CHANNELL COMMERCIAL CORP
LEASE BETWEEN THE COMPANY AND YNEZ STREET, LTD.
<DOCUMENT>
<TYPE>EX-10.29
<SEQUENCE>4
<FILENAME>dex1029.txt
<DESCRIPTION>LEASE BETWEEN THE COMPANY AND YNEZ STREET, LTD.
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.29

               [LOGO] AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

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

1.   Basic Provisions ("Basic Provisions").

     1.1 Parties: This Lease ("Lease"), dated for reference purposes only, -
June 27, 2002, is made by and between - Ynez Street, Ltd., a California limited
partnership ("Lessor") and - Channell Commercial Corporation, a Delaware
Corporation ("Lessee"), (collectively the "Parties," or individually a "Party").

     1.2 Premises: That certain real property, including all improvements
therein or to be provided by Lessor under the terms of this Lease, and commonly
know as - 26090 Ynez Road, Temecula, located in the County of Riverside, State
of California, and generally described as (describe briefly the nature of the
property and, if applicable, the "Project", if the property is located within a
Project) freestanding building of approximately 102,566 square feet, SAID REAL
PROPERTY BEING MORE PARTICULARLY DESCRIBED AS PARCEL 10 OF PARCEL MAP 21361 AS
SHOWN BY MAP ON FILE IN BOOK 139 PAGE(S) 89 AND 90 OF PARCEL MAPS, RECORDS OF
RIVERSIDE COUNTY, CALIFORNIA ("Premises"). (See also Paragraph 2)

     1.3 Term: Ten (10) years and -0- months ("Original Term") commencing - June
27, 2002 ("Commencement Date") and ending - June 30, 2012 ("Expiration Date").
(See also Paragraph 3)

     1.4 Early Possession:- Upon mutual lease execution ("Early Possession
Date"). (See also Paragraphs 3.2 and 3.3)

     1.5 Base Rent: $53,334 per month ("Base Rent"), payable on the 1st day of
each month commencing - August, 2002. (See also Paragraph 4)

[ ]  If this box is checked, there are provisions in this Lease for the Base
     Rent to be adjusted.

     1.6 Base Rent and Other Monies Paid Upon Execution:

          (a)  Base Rent $60,215.80 for the period June 27, 2002 through July
               31, 2002.

          (b)  Security Deposits: $ 160,000.00 ("Security Deposit"). (See also
               Paragraph 5)

          (c)  Association Fees: $ -0- for the period N/A

          (d)  Other: $-0- for N/A

          (e)  Total Due Upon Execution of this Lease: $220,215.80.

     1.7 Agreed Use: Office, design, testing, manufacturing, painting, powder
coating, assembly warehouse and related functions of plastic and metal and
related products. (See also Paragraph 6)

     1.8 Insuring Party: Lessor is the "Insuring Party" unless otherwise stated
herein. (See also Paragraph 8)

     1.11 Attachments. Attached hereto are the following, all of which
constitute a part of this Lease:

[ ] an Addendum consisting of Paragraphs 51 through 69;

[ ] a plot plan depicting the Premises;

[ ] a current set of the Rules and Regulations;

[ ] a Work Letter;

[ ] other (specify);
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2. Premises.

     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 size set forth in this Lease, all that may have been
used in calculating Rent, is an approximation which the Parties agree is
reasonable and any payments based thereon are not subject to revision whether or
not the actual size is more or less. Note: Lessee is advised to verify the
actual size prior to executing this Lease.

     2.2 Condition. Lessor shall deliver the Premises to Lessee broom clean and
free of debris on the Commencement Date or the Early Possession Date, whichever
first occurs ("Start Date"), and, so long as the required service contracts
described in the Paragraph 7.1(b) below are obtained by Lessee and in effect
within thirty days following the Start Date, warrants that the existing
electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air
conditioning systems ("HVAC"), loading doors, sump pumps, if any, and all other
such elements in the Premises, other than those constructed by Lessee, shall be
in good operating condition on said date and that the structural elements of the
roof, bearing walls and foundation of any buildings on the Premises (the
"Building") shall be free of material defects. If a non-compliance with said
warranty exists as of the Start Date, or if one of such systems or elements
should malfunction or fail within the appropriate warranty period, Lessor shall,
as Lessor's sole obligation with respect to such matter, except as otherwise
provided in this Lease, promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such non-compliance,
malfunction of failure, rectify same at Lessor's expense. The warranty periods
shall be as follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as
the remaining systems and other elements of the Building. If Lessee does not
give Lessor the required notice within appropriate warranty period.


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correction of any such non-compliance, malfunction or failure shall be the
obligation of Lessee at Lessee's sole cost and expense.

     2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in
Paragraph 2 shall be of no force or effect if immediately prior to the Start
Date Lessee was the owner or occupant of the Premises. In such event, Lessee
shall be responsible for any necessary corrective work.

3. Term.

     3.1 Term. The Commencement Date, Expiration Date and Original Term of this
Lease are as specified in Paragraph 1.3.

     3.2 Early Possession. If Lessee totally or partially occupies the Premises
prior to the Commencement Date, the obligation to pay Base Rent shall be abated
for the period of such early possession. All other terms of this Lease
(including but not limited to the obligations to pay Real Property Taxes and
insurance premiums and to maintain the Premises) shall, however, be in effect
during such period. Any such early possession shall not affect the Expiration
Date.

     3.3 Delay in Possession. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession by such date, Lessor shall not be subject to any liability therefor,
nor shall such failure affect the validity of this Lease. Lessee shall not,
however, be obligated to pay Rent or perform its other obligations until Lessor
delivers possession of the Premises and any period of rent abatement that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to what Lessee would otherwise have
enjoyed under the terms hereof, but minus any days of delay caused by the acts
or omissions of Lessee. If possession is not delivered within 60 days after the
Commencement Date, Lessee may, at its option, by notice in writing within 10
days after the end of such 60 day period, cancel this Lease, in which event the
Parties shall be discharged from all obligations hereunder. If such written
notice is not received by Lessor within said 10 day period, Lessee's right to
cancel shall terminate. If possession of the Premises is not delivered within
120 days after the Commencement Date, this Lease shall terminate unless other
agreements are reached between Lessor and Lessee, in writing.

     3.4 Lessee Compliance. Lessor shall not be required to deliver possession
of the Premises to Lessee until Lessee complies with its obligation to provide
evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee
shall be required to perform all of its obligations under this Lease from and
after the Start Date, including the payment of Rent, notwithstanding Lessor's
election to withhold possession pending receipt of such evidence of insurance.
Further, if Lessee is required to perform any other conditions prior to or
concurrent with the Start Date, the Start Date shall occur but Lessor may elect
to withhold possession until such conditions are satisfied.

4. Rent.

     4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the
terms of this Lease (except for the Security Deposit) are deemed to be rent
("Rent").

     4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in
lawful money of the United States on or before the day on which it is due,
without offset or deduction (except as specifically permitted in this Lease).
Rent for any period during the term hereof which is for less than one full
calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated herein or
to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating. In the event that any check,
draft, or other instrument of payment given by Lessee to Lessor is dishonored
for any reason, Lessee agrees to pay to Lessor the sum of $25 in addition to any
Late Charge and Lessor, at its option, may require all future payments to be
made by Lessee to be by cashier's check. Payments will be applied first to
accrued late charges and attorney's fees, second to accrued interest, then to
Base Rent and Operating Expense Increase, and any remaining amount to any other
outstanding charges or costs.

     4.3 Association Fees. In addition to the Base Rent, Lessee shall pay to
Lessor each month an amount equal to any owner's association or condominium fees
levied or assessed against the Premises. Said monies shall be paid at the same
time and in the same manner as the Base Rent.

5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of the Security Deposit, Lessee shall within 10 days after written request
therefor deposit monies with Lessor sufficient to restore said Security Deposit
to the full amount required by this Lease. Lessor shall not be required to keep
the Security Deposit separate from its general accounts. Within 14 days after
the expiration or termination of this Lease, if Lessor elects to apply the
Security Deposit only to unpaid Rent, and otherwise within 30 days after the
Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall
return that portion of the Security Deposit not used or applied by Lessor. No
part of the Security Deposit shall be considered to be held in trust, to bear
interest or to be prepayment for any monies to be paid by Lessee under this
Lease.


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6.   Use.

     6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use,
or any other legal use which is reasonably comparable thereto, and for no other
purpose. Lessee shall not use or permit the use of the Premises in a manner that
is unlawful, creates damage, waste or a nuisance, or that disturbs occupants of
or causes damage to neighboring premises or properties. Lessor shall not
unreasonably withhold or delay its consent to any written request for a
modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, and/or is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within 7 days after
such request give written notification of same, which notice shall include an
explanation of Lessor's objections to the change in the Agreed Use.

     6.2 Hazardous Substances. (See Addendum Para.56)

          (a) Reportable Uses Require Consent. The term "Hazardous Substance"
as used in this Lease shall mean any product, substance, or waste whose
presence, use, manufacture, disposal, transportation, or release, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substances shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, and/or crude oil or any products, by-products or fractions
thereof. Lessee shall not engage in any activity in or on the Premises which
constitutes a Reportable Use of Hazardous Substances without the express prior
written consent of Lessor and timely compliance (at Lessee's expense) with all
Applicable Requirements. "Reportable Use" shall mean(i) the installation or use
of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and/or
(iii) the presence at the Premises of a Hazardous Substance with respect to
which any Applicable Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring properties. Notwithstanding
the foregoing, Lessee may use any ordinary and customary materials reasonably
required to be used in the normal course of the Agreed Use, ordinary office
supplies (copier toner, liquid paper, glue, etc.) and common household cleaning
materials, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or expose
Lessor to any liability therefor. In addition, Lessor may condition its consent
to any Reportable Use upon receiving such additional assurances as Lessor
reasonably deems necessary to protect itself, the public, the Premises and/or
the environment against damage, contamination, injury and/or liability,
including, but not limited to, the installation (and removal on or before Lease
expiration or termination) of protective modifications (such as concrete
encasements) and/or increasing the Security Deposit.

          (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to
believe, that a Hazardous Substance has come to be located in, on, under or
about the Premises, other than as previously consented to by Lessor, Lessee
shall immediately give written notice of such fact to Lessor, and provide Lessor
with a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.

          (c) Lessee Remediation. Lessee shall not cause or permit any Hazardous
Substance to be spilled or released in, on, under, or about the Premises
(including through the plumbing or sanitary sewer system) and shall promptly, at
Lessee's expense, comply with all Applicable Requirements and take all
investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises or neighboring
properties, that was caused or materially contributed to by Lessee, or
pertaining to or involving any Hazardous Substance brought onto the Premises
during the term of this Lease, by or for Lessee, or any third party.

          (d) Lessee Indemnification. Lessee shall indemnify, defend and hold
Lessor, its agents, employees, lenders and ground lesssor, if any, harmless from
and against any and all loss of rents and/or damages, liabilities, judgments,
claims, expenses, penalties and attorneys' and consultants' fees arising out of
or involving any Hazardous Substance brought onto the Premises by or for Lessee,
or any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance
under the Premises from adjacent properties not caused or contributed to by
Lessee). Lessee's obligations shall include, but not be limited to, the effects
of any contamination or injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this Lease
with respect to Hazardous Substances, unless specifically so agreed by Lessor in
writing at the time of such agreement.

          (e) Lessor Indemnification. Lessor and its successors and assigns
shall indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages, including the cost
of remediation, which result from Hazardous Substances which existed on the
Premises prior to Lessee's occupancy or which are caused by the gross negligence
or willful misconduct of Lessor, its agents or employees. Lessor's obligations,
as and when required by the Applicable Requirements, shall include, but not be
limited to, the cost of investigation, removal, remediation, restoration and/or
abatement, and shall survive the expiration or termination of this Lease.

          (f) Investigations and Remediations. Lessor shall retain the
responsibility and pay for any investigations or remediation measures required
by governmental entities having jurisdiction with respect to the existence of
Hazardous Substances on the Premises prior to Lessee's occupancy, unless such
remediation measure is required as a result of Lessee's use (including
"Alterations", as defined in paragraph 7.3(a) below) of the Premises, in which
event Lessee shall be responsible for such payment. Lessee shall cooperate fully
in any such activities at the request of Lessor, including allowing Lessor and
Lessor's agents to have reasonable access to the Premises at reasonable times in
order to carry out Lessor's investigative and remedial responsibilities.

          (g) Lessor Termination Option. If a Hazardous Substance Condition (see
Paragraph 9.1(e)) occurs during the term of this Lease, unless Lessee is legally
responsible therefor (in which case Lessee shall make the investigation and
remediation thereof required by the Applicable Requirements and this Lease shall
continue in full force and effect, but subject to Lessor's rights under
Paragraph 6.2 (d) and Paragraph 13), Lessor may, at Lessor's option, either (i)
investigate and remediate such Hazardous Substance Condition, if required, as
soon as reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) if the estimated cost to remediate
such condition exceeds 12 times the then monthly Base Rent of $100,000,
whichever is greater, give written notice to Lessee, within 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 60 days
following the date of such notice. In the event Lessor elects to give a
termination notice, Lessee may, within 10 days thereafter, give written notice
to Lessor of Lessee's commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount equal to 12
times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall
provide Lessor with said funds or satisfactory assurance thereof within 30 days
following such commitment. In such event, this Lease shall continue in full
force and effect, and Lessor shall proceed to make such remediation as soon as
reasonably possible after the required funds are available. If Lessee does not
give such notice and provide the required funds or assurance thereof within the
time provided, this Lease shall terminate as of the date specified in Lessor's
notice of termination.

     6.3 Lessee's Compliance with Applicable Requirements.

     6.4 Inspection; Compliances. Lessor and Lessor's "Lender" (as defined in
Paragraph 30) and consultants shall have the right to enter into Premises at any
time, in the case of an emergency, and otherwise at reasonable times after
reasonable notice, for the purpose of inspecting the condition of the Premises
and for verifying compliance by Lessee with this Lease. The cost of any such
inspections shall be paid by Lessor, unless a violation of Applicable
Requirements, or a Hazardous Substance Condition (see paragraph 9.1) is found to
exist or be imminent, or the inspection is requested or ordered by a
governmental authority. In such case, Lessee shall upon request reimburse Lessor
for the cost of such inspection, so long as such inspection is reasonably
related to the violation or contamination.

7.   Maintenance; Repairs, Utility Installations; Trade Fixtures Alterations.

     7.1  Lessee's Obligations.

          (a) In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligation), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises,
Utility Installations (intended for Lessee's exclusive use, no matter where
located), and Alterations in good order, condition and repair (whether or not
the portion of the Premises requiring repairs, or the means of repairing the
same, are reasonably or readily accessible to Lessee, and whether or not the
need for such repairs occurs as a result of Lessee's use, any prior use, the
elements or the age of such portion of the Premises), including, but not limited
to, all equipment or facilities, such as plumbing, HVAC equipment, electrical,
lighting facilities, boilers, pressure vessels, fire protection system,
fixtures, walls(interior and exterior), foundations, ceilings, roofs, roof
drainage systems, floors, windows, doors, plate glass, skylights, landscaping,
driveways, parking lots, fences, retaining walls, signs, sidewalks and parkways
located in, on, or adjacent to the Premises. Lessee, in keeping the Premises in
good order, condition and repair, shall exercise and perform good maintenance
practices, specifically including the procurement and maintenance of the service
contracts required by Paragraph 7.1(b) below. Lessee's obligations shall
include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair. Lessee shall, during the term of this Lease, keep the
exterior appearance.


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of the Building in a first-class condition (including, e.g. graffiti removal)
consistent with the exterior appearance of other similar facilities of
comparable age and size in the vicinity, including, when necessary, the exterior
repainting of the Building.

          (c) Failure to Perform. If Lessee fails to perform Lessee's
obligations under this Paragraph 7.1, Lessor may enter upon the Premises after
10 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, and Lessee
shall promptly pay to Lessor a sum equal to 115% of the cost thereof.

          (d) Replacement. Subject to Lessee's Indemnification of Lessor as set
forth in Paragraph 8.7 below, and without relieving Lessee of liability
resulting from Lessee's failure to exercise and perform good maintenance
practices, if an item described in Paragraph 7.1(b) cannot be repaired other
than at a cost which is in excess of 50% of the cost of replacing such item,
then such item shall be replaced by Lessor, and the cost thereof shall be
prorated between the Parties and Lessee shall only be obligated to pay, each
month during the remainder of the term of this Lease, on the date on which Base
Rent is due, an amount equal to the product of multiplying the cost of such
replacement by a fraction, the numerator of which is one, and the denominator of
which is 144 (i.e. 1/144th of the cost per month). Lessee shall pay interest on
the unamortized balance at a rate that is commercially reasonable in the
judgment of Lessor's accountants. Lessee may, however, prepay its obligation at
any time.

     7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 9 (Damage or Destruction) and 14 (Condemnation),
it is intended by the Parties hereto that Lessor have no obligation, in any
manner whatsoever, to repair and maintain the Premises, or the equipment
therein, all of which obligations are intended to be that of the Lessee. It is
the intention of the Parties that the terms of this Lease govern the respective
obligations of the Parties as to maintenance and repair of the Premises, and
they expressly waive the benefit of any statute now or hereafter in effect to
the extent it is inconsistent with the terms of this Lease.

     7.3 Utility Installations; Trade Fixtures; Alterations.

          (a) Definitions. The term "Utility installations" refers to all floor
and window coverings, air and/or vacuum lines, power panels, electrical
distribution, security and fire protection systems, communication cabling,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can
be removed without doing material damage to the Premises. The term "Alterations"
shall mean any modification of the improvements, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned
Alterations and/or Utility Installations" are defined as Alterations and/or
Utility Installations made by Lessee that are not yet owned by Lessor pursuant
to Paragraph 7.4(a).

          (b) Consent. Lessee shall not make any Alterations or Utility
Installations to the Premises over $5000.00 without Lessor's prior written
consent. Lessee may, however, make non-structural Utility Installations to the
interior of the Premises (excluding the roof) without such consent but upon
notice to Lessor, as long as they are not visible from the outside, do not
involve puncturing, relocating or removing the roof/or any existing walls, will
not affect the electrical, plumbing, HVAC, and/or life safety systems, and the
cumulative cost thereof during this Lease as extended does not exceed a sum
equal to 3 month's Base Rent in the aggregate or a sum equal to one month's Base
Rent in any one year. Notwithstanding the foregoing, Lessee shall not make or
permit any roof penetrations and/ or install anything on the roof without the
prior written approval of Lessor. Lessor may, as a precondition to granting such
approval, require Lessee to utilize a contractor chosen and/or approved by
Lessor. Any Alterations or Utility Installations that Lessee shall desire to
make and which require the consent of the Lessor shall be presented to Lessor in
written form with detailed plans. Consent shall be deemed conditioned upon
Lessee's: (i) acquiring all applicable governmental permits, (ii) furnishing
Lessor with copies or both the permits and the plans and specifications prior to
commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike
manner with good and sufficient materials. Lessee shall promptly upon completion
furnish Lessor with as-built plans and specifications. For work which costs an
amount in excess of one month's Base Rent. Lessor may condition its consent upon
Lessee providing a lien and completion bond in an amount equal to 150% of the
estimated cost of such Alteration or Utility Installation and/or upon Lessee's
posting an additional Security Deposit with Lessor.

          (c) Liens; Bonds. Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or for
use on the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than 10 days notice prior to the commencement of any work
in, on or about the Premises, and Lessor shall have the right to post notices of
non-responsibility. If Lessee shall contest the validity of any such lien, claim
or demand, then Lessee shall, at its sole expense defend and protect itself.
Lessor and the Premises against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement thereof. If
Lessor shall require, Lessee shall furnish a surety bond in an amount equal to
150% of the amount of such contested lien, claim or demand, indemnifying Lessor
against liability for the same. If Lessor elects to participate in any such
action, Lessee shall pay Lessor's attorneys' fees and costs.

     7.4 Ownership; Removal; Surrender; and Restoration.

          (a) Ownership. Subject to Lessor's right to require removal or elect
ownership as hereinafter provided, all Alterations and Utility Installations
made by Lessee shall be the property of Lessee, but considered a part of the
Premises. Lessor may, at any time, elect in writing to be the owner of all or
any specified part of the Lessee Owned Alterations and Utility Installations.
Unless otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned
Alterations and Utility Installations shall, at the expiration or termination of
this Lease, become the property of Lessor and be surrendered by Lessee with the
Premises.

          (b) Removal. By delivery to Lessee of written notice from Lessor not
earlier than 90 and not later than 30 days prior to the end of the term of this
Lease, Lessor may require that any or all Lessee Owned Alterations or Utility
Installations be removed by the expiration or termination of this Lease. Lessor
may require the removal at any time of all or any part of any Lessee Owned
Alterations or Utility Installations made without the required consent excluding
underground utilities

          (c) Surrender; Restoration. Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces there of broom clean and free of debris, and in good
operating order, condition and state of repair, ordinary wear and tear excepted.
"Ordinary wear and tear" shall not include any damage or deterioration that
would have been prevented by good maintenance practice. Notwithstanding the
foregoing, if this Lease is for 12 months or less, then Lessee shall surrender
the Premises in the same condition as delivered to Lessee on the Start Date with
NO allowance for ordinary wear and tear. Lessee shall repair any damage
occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee
owned Alterations and/or Utility Installations, furnishings, and equipment as
well as the removal of any storage tank installed by or for Lessee. Lessee shall
completely remove from the Premises any and all Hazardous Substances brought
onto the Premises by or for Lessee, or any third party (except Hazardous
Substances which were deposited via underground migration from areas outside of
the Premises, or if applicable, the Project) even if such removal would require
Lessee to perform or pay for work that exceeds statutory requirements. Trade
Fixtures shall remain the property of Lessee and shall be removed by Lessee. Any
personal property of Lessee not removed on or before the Expiration Date or any
earlier termination date shall be deemed to have been abandoned by Lessee and
may be disposed of or retained by Lessor as Lessor may desire. The failure by
Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without
the express written consent of Lessor shall constitute a holdover under the
provisions of Paragraph 26 below.

8.   Insurance; Indemnity.

     8.1 Payment For Insurance. Lessee shall pay for all insurance required
under Paragraph 8 except to the extent of the cost attributable to liability
insurance carried by Lessor under Paragraph 8.2(b) in excess of $2,000,000 per
occurrence. Premiums for policy periods commencing prior to or extending beyond
the Lease term shall be prorated to correspond to the Lease term. Payment shall
be made by Lessee to Lessor within 10 days following receipt of an invoice.

     8.2 Liability Insurance.

          (a) Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability policy of Insurance protecting Lessee and Lessor as
an additional insured against claims for bodily injury, personal injury and
property damage based upon or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such insurance
shall be on an occurrence basis providing single limit coverage in an amount not
less than $1,000,000 per occurrence with an annual aggregate of not less than
$2,000,000, an "Additional Insured-Managers or Lessors of Premises Endorsement"
and contain the "Amendment of the Pollution Exclusion Endorsement" for damage
caused by heat, smoke or fumes from a hostile fire. The policy shall not contain
any intra-insured exclusions as between insured persons or organizations, but
shall include coverage for liability assumed under this Lease as an "insured
contract" for the performance of Lessee's indemnity obligations under this
Lease. The limits of said insurance shall not, however, limit the liability of
Lessee nor relieve Lessee of any obligation hereunder. All insurance carried by
Lessee shall be primary to and not contributory with any similar insurance
carried by Lessor, whose insurance shall be considered excess insurance only.

          (b) Carried by Lessor. Lessor shall maintain liability insurance as
described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance
required to be maintained by Lessee. Lessee shall not be named as an additional
insured therein however, any changes in coverage must be approved in writing by
Lessee.

     8.3 Property Insurance - Building, Improvements and Rental Value.

          (a) Building and Improvements. The Insuring Party shall obtain and
keep in force a policy or policies in the name of Lessor, with loss payable to
Lessor, any ground-lessor, and to any Lender insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, or the amount
required by any Lender, but in no event more than the


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commercially reasonable and available insurable value thereof. If Lessor is the
Insuring Party, however, Lessee Owned Alterations and Utility Installations,
Trade Fixtures, and Lessee's personal property shall be insured by Lessee under
Paragraph 8.4 rather than by Lessor. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all risks
of direct physical loss or damage (except the perils of flood and/or earthquake
unless required by a Lender), including coverage for debris removal and the
enforcement of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result of a
covered loss. Said policy or policies shall also contain an agreed valuation
provision in lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor or not less than the adjusted U.S. Department of
Labor Consumer Price Index for All Urban Consumers for the city nearest to where
the Premises are located. If such insurance coverage has a deductible clause,
the deductible amount shall not exceed $25,000 per occurrence, and Lessee shall
be liable for such deductible amount in the event of an Insured Loss.

          (b) Rental Value. The Insuring Party shall obtain and keep in force a
policy or policies in the name of Lessor with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one year with an extended period
of indemnity for an additional 180 days ("Rental Value Insurance"). Said
insurance shall contain an agreed valuation provision in lieu of any coinsurance
clause, and the amount of coverage shall be adjusted annually to reflect the
projected Rent otherwise payable by Lessee, for the next 12 month period. Lessee
shall be liable for any deductible amount in the event of such loss.

          (c) Adjacent Premises. If the Premises are part of a larger building,
or of a group of buildings owned by Lessor which are adjacent to the Premises,
the Lessee shall pay for any increase in the premiums for the property insurance
of such building or buildings if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.

     8.4  Lessee's Property; Business Interruption Insurance.

          (a) Property Damage. Lessee shall obtain and maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned
Alterations and Utility Installations. Such insurance shall be full replacement
cost coverage with a deductible of not to exceed $25,000 per occurrence. The
proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility
Installations. Lessee shall provide Lessor with written evidence that such
insurance is in force.

          (b) Business Interruption. Lessee shall obtain and maintain loss of
income and extra expense insurance in amounts as will reimburse Lessee for
direct or indirect loss of earnings attributable to all perils commonly insured
against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.

          (c) No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.

     8.5 Insurance Policies. Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+, V, as set forth in the most current issue of "Best's
Insurance Guide", or such other rating as may be required by a Lender. Lessee
shall not do or permit to be done anything which invalidates the required
insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor
certified copies of policies of such insurance or certificates evidencing the
existence and amounts of the required insurance. No such policy shall be
cancelable or subject to modification except after 30 days prior written notice
to Lessor. Lessee shall, at least 30 days prior to the expiration of such
policies, furnish Lessor with evidence of renewals or "insurance binders"
evidencing renewal thereof, or Lessor may order such insurance and charge the
cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon
demand. Such policies shall be for a term of at least one year, or the length of
the remaining term of this Lease, whichever is less. If either Party shall fail
to procure and maintain the insurance required to be carried by it, the other
Party may, but shall not be required to, procure and maintain the same.

     8.6 Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee and Lessor each hereby release and relieve the other, and waive their
entire right to recover damages against the other, for loss of or damage to its
property arising out of or incident to the perils required to be insured against
herein. The effect of such releases and waivers is not limited by the amount of
insurance carried or required, or by any deductibles applicable hereto. The
Parties agree to have their respective property damage insurance carriers waive
any right to subrogation that such companies may have against Lessor or Lessee,
as the case may be, so long as the insurance is not invalidated thereby.

     8.7 Indemnity. Except for Lessor's gross negligence or willful misconduct,
Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor
and its agents. Lessor's master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, liens, judgments,
penalties, attorneys' and consultants' fees , expenses and/or liabilities
arising out of, involving, or in connection with, the use and/or occupancy of
the Premises by Lessee. If any action or proceeding is brought against Lessor by
reason of any of the foregoing matters, Lessee shall upon notice defend the same
at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be defended or indemnified.

     8.8 Exemption of Lessor from Liability. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee. Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, or from the breakage,
leakage, obstruction or other defects of pipes, fire sprinklers, wires,
appliances, plumbing, HVAC or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Premises or upon other portions of the building of which the Premises are a
part, or from other sources or places. Lessor shall not be liable for any
damages arising from any act or neglect of any other tenant of Lessor nor from
the failure of Lessor to enforce the provisions of any other lease in the
Project. Notwithstanding Lessor's negligence or breach of this Lease, Lessor
shall under no circumstances be liable for injury to Lessee's business or for
any loss of income or profit therefrom.

     8.9 Failure to Provide Insurance. Lessor shall give written notice of
Lessee's alleged failure to carry required insurance and twenty (20) days to
cure.

9.   Damage or Destruction.

     9.1  Definitions.

          (a) "Premises Partial Damage" shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which can reasonably be repaired in 6 months or less from the
date of the damage or destruction. Lessor shall notify Lessee in writing within
30 days from the date of the damage or destruction as to whether or not the
damage is Partial or Total.

          (b) "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which cannot reasonably be repaired in 6 months or less from the
date of damage or destruction. Lessor shall notify Lessee in writing within 30
days from the date of the damage or destruction as to whether or not the damage
is Partial or Total.

          (c) "Insured Loss" shall mean damage or destruction to improvements on
the Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.

          (d) "Replacement Cost" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of Application Requirements, and without
deduction for depreciation.

          (e) "Hazardous Substance Condition" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises which requires repair, remediation, or restoration.

     9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage
(but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $10,000 or less, and, in such event, Lessor shall make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose. Notwithstanding the foregoing, if the required insurance was not in
force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds (except as to
the deductible which is Lessee's responsibility) as and when required to
complete said repairs. In the event, however, such shortage was due to the fact
that, by reason of the unique nature of the improvements, full replacement cost
insurance coverage was not commercially reasonable and available. Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within 10 days following
receipt of written notice of such shortage and request therefor. If Lessor
receives said funds or adequate assurance thereof within said 10 day period, the
party responsible for making the repairs shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect. If
such funds or assurance are not received, Lessor may nevertheless elect by
written notice to Lessee within 10 days thereafter to: (i) 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, or
(ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled
to reimbursement of any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be subject
to Paragraph 9.3, notwithstanding that there 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 a Premises Partial Damage that is
not an Insured Loss occurs, unless caused by a negligent or


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willful act of Lessee (in which event Lessee shall make the repairs at Lessee's
expense), Lessor may either: (i) repair such damage as soon as reasonably
possible at Lessor's expense, in which event this Lease shall continue in full
force and effect, or (ii) terminate this Lease by giving written notice to
Lessee within 30 days after receipt by Lessor of knowledge of the occurrence of
such damage. Such termination shall be effective 60 days following the date of
such notice. In the event Lessor elects to terminate this Lease. Lessee shall
have the right within 10 days after receipt of the termination notice to give
written notice to Lessor of Lessee's commitment to pay for the repair of such
damage without reimbursement from Lessor. Lessee shall provide Lessor with said
funds or satisfactory assurance thereof within 30 days after making such
commitment. In such event this Lease shall continue in full force and effect,
and Lessor shall proceed to make such repairs as soon as reasonably possible
after the required funds are available. If Lessee does not make the required
commitment, this Lease shall terminate as of the date specified in the
termination notice.

     9.4 Total Destruction. Notwithstanding any other provision thereof, if a
Premises Total Destruction occurs, this Lease shall terminate 60 days following
such Destruction. If the damage or destruction was caused by the gross
negligence or willful misconduct of Lessee, Lessor shall have the right to
recover Lessor's damages from Lessee, except as provided in paragraph 8.6.

     9.5 Damage Near End of Term. If at any time during the last 6 months of
this Lease there is a damage for which the cost to repair exceeds one month's
Base Rent, whether or not an Insured Loss, Lessor may terminate this Lease
effective 60 days following the date of occurrence of such damage by giving a
written termination notice to Lessee within 30 days after the date of occurrence
of such damage. Notwithstanding the foregoing, if Lessee at that time has an
exercisable option to extend this Lease or to purchase the Premises, then Lessee
may preserve this Lease by, (a) exercising such option and (b) providing Lessor
with any shortage in insurance proceeds (or adequate assurance thereof) needed
to make the repairs on or before the earlier of (i) the date which is 10 days
after Lessee's receipt of Lessor's written notice purporting to terminate this
Lease, or (ii) the day prior to the day upon which such option expires. If
Lessee duly exercises such option during such period and provides Lessor with
funds (or adequate assurance thereof) to cover any shortage in insurance
proceeds, Lessor shall, at Lessor's commercially reasonable expense, repair such
damage as soon as reasonably possible and this Lease shall continue in full
force and effect. If Lessee fails to exercise such option and provide such funds
or assurance during such period, then this Lease shall terminate on the date
specified in the termination notice and Lessee's option shall be extinguished.

     9.6 Abatement of Rent; Lessee's Remedies.

          (a) Abatement. In the event of Premises Partial Damage or Premises
Total Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee's use of the Premises in impaired, but
not to exceed the proceeds received form the Rental Value insurance. All other
obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall
have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein.

          (b) Remedies. If Lessor shall obligated to repair or restore the
Premises and does not commence, in a substantial and meaningful way, such repair
or restoration within 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 60 days
following the giving of such notice. If Lessee gives such notice and such repair
or restoration is not commenced within 30 days thereafter, this Lease shall
terminate as of the date specified in said notice. If the repair or restoration
is commenced within such 30 days, this Lease shall continue in full force and
effect. "Commence" shall mean either the unconditional authorization of the
preparation of the required plans, or the beginning of the actual work on the
Premises, whichever first occurs.

     9.7 Termination; Advance Payments. Upon termination of this Lease pursuant
to Paragraph 6.2(g) of Paragraph 9, an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security
Deposit as has not been, or is not then required to be, used by Lessor.

     9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises with
respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.

10.  Real Property Taxes.

     10.1 Definition. As used herein, the term "Real Property Taxes" shall
include any form of assessment; real estate, general, special, ordinary or
extraordinary, or rental levy or tax (other than inheritance, personal income or
estate taxes); improvement bond; and/or license fee imposed upon or levied
against any legal or equitable interest of Lessor in the Premises or the
Project, Lessor's right to other income therefrom, and/or Lessor's business of
leasing, by any authority having the direct of indirect power to tax and where
the funds are generated with reference to the Building address and where the
proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Premises are located. Real
Property Taxes shall also include any tax, fee, levy, assessment or charge, or
any increase therein: (i) imposed by reason of events occurring during the term
of this Lease, including but not limited to, a change in the ownership of the
Premises, and (ii) levied or assessed on machinery or equipment provided by
Lessor to Lessee pursuant to this Lease.

     10.2 Payment of Taxes. In addition to Base Rent, Lessee shall pay to Lessor
an amount equal to the Real Property tax installment due at least 10 days prior
to the applicable delinquency date. If any such installment shall cover any
period of time prior to or after the expiration or termination of this Lease,
Lessee's share of such installment shall be prorated. In the event Lessee incurs
a late charge on any Rent payment. Lessor may estimate the current Real Property
Taxes, and require that such taxes be paid in advance to Lessor by Lessee
monthly in advance with the payment of the Base Rent. Such monthly payments
shall be an amount equal to the amount of the estimated installment of taxes
divided by the number of months remaining before the month in which said
installment becomes delinquent. When the actual amount of the applicable tax
bill is known, the amount of such equal monthly advance payments shall be
adjusted as required to provide the funds needed to pay the applicable taxes. If
the amount collected by Lessor is insufficient to pay such Real Property Taxes
when due, Lessee shall pay Lessor, upon demand, such additional sum as is
necessary. Advance payments may be intermingled with other moneys of Lessor and
shall not bear interest. In the event of a Breach by Lessee in the performance
of its obligations under this Lease, then any such advance payments may be
treated by Lessor as an additional Security Deposit.

     10.3 Joint Assessment. If the Premises are not separately assessed,
Lessee's liability shall be an equitable proportion of the Real Property Taxes
for all of the land and improvements included within the tax parcel assessed,
such proportion to be conclusively determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available.

     10.4 Personal Property taxes. Lessee shall pay, prior to delinquency, all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause 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
within 10 days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.

11. Utilities and Services. Lessee shall pay for all water, gas, heat, light,
power, telephone, trash disposal and other utilities and services supplied to
Premises, together with any taxes thereon. If any such services are not
separately metered or billed to Lessee, Lessee shall pay a reasonable
proportion, to be determined by Lessor, of all charges jointly metered or
billed. There shall be no abatement of rent and Lessor shall not be liable in
any respect whatsoever for the inadequacy, stoppage, interruption or
discontinuance of any utility or service due to riot, strike, labor dispute,
breakdown, accident, repair or other cause beyond Lessor's reasonable control or
in cooperation with governmental request or directions.

12. Assignment and Subletting.

     12.1 Lessor's Consent Required.

          (a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "assign or assignment") or sublet
all or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent.

          (d) An assignment or subletting without consent shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1 (c), or a
noncurable Breach without the necessity of any notice and grace period. If
Lessor elects to treat such unapproved assignment or subletting as a noncurable
Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days
written notice, increase the monthly Base Rent to 110% of the Base Rent then in
effect. Further, in the event of such Breach and rental adjustment. (i) the
purchase price of any option to purchase the Premises held by Lessee shall be
subject to similar adjustment to 110% of the price previously in effect, and
(ii) all fixed and non-fixed rental adjustments scheduled during the remainder
of the Lease term shall be increased to 110% of the scheduled adjusted rent.

          (e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall
be limited to compensatory damages and/or injunctive relief.

     12.2 Terms and Conditions Applicable to Assignment and Subletting.

          (a) Regardless of Lessor's consent, no assignment or subletting shall:
(i) be effective without the express written assumption by such assignee or
sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of
any obligations hereunder, or (iii) alter the primary liability of


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Lessee for the payment of Rent or for the performance of any other obligations
to be performed by Lessee.

          (b) Lessor may accept Rent or performance of Lessee's obligations from
any person other than Lessee pending approval or disapproval of an assignment.
Neither a delay in the approval or disapproval of such assignment nor the
acceptance of Rent or performance shall constitute a waiver or estoppel of
Lessor's right to exercise its remedies for Lessee's Default or Breach.

          (c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.

          (d) In the event of any Default or Breach by Lessee, Lessor may
proceed directly against Lessee, any Guarantors or anyone else responsible for
the performance of Lessee's obligations under this Lease, including any assignee
or sublessee, without first exhausting Lessor's remedies against any other
person or entity responsible 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, together with a fee of $500 as
consideration for Lessor's considering and processing said request. Lessee
agrees to provide Lessor with such other or additional information and/or
documentation as may be reasonably requested. (See also Paragraph 36)

          (f) Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, be deemed to have
assumed and agreed to conform and comply with each and every term, covenant,
condition and obligation herein to be observed or performed by Lessee during the
term of said assignment or sublease, other than such obligations as are contrary
to or inconsistent with provisions of an assignment or sublease to which Lessor
has specifically consented to in writing.

          (g) Lessor's consent to any assignment or subletting shall not
transfer to the assignee or sublessee any Option granted to the original Lessee
by this Lease unless such transfer is specifically consented to by Lessor in
writing. (See Paragraph 39.2)

     12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein :

          (a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all Rent payable on any sublease, and Lessor may collect such Rent
and apply same toward Lessee's obligations under this Lease; provided, however,
that until a Breach shall occur in the performance of Lessee's obligations.
Lessee may collect said Rent. In the event that the amount collected by Lessor
exceeds Lessee's obligations any such excess shall be refunded to Lessee. Lessor
shall not, by reason of the foregoing or any assignment of such sublease, nor by
reason of the collection of Rent, be deemed liable to the sublessee for any
failure of Lessee to perform and comply with any of Lessee's obligations to such
sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee,
upon receipt of a written notice from Lessor stating that a Breach exists in the
performance of Lessee's obligations under this Lease, to pay to Lessor all Rent
due and to become due under the sublease. Sublessee shall rely upon any such
notice from Lessor and shall pay all Rents to Lessor without any obligation or
right to inquire as to whether such Breach exists, notwithstanding any claim
from Lessee to the contrary.

          (b) In the event of a Breach by Lessee, Lessor may, at its option,
require sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided, however, Lessor
shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such
sublessor.

          (c) Any matter requiring the consent of the sublessor under a sublease
shall also require the consent of the Lessor.

          (d) No sublessee shall further assign or sublet all or any part of the
Premises without Lessor's prior written consent.

          (e) Lessor shall deliver a copy of any notice of Default or Breach by
Lessee to the sublessee, who shall have the right to cure the Default of Lessee
within the grace period, if any, specified in such notice. The sublessee shall
have a right of reimbursement and offset from and against Lessee for any such
Defaults cured by the sublessee.

13.  Default; Breach; Remedies.

     13.1 Default; Breach. A "Default" is defined as a failure by the Lessee to
comply with or perform any of the terms, covenants, conditions or Rules and
Regulations under this Lease. A "Breach" is defined as the occurrence of one or
more of the following Defaults and the failure of Lessee to cure such Default
within any applicable grace period:

          (a) The abandonment of the Premises; or the vacating of the Premises
without providing a commercially reasonable level of security, or where the
coverage of the property insurance described in Paragraph 8.3 is jeopardized as
a result thereof, or without providing reasonable assurances to minimize
potential vandalism.

          (b) The failure of Lessee to make any payment of Rent or any Security
Deposit required to be made by Lessee hereunder, whether to Lessor or to a third
party, when due, to provide reasonable evidence of insurance or surety bond, or
to fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of 5 business days following
written notice to Lessee.

          (c) The failure by Lessee to provide (i) reasonable written evidence
of compliance with Applicable Requirements, (ii) the rescission of an
unauthorized assignment or subletting, (iii) an Estoppel Certificate, (iv) a
requested subordination, (v) evidence concerning any guaranty and/or Guarantor,
(vi) any document requested under Paragraph 42, (vii) material safety data
sheets (MSDS), 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 10 days following written notice to Lessee.

          (d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of 30 days after written notice; provided,
however, that if the nature of Lessee's Default is such that more than 30 days
are reasonably required for its cure, then it shall be deemed to be a Breach if
Lessee commences such cure within said 30 day period and thereafter diligently
prosecutes such cure to completion.

          (e) The occurrence of any of the following events: (i) the making of
any general arrangement or assignment for the benefit of creditors ; (ii)
becoming a "debtor" as defined in 11 U.S.C. (S) 101 or any successor statute
thereto (unless, in the case of a petition filed against Lessee, the same is
dismissed within 60 days); (iii) the appointment of a trustee or receiver to
take possession of substantially all of Lessee's assets located at the Premises
or of Lessee's interest in this Lease, where possession is not restored to
Lessee within 30 days; or (iv) the attachment, execution or other judicial
seizure of substantially all of Lessee's assets located at the Premises or of
Lessee's interest in this Lease, where such seizure is not discharged within 30
days; provided, however, in the event that any provision of this subparagraph
(e) is contrary to any applicable law, such provision shall be of no force or
effect, and not affect the validity of the remaining provisions.

          (f) The discovery that any financial statement of Lessee or of any
Guarantor given to Lessor was materially false.

     13.2 Remedies. If Lessee fails to perform any of its affirmative duties or
obligations, within 10 days of written notice, Lessor may, at its option,
perform such duty or obligation on Lessee's behalf, including but not limited to
the obtaining of reasonably required bonds, insurance policies, or governmental
licenses, permits or approvals. Lessee shall pay to Lessor an amount equal to
115% of the cost and expenses incurred by Lessor in such performance upon
receipt of an invoice therefor. In the event of a Breach, Lessor may, with or
without further notice or demand, and without limiting Lessor in the exercise of
any right or remedy which Lessor may have by reason of such Breach;

          (a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorney's 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 discount rate of
the Federal Reserve Bank of the District within which the Premises are located
at the time of award plus one percent. Efforts by Lessor to mitigate damages
caused by Lessee's Breach of this Lease shall not waive Lessor's right to
recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding any unpaid Rent and damages as are recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under Paragraph 13.1 was
not previously given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statue shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.

          (b) Continue the Lease and Lessee's right to possession and recover
the Rent as it becomes due, in which event Lessee may sublet or assign, subject
only to reasonable limitations. Acts of maintenance, efforts to relet, and/or
the appointment of a receiver to protect the Lessor's interests, shall not
constitute a termination of the Lessee's right to possession.


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          (c) Pursue any other remedy now or hereafter available under the laws
or judicial decisions of the state wherein the Premises are located. The
expiration or termination of this Lease and/or the termination of Lessee's right
to possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee's occupancy of the Premises.

     13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee
of Rent will cause Lessor to incur costs not contemplated by this Lease, the
exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within 5 days after such amount shall be due,
then, without any requirement for notice to Lessee, Lessee shall immediately pay
to Lesssor a one-time late charge equal to 10% of each such overdue amount or
$100, whichever is greater. The Parties hereby agree that such late charge
represents a fair and reasonable estimate of the costs Lessor will incur by
reason of such late payment. Acceptance of such late charge by Lessor shall in
no event constitute a waiver of Lessee's Default or Breach with respect to such
overdue amount, nor prevent the exercise of any of the other rights and remedies
granted hereunder. In the event that a late charge is payable hereunder, whether
or not collected, for 3 consecutive installments of Base Rent, then
notwithstanding any provision of this Lease to the contrary, Base Rent shall, at
Lessor's option, become due and payable quarterly in advance.

     13.5 Interest. Any monetary payment due Lessor hereunder, other than late
charges, not received by Lessor, when due as to scheduled payments (such as Base
Rent) or within 30 days following the date on which it was due for non-scheduled
payment, shall bear interest from the date when due, as to scheduled payments,
or the 31st day after it was due as to non-scheduled payments. The
interest("Interest") charged shall be computed at the rate of 10% per annum but
shall not exceed the maximum rate allowed by law., Interest is payable in
addition to the potential late charge provided for in Paragraph 13.4.

     13.6 Breach by Lessor.

          (a) Notice of Breach. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a reasonable
time shall in no event be less than 30 days after receipt by Lessor, and any
Lender whose name and address shall have been furnished Lessee in writing for
such purposes, of written notice specifying wherein such obligation of Lessor
has not been performed; provided, however, that if the nature of Lessor's
obligation is such that more than 30 days are reasonably required for its
performance, then Lessor shall not be in breach if performance is commenced
within such 30 day period and thereafter diligently pursued to completion.

          (b) Performance by Lessee on Behalf of Lessor. In the event that
neither Lessor nor Lender cures said breach within 30 days after receipt of said
notice, or if having commenced said cure they do not diligently pursue it to
completion, then Lessee may elect to cure said breach at Lessee's expense and
offset from Rent the actual and reasonable cost to perform such cure, provided
however, that such offset shall not exceed an amount equal to the greater of one
month's Base Rent or the Security Deposit, reserving Lessee's right to seek
reimbursement from Lessor. Lessee shall document the cost of said cure and
supply said documentation to Lessor.

14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively "Condemnation"), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than 10% of the Building, or more than 25% of that portion
of the Premises not occupied by any building, is taken by Condemnation, Lessee
may, at Lessee's option, to be exercised in writing within 10 days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within 10 days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessee's
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.

16. Estoppel Certificates.

          (a) Each Party (as "Responding Party") shall within 10 days after
written notice from the other Party (the "Requesting Party") execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current "Estoppel Certificate" form published by the
American Industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.

          (b) If the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such 10 day period, the Requesting Party may execute
an Estoppel Certificate stating that: (i) the Lease is in full force and effect
without modification except as may be represented by the Requesting Party, (ii)
there are no uncured defaults in the Requesting Party's performance, and (iii)
if Lessor is the Requesting Party, not more than one month's rent has been paid
in advance. Prospective purchasers and encumbrancers may rely upon the
Requesting Party's Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.

          (c) If Lessor desires to finance, refinance, or sell the Premises, or
any part thereof, Lessee and all Guarantors shall deliver to any potential
lender or purchaser designated by Lessor such financial statements as may be
reasonably required by such lender or purchaser, including but not limited to
Lessee's financial statements for the past 3 years. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.

17. Definition of Lessor. The term "Lessor" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises, or,
if this is a sublease, of the Lessee's interest in the prior lease. In the event
of a transfer of Lessor's title or interest in the Premises or this Lease,
Lessor shall deliver to the transferee or assignee (in cash or by credit) any
unused Security Deposit held by Lessor. Except as provided in Paragraph 15, upon
such transfer or assignment and delivery of the Security Deposit, as aforesaid,
the prior Lessor shall be relieved of all liability with respect to the
obligations and/or covenants under the 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. Days. Unless otherwise specifically indicated to the contrary, the word
"days" as used in this Lease shall mean and refer to calendar days.


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20. Limitation on Liability. The obligations of Lessor under this Lease shall
not constitute personal obligations of Lessor or its partners, members,
directors, officers or shareholders, and Lessee shall look to the Premises, and
to no other assets of Lessor, for the satisfaction of any liability of Lessor
with respect to this Lease, and shall not seek recourse against Lessor's
partners, members, directors, officers or shareholders, or any of their personal
assets for such satisfaction.

21. Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.

22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the use, nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. The liability (including court costs and attorneys'
fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or
modification hereto shall be limited to an amount up to the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation
on each Broker's liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.

23. Notices.

     23.1 Notice or Requirements. All notices required or permitted by this
Lease or applicable law shall be in writing and may be delivered in person (by
hand or by courier) or may be sent by regular, certified or registered mail or
U.S. Postal Service Express Mail, with postage prepaid, or by facsimile
transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party's
signature on this Lease shall be that Party's address for delivery or mailing of
notices. Either Party may by written notice to the other specify a different
address for notice, except that upon Lessee's taking possession of the Premises,
the Premises shall constitute Lessee's address for notice. A copy of all notices
to Lessor shall be concurrently transmitted to such party or parties at such
addresses as Lessor may from time hereafter designate in writing.

     23.2 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed given 48 hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantee next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal
Service or courier. Notices transmitted by facsimile transmission or similar
means shall be deemed delivered upon telephone confirmation of receipt
(confirmation report from fax machine is sufficient), provided a copy is also
delivered via delivery or mail. If notice is received on a Saturday, Sunday or
legal holiday, it shall be deemed received on the next business day.

24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof. Lessor's consent
to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor's consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the basis of an estoppel to enforce the provision
or provisions of this Lease requiring such consent. The acceptance of Rent by
Lessor shall not be a waiver or any Default or Breach by Lessee. Any payment by
Lessee may be accepted by Lessor on account of moneys 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. Disclosures Regarding The Nature of a Real Estate Agency Relationship.

          (a) When entering into a discussion with a real estate agent regarding
a real estate transaction, a Lessor or Lessee should from the outset understand
what type of agency relationship or representation it has with the agent or
agents in the transaction. Lessor or Lessee acknowledge being advised by the
Brokers in this transaction, as follows:

               (i)Lessor's Agent. A Lessor's agent under a listing agreement
with the Lessor acts as the agent for Lessor only. A Lessor's agent or
subagent has the following affirmative obligations: To the Lessor: A fiduciary
duty of utmost care, integrity, honesty, and loyalty in dealings with the
Lessor. To the Lessee and the Lessor: a. Diligent exercise of reasonable skills
and care in performance of the agent's duties. b. A duty of honest and fair
dealing and good faith. c. A duty to disclose all facts known to the agent
materially affecting the value or desirability of the property that are not
known to, or within the diligent attention and observation of, the Parties. An
agent is not obligated to reveal to either Party any confidential information
obtained from the other Party which does not involve the affirmative duties set
forth above.

               (ii)Lessee's Agent. An agent can agree to act as agent for the
Lessee only. In these situations, the agent is not the Lessor's agent, even if
by agreement the agent may receive compensation for services rendered, either in
full or in part from the Lessor. An agent acting only for a Lessee has the
following affirmative obligations. To the Lessee: A fiduciary duty of utmost
care, integrity, honesty, and loyalty in dealings with the Lessee. To the Lessee
and the Lessor: a. Diligent exercise of reasonable skills and care in
performance of the agent's duties. b. A duty of honest and fair dealing and good
faith. c. A duty to disclose all facts known to the agent materially affecting
the value or desirability of the property that are not known to, or within the
diligent attention and observation of, the Parties. An agent is not obligated to
reveal to either Party any confidential information obtained from the other
Party which does not involve the affirmative duties set forth above.

               (iii)Agent Representing Both Lessor and Lessee. A real estate
agent, either acting directly or through one or more associate licenses, can
legally be the agent of both the Lessor and the Lessee in a transaction, but
only with the knowledge and consent of both the Lessor and the Lessee. In a dual
agency situation, the agent has following affirmative obligations to both the
Lessor and the Lessee: a. A fiduciary duty of utmost care, integrity, honesty
and loyalty in the dealings with either Lessor or the Lessee. b. Other duties to
the Lessor and the Lessee as stated above in subparagraphs (i) or (ii). In
representing both Lessor and Lessee, the agent may not without the express
permission of the respective Party, disclose to the other Party that the Lessor
will accept rent in an amount less than that indicated in the listing or that
the Lessee is willing to pay a higher rent than that offered. The above duties
of the agent in a real estate transaction do not relieve a Lessor or Lessee from
the responsibility to protect their own interests. Lessor and Lessee should
carefully read all agreements to assure that they adequately express their
understanding of the transaction. A real estate agent is a person qualified to
advise about real estate. If legal or tax advice is desired, consult a competent
professional.

          (b) Brokers have no responsibility with respect to any default or
breach hereof by either Party. The Liability (including court costs and
attorney's fees), of any Broker with respect to any breach of duty, error or
omission relating to these Lease shall not exceed the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation
on each Broker's liability shall not be applicable to any gross negligence or
willful misconduct of each Broker.

          (c) Lessor and Lessee agree to identify to Brokers as "Confidential"
any communication or information given Brokers that is considered by such Party
to be confidential.

26. No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
115% of the Base Rent applicable immediately preceding the expiration or
termination. Nothing contained herein shall be construed as consent by Lessor to
any holding over by Lessee.

27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

28. Covenants and Conditions; Construction of Agreement. All provisions of this
Lease to be observed or performed by Lessee are both covenants and conditions.
In construing this Lease, all headings and titles are for the convenience of the
Parties only and shall not be considered a part of this Lease. Whenever required
by the context, the singular shall include the plural and vice versa. This Lease
shall not be construed as if prepared by one of the Parties, but rather
according to its fair meaning as a whole, as if both Parties had prepares it.

29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties,
their personal representatives, successors and assigns and be governed by the
laws of the State in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which
the Premises are located.

30. Subordination; Attornment; Non-Disturbance.

     30.1 Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and all advances made on the
security thereof, and to all renewals, modifications, and extensions thereof.
Lessee agrees that the holders of any such Security Devices (in this Lease
together referred to as "Lender") shall have no liability or obligation to
perform any of the obligations of Lessor under this Lessee. Any Lender may elect
to have this Lease and/or any Option granted hereby superior to the lien of its
Security Device by giving written notice thereof to Lessee, whereupon this Lease
and such Options shall be deemed prior to such Security Device, notwithstanding
the relative dates of the documentation or recordation thereof.


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     30.2 Attornment. In the event that Lessor transfers title to the Premises,
or the Premises are acquired by another upon the foreclosure or termination of a
Security Device to which this Lease is subordinated (i) Lessee shall, subject to
the non-disturbance provisions of Paragraph 30.3, attorn to such new owner, and
upon request, enter into a new lease, containing all of the terms and provisions
of this Lease, with such new owner for the remainder of the term hereof, or, at
the election of such new owner, this Lease shall automatically become a new
Lease between Lessee and such new owner, upon all of the terms and conditions
hereof, for the remainder of the term hereof, and (ii) Lessor shall thereafter
be relieved of any further obligations hereunder and such new owner shall assume
all of the Lessor's obligations hereunder, except that such new owner shall not:
(a) be liable for any act or omission of any prior lessor or with respect to
events occurring prior to acquisition of ownership; (b) be subject to any
offsets or defenses which Lessee might have against any prior lessor, (c) be
bound by prepayment of more than one month's rent, or (d) be liable for the
return of any security deposit paid to any prior lessor.

     30.3 Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides the Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within 60 days after the execution of this Lease. Lessor
shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee's
option, directly contact Lender and attempt to negotiate for the execution and
delivery of a Non-Disturbance Agreement.

     30.4 Self-Executing. The agreements contained in this Paragraph 30 shall
be effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall
have the right to enter the Premises at any time, in the case of an emergency,
and otherwise at reasonable times after reasonable prior notice for the purpose
of showing the same to prospective purchasers, lenders, or tenants, and making
such alterations, repairs, improvements or additions to the Premises as Lessor
may deem necessary or desirable an the erecting, using and maintaining of
utilities, services, pipes and conduits through the Premises and/or other
premises as long as there is no material adverse effect to Lessee's use of the
Premises. All such activities shall be without abatement of rent or liability to
Lessee.

33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction
upon the Premises without Lessor's prior written consent. Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether to
permit an auction.

35. Termination; Merger. Unless specifically stated otherwise in writing by the
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 lessor estate in
the Premises; provided, however, that Lessor may elect to continue any one of
all existing subtenancies. Lessor's failure within 10 days following any such
event to elect to the contrary by written notice to the holder of any such
lessor interest, shall constitute Lessor's election to have such event
constitute the termination of such interest.

36. Consents. Except as otherwise provide 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, including but not limited to consents
to an assignment, a subletting or the presence or use of a Hazardous Substance,
shall be paid by Lessee upon receipt of an invoice and supporting documentation
therefor. Lessor's consent to any act, assignment or subletting shall not
constitute an acknowledgment that no Default of Breach by Lessee of this Lease
exits, nor shall such consent be deemed a waiver of any then existing Default or
Breach, except as may be otherwise specifically stated in writing by Lessor at
the time of such consent. The failure to specify herein any particular condition
to Lessor's consent shall not preclude the imposition by Lessor at the time of
consent of such further or other conditions as are then reasonable within
reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable details
within 10 business days following such request.

38. Quiet Possession. Subject to payment by Lessee of the Rent and performance
of all of the covenants, conditions and provisions on Lessee's part to be
observed and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.

39. Options. If Lessee is granted an Option, as defined below, then the
following provisions shall apply:

     39.1 Definition. "Option" shall mean: (a) the right to extend the term of
or renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (b) the right of first refusal or first offer to lease
either the Premises or other property of Lessor; (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.

     39.2 Options Personal To Original Lessee. Any Option granted to Lessee in
this Lease is personal to the original Lessee, and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee is in full possession of the Premises and, if requested by Lessor, with
Lessee certifying that Lessee has no intention of thereafter assigning of
subletting.

     39.3 Multiple Options. In the event that Lessee has any multiple Options to
extend or renew this Lease, a later Option cannot be exercised unless the prior
Options have been validly exercised.

     39.4 Effect of Default on Options.

          (a) Lessee shall have no right to exercise on Option: (i) during the
period commencing with the giving of any notice of Default and continuing until
said Default is cured, (ii) during the period of time any Rent is unpaid
(without regard to whether notice thereof is given Lessee), (iii) during the
time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has
been given 3 or more notices of separate Default, whether or not the Defaults
are cured, during the 12 month period immediately preceding the exercise of the
Option.

          (b) The period of time within which an Option may be exercised shall
not be extended or enlarged by reason of Lessee's inability to exercise an
Option because of the provisions of Paragraph 39.4(a).

          (c) An Option shall terminate and be of no further force or effect,
notwithstanding Lessee's due and timely exercise of the Option, if, after such
exercise and prior to the commencement of the extended term or completion of the
purchase, (i) Lessee fails to pay Rent for a period of 30 days after such Rent
becomes due (without any necessity of Lessor to give notice thereof), or (ii) if
Lessee commits a Breach of this Lease.

40. Multiple Buildings. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by and conform to all
reasonable rules and regulations with written consent which Lessor may make from
time to time for the management, safely, and care of said properties, including
the care and cleanliness of the grounds and including the parking, loading and
unloading of vehicles, and to cause its employees, suppliers, shippers,
customers, contractors, and invitees to so abide and conform. Lessee also agrees
to pay its fair share of common expenses incurred in connection with such rules
and regulations.


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

                                                                   /s/ Illegible
------------------                                                 -------------
Initials                          Page 10 of 12                    Initials

<PAGE>

41. Security Measures. Lessee hereby acknowledges that the Rent 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 the responsibility for the protection of the Premises,
Lessee, its agents and invitees and their property from the acts of third
parties.

42. Reservations. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as much easements, rights, dedications maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.

43. Performance Under 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 be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay.

44. Authority; Multiple Parties; Execution.

          (a) If either Party hereto is a corporation, trust, limited liability
company, partnership, or similar entity, each individual executing this Lessee
on behalf of such entity represents and warrants that he or she is duly
authorized to execute and deliver this Lease on its behalf. Each party shall,
within 30 days after request, deliver to the other party satisfactory evidence
of such authority.

          (b) If this Lease is executed by more than one person or entity as
"Lessee", each such person or entity shall be jointly and severally liable
hereunder. It is agreed that any one of the named Lessees shall be empowered to
execute any amendment to this Lease, or other document ancillary thereto and
bind all of the named Lessees, and Lessor may rely on the same as if all of the
named Lessees had executed such document.

          (c) This Lease may be executed by the parties in counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument.

45. Conflict. Any conflict between the printed provisions of this Lease and
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.

46. Offer. Preparation of this Lease by either Party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.

47. Amendments. This Lease may be modified only in writing signed by the Parties
in interest at the time of modification. As long as they do not materially
change Lessee's obligations hereunder, Lessee agrees to make such reasonable
non-monetary modifications to this Lease as may be reasonably required by a
Lender in connection with the obtaining of normal financing or refinancing of
the Premises.

48. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT
OF THIS AGREEMENT.

49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation
and/or the Arbitration of all dispute between the Parties and/or Brokers arising
out of this Lease [ ] is [X] is not attached to this Lease.

50. Americans with Disabilities Act. Since compliance with the Americans with
Disabilities Act (ADA) is dependent upon Lessee's specific use of the Premises,
Lessor makes no warranty or representation as to whether or not the Premises
comply with ADA or any similar legislation. In the event that Lessee's use of
the Premises requires modifications or additions to the Premises in order to be
in ADA compliance, Lessee agrees to make any such necessary modifications and/or
additions at Lessee's expense.


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

                                                                   /s/ Illegible
------------------                                                 -------------
Initials                          Page 11 of 12                    Initials

<PAGE>

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.

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

1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES, SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL
INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY
OF THE PREMISES FOR LESSEE'S INTENDED USE.

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

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

<TABLE>
<S>                                                     <C>
Executed at: IRVINE                                     Executed at: TEMECULA, CALIFORNIA
on:  6/22/02                                            on:  6/21/02

By LESSOR:                                              By LESSEE:
Ynez Street, Ltd., a California limited partnership     Channel Commercial Corporation, a Delaware
By: Ynez Street, Inc., a California corporation,        Corporation
its general partner


By: /s/ Bruce H. Dohrman                                By: /s/ William H. Channell, Jr.
    ----------------------------                            --------------------------------------
Name Printed: Bruce H. Dohrman                          Name Printed: William H. Channell, Jr.
Title: Vice President                                   Title: President/COO


By:                                                     By: /s/ Tom Liquori
   -----------------------------------------------          --------------------------------------
Name Printed:                                           Name Printed: Tom Liquori
             -------------------------------------      Title: CFO
Title:                                                  Address: 26050 Ynez Road
      --------------------------------------------      Temecula, CA 92589-9022
Address:                                                Telephone/Facsimile:
        ------------------------------------------                          ----------------------
                                                        Federal ID No. 95-2453261
--------------------------------------------------
Telephone/Facsimile: (909) 719-2600/(909) 296-2328
Federal ID No.
               -----------------------------------
</TABLE>

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

      (C) Copyright 1997 - By American Industrial Real Estate Association.
                              All rights reserved.
                 No part of these works may be reproduced in any
                       form without permission in writing.


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

                                                                   /s/ Illegible
------------------                                                 -------------
Initials                          Page 12 of 12                    Initials

<PAGE>

                                    ADDENDUM
                                  (Page 1 of 1)

As referred to in Paragraph 1.12 this is an Addendum attached to the lease
agreement dated             , 2002, by and between                 ("Lessor"),
                ------------                       ---------------
and Channell Commercial Corporation, a Delaware Corporation ("Lessee") and
constitutes a part of the attached Lease.

51. General Provisions:           To the extent of any conflict or
                                  inconsistency between any of the terms,
                                  conditions or provisions of this Addendum and
                                  any of the terms, conditions or provisions of
                                  the Lease, the terms, conditions and
                                  provisions of this Addendum shall control and
                                  supersede, but only to the extent of the
                                  actual conflict or inconsistency. All
                                  capitalized terms not otherwise defined in
                                  this Addendum shall have the same definitions
                                  as in the Lease.

52. Rent Schedule:
                                  Lease Period          Monthly NNN Rent
                                  ------------          ----------------
                                  Months 1-12           $53,334*

                                  The Rent Schedule shall be increased by five
                                  (5%) percent every 30 months.

53. Miscellaneous:                (a)  The captions of this Lease are for
                                       convenience only and are not a part of
                                       this Lease, and do not in any way
                                       define, limit, describe or amplify the
                                       terms or provisions of this Lease or the
                                       scope of intent thereof.

                                  (b)  This Lease may be executed in multiple
                                       counterparts, each of which shall
                                       constitute an original, but all of which
                                       taken together shall constitute one and
                                       the same agreement.

                                  (c)  Lessee and Lessor understand, agree, and
                                       acknowledge that this Lease has been
                                       freely negotiated by both parties; and
                                       that in the event of any controversy,
                                       dispute, or contest over the meaning,
                                       interpretation, validity, or
                                       enforceability of the Lease or any of
                                       its terms or conditions, there shall
                                       be no interference, presumptions, or
                                       conclusion drawn whatsoever against
                                       either party by virtue of that party
                                       having drafted this Lease or any portion
                                       thereof.

54. Exhibits and Addenda:         Addendum:
                                  Exhibit A: Site Plan
                                  Exhibit B: California  Sale/Lease  Americans
                                             With Disabilities Act, Hazardous
                                             Materials and Tax Disclosure
                                  Exhibit C: Corporate Resolution

                                  Exhibit D: Lessee Materials

55. Option to Extend the Lease:   See Paragraph 69 on Insert A-1 to this
                                  Addendum.

56. Lessee Materials:             Lessor acknowledges and agrees to Lessee's
                                  use of materials described in the attached
                                  Exhibit D as an allowable use under this
                                  Lease Agreement, and, as such, no additional
                                  required consent is needed by Lessee under
                                  paragraph 6.2.

     See Insert A to Addendum to Lease attached hereto for Paragraphs 58 thru 68
and Insert A-1 for Paragraph 69.

LESSEE:                                          LESSOR:
Channell Commercial Corporation,
A Delaware Corporation


By: /s/ William H. Channell, Jr.                 By: /s/ Bruce H. Dohrman
    ---------------------------------------          ---------------------------
    William H. Channell, Jr., President/COO          Bruce H. Dohrman

Date: 6-21-02                                    Date: 6-22-02


By: /s/ Tom Liquori
    --------------------------------------
    Tom Liquori, CFO

Date: 6-21-02

<PAGE>

                                   [LOGO] AIR

                               OPTION(S) TO EXTEND
                             STANDARD LEASE ADDENDUM
                         Insert A-1 to Addendum to Lease

       Dated
            -------------------------------------------------------

       By and Between (Lessor) - Ynez Street, Ltd. a California limited
                                 partnership

                      (Lessee) Channell Commercial Corporation,
                               a Delaware Corporation

       Address of Premises: 26090 Ynez Road
                            Temecula, California 92589-9022

Paragraph 69

A.   OPTION(S) TO EXTEND:

Lessor hereby grants to Lessee the option to extend the term of this Lease for
two (2) additional sixty (60) month period(s) commencing when the prior term
expires upon each and all of the following terms and conditions:

     (i) In order to exercise an option to extend, Lessee must give written
notice of such election to Lessor and Lessor must receive the same at least 6
but not more than 9 months prior to the date that the option period would
commence, time being of the essence. If proper notification of the exercise of
an option is not given and/or received, such option shall automatically expire.
Options (if there are more than one) may only be exercised consecutively.

     (ii) The provisions of paragraph 39, including those relating to Lessee's
Default set forth in paragraph 39.4 of this Lease, are conditions of this
Option.

     (iii) Except for the provisions of this Lease granting an option or options
to extend the term, all of the terms and conditions of this Lease except where
specifically modified by this option shall apply.

     (iv) This Option is personal to the original Lessee, and cannot be assigned
to exercised by anyone other than said original Lessee and only while the
original Lessee is in full possession of the Premises and without the intention
of thereafter assigning or subletting.

     (v) The monthly rent for each month of the option period shall be
calculated as follows, using the method(s) indicated below:
(Check Method(s) to be Used and Fill in Appropriately)

[ ]  I. Cost of Living Adjustment(s) (COLA)
     a. On (Fill in COLA Dates):
                                 -----------------------------------------------


--------------------------------------------------------------------------------
the Base Rent shall be adjusted by the change, if any, from the Base Month
specified below, in the Consumer Price Index of the Bureau of Labor Statistics
of the U.S. Department of Labor for (select one): [ ] CPI W ( Urban Wage Earners
and Clerical Workers) or [ ] CPI U (All Urban Consumers), for (Fill in Urban
Area):

--------------------------------------------------------------------------------
All Items (1982-1984 = 100), herein referred to as "CPI".

     b. The monthly rent payable in accordance with paragraph A.I.a. of this
Addendum shall be calculated as follows: the Base Rent set forth in paragraph
1.5 of the attached Lease , shall be multiplied by a fraction the numerator of
which shall be the CPI of the calendar month 2 months prior to the month(s)
specified in paragraph A.I.a. above during which the adjustment is to take
effect, and the denominator of which shall be the CPI of the calendar month
which is 2 months prior to (select one): [ ] the first month of the term of this
Lease as set forth in paragraph 1.3 ("Base Month") or [ ] (Fill in Other "Base
Month"):                                                      . The sum so
         -----------------------------------------------------
calculated shall constitute the new monthly rent hereunder, but in no event,
shall any such new monthly rent be less than the rent payable for the month
immediately preceding the rent adjustment.

     c. In the event the compilation and/or publication of the CPI shall be
transferred to any other governmental department or bureau or agency or shall be
discontinued, then the index most nearly the same as the CPI shall be used to
make such calculation. In the event that the Parties cannot agree on such
alternative index, then the matter shall be submitted for decision to the
American Arbitration Association in accordance with the then rules of said
Association and the decision of the arbitrators shall be binding upon the
parties. The cost of said Arbitration shall be paid equally by the Parties.

[X]  II. Market Rental Value Adjustment(s) (MRV)

     a. On (Fill in MRV Adjustment Date(s)) The Tenth (10th) anniversary of the
Lease and the Fifteenth anniversary of the Lease the Base Rent shall be adjusted
to the "Market Rental Value" of the property as follows:

          1) Four months prior to each Market Rental Value Adjustment Date
described above, the Parties shall attempt to agree upon what the new MRV will
be on the adjustment date. If agreement cannot be reached, within thirty days,
then:

               (a) Lessor and Lessee shall immediately appoint a mutually
acceptable appraiser or broker to establish the new MRV within the next 30 days.
Any associated costs will be split equally between the Parties, or

               (b) Both Lessor and Lessee shall each immediately make a
reasonable determination of the MRV and submit such determination, in writing,
to arbitration in accordance with the following provisions:


Initials:                                               Initials: /s/ Illegible
          --------------                                          --------------


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

                                   Page 1 of 2

<PAGE>

               (i) Within 15 days thereafter, Lessor and Lessee shall each
select an [ ] appraiser or [X] broker ("Consultant" check one) of their choice
to act as an arbitrator. The two arbitrators so appointed shall immediately
select a third mutually acceptable Consultant to act as a third arbitrator.

               (ii) The 3 arbitrators shall within 30 days of the appointment of
the third arbitrator reach a decision as to what actual MRV for the Premises is
and whether Lessor's or Lessee's submitted MRV is the closest thereto. The
decision of a majority of the arbitrators shall be binding on the Parties. The
submitted MRV which is determined to be the closest to actual MRV shall
thereafter be used by the Parties.

               (iii) If either of the Parties fails to appoint an arbitrator
within the specified 15 days, the arbitrator timely appointed by one of them
shall reach a decision on his or her own, and said decision shall be binding on
the Parties.

               (iv) The entire cost of such arbitration shall be paid by the
party whose submitted MRV is not selected, i.e. the one that is NOT the closest
to the actual MRV.

          2) Notwithstanding the foregoing, the new MRV shall not be less than
the rent payable for the month immediately preceding the rent adjustment.

     b. Upon the establishment of each New Market Rental Value:

          1) The new MRV will become the new "Base Rent" for the purpose of
calculating any further Adjustments, and

          2) The first month of each Market Rental Value term shall become the
new "Base Month" for the purpose of calculating any further Adjustments.

     III. Fixed Rental Adjustment(s) (FRA)

The Base Rent shall be increased to the following amounts on the dates set forth
below:

     On (Fill in FRA Adjustment Date(s)):   The New Base Rent shall be:

                                            $
     ----------------------------------      ---------------------------

                                            $
     ----------------------------------      ---------------------------

                                            $
     ----------------------------------      ---------------------------

                                            $
     ----------------------------------      ---------------------------

B. NOTICE:

     Unless specified otherwise herein, notice of any rental adjustments, other
than Fixed Rental Adjustments, shall be made as specified in paragraph 23 of the
Lease

Note: These forms are often modified to meet changing requirements of law and
needs of the industry. Always write or call to make sure you are utilizing the
most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 S. Flower
Street, Suite 600, Los Angles, Calif. 90017


Initials:                                        Initials:
          --------------------                             ---------------------

          /s/ Illegible                                    /s/ Illegible
          --------------------                             ---------------------

                                  Page 2 of 2

<PAGE>

                          INSERT A TO ADDENDUM TO LEASE

58.  The Premises are encumbered by that certain Deed of Trust dated October 21,
     1998, by CC Holdings, Inc., a California corporation, as Trustor, in favor
     of Woodmen of the World Life Insurance Society ("Woodmen"), as Beneficiary,
     and recorded in the official records of Riverside County, California, as
     Instrument No. 406443 on October 28, 1998 (the "Woodmen Trust Deed"). As
     additional Rent, Lessee shall pay Lessor no later than thirty (30) days
     after demand therefor an amount equal to one half (1/2) of the Qualified
     Woodmen Prepayment Premium (as defined herein) actually paid by Lessor to
     the holder of the obligations secured by the Woodman Trust Deed (the
     "Holder"). As used herein, the term "Woodmen Prepayment Premium" shall mean
     the premium or penalty provided for in Paragraph 4 of the Woodmen Note. As
     used herein, the term "Woodmen Note" shall mean that certain Promissory
     Note, dated October 21, 1998, by CC Holding, Inc., in favor and for the
     benefit of Woodmen, in the original principal amount of Four Million Three
     Hundred Thousand Dollars ($4,300,000.00), as such note exists on the date
     hereof, without further modification or amendment after the date hereof
     with respect to either the timing and amount of the prepayment penalty or
     premium or the timing and amount of payment and amortization of principal
     and interest pursuant to the terms thereof (such unmodified note being
     referred to herein as the "Woodmen Note"). As used herein, the term
     "Qualified Woodman Prepayment Premium" shall mean the Woodmen Prepayment
     Premium imposed on the prepayment of al1 the outstanding principal amount
     of the loan evidenced by the Woodman Note if such prepayment shall occur
     during the Loan Months (as defined in the Woodmen Note) 97 through 117, and
     if at the time of the imposition of the Woodmen Prepayment Premium the
     principal amount evidenced by the Woodmen Note has been paid down to the
     date of prepayment in accordance with the terms of the Woodmen Note.

59.  Attorneys' Fees. If any Party brings an action or proceeding involving the
     Premises whether founded in tort, contract or equity, or to declare rights
     hereunder, the Prevailing Party (as hereafter defined) in any such
     proceeding, action or appeal thereon, shall be entitled to reasonable
     attorneys' fees. The term "Prevailing Party" shall include, without
     limitation, a Party who substantially obtains or defeats the relief sought,
     as the case may be, whether by compromise, settlement, judgment, or the
     abandonment by the other Party of its claim or defense. The attorneys' fees
     award shall not be computed in accordance with any court fee schedule, but
     shall be such as to fully reimburse all attorneys' fees reasonably
     incurred. In addition, Lessor shall be entitled to attorneys' fees, costs
     and expenses incurred in the preparation and service of notices of Default
     and consultations in connection therewith, whether or not a legal action is
     subsequently commenced in connection with such Default or resulting Breach
     ($200 is a reasonable minimum per occurrence for such services and
     consultation).

60.  Service Contracts. Lessee shall, at Lessee's sole expense, procure and
     maintain the Premises by contracting with licensed, experienced contractors
     or by providing equivalent maintenance by Lessee's employees with respect
     to (i) HVAC equipment, (ii) boiler, and pressure vessels, (iii) fire
     extinguishing systems, including fire alarm and/or smoke detection, (iv)
     landscaping and irrigation systems, (v) roof covering and drains, (vi)
     clarifiers, (vii) basic utility feed to the perimeter of the Building,
     (viii) any

<PAGE>

     other equipment, if reasonably required by Lessor. At the reasonable
     request of Lessor, Lessee shall provide Lessor copies of the maintenance
     and service contracts referred to in this Paragraph 60 and the names and
     qualifications of the employees providing the maintenance and service in
     lieu of such contracts. Any reference in the Lease to Paragraph 7.1(b) of
     the Lease shall be deemed to be a reference to this Paragraph 60 of this
     Addendum.

61.  As used herein, the term "Applicable Requirements" shall mean building
     codes, applicable laws, covenants and restrictions of record, regulations
     and ordinances. Lessor makes no representation and warranties relating to
     the compliance of the Premises with Applicable Requirements. If the
     Applicable Requirements are hereafter changed so as to require during he
     term of this Lease the construction of an addition to or an alteration of
     the Premises and/or Building, the remediation of any Hazardous Substance,
     or the reinforcement or other physical modification of the Unit, Premises
     and/or Building ("Capital Expenditure"), Lessor and Lessee shall allocate
     the cost of such work as follows:

     (a)  Subject to Paragraph 61(c) below, if such Capital Expenditures are
          required as a result of the specific and unique use of the Premises by
          Lessee as compared with uses by tenants in general , Lessee shall be
          fully responsible for the cost thereof, provided, however, that if
          such Capital Expenditure is required during the last eighteen (18)
          months of his Lease and the cost thereof exceeds 6 months' Base Rent,
          Lessee may instead terminate this Lease unless Lessor notifies Lessee,
          in writing, within 10 days after receipt of Lessee's termination
          notice that Lessor has elected to pay the difference between the
          actual cost thereof and an amount equal to 6 month's Base Rent. If
          Lessee elects termination, Lessee shall immediately cease the use of
          the Premises which requires such Capital Expenditure and deliver to
          Lessor written notice specifying a termination date at least 90 days
          thereafter. Such termination date shall, however, in no event be
          earlier than the last day that Lessee could legally utilize the
          Premises without commencing such Capital Expenditure.

     (b)  If such Capital Expenditure is not the result of the specific and
          unique use of the Premises by Lessee (such as, governmentally mandated
          seismic modifications), then Lessor and Lessee shall allocate the
          obligation to pay for such costs pursuant to the provision of
          Paragraph 7.1(d), provided, however, that if such Capital Expenditure
          is required during the last eighteen (18) months of this Lease or if
          Lessor reasonably determines that it is not economically feasible to
          pay its share thereof, Lessor shall have the option to terminate this
          Lease upon 90 days prior written notice to Lessee unless Lessee
          notifies Lessor, in writing, within 10 days after receipt of Lessor's
          termination notice that Lessee will pay for such Capital Expenditure.
          If Lessor does not elect to terminate, and fails to tender its share
          of any such Capital Expenditure, Lessee may advance such funds and
          deduct the same, with interest, from Rent until Lessor's share of such
          costs have been fully paid. If Lessee is unable to finance Lessor's
          share, or if the balance of the Rent due and payable for the remainder
          of this Lease is not sufficient to fully reimburse Lessee on an offset
          basis, Lessee shall have the right to terminate this Lease upon 30
          days written notice to Lessor.

                                      -2-

<PAGE>

     (c)  Notwithstanding the above, the provisions concerning Capital
          Expenditures are intended to apply only to non-voluntary, unexpected
          and new Applicable Requirements. If the Capital Expenditures are
          instead triggered by Lessee as a result of an actual or proposed
          change in use, change in intensity of use, or modification to the
          Premises then, and in that event, Lessee shall either: (i) immediately
          cease such changed use or intensity of use and/or take such other
          steps as may be necessary to eliminate the requirement for such
          capital Expenditure, or (ii) complete such Capital Expenditure at its
          own expense. Lessee shall not, however, have any right to terminate
          this Lease.

     (d)  All references in the Lease to Paragraph 3.3 of the Lease shall be
          deemed to refer to Paragraph 61 of this Addendum; all references in
          the Lease to Paragraph 3.3(a) of the Lease shall be deemed to refer to
          Paragraph 61(a) of this Addendum; all references in the Lease to
          Paragraph 3.3(b) of the Lease shall be deemed to refer to Paragraph
          61(b) of this Addendum; all references in the Lease to Paragraph
          3.3(c) of the Lease shall be deemed to refer to Paragraph 61(c) of
          this Addendum.

62.  Lessor acknowledges that Lessee has operations on properties that adjoin
     the Premises, which properties are more particularly described on Schedule
     1 to this Insert A to Addendum to Lease (the "Adjoining Properties").
     Lessor further acknowledges that Lessee has laid cable, piping and utility
     lines from the Premises to the Adjoining Properties and has constructed a
     staircase on the slope that runs along the border between the Premises and
     one of the Adjoining Properties (the "Staircase"). Lessor hereby
     understands, acknowledges and agrees that in addition to the other uses of
     the Premises set forth herein, Lessee may use the Premises for purposes of
     maintaining the piping and cabling currently located on the Premises and
     connecting the Premises to the Adjoining Properties, maintaining the
     Staircase, and locating and maintaining such other piping, cabling, utility
     and phone lines and access ways as Lessee deems necessary or appropriate
     for the continued operation of Lessee's business, whether such business is
     conducted on the Premises or on the Adjoining Property.

63.  CONDITION/MAINTENANCE OF THE PREMISES: LESSOR MAKES NO WARRANTY OR
     REPRESENTATION EXPRESS OR IMPLIED, IN RESPECT OF THE PREMISES OR ANY PART
     THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY
     PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY OF THE MATERIAL
     OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH
     RISKS ARE TO BE BORNE BY LESSEE. LESSEE ACKNOWLEDGES THAT THE PREMISES HAVE
     BEEN INSPECTED BY LESSEE AND ARE SATISFACTORY TO IT. Lessee further
     acknowledges that Lessee is solely responsible for the condition of the
     Premises.

64.  LESSEE'S OBLIGATIONS To AVOID LIENS AND ENCUMBRANCES.

     (a)  In addition to Real Property Taxes (governed by Section 10), Lessee
          will pay, or cause to be paid, all water, sewer or other rents and
          charges, excises, tax levies, fees (including, without limitation,
          license, permit, inspection, authorization and similar

                                      -3-

<PAGE>

          fees), and all other governmental charges, in each case whether
          general or special, ordinary or extraordinary, or foreseen or
          unforeseen, of every character in respect of the Premises or the
          business conducted thereon by Lessee (including all interest and
          penalties thereon due to any failure in payment by Lessee), which at
          any time prior to, during or in respect of the term hereof may be
          assessed or imposed on or in respect of or be a lien upon
          (collectively, the "Impositions"): (i) Lessor of Lessor's interest in
          the Premises, (ii) the Premises or any part thereof or any rent
          therefrom or any estate, tight, title or interest therein, or (iii)
          any occupancy, operation, use or possession of, or sales from or
          activity conducted on, or in connection with the Premises or the
          leasing or use of the Premises or any part thereof or (iv) the Base
          Rent. Such payment shall be made ten (10) days before any fine,
          penalty, interest or cost may be added for non-payment, such payments
          to be made directly to the taxing authorities, where feasible. Lessee
          will promptly, upon request, furnish to Lessor copies of official
          receipts or other satisfactory proof evidencing such payments.

     (b)  Lessor shall give reasonable written notice to Lessee of all
          Impositions payable by Lessee hereunder of which Lessor at any time
          has knowledge, but Lessor's failure to give any such notice shall in
          no way diminish Lessee's obligations hereunder to pay such
          Impositions.

65.  ASSIGNMENT AND SUBLETTING: If Lessee is a corporation, then the merger,
     consolidation or reorganization of such corporation and/or the sale,
     issuance, or transfer, cumulatively or in one transaction, of any voting
     stock, by Lessee or the stockholders of record of Lessee as of the date of
     this Lease, which results in the stockholders of record of Lessee as of the
     date of this Lease not having either direct or indirect voting control of
     Lessee shall constitute an assignment for purposes of Section 12.1.
     Provided, however, that while Lessee or any direct or indirect stockholder
     of Lessee remains as a publicly traded company listed on the New York Stock
     Exchange (or other recognized stock exchange), transactions in respect of
     securities of such person or entity effected through such stock exchange
     shall not be considered in the determination whether there has been a
     change of control for purposes of Section 12.1.

66.  AMENDMENTS REQUESTED BY LENDER: Lessee agrees to consent to amend this
     Lease as reasonably required by any Lender other than Woodman; provided,
     however, that Lessee shall have no obligation to consent to any amendment
     to the Lease or to enter into any agreement with any Lender if such
     amendment or agreement would result in the alteration of the economic terms
     of this Lease or diminish the rights of Lessee under this Lease, increase
     any obligations of Lessee under this Lease, or impose upon Lessee
     additional obligations not imposed by this Lease. Notwithstanding the
     foregoing, or anything to the contrary contained in this Lease, if any
     Lender other than Woodman requires as a condition to the making of a loan
     to Lessor to finance or refinance the Premises that payments owing by
     Lessee under this Lease for real property taxes or insurance premiums be
     impounded or placed in an escrow account, Lessee shall agree to an
     amendment of this Lease to provide for such an impound or escrow
     arrangement and to the payment of taxes and insurance premiums for a Lease
     Year, which are otherwise payable under this Lease, to Lessor or such
     Lender in no less than twelve (12) equal monthly installments and otherwise
     in the manner required by

                                      -4-

<PAGE>

     such Lender, even though such payment may be in advance of the date on
     which such payment would otherwise be due under this Lease.

67.  Lessee shall, upon the reasonable written request of the Lessor, provide
     such data as is maintained by Lessee with respect to the Premises as may be
     necessary to prepare any required returns and reports of the Lessor.

68.  Notwithstanding the provisions of paragraph 4.3, until Lessor notifies
     Lessee in writing to the contrary, Lessee shall pay association fees
     directly to the association and such dues shall be treated as an Imposition
     governed by the provisions of paragraph 64 of this Addendum.

                                      -5-

<PAGE>

                    SCHEDULE I TO INSERT A ADDENDUM TO LEASE

                   (Legal Description of Adjoining Properties)

All that certain real property located in the City of Temecula, County of
Riverside, State of California, more particularly described as follows:

PARCEL 6 AND 7 OF PARCEL MAP 21361 AS SHOWN BY MAP ON FILE IN BOOK 139 PAGE(S)
89 AND 90 OF PARCEL MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA.

                                      -6-

<PAGE>

                                    Exhibit A

                                   Site, Plan

                                    [GRAPHIC]

<PAGE>

                                    EXHIBIT B

[LOGO] Grubb & Ellis.

             CALIFORNIA SALE/LEASE AMERICANS WITH DISABILITIES ACT,
                     HAZARDOUS MATERIALS, AND TAX DISCLOSURE

The Americans With Disabilities Act is intended to make many business
establishments equally accessible to persons with a variety of disabilities;
modifications to real property may be required. State and local laws also may
mandate changes. The real estate brokers in this transaction are not qualified
to advise you as to what, if any, changes may be required now, or in the future.
Owners and tenants should consult the attorneys and qualified design
professionals of their choice for information regarding these matters. Real
estate brokers cannot determine which attorneys or design professionals have the
appropriate expertise in this area.

Various construction materials may contain items that have been or may in the
future be determined to be hazardous (toxic) or undesirable and may need to
specifically treated/handled or removed. For example, some transformers and
other electrical components contain PCBs, and asbestos has been used in
components such as fire-proofing, heating and cooling systems, air duct
insulation, spray-on and tile acoustical materials, linoleum, floor tiles,
roofing, dry wall and plaster. Due to prior or current uses of the Property or
in the area, the Property may have hazardous or undesirable metals (including
lead-based paint), minerals, chemicals, hydrocarbons, or biological hazards
(including, but not limited to, mold) or radioactive items (including electrical
and magnetic fields) in soils, water, building components, above or below-ground
containers or elsewhere in areas that may or may not be accessible or
noticeable. Such items may leak or otherwise be released. Real estate agents
have no expertise in the detection or correction of hazardous or undesirable
items. Expert inspections are necessary. Current or future laws may require
clean up by past, present and/or future owners and/or operators. It is the
responsibility of the Seller/Lessor and Buyer/Tenant to retain qualified experts
to detect and correct such matters and to consult with legal counsel of their
choice to determine what provisions, if any, they may include in transaction
documents regarding the Property.

Sellers/Lessors are required under California Health and Safety Code Section
25915 et seq. to disclose reports and surveys regarding asbestos to certain
persons, including their employees, contractors, co-owners, purchasers and
tenants. Buyers/Tenants have similar disclosure obligations. Sellers/Lessors and
Buyers/Tenants have additional hazardous materials disclosure responsibilities
to each other under California Health and Safety Code Section 25359.7 and other
California laws. Consult your attorney regarding this matter, and make proper
disclosures. Grubb & Ellis Company is not qualified to assist you in this matter
or provide you with other legal or tax advice.

Sale, lease and other transactions can have local, state and federal tax
consequences for the seller/lessor and/or buyer/tenant. In the event of a sale,
Internal Revenue Code Section 1445 requires that all buyers of an interest in
any real property located in the United States must withhold and pay over to the
Internal Revenue Service (IRS) an amount equal to ten percent (10%) of the gross
sales price within ten (10) days of the date of the sale unless the buyer can
adequately establish that the seller was not a foreigner, generally by having
the sailor sign a Non-Foreign Seller Certificate. Note that depending upon the
structure of the transaction, the tax withholding liability could exceed the net
cash proceeds to be paid to the seller at closing. California poses an
additional withholding requirement equal to three an one-third percent (3 1/3%)
of the gross sales price not only on foreign sellers but also out-of-state
sellers and sellers leaving the state if the sale price exceeds $100,000.
Generally, withholding is required if the sales proceeds are disbursed outside
of California, if the last known address of the seller is outside of California
or if a financial intermediary is used. Consult your tax and legal advisor. Real
estate brokers are not qualified to give legal or tax advice or to determine
whether any other person is properly qualified to provide legal or tax advice.

LESSOR                                         TENANT


By: /s/ Bruce H. Dohrman                       By:
   -----------------------------                   -----------------------------
Title: BRUCE H. DOHRMAN                        Title:
      --------------------------                      --------------------------
Date: 6-22-02                                   Date:
     ---------------------------                     ---------------------------

<PAGE>

                                   EXHIBIT B

[LOGO] Grubb & Ellis

             CALIFORNIA SALE/LEASE AMERICANS WITH DISABILITIES ACT,
                    HAZARDOUS MATERIALS, AND TAX DISCLOSURE

The Americans With Disabilities Act is intended to make many business
establishments equally accessible to persons with a variety of disabilities;
modifications to real property may be required. State and local laws also may
mandate changes. The real estate brokers in this transaction are not qualified
to advise you as to what, if any, changes may be required now, or in the future.
Owners and tenants should consult the attorneys and qualified design
professionals of their choice for information regarding these matters. Real
estate brokers cannot determine which attorneys or design professionals have the
appropriate expertise in this area.

Various construction materials may contain items that have been or may in the
future be determined to be hazardous (toxic) or undesirable and may need to be
specifically treated/handled or removed. For example, some transformers and
other electrical components contain PCBs, and asbestos has been used in
components such as fire-proofing, heating and cooling systems, air duct
insulation, spray-on and the acoustical materials, linoleum, floor tiles,
roofing, dry wall and plaster. Due to prior or current users of the Property or
in the area, the Property may have hazardous or undesirable metals (including
lead-based paint), minerals, chemicals, hydrocarbons, or biological hazards
(including, but not limited to, mold) or radioactive items (including electrical
and magnetic fields) in soils, water, building components, above or below-ground
containers or elsewhere in areas that may or may not be accessible or
noticeable. Such items may leak or otherwise be released. Real estate agents
have no expertise in the detection or correction of hazardous or undesirable
items. Expert inspections are necessary. Current or future laws may require
clean up by past, present and/or future owners and/or operators. It is the
responsibility of the Seller/Lessor and Buyer/Tenant to retain qualified experts
to detect and correct such matters and to consult with legal counsel of their
choice to determine what provisions, if any, they may include in transaction
documents regarding the Property.

Sellers/Lessors are required under California Health and Safety Code Section
25915 et seq. to disclose reports and surveys regarding asbestos to certain
persons, including their employees, contractors, co-owners, purchasers and
tenants. Buyers/Tenants have similar disclosure obligations. Sellers/Lessors and
Buyers/Tenants have additional hazardous materials disclosure responsibilities
to each other under California Health and Safety Code Section 25359.7 and other
California laws. Consult your attorney regarding this matter, and make proper
disclosures. Grubb & Ellis Company is not qualified to assist you in this matter
or provide you with other legal or tax advice.

Sale, lease and other transactions can have local, state and federal tax
consequences for the seller/lessor and/or buyer/tenant. In the event of a sale,
Internal Revenue Code Section 1445 requires that all buyers of an interest in
any real property located in the United States must withhold and pay over to the
Internal Revenue Service (IRS) an amount equal to ten percent (10%) of the gross
sales price within ten(10) days of the date of the sale unless the buyer can
adequately establish that the seller was not a foreigner, generally by having
the seller sign a Non-Foreign Seller Certificate. Note that depending upon the
structure of the transaction, the tax withholding liability could exceed the net
cash proceeds to be paid to the seller at closing. California posses an
additional withholding requirement equal to three and one-third percent(3 1/3%)
of the gross sales price not only on foreign sellers but also out-of-state
sellers and sellers leaving the state if the sale price exceeds $100,000.
Generally, withholding is required if the sales proceeds are disbursed outside
of California, if the last known address of the seller is outside of California
or if a financial intermediary is used. Consult your tax and legal advisor. Real
estate brokers are not qualified to give legal or tax advice or to determine
whether any other person is properly qualified to provide legal or tax advice.

SELLER/LESSOR                                BUYER/TENANT


By: /s/ William H. Channell, Jr.             By:
    --------------------------------             -------------------------------
Title: President                             Title:
       -----------------------------                ----------------------------
Date: 6/21/02                                Date:
      ------------------------------               -----------------------------

<PAGE>

                                   EXHIBIT C

                             CORPORATE RESOLUTIONS

<PAGE>

                           ACTION BY UNANIMOUS CONSENT
                          OF THE BOARD OF DIRECTORS OF
                         CHANNELL COMMERCIAL CORPORATION

     Pursuant to the authority of Section 141 (f) of the Delaware General
Corporation Law, the undersigned, being all of the members of the Board of
Directors of CHANNELL COMMERCIAL CORPORATION a Delaware corporation (the
"Company"), hereby dispense with the formality of a meeting and certify that
they have consented to and adopted and hereby consent to and adopt the following
resolutions:

     WHEREAS: CC Holdings, Inc., a California corporation ("CC Holdings") is a
wholly-owned subsidiary of the Company;

     WHEREAS: CC Holdings owns that certain real property located in the City of
Temecula, County of Riverside, State of California, commonly known as 26090 Ynez
Road, Temecula, California (the "Property");

     WHEREAS: The Company has leased the Property from CC Holdings pursuant to
that certain Standard Industrial/Commercial Single-Tenant Lease, dated as of
October l, 1998 (the "Original Lease");

     WHEREAS, in connection with the financing of the Property, CC Holdings
borrowed $4,300,000 (the "Loan") from Woodmen Of The World Life Insurance
Society and/or Omaha Woodmen Life Insurance Society, a Nebraska corporation
("Lender"), evidenced by that certain Promissory Note, in the original principal
amount of the Loan, dated October 1, 1998, by CC Holdings in favor of Lender
(the "Note"), and secured by that certain Deed of Trust, Security Agreement,
Absolute Assignment of Leases and Rents and Fixture Financing Statement dated
October 1, 1998, by CC Holdings to Lender, and recorded in the official real
estate records for Riverside County, California, as document number 465657 (the
"Trust Deed"), on the terms and conditions set forth in the Note, the Trust Deed
and all other documents and instruments relating to or securing the obligations
evidenced by the Note (collectively the "Loan Documents");

     WHEREAS: CC Holdings and Dasco Company, Inc., a California corporation
("Buyer'), have entered into that certain Offer, Agreement and Escrow
Instructions for Purchase of Real Property, dated for reference purposes
February 25, 2002 (the "Original Purchase Agreement"), as amended by that
certain First Amendment to Offer, Agreement and Escrow Instructions for Purchase
of Real Property, dated April, 2002, between CC Holdings and Buyer (the "First
Amendment to Purchase Agreement") (the Original Purchase Agreement as amended by
the First Amendment to Purchase Agreement shall be referred to herein as the
"Purchase Agreement"), pursuant to which CC Holdings agreed to sell the Property
to Buyer, on the terms and conditions contained in the Purchase Agreement;

     WHEREAS: In accordance with the Purchase Agreement, the Company and CC
Holdings are to terminate the Original Lease pursuant to that certain
Termination of Lease, by and between the Company and CC Holdings (the
"Termination of Lease");

                                      -2-

<PAGE>

     WHEREAS: Pursuant to the Purchase Agreement, on the sale of the Property by
CC Holdings to the Buyer, it is proposed that the Company, as Lessee, and the
Buyer, as Lessor, enter into that certain Standard Industrial/Commercial
Single-Tenant Lease--Net, covering the Property (the "New Lease");

     WHEREAS: In connection with the assumption of the Loan and the obligations
of CC Holdings under the Loan Documents by the Buyer, the Lender is or may be
requiring the Company to execute certain certificates relating to the New Lease
and a subordination and non-disturbance agreement with respect to the New Lease
(collectively, the "Lender Lease Subordination Documents"); and

     WHEREAS: The directors deem it advisable and in the best interests of the
Company and its stockholders to terminate the original lease of the Property and
to authorize and approve the transactions described in the New Lease and the
Lender Lease Subordination Documents (collectively, the "Transaction Documents")
including, without limitation, the leasing of the Property by the Company from
the Buyer pursuant to the terms of the New Lease, and the subordination of the
Company's interest under the New Lease to the Trust Deed and other Loan
Documents on the terms and conditions set forth in the Lender Lease
Subordination Documents, and to authorize and approve the Transaction Documents
and the execution and delivery of the New Lease and the Lender Lease
Subordination Documents;

     NOW, THEREFORE, BE IT RESOLVED, that the directors of the Company do hereby
determine that it is advisable and in the best interests of the Company and its
stockholders to terminate the original lease of the Property and to ratify and
approve the transactions contemplated by the Transaction Documents and they are
hereby so approved and ratified;

     RESOLVED FURTHER, that the Termination of Lease, the New Lease and the
Lender Lease Subordination Documents be and hereby are adopted, and that the
Company and hereby authorizes and directs any officer of the Company to execute
and deliver on behalf of the Company any documents or instruments, including
without limitation, the Transaction Documents, to effect (i) the leasing of the
Property from the Buyer by the Company pursuant to the New Lease, (ii) the
termination of the Old Lease on the terms set forth in the Lease Termination,
and (iii) and the subordination of the New Lease to the Trust Deed and other
Loan Documents on the terms set forth in the Lender Lease Subordination
Documents, all as he, she or they deem necessary, advisable or appropriate to
effect the leasing of the Property to the Company by the Buyer pursuant to the
New Lease, and the other transactions pursuant to the Transaction Documents, as
such New Lease and Transaction Documents may be amended or modified in the
manner deemed necessary, appropriate or advisable by such officer, and the
execution and delivery of such amendment or modification by such member or
officer shall be deemed conclusive evidence of such member or officer's approval
of such amendment or modification;

                                      -3-

<PAGE>

     RESOLVED FURTHER, that the actions, if any, previously taken by the
officers of the Company, consistent with the foregoing resolutions in connection
with the matters referred to herein be and hereby are ratified and approved; and

     RESOLVED FURTHER, that all documents executed by the officers of the
Company, or any person or persons designated and authorized to act by any of
them, prior to the adoption of these resolutions, which would have been
authorized thereby after adoptions of these resolutions, are hereby ratified,
confirmed, approved and adopted in all respects.

This Unanimous Written Consent may be executed in counterparts, which taken
together shall be deemed to be a single document, shall be filed in the minute
book of this corporation and shall become a part of the records of the Company.

IN WITNESS WHEREOF, the undersigned have executed the above and foregoing
instrument as of the 18th day of June, 2002.


                                             /s/ William H. Channell, Sr.
                                             -----------------------------------
                                             William H. Channell, Sr.


                                             /s/ Richard A. Cude
                                             -----------------------------------
                                             Richard A. Cude


                                             /s/ William H. Channell, Jr.
                                             -----------------------------------
                                             William H. Channell, Jr.


                                             /s/ Eugene R. Schutt, Jr.
                                             -----------------------------------
                                             Eugene R. Schutt, Jr.


                                             /s/ Peter Hicks
                                             -----------------------------------
                                             Peter Hicks


                                             /s/ Bruce Glidden
                                             -----------------------------------
                                             Bruce Glidden

                                      -4-

<PAGE>

                                    EXHIBIT D

                                (Lease Materials)

The following materials or materials that fulfill an equivalent function in the
processes used in Lessee's business:

590 CONCENTRATE
ACETONE
AGMA Industrial Gear Lubricant
All Weather Gear oil
Alvania EP Grease 2
Anti- spatter Aerosol
Anti-spatter liquid
AquaWorks Cleaning Solution
Arrow 7289 Machining Fluid
BELMONT EDM POCO 3
BroCo RPA Rust Inhibitor
CASTROL MOLY-DEE
CASTROL W-329 WATER SOLUBLE
CEMENTED TUNGSTEN CARBIDE W/ COBALT BNDR
Citgo MP ATF, Dexron II/Mercon
Cor Add 16
Cor Draw 6326 NF
Corak 763
Corcut 6209A Machining fluid
Corlube B synthetic drawing compound
Denatured Alcohol
DE-SOLV-IT
Dowtherm SR-1 Heat transfer fluid
Dura-Lith Grease EP NLGI 2
Dura-Lith Grease EP1
Dura-Lith Grease EP2
DYKEM
EDM SUPPLIES-P0C0 3/ EDM3/ EOM C-3
Enamel Spray Paint
Epoxy Resin
Flash Clene 2020
GRINDING/ ADHESIVE PADS
Hoy Lubricant
Hydraulic Oil
ILOCUT 5468
Isopropanol
ISOPROPYL ALCOHOL
KEROSENE
LENOX BAND-ADE
MEK
Mineral Spirits
Mobil DTE Oil Light
MP180 thinner
MP182 Slow thinner
Multipurpose Auto Transmission Fluid.
Multi-Purpose Screen ink
Nozzle Dip
ORANGE SOLVENT
OSG TAP & DIE
pH Minus
pH Raise
Propylene Glycol USP
Shell Omala Oil 320

                                      -5-

<PAGE>

Shell Tellus Oil 32
Sher-Lac Acrylic Lacquer
SUPER GLUE/ BOND
Surcoat 9035
TAPMATIC-MOLY-DEE MIX
Titration Solution #6
Titration Solution #8
VALCOOL "TURN TECH"
WATER SOLUBLE CUTTING & GRINDING FLUID-E-190
WAY OIL
Way Lube
WD-40

</TEXT>
</DOCUMENT>
