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

1.   BASIC PROVISIONS ("BASIC PROVISIONS").

     1.1     PARTIES: This Lease ("LEASE"), dated for reference purposes only,
May 1, 1998, is made by and between ORIX SBAP GOLETA VENTURE, a general
partnership, ("LESSOR") and EARTHSHELL CORPORATION, a Delaware corporation
("LESSEE") (collectively the "PARTIES," or individually a "PARTY").

     1.2(a)  PREMISES: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 500 South Fairview Avenue, located in
unincorporated area of Goleta, County of Santa Barbara, State of California,
with zip code 93117, as outlined on Exhibit A attached hereto ("PREMISES"). The
"BUILDING" is that certain building containing the Premises and generally
described as (describe, briefly, the nature of the Building): Commercial office
(approximately 54,800 westerly square feet in the Building to be under this
Lease)  In addition to Lessee's rights to use and occupy the Premises as
hereinafter specified, Lessee shall have non-exclusive rights to the Common
Areas (as defined in Paragraph 2.7 below) as hereinafter specified, but shall
not have any rights to the roof, exterior walls or utility raceways of the
Building or to any other buildings in the Industrial Center. The Premises, the
Building, the Common Areas, the land upon which they are located, along with all
other buildings and improvements thereon, are herein collectively referred to as
the "INDUSTRIAL CENTER."  (Also see Paragraph 2.)

     1.2(b)  PARKING:  Lessee shall have the right to use 90 parking spaces in
the area designated on Exhibit A on a non-exclusive basis and 10 parking spaces
where shown on Exhibit A on an exclusive basis.  Lessee acknowledges that the
availability of 100 spaces for Lessee is based on a preliminary site plan for
the Building and Common Area which shows a total of 370 parking spaces. In the
event that further refinements of the site plan reduce the total number of
parking spaces for the Building and Common Area, then the number of parking
spaces available to Lessee shall be reduced proportionately, but in no event
below 90 spaces.

     1.3(b)  TERM:  This Lease shall have a term of five (5) years (the
"Original Term"). The Original Term shall commence on the "Commencement Date,"
which shall be the later of June 1, 1998 or the date that the Premises Turnover
has occurred. The term "Premises Turnover" means when Lessor has substantially
completed Lessor's Work (described in Paragraph 49 below), other than the work
of enclosing the dock area at the west end of the Building (the "Dock Work"). If
the Premises Turnover and the Commencement Date occur prior to completion of the
Dock Work, then the Base Rent payable hereunder shall be based upon the size of
the Premises without the dock area at the west end of the Building (the "Dock
Area"). Until the Commencement Date occurs, Lessee's existing month-to-month
tenancy shall continue on its present terms and conditions. If the Commencement
Date has not occurred by March 1, 1999, for any reason not caused by Lessee,
then Lessee shall have the right to terminate this Lease upon sixty (60) days
written notice to Lessor, provided that the Commencement Date has not occurred
during the sixty (60)-day notice period. This right of termination and the delay
of the Commencement Date shall be the sole remedies of Lessee for a delay in the
Commencement Date, and Lessor shall have no liability to Lessee for such delay.
The "Expiration Date" shall be the date that is five (5) years after the
Commencement Date.

     1.4     EARLY POSSESSION:  N/A  ("EARLY POSSESSION DATE"). (Also see
Paragraphs 3.2 and 3.3.)

     1.5     BASE RENT: $.80/sq. ft. per month ("BASE RENT"), payable on the 1st
day of each calendar month commencing 

             (a)    RENT COMMENCEMENT.  Base Rent shall commence one month 
and 15 days after the Commencement Date (the "Rent Commencement Date"). If 
the Rent Commencement Date is a day other than the first day of a calendar 
month, then the rent payment that is due and payable on the Rent Commencement 
Date will be a prorated portion of the Base Rent for a calendar month, based 
on the number of days from and including the Rent Commencement Date through 
and including the last day of the calendar month in which the Rent 
Commencement Date occurs, based on the actual number of days in that calendar 
month.  The next payment of Base Rent shall be due and payable on the first 
day of the first calendar month after the Rent Commencement Date (the "next 
calendar month").  The Base Rent payable upon execution of this Lease, as set 
forth in Paragraph 1.6(a) of this Lease, shall be applied first to the 
payment of Base Rent due and payable on the Rent Commencement Date and then 
to the payment of Base Rent due and payable on the first day of the next 
calendar month, with Lessee to pay any amount of Base Rent remaining due 
after applications of the pre-paid rent.

             (b)    DOCK AREA.  Until completion of the Dock Work, the Base Rent
shall be calculated based on the area of the Premises excluding the Dock Area.
The estimated area of the Dock Area is 11,670 square feet.  The estimated area
of the Premises excluding the Dock Area is 43,130 square feet. When Lessor
conducts its final measurement of the Premises following final placement of the
demising walls of the Premises, Lessor and Lessee shall sign a memorandum
setting forth the actual areas of the Premises, both including and excluding the
Dock Area, and the Building.  (Also see Paragraph 4.)

[X]  If this box is checked, this Lease provides for the Base Rent to be
adjusted per Addendum 53, attached hereto.

     1.6(a)  BASE RENT PAID UPON EXECUTION: $.80/sq. ft. as Base Rent for the
period second half of the second month, and third month.

     1.6(b)  LESSEE'S SHARE OF COMMON AREA OPERATING EXPENSES: __________ 
percent (   %) ("LESSEE'S SHARE") as determined by [  ] prorata square 
footage of the Premises as compared to the total square footage of the 
Building or [  ] other criteria as described in Addendum _________. Lessor 
has preliminarily measured the Premises to contain approximately 54,800 
square feet including the Dock Area and 43,130 square feet excluding the Dock 
Area, and the Building to contain approximately 119,600 square feet.  Based 
on these preliminary measurements, "Lessee's Share" would be approximately 
45.819% including the Dock Area and 36.062% excluding the Dock Area. Upon the 
final measurements of the Premises and the Building by Lessor, as described 
in Paragraph 1.5(b) above, the amount of Base Rent and Lessee's Share shall 
be adjusted based on Such measurements.

     1.7     SECURITY DEPOSIT:  $.80/sq. ft. ("SECURITY DEPOSIT"). (Also see
Paragraph 5.)

     1.8     PERMITTED USE:  General office or any other lawful use ("PERMITTED
USE"). (Also see Paragraph 6.)

     1.9     INSURING PARTY.  Lessor is the "INSURING PARTY." (Also see
Paragraph 8.)

     1.12    ADDENDA AND EXHIBITS.  Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 53, and Exhibits A through ___, all of which
constitute a part of this Lease.

2.   PREMISES, PARKING AND COMMON AREAS.

     2.1     LETTING.  Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease.

     2.2     CONDITION. Lessor shall deliver the premises to Lessee clean and 
free of debris and in good repair and condition on the Commencement Date and 
warrants to Lessee that the existing plumbing, electrical systems, fire 
sprinkler system, lighting, air conditioning and heating systems and loading 
doors, if any, in the Premises, other than those constructed by Lessee, shall 
be in good operating condition on the Commencement Date.  If a non-compliance 
with said warranty exists as of the Commencement Date, Lessor shall, except 
as otherwise provided in this Lease, promptly after receipt of written notice 
from Lessee setting forth with specificity the nature and extent of such 
non-compliance, rectify same at Lessor's expense. If Lessee does not give 
Lessor written notice of a non-compliance with this warranty within thirty 
(30) days after the Commencement Date, correction of that non-compliance 
shall be the obligation of Lessee at Lessee's sole cost and expense; provided 
that the 30-day time limit for reporting by Lessee of defects shall not apply 
to latent defects that could not be detected by Lessee with ordinary 
diligence within that time limit.

     2.3     COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE.  
Lessor warrants that any improvements (other than those constructed by Lessee 
or at Lessee's direction) on or in the Premises which have been constructed 
or installed by Lessor or with Lessor's consent or at Lessor's direction 
shall comply with all applicable covenants or restrictions of record and 
applicable building codes, regulations and ordinances in effect on the 
Commencement Date. Lessor further warrants to Lessee that Lessor has no 
knowledge of any claim having been made by any governmental agency that a 
violation or violations of applicable building codes, regulations, or 
ordinances exist with regard to the Premises as of the Commencement Date. 
Said warranties shall not apply to any Alterations or Utility Installations 
(defined in Paragraph 7.3(a)) made or to be made by Lessee. If the Premises 
do not comply with said warranties, Lessor shall, except as otherwise 
provided in this Lease, promptly after receipt of written notice from Lessee 
given within six (6) months following the Commencement Date and setting forth 
with specificity the nature and extent of such non-compliance, take such 
action, at Lessor's expense, as may be reasonable or appropriate to rectify 
the non-compliance. Lessor makes no warranty that the Permitted Use in 
Paragraph 1.8 is permitted for the Premises under Applicable Laws (as defined 
in Paragraph 2.4).  See Addendum PARA 50. The six-month limit on reporting by 
Lessee of breaches of the warranties in this Paragraph shall not apply to 
latent defects that could not be detected by Lessee with ordinary diligence 
within that time limit.

     2.4     ACCEPTANCE OF PREMISES.  Lessee hereby acknowledges: (a) that it 
has been advised by the Broker(s) to satisfy itself with respect to the 
condition of the Premises (including but not limited to the electrical and 
fire sprinkler systems, security, environmental aspects, seismic and 
earthquake requirements, and compliance with the Americans with Disabilities 
Act and applicable zoning, municipal, county, state and federal laws, 
ordinances and regulations and any covenants or restrictions of record 
(collectively, "APPLICABLE LAWS") and the present and future suitability of 
the Premises for Lessee's intended use; (b) that Lessee has made such 
investigation as it deems necessary with reference to such matters, is 
satisfied with reference thereto, and assumes all responsibility therefore as 
the same relate to Lessee's occupancy of the Premises and/or the terms of 
this Lease; and (c) that neither Lessor, nor any of Lessor's agents, has made 
any oral or written representations or warranties with respect to said 
matters other than as set forth in this Lease.  This acceptance of the 
Premises by Lessee described in Paragraph 2.4 does not extend to or cover 
Lessor's Work, as described in Paragraph 49, which will be commenced and 
completed after the date of this Lease.

     2.5     LESSEE AS PRIOR OWNER/OCCUPANT.  Because Lessee was the prior 
occupant of the Premises prior to the time that Lessor became the owner of 
the Building, if Lessee had knowledge, prior to execution of this Lease, of a 
condition in the Premises that would be a breach of the warranties of Lessor 
in Paragraph 2, Lessee failed to report the condition to Lessor prior to 
execution of this Lease, and Lessor had no knowledge of that condition prior 
to execution of this Lease, then such condition shall not be deemed a breach 
of Lessor's warranties in this Paragraph 2.  Also, no condition of the 
Premises shall be a breach of the warranties in this Paragraph 2 if repair or 
correction of such condition was the responsibility of Lessee under its prior 
lease of the Premises.

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     2.6     VEHICLE  PARKING. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Areas designated from time to time by
Lessor for parking. Lessee shall not use more parking spaces than said number.
Said parking spaces shall be used for parking by vehicles no larger than
full-size passenger automobiles, passenger vans or pick-up trucks, herein called
"PERMITTED SIZE VEHICLES." Vehicles other than Permitted Size Vehicles shall be
parked and loaded or unloaded as directed by Lessor in the Rules and Regulations
(as defined in Paragraph 40) issued by Lessor. (Also see Paragraph 2.9.)

             (a)    Lessee shall not permit or allow any vehicles that belong to
or are controlled by Lessee or Lessee's employees, suppliers, shippers,
customers, contractors or invitees to be loaded, unloaded, or parked in areas
other than those designated by Lessor for such activities.

             (b)    If Lessee permits or allows any of the prohibited activities
described in this Paragraph 2.6, then Lessor shall have the right, without
notice, in addition to such other rights and remedies that it may have, to
remove or tow away the vehicle involved and charge the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.

             (c)    Lessor shall at the Commencement Date of this Lease, provide
the parking facilities required by Applicable Law. 

     2.7     COMMON AREAS - DEFINITION. The term "COMMON AREAS" is defined as 
all areas and facilities outside the Premises and within the exterior 
boundary line of the Industrial Center and interior utility raceways within 
the Premises that are provided and designated by the Lessor from time to time 
for the general non-exclusive use of Lessor, Lessee and other lessees of the 
Industrial Center and their respective employees, suppliers, shippers, 
customers, contractors and invitees, including parking areas, loading and 
unloading areas, trash areas, roadways, sidewalks, walkways, parkways, 
driveways and landscaped areas. 

     2.8     COMMON AREAS - LESSEE'S RIGHTS. Lessor hereby grants to Lessee, for
the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and
regulations or restrictions governing the use of the Industrial Center. Under no
circumstances shall the right herein granted to use the Common Areas be deemed
to include the right to store any property, temporarily or permanently, in the
Common Areas. Any such storage shall be permitted only by the prior written
consent of Lessor or Lessor's designated agent, which consent may be revoked at
any time. In the event that any unauthorized storage shall occur, then Lessor
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove the property and charge the cost to Lessee,
which cost shall be immediately payable upon demand by Lessor.

     2.9     COMMON AREAS - RULES AND REGULATIONS. Lessor or such other 
person(s) as Lessor may appoint shall have the exclusive control and 
management of the Common Areas and shall have the right, from time to time, 
to establish, modify, amend and enforce reasonable Rules and Regulations with 
respect thereto in accordance with Paragraph 40. Lessee agrees to abide by 
and conform to all such Rules and Regulations, and to cause its employees, 
suppliers, shippers, customers, contractors and invitees to so abide and 
conform. Lessor shall not be responsible to Lessee for the non-compliance 
with said rules and regulations by other lessees of the Industrial Center. 
Any Rules and Regulations established by Lessor pursuant to this Paragraph 
(a) shall be established, implemented, applied and enforced by Lessor in a 
good-faith, non-discriminatory matter and (b) shall not unreasonably 
interfere with Lessee's operations on the Premises, provided such operations 
are a Permitted Use, comply with law and otherwise comply with the provisions 
of this Lease.
 
     2.10    COMMON AREAS - CHANGES. Lessor shall have the right, in Lessor's
sole discretion, from time to time:

             (a)    To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, walkways and utility raceways;

             (b)    To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;

             (e)    To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Industrial Center, or any portion
thereof; and

             (f)    To do and perform such other acts and make such other 
changes in, to or with respect to the Common Areas and Industrial Center as 
Lessor may, in the exercise of sound business judgement, deem to be 
appropriate. 

     However, the exercise by Lessor of its rights under this 
Paragraph may not unreasonably interfere with Lessee's operations on the 
Premises, provided such operations are a Permitted Use, comply with law and 
otherwise comply with the provisions of this Lease.

3.   TERM.

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

     3.3     DELAY IN POSSESSION. DELAY IN COMMENCEMENT DATE. Lessee 
currently is in possession of the Premises under a month-to-month tenancy as 
a holding over after expiration of its previous lease. In the event that the 
Commencement Date does not occur by June 1, 1998, then the provisions of 
Paragraph 1.3(b) shall govern, and Lessee shall continue to lease and occupy 
the Premises under its month-to-month tenancy.

4.   RENT.

     4.1     BASE RENT. Lessee shall pay Base Rent and other rent or charges, as
the same may be adjusted from time to time, to Lessor in lawful money of the
United States, without offset or deduction, on or before the day on which it is
due under the terms of this Lease. Base Rent and all other rent and charges for
any period during the term hereof which is for less than one full month shall be
prorated based upon the actual number of days of the month involved. Payment of
Base Rent and other charges shall be made to Lessor at its address stated herein
or to such other persons or at such other addresses as Lessor may from time to
time designate in writing to Lessee. 

     4.2     COMMON AREA OPERATING EXPENSES. Lessee shall pay to Lessor 
during the term hereof, in addition to the Base Rent, Lessee's Share (as 
specified in Paragraph 1.6(b)) of all Common Area Operating Expenses, as 
hereinafter defined, during each calendar year of the term of this Lease, in 
accordance with the following provisions: Lessee shall not pay Lessee's Share 
of Common Area Operating Expenses for the first one month and 15 days of the 
term, from the Commencement Date until the Rent Commencement Date. Lessee's 
liability for Common Area Operating Expenses during the calendar year in 
which the Rent Commencement Date occurs shall be calculated by multiplying 
the total Common Area Operating Expenses for that calendar year by a 
fraction, the numerator of which is the number of days remaining in the 
calendar year as of the Rent Commencement Date and the denominator of which 
is 365.

             (a)    "COMMON AREA OPERATING EXPENSES" are defined, for
purposes of this Lease, as all costs incurred by Lessor relating to the
ownership and operation of the Industrial Center, including, but not limited to,
the following:

                    (i)     The operation, repair and maintenance, in neat,
clean, good order and condition, of the following:

                            (aa)   The Common Areas, including parking areas,
loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways, driveways, landscaped areas, striping, bumpers, irrigation systems,
Common Area lighting facilities, fences and gates, elevators and roof.

                            (bb)   Exterior signs and any tenant directories.

                            (cc)   Fire detection and sprinkler systems.

                    (ii)    The cost of water, gas, electricity and telephone to
service the Common Areas.

                    (iii)   Trash disposal, property management and security
services and the costs of any environmental inspections.

                    (iv)    Reserves set aside for maintenance and repair of
Common Areas.       
     
                    (v)     Real Property Taxes (as defined in Paragraph 10.2)
to be paid by Lessor for the Building and the Common Areas under Paragraph 
[cut off] hereof.

                    (vi)    The cost of the premiums for the insurance policies
maintained by Lessor under Paragraph 8 hereof.

                    (vii)   Any deductible portion of an insured loss concerning
the Building or the Common Areas.

                    (viii)  Any other services to be provided by Lessor that are
stated elsewhere in this Lease to be a Common Area Operating Expense.

     4.2(a)  "COMMON AREA OPERATING EXPENSES." Notwithstanding anything to the
contrary in the foregoing, the following terms shall specifically be excluded
from the definition of Common Area Operating Expenses:

          (i)    costs incurred by Lessor with respect to goods and services,
including utilities sold or supplied to lessees and occupants of the Building,
to the extent that Lessor is entitled to reimbursement for such costs, except
through rental adjustments (or escalation) collected from lessees in the
Building and Lessee;

          (ii)   costs incurred by Lessor for the repair of damage to the
Building to the extent that Lessor is reimbursed by insurance proceeds;

          (iii)  capital costs incurred with respect to the installation of
tenant improvements for new lessees in the Building or incurred in renovating or
otherwise improving, decorating, painting or redecorating space leased by or
available for leasing to lessees or other occupants of the Building;

          (iv)   leasing commissions, attorneys' fees and other costs and
expenses incurred in connection with negotiations or disputes with present or
prospective lessees or other occupants of the Building;

          (v)    costs in connection with services or other benefits which are
not available to Lessee or for which Lessee is charged directly (except through
rental adjustments or escalations) to another tenant or occupant of the
Building;

          (vi)   costs incurred by Lessor in enforcing other leases of space of
the Building;

          (vii)  advertising and promotional expenditures primarily directed
toward leasing tenant space in the Building;

          (viii) ground lessee payments, and interest, points and fees on debt
or amortization on or for any mortgage or mortgages encumbering the Building, or
any part thereof, and all principal, escrow deposits and other sums paid on or
in respect to any indebtedness (whether or not secured by a mortgage lien) and
on any equity participations of any lender or lessor, and all costs incurred in
connection with any financing, refinancing or syndication of the Building, or
any part thereof; and

          (ix)   costs of goods, services or other products obtained by Lessor
from an affiliate of Lessor, to the extent that such costs exceed the fair
market value of such goods, services or products when obtained from unrelated
third parties.

             (b)    Any Common Area Operating Expenses and Real Property Taxes
that are specifically attributable to the Building or to any other building in
the Industrial Center or to the operation, repair and maintenance thereof, shall
be allocated entirely to the Building or to such other building. However, any
Common Area Operating Expenses and Real Property Taxes that are not specifically
attributable to the Building or to any other building or to the operation,
repair and maintenance thereof, shall be equitably allocated by Lessor to all 
buildings in the Industrial Center.  Common Area Operating Expenses or Real 
Property Taxes attributable entirely to another building pursuant to this 
Paragraph shall not be considered Common Area Operating Expenses.

             (c)    The inclusion of the improvements, facilities and services
set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation
upon Lessor to either have said improvements or facilities or to provide those
services unless the Industrial Center already has the same, Lessor already
provides the services, or Lessor has agreed elsewhere in this Lease to
provide the same or some of them.

             (d)    Lessee's Share of Common Area Operating Expenses shall be
payable by Lessee within thirty (30) days after a reasonably detailed statement
of actual expenses is presented to Lessee by Lessor. At Lessor's option,
however, an amount may be estimated by Lessor from time to time of Lessee's
Share of annual Common Area Operating Expenses and the same shall be payable
monthly or quarterly, as Lessor shall designate, during each 12-month period of
the Lease term, on the same day as the Base Rent is due hereunder. Lessor shall
deliver to Lessee within sixty (60) days after the expiration of each calendar
year a reasonably detailed statement showing Lessee's Share of the actual Common
Area Operating Expenses incurred during the preceding year. If Lessee's payments
under this Paragraph 4.2(d) during said preceding year exceed Lessee's Share as
indicated on said statement, Lessee shall be credited the amount of such
over-

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payment against Lessee's Share of Common Area Operating Expenses next 
becoming due. If Lessee's payments under this Paragraph 4.2(d) during said 
preceding year were less than Lessee's Share as indicated on said statement, 
Lessee shall pay to Lessor the amount of the deficiency within thirty (30) 
days after delivery by Lessor to Lessee of said statement.

5.  SECURITY DEPOSIT. Lessee shall deposit with Lessor upon Lessee's 
execution hereof the Security Deposit set forth in Paragraph 1.7 as security 
for Lessee's faithful performance of Lessee's obligations under this Lease. 
If Lessee fails to pay Base Rent or other rent or charges due hereunder, or 
otherwise Defaults under this Lease (as defined in Paragraph 13.1), Lessor 
may use, apply or retain all or any portion of said Security Deposit for the 
payment of any amount due Lessor or to reimburse or compensate Lessor for any 
liability, cost, expense, loss or damage (including attorneys' fees) which 
Lessor may suffer or incur by reason thereof. If Lessor uses or applies all 
or any portion of said Security Deposit, Lessee shall within thirty (30) days 
after written request therefore deposit monies with Lessor sufficient to 
restore said Security Deposit to the full amount required by this Lease. Any 
time the Base Rent increases during the term of this Lease, Lessee shall, 
upon written request from Lessor, deposit additional monies with Lessor as an 
addition to the Security Deposit so that the total amount of the Security 
Deposit shall at all times bear the same proportion to the then current Base 
Rent as the initial Security Deposit bears to the initial Base Rent set forth 
in Paragraph 1.5. Lessor shall not be required to keep all or any part of the 
Security Deposit separate from its general accounts. Lessor shall, at the 
expiration or earlier termination of the term hereof and after Lessee has 
vacated the Premises, return to Lessee (or, at Lessor's option, to the last 
assignee, if any, of Lessee's interest herein), that portion of the Security 
Deposit not used or applied by Lessor. Unless otherwise expressly agreed in 
writing by Lessor, no part of the Security Deposit shall be considered to be 
held in trust, to bear interest or other increment for its use, or to be 
prepayment for any monies to be paid by Lessee under this Lease.

6.  USE.

    6.1     PERMITTED USE.

            (a)    Lessee shall use and occupy the Premises only for the
Permitted Use set forth in Paragraph 1.8, or any other legal use which is
reasonably comparable thereto, and for no other purpose. Lessee shall not use or
permit the use of the Premises in a manner that is unlawful, creates waste or a
nuisance, or that disturbs owners and/or occupants of, or causes damage to the
Premises or neighboring premises or properties.

            (b)    Lessor hereby agrees to not unreasonably withhold or delay
its consent to any written request by Lessee, Lessee's assignees or subtenants,
and by prospective assignees and subtenants of Lessee, its assignees and
subtenants, for a modification of said Permitted Use, so long as the same will
not impair the structural integrity of the Improvements on the Premises or in
the Building or the mechanical or electrical systems therein, does not conflict
with uses by other lessees, is not significantly more burdensome to the Premises
or the Building and the improvements thereon, and is otherwise permissible
pursuant to this Paragraph 6. If Lessor elects to withhold such consent, Lessor
shall within five (5) business days after such request give a written
notification of same, which notice shall include an explanation of Lessor's
reasonable objections to the change in use.

    6.2     HAZARDOUS SUBSTANCES.

            (a)     REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS 
SUBSTANCE" as used in this Lease shall mean any product, substance, chemical, 
material or waste whose presence, nature, quantity and/or intensity of 
existence, use, manufacture, disposal, transportation, spill, release or 
effect, either by itself or in combination with other materials expected to 
be on the Premises, is either: (i) potentially 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 Substance shall include, 
but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or any 
products or by-products thereof. Lessee shall not engage in any activity in 
or about the Premises which constitutes a Reportable Use (as hereinafter 
defined) of Hazardous Substances without the express prior written consent of 
Lessor and compliance in a timely manner (at Lessee's sole cost and expense) 
with all Applicable Requirements (as defined in Paragraph 6.3). "REPORTABLE 
USE" shall mean (i) the installation or use of any above or below ground 
storage tank, (ii) the generation, possession, storage, use, transportation, 
or disposal of a Hazardous Substance that requires a permit from, or with 
respect to which a report, notice, registration or business plan is required 
to be filed with, any governmental authority, and (iii) the presence in, on 
or about the Premises of a Hazardous Substance with respect to which any 
Applicable Laws require that a notice be given to persons entering or 
occupying the Premises or neighboring properties. Notwithstanding the 
foregoing, Lessee may, without Lessor's prior consent, but upon notice to 
Lessor and in compliance with all Applicable Requirements, use any ordinary 
and customary materials reasonably required to be used by Lessee in the 
normal course of the Permitted Use, so long as such use is not a Reportable 
Use and does not expose the Premises or neighboring properties to any 
meaningful risk of contamination or damage or expose Lessor to any liability 
therefor. In addition, Lessor may (but without any obligation to do so) 
condition its consent to any Reportable Use of any Hazardous Substance by 
Lessee upon Lessee's giving Lessor such additional assurances as Lessor, in 
its reasonable discretion, deems necessary to protect itself, the public, the 
Premises and the environment against damage, contamination or injury and/or 
liability therefor, including but not limited to the installation (and, at 
Lessor's option, removal on or before Lease expiration or earlier 
termination) of reasonably necessary protective modifications to the Premises 
(such as concrete encasements) and/or the deposit of an additional Security 
Deposit under Paragraph 5 hereof. Lessee warrants and represents to
Lessor that Exhibit B attached to this Lease and incorporated by this reference
lists the Hazardous Substances (other than reasonable amounts of commonly used
cleaning chemicals and compounds) and Reportable Uses currently utilized by
Lessee in its operations on the Premises. Lessor consents to the use by Lessee
on the Premises of the Reportable Uses and Hazardous Substances listed in
Exhibit B, in accordance with Lessee's present practices and procedures,
provided that such use complies with all Applicable Requirements.

            (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 or the Building, other than as previously 
consented to by Lessor, Lessee shall immediately give Lessor written notice 
thereof, together with a copy of any statement, report, notice, registration, 
application, permit, business plan, license, claim, action, or proceeding 
given to, or received from, any governmental authority or private party 
concerning the presence, spill, release, discharge of, or exposure to, such 
Hazardous Substance including but not limited to all such documents as may be 
involved in any Reportable Use involving the Premises. Lessee shall not cause 
or permit any Hazardous Substance to be spilled or released in, on, under or 
about the Premises (including, without limitation, through the plumbing or 
sanitary sewer system).

            (c)     INDEMNIFICATION. Lessee shall indemnify, protect, defend 
and hold Lessor, its agents, employees, lenders and ground lessor, if any, 
and the Premises, harmless from and against any and all damages, liabilities, 
judgments, costs, claims, liens, expenses, penalties, loss of permits and 
attorneys' and consultants' fees resulting from any Hazardous Substance 
brought onto the Premises by or for Lessee or by anyone under Lessee's 
control.  Lessee's obligations under this Paragraph 6.2(c) shall include, but 
not be limited to, the effects of any contamination or injury to person, 
property or the environment created or suffered by Lessee, and the cost of 
Investigation (including consultants' and attorneys' fees and testing), 
removal, remediation, restoration and/or abatement thereof, or of any 
contamination therein involved, and shall survive the expiration or earlier 
termination of this Lease. No termination, cancellation or release agreement 
entered into by Lessor and Lessee shall release Lessee from its obligations 
under this Lease with respect to Hazardous Substances, unless specifically so 
agreed by Lessor in writing at the time of such agreement. See Insert.

            (d)     LESSOR  INDEMNIFICATION. Lessor agrees that, as between 
Lessor and Lessee, Lessor shall be responsible for any Hazardous Substances 
existing in the Building or Common Areas as of the Commencement Date, except 
for Hazardous Substances resulting from the actions of Lessee, its employees, 
contractors and agents. Lessor represents and warrants to Lessee that as of 
the date hereof to Lessor's actual knowledge, there are no Hazardous 
Substances located in or under the Building or Common Area, except as may be 
described in the various environmental reports described below, copies of 
which have been supplied to Lessee. Lessor agrees to indemnify and hold 
harmless Lessee from any loss, cost or expense incurred by Lessee as a result 
of a breach of the foregoing representation and warranty by Lessor. Said 
Environmental Reports are:

            A.   Report title "Plaza de Goleta/Airport Plaza, South Fairview
Avenue, Goleta, California" dated August 13, 1992 prepared by Dames & Moore as
Job No. 25050-01-042.

            B.   Report titled "Additional Investigations, Plaza de
Goleta/Airport Plaza, South Fairview Avenue, Goleta, California" dated January
28, 1993 prepared by Dames & Moore as Job No. 25050-001-042.

            C.   Report titled "Asbestos Survey Report, Plaza de Goleta/Airport
Plaza, Goleta, California" dated March 1, 1993 prepared by Masek Consulting
Services, Inc. for Dames & Moor.

            D.   Report title "Additional Subsurface Environmental
Investigation" conducted as Airport Plaza, South Fairview Avenue, Goleta,
California dated October 14, 1993 prepared by RESNA Industries Inc. as Job No.
23101801.

            E.   Letter dated December 21, 1993 from Ross Grayson to Jerry
Beaver regarding Plaza de Goleta/Airport Plaza.

            F.   Report titled "Additional Subsurface Environmental
Investigation" conducted at Airport Plaza, South Fairview Avenue, Goleta,
California dated February 1, 1994 prepared by RESNA Industrial, Inc. as Job No.
231018.01.

            G.   Report titled "Additional Subsurface Environmental
Investigation" at 500 South Fairview Avenue, Airport Plaza, Goleta, California
dated April 12, 1995 prepared by Ground Zero Analysis, Inc. as Job No. 019.

            H.   Letter dated November 20, 1995 from Ground Zero Analysis, Inc.
to Richard Aleshire with the CA Regional Water Quality Control Board regarding
Fourth Quarter 1995 ground water monitoring and sampling report.

            I.   Report titled "Soils Investigation - US Post Office, Goleta,
California" dated August 1996 prepared by Dan Giffen.

            J.   Report title "Remedial Investigation and Alternatives" dated
October  1996 prepared by Dan Giffen and Clayton Environmental Consultants.

            K.   Letter date May 13, 1997 from Harding Lawson Associates to Tom
H. Clarke of Ropers, Majeski, Cohn & Bentley, Inc. regarding results of
geophysical investigation, underground storage tank areas, former U.S. Post
Office Complex, Goleta, California.

            L.   Phase I Environmental Site Assessment Update, dated December
19, 1998, prepared for ORIX Real Estate Equities, Inc. by ENSR.

    6.2(d)  RENT ABATEMENT. In the event that a release of Hazardous Substances
occurs on the Premises, in the Building or on the real property on which the
Premises are situated, which is not caused in whole or in part by Lessee or any
of Lessee's employees, agents, contractors or business invitees, and as a result
of the Release or in order to remedy the Release, Lessee must vacate all or part
of the Premises, then the provisions of Section 9.6(a) shall apply, but Lessee
shall not have the right to terminate this Lease.

    6.3     LESSEE'S COMPLIANCE WITH REQUIREMENTS. Lessee shall, at Lessee's
sole cost and expense, fully, diligently and in a timely manner, comply with all
"APPLICABLE REQUIREMENTS," which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or consultants, relating in any manner to the Premises (including
but not limited to matters pertaining to (i) industrial hygiene, (ii)
environmental conditions on, in, under or about the Premises, including soil and
groundwater conditions, and (iii) the use, generation, manufacture, production,
installation, maintenance, removal, transportation, storage, spill, or release
of any Hazardous Substance), now in effect or which may hereafter come into
effect. Lessee shall, within five (5) days after receipt of Lessor's written
request, provide Lessor with copies of all documents and information, including
but not limited to permits, registrations, manifests, applications, reports and
certificates, evidencing Lessee's compliance with any Applicable Requirements
specified by Lessor, and shall immediately upon receipt, notify Lessor in
writing (with copies of any documents involved) of any threatened or actual
claim, notice, citation, warning, complaint or report pertaining to or involving
failure by Lessee or the Premises to comply with any Applicable Requirements.

    6.4     INSPECTION: COMPLIANCE WITH LAW. Lessor, Lessor's agents, 
employees, contractors and designated representatives, and the holders of any 
mortgages, deeds of trust or ground leases on the Premises ("LENDERS") shall 
have the right to enter the Premises at any time in the case of an emergency, 
and otherwise at reasonable times, for the purpose of inspecting the 
condition of the Premises and for verifying compliance by Lessee with this 
Lease and all Applicable Requirements (as defined in Paragraph 6.3), and 
Lessor shall be entitled to employ experts and/or consultants therewith to 
advise Lessor with respect to Lessee's activities, including but not limited 
to Lessee's installation, operation, use, monitoring, maintenance, or removal 
of any Hazardous Substance on or from the Premises. The costs and expenses of 
any such inspections shall be paid by the party requesting same, unless a 
Default or Breach of this Lease by Lessee or a violation of Applicable 
Requirements or a contamination, caused or materially contributed to by 
Lessee, is found to exist or to be imminent, or unless the inspection is 
requested or ordered by a governmental authority as the result of any such 
existing or imminent violation or contamination. In such case, Lessee shall 
upon request reimburse Lessor or Lessor's Lender, as the case may be, for the 
costs and expenses of such inspections.

7.  MAINTENANCE, REPAIRS, UTILITY INSTALLATIONS, TRADE FIXTURES AND
ALTERATIONS.

    7.1     LESSEE'S OBLIGATIONS.

            (a)     Subject to the provisions of Paragraphs 2.2 (Condition), 
2.3 (Compliance with Covenants, Restrictions and Building Code), 7.2 
(Lessor's Obligations), 9 (Damage or Destruction), and 14 (Condemnation), 
Lessee shall, at Lessee's sole cost and expense and at all times, keep the 
Premises and every part thereof in good order, condition and repair (whether 
or not such portion of the Premises requiring repair, or the means of 
repairing the same, are reasonably or readily accessible to Lessee, and 
whether or not the need for such repairs occurs as a result of Lessee's use, 
any prior use by Lessee the elements or the age of such portion of the 
Premises), including, without limiting the generality of the foregoing, all 
equipment or facilities specifically serving the Premises, such as plumbing, 
heating, air conditioning, ventilating, electrical, lighting facilities, 
boilers, fired or unfired pressure vessels, fire hose connections if within 
the Premises, fixtures, interior walls, interior surfaces of exterior walls, 
ceilings, floors, windows, doors, plate glass, and skylights, but excluding 
any items which are the responsibility of Lessor pursuant to Paragraph 7.2 
below. Lessee, in keeping the Premises in good order, condition and repair, 
shall exercise and perform good maintenance practices. Lessee's obligations 
shall include restorations, replacements or renewals when necessary to keep 
the Premises and all improvements thereon or a part thereof in good order, 
condition and state of repair. Notwithstanding anything to the contrary in
Paragraph 7.1(a), if Paragraph 7.1(a) would require Lessee to replace HVAC,
electrical or plumbing equipment that would constitute capital improvements
under generally accepted accounting principles, and the useful life of the new
improvements would extend beyond the end of the term of this Lease, based on
United States Internal Revenue Code depreciation schedules, then Lessee shall
only be responsible for that portion of the cost of the equipment equal to the
portion of the useful life of the improvements that falls within the term of
this Lease, and Lessor shall pay the balance of the cost of such equipment.

            (b)     Lessee shall, at Lessee's sole cost and expense, procure 
and maintain a contract, with copies to Lessor, in customary form and 
substance for and with a contractor specializing and experienced in the 
inspection, maintenance and service of the heating, air conditioning and 
ventilation system for the Premises.

            (c)     If Lessee fails to perform Lessee's obligations under 
this Paragraph 7.1, Lessor may enter upon the Premises after ten (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, in 
accordance with Paragraph 13.2 below.

    7.2     LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2 
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code), 
4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9 
(Damage or Destruction) and 14 (Condemnation), Lessor, subject to 
reimbursement pursuant to Paragraph 4.2 (if a Common Area Operating Expense) 
shall keep in good order, condition and repair the foundations, exterior 
walls, structural condition of interior bearing walls, exterior roof, fire 
sprinkler and/or standpipe and hose (if located in the Common Areas) or other 
automatic fire extinguishing system including fire alarm and/or smoke

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detection systems and equipment, fire hydrants, parking lots, walkways,
parkways, driveways, landscaping, fences, signs and utility systems serving the
Common Areas and all parts thereof, as well as providing the services for which
there is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor shall
not be obligated to paint the exterior or interior surfaces of exterior walls
nor shall Lessor be obligated to maintain, repair or replace windows, doors or
plate glass of the Premises. Lessee expressly waives the benefit of any statute
now or hereafter in effect which would otherwise afford Lessee the right to make
repairs at Lessor's expense or to terminate this Lease because of Lessor's
failure to keep the Building, Industrial Center or Common Areas in good order,
condition and repair.

     7.3     UTILITY INSTALLATIONS, TRADE FIXTURES, ALTERATIONS.

             (a)    DEFINITIONS; CONSENT REQUIRED.  The term "UTILITY 
INSTALLATIONS" is used in this Lease to refer to all air lines, power panels, 
electrical distribution, security, fire protection systems, communications 
systems, lighting fixtures, heating, ventilating and air conditioning 
equipment, plumbing, and fencing in, on or about the Premises. The term 
"TRADE FIXTURES" shall mean Lessee's machinery and equipment which can be 
removed without doing material damage to the Premises. The term "ALTERATIONS" 
shall mean any modification of the improvements on the Premises which are 
provided by Lessor under the terms of this Lease, other than Utility 
Installations or Trade Fixtures. "LESSEE-OWNED ALTERATIONS AND/OR UTILITY 
INSTALLATIONS" are defined as Alterations and/or Utility Installations made 
by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a). 
Lessee shall not make nor cause to be made any Alterations or Utility 
Installations in, on, under or about the Premises without Lessor's prior 
written consent. Lessee may, however, make non-structural Utility 
Installations to the interior of the Premises (excluding the roof) without 
Lessor's consent but upon notice to Lessor, so long as they are not visible 
from the outside of the Premises, do not involve puncturing, relocating or 
removing the roof or any existing walls, or changing or interfering with the 
fire sprinkler or fire detection systems and the cumulative cost thereof 
during the term of this Lease as extended does not exceed $2,500.00. 
Notwithstanding anything to the contrary in Paragraph 7.3 or other provisions 
of this Lease, Lessee may, without the prior written consent of Lessor, 
alter, modify, relocate, remove and replace air lines, secondary electrical 
lines, secondary HVAC lines, secondary plumbing (such as outlet pipes, sinks, 
faucets and plumbing fixtures) and lighting fixtures, provided that Tenant 
replaces any removed items with replacements of equal or better quality. 
Lessee shall perform any work for which Lessor's consent is not required in 
full compliance with the other provisions of Paragraphs 7.3(b) and (c).

             (b)    CONSENT. Any Alterations or Utility Installations that
Lessee shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. All consents given by
Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent,
shall be deemed conditioned upon: (i) Lessee's acquiring all applicable permits
required by governmental authorities; (ii) the furnishing of copies of such
permits together with a copy of the plans and specifications for the Alteration
or Utility Installation to Lessor prior to commencement of the work thereon; and
(iii) the compliance by Lessee with all conditions of said permits in a prompt
and expeditious manner. Any Alterations or Utility Installations by Lessee
during the term of this Lease shall be done in a good and workmanlike manner,
with good and sufficient materials, and be in compliance with all Applicable
Requirements. Lessee shall promptly upon completion thereof furnish Lessor with
as-built plans and specifications therefor. Lessor may, (but without obligation
to do so), condition its consent to any requested Alteration or Utility
Installation that costs $2,500.00 or more upon Lessee's providing Lessor with a
lien and completion bond in an amount equal to one and one-half times the
estimated cost of such Alteration or Utility Installation.

             (c)    LIEN PROTECTION. Lessee shall pay when due all claims for
labor or materials furnished or alleged to have been furnished to or for Lessee
at or for use on the Premises, which claims are or may be secured by any
mechanic's or materialmen's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than ten (10) days' notice prior to the
commencement of any work in, on, or about the Premises, and Lessor shall have
the right to post notices of non-responsibility in or on the Premises as
provided by law. If Lessee shall, in good faith, contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense, defend and
protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof against the Lessor or the Premises. If Lessor shall
require, Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in
an amount equal to one and one-half times the amount of such contested lien
claim or demand, indemnifying Lessor against liability for the same, as required
by law for the holding of the Premises free from the effect of such lien or
claim. In addition, Lessor may require Lessee to pay Lessor's attorneys' fees
and costs in participating in such action if Lessor shall decide it is to its
best interest to do so.

     7.4     OWNERSHIP, REMOVAL, SURRENDER, AND RESTORATION.

             (a)    OWNERSHIP. Subject to Lessor's right to require their 
removal and to cause Lessee to become the owner thereof as hereinafter 
provided in this Paragraph 7.4, all Alterations and Utility Installations 
made to the Premises by Lessee shall be ther property of and owned by Lesee, 
but considered a part of the Premises. Lessor may, at any time and at its 
option, elect in writing to Lessee to be the owner of all or any specified 
part of the Lessee-Owned Alterations and Utility Installations.  Unless 
otherwise instructed per Subparagraph 7.4(b) hereof, all Lessee-Owned 
Alterations and Utility Installations shall, at the expiration or earlier 
termination of this Lease, become the property of Lessor and remain upon the 
Premises and be surrendered with the Premises by Lessee. Lessor may only 
elect to become the owner of all or any part of the Lessee-Owned Alterations 
and Utility Installations, either during the term of this Lease or upon 
expiration or termination of the Lease term, if Lessor gives Lessee written 
notice of its election to own such improvements at the time that Lessor 
consents to such improvements pursuant to Paragraph 7.3 above.

             (b)    REMOVAL. Unless otherwise agreed in writing, Lessor may 
require that any or all Lessee-Owned Alterations or Utility Installations be 
removed by the expiration or earlier termination of this Lease, 
notwithstanding that their installation may have been consented to by Lessor. 
Lessor may require the removal at any time of all or any part of any 
Alterations or Utility Installations made without the required consent of 
Lessor. Lessor may only require the removal of Lessee-Owned Alterations and 
Utility Installations installed with the prior consent of Lessor if Lessor 
gives Lessee notice of its election to require such removal at the time it 
consents to the installation of such improvements. However, Lessor may waive 
its right to require such removal at the termination or expiration of the 
Lease.

             (c)    SURRENDER/RESTORATION. Lessee shall surrender the 
Premises by the end of the last day of the Lease term or any earlier 
termination date, clean and free of debris and in good operating order, 
condition and state of repair, ordinary wear and tear excepted. Ordinary wear 
and tear shall not include any damage or deterioration that would have been 
prevented by good maintenance practice or by Lessee performing all of its 
obligations under this Lease. Except as otherwise agreed or specified herein, 
the Premises, as surrendered, shall include the Alterations and Utility 
Installations. The obligation of Lessee shall include the repair of any 
damage occasioned by the installation, maintenance or removal of Lessee's 
Trade Fixtures, furnishings, equipment, and Lessee-Owned Alterations and 
Utility Installations, as well as the removal of any storage tank installed 
by or for Lessee, and the removal, replacement, or remediation of any soil, 
material or ground water contaminated by Lessee, all as may then be required 
by Applicable Requirements and/or good practice. Lessee's Trade Fixtures 
shall remain the property of Lessee and shall be removed by Lessee subject to 
its obligation to repair and restore the Premises per this Lease. 
Notwithstanding the preceding provisions of Paragraph 7.4(c), Lessee shall 
have no obligation to repair or restore damage caused by Lessor or any of 
Lessor's employees, agents or contractors.

             (d)    LESSOR'S WAIVER. Notwithstanding anything to the contrary
set forth in this Paragraph 7.4 or any other provision of this Lease, any and
all personal property and fixtures owned by Lessee and used by Lessee in the
operation of its business, whether or not such property constitutes Lessee's
trade fixtures shall be and shall remain the property of Lessee, may be
encumbered by Lessee, and, at the Lessee's option, may be removed by Lessee (or
its designees, nominees, successors or assigns) upon, or within thirty days
after, the expiration of the term of this Lease; provided that Lessee repairs
any damage to the Premises, the Building or the Common Areas occasioned by such
removal. Without limiting the generality of the foregoing, Lessor agrees to
execute any "lessor's waiver" which may be requested by a lender of Lessee, in
which Lessor shall, without limiting the generality of the foregoing, waive its
rights with respect to such property, and shall grant such rights to Lessee's
lender as Lessee's lender may reasonably require with respect to the maintenance
and removal of such property.


8.   INSURANCE; INDEMNITY.

     8.1     PAYMENT OF PREMIUMS. The cost of the premiums for the insurance
policies maintained by Lessor under this Paragraph 8 shall be a Common Area
Operating Expense pursuant to Paragraph 4.2 hereof. Premiums for policy periods
commencing prior to, or extending beyond, the term of this Lease shall be
pro-rated to coincide with the corresponding Commencement Date or Expiration
Date.

     8.2     LIABILITY INSURANCE.

             (a)    CARRIED BY LESSEE. Lessee shall obtain and keep in force
during the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee, Lessor and any Lender(s) whose names have been provided to
Lessee in writing (as additional insureds) against claims for bodily injury,
personal injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less that $3,000,000 per occurrence with
an "Additional Insured-Managers or Lessors of Premises" endorsement and contain
the "Amendment of the Pollution Exclusion" endorsement for damage caused by
heat, smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an "INSURED CONTRACT"
for the performance of Lessee's indemnity obligations under this Lease. The
limits of said insurance required by this Lease or as carried by Lessee shall
not, however, limit the liability of Lessee nor relieve Lessee of any obligation
hereunder. All insurance to be carried by Lessee shall be primary to and not
contributory with any similar insurance carried by Lessor, whose insurance shall
be considered excess insurance only.

             (b)    CARRIED BY LESSOR. Lessor shall also maintain liability
insurance described in Paragraph 8.2(a) above, in addition to and not in lieu
of, the insurance required to be maintained by Lessee. Lessee shall not be named
as an additional insured therein.

     8.3     PROPERTY INSURANCE-BUILDING, IMPROVEMENTS AND RENTAL VALUE.

             (a)    BUILDING AND IMPROVEMENTS. Lessor shall obtain and keep in
force during the term of this Lease a policy or policies in the name of Lessor,
with loss payable to Lessor and to any Lender(s), insuring against loss or
damage to the Premises. Such insurance shall be for full replacement cost, as
the same shall exist from time to time, or the amount required by any Lender(s),
but in no event more than the commercially reasonable and available insurable
value thereof if, by reason of the unique nature or age of the improvements
involved, such latter amount is less than full replacement cost. Lessee-Owned
Alterations and Utility Installations, Trade Fixtures and Lessee's personal
property shall be insured by Lessee pursuant to Paragraph 8.4. If the coverage
is available and commercially appropriate, Lessor's policy or policies shall
insure against all risks of direct physical loss or damage (except the perils of
flood and/or earthquake unless required by a Lender), including coverage for any
additional costs resulting from debris removal and reasonable amounts of
coverage for the enforcement of any ordinance or law regulating the
reconstruction or replacement of any undamaged sections of the Building required
to be demolished or removed by reason of the enforcement of any building,
zoning, safety or land use laws as the result of a covered loss, but not
including plate glass insurance. Said policy or policies shall also contain an
agreed valuation provision in lieu of any co-insurance clause, waiver of
subrogation, and inflation guard protection causing an increase in the annual
property insurance coverage amount by a factor of not less than the adjusted
U.S. Department of Labor Consumer Price Index for All Urban Consumers for the
city nearest to where the Premises are located.

             (b)    RENTAL VALUE. Lessor shall also obtain and keep in force
during the term of this Lease a policy or policies in the name of Lessor, with
loss payable to Lessor and any Lender(s), insuring the loss of the full rental
and other charges payable by all lessees of the Building to Lessor for one year
(including all Real Property Taxes, insurance costs, all Common Area Operating
Expenses and any scheduled rental increases). Said insurance may provide that in
the event the Lease is terminated by reason of an insured loss, the period of
indemnity for such coverage shall be extended beyond the date of the completion
of repairs or replacement of the Premises, to provide for one full year's loss
of rental revenues from the date of any such loss. Said insurance shall contain
an agreed valuation provision in lieu of any co-insurance clause, and the amount
of coverage shall be adjusted annually to reflect the projected rental income,
Real Property Taxes, insurance premium costs and other expenses, if any,
otherwise payable, for the next 12-month period. Common Area Operating Expenses
shall include any deductible amount in the event of such loss.

             (c)    ADJACENT PREMISES. Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas or
other buildings in the Industrial Center if said increase is caused by Lessee's
acts, omissions, use or occupancy of the Premises.

             (d)    LESSEE'S IMPROVEMENTS. Since Lessor is the Insuring Party,
Lessor shall not be required to insure Lessee-Owned Alterations and Utility
Installations unless the item in question has become the property of Lessor
under the terms of this Lease.

     8.4     LESSEE'S PROPERTY INSURANCE. Subject to the requirements of
Paragraph 8.5, Lessee at its cost shall either by separate policy or, at
Lessor's option, by endorsement to a policy already carried, maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures and Lessee-Owned
Alterations and Utility Installations in, on, or about the Premises similar in
coverage to that carried by Lessor as the Insuring Party under Paragraph 8.3(a).
Such insurance shall be full replacement cost coverage with a deductible not to
exceed $1,000 per occurrence. The proceeds from any such insurance shall be used
by Lessee for the replacement of personal property and the restoration of Trade
Fixtures and Lessee-Owned Alterations and Utility Installations. Upon request
from Lessor, Lessee shall provide Lessor with written evidence that such
insurance is in force.

     8.5     INSURANCE POLICIES. Insurance required hereunder shall be in 
companies duly licensed to transact business in the state where the Premises 
are located, and maintaining during the policy term a "General Policyholders 
Rating" of at least B+, V, or such other rating as may be required by a 
Lender, as set forth in the most current issue of "Best's Insurance Guide." 
Lessee shall not do or permit to be done anything which shall invalidate the 
insurance policies referred to in

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this Paragraph 8. Lessee shall cause to be delivered to Lessor, within seven 
(7) days after the earlier of the Early Possession Date or the Commencement 
Date, certified copies of, or certificates evidencing the existence and 
amounts of, the insurance required under Paragraph 8.2(a) and 8.4. No such 
policy shall be cancelable or subject to modification except after thirty 
(30) days' prior written notice to Lessor. Lessee shall at least thirty (30) 
days prior to the expiration of such policies, furnish Lessor with evidence 
of renewals or "insurance binders" evidencing renewal thereof, or Lessor may 
order such insurance and charge the cost thereof to Lessee, which amount 
shall be payable by Lessee to Lessor upon demand.

     8.6     WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages (whether in contract or in tort) against
the other, for loss or damage to their property arising out of or incident to
the perils required to be insured against under Paragraph 8. The effect of such
releases and waivers of the right to recover damages shall not be limited by the
amount of insurance carried or required, or by any deductibles applicable
thereto. Lessor and Lessee agree to have their respective insurance companies
issuing property damage insurance waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the
insurance is not invalidated thereby.

     8.7     INDEMNITY. Except for Lessor's negligence and/or breach of 
express warranties, Lessee shall indemnify, protect, defend and hold harmless 
the Premises, Lessor and its agents, Lessor's master or ground lessor, 
partners and Lenders, from and against any and all claims, loss of rents 
and/or damages, costs, liens, judgments, penalties, loss of permits, 
attorneys' and consultants' fees, expenses and/or liabilities arising out of, 
involving, or in connection with, the occupancy of the Premises by Lessee, 
the conduct of Lessee's business, any act, omission or neglect of Lessee, its 
agents, contractors, employees or invitees, and out of any Default or Breach 
by Lessee in the performance in a timely manner of any obligation on Lessee's 
part to be performed under this Lease. The foregoing shall include, but not 
be limited to, the defense or pursuit  of any claim or any action or 
proceeding involved therein, and whether or not (in the case of claims made 
against Lessor) litigated and/or reduced to judgment. In case any action or 
proceeding be brought against Lessor by reason of any of the foregoing 
matters, Lessee upon notice from Lessor shall defend the same at Lessee's 
expense by counsel reasonably satisfactory to Lessor and Lessor shall 
cooperate with Lessee in such defense. Lessor need not have first paid any 
such claim in order to be so indemnified.

     8.8     EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable 
for injury or damage to the person or goods, wares, merchandise or other 
property of Lessee, Lessee's employees, contractors, 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, air conditioning or lighting 
fixtures, or from any other cause, whether said injury or damage results from 
conditions arising upon the Premises or upon other portions of the Building 
of which the Premises are a part, from other sources or places, and 
regardless of whether the cause of such damage or injury or the means of 
repairing the same is accessible or not. Lessor shall not be liable for any 
damages arising from any act or neglect of any other lessee of Lessor nor 
from the failure by Lessor to enforce the provisions of any other lease in 
the Industrial Center. 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. Nothing in Paragraph 
8.8 shall be deemed to release or exempt Lessor from liability for the gross 
negligence or reckless or intentional misconduct of Lessor or its employees 
and agents. This Paragraph shall not be interpreted, however, to expand the 
liability of Lessor for the acts or omissions of its agents and employees 
beyond the ordinary scope of that liability under California case law and 
statute.

9.   DAMAGE OR DESTRUCTION.

     9.1     DEFINITIONS.

             (a)    "PREMISES PARTIAL DAMAGE" shall mean damage or 
destruction to the Premises, other than Lessee-Owned Alterations and Utility 
Installations, the repair cost of which damage or destruction is less than 
fifty percent (50%) of the then Replacement Cost (as defined in Paragraph 
9.1(d)) of the Premises (excluding Lessee-Owned Alterations and Utility 
Installations and Trade Fixtures) immediately prior to such damage or 
destruction.

             (b)    "PREMISES TOTAL DESTRUCTION" shall mean damage or 
destruction to the Premises, other than Lessee-Owned Alterations and Utility 
Installations, the repair cost of which damage or destruction is fifty
percent (50%) or more of the then Replacement Cost of the Premises (excluding 
Lessee-Owned Alterations and Utility Installations and Trade Fixtures) 
immediately prior to such damage or destruction. In addition, damage or 
destruction to the Building, other than Lessee-Owned Alterations and Utility 
Installations and Trade Fixtures of any lessees of the Building, the cost of 
which damage or destruction is fifty percent (50%) or more of the then 
Replacement Cost (excluding Lessee-Owned Alterations and Utility 
Installations and Trade Fixtures of any lessees of the Building) of the 
Building shall, at the option of Lessor, be deemed to be Premises Total 
Destruction.

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

             (d)    "REPLACEMENT COST" shall mean the cost to repair or rebuild
the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of applicable building codes,
ordinances or laws, and without deduction for depreciation.

             (e)    "HAZARDOUS SUBSTANCE CONDITION" shall mean the occurrence or
discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.

     9.2     PREMISES PARTIAL DAMAGE - INSURED LOSS. If Premises Partial 
Damage that is an Insured Loss occurs, then Lessor shall, at Lessor's 
expense, repair such damage (but not Lessee's Trade Fixtures or Lessee-Owned 
Alterations and Utility Installations) as soon as reasonably possible and 
this Lease shall continue in full force and effect. In the event, however, 
that there is a shortage of insurance proceeds and such shortage is due to 
the fact that, by reason of the unique nature of the improvements in the 
Premises, full replacement cost insurance coverage was not commercially 
reasonable and available, Lessor shall have no obligation to pay for the 
shortage in insurance proceeds or to fully restore the unique aspects of the 
Premises unless Lessee provides Lessor with the funds to cover same, or 
adequate assurance thereof, within ten (10) days following receipt of written 
notice of such shortage and request therefor. If Lessor receives said funds 
or adequate assurance thereof within said ten (10) day period, Lessor shall 
complete them as soon as reasonably possible and this Lease shall remain in 
full force and effect. If Lessor does not receive such funds or assurance 
within said period, Lessor may nevertheless elect by written notice to Lessee 
within ten (10) days thereafter to make such restoration and repair as is 
commercially reasonable with Lessor paying any shortage in proceeds, in which 
case this Lease shall remain in full force and effect. If Lessor does not 
receive such funds or assurance within such ten (10) day period, and if 
Lessor does not so elect to restore and repair, then this Lease shall 
terminate sixty (60) days following the occurrence of the damage or 
destruction. Unless otherwise agreed, Lessee shall in no event have any right 
to reimbursement from Lessor for any funds contributed by Lessee to repair 
any such damage or destruction. Premises Partial Damage due to flood or 
earthquake shall be subject to Paragraph 9.3 rather than Paragraph 9.2, 
notwithstanding that there may be some insurance coverage, but the net 
proceeds of any such insurance shall be made available for the repairs if 
made by either party. If, in the reasonable judgment of a qualified, licensed 
contractor, the Premises cannot be completely restored within one hundred 
eighty days (180) days after the occurrence of the damage or destruction, 
then Lessee may elect to terminate the Lease within thirty (30) days after 
the event of damage or destruction. If such damage or destruction is not 
repaired within one hundred eighty (180) days after the occurrence of the 
damage or destruction, then Lessee may terminate this Lease upon sixty (60) 
days written notice to Lessor, provided that the restoration of the Premises 
is not completed within the sixty (60)-day notice period.

     9.3     PARTIAL DAMAGE - UNINSURED LOSS.  If Premises Partial Damage 
that is not an Insured Loss occurs, unless caused by a negligent or willful 
act of Lessee (in which event Lessee shall make the repairs at Lessee's 
expense and this Lease shall continue in full force and effect), Lessor may 
at Lessor's option, either (i) repair such damage as soon as reasonably 
possible at Lessor's expense, in which event this Lease shall continue in 
full force and effect, or (ii) give written notice to Lessee within thirty 
(30) days after receipt by Lessor of knowledge of the occurrence of such 
damage of Lessor's desire to terminate this Lease as of the date sixty (60) 
days following the date of such notice. In the event Lessor elects to give 
such notice of Lessor's intention to terminate this Lease, Lessee shall have 
the right within ten (10) days after the receipt of such notice to give 
written notice to Lessor of Lessee's commitment to pay for the repair of such 
damage totally at Lessee's expense and without reimbursement from Lessor. 
Lessee shall provide Lessor with the required funds or satisfactory assurance 
thereof within thirty (30) days following such commitment from Lessee. In 
such event this Lease shall continue in full force and effect, and Lessor 
shall proceed to make such repairs as soon as reasonably possible after the 
required funds are available. If Lessee does not give such notice and provide 
the funds or assurance thereof within the times specified above, this Lease 
shall terminate as of the date specified in Lessor's notice of termination. 
If, in the reasonable judgment of a qualified, licensed contractor, the 
Premises cannot be completely restored within one hundred eighty days (180) 
days after the occurrence of the damage or destruction, then Lessee may elect 
to terminate the Lease within thirty (30) days after the event of damage or 
destruction. If such damage or destruction is not repaired within one hundred 
eighty (180) days after the occurrence of the damage or destruction, then 
Lessee may terminate this Lease upon sixty (60) days written notice to 
Lessor, provided that the restoration of the Premises is not completed within 
the sixty (60)-day notice period.

     9.4     TOTAL DESTRUCTION. Notwithstanding any other provision hereof, 
if Premises Total Destruction occurs (including any destruction required by 
any authorized public authority), this Lease shall terminate upon the date of 
such Premises Total Destruction, whether or not the damage or destruction is 
an Insured Loss or was caused by a negligent or willful act of Lessee. In the 
event, however, that the damage or destruction was caused by Lessee, Lessor 
shall have the right to recover Lessor's damages from Lessee except as 
released and waived in Paragraph 9.7.

     9.5     DAMAGE NEAR END OF TERM. If at any time during the last six (6) 
months of the term of this Lease there is damage for which the cost to repair 
exceeds one month's Base Rent, whether or not an Insured Loss, Lessor may, at 
Lessor's option, terminate this Lease effective sixty (60) days following the 
date of occurrence of such damage by giving written notice to Lessee of 
Lessor's election to do so within thirty (30) days after the date of 
occurrence of such damage. Provided, however, if Lessee at that time has an 
exercisable option to extend this Lease or to purchase the Premises, then 
Lessee may preserve this Lease by (a) exercising such option, and (b) 
providing Lessor with any shortage in insurance proceeds (or adequate 
assurance thereof) needed to make the repairs on or before the earlier of (i) 
the date which is ten (10) days after Lessee's receipt of Lessor's written 
notice purporting to terminate this Lease, or (ii) the day prior to the date 
upon which such option expires. If Lessee duly exercises such option during 
such period and provides Lessor with funds (or adequate assurance thereof) to 
cover any shortage in insurance proceeds, Lessor shall, at Lessor's expense 
repair such damage as soon as reasonably possible and this Lease shall 
continue in full force and effect. If Lessee fails to exercise such option 
and provide such funds or assurance during such period, then this Lease shall 
terminate as of the date set forth in the first sentence of this Paragraph 
9.5. If at any time during the last six (6) months of the term of this Lease 
the Premises are damaged to an extent that would require Lessee to 
discontinue its business operations on the Premises for thirty (30) days or 
more, Lessee shall have the right to terminate this Lease by written notice 
to Lessor given within ten (10) days after the occurrence of the damage.

     9.6     ABATEMENT OF RENT; LESSEE'S REMEDIES.

             (a)    In the event of (i) Premises Partial Damage or (ii)
Hazardous Substance Condition for which Lessee is not legally responsible, the
Base Rent, Common Area Operating Expenses and other charges, if any, payable by
Lessee hereunder for the period during which such damage or condition, its
repair, remediation or restoration continues, shall be abated in proportion to
the degree to which Lessee's use of the Premises is impaired, but not in excess
of proceeds from insurance required to be carried under Paragraph 8.3(b). Except
for abatement of Base Rent, Common Area Operating Expenses and other charges, if
any, as aforesaid, all other obligations of Lessee hereunder shall be performed
by Lessee, and Lessee shall have no claim against Lessor for any damage suffered
by reason of any such damage, destruction, repair, remediation or restoration.

             (b)    If Lessor shall be obligated to repair or restore the
Premises under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises within
ninety (90) days after such obligation shall accrue, Lessee may, at any time
prior to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice of Lessee's election
to terminate this Lease on a date not less than sixty (60) days following the
giving of such notice. If Lessee gives such notice to Lessor and such Lenders
and such repair or restoration is not commenced within thirty (30) days after
receipt of such notice, this Lease shall terminate as of the date specified in
said notice. If Lessor or a Lender commences the repair or restoration of the
Premises within thirty (30) days after the receipt of such notice, this Lease
shall continue in full force and effect. "COMMENCE" as used in this Paragraph
9.6 shall mean either the unconditional authorization of the preparation of the
required plans, or the beginning of the actual work on the Premises, whichever
occurs first.

             (c)    If Lessor shall be obligated to repair or restore the
Premises under the Premises under the provisions of this Paragraph 9 
(excluding a Hazardous Substance Condition or other release of Hazardous 
Substances), and Lessor does not complete the repairs or restoration within 
one hundred eighty (180) days after the occurrence of the damage or 
destruction, then Lessee may terminate this Lease upon sixty (60) days 
written notice to Lessor, provided that the restoration of the Premises is 
not completed within the sixty (60)-day notice period. 

             (d)    For purposes of Paragraph 9(a) and Paragraph 9.7, Lessee is
only to be deemed "legally responsible" for a Hazardous Condition if the 
Hazardous Condition was caused in whole or in part by Lessee or any of its 
employees, agents, contractors, or business invitees. Nothing in this 
Paragraph shall be deemed to release any claim of liability that Lessor may 
have against Lessee under Applicable Requirements (as defined in Paragraph 
6.3).

     9.7     HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance Condition
occurs, unless Lessee is legally responsible therefor (in which case Lessee
shall make the investigation and remediation thereof required by Applicable
Requirements and this Lease shall continue in full force and effect, but subject

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to Lessor's rights under Paragraph 6.2(c) and Paragraph 13), Lessor may at 
Lessor's option either (i) investigate and remediate such Hazardous Substance 
Condition, if required, as soon as reasonably possible at Lessor's expense, 
in which event this Lease shall continue in full force and effect, or (ii) if 
the estimated cost to investigate and remediate such condition exceeds twelve 
(12) times the then monthly Base Rent or $100,000 whichever is greater, give 
written notice to Lessee within thirty (30) days after receipt by Lessor of 
knowledge of the occurrence of such Hazardous Substance Condition of Lessor's 
desire to terminate this Lease as of the date sixty (60) days following the 
date of such notice. In the event Lessor elects to give such notice of 
Lessor's intention to terminate this Lease, Lessee shall have the right 
within ten (10) days after the receipt of such notice to give written notice 
to Lessor of Lessee's commitment to pay for the excess costs of (a) 
investigation and remediation of such Hazardous Substance Condition to the 
extent required by Applicable Requirements, over (b) an amount equal to 
twelve (12) times the then monthly Base Rent or $100,000, whichever is 
greater. Lessee shall provide Lessor with the funds required of Lessee or 
satisfactory assurance thereof within thirty (30) days following said 
commitment by Lessee. In such event this Lease shall continue in full force 
and effect, and Lessor shall proceed to make such investigation and 
remediation as soon as reasonably possible after the required funds are 
available. If Lessee does not give such notice and provide the required funds 
or assurance thereof within the time period specified above, this Lease shall 
terminate as of the date specified in Lessor's notice of termination.

    9.8     TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this Paragraph 9, Lessor shall return to Lessee any advance payment
made by Lessee to Lessor and so much of Lessee's Security Deposit as has not
been, or is not then required to be, used by Lessor under the terms of this
Lease.

    9.9     WAIVER OF STATUTES. Lessor and Lessee agree that the terms of 
this Lease shall govern the effect of any damage to or destruction of the 
Premises and the Building with respect to the termination of this Lease and 
hereby waive the provisions of any present or future statute to the extent it 
is inconsistent herewith.

10. REAL PROPERTY TAXES.

    10.1    PAYMENT OF TAXES. Lessor shall pay the Real Property Taxes, as
defined in Paragraph 10.2, applicable to the Industrial Center, and except as
otherwise provided in Paragraph 10.3, any such amounts shall be included in the
calculation of Common Area Operating Expenses in accordance with the provisions
of Paragraph 4.2.

    10.2    REAL PROPERTY TAX DEFINITION. As used herein, the term, "REAL 
PROPERTY TAXES" shall include any form of real estate tax or assessment, 
general, special, ordinary or extraordinary, and any license fee, commercial 
rental tax, improvement bond or bonds, levy or tax (other than inheritance, 
franchise, personal income or estate taxes [collectively, "EXCLUDED TAXES"]) 
imposed upon the Industrial Center by any authority having the direct or 
indirect power to tax, including any city, state or federal government, or 
any school, agricultural, sanitary, fire, street, drainage, or other 
improvement district thereof, levied against any legal or equitable interest 
of Lessor in the Industrial Center or any portion thereof, Lessor's right to 
rent or other income therefrom, and/or Lessor's business of leasing the 
Premises. The term "REAL PROPERTY TAXES" shall also include any tax, fee, 
levy, assessment or charge, or any increase therein (other than Excluded 
Taxes), imposed by reason of events occurring, or changes in Applicable Law 
taking effect, during the term of this Lease, including but not limited to a 
change in the ownership of the Industrial Center or in the improvements 
thereon, the execution of this Lease, or any modification, amendment or 
transfer thereof, and whether or not contemplated by the Parties. In 
calculating Real Property Taxes for any calendar year, the Real Property 
Taxes for any real estate tax year shall be included in the calculation of 
Real Property Taxes for such calendar year based upon the number of days 
which such calendar year and tax year have in common. 

    10.3    ADDITIONAL IMPROVEMENTS. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional improvements placed upon the Industrial
Center by other lessees or by Lessor for the exclusive enjoyment of such other
lessees. Notwithstanding Paragraph 10.1 hereof, Lessee shall, however, pay to
Lessor at the time Common Area Operating Expenses are payable under Paragraph
4.2, the entirety of any increase in Real Property Taxes if assessed solely by
reason of Alterations, Trade Fixtures or Utility Installations placed upon the
Premises by Lessee or at Lessee's request.

    10.4    JOINT ASSESSMENT. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of the
Real Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available. Lessor's reasonable determination thereof, in good
faith, shall be conclusive.

    10.5    LESSEE'S PROPERTY TAXES. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or stored within the Industrial Center. When
possible, Lessee shall cause its Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.
If any of Lessee's said property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee's property within
thirty (30) days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.

11. UTILITIES. Lessee shall pay directly for all utilities and services 
supplied to the Premises, including but not limited to electricity, trash 
removal, telephone, security, gas and cleaning of the Premises, together with 
any taxes thereon. If any such utilities or services are not separately 
metered to the Premises or separately billed to the Premises, Lessee shall 
pay to Lessor a reasonable proportion to be determined by Lessor of all such 
charges jointly metered or billed with other premises in the Building, in the 
manner and within the time periods set forth in Paragraph 4.2(d).

12. ASSIGNMENT AND SUBLETTING.

    12.1    LESSOR'S CONSENT REQUIRED.

            (a)    Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively, "assign") or
sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent given under and subject to the terms of
Paragraph 36.

            (b)    A change in the control of Lessee shall constitute an 
assignment requiring Lessor's consent. The transfer on a cumulative basis, of 
twenty-five percent (25%) or more of the voting control of Lessee shall 
constitute a change in control for this purpose. Notwithstanding anything to 
the contrary in Paragraphs 12.1(a) or (b), Lessor's consent shall not be 
required for Lessee to make an initial public offering of its stock, and, at 
any time when Lessee is a publicly held corporation, neither a merger or 
acquisition of Lessee, nor the sale of its stock, shall require the consent 
of Lessor, even though the merger or acquisition or sale of stock may involve 
a change of control or transfer of more than twenty-five percent (25%) of the 
voting control of Lessee.

            (c)    The involvement of Lessee or its assets in any transaction,
or series of transactions (by way of merger, sale, acquisition, financing,
refinancing, transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee's assets occurs, which
results or will result in a reduction of the Net Worth of Lessee, as hereinafter
defined, by an amount equal to or greater than twenty-five percent (25%) of such
Net Worth of Lessee as it was represented to Lessor at the time of full
execution and delivery of this Lease or at the time of the most recent
assignment to which Lessor has consented, or as it exists immediately prior to
said transaction or transactions constituting such reduction, at whichever time
said Net Worth of Lessee was or is greater, shall be considered an assignment of
this Lease by Lessee to which Lessor may reasonably withhold its consent. "NET
WORTH OF LESSEE" for purposes of this Lease shall be the net worth of Lessee
(excluding any Guarantors) established under generally accepted accounting
principles consistently applied.

            (d)    An assignment or subletting of Lessee's interest in this 
Lease without Lessor's specific prior written consent shall, at Lessor's 
option, be a Default curable after notice per Paragraph 13.1, or a 
non-curable Breach without the necessity of any notice and grace period. If 
Lessor elects to treat such unconsented to assignment or subletting as a 
non-curable Breach, Lessor shall have the right to either: (i) terminate this 
Lease, or (ii) upon thirty (30) days' written notice ("LESSOR'S NOTICE"), 
increase the monthly Base Rent for the Premises to the greater of the then 
fair market rental value of the Premises, as reasonably determined by Lessor, 
or one hundred ten percent (110%) of the Base Rent then in effect. Pending 
determination of the new fair market rental value, if disputed by Lessee, 
Lessee shall pay the amount set forth in Lessor's Notice, with any 
overpayment credited against the next installment(s) of Base Rent coming due, 
and any underpayment for the period retroactively to the effective date of 
the adjustment being due and payable immediately upon the determination 
thereof. Further, in the event of such Breach and rental adjustment, (i) the 
purchase price of any option to purchase the Premises held by Lessee shall be 
subject to similar adjustment to the then fair market value as reasonably 
determined by Lessor (without the Lease being considered an encumbrance or 
any deduction for depreciation or obsolescence, and considering the Premises 
at its highest and best use and in good condition) or one hundred ten percent 
(110%) of the price previously in effect, (ii) any index-oriented rental or 
price adjustment formulas contained in this Lease shall be adjusted to 
require that the base index be determined with reference to the index 
applicable to the time of such adjustment, and (iii) any fixed rental 
adjustments scheduled during the remainder of the Lease term shall be 
increased in the same ratio as the new rental bears to the Base Rent in 
effect immediately prior to the adjustment specified in Lessor's Notice.

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

    12.2    TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.

            (a)    Regardless of Lessor's consent, any assignment or subletting
shall not (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, nor (iii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.

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

            (c)    The consent of Lessor to any assignment or subletting shall
not constitute a consent to any subsequent assignment or subletting by Lessee or
to any subsequent or successive assignment or subletting by the assignee or
sublessee. However, Lessor may consent to subsequent sublettings and assignments
of the sublease or any amendments or modifications thereto without notifying
Lessee or anyone else liable under this Lease or the sublease and without
obtaining their consent, and such action shall not relieve such persons from
liability under this Lease or the sublease.

            (d)    In the event of any Default or Breach of Lessee's obligation
under this Lease, Lessor may proceed directly against Lessee, any Guarantors or
anyone else responsible for the performance of the Lessee's obligations under
this Lease, including any sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor.

            (e)    Each request for consent to an assignment or subletting 
shall be in writing, accompanied by information relevant to Lessor's 
determination as to the financial and operational responsibility and 
appropriateness of the proposed assignee or sublessee, including but not 
limited to the intended use and/or required modification of the Premises, if 
any, together with a non-refundable deposit of $1,000 or ten percent (10%) of 
the monthly Base Rent applicable to the portion of the Premises which is the 
subject of the proposed assignment or sublease, whichever is greater, as 
reasonable consideration for Lessor's considering and processing the request 
for consent. Lessee agrees to provide Lessor with such other or additional 
information and/or documentation as may be reasonably requested by Lessor.

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

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             (g)    The occurrence of a transaction described in Paragraph
12.2(c) shall give Lessor the right (but not the obligation) to require that the
Security Deposit be increased by an amount equal to six (6) times the then
monthly Base Rent, and Lessor may make the actual receipt by Lessor of the
Security Deposit increase a condition to Lessor's consent to such transaction.

             (h)    Lessor, as a condition to giving its consent to any
assignment or subletting, may require that the amount and adjustment schedule of
the rent payable under this Lease be adjusted to what is then the market value
and/or adjustment schedule for property similar to the Premises as then
constituted, as determined by Lessor.

     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 rentals and income arising from any sublease of all 
or a portion of the Premises heretofore or hereafter made by Lessee, and 
Lessor may collect such rent and income and apply same toward Lessee's 
obligations under this Lease; provided, however, that until a Breach (as 
defined in Paragraph 13.1) shall occur in the performance of Lessee's 
obligations under this Lease, Lessee may, except as otherwise provided in 
this Lease, receive, collect and enjoy the rents accruing under such 
sublease.  Lessor shall not, by reason of the foregoing provision or any 
other assignment of such sublease to Lessor, nor by any reason of the 
collection of the rents from a sublessee, be deemed liable to the sublessee 
for any failure of Lessee to perform and comply with any of Lessee's 
obligations to such sublessee under such Sublease.  Lessee hereby irrevocably 
authorizes and directs any such sublessee, upon receipt of a written notice 
from Lessor stating that a Breach exists in the performance of Lessee's 
obligations under this Lease, to pay to Lessor the rents and other charges 
due and to become due under the sublease.  Sublessee shall rely upon any such 
statement and request from Lessor and shall pay such rents and other charges 
to Lessor without any obligation or right to inquire as to whether such 
Breach exists and notwithstanding any notice from or claim from Lessee to the 
contrary.  Lessee shall have no right or claim against such sublessee, or, 
until the Breach has been cured, against Lessor, for any such rents and other 
charges so paid by said sublessee to Lessor.

             (b)    In the event of a Breach by Lessee in the performance of 
its obligations under this Lease, Lessor, at its option and without any 
obligation to do so, may require any sublessee to attorn to Lessor, in which 
event Lessor shall undertake the obligations of the sublessor under such 
sublease from the time of the exercise of said option to the expiration of 
such sublease; provided, however, Lessor shall not be liable for any prepaid 
rents or security deposit paid by such sublessee to such sublessor or for any 
other prior defaults or breaches of such sublessor under such sublease.

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

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

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

13.  DEFAULT; BREACH; REMEDIES.

     13.1    DEFAULT; BREACH. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in said
notice as rent due and payable to cure said default. A "DEFAULT" by Lessee is
defined as a failure by Lessee to observe, comply with or perform any of the
terms, covenants, conditions or rules applicable to Lessee under this Lease. A
"BREACH" by Lessee is defined as the occurrence of any one or more of the
following Defaults, and, where a grace period for cure after notice is specified
herein, the failure by Lessee to cure such Default prior to the expiration of
the applicable grace period, and shall entitle Lessor to pursue the remedies set
forth in Paragraphs 13.2 and/or 13.3:

             (a)    The vacating of the Premises without the intention to
reoccupy same, or the abandonment of the Premises.

             (b)    Except as expressly otherwise provided in this Lease, the
failure by Lessee to make any payment of Base Rent, Lessee's Share of Common
Area Operating Expenses, or any other monetary payment required to by made by
Lessee hereunder as and when due, the failure by Lessee to provide Lessor with
reasonable evidence of insurance or surety bond required under this Lease, or
the failure of Lessee to fulfill any obligation under this Lease which endangers
or threatens life or property, where such failure continues for a period of
three (3) days following written notice thereof by or on behalf of Lessor to
Lessee.

             (c)    Except as expressly otherwise provided in this Lease, the
failure by Lessee to provide Lessor with reasonable written evidence (in duly
executed original form, if applicable) of (i) compliance with Applicable
Requirements per Paragraph 6.3, (ii) the inspection, maintenance and service
contracts required under Paragraph 7.1(b), (iii) the rescission of an
unauthorized assignment or subletting per Paragraph 12.1, (iv) a Tenancy
Statement per Paragraphs 16 or 37, (v) the subordination or non-subordination of
this Lease per Paragraph 30, (vi) the guaranty of the performance of Lessee's
obligations under this Lease if required under Paragraphs 1.11 and 37, (vii) the
execution of any document requested under Paragraph 42 (easements), or (viii)
any other documentation or information which Lessor may reasonably require of
Lessee under the terms of this lease, where any such failure continues for a
period of thirty (30) days following written notice by or on behalf of Lessor to
Lessee.

             (d)    A Default by Lessee as the terms, covenants, conditions 
or provisions of this Lease, or of the rules adopted under Paragraph 40 
hereof that are to be observed, complied with or performed by Lessee, other 
than those described in Subparagraphs 13.1(a), (b) or (c), above, where such 
Default continues for a period of thirty (30) days after written notice 
thereof by or on behalf of Lessor to Lessee; provided, however, that if the 
nature of Lessee's Default is such that more than thirty (30) days are 
reasonably required for its cure, then it shall not be deemed to be a Breach 
of this Lease by Lessee if Lessee commences such cure within said thirty 
(30) day period and thereafter diligently prosecutes such cure to completion.

             (e)    The occurrence of any of the following events: (i) the 
making by Lessee of any general arrangement or assignment for the benefit of 
creditors; (ii) Lessee's becoming a "debtor" as defined in 11 U.S. Code 
Section 101 or any successor statute thereto (unless, in the case of a 
petition filed against Lessee, the same is dismissed within sixty (60) days; 
(iii) the appointment of a trustee or receiver to take possession of 
substantially all of Lessee's assets located at the Premises or of Lessee's 
interest in this Lease, where possession is not restored to Lessee within 
thirty (30) days; or (iv) the attachment, execution or other judicial seizure 
of substantially all of Lessee's assets located at the Premises or of 
Lessee's interest in this Lease, where such seizure is not discharged within 
thirty (30) days; provided, however, in the event that any provision of this 
Subparagraph 13.1(e) is contrary to any applicable law, such provision shall 
be of no force or effect, and shall not affect the validity of the remaining 
provisions.

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

     13.2    REMEDIES. If Lessee fails to perform any affirmative duty or 
obligation of Lessee under this Lease, within thirty (30) days after written 
notice to Lessee (or in case of an emergency, without notice), Lessor may at 
its option (but without obligation to do so), perform such duty or obligation 
on Lessee's behalf, including but not limited to the obtaining of reasonably 
required bonds, insurance policies, or governmental licenses, permits or 
approvals. The costs and expenses of any such performance by Lessor shall be 
due and payable by Lessee to Lessor upon invoice therefor. If any check given 
to Lessor by Lessee shall not by honored by the bank upon which it is drawn, 
Lessor, at its own option, may require all future payments to be made under 
this Lease by Lessee to be made only by cashier's check. In event of a Breach 
of this Lease by Lessee (as defined in Paragraph 13.1), with or without 
further notice or demand, and without limiting Lessor in the exercise of any 
right or remedy which Lessor may have by reason of such Breach, Lessor may:

             (a)    Terminate Lessee's right to possession of the Premises by 
any lawful means, in which case this Lease and the term hereof shall 
terminate and Lessee shall immediately surrender possession of the Premises 
to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) 
the worth at the time of the award of the unpaid rent which had been earned 
at the time of termination: (ii) the worth at the time of award of the amount 
by which the unpaid rent which would have been earned after termination until 
the time of award exceeds the amount of such rental loss that the Lessee 
proves could have been reasonably avoided; (iii) the worth at the time of 
award of the amount by which the unpaid rent for the balance of the term 
after the time of award exceeds the amount such rental loss that the Lessee 
proves could be reasonably avoided; and (iv) any other amount necessary to 
compensate Lessor for all the detriment proximately caused by the Lessee's 
failure to perform its obligations under this Lease or which in the ordinary 
course of things would be likely to result therefrom, including but not 
limited to the cost of recovering possession of the Premises, expenses of 
reletting, including necessary renovation and alteration of the Premises, 
reasonable attorneys' fees, and that portion of any leasing commission paid 
by Lessor in connection with 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 San Francisco 
or the Federal Reserve Bank District in which the Premises are located at the 
time of award plus one percent (1%). Efforts by Lessor to mitigate damages 
cased by Lessee's Default or Breach of this Lease shall not waive Lessor's 
right to recover damages under this Paragraph 13.2. If termination of this 
Lease is obtained through the provisional remedy of unlawful detainer, Lessor 
shall have the right to recover in such proceeding the unpaid rent and 
damages as are recoverable therein, or Lessor may reserve the right to 
recover all or any part thereof in a separate suit for such rent and/or 
damages. If a notice and grace period required under Subparagraph 13.1(b), (c) 
or (d) was not previously given, a notice to pay rent or quit, or to perform 
or quit, as the case may be, given to Lessee under any statute authorizing 
the forfeiture of leases for unlawful detainer shall also constitute the 
applicable notice for grace period purposes required by Subparagraph 
13.1(b), (c) or (d). In such case, the applicable grace period under the 
unlawful detainer statute shall run concurrently after the one such statutory 
notice, and the failure of Lessee to cure the Default within the greater of 
the two (2) such grace periods shall constitute both an unlawful detainer and 
a Breach of this Lease entitling Lessor to the remedies provided for in this 
Lease and/or by said statute.

             (b)    Continue the Lease and Lessee's right to possession in 
effect (in California under California Civil Code Section 1951.4) after 
Lessee's Breach and recover the rent as it becomes due, provided Lessee has 
the right to sublet or assign, subject only to reasonable limitations. Lessor 
and Lessee agree that the limitations on assignment and subletting in this 
Lease are reasonable. Acts of maintenance or preservation, efforts to relet 
the Premises or the appointment of a receiver to protect the Lessor's 
interest under this Lease, shall not constitute a termination of the Lessee's 
right to possession.

             (c)    Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are
located.

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             (d)    The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee or Lessor
from liability under any indemnity provisions of this lease as to matters
occurring or accruing during the term hereof or by reason of Lessee's occupancy
of the Premises.

     13.3    INDUCEMENT RECAPTURE IN EVENT OF BREACH. Any agreement by Lessor 
for free or abated rent or other charges applicable to the Premises, or for 
the giving or paying by Lessor to or for Lessee of any cash or other bonus, 
inducement or consideration for Lessee's entering into this Lease, all of 
which concessions are hereinafter referred to as "INDUCEMENT PROVISIONS" 
shall be deemed conditioned upon Lessee's full and faithful performance of 
all of the terms, covenants and conditions of this Lease to be performed or 
observed by Lessee during the term hereof as the same may be extended. Upon 
the occurrence of a Breach (as defined in Paragraph 13.1) of this Lease by 
Lessee, any such Inducement Provision shall automatically be deemed deleted 
from this Lease and of no further force or effect, and any rent, other 
charge, bonus, inducement or consideration theretofore abated, given or paid 
by Lessor under such an Inducement Provision shall be immediately due and 
payable by Lessee to Lessor, and recoverable by Lessor, as additional rent 
due under this Lease, notwithstanding any subsequent cure of said Breach by 
Lessee. The acceptance by Lessor of rent or the cure of the Breach which 
initiated the operation of this Paragraph 13.3 shall not be deemed a waiver 
by Lessor of the provisions of this Paragraph 13.3 unless specifically so 
stated in writing by Lessor at the time of such acceptance.

     13.4    LATE CHARGES. Lessee hereby acknowledges that late payment by 
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to 
incur costs not contemplated by this Lease, the exact amount of which will be 
extremely difficult to ascertain. Such costs include, but are not limited to, 
processing and accounting charges, and late charges which may be imposed upon 
Lessor by the terms of any ground lease, mortgage or deed of trust covering 
the Premises.  Accordingly, if any installment of rent or other sum due from 
Lessee shall not be received by Lessor or Lessor's designee within ten (10) 
days after such amount shall be due, then, without any requirement for notice 
to Lessee, Lessee shall pay to Lessor a late charge equal to six percent (6%) 
of such overdue amount. The parties hereby agree that such late charge 
represents a fair and reasonable estimate of the costs Lessor will incur by 
reason of late payment by Lessee. Acceptance of such late charge by Lessor 
shall in no event constitute a waiver of Lessee's Default or Breach with 
respect to such overdue amount, nor prevent Lessor from exercising any of the 
other rights and remedies granted hereunder. In the event that a late charge 
is payable hereunder, whether or not collected, for three (3) consecutive 
installments of Base Rent, then notwithstanding Paragraph 4.1 or any other 
provision of this Lease to the contrary, Base Rent shall, at Lessor's option, 
become due and payable quarterly in advance.

     13.5    BREACH BY LESSOR. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to by performed by Lessor. For purposes of this Paragraph 13.5, a
reasonable time shall in no event be less than thirty (30) days after receipt by
Lessor, and by any Lender(s) whose name and address shall have been furnished to
Lessee in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after such
notice are reasonably required for its performance, then Lessor shall not be in
breach of this Lease if performance is commenced within such thirty (30) day
period and thereafter diligently pursued to completion.

14.  CONDEMNATION. If the Premises or any portion thereof are taken under the 
power of eminent domain or sold under the threat of the exercise of said 
power (all of which are herein called "condemnation"), this Lease shall 
terminate as to the part so taken as of the date the condemning authority 
takes title or possession, whichever first occurs. If so much of the Premises 
is taken by condemnation as will prevent Lessee, in its reasonable judgment, 
from conducting its business operations on the Premises in the manner 
contemplated as of the Commencement Date, Lessee may, at Lessee's option to be 
exercised in writing within ten (10) days after Lessor shall have given 
Lessee written notice of such taking (or in the absence of such notice, 
within ten (10) days after the condemning authority shall have taken 
possession) terminate this Lease as of the date the condemning authority 
takes such possession. If Lessee does not terminate this Lease in accordance 
with the foregoing, this Lease shall remain in full force and effect as to 
the portion of the Premises remaining, except that the Base Rent shall be 
reduced in the same proportion as the rentable floor area of the Premises 
taken bears to the total rentable floor area of the Premises. No reduction of 
Base Rent shall occur if the condemnation does not apply to any portion of 
the Premises. Any award for the taking of all or any part of the Premises 
under the power of eminent domain or any payment made under threat of the 
exercise of such power shall be the property of Lessor, whether such award 
shall be made as compensation for diminution of value of the leasehold or for 
the taking of the fee, or as severance damages; provided, however, that 
Lessee shall be entitled to any compensation, separately awarded to Lessee 
for Lessee's relocation expenses and/or loss of Lessee's Trade Fixtures. In 
the event that this Lease is not terminated by reason of such condemnation, 
Lessor shall to the extent of its net severance damages received, over and 
above Lessee's Share of the legal and other expenses incurred by Lessor in 
the condemnation matter, repair any damage to the Premises caused by such 
condemnation authority. In the event that Base Rent is reduced 
proportionately pursuant to this Paragraph, Lessee's Share shall be adjusted 
accordingly, based on the ratio of the remaining area of the Premises to the 
remaining area of the Building.

If the net severance damages received by Lessor are insufficient to 
repair any damages to the Premises caused by the condemning authority, then 
Lessor may elect to terminate this Lease rather than restore the Premises, on 
thirty (30)-days prior written notice to Lessee, unless Lessee, within the 
thirty (30)-day notice period, notifies Lessor that it will bear the cost of 
the restoration in excess of the net severance damages, and pays such excess 
cost to Lessor within thirty (30) days thereafter.

15.  BROKERS' FEES. Terms relating to Brokers are in separate writing between
Lessor and Grubb & Ellis.

     15.4    REPRESENTATIONS AND WARRANTIES. Lessee and Lessor each represent
and warrant to the other that it has had no dealings with any person, firm,
broker or finder other than as named in Paragraph 1.10(a) in connection with the
negotiation of this Lease and/or the consummation of the transaction
contemplated hereby, and that no broker or other person, firm or entity other
than said named Broker(s) is entitled to any commission or finder's fee in
connection with said transaction. Lessee and Lessor do each hereby agree to
indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed
broker, finder or other similar party by reason of any dealings or action of the
indemnifying Party, including any costs, expenses, and/or attorneys' fees
reasonably incurred with respect thereto.

16.  TENANCY AND FINANCIAL STATEMENTS.

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

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