EXHIBIT 10.26

 


                               SUBLEASE


THIS SUBLEASE ("Sublease") is entered into as of the 8th day of March, 
1999 between Kelley-Clarke, Inc., a California corporation ("Sublandlord") 
and SangStat Medical Corporation, a Delaware corporation ("Subtenant") 
with reference to the following facts:

     A. Pursuant to that certain Lease Agreement dated November 28, 1988, 
as amended on February 26, 1990 ("First Amendment"); May 1, 1990 ("Second 
Amendment"); May 5, 1992 ("Third Amendment"); and January 18, 1995 
("Fourth Amendment") between TriNet Essential Facilities X, Inc. 
("Landlord") and Kelley-Clarke, Inc., as Tenant (collectively Master 
Lease"), a copy of which is attached hereto as Exhibit A and made a part 
hereof, Sublandlord leased from Landlord and Landlord leased to 
Sublandlord approximately 44,000 rentable square feet of space (the 
"Master Lease Premises") which consists of the' building located at 6300 
Dumbarton Circle, Fremont, California ("Building").

     B. Subtenant desires to sublet from Sublandlord the Master Lease 
Premises as more particularly set forth in Exhibit B attached hereto and 
made a part hereof ("'Subleased Premises"), and Sublandlord does hereby 
sublet the same to Subtenant upon the terms, covenants and conditions 
hereinafter set forth.

NOW, THEREFORE, in consideration of the covenants herein contained, 
and for other good and valuable consideration, the receipt and adequacy of 
which are hereby acknowledged, the parties do hereby agree as follows:

1 - Sublease. Sublandlord does hereby sublease and demise to 
Subtenant, and Subtenant does hereby hire and take from Sublandlord, all 
of the Subleased Premises subject to: (i) the covenants, agreements, 
terms, provisions and conditions of this Sublease for the term hereinafter 
stated; and (ii) the covenants, agreements, terms, provisions and 
conditions of the Master Lease. Subtenant hereby acknowledges receipt of 
the Master Lease attached hereto as Exhibit A. Sublandlord represents to 
Subtenant that the copy of the Master Lease attached hereto is true and 
correct and that there are no amendments or modifications to such document 
other than as so attached. Capitalized terms not otherwise defined herein 
shall have the meaning ascribed to them in the Master Lease.

2.Term.

     A. The term of this Sublease ("Term") shall commence on June 
1, 1999 (the "Commencement Date") and shall end June 30, 2005, or on such 
earlier date upon which said Term may expire or be terminated pursuant to 
any of the conditions of limitation or other provisions of this Sublease, 
the Master Lease, or pursuant to law. The parties shall use their best 
efforts to execute all requisite documents as expeditiously as possible.

     B. Subtenant shall have the right of access to the 
Subleased Premises, subject to all of the provisions of this Sublease, 
other than payment of base rent and Additional Rent (as
defined in Section 4-B. below), at any time between the date of Landlord 
consent to this fully executed Sublease and the Commencement Date for the 
purposes of performing measurements and space planning and any 
construction of Alterations (as defined in Section 7.B. below), provided 
that Subtenant shall give Sublandlord reasonable prior notice in advance 
of accessing the Subleased Premises.

I       Use. Subtenant shall use the Subleased Premises for office, 
administration, R&D and distribution of products related to the transplant 
industry and otherwise in conformance with allowable uses under the Master 
Lease.

4.      Rent.

     A. Subtenant shall pay Sublandlord as monthly base rent for 
the Subleased Premises on the first (1st) day of each calendar month 
during the Term of this Sublease according to the following schedule:

                            Monthly NNN
           Months               Rent
          ---------         ------------
            1-12             $31,739.45
            13-24            $39,939.45
            25-36            $47,489.45
            37-48            $64,939.45
            49-60            $67,139.45
            61-73            $69,339.45

The base rent for June 1999 shall be due and payable on the mutual 
execution of this Sublease. The base rent for October, November and 
December 1999 shall be paid in full on October 1, 1999. All rent shall be 
payable, in advance, without any offset, deduction, or abatement, except 
as otherwise set forth in this Sublease. The base rent shall be a triple 
net rent, and Subtenant shall also be fully responsible for "Additional 
Rent" assessed against the Subleased Premises pursuant to Section 4.B. 
below.

     B. Subtenant shall also pay to Sublandlord all "Additional 
Rent"' for the Subleased Premises for each calendar month of the Term 
within ten (10) business days after delivery by Sublandlord of invoices 
evidencing "Additional Rent". If Subtenant fails to reimburse 
Sublandlord for "Additional Rent" within such ten (10) business day 
period, Subtenant shall also pay interest on such amount at ten percent 
(10% per annum) from the date due until paid. "Additional Rent" shall 
consist of Subtenant's share prorated, based on actual square footage on 
which Subtenant is obligated to pay rent as set forth in the table below, 
of all payments which Sublandlord is required to pay to Master Landlord 
for Real Property Taxes and Common Maintenance Costs pursuant to Articles 
7 and 8 of the Master Lease and any delinquent charges due and payable by 
Subtenant to Sublandlord. For purposes herein, "Rent' shall include all 
monthly base rent, security deposit, and Additional Rent.

Subtenant's occupancy schedule shall be as follows:

Months                                       Square Feet
1-12                                            28,000
13-24                                           32,000
25-36                                           35,000
37-48                                           44,000
49-60                                           44,000
61-73                                           44,000

5. Incorporation of Master Lease. Except to the extent that they are 
inapplicable to, or modified by, or excluded by, the terms of this 
Sublease, all of the covenants, agreements, terms, provisions and 
conditions of the Master Lease are hereby incorporated into and made a 
part of this Sublease. Except to the extent that they are inapplicable to, 
or modified by, the terms of this Sublease, the rights and obligations 
contained in the Master Lease are hereby imposed upon the respective 
parties hereto, Sublandlord being substituted for "Lessor" named in the 
Master Lease, Subtenant being substituted for the "Lessee" named in the 
Master Lease, and "Subleased Premises" being substituted for the 
"Premises" named in the Master Lease, except for Articles I, Sections 1. 
1, 1.2, 1.4, 1.5 and 1.6, Article 4, Article 5, Sections 6. 1 and 6.2, 
Article 16, Section 30.2, Article 32, Article 47, Article 48, Section 
50.12, Exhibit C, the First Amendment, Second Amendment, Third Amendment 
and Fourth Amendment, except Section 4 as so excluded, inapplicable or 
modified, all acts and obligations to be performed and all of the terms 
and conditions to be observed by Sublandlord as Lessee under the Master 
Lease with respect to the Master Lease Premises shall be performed and 
observed by Subtenant with respect to the Subleased Premises.

6.      Subordination Rights to the Master Lease and Ground Lease. This 
Sublease and Subtenant's rights under this Sublease shall at all times be 
subject and subordinate to we underlying Master Lease. If any conflict 
between the Master Lease and the Sublease occurs, the Master Lease will 
control, except as inapplicable to, or modified by, the terms of its 
Sublease or excluded from the incorporation provisions of Section 5 
hereof. Subtenant acknowledge and agrees that any termination of the 
underlying Master Lease pursuant to Subtenant's rights under the Master 
Lease shall extinguish the Sublease at Landlord's discretion, upon at 
least thirty (30) days prior written notice to Subtenant, without 
liability to Sublandlord; provided, however, that such termination is not 
due to the default of Sublandlord under the Master Lease or to the 
voluntary surrender by Sublandlord of its rights under the Master Lease.

7.      Condition of Subleased Premium.

      A.  Sublandlord shall deliver the Subleased Premises in broom
clean condition, with all existing improvements in place, including
without limitation, the UPS and security system, but shall remove the
freezers and kitchen equipment as soon as possible. Sublandlord
represents and warrants that the roof, including the structure and
membrane, foundations and exterior walls shall be in sound condition
and repair as of the Commencement Date. In addition, Sublandlord, at
its sole cost and expense, shall deliver all building systems,
including but not limited to HVAC, mechanical, plumbing, electrical and
elevator in good working condition and repair.  Sublandlord shall also
provide Subtenant a sixty (60) day discovery period from the
Commencement Date, whereby Sublandlord after notice from Subtenant,
shall repair and/or replace any broken or inoperable building systems,
excluding any damage caused by Subtenant.

      B.  Subtenant shall not make or suffer to be made any 
alterations, additions or improvements (collectively, "Alterations") in, 
on or to the Subleased Premises without the prior written consent of 
Sublandlord and Landlord, which shall not be unreasonably withheld or 
delayed. All Alterations shall be performed in compliance with Article 20 
of the Master Lease. The Alterations shall be made by Subtenant, at 
Subtenant's sole cost and expense, and any contractor or person selected 
by Subtenant to make the same shall first be reasonably approved by 
Sublandlord and Landlord. Upon the expiration or sooner termination of 
this Sublease, Subtenant shall, upon written demand by Landlord (but not 
Sublandlord), at Subtenant's sole cost and expense, forthwith and with all 
due diligence, remove any Alterations made by Subtenant, which Landlord 
requires at the time of its, consent be removed at Sublease expiration: 
provided, however, Subtenant shall have no obligation to reconstruct any 
of Sublandlord's improvements that were demolished as part of its 
Alterations, and Sublandlord shall remain solely responsible, at its cost, 
for removing the Special Improvements and Additional improvements (as 
defined in the Master Lease). Finally, Sublandlord shall cooperate with 
Subtenant and use good faith efforts to acquire Landlord's consent to any 
Alterations.

       C. The general terms and conditions regarding Subtenant's 
construction of its Alterations shall be governed by the terms of the 
Master Lease; provided, however, that: (i) there shall be no specified 
subcontractors unless Subtenant approves such subcontractor and the party 
requesting such subcontractor agrees to pay any additional costs; (ii) 
neither Sublandlord nor Landlord shall charge a construction management 
fee; and (iii) if performance or payment bonds are required by Sublandlord 
and/or Landlord, they would be at such party's expense.

9. Insurance. Subtenant, at its sole cost and expense, shall obtain 
and keep in full force and effect during the entire term of this Sublease 
such insurance, and in such amounts, as are required under Sections 10.5, 
11.1 and 12.1 of the Master Lease. Sublandlord and the Landlord shall be 
named as additional insured parties under any such policy of insurance. 
Subtenant and Sublandlord shall each obtain from their respective insurers 
hereof a waiver of all rights of subrogation as set forth in Section 14.1 
of the Master Lease and the other waivers contained in Section 14.2 of the 
Master Lease shall apply as between the Subtenant and Sublandlord.

10. Security deposit. Upon execution hereof, Subtenant shall deposit 
with Sublandlord Sixty Nine Thousand Three Hundred Thirty Nine and 45/100 
Dollars ($69,339.45) in cash, as security for the performance by Subtenant 
of the terms and conditions of this Sublease. If Subtenant is in default 
after passage of the applicable notice and cure provision, the remaining 
balance of the security deposit shall be immediately due and payable.

If Subtenant fails to pay Rent. Additional Rent or other expenses due 
hereunder or otherwise defaults with respect to any of this Sublease, 
Sublandlord may draw upon, use, apply or retain all or any portion of the 
security deposit for the payment of any Rent. Additional Rent, or other 
expenses in default, for the payment of any other sum which Sublandlord 
has become obligated to pay by reason of Subtenant's default, or to 
compensate Sublandlord for any out-of-pocket expenses which Sublandlord 
has suffered thereby. If Sublandlord so uses or applies all or any portion 
of the security deposit, then Subtenant shall within ten (10) business 
days after written demand therefor, deposit cash with Sublandlord in the 
amount required to restore the security deposit.  If at the end of the 
Sublease Term, Sublandlord shall return to Subtenant that portion of the 
security deposit which has not been applied by Sublandlord pursuant to 
this Section 10, or which is not otherwise required to cure Subtenant's 
defaults.  Notwithstanding the foregoing, Sublandlord shall give Subtenant 
five (5) business days' prior written notice prior to Sublandlord drawing 
upon or using in any manner the security deposit.

11.     Notices. All notices and other communications which are required 
or desired to be given by either party to the other hereunder shall be in 
writing and shall be sent by United States registered or certified mail, 
postage prepaid, return receipt requested, addressed to the appropriate 
party at its address as such party shall have last designated by notice to 
the other party in the manner herein provided. Notices and communications 
to Sublandlord shall be sent to:

Sublandlord:
For Mail Purposes:                    For Delivery Purposes:
Kelley Clarke, Inc                    Kelley Clarke, Inc
P.O. Box 5558                         1470 S. Valley Vista Ave., Suite 200
Diamond Bar, CA  91765-7558           Diamond Bar, CA 91765-7558
Attn: President                       Attn: President

Subtenant:
SangStat Medical Corporation
6300 Dumbarton Circle
Fremont, CA 94555
Attn: Ralph Levy

Notices and commununications to Subtenant shall be sent to the Subleased 
Premises. Notices and other communications shall be deemed given on the 
date so mailed.

12.     Amendments. Sublandlord and Subtenant shall not amend in any 
respect this Sublease unless such is in writing and signed by both 
parties.

13.      Consent. This Sublease shall be subject to the consent by 
Landlord to the terms and conditions of this Sublease, w1ucti shall not 
become effective unless and until such consent is executed and delivered 
by such parties.

If Landlord fails to consent to this Sublease within thirty (30) days of 
the date of this Sublease, the Sublease shall automatically terminate and 
neither party shall have any continuing rights against or obligations to 
the other with respect to the Subleased Premises or this Sublease, except 
that Sublandlord shall return to Subtenant all advance rents and security 
deposits paid by Subtenant to Sublandlord.

14.     Indemnification.

     A. Subtenant shall indemnify, defend, protect and hold 
harmless Sublandlord and Sublandlord's officers, directors, agents and 
employees (collectively, Sublandlord's Parties") from and against all 
liability, cost, damage and expense (including, without limitation, 
reasonable attorneys' fees) arising from either: (i) the negligence, 
willful misconduct, or breach of this Sublease by Subtenant or Subtenant's 
officers, directors, agents or employees (collectively "Subtenant's 
Parties"); (ii) the use of the Subleased Premises by Subtenant or 
Subtenant's Parties; (iii) the construction of the Alterations or any 
claims for work or labor performed, or for materials or supplies furnished 
to or at the request of Subtenant in relation thereto; or (iv) the use, 
release or disposal of Hazardous Materials by Subtenant or Subtenant's 
Parties in, on or about the Subleased Premises: provided, however, that 
the indemnification provided in this Section 14-A. shall not apply to the 
extent that any liability, cost, damage or expense arises from the 
negligence, willful misconduct, or breach of this Sublease by Sublandlord 
or Sublandlord's Parties.

     B. Sublandlord shall indemnify, defend, protect and hold 
harmless Subtenant's Parties from and against all liability, cost, damage 
and expense (including, without limitation, reasonable attorneys' fees) 
arising from either (i) the negligence, willful misconduct, or breach of 
this Sublease or the Master Lease by Sublandlord or Sublandlord's Parties; 
(ii) the use of the Master Lease Premises by Sublandlord or Sublandlord's 
Parties; or (iii) the use, release or disposal of Hazardous Materials by 
Sublandlord or Sublandlord's, Parties in, on or about the Subleased 
Premises; provided, however, that the indemnification provided in this 
Section 14-B. shall not apply to the extent that any liability, cost, 
damage or expense arises from the negligence, willful misconduct, or 
breach of this Sublease by Subtenant or Subtenant's Parties.

     C. The terms of this Section 14 shall survive the expiration or 
termination of this Sublease.

15.     Miscellaneous.

A. Subtenant shall be entitled to use, on an exclusive basis and free 
of charge, 167 parking stalls available for use by Sublandlord for the 
Subleased Premises as set forth in the Master Lease.

B. This Sublease may be executed in counterparts each of which when 
executed shall constitute but one original, and all of which together 
shall constitute a single agreement.

C. Sublandlord shall remove its existing signs, at its sole expense, 
as soon as possible after mutual execution of the Sublease. Subtenant 
shall have the right, at its sole cost and expense, to install: (i) door 
signage at the entrance to the Premises; (ii) multiple Building Signage; 
and (iii) monument signage on Dumbarton Circle. All signage shall be 
subject to the terms of the Master Lease and the consent of Sublandlord, 
Landlord and the City of Fremont.

E. Sublandlord and Subtenant represent and warrant that they 
have negotiated this Sublease directly with Colliers Parrish 
("Colliers") and Tory Corporate Real Estate Advisors, Inc. (dba The 
Staubach Company) (collectively "Brokers"). Sublandlord shall pay the 
Brokers a commission pursuant to a separate written agreement with each 
broker. Subtenant has not authorized or employed, or acted by implication 
to authorize or to employ, any other real estate broker or salesman to act 
for Subtenant in connection with this Sublease. Each party shall hold the 
other harmless from and indemnify and defend the other against any and all 
claims by any real estate broker or salesman other than the Brokers 
identified above claiming to represent that party for a commission, 
finders fee or other compensation as a result of each party entering into 
this Sublease.

F. By consenting to this Sublease, in the event the Sublease 
is terminated for any reason during the term of this Sublease, Landlord 
agrees that, so long as Subtenant is not in default under the terms of the 
Sublease, the right of Subtenant to retain possession of the Subleased 
Premises shall not be distributed and Subtenant leasehold interest in the 
Subleased Premises shall not be extinguished, subject to all of the terms, 
covenants and conditions of this Sublease and such terms, covenants and 
conditions of the Master Lease as are expressly incorporated into this 
Sublease by reference thereto.

G. Sublandlord represents to Subtenant the following: (i) that 
the Master Lease is in full force and effect and that, to the best of 
Sublandlord's knowledge, no default or event that, with the passing of 
time or the giving of notice or both, would constitute a default, exists 
on the part of Sublandlord, and to the best of Sublandlord's knowledge, 
the Landlord thereunder; and (ii) to the best of Sublandlord's knowledge, 
there are no hazardous materials present in, on or about the Subleased 
Premises. Sublandlord agrees to maintain the Master Lease, in full force 
and effect except to the extent its failure to maintain the Master Lease 
is due to the failure of Subtenant to comply with its obligations under 
this Sublease, provided Subtenant receives prior written notice from 
Sublandlord as required by the Master Lease. During the Term, Sublandlord 
shall not enter into any amendment of the Master Lease that during the 
initial term, would materially diminish Subtenant's rights or materially 
increase Subtenant's obligations hereunder.

H. The covenants and conditions herein contained shall apply 
to and bind the heirs, successors, executors, administrators and assigns 
of all of the parties hereto; and all of the parties hereto shall be 
jointly and severally liable hereunder.


IN WITNESS WHEREOF, the parties hereto have executed this
Sublease as of this date first above written.


"SUBLANDLORD"                           "SUBTENANT"

KELLEY-CLARKE, INC                      SANGSTAT MEDICAL CORPORATION,

a California corporation                a Delaware corporation


By: ___________________                 By: ___________________

Its: ____________________               Its: ____________________


<PAGE>



                        ARDENWOOD CORPORATE COMMONS
                            KELLEY-CLARKE, INC.

                            FREMONT, CALIFORNIA

                       ARTICLE 1. - SALIENT LEASE TERMS

THIS LEASE is dated for reference purposes only this 1st day of September, 
1988.

1. 1    Rent            KAISER DEVELOPMENT COMPANY
        Payment:        c/o Bedford Properties, Inc.
                        P. 0. Box 1267
                        Lafayette, CA 94549

1.2     Parties         Lessor: KAISER DEVELOPMENT' COMPANY
        and             c/o Bedford Properties, Inc.
        Notice          3470 Mount Diablo Boulevard, Suite A200
        Addresses:      Lafayette, CA 94549

                        Lessee: KELLEY-CLARKE, INC
                        a California corporation
                        30740 Santana Street
                        Hayward, CA 94540-4801 until commencement,
                        thereafter, at the Leased Premises
                        (Section 4 9. 12)

1.3     Premises:   (A)     Name and Location of Complex:
                            Ardenwood Corporate Commons
                            Fremont, California
                    (B)     Leased Premises:
                            Dumbarton circle
                            Fremont, California
                    (C)     Approximately 44,000 square feet of
                            Rentable Area on approximately 2.399 acres of land
                            area.
                              (Section 3-2)

1.4 Term:           (A)     Initial Term: 120 Months
                    (B)     Options to Extend: Two at Five years each
                               (Section 4. 1)

1.5 Rent:  Minimum Monthly Rent
                    (A)     Commencement through 60th lease month:See Article 6
                    (B)     Balance of Initial Term: 1.1699 x Beginning Rent
                    (C)     Each extended Term: 90% of fair market value.
                           (Section 6.1)
1.6 Security Deposit:    Fifty Thousand Dollars ($50,000)
                             (Section 16. 1)

1.7     Use:   Premises used solely for general office purposes (including,
        however,  a test kitchen and storage area which in the aggregate, 
        may not  exceed 5,000 square feet.)

                (Section 17. 1)

1.8     Initial 1.3%
        Pro Rata%               (Section 8.3)

1.9     Declaration of
        Restrictions:

                      Date Recorded:  Series Number

Original            March 30, 1984      84-062367
Modified            June 29, 1984       84-127903
Modified            May 28, 1985        85-061691
Modified            October 1, 1986     86-241538
Modified            March 12, 1987      87-069602

Two amendments of the Restrictions are to be recorded in the 
form substantially as attached hereto as Exhibit "H".
(Section 3.4)

1.10    Contents: This Lease consists of:
        Pages 1 through 46
        Sections-1 through 50.16
        Exhibits:
          A. Legal Description of Leased Premises
          B. Plot Plan of Leased Premises
          C. Construction Obligations
          D. Acknowledgment of Rent and Commencement of Term
          E. Plot Plan of Complex
          F. Lessee's Sign
          G. Rental Reimbursement Agreement
          H. Declaration of Restrictions
          I. Purchase Agreement
          J. Hazardous Materials Report
          K. Memorandum of Lease
          L. Quitclaim Deed
          M. First Offer Area

The above terms are incorporated in this Lease as indicated above and 
referenced herein.


ARTICLE 2. DEFINITIONS

      2.1     "Building": The structure or structures upon the Leased 
Premises which is completely enclosed by walls and a roof.

              "Commencement of Construction": The date upon which the 
trenching for foundations of the Building is commenced, in the case of 
Lessor's work under Exhibit "C"; or in the case of a repair or 
reconstruction in event of a casualty, the date upon which the general 
building contractor commences work under the terms of its building 
contract.

              "Commencement Date": See Section 4.1.

              "Common Maintenance Areas": See Section 8.1.

              "Common Maintenance Costs": See Section 8.4.

              "Complex": See Section 3.2.

              "Hazardous Materials":See Section 18.3.

              "Lease Month": Any calendar month, or portion thereof 
following the commencement hereof, which period is included the Term.

              "Leased Premises": The real property, land and improvements 
thereto leased to Lessee hereunder.

              "Lessee Delay": : Any delay in delivery of the premises by 
Lessor following substantial completion of Lessor's work specified in 
Exhibit "C", as a result of design decisions, revisions or additional 
work or preparation of plans by Lessee or its agents.

              "Major Uninsured Casualty": A casualty not covered by the 
insurance required to be obtained by Lessor pursuant to Section 10.2, 
(whether or not Lessor has obtained such insurance) , the cost for repair 
of which exceeds $l00,000 in Lessor's sole good faith judgement.

              "Occupant": Any party with a possessory right to occupy any 
premises within the complex, including without limitation, owners, 
tenants, subtenants or licensees.

              "Permissible Delay ":Any delay in the performance of any 
covenant under this Lease, which delay results from strikes, walkouts, 
riots, shortages of materials, governmental regulations, acts of God, 
inclement weather, fire, flood or other casualty, or other causes, other 
than financial causes, beyond the reasonable control of the party 
obligated to perform the task.

              "Rent": Minimum Monthly Rent and all other sums required to 
be paid by Lessee pursuant to the terms of this Lease.

              "Rentable Area": The area within Building(s) measured to the 
inside finished surface of the dominant portion of the permanent outer 
Building walls without deduction.

      "Restrictions": See Section 3.3.

              "Structural": Any portion of the Leased Premises or Complex 
or Building which provides bearing support to any other integral member of 
the Leased Premises, including by limitation the roof structure (trusses, 
joists, beams), posts, load bearing walls, foundations, girders, floor 
joists, footings, and other load bearing members constructed by Lessor.

              "Substantial Completion": Completion of construction work to 
a degree that occupancy can occur without material impairment of Lessee's 
ability to conduct the business operations intended to be conducted within 
the Leased Premises.

      "Taxes or Real Estate Taxes": See Section 7.1.

              " Term": The term of the Lease as specified in Article 4 
hereof, including any partial month at the commencement of the Term.

              "Total Project Costs": Same definition as for Construction 
Costs as defined in Exhibit "C".

      "Transfer": See Section 9.2.

              "Usable Area": The number of square feet computed by 
measuring to the finished surface of the office side of corridor and other 
permanent walls, to the center of partitions that separate the permanent 
walls, to the center of partitions that separate the office from adjoining 
Usable Areas, and to the inside finished surface of the permanent outer 
Building walls. No deductions shall be made for the columns and 
projections necessary to the Building.

ARTICLE 3.      PREMISES

      3.1     Demising Clause. Lessor hereby leases to Lessee, and Lessee 
hires from Lessor a portion of the Complex as hereinafter defined.

      3.2     Description. The "Complex" consists of those parcels of real 
property originally held in common ownership with, and contiguous to, the 
parcel of which the Leased Premises forms a part, which is referenced in 
Section 1.3(A) and delineated in Exhibit "F" attached hereto and made a 
part hereof by reference. The premises leased herein are described in 
Section 1.3(B) and Exhibit "A" and delineated on Exhibit "B", which is 
attached hereto and made a part hereof by reference, consisting of the 
approximate amount of square footage as specified in Section 1.3(C) 
hereof. Lessor reserves the area beneath and above the Leased Premises and 
the use thereof together with the right to install, maintain, use, repair 
and replace underground pipes, ducts, conduits and wires leading through 
the Leased Premises serving other parts of the Complex, so long as such 
items are concealed and Lessor uses reasonable efforts to minimize 
interference with Lessee's business operations in the Leased Premises. 
Such reservation in no way affects the maintenance obligations imposed 
herein.

      3.3     Covenants, Conditions and Restrictions. The parties agree that 
this Lease is subject to the effect of (a) any covenants, conditions, 
restrictions, easements, mortgages or deeds of trust, ground leases, 
rights of way of record, and any other matters or documents of record; (b) 
any zoning laws of the city, county and state where the Complex is 
situated; and (c) general and special taxes not delinquent. Lessee agrees 
that as to its leasehold estate, Lessee and all persons in possession or 
holding under Lessee, will conform to and will not violate the terms of 
any covenants, conditions or restrictions of record which may now or 
hereafter encumber the property (hereinafter the "Restrictions"). This 
Lease is subordinate to the restrictions and any amendments or 
modifications thereto. Any amendments, modifications or additional 
Restrictions effectuated after the date hereof, in order to govern this 
Lease, must have been subject to Lessee's prior written consent which may 
not be unreasonably withheld or delayed.

      3.4     Declaration of Restrictions. The Leased Premises are or will 
be subject to a Declaration of Restrictions as referenced in Section 1.9 
hereof.

ARTICLE 4.      TERM

      4.1     Commencement Date.

                      (a) The Term shall commence on the earlier of: (i) ten 
(10) days following the date Lessor notifies Lessee of the Substantial 
Completion of its construction obligations described in Exhibit "C" to 
this Lease provided a Certificate of Occupancy has been issued; and (ii) 
when Lessee occupies the Leased Premises for the purpose of conducting 
business. The Term shall continue for the period of months specified in 
Section 1.4 of the Lease, plus the portion of a calendar month, if any, 
immediately following commencement.

                      (b) If despite Lessor's diligent efforts Lessor's work 
upon the Leased Premises improved in accordance with the provisions of 
Exhibit "C" are not substantially completed by a date which is 300 days 
following the date of the issuance of the building permit to the Lessor 
for construction of the Lessor's work specified in Exhibit "C" (the 
"Estimated Completion Date") , provided that said date shall be extended 
for period equal to the time construction has been delayed due to 
Permissible Delays, then, in such event, for each day of such further 
delay caused by Lessor, Lessee shall be credited with an amount equal to a 
sum derived by dividing the Minimum Monthly Rent at commencement of the 
Term by 30, which credit shall be applicable to Tenant's Minimum Monthly 
Rent obligation. However, for each day of delay beyond the Estimated 
Completion Date caused by Lessee Delay, Lessee shall pay additional rent 
to Lessor computed in the same manner which shall be payable with the 
first regular installment of Minimum Monthly Rent. However, any such 
delay, whether caused by Lessee or Lessor, shall be subject to a 5 day 
period during which the culpable party shall not be responsible for the 
remedies herein above described. In no event, however, shall extensions 
resulting from Permissible Delay exceed 180 days. Each party shall notify 
the other of any delays caused by the other party within a reasonable time 
following the first party's knowledge of the delay. However, failure to 
notify shall not constitute a waiver of the rights of either party 
hereunder arising as a result of the delay.

              (c) If the Term has not commenced within three (3) years 
from date of execution hereof, it shall be automatically terminated.

      4.2     Acknowledgment of Commencement. After delivery of the Leased 
Premises to Lessee, Lessee shall execute a written acknowledgement of the 
date of commencement and the agreed upon rent in the form attached hereto 
as Exhibit "D" and by this reference it shall be incorporated herein.

      4. 3    Option to Extend the Term-Negotiated Rental-Three 
Arbitrators

              (a) Notice of Exercise. Lessee hall have the right to extend 
the initial term hereof for two (2) additional and consecutive, periods of 
five (5) years each upon the same terms and conditions as stated herein, 
except for Minimum Monthly Rent and further, except that the number of 
additional periods shall be reduced by one for each extension that is 
exercised. Each such extension is herein referred to as "Extended Term." 
Failure to timely exercise any extension option hereunder shall cause all 
subsequent options to immediately become null and void. Lessee must 
exercise its right, if at all, by written notification (the "Notice of 
Exercise") to Lessor not less than three hundred sixty (360) days prior 
to the expiration of the initial term hereof, or the then current Extended 
Term, if any, provided that Lessee has not caused a Notice of Default 
under the provisions of Article 26 to be sent to it by Lessor at least 
five (5) times during the initial term (in the case of exercise of the 
First Option to Extend) or three (3) times during the first Extended Term 
(in the case of exercising the Second Option to Extend.)

              (b) Options Are Personal. The options to extend granted herein 
are personal to the original Lessee executing this Lease, and 
notwithstanding anything to the contrary contained in the Lease, the 
rights contained in this Section 4.3 are not assignable or transferable by 
such original Lessee except in connection with an assignment made pursuant 
to Section 9.3(c). However, a sublease shall not invalidate Lessee's 
rights hereunder. Lessor grants the rights contained herein to Lessee in 
consideration of Lessee's strict compliance with the provisions hereof, 
including, without limitation, the manner of exercise of this option.

              (c) Fair Market Rental. If Lessee exercises the right to 
extend the Term, then the Minimum Monthly Rent shall be adjusted to be 
equal to ninety per cent (90%) of the Fair Market Rental for the premises 
as of the date of the commencement of each such Extended Term, pursuant to 
the procedures hereinafter set forth. The term "Fair Market Rental" 
means the Minimum Monthly Rent chargeable for the Leased Premises based 
upon the following factors applicable to the Leased Premises or any 
comparable premises:

                      (i) Rental rates being charged for comparable premises 
in the same geographical location.

                     (ii) The relative locations of the comparable premises

                    (iii) Improvements, or allowances provided for 
improvements, or to be provided, or the lack thereof.

                     (iv) Rental adjustments, if any, or rental concessions.

                      (v) Services and utilities provided or to be provided.

                     (vi) Use limitations or restrictions.

                    (vii) The age of the building.

                   (viii) That no brokerage commissions are payable.

                     (ix) Any other relevant Lease terms or conditions.

In no event, however, shall ninety per cent (90%) of the Fair Market 
Rental be less than the Minimum Monthly Rent in effect immediately prior 
to the commencement date of the Extended Term in question. The Fair Market 
Rental evaluation may include provision for further rent adjustments 
during the Extended Term in question if such adjustments are commonly 
required in the market place for similar types of leases.

              (d) Determination of Fair Market Rental. Upon exercise of the 
right to extend the term, and included within the Notice of Exercise, 
Lessee shall notify Lessor of its opinion of Fair Market Rental as above 
defined for the Extended Term. However, in no event shall Lessor be 
obligated to join any such discussions, nor shall any appraisal or 
Arbitration described herein commence prior to three hundred sixty-five 
(365) days before the expiration of the then current Term. If the parties 
are unable to agree upon a Minimum Monthly Rent for the Extended Term 
within thirty (30) days thereafter, then, within ten (10) days after the 
expiration of such period, either party at its own cost and expense and by 
giving notice to the other party in writing, may appoint a real estate 
appraiser who is a Member of the Appraisal Institute, or Society of Real 
Estate Appraisers, or an equivalent professional organization, with at 
least five (5) years' experience appraising properties devoted to the same 
general type of use (e.g. office) as the Leased Premises in the county in 
which the Leased Premises are located, ("Qualified Appraiser"), to set 
the Minimum Monthly Rent for the Extended Term. The terms "Minimum 
Monthly Rent" and ninety per cent (90%) of the "Fair Market Rental" as 
used in this article shall be interchangeable. If a party does not appoint 
a Qualified Appraiser within ten (10) days after the first party has given 
notice of the name of its Qualified Appraiser, the single Qualified 
Appraiser appointed shall be the sole appraiser and shall set the Fair 
Market Rental for the Extended Term. If two Qualified Appraisers are 
appointed by the parties, they shall meet promptly, on five (5) days' 
notice to the parties, to take such evidence and other information as the 
parties may deem reasonable to submit to the Qualified Appraisers. Within 
thirty (30) days after the selection of the last of the two Qualified 
Appraisers to be appointed by the parties, the Qualified Appraisers shall 
render their opinions of the Fair Market Rental of the premises as above 
qualified. If the two valuations are within ten per cent (10%) of each 
other, they shall be averaged and ninety per cent (90%) of the average of 
the two shall be the Minimum Monthly Rent for the Extended Term. If only 
one appraisal is timely submitted, ninety per cent (90%) of that appraisal 
shall constitute the Minimum Monthly Rent for the Extended Term. If the 
two valuations are separated by more than ten per cent (10%), then the two 
appraisers shall, within ten (10) days following the last date for 
submission of the two appraisals of Fair Market Rental, appoint a third 
Qualified Appraiser. If they are unable to agree upon a third Qualified 
Appraiser within such ten (10) day period, either of the parties to this 
Lease, by giving five (5) days' notice to the other party, may demand 
Arbitration as specified in Subsection (f) of this Section. If neither 
party applies for Arbitration within the ten (10) day period herein 
specified, the two appraisals of value shall be averaged as stated above.

              (c) Arbitration. In the event the parties are unable to 
mutually agree upon a Minimum Monthly Rent for the Extended Term, and in 
such event proceed to the Appraisal or Arbitration procedure herein 
specified, both parties shall be bound to submit the matter for such 
determination. The procedure specified in this Article for appointment of 
Qualified Appraisers, delivery of appraisals, appointment of an 
Arbitrator, and determination of Fair Market Rental Value thereby is 
herein collectively referred to as "Arbitration." The Arbitration shall 
be conducted and determined in the County where the Leased Premises are 
situated. If the Arbitration is not concluded before the commencement of 
the Extended Term, Lessee shall pay Minimum Monthly Rent to Lessor in an 
amount equal to ninety per cent (90%) of the Fair Market Rental set forth 
in the appraisal by Lessor's Qualified Appraiser until the Fair Market 
Rental is determined in accordance with the Arbitration provisions hereof. 
If the Fair Market Rental as determined by Arbitration differs from that 
stated by Lessor's Qualified Appraiser, then any adjustment required to 
correct the amount previously paid by Lessee shall be made by payment by 
the appropriate party within thirty (30) days after the determination of 
Fair Market Rental by Arbitration has been concluded, as provided herein. 
Lessee shall be obligated to make payment during the entire Extended Term 
of the Minimum Monthly Rent determined in accordance with the Arbitration 
procedures hereunder.

              (f) Demand for Arbitration. A party demanding Arbitration 
hereunder shall make its demand in writing ("Demand Notice") within ten 
(10) days after the delivery of the last of the two appraisals presented 
by the Qualified Appraisers as specified in Subsection (d) above. A copy 
of the Demand Notice shall be sent to the Presiding Judge of the Superior 
Court of Alameda County. The Presiding Judge, is hereinafter referred to 
as the "Appointer". The Appointer, acting in his personal, private 
capacity, shall appoint within ten (10) days thereafter a Qualified 
Appraiser. The Arbitrator shall be qualified to serve as an expert 
witness, over objection, and to give opinion testimony addressed to the 
issue in a court of competent jurisdiction.

              (g) Decision of the Arbitrator. As used herein, the term 
Arbitrator refers to a third Qualified Appraiser, selected by any of the 
methods heretofore set forth. The Arbitrator shall, within ninety (90) 
days after his appointment, state in writing his determination as to 
whether the Fair Market Rental stated by Lessor's Qualified Appraiser or 
the Fair Market Rental stated by Lessee's Qualified Appraiser, most 
closely approximates his own. The Arbitrator shall have the right to 
consult experts and competent authorities with factual information or 
evidence pertaining to a determination of Fair Market Rental, but any such 
consultation shall be made in the presence of both parties with full right 
to cross examine. The Arbitrator may not state his own opinion of Fair 
Market Rental, but is strictly limited to the selection of one of the two 
appraisals submitted by the other two Qualified Appraisers. The Arbitrator 
shall have no right to propose a middle ground or any modification of 
either of the proposed valuation, and shall have no power to modify this 
Lease. The valuation so chosen as most closely approximating that of the 
Arbitrator shall constitute his decision. The Arbitrator shall render a 
decision and award in writing, with counterpart copies to each party.

              (h) Successor Arbitrator; Fees and Expenses. In the event of 
failure, refusal, or inability of the Arbitrator to act in a timely 
manner, a successor shall be appointed in the same manner as such 
Arbitrator was first chosen hereunder. The fees and expenses of the 
Arbitrator and for the administrative hearing fee, if any, shall be 
divided equally between the parties. Each party shall bear its own 
attorneys' fees and other expenses including fees of witnesses in 
presenting evidence, and the fees and cost of its own Qualified Appraiser.

              (i) Recission. Within ten (10) days following the date that 
the Minimum Monthly Rent for the ensuing option period is established by 
the procedures herein, Lessee may, by written notice to the Lessor, elect 
to rescind its exercise of the option in which case the Lease term shall 
expire on the expiration of the then current Term.

ARTICLE 5.      PRE-TERM POSSESSION

      5.1     Conditions of Entry. Lessor may notify Lessee when the Leased 
Premises are ready for Lessee's fixturing or Lessee's work, which may be 
prior to Substantial Completion by Lessor. Lessee may thereupon enter the 
Leased Premises for such purposes at its own risk, to make such 
improvements as Lessee shall have the right to make, to install fixtures, 
supplies, furniture and other property. Lessee agrees that it shall not in 
any way interfere with the progress of Lessor's work by such entry. Should 
such entry prove an impediment to the progress of Lessor's work, in 
Lessor's judgment, Lessor may demand that Lessee forthwith vacate the 
Leased Premises until such time as Lessor's work is complete, and Lessee 
shall immediately comply with this demand.

During the course of any pre-term possession, whether such pre-term 
period arises because of an obligation of construction on the part of 
Lessor, or otherwise, all terms and conditions of this Lease, except 
for rent and commencement, shall apply, particularly with reference to 
indemnity by Lessee of Lessor under Article 14 herein for all 
occurrences within or about the Leased Premises.

ARTICLE 6       MINIMUM RENT

      6.1     Payment. Lessee shall pay to Lessor at the address specified 
in Section 1.1, or at such other place as Lessor may otherwise designate, 
as "Minimum Monthly Rent" for the Leased Premises the amount specified 
in Section 1.5 hereof, payable in advance on the first day of each month 
during the Term. If the Term commences on other than the first day of a 
calendar month, the rent for the first partial month shall be prorated 
accordingly.

All payments of Minimum Monthly Rent (including sums defined as rent in 
Section 27.2) shall be in lawful money of the United States, and payable 
without deduction, offset, counterclaim, prior notice or demand.

      6.2     Calculation of Minimum Monthly Rent.

              (a) The Minimum Monthly Rent shall be calculated as 
follows:

                      (i) Total Project Costs, as that term is defined in 
Exhibit "C" hereto, exclusive of land costs, shall form the basis of the 
calculation of Minimum Monthly Rent.

                     (ii) Total Project Costs shall be multiplied by ten per 
cent (10%) and the product thereof divided by .97.

                    (iii) The quotient derived in (ii) above shall be 
divided by twelve to arrive at the Minimum Monthly Rent at commencement of 
the Term.

              (b) At least ten (10) days prior to the date when the first 
payment of Minimum Monthly Rent is due hereunder, Lessor shall estimate 
Total Project Costs, make the calculation of Minimum Monthly Rent on an 
estimated basis in writing, and forward the same to Lessee. Lessee shall 
pay the Minimum Monthly Rent so estimated until a final determination of 
initial Minimum Monthly Rent, as hereinafter described, is established.

              (c) Within ninety (90) days following the Commencement Date, 
Lessor shall deliver to Lessee an itemized accounting of Total Project 
Costs. Within thirty (30) days thereafter Lessee may, at its option, have 
Total Project Costs audited by Lessee's independent certified public 
accountant. If Lessee's calculation of Total Project Costs and Lessor's 
calculation thereof differ, Lessee shall submit its calculation thereof in 
writing to Lessor within the thirty (30) day examination period specified 
in the preceding sentence. The parties shall negotiate in good faith to 
resolve their differences within fifteen (15) days following the date of 
Lessee's notice to Lessor of Lessee's determination of Total Project 
Costs. If the parties are unable to resolve their differences within this 
period, the matter may be submitted by either party to the public 
accounting firm of Peat, Marwick & Mitchell who shall make a final 
determination within sixty (60) days thereafter. Upon establishment of the 
Minimum Monthly Rent, should there be a difference from that estimated by 
Lessor as stated in (b) above, the Lessor shall pay, if the determination 
so establishes, the due sum for any overpayment received from Lessee 
during the period of the determination of Total Project Costs, within ten 
(10) days after the final determination thereof in accordance with the 
terms of this paragraph. Upon establishment of the Minimum Monthly Rent, 
the parties, on request of either party, shall amend this Lease to so 
state the established initial Minimum Monthly Rent. If it is established 
by the process specified in this Section 6.2(c) that Lessor has overstated 
Project Costs by more than $100,000.00, Lessor shall pay the reasonable 
cost of Lessee's certified public accountants who perform Lessee's audit.

      6.3     Rent Adjustment. The Minimum Monthly Rent as established in 
Section 6.2 above shall be effective from the Commencement Date through 
the sixtieth (60th) Lease Month, commencing with the first (1st) day of 
the sixty first (61st) Lease Month the Minimum Monthly Rent shall be 
increased by multiplying the Minimum Monthly Rent established in the 
preceding Section 6.2 by 1.1699. At such time, either party may require 
that another Lease amendment be executed setting forth the newly 
established Minimum Monthly Rent for the balance of the initial term. The 
Minimum Monthly Rent for any Extended Term has been provided for in 
Section 4.3 hereof.

      6.4     Late Payment. If during any twelve (12) month period Lessee 
fails on more than one occasion to make any payment of Minimum Monthly 
Rent to Lessor within five (5) days following receipt of written notice 
from Lessor that such is due, then Lessor may, by giving written notice to 
Lessee, require that Lessee pay the Minimum Monthly Rent to Lessor 
quarterly in advance. Having been caused to commence quarterly payments 
under the provisions of this section, should Lessee thereafter make its 
quarterly rental payments on or before the first business day of each 
quarter for eight (8) consecutive quarters, thereafter Lessee's rental 
payment schedule shall revert to monthly periods.

ARTICLE 7       TAXES

     7.1 Definition. In this Article 7 the terms "Real Property Taxes" and 
"Taxes" are used interchangeably. "Real Property Taxes" as used in this 
Lease shall include all Real Property Taxes on the Building, the Leased 
Premises, the land on which the Building is situated, and the various 
estates in the Building and the land, including this Lease, as well as all 
personal property taxes levied on the property used in the operation of 
the Leased Premises, whether or not now customary or within the 
contemplation of the parties to this Lease. "Taxes" also shall include 
the reasonable cost to Lessor of contesting the amount, validity, or 
applicability of any Taxes mentioned in this Section. Further included in 
the definition of Taxes herein shall be general and special assessments, 
fees of every kind and nature, commercial rental tax, levy, penalty or tax 
(other than any tax which may be levied upon or against the general net 
income or profits of Lessor or its successors or assigns, inheritance or 
estate taxes) imposed by any authority having the direct or indirect power 
to tax, as against any legal or equitable interest of Lessor in the Leased 
Premises in the real property of which the Leased Premises are a part, as 
against Lessor's right to rent or other income therefrom, or as against 
Lessor's business of leasing the Leased Premises, any tax, fee, or charge 
with respect to the possession, leasing, transfer of interest, operation, 
management, maintenance, alteration, repair, use, or occupancy by Lessee, 
of the Leased Premises or any portion thereof, the Building, or the 
Complex, or any tax imposed in substitution, partially or totally, for any 
tax previously included within the definition of Taxes herein, or any 
additional tax, the nature of which may or may not have been previously 
included within the definition of Taxes.

      7. 2    Assessments. With respect to any general or special 
assessments which may be levied upon or against the Leased Premises, the 
Building, the Complex, or the underlying realty, or which may be evidenced 
by improvement or other bonds, and which may be paid in annual or 
semi-annual installments, only the current amount of such installment, pro 
rated for any partial year, and statutory interest, shall be included 
within the computation of Taxes for which Lessee is responsible hereunder.

      7.3     Payment. Lessee shall pay to the Lessor at least thirty (30) 
days prior to the date when such Taxes would be delinquent but not prior 
to ten (10) days following notice from Lessor of the amount due, all Real 
Property Taxes as hereinabove defined applicable to the Leased Premises or 
arising under section 7.1 above.

      7. 4    Estimated Payments. If required by Lessor's lender Lessor may, 
at its option, estimate the amount of Taxes next due and collect from 
Lessee on a monthly or quarterly basis, at Lessor's option, the amount of 
Lessee's estimated tax obligation. On or before March 1 of each year 
during the Term, Lessor shall provide Lessee with a reconciliation of 
Lessee's account with respect to such estimated tax payments. In event it 
is established upon such reconciliation that Lessee has not paid 
sufficient amount in estimated tax payments to cover its pro rata share 
for the year in question, Lessee shall pay to Lessor the full amount of 
any such shortage within ten (10) days of date of billing. If it is 
established that Lessee has made an overpayment of its tax obligation upon 
such reconciliation, Lessee shall receive, at Lessor's option, either a 
credit applicable to the next ensuing estimated tax payments, or a credit 
to a tax reserve account to be held by Lessor for application to sums due 
in respect of reassessment or escape assessments applicable to the period 
in question, but yet to be billed.

      7.5     Personal Property Taxes. Lessee shall pay prior to delinquency 
all Taxes assessed against and levied upon trade fixtures, furnishings, 
equipment and all other personal property of Lessee contained in the 
Leased Premises or elsewhere. When possible, Lessee shall cause such 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 personal property shall be assessed with Lessor's real 
property, Lessee shall pay Lessor Taxes attributable to Lessee within ten 
(10) days after receipt of a written statement setting forth the Taxes 
applicable to Lessee's property, including an explanation of the 
calculation of the sum due from Lessee.

      7.6     Net Rent. It is the intention of Lessor and Lessee that the 
rental received by Lessor be net of any Taxes of any sort to be paid by 
Lessor, subject to the exclusions stated in Section 7.1.

In the event it shall not be lawful for Lessee to reimburse Lessor for any 
of the Taxes covered by this Article, the Minimum Monthly Rent payable to 
Lessor under the terms of this Lease shall be increased by the amount of 
the portion allocable to Lessee so as to net to Lessor the amount which 
would have been receivable by Lessor if such tax had not been imposed.

ARTICLE 8.      COMMON MAINTENANCE

      8. 1    Definition of Common Maintenance Areas. The term "Common 
Maintenance Areas" as used herein means all areas and facilities within 
the Complex, but outside the boundaries of any lot within the recorded 
subdivision which comprises the Complex, including, however, any recorded 
lot owned by Lessor or an affiliate of Lessor which is used for the 
general benefit of the Complex, and further including, without limitation, 
streets (whether public or private), sidewalks, and landscaped areas, all 
as generally described on Exhibit "E" attached hereto. Exhibit "E" is 
tentative and Lessor reserves the right to make alterations thereto from 
time to time, and to exclude areas of other parcels in the Complex, in 
Lessor's sole judgment, so long as no such alteration or exclusion shall 
unreasonably interfere with the access to the Leased Premises, nor shall 
it cause a material interference as a result of the unreasonable activity 
of the Lessor, with Lessee's use of the Leased Premises as described in 
Section 1.7 hereof.

      8.2     Rights and Duties of Lessor. Lessor shall, in a manner it 
deems proper in its opinion, maintain the Common Maintenance Areas in a 
manner consistent with similar developments in the area, establish and 
enforce reasonable rules and regulations concerning such areas, close any 
of the Common Maintenance Areas to whatever extent required in the opinion 
of Lessor's counsel to prevent a dedication of any of the Common 
Maintenance Areas or the accrual of any rights of any person or of the 
public to the Common Maintenance Areas, close temporarily any of the 
Common Maintenance Areas for maintenance purposes, and make changes to the 
Common Maintenance Areas including, without limitation, changes in the 
location of driveways, entrances, exits, vehicular parking spaces, parking 
area, the designation of areas for the exclusive use of others, the 
direction of the flow of traffic or construction of additional buildings 
thereupon; provided, however, that Lessor shall use diligent efforts to 
minimize interference with Lessee's business, use and enjoyment of the 
Common Maintenance Areas and the Leased Premises and Lessor shall not 
prevent Lessee's access to the Leased Premises. Lessee hereby acknowledges 
that Lessor is under no obligation to provide security for the Maintenance 
Areas but may do so at its option.

      8.3     Payment by Lessee. Lessee shall pay to Lessor, as additional 
rent, its proportionate share of Common Maintenance costs as hereinafter 
defined, within ten (10) days of receiving a bill therefore from Lessor, 
but no more frequently than monthly. Lessee's proportionate share (or 
"Pro Rata %") shall be that fraction of Common Maintenance Costs the 
numerator of which is the number of square feet of land area in the Leased 
Premises and the denominator of which is the gross square footage of land 
area in all lots, whether or not built upon, within the Complex. Lessee's 
Initial Pro Rata % of Common Maintenance Costs is stated in Section 1. 8. 
Lessor may bill Lessee estimated charges in accordance with Section 8.5. 
Notwithstanding the preceding provisions of this Section 8.3, Lessee's 
proportionate share as to certain expenses included in Common Maintenance 
Costs may be calculated differently to yield a higher percentage share for 
Lessee as to certain expenses in the event Lessor permits other owners or 
occupants in the Complex to incur such expenses directly rather than have 
Lessor incur the expense in common for the complex, in such case Lessee's 
proportionate share of the applicable expense shall be calculated as 
having as its denominator the gross square footage of land area of all 
lots in the Complex less the gross leasable area of tenants who have 
incurred such expense directly. In any case in which Lessee, with Lessor's 
consent, incurs such expenses directly, Lessee's proportionate share of 
Common Maintenance Costs will be calculated specially so that expenses of 
the same character which are incurred by Lessor for the benefit of other 
occupants in the Complex shall not be charged to Lessee. Nothing herein 
shall imply that Lessor will permit Lessee or any other occupant of the 
Complex to incur Common Maintenance Costs. Any such permission shall be in 
the sole discretion of Lessor, which Lessor may grant or withhold in its 
sole good faith business judgment.

8.4     Definition of Common Maintenance Costs.

              (a) "Common Maintenance Costs" means all sums (including 
"Capital Costs" as hereinafter defined and to the extent stated herein) 
expended by Lessor for the maintenance, repair, replacement and operation 
of the Common Maintenance Areas, as well as liability insurance premiums, 
security services for the Complex, Ardenwood Corporate Commons Owners' 
Association expenses, property taxes on property held for the general 
benefit of the Complex and a management fee of ten per cent (10%) of 
Common Maintenance Area costs. Capital Costs are defined as those 
expenditures which do not normally recur more frequently than at five (5) 
year intervals in the normal course of operation and maintenance of the 
Complex. Notwithstanding anything above which may be to the contrary, 
Common Maintenance Costs shall include a portion of all Capital Costs, 
representing any costs of capital improvements made by Lessor to the 
Complex for the purpose of reducing recurring expenses or utility costs 
and from which Lessee can expect a reasonable benefit, or that are 
required by governmental law, ordinance, regulation or mandate, not 
applicable to the Complex at the time of the original construction. The 
portion thereof to be included each year in Common Maintenance Costs shall 
be that fraction allocable to the calendar year in question calculated by 
amortizing. the cost over the reasonably useful life of such improvement, 
as determined by Lessor, with interest on the unamortized balance at ten 
per cent (10%) per annum or such higher rate as may have been paid by 
Lessor for funds borrowed for the purpose of constructing such 
improvements, but in no event to exceed the highest rate permissible by 
law.

              (b) Exclusions from Common Maintenance Costs. The following 
costs and expenses shall be excluded from the definition of Common 
Maintenance Costs:

                      (i) Any costs or expense to the extent to 
which Lessor is paid or reimbursed from any person (other than as payment 
for Common Maintenance Costs), including, but not limited to, (1) work or 
services performed for any tenant (including Lessee) at such tenant's 
cost, (2) the cost of any item for which Lessor is or is entitled to be 
paid or reimbursed by insurance or otherwise, and (3) increased insurance 
or Real Estate Taxes assessed specifically to any tenant of the Complex;

                    (ii) The cost of correcting defects in the design, 
construction, or equipment, or latent defects in any buildings in the 
complex or on the Common Maintenance Areas in the complex;

                   (iii) The cost of installing, operating and maintaining 
any athletic or recreation club, provided, however, if Lessor does install 
and or operate such a facility, Lessee and Lessee's employees may not have 
the use thereof.

                    (iv) Salaries and bonuses of officers and executives of 
Lessor;

                     (v) The cost of any work or services performed for any 
facility other than the Complex;

                    (vi) Repaving or resurfacing costs of the parking and 
driveway areas except to the extent the charges included are based on an 
amortization of such costs over the reasonably useful life of the work 
done at an interest rate equal to the prime rate chargeable by Bank of 
America to its best customers plus 1%, adjusted annually not to exceed the 
maximum that may be charged under law and then only if such repaving or 
resurfacing is not due to negligent construction of the parking and 
driveway;

                   (vii) Interest on debt or amortization payments on any 
mortgage and rental under any ground lease or other underlying lease;

                  (viii) Any fees, costs and commissions incurred in 
procuring or attempting to procure other tenants including brokerage 
commissions, finders' fees, attorneys' fees, entertainment costs and 
travel expenses;

                    (ix) Any costs representing an amount paid to a person, 
firm, corporation or other entity related to Lessor which is in excess of 
the amount which would have been paid in the absence of such relationship;

                     (x) Any cost of painting or decorating of any interior 
parts of the buildings in the Complex other than buildings in the Common 
Maintenance Areas:

                    (xi) Lessor's general overhead:

                   (xii) The cost of initial cleaning and rubbish removal 
from the Complex and the buildings thereon to be performed prior to final 
completion of the building;

                  (xiii) The cost of the initial landscaping of the 
complex;

                   (xiv) Attorneys' fees, accounting fees, and expenditures 
incurred in connection with negotiations, disputes and claims of other 
tenants or occupants of the Complex or with other third parties except as 
specifically otherwise provided in the Lease;

                    (xv) The cost of any uninsured repairs or replacements 
other than the deductible portion of any insured risk:

                   (xvi) Costs which, under generally accepted accounting 
principles, are properly classified as capital expenses, except for 
capital costs as defined in Subsection (a) above, and except as 
specifically set forth in this Subsection (b);

                  (xvii) The cost of the initial stock of tools and 
equipment for operation, repair and maintenance of the Complex and the 
Buildings thereon;

                 (xviii) The cost of acquiring sculptures, paintings and 
other objects of art;

                (xviiii) Costs related to correcting items which were 
not in compliance with law for any of the buildings, the Complex, or the 
Common Maintenance Areas as of the Commencement Date.

      8.5     Estimated Payments. Lessor shall have the right, at its 
option, to estimate Lessee's pro rata share of Common Maintenance Costs 
due in the future from Lessee and to collect from Lessee on a monthly or 
quarterly basis, as Lessor may elect, the amount of Lessee's estimated pro 
rata share of such costs. Lessor shall provide Lessee with a 
reconciliation of Lessee's account at least annually, and if such 
reconciliation shall indicate that Lessee's account is insufficient to 
satisfy Lessee's pro rata share of Common Maintenance Costs for the period 
estimated, Lessee shall immediately pay to Lessor any deficiency. Any 
excess in such account indicated by the reconciliation shall be credited 
to Lessee's account to reduce the estimated payments for the next ensuing 
period.

      8.6     Audit Rights. At anytime within ninety (90) days following the 
date that Lessor presents Lessee with a reconciliation of Lessee's account 
with respect to Common Maintenance Costs for the preceding year, Lessee 
shall have the right upon five (5) days prior written notice to Lessor to 
cause Lessor's books and records with respect to Common Maintenance Costs 
to be audited by an independent certified public accountant of Lessee's 
selection (the "Lessee's Accountant"). Should Lessee's Accountant 
establish in its judgment that the actual Common Maintenance Costs were 
more than five percent (5%) less than those charged to Lessee by Lessor 
for the period in question, Lessor shall either: (i) Repay Lessee the 
amount of the overpayment plus the reasonable costs for the audit 
chargeable by Lessee's Accountant; or (ii) Contest the findings of 
Lessee's Accountant by demanding the matter be submitted to arbitration 
under the Rules of the American Arbitration Association in San Francisco, 
California. In the latter case, both parties shall promptly submit the 
matter to arbitration. The decision of the arbitrator elected by the San 
Francisco office of the American Arbitration Association shall be 
conclusive. The cost of the arbitrator shall be paid by the unsuccessful 
party to the arbitration.

ARTICLE 9. ASSIGNMENT AND SUBLETTING

      9.1     "Transfer of the Leased Premises" Defined. The terms 
"Transfer of the Leased Premises" or "Transfer" as used herein shall 
include any assignment of all or any part this Lease (including assignment 
by operation of law), subletting of all or any part the Leased Premises or 
transfer of possession, or right of possession or contingent right of 
possession of all or any portion of the Leased Premises including without 
limitation, concession, mortgage, devise, hypothecation, agency, franchise 
or management agreement, or to suffer any other person (the agents and 
servants of Lessee excepted) to occupy or use the said Leased Premises or 
any portion thereof. If Lessee is a corporation which is not deemed a 
public corporation, or is an unincorporated association or partnership, or 
Lessee consists of more than one party, the transfer, assignment or 
hypothecation of any stock or interest in such corporation, association, 
partnership or ownership interest, in the aggregate in excess of 
twenty-five percent (25%), shall be deemed a Transfer of the Leased 
Premises.

      9.2     No Transfer Without Consent. Lessee shall not suffer a 
Transfer of the Leased Premises or any interest therein, or any part 
thereof, or any right or privilege appurtenant thereto without the prior 
written consent of Lessor, and a consent to one Transfer of the Leased 
Premises shall not be deemed to be a consent to any subsequent Transfer of 
the Leased Premises. Any transfer of the Leased Premises without such 
consent shall be void, and shall, at the option of Lessor, terminate this 
Lease

      9.3     When Consent Granted.

              (a) The consent of Lessor to a Transfer may not be 
unreasonably withheld. Lessor shall respond to Lessee's request for 
consent within ten (10) business days following Lessor's receipt of the 
information described in Section 9.4 hereof. Should Lessor deny consent it 
shall specify its reasons therefor in its written denial. Should Lessor 
fail to respond within ten (10) business days to Lessee's request for 
consent, Lessor's consent shall be deemed to have been granted.

              (b) Should Lessor withhold its consent for any of the 
following reasons, which list is not exclusive, such withholding shall be 
deemed to be reasonable if exercised in good faith:

                      (i) Financial strength of the proposed transferee is 
adequate in Lessor's reasonable judgment to meet the obligations of this 
lease;

                     (ii) A proposed transferee whose occupation of the 
Leased Premises would cause a diminution in the reputation of the Complex 
or the other businesses located therein;

                    (iii) A proposed transferee whose impact on the common 
facilities or the other occupants of the Complex would be disadvantageous; 
or

                     (iv) A proposed transferee whose occupancy will require 
a variation in the terms of the Lease.

                      (v) Lessee agrees that its personal business skills or 
operation and philosophy were an important inducement to Lessor for 
entering into this Lease Agreement and that Lessor may reasonably object 
to the transfer of the Leased Premises to another whose proposed use, 
while permitted by the use clause of this Lease, would involve a different 
quality, manner or type of business skills than that of Lessee.

              (c) Notwithstanding any other provision hereof, Lessee shall 
have the right, without the prior consent of Lessor, to assign this Lease 
in connection with a merger or consolidation of Lessee, or to a subsidiary 
of Lessee, or to a company incorporated or to be incorporated by Lessee, 
provided that Lessee owns or beneficially controls all or substantially 
all of the issued and outstanding shares of capital stock of such company. 
In any of such events, Lessee shall be required to provide Lessor written 
notice of such event, and to further provide Lessor with the name of the 
Assignee. In the event of an assignment of this Lease described in this 
Subsection 9.3(c), the provisions of Subsection 9.5(b) shall not be 
applicable. All other provisions of this Lease, including the balance of 
the provisions of section 9.5 shall apply.



        9.4     Procedure for Obtaining Consent.

              (a) Lessor need not commence its review of any proposed 
Transfer, or respond to any request by Lessee with respect to such, unless 
and until it has received from Lessee adequate descriptive information 
concerning the business to be conducted by the proposed transferee, the 
transferee's financial capacity, and such other information as may 
reasonably be required in order to form a prudent judgment as to the 
acceptability of the proposed Transfer, including, without limitation, the 
following:

                      (i) If an individual or unincorporated entity for which 
there is personal liability: The past two year's Federal Income Tax 
returns of the proposed transferee or, in the alternative, the past two 
years' audited annual Balance Sheets and Profit and Loss statements, 
certified correct by a Certified Public Accountant (the "Audited 
Statements");.

                     (ii) If a Corporate entity: the past two (2) years' 
Audited Statements; 

                    (iii) Banking references of the proposed transferee;

                     (iv) A resume of the business background and experience 
of the proposed transferee;

                      (v) An executed copy of the instrument by which Lessee 
proposes to effectuate the Transfer.

              (b) Lessee shall reimburse Lessor as additional rent for 
Lessor's reasonable costs and attorney's fees, not to exceed $2,500 per 
request, incurred in conjunction with the processing and documentation of 
any proposed Transfer of the Leased Premises, whether or not consent is 
granted.

      9.5     Effect of Transfer. If Lessor consents to a Transfer, the 
following conditions shall apply:

              (a) Each and every. covenant, condition or obligation imposed 
upon Lessee by this Lease and each and every right, remedy or benefit 
afforded Lessor by this Lease shall not be impaired or diminished as a 
result of such Transfer.

              (b) (i) On a monthly basis, any sums of money, or other 
economic consideration received by Lessee from the Transferee in such 
month (whether or not for a period longer than one month), including 
higher rent, bonuses, key money, or the like which exceed, in the 
aggregate, the total sums which Lessee pays Lessor under this Lease in 
such month, or the prorated portion thereof the numerator of which is the 
Transfer Space and denominator of which is 44,000 (the "Prorata 
Portion") if the Leased Premises transferred is less than the entire 
Leased Premises (the "Transfer Profit"), shall be payable as follows:

                      A. Transfer Profit realized on the first 10,000 square 
feet of Rentable Area, in the aggregate for which a Transfer is contracted 
(the "Threshold Transfer Space") shall be divided equally between Lessor 
and Lessee provided, however, following deduction for the benefit of 
Lessee for those subleasing costs incurred by Lessee and described in 
Subsection 9.5(b) (ii) below, Lessor is first allocated the sum of $4,730 
per month (or the, applicable Prorata Portion thereof) representing a 
return on Lessor's investment in the land which is part of the Leased 
Premises;

                      B. However, once Lessee contract Transfer, in the 
aggregate, more than the Threshold Transfer Space then all Transfer Profit 
(including that realized thereafter from Threshold Transfer Space) shall 
be allocated eighty percent (80%) to Lessor and twenty percent (20%) to 
Lessee.

                      (ii) Lessor's share of the Transfer Profit shall be paid 
with Lessee's payment of Minimum Monthly Rent each month. Notwithstanding 
the provisions above, there shall be no allocation of land profit to 
Lessor as described in Subsection (A) above if Landlord's entitlement is 
governed by the provisions of Subsection (B). Further, in the case of a 
profit split governed by the provisions of Subsection (ii), Lessee shall 
be entitled, prior to calculation of Transfer Profit, and as a deduction 
therefrom, to a return of brokerage commissions, advertising costs, rent 
concessions and tenant improvements provided to the Transferee and paid 
for by the Lessee which sum, prior to deduction, shall be calculated as 
based upon an amortization of such costs at no interest over the remaining 
term of the applicable Transfer. Thus, by example, if Lessee expends the 
sum of $10,000 to place a Transferee in possession of a. portion of the 
Premises, and the term of the sublease applicable to such Transfer is 
three (3) years, then, each month the Lessee shall be entitled to a prior 
allocation from Transfer Profit in the amount of $277.77.

            (c) No Transfer, whether or not consent of Lessor is 
required hereunder, shall relieve Lessee of its primary obligation to pay 
the rent and to perform all other obligations to be performed by Lessee 
hereunder. The acceptance of rent by Lessor from any person shall not be 
deemed to be a waiver by Lessor of any provision of this Lease or to be a 
consent to any Transfer of the Leased Premises.

            (d) If Lessor consents to a sublease, such sublease 
shall not extend beyond the expiration of the Term except as follows:

                              (i) Lessee may exercise an option to extend the 
term, keeping in effect any sublease it may have entered into, provided 
that Kelley-Clarke, Inc. is in possession of not less than 22,000 square 
feet of Rentable Area; or

                              (ii) If Kelley-Clarke, Inc.(or an assignee of 
Kelley-Clarke, Inc. described in Subsection 9.3(c)), is not in possession 
at commencement of any Extended Term of at least 22,000 square feet of 
Rentable Area, it may exercise an option to extend provided the sublessee 
has been approved by the Lessor herein in accordance with the provisions 
of this Article 9 and this Lease is amended in a writing executed by all 
parties to restate the rent for the Extended Term to be one hundred 
percent (100%) of fair market value instead of ninety-percent (90%) of 
fair market value as described in Section 6.2 herein.

            (e) No Transfer shall be valid and no transferee shall 
take possession of the Leased Premises or any part thereof unless, within 
ten (10) days after the execution of the documentary evidence thereof, 
Lessee shall deliver to Lessor a duly executed duplicate original of the 
Transfer instrument in form reasonably satisfactory to Lessor which 
provides that (i) the transferee assumes Lessee's obligations for the 
payment of rent and for the full and faithful observance and performance 
of the covenants, terms and conditions contained herein, (ii) such 
transferee will, at Lessor's election, attorn directly to Lessor in the 
event Lessee's Lease is terminated for any reason on the terms set forth


ARTICLE 10. PROPERTY INSURANCE

10.1 Use of Premises. No use shall be made or permitted to be made on the 
Leased Premises, nor acts done, which will increase the existing rate of 
insurance upon any other building in the complex or cause the cancellation 
of any insurance policy covering the Building, or any part thereof, nor 
shall Lessee sell, or permit to be kept, used or sold, in or about the 
Leased Premises, any article which may be prohibited by the standard form 
of all-risk fire insurance policies. Lessee shall, at its sole cost and
expense, comply with any and all requirements pertaining to the Leased
Premises, of any insurance organization or company, necessary for the
maintenance of reasonable property damage and public, liability insurance,
covering the Leased Premises, the Building or the Complex.

10.2 Lessor's Property Insurance. Subject to reimbursement by Lessee 
as provided herein, Lessor shall obtain "All Risk" property insurance 
(including inflation endorsement and sprinkler leakage endorsement 
excluding coverage of any of Lessee's personal property on or in the 
building) for full replacement value of the Building owned by Lessor 
exclusive of foundations and footings. Such insurance shall also include 
coverage for rental loss on an All Risk basis for a period of not less 
than six (6) months commencing from the date of the loss. Further, such 
insurance may, if required by Lessor's lender, or if commercially 
available, include earthquake and flood peril coverage.

10.3 Pro rata Share of Premiums.

(a) Lessee shall pay to Lessor, during the Term, as additional 
rent, its pro rata share (as reasonably determined- by Lessor's insurance 
advisor) of the insurance premiums for the property insurance carried by 
Lessor covering the Complex (the "Complex Insurance Premium") Such pro 
rata share shall be computed by evaluating all the risk factors for each 
property covered by Lessor's insurance policy or policies, including 
without limitation, size of premises, type of construction, use, and fire 
safety provisions. Lessor's policy may be a blanket coverage policy 
including properties beyond those in the Complex. The sum due under this 
subsection shall be in addition to that which may be due under the 
previous section of this Lease.

(b) Lessee shall pay any such premium portion to Lessor within 
ten (10) days after receipt by Lessee of Lessor's billing therefor.

10.4 Estimated Payments. Lessor shall have the right, at its option, 
to estimate Lessee's pro rata share of insurance premiums for property 
insurance to be due in the future from Lessee, and to collect from Lessee 
on a monthly or quarterly basis, as Lessor may elect, the amount of 
Lessee's prorate share of such cost. Lessor shall provide Lessee with a 
reconciliation of Lessee's account at least annually, and if such 
reconciliation shall indicate that Lessee's account is insufficient to 
satisfy Lessee's pro rata share of insurance premiums for the period 
estimated, Lessee shall immediately pay to Lessor any deficiency. Any 
excess in such account indicated by the reconciliation shall be credited 
to Lessee's account to reduce the estimated payments for the next ensuing 
period.

10.5    Personal Property Insurance. Lessee shall maintain in full force and
effect on all of its fixtures and equipment in the Leased Premises a policy
or policies Of fire and casualty insurance in "all risk" form to the extent
of at least ninety percent (90%) of their replacement cost, or that
percentage of the replacement cost required to negate the effect of a
co-insurance provision, whichever is greater. No such policy shall have a
deductible in a greater amount than FIVE HUNDRED DOLLARS ($500.00). Lessee
shall also insure in the same manner the physical value of all its leasehold
improvements in the Leased Premises. During the Term, the proceeds from any
such policy or policies of insurance shall be used for the repair or
replacement of the fixtures, equipment, and leasehold improvements so
insured. Lessor shall have no interest in said insurance, and will sign all
documents necessary or proper in connection with the settlement of any claim
or loss by Lessee. Lessee shall also maintain insurance for all plate glass
upon the Leased Premises. Lessee may self insure the plate glass.

ARTICLE 11, LIABILITY INSURANCE

11.1  Lessee's Insurance. Lessee shall, at Lessee Is expense, obtain 
and keep in force during the Term, a comprehensive general liability 
insurance policy insuring Lessor and Lessee against the risks of personal 
injury and property damage arising out of the ownership, use, occupancy or 
maintenance of the Leased Premises and all areas appurtenant thereto. Such 
insurance shall be a combined single limit policy in an amount not less 
than ONE MILLION DOLLARS ($1,000,000.00) per occurrence and an umbrella 
policy of THREE MILLION DOLLARS ($3, 000,000. 00) combined single 1imit 
per occurrence. The policy shall contain cross liability endorsements and 
shall insure performance by Lessee of the indemnity provisions of this 
Lease. In addition, such policy shall cover contractual liability, and 
products liability. The limits of said insurance shall not, however, limit 
any liability of Lessee hereunder. Said insurance shall have a Lessor's 
protective liability endorsement attached thereto. Not more frequently 
than every three (3) years, if, in the reasonable opinion of Lessor, the 
amount of liability insurance required hereunder is not adequate, Lessee 
shall promptly increase said insurance coverage as required by Lessor.


ARTICLE 12, INSURANCE POLICY REQUIRMENTS

12.1 General Requirements. All insurance policies required to be 
carried by Lessee hereunder shall conform to the following requirements:

(a) The insurer in each case shall carry a designation in 
"Best's Insurance Reports"' as issued from time to time throughout the 
Term as follows: Policy holders, rating of A; financial rating of not less 
than X;

(b) The insurer shall be qualified to do business in the state 
in which the Leased Premises are located;



(c) The policy shall be in a form reasonably acceptable to 
Lessor;

(d) Each policy (except Lessee ' s Personal Property Insurance) 
shall name Lessor as an additional insured and, at Lessor's request, shall 
carry a lender's loss payee endorsement in favor of Lessor's lender and 
such other endorsement(s) as Lessor may from time to time require;

(e) An executed copy of each insurance policy or a certificate 
thereof, shall be delivered to Lessor at commencement of the Term and 
shall remain in effect throughout the Term, including copies of any 
renewals or certificates thereof, at least thirty (30) days prior to the 
expiration of such policies:

(f) These policies shall require that Lessor be in writing by 
the insurer at least thirty (30) days prior to any cancellation or 
expiration of such policy, or any reduction in the amounts of insurance 
carried;

(g) Each policy shall be primary, not contributing with, and 
not in excess of, coverage which Lessor may carry;

        (h) All liability insurance required to be carried by Lessee 
hereunder shall state that Lessor is entitled to recovery for the 
negligence of Lessee even though Lessor is named as an additional insured; 
shall provide for severability of interest; shall provide that an act or 
omission of one of the insureds or additional insureds which would void or 
otherwise reduce coverage shall not void or reduce coverages as to the 
other insured or additional insured; and shall afford coverage after the 
expiration of the Term (by separate policy or extension if necessary) for 
all claims based -on acts, -omissions, injury or damage which occurred or 
arose (or the onset of which occurred or arose) in whole or in part during 
the Term.

ARTICLE 13.  LESSEE INSURANCE DEFAULT

13.1 Rights of Lessor.  In the event that Lessee fails to obtain any 
insurance required of it under the terms of this Lease, Lessor may, at its 
option, but is not obligated to, obtain such insurance on behalf of Lessee 
and bill Lessee, as additional rent, for the cost thereof. Payment shall 
be due within ten (10) days of receipt of the billing therefor by Lessee.

ARTICLE 14.  IMDEMIFICATION, WAIVER OF CLAIMS AND SUBROGATION

14.1 Waiver of Subrogation. Lessor and Lessee release each other, and 
their respective authorized representatives, from any claims for damage to 
any person or to the Leased Premises and the Building and other 
improvements in which the Leased Premises are located, and to the 
fixtures, personal property, Lessee's improvements and alterations of 
either Lessor or Lessee, in or on the Leased Premises and the Building and 
other improvements in which the Leased Premises are located, including 
loss of income, that are caused by or result from risks insured or 
required under the terms of this Lease to be insured against under any 
property insurance policies carried or to be carried by either of the 
parties.

14.2    Form of Policy  Each party shall cause each such insurance 
policy obtained by it to provide that the insurance company waives all 
rights of recovery by way of subrogation against either party in 
connection with any damage covered by such policy. Neither party shall be 
liable to the other for any damage caused by fire or any other risks 
insured against under any property insurance policy carried under the 
terms of this Lease. If any such insurance policy cannot be obtained with 
a waiver of subrogation without payment of an additional premium charge 
above that charged by the insurance companies issuing such policies 
without waiver of subrogation, the party receiving the benefit shall elect 
to either forfeit the benefit or shall pay such additional premium to the 
insurance carrier requiring such additional premium.

14.3    Indemnity.

(a) Lessee, as a material part of the consideration to be 
rendered to Lessor, shall indemnify, defend, protect and hold harmless 
Lessor against all actions, claims, demands, damages, liabilities, losses, 
penalties, or expenses of any kind which may be brought or imposed upon 
Lessor or which Lessor may pay or incur by reason of injury to person or 
property, from whatever cause, all or in any way connected with the 
condition or use of the Leased

Premises, or the Improvements or personal property there in or thereon, 
including without limitation any liability or injury to the person or 
property of Lessee, its agents, officers, employees or invitees, but 
excluding any demands, damages, liabilities, losses, penalties or expenses 
of any kind arising out of, or in connection with, the sole negligence or 
willful act of the Lessor, its agents, officers, employees or invitees. 
Lessee agrees to indemnify, defend and protect Lessor and hold it harmless 
from any and all liability, loss, cost or obligation on account of, or 
arising out of, any such injury or loss however occurring, including 
breach of the provisions of this Lease and the negligence of the parties 
hereto.

(b)     Lessor as a material part of the consideration to be 
rendered to Lessee, shall indemnify, defend, protect and hold Lessee 
harmless against all actions, claims, demands, damages liabilities, 
losses, penalties, or expenses of any kind, including attorney's fees and 
costs related thereto, which may be brought or imposed upon Lessee or 
which Lessee may pay or incur by reason of injury to person or property 
caused by the negligence or willful act of Lessor, or Lessor's breach of 
the Restrictions, or, only to the extent of liability in excess of the 
policy limits of the insurance policies required to be carried by Lessee 
hereunder, Lessor's breach of this Lease.

14.4 Defense of Claims. In the event any action, suit or proceeding 
is brought against Lessor by reason of any such occurrence, Lessee, upon 
Lessor's request will at Lessee's expense resist and defend such action, 
suit or proceeding, or cause the same to be resisted and defended by 
counsel designated either by Lessee or by the insurer whose policy covers 
the occurrence and in either case approved by Lessor. The obligations of 
Lessee under this Section arising by reason of any occurrence taking place 
during the Lease term shall survive any termination of this Lease.

14.5 Waiver, of Claims. Lessee, as a material part of the 
consideration to be rendered to Lessor, hereby waives all claims against 
Lessor for damages to goods, wares, merchandise and loss of business in, 
upon or about the Leased Premises from any cause arising at any time, 
including breach of the provisions of this Lease and the negligence of the 
parties hereto.

14.6 References. Wherever in this Article the term Lessor or Lessee 
is used and such party is to receive the benefit of a provision contained 
in this Article, such term shall refer not only to that party but also to 
its officers, directors, employees, partners and agents.

ARTICLE 15. DESTRUCTION

15.1 Rights of Termination. In the event the Leased Premises suffers (a) a 
Major Uninsured Casualty, or (b) a casualty which cannot be repaired 
within two hundred ten (10) days from the date of destruction under the 
laws and regulations of state-federal, county or municipal authorities, or 
other authorities with jurisdiction (hereinafter collectively a "Major 
Casualty"), Lessor may terminate this Lease as at the date of the damage 
upon written notice to Lessee following the casualty. However, if Lessor 
elects to terminate this Lease as a result of a Major Uninsured Casualty, 
within fifteen (15) days following the date Lessee receives notice of 
Lessor's election to terminate, Lessee may cause this Lease to continue in 
full force and effect by written notice to Lessor stating that Lessee will 
pay the full cost of the repair of such casualty provided that within ten 
(10) days following receipt of a written estimate of Lessor's building 
contractor retained for the purpose of reconstruction of the Major 
Uninsured Casualty, Lessee deposits with Lessor the full amount of such 
estimate subject to additional payments for other charges as are incurred 
in the course of Lessor's good faith reconstruction. In the event of a 
Major Casualty, Lessor shall deliver to Lessee at the time that it elects 
to terminate under the provisions hereof, or if Lessor does not elect to 
terminate, then within sixty (60) days of the date of the casualty, a 
statement of Lessor's best good faith judgment of the cost of the 
reconstruction, and the time estimated to elapse from the date of the 
casualty through completion of the reconstruction (the "Reconstruction 
Period"). If the Reconstruction Period is estimated to take longer than 
two hundred ten (210) days, then, Lessee may elect by written notice to 
the Lessor within thirty (30) days following the date of Lessee's receipt 
of the estimates described in the preceding sentence, to terminate this 
Lease.

15.2 Repairs. In the event of a casualty other than a Major Casualty, 
or, in the alternative, in the event either party elects to terminate this 
Lease under the terms of Section 15.1 above, then this Lease shall 
continue in full force and effect and Lessor shall forthwith undertake to 
make such repairs to reconstitute the Leased Premises to as near the 
condition as existed prior to the casualty as practicable. Such partial 
destruction shall in no way annul or void this -Lease except that Lessee 
shall be entitled to a proportionate reduction of Minimum Monthly Rent 
following the casualty and until the time th6 Leased Premises are 
restored. Such reduction shall be an amount, which reflects the degree of 
interference with Lessee's business. So long as Lessee conducts its 
business in the Leased Premises there shall be no abatement until the 
parties agree on the amount thereof. If the parties cannot agree within 
forty five (45) days of the casualty, the matter shall be submitted to 
Arbitration under the rules of the American Arbitration Association. Upon 
the resolution of the dispute, the settlement shall be retroactive and 
Lessor shall within ten (10) days thereafter refund to Lessee any sums due 
in respect of the reduced rental from the date of the casualty. Lessor's 
obligations to restore shall in no way include any construction originally 
performed by Lessee or subsequently undertaken by Lessee, but shall 
include solely that property constructed by Lessor prior to commencement 
of the Term.

15.3    Repair Costs. The cost of any repairs to be made by Lessor, 
pursuant to Section 15.2 of this Lease, shall be paid by Lessor utilizing 
available insurance proceeds. Lessee shall reimburse Lessor upon 
completion of the repairs for any deductible for which no insurance 
proceeds will be obtained under Lessor's insurance policy, or if other 
premises are also repaired, a pro rata share based on total costs of 
repair equitably apportioned to the Leased Premises. Lessee shall, 
however, not be responsible to pay any deductible or its share of any 
deductible to the extent that Lessee ' s payment would be in excess of 
$10, 000 if Lessee `s consent has not been received by Lessor, unless such 
denial of consent by Lessee s unreasonable.

15.4 Waiver. Lessee hereby waives all statutory or common law rights 
of termination in respect to any partial destruction or casualty which 
Lessor is obligated to repair or may elect to repair under the terms of 
this Article.

15.5    End of Term Casualty.

(a) In the event of a casualty occurring during the last twelve 
(12) full calendar months of the original Term hereof or of any Extended 
Term the cost for repair of which exceeds $50,000 in Lessor's best good 
faith judgment, either Lessor or Lessee shall have the right to terminate 
this Lease by written notice to the other delivered, in Lessor's case 
within thirty (30) days of the date of the casualty and, in the Lessee's 
case within thirty (30) days of the date of receipt from Lessor of 
Lessor's best good faith estimate of the cost of repair.

(b) In the event of a casualty occurring during the period 
commencing with the first day of the twenty-fourth (24th) month prior to 
the expiration of the then current Term, and expiring on the last day of 
the thirteenth (13th) month prior to the expiration of the then current 
Term, the cost for repair of which exceeds two hundred thousand dollars 
($200,000) in Lessor's best good faith judgment, either party shall have 
the right to terminate this Lease provided it gives the other party one 
hundred twenty (120) days written notice thereof, which notice shall be 
delivered not later than thirty (30) days following the date that Lessor 
delivers to Lessee Lessor's best good faith estimate of the cost of 
repair.

(c)     Notwithstanding the foregoing, if within thirty (30) days 
of the date of the casualty described in this Section 15.5, Lessee has the 
right under the terms of this Lease to extend the Term, and does exercise 
its right to do so within thirty (30) days of the date of the casualty, 
the election by Lessor to terminate under the provisions of this Section 
15.5 shall be void and the repair of the Leased Premises or termination of 
the Lease shall be subject to the other provision of this Article 15.

ARTICLE 16, SECURITY DEPOST

16.1    Payment on Lease Execution. Lessee shall pay Lessor upon 
execution hereof the sum specified in Section 1.6.. This sum is designated 
as a Security Deposit and shall remain the sole and separate property of 
Lessor until actually repaid to Lessee (or at Lessor's option the last 
assignee, if any, of Lessee's interest hereunder), said sum not being 
earned by Lessee until all conditions precedent for its payment to Lessee 
have been fulfilled. As this sum both in equity and at law is Lessor's 
separate property, Lessor shall not be required to keep said deposit 
separate from his general accounts. If Lessee fails to pay rent or other 
charges when due hereunder, or otherwise defaults with respect to any 
provision of this Lease, including and not limited to Lessee's obligation 
to restore or clean the Leased Premises following vacation thereof, 
Lessee, at Lessor's election, shall be deemed not to have earned the right 
to repayment of the Security Deposit, or those portions thereof used or 
applied by Lessor for the payment of any rent or other charges in default, 
or for the payment of any other sum to which Lessor may become obligated 
by reason of Lessee's default, or to compensate Lessor for any loss or 
damage which Lessor may suffer thereby. Lessor may retain such portion of 
the Security Deposit, as it reasonably deems necessary to restore or clean 
the Leased Premises following vacation by Lessee. The Security Deposit is 
not to-be characterized as rent until and unless so applied in respect of 
a default by Lessee. Within sixty (60) days following the expiration of 
the Term, provided Lessee is not in default at expiration of the Term 
under this Lease, Lessor shall repay to Lessee that portion of the 
Security Deposit not applied as provided herein (the "Unused Deposit"), 
with interest on the Unused Deposit at 7% per annum for the entire period 
of the Term during which such Unused Deposit had not been applied by the 
Lessor.

16.2 Restoration of Deposit. If Lessor elects to use or apply all or 
any portion of the Security Deposit as provided in Section 16.1, Lessee 
shall within ten (10) days after written demand therefor pay to Lessor in 
cash, an amount equal to that portion of the Security Deposit used or 
applied by Lessor, and Lessee's failure to so do shall be a material 
breach of this Lease. The ten (10) day notice specified in the preceding 
sentence shall insofar as not prohibited by law, constitute full 
satisfaction notice of default provisions required by law or ordinance.

16.3 Early Earnback. If Lessee has not been in default under the 
provisions of this Lease at any time during the first thirty six (36) full 
months of the term hereof and, further, Lessee has maintained a net worth 
computed in accordance with generally accepted accounting principles of 
not less than four million ($4,000,000) dollars during such period, then, 
in such event, Lessee shall have earned the right to have Lessor repay to 
Lessee within ten (10) days following the date upon which Lessee provides 
Lessor with satisfactory evidence that it has met the conditions set forth 
in this Subsection 16.3, the full amount of the Security Deposit plus 
interest thereon at seven percent (7%) per annum, compounded, from 
commencement of the term through the* date of repayment. Lessee represents 
to Lessor that it has a- net worth at commencement of the term, calculated 
in accordance with generally accepted accounting principles, of not less 
than four million dollars (4,000,000). Lessee shall provide on request of 
Lessor, not more frequently than annually, during the Term, copies of its 
most recent financial statements certified to be true and correct by the 
Chief Financial officer of the company, to such officer's best knowledge 
and belief. If at any time the net worth of Lessee declines below four 
million dollars ($4,000,000), then it shall so notify Lessor, and within 
ten (10) days following request therefor from Lessor, Lessee shall 
reinstate the Security Deposit by cash payment to Lessor in the full 
amount thereof, subject to its right to once again earn back the Security 
Deposit as provided in this Section 16.3.

ARTICLE 17, USE

17.1 Permitted Use. The Leased Premises may be used and occupied only 
for the purposes specified in Section 1.7 hereof, and for no other purpose 
or purposes. Lessee shall promptly comply with all laws, ordinances, 
orders and regulations affecting the Leased Premises, their cleanliness, 
safety, occupation and use. Lessor represents that the Lessee's use as 
specified in Section 1.7 is permissible by law in the Leased Premises at 
commencement of the Term. This representation pertains only to compliance 
as at the Commencement Date and does not apply to use or law violations or 
activities occurring thereafter.

ARTICLE 18. COMPLIANCE WITH LAWS AND REGULATIONS

        18.1 Lessee's Obligations. Lessee shall, at its sole cost and 
expense, comply with all of the requirements of all municipal, state and 
federal authorities now in force, or which may hereafter be in force, 
pertaining to the Leased Premises, and shall faithfully observe in the use 
of the Leased Premises all municipal ordinances and state and federal 
statutes now in force or which may hereafter be in force. The judgment of 
any court of competent jurisdiction, or the admission of Lessee in any 
action or proceeding against Lessee, whether Lessor be a party thereto or 
not, that any such ordinance or statute pertaining to the Leased Premises 
has been violated, shall be conclusive of that fact as between Lessor and 
Lessee.

18.2 Condition of Leased Premises. Lessee shall be deemed to have 
accepted the Leased Premises on the Commencement Date subject to all 
applicable zoning, municipal, county and state laws, ordinances, rules, 
regulations, orders, restrictions of record, and requirements in -effect 
during the Term or any part of the Term hereof regulating the Leased 
Premises, but, however, subject to Lessee's right to inspect the Premises 
for a period of thirty (30) days following commencement and to provide to 
Lessor within that period a list of all items improperly or inadequately 
completed, or which are defective       (the "Punch List") Lessor shall 
diligently undertake to correct the Punch List items.

18.3    Hazardous Materials.

(a) Hazardous Materials Defined. As used herein, the term 
"Hazardous Materials" shall mean (i) any hazardous or toxic wastes, 
materials or substances, and any other pollutants or contaminants, which 
are or may become regulated by any applicable local, state or federal 
laws, including but not limited to, 33 U.S.C. Section 1251 et seg.,42 
U.S.C. 6901 et seg., 42 U.S.C. Section 7401 et seg., 42 U.S.C. 9601 et 
seg., and California Health and Safety Code Sections 25100 et seg., and 
25300 et seg., California Water Code, Section 13020 et seg., or any 
successor(s) thereto (collectively "Environmental Laws"); (ii) petroleum: 
(iii) asbestos; (iv) polychlorinated biphenyls; and (v) radioactive 
materials.

        (b) Use. etc. of Hazardous Materials. Lessee agrees that during 
the Term of this Lease, there shall be no use, presence, disposal, 
storage, generation, (collectively "Hazardous
Use"), or intentional Release, as defined in 42 U.S .C. Section 9601 (22), 
or any successor(s) thereto, or threatened Release of Hazardous Materials 
on, from or under the Leased Premises except to the extent that, and. in 
accordance with such conditions as, Lessor may have previously approved in 
writing. It is further agreed that Lessee shall be entitled to use and 
store only those
Hazardous Materials which are necessary for Lessee's business, provided 
that such usage and storage is in full compliance with Environmental Laws, 
and all judicial and administrative decisions pertaining thereto. Lessee 
shall not be entitled to install any tanks under, on or about the Leased 
Premises for the storage of Hazardous Materials without the express 
written consent of Lessor, which may be given or withheld in Lessor's sole 
arbitrary judgment.

        (c) Hazardous Materials _Report. At any time during the Term, 
upon five (5) days prior written notice to Lessee, Lessor may arrange for 
the preparation, including the tests necessary therefor, of a written 
report by a professional consultant with respect to Hazardous Materials 
(the "Report"). Should the Report indicate the existence of Hazardous 
Materials in excess of the levels specified in that report described in 
Exhibit "J" attached hereto (the "Hazardous Materials Report") which 
indicates the level of Hazardous Materials, if any, in existence on the 
Leased Premises at date hereof and further, the presence of such Hazardous 
materials has been caused by the Hazardous Use by Lessee, then, in such 
case, the cost of the Report shall be borne by the Lessee and Lessee shall 
pay the full cost thereof within ten (10) days following the date it 
receives a written invoice therefor. If the Report does not so indicate, 
Lessor shall bear the cost of the Report.

(d) Release of Hazardous materials:  Notification and Clean-up. 
If at any time during the Term Lessee or Lessor knows or believes that any 
Release of any Hazardous Materials -has come or will come to be located 
upon, about, or beneath the Leased Premises, then Lessee or Lessor, as the 
case may be, shall, as soon as reasonably possible, either prior to the 
Release or following the discovery thereof, give verbal and. follow-up 
written notice of that condition to the other party. Lessee covenants to 
investigate, clean up and otherwise remediate any Release of Hazardous 
Materials caused by the acts or omissions of Lessee, or its agents, 
employees, representatives, invitees, licensees, subtenants, customers or 
contractors at Lessee's cost and expense; such investigation, clean-up and 
remediation shall be performed only after Lessee has obtained Lessor's 
written consent, which shall not be unreasonably withheld; provided, 
however, that Lessee shall be entitled to respond immediately to an 
emergency without obtaining Lessor's written consent. All clean-up and 
remediation shall be done to the reasonable satisfaction of Lessor.

(e) Indemnity. Lessee shall indemnify, defend and hold Lessor 
harmless from and against any and all claims, judgments, damages, 
penalties, fines, liabilities, losses, suits, administrative proceedings 
and costs (including, but not limited to, attorneys and consultants fees) 
arising from or related to Hazardous Use or Release of Hazardous Materials 
on or about the Leased Premises caused by the acts or omissions of Lessee, 
its agents, employees, representatives, invitees, licensees, subtenants, 
customers or contractors.

        18. 4 Indemnity . Lessee agrees to indemnify, defend, protect and 
hold harmless   Lessor, its directors, officers, employees, partners, 
and agents' from and against any and all losses, claims,
demands,         actions, damages (whether direct or consequential) penalties, 
liabilities, costs and expenses, including all attorneys' fees and legal 
expenses, arising out of any violation or alleged Violation of any of the 
laws or regulations referred to in this Article 18, or breach of any of 
the provisions of this Article. This indemnification shall survive 
termination of this Lease.

18.5 Lessor's Indemnity. Lessor shall indemnify, defend and hold 
Lessee harmless from and against any and all claims, judgments, damages, 
penalties, fines, liabilities, losses, suits, administrative proceedings 
and costs. (including, but not limited. to, attorneys' and consultants' 
fees) arising from or related to Hazardous Use or release of Hazardous 
Materials on or about the Leased Premises caused by the acts or omissions 
of Lessor, its agents, employees, representatives, or arising out of any 
violation or alleged violation of any of the laws or regulations referred 
to in Article 18, or breach of any of -the provisions of this Article 18, 
by Lessor. This indemnification shall survive termination of this Lease.

ARTICLE 12. UTILITIES

19.1 Payment by Lessee. Lessee, from the time it first enters the 
Leased Premises for the purpose of setting fixtures, or from the 
commencement of this Lease, whichever date shall first occur, and 
throughout the term of this Lease, shall pay all charges including 
connection fees for water, gas, heat, sewer, power, telephone services and 
any other utility supplied to or consumed in or on the Leased Premises. 
Lessee shall not allow refuse, garbage or trash to accumulate outside of 
the Leased Premises except on the day of scheduled scavenger pick-up 
services, and then only in areas designated for that purpose by Lessor. 
Lessor shall not be responsible or liable for any interruption in utility 
services, except when* caused by Lessor's sole negligence, nor shall such 
interruption affect the continuation or validity of this Lease. In the 
event of an interruption in utility service caused by the sole negligence 
of the Lessor, which interruption continues unabated for 72 consecutive 
hours following written notice to Lessor, during business days, 
thereafter, Lessee shall bill to the Lessor the amount of 1/30th of the 
Minimum Monthly Rent then in effect for each day of such interruption 
during which Lessee is unable to operate its business in the Leased 
Premises.

ARTICLE 20. ALTERATIONS

20.1 Consent or Lessor; Ownership. Lessee shall not make, or suffer 
to be made, any alterations to the Leased Premises, or any part thereof, 
unless the cost of which will not exceed S25,000 in the aggregate and the 
alterations are nonstructural and interior in nature, without the written 
consent of Lessor first had and obtained. Notwithstanding anything to the 
contrary herein, Lessee may not demolish or remove any improvements paid 
for by Lessor without Lessor's prior consent. Any additions to, or 
alterations of, the Leased Premises, except trade fixtures, shall upon 
expiration or termination of this Lease become a part of the realty and 
belong to Lessor. Except as otherwise provided in this Lease, Lessee shall 
have the right to remove its trade fixtures placed upon the Leased 
Premises provided that Lessee restores the Leased Premises as indicated 
below.

20.2 Requirements  Any alterations additions or installations 
performed by Lessee (hereinafter collectively "Alterations") shall be 
subject to strict conformity with the following requirements: 

(a) All alterations shall be at the sole cost and expense of 
Lessee;

(b) Prior to Commencement of any work of alteration, Lessee 
shall submit detailed plans and specifications, including working drawings 
if available, (hereinafter referred to as "Plans") of the proposed 
alterations, which shall be subject to the consent of Lessor in accordance 
with the terms of Section 20.1 above;

(c) Following approval of the Plans by Lessor, Lessee shall 
give Lessor at least tan (10) days prior written notice of commencement of 
work in the Leased Premises so that Lessor may post notices of 
non-responsibility in or upon the Leased Premises as provided by law;

(d) No alterations shall be commenced without Lessee having 
previously obtained all appropriate permits and approvals required by and 
of governmental agencies copies of which shall be provided to Lessor prior 
to commencement of work;

(e) All alterations shall be performed in a skillful and 
workmanlike manner, consistent with the best practices and standards of 
the construction industry, and pursued with diligence in accordance with 
the Plans previously approved by Lessor and in full accord with all 
applicable laws and ordinances. All material, equipment, and articles 
incorporated in the alterations is to be new, and of recent manufacture 
except for specialty design features with unique high quality 
characteristics, and of the most suitable grade for the purpose intended;

(f) Lessee must obtain the prior written approval from Lessor 
for Lessee's contractor prior to commencement of the work. Lessee's 
contractor shall maintain all of the insurance reasonably required by 
Lessor, including comprehensive general liability, workers' compensation, 
builder's risk insurance and course of construction insurance;

(g) As a condition of approval of the alterations, Lessor may 
require performance and labor and materialmen's payment bonds issued by a 
surety approved by Lessor, in a sum equal to the cost of the alterations 
guarantying the completion of the alterations free and clear of all liens 
and other charges in accordance with the Plans. Such bonds shall name 
Lessor as beneficiary;

(h) The alterations must be performed in a manner such that 
they will not interfere with the quiet enjoyment of the other lessees in 
the Complex.

20.3  Liens.    Lessee shall keep the Leased Premises and the Complex 
in which the Leased Premises are situated, free from any liens arising out 
of any work performed, materials furnished or obligations incurred by 
Lessee In the event a mechanic's or other lien is filed against the Leased 
Premises or the Complex of which the Leased Premises forms a part as a 
result of a claim arising through Lessee, Lessor may demand that Lessee 
furnish to Lessor a surety bond satisfactory to Lessor in an amount equal 
to at least one hundred fifty percent (150%) of the amount of the 
contested lien claim or demand, indemnifying Lessor against liability for 
the same and holding the Leased Premises free from the effect of such lien 
or claim. Such bond must be posted within twenty (20) days following 
notice from Lessor unless. Lessee otherwise expunges such liens from the 
record. In addition, Lessor may require Lessee to pay Lessor's attorney's 
fees and costs in participating in any action to foreclose such lien if 
Lessor shall decide it is to it; best interest to do so. Lessor may pay 
the claim prior to the enforcement thereof, in which event Lessee shall 
reimburse Lessor in full, including attorney's fees, for any such expense, 
as additional rent, with the next due rental.

20.4 Restoration. Lessee shall return the Leased Premises to Lessor 
at the expiration or earlier termination of this Lease in good and 
sanitary order, condition and repair, free of rubble and debris, broom 
clean, reasonable wear and tear excepted and subject to the provisions of 
Article 15. All damage to the Leased Premises caused by the removal of 
trade fixtures and other personal property that Lessee is permitted or 
required to remove under the terms of this Lease and/or such restoration 
shall be repaired by Lessee at its sole cost and expense prior to 
termination.

20.5 Removal. In no event shall Lessee be obligated to remove any 
improvements initially installed in the Leased Premises as of the 
Commencement Date. Notwithstanding any other provision hereof, any 
improvements or other alterations made subsequent to the Commencement Date 
that Lessor will require Lessee to remove upon the expiration of the Term 
shall be designated as items to be removed by Lessor at the time Lessor 
grants its consent for such alterations pursuant to Section 20.1 of the 
Lease. If Lessor does not so designate for removal, such alterations or 
improvements may be removed by Lessee at its discretion prior to the 
expiration of the term.

ARTICLE 21. MAINTENANCE AND REPAIRS

21.1 Obligations of Lessee. Except as specifically set forth herein, 
Lessee shall, at its sole cost and expense, keep and maintain the Leased 
Premises and appurtenances, and every part thereof in good and sanitary 
order, condition and repair including all necessary replacements. 
Notwithstanding the foregoing, Lessor shall, at Lessee's expense, perform 
all necessary repairs, maintenance and replacement of the heating, 
ventilating and air conditioning system ("HVAC"), painting of exterior 
walls for maintenance of appearance, but not solely for design purposes 
(not less than once in each five year period of the term, including 
extensions) and maintenance of the Leased Premises outside of the Building 
such as the parking and landscaped areas, (the "Premises Maintenance 
costs") . Lessee shall, at its sole cost, keep and maintain all utilities, 
fixtures and mechanical equipment used by Lessee in good order, condition 
and repair. Lessor need not competitively bid the work described herein, 
provided the costs billed to Lessee do not exceed those which are normal 
and customary for the work performed.

21.2 Premises Maintenance Costs. Lessee shall pay to Lessor, as 
additional rent, all Premises Maintenance Costs plus a management fee in 
the amount of 10% thereof, within ten (10) days of receiving a billing 
therefor from Lessor, but no more frequently than monthly. Lessor may bill 
Lessor estimated charges in accordance with Section 21.3. it is the intent 
of the parties -that all maintenance and replacement expenditures with 
respect to the Leased Premises and the Building be borne by Lessee, 
whether performed by Lessee or Lessor, this Lease being intended to be 
absolutely net except for costs incurred as a result of the willful act or 
sole negligence of the Lessor, its agents, contractors or employees or 
other costs to be borne by the Lessor as expressly set forth in this 
Lease.

        21.3 Estimated Payments. Lessor shall have the right, at its option, 
to estimate Lessee's Premises Maintenance Costs due in the future from 
Lessee and to collect from Lessee on a monthly or quarterly basis, as 
Lessor may elect, the amount of Lessee's estimated Premises Maintenance 
Costs. Lessor shall provide Lessee with a reconciliation of Lessee's 
account at least annually, and if such reconciliation shall indicate that 
Lessee's account is insufficient to satisfy the Premises Maintenance Costs 
for the period estimated, Lessee shall immediately pay to Lessor any 
deficiency. Any excess in such account indicated by the reconciliation 
shall be credited to Lessee's account to reduce the estimated payments for 
the next ensuing period. 

21.4 Lessor Maintenance Obligation.. Except for the negligence of 
Lessee, Lessor, at Lessor's expense, shall be responsible for the 
maintenance, repair and replacement of the following: structural portions 
of the Building (including foundation slab, structure of the exterior 
walls, columns and roof structure), roof membrane and plumbing installed 
in the concrete slab. Lessee covenants that Lessee, its agents, 
contractors or representatives shall not at any time enter upon the roof 
except in the physical presence of the Lessor. A breach of this provision 
shall constitute a material breach of this Lease.

21.5 Waiver. Subject to the provisions of Section 30.1(b) Lessee 
waives all rights it may have under law to make repairs at Lessor's 
expense.

ARTICLE 22. CONDEMNATION

22.1    Definitions.

(a) "Condemnation" means (i) the exercise of any governmental 
power, whether by legal proceedings or otherwise, by a condemnor and/or 
(ii) a voluntary sale or transfer by Lessor to any condemnor, either under 
threat of condemnation or while legal proceedings for condemnation are 
pending.

(b) "Date. of taking" means the date the condemnor has the 
right to possession of the property being condemned.

(c) "Award" means all compensation, sums or anything of value 
awarded, paid or received on a total or partial condemnation.

(d) "Condemnor" means any public or quasi-public authority, or 
private corporation or individual, having the power of condemnation.

22.2 Total Taking. If the Leased Premises are totally taken by 
condemnation, this Lease shall terminate on the date of taking.

22.3    Partial Taking; Common Area.

(a) If any portion of the Leased Premises is taken by 
condemnation, this Lease shall remain in effect, except that Lessee can 
elect to terminate this Lease if so much of the Building is taken as to 
materially interfere with Lessee's use of the Leased Premises.
(b) If any part of the area of the Leased Premises outside the 
Building are taken by condemnation, this Lease shall remain in full force 
and effect so long as there is no material interference with the access to 
the Leased Premises, except that if thirty percent (30%) or more of such 
Area is taken by condemnation, either party shall have the election to 
terminate this Lease pursuant to this Section.

(c) If fifty percent (50%) or more of the Building is taken, 
Lessor shall have the election to terminate this Lease in the manner 
prescribed herein.

22.4    Termination or Abatement. If either party elects to terminate this 
Lease under the provisions of Section 22.3(such party is hereinafter 
referred to as the "Terminating Party") it must terminate by giving notice 
(the "Notice of Termination") to the other party (the "Non terminating 
Party") within thirty (30) days after the nature and extent of the taking 
have been finally determined (the "Decision Period"). The Terminating 
Party shall notify the Non terminating Party of the date of termination, 
which date shall not be earlier than sixty (60) days after the Terminating 
Party has notified the Non terminating Party of its election to terminate 
nor later than the date of taking. If Notice of Termination is not given 
within the Decision Period, the Lease shall continue in full force and 
effect except that Minimum Monthly Rent shall be reduced by subtracting 
therefrom an amount calculated by multiplying the Minimum Monthly Rent in 
effect prior to the taking by a fraction the numerator of which is the 
number of square feet taken from the Leased Premises and the denominator 
of which is the number of square feet in the Leased Premises prior to the 
taking.

22.5 Restoration. If there is a partial taking of the Leased Premises 
and this Lease remains in full force and effect pursuant to this Article, 
Lessor, at its cost, shall accomplish all necessary restoration so that 
the Leased Premises is returned as near as practical to its condition 
immediately prior to the date of the taking, but in no event shall Lessor 
be obligated to expend more for such restoration than the extent of funds 
actually paid to Lessor by the condemnor.

22.6 Award. Any award arising from the condemnation or the settlement 
thereof shall belong to and be paid to Lessor except that Lessee shall 
receive from the award compensation for the following if specified in the 
award by the condemning authority, so long as it does not reduce Lessor's 
award in respect of the real property: Lessee's trade fixtures, tangible 
personal property, goodwill, loss of business and relocation expenses. At 
all events, Lessor shall be solely entitled to all award in respect of the 
real property, including the bonus value of the leasehold. Lessee shall 
not be entitled to any award until Lessor has received the above sum in 
full.

ARTICLE 23. INTERUPTION

23.1 Interruption If as a result of Lessor's uninsured negligence the 
Leased Premises suffers a casualty which results in Lessee being unable to 
operate its business upon the Leased Premises for one hundred -twenty 
(120) consecutive days, then, within thirty (30) days following the 
expiration of such one hundred twenty (120) consecutive day period, Lessee 
by written notice within such period to Lessor may terminate this Lease.


ARTICLE 24, ENTRY BY LESSOR

24.1 Rights of Lessor Lessee shall permit Lessor and Lessors agents 
upon 24 hours prior telephonic notice (except in the case of emergencies 
or regularly scheduled contract maintenance) to enter the Leased Premises 
at all reasonable times for the purpose of inspecting the same or for the 
purpose of maintaining the Building, or for the purpose of making repairs, 
alterations or additions to any portion of the Building, including the 
erection and maintenance of such scaffolding, canopies, fences and props 
as may be required, or for the purpose of posting notices of 
non-responsibility for alterations, additions or repairs', or for the 
purpose of placing upon the Building any usual or ordinary "for sale" 
signs. if such entry upon the Premises by the Lessor will cause a material 
interruption in the business operations of the Lessee, Lessee must so 
inform the Lessor when Lessor makes its request. In such case Lessor shall 
agree to delay its entry for up to five (5) days to avoid such 
interruption. During any entry exercised by Lessor hereunder, Lessor shall 
diligently attempt to minimize any interruption or interference with 
Lessee's use of the Leased Premises and its business operations. In the 
event a material interruption in Lessee's business operations occurs as a 
result of Lessor's negligence, Lessee shall bill to the Lessor the amount 
of 1/30th of the Minimum Monthly Rent then in effect for each day of such 
interruption following written notice to Lessor during which Lessee is 
unable to operate its business in the Leased Premises. Lessee shall permit 
Lessor, at any time within one hundred eighty (180) days prior to the 
expiration of this Lease, to place upon the Leased Premises any usual or 
ordinary "to let" or "to lease" signs. This Section in no way affects the 
maintenance obligations of the parties hereto.

ARTICLE 25. SIGNS

25.1 Approval. Installation and Maintenance. Lessee shall not place 
on the Leased Premises or on the Complex, any exterior signs or 
advertisements nor any interior signs or advertisements that are visible 
from the exterior of the Leased Premises, without Lessor's prior written 
consent, which Lessor reserves the right to withhold for any aesthetic 
reason in its sole judgment. However, Lessor may not exercise its rights 
hereunder in such a manner as to discriminate against Lessee as compared 
to other occupants of the Complex. The cost of installation and regular 
maintenance of any such signs approved by Lessor shall be at the sole 
expense of Lessee. At the termination of this Lease or any extension 
thereof, Lessee shall remove all his signs, and all. damage caused by such 
removal shall be repaired at Lessee's expense. Upon approval of Lessee's 
sign by Lessor, an exhibit thereof shall be attached hereto as Exhibit 
"F."

ARTICLE 26.  DEFAULT

26.1    Definition. The occurrence of any of the following shall 
constitute a material default and breach of this Lease by

(a) Any failure by Lessee to pay the rental or to make any 
other payment required to be made by Lessee hereunder within five (5) days 
following written notice from Lessor that such is due (any such notice 
shall be concurrent with any required statutory default notice);

(b) A failure by Lessee to observe and perform any other 
provision of this Lease to be observed or performed by Lessee, where such 
failure continues for fifteen (15) days after written notice thereof by 
Lessor to Lessee; provided, however, that if the nature of the default is 
such that the same cannot reasonably be cured within the fifteen (15) day 
period allowed, Lessee shall not be deemed to be in default if Lessee 
shall, within such ten (10) day period, commence to cure and thereafter 
diligently prosecute the same to completion;

(c) Either (1) the appointment of a receiver (except a receiver 
appointed at the instance or request of Lessor) to take possession of all 
or substantially all of the assets of Lessee, or (2) a general assignment 
by Lessee for the benefit of creditors, or (3) any action taken or 
suffered by Lessee under any insolvency or bankruptcy act shall constitute 
a breach of this Lease by Lessee. In such event, Lessor may, at its 
option, declare this Lease terminated and forfeited by Lessee, and Lessor 
shall be entitled to immediate possession of 'the Leased Premises. Upon 
such notice of termination, this Lease shall terminate immediately and 
automatically by its own limitation.

ARTICLE 27. REMEDIES UPON DEFAULT

27.1    Termination and Damage. In the event of any default by Lessee, then, 
in addition to any other remedies available to Lessor herein or at law or 
in equity, Lessor shall have the immediate option to terminate this Lease 
and all rights of Lessee hereunder by giving written notice of such 
intention to terminate. In the event that Lessor shall elect to so 
terminate this Lease, then Lessor may recover from Lessee:

        (a) The worth at the time " of award of any unpaid rent which 
had been earned at the time of such termination; plus

(b) 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 Lessee proves could have 
been reasonably avoided; plus

(c) 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 Lessee proves could be reasonably 
avoided; plus

(d) Any other amount necessary to compensate Lessor for all the 
detriment proximately caused by Lessee's failure to perform its 
obligations under this Lease or which in the ordinary course of events 
would be likely to result therefrom; and

(e) At Lessor's election, such other amounts in addition to or 
in lieu of the foregoing as may be permitted from time to time by the 
applicable law in the state in which the Leased Premises are located.

27.2    Definitions.

(a) The term "rent", as used in this Lease, shall be deemed to 
be and to mean the Minimum Monthly Rent and all other sums required to be 
paid by Lessee pursuant to the terms of this Lease.

(b) As used in Sections 27.1(a) and (b) above, the ..worth at 
the time of award" is computed by allowing interest at the rate of ten 
percent (10%) per annum. As used in Section 27.1(c) above, the "worth at 
the time of award" is computed by discounting such amount at the discount 
rate of the Federal Reserve Bank for the region in which the Complex is 
located at the time of award plus one percent (1%).

27.3    Personal Property. In the event of any default by Lessee, Lessor 
shall also have the right, with or without terminating this Lease, to 
reenter the Leased Premises and remove all persons and property from the 
Leased Premises; such property may be removed and stored in a public 
warehouse or elsewhere at the cost of and for the account of Lessee.

27.4 Recovery of Rent; Reletting.

        (a) In the event of the vacation or abandonment of the Leased 
Premises by Lasses or in the event that Lessor shall elect to reenter as
provided in Section 27.3 above, or shall take possession of the Leased
Premises pursuant to legal proceeding or pursuant to any notice provided
by law, then if Lessor does not elect to terminate this Lease as provided
in Section 27.1 above, Lessor may from time to time, without terminating
this Lease, either recover all rental as it becomes. due or relet the
Leased Premises or any part thereof for such term or terms and. at such
rental or rentals and upon such other terms and conditions as Lessor in
its sole discretion, may deem advisable with the right to make
alterations and repairs to the Leased Premises.

(b) In the event that Lessor shall elect to so relet, then 
rentals received by Lessor from such reletting shall be applied: first, to 
the payment of any indebtedness other than rent due hereunder from Lessee 
to Lessor; second, to the payment of any cost of such reletting; third, to 
the payment of the cost of any alterations and repairs to the Leased 
Premises; fourth, to the payment of rent due and unpaid hereunder; and the 
residue, if any, shall be held by Lessor and applied in payment of future 
rent as the same may become due and payable hereunder. Should that portion 
of such rentals received from such reletting during any month, which is 
applied by the payment of rent hereunder, be less than the rent payable 
during that month by Lessee hereunder, then Lessee shall pay such 
deficiency to Lessor immediately upon demand therefor by Lessor. Such 
deficiency shall be calculated and paid monthly. Lessee shall also pay to 
Lessor as soon as ascertained, any costs and expenses incurred by Lessor 
in such reletting or in making such alterations and repairs not covered by 
the rentals received from such reletting.

(c) No reentry -or taking possession of the Leased Premises or 
any other action under this Section shall be construed as an election to 
terminate this Lease unless a written notice of such intention, be given 
to Lessee or unless the termination thereof be decreed by a court of 
competent jurisdiction. Notwithstanding any reletting without termination 
by Lessor because of any default by Lessee, Lessor may at any time after 
such reletting elect to terminate this Lease.-for any such default.

27.5 No Waiver. Efforts by Lessor to mitigate the damages caused by 
Lessee's default in this Lease shall not constitute a waiver of Lessor's 
right to recover damages hereunder, nor shall Lessor have any obligation 
to mitigate damages hereunder.

27.6 Curing Defaults. Should Lessee fail to repair, maintain, and/or 
service the Leased Premises, or any part or contents thereof at any time 
or times, or perform any other obligations imposed by this Lease or 
otherwise, then after having given Lessee reasonable notice of the failure 
or failures and a reasonable opportunity, which in no case shall exceed 
fifteen (15) days subject to the proviso of Section 26.1(b), to remedy the 
failure, Lessor may perform or contract for the performance of the repair, 
maintenance, or other Lessee obligation, and Lessee shall pay Lessor for 
all direct and indirect costs incurred in connection therewith within ten 
(10) days of receiving a bill therefor from Lessor.


27.7    Cumulative Remedies. The various rights, options, election powers, 
and remedies of Lessor contained in this Article and elsewhere in this 
Lease shall be construed as cumulative and no one of them exclusive of any 
others or of any legal or equitable remedy which Lessor might otherwise 
have in the event of breach or default, and the exercise of one right or 
remedy by Lessor shall not in any way impair its right to any other right 
or remedy.

ARTICLE 28.  FORFITURE OF PROPERTY AND LESSOR'S LIEN

28.1 Removal of Personal Property.   Lessee agrees that as at the date of 
termination of this Lease or repossession of the Leased Premises by 
Lessor, by way of default or otherwise, it shall remove all personal 
property to which it has the right to ownership pursuant to the terms of 
this Lease. -Any and all such property of Lessee not removed by such date 
shall, at the option of Lessor, irrevocably become the sole property of 
Lessor. Lessee waives all rights to notice and all common law and 
statutory claims and causes of action which it may have against Lessor 
subsequent to such date as regards the storage, destruction, damage, loss 
of use and ownership of the personal property affected by the terms of 
this Article. Lessee acknowledges Lessor's need to relet the Leased 
Premises upon termination of this Lease or repossession of the Leased 
Premises and understands that the forfeitures and waivers provided herein 
are necessary to aid said reletting, and to prevent Lessor incurring a 
loss for inability to deliver the Leased Premises to a prospective lessee.

ARTICLE 29. SURRENDER OF LEASE

29.1 No Merger. The voluntary or other surrender of this Lease by 
Lessee, or a mutual cancellation thereof, shall not work as a merger, and 
shall, at the option of Lessor, terminate all or any existing subleases or 
subtenancies, or may, at the option of Lessor, operate as an assignment to 
it of any or all such subleases or subtenancies.

ARTICLE 30. LESSOR'S EXCULPATION AND DEFAULT

30.1    Default by Lessor.

(a) Lessor shall not be in default unless Lessor fails to 
perform obligations required of Lessor within a reasonable time, but in no 
event later than fifteen (15) days after written notice of Lessee to 
Lessor specifying wherein Lessor has failed to perform such obligations; 
provided, however, that if the nature of Lessor's obligation is such that 
more than fifteen (15) days are reasonably required for performance, then 
Lessor shall not be in default if Lessor commences performance within such 
fifteen (15) day period and thereafter diligently prosecutes the same to 
completion.

(b) Lessee's Right to Perform Lessor's Covenants. If Lessor 
fails to make any payment or perform any other act-on its part to be 
performed under this Lease, provided that Lessee has delivered to Lessor 
written notice of such default and Lessor has failed to cure such default 
within the time period required under this article, Lessee may, but shall 
not be obligated to and without waiving or releasing Lessor from any 
obligation of Lessor under this Lease, make such payment or perform such 
other act to the extent Lessee may deem desirable, and in connection 
therewith, pay expenses and employ counsel. All sums so paid by Lessee and 
all penalties, interest and other costs in connection therewith shall be 
due and payable by Lessor within five (5) days after receipt of notice of 
payment by Lessee, together with interest thereon at the maximum rate 
permitted by law, plus collection costs and attorneys' fees.

30.2 Limited Liability. In the event of default, breach, or 
violation by Lessor (which term includes Lessor's partners, co-ventures, 
co-tenants, officers, directors, employees, agents, or representatives) of 
any Lessor's obligations under this Lease, Lessor's liability to Lessee 
shall be limited to its ownership interest in the Leased Premises (or its 
interest in the Complex, if applicable) or the proceeds of a public sale 
of such interest pursuant to foreclosure of a judgment against Lessor. 
Lessor may, at its option, and among its other alternatives, relieve 
itself of all liability under this Lease by conveying the Leased Premises 
to Lessee. Notwithstanding any such -conveyance, Lessee's leasehold and 
ownership interest shall not merge.

30.3 No Recourse. Lessor (as defined in Section 30.1) shall not be 
personally liable for any deficiency beyond its interest in the Leased 
Premises.

30.4 Valid . The provisions of Section 30.2 and 30.3 shall be valid 
so long as the Leased Premises are not encumbered by Deeds of Trust the 
outstanding balance of which at the time such were recorded, in the 
aggregate, did not exceed eighty' percent (80%) of the fair market value 
of the Leased Premises. The valuation of an institutional lender secured 
by the Leased Premises shall be conclusive as to the test described in 
this Section 30.4.

ARTICLE 31.  ATTORNEY'S FEES

31.1 Actions. Proceedings, etc. Lessee hereby agrees to pay, as 
additional rent, all attorney's fees and disbursements, and all other 
court costs or expenses of legal proceedings or other 'legal services 
which Lessor may incur or pay out by reason of, or in connection with:

(a) any action or proceeding brought by Lessor wherein Lessor 
obtains a final judgment. or award against Lessee (including Arbitration) 
on account of any default by Lessee in the observance or performance of 
any obligation under this Lease including, but not limited to, matters 
involving payment of rent and additional rent, alterations or other 
Lessee's work and subletting or assignment;

(b) any action or proceeding brought by Lessee against Lessor 
(or any officer, partner, or employee of Lessor) in which Lessee fails to 
secure a final judgment against Lessor;

(c) any other appearance by Lessor (or any officer, partner, or 
employee of Lessor) as a witness or otherwise in any action or proceeding 
whatsoever involving or affecting Lessee or this Lease;

(d) provisions (a), (b) and (c) above in this Section

        31.1 shall be reciprocal for the benefit of the Lessee when the 
Lessor has been the causative and unsuccessful party.

31.2 Survival. The obligations of the Parties under this Section 
shall survive the expiration or any other termination of this Lease. This 
Section is intended to supplement (and not to limit) other provisions of 
this Lease pertaining to indemnities and/or attorney's fees.

31.3 Counsel Fees. Should it be necessary for either party to employ 
legal counsel to enforce any of the provisions of this Lease, the 
unsuccessful party agrees to pay, as additional rent, all attorney's fees 
and Court costs reasonably incurred thereby, whether or not Lessor 
commences any legal action or proceeding.

The "unsuccessful party" is the party against who the relief sought is 
obtained.

ARTICLE 33. NOTICES

32.1 Writing.  All notices, demands and requests required or permitted 
to be given or made under any provision of this Lease, shall be in writing 
and shall be given or made by personal service or by mailing same by 
registered or certified mail, return receipt requested, postage prepaid, 
or by reputable courier which provides written evidence of delivery, 
addressed to the respective party at the address set forth in Section 1.2 
Of this Lease or at such other address as the party may from time to time 
designate, by a written notice, sent to the other in the manner aforesaid.

32.2    Effective Data. Any such notice, demand or request ("notice") 
shall be deemed given or made on the fifth day after the date so mailed. 
Notwithstanding the foregoing, notice given by personal delivery to the 
party at its address as aforesaid, shall be deemed given on the day on 
which delivery is made. Notice given by a reputable courier service which 
provides written, evidence of delivery shall be deemed given on the 
business day immediately following deposit with the courier service.

32.3    Authorization to Receive.       Each person and/or entity whose 
signature is affixed to this Lease as Lessee or as guarantor of Lessee's 
obligations ("obligor") designates such other obligor their agent for the 
purpose of receiving any notice pertaining to this Lease or service of 
process in the event of any litigation or dispute arising from any 
obligation imposed by this Lease.

ARTICLE 33. SUBORDIRATION

33.1 Priority of Encumbrances. This Lease, at Lessor's option, shall 
be subordinate to any ground lease, mortgage, deed of trust, or any other 
hypothecation for security now or hereafter placed upon the real property 
of which the Leased Premises are a part and to any and all advances made 
on the security thereof and to all renewals, modifications, 
consolidations, replacements and extensions thereof. Notwithstanding such 
subordination, Lessee's right to quiet possession of the Leased Premises 
shall not be disturbed if Lessee is not in default and so long as Lessee 
shall pay the rent and observe and perform all the provisions of this 
Lease, unless this Lease is otherwise terminated pursuant to its terms. If 
any mortgagee, trustee or ground lessor shall elect to have this Lease 
prior to the lien of its mortgage, deed of trust or ground lease, and 
shall give written notice thereof to Lessee, this Lease shall be deemed 
prior to such mortgage, deed of trust or ground lease, whether this Lease 
is dated prior or subsequent to the date of said mortgage, deed of trust 
or ground lease or the date of recording thereof.

33.2 Execution of Documents. Provided Lessee receives a written 
nondisturbance, recognition and attornment agreement in form reasonably 
satisfactory to Lessee from the Lender for whose benefit Lessee agrees to 
execute any documents required to effectuate such subordination as is 
described in Section 33.1, or to make this Lease prior to the lien of any 
mortgage, deed of trust or ground lease, as the case may be. It is 
understood by all parties, that Lessee's failure to execute the 
subordination documents referred to above may cause Lessor serious 
financial damage by causing the failure of a financing or sale 
transaction.

33.3    Attornment. Lessee shall attorn to any purchaser at any 
foreclosure sale, or to any grantee or transferee designated in any Deed 
given in lieu of foreclosure.

ARTICLE 34. ESTOPPEL CERTIFICATE

34.1 Execution by Lessee. Within ten (10) days of request 
therefor by Lessor, Lessee shall execute a Written statement 
acknowledging the commencement and termination dates of this Lease 
that it is in full force and effect, has not been modified (or if it 
has, stating such modifications), and providing any other pertinent 
information as Lessor or its agent might reasonably request. Failure 
to comply with this Article shall be a material breach of this Lease 
by Lessee giving Lessor all rights and remedies under Article 27 
hereof, as well as a right to damages caused by the loss of a loan 
or sale which may result from such failure by Lessee.

34.2 Financing. if Lessor desires to finance or refinance the 
Leased Premises, or any part thereof, or the Building, Lessee hereby 
agrees to deliver to any lender designated by Lessor such financial 
statements of Lessee as may be reasonably required by such lender. 
Such statements shall include the past two (2) years, financial 
statements of Lessee. All such financial statements shall be 
received by Lessor prior to the default date specified in Section 
26.1(a) in confidence and shall be used only for the purposes herein 
set forth.

ARTICLE 35. WAIVER

35.1 Effect of Waiver. The waiver by Lessor of any breach of 
any Lease provision shall not be deemed to be a waiver of such Lease 
provision or any subsequent breach of the same or any other term, 
covenant or condition therein contained. The subsequent acceptance 
of rent hereunder by Lessor shall not be deemed to be a waiver of 
any preceding breach by Lessee of any provision of this Lease, other 
than the failure of Lessee to pay the particular rental so accepted, 
regardless of Lessor's knowledge of such preceding breach at the 
time of acceptance of such rent.

ARTICLE 36. HOLDING OVER

36.1 Month-to-Month Tenancy on Acceptance. If Lessee should 
remain in possession of the Leased Premises after the expiration of 
the. Term and without executing a new Lease, then, upon acceptance 
of rent by Lessor, such holding over shall be construed as a tenancy 
from month to month, subject to all the conditions, provisions and 
obligations of this Lease as existed during the last month of the 
term hereof, so far as applicable to a month to month tenancy, 
except that the Minimum Monthly Rent shall be equal to 1251 of the 
Minimum Monthly Rent payable immediately prior to the expiration or 
sooner termination of the Lease.

ARTICLE 37. SUCCESSORS AND ASSIGNS

37.1 Binding Effect. The covenants and conditions herein 
contained shall, subject to the provisions as to assignment, apply 
to and bind the heirs, successors, executors, administrators and 
assigns of all of the parties hereto; and all of the parties hereto 
shall be jointly and severally liable hereunder.

ARTICLE 38. TIME

38.1 Time is of the Essence Time is of the essence this Lease with respect 
to each and every article, section and subsection hereof.
ARTICLE 39, EFFECT OF LESSOR'S CONVEYANCE

39.1 Release of Lessor. If, during the term of this Lease, Lessor 
shall sell its interest in the Building or Complex of which the Leased 
Premises forms a part, or the Leased Premises, then from and after the 
effective date of the sale or conveyance, Lessor shall be released and 
discharged from any and all obligations and' responsibilities under this 
Lease, except those already accrued.

ARTICLE 40, TRANSFER OF SECURITY

40.1    Transfer to Purchaser. If any security be given by Lessee to secure 
the faithful performance of all or any of the covenants of this Lease on 
the part of Lessee, Lessor may transfer and/or deliver the security, as 
such, to the purchaser of the reversion, in the event that the reversion 
be sold, and thereupon Lessor shall be discharged from any further 
liability in reference thereto.

ARTICLE 41, CORPORATE AUTHORITY

41.1 Authorization to Execute.

(a) Each individual executing this Lease on behalf of Lessee 
corporation, . represents and warrants that he is duly authorized to 
execute and deliver this Lease an behalf of said corporation in accordance 
with a duly adopted resolution of the Board of Directors of said 
corporation or in accordance with the Bylaws of said corporation, and that 
this Lease is binding upon said corporation in accordance with its terms. 
Further, Lessee shall, within thirty (30) days after execution of this 
Lease, deliver to Lessor a certified copy of a resolution of the Board of 
Directors of said corporation authorizing or ratifying the execution of 
this Lease.

(b) The parties executing this Lease on behalf of the Lessor 
corporation represent and warrant that they are authorized to do so under 
the terms of a valid resolution.

ARTICLE 42, WAIVER OF CALIFORNIA CODE SECTIONS

42.1 Waiver by Lessee. Lessee waives (for itself and all persons 
claiming under Lessee) the provisions of civil Code Sections 1932(2) and 
1933(4) with respect to the destruction of the Leased Premises, Civil Code 
Sections 1941 and 1942 with respect to Lessor's repair duties and Lessee's 
right to repair, Code of Civil Procedure Section 1265.130, allowing either 
party to petition the Superior Court to terminate this Lease in the event 
of a partial taking of the Leased Premises by condemnation as herein 
defined, and any right of redemption or reinstatement of Lessee under any 
present or future case law or statutory provision (including Code of Civil 
Procedure Sections 473 and 1179 and Civil Code Section 3275) in the event 
Lessee is dispossessed from the Leased Premises for any reason. This 
waiver applies to future statutes enacted in addition to or in 
substitution for the statutes specified herein.

ARTICLE 43, WASTE

43.1 Waste or Nuisance. Lessee shall not commit, or suffer to be 
committed, any waste upon the Leased Premises, or any nuisance, or other 
act or thing which may disturb the quiet, enjoyment of any other tenant or 
occupant of the Complex in which the Leased Premises are located. in the 
instrument of transfer and (iii) such instrument of transfer contains such 
other assurances as Lessor reasonably deems necessary.

ARTICLE 44. BANRUPTCY

44. 1 Bankruptcy Events. If at any time during the Term shall be 
filed by or against Lessee in any court pursuant to any statute either of 
the United States or of any State a petition in bankruptcy or insolvency 
or for reorganization or for the appointment of a receiver or trustee of 
all or a portion of Lessee's property, or if a receiver or trustee takes 
possession of any of the assets of Lessee, or if the leasehold interest 
herein passes to a receiver, or if Lessee makes an assignment for the 
benefit of creditors or petitions for or enters into an arrangement (any 
of which are referred to herein as "a bankruptcy event") , then the 
following provisions shall apply:

(a) At all events any receiver or trustee in bankruptcy or 
Lessee as debtor in possession ("debtor"), shall either expressly assume 
or reject this Lease within sixty (60) days following the entry of an 
"Order for Relief".

(b) In the event of an assumption of the Lease by a debtor, 
receiver, or trustee, such debtor, receiver, or trustee shall immediately 
after such assumption (1) cure any default or provide adequate assurances 
that defaults will be promptly cured; and (2) compensate Lessor f or 
actual pecuniary loss or provide adequate assurances that compensation 
will be made for actual pecuniary loss; and (3) provide adequate assurance 
of future performance.

For the purposes of this paragraph 44.1 (b), adequate assurance 
of future performance of all obligations under this Lease shall include, 
but is not limited to:

(i) written assurance that rent and any other 
consideration due under the Lease shall first be paid before any other of 
Lessee's costs of operation of its business in the Leased Premises are 
paid;

(ii) written agreement that assumption of this Lease will 
not cause a breach of any provision hereof including, but not limited to, 
any provision relating to use or exclusivity in this or any other Lease, 
or agreement relating to the Leased Premises, or if such a breach is 
caused, the debtor, receiver or trustee will indemnify Lessor against such 
loss (including costs of suit and attorney's fees), occasioned by such 
breach;

(c) Where a default exists under the Lease, the party assuming 
the Lease may not require Lessor to provide services or supplies 
 .11-.ncidental to the Lease before its assumption by such trustee or 
debtor, unless Lessor is compensated under the terms of the Lease for such 
services and supplies provided before the assumption of such Lease.

(d) The debtor, receiver, or trustee may only assign this Lease 
if adequate assurance of future performance by the assignee is provided, 
whether or not there has been a default under the Lease. Any consideration 
paid by any assignee in excess of the rental reserved in the Lease shall 
be the sole property of, and paid to, Lessor. Upon assignment by the 
debtor or trustee the obligations of the Lease shall be deemed to have 
been assumed and the assumptor shall execute an assignment agreement on 
request of Lessor.

(e) Lessor shall be entitled to the fair market value for the   Leased,
Premises and the services provided by Lessor (but in no event less than
the rental reserved in the Lease) subsequent to commencement of a
bankruptcy event.

(f) Lessor specifically reserves any and all remedies available 
to Lessor in Article 27 hereof or at law or in equity in respect of a 
bankruptcy event by Lessee to the extent such remedies are permitted by 
law.

ARTICLE 45. LATE CHARGE

45.1 Late Payment by Lessee.   Lessee acknowledges that late payment 
by Lessee to Lessor of rent or any other payment due hereunder will cause 
Lessor to incur costs not contemplated by this Lease, the exact amount of 
such costs being extremely difficult and impractical to fix. Such costs 
include, without limitation, processing and accounting charges, and late 
charges that may be imposed on Lessor by the terms of any encumbrance and 
note secured by any encumbrance covering the Leased Premises. Therefore, 
if any installment of rent, or any other payment due hereunder from Lessee 
is not received by Lessor within ten (10) days following* written notice 
from Lessor, Lessee shall pay to. Lessor an additional sum of five per 
cent (5%) of such rent or other charge as a late charge" The parties agree 
that this late charge represents a fair and reasonable estimate of the 
cost that Lessor will incur by reason of late payment by Lessee. 
Acceptance of any late charge shall not constitute a waiver of Lessee 
default with respect to the overdue amount, or prevent Lessor from 
exercising any other rights or remedies available to Lessor.

ARTICLE 46, MORTGAGEE PROTECTION

46.1 Notice And Right to cure Default. Lessee agrees to give any 
mortgagee(s) and/or trust deed holders, by registered mail, a copy of any 
notice of default served upon Lessor, provided that prior to such notice 
Lessee has been notified, in writing (by way of Notice of Assignment of 
Rents and Leases, or otherwise), of the address of such mortgagees and/ or 
trust deed holders. Lessee further agrees that if Lessor shall have failed 
to cure such default within the time provided for in this Lease, then the 
mortgagees and/or trust deed holders shall have an additional thirty (30) 
days within which to cure such default or if such default cannot be cured 
within that time, then such additional time as may be necessary if within 
such thirty (30) days, any mortgagee and/or trust deed holder has 
commenced and is diligently pursuing the remedies necessary to cure such 
default (including but not limited to commencement of foreclosure 
proceedings, if necessary to effect such cure) , in which event this Lease 
shall not be terminated while such remedies are being so diligently 
pursued; provided, however, that notwithstanding the time extension 
provided herein, Lessee may undertake the cure of a Lessor default after 
the expiration of the period permitted Lessor under the provisions of this 
Lease.

ARTICLE 47,    EXISTING LEASE

47.1  Procedure. At commencement of the term, vacation of the 
Existing Lease premises by the Lessee, and occupancy of the Leased 
Premises by Lessee, Lessor agrees to reimburse Lessee or, to pay on behalf 
of Lessee, as Lessee shall elect, the Minimum Monthly Rent obligation of 
its existing lease at 30740 Santana Street, Hayward, California, (the 
"Existing Lease") , by execution of Agreement in form and substance as 
attached hereto as Exhibit "G", by both parties.

47.2    Financial Obligation.   In no event shall Lessor's obligation under 
the Existing Lease for payment of its obligation under this Article 47, 
and Exhibit G exceed two hundred fifty three thousand dollars ($253,000).

ARTICLE 48. OPTION TO PURCHASE

48.1 Grant  Lessee shall I have the option to purchase the Leased 
Premises ("option") on the terms and conditions set forth in this Article 
48 and in Exhibit I.

48.2    Exercise Periods. The Option shall be exercisable only within 
the following time periods (the "Exercise Periods") :

(a) Within sixty (60) days following the Commencement Date; or

(b) During the sixty first (61st) Lease Month of the Term; or

(c) During the one hundred-twenty first (121st) Lease Months of 
the Term, provided, however, Lessee has timely exercised its first option 
to extend the Term.

48.3 Method of Exercise. The exercise of this Option shall be by 
written notice delivered to Lessor prior to the expiration of each 
Exercise Period, but not before commencement of the applicable Exercise 
Period, accompanied by a fully executed copy of the Purchase Agreement 
attached hereto as Exhibit I, with all blanks filled in, but otherwise 
unaltered (the "Purchase Agreement").

48.4 Effect of Exercise. Upon Lessee's exercise of this Option, this 
Purchase Agreement shall constitute a contract for the purchase of the 
Leased Premises.

48.5 Purchase Price. The purchase price must be established prior to 
the exercise of the Option. The purchase price shall be the higher of the 
following:

(a)     One hundred ten percent (110%) multiplied by the sum of the 
following:

(i)Total Project Costs which formed the basis for the 
calculation of minimum monthly rent under the provisions of Section 6.2 
hereof; and

(ii)  "Negative Cash Flow" as hereinafter defined; and

(iii)five dollars thirty cents ($5.30) per square foot times 
the number of square feet of land area in the Leased Premises (the "Land 
Value")

or

(b)     The fair market value of the Leased Premises determined in 
accordance with the provisions of Section 48.6.

The term "Negative Cash Flow" means an annual sum computed as at each 
anniversary of the term of this Lease, provided such sum is negative, by 
subtracting the following from all sums received by the Lessor from the 
Lessee during the annual period which is the subject of the calculation:

(i)all costs of operation, maintenance, insurance, tax, 
administration, management, supervision, and reconstruction, related to 
the Leased Premises other than (1) those costs included in Construction 
Costs as defined in Exhibit "C" hereto upon which the initial calculation 
of minimum monthly rent was based; (2) those costs which have been paid or 
reimbursed to Lessor by Lessee pursuant to this Lease; and

        (ii)all interests costs for any note secured by a deed of trust 
encumbering the Leased Premises which were not  included in Total Project 
Costs, provided the principal amount of such note does not exceed an 
amount equivalent to the Total Project costs plus the Land Value.

It is the intent of the parties that the purchase price not be less than 
one hundred tan percent (110%) of all sums of any type or nature expended 
by the Lessor in respect of the Leased Premises f or which Lessor has not 
received reimbursement.

48.6 Fair Market Value. The Fair Market Value of the Leased Premises 
shall be determined as follows:

(a) Not less than one hundred twenty (120) days prior to Lessee 
I s planned exercise of-this Option. Lessee* shall notify Lessor of its 
opinion of the fair market value of the Leased Premises as that term is 
hereinafter defined. If the parties are unable t ' q agree upon a fair 
market value within thirty (30) days thereafter (the "Negotiation Period") 
, then within ten (10) days after the expiration of the -Negotiation 
Period, either party at its own cost and expense and by giving notice to 
the other in writing, may appoint a real estate appraiser who is a member 
of the American Appraisal Institute, or the Society or Real Estate 
Appraisers, or an equivalent professional organization, with at lease five 
(5) years experience appraising office properties in Alameda County 
California ("Qualified Appraiser") , to set the fair market value in 
writing. If a party does not appoint a Qualified Appraiser within ten (10) 
days after the first party has given notice of the name of its Qualified 
Appraiser, the single Qualified Appraiser shall be the sole appraiser and 
shall set the fair market value for purposes of establishing a purchase 
price. If two Qualified Appraisers are appointed by the parties, they 
shall meet promptly, on five (5) days notice to the parties, to take such 
evidence and other information as the parties may deem reasonable to 
submit to the Qualified Appraisers. Within thirty (30) days after the 
selection of the last of the two Qualified Appraisers to be appointed by 
the parties, the Qualified Appraisers shall render their opinions of the 
fair market value in writing. If the two valuations are within ten (10%) 
percent of each other, they shall be averaged and the average of the two 
shall be the fair market value. If only one appraisal is timely submitted, 
that appraisal shall constitute the fair market value. If the two 
valuations are separated by more than ten (10%) percent, than the two 
appraisers shall, within. ten (10) days following the last for submission 
of the two appraisals of fair market value, appoint a third Qualified 
Appraiser. If they are unable to agree upon a third Qualified Appraiser 
within such ten (10) day period, either of the parties to this Lease, by 
giving five (5) days notice to the other party, may demand Arbitration as 
specified below. If neither party applies for Arbitration within the ten 
(10) day period herein specified, the two appraisals of value shall be 
averaged as stated above.

(b) Fair Market Value . The term "fair market value" as used in 
this Article 48 shall mean the fair market value of the Leased Premises 
deter-mined in accordance with good appraisal practice including 
consideration of the following factors:

(i)     Rental rates being charged for comparable 
premises in the same geographical area;

        (ii)    The rental rate specified in this Lease 
increased, however, by a factor calculated as follows:

A. The total number of square feet in the land 
area underlying the Leased Premises shall be multiplied by five dollars 
and thirty-five cents ($5.30)

B.      The product derived in "All shall be 
multiplied by ten percent (10%).

C.      The product derived in "B" shall be divided 
by .97;

D.      The quotient derived in "C" above shall be 
multiplied by 1.1699; and

E.   The product of "D" above shall be divided 
by 12 and the quotient added to the current Minimum Monthly Rent under the 
terms of this Lease for purposes of establishing the Minimum Monthly Rent 
to be considered the contract rent hereunder for valuation purposes.

(iii) It is the intent of the parties that the fair market 
value of the Leased Premises shall be determined by the comparable value 
market analysis, reproduction costs, and end income analysis methods of 
appraisal. The income analysis shall give consideration to both (i) the 
fair market rental value of the Leased Premises as if unencumbered by this 
Lease, and (ii) the contract rentals hereunder increased as provided in 
(ii) above.

(iv)    All terms and conditions of any financing secured 
by deeds of trust encumbering the Leased Premises.

(v) The outstanding principal balance of any assessment 
bonds encumbering the Leased Premises or as the close of escrow.

(c) Arbitration  In the event the parties are to 
mutually agree upon a fair market value, and in such event proceed to the 
Appraisal or Arbitration procedure herein specified, both parties shall be 
bound to submit the matter for such determination. The procedure specified 
in this article for appointment of Qualified Appraisers, delivery of 
appraisals, appointment of an Arbitrator, and determination of fair market 
value thereby, is herein collectively referred to as "Arbitration" The 
Arbitration shall be conducted and determined in Alameda County where the 
Leased Premises are situated.

        (d) Demand for Arbitration.-    A party demanding Arbitration 
hereunder shall make its demand in writing ("Demand Notice") within ten 
(10) days after the delivery of the last of the two appraisals presented 
by the Qualified Appraisers as specified above. A copy of the Demand 
Notice shall be sent to the Presiding Judge of the* highest trial court in 
such county for the state in which the Leased Premises are located. The 
Presiding Judge is hereinafter referred to as the "Appointer". The 
Appointer, acting in his personal, private capacity, shall appoint within 
ten (10) days thereafter a Qualified Appraiser. The Arbitrator shall be 
qualified to serve as an expert witness, over objection, to give opinion 
testimony addressed to the issue in a court of competent jurisdiction.

(e) Decision of the Arbitrator. As used herein, the term 
Arbitrator refers to a third Qualified Appraiser, selected by any of the 
methods heretofore set forth. The Arbitrator shall, within sixty (60) days 
after his appointment, state in writing his determination as to whether 
the fair market value stated by Lessor's Qualified Appraiser or the fair 
market value stated by Lessee's Qualified Appraiser, most closely 
approximates his own. the Arbitrator shall have the right to consult 
experts and competent authorities with factual information or evidence 
pertaining to a determination of fair market value, but any such 
consultation shall be made in the presence of both parties with full right 
to cross examine. The Arbitrator may not state his own opinion of fair 
market value, but is strictly limited to the selection of one of the two 
appraisals submitted by the other two Qualified Appraisers. The Arbitrator 
shall have no right to propose a middle ground or any modification of 
either of the proposed valuations, and shall have no power to modify this 
Lease. The valuation so chosen as most closely approximating that of the 
Arbitrator shall constitute his decision and shall be final and binding 
upon the parties absent fraud or gross error. The Arbitrator shall render 
a decision and award in writing, with counterpart copies to each party. 
Judgment may be entered thereon in any court of competent jurisdiction.

(f) Successor Arbitrator; Fees and Expenses. In the event of 
failure, refusal, or inability of the Arbitrator to act in a timely 
manner, a successor shall be appointed in the same manner as such 
Arbitrator was first chosen hereunder. The fees and expenses of the 
Arbitrator and for the administrative hearing fee, if any, shall be 
divided equally between the parties. Each party shall bear its own 
attorneys' fees and other expenses including fees of witnesses in 
presenting evidence, and the fees and cost of its own Qualified Appraiser.

48.7 Payment. The purchase price shall be payable in cash at closing 
over the above; (i) outstanding balance of assessment bonds encumbering 
the Leased Premises; and (ii) the outstanding principal balance of any 
loan encumbering the Leased Premises which is not subject to early 
prepayment. All assumption fees, the responsibility for qualifying for 
assumption, payment of prepayment penalties or other costs associated with 
financing which encumbers the Leased Premises at the time of closing shall 
be at the sole cost and expense of Lessee.

48.8 Time.  Time is of the essence of the Lease and this Option 
agreement, and the Option Exercise Periods set forth herein are agreed by 
the parties to have been negotiated subject to no variation whatsoever 
without the express written consent of both parties, it being further 
agreed and understood that the dates for exercise and closing were not 
intended to be approximate, but are intended to be exact.

        48.9  Assignment. This Option to purchase is not assignable except as 
provided in Subsection 9.3(c) and shall become null and void and of no 
further force or effect upon the assignment of this Lease or the sublease 
of more than thirty percent (30%) of the Building.

48.10 Memorandum Lessee shall have 'the right to record a short form 
memorandum of this Lease disclosing Lessee's option to purchase set forth 
herein, and Lessor shall execute and have acknowledged such short form 
lease memorandum, in the form attached hereto as Exhibit M.

  48.11 Quitclaim Deed. On the expiration of the last to occur of the 
Exercise Periods described in Section 48.2, without exercise of the option 
described in this Article 48 by the Lessee, Lessee shall, on demand of 
Lessor, execute a Quitclaim Deed in the form attached hereto as Exhibit 
"L", in recordable form, for recordation by the Lessor to expunge Lessee's 
rights under this Article 48.

ARTICLE 49.  PARKING

49.1 Lessor shall provide that Lessee shall have available to it not 
less than four (4) parking places per 1, 000 square feet of Usable Area.

ARTICLE 50.  MISCELLANEOUS PROVISIONS

50.1 Captions. The captions of this Lease are for convenience only 
and are not a part of this Lease and do not in any way limit or amplify 
the terms and provisions of this Lease.

50.2 Number and gender.. Whenever the singular number is used in this 
Lease and when required by the context, the same shall include the plural, 
the plural shall include the singular, and the masculine gender shall 
include the feminine and neuter genders, and the word "Person" shall 
include corporation, firm or association. If there be more than one 
Lessee, the obligations imposed under this Lease upon Lessee, shall be 
joint and several.

50.3 Modifications. This instrument contains all of the agreements, 
conditions and representations made between the parties to this Lease and 
may not be modified orally or in any other manner than by an agreement in 
writing signed by all of the parties to this Lease.

50.4 Payments. Except as otherwise expressly stated, each payment 
required to be made by Lessee shall be in addition to and not in 
substitution for other payments to be made by Lessee.

50.5 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.

50.6  No Offer. The preparation and submission of a draft of this 
Lease by either party to the other shall not constitute an offer nor shall 
either party be bound to any terms of this Lease or the entirety of the 
Lease itself until both parties have fully executed a final document and 
an original signature document has been received by both parties until 
such time as described in the previous sentence, either party is free to 
terminate negotiations with no obligation to the other.

50.7 Disputed Sums. Under the terms of this Lease numerous charges 
are and may be due from Lessee to Lessor including, without limitation, 
Common Area charges, real estate taxes, insurance reimbursement and other 
items of a similar nature including advances made by Lessor in respect of 
Lessee I s default at Lessor I s option. In event that at any time during 
the term there is a dispute between the parties as to the amount due f or 
any of such charges claimed by Less-or to be due, the amount demanded by 
Lessor shall be paid by Lessee until the resolution of the dispute between 
the parties or by litigation. Failure by Lessee to pay the disputed sums 
until resolution shall constitute a default under the terms of the Lease.

50.8  Light, Air and View. No diminution of light, air, or view by 
any structure which may hereafter be erected (whether or not by Lessor) 
shall entitle Lessee to any reduction of rent, result in any liability of 
Lessor to Lessee, or in any other way affect this Lease or Lessee's 
obligations hereunder.

50.9 Public Transportation Information. Lessee shall establish and 
maintain during the Term hereof a program to encourage maximum use of 
public transportation by personnel of Lessee employed on the Leased 
Premises, including without limitation the distribution to such employees 
of written materials explaining the convenience and availability of public 
transportation facilities adjacent or proximate to the Complex, staggering 
working hours of employees, and encouraging use of such facilities, all at 
Lessee's sole reasonable cost' and expense. Lessee shall comply with all 
requirements of any local transportation management ordinance.

50.10 Rules and Regulations. Lessee agrees to comply with all 
reasonable rules and regulations adopted and promulgated by Lessor and 
applicable to all tenants in the Complex for the lawful, orderly, clean, 
safe, aesthetic, quiet, and beneficial use, operation, maintenance, 
management, and enjoyment of the complex, provided Lessee has received 
prior written notice thereof.

50.11 Joint and Several Liability. Should Lessee consist of more than 
one person or entity, they shall be jointly and severally liable on this 
Lease.

50.12 First Offer - Adjacent Space. During the first sixty (60) Lease 
months of the Term hereof, Lessee shall have the right, subject to the 
specific conditions expressly provided herein to negotiate for additional 
space within the Complex provided:

(a) Lessee first notifies Lessor in writing that it wishes to 
lease additional space which may be no more than 10,0.00 square feet of 
Rentable Area; and

(b) That the building area to which the right specified in this 
Section 50.12 is applicable are those buildings which may be constructed 
upon any parcel within the Complex all or a portion of which lies within 
the areas described by cross-hatching on Exhibit "M" attached hereto and 
made a part hereof by reference and this right shall apply to no other 
area of the Complex; and

(c) That the rental which shall form the basis of the 
negotiation between the Lessor and the Lessee with regard to such 
additional space shall be ninety percent (90%) of Lessor's good faith 
judgment as to the fair market value thereof, in Lessors sole good faith 
discretion; and

(d) That Lessor shall have no obligation to negotiate with 
Lessee for any space for which it is currently in lease discussions with 
any prospective tenant provided, however, that once such discussions are 
conclusively terminated, and Lessee has indicated an interest therein, 
Lessor shall make that space available as "First Offer Space" under the 
provisions of this section 50.12; and

(e)     Lessor's obligation extends to a good faith negotiation 
with Lessee and neither party is bound to proceed to execute a lease which 
it deems to be unsatisfactory as to the First Offer Space: and

(f) The rights under this Section 50.12 shall expire and be of 
no further force and affect on the expiration of the sixtieth (60th) 
Lease, month following commencement of the Term hereof.

50.13 Reimbursable Expenditures. Lessee shall not be obligated for a 
pro rata share of any expenditures due to be paid by it hereunder to the 
extent of the unreasonableness of such expenditure.

50.14  Lien Waivers. Subject to review and satisfaction of counsel 
for Lessor, Lessor shall execute any reasonable Lien Waiver forms 
submitted to it by Lessee releasing any interest Lessor may have in 
Lessor's personal property and or alterations that Lessee may remove 
pursuant to Article 20 hereof, in favor of a third party vendor, lender, 
or Lessor, provided that such reasonable documentary alterations as Lessor 
or Lessor's counsel requests to protect the interest of Lessor in the 
Leased Premises are adequately provided. Lessor shall execute such 
documentation within ten (10) days of receipt of a document in form 
agreeable to Lessor's counsel.

50.15 Consents. Wherever the consent or approval of either party is 
required under this Lease, such consent or approval shall not be 
unreasonably withheld or delayed, unless otherwise specified in this 
Lease.

50.16 Lessor's Representations. Notwithstanding any other provision 
hereof, Lessor hereby warrants that as of the Commencement Date the Leased 
Premises are in good condition and repair and built in a good and 
workmanlike manner in accordance with the approved Final Plans. Lessor 
also warrants that all building equipment is in good operating order as of 
the Commencement Date and that the Leased Premises and the Common 
Maintenance Areas are in compliance with all applicable laws and 
governmental regulations as of the Commencement Date, but makes no 
warranty as to conditions or compliance with laws and regulations 
thereafter.

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

LESSOR                                          LESSEE
KAISER DEVELOPMENT COMPANY              KELLEY-CLARKE, INC.

By: /s/ Edward T Pike, III             By: /s/ John F. Blazin, VP


<PAGE>


                             LEASE AMENDMENT

        This Lease Amendment ("Amendment") is made this 26th day of 
February, 1990 by and between BEDFORD DEVELOPMENT COMPANY ("Lessor") and 
KELLEY-CLARKE, INC. ("Lessee").

                                 RECITALS

        A.      Lessor's predecessor in interest, Kaiser Development Company, 
and Lessee entered into that certain Lease dated September 1, 1988 (the 
"Lease") for premises located in Ardenwood Corporate Commons, Fremont, 
California ("Leased Premises") as more fully described in the Lease.

        B.      Lessor is currently constructing the Leased Premises.

        C.      The parties wish to amend the Lease to reflect, among other 
things, additional construction to be required of Lessor.

                              CONSIDERATION

        In consideration of the covenants and agreements herein contained, 
and for other good and valuable consideration, the receipt and sufficiency 
of which is hereby acknowledged, the parties agree as follows:

                                    TERMS

        1.      Lessor agrees to perform and install the following additional 
improvements which were not part of Lessor's construction obligations 
under the Lease and which shall not be deemed part of the Total Project 
Costs, as that term is defined in the Lease:

Construction of a commercial kitchen, an employee kitchen, a walk-in 
freezer, a walk-in cooler, pallet racks, and an outdoor enclosure 
for the freezer and cooler ("Special Improvements")

Lessor shall pay all costs associated with the design, engineering and 
installation of the Special Improvements which shall be more particularly 
described in the "Plans" defined below.

        2.      The parties have agreed to Plans ("Plans") adequately 
describing the Special Improvements.

        3.      Lessor shall pay for the first one hundred sixty-two thousand 
six hundred dollars ($162,600) of such Special Improvement costs. If the 
costs exceed one hundred sixty-two thousand six hundred dollars 
($162,600), Lessee shall have the option of reducing the scope of work of 
the Special Improvements to reduce the costs thereof, or of paying in cash 
to Lessor prior to construction of such Special Improvements the costs 
thereof exceeding one hundred sixty-two thousand six hundred dollars 
($162,600). All delays in construction caused by the engineering, design 
or installation of the Special Inprovements and the review process 
required thereby shall be "Lessee Delays" as defined in the Lease.

        4.      Minimum Monthly Rent, calculated in accordance with Section 
6.2 of the Lease shall be increased by the sum of two thousand two hundred 
forty dollars ($2,240).

        5.      Notwithstanding the provision of the Lease, Lessee shall be 
required to remove all Special Improvements from the Leased Premises at 
the expiration or termination of the Lease unless Lessor agrees to the 
contrary.

        6.      Notwithstanding any provision of the Lease to the contrary, 
Lessee shall maintain and repair (and replace as necessary) at its sole 
cost and expense all Special Improvements.

        7.      Sections 48.2(a) and 48.2(c) of the Lease are hereby deleted.

        8.      Section 49.1 of the Lease is hereby deleted and replaced with 
the following:

 "49.1  Lessor shall provide that Lessee shall have available to 
it not less than four (4) parking places per 1,000 square feet of 
Usable Area, but in no event is Lessor required to provide for 
Lessee's use more than 156 parking spaces."

        9.      Exhibit "B" of the Lease is hereby deleted and replaced with 
Exhibit "B" attached hereto which shall henceforth be deemed the Exhibit 
"B" to the Lease.

IN WITNESS WHEREOF, the parties have executed this Amendment.


LESSOR                                      LESSEE
BEDFORD DEVELOPMENT COMPANY                 KELLEY-CLARKE, INC.


By: __________________________              By: _________________________
                                                 William C. Pratt,
Its: Area Manager                                President

                                            By: __________________________
                                                 John F. Blazin,
                                                 Vice President


<PAGE>


                          SECOND LEASE AMENDMENT


        This Second Lease Amendment ("Amendment") is made this 1st day of 
May, 1990 by and between BEDFORD DEVELOPMENT COMPANY ("Lessor") and 
KELLEY-CLARKE, INC. ("Lessee").

                                RECITALS

WHEREAS,

        A.      Lessor's predecessor in interest, Kaiser Development Company, 
and Lessee entered into that certain Lease dated September 1, 1988 (the 
"Lease") for premises located in Ardenwood Corporate Commons, Fremont, 
California ("Leased Premises") as more fully described in the Lease.

        B.      The Lease vas modified by Lease Amendment dated February 26, 
1990.

        C.      Lessor is currently constructing the Leased Premises.

        D.      The parties wish to further amend the Lease to reflect, among 
other things, additional construction to be required of Lessor.

                               CONSIDERATION

        In consideration of the covenants and agreements herein contained, 
and for other good and valuable consideration, the receipt and sufficiency 
of which is hereby acknowledged, the parties agree as follows:

                                    TERMS

        1.      Lessor agrees to perform and install the following additional 
improvements which were not part of Lessor's construction obligations 
under the Lease and which shall not be deemed part of the Total Project 
Costs, as that term is defined in the Lease:

Construction of a computer room with raised floor and ramp, together 
with necessary plumbing, hvac, electrical and fire suppression 
systems ("Additional Improvements").

Lessor shall pay all costs ("Costs") associated with the design, 
engineering and installation of the Additional Improvements (including 
permit, application and other processing fees, and legal fees associated 
with this Second Amendment) which shall be more particularly described in 
the "Plans" defined below.

        2.      The Parties have agreed to Plans ("Plans") adequately 
describing the Additional Improvements.

        3.      All delays in construction caused by the engineering, design 
or installation of the Additional Improvements and the review process 
required thereby shall be "Lessee Delays" as defined in the Lease.

        4.      Minimum Monthly Rent, as calculated in accordance with Section 
6.2 of the Lease and as adjusted per the Lease Amendment shall be 
increased by the sum of one thousand three hundred eighty dollars and 
seventy-two cents ($1,380.72) per month.

        5.      Notwithstanding the provision of the Lease, Lessee shall be 
required to remove all Additional Improvements from the Leased Premises at 
the expiration or termination of the Lease unless Lessor agrees to the 
contrary.

        6.      Notwithstanding any provision of the Lease to the contrary, 
Lessee maintain and repair (and replace as necessary) at its sole cost and 
expense all Additional Improvements.

        7.      Lessee will accept the Additional Improvements as constructed 
in accordance with the Plans and shall hold Lessor harmless from all 
liabilities with respect thereto from and after the date of delivery of 
the Leased Premises to Lessee.

IN WITNESS WHEREOF, the Parties have executed this Amendment.

LESSOR                                      LESSEE
BEDFORD DEVELOPMENT COMPANY                 KELLEY-CLARKE, INC.


By: __________________________              By: _________________________
                                                 William C. Pratt,
Its: Area Manager                                President

                                            By: __________________________
                                                 John F. Blazin,
                                                 Vice President


<PAGE>



                         THIRD AMENDMENT TO LEASE

        This Third Amendment ("Third Amendment") in made this 5th day of 
May, 1992 by and between BEDFORD DEVELOPMENT COMPANY ("Lessor") and 
KELLEY-CLARKE, INC. ("Lessee").

                                RECITALS

        A.      Lesser and Lessee entered into that certain lease dated 
September 1, 1988 (the "Original Lease"), which was amended on February 
26, 1990 (the "First Amendment") and on May 1, 1990, (the "Second 
Amendment"), for certain property generally situated at 6300 Dumbarton 
Circle, Fremont, California, which collectively are hereinafter called the 
"Lease". The Lease affects Premises which are more particularly 
described in the Lease (the "Leased Premises");

        B.      The parties hereto wish by this Amendment to amend the Lease.

                              CONSIDERATION

        Therefore, in consideration of the agreements herein contained, and 
for other good and valuable consideration, the receipt and sufficiency of 
which is hereby acknowledged, the Parties agree as follows:

        1.      Unless otherwise stated any capitalized term is hereby given 
the same meaning as set forth in the Lease.

        2.      Except as otherwise stated in this Amendment, the terms of the 
Lease remain in full force and effect and the Lease, as hereby amended 
shall bind, and inure to the benefit of, the successors of the parties 
hereto.

        3.      MINIMUM MONTHLY RENT. Notwithstanding any provision of the 
Lease to the contrary, the Minimum Monthly Rent as set forth in Section 
1.5 of the Lease shall be amended to read as follows:

        Months 1-60             $40,951.29 per month

        Months 61-121           $47,908.92 per month

        4.      All other terms and conditions of the Lease are hereby 
ratified and reconfirmed.

IN WITNESS WHEREOF, the parties have executed this Amendment.


LESSOR                                      LESSEE
BEDFORD DEVELOPMENT COMPANY                 KELLEY-CLARKE, INC.


By: __________________________              By: _________________________
       J. Randell Moore                            John F. Blazin,
       Vice President                              President/CEO
Date: 6/9/92                                Date: May 18, 1992

                                            By: __________________________



<PAGE>


                          FOURTH AMENDMENT TO LEASE

This Fourth Amendment ("Fourth Amendment") is made this 19th day of 
April, 1995 ("Effective Date") by and between KRDC, Inc., a California 
Corporation, formerly Bedford Development Company and also Kaiser 
Development Company ("Lessor"), and Kelley-Clarke, Inc., a California 
corporation ("Lessee").

                                 RECITALS

WHEREAS,

        A.      Lessor and Lessee entered. into that certain Lease dated 
September 1, 1988 (the "Original Lease") which was amended on February 
26, 1990 (the "First Amendment") ; on May 1, 1990, (the "Second 
Amendment") ; and on May 5, 1992, (the "Third Amendment") for certain 
property generally situated at 6300 Dumbarton Circle, Fremont, California, 
(the Original Lease, as amended, is referred to herein as the "Lease"). 
The Lease covers the premises which are more particularly described 
therein (the "Leased Premises");

        B.      The parties hereto wish by this Amendment to amend the Lease.

                                   CONSIDERATION

        Therefore, in consideration of the agreements herein contained, and 
for other good and valuable consideration, the receipt and sufficiency of 
which is hereby acknowledged, the parties agree as follows:

TERMS

        1.      Unless otherwise stated, any capitalized term is hereby given 
the same meaning as set forth in the Lease.

        2.      Except as otherwise stated in this Amendment, the terms of the 
Lease remain in full force and effect and the Lease, as hereby amended 
shall bind, and inure to the benefit of, the successors of the parties 
hereto.

        3.      Premises. Effective October 25, 1994, Section 1. 3 (C) of the 
Lease is amended by deleting "2.399 acres" and substituting in place 
thereof "approximately 2.64 acres" to reflect the increased gross square 
footage of land area in the Complex as depicted on Parcel Map No. 6773 
(being a subdivision of Parcel 1 through 4, inclusive of Parcel Map 4483, 
filed for record in Book 152 of Maps at Pages 78-82, Alameda County 
Records, City of Fremont, County of Alameda, State of California). The 
detailed legal description of the Leased Premises is forthcoming and shall 
be attached hereto upon final completion. A copy of Parcel Map No. 6773 is 
attached hereto for reference as Exhibit "A".

        4.      Term.   The term shall be extended by an additional sixty (60) 
months, commencing July 1, 2000 and expiring June 30, 2005.

        5.      Option to Extend. The provisions pertaining to the Options to 
Extend (two at five years each) as specified in Sections 1.4 (B), 1.5(C) 
and 4.3 of the Lease shall be deleted in their entirety and the provisions 
attached hereto as Exhibit "B" shall be substituted in their place.

        6. Minimum Monthly Rent. The Minimum Monthly Rent as set forth in 
Section 1.5 of the Lease shall be amended to read as follows:

        07/01/1995 - 06/30/2000 $ 44,572.00 per month
        07/01/2000 - 06/30/2005 $ 51,920.00 per month

        Section 1. 5 (C) of the Lease is hereby deleted and of no further 
force and effect.

        7.      Initial Pro Rata %. Due to the increase in the gross square 
footage of land area in the Complex as described in Paragraph 3 of this 
Amendment, effective January 1, 1995, Lessee's Initial Pro Rata % as set 
forth in Section 1.8 of the Lease shall be revised from "1.3%" to 
"0.9136%" (approximately 2.64 acres/approximately 288.96 total acres).

        8.      0ption to Purchase. The provisions of Article 48 .(Option to 
Purchase) of the Lease are hereby deleted in their entirety and shall 
hereafter be of no further force and effect.

        9.      Parking. The provisions in Section 49.1 of the Lease are 
hereby amended as follows:

        Notwithstanding anything to the contrary in the Lease, Lessor shall 
provide within six (6) months from execution of this Amendment, at 
Lessor's expense: i) ten (10) additional parking stalls; and ii) thirty 
one (31) relocated stalls, as shown on the attached Exhibit "C" (Parking 
Plan). The Exhibit "C" is intended as a preliminary parking plan and is 
subject to all necessary governmental approvals and compliance with all 
applicable laws, ordinances and regulations.

        10.     First Offer - Adjacent Space. The provisions in Section 50.12 
of the Lease shall hereinafter be deleted and of no further force and 
effect.

        11.     Right of First Offer to Purchase.

              (a)     Grant. Subject to the terms of this Section 11, Lessor 
grants to Lessee a right of first offer to purchase the Leased Premises 
(the "Purchase Right").

              (b)      Term. The term of the Purchase Right ("Purchase Right 
Term") shall commence on the earlier to occur of (i) one (1) year after 
the Effective Date, or (ii) one (1) day after the date on which Lessor 
conveys fee title to the Leased Premises to a bona fide third party, and 
shall terminate on the expiration or earlier termination of the initial 
Lease term.

              (c)     Covenants of Lessor. Subject to the conditions precedent 
established by Section 11(e) below, if, at any time during Purchase Right 
Term, Lessor decides to offer the Leased Premises for sale to a bona fide 
third party, Lessor shall first provide Lessee with a written notice 
("Sale Notice") detailing the purchase price of the Leased Premises, 
payment terms, conditions of title, costs of escrow and other relevant 
terms.

              (d)     Exercise of Lessee's Purchase Right.

                      (i) Within five (5) business days of receipt of a Sale 
Notice from Lessor, Lessee shall either (a) provide written notice 
("Purchase Notice") to Lessor of Lessee's election to purchase the 
Leased Premises on the terms stated in the Sale Notice and deliver to 
Lessor a refundable deposit in the amount of S50,000 ("Deposit") to be 
used toward the purchase price for the Leased Premises, or (b) provide 
written notice ("Counteroffer Notice") to Lessor of Lessee's election 
not to purchase the Leased Premises, but stating the purchase price 
("Counteroffer") at which Lessee would be willing to purchase the Leased 
Premises. If Lessee shall fail to provide to Lessor either a Purchase 
Notice or a Counteroffer Notice, Lessee shall be deemed to have waived its 
right to purchase the Leased Premises (under any terms) for the twelve 
(12) month period immediately following the applicable Sale Notice.

                      (ii) Within fifteen (15) business days of Lessee's 
delivery to Lessor of the Purchase Notice, Lessor and Lessee shall execute 
an agreement of purchase and sale satisfactory to Lessor (which agreement 
shall contain the terms specified in the Sale Notice). If Lessor and 
Lessee shall fail to execute an agreement of purchase and sale within such 
time, Lessee shall be deemed to have waived its right to purchase the 
Leased Promises for the twelve (12) month period immediately following the 
Sale Notice, as long as the terms in the agreement of purchase and sale to 
a bona fide third party do not materially differ from the terms of the 
agreement of purchase and sale presented to Lessee by Lessor.

                      (iii) If Lessee shall deliver to Lessor a Counteroffer 
Notice, Lessor may, at any time during the twelve (12) month period 
following the date of the Sale Notice, either (a) notify Lessee in writing 
("Counteroffer Acceptance Notice") of Lessor's acceptance of the 
Counteroffer, or (b) proceed with the sale of the Leased Premises to a 
bona fide third party provided the purchase price for such sale is in 
excess of the Counteroffer and the terms of sale are otherwise generally 
in accordance with the terms stated in the Sale Notice. If Lessor elects 
to accept Lessee's Counteroffer, Lessee shall deliver the Deposit to 
Lessor within five (5) business days of receipt of the Counteroffer 
Acceptance Notice and Lessor and Lessee shall, within fifteen (15) 
business days following delivery of the Deposit, execute an agreement of 
purchase and sale satisfactory to Lessor (which agreement shall contain 
the terms specified in the Sale Notice except that the purchase price 
shall be the amount of the Counteroffer). If Lessor and Lessee shall fail 
to execute an agreement of purchase and sale within such time, Lessee 
shall be deemed to have waived its right to purchase the Leased Premises 
for the twelve (12) month period immediately following the Counteroffer 
Acceptance Notice, as long as the terms in the agreement of purchase and 
sale to a bona fide third party do not materially differ from the terms of 
the agreement of purchase and sale presented to Lessee by Lessor.

              (e)     Conditions to Purchase Right. Notwithstanding anything 
to the contrary in this Section 11, Lessor shall have no obligation to 
provide Lessee with a Sale Notice, and Lessee shall have no right to 
exercise Lessee's Purchase Right, if Lessee is in default either: (i) at 
the time Lessor seeks to sell the Leased Premises, or (ii) upon the date 
Lessee seeks to close escrow on the sale of the Leased Premises. The 
Purchase Right shall be personal to Lessee and shall not be transferable 
with any assignment of this Lease or subletting of the Premises.

              (f)     Terms for Purchase Right. In the event that Lessee 
exercises Lessee's Purchase Right, Lessee's purchase of the Leased 
Premises shall be on all of the same terms and conditions described in the 
Sale Notice.

              (g)     Continuing Right. Lessee's failure to exercise its 
Purchase Right shall not be deemed a waiver or relinquishment of such 
right if Lessor fails to convey the Leased Premises to a bona fide third 
party within one (1) year of the date of the Sale Notice.

              (h)     Exceptions to Offer. Notwithstanding anything to the 
contrary in this Section 11, Lessor shall not be obligated to provide 
Lessee with a Sale Notice, and the terms of this Section 11 shall not 
apply, in the event of: (i) a transfer of the Premises to an affiliate of 
Lessor (ii) a portfolio sale, or (iii) a foreclosure sale.

              (i)     Subordinate Nature. Lessee's Purchase Right shall be 
subject and subordinate to the lien of any mortgage, deed of trust or 
other lien resulting from any other method of financing or refinancing, 
now or hereafter in force against the Building or Leased Promises, and to 
all advances made or hereafter to be made upon the security thereof.

              (j)     Closing Costs. Lessor and Lessee shall each pay the fees 
of their respective attorneys and consultants in connection with the sale 
of the Leased Promises to Lessee. All closing costs incurred in connection 
with that sale shall be apportioned in accordance with local custom.

              (k)     Successors and Assigns. Lessee's Purchase Right shall be 
binding on the successors and assigns of Lessor.

        All other terms and conditions of the Lease are hereby ratified and 
reconfirmed.

        IN WITNESS WHEREOF, the parties have executed this Amendment.


LESSOR:                                  LESSEE:

KRDC, Inc., a California corporation     Kelley-Clarke, Inc., a California
                                         corporation
By: Kemper Real Estate Management
Company, a Delaware corporation, its
duly authorized agent

By: ________________________________     By: ________________________________
    Lisa A. Berlin                           C. William Frankland 
    its duly authorized agent                its: Vice-Chairman,
                                             Chief Financial Officer


Date: ______________________________     Date: 4/21/95