AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

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

1.       Basic Provisions ("Basic Provisions")

         1.1 Parties:  This Lease ("Lease"),  dated for reference  purposes only
February 22, 1999, is made by and between Carmel Mountain #8 Associates, L.P., a
California Limited Partnership ("Lessor") and Imaging Technologies  Corporation,
a Delaware Corporation ("Lessee"),  (collectively the "Parties," or individually
a "Party").

         1.2 Premises:  That certain real property,  including all  improvements
therein or to be provided by Lessor under the terms of this Lease,  and commonly
known as 15175  Innovation  Drive  located in the County of San Diego,  State of
California,  and  generally  described  as  (describe  briefly the nature of the
property and, if applicable,  the "Project", if the property is located within a
Project) an approximately 56,693 sqaure foot industrial/R7D  building located in
the Carmel Mountain Ranch ("Premises"). (See also Paragraph 2)

         1.3 Term:  Seven (7) years and 0 months  ("Original  Term")  commencing
April 1, 1999  ("Commencement  Date") and  ending  March 31,  2006  ("Expiration
Date"). (See also Paragraph 3)

         1.4 Early Possession:  March 1, 1999 ("Early  Possession  Date").  (See
also Paragraphs 3.2 and 3.3)

         1.5 Base Rent:  $40,500 per month ("Base  Rent"),  payable on the first
(1st) day of each month  commencing  April 1, 1999 (See also Paragraph 4) [X] If
this box is checked,  there are provisions in this Lease for the Base Rent to be
adjusted.

         1.6 Base Rent Paid Upon Execution:  $40,500 as Base Rent for the period
April 1, 1999 through April 30, 1999.

         1.7 Security Deposit: $40,500 ("Security Deposit"). (See also Paragraph
5)

         1.8 Agreed Use:  General  office and related  activities  as  permitted
under existing zoning. (See also Paragraph 6)

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

                                       -1-

<PAGE>




         1.10     Real Estate Brokers: (See also Paragraph 15).

                  (a)   Representation:   The  following   real  estate  brokers
(collectively,   the  "Broker")  and  brokerage   relationships  exist  in  this
transaction  (check applicable  boxes):  
[X] CB Richard Ellis, Inc. represents Lessor exclusively ("Lessor's Broker");

[X] J. Steve  Tiritilli  Real Estate  Brokerage  represents  Lessee  exclusively
    ("Lessee's Broker"); or

[ ] __________________________   represents   both  Lessor  and  Lessee   ("Dual
    Agency").

                  (b) Payment to Brokers:  Upon  execution  and delivery of this
Lease by both Parties, Lessor shall pay to the Broker the fee agreed to in their
separate written agreement.

         1.11 Guarantor.  The  obligations of the Lessee under this Lease are to
be guaranteed by None ("Guarantor"). (See also Paragraph 37)

         1.12 Addenda and  Exhibits.  Attached  hereto is an Addendum or Addenda
consisting  of  Paragraphs  50 through 57 and Exhibits  "A", "B" and "C", all of
which constitute a part of this Lease.

2.       Premises.

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

         2.2 Condition.  Lessor shall deliver the premises to Lessee broom clean
and free of  debris  on the  Commencement  Date or the  Early  Possession  Date,
whichever  first occurs  ("Start  Date"),  and, so long as the required  service
contracts  described  in Paragraph  7.1(b)  below are obtained by Lessee  within
thirty  (30)  days  following  the  Start  Date,   warrants  that  the  existing
electrical,  plumbing, fire sprinkler,  lighting,  heating,  ventilating and air
conditioning  systems  ("HVAC"),  loading  doors,  if any,  and all  other  such
elements in the Premises,  other than those  constructed by Lessee,  shall be in
good operating  condition on said date and that the  structural  elements of the
roof,  bearing  walls and  foundation  of any  buildings  on the  Premises  (the
"Building")  shall be free of material  defects.  If a non-compliance  with said
warranty exists as of the Start Date,  Lessor shall, as Lessor's sole obligation
with  respect  to such  matter,  except as  otherwise  provided  in this  Lease,
promptly  after  receipt  of  written  notice  from  Lessee  setting  forth with
specificity  the  nature  and  extent of such  non-compliance,  rectify  same at
Lessor's expense.

         2.3 Compliance.  Lessor warrants that the  improvements on the Premises
comply with all applicable laws,  covenants or restrictions of record,  building
codes,  regulations and ordinances ("Applicable  Requirements") in effect on the
Start Date. Said warranty does not apply to the use


                                       -2-

<PAGE>

to  which  Lessee  will  put the  Premises  or to any  Alternations  or  Utility
Installations  (as defined in  Paragraph  7.3(a))  made or to be made by Lessee.
NOTE:  Lessee  is  responsible  for  determining  whether  or not the  zoning is
appropriate for Lessee's  intended use, and  acknowledges  that past uses of the
Premises  may no longer be  allowed.  If the  Premises  do not comply  with said
warranty, Lessor shall, except as otherwise provided,  promptly after receipt of
written notice from Lessee setting forth with  specificity the nature and extent
of such non-compliance, rectify the same at Lessor's expense. If Lessee does not
give  Lessor  written  notice  of a  non-compliance  with this  warranty  within
following  the  Start  Date,  correction  of that  non-compliance  shall  be the
obligation  of  Lessee at  Lessee's  sole cost and  expense.  If the  Applicable
Requirements  are  hereafter  changed (as opposed to being in  existence  at the
Start Date,  which is  addressed  in  Paragraph  6.2(e)  below) so as to require
during  the  term  of  this  Lease  the  construction  of an  addition  to or an
alteration of the Building,  the remediation of any Hazardous Substance,  or the
reinforcement  or  other  physical   modification  of  the  Building   ("Capital
Expenditure"),  Lessor  and  Lessee  shall  allocate  the  cost of such  work as
follows:

                  (a)  Subject  to  paragraph  2.3(c)  below,  if  such  Capital
Expenditures  are  required  as a result of the  specific  and unique use of the
Premises by Lessee as compared with uses by tenants in general,  Lessee shall be
fully responsible for the cost thereof,  provided,  however that if such Capital
Expenditure is required during the last two (2) years of this Lease and the cost
thereof  exceeds six (6) months' Base Rent,  Lessee may instead  terminate  this
Lease unless  Lessor  notifies  Lessee,  in writing,  within ten (10) days after
receipt of  Lessee's  termination  notice  that  Lessor  has  elected to pay the
difference  between  the actual  cost  thereof  and the amount  equal to six (6)
months' Base Rent. If Lessee elects termination,  Lessee shall immediately cease
the use of the Premises which requires such Capital  Expenditure  and deliver to
Lessor  written notice  specifying a termination  date at least ninety (90) days
thereafter.  Such termination date shall,  however,  in no event be earlier than
the last day that Lessee could legally utilize the Premises  without  commencing
such Capital Expenditure.

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

                  (c)  Notwithstanding  the  above,  the  provisions  concerning
Capital  Expenditures are intended to apply only to  non-voluntary,  unexpected,
and new Applicable Requirements. If the

                                       -3-

<PAGE>

Capital Expenditures are instead triggered by Lessee as a result of an actual or
proposed  change in use,  change in  intensity  of use, or  modification  to the
Premises then, and in that event, Lessee shall be fully responsible for the cost
thereof, and Lessee shall not have any right to terminate this Lease.

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

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

3.       Term.

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

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

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


                                       -4-

<PAGE>

Lessee would  otherwise have enjoyed under the terms hereof,  but minus any days
of delay  caused  by the acts or  omissions  of  Lessee.  If  possession  of the
Premises is not delivered  within four (4) months after the  Commencement  Date,
this Lease shall  terminate  unless other  agreements are reached between Lessor
and Lessee, in writing.

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

4.       Rent.

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

         4.2  Payment.  Lessee  shall  cause  payment of Rent to be  received by
Lessor in lawful money of the United States, without offset or deduction (except
as  specifically  permitted in this Lease),  on or before the day on which it is
due.  Rent for any period  during the term hereof which if for less than one (1)
full  calendar  month shall be prorated  based upon the actual number of days of
said month. Payment of Rent shall be made to Lessor at its address stated herein
or to such other  persons or place as Lessor may from time to time  designate in
writing.  Acceptance  of a payment  which is less than the amount then due shall
not be a waiver of Lessor's  rights to the balance of such Rent,  regardless  of
Lessor's endorsement of any check so stating.

5. Security Deposit.  Lessee shall deposit with Lessor upon execution hereof the
Security  Deposit  as  security  for  Lessee's   faithful   performance  of  its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this  Lease,  Lessor may use,  apply or retain all or any  portion of said
Security  Deposit  for the payment of any amount due Lessor or to  reimburse  or
compensate  Lessor for any liability,  expense,  loss or damage which Lessor may
suffer or incur by reason thereof.  If Lessor uses or applies all or any portion
of said  Security  Deposit,  Lessee  shall  within ten (10) days  after  written
request therefor deposit monies with Lessor  sufficient to restore said Security
Deposit to the full amount  required by this Lease.  If the Base Rent  increases
during the term of this Lease,  Lessee shall,  upon written request from Lessor,
deposit  additional  moneys with Lessor so that the total amount of the Security
Deposit shall at all times bear the same  proportion to the increased  Base Rent
as the initial Security Deposit bore to the initial Base Rent. Should the Agreed
Use be amended to accommodate a material  change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary,  in Lessor's reasonable  judgment,  to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such  change  the  financial  condition  of Lessee  is, in  Lessor's  reasonable
judgment,


                                       -5-

<PAGE>

significantly  reduced,  Lessee shall deposit such additional monies with Lessor
as shall be  sufficient  to cause the Security  Deposit to be at a  commercially
reasonable level based on said change in financial  condition.  Lessor shall not
be required to keep the Security  Deposit  separate  from its general  accounts.
Within  fourteen (14) days after the expiration or termination of this Lease, if
Lessor elects to apply the Security  Deposit only to unpaid Rent,  and otherwise
within  thirty  (30) days  after the  premises  have been  vacated  pursuant  to
Paragraph 7.4(c) below, Lessor shall return that portion of the Security Deposit
not  used or  applied  by  Lessor.  No part of the  Security  Deposit  shall  be
considered to be held in trust,  to bear  interest or to be  prepayment  for any
monies to be paid by Lessee under this Lease.

6.       Use.

         6.1 Use.  Lessee shall use and occupy the Premises  only for the Agreed
Use, or any other legal use which is reasonably  comparable thereto,  and for no
other  purpose.  Lessee  shall not use or permit  the use of the  Premises  in a
manner that is unlawful,  creates damage, waste or a nuisance,  or that disturbs
owners and/or occupants of, or causes damage to neighboring  properties.  Lessor
shall not unreasonably withhold or delay its consent to any written requires for
a  modification  of the  Agreed  Use,  so long as the same will not  impair  the
structural  integrity of the  improvements  on the Premises or the mechanical or
electrical  systems  therein,  is  not  significantly  more  burdensome  to  the
Premises.  If Lessor  elects to withhold  consent,  Lessor shall within five (5)
business days after such request give written notification of same, which notice
shall include an explanation of Lessor's objections to the change in use.

         6.2      Hazardous Substances.

                  (a)  Reportable  Uses  Require  Consent.  The term  "Hazardous
Substance"  as used in this Lease shall mean any  product,  substance,  or waste
whose presence, use, manufacture,  disposal,  transportation, or release, either
by itself or in combination with other materials expected to be on the Premises,
is either:  (i) potentially  injurious to the public health,  safety or welfare,
the environment or the Premises, (ii) regulated or monitored by any governmental
authority,   or  (iii)  a  basis  for  potential  liability  of  Lessor  to  any
governmental  agency or third party under any  applicable  statute or common law
theory. Hazardous Substances shall include, but not be limited to, hydrocarbons,
petroleum,  gasoline, and/or crude oil or any products, by-products or fractions
thereof.  Lessee shall not engage in any  activity in or on the  Premises  which
constitutes a Reportable Use of Hazardous  Substances  without the express prior
written consent of Lessor and timely  compliance (at Lessee's  expense) with all
Applicable Requirements. "Reportable Use" shall mean (i) the installation or use
of any above or below ground  storage  tank,  (ii) the  generation,  possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit  from,  or with  respect  to which a report,  notice,  registration  or
business plan is required to be filed with, any governmental  authority,  and/or
(iii) the  presence at the  Premises of a Hazardous  Substance  with  respect to
which any  Applicable  Requirements  requires  that a notice be given to persons
entering or occupying the Premises or  neighboring  properties.  Notwithstanding
the foregoing,  Lessee may use any ordinary and customary  materials  reasonably
required to be used in the normal course of the Agreed Use, so long


                                       -6-

<PAGE>

as  such  use  is in  compliance  with  all  Applicable  Requirements,  is not a
Reportable Use, and does not expose the Premises or neighboring  property to any
meaningful  risk of  contamination  or damage or expose  Lessor to any liability
therefor.  In addition,  Lessor may condition its consent to any  Reportable Use
upon receiving such additional  assurances as Lessor  reasonably deems necessary
to protect  itself,  the public,  the Premises  and/or the  environment  against
damage, contamination,  injury and/or liability,  including, but not limited to,
the  installation  (and removal on or before Lease expiration or termination) of
protective  modifications  (such as concrete  encasements) and/or increasing the
Security Deposit.

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

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

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

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

                                       -7-

<PAGE>

investigation,  removal,  remediation,  restoration and/or abatement,  and shall
survive the expiration or termination of this Lease.

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

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

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


                                       -8-

<PAGE>

of any  threatened  or actual claim,  notice,  citation,  warning,  complaint or
report  pertaining  to or  involving  the  failure of Lessee or the  Premises to
comply with any Applicable Requirements.

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

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

         7.1      Lessee's Obligations.

                  (a) In General.  Subject to the  provisions  of Paragraph  2.2
(Condition),   2.3  (Compliance),   6.3  (Lessee's  Compliance  with  Applicable
Requirements),  7.2 (Lessor's  Obligations),  9 (Damage or Destruction),  and 14
(Condemnation),  Lessee  shall,  at Lessee's  sole  expense,  keep the Premises,
Utility  Installations,  and  Alterations  in good order,  condition  and repair
(whether or not the portion of the Premises requiring  repairs,  or the means of
repairing the same, are reasonably or readily  accessible to Lessee, and whether
or not the need for such repairs  occurs as a result of Lessee's  use, any prior
use, the elements or the age of such portion of the  Premises),  including,  but
not  limited  to,  all  equipment  or  facilities,  such as  plumbing,  heating,
ventilating,   air-conditioning,   electrical,   lighting  facilities,  boilers,
pressure  vessels,  fire  protection  system,   fixtures,  walls  (interior  and
exterior),  foundations,  ceilings,  roofs, floors, windows, doors, plate glass,
skylights, landscaping, driveways, parking lots, fences, retaining walls, signs,
sidewalks and parkways located in, on, or adjacent to the Premises.  Lessee,  in
keeping the Premises in good order,  condition  and repair,  shall  exercise and
perform good maintenance  practices,  specifically including the procurement and
maintenance  of the  service  contracts  required  by  Paragraph  7.1(b)  below.
Lessee's obligations shall include  restorations,  replacements or renewals when
necessary to keep the Premises and all improvements thereon or a part thereof in
good order, condition and state of repair. Lessee shall, during the term of this
Lease, keep the exterior  appearance of the Building in a first-class  condition
consistent  with  the  exterior   appearance  of  other  similar  facilities  of
comparable age and size in the vicinity, including, when necessary, the exterior
repainting of the Building.

                  (b) Service Contracts. Lessee shall, at Lessee's sole expense,
procure and maintain  contracts,  with copies to Lessor,  in customary  form and
substance  for,  and  with  contractors  specializing  and  experienced  in  the
maintenance  of the following  equipment and  improvements,  if any, if and when
installed  on the  Premises:  (i) HVAC  equipment,  (ii)  boiler,  and  pressure
vessels,  (iii) fire  extinguishing  systems,  including fire alarm and/or smoke
detection,  (iv)  landscaping  and  irrigation  systems,  (v) roof  covering and
drains, (vi) driveways and parking lots, (vii) clarifiers, (viii) basic


                                       -9-

<PAGE>



utility feed to the perimeter of the Building, and (ix) any other equipment,  if
reasonably required by Lessor.

                  (c) Replacement. Subject to Lessee's indemnification of Lessor
as set forth in Paragraph 8.7 below,  and without  relieving Lessee of liability
resulting  from  Lessee's  failure to  exercise  and  perform  good  maintenance
practices,  if the  Basic  Elements  described  in  Paragraph  7.1(b)  cannot be
repaired other than at a cost which is in excess of 50% of the cost of replacing
such Basic Elements,  then such Basic Elements shall be replaced by Lessor,  and
the cost thereof shall be prorated  between the Parties and Lessee shall only be
obligated to pay, each month during the remainder of the term of this Lease,  on
the  date  on  which  Base  Rent is due,  an  amount  equal  to the  product  of
multiplying the cost of such  replacement by a fraction,  the numerator of which
is one, and the  denominator of which is the number of months of the useful life
of such replacement as such useful life is specified  pursuant to Federal income
tax regulations or guidelines for depreciation  thereof  (including  interest on
the unamortized  balance as is then  commercially  reasonable in the judgment of
Lessor's accountants),  with Lessee reserving the right to prepay its obligation
at any time.

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

         7.3      Utility Installations; Trade Fixtures; Alterations.

                  (a)   Definitions;   Consent   Required.   The  term  "Utility
Installations"  refers to all floor  and  window  coverings,  air  lines,  power
panels,   electrical   distribution,   security  and  fire  protection  systems,
communication systems, lighting fixtures, HVAC equipment,  plumbing, and fencing
in or on the Premises.  The term "Trade Fixtures" shall mean Lessee's  machinery
and equipment that can be removed without doing material damage to the Premises.
The term  "Alterations"  shall mean any modification of the improvements,  other
than Utility  Installations or Trade Fixtures,  whether by addition or deletion.
"Lessee  Owned  Alterations   and/or  Utility   Installations"  are  defined  as
Alterations  and/or Utility  Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any Alterations or
Utility  Installations  to the Premises  without Lessor's prior written consent.
Lessee may, however,  make non-structural  Utility Installations to the interior
of the  Premises  (excluding  the roof)  without such consent but upon notice to
Lessor,  as long as they  are not  visible  from  the  outside,  do not  involve
puncturing,  relocating  or removing  the roof or any  existing  walls,  and the
cumulative cost thereof during this Lease as extended does not exceed $50,000 in
the aggregate or $10,000 in any one year.

                  (b) Consent.  Any  Alterations or Utility  Installations  that
Lessee shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with


                                      -10-

<PAGE>

detailed plans. Consent shall be deemed conditioned upon Lessee's: (i) acquiring
all applicable  governmental permits, (ii) furnishing Lessor with copies of both
the permits and the plans and specifications  prior to commencement of the work,
and (iii)  compliance  with all conditions of said permits and other  Applicable
Requirements  in a prompt and  expeditious  manner.  Any  Alterations or Utility
Installations  shall  be  performed  in  a  workmanlike  manner  with  good  and
sufficient materials.  Lessee shall promptly upon completion furnish Lessor with
as-built plans and  specifications.  For work which costs an amount equal to the
greater of one month's Base Rent,  or $10,000,  Lessor may condition its consent
upon Lessee  providing a lien and completion  bond in an amount equal to one and
one-half  times the estimated  cost of such  Alteration or Utility  Installation
and/or upon Lessee's posting an additional Security Deposit with Lessor.

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

         7.4      Ownership; Removal; Surrender; and Restoration.

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

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

                  (c) Surrender/Restoration. Lessee shall surrender the Premises
by the  Expiration  Date  or  any  earlier  termination  date,  with  all of the
improvements,  parts and surfaces thereof broom clean and free of debris, and in
good operating order, condition and state of repair, ordinary wear and


                                      -11-

<PAGE>



tear  excepted.  "Ordinary  wear and  tear"  shall  not  include  any  damage or
deterioration  that  would have been  prevented  by good  maintenance  practice.
Lessee shall repair any damage  occasioned by the  installation,  maintenance or
removal  of  Trade   Fixtures,   Lessee   Owned   Alterations   and/or   Utility
Installations,  furnishings, and equipment as well as the removal of any storage
tank installed by or for Lessee, and the removal, replacement, or remediation of
any soil, material or groundwater  contaminated by Lessee.  Trade Fixtures shall
remain the  property  of Lessee and shall be removed by Lessee.  The  failure by
Lessee to timely vacate the Premises  pursuant to this Paragraph  7.4(c) without
the express  written  consent of Lessor shall  constitute  a holdover  under the
provisions of Paragraph 26 below.

8.       Insurance; Indemnity.

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

         8.2      Liability Insurance.

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

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

         8.3      Property Insurance - Building, Improvements and Rental Value.

                  (a) Building and Improvements. The Insuring Party shall obtain
and keep in force a policy or policies in the name of Lessor,  with loss payable
to Lessor, any groundlessor, and to any Lender(s) insuring loss or damage to the
Premises. The amount of such insurance shall be


                                      -12-

<PAGE>

equal to the full replacement cost of the Premises, as the same shall exist from
time to time, or the amount  required by any Lenders,  but in no event more than
the commercially  reasonable and available insurable value thereof. If Lessor is
the Insuring Party, however, Lessee Owned Alterations and Utility Installations,
Trade Fixtures,  and Lessee's personal property shall be insured by Lessee under
Paragraph 8.4 rather by Lessor.  If the coverage is available  and  commercially
appropriate,  such policy or policies  shall insure  against all risks of direct
physical  loss or damage  (except the perils of flood and/or  earthquake  unless
required by a Lender), including coverage for debris removal and the enforcement
of  any   Applicable   Requirements   requiring   the   upgrading,   demolition,
reconstruction  or replacement of any portion of the Premises as the result of a
covered  loss.  Said policy or policies  shall also contain an agreed  valuation
provisions  in  lieu of any  coinsurance  clause,  waiver  of  subrogation,  and
inflation guard protection  causing an increase in the annual property insurance
coverage  amount by a factor of not less than the adjusted  U.S.  Department  of
Labor Consumer Price Index for All Urban Consumers for the city nearest to where
the Premises are located.  If such insurance  coverage has a deductible  clause,
the deductible  amount shall not exceed $1,000 per occurrence,  and Lessee shall
be liable for such deductible amount in the event of an Insured Loss.

                  (b) Rental Value.  The Insuring Party shall obtain and keep in
force a policy or policies in the name of Lessor with loss payable to Lessor and
any Lender,  insuring the loss of the full Rent for one (1) year. Said insurance
shall  provide that in the event the Lease is terminated by reason of an insured
loss,  the period of indemnity  for such coverage  shall be extended  beyond the
date of the completion of repairs or replacement of the Premises, to provide for
one full  year's  loss of Rent from the date of any such  loss.  Said  insurance
shall contain an agreed valuation  provision in lieu of any coinsurance  clause,
and the amount of coverage  shall be adjusted  annually to reflect the projected
Rent otherwise payable by Lessee, for the next twelve (12) month period.  Lessee
shall be liable for any deductible amount in the event of such loss.

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

         8.4      Lessee's Property/Business Interruption Insurance.

                  (a)  Property   Damage.   Lessee  shall  obtain  and  maintain
insurance  coverage on all of Lessee's personal  property.  Trade Fixtures,  and
Lessee Owned Alterations and Utility Installations. Such insurance shall be full
replacement  cost  coverage  with  a  deductible  of not to  exceed  $1,000  per
occurrence. The proceeds from any such insurance shall be used by Lessee for the
replacement of personal  property,  Trade Fixtures and Lessee Owned  Alterations
and Utility  Installations.  Lessee shall provide  Lessor with written  evidence
that such insurance is in force.

                  (b)  Business  Interruption.  Lessee shall obtain and maintain
loss of income and extra expense  insurance in amounts as will reimburse  Lessee
for direct or indirect loss of earnings


                                      -13-

<PAGE>

attributable  to all perils  commonly  insured against by prudent lessees in the
business of Lessee or  attributable to prevention of access to the Premises as a
result of such perils.

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

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

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

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

         8.8 Exemption of Lessor from Liability.  Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee's employees,


                                      -14-

<PAGE>

contractors,  invitees, customers, or any other person in or about the Premises,
whether  such  damage  or  injury is caused  by or  results  from  fire,  steam,
electricity,  gas, water or rain, or from the breakage, leakage,  obstruction or
other defects of pipes, fire sprinklers,  wires,  appliances,  plumbing, HVAC or
lighting  fixtures,  or from any other cause,  whether the said injury or damage
results from conditions  arising upon the Premises or upon other portions of the
Building  of which the  Premises  are a part,  or from other  sources or places.
Lessor  shall not be liable for any damages  arising  from any act or neglect of
any other tenant of Lessor.  Notwithstanding  Lessor's  negligence  or breach of
this Lease, Lessor shall under no circumstances be liable for injury to Lessee's
business or for any loss of income or profit therefrom.

9.       Damage or Destruction.

         9.1      Definitions.

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

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

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

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

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

         9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is
an Insured Loss occurs,  then Lessor  shall,  at Lessor's  expense,  repair such
damage (but not Lessee's Trade Fixtures or Lessee Owned  Alterations and Utility
Installations) as soon as reasonably possible and this Lease


                                      -15-

<PAGE>

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

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

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



                                      -16-

<PAGE>

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

         9.6      Abatement of Rent: Lessee's Remedies.

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

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

         9.7  Termination-Advance  Payments.  Upon  termination  of  this  Lease
pursuant to Paragraph  6.2(g) or Paragraph 9, an equitable  adjustment  shall be
made concerning  advance Base Rent and any other advance payments made by Lessee
to Lessor, Lessor shall, in addition, return to


                                      -17-

<PAGE>

Lessee so much of  Lessee's  Security  Deposit  as has not been,  or is not then
required to be, used by Lessor.

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

10.      Real Property Taxes.

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

         10.2

                  (a) Payment of Taxes. Lessee shall pay the Real Property Taxes
applicable to the Premises  during the term of this Lease.  Subject to Paragraph
10.2(b),  all such  payments  shall be made at least ten (10) days  prior to any
delinquency  date.  Lessee  shall  promptly  furnish  Lessor  with  satisfactory
evidence  that such  taxes have been paid.  If any such  taxes  shall  cover any
period of time prior to or after the  expiration  of  termination  of the Lease.
Lessee's share of such taxes shall be prorated to cover only that portion of the
tax bill applicable to the period that this Lease is in effect, and Lessor shall
reimburse Lessee for any  overpayment.  If Lessee shall fail to pay any required
Real  Property  Taxes,  Lessor shall have the right to pay the same,  and Lessee
shall reimburse Lessor therefor upon demand.

                  (b) Advance Payment.  In the event Lessee incurs a late charge
on any Rent payment,  Lessor may, at Lessor's option,  estimate the current Real
Property  Taxes,  and  require  that such  taxes be paid in advance to Lessor by
Lessee,  either: (i) in a lump sum amount equal to the installment due, at least
twenty  (20) days prior the  applicable  delinquency  date,  or (ii)  monthly in
advance with the payment of the Base Rent. If Lessor  elects to require  payment
monthly in advance,  the monthly  payment shall be an amount equal to the amount
of the estimated  installment of taxes divided by the number of months remaining
before the month in which said installment becomes  delinquent.  When the actual
amount of applicable tax bill is known, the amount of such equal monthly advance
payments shall be adjusted as required to provide the funds needed to pay the


                                      -18-

<PAGE>

applicable  taxes. If the amount collected by Lessor is insufficient to pay such
Real  Property  Taxes when due,  Lessee  shall pay  Lessor,  upon  demand,  such
additional  sums as are  necessary to pay such  obligations.  All moneys paid to
Lessor under this Paragraph may be intermingled  with other moneys of Lessor and
shall not bear interest.  In the event of a Breach by Lessee in the  performance
of its  obligations  under this Lease,  then any balance of funds paid to Lessor
under the provisions of this  Paragraph may at the option of Lessor,  be treated
as an additional Security Deposit.

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

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

11.  Utilities.  Lessee  shall  pay for all  water,  gas,  heat,  light,  power,
telephone,  trash  disposal and other  utilities  and  services  supplied to the
Premises,  together  with  any  taxes  thereon.  If any  such  services  are not
separately metered to Lessee,  Lessee shall pay a reasonable  proportion,  to be
determined by Lessor, of all charges jointly metered.

12.      Assignment and Subletting.

         12.1     Lessor's Consent Required.

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

                  (b) A change in the  control  of Lessee  shall  constitute  an
assignment  requiring  consent.   The  transfer,   on  a  cumulative  basis,  of
twenty-five  percent  (25%)  or more  of the  voting  control  of  Lessee  shall
constitute a change in control for this purpose.


------------------
* which shall not be unreasonably withheld.


                                      -19-

<PAGE>




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

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

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

         12.2     Terms and Conditions Applicable to Assignment and Subletting.

                  (a)  Regardless  of  Lessor's   consent,   any  assignment  or
subletting shall not: (i) be effective without the express written assumption by
such assignee or sublessee of the  obligations of Lessee under this Lease,  (ii)
release  Lessee  of any  obligations  hereunder,  or  (iii)  after  the  primary
liability of Lessee for the payment or Rent or for the  performance of any other
obligations to be performed by Lessee.

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

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


                                      -20-

<PAGE>



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

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

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

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

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

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



                                      -21-

<PAGE>

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

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

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

13.      Default; Breach; Remedies.

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

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

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

                  (c) The  failure by Lessee to provide (i)  reasonable  written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized assignment or subletting, (iv) a Tenancy
Statement, (v) a requested subordination,  (vi) evidence concerning any guaranty
and/or Guarantor,  (vii) any document  requested under Paragraph 42 (easements),
or (viii) any other  documentation  or  information  which Lessor may reasonably
require  of  Lessee  under  the  terms of this  Lease,  where  any such  failure
continues for a period of ten (10) days following written notice to Lessee.


---------------------
* not to be unreasonably withheld.


                                      -22-

<PAGE>

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

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

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

                  (g) If the  performance  of  Lessee's  obligations  under this
Lease is  guaranteed:  (i) the death of a Guarantor,  (ii) the  termination of a
Guarantor's  liability with respect to this Lease other than in accordance  with
the  terms of such  guaranty,  (iii) a  Guarantor's  becoming  insolvent  or the
subject  of a  bankruptcy  filing,  (iv) a  Guarantor's  refusal  to  honor  the
guaranty,  or  (v)  a  Guarantor's  breach  of  its  guaranty  obligation  on an
anticipatory  basis,  and Lessee's  failure,  within  sixty (60) days  following
written notice of any such event,  to provide written  alternative  assurance or
security, which, when coupled with the then existing resources of Lessee, equals
or exceeds the combined  financial  resources of Lessee and the Guarantors  that
existed at the time of execution of this Lease.

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



                                      -23-

<PAGE>

                  (a) Terminate  Lessee's right to possession of the Premises by
any lawful  means,  in which case this Lease shall  terminate  and Lessee  shall
immediately  surrender  possession  to  Lessor.  In such event  Lessor  shall be
entitled to recover  from  Lessee:  (i) the unpaid Rent which had been earned at
the time of  termination;  (ii) the worth at the time of award of the  amount by
which the unpaid rent which would have been earned after  termination  until the
time of award  exceeds  the amount of such  rental  loss that the Lessee  proves
could have been reasonably avoided;  (iii) the worth at the time of award of the
amount by which the  unpaid  rent for the  balance of the term after the time of
award  exceeds the amount of such rental  loss that the Lessee  proves  could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the  detriment  proximately  caused by the  Lessee's  failure to perform its
obligations  under this Lease or which in the ordinary course of things would be
likely to result therefrom,  including but not limited to the cost of recovering
possession  of  the  Premises,   expenses  of  reletting,   including  necessary
renovation and alteration and alteration of the Premises,  reasonable attorneys'
fees,  and that portion of any leasing  commission  paid by Lessor in connection
with this Lease applicable to the unexpired term of this Lease. The worth at the
time of award of the amount  referred to in provision  (iii) of the  immediately
preceding  sentence shall be computed by discounting such amount at the discount
rate of the Federal  Reserve Bank of the District  within which the Premises are
located  at the time of award  plus one  percent  (1%).  Efforts  by  Lessor  to
mitigate  damages  caused  by  Lessee's  Breach  of this  Lease  shall not waive
Lessor's  right to recover  damages under  Paragraph 12. If  termination of this
Lease is obtained through the provisional  remedy of unlawful  detainer,  Lessor
shall have the right to recover in such  proceeding  any unpaid Rent and damages
as are  recoverable  therein,  or Lessor may reserve the right to recover all or
any part thereof in a separate suit. If a notice and grace period required under
Paragraph  13.1 was not  previously  given,  a notice to pay rent or quit, or to
perform or quit given to Lessee under the unlawful  detainer  statute shall also
constitute the notice  required by Paragraph  13.1. In such case, the applicable
grace period required by Paragraph 13.1 and the unlawful  detainer statute shall
run  concurrently,  and the  failure  of Lessee to cure the  Default  within the
greater of the two such grace periods shall constitute both an unlawful detainer
and a Breach of this Lease entitling Lessor to the remedies provided for in this
Lease and/or by said statute.

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

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

         13.3  Inducement  Recapture.  Any  agreement for free or abated rent or
other  charges,  or for the  giving or paying by Lessor to or for  Lessee of any
cash or other bonus, inducement or consideration for Lessee's entering into this
Lease, all of which concessions are hereinafter referred


                                      -24-

<PAGE>

to as "Inducement  Provisions,"  shall be deemed  conditioned upon Lessee's full
and faithful  performance of all of the terms,  covenants and conditions of this
Lease. Upon Breach of this Lease by Lessee, any such Inducement Provisions shall
automatically  be deemed  deleted  from this  Lease and of no  further  force or
effect,  and  any  rent,  other  charge,  bonus,   inducement  or  consideration
theretofore abated,  given or paid by Lessor under such an Inducement  Provision
shall be immediately  due and payable by Lessee to Lessor,  notwithstanding  any
subsequent  cure of said Breach by Lessee.  The  acceptance by Lessor of rent or
the cure of the Breach which initiated the operation of this paragraph shall not
be  deemed a  waiver  by  Lessor  of the  provisions  of this  paragraph  unless
specifically so stated in writing by Lessor at the time of such acceptance.

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

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

         13.6     Breach by Lessor.

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


                                      -25-

<PAGE>

performance  is  commenced  within such  thirty  (30) day period and  thereafter
diligently pursued to completion.

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

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

15.      Brokers' Fees.

         15.1  Assumption  of  Obligations.  Any buyer or transferee of Lessor's
interest  in this  Lease  shall be deemed to have  assumed  Lessor's  obligation
hereunder.  Each Broker shall be a third party  beneficiary of the provisions of
Paragraphs  1.10,  15, 22 and 31. If Lessor fails to pay to a Broker any amounts
due as and for commissions  pertaining to this Lease when due, then such amounts
shall accrue Interest.

         15.2  Representations and Indemnities of Broker  Relationships.  Lessee
and Lessor each  represent  and warrant to the other that it has had no dealings
with any person, firm, broker or


                                      -26-

<PAGE>

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

16.      Estoppel Certificates.

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

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

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

17. Definition of Lessor.  The term "Lessor" as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises,  or, if this
is a sublease,  of the Lessee's  interest in the prior lease.  In the event of a
transfer of Lessor's  title or  interest in the  Premises or this Lease,  Lessor
shall  deliver to the  transferee  or assignee (in cash or by credit) any unused
Security  Deposit held by Lessor.  Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit,  as aforesaid,  the
prior Lessor shall be relieved of all liability with respect to the  obligations
and/or  covenants  under this Lease  thereafter  to be  performed by the Lessor.
Subject to the foregoing,  the obligations  and/or covenants in this Lease to be
performed  by the Lessor  shall be binding  only upon the Lessor as  hereinabove
defined.  Notwithstanding  the above, and subject to the provisions of Paragraph
20 below,  the original Lessor under this Lease,  and all subsequent  holders of
the Lessor's  interest in this Lease shall remain  liable and  responsible  with
regard to the potential duties and liabilities of Lessor pertaining to Hazardous
Substances as outlined in Paragraph 6 above.


                                      -27-

<PAGE>

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

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

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

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

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

23.      Notices.

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


                                      -28-

<PAGE>

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

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

25.  Recording.  Either  Lessor or Lessee  shall,  upon  request  of the  other,
execute,  acknowledge  and deliver to the other a short form  memorandum of this
Lease  for  recording  purposes.  The  Party  requesting  recordation  shall  be
responsible for payment of any fees applicable thereto.

26.  No Right To  Holdover.  Lessee  has no right to  retain  possession  of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee  holds over,  then the Base Rent shall be  increased to
one hundred fifty percent (150%) of the Basic Rent  applicable  during the month
immediately  preceding the expiration or termination.  Nothing  contained herein
shall be construed as consent by Lessor to any holding over by Lessee.

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

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


                                      -29-

<PAGE>

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

30.      Subordination; Attornment; Non-Disturbance.

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

         30.2 Attornment. Subject to the non-disturbance provisions of Paragraph
30.3,  Lessee  agrees to attorn  to a Lender  or any  other  party who  acquires
ownership of the Premises by reason of a foreclosure of a Security  Device,  and
that in the event of such  foreclosure,  such new owner shall not: (i) be liable
for any act or omission or any prior lessor or with respect to events  occurring
prior to  acquisition  of ownership;  (ii) be subject to any offsets or defenses
which  Lessee  might  have  against  any  prior  lessor,  or  (iii)  be bound by
prepayment of more than one (1) month's rent.

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

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


                                      -30-

<PAGE>

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

32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall
have the right to enter the Premises at any time,  in the case of an  emergency,
and  otherwise  at  reasonable  times for the  purpose  of  showing  the same to
prospective  purchasers,  lenders,  or  lessees,  and making  such  alterations,
repairs, improvements or additions to the Premises as Lessor may deem necessary.
All such activities  shall be without  abatement of rent or liability to Lessee.
Lessor may at any time place on the Premises  any ordinary  "For Sale" signs and
Lessor  may  during  the last six (6)  months of the terms  hereof  place on the
Premises  any  ordinary  "For Lease"  signs.  Lessee may at any time place on or
about the Premises any ordinary "For Sublease" sign.

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

34. Signs.  Except for ordinary "For Sublease" signs, Lessee shall not place any
sign upon the Premises without  Lessor's prior written  consent.  All signs must
comply with all Applicable Requirements.

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

36. Consents.  Except as otherwise  provided herein,  wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed.  Lessor's actual reasonable costs
and expenses (including but not limited to architects',  attorneys',  engineers'
and other consultants' fees) incurred in the consideration of, or response to, a


                                      -31-

<PAGE>

request by Lessee for any Lessor consent,  including but not limited to consents
to an assignment,  a subletting or the presence or use of a Hazardous Substance,
shall be paid by Lessee upon receipt of an invoice and supporting  documentation
therefor.  Lessor's  consent  to any act,  assignment  or  subletting  shall not
constitute an  acknowledgment  that no Default or Breach by Lessee of this Lease
exists,  not shall such consent be deemed a waiver of any then existing  Default
or Breach,  except as may be otherwise  specifically stated in writing by Lessor
at the time of such  consent.  The  failure  to specify  herein  any  particular
condition to Lessor's consent shall not preclude the imposition by Lessor at the
time of consent of such further or other  conditions as are then reasonable with
reference to the  particular  matter for which  consent is being  given.  In the
event that  either  Party  disagrees  with any  determination  made by the other
hereunder  and  reasonably  requests  the  reasons for such  determination,  the
determining  party shall furnish its reasons in writing and in reasonable detail
within ten (10) business days following such request.

37.      Guarantor.

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

         37.2  Default.  It shall  constitute  a  Default  of the  Lessee if any
Guarantor  fails or  refuses,  upon  request to  provide:  (a)  evidence  of the
execution of the  guaranty,  including  the  authority  of the party  signing on
Guarantor's  behalf  to  obligate  Guarantor,  and in the  case  of a  corporate
Guarantor,  a  certified  copy  of  a  resolution  of  its  board  of  directors
authorizing the making of such guaranty, (b) current financial statements, (c) a
Tenancy  Statement,  or (d) written  confirmation  that the guaranty is still in
effect.

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

39.      Options.

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

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



                                      -32-

<PAGE>

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

         39.4     Effect of Default on Options.

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

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

                  (c) An Option shall  terminate  and be of no further  force or
effect,  notwithstanding  Lessee's  due and timely  exercise of the Option,  if,
after such  exercise and prior to the  commencement  of the extended  term,  (i)
Lessee  fails to pay Rent for a period  of  thirty  (30)  days  after  such Rent
becomes due  (without  any  necessity  of Lessor to give notice  thereof),  (ii)
Lessor gives to Lessee three (3) or more notices of separate  Default during any
twelve (12) month  period,  whether or not the Defaults  are cured,  or (iii) if
Lessee commits a Breach of this Lease.

40.  Multiple  Buildings.  If the  Premises  are a party of a group of buildings
controlled by Lessor,  Lessee agrees that it will observe all  reasonable  rules
and  regulations  which  Lessor  may make from time to time for the  management,
safety,  and care of said properties,  including the care and cleanliness of the
grounds and including the parking,  loading and unloading of vehicles,  and that
Lessee  will pay its fair  share  of  common  expenses  incurred  in  connection
therewith.

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

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



                                      -33-

<PAGE>

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

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

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

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

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

48.  Multiple  Parties.  If more than one  person  or entity is named  herein as
either  Lessor or Lessee,  such  multiple  Parties  shall have joint and several
responsibility to comply with the terms of this Lease.

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


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



                                      -34-

<PAGE>




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

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

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

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

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


Executed at:                               |Executed at: San Diego, California
on:                                        |on:  March 5, 1999
By LESSOR:                                 |By LESSEE:
                                           |
Carmel Mountain #8 Associates, L.P.,       |Imaging Technologies Corporation,
A California limited partnership           |     a Delaware Corporation
By:    Chancellor Development Corporation, |By: /s/ Brian Bonar
       a California corporation,           |Name Printed:   Brian Bonar
       General Partner                     |Title:     Chief Executive Officer
       By: /s/ Roger A.P. Joseph           |
                Roger A.P. Joseph          |
       Its:     President                  |
Date: March 5, 1999                        |By: /s/ Christopher W. McKee
                                           |Named Printed: Christopher  W. McKee
                                           |Title:  Vice President of Finance  
                                           |        and Operations           
Carmel Mountain Environmental LLC,         |Address:  11031 Via Frontera       
 a California limited liability company    |          San Diego, CA  92127     
                                           |                                  
                                           |Telephone:   (619) 613-1300      
By:   /s/ Bruce E. Tabb                    |Facsimile:   (619) 613-1311        
       Bruce E. Tabb                       |Federal ID No.  33-0021693      
Its:   Managing Member                     |                               
Telephone:  (619) 457-4501                 |  
Facsimile:  (619) 457-4511                 |                      
                                           |  
                                           |                                    
                                              

                                      -35-

<PAGE>



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



                                      -36-

<PAGE>


Page 1 of 3

                                    ADDENDUM

THIS IS AN ADDENDUM TO THAT CERTAIN INDUSTRIAL BUILDING LEASE DATED FEBRUARY 22,
1999, BY AND BETWEEN CARMEL MOUNTAIN #8 ASSOCIATES,  L.P., A CALIFORNIA  LIMITED
PARTNERSHIP,  AS  LESSOR,  AND  IMAGING  TECHNOLOGIES  CORPORATION,  A  DELAWARE
CORPORATION, AS LESSEE, FOR THE PROPERTY LOCATED AT 15175 INNOVATION DRIVE, CITY
OF   SAN    DIEGO,    COUNTY    OF   SAN    DIEGO,    STATE    OF    CALIFORNIA.
--------------------------------------------------------------------------------


Page 1 of 3


50.      Base Rental Adjustment.

                  (a)    The Base  Rent  shall be  $40,500.00  per month for the
                         period from April 1, 1999 through March, 2000.

                  (b)    The Base  Rent  shall be  $50,754.00  per month for the
                         period from April 1, 2000 through March, 2001.

                  (c)    The Base  Rent  shall be  $52,784.16  per month for the
                         period from April 1, 2001 through March, 2002.

                  (d)    The Base  Rent  shall be  $54,895.53  per month for the
                         period from April 1, 2002 through March, 2003.

                  (e)    The Base  Rent  shall be  $57,091.35  per month for the
                         period from April 1, 2003 through March, 2004.

                  (f)    The Base  Rent  shall be  $59,375.00  per month for the
                         period from April 1, 2004 through March, 2005.

                  (g)    The Base  Rent  shall be  $61,750.00  per month for the
                         period from April 1, 2005 through March, 2006.

51.  Signage.  Lessee shall have the  exclusive  sign rights on the building and
monument  area where  designated,  as well as the right to  install  directional
signage at the main entrance subject to the Project's Covenants, Conditions, and
Restrictions,  Lessor's approval (which shall not be unreasonably withheld), and
all other governmental approvals. Lessee shall pay for all costs relating to the
design, installation, permitting and removal of said signage.




<PAGE>


Page 2 of 3

52.  Delivery of Service  Contracts.  Lessor shall provide  Lessee a list of all
vendors and copies of their maintenance service contracts  currently  performing
service for the Premises within ten (10) days of mutual execution of the Lease.

53. Property Owners  Association  Fees. Lessee shall pay for the Property Owners
Association Fees for the Premises,  which are estimated at approximately $445.00
per month.

54. St. Bernard  Software Lease.  Lessee is aware that a portion of the Premises
is currently under a Lease Agreement with St. Bernard Software, Inc. ("Tenant"),
who is obligated to pay rent on the subject Premises through and including April
30, 1999, unless terminated  earlier by Landlord.  As of May 1, 1998, Tenant has
been holding over pursuant to Section 26 of their Lease. The monthly rental rate
due and  payable by Tenant,  to  Landlord  is  $2,058.94.  By the terms of their
agreement with Tenant (see attached  Exhibit "C," "Holdover at Leased  Premises,
15175 Innovation Drive, San Diego"), Landlord has the right to serve Tenant with
a thirty  (30) day notice to vacate the  Premises  at any time  during the Lease
Term. This right is  non-reciprocal.  This Agreement shall be assigned to Lessee
beginning  April 1, 1999 and Lessee shall be entitled to any rental  income from
Tenant as a result of this Agreement from that date forward.

55. Palomar Pomerado Health Systems Parking Spaces.  Lessee is aware that Lessor
has deeded to the adjacent  property  owner,  Palomar  Pomerado  Health Systems,
approximately  twenty-six (26) parking spaces  designated as "NOT A PART" on the
attached  Exhibit  "A" and  that  these  spaces  are not a part of the  Premises
described in Paragraph 1.2 of the Lease.

56.  Management Fee. Lessee shall pay to Lessor,  on the first day of each month
during the term hereof, $650.00 for Lessor's management of the Premises.  Lessor
reserves  the right in its sole  discretion  to adjust this fee  upward,  should
Lessor  determine  that this amount is not adequate to cover  Lessor's  costs to
manage the Premises.

57. Premises Condition. Subject to the provisions of Paragraph 2.2 of the lease,
Lessee  shall accept the  Premises in an "as is"  condition  with all systems in
good  working  order and repair as of the start date.  Lessee shall have fifteen
(15) days from the start date to notify Lessor in writing of any  non-compliance
with Lessor's warranty described in Paragraph 2.2 of the Lease.



LESSOR:                                        LESSEE:
Carmel Mountain #8 Associates, L.P.,           Imaging Technologies Corporation,
a California limited partnership               a Delaware corporation
By:  Chancellor Development Corporation,
     a California corporation,
     General Partner




<PAGE>


Page 3 of 3

        By:   /s/ Roger A.P. Joseph            By:   /s/ Brian Bonar
              ---------------------                  ---------------------------
                  Roger A.P. Joseph                    Brian Bonar
        Its:      President                    Title:  Chief Executive Officer
Date:   March 5, 1999                          Date:   March 5, 1999

Carmel Mountain Environmental LLC,
a California limited liability company

By:   /s/ Bruce E. Tabb                        By:   /s/ Christopher W. McKee
      -----------------                              ---------------------------
        Bruce E. Tabb                                  Christopher W. McKee
Its:    Managing Member                        Title:  Vice President of Finance
Date:   March 5, 1999                                  and Operations
                                               Date:   March 5, 1999