EXHIBIT 10.59

STANDARD INDUSTRIAL/COMMERCIAL
MULTI-TENANT LEASE – GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

1.     BASIC PROVISIONS (“BASIC PROVISIONS”).

        1.1     Parties: This Lease (“Lease”), dated for reference purposes only
October 6, 2005, is made by and between Z & M LLC, a California Limited
Liability Company, (“Lessor”) and STAAR Surgical Company (“Lessee”),
(collectively the “Parties”, or individually a “Party”).

        1.2(a) Premises: That certain portion of the Project (as defined below),
including all improvements therein or to be provided by Lessor under the terms
of this Lease, commonly known by the street address of 1811-1813 Myrtle Avenue,
located in the City of Monrovia, County of Los Angeles, State of California,
with zip code 91016, as outlined on Exhibit __ hereto (“Premises”) and generally
described as (describe briefly the nature of the Premises): 2,887 square feet of
warehouse space. 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 containing the Premises (“Building”) or to any other buildings in the
Project. 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 “Project.” (See also Paragraph 2.)

        1.2(b)  Parking: N/A unreserved vehicle parking spaces (“Unreserved
Parking Spaces”); and N/A reserved vehicle parking spaces (“Reserved Parking
Spaces”). (See also Paragraph 2.6)

        1.3     Term: Three (3) years and -0- months (“Original Term”)
commencing November 1, 2005 (“Commencement Date”) and ending October 31. 2008
(“Expiration Date”). (See also Paragraph 3.)

        1.4     Early Possession: N/A (“Early Possession Date”). (See also
Paragraphs 3.2 and 3.3.)

        1.5     Base Rent: $ 2.598.30 per month (“Base Rent”), payable on the
1st day of each month commencing November 1, 2005. (See also Paragraph 4.) 
        [     ] If this box is checked, there are provisions in this Lease for
the Base Rent to be adjusted. 1.6Lessee’s Share of Common Area Operating
Expenses: 22.17 percent ( 22.17%) (“Lessee’s Share”). 1.7Base Rent and Other
Monies Paid Upon Execution:

                  (a)     Base Rent: $ 2,598.30 for the period __________.
                  (b)     Common Area Operating Expenses: $_____ for the
period_________.
                  (c)     Security Deposit: $2,810.00 (“Security Deposit”). (See
also Paragraph 5.)
                  (d)     Other: $ ______________ for
_______________________________.
                  (e)     Total Due Upon Execution of this Lease: $ 5 408.30.

        1.8     Agreed Use: Office and medical equipment storage. . (See also
Paragraph 6.)

        1.9     lnsuring Party. Lessor is the “Insuring Party”. (See also
Paragraph 8.)

         1.10   Real Estate Brokers: (See also Paragraph 15.) 
                  (a)   Representation: The following real estate brokers (the
“Brokers”) and brokerage relationships exist in this transaction (check
applicable boxes): [XX] ALDEN MANAGEMENT GROUP represents Lessor exclusively
(“Lessor’s Broker”); [   ] represents Lessee exclusively (“Lessee’s Broker”); or
[   ]represents both Lessor and Lessee (“Dual Agency”). 
                  (b)   Payment to Brokers: Upon execution and delivery of this
Lease by both Parties, Lessor shall pay to the Brokers the brokerage fee agreed
to in a separate written agreement (or if there is no such agreement, the sum of
_________ or ______% of the total Base Rent for the brokerage services rendered
by the Brokers).

        1 .11   Guarantor. The obligations of the Lessee under this Lease are to
be guaranteed by ______________________ (“Guarantor”). (See also Paragraph 37.) 

        1 .12   Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 57 and Exhibits ____ through ____, all of
which constitute a part of this Lease.

2.       Premises.

         2.1   Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating Rent, is an approximation which the Parties agree is
reasonable and any payments based thereon are not subject to revision whether or
not the actual size is more or less.

        2.2   Condition. Lessor shall deliver that portion of the Premises
contained within the Building (“Unit”) to Lessee broom clean and free of debris
on the Commencement Date or the Early Possession Date, whichever first occurs
(“Start Date”), and, so long as the required service contracts described in
Paragraph 7.1 (b) below are obtained by Lessee and in effect within thirty days
following the Start Date, warrants that the existing electrical, plumbing, fire
sprinkler, lighting, heating, ventilating and air conditioning systems (“HVAC”),
loading doors, if any, and all other such elements in the Unit, other than those
constructed by Lessee, shall be in good operating condition on said date and
that the structural elements of the roof, bearing walls and foundation of the
Unit shall be free of material defects. If a non-compliance with such warranty
exists as of the Start Date, or if one of such systems or elements should
malfunction or fail within the appropriate warranty period, Lessor shall, as
Lessor’s sole obligation with respect to such matter, except as otherwise
provided in this Lease, promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such non-compliance,
malfunction or failure, rectify same at Lessor’s expense. The warranty periods
shall be as follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as to
the remaining systems and other elements of the Unit. If Lessee does not give
Lessor the required notice within the appropriate warranty period, correction of
any such non-compliance, malfunction or failure shall be the obligation of
Lessee at Lessee’s sole cost and expense (except for the repairs to the fire
sprinkler systems, roof, foundations, and/or bearing walls — see Paragraph 7).

        2.3   Compliance. Lessor warrants that the improvements on the Premises
and the Common Areas comply with the building codes that were in effect at the
time that each such improvement, or portion thereof, was constructed, and also
with all applicable laws, covenants or restrictions of record, regulations, and
ordinances in effect on the Start Date (“Applicable Requirements”). Said
warranty does not apply to the use to which Lessee will put the Premises or to
any Alterations or Utility Installations (as defined in Paragraph  7.3(a).) made
or to be made by Lessee. NOTE: Lessee is responsible for determining whether or
not the zoning is appropriate

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AZ                                                                                                                                                                      
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for Lessee’s intended use, and acknowledges that past uses of the Premises may
no longer be allowed. If the Premises do not comply with said warranty, Lessor
shall, except as otherwise provided, promptly after receipt of written notice
from Lessee setting forth with specificity the nature and extent of such
non-compliance, rectify the same at Lessor’s expense. If Lessee does not give
Lessor written notice of a non-compliance with this warranty within 6 months
following the Start Date, correction of that non-compliance shall be the
obligation of Lessee at Lessee’s sole cost and expense. If the Applicable
Requirements are hereafter changed so as to require during the term of this
Lease the construction of an addition to or an alteration of the Unit, Premises
and/or Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the Unit, Premises and/or
Building (“Capital Expenditure”), Lessor and Lessee shall allocate the cost of
such work as follows: 
                (a)   Subject to Paragraph 2.3(c) below, if such Capital
Expenditures are required as a result of the specific and unique use of the
Premises by Lessee as compared with uses by tenants in general, Lessee shall be
fully responsible for the cost thereof, provided, however, that if such Capital
Expenditure is required during the last 2 years of this Lease and the cost
thereof exceeds 6 months’ Base Rent, Lessee may instead terminate this Lease
unless Lessor notifies Lessee, in writing, within 10 days after receipt of
Lessee’s termination notice that Lessor has elected to pay the difference
between the actual cost thereof and the amount equal to 6 months’ Base Rent. If
Lessee elects termination, Lessee shall immediately cease the use of the
Premises which requires such Capital Expenditure and deliver to Lessor written
notice specifying a termination date at least 90 days thereafter. Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure.
                (b)   If such Capital Expenditure is not the result of the
specific and unique use of the Premises by Lessee (such as, governmentally
mandated seismic modifications), then Lessor and Lessee shall allocate the
obligation to pay for the portion of such costs reasonably attributable to the
Premises pursuant to the formula set out in Paragraph 7.l(d); provided, however,
that if such Capital Expenditure is required during the last 2 years of this
Lease or if Lessor reasonably determines that it is not economically feasible to
pay its share thereof, Lessor shall have the option to terminate this Lease upon
90 days prior written notice to Lessee unless Lessee notifies Lessor, in
writing, within 10 days after receipt of Lessor’s termination notice that Lessee
will pay for such Capital Expenditure. If Lessor does not elect to terminate,
and fails to tender its share of any such Capital Expenditure, Lessee may
advance such funds and deduct same, with interest, from Rent until Lessor’s
share of such costs have been fully paid. If Lessee is unable to finance
Lessor’s share, or if the balance of the Rent due and payable for the remainder
of this Lease is not sufficient to fully reimburse Lessee on an offset basis,
Lessee shall have the right to terminate this Lease upon 30 days written notice
to Lessor.
                 (c)   Notwithstanding the above, the provisions concerning
Capital Expenditures are intended to apply only to nonvoluntary, unexpected, and
new Applicable Requirements. If the Capital Expenditures are instead triggered
by Lessee as a result of an actual or proposed change in use, change in
intensity of use, or modification to the Premises then, and in that event,
Lessee shall be fully responsible for the cost thereof, and Lessee shall not
have any right to terminate this Lease.

        2.4   Acknowledgements.     Lessee acknowledges that: (a) it has been
advised by Lessor and/or Brokers to satisfy itself with respect to the condition
of the Premises (including but not limited to the electrical, HVAC and fire
sprinkler systems, security, environmental aspects, and compliance with
Applicable Requirements and the Americans with Disabilities Act), and their
suitability for Lessee’s intended use, (b) Lessee has made such investigation as
it deems necessary with reference to such matters and assumes ail responsibility
therefor as the same relate to its occupancy of the Premises, and (c) neither
Lessor, Lessor’s agents, nor Brokers have made any oral or written
representations or warranties with respect to said matters other than as set
forth in this Lease. In addition, Lessor acknowledges that: (i) Brokers have
made no representations, promises or warranties concerning Lessee’s ability to
honor the Lease or suitability to occupy the Premises, and (ii) it is Lessor’s
sole responsibility to investigate the financial capability and/or suitability
of all proposed tenants.

         2.5    Lessee as Prior Owner10ccupant. The warranties made by Lessor in
Paragraph 2 shall be of no force or effect if immediately prior to the Start
Date Lessee was the owner or occupant of the Premises. In such event, Lessee
shall be responsible for any necessary corrective work.

         2.6    Vehicle Parking. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Areas designated from time to time by
Lessor for parking. Lessee shall not use more parking spaces than said number.
Said parking spaces shall be used for parking by vehicles no larger than
full-size passenger automobiles or pick-up trucks, herein called “Permitted Size
Vehicles.” Lessor may regulate the loading and unloading of vehicles by adopting
Rules and Regulations as provided in Paragraph 2.9. No vehicles other than
Permitted Size Vehicles may be parked in the Common Area without the prior
written permission of Lessor.
                 (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)     Lessee shall not service or store any vehicles in the
Common Areas.
                 (c)     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.

        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 Project and interior utility raceways and installations within the
Unit that are provided and designated by the Lessor from time to time for the
general non-exclusive use of Lessor, Lessee and other tenants of the Project and
their respective employees, suppliers, shippers, customers, contractors and
invitees, including parking areas, loading and unloading areas, trash areas,
roadways, walkways, driveways and landscaped areas.

        2.8    Common Areas — Lessee’s Rights. Lessor 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 Project. 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 (“Rules and
Regulations”) for the management, safety, care, and cleanliness of the grounds,
the parking and unloading of vehicles and the preservation of good order, as
well as for the convenience of other occupants or tenants of the Building and
the Project and their invitees. 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 tenants of the Project.

         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;
                  (c)     To designate other land outside the boundaries of the
Project to be a part of the Common Areas;
                  (d)     To add additional buildings and improvements to the
Common Areas; 
                   (e)    To use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Project, or any portion
thereof; and

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

3. Term.

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

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

        3.3    Delay In Possession. Lessor agrees to use its best commercially
reasonable efforts to deliver possession of the Premises to Lessee by the
Commencement Date. If, despite said efforts, Lessor is unable to deliver
possession as agreed, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease. Lessee shall not, however,
be obligated to pay Rent or perform its other obligations until it receives
possession of the Premises. If possession is not delivered within 60 days after
the Commencement Date, Lessee may, at its option, by notice in writing within 10
days after the end of such 60 day period, cancel this Lease, in which event the
Parties shall be discharged from all obligations hereunder. If such written
notice is not received by Lessor within said 10 day period, Lessee’s right to
cancel shall terminate. Except as otherwise provided, if possession is not
tendered to Lessee by the Start Date and Lessee does not terminate this Lease,
as aforesaid, any period of rent abatement that Lessee would otherwise have
enjoyed shall run from the date of delivery of possession and continue for a
period equal to what Lessee would otherwise have enjoyed under the terms hereof,
but minus any days of delay caused by the acts or omissions of Lessee. If
possession of the Premises is not delivered within 4 months after the
Commencement Date, this Lease shall terminate unless other agreements are
reached between Lessor and Lessee, in writing.

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

4.     RENT.

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

        4.2   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.) of all Common Area Operating Expenses, as hereinafter defined,
during each calendar year of the term of this Lease, in accordance with the
following provisions:
                (a) “Common Area Operating Expenses” are defined, for purposes
of this Lease, as all costs incurred by Lessor relating to the ownership and
operation of the Project, including, but not limited to, the following:
                        (i)     The operation, repair and maintenance, in neat,
clean, good order and condition, but not the replacement (see subparagraph (e)),
of the following:
                                (aa)    The Common Areas and Common Area
improvements, including parking areas, loading and unloading areas, trash areas,
roadways, parkways, walkways, driveways, landscaped areas, bumpers, irrigation
systems, Common Area lighting facilities, fences and gates, elevators, roofs,
and roof drainage systems
                                (bb)    Exterior signs and any tenant
directories. 
                                (cc)     Any fire sprinkler systems.
                        (ii)     The cost of water, gas, electricity and
telephone to service the Common Areas and any utilities not separately metered.
                        (iii)    Trash disposal, pest control services, property
management, security services, and the costs of any environmental inspections.
                        (iv)    Reserves set aside for maintenance and repair of
Common Areas.
                        (v)     Any increase above the Base Real Property Taxes
(as defined in Paragraph 10).
                        (vi)    Any “Insurance Cost Increase” (as defined in
Paragraph 8).
                        (vii)   Any deductible portion of an insured loss
concerning the Building or the Common Areas.
                        (viii)  The cost of any Capital Expenditure to the
Building or the Project not covered under the provisions of Paragraph 2.3
provided; however, that Lessor shall allocate the cost of any such Capital
Expenditure over a 12 year period and Lessee shall not be required to pay more
than Lessee’s Share of 1/144th of the cost of such Capital Expenditure in any
given month.
                        (ix)     Any other services to be provided by Lessor
that are stated elsewhere in this Lease to be a Common Area Operating Expense.
                (b)    Any Common Area Operating Expenses and Real Property
Taxes that are specifically attributable to the Unit, the Building or to any
other building in the Project or to the operation, repair and maintenance
thereof, shall be allocated entirely to such Unit, Building, or 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 Project.
                 (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 Project 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 10 days after a reasonably detailed statement of
actual expenses is presented to Lessee. 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 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 the preceding year exceed Lessee’s Share as indicated on such
statement, Lessor shall credit the amount of such over-payment against Lessee’s
Share of Common Area Operating Expenses next becoming due. If Lessee’s payments
under this Paragraph 4.2(d) during the preceding year were less than Lessee’s
Share as indicated on such statement, Lessee shall pay to Lessor the amount of
the deficiency within 10 days after delivery by Lessor to Lessee of the
statement.
                (e)   When a capital component such as the roof, foundations,
exterior walls or a Common Area capital improvement, such as the parking lot
paving, elevators, fences, etc. requires replacement, rather than repair or
maintenance, Lessor shall, at Lessor’s expense, be responsible for such
replacement. Such expenses and/or costs are not Common Area Operating Expenses.

         4.3   Payment.     Lessee shall cause payment of Rent to be received by
Lessor in lawful money of the United States, without offset or deduction (except
as specifically permitted in this Lease), on or before the day on which it is
due. Rent for any period during the term hereof which is for less than one full
calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated herein or
to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor’s rights to the balance of such Rent, regardless of
Lessor’s endorsement of any check so stating. In the event that any check,
draft, or other instrument of payment given by Lessee to Lessor is dishonored
for any reason, Lessee agrees to pay to Lessor the sum of $25.

5.     Security Deposit. Lessee shall deposit with Lessor upon execution hereof
the Security Deposit as security for Lessee’s faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of the Security Deposit, Lessee shall within 10 days after written request
therefor deposit monies with Lessor sufficient to restore

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said Security Deposit lo the full amount required by this Lease. If the Base
Rent increases during the term of this Lease, Lessee shall, upon written request
from Lessor, deposit additional monies with Lessor so that the total amount of
the Security Deposit shall at all times bear the same proportion to the
increased Base Rent as the initial Security Deposit bore to the initial Base
Rent. Should the Agreed Use be amended to accommodate a material change in the
business of Lessee or to accommodate a sublessee or assignee, Lessor shall have
the right to increase the Security Deposit to the extent necessary, in Lessor’s
reasonable judgment, to account for any increased wear and tear that the
Premises may suffer as a result thereof. If a change in control of Lessee occurs
during this Lease and following such change the financial condition of Lessee
is, in Lessor’s reasonable judgment, significantly reduced, Lessee shall deposit
such additional monies with Lessor as shall be sufficient to cause the Security
Deposit to be at a commercially reasonable level based on such change in
financial condition. Lessor shall not be required to keep the Security Deposit
separate from its general accounts. Within 14 days after the expiration or
termination of this Lease, if Lessor elects to apply the Security Deposit only
to unpaid Rent, and otherwise within 30 days after the Premises have been
vacated pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of
the Security Deposit not used or applied by Lessor. No part of the Security
Deposit shall be considered to be held in trust, to bear interest or to be
prepayment for any monies to be paid by Lessee under this Lease.

6.     USE.

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

        6.2   HAZARDOUS SUBSTANCES.

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

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

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

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

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

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

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

 _/s/
M_                                                                                                                                                                      
                                                             ______
_/s/
AZ                                                                                                                                                                      
                                                            _/s/ DA
Initials                                                                                                                                                                      
                                                               Initials

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        6.3    Lessee’s Compliance with Applicable Requirements. Except as
otherwise provided in this Lease, Lessee shall, at Lessee’s sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor’s engineers and/or consultants
which relate in any manner to the Premises, without regard to whether said
requirements are now in effect or become effective after the Start Date. Lessee
shall, within 10 days after receipt of Lessor’s written request, provide Lessor
with copies of all permits and other documents, and other information evidencing
Lessee’s compliance with any Applicable Requirements specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving the failure of Lessee or
the Premises to comply with any Applicable Requirements.

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

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

        7.1    LESSEE’S OBLIGATIONS.

                (a)     In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee’s Compliance with Applicable
Requirements), 7.2 (Lessor’s Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee’s sole expense, keep the Premises,
Utility lnstallations (intended for Lessee’s exclusive use, no matter where
located), and Alterations in good order, condition and repair (whether or not
the portion of the Premises requiring repairs, or the means of repairing the
same, are reasonably or readily accessible to Lessee, and whether or not the
need for such repairs occurs as a result of Lessee’s use, any prior use, the
elements or the age of such portion of the Premises), including, but not limited
to, all equipment or facilities, such as plumbing, HVAC equipment, electrical,
lighting facilities, boilers, pressure vessels, fixtures, interior wails,
interior surfaces of exterior wails, ceilings, floors, windows, doors, plate
glass, and skylights but excluding any items which are the responsibility of
Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good order,
condition and repair, shall exercise and perform good maintenance practices,
specifically including the procurement and maintenance of the service contracts
required by Paragraph 7.1 (b) below. Lessee’s obligations shall include
restorations, replacements or renewals when necessary to keep the Premises and
all improvements thereon or a part thereof in good order, condition and state of
repair. 
                 (b)    Service Contracts. Lessee shall, at Lessee’s sole
expense, procure and maintain contracts, with copies to Lessor, in customary
form and substance for, and with contractors specializing and experienced in the
maintenance of the following equipment and improvements, if any, if and when
installed on the Premises: (i) HVAC equipment, (ii) boiler and pressure vessels,
(iii) clarifiers, and (iv) any other equipment, if reasonably required by
Lessor. However, Lessor reserves the right, upon notice to Lessee, to procure
and maintain any or all of such service contracts, and if Lessor so elects,
Lessee shall reimburse Lessor, upon demand, for the cost thereof.
                 (c)    Failure to Perform.    If Lessee fails to perform
Lessee’s obligations under this Paragraph 7.1, Lessor may enter upon the
Premises after 10 days’ prior written notice to Lessee (except in the case of an
emergency, in which case no notice shall be required), perform such obligations
on Lessee’s behalf, and put the Premises in good order, condition and repair,
and Lessee shall promptly reimburse Lessor for the cost thereof.
                 (d)    Replacement. Subject to Lessee’s indemnification of
Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of
liability resulting from Lessee’s failure to exercise and perform good
maintenance practices, if an item described in Paragraph 7.1(b) cannot be
repaired other than at a cost which is in excess of 50% of the cost of replacing
such item, then such item shall be replaced by Lessor, and the cost thereof
shall be prorated between the Parties and Lessee shall only be obligated to pay,
each month during the remainder of the term of this Lease, on the date on which
Base Rent is due, an amount equal to the product of multiplying the cost of such
replacement by a fraction, the numerator of which is one, and the denominator of
which is 144 (i.e. 1/144th of the cost per month). Lessee shall pay interest on
the unamortized balance at a rate that is commercially reasonable in the
judgment of Lessor’s accountants. Lessee may, however, prepay its obligation at
any time.

         7.2    Lessor’s Obligations. Subject to the provisions of Paragraphs
2.2 (Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6
(Use), 7.1 (Lessee’s Obligations), 9 (Damage or Destruction) and 14
(Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2,
shall keep in good order, condition and repair the foundations, exterior walls,
structural condition of interior bearing walls, exterior roof, fire sprinkler
system, Common Area fire alarm and/or smoke detection systems, 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 to
the extent it is inconsistent with the terms of this Lease.

        7.3   Utility Installations; Trade Fixtures; Alterations.

                (a)     Definitions. The term “Utility Installations” refers to
all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems, communication systems,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term “Trade Fixtures” shall mean Lessee’s machinery and equipment that can
be removed without doing material damage to the Premises. The term “Alterations”
shall mean any modification of the improvements, other than Utility
lnstallations or Trade Fixtures, whether by addition or deletion. “Lessee Owned
Alterations and/or Utility lnstallations” are defined as Alterations and/or
Utility lnstallations made by Lessee that are not yet owned by Lessor pursuant
to Paragraph 7.4(a).
                (b)    Consent. Lessee shall not make any Alterations or Utility
lnstallations to the Premises without Lessor’s prior written consent. Lessee
may, however, make non-structural Utility installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor, as
long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, and the cumulative cost
thereof during this Lease as extended does not exceed a sum equal to 3 month’s
Base Rent in the aggregate or a sum equal to one month’s Base Rent in any one
year. Notwithstanding the foregoing, Lessee shall not make or permit any roof
penetrations and/or install anything on the roof without the prior written
approval of Lessor. Lessor may, as a precondition to granting such approval,
require Lessee to utilize a contractor chosen and/or approved by Lessor. Any
Alterations or Utility lnstallations that Lessee shall desire to make and which
require the consent of the Lessor shall be presented to Lessor in written form
with detailed plans. Consent shall be deemed conditioned upon .Lessee’s: (I)
acquiring ail applicable governmental permits, (ii) furnishing Lessor with
copies of both the permits and the plans and specifications prior to
commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility lnstallations shall be performed in a workmanlike
manner with good and sufficient materials. Lessee shall promptly upon completion
furnish Lessor with as-built plans and specifications. For work which costs an
amount in excess of one month’s Base Rent, Lessor may condition its consent upon
Lessee providing a lien and completion bond in an amount equal to 150% of the
estimated cost of such Alteration or Utility installation and/or upon Lessee’s
posting an additional Security Deposit with Lessor.
                (c)    Indemnification. Lessee shall pay, when due, all claims
for labor or materials furnished or alleged to have been furnished to or for
Lessee at or for use on the Premises, which claims are or may be secured by any
mechanic’s or materialmen’s lien against the Premises or any interest therein.
Lessee shall give Lessor not less than 10 days notice prior to the commencement
of any work in, on or about the Premises, and Lessor shall have the right to
post notices of non-responsibility. If Lessee shall contest the validity of any
such lien, claim or demand, then Lessee shall, at its sole expense defend and
protect itself, Lessor and the Premises against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond
in an amount equal to 150% of the amount of such contested lien, claim or
demand, indemnifying Lessor against liability for the same. If Lessor elects to
participate in any such action, Lessee shall pay Lessor’s attorneys’ fees and
costs.

 _/s/
M_                                                                                                                                                                      
                                                           ______
_/s/
AZ                                                                                                                                                                      
                                                            _/s/ DA
Initials                                                                                                                                                                      
                                                              Initials

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        7.4    Ownership; Removal; Surrender; and Restoration.

                 (a)     Ownership. Subject to Lessor’s right to require removal
or elect ownership as hereinafter provided, all Alterations and Utility
Installations made by Lessee shall be the property of Lessee, but considered a
part of the Premises. Lessor may, at any time, elect in writing to be the owner
of all or any specified part of the Lessee Owned Alterations and Utility
installations. Unless otherwise instructed per paragraph 7.4(b) hereof, all
Lessee Owned Alterations and Utility Installations shall, at the expiration or
termination of this Lease, become the property of Lessor and be surrendered by
Lessee with the Premises. 
                 (b)     Removal. By delivery to Lessee of written notice from
Lessor not earlier than 90 and not later than 30 days prior to the end of the
term of this Lease, Lessor may require that any or ail Lessee Owned Alterations
or Utility Installations be removed by the expiration or termination of this
Lease. Lessor may require the removal at any time of all or any part of any
Lessee Owned Alterations or Utility Installations made without the required
consent.
                 (c)     Surrender; Restoration. Lessee shall surrender the
Premises by the Expiration Date or any earlier termination date, with all of the
improvements, parts and surfaces thereof broom clean and free of debris, and in
good operating order, condition and state of repair, ordinary wear and tear
excepted. “Ordinary wear and tear” shall not include any damage or deterioration
that would have been prevented by good maintenance practice. Notwithstanding the
foregoing, if this Lease is for 12 months or less, then Lessee shall surrender
the Premises in the same condition as delivered to Lessee on the Start Date with
NO allowance for ordinary wear and tear. Lessee shall repair any damage
occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee
owned Alterations and/or Utility Installations, furnishings, and equipment as
well as the removal of any storage tank installed by or for Lessee. Lessee shall
also completely remove from the Premises any and ail Hazardous Substances
brought onto the Premises by or for Lessee, or any third party (except Hazardous
Substances which were deposited via underground migration from areas outside of
the Project) even if such removal would require Lessee to perform or pay for
work that exceeds statutory requirements. Trade Fixtures shall remain the
property of Lessee and shall be removed by Lessee. The failure by Lessee to
timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express
written consent of Lessor shall constitute a holdover under the provisions of
Paragraph 26 below.

8.     Insurance; Indemnity.

        8.1   Payment of Premium Increases.

                 (a)     As used herein, the term “lnsurance Cost Increase” is
defined as any increase in the actual cost of the insurance applicable to the
Building and/or the Project and required to be carried by Lessor, pursuant to
Paragraphs 8.2(b), 8.3(a) and 8.3(b), (“Required Insurance”), over and above the
Base Premium,, as hereinafter defined, calculated on an annual basis. lnsurance
Cost lncrease shall include, but not be limited to, requirements of the holder
of a mortgage or deed of trust covering the Premises, Building and/or Project,
increased valuation of the Premises, Building and/or Project, and/or a general
premium rate increase. The term insurance Cost increase shall not, however,
include any premium increases resulting from the nature of the occupancy of any
other tenant of the Building. If the parties insert a dollar amount in Paragraph
1.9, such amount shall be considered the “Base Premium.” The Base Premium shall
be the annual premium applicable to the 12 month period immediately preceding
the Start Date. If, however, the Project was not insured for the entirety of
such 12 month period, then the Base Premium shall be the lowest annual premium
reasonably obtainable for the Required lnsurance as of the Start Date, assuming
the most nominal use possible of the Building. In no event, however, shall
Lessee be responsible for any portion of the premium cost attributable to
liability insurance coverage in excess of $2,000,000 procured under Paragraph
8.2(b).
                (b)     Lessee shall pay any lnsurance Cost Increase to Lessor
pursuant to Paragraph 4,2. Premiums for policy periods commencing prior to, or
extending beyond, the term of this Lease shall be prorated to coincide with the
corresponding Start Date or Expiration Date.

          8.2    LIABILITY INSURANCE.

                 (a)     Carried by Lessee. Lessee shall obtain and keep in
force a Commercial General Liability policy of insurance protecting Lessee and
Lessor as an additional insured against claims for bodily injury, personal
injury and property damage based upon or arising out of the ownership, use,
occupancy or maintenance of the Premises and all areas appurtenant thereto. Such
insurance shall be on an occurrence basis providing single limit coverage in an
amount not less than $1,000,000 per occurrence with an annual aggregate of not
less than $2,000,000, an “Additional Insured-Managers or Lessors of Premises
Endorsement” and contain the “Amendment of the Pollution Exclusion Endorsement”
for damage caused by heat, smoke or fumes from a hostile fire. The policy shall
not contain any intra-insured exclusions as between insured persons or
organizations, but shall include coverage for liability assumed under this Lease
as an “insured contract” for the performance of Lessee’s indemnity obligations
under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All
insurance carried by Lessee shall be primary to and not contributory with any
similar insurance carried by Lessor, whose insurance shall be considered excess
insurance only.
                 (b)      Carried by Lessor. Lessor shall maintain liability
insurance as described in Paragraph 8.2(a), in addition to, and not In lieu of,
the insurance required to be maintained by Lessee. Lessee shall not be named as
an additional insured therein.

        8.3    PROPERTY LNSURANCE — BUILDING, IMPROVEMENTS AND RENTAL VALUE.

                (a)     Building and Improvements. Lessor shall obtain and keep
in force a policy or policies of insurance in the name of Lessor, with loss
payable to Lessor, any ground-Lessor, and to any Lender insuring loss or damage
to the Premises. The amount of such insurance shall be equa1.to the full
replacement cost of the Premises, as the same shall exist from time to time, or
the amount required by any Lender, but in no event more than the commercially
reasonable and available insurable value thereof. Lessee Owned Alterations and
Utility Installations, Trade Fixtures, and Lessee’s personal property shall be
insured by Lessee under Paragraph 8.4. If the coverage is available and
commercially appropriate, such policy or policies shall insure against all risks
of direct physical loss or damage (except the perils of flood and/or earthquake
unless required by a Lender), including coverage for debris removal and the
enforcement of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result of a
covered loss. Said policy or policies shall also contain an agreed valuation
provision in lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S. Department of
Labor Consumer Price Index for Ail Urban Consumers for the city nearest to where
the Premises are located. If such insurance coverage has a deductible clause,
the deductible amount shall not exceed $1,000 per occurrence.
                (b)     Rental Value. Lessor shall also obtain and keep in force
a policy or policies in the name of Lessor with loss payable to Lessor and any
Lender, insuring the loss of the full Rent for one year with an extended period
of indemnity for an additional 180 days (“Rental Value insurance”). Said
insurance shall contain an agreed valuation provision in lieu of any coinsurance
clause, and the amount of coverage shall be adjusted annually to reflect the
projected Rent otherwise payable by Lessee, for the next 12 month period.
                (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 Project 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; BUSINESS INTERRUPTION INSURANCE.

                 (a)     Property Damage. Lessee shall obtain and maintain
insurance coverage on all of Lessee’s personal property, Trade Fixtures, and
Lessee Owned Alterations and Utility Installations. Such insurance shall be full
replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the
replacement of personal property, Trade Fixtures and Lessee Owned Alterations
and Utility Installations. Lessee shall provide Lessor with written evidence
that such insurance is in force.
                (b)    Business Interruption. Lessee shall obtain and maintain
loss of income and extra expense insurance in amounts as will reimburse Lessee
for direct or indirect loss of earnings attributable to all perils commonly
insured against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.
                (c)     No Representation of Adequate Coverage. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee’s property, business operations or
obligations under this Lease.

 _/s/
M_                                                                                                                                                                      
                                                            ______
_/s/
AZ                                                                                                                                                                      
                                                            _/s/ DA
Initials                                                                                                                                                                      
                                                               Initials

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

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

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

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

 9. Damage or Destruction.

        9.1    DEFINITIONS.

                (a)     “Premises Partial Damage” shall mean damage or
destruction to the improvements on the Premises, other than Lessee Owned
Alterations and Utility Installations, which can reasonably be repaired in 3
months or less from the date of the damage or destruction, and the cost thereof
does not exceed a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee
in writing within 30 days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.
                 (b)     “Premises Total Destruction” shall mean damage or
destruction to the improvements on the Premises, other than Lessee Owned
Alterations and Utility lnstallations and Trade Fixtures, which cannot
reasonably be repaired in 3 months or less from the date of the damage or
destruction and/or the cost thereof exceeds a sum equal to 6 month’s Base Rent.
Lessor shall notify Lessee in writing within 30 days from the date of the damage
or destruction as to whether or not the damage is Partial or Total.
                (c)     “lnsured Loss” shall mean damage or destruction to
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which was caused by an event required to be
covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.
                (d) “Replacement Cost” shall mean the cost to repair or rebuild
the improvements owned by Lessor at the time of the occurrence to their
condition existing immediately prior thereto, including demolition, debris
removal and upgrading required by the operation of Applicable Requirements, and
without deduction for depreciation.
                 (e) “Hazardous Substance Condition” shall mean the occurrence
or discovery of a condition involving the presence of, or a contamination by, a
Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
Premises.

         9.2    Partial Damage — lnsured Loss. If a Premises Partial Damage that
is an lnsured Loss occurs, then Lessor shall, at Lessor’s expense, repair such
damage (but not Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor’s
election, make the repair of any damage or destruction the total cost to repair
of which is $5,000 or less, and, in such event, Lessor shall make any applicable
insurance proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required insurance was not in force or the
insurance proceeds are not sufficient to effect such repair, the Insuring Party
shall promptly contribute the shortage in proceeds as and when required to
complete said repairs. In the event, however, such shortage was due to the fact
that, by reason of the unique nature of the improvements, full replacement cost
insurance coverage was not commercially reasonable and available, Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within 10 days following
receipt of written notice of such shortage and request therefor. If Lessor
receives said funds or adequate assurance thereof within said 10 day period, the
party responsible for making the repairs shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect. If
such funds or assurance are not received, Lessor may nevertheless elect by
written notice to Lessee within 10 days thereafter to: (i) make such restoration
and repair as is commercially reasonable with Lessor paying any shortage in
proceeds, in which case this Lease shall remain in full force and effect, or
(ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled
to reimbursement of any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be subject
to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but
the net proceeds of any such insurance shall be made available for the repairs
if made by either Party.

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

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

        9.5    Damage Near End of Term. If at any time during the last 6 months
of this Lease there Is damage for which the cost to repair exceeds one month’s
Base Rent, whether or not an lnsured Loss, Lessor may terminate this Lease
effective 60 days following the date of occurrence of such damage by giving a
written termination notice to Lessee within 30 days after the date of occurrence
of such damage. Notwithstanding the foregoing, if Lessee at that time has an
exercisable option to extend this Lease or to purchase the Premises, then Lessee
may preserve this Lease by, (a) exercising such option and (b) providing Lessor
with any shortage in insurance proceeds (or adequate assurance thereof) needed
to make the repairs on or before the earlier of (i) the date which is 10 days
after Lessee’s receipt of Lessor’s written notice purporting to terminate this
Lease, or (ii) the day prior to the date upon which such option

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expires.     If Lessee duly exercises such option during such period and
provides Lessor with funds (or adequate assurance thereof) to cover any shortage
in insurance proceeds, Lessor shall, at Lessor’s commercially reasonable
expense, repair such damage as soon as reasonably possible and this Lease shall
continue in full force and effect. If Lessee fails to exercise such option and
provide such funds or assurance during such period, then this Lease shall
terminate on the date specified in the termination notice and Lessee’s option
shall be extinguished.

        9.6    Abatement of Rent; Lessee’s Remedies.

                 (a)     Abatement. In the event of Premises Partial Damage or
Premises Total Destruction or a Hazardous Substance Condition for which Lessee
is not responsible under this Lease, the Rent payable by Lessee for the period
required for the repair, remediation or restoration of such damage shall be
abated in proportion to the degree to which Lessee’s use of the Premises is
impaired, but not to exceed the proceeds received from the Rental Value
insurance. All other obligations of Lessee hereunder shall be performed by
Lessee, and Lessor shall have no liability for any such damage, destruction,
remediation, repair or restoration except as provided herein.
                (b)    Remedies. If Lessor shall be obligated to repair or
restore the Premises and does not commence, in a substantial and meaningful way,
such repair or restoration within 90 days after such obligation shall accrue,
Lessee may, at any time prior to the commencement of such repair or restoration,
give written notice to Lessor and to any Lenders of which Lessee has actual
notice, of Lessee’s election to terminate this Lease on a date not less than 60
days following the giving of such notice. If Lessee gives such notice and such
repair or restoration is not commenced within 30 days thereafter, this Lease
shall terminate as of the date specified in said notice. If the repair or
restoration is commenced within such 30 days, this Lease shall continue in full
force and effect. “Commence” shall mean either the unconditional authorization
of the preparation of the required plans, or the beginning of the actual work on
the Premises, whichever first occurs.

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

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

10.     Real Property Taxes. 

        10.1    Definitions.

                (a)     “Real Property Taxes:’ As used herein, the term “Real
Property Taxes” shall include any form of assessment; real estate, general,
special, ordinary or extraordinary, or rental levy or tax (other than
inheritance, personal income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable interest of Lessor in
the Project, Lessor’s right to other income therefrom, and/or Lessor’s business
of leasing, by any authority having the direct or indirect power to tax and
where the funds are generated with reference to the Project address and where
the proceeds so generated are to be applied by the city, county or other local
taxing authority of a jurisdiction within which the Project is located. The term
“Real Property Taxes” shall also include any tax, fee, levy, assessment or
charge, or any increase therein, imposed by reason of events occurring during
the term of this Lease, including but not limited to, a change in the ownership
of the Project or any portion thereof or a change in the improvements thereon.
                (b)     “Base Real Property Taxes:’ As used herein, the term
“Base Real Property Taxes” shall be the amount of Real Property Taxes, which are
assessed against the Premises, Building, Project or Common Areas in the calendar
year during which the Lease is executed. 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.

         10.2    Payment of Taxes. Lessor shall pay the Real Property Taxes
applicable to the Project, and except as otherwise provided in Paragraph 10.3,
any increases in such amounts over the Base Real Property Taxes shall be
included in the calculation of Common Area Operating Expenses in accordance with
the provisions of Paragraph 4.2.

         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 Project by
other lessees or by Lessor for the exclusive enjoyment of such other lessees.
Notwithstanding Paragraph 10.2 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    Personal 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 ail personal property
of Lessee contained in the Premises. When possible, Lessee shall cause its
Lessee Owned Alterations and Utility installations, Trade Fixtures, furnishings,
equipment and all other personal property to be assessed and billed separately
from the real property of Lessor. If any of Lessee’s said property shall be
assessed with Lessor’s real property, Lessee shall pay Lessor the taxes
attributable to Lessee’s property within 10 days after receipt of a written
statement setting forth the taxes applicable to Lessee’s property.

11. Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. Notwithstanding the provisions of
Paragraph 4.2, if at any time in Lessor’s sole judgment, Lessor determines that
Lessee is using a disproportionate amount of water, electricity or other
commonly metered utilities, or that Lessee is generating such a large volume of
trash as to require an increase in the size of the dumpster and/or an increase
in the number of times per month that the dumpster is emptied, then Lessor may
increase Lesee’s Base Rent by an amount equal to such increased costs.

12.   ASSIGNMENT AND SUBLETTING.

         12.1    LESSOR’S CONSENT REQUIRED.

                 (a)     Lessee shall not voluntarily or by operation of law
assign, transfer, mortgage or encumber (collectively “assign or assignment” or
sublet any part of Lessee’s interest in the Lease or in the Premises without
Lessor’s prior written consent, which shall not unreasonably be withheld. /s/ DA
/s/ AZ /s/ M
                (b)    [Section deleted]
                (c)    The involvement of Lessee or its assets in any
transaction, or series of transactions (by way of merger, sale, acquisition,
financing, transfer, leveraged buy-out or otherwise), whether or not a formal
assignment or hypothecation of this Lease or Lessee’s assets occurs, which
results or will result in a reduction of the Net Worth of Lessee by an amount
greater than 25% of such Net Worth as it was represented at the time of the
execution of this Lease or at the time of the most recent assignment to which
Lessor has consented, or as it exists immediately prior to said transaction or
transactions constituting such reduction, whichever was or is greater, shall be
considered an assignment of this Lease to which Lessor may withhold its consent.
“Net Worth of Lessee” shall mean the net worth of Lessee (excluding any
guarantors) established under generally accepted accounting principles.
                 (d)     An assignment or subletting without consent shall, at
Lessor’s option, be a Default curable after notice per Paragraph 13.l(c), or a
noncurable Breach without the necessity of any notice and grace period. If
Lessor elects to treat such unapproved assignment or subletting as a noncurable
Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days
written notice, increase the monthly Base Rent to 110% of the Base Rent then in
effect. Further, in the event of such Breach and rental adjustment, (i) the
purchase price of any option to purchase the Premises held by Lessee shall be
subject to similar adjustment to 110% of the price previously in effect, and
(ii) all fixed and non-fixed rental adjustments scheduled during the remainder
of the Lease term shall be increased to 110% of the scheduled adjusted rent.
                 (e)     Lessee’s remedy for any breach of Paragraph 12.1 by
Lessor shall be limited to compensatory damages and/or injunctive relief.

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        12.2    Terms and Conditions Applicable to Assignment and Subletting.

                 (a)     Regardless of Lessor’s consent, any assignment or
subletting shall not: (i) be effective without the express written assumption by
such assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other
obligations to be performed by Lessee.
                (b)     Lessor may accept Rent or performance of Lessee’s
obligations from any person other than Lessee pending approval or disapproval of
an assignment. Neither a delay in the approval or disapproval of such assignment
nor the acceptance of Rent or performance shall constitute a waiver or estoppel
of Lessor’s right to exercise its remedies for Lessee’s Default or Breach.
                (c)     Lessor’s consent to any assignment or subletting shall
not constitute a consent to any subsequent assignment or subletting.
                (d)    In the event of any Default or Breach by Lessee, Lessor
may proceed directly against Lessee, any Guarantors or anyone else responsible
for the performance of Lessee’s obligations under this Lease, including any
assignee or sublessee, without first exhausting Lessor’s remedies against any
other person or entity responsible therefore to Lessor, or any security held by
Lessor.
                (e)     Each request for consent to an assignment or subletting
shall be in writing, accompanied by information relevant to Lessor’s
determination as to the financial and operational responsibility and
appropriateness of the proposed including but not limited to the intended use
and/or required modification of the Premises, if any, together with a fee of
$350 . /s/ DA /s/ AZ /s/ M or 10% of the current monthly Base Rent applicable to
the portion of the Premises which is the subject of the proposed assignment or
sublease, whichever is greater, as consideration for Lessor’s considering and
processing said request. Lessee agrees to provide Lessor with such other or
additional information and/or documentation as may be reasonably requested.
                 (f)    Any assignee of, or sublessee under, this Lease shall,
by reason of accepting such assignment or entering into such sublease, be deemed
to have assumed and agreed to conform and comply with each and every term,
covenant, condition and obligation herein to be observed or performed by Lessee
during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or sublease to
which Lessor has specifically consented to in writing.

         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 ail subleases under
this Lease whether or not expressly incorporated therein:
                (a)     Lessee hereby assigns and transfers to Lessor ail of
Lessee’s interest in all Rent payable on any sublease, and Lessor may collect
such Rent and apply same toward Lessee’s obligations under this Lease; provided,
however, that until a Breach shall occur in the performance of Lessee’s
obligations, Lessee may collect said Rent. Lessor shall not, by reason of the
foregoing or any assignment of such sublease, nor by reason of the collection of
Rent, be deemed liable to the sublessee for any failure of Lessee to perform and
comply with any of Lessee’s obligations to such sublessee. Lessee hereby
irrevocably authorizes and directs any such sublessee, upon receipt of a written
notice from Lessor stating that a Breach exists in the performance of Lessee’s
obligations under this Lease, to pay to Lessor all Rent due and to become due
under the sublease. Sublessee shall rely upon any such notice from Lessor and
shall pay ail Rents to Lessor without any obligation or right to inquire as to
whether such Breach exists, notwithstanding any claim from Lessee to the
contrary.
                 (b)    In the event of a Breach by Lessee, Lessor may, at its
option, require sublessee to attorn to Lessor, in which event Lessor shall
undertake the obligations of the sublessor under such sublease from the time of
the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to such sublessor or for any prior Defaults or Breaches
of such sublessor.
                (c)     Any matter requiring the consent of the sublessor under
a sublease shall also require the consent of Lessor.
                (d)     No sublessee shall further assign or sublet all or any
part of the Premises without Lessor’s prior written consent.
                (e)     Lessor shall deliver a copy of any notice of Default or
Breach by Lessee to the sublessee, who shall have the right to cure the Default
of Lessee within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against Lessee
for any such Defaults cured by the sublessee.

13.     Default; Breach; Remedies.

        13.1   Default; Breach. A “Default” is defined as a failure by the
Lessee to comply with or perform any of the terms, covenants, conditions or
Rules and Regulations under this Lease. A “Breach” is defined as the occurrence
of one or more of the following Defaults, and the failure of Lessee to cure such
Default within any applicable grace period:
                 (a)     The abandonment of the Premises; or the vacating of the
Premises without providing a commercially reasonable level of security, or where
the coverage of the property insurance described in Paragraph 8.3 is jeopardized
as a result thereof, or without providing reasonable assurances to minimize
potential vandalism.
                (b)    The failure of Lessee to make any payment of Rent or any
Security Deposit required to be made by Lessee hereunder, whether to Lessor or
to a third party, when due, to provide reasonable evidence of insurance or
surety bond, or to fulfill any obligation under this Lease which endangers or
threatens life or property, where such failure continues for a period of 3
business days following written notice to Lessee.
                 (c)    The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized assignment or subletting, (iv) an
Estoppel Certificate, (v) a requested subordination, (vi) evidence concerning
any guaranty and/or Guarantor, (vii) any document requested under Paragraph 41
(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 10 days following written notice to Lessee.
                (d)     A Default by Lessee as to the terms, covenants,
conditions or provisions of this Lease, or of the rules adopted under Paragraph
2.9 hereof, other than those described in subparagraphs 13.1(a), (b) or (c),
above, where such Default continues for a period of 30 days after written
notice; provided, however, that if the nature of Lessee’s Default is such that
more than 30 days are reasonably required for its cure, then it shall not be
deemed to be a Breach if Lessee commences such cure within said 30 day period
and thereafter diligently prosecutes such cure to completion.
                (e)     The occurrence of any of the following events: (i) the
making of any general arrangement or assignment for the benefit of creditors;
(ii) becoming a “debtor” as defined in 11 U.S.C. 5 101 or any successor statute
thereto (unless, in the case of a petition filed against Lessee, the same is
dismissed within 60 days); (iii) the appointment of a trustee or receiver to
take possession of substantially all of Lessee’s assets located at the Premises
or of Lessee’s interest in this Lease, where possession is not restored to
Lessee within 30 days; or (iv) the attachment, execution or other judicial
seizure of substantially all of Lessee’s assets located at the Premises or of
Lessee’s interest in this Lease, where such seizure is not discharged within 30
days; provided, however, in the event that any provision of this subparagraph
(e) is contrary to any applicable law, such provision shall be of no force or
effect, and not affect the validity of the remaining provisions.
                (f)    The discovery that any financial statement of Lessee or
of any Guarantor given to Lessor was materially false.
                (g)     If the performance of Lessee’s obligations under this
Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a
Guarantor’s liability with respect to this Lease other than in accordance with
the terms of such guaranty, (iii) a Guarantor’s becoming insolvent or the
subject of a bankruptcy filing, (iv) a Guarantor’s refusal to honor the
guaranty, or (v) a Guarantor’s breach of its guaranty obligation on an
anticipatory basis, and Lessee’s failure, within 60 days following written
notice of any such event, to provide written alternative assurance or security,
which, when coupled with the then existing resources of Lessee, equals or
exceeds the combined financial resources of Lessee and the Guarantors that
existed at the time of execution of this Lease.

        13.2    Remedies. If Lessee fails to perform any of its affirmative
duties or obligations, within 10 days after written notice (or in case of an
emergency, without notice), Lessor may, at its option, perform such duty or
obligation on Lessee’s behalf, including but not limited to the obtaining of
reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee upon receipt of invoice therefor. If any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments to be made by Lessee to
be by cashier’s check. In the event of a Breach, Lessor may, with or without
further notice or demand, and without limiting Lessor in the exercise of any
right or remedy which Lessor may have by reason of such Breach:

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                (a)     Terminate Lessee’s right to possession of the Premises
by any lawful means, in which case this Lease shall terminate and Lessee shall
immediately surrender possession to Lessor. In such event Lessor shall be
entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination; (ii) the worth at the time of award of the amount by
which the unpaid rent which would have been earned after termination until the
time of award exceeds the amount of such rental loss that the Lessee proves
could have been reasonably avoided; (iii) the worth at the time of award of the
amount by which the unpaid rent for the balance of the term after the time of
award exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee’s failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys’ fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of the District within which the Premises are located
at the time of award plus one percent. Efforts by Lessor to mitigate damages
caused by Lessee’s Breach of this Lease shall not waive Lessor’s right to
recover damages under Paragraph 12. If termination of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such proceeding any unpaid Rent and damages as are recoverable
therein, or Lessor may reserve the right to recover all or any part thereof in a
separate suit. If a notice and grace period required under Paragraph 13.1 was
not previously given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful detainer statute shall also constitute the notice
required by Paragraph 13.1. In such case, the applicable grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and
the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.
                (b)     Continue the Lease and Lessee’s right to possession and
recover the Rent as it becomes due, in which event Lessee may sublet or assign,
subject only to reasonable limitations. Acts of maintenance, efforts to relet,
and/or the appointment of a receiver to protect the Lessor’s interests, shall
not constitute a termination of the Lessee’s right to possession.
                 (c)     Pursue any other remedy now or hereafter available
under the laws or judicial decisions of the state wherein the Premises are
located. The expiration or termination of this Lease and/or the termination of
Lessee’s right to possession shall not relieve Lessee from liability under any
indemnity provisions of this Lease as to matters occurring or accruing during
the term hereof or by reason of Lessee’s occupancy of the Premises.

        13.3    lnducement Recapture. Any agreement for free or abated rent or
other charges, or for the giving or paying by Lessor to or for Lessee of any
cash or other bonus, inducement or consideration for Lessee’s entering into this
Lease, all of which concessions are hereinafter referred to as “lnducement
Provisions”, shall be deemed conditioned upon Lessee’s full and faithful
performance of all of the terms, covenants and conditions of this Lease. Upon
Breach of this Lease by Lessee, any such lnducement 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 lnducement Provision
shall be immediately due and payable by Lessee to Lessor, notwithstanding any
subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or
the cure of the Breach which initiated the operation of this paragraph shall not
be deemed a waiver by Lessor of the provisions of this paragraph unless
specifically so stated in writing by Lessor at the time of such acceptance.

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

        13.5    Interest. Any monetary payment due Lessor hereunder, other than
late charges, not received by Lessor, when due as to scheduled payments (such as
Base Rent) or within 30 days following the date on which it was due for
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the 31st day after it was due as to non-scheduled
payments. The interest (“lnterest”) charged shall be equal to the prime rate
reported in the Wall Street Journal as published closest prior to the date when
due plus 4%, but shall not exceed the maximum rate allowed by law. lnterest is
payable in addition to the potential late charge provided for in Paragraph 13.4.

        13.6    BREACH BY LESSOR.

                (a)     Notice of Breach. Lessor shall not be deemed in breach
of this Lease unless Lessor fails within a reasonable time to perform an
obligation required to be performed by Lessor. For purposes of this Paragraph, a
reasonable time shall in no event be less than 30 days after receipt by Lessor,
and any Lender whose name and address shall have been furnished Lessee in
writing for such 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 30 days are reasonably required for
its performance, then Lessor shall not be in breach if performance is commenced
within such 30 day period and thereafter diligently pursued to completion.
                (b)    Performance by Lessee on Behalf of Lessor. In the event
that neither Lessor nor Lender cures said breach within 30 days after receipt of
said notice, or if having commenced said cure they do not diligently pursue it
to completion, then Lessee may elect to cure said breach at Lessee’s expense and
offset from Rent an amount equal to the greater of one month’s Base Rent or the
Security Deposit, and to pay an excess of such expense under protest, reserving
Lessee’s right to reimbursement from Lessor. Lessee shall document the cost of
said cure and supply said documentation to Lessor.

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

15.     Brokerage Fees.

        15.1    Additional Commission. In addition to the payments owed pursuant
to Paragraph 1.10 above, and unless Lessor and the Brokers otherwise agree in
writing, Lessor agrees that: (a) if Lessee exercises any Option, (b) if Lessee
acquires from Lessor any rights to the Premises or other premises owned by
Lessor and located within the Project, (c) if Lessee remains in possession of
the Premises, with the consent of Lessor, after the expiration of this Lease, or
(d) if Base Rent is increased, whether by agreement or operation of an
escalation clause herein, then, Lessor shall pay Brokers a fee in accordance
with the schedule of the Brokers in effect at the time of the execution of this
Lease.

_/s/
M_                                                                                                                                                                      
                                                             ______
_/s/
AZ                                                                                                                                                                      
                                                            _/s/ DA
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        15.2    Assumption of Obligations. Any buyer or transferee of Lessor’s
interest in this Lease shall be deemed to have assumed Lessor’s obligation
hereunder. Brokers shall be third party beneficiaries of the provisions of
Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to Brokers any amounts
due as and for brokerage fees pertaining to this Lease when due, then such
amounts shall accrue interest. In addition, if Lessor fails to pay any amounts
to Lessee’s Broker when due, Lessee’s Broker may send written notice to Lessor
and Lessee of such failure and if Lessor fails to pay such amounts within 10
days after said notice, Lessee shall pay said monies to its Broker and offset
such amounts against Rent. In addition, Lessee’s Broker shall be deemed to be a
third party beneficiary of any commission agreement entered into by and/or
between Lessor and Lessor’s Broker for the limited purpose of collecting any
brokerage fee owed.

        15.3    Representations and Indemnities of Broker Relationships. Lessee
and Lessor each represent and warrant to the other that it has had no dealings
with any person, firm, broker or finder (other than the Brokers, if any) in
connection with this Lease, and that no one other than said named Brokers is
entitled to any commission or finder’s fee in connection herewith. Lessee and
Lessor do each hereby agree to indemnify, protect, defend and hold the other
harmless from and against liability for compensation or charges which may be
claimed by any such unnamed broker, finder or other similar party by reason of
any dealings or actions of the indemnifying Party, including any costs,
expenses, attorneys’ fees reasonably incurred with respect thereto.

16. Estoppel Certificates.

        (a)     Each Party (as “Responding Party”) shall within 10 days after
written notice from the other Party (the “Requesting Party”) execute,
acknowledge and deliver to the Requesting Party a statement in writing in form
similar to the then most current “Estoppel Certificate” form published by the
American industrial Real Estate Association, plus such additional information,
confirmation and/or statements as may be reasonably requested by the Requesting
Party.
        (b)     if the Responding Party shall fail to execute or deliver the
Estoppel Certificate within such 10 day period, the Requesting Party may execute
an Estoppel Certificate stating that: (i) the Lease is in full force and effect
without modification except as may be represented by the Requesting Party, (ii)
there are no uncured defaults in the Requesting Party’s performance, and (iii)
if Lessor is the Requesting Party, not more than one month’s rent has been paid
in advance, Prospective purchasers and encumbrancers may rely upon the
Requesting Party’s Estoppel Certificate, and the Responding Party shall be
estopped from denying the truth of the facts contained in said Certificate.
        (c)     If Lessor desires to finance, refinance, or sell the Premises,
or any part thereof, Lessee and all Guarantors shall deliver ,to any potential
lender or purchaser designated by Lessor such financial statements as may be
reasonably required by such lender or purchaser, including but not limited to
Lessee’s financial statements for the past 3 years. All such financial
statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.

17.     Definition of Lessor. The term “Lessor” as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or, if
this is a sublease, of the Lessee’s interest in the prior lease. In the event of
a transfer of Lessor’s title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined. Notwithstanding the above, and subject to the provisions of Paragraph
20 below, the original Lessor under this Lease, and all subsequent holders of
the Lessor’s interest in this Lease shall remain liable and responsible with
regard to the potential duties and liabilities of Lessor pertaining to Hazardous
Substances as outlined in Paragraph 6.2 above.

18.    Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof.

19.    Days. Unless otherwise specifically indicated to the contrary, the word
“days” as used in this Lease shall mean and refer to calendar days.

20.    Limitation on Liability. Subject to the provisions of Paragraph 17 above,
the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall look
to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against the individual partners of Lessor, or its or their individual partners,
directors, officers or shareholders, or any of their personal assets for such
satisfaction.

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

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

23. Notices.

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

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

24.     Waivers. No waiver by Lessor of the Default or Breach of any term,
covenant or condition hereof by Lessee, shall be deemed a waiver of any other
term, covenant or condition hereof, or of any subsequent Default or Breach by
Lessee of the same or of any other term, covenant or condition hereof. Lessor’s
consent to, or approval of, any act shall not be deemed to render unnecessary
the obtaining of Lessor’s consent to, or approval of, any subsequent or similar
act by Lessee, or be construed as the basis of an estoppel to enforce the
provision or provisions of this Lease requiring such consent. The acceptance of
Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any
payment by Lessee may be accepted by Lessor on account of monies or damages due
Lessor, notwithstanding any qualifying statements or conditions made by Lessee
in connection therewith, which such statements and/or conditions shall be of no
force or effect whatsoever unless specifically agreed to in writing by Lessor at
or before the time of deposit of such payment.

25.     Disclosures Regarding The Nature of a Real Estate Agency Relationship.

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

_/s/
M_                                                                                                                                                                      
                                                            ______
_/s/
AZ                                                                                                                                                                      
                                                            _/s/ DA
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                                                               Initials

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                (i)     Lessor’s Agent. A Lessor’s agent under a listing
agreement with the Lessor acts as the agent for the Lessor only. A Lessor’s
agent or subagent has the following affirmative obligations: To the Lessor: A
fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with
the Lessor. To the Lessee and the Lessor: a. Diligent exercise of reasonable
skills and care in performance of the agent’s duties. b. A duty of honest and
fair dealing and good faith. c. A duty to disclose all facts known to the agent
materially affecting the value or desirability of the property that are not
known to, or within the diligent attention and observation of, the Parties. An
agent is not obligated to reveal to either Party any confidential information
obtained from the other Party which does not involve the affirmative duties set
forth above.
                (ii)     Lessee’s Agent. An agent can agree to act as agent for
the Lessee only. In these situations, the agent is not the Lessor’s agent, even
if by agreement the agent may receive compensation for services rendered, either
in full or in part from the Lessor. An agent acting only for a Lessee has the
following affirmative obligations. To the Lessee: A fiduciary duty of utmost
care, integrity, honesty, and loyalty in dealings with the Lessee. To the Lessee
and the Lessor: a. Diligent exercise of reasonable skills and care in
performance of the agent’s duties, b. A duty of honest and fair dealing and good
faith, c. A duty to disclose all facts known to the agent materially affecting
the value or desirability of the property that are not known to, or within the
diligent attention and observation of, the Parties. An agent is not obligated to
reveal to either Party any confidential information obtained from the other
Party which does not involve the affirmative duties set forth above.
                 (iii) Agent Representing Both Lessor and Lessee. A real estate
agent, either acting directly or through one or more associate licenses, can
legally be the agent of both the Lessor and the Lessee in a transaction, but
only with the knowledge and consent of both the Lessor and the Lessee. In a dual
agency situation, the agent has the following affirmative obligations to both
the Lessor and the Lessee: a. A fiduciary duty of utmost care, integrity,
honesty and loyalty in the dealings with either Lessor or the Lessee. b. Other
duties to the Lessor and the Lessee as stated above in subparagraphs (I) or
(ii). In representing both Lessor and Lessee, the agent may not without the
express permission of the respective Party, disclose to the other Party that the
Lessor will accept rent in an amount less than that indicated in the listing or
that the Lessee is willing to pay a higher rent than that offered. The above
duties of the agent in a real estate transaction do not relieve a Lessor or
Lessee from the responsibility to protect their own interests. Lessor and Lessee
should carefully read ail agreements to assure that they adequately express
their understanding of the transaction. A real estate agent is a person
qualified to advise about real estate. If legal or tax advice is desired,
consult a competent professional.
        (b)     Brokers have no responsibility with respect to any default or
breach hereof by either Party. The liability (including court costs and
attorneys’ fees), of any Broker with respect to any breach of duty, error or
omission relating to this Lease shall not exceed the fee received by such Broker
pursuant to this Lease; provided, however, that the foregoing limitation on each
Broker’s liability shall not be applicable to any gross negligence or willful
misconduct of such Broker.
         (c)     Buyer and Seiler agree to identify to Brokers as “Confidential”
any communication or information given Brokers that is considered by such Party
to be confidential any communication or information given Brokers that is
considered by such Party to be confidential.

26.     Section Deleted. /s/ DA /s/ AZ /s/ M

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

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

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

30.     Subordination; Attornment; Non-Disturbance.

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

        30.2    Attornment. Subject to the non-disturbance provisions of
Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and that in the event of such foreclosure, such new owner shall not: (a)
be liable for any act or omission of any prior Lessor or with respect to events
occurring prior to acquisition of ownership; (b) be subject to any offsets or
defenses which Lessee might have against any prior Lessor, (c) be bound by
prepayment of more than one month’s rent, or (d) be liable for the return of any
security deposit paid to any prior Lessor.

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

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

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

32.     Lessor’s Access; Showing Premises; Repairs. Lessor’s agents shall have
the right to enter the Premises at any time, in the case of an emergency, and
otherwise at reasonable times and with reasonable prior notice /s/ DA /s/ AZ /s/
M For the purpose of showing the same to prospective purchasers, lenders, or
tenants, and making such alterations, repairs, improvements or additions to the
Premises as Lessor may deem necessary. All such activities shall be without
abatement of rent or liability to Lessee. Lessor may at any time place on the
Premises any ordinary “For Sale” signs and Lessor may during the last 6 months
of the term hereof place on the Premises any ordinary “For Lease” signs. Lessee
may at any time place on the Premises any ordinary “For Sublease” sign.

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

_/s/
M_                                                                                                                                                                      
                                                          ______
_/s/
AZ                                                                                                                                                                      
                                                            _/s/ DA
Initials                                                                                                                                                                      
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34.     Signs. Except for ordinary “For Sublease” signs which may be placed only
on the Premises, Lessee shall not place any sign upon the Project without
Lessor’s prior written consent. Ail signs must comply with all Applicable
Requirements.

35.     Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate In the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor’s failure within 10 days following any such event
to elect to the contrary by written notice to the holder of any such lesser
interest, shall constitute Lessor’s election to have such event constitute the
termination of such interest.

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

 37. Guarantor.

        37.1    Execution. The Guarantors, if any, shall each execute a guaranty
in the form most recently published by the American industrial Real Estate
Association, and each such Guarantor shall have the same obligations as Lessee
under this Lease.

        37.2    Default. It shall constitute a Default of the Lessee if any
Guarantor fails or refuses, upon request to provide: (a) evidence of the
execution of the guaranty, including the authority of the party signing on
Guarantor’s behalf to obligate Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors
authorizing the making of such guaranty, (b) current financial statements, (c)
an Estoppel Certificate, or (d) written confirmation that the guaranty is still
in effect. 38. Quiet Possession. Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on Lessee’s part
to be observed and performed under this Lease, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof.

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

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

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

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

        39.4     Effect of Default on Options.

                (a)     Lessee shall have no right to exercise an Option: (i)
during the period commencing with the giving of any notice of Default and
continuing until said Default is cured, (ii) during the period of time any Rent
is unpaid (without regard to whether notice thereof is given Lessee), (iii)
during the time Lessee is in Breach of this Lease, or (iv) in the event that
Lessee has been given 3 or more notices of separate Default, whether or not the
Defaults are cured, during the 12 month period immediately preceding the
exercise of the Option.
                (b) The period of time within which an Option may be exercised
shall not be extended or enlarged by reason of Lessee’s inability to exercise an
Option because of the provisions of Paragraph 39.4(a).
                 (c) An Option shall terminate and be of no further force or
effect, notwithstanding Lessee’s due and timely exercise of the Option, if,
after such exercise and prior to the commencement of the extended term, (i)
Lessee fails to pay Rent for a period of 30 days after such Rent becomes due
(without any necessity of Lessor to give notice thereof), (ii) Lessor gives to
Lessee 3 or more notices of separate Default during any 12 month period, whether
or not the Defaults are cured, or (iii) if Lessee commits a Breach of this
Lease.

40.     Security Measures. Lessee hereby acknowledges that the Rent payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes ail responsibility for the protection of the Premises, Lessee,
its agents and invitees and their property from the acts of third parties.

41.     Reservations. Lessor reserves the right: (i) to grant, without the
consent or joinder of Lessee, such easements, rights and dedications that Lessor
deems necessary, (ii) to cause the recordation of parcel maps and restrictions,
and (iii) to create and/or install new utility raceways, so long as such
easements, rights, dedications, maps, restrictions, and utility raceways do not
unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to
sign any documents reasonably requested by Lessor to effectuate such rights.

 42.     Performance Under Protest. If at any time a dispute shall arise as to
any amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment “under protest” and such payment
shall not be regarded as a voluntary payment and there shall survive the right
on the part of said Party to institute suit for recovery of such sum. If it
shall be adjudged that there was no legal obligation on the part of said Party
to pay such sum or any part thereof, said Party shall be entitled to recover
such sum or so much thereof as it was not legally required to pay.

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

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

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

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

47.     Multiple Parties. If more than one person or entity is named herein as
either Lessor or Lessee, such multiple Parties shall have joint and several
responsibility to comply with the terms of this Lease. 48. Waiver of Jury Trial.
The Parties hereby waive their respective rights to trial by jury in any action
or proceeding involving the Property or arising out of this Agreement.

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

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

_/s/
M_                                                                                                                                                                       
                                                          ______
_/s/
AZ                                                                                                                                                                        
                                                          _/s/ DA
Initials                                                                                                                                                                       
                                                             Initials

PAGE 13
©1998-American Industrial Real Estate Association FORM MTG-2-11/98

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

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

2.     RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF
THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED T0:  THE
POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE
STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS,
COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE
PREMISES FOR LESSEE’S INTENDED USE.

WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WlTH THE LAWS OF THE
STATE IN WHICH THE PREMISES ARE LOCATED. The parties hereto have executed this
Lease at the place and on the dates specified above their respective signatures.

Executed at:    Costa Mesa,
California                                                                                                        Executed
at:    Monrovia, California
on:   
10-30-05                                                                                                                                                 on:
October 27, 2005
By
LESSOR:                                                                                                                                                    By
LESSEE:
Z & M LLC. a California
Limited                                                                                                                  STAAR
SURGICAL COMPANY
Liability Company 
By: /s/ Frank
Marshall                                                                                                                                  
By:    /s/ Deborah Andrews
Name Printed: Frank
Marshall                                                                                                                      Name
Printed: Deborah Andrews
Title:
President                                                                                                                                                Title:
CFO

By: /s/ Andrew R. Zimbaldi
Name Printed: Andrew R. Zimbaldi
Title: Secretary

Address: 150 Paularino Ave.,
#194                                                                                                               Address:
1811 – 1813 Myrtle Avenue
Costa Mesa, CA
92626                                                                                                                                   
Monrovia, CA 91016
Telephone: (714)
751.7858                                                                                                                             
Telephone: (626) 303. 7902
Facsimile: (714)
751.7857                                                                                                                                
Facsimile: (626) 358.0416
Federal ID
No.                                                                                                                                                 
Federal ID No.

These forms are often modified to meet changing requirements of law and needs of
the Industry. Always write or call to make sure you are utilizing the most
current form: American lndustrial Real Estate Association, 700 South Flower
Street, Suite 600, Los Angeles, CA 90017. (213) 687-8777.

@Copyright 1998-By American Industrial Real Estate Association.
All rights reserved.
No part of these works may be reproduced in any form without permission in
writing.

 

 

 

 

 

PAGE 14

©1998-American Industrial Real Estate Association FORM MTG-2-11/98

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ADDENDUM

Addendum to Lease dated 10/06/2005, by and between Z & M LLC, A California
Limited Liability Company, as Lessor, and Staar Surgical Company, as LESSEE, for
the premises located at 19811-1813 South Myrtle, Monrovia, California.

49.        Building Occupancy:   Lessee shall be entitled to keys and occupancy
to the premises on 11/1/05 upon Lessor’s receipt of the following:
            a.         Certificate of Liability Insurance, referenced in
paragraph 8.2(a), naming Lessor and Alden Management Group as additional
insured. 
            b.         A fully executed original lease document.

50.     Condition of the Premises:

           a.           Outside Storage: No storage will be allowed outside the
building nor on any of the common areas as it pertains to landscaping,
driveways, parking lots, fences, and all sidewalks and parkways adjacent to the
premises. This includes, but is not limited to, supplies, materials, goods,
pallets, vehicles and equipment. No vehicles, including boats and trailers, may
be parked or stored outside the building overnight. Any such vehicle shall be
removed by Lessor without notice at Lessee’s expense. Lessee’s authority to
Lessor to have said vehicle towed or otherwise removed, is given with Lessee’s
signature to this lease. Violation of this paragraph shall constitute a material
breach of this lease.

             b.     Forklifts: Forklifts shall not be allowed on driveways or
parking lots of the park without written agreement by Lessee to pay for
installation of a concrete apron over areas of damage.

             c.     Outside Work: No Lessee shall conduct any work activity, or
place or store any item, outside the building. Any item outside the building
will be automatically removed at Lessee’s expense without notice, regardless if
Lessee claims ownership or not.

             d.      Trash: No Lessee shall permit any chemicals, trash or other
foreign materials to be deposited or disposed of in the landscaped areas or on
the asphalt or concrete surfaced areas, but will dispose of same in refuse cans
or other appropriate containers or means. Lessee shall cooperate with Lessor and
all other tenants of the development so that the common areas may be kept in a
clean and orderly condition and free of obstructions. It is Lessee’s
responsibility that all trash must be placed in trash receptacles. Violations
will be remedied at Lessee’s expense.

                                                                                                                                                                        
           Landlord’s /s/ AZ /s/ M Initials:

                                                                                                                                                                        
           Tenant’s Initials: /s/ DA

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

51.            Holdover Tenancy: In the event that Lessee shall not immediately
surrender the demised premises on the date of expiration of the term here of,
Lessee shall, by virtue of the provisions hereof, become a Lessee by the month
at a monthly rental equal to the monthly rental in effect during the last month
of the term of this Lease, which said monthly tenancy shall commence with the
first day next after the expiration of the term of this Lease. The Lessee shall,
as a monthly tenant, be subject to all of the conditions and covenants of this
Lease as though the same had originally been a monthly tenancy. Tenant shall
give to Landlord at least thirty (30) days written notice to quit the demised
premises, except in the event of nonpayment of rent in advance of the breach of
any other covenant by the Tenant in which event Tenant shall not be entitled to
any notice to quite, the usual thirty (30) days notice to quit being hereby
expressly waived.

52.           City of Monrovia Compliance: Lessee shall have the sole
responsibility to secure any and all governmental approvals relating to Lessee’s
use of Premises, including, but not limited to, an Occupancy Permit issued by
the City of Monrovia or any requirements of the American’s with Disabilities Act
(the ADA). Lessee shall secure such approvals promptly and hold Lessor harmless
from any costs and fees incurred in the process, and from any fines or penalties
arising from Lessee’s non-conformance with applicable laws and regulations.

53.            Signage: Lessor shall approve all copy and/or logo design, color,
size, etc. prior to the installation of any signage. Lessee to obtain the
applicable city permit, etc., and submit same to Lessor prior to fabrication or
installation of signage. Lessee shall be responsible for the fulfillment for all
requirements of this permit. No electric or audible signs shall be allowed. A
tenant identification sign shall by provided by Lessor on the monument at the
project entrance and on the window of the Premises.

54.            Animals: If Lessee chooses to have any pet or animal on the
premises or within his/her suite, Lessee shall be solely responsible to insure
that the Lessee’s pet or animal is appropriately leashed or restrained from
wandering throughout the project unsupervised. Lessee shall also have the
responsibility to clean up any mess created as a result of the animals presence
on the property. Violations will be remedied at Lessee’s expense.

55.            Payment of Rent: The payment of rent by Lessee to Lessor for the
use of said suite shall be due on the first day of each month commencing with
the Lease Commencement Date (Section 1.3). If Lessee fails to make payment of
rent by the tenth (10th) day of any month there after, Lessee shall be
responsible to pay a 10% late fee in addition to said base rent. Lessee shall
also be responsible to pay a $50.00 charge on any returned check.

56.          Annual Base Rent Adjustments: The Base Rent shall be adjusted
annually. The Base Rent shall have an upward adjustment of 4% on the lease
anniversary date.

                                                                                                                                                                        
            Landlord’s /s/ AZ /s/ M Initials:

                                                                                                                                                                        
             Tenant’s Initials: /s/ DA

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

57.             Option to Renew: Lessee shall have the option to renew said
Lease for an additional three (3) year term upon Lessor’s receipt of a written
notice to renew ninety (90) days prior to the lease termination date as defined
in section 1.3. Base Rent during the first year of the option shall be the Base
Rent in year three of the Lease adjusted upwardly by 4%. Each year thereafter,
there shall be an upward adjustment of 4% in the Base Rent on the Lease
anniversary date (November 1).

58.             ALTERATIONS: Pursuant to Paragraph 7.3(b) or this Lease, Lessor
specifically consents to the Lessee’s making any alterations to the Premises
necessary for the Agreed Use, except for structural changs to the building such
as exterior walls, internal load-bearing walls, and structural elements of roofs
and floors.

Unless otherwise agreed in writing by the Lessor, Lessee shall be responsible
for removing all alterations when leaving the premises.

                                                                                                                                                                        
             Landlord’s /s/ AZ /s/ M Initials:

                                                                                                                                                                       
                Tenant’s Initials: /s/ DA