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                                  DHL BUILDING
                                 13429 S.E. 30TH
                              BELLEVUE, WASHINGTON

                           TENANT: OPTIVA CORPORATION

                              LANDLORD: I. BITNERS


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                                 D.H.L. BUILDING
                                INDUSTRIAL LEASE

1.       BASIC LEASE TERMS

         a.       DATE OF LEASE:  July 11, 1997

         b.       TENANT: Optiva Corporation
                  Trade Name: Optiva
                  Address (Leased Premises): 13429 S.E. 30th
                                             Bellevue, WA
                  Building/Unit:
                  Address (For Notices):  OPTIVA CORPORATION
                  ATTN:  FACILITIES MANAGER
                  13222 S.E. 30th Street, Bellevue, WA  98005


         c.       LANDLORD: I. Bitners
                  Address (For Notices): 11711 S.E. 8th St., #310
                                         Bellevue, WA  98005

         d.       TENANT'S USE OF PREMISES: Warehouse

         e.       PREMISES AREA: 10,000 Rentable Square Feet

         f.       PROJECT AREA: 28,000 Square Feet

         g.       TERM OF LEASE: Commencement 7/23/97 Expiration July 31, 1999
                  (24 month lease after which the lease will be month to month
                  with thirty (30) days notice to vacate

         h.       BASE MONTHLY RENT: $5,300.000 NNN

         i.       RENT ADJUSTMENT (Initial One):

                  Landlord
                  Tenant
                                 (1) Cost of living. If this provision is
                                 initialed, the cost of living provisions of
                                 section 4.b(1) apply. NONE

                  Landlord
                  Tenant

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                                 (2 Step Increase. If this provision is
                                 initialed, the step adjustment provisions of
                                 section 4.b(2) apply as follows: N/A

         k.       PREPAID RENT:  $____________

         l.       DEPOSIT: $5,300.00 plus $900.000 = $6,200.000 total deposit
                  $6,200.000 (1st month's rent)
                  NON-REFUNDABLE CLEANING FEE: $0

         m.       BROKER(S): Sven Goldmaris  Payable to:  I.I. BITNERS
                                             9008 SE 59th St.
                                             Mercer Island, WA 98040
                                             Tel: (206) 644-2425 (Office)
                                                  (206) 232-7478 (Home)

         n.       GUARANTOR(S): None

         o.       ADDITIONAL SECTIONS
                  Additional sections of this lease numbered 29 through 0 are
                  attached hereto and made a part hereof. If non, so state in
                  the following space: 0.

         p.       ADDITIONAL EXHIBITS
                  Additional exhibits lettered D through 0 are attached hereto 
                  and made a part hereof.  If none, so state in the following 
                  space: 0.


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2.       PREMISES

         Landlord leases to Tenant the premises [_________________________]
project described on Exhibit B (the "Project"). By entry on the Premises, Tenant
acknowledges that it has examined the Premises and accepts the Premises in their
present condition, subject to any additional work Landlord has agreed to do.
Tenant represents and warrants that it agrees with the square footage specified
for the Premises in Section 1 and will not hereafter challenge such
determination and agreement.

3.       TERM

         The term of this lease is for the period set forth in Section 1,
commencing on the date in Section 1. If Landlord, for any reason, cannot deliver
possession of the Premises to Tenant upon commencement of the term, this Lease
shall not be void or voidable, nor shall Landlord be liable to Tenant for any
loss or damage resulting from such delay. In that event, however, there shall be
a rent abatement covering the period between the commencement of the term and
the time when Landlord delivers possession to Tenant, and all other terms and
conditions of this Lease shall remain in full force and effect, provided,
however, that if Landlord cannot deliver possession of the Premises to Tenant,
this Lease shall be void. If a delay in possession is caused by Tenant's failure
to perform any obligation in accordance with this Lease, the term shall commence
as set forth in Section 1 and there shall be no reduction of rent between the
commencement of the term and the time Tenant takes possession.

4.       RENT

         a.       BASE RENT

         Tenant shall pay Landlord monthly base rent in the initial amount in
Section 1 which shall be payable monthly in advance on the first day of each and
every calendar month ("Base Monthly Rent") provided, however, the first month's
rent is due and payable upon execution of this Lease. If the term of this Lease
contains any rental abatement period, Tenant hereby agrees that if Tenant
breaches the Lease and/or abandons the Premises before the end of the Lease
term, or if Tenant's right to possession is terminated by Landlord because of
Tenant's breach of the Lease, Landlord shall, at its option, (1) void the rental
abatement period; and (2) recover from Tenant, in addition to any damages due
Landlord under the terms and conditions of the Lease, rent prorated for the
entirety of the rental abatement period at a rental rate equivalent to two (2)
times the Base Monthly rent.


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         For purposes of Section 467 of the Internal Revenue Code, the parties
to this Lease hereby agree to allocate the stated rents, provided herein, to the
periods which correspond to the actual rent payments as provided under the terms
and conditions of this agreement.

         b.       EXPENSES

         The purpose of this Section 4.c is to ensure that Tenant bears a share
of all Expenses related to the use, maintenance, ownership, repair or
replacement, and insurance of the Project. Accordingly, beginning on the date
Tenant takes possession of the Premises, Tenant shall pay to Landlord, Tenant's
Share (as defined below) of Expenses related to the Protect.

         1) EXPENSES DEFINED. The term "Expenses" shall mean the following
costs:

               (a) All supplies, materials, labor, equipment, and utilities used
in or related to the operation and maintenance of the Project;

               (b) All maintenance, management, janitorial, insurance, and
service agreement costs related to the Project;

               (c) All maintenance, replacement and repair costs relating to the
areas within or around the Project, including, without limitation, air
conditioning systems, sidewalks, landscaping, service areas, driveways, parking
areas (including resurfacing and restriping parking areas), walkways, building
exteriors (including painting), signs and directories, repairing and replacing
roofs, walls, etc. These costs may be included based on actual expenditures;

               (d) Amortization (along with reasonable financing charges) of
capital improvements made to the Project which may be required by any government
authority or which will improve the operating efficiency of the Project
(provided, however, that the amount of such amortization for improvements not
mandated by government authority shall not exceed in any year the amount of
costs reasonably determined by Landlord to have been saved by the expenditure
either through the reduction or minimization of increases which would have
otherwise occurred).

               (e) Real Property Taxes including all taxes, assessments (general
and special) and other impositions or charges which may be taxed, charged,
levied, assessed or imposed upon all or any portion of or in relation to the
Project or any portion thereof, any leasehold estate in the Premises or measured
by rent from the Premises, including any increase caused by the transfer, sale
or encumbrance of the 

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Project or any portion thereof. Real Property Taxes shall also include any form
of assessment, levy, penalty, charge or tax (other than estate, inheritance, net
income, or franchise taxes) imposed by any authority having a direct or indirect
power to tax or charge, including, without limitation, any city, county, state
federal or any improvement or other district, whether such tax is (1) determined
by the value of the Project or the rent or other sums payable under this Lease;
(2) upon or with respect to any legal or equitable interest of Landlord in the
Project or any part thereof; (3) upon this transaction or any document to which
Tenant is a party creating a transfer in any interest in the Project; (4) in
lieu of or as a direct substitute in whole or in part of or in addition to any
real property taxes on the Project; (5) based on any parking spaces or parking
facilities provided in the Project; or (6) in consideration for services, such
as police protection, fire protection, street, sidewalk and roadway maintenance,
refuse removal or older services that may be provided by any governmental or
quasigovernmental agency from time to time which were formerly provided without
charge or with less charge to property owners or occupants.

         2) ANNUAL ESTIMATE OF EXPENSES; TENANT'S SHARE. When Tenant takes
possession of the Premises, Landlord shall estimate Tenant's share of Expenses
for the remainder of the calendar year, and at the commencement of each calendar
year thereafter, Landlord shall estimate Tenant's Share or Expenses for the
coming year by multiplying the estimated annual per square foot Project Expenses
by the Premises Area.

         3) MONTHLY PAYMENT OF EXPENSES. Tenant shall pay to Landlord, monthly
in advance, as additional rent, one-twelfth (1/12) of the Annual Estimate of
Expenses beginning on the date Tenant takes possession of the Premises. As soon
as practical following each calendar year, Landlord shall prepare an accounting
of actual Expenses incurred during the prior calendar year and such accounting
shall reflect Tenant's Share of Expenses. If the additional rent paid by Tenant
under this Section 4.c.3 during the preceding calendar year was less than the
actual amount of Tenant's Share of Expenses, Landlord shall so notify Tenant and
Tenant shall pay such amount to Landlord within 30 days of receipt of such
notice. Such amount shall be deemed to have accrued during the prior calendar
year and shall be due and payable from Tenant even though the term of this Lease
has expired or this Lease has been terminated prior to Tenant's receipt of this
notice. Tenant shall have thirty (30) days from receipt of such notice to
contest the amount due; failure to so notify Landlord shall represent final
determination of Tenant's Share of expenses. If Tenant's payments were greater
than the actual amount, then such overpayment shall be credited by Landlord to
all present rent due under this Section 4.c.3.


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         4) RENT WITHOUT OFFSET AND LATE CHARGE. All rent shall be paid by
Tenant to Landlord monthly in advance on the first day of every calendar month,
at the address shown in Section 1, or such other place as landlord may designate
in writing from time to time. All rent shall be paid without prior demand or
notice and without any deduction or offset whatsoever. All rent shall be paid in
lawful currency of the United States of America. Proration of rent due for any
partial month shall be calculated by dividing the number of days in the month
for which rent is due by the actual number of days in that month and multiplying
by the applicable monthly rate. Tenant acknowledges that late payment by Tenant
to Landlord of any rent or other sums due under this Lease will cause Landlord
to incur costs not contemplated by this Lease, the exact amount of such cost
being extremely difficult and impracticable to ascertain. Such costs include,
without limitation, processing and accounting charges and late charges that may
be imposed on Landlord by the terms of any encumbrance or note secured by the
Premises. Therefore, if any rent or other sum due from Tenant is not received
when due, Tenant shall pay to Landlord an additional sum equal to 10% of such
overdue payment. Landlord and Tenant hereby agree that such late charge
represents a fair and reasonable estimate of the costs that Landlord will incur
by reason of any such late payment and that the late charge is in addition to
any and all remedies available to the Landlord and that the assessment and/or
collection of the late charge shall not be deemed a waiver of any other default.
Additionally, all such delinquent rent or other sums, plus this late charge,
shall bear interest at the rate of 18 percent per annum. If the interest rate
specified in this Lease is higher than the rate permitted by law, the interest
rate is hereby decreased to the maximum legal interest rate permitted by law.
Any payments of any kind returned for insufficient funds will be subject to an
additional handling charge of $25.00, and thereafter, Landlord may require
Tenant to pay all future payments of rent or other sums due by money order or
cashier's check.

7.       USE OF PREMISES AND PROJECT FACILITIES

         Tenant shall use the Premises solely for the purposes set forth in
Section 1 and for no other purpose without obtaining the prior written consent
of Landlord. Tenant acknowledges that neither Landlord nor any agent of Landlord
has made any representation or warranty with respect to the Premises or with
respect to the suitability of the Premises or the Project for the conduct of
Tenant's business, nor has Landlord agreed to undertake any modification,
alteration or improvement to the Premises or the Project, except as provided in
writing in this Lease. Tenant acknowledges that Landlord may from time to time,
at its sole discretion, make such modifications, alterations, deletions or
improvements to the Project as Landlord may deem necessary or desirable, without
compensation or notice to Tenant. Tenant shall promptly comply with all laws,
ordinances, orders and regulations affecting the 

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Premises and the Project, including, without limitation, any rules and
regulations that may be attached to this Lease and to any reasonable
modifications to these rules and regulations as Landlord may adopt from time to
time. Tenant shall not do or permit anything to be done in or about the Premises
or bring or keep anything in the Premises that will in any way increase the
premiums paid by Landlord on its insurance related to the Project or which will
in any way increase the premiums for fire or casualty insurance carried by other
tenants in the Project. Tenant will not perform any act or carry on any
practices that may injure the Premises or the Project; that may be a nuisance or
menace to other tenants in the Project; or that shall in any way interfere with
the quiet enjoyment of such other tenants. Tenant shall not use the Premises for
sleeping, washing clothes, cooking or the preparation, manufacture or mixing of
anything that might emit any objectionable odor, noises, vibrations or lights
onto such other tenants. If sound insulation is required to muffle noise
produced by Tenant on the Premises, Tenant at its own cost shall provide all
necessary insulation. Tenant shall not do anything on the premises which will
overload any existing parking or service to the Premises. Pets and/or animals of
any type shall not be kept on the Premises.

8.       EMISSIONS; STORAGE, USE AND DISPOSAL OF WASTE

         a. EMISSIONS

         Tenant shall not:

                  1) Permit any vehicle on the premises to emit exhaust which is
in violation of any governmental law, rule, regulation or requirement;

                  2) Discharge, emit or permit to be discharged or emitted, any
liquid, solid or gaseous matter, or any combination thereof, into the
atmosphere, the ground or any body of water which matter, as reasonable
determined by Lessor or any governmental entity, does, or may, pollute or
contaminate the same, or is, or may become, radioactive or does, or may,
adversely affect the (a) health or safety of persons, wherever located, whether
on the Premises or anywhere else, (b) condition, use or enjoyment of the
Premises or any other real or personal property, whether on the Premises or
anywhere else, or (c) Premises or any of the Improvements thereto or thereon
Including buildings, foundations, pipes, utility lines, landscaping or parking
areas;

                  3) Produce, or permit to be produced, any intense glare, light
or heat except within an enclosed or screened area and then only in such manner
that the glare, light or heat shall not be discernible from outside the
Premises;

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                  4) Create, or permit to be created, any sound pressure level
which will interfere with the quiet enjoyment of any real property outside the
Premises, or which will create a nuisance or violate any governmental law, rule,
regulation or requirement.

                  5) Create, or permit to be created, any ground vibration that
is discernible outside the Premises.

                  6) Transmit, receive or permit to be transmitted or received,
any electromagnetic, microwave or other radiation which is harmful or hazardous
to any person or property in, or about the Premises, or anywhere else.

         b.       STORAGE AND USE

                  1) Storage. Subject to the uses permitted and prohibited to
Tenant under this lease, Tenant shall store in appropriate leak proof containers
all solid, liquid or gaseous matter, or any combination thereof, which matter,
if discharged or emitted into the atmosphere, the ground or any body of water,
does or may (a) pollute or contaminate the same, or (b) adversely affect the (i)
health or safety of persons, whether on the Premises or anywhere else, (ii)
condition, use or enjoyment of the Premises or any real or personal property,
whether on the Premises or anywhere else, or (iii) Premises or any of the
improvements thereto or thereon.

                  2) Use. In addition, without Landlord's prior written consent,
Tenant shall not use, store or permit to remain on the Premises any solid,
liquid or gaseous matter which is, or may become radioactive. If Landlord does
give its consent, Tenant shall store the materials in such a manner that no
radioactivity will be detectable outside a designated storage area and Tenant
shall use the materials in such a manner that (a) no real or personal property
outside the designated storage area shall become contaminated thereby or (b)
there are and shall be no adverse effects on the (i) health or safety of
persons, whether on the Premises or anywhere else, (ii) condition, use or
enjoyment of the Premises or any real or personal properly thereon or therein,
or (iii) Premises or any of the Improvements thereto or thereon.

         c.       DISPOSAL OF WASTE

                  1) Refuse Disposal. Tenant shall not keep any trash, garbage,
waste or other refuse on the Premises except in sanitary containers and shall
regularly and frequently remove same from the Premises. Tenant shall keep all
incinerators, containers or other equipment used for storage or disposal of such
materials in a clean and sanitary condition.

                                      -8-
<PAGE>   10

                  2) Sewage Disposal. Tenant shall properly dispose of all
sanitary sewage and shall not use the sewage disposal system (a) for the
disposal of anything except sanitary sewage or (b) excess of the lesser amount
(i) reasonably contemplated by the uses permitted under this Lease or (ii)
permitted by any governmental entity. Tenant shall keep the sewage disposal
system free of all obstructions and in good operating condition.

                  3) Disposal of Other Waste. Tenant shall properly dispose of
all other waste or other matter delivered to, stored upon, located upon or
within, used on, or removed from, the Premises in such a manner that it does
not, and will not, adversely affect the (a) health or safety of persons,
wherever located, whether on the Premises or elsewhere (b) condition, use or
enjoyment of the Premises or any other real or personal property, wherever
located, whether on the Premises or anywhere else, or (c) Premises or any of the
improvements thereto or thereon including buildings, foundations, pipes, utility
lines, landscaping or parking areas.

         d.       INFORMATION

         Tenant shall provide Landlord with any and all information regarding
hazardous or toxic materials in the Premises, including copies of all fillings
and reports to governmental entities at the time they are originated. In the
event of any accident, spill or other incident involving hazardous or toxic
matter, Tenant shall immediately report the same to Landlord and supply Landlord
with all information and reports with respect to the same.

         e.       COMPLIANCE WITH LAW

         Notwithstanding any other provision in this Lease to the contrary,
Tenant shall comply with all laws, statutes, ordinances, regulations, rules and
other governmental requirements in complying with its obligations under this
lease, and in particular, relating to the storage, use and disposal of hazardous
or toxic matter.

         f.       INDEMNIFICATION

         Tenant shall defend, indemnify and hold Landlord harmless from any
loss, claim, liability or expense, including attorneys' fees and costs, arising
out of or in connection with its failure to observe or comply with the
provisions of this Lease.

9.       SIGNAGE

         All signing shall comply with rules and regulations set forth by
Landlord as may be modified from time to time. Tenant shall place no window
covering (e.g., 

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shades, blinds, curtains, drapes, screens, or tinting materials), stickers,
signs, lettering, banners or advertising or display material on or near exterior
windows or doors if such materials are visible from the exterior of the
Premises, without Landlord's prior written consent. Similarly, Tenant may not
install any alarm boxes, foil protection tape or other security equipment on the
Premises without Landlord's prior written consent. Any material violating this
provision may be destroyed by Landlord without compensation to Tenant.

10.      PERSONAL PROPERTY TAXES

         Tenant shall pay before delinquency all taxes, assessments, license
fees and public charges levied, assessed or imposed upon its business operations
as well as upon all trade fixtures, leasehold improvements, merchandise and
other personal property in or about the Premises.

11.      PARKING

         Landlord grants to Tenant and Tenant's customers, suppliers, employees
and Invitees, a non-exclusive license to use the designated parking areas in the
Project for the use of motor vehicles during the term of this Lease. Landlord
reserves the right at any time to grant similar non-exclusive use to other
tenants, to promulgate rules and regulations relating to the use of such parking
areas, including reasonable restrictions on parking by tenants and employees, to
designate specific spaces for the use of any tenant, to make charges in the
parking layout from time to time, and to establish reasonable time limits on
parking. Overnight parking is prohibited and any vehicle violating this or any
other vehicle regulation adopted by Landlord is subject to removal at the
owner's expense.

12. UTILITIES (Strike and initial clause which does not apply).

         a.       OFFICE SPACE

         Landlord shall provide, in the area shown on Exhibit A hereto as office
space, all heal, electricity and gas, during the hours of 8:00 a.m. to 6:00 p.m.
Monday through Friday, except legal holidays, and water for restroom facilities,
if any. If Tenant uses water, electricity, heat or in excess of normal office
use, Landlord may separately meter the increased use and Tenant shall pay the
increased cost directly to the appropriate utility; or Landlord may, in its sole
judgment, measure or estimate the increased use and Tenant shall pay Landlord,
on demand, any increased costs so measured or estimated. In any event, Tenant
shall pay all telephone, waste removal and any other services for which Tenant
shall contract.

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                                                                     Landlord IB
                                                                       Tenant DG

         b.       INDUSTRIAL SPACE

         Tenant shall pay for all water, gas, heat, light, power, sewer,
electricity, telephone or other service metered, chargeable or provided to the
Premises. Landlord reserves the right to install separate meters for any such
utility and to charge Tenant for the cost of such installation.

                                                                     Landlord IB
                                                                       Tenant DG

13.      MAINTENANCE

         Landlord shall maintain, in good condition, the structural parts of the
Premises, which shall include only the foundations, bearing and exterior walls
(excluding glass), subflooring and roof (excluding skylights), the unexposed
electrical, plumbing and sewerage systems, including those portions of the
systems lying outside the Premises, gutters and downspouts on the Building and
the heating, ventilating and air conditioning system servicing the Premises;
provided, however, the cost of all such maintenance shall be considered
"Expenses" for purposes of Section 4.c. Except as provided above, Tenant shall
maintain and repair the Premises in good condition, including, without
limitation, maintaining and repairing all walls, storefronts, floors, ceilings,
interior and exterior doors, exterior and interior windows and fixtures and
interior plumbing as well as damage caused by Tenant, its agents, employees or
invitees. Upon expiration or termination of this Lease, Tenant shall surrender
the Premises to Landlord in the same condition as existed at the commencement of
the term, except for reasonable wear and tear or damage caused by fire or other
casualty for which Landlord has received all funds necessary for restoration of
the Premises from insurance proceeds.

14.      ALTERATIONS

         Tenant shall not make any alterations to the Premises, or to the
Project, including any changes to the existing landscaping, without Landlord's
prior written consent. If Landlord gives its consent to such alterations,
Landlord may post notices in accordance with the laws of the state in which the
premises are located. Any alterations made shall remain on and be surrendered
with the Premises upon expiration or termination of this Lease, except that
Landlord may, within 30 days before or 30 days after expiration of the term,
elect to require Tenant to remove any alterations which Tenant may have made to
the Premises. If Landlord so elects, at its 


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<PAGE>   13

own cost Tenant shall restore the Premises to the condition designated by
Landlord in its election, before the last day or the term or within 30 days
after notice of its election is given, whichever is later.

         Should Landlord consent in writing to Tenant's alterations of the
Premises, Tenant shall contract with a contractor approved by Landlord for the
construction of such alterations, shall secure all appropriate governmental
approvals and permits, and shall complete such alterations with due diligence in
compliance with plans and specifications approved by Landlord. All such
construction shall be performed in a manner which will not interfere with the
quiet enjoyment of other tenants of the Project. Tenant shall pay all costs for
such construction and shall keep the Premises and the Project free and clear of
all mechanics' liens which may result from construction by Tenant.

15.      RELEASE AND INDEMNITY

         As material consideration to Landlord, Tenant agrees that Landlord
shall not be liable to Tenant for any damage to Tenant or Tenant's property from
any cause, and Tenant waives all claims against Landlord for damage to persons
or property arising for any reason, except for damage resulting directly from
Landlord's breach of its express obligations under this Lease which Landlord has
not cured within a reasonable time after receipt of written notice of such
breach from Tenant. Tenant shall indemnify and hold Landlord harmless from all
damages arising out of any damage to any person or property occurring in, on or
about the Premises to the extent caused by Tenant's use of the Premises or
Tenant's breach of any term of this Lease.

16.      INSURANCE

         Tenant, at its cost, shall maintain public liability and property
damage insurance and products liability insurance with a single combined
liability limit of $1,000,000, insuring against all liability of Tenant and its
representatives, employees, invitees, and agents arising out of or in connection
with Tenant's use or occupancy of the Premises. Public liability insurance,
products liability insurance and property damage insurance shall insure
performance by Tenant of the indemnity provisions of Section 15. Landlord shall
be named as additional insured and the policy shall contain cross-liability
endorsements. All insurance required to be provided by Tenant under this Lease
shall release Landlord from any claims for damage to any person or the Premises
and the Project, and to Tenant's fixtures, personal property, improvements and
alterations in or on the Premises or the Project, caused by or resulting from
risks insured against under any insurance policy carried by Tenant in force at
the time of such damage. All insurance required to be provided by Tenant under
this Lease: (a) shall be issued by insurance companies authorized to do business


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<PAGE>   14

in the state in which the premises are located with a financial rating of at
least an A+XII status as rated in the most recent edition of Best's Insurance
Reports; (b) shall be issued as a primary policy; and (c) shall contain an
endorsement requiring at least 30 days prior written notice of cancellation to
Landlord and Landlord's lender, before cancellation or change in coverage, scope
or amount of any policy. Tenant shall deliver a certificate or copy of such
policy together with evidence of payment of all current premiums to Landlord
within 30 days of execution of this Lease. Tenant's failure to provide evidence
of such coverage to Landlord may, in Landlord's sole discretion, constitute a
default under this Lease.

17.      DESTRUCTION

         If during the term, the Premises or Project are more than 10% destroyed
from any cause, or rendered inaccessible or unusable from any cause, Landlord
may, in its sole discretion, terminate this Lease by delivery of notice to
Tenant within 30 days of such event without compensation to Tenant. If in
Landlord's estimation, the Premises cannot be restored within 90 days following
such destruction, the Landlord shall notify Tenant and Tenant may terminate this
Lease by delivery of notice to Landlord within 30 days of receipt of Landlord's
notice. If Landlord does not terminate this Lease and if in Landlord's
estimation the Premises can be restored within 90 days, then Landlord shall
commence to restore the Premises in compliance with then existing laws and shall
complete such restoration with due diligence. In such event, this Lease shall
remain in full force and effect, but there shall be an abatement of rent between
the date of destruction and the date of completion of restoration, based on the
extent to which destruction interferes with Tenant's use of the Premises.

18.      CONDEMNATION

         a.       DEFINITIONS

         The following definitions shall apply. (1) "Condemnation" means (a) the
exercise of any governmental power of eminent domain, whether by legal
proceedings or otherwise by condemnor and (b) the voluntary sale or transfer by
Landlord to any condemnor either under threat of condemnation or while legal
proceedings for condemnation are proceeding; (2) "Date of Taking" means the date
the condemnor has right to possession of the property being condemned; (3)
"Award" means all compensation, sums or anything of value awarded, paid or
received on a total or partial condemnation; and (4) "Condemnor" means any
public or quasi-public authority, or private corporation or individual, having
power of condemnation.


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<PAGE>   15

         b.       OBLIGATIONS TO BE GOVERNED BY LEASE

         If during the term of the Lease there is any taking of all or any part
of the Premises or the Project, the rights and obligations of the parties shall
be determined pursuant to this Lease.

         c.       TOTAL OR PARTIAL TAKING

         If the Premises are totally taken by condemnation, this Lease shall
terminate on the date of taking. If any portion of the Premises is taken by
condemnation, this Lease shall remain in effect, except that Tenant can elect to
terminate this Lease if the remaining portion of the Premises is rendered
unsuitable for Tenant's continued use of Premises. If Tenant elects to terminate
this Lease, Tenant must exercise its right to terminate by giving notice to
Landlord within 30 days after the nature and extent of the taking have been
finally determined. If Tenant elects to terminate this Lease, Tenant shall also
notify Landlord of the date of termination, which date shall not be earlier than
30 days nor later than 90 days after Tenant has notified Landlord of its
election to terminate, except that this lease shall terminate on the date of
taking if the date of taking falls on a date before the date of termination as
designated by Tenant. If any portion of the Premises is taken by condemnation
and this Lease remains in full force and effect, on the date of taking the rent
shall be reduced by an amount in the same ratio as the total number of square
feet in the Premises taken bears to the total number of square feet in the
Premises immediately before the date of taking.

19.       ASSIGNMENT OR SUBLEASE

         Tenant shall not assign or encumber its interest in this Lease or the
Premises except to a parent, subsidiary or affiliate of Tenant, or sublease all
or any part of the Premises or allow any other person or entity (except Tenant's
authorized representatives, employees, invitees or guests) to occupy or use all
or any part of the Premises without first obtaining Landlord's consent which
shall not be unreasonably withheld. Any such assignment, encumbrance or sublease
without Landlord's written consent shall be voidable and at Landlord's election,
shall constitute a default. If Tenant is a partnership, a withdrawal or change,
voluntary, involuntary or by operation of law of any partner, or the dissolution
of the partnership, shall be deemed a voluntary assignment. If Tenant consists
of more than one person, a purported assignment, voluntary or involuntary or by
operation of law from one person to the other shall be deemed a voluntary
assignment.

         No interest of Tenant in this Lease shall be assignable by involuntary
assignment through operation of law (including without limitation the transfer
of this Lease by testacy or intestacy). Each of the following acts shall be
considered an 

                                      -14-


<PAGE>   16

involuntary assignment: (a) if Tenant is or becomes bankrupt or insolvent, makes
an assignment for the benefit of creditors, or institutes proceedings under the
Bankruptcy Act in which Tenant is the bankrupt; or if Tenant is a partnership or
consists of more than one person or entity, if any partner of the partnership or
other person or entity is or becomes bankrupt or insolvent, or makes an
assignment for the benefit of creditors; or (b) if a writ of attachment or
execution is levied on this Lease; or (c) if in any proceeding or action to
which Tenant is a party, a receiver is appointed with authority to take
possession of the Premises. An involuntary assignment shall constitute a default
by Tenant and Landlord shall have the right to elect to terminate this Lease, in
which case this Lease shall not be treated as an asset of Tenant.

20.      DEFAULT

         The occurrence of any of the following shall constitute a default by
Tenant: (a) a failure to pay rent or other charge when due; (b) abandonment and
vacation of the Premises (failure to occupy and operate the Premises for ten
consecutive days shall be deemed an abandonment and vacation); or (c) failure to
perform any other provision of this Lease.

21.      LANDLORD'S REMEDIES

         Landlord shall have the following remedies if Tenant is in default.
(These remedies are not exclusive; they are cumulative and in addition to any
remedies now or later allowed by law): Landlord may terminate Tenant's right to
possession of the Premises at any time. No act by Landlord other than giving
notice to Tenant shall terminate this Lease. Acts of maintenance, efforts to
relet the Premises, or the appointment of a receiver on Landlord's initiative to
protect Landlord's interest under this Lease shall not constitute a termination
of Tenant's right to possession. Upon termination of Tenant's right to
possession, Landlord has the right to recover from Tenant: (1) the worth of the
unpaid rent that had been earned at the time of termination of Tenant's right to
possession; (2) the worth of the amount of the unpaid rent that would have been
earned after the date of termination of Tenant's right to possession; (3) any
other amount, including but not limited to, expenses incurred to relet the
premises, court, attorney and collection costs, necessary to compensate Landlord
for all detriment caused by Tenant's default. "The Worth," as used for Item
21(l) in this Paragraph 21 is to be computed by allowing interest at the rate of
18 percent per annum. If the interest rate specified in this Lease is higher
than the rate permitted by law, the interest rate is hereby decreased to the
maximum legal interest rate permitted by law. "The Worth" as used for Item 21(2)
in this Paragraph 21 is to be computed by discounting the amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of termination of
Tenant's right of possession.

                                      -15-
<PAGE>   17

22.      ENTRY ON PREMISES

         Landlord and its authorized representatives shall have the right to
enter the Premises at all reasonable times and upon reasonable notice for any of
the following purposes: (a) to determine whether the Premises are in good
condition and whether Tenant is complying with its obligations under this Lease;
(b) to do any necessary maintenance and to make any restoration to the Premises
or the Project that Landlord has the right or obligation to perform; (c) to post
"for sale" signs at any time during the term, to post "for rent" or "for lease"
signs during the last 90 days of the term, or during any period while Tenant is
in default; (d) to show the Premises to prospective brokers, agents, buyers,
tenants or persons interested in leasing or purchasing the Premises, at any time
during the term; or (e) to repair, maintain or improve the Project and to erect
scaffolding and protective barricades around and about the Premises but not so
as to prevent entry to the Premises and to do any other act or thing necessary
for the safety or preservation of the Premises or the Project. Landlord shall
not be liable in any manner for any inconvenience, disturbance, loss of
business, nuisance or other damage arising out of Landlord's entry onto the
Premises as provided in this Section 22. Tenant shall not be entitled to an
abatement or reduction of rent if Landlord exercises any rights reserved in this
Section 22. Landlord shall conduct his activities on the Premises as provided
herein in a manner that will cause the least inconvenience, annoyance or
disturbance to Tenant. For each of these purposes, Landlord shall at all times
have and retain a key with which to unlock all the doors in, upon and about the
Premises, excluding Tenant's vaults and safes. Tenant shall not alter any lock
or install a new or additional lock or bolt on any door of the Premises without
prior written consent of Landlord. If Landlord gives its consent, Tenant shall
furnish Landlord with a key for any such lock.

23.      SUBORDINATION

         Without the necessity of any additional document being executed by
Tenant for the purpose of effecting a subordination, and at the election of
Landlord or any mortgagee or any beneficiary of a Deed of Trust with a lien on
the Project or any ground lessor with respect to the Project, this Lease shall
be subject and subordinate at all times to (a) all ground leases or underlying
leases which may now exist or hereafter be executed affecting the Project, and
(b) the lien of any mortgage or deed of trust which may now exist or hereafter
be executed in any amount for which the Project, ground leases or underlying
leases, or Landlord's interest or estate in any of said items is specified as
security. In the event that any ground lease or underlying lease terminates for
any reason or any mortgage or Deed of Trust [_______________________] in lieu of
foreclosure is made for any reason, Tenant shall, notwithstanding any
subordination, attorn to and become the Tenant of the 


                                      -16-
<PAGE>   18

successor in interest to Landlord, at the option of such successor in interest.
Tenant covenants and agrees to execute and deliver, upon demand by Landlord and
in the form requested by Landlord any additional documents evidencing the
priority or subordination of this Lease with respect to any such ground lease or
underlying leases or the lien of any such mortgage or Deed of Trust. Tenant
hereby irrevocably appoints Landlord as attorney-in-fact of Tenant to execute,
deliver and record any such document in the name and on behalf of Tenant.

         Tenant, within ten days from notice from Landlord, shall execute and
deliver to Landlord, in recordable form, certificates stating that this Lease is
not in default, is unmodified and in full force and effect, or in full force and
effect as modified, and stating the modifications. This certificate should also
state the amount of current monthly rent, the dates to which rent has been paid
in advance, and the amount of any security deposit and prepaid rent. Failure to
deliver this certificate to Landlord within ten days shall be conclusive upon
Tenant that this Lease is in full force and effect and has not been modified
except as may be represented by Landlord.

24.      NOTICE

         Any notice, demand, request, consent, approval or communication desired
by either party or required to be given, shall be in writing and served either
personally or sent by prepaid certified first class mail, addressed as set forth
in Section 1. Either party may change its address by notification to the other
party. Notice shall be deemed to be communicated 48 hours from the time of
mailing, or from the time of service as provided in this Section 24.

25.      WAIVER

         No delay or omission in the exercise of any right or remedy by Landlord
shall impair such right or remedy or be construed as a waiver. No act or conduct
of Landlord, including without limitation, acceptance of the keys to the
Premises, shall constitute an acceptance of the surrender of the Premises by
Tenant before the expiration of the term. Only written notice from Landlord to
Tenant shall constitute acceptance of the surrender of the Premises and
accomplish termination of the Lease. Landlord's consent to or approval of any
act by Tenant requiring Landlord's consent or approval shall not be deemed to
waive or render unnecessary Landlord's consent to or approval of any subsequent
act by Tenant. Any waiver by Landlord of any default must be in writing and
shall not be a waiver of any other default concerning the same or any other
provision of the Lease.

                                      -17-
<PAGE>   19


26.      SURRENDER OF PREMISES; HOLDING OVER

         Upon expiration of the term, Tenant shall surrender to Landlord the
Premises and all Tenant improvements and alterations in good condition, except
for ordinary wear and tear and alterations. Tenant has the right or is obligated
to remove under the provisions of Section 14 herein. Tenant shall remove all
personal property including, without limitation, all wallpaper, paneling and
other decorative improvements or fixtures and shall perform all restoration made
necessary by the removal of any alterations or Tenant's personal property before
the expiration of the term, including for example, restoring all wall surfaces
to their condition prior to the commencement of this Lease. Landlord can elect
to retain or dispose of in any manner Tenant's personal property not removed
from the Premises by Tenant prior to the expiration of the term. Tenant waives
all claims against Landlord for any damage to Tenant resulting from Landlord's
retention or disposition of Tenant's personal property. Tenant shall be liable
to Landlord for Landlord's cost for storage, removal or disposal of Tenant's
personal property.

         If Tenant, with Landlord's consent, remains in possession of the
Premises after expiration or termination of the term, or after the date in any
notice given by Landlord to Tenant terminating this Lease, such possession by
Tenant shall be deemed to be a month-to-month tenancy terminable on written
30-day notice at any time, by either party. All provisions of this Lease, except
those pertaining to term and rent, shall apply to the month-to-month tenancy.
Tenant shall pay monthly rent in an amount equal to 125% of Rent for the last
full calendar month during the regular term plus 100% of said last month's
estimate of Tenant's share of Expenses pursuant to Section 4.c.3.

27.      LIMITATION OF LIABILITY

         In consideration of the benefits accruing hereunder, Tenant agrees
that, in the event of any actual or alleged failure, breach or default of this
Lease by Landlord, if Landlord is a partnership:

                  a. The sole and exclusive remedy shall be against the
partnership and its partnership assets;

                  b. No partner of Landlord shall be sued or named as a party in
any suit or action, except as required by law in order to maintain an action
against the partnership and its partnership assets.

                                      -18-
<PAGE>   20

                  c. No service of process shall be made against any partner of
Landlord, except as required by law in order to maintain an action against the
partnership and its partnership assets.

                  d. No partner of Landlord shall be required to answer or
otherwise plead to any service or process;

                  e. No judgment may be taken against any partner of Landlord;

                  f. Any judgment taken against any partner of Landlord shall be
vacated and set aside at any time without hearing;

                  g. No writ of execution will ever be levied against the assets
of any partner of Landlord;

                  h. These covenants and agreements are enforceable both by
Landlord and also by any partner of Landlord.

         Tenant agrees that each of the foregoing provisions shall be applicable
to any covenant or agreement either expressly contained in this Lease or imposed
by statute or at common law.

28.      MISCELLANEOUS PROVISIONS

                  a. TIME OF ESSENCE. Time is of the essence of each provision
of this Lease.

                  b. SUCCESSOR. This Lease shall be binding on and inure to the
benefit of the parties and their successors, except as provided in Section 19
herein.

                  c. LANDLORD'S CONSENT. Any consent required by Landlord under
this Lease must be granted in writing and may be withheld or conditioned by
Landlord in its sole and absolute discretion, unless otherwise provided.

                  d. COMMISSIONS. Each party represents that it has not had
dealings with any real estate broker, finder or other person, with respect to
this Lease in any manner, except for the broker identified in Section 1, who
shall be compensated by Landlord.

                  e. OTHER CHARGES. If Landlord becomes a party to any
litigation concerning this Lease, the Premises or the Project, by reason of any
act or omission of Tenant or Tenant's authorized representatives, Tenant shall
be liable to Landlord for reasonable attorney's fees and court costs incurred by
Landlord in the litigation. 


                                      -19-


<PAGE>   21

Should the court render a decision which is thereafter appealed by any party
thereto, Tenant shall be liable to Landlord for reasonable attorneys' fees and
court costs incurred by Landlord in connection with such appeal.

         If either party commences any litigation against the other party or
files an appeal of a decision arising out of or in connection with the Lease,
the prevailing party shall be entitled to recover from the other party
reasonable attorney's fees and costs of suit. If Landlord employs a collection
agency to recover delinquent charges, Tenant agrees to pay all collection agency
and attorneys' fees charged to Landlord in addition to rent, late charges,
interest and other sums payable under this Lease. Tenant shall pay a charge of
$75 to Landlord for preparation of a demand for delinquent rent.

                  f. LANDLORD'S SUCCESSORS. In the event of a sale or conveyance
by Landlord of the Project, the same shall operate to release Landlord from any
liability under this Lease, and in such event Landlord's successor in interest
shall be solely responsible for all obligations of Landlord under this Lease.

                  g. INTERPRETATION. This Lease shall be construed and
interpreted in accordance with the laws of the state in which the premises are
located. This Lease constitutes the entire agreement between the parties with
respect to the Premises and the Project, except for such guarantees or
modifications as may be executed in writing by the parties from time to time.
When required by the context of this Lease, the singular shall include the
plural, and the masculine shall include the feminine and/or neuter. "Party"
shall mean Landlord or Tenant. If more than one person or entity constitutes
Landlord or Tenant, the obligations imposed upon that party shall be joint and
several. The enforceability, invalidity or illegality of any provision shall not
render the other provisions unenforceable, invalid or illegal.

Landlord: /s/ I.I. Bitners July 23, 1997
          ------------------------------

         By       owner
            ----------------------------

         By
            ----------------------------

    Tenant: s/s David Guiliani
            ----------------------------

         By its President and CEO
            ----------------------------

         By         7/29/97
            ----------------------------



                                      -20-