Document:

CHANGE IN TERMS AGREEMENT

Principal     Loan Date  Maturity   Loan No   Call/coll Account Officer Initials
$9,000,000.00 12-31-2002 12-31-2003 3030600000  4A0/71            321    /s/CC

   References in the shaded area are for Lender's use only and do not limit the
         applicability of this document to any particular loan or item.
Any item above containing "***" has been omitted due to text length limitations.
--------------------------------------------------------------------------------

Borrower:   I/O  MAGIC  CORPORATION    Lender:   CHINATRUST  BANK  [USA]
            1300  WAKEHAM  AVENUE                CORPORATE  LENDING

Principal Amount: $9,000,000.00 Initial Rate: 5.500%  Date of Agreement:
                                                             December  31,  2002

DESCRIPTION  OF  EXISTING INDEBTEDNESS. AN ORIGINAL INDEBTEDNESS AS EVIDENCED BY
PROMISSORY  NOTE DATED 04-09-2001 IN THE AMOUNT OF $8,000,000.00, AS AMENDED AND
SUPERSEDED  BY:  CHANGE  IN  TERMS  AGREEMENT  NOW  MATURING  12-31-2002.

DESCRIPTION  OF  COLLATERAL.  COLLATERAL  DESCRIBED IN UCC-1 FINANCING STATEMENT
FILED  ON  04-26-2001,  UNDER  THE  NAME  OF  I/OMAGIC  CORPORATION,  INSTRUMENT
#0112160339.

DESCRIPTION  OF  CHANGE  IN  TERMS.  THE MATURITY DATE OF THE LINE IS CHANGED TO
12-31-2003.  THE  LOAN  AMOUNT  IS DECREASED TO $9,000,000.00. THE BUSINESS LOAN
AGREEMENT  DATED 04-09-2002 IS AMENDED AND SUPERSEDED BY BUSINESS LOAN AGREEMENT
DATED  12-31-2002.  ALL  OTHER TERMS AND CONDITIONS, STATED IN ALL OTHER RELATED
LOAN DOCUMENTS INCLUDING BUT NOT LIMITED TO THE SECURITY AGREEMENT, NOT MODIFIED
HEREWITH  WILL REMAIN IN FULL FORCE AND EFFECT WITHOUT WAIVER OR MODIFICATION OF
ANY  KIND.

PROMISE  TO PAY. I/OMAGIC CORPORATION ("Borrower") promises to pay to CHINATRUST
BANK  [USA]  ("Lender"),  or  order,  in  lawful  money  of the United States of
America,  the  principal amount of Nine Million & 00/100 Dollars ($9,000,000.00)
or  so  much  as  may  be  outstanding,  together  with  interest  on the unpaid
outstanding principal balance of each advance. Interest shall be calculated from
the  dale  of  each  advance  until  repayment  of  each  advance.

PAYMENT.  Borrower  will  pay  this  loan  on  demand.  Payment  in  full is due
immediately  upon  Lender's demand. If no demand is made, Borrower will pay this
loan  in  accordance  with  the  following  payment  schedule:

ADVANCES  FOR REFINANCING OF LETTERS OF CREDIT, LOCAL PURCHASE FINANCING AGAINST
INVOICES  AND  WORKING  CAPITAL LOANS WILL ALL HAVE A MATURITY NOT EXCEEDING 150
DAYS.

INTEREST  ACCRUED  ON  ANY  ADVANCE UNDER THIS LINE OF CREDIT WILL BE DUE ON THE
FIRST  DAY OF EACH AND EVERY MONTH FOLLOWING SUCH ADVANCE. PRINCIPAL WILL BE DUE
AND  PAYABLE  ON  THE  RESPECTIVE  SCHEDULED  MATURITY  OF  EACH  ADVANCE.

Interest  on this Agreement is computed on a 365/360 simple interest basis; that
is,  by  applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of  days  the  principal  balance  is  outstanding.  Borrower will pay Lender at
Lender's  address  shown above or at such other place as Lender may designate in
writing.

VARIABLE INTEREST RATE. The interest rate on this Agreement is subject to change
from  time  to  time  based on changes in an independent index which is the WALL
STREET JOURNAL PRIME (the "Index"). The Index is not necessarily the lowest rate
charged by Lender on its loans. If the Index becomes unavailable during the term
of  this loan, Lender may designate a substitute index after notice to Borrower.
Lender  will  tell  Borrower the current Index rate upon Borrower's request. The
interest  rate  change  will  not  occur  more  often  than  each  DAY. Borrower
understands  that  Lender may make loans based on other rates as well. THE INDEX
CURRENTLY  IS  4.250%  PER  ANNUM. THE INTEREST RATE TO BE APPLIED TO THE UNPAID
PRINCIPAL  BALANCE OF THE NOTE WILL BE AT A RATE OF 0.750 PERCENTAGE POINTS OVER
THE  INDEX,  ADJUSTED IF NECESSARY FOR ANY MINIMUM AND  MAXIMUM RATE LIMITATIONS
DESCRIBED  BELOW,  RESULTING  IN  AN  INITIAL  RATE  OF  5.500%  PER  ANNUM.
NOTWITHSTANDING  THE FOREGOING, THE VARIABLE INTEREST RATE OR RATES PROVIDED FOR
IN  THE NOTE WILL BE SUBJECT TO THE FOLLOWING MINIMUM AND MAXIMUM RATES. NOTICE:
Under  no  circumstances  will the interest rate on the Note be less than 5.500%
per  annum  or  more  than  the  maximum  rate  allowed  by  applicable  law.

PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are  earned  fully  as of the date of the loan and will not be subject to refund
upon  early  payment  (whether  voluntary  or as a result of default), except as
otherwise  required  by  law. Except for the foregoing, Borrower may pay without
penalty  all  or  a  portion  of  the  amount owed earlier than it is due. Early
payments  will  not,  unless agreed to by Lender in writing, relieve Borrower of
Borrower's  obligation  to continue to make payments of accrued unpaid interest.
Rather,  early  payments  will reduce the principal balance due. Borrower agrees
not to send Lender payments marked "paid in full,""without recourse," or similar
language.  If Borrower sends such a payment, Lender may accept it without losing
any  of Lender's rights under this Agreement, and Borrower will remain obligated
to  pay any further amount owed to Lender. All written communications concerning
disputed amounts, including any check or other payment instrument that indicates
that  the  payment  constitutes  "payment in full" of the amount owed or that is
tendered  with  other  conditions  or  limitations  or as full satisfaction of a
disputed amount must be mailed or delivered to: CHINATRUST BANK [USA], CORPORATE
LENDING,  18645  GALE  AVENUE  #  150,  CITY  OF  INDUSTRY,  CA  91748.

LATE  CHARGE.  If  a  payment  is 10 days or more late, Borrower will be charged
5.000%  OF  THE  UNPAID  PORTION  OF  THE  REGULARLY SCHEDULED PAYMENT OR $5.00,
WHICHEVER  IS  GREATER.

INTEREST  AFTER  DEFAULT.  Upon default, at Lender's option, and if permitted by
applicable Law, Lender may add any unpaid accrued interest to principal and such
sum  will  bear  interest  therefrom  until  paid  at  the rate provided in this
Agreement  (including  any  increased  rate). Upon Borrower's failure to pay all
amounts  declared  due  pursuant to this section, Lender, at its option, may, if
permitted  under  applicable  law,  increase  the variable interest rate on this
Agreement  to  5.750  percentage  points  over  the  Index.

DEFAULT.  Each  of the following shall constitute an Event of Default under this
Agreement:

PAYMENT  DEFAULT.  Borrower  fails  to  make  any  payment  when  due  under the
indebtedness.

OTHER  DEFAULTS.  Borrower  fails  to  comply with or to perform any other term,
obligation,  covenant  or condition contained in this Agreement or in any of the
Related Documents or to comply with or to perform any term, obligation, covenant
or  condition  contained  in  any  other  agreement between Lender and Borrower.

DEFAULT IN FAVOR OF THIRD PARTIES Borrower defaults under any loan, extension of
credit, security agreement, purchase or sales agreement, or any other agreement,
in  favor  of  any  other  creditor  or person that may materially affect any of
Borrower's  property  or  Borrower's  ability  to perform Borrower's obligations
under  this  Agreement  or  any  of  the  Related  Documents.

FALSE STATEMENTS. Any warranty, representation or statement made or furnished to
Lender  by  Borrower or on Borrower's behalf under this Agreement or the Related

<PAGE>

Documents  is  false or misleading in any material respect, either now or at the
time  made  or  furnished or becomes false or misleading at any time thereafter.
INSOLVENCY.  The  dissolution  or termination of Borrower's existence as a going
business, the insolvency of Borrower, the appointment of a receiver for any part
or Borrower's property, any assignment for the benefit of creditors, any type of
creditor  workout, or the commencement of any proceeding under any bankruptcy or
insolvency  laws  by  or  against  Borrower.

CREDITOR  OR  FORFEITURE  PROCEEDINGS. Commencement of foreclosure or forfeiture
proceedings,  whether  by  judicial  proceeding,  self-help, repossession or any
other  method, by any creditor of Borrower or by any governmental agency against
any  collateral securing the indebtedness. This includes a garnishment of any of
Borrower's  accounts,  including  deposit  accounts,  with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Borrower as
to  the  validity  or  reasonableness  of  the  claim  which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written notice of
the  creditor  or  forfeiture  proceeding  and  deposits with Lender monies or a
surety  bond  for the creditor or forfeiture proceeding, in an amount determined
by  Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.

EVENTS  AFFECTING  GUARANTOR. Any of the preceding events occurs with respect to
any  guarantor,  endorser,  surety,  or  accommodation  party  of  any  of  the
indebtedness  or any guarantor, endorser, surety, or accommodation party dies or
becomes incompetent, or revokes or disputes the validity of, or liability under,
any  Guaranty  of  the  indebtedness  evidenced  by this Note. In the event of a
death,  Lender,  at  its  option,  may, but shall not be required to, permit the
guarantor's  estate  to assume unconditionally the obligations arising under the
guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event of
Default.

CHANGE  IN  OWNERSHIP.  Any  change in ownership of twenty-five percent (25%) or
more  of  the  common  stock  of  Borrower.

ADVERSE  CHANGE.  A  material  adverse  change  occurs  in  Borrower's financial
condition,  or  Lender  believes  the  prospect of payment or performance of the
indebtedness  is  impaired.

INSECURITY.  Lender  in  good  faith  believes  itself  insecure.

CURE  PROVISIONS. If any default, other than a default in payment is curable and
if  Borrower  has  not  been given a notice of a breach of the same provision of
this  Agreement within the preceding twelve (12) months, it may be cured (and no
event of default will have occurred) if Borrower, after receiving written notice
from Lender demanding cure of such default: (1) cures the default within fifteen
(15)  days; or (2) if the cure requires more than fifteen (15) days, immediately
initiates  steps which Lender deems in Lender's sole discretion to be sufficient
to  cure  the  default and thereafter continues and completes all reasonable and
necessary  steps  sufficient  to  produce  compliance  as  soon  as  reasonably
practical.

LENDER'S  RIGHTS.  Upon  default, Lender may declare the entire unpaid principal
balance  on  this Agreement and all accrued unpaid interest immediately due, and
then  Borrower  will  pay  that  amount.

ATTORNEYS'  FEES;  EXPENSES. Lender may hire or pay someone else to help collect
this  Agreement  if Borrower does not pay. Borrower will pay Lender that amount.
This  includes,  subject to any limits under applicable law, Lender's attorneys'
fees  and  Lender's legal expenses, whether or not there Is a lawsuit, including
attorneys'  fees,  expenses  for  bankruptcy  proceedings  (including efforts to
modify  or  vacate any automatic stay or injunction), and appeals. Borrower also
will  pay  any  court  costs,  in  addition  to  all other sums provided by law.

GOVERNING  LAW.  THIS  AGREEMENT  WILL BE GOVERNED BY, CONSTRUED AND ENFORCED IN
ACCORDANCE  WITH  FEDERAL  LAW  AND  THE  LAWS  OF THE STATE OF CALIFORNIA. THIS
AGREEMENT  HAS  BEEN  ACCEPTED  BY  LENDER  IN  THE  STATE  OF  CALIFORNIA.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit  to  the  jurisdiction  of  the  courts  of  LOS ANGELES County, State of
California.

RIGHT  OF  SETOFF.  To the extent permitted by applicable law, Lender reserves a
right  of  setoff  in  all  Borrower's  accounts  with Lender (whether checking,
savings,  or  some  other  account).  This  includes all accounts Borrower holds
jointly  with  someone  else  and  all accounts Borrower may open In the future.
However,  this does not include any IRA or Keogh accounts, or any trust accounts
for  which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent  permitted  by  applicable law, to charge or setoff all sums owing on the
indebtedness  against  any  and  all  such  accounts.

COLLATERAL.  Borrower  acknowledges  this  Agreement  is  secured  by:
PLEASE  REFER  TO  THE  "DESCRIPTION  OF  COLLATERAL"  PARAGRAPH  STATED  ABOVE.

LINE  OF  CREDIT.  This Agreement evidences a revolving line of credit. Advances
under  this Agreement may be requested orally by Borrower or as provided in this
paragraph.  All  oral  requests  shall be confirmed in writing on the day of the
request.  All  communications,  instructions,  or  directions  by  telephone  or
otherwise  to  Lender  are  to  be  directed to Lender's office shown above. The
following  persons  currently  are  authorized to request advances and authorize
payments  under  the  line  of  credit  until  Lender receives from Borrower, at
Lender's  address  shown above, written notice of revocation of their authority:
ANY  ONE  OF  THE  FOLLOWING:  TONY  SHAHBAZ,  PRESIDENT/SECRETARY  OF  I/OMAGIC
CORPORATION;  and  STEVE GILLINGS (ACTUAL SIGNATURE) X /s/ STEVE GILLINGS, CHIEF
FINANCIAL  OFFICER OF I/OMAGIC CORPORATION. Borrower agrees to be liable for all
sums  either:  (A) advanced in accordance with the instructions of an authorized
person  or  (B)  credited to any of Borrower's accounts with Lender.  The unpaid
principal  balance  owing  on  this  Agreement  at  any time may be evidenced by
endorsements  on this Agreement or by Lender's internal records, including daily
computer  print-outs. Lender will have no obligation to advance funds under this
Agreement  if:  (A)  Borrower  or any guarantor is in default under the terms of
this  Agreement or any agreement that Borrower or any guarantor has with Lender,
including  any  agreement made in connection with the signing of this Agreement;
(B)  Borrower  or  any  guarantor ceases doing business or is insolvent; (C) any
guarantor  seeks,  claims  or otherwise attempts to limit, modify or revoke such
guarantor's  guarantee  of  this  Agreement  or  any other loan with Lender; (D)
Borrower  has  applied  funds  provided  pursuant to this Agreement for purposes
other  than  those  authorized  by  Lender; or (E) Lender in good faith believes
itself  insecure.
\ARBITRATION.  BORROWER  AND  LENDER  AGREE  THAT  ALL  DISPUTES,  CLAIMS  AND
CONTROVERSIES  BETWEEN  THEM  WHETHER  INDIVIDUAL,  JOINT,  OR  CLASS IN NATURE,
ARISING  FROM THIS AGREEMENT OR OTHERWISE, INCLUDING WITHOUT LIMITATION CONTRACT
AND  TORT  DISPUTES,  SHALL  BE ARBITRATED PURSUANT TO THE RULES OF THE AMERICAN
ARBITRATION  ASSOCIATION  IN EFFECT AT THE TIME THE CLAIM IS FILED, UPON REQUEST
OF  EITHER PARTY. NO ACT TO TAKE OR DISPOSE OF ANY COLLATERAL SHALL CONSTITUTE A
WAIVER  OF  THIS  ARBITRATION  AGREEMENT  OR  BE  PROHIBITED BY THIS ARBITRATION
AGREEMENT.  THIS  INCLUDES, WITHOUT LIMITATION, OBTAINING INJUNCTIVE RELIEF OR A
TEMPORARY RESTRAINING ORDER; INVOKING A POWER OF SALE UNDER ANY DEED OF TRUST OR
MORTGAGE;  OBTAINING  A  WRIT  OF  ATTACHMENT  OR  IMPOSITION  OF A RECEIVER; OR
EXERCISING  ANY  RIGHTS  RELATING  TO  PERSONAL  PROPERTY,  INCLUDING  TAKING OR
DISPOSING  OF SUCH PROPERTY WITH OR WITHOUT JUDICIAL PROCESS PURSUANT TO ARTICLE
9  OF  THE  UNIFORM  COMMERCIAL  CODE.  ANY  DISPUTES,  CLAIMS, OR CONTROVERSIES
CONCERNING  THE  LAWFULNESS  OR  REASONABLENESS  OF  ANY ACT, OR EXERCISE OF ANY
RIGHT,  CONCERNING  ANY  COLLATERAL,  INCLUDING ANY CLAIM TO RESCIND, REFORM, OR
OTHERWISE  MODIFY  ANY  AGREEMENT  RELATING  TO  THE  COLLATERAL,  SHALL ALSO BE
ARBITRATED,  PROVIDED  HOWEVER  THAT  NO  ARBITRATOR SHALL HAVE THE RIGHT OR THE
POWER TO ENJOIN OR RESTRAIN ANY ACT OF ANY PARTY. BORROWER AND LENDER AGREE THAT
IN  THE  EVENT OF AN ACTION FOR JUDICIAL FORECLOSURE PURSUANT TO CALIFORNIA CODE
OF CIVIL PROCEDURE SECTION 726, OR ANY SIMILAR PROVISION IN ANY OTHER STATE, THE
COMMENCEMENT  OF  SUCH  AN  ACTION  WILL NOT CONSTITUTE A WAIVER OF THE RIGHT TO
ARBITRATE  AND  THE  COURT  SHALL  REFER  TO ARBITRATION AS MUCH OF SUCH ACTION,
INCLUDING  COUNTERCLAIMS,  AS  LAWFULLY MAY BE REFERRED TO ARBITRATION. JUDGMENT
UPON  ANY  AWARD  RENDERED  BY ANY ARBITRATOR MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION.  NOTHING  IN  THIS AGREEMENT SHALL PRECLUDE ANY PARTY FROM SEEKING
EQUITABLE  RELIEF  FROM  A  COURT  OF  COMPETENT  JURISDICTION.  THE  STATUTE OF
LIMITATIONS,  ESTOPPEL,  WAIVER,  LACHES,  AND  SIMILAR  DOCTRINES  WHICH  WOULD
OTHERWISE  BE  APPLICABLE IN AN ACTION BROUGHT BY A PARTY SHALL BE APPLICABLE IN
ANY  ARBITRATION  PROCEEDING,  AND THE COMMENCEMENT OF AN ARBITRATION PROCEEDING
SHALL  BE  DEEMED  THE COMMENCEMENT OR AN ACTION FOR THESE PURPOSES. THE FEDERAL

<PAGE>

ARBITRATION ACT SHALL APPLY TO THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
OF  THIS  ARBITRATION  PROVISION.

CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of
the  original  obligation  or obligations, including all agreements evidenced or
securing  the  obligation(s),  remain  unchanged  and  in full force and effect.
Consent  by  Lender  to  this  Agreement does not waive Lender's right to strict
performance  of  the  obligation(s)  as changed, nor obligate Lender to make any
future change in terms. Nothing in this Agreement will constitute a satisfaction
of  the obligation(s). It is the intention of Lender to retain as liable parties
all  makers and endorsers of the original obligation(s), including accommodation
parties, unless a party is expressly released by Lender in writing. Any maker or
endorser, including accommodation makers, will not be released by virtue of this
Agreement.  If  any person who signed the original obligation does not sign this
Agreement  below, then all persons signing below acknowledge that this Agreement
is  given  conditionally,  based  on  the  representation  to  Lender  that  the
non-signing  party  consents  to the changes and provisions of this Agreement or
otherwise  will  not  be  released  by  it.  This waiver applies not only to any
initial  extension,  modification  or  release,  but also to all such subsequent
actions.

UNCOLLECTED  FUNDS  AVAILABILITY. LENDER AGREES TO MAKE AVAILABLE TO BORROWER AN
UNCOLLECTED  FUNDS  PROTECTION  FACILITY IN THE AMOUNT OF ONE MILLION AND 00/100
U.S.  DOLLARS  ($1,000,000.00).  BORROWER  MAY  USE  UP  TO  $1,000,000.00  OF
UNCOLLECTED FUNDS DEPOSITED INTO BORROWER'S BUSINESS CHECKING ACCOUNT #22606270.
(SEE  "RIDER  TO  BUSINESS  LOAN  AGREEMENT"  DATED  04-29-2002.).

SUCCESSORS  AND  ASSIGNS. Subject to any limitations stated in this Agreement on
transfer  of Borrower's interest, this Agreement shall be binding upon and inure
to the benefit of the parties, their successors and assigns. If ownership of the
Collateral  becomes  vested  in  a  person  other than Borrower, Lender, without
notice  to  Borrower, may deal with Borrower's successors with reference to this
Agreement  and  the  indebtedness  by  way  of  forbearance or extension without
releasing Borrower from the obligations of this Agreement or liability under the
indebtedness.

NOTIFY  US  OF  INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES.
Please  notify  us if we report any inaccurate information about your account(s)
to  a  consumer  reporting  agency.  Your written notice describing the specific
inaccuracy(ies)  should  be sent to us at the following address: CHINATRUST BANK
[USA],  CORPORATE  LENDING,  18645 GALE AVENUE #150, CITY OF INDUSTRY, CA 91748.

MISCELLANEOUS  PROVISIONS. This Agreement is payable on demand. The inclusion of
specific  default  provisions  or  rights  of Lender shall not preclude Lender's
right  to  declare  payment of this Agreement on its demand. Lender may delay or
forgo  enforcing  any  of  its  rights  or remedies under this Agreement without
losing  them.  Borrower  and  any other person who signs, guarantees or endorses
this  Agreement,  to  the extent allowed by law, waive any applicable statute of
limitations,  presentment,  demand for payment, and notice of dishonor. Upon any
change  in the terms of this Agreement, and unless otherwise expressly stated in
writing,  no  party  who  signs  this  Agreement,  whether  as maker, guarantor,
accommodation  maker  or  endorser,  shall  be released from liability. All such
parties  agree that Lender may renew or extend (repeatedly and for any length of
time) this loan or release any party or guarantor or collateral; or impair, fail
to  realize  upon  or  perfect Lender's security interest in the collateral; and
take  any  other  action  deemed  necessary  by Lender without the consent of or
notice  to  anyone. All such parties also agree that Lender may modify this loan
without  the  consent  of or notice to anyone other than the party with whom the
modification  is  made.  The  obligations  under  this  Agreement  are joint and
several.

PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF  THIS  AGREEMENT,  INCLUDING  THE VARIABLE INTEREST RATE PROVISIONS. BORROWER
AGREES  TO  THE  TERMS  OF  THE  AGREEMENT.
BORROWER:

I/O  MAGIC  CORPORATION

By:   /s/  TONY  SHAHBAZ
    --------------------
TONY  SHAHBAZ,  President/Secretary  of  I/O  MAGIC
CORPORATIONCOMMERCIAL LEASE AGREEMENT

This Commercial Lease Agreement ("Lease") is made March __, 2003, by and between
ALEX  PROPERTIES,  a  California  general partnership ("Landlord"), and I/OMAGIC
CORPORATION,  a  Nevada  Corporation  ("Tenant").

WHEREAS,  Landlord is the owner of land and buildings thereon commonly known and
numbered  as  1300  Wakeham,  Santa Ana, 92705, located in the County of Orange,
State  of  California  ("Leased  Premises").

WHEREAS,  Landlord  desires  to  lease the Leased Premises to Tenant, and Tenant
desires  to lease the Leased Premises from Landlord for the Term (as hereinafter
defined), at the rental and upon the covenants, conditions and provisions herein
set  forth.

NOW,  THEREFORE,  in  consideration of the mutual promises herein, contained and
other  good  and  valuable  consideration,  it  is  agreed:

1.      TERM.
        -----

The  term of this Lease ("Term") shall commence on the effective date as defined
in  paragraph  23.(2)  of  that  certain Settlement Agreement and Release by and
among Landlord, Tenant, IOM Holdings, Inc., and other parties referenced therein
("Commencement  Date") and end on September 30, 2003 ("Expiration Date"), unless
sooner  terminated as provided herein.  Upon the Commencement Date, the existing
Commercial  Lease  Agreement  dated  April  1,  2000 by and between Landlord and
Tenant's  related  entity, IOM Holdings, Inc., a Nevada corporation, as modified
by  that  certain Amendment to Lease Agreement dated June 1, 2000 (the "Previous
Lease"),  shall  automatically  terminate  and be of no further force or effect.
Notwithstanding  the  foregoing,  Tenant  may  terminate this Lease prior to the
Expiration Date upon twenty (20) days prior written notice to Landlord; provided
however  that  in  no  event  shall the effective date of such termination occur
earlier  than  June  30,  2003.

2.     RENT.
       ----

Tenant  shall  pay  to  Landlord  during  the Term rent of $28,687.00 per month,
payable  on  the  first  day  of  each  month.  The  rent  for  the month of the
Commencement  Date shall equal $956.00 multiplied by the number of days from the
Commencement  Date  to  the  end  of  said  month,  and  shall  be  payable  the
Commencement  Date.  The  rent for any subsequent months in the Lease Term shall
be  payable  on  the  first  day  of  each month.  If Tenant exercises its right
(pursuant  to  paragraph 1 above) to terminate this Lease prior to September 30,
2003,  Landlord  shall  refund to Tenant rent for the month of termination in an
amount  equal  to  $956.00 multiplied by the number of days from the termination
date  to  the  end  of  said  month of termination.  In no event shall Tenant be
responsible  for  the  payment  of  any  rent  after  such  termination  date.

                                      -1-

<PAGE>

3.     USE.
       ---

The  Leased  Premises  may be used and occupied by Tenant for any lawful purpose
which  complies  with  applicable  zoning  ordinances.  Notwithstanding  the
foregoing, Tenant shall not use the Leased Premises for the purposes of storing,
manufacturing  or  selling  any  explosives,  flammables  or  other  inherently
dangerous  substance,  chemical,  thing  or  devise.

4.     SUBLEASE  AND  ASSIGNMENT.
      ---------------------------

Tenant  shall not voluntarily or by operation of law assign, transfer, mortgage,
encumber  or sublet all or any part of Tenant's interest in this Lease or in the
Leased  Premises  without  Landlord's  prior  written  consent.

5.     REPAIRS.
       --------

During  the  Term,  Landlord  shall, at Landlord's sole expense, keep the Leased
Premises  in  good order, condition and repair (whether or not the need for such
repairs  occurs  as a result of Tenant's use, any prior use, the elements or the
age of such portion of the Leased Premises), but only to the extent necessary to
allow for the continued operation of Tenant's business at the Leased Premises in
the  same  manner as it has been operated under the Previous Lease.  The parties
understand  and agree that Tenant and IOM Holdings, Inc. (the predecessor lessee
under  the  Previous  Lease),  as  well  as  each  of their officers, directors,
employees, agents and representatives, shall not have any obligations to make or
pay  for  any  repairs,  alterations,  or improvements to all or any part of the
Leased  Premises  during  the  Lease  Term  or at any other time, and, except as
specifically  provided  for in this Lease, shall not have any obligations to pay
for  any  expenses  relating to the Leased Premises.  The parties understand and
agree  that,  prior  to  the  Commencement Date and the execution of this Lease,
Tenant  had  previously  contracted for certain improvements, alterations and/or
repairs  to  the  Leased Premises that have not yet been paid for, and which are
set  forth  in  Exhibit A attached hereto.  The items listed on Exhibit A hereto
which  have  not yet been paid for shall be the sole responsibility of Landlord,
who  shall  pay  for  such items in a timely manner pursuant to the terms of the
contracts  included  in  Exhibit  A hereto.   Prior to the Commencement Date and
execution  of  this  Lease,  Landlord  had  made  requests to its lender Bank of
America  ("BofA")  for  reimbursements  from  a  BofA reserve account of certain
repairs  and/or  improvements  to  the  Leased  Premises,  which  requests  are
summarized  in Exhibit B hereto (and which include the items listed on Exhibit A
hereto).  In  the  event any such reimbursements are made by BofA for any of the
items  listed  on  Exhibit B hereto, Landlord shall have the right to retain and
shall  retain  all  such  reimbursements.

6.     TENANT  PROPERTY;  SURRENDER.
       ----------------------------

A.     All  non-permanent  fixtures  of  any  type  or nature (including but not
limited  to  bolted pallet rack systems, any other equipment or machinery bolted

                                      -2-

<PAGE>

or  affixed  to  any  part  of  the Leased Premises, chain link fences, signage,
security  cameras  or any other non-permanent fixtures located anywhere in or at
the  Leased  Premises)  and  all  equipment  or  property  of any type or nature
(including  but  not  limited  to any machinery, mobile or non-mobile equipment,
assembly  line equipment, shrink wrap machines, phone lines (except for internal
wiring  contained  within  the  walls  of  the buildings),  phone systems, phone
equipment,  computers,  computer  lines  (except  for  internal wiring contained
within  the  walls  of the buildings), computer systems, time clocks, electronic
white  boards,  trash  compactors,  warehouse rack equipment, furniture, storage
containers,  trash  containers, and work stations/benches located anywhere in or
at  the  Leased Premises) which were present at the Leased Premises on or before
the Commencement Date or which are placed or installed at the Leased Premises by
Tenant  at  any  time  thereafter,  are all the property of Tenant, and Landlord
shall have no right, title or interest in or to same.  Upon its surrender of the
Leased  Premises, Tenant may remove all of the above-mentioned property from the
Leased  Premises.

B.     Tenant  shall surrender the Leased Premises by the Expiration Date or any
earlier  termination date as provided herein, in "As-Is" condition, except that,
upon  surrender  of the Leased Premises:  (a) the Leased Premises shall be swept
clean  of  debris  by  Tenant,  and (b) Tenant shall not create any holes in the
walls of the buildings at the Leased Premises as a result of Tenant's removal of
Tenant's  property  described  in  paragraph  6.A.  above.

C.     Tenant  shall  reimburse  Landlord for and indemnify Landlord against all
damages  incurred  by  Landlord  as  a  result of Tenant's delay in vacating the
Leased  Premises.  If Tenant remains in possession of the Leased Premises or any
part thereof after the Expiration Date or earlier termination of this Lease with
or  without the consent of Landlord, then: (a) such occupancy shall be a tenancy
from  month-to-month only and not a renewal of this Lease; (b) the rent shall be
increased to 200% of the rent in effect during the last month of the Lease Term;
and (c) such tenancy shall be terminable on thirty (30) days notice given at any
time  by  either  party.

7.     PROPERTY  TAXES.
       ---------------

Landlord  shall  pay,  prior  to  delinquency, all general real estate taxes and
installments  of  special  assessments  coming due during the Term on the Leased
Premises,  and  all  personal property taxes with respect to Landlord's personal
property, if any, on the Leased Premises. Tenant shall be responsible for paying
all  personal  property  taxes with respect to Tenant's personal property at the
Leased  Premises.

8.     INSURANCE.
       ---------

A.     Landlord  shall  maintain  fire  and  extended  coverage insurance on the
Leased  Premises  in  such  amounts  as Landlord shall deem appropriate.  Tenant
shall  be  responsible, at its expense, for fire and extended coverage insurance
on  all of its personal property, including removable trade fixtures, located on
the  Leased  Premises.

                                      -3-

<PAGE>

B.     Tenant  shall  maintain  a  policy  or  policies of comprehensive general
liability  insurance  with respect to its activities on the Leased Premises with
the  premiums thereon fully paid on or before due date, such insurance to afford
minimum protection of not less than $1,000,000 combined single limit coverage of
bodily  injury,  property  damage  or  combination  thereof.

9.      UTILITIES.
        ---------

Tenant  shall  pay all charges for water, sewer, gas, electricity, telephone and
other  services  and  utilities used by Tenant on the Leased Premises during the
Term unless otherwise expressly agreed in writing by Landlord. In the event that
any  utility  or  service  provided  to  the  Leased  Premises is not separately
metered,  Landlord  shall  pay  the amount due and separately invoice Tenant for
Tenant's  pro  rata  share  of the charges. Tenant shall pay such amounts within
fifteen  (15)  days of invoice. Tenant acknowledges that the Leased Premises are
designed  to  provide  standard  office  use  electrical facilities and standard
office  lighting.  Tenant  shall  not use any equipment or devices that utilizes
excessive  electrical  energy  or  which  may, in Landlord's reasonable opinion,
overload  the  wiring  or  interfere  with electrical services to other tenants.

10.     SIGNS.
        -----

Tenant  shall  have  the  right  to  place  on the Leased Premises, at locations
selected  by  Tenant,  any  signs  which  are  permitted  by  applicable  zoning
ordinances  and  private  restrictions.

11.     ENTRY.
        -----

Landlord's agent, as approved and agreed upon by Tenant, shall have the right to
enter  upon  the Leased Premises at reasonable hours to show the Leased Premises
for  purposes  of  marketing  the Leased Premises for potential future sale upon
providing  Tenant  with one (1) day prior written notice, provided that Landlord
shall  not  thereby  unreasonably interfere with Tenant's business on the Leased
Premises.

12.     PARKING.
        -------

During  the  Term,  Tenant  shall have the exclusive use of all non-reserved and
reserved  common  automobile  parking  areas,  driveways,  and  footways.

13.     DAMAGE  AND  DESTRUCTION.
        ------------------------

Subject  to Section 8A above, if during the Term the Leased Premises or any part
thereof  or  any  appurtenances  thereto  is  so  damaged  by  fire, casualty or
structural  defects  that  the  same  cannot be used for Tenant's purposes, then
Tenant  shall  have the right within fifteen (15) days following damage to elect
by  notice to Landlord to terminate this Lease as of the date of such damage. In
the event of minor damage to any part of the Leased Premises, and if such damage
does  not  render  the  Leased Premises unusable for Tenant's purposes, Landlord

                                      -4-

<PAGE>

shall  promptly  repair  such  damage at the cost of the Landlord. In making the
repairs  called for in this section, Landlord shall not be liable for any delays
resulting from strikes, governmental restrictions, inability to obtain necessary
materials  or  labor or other matters which are beyond the reasonable control of
Landlord. Tenant shall be relieved from paying rent and other charges during any
portion  of  the  Term  that  the  Leased  Premises  are inoperable or unfit for
occupancy, or use, in whole or in part, for Tenant's purposes. Rentals and other
charges  paid  in  advance  for  any  such periods shall be credited on the next
ensuing  payments,  if  any, but if no further payments are to be made, any such
advance  payments  shall  be  refunded to Tenant. The provisions of this section
extend  not  only  to the matters aforesaid, but also to any occurrence which is
beyond Tenant's reasonable control and which renders the Leased Premises, or any
appurtenance  thereto,  inoperable or unfit for occupancy or use, in whole of in
part,  for  Tenant's  purposes.

14.     DEFAULT.
        -------

A.     If  default  shall  at  any time be made by Tenant in the payment of rent
when  due to Landlord as herein provided, and if said default shall continue for
fifteen  (15)  days after written notice thereof shall have been given to Tenant
by  Landlord,  or  if  default  shall  be  made in any of the other covenants or
conditions  to be kept, observed and performed by Tenant, and such default shall
continue  for  thirty  (30)  days  after  notice thereof in writing to Tenant by
Landlord  without  correction  thereof then having been commenced and thereafter
diligently  prosecuted,  Landlord  may  declare the Term ended and terminated by
giving  Tenant written notice of such intention, and if possession of the Leased
Premises  is  not  surrendered,  Landlord  may  reenter  said  premises.

B.     Landlord  shall have, in addition to the remedy above provided, any other
right  of  remedy available to Landlord on account of any Tenant default, either
in  law  or  equity.  Landlord  shall  use  reasonable  efforts  to mitigate its
damages.

15.     QUIET  POSSESSION.
        -----------------

Landlord  covenants  and  warrants  that  upon  performance  by  Tenant  of  its
obligations  hereunder,  Landlord  will  keep  and maintain Tenant in exclusive,
quiet,  peaceable  and  undisturbed  and  uninterrupted possession of the Leased
Premises  during  the  Term.

16.     CONDEMNATION.
        ------------

If  any legally, constituted authority condemns the Leased Premises or such part
thereof  which shall make the Leased Premises unsuitable for leasing, this Lease
shall  cease when the public authority takes possession, and Landlord and Tenant
shall  account  for  rental  as of that date.  Such termination shall be without
prejudice  to  the  rights  of  either  party  to  recover compensation from the
condemning authority for any loss or damage caused by the condemnation.  Neither
party  shall  have  any  rights  in  or  to  any  award made to the other by the
condemning  authority.

                                      -5-

<PAGE>

17.     SUBORDINATION.
        -------------

Tenant accepts this Lease subject and subordinate to any mortgage, deed of trust
or  other lien presently existing or hereafter arising upon the Leased Premises,
or  upon  the  building and to any renewals, refinancing and extensions thereof,
but  Tenant  agrees  that any such mortgagee shall have the right at any time to
subordinate  such  mortgage,  deed  of trust or other lien to this Lease on such
terms  and  subject to such conditions as such mortgagee may deem appropriate in
its  discretion.  Landlord  is  hereby  irrevocably  vested  with full power and
authority to subordinate this Lease to any mortgage, deed of trust or other lien
now  existing  or  hereafter  placed upon the Leased Premises, and Tenant agrees
upon  demand  to  execute  such  further instruments subordinating this Lease or
attorning to the holder of any such liens as Landlord may request.  In the event
that  Tenant  should  fail  to  execute  any  instrument of subordination herein
required  to  be  executed  by  Tenant  promptly  as  requested,  Tenant  hereby
irrevocably  constitutes  Landlord  as  its  attorney-in-fact  to  execute  such
instrument in Tenant's name, place and stead, it being agreed that such power is
one coupled with an interest.  Tenant agrees that it will from time to time upon
request  by  Landlord  execute  and  deliver  to  such persons as Landlord shall
request  a statement in recordable form certifying that this Lease is unmodified
and in full force and effect (or if there have been modifications, that the same
is in full force and effect as so modified), stating the dates to which rent and
other charges payable under this Lease haven been paid, stating that Landlord is
not  in  default hereunder (or if Tenant alleges a default stating the nature of
such  alleged  default) and further stating such other matters as Landlord shall
reasonably  require.

18.     INDEMNIFICATION  OF  LANDLORD.
        -----------------------------

Tenant shall hold harmless, indemnify, and defend Landlord, and its agents, with
counsel  reasonably  satisfactory  to  Landlord  (and  Landlord agrees to accept
counsel  that  any  insurer  requires  be  used), from all liability, penalties,
losses,  damages,  costs,  expenses,  causes of action, claims, and/or judgments
arising  by reason of any third party's death, bodily injury, or personal injury
resulting  from and to the extent caused by the negligence or willful misconduct
of  Tenant  or  its agents in their activities at the Leased Premises during the
Lease  Term.

19.     INDEMNIFICATION  OF  TENANT.
        ---------------------------

Landlord  shall hold harmless, indemnify, and defend Tenant and its agents, with
counsel  reasonably  satisfactory to Tenant (and Tenant agrees to accept counsel
that  any  insurer  requires  be  used),  from all liability, penalties, losses,
damages,  costs, expenses, causes of action, claims, and/or judgments arising by
reason  of  any third party's death, bodily injury, or personal injury resulting
from  and  to  the  extent  caused  by  the  negligence or willful misconduct of
Landlord  or  its  agents  in their activities at the Leased Premises during the
Lease  Term.

                                      -6-

<PAGE>

20.     ESTOPPEL  CERTIFICATES.
        ----------------------

At  all times during the Lease Term, each party agrees, following any request by
the  other party, promptly to execute and deliver to the requesting party within
ten  (10)  days following delivery of such request an estoppel certificate:  (1)
certifying  that  this  Lease  is unmodified and in full force and effect or, if
modified,  stating  the  nature  of  such  modification and certifying that this
Lease,  as  so  modified,  is  in full force and effect; (2) stating the date to
which  the rent and other charges are paid in advance, if any; (3) acknowledging
that there are not, to the certifying party's knowledge, any uncured defaults on
the  part  of  any party hereunder or, if there are uncured defaults, specifying
the nature of such defaults; and (4) certifying such other information about the
Lease  as  may  be  reasonably  required  by  the  requesting  party.

21.     ATTORNEYS'  FEES.
        ----------------

In  the  event  either  Landlord  or  Tenant  shall  bring  any  action or legal
proceeding  for  an  alleged  breach  of any provision of this Lease, to recover
rent,  to  terminate  this Lease, or otherwise to enforce, protect, or establish
any  term  or  covenant of this Lease, the prevailing party shall be entitled to
recover  as  part  of such action or proceeding, or in a separate action brought
for  that purpose, reasonable attorneys' fees, court costs, and experts' fees as
may  be  fixed  by  the  court,  including  matters  on  appeal.

22.     LATE  CHARGE;  INTEREST.
        -----------------------

Tenant  acknowledges  that  the  late  payment  of  rent  by  Tenant to Landlord
hereunder  will  cause Landlord to incur administrative costs and other damages,
the  exact  amount  of  which  would  be impracticable or extremely difficult to
ascertain.  Landlord and Tenant agree that if Landlord does not receive any such
payment  on  or  before  five (5) days after the date the payment is due, Tenant
shall  pay  to  Landlord,  as  additional  rent, (a) a late charge equal to five
percent (5%) of the overdue amount to cover such additional administrative costs
and other damages; and (b) interest on the delinquent amounts at the less of the
maximum  rate permitted by law if any or twelve percent (12%) per annum from the
date  due  to  the  date  paid.

23.     DISHONORED  CHECKS.
        ------------------

If  any  of  Tenant's  checks for payment of rent are dishonored for any reason,
Tenant  shall  pay Landlord a service charge of $25.00 for each dishonored check
in addition to repayment of the dishonored check. If two (2) or more of Tenant's
checks  are  dishonored,  Landlord  may  require, during the balance of Tenant's
tenancy,  that  all  payments  due  be  made  by cashier's check or money order.

                                      -7-

<PAGE>

24.     NOTICE.
        ------

Any  notice  required or permitted under this Lease shall be deemed sufficiently
given  or  served  if sent by postage prepaid United States first class mail, as
well  as  concurrently by facsimile, to the following addresses and fax numbers:

         If  to  Landlord  to:

                Alex  Properties
                12  Sunpeak
                Irvine,  CA  92612
                Fax  No.:  (714)  908-7254

                with  a  copy  of  same  sent  to:

                Jeffrey  Huron,  Esq.
                Huron  Law  Group
                1800  Century  Park  East,  Suite  480
                Los  Angeles,  CA  90067
                Fax  No.:  (310)  772-0037

         If  to  Tenant  to:

                I/OMagic  Corporation
                c/o  Tony  Shahbaz
                1300  Wakeham  Avenue
                Santa  Ana,  CA  92705
                Fax  No.:  (714)  619-6369

                with  a  copy  of  same  sent  to:

                Paul  R.  Pearlson,  Esq.
                Cameron,  Pearlson  &  Foster
                One  World  Trade  Center,  Suite  1600
                Long  Beach,  CA  90831
                Fax  No.:  (562)  437-1967

Landlord  and  Tenant  shall each have the right from time to time to change the
place  notice  is  to be given under this paragraph by written notice thereof to
the  other  party.

25.     BROKERS.
        -------

Tenant  represents  that  Tenant  was  not shown the Leased Premises by any real
estate  broker  or  agent  and  that  Tenant  has  not otherwise engaged in, any
activity  which  would  form  the  basis for a claim for real estate commission,
brokerage  fee,  finder's  fee  or other similar charge, in connection with this
Lease.

                                      -8-

<PAGE>

26.     WAIVER.
        ------

No  waiver  of any default of Landlord or Tenant hereunder shall be implied from
any  omission  to  take  any  action  or account of such default if such default
persists  or  is  repeated, and no express waiver shall affect any default other
than  the default specified in the express waiver and that only for the time and
to  the  extent therein stated.  One or more waivers by Landlord or Tenant shall
not  be  construed as a waiver of a subsequent breach of the same covenant, term
or  condition.

27.     MEMORANDUM  OF  LEASE.
        ---------------------

The parties hereto contemplate that this Lease should not and shall not be filed
for  record,  but  in lieu thereof, at the request of either party, Landlord and
Tenant  shall  execute  a Memorandum of Lease to be recorded for the purposes of
giving  record  notice  of  the  appropriate  provisions  of  this  Lease.

28.     HEADINGS.
        --------

The  headings  used  in  this  Lease are for convenience of the parties only and
shall  not  be  considered  in interpreting the meaning of any provision of this
Lease.

29.     SUCCESSORS.
        ----------

The  provisions  of  this Lease shall extend to and be binding upon Landlord and
its  legal  representatives,  successors  and  assigns.

30.      CONSENT.
         -------

Landlord  shall  not  unreasonably withhold or delay its consent with respect to
any  matter  for  which  Landlord's  consent is required or desirable under this
Lease.

31.     PERFORMANCE.
        -----------

If there is a default with respect to any of Landlord's covenants, warranties or
representations under this Lease, and if the default continues more than fifteen
(15)  days  after  notice  in  writing  from  Tenant  to Landlord specifying the
default,  Tenant  may,  at  its  option  and  without affecting any other remedy
hereunder,  cure such default and deduct the cost thereof from the next accruing
installment  or  installments  of rent payable hereunder until Tenant shall have
fully reimbursed for such expenditures, together with interest thereon at a rate
equal to the lesser of twelve percent (12%) per annum or the then highest lawful
rate.  If  this Lease terminates prior to Tenant's receiving full reimbursement,
Landlord  shall  pay the unreimbursed balance plus accrued interest to Tenant on
demand.

                                      -9-

<PAGE>

32.     COMPLIANCE  WITH  LAW.
        ----------------------

Tenant  shall  comply  with  all  laws,  orders,  ordinances  and  other  public
requirements  now  or  hereafter  pertaining  to  Tenant's  used  of  the Leased
Premises.  Landlord  shall  comply  with  all laws, orders, ordinances and other
public  requirements  now  or  thereafter  affecting  the  Leased  Premises.

33.     PARTIES.
        --------

This  Lease is entered into by and between Alex Properties, a California general
partnership, as the Landlord, and I/OMagic Corporation, a Nevada corporation, as
the  Tenant.  The  parties  hereby  agree  and acknowledge that the officers and
directors  of I/OMagic Corporation shall not, in any event, be held individually
responsible  for  any  payments or obligations of Tenant under the terms of this
Lease.

34.     FINAL  AGREEMENT.
        ----------------

This  agreement  terminates and supersedes all prior understanding or agreements
on  the  subject matter hereof.  Only by a further writing that is duly executed
by  both  parties  may  modify  this  Agreement.

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

"LANDLORD"                                      "TENANT"

Alex  Properties                                I/OMagic  Corporation

By:    /s/ Mark Vakili                          By:  /s/ Tony Shahbaz
Its:   /s/ G.P. 3/25/03                         Its:  President

                                      -10-

<PAGE>

                          EXHIBIT A TO LEASE AGREEMENT

(1)     A-1  All  American  Roofing  Co.:

Amount  that has not yet been paid:     $ 7,047.50, plus any additional costs or
                                        charges  necessary  to  complete  work.

(2)     Accurate  Awning  Corporation:

Amount  that  has not yet been paid:    $ 5,025, plus any additional costs
                                        or charges necessary to complete  work.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00050-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00050-of-00352.parquet"}]]