
price adjustment formulas contained in this Lease shall be adjusted to 
require that the base index be determined with reference to the index 
applicable to the time of such adjustment, and (iii) any fixed rental 
adjustments scheduled during the remainder of the Lease term shall be 
increased in the same ratio as the new rental bears to the Base Rent in 
effect immediately prior the adjustment specified in Lessor's Notice.
             (e) Lessee's remedy for any breach of this 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, nor (iii) alter the primary 
liability of Lessee for the payment of Base Rent and other sums due Lessor 
hereunder or for the performance of any other obligations to be performed by 
Lessee under this Lease.
             (b) Lessor may accept any rent or performance of Lessee's 
obligations from any person other than Lessee pending approval or disapproval 
of an assignment.
             (c) The consent of Lessor to any assignment or subletting shall 
not constitute a consent to any subsequent assignment or subletting by Lessee 
or to any subsequent or successive assignment or subletting by the assignee 
or sublessee. However, Lessor may not consent to subsequent sublettings and 
assignments of the sublease or any amendments or modifications thereto 
without notifying Lessee or anyone else liable under this Lease or the 
sublease and without obtaining their consent, and such action shall not 
relieve such persons from liability under this Lease or the sublease.
             (d) In the event of any Default or Breach of Lessee's obligation 
under this Lease, Lessor may proceed directly against Lessee, any Guarantors 
or anyone else responsible for the performance of the Lessee's obligations 
under this Lease, including any sublessee, without first exhausting Lessor's 
remedies against any other person or entity responsible therefor 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. Lessee agrees to provide Lessor with such other or additional 
information and/or documentation as may be reasonably requested by Lessor.
             (f) Any assignee of, or sublessee under, this Lease shall, by 
reason of accepting such assignment or entering into such sublease, be 
deemed, for the benefit of Lessor, 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 in writing.

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     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) Solely as security for Lessee's performance hereunder, 
Lessee hereby assigns and transfers to Lessor all of Lessee's interest in all 
rentals and income arising from any sublease of all or a portion of the 
Premises heretofore or hereafter made by Lessee, and Lessor may collect such 
rent and income and apply same toward Lessee's obligations under this Lease; 
provided, however, that until a Breach (as defined in Paragraph 13.1) shall 
occur in the performance of Lessee's obligations under this Lease, Lessee 
may, except as otherwise provided in this Lease, receive, collect and enjoy 
the rents accruing under such sublease. Lessor shall not, by reason of the 
foregoing provision or any other assignment of such sublease to Lessor, nor 
by reason of the collection of the rents from a sublessee, be deemed liable 
to the sublessee for any failure of Lessee to perform and comply with any of 
Lessee's obligations to such sublessee under such Sublease. 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 the rents and other 
charges due and to become due under the sublease. Sublessee shall rely upon 
any such statement and request from Lessor and shall pay such rents and other 
charges to Lessor without any obligation or right to inquire as to whether 
such Breach exists and notwithstanding any notice from or claim from Lessee 
to the contrary. Lessee shall have no right or claim against such sublessee, 
or, until the Breach has been cured, against Lessor, for any such rents and 
other charges so paid by said sublessee to Lessor.
             (b) In the event of a Breach by Lessee in the performance of its 
obligations under this Lease, Lessor, at its option and without any 
obligation to do so, may require any 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 
other prior defaults or breaches of such sublessor under such sublease.
             (c) Any matter or thing requiring the consent of the sublessor 
under a sublease shall also require the consent of Lessor herein.
             (d) No sublessee under a sublease approved by Lessor 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. Lessor and Lessee agree that if an attorney is 
consulted by Lessor in connection with a Lessee Default or Breach (as 
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence 
for legal services and costs in the preparation and service of a notice of 
Default, and that Lessor may include the cost of such services and costs in 
said notice as rent due and payable to cure said default. A "DEFAULT" by 
Lessee is defined as a failure by Lessee to observe, comply with or perform 
any of the terms, covenants, conditions or rules applicable to Lessee under 
this Lease. A "BREACH" by Lessee is defined as the occurrence of any one or 
more of the following Defaults, and, where a grace period for cure after 
notice is specified herein, the failure by Lessee to cure such Default prior 
to the expiration of the applicable grace period, and shall entitle Lessor to 
pursue the remedies set forth in Paragraphs 13.2 and/or 13.3:
             (a) the vacating of the Premises without the intention to 
reoccupy same, or the abandonment of the Premises for ten (10) consecutive 
business days.
             (b) Except as expressly otherwise provided in this Lease, the 
failure by Lessee to make any payment of Base Rent, Lessee's Share of Common 
Area Operating Expenses, or any other monetary payment required to be made by 
Lessee hereunder, the failure by Lessee to provide Lessor with reasonable 
evidence of insurance or surety bond required under this Lease, or the 
failure of Lessee 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 thereof by or on behalf of 
Lessor to Lessee.
             (c) Except as expressly otherwise provided in this Lease, the 
failure by Lessee to provide Lessor with reasonable written evidence (in duly 
executed original form, if applicable) of (i) compliance with Applicable 
Requirements per Paragraph 6.3, (ii) the inspection, maintenance and service 
contracts required under Paragraph 7.1(b), (iii) the rescission of an 
unauthorized assignment or subletting per Paragraph 12.1, (iv) a Tenancy 
Statement per Paragraphs 16 or 37, (v) the subordination or non-subordination 
of this Lease per Paragraph 30, (vi) the guaranty of the performance of 
Lessee's obligations under this Lease if required under Paragraphs 1.11 and 
37, (vii) the execution of 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) business days following 
written notice by or on behalf of Lessor 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 that are to be observed, complied with or performed by Lessee, other 
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 
thereof by or on behalf of Lessor to Lessee; 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 
of this Lease by Lessee 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 by Lessee of any general arrangement or assignment for the benefit of 
creditors; (ii) Lessee's becoming a "debtor" as defined in 11 U.S. code 
Section 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 session 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 in 
thirty (30) days; provided, however, in the event that any provision of this 
Subparagraph 13.1(a) is contrary to any applicable law, such provision shall 
be of no force or effect, and shall not affect the validity of the remaining 
provisions.
             (f) The discovery by Lessor that any financial statement of 
Lessee or of any Guarantor, given to Lessor by Lessee or any Guarantor, 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 breach basis, and Lessee's failure, within sixty (60) days 
following written notice by or on behalf of Lessor to Lessee of any such 
event, to provide Lessor with written alternative assurances of security, 
which, when coupled with the then existing resources of Lessee, equals or 
exceeds the combined financial resources of Lessee and the Guarantors that 
exist at the time of execution of this Lease.
     13.2    REMEDIES. If Lessee fails to perform any affirmative duty or 
obligation of Lessee under this Lease, within fifteen (15) business days 
after written notice to Lessee (or in case of an emergency, without notice), 
Lessor may at its option (but without obligation to do so), 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 to Lessor upon 
invoice therefor. If any check given to Lessor by Lessee shall not be honored 
by the bank upon which it is drawn due to any fault of Lessee, Lessor, at its 
own option, may require all future payments to be made under this Lease by 
Lessee to be made only by cashier's check. In the event of a Breach of this 
Lease by Lessee (as defined in Paragraph 13.1), 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, Lessor may:
             (a) Terminate Lessee's right to possession of the Premises by 
any lawful means, in which case this Lease and the term hereof shall 
terminate and Lessee shall immediately surrender possession of the Premises 
to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) 
the worth at the time of the award of 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 reasonable cost of recovering possession of the 
Premises, reasonable 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 time of 
award of the amount referred to in provision (iii) of the immediately 
preceding sentence shall be computed by discounting such amount at the

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discount rate of Federal Reserve Bank of San Francisco or Federal Reserve 
Bank District in which the Premises are located at the time of award plus one 
percent (1%). Efforts by Lessor to mitigate damages caused by Lessee's 
Default or Breach of this Lease shall not waive Lessor's right to recover 
damages under this Paragraph 13.2. If termination of this Lease is obtained 
through the provisional remedy of unlawful detainer, Lessor shall have the 
right to recover in such proceeding the 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 for such rent and/or damages. If a notice and 
grace period required under Subparagraphs 13.1(b), (c) or (d) was not 
previously given, a notice to pay rent or quit, or to perform or quit, as the 
case may be, given to Lessee under any statute authorizing the forfeiture of 
leases for unlawful detainer shall also constitute the applicable notice for 
grace purposes required by Subparagraph 13.1(b), (c) or (d). In such case, 
the applicable grace period under the unlawful detainer statute shall run 
concurrently after the one such statutory notice, and the failure of Lessee 
to cure the Default within the greater of the two (2) 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 in 
effect (in California under California Civil Code Section 1951.4) after 
Lessee's Breach and recover the rent as it becomes due, provided Lessee has 
the right to sublet or assign, subject only to reasonable limitations. Lessor 
and Lessee agree that the limitations on assignment and subletting in this 
Lease are reasonable. Acts of maintenance or preservation, efforts to relet 
the Premises, or the appointment of a receiver to protect the Lessor's 
interest under this Lease, shall not constitute a termination of the Lessee's 
right to possession.
             (c) Pursue any other remedy now or hereafter available to Lessor 
under the laws or judicial decisions of the state wherein the Premises are 
located.
             (d) 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.
     13.4    LATE CHARGES. Lessee hereby acknowledges that late payment by 
Lessee to Lessor of rent and other sums due hereunder 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 the terms of any ground lease, mortgage or deed of trust covering 
the Premises. Accordingly, if any installment of rent or other sum due from 
Lessee shall not be received by Lessor or Lessor's designee within ten (10) 
days after such amount shall be due, then, without any requirement for notice 
to Lessee, Lessee shall pay to Lessor a late charge equal to five percent 
(5%) of 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 late payment by Lessee. 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 Lessor from exercising 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 Paragraph 4.1 or any other 
provision of this Lease to the contrary, Base Rent shall, at Lessor's option, 
become due and payable quarterly in advance.
     13.5    BREACH BY LESSOR. 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 13.5, a 
reasonable time shall in no event be less than thirty (30) days after receipt 
by Lessor, and by any Lender(s) whose name and address shall have been 
furnished to Lessee in writing for such purpose, of written notice satisfying 
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 after such notice are reasonably required for its performance, then 
Lessor shall not be in breach of this Lease if performance is commenced 
within such thirty (30) day period and thereafter diligently pursued to 
completion. 
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 (all of which are herein called "condemnation"), this Lease shall 
terminate as to the part so taken as of the date the condemning authority 
takes title or possession, whichever first occurs. If more than ten percent 
(10%) of the floor area of the Premises, or more than twenty-five percent 
(25%) of the portion of the Common Areas designated for Lessee's parking, is 
taken by condemnation, Lessee may, at Lessee's option, to be exercised in 
writing within ten (10) business days after Lessor shall have given Lessee 
written notice of such taking (or in the absence of such notice, within ten 
(10) business 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 the same proportion as the rentable floor area of the Premises 
taken bears to the total rentable floor area of the Premises. No reduction of 
base rent shall occur if the condemnation does not apply to any portion of 
the Premises. Any award for the taking of all or any part of the Premises 
under the power of eminent domain or any payment made under threat of the 
exercise of such power shall be the property of Lessor, whether such award 
shall be made as compensation for diminution of value of the leasehold or for 
the taking of the fee, or as severance damages; provided, however, that 
Lessee shall be entitled to any compensation, separately awarded to Lessee 
for Lessee's relocation expenses, business interruption and/or loss of 
Lessee's trade fixtures. In the event that this Lease is not terminated by 
reason of such condemnation, Lessor shall to the extent of its net severance 
damages received, over and above Lessee's share of the legal and other 
expenses incurred by Lessor in the condemnation matter, repair any damage to 
the Premises caused by such condemnation authority. Lessee shall be 
responsible for the payment of any amount in excess of such net severance 
damages required to complete such repair.
15.  BROKERS' FEES
     15.1    PROCURING CAUSE. The Broker(s) named in Paragraph 1.10 is/are 
the procuring cause of this Lease.
     15.2    ADDITIONAL TERMS. Unless Lessor and Broker(s) have otherwise 
agreed in writing, Lessor agrees that: (a) if Lessee exercises any Option (as 
defined in Paragraph 39.1) granted under this Lease or any Option 
subsequently granted, or (b) if Lessee acquires any rights to the Premises or 
other premises in which Lessor has an interest, or (c) if Lessee remains in 
possession of the Premises with the consent of Lessor after the expiration of 
the term of this Lease after having failed to exercise an Option, or (d) if 
said Brokers are the procuring cause of any other lease or sale entered into 
between the Parties pertaining to the Premises and/or any adjacent property 
in which Lessor has an interest, or (e) if Base Rent is increased, whether by 
agreement or operation of an escalation clause herein, then as to any of said 
transactions, Lessor shall pay said Broker(s) a fee in accordance with the 
schedule of said Broker(s) in effect at the time of execution of this Lease.
     15.3    ASSUMPTION OF OBLIGATIONS. Any buyer or transfer of Lessor's 
interest in this Lease, whether such transfer is by agreement or by operation 
of law, shall be deemed to have assumed Lessor's obligation under this 
Paragraph 15. Each Broker shall be an intended third party beneficiary of the 
provisions of Paragraph 1.10 and of this Paragraph 15 to the extent of its 
interest in any commission arising from this Lease and may enforce that right 
directly against Lessor and its successors.
     15.4    REPRESENTATIONS AND WARRANTIES. 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 as named in Paragraph 1.10(a) in connection with 
the negotiation of this lease and/or the consummation of the transaction 
contemplated hereby, and that no broker or other person, firm or entity other 
than said named Broker(s) is entitled to any commission or finder's fee in 
connection with said transaction. 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 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.  TENANCY AND FINANCIAL STATEMENTS.
     16.1    TENANCY STATEMENT. Each Party (as "RESPONDING PARTY") shall 
within ten (10) business days after written notice from the other Party (the 
"REQUESTING PARTY") execute, acknowledge and deliver to the Requesting Party 
a statement in writing in a form similar to the then most current "TENANCY 
STATEMENT" 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.
     16.2    FINANCIAL STATEMENT. If Lessor desires to finance, refinance, or 
sell the Premises or the Building, or any part thereof, Lessee and all 
Guarantors shall deliver to any potential lender or purchaser designated by 
Lessor such financial statements of Lessee and such Guarantors 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.  LESSOR'S LIABILITY. The term "LESSOR" as used herein shall mean the owner 
or owners at the time in question of the fee title to the Premises. In the 
event of a

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transfer of Lessor's title or interest in Premises or in this Lease, Lessor 
shall deliver to the transferee or assignee (in cash or by credit) any unused 
Security Deposit held by Lessor at the time of such transfer or assignment. 
Except as provided in Paragraph 15.3, 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.
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.  INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor 
hereunder, other than late charges, not received by Lessor within ten (10) 
days following the date on which it was due, shall bear interest from the 
date due at the prime rate charged by the largest state chartered bank in the 
state in which the Premises are located plus four percent (4%) per annum, but 
not exceeding the maximum rate allowed by law, in addition to the potential 
late charge provided for in Paragraph 13.4.
20.  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.
21.  RENT DEFINED. All monetary obligations of Lessee to Lessor under the 
terms of this Lease are deemed to be rent.
22.  NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all 
agreements between the Parties with respect to any matter mentioned herein, 
and 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. Each Broker shall be an intended 
third party beneficiary of the provisions of this Paragraph 22.
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 
messenger or courier service) or may be sent by regular, certified or 
registered mail or U.S. Postal Service Express Mail, with postage prepaid, or 
by facsimile transmission during normal business hours, 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 notice purposes. Either Party may 
by written notice to the other specify a different address for notice 
purposes, except that upon Lessee's taking possession of the Premises, the 
Premises shall constitute Lessee's address for the purpose of mailing or 
delivering notices to Lessee. A copy of all notices required or permitted to 
be given to Lessor hereunder shall be concurrently transmitted to such party 
or parties at such addresses as Lessor may from time to time hereafter 
designate by written notice to Lessee.
     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. 
Notices delivered by United States Express Mail or overnight courier that 
guarantees next day delivery shall be deemed given upon delivery of the same 
by the United States Postal Service or courier. If any notice is transmitted 
by facsimile transmission or similar means, the same shall be deemed served 
or delivered upon telephone or facsimile confirmation of receipt of the 
transmission thereof, provided a copy is also delivered via delivery or mail. 
If notice is received on a Saturday or a Sunday or a 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 of any other 
term, covenant or condition hereof, or of any subsequent Default or Breach by 
Lessee of the same or any other term, covenant or condition hereof. Lessor's 
consent to, or approval of, any such 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. Regardless of Lessor's knowledge of a Default or Breach at the time 
of accepting rent, the acceptance of rent by Lessor shall not be a waiver of 
any Default or Breach by Lessee of any provision hereof.  Any payment given 
Lessor by Lessee may be accepted by Lessor on account of 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 or taxes 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 earlier termination of 
this Lease. In the event that lessee holds over in violation of this 
Paragraph 26 then the Base Rent payable from and after the time of the 
expiration or earlier termination of this Lease shall be increased to one 
hundred ten percent (110%) for the first thirty (30) days, and thereafter to 
two hundred percent (200%) of the Base Rent applicable during the month 
immediately preceding such expiration or earlier termination. Nothing 
contained herein shall be construed as a 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.  All provisions of this Lease to be observed 
or performed by Lessee are both covenants and conditions.
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 state in which the Premises are located. Any 
litigation between the Parties hereto concerning this Lease shall be 
initiated in the county in which 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 by Lessor upon the real property of which the Premises 
are a part, to any and all advances made on the security thereof, and to all 
renewals, modifications, consolidations, replacements and extensions thereof. 
Lessee agrees that the Lenders holding any such Security Device shall have no 
duty, liability or obligation to perform any of the obligations of Lessor 
under this Lease, but that in the event of Lessor's default with respect to 
any such obligation, Lessee will give any Lender whose name and address have 
been furnished Lessee in writing for such purpose notice of Lessor's default 
pursuant to Paragraph 13.5. If any Lender shall elect to have this Lease 
and/or any Option granted hereby superior to the lien of its Security Device 
and shall give written notice thereof to Lessee, 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 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: (i) be 
liable for any act or omission of any prior lessor or 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 assurance (a "non-disturbance agreement") 
from the Lender that Lessee's possession 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.
     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 Premises, Lessee and lessor shall execute 
such further writings as may reasonably required to separately document any 
such subordination or non-subordination, attornment and/or non-disturbance 
agreement as is provided for herein.
31.  ATTORNEYS' FEES. If any Party or Broker brings an action or proceeding 
to enforce the terms hereof or 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, judgement, or the abandonment by the other Party or 
Broker of its claim or defense. The attorneys' fee 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. Lessor shall be 
enticed to attorneys' fees, costs and expenses incurred in 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. Broker(s) shall be intended third party 
beneficiaries of this Paragraph 31.
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 en 
emergency, and otherwise at reasonable times after twenty-four (24) hours' 
prior written notice for the purpose of showing the same to prospective 
purchasers, lenders, or lessees, and making such alterations, repairs, 
improvements or additions to the Premises or to the Building, as Lessor may 
reasonably deem necessary.

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Lessor may at any time place on or about the Premises or Building any 
ordinary "For Sale" signs and Lessor may at any time during the last one 
hundred eighty (180) days of the term hereof place on or about the Premises 
any ordinary "For Lease" signs. All such activities of Lessor shall be 
without abatement of Rent or liability to Lessee.
33.  AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either 
voluntarily or involuntarily, any auction upon the Premises without first 
having obtained Lessor's prior written consent. Notwithstanding anything to 
the contrary in this Lease, Lessor shall not be obligated to exercise any 
standard of reasonableness in determining whether to grant such consent.
34.  SIGNS. Lessee shall not place any sign upon the exterior of the Premises 
or the Building, except that Lessee may, with Lessor's prior written consent, 
install (but not on the roof) such signs as are reasonably required to 
advertise Lessee's own business so long as such signs are in a location 
designated by Lessor and comply with Applicable Requirements and signage 
criteria established for the Industrial Center by Lessor. The installation of 
any sign on the Premises by or for Lessee shall be subject to the provisions 
of Paragraph 7 (Maintenance, Repairs, Utility Installations, Trade Fixtures 
and Alterations). Unless otherwise expressly agreed herein, Lessor reserves 
all rights to the use of the roof of the Building, and the right to install 
advertising signs on the Building, including the roof, which do not 
unreasonably interfere with the conduct of Lessee's business; Lessor shall be 
entitled to all revenues from such advertising signs.
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, Lessor shall, in event of any such 
surrender, termination or cancellation, have the option to continue any one 
or all of any existing subtenancies. Lessor's failure within ten (10) days 
following any such event to make a written election 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.
             (a) Except for Paragraph 33 hereof (Auctions) or 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 to, architects', attorneys', engineers' and other 
consultants' fees) incurred in the consideration of, or response to, a 
request by Lessee for any Lessor consent pertaining to this Lease or the 
Premises, including, but not limed to, consents to an assignment, a 
subletting or the presence or use of a Hazardous Substance, shall be paid by 
Lessee to Lessor upon receipt of an invoice and supporting documentation 
therefor. In addition to the deposit described in Paragraph 12.2(a), Lessor 
may, as a condition to considering any such request by Lessee, require that 
Lessee deposit with Lessor an amount of money (in addition to the Security 
Deposit held under Paragraph 5) reasonably calculated by Lessor to represent 
the cost Lessor will incur in considering and responding to Lessee's request. 
Any unused portion of said deposit shall be refunded to Lessee without 
interest. Lessor's consent to any act, assignment of this Lease or subletting 
of the Premises by Lessee 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.
             (b) All conditions to Lessor's consent authorized b this Lease 
are acknowledged by Lessee as being reasonable. The failure to specify herein 
any particular condition to Lessor's consent shall not preclude the 
impositions 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.
37. GUARANTOR.
     37.1    FORM OF GUARANTY. If there are to be any Guarantors of this 
Lease per Paragraph 1.11, the form of the guaranty to be executed by each 
such Guarantor shall be 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, including, but limited to, the 
obligation to provide the Tenancy Statement and information required in 
Paragraph 16.
     37.2    ADDITIONAL OBLIGATIONS OF GUARANTOR. It shall constitute a 
Default of the Lessee under this Lease if any such Guarantor fails or 
refuses, upon reasonable request by Lessor to give: (a) evidence of the due 
execution of the guaranty called for by this Lease, including the authority 
of the Guarantor (and of the party signing on Guarantor's behalf) to obligate 
such Guarantor on said guaranty, and resolution of its board of directors 
authorizing the making of such guaranty, together with a certificate of 
incumbency showing the signatures of the persons authorized to sign on its 
behalf, (b) current financial statements of Guarantor as may from time to 
time be requested by Lessor, (c) a Tenancy Statement, or (d) written 
confirmation that the guaranty is still in effect. 
38.  QUIET POSSESSION. Upon payment by Lessee of the Rent for the Premises 
and the 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 of the Premises for the entire term hereof subject to 
all of the provisions of this Lease.
39.  OPTIONS.
     39.1    DEFINITION. As used in this Lease, the word "OPTION" has the 
following meaning: (a) the right to extend the term of this Lease or to renew 
Lease or to extend or renew any lease that Lessee has on other property of 
Lessor; (b) the right of first refusal to lease the Premises or the right of 
first offer to lease the Premises or the right of first refusal to lease 
other property of Lessor or the right of first offer to lease other property 
of Lessor; (c) the right to purchase the Premises, or the right of first 
refusal to purchase the Premises, or the right of first offer to purchase the 
Premises, or the right to purchase other property of Lessor, or the right of 
first refusal to purchase other property of Lessor, or the right of first 
offer to purchase other property of Lessor.
   39.2
   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 to extend or renew this Lease have been validly 
exercised.
40.  RULES AND REGULATIONS. Lessee agrees that it will abide by, and keep and 
observe all reasonable non-discriminatory rules and regulations ("RULES AND 
REGULATIONS") which Lessor may make from time to time for the management, 
safety, care, and cleanliness of the grounds, the parking and unloading of 
vehicles and the preservation of good order, as well as for the convenience 
of other occupants or tenants of the Building and the Industrial Center and 
their invitees.
41.  SECURITY MEASURES. Lessee hereby acknowledges that the rental payable to 
Lessor hereunder does not include the cost of guard service or 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 the right, from time to time, to grant, 
without the consent or joinder of Lessee, such easements, rights of way, 
utility raceways, and dedications that Lessor deems necessary, and to cause 
the recordation of parcel maps and restrictions, so long as such easements, 
rights of way, utility raceways, 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 PROTEST. If 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 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 
under the provisions of this Lease.
44.  AUTHORITY. If either Party hereto is a corporation, trust, or general or 
limited partnership, each individual executing this Lease on behalf of such 
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represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf.
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 Lessor or Lessee or Lessor's
agent or Lessee's agent and submission of same to Lessee or Lessor shall not be
deemed an offer to lease. 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. The Parties shall amend 
this Lease from time to time to reflect any adjustments that are made to the 
Base Rent or other rent payable under this Lease. 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 an institutional insurance company or pension plan Lender in 
connection with the obtaining of normal financing or refinancing of the 
property of which the Premises are a part.
48. MULTIPLE PARTIES. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or 
Lessee.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED 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.

     IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR ATTORNEY'S
     REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO EVALUATE THE
     CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF ASBESTOS,
     UNDERGROUND STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR
     RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
     OR BY THE REAL ESTATE BROKERS OR THEIR CONTRACTORS, AGENTS OR EMPLOYEES AS
     TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE
     OR THE TRANSACTION TO WHICH IT RELATES; THE PARTIES SHALL RELY SOLELY UPON
     THE ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF
     THIS LEASE. IF THE SUBJECT PROPERTY IS IN A STATE OTHER THAN CALIFORNIA, AN
     ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED SHOULD BE CONSULTED.

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

Executed at: Los Angeles, CA              Executed at:
             --------------------------               --------------------------

on:  October 29, 1998                     on:
   ------------------------------------      -----------------------------------

BY LESSOR:                                BY LESSEE:
3002 Pennsylvania Avenue, LLC             Mossimo, Inc., a Delaware corporation
---------------------------------------   --------------------------------------

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

By: /s/ Richman Bry, Jr.                  By: /s/ Thora Thoroddsen
   ------------------------------------      -----------------------------------

Name Printed: Richman Bry, Jr.            Name Printed: Thora Thoroddsen
             --------------------------                -------------------------

Title: Manager                            Title: Secretary Treasurer
      ---------------------------------         --------------------------------

By: /s/ David R. Wilson                       By:
   ------------------------------------      -----------------------------------

Name Printed: David R. Wilson             Name Printed:
             --------------------------                -------------------------
Title: Manager                            Title:
      ---------------------------------         --------------------------------
Address:                                  Address:
        -------------------------------           ------------------------------

---------------------------------------   --------------------------------------
Telephone: (   )                          Telephone: (   )
            --- -----------------------               --- ----------------------
Facsimile: (   )                          Facsimile: (   )
            --- -----------------------               --- ----------------------


BROKER:                                   BROKER:

Executed at:                              Executed at:
            ---------------------------                -------------------------

on:                                       on:
   ------------------------------------      -----------------------------------

By:                                       By:
   ------------------------------------      -----------------------------------

Name Printed:                             Name Printed:
             --------------------------                -------------------------
Title:                                    Title:
      ---------------------------------         --------------------------------
Address:                                  Address:
        -------------------------------           ------------------------------

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

Telephone: (   )                          Telephone: (   )
            --- -----------------------               --- ----------------------
Facsimile: (   )                          Facsimile: (   )
            --- -----------------------               --- ----------------------

NOTE:  These forms are often modified to meet changing requirements of law end
       needs of the industry. Always write or call to make sure you are
       utilizing the most current form: AMERICAN INDUSTRIAL REAL ESTATE
       ASSOCIATION, 700 South Flower Street, Suite 600, Los Angeles,
       California 90017. (213) 687-8777

                                                           Initials:  RB - DW
                                                                     ----------
                                                                         TT
                                                                     ----------

                          MULTI-TENANT - MODIFIED NET

-C-1993 - AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION  REVISED  FORM MTG-1-6/93E

                                PAGE 12 OF 12

<PAGE>

                           FIRST ADDENDUM TO LEASE
                                BY AND BETWEEN
                   3002 PENNSYLVANIA AVENUE LLC ("LESSOR")
                                     AND
               MR. MOSSIMO GIANNULLI, AN INDIVIDUAL ("LESSEE")


This is a First Addendum to that Standard Industrial Lease dated July 20, 1998 
by and between 3002 Pennsylvania Avenue LLC. ("Lessor") and Mr. Mossimo 
Giannulli as an individual, ("Lessee"). This Addendum relates to the premises 
at 3002 Pennsylvania Avenue, Santa Monica, California 90404 (the "Premises"). 
This First Addendum is a part of the Lease and a continuation thereof. To the 
extent any provision of this Addendum changes or is inconsistent with the 
Lease, the provisions of this First Addendum shall control.

1.    Referring to paragraph 5 of the Lease, any references to attorney's fees 
therein shall be a to "reasonable attorney's fees".

2.    Referring to paragraph 8.2 of the Lease, the reference thereto of 
$1,000,000 per occurrence shall be changed to $2,000,000. However, in the 
event Lessor requests same, Lessee shall increase that amount up to 
$5,000,000, but Lessor shall pay any additional cost of such insurance above 
that which would have been incurred for a $2,000,000 policy.

3.    Referring to paragraph 31, of the Lease, the attorney's fees and costs 
shall be reasonable under the circumstances.

4.    BROKERS' COMMISSION. Lessor and Lessee acknowledges that there are no 
      Brokers involved in connection with this Lease and/or Lessee's occupancy 
      of the Premises. Lessee confirms that it has not engaged any broker in 
      connection with this Lease. David Wilson is a principle of Lee & 
      Associates and 3002 Pennsylvania LLC. He is not acting as a Broker.

5.    TENANT IMPROVEMENTS.  The premises shall be delivered to Lessee in a 
finished shell condition per the attached building plans and specifications 
(Exhibit D) which will be approved by the City of Santa Monica Building 
Department including without limitation the condition of the ceilings, 
interior brick and windows. All Tenant Improvements shall be paid for by 
Lessee. All Tenant improvements made by Lessee shall become the property of 
Lessor upon expiration or earlier termination of the Lease. Lessee agrees that 
included in the Improvements to be constructed by Lessee shall be sound 
proofing insulation to be installed in the Premises as and where reasonably 
requested by Lessor, including without limitation all floor surfaces. Such 
sound insulation shall be defined as standard commercial carpet, floor 
covering or any other reasonable surface, and shall be of type and quality 
reasonably acceptable to Lessor. All floors and walls to be adequately sound 
insulated, All ceiling heights to be a minimum of 10 foot finished.

      In accordance with paragraph 7 of the Lease, all Tenant Improvements to 
be constructed on the Premises shall be constructed by Lessee at Lessee's 
expense.


                                    Page 1

<PAGE>

      The public liability insurance and property damage insurance carried by 
each contractor of Lessee shall insure Lessor and Lessee, as their interests 
may appear, as well as the contractor (or subcontractor), and each contractor 
shall deliver to Lessor a copy of all insurance policies which shall provide 
at least thirty (30) days prior written notice to Lessor and Lessee of any 
cancellation.

      Lessee shall try to utilize the same contractors who installed the base 
electrical, fire and safety (including sprinkler) and HVAC for Lessee's 
Leasehold Improvements. However, in the event such contractors are not 
utilized, and a dispute arises as to defect therein and whose responsibility 
those defects are (as between Lessor's contractors and Lessee's contractors), 
Lessor and Lessee will select an independent contractor to determine 
responsibility for the defect, the parties will share the cost of that 
determination, and that determination will be binding upon the parties. In the 
event the parties cannot agree in the selection of a contractor, each shall 
select a contractor, and the two (2) of them will select a third, and the 
contractors will then make the determination by majority vote. In such event, 
each party shall pay for their own contractor as selected, and both parties 
shall share the cost of the third contractor.

6.    RENT SCHEDULE. The base rental schedule during year one for the Premises 
      is $2.00 per rentable square foot per month triple net, escalating 
      annually by three and one-half percent (3.5%), compounded. The 
      rentable/useable add-on factor shall be defined as twelve (12%) percent.

7.    PARKING. Four (4) tandem spaces on-site at fifty dollars ($50.00) per 
      space per month, escalating annually by three and one-half percent 
      (3.5%), compounded 1-3.

8.    BASE BUILDING. Lessor shall provide, the following Base Building work:

      a) One (1) ton of HVAC per 500 square feet installed on the roof ducted 
         to the space. The distribution of HVAC is a tenant cost.

      b) Install a sub-meter for electric to separately meter both spaces.

      c) Restrooms per Code and ADA approved per the Landlord's plan.

      d) Electrical service and panels as per Landlord's plan.

      e) Smoke detectors and exit lights installed per local codes.

      f) The completion of all site work, landscaping and gating.

      g) There is no asbestos or other hazardous materials in or about the
         Premises to the best of Landlord's knowledge.

      h) Operable windows repaired per plans.

      i) Concrete floor in existing "as is" condition.

      j) Exterior lighting will be installed per plans.

      k) Sandblast the interior.


                                    Page 2

<PAGE>

9.    OPTION. Lessee may extend the term of this Lease for one (1) additional 
      five (5) year period of time upon the terms set forth herein, and Lessee 
      shall be presumed to have exercised its right to extend this Lease 
      unless Lessee shall have given Lessor written notice of its election not 
      to so extend the term of this Lease at least sixty (60) days before the 
      end of the Original Term.

10.   APPROVAL. Notwithstanding anything to the contrary contained in 
      Paragraph 12 of this Lease, if Lessee requests in writing Lessor's 
      approval of any assignment or sublet as provided in this Lease, Lessor's 
      failure to give any such disapproval, on the basis of reasonable grounds 
      which shall be stated in a reasonably detailed writing delivered to 
      Lessee within ten (10) business days after such request, shall be deemed 
      to constitute approval thereof, and shall not result in a breach or 
      default by Lessee under this Lease.

11.   PERMITTED TRANSFERS BY LESSEE. Notwithstanding anything to the contrary 
      contained is this Lease, Lessee may, without the prior consent of 
      Lessor, assign this Lease or sublet the premises, or any portion 
      thereof, to a corporation or other entity which: (i) owns, is owned by 
      or is under common ownership with Lessee; or (ii) as a result of a 
      consolidation, merger, acquisition or other reorganization with Lessee, 
      owns more than 50% of Lessee's stock or assets. Except as provided 
      below, any such assignment or sublet shall be subject to the following: 
      (i) Lessee shall remain fully liable during the unexpired term of this 
      Lease; and (b) any such assignment or sublet shall be subject to all of 
      the terms, covenants and conditions of this Lease. In addition to the 
      foregoing, and notwithstanding anything to the contrary contained in 
      this Lease, Lessee shall have the right, without the prior consent of 
      Lessor, to assign this Lease or sublet the premises, or any portion 
      thereof, to any entity which has a net worth computed pursuant to 
      generally accepted accounting principles consistently applied (as shown 
      in a financial statement to be delivered by such entity to Lessor at 
      least ten (10) business days prior to the effective date of such 
      assignment or sublet) equal to or greater than Lessee; provided that 
      such entity expressly assumes in writing all of Lessee's obligations 
      hereunder. Provided the foregoing conditions relating to net worth and 
      written assumptions of obligations are satisfied, Lessee shall be 
      released from all of its obligations hereunder upon consummation of such 
      assignment or sublet.




                                    Page 3