LEASE AGREEMENT


                                    Between

                           ACBEL TECHNOLOGIES, INC.,
                                 as "Landlord"


                                      and

                           BELL MICROPRODUCTS, INC.,
                                  as "Tenant"


                                       i

<PAGE>
<TABLE>
<CAPTION>

                                  BASIC LEASE INFORMATION
<S>                               <C>
Lease Date:                       For identification purposes only, the date of this Lease is
                                  August 1, 1999

Landlord:                         ACBEL TECHNOLOGIES, INC., DBA SUN MOON STAR, a
                                  California corporation

Tenant:                           BELL MICROPRODUCTS, INC., a California corporation

Building Address:                 1941 Ringwood Avenue
                                  San Jose, California 95131
Rentable Area of
Building:                         Approximately 56,840 square feet

Premises Address:                 1941 Ringwood Avenue, Suite 200
                                  San Jose, California 95131
Rentable Area of
Premises:                         Approximately 22,868 square feet

Term:                             September 1, l999 through December 31, 2002

Scheduled                         September 1, 1999
Commencement Date:

Expiration Date:                  December 31, 2002

Base Rent:                        Commencement Date through 5/31/2000: $28,585.00 per month
                                  (based upon a monthly rate of $1.25 per rentable square foot in the
                                  Premises)
                                  6/1/2000 -- 5/31/2001: $30,871.80 per month (based upon a
                                  monthly rate of $1.35 per rentable square foot in the Premises)
                                  6/1/2002 -- 5/31/2002: $33,158.60 per month (based upon a
                                  monthly rate of $1.45 per rentable square foot in the Premises)
                                  6/1/2002 -- 12/31/2002 $34,302.00 per month (based upon a
                                  monthly rate of $1.50 per rentable square foot in the Premises)

Permitted Use:                    Marketing, research and development, storage and distribution of
                                  pc-related products, administrative and general office, but only to
                                  the extent  permitted  by the City of San Jose and  County  of Santa
                                  Clara  and all agencies and governmental authorities having
                                  jurisdiction thereof.

Maintenance,                      This is a "triple net lease" where Tenant is responsible for
Operating Costs and               maintenance, operating costs and taxes, all in accordance with the
Taxes:                            applicable provisions of the Lease.
Security Deposit:                 $34,302.00

Landlord's Address                1941 Ringwood Avenue, Suite 200
until Commencement                San Jose, CA 95113
Date:
                                  with a copy to:

                                  General Counsel Associates LLP
                                  1891 Landings Drive
                                  Mountain View, CA 94043
                                  Attn:   Naomi A. Vargas


                                      -1-
<PAGE>


Tenant's Address:                 1941 Ringwood Avenue, Suite 100
                                  San Jose, CA 95131


Broker(s):                        None
</TABLE>

Exhibits:
--------
Exhibit A: The Premises
Exhibit B: Expansion Space



        The Basic Lease Information set forth above is part of the Lease. In the
event of any conflict  between any provision in the Basic Lease  Information and
the Lease, the Lease shall control.


                                      -2-

<PAGE>

         THIS  LEASE is made as of the Lease  Date set forth in the Basic  Lease
Information,  by  and  between  the  Landlord  identified  in  the  Basic  Lease
Information  ("Landlord"),   and  the  Tenant  identified  in  the  Basic  Lease
Information ("Tenant"). Landlord and Tenant hereby agree as follows:

1.       PREMISES.  In  consideration  for the rents and all other  charges  and
payments  payable by Tenant,  and for the agreements  terms and conditions to be
performed by Tenant in this Lease,  Landlord  does hereby  lease to Tenant,  and
Tenant does hereby hire and take from  Landlord,  the premises  described in the
Basic  Lease  Information  (the  "Premises"),  upon the  agreements,  terms  and
conditions of this Lease for the Term hereinafter  stated.  The Premises demised
by this Lease consists of a building  identified in the Basic Lease  Information
(the  "Building").  The Premises has the address and contains the square footage
specified in the Basic Lease  Information.  The location and  dimensions  of the
Premises  are  depicted on the attached  Exhibit A  incorporated  herein by this
reference.  Tenant shall also have the exclusive  right to use the parking areas
appurtenant to the Building. The Building,  together with the parking facilities
serving the Building  ("Parking"),  and the parcel of land on which the Building
and the  Parking  are  situated  are  collectively  referred  to  herein  as the
"Property".

2.       TERM; POSSESSION.

         2.1 Term.  The term of this Lease (the  "Term")  shall  commence on the
date set forth in the Basic Lease Information  ("Commencement  Date"), and shall
expire on the date set forth in the Basic  Lease  Information  (the  "Expiration
Date").

         2.2 Delivery and Acceptance of Possession.  It is  specifically  agreed
between  the  parties  that  Landlord  shall  not be  required  to make,  nor be
responsible  for any cost, in connection with any repair,  restoration,  and /or
improvements to the Premises in order for this Lease to commence, or thereafter,
throughout  the term of this Lease except as expressly  set forth in this Lease.
Tenant shall accept the Premises as being in good condition and repair and shall
accept the Premises and the improvements therein in the condition that exists at
the Commencement Date and without any  representation or warranty by Landlord as
to the condition of the Premises or as to the compliance of the Premises, or any
portion thereof,  with environmental laws, seismic and earthquake  requirements,
the Americans  with  Disabilities  Act of 1990,  applicable  zoning,  municipal,
county,  state, and federal laws, ordinances and regulations or any covenants or
restrictions of record  (collectively,  "Applicable Laws"), or as to the present
and future  suitability  of the Premises for Tenant's  intended use.  Tenant has
made such investigation as it deems necessary with reference to such matters, is
satisfied with reference thereto, and assumes all responsibility therefor as the
same  relate to  Tenant's  occupancy  of the  Premises  and/or the terms of this
Lease.  Neither  Landlord,  nor any of Landlord's  agents,  has made any oral or
written representations or warranties with respect to said matters other than as
set  forth  in  this  lease.

         2.3 Delay in Delivery of Possession.  Tenant acknowledges that Landlord
is in the  process  of  locating  replacement  premises  in order to  accomodate
Tenant's expansion needs. If for any reason including the failure of Landlord to
locate  new  premises  for its  business  operations,  Landlord  cannot  deliver
possession  of the Premises to  Sublessee  for any reason  whatsoever,  Landlord
shall not be subject to any liability  therefor,  nor shall such failure  affect
the validity of this Lease.  Tenant shall not, however, be obligated to pay Rent
or perform its other obligations  until it receives  possession of the Premises.
Notwithstanding the foregoing, if possession of the Premises is not delivered to
Tenant  within 90 days  following  the scheduled  Commencement  Date,  Tenant or
Landlord may elect to terminate  this Lease upon written notice to the other and
Landlord shall promptly refund all monies previously tendered by Tennant.


3.       RENT.

         3.1 Base Rent. Tenant agrees to pay to Landlord the Base Rent set forth
in the Basic Lease Information, without prior notice or demand, on the first day
of each and every calendar month during the Term,  except that Base Rent for the
first  full  calendar  month in which  Base Rent is  payable  shall be paid upon
Tenant's  execution  of this  Lease and Base Rent for any  partial  month at the
beginning of the Term shall be paid on the Commencement  Date. Base Rent for any
partial


                                      -3-
<PAGE>


month at the beginning or end of the Term shall be prorated  based on the actual
number of days in the month.  All Rent shall be paid without offset,  recoupment
or  deduction  in lawful  money of the United  States of America to  Landlord at
Landlord's Address as set forth in the Basic Lease Information, or to such other
person or at such other place as Landlord  may from time to time  designate.  If
the Basic Lease Information provides for any change in Base Rent by reference to
years or months  (without  specifying  particular  dates),  the change will take
effect on the applicable monthly anniversary of the Commencement Date.

         3.2 Additional  Rent.  This Lease is intended to be a triple-net  Lease
with respect to Landlord;  and except as specifically  provided for herein,  the
Base Rent  owing  hereunder  shall  not to be  reduced,  offset  or  diminished,
directly or  indirectly,  by any cost,  charge or expense  payable  hereunder by
Tenant or by others in  connection  with the Premises,  the Building  and/or the
Property  or any part  thereof.  Base Rent and all other sums owing to  Landlord
under  this  Lease  shall be  considered  to be  additional  rent  (collectively
"Additional  Rent").  Any  items of  Additional  Rent  which  would be  properly
capitalized  shall be amortized  over the useful life of the item in question in
accordance with generally accepted accounting  principles,  and Tenant shall pay
the amortized  cost thereof to Landlord,  together with interest  thereon at the
rate of eight percent (8%) per annum.  on a monthly basis during the Lease Term.
Tenant  shall pay  Additional  Rent to Landlord  within  thirty (30) days after
written demand.

         3.3  Security  Deposit:  Upon  execution  of this Lease,  Tenant  shall
deposit  with  Landlord  the  amount  set forth in the Basic  Lease  Summary  as
security for the performance by Tenant of its obligations  under this Lease, and
not as prepayment of rent (the  "Security  Deposit").  Landlord may from time to
time apply such portion of the Security  Deposit as is reasonably  necessary for
the  following  purposes:  (a) to remedy any default by Tenant in the payment of
rent;  (b) to repair  damage  to the  Premises  caused  by  Tenant  which is not
repaired by Tenant within any applicable  notice and cure periods;  (c) to clean
the Premises upon  termination of the Lease; and (d) to remedy any other default
of Tenant to the extent  permitted  by Law, and in this  regard,  Tenant  hereby
waives any  restriction  on the uses to which the  Security  Deposit  may be put
contained in  California  Civil Code Section  1950.7.  In the event the Security
Deposit or any  portion  thereof is so used,  Tenant  agrees to pay to  Landlord
promptly  upon  demand an amount in cash  sufficient  to  restore  the  Security
Deposit to the full original  amount.  Landlord shall not be deemed a trustee of
the Security  Deposit and shall not be required to segregate it from its general
accounts.  Tenant shall not be entitled to any interest on the Security Deposit.
If Landlord transfers the Premises during the Lease Term, Landlord shall pay the
Security Deposit to any transferee of Landlord's interest in conformity with the
provisions of California Civil Code Section 1950.7 and/or any successor statute,
in which event the transferring Landlord will be released from all liability for
the return of the Security Deposit.

         3.4 Relocation Fee. In order to accommodate  Tenant's  request to lease
the Premises, which are currently occupied by Landlord,  Landlord is agreeing to
relocate its business operations to another location.  As consideration for such
relocation, Tenant agrees to pay to Landlord, concurrently with the execution of
this Lease, the sum of Thirty-Two Thousand Five Hundred Dollars ($32,500.00).

4.       MAINTENANCE AND REPAIRS.

         4.1 Tenant=s  Obligations.  Tenant  currently is leasing the  remaining
portion of the Building (i.e., Suite 100) under a Lease dated March 17, 1992, as
subsequently  amended  ("Suite 100 Lease").  By leasing the Premises  under this
Lease, Tenant will be the only tenant in the Building,  and accordingly,  Tenant
agrees  that,  except  as  provided  in  Section  4.2  below,  Tenant  shall  be
responsible  to  clean,   maintain  and  repair  the  entire  Property  and  all
improvements  thereon,  including,  without limitation,  landscaping  (including
cleaning the parking lot and  sidewalks),  all interior  areas of the  Building,
which  shall  include  periodic  janitorial  service;  repair-maintenance,   and
replacement  of the lighting and plumbing  fixtures;  the restrooms  serving the
Building;  any  interior  stairways in the  Building;  the interior and exterior
glass,  plate glass and skylights;  interior  walls;  floor  coverings;  ceiling
(ceiling tiles and grid); Alterations; fire extinguishers;  outlets and fixtures
and any appliances in


                                      -4-
<PAGE>


the Building, in a first class condition, and keep the Building in a clean, safe
and orderly  condition.  Prior to the  Commencement  Date,  Tenant shall provide
Landlord with a copy of a service contract with a licensed  commercial  heating,
ventilating and air-conditioning maintenance company (which contract and company
shall be subject to Landlord=s  prior approval,  which shall not be unreasonably
withheld or delayed), to maintain, on an ongoing basis (at least quarterly), the
heating,  ventilating and air-conditioning system ("HVAC") serving the Building.
Tenant  shall be  responsible  for all repairs and  maintenance  of the Building
Systems.  To the extent that the provisions in the Suite 100 Lease regarding the
maintenance,  repair and replacement  obligations of the parties with respect to
the Property or any portion thereof conflict with this Article 4, the provisions
of this Section 4 shall prevail.

         4.2 Landlord=s Obligations.  Landlord shall assign to Tenant all rights
Landlord may have to  reimbursement  from others for the repairs and maintenance
to be performed by Tenant, whether pursuant to a warranty, guarantee,  insurance
policy or other claim.  Except to the extent  necessitated by the negligent acts
or  omissions  or  willful  misconduct  of  Tenant,  its  agents,  employees  or
contractors,  or Tenant=s  misuse of the Building,  Landlord shall (a) maintain,
repair and replace, if necessary, at its sole cost, or permit Tenant to perform,
under the direction and at the cost of Landlord,  the structural elements of the
Building,  (which  shall  consist of the beams,  columns,  bearing  walls,  roof
structure,  and foundations),  (b) replace,  if necessary,  at its sole cost, or
permit Tenant to perform,  under the direction and at the cost of Landlord,  the
HVAC compressor serving the Building,  and (c) maintain,  repair and replace, if
necessary,  subject to  reimbursement  by Tenant as  Additional  Rent,  the roof
membrane,  including the plywood sheathing, the plumbing and electrical systems,
the hardscape  (consisting of the parking lot and  sidewalks),  and the exterior
walls of the  Building.  Any such  repairs  performed  by Tenant under (b) above
shall require the approval of Landlord, which approval shall not be unreasonably
withheld.  As a material part of the consideration for this Lease, Tenant hereby
waives any  benefits of any  applicable  existing or future Law,  including  the
provisions of California Civil Code Sections 1932(1), 1941 and 1942, that allows
a tenant to make repairs at its landlord=s  expense.  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 Building,  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.

    4.3 Landlord=s  Rights.  Landlord hereby  reserves the right,  upon 48 hours
prior oral or written  notice to Tenant  (or  without  notice in the event of an
emergency)  from  time  to  time,  without  liability  to  Tenant,  and  without
constituting an eviction,  constructive or otherwise, or entitling Tenant to any
abatement of rent or to terminate this Lease or otherwise  releasing Tenant from
any of  Tenant=s  obligations  under  this  Lease:


                  (a) To make alterations,  additions,  repairs, improvements to
or in all or any part of the Premises,  the fixtures and equipment therein,  and
the Premises  Systems  (except that Landlord shall not have any right under this
provision  to  materially  reduce  the  size of the  Premises,  or  permanently,
materially  and  adversely  affect  Tenant=s  access to and use of the Premises,
except only as may be required to comply with Laws or as a result of any fire or
other casualty, or Condemnation);

                  (b) To change the Premises=name or street address; and

                  (c) If any governmental  authority  promulgates or revises any
Law or imposes mandatory or voluntary controls or guidelines on Landlord or the
Premises  relating  to the use or  conservation  of energy or  utilities  or the
reduction of automobile or other emissions or reduction or management of traffic
or  parking  on the  Premises  (collectively  AControls=),  to comply  with such
Controls,  whether  mandatory  or  voluntary,  or make  any  alterations  to the
Premises related thereto;  provided, that Tenant shall not be required to comply
with any such Controls  requiring  capital  improvements  to the Premises unless
such  improvements  are required  solely due to Tenant's  particular  use of the
Premises.

                  (d) In exercising its rights under this Section 7.3,  Landlord
agrees to use reasonable  efforts to minimize any  interruption to or disruption
of Tenant=s use of the Premises.


                                      -5-
<PAGE>


5.       USE AND COMPLIANCE WITH LAWS.

         5.1  Limitation  on Use:  Tenant shall not use the Premises for any use
other than the Permitted Use specified in the Basic Lease  Summary,  without the
prior  written  consent of  Landlord  which will not be  unreasonably  withheld.
Tenant  shall not do  anything  in or about the  Premises  which  will (i) cause
structural  injury  to the  Building,  or (ii)  cause  damage to any part of the
Building  except to the extent  reasonably  necessary  for the  installation  of
Tenant's  Trade  Fixtures  and Tenant's  Alterations,  and then only in a manner
which has been first  approved by Landlord in writing.  Tenant shall not operate
any equipment  within the Premises which will (i) materially  damage any portion
of the Property,  (ii) overload existing  electrical systems or other mechanical
equipment  servicing the Building,  (iii) impair the efficient  operation of the
sprinkler system, the HVAC equipment,  mechanical,  plumbing,  electrical,  fire
protection,   life   safety,   security  or  other   systems  in  the   Building
(collectively,  "Building  Systems"),  or (iv)  damage,  overload or corrode the
sanitary sewer system.  Tenant shall not attach,  hang or suspend  anything from
the ceiling, roof, walls or columns of the Building or set any load on the floor
in excess of the load limits for which such items are  designed nor operate hard
wheel  forklifts  within  the  Premises.  Any  dust,  fumes,  or waste  products
generated  by Tenant's use of the  Premises  shall be contained  and disposed so
that they do not (i) create an unreasonable  fire or health hazard,  (ii) damage
the Premises, or (iii) result in the violation of any Applicable Laws. Except as
approved by  Landlord,  Tenant  shall not change the exterior of the Building or
install any equipment or antennas on or make any penetrations of the exterior or
roof of the  Building.  Tenant  shall  not  commit  any  waste in or  about  the
Premises,  and Tenant shall keep the Premises in a neat,  clean,  attractive and
orderly  condition,  free of any  nuisances.  Tennant  shall not conduct  on any
portion of the  Premises or the  Property  any sale of any kind,  including  any
public or private auction, fire sale,  going-out-of-business sale, distress sale
or other liquidation sale.

         5.2 Compliance with  Regulations:  Tenant shall not use the Premises in
any manner which violates any Applicable Laws which affect the Premises.  Tenant
shall abide by and  promptly  observe and comply with all Laws and all  recorded
covenants,  conditions and restrictions relating to the Property  (collectively,
"Private  Restrictions").  Tenant shall not use the Premises in any manner which
will cause a cancellation of any insurance policy covering Tenant's  Alterations
or any  improvements  installed  by  Landlord  at its  expense or which poses an
unreasonable risk of damage or injury to the Premises. Tenant shall not sell, or
permit to be kept,  used, or sold in or about the Premises any article which may
be prohibited by the standard form of fire  insurance  policy,  except as may be
permitted by Landlord in writing after  Tenant's  disclosure  of the  prohibited
article and the means by which  Tenant shall  protect the Premises  from fire or
other  casualty.  Tenant shall comply with all  reasonable  requirements  of any
insurance company,  insurance  underwriter,  or Board of Fire Underwriters which
are necessary to maintain the insurance  coverage  carried by either Landlord or
Tenant pursuant to this Lease.  Notwithstanding anything to the contrary in this
Lease,  Tenant  shall not be required  to cause the  Premises to comply with any
Laws or Private Restrictions requiring structural changes to the Premises unless
the compliance with such Laws or Private Restrictions is necessitated solely due
to Tenant's particular use of the Premises.

         5.3  Outside  Areas:  No  materials,  supplies,  tanks  or  containers,
equipment,   finished  products  or  semi-finished   products,   raw  materials,
inoperable  vehicles or articles of any nature shall be stored upon or permitted
to remain  outside of the Premises  except in fully  fenced and  screened  areas
outside the  Building  which have been  designed  for such purpose and have been
approved in writing by Landlord for such use by Tenant.

         5.4 Signs:  Tenant  shall not place on any portion of the  Premises any
sign, placard, lettering in or on windows, banner, displays or other advertising
or  communicative  material  which is visible  from the exterior of the Building
without the prior  written  approval of Landlord,  which  approval  shall not be
unreasonably  withheld.  Notwithstanding  the  foregoing,  Landlord  agrees that
Tenant may install a monument sign on the Property  similar to the monument sign
located at Tenant's  other  facility in Santa Clara  Valley.  All signs approved
permitted to be placed on the  Premises,  the  Building  and the Property  shall
strictly conform to all Applicable Laws and shall be installed at the expense of
Tenant.  Tenant shall maintain such signs in good  condition and repair.  At the
expiration or earlier  termination of this Lease, Tenant shall remove all of its
signs and repair and damage caused as a result.


                                      -6-
<PAGE>

         5.6 Hazardous Materials.

                  (a) As used in this  Lease,  the  term  "Hazardous  Materials"
shall mean and include any  substance  that is or  contains  (1) any  "hazardous
substance"  as now or  hereafter  defined in ss.  101(14)  of the  Comprehensive
Environmental  Response,  Compensation,  and  Liability  Act of 1980, as amended
("CERCLA") (42 U.S.C.  ss. 9601 et seq.) or any  regulations  promulgated  under
CERCLA;  (2) any "hazardous  waste" as now or hereafter  defined in the Resource
Conservation  and Recovery Act, as amended ("RCRA") (42 U.S.C. ss. 6901 et seq.)
or any  regulations  promulgated  under RCRA; (3) any substance now or hereafter
regulated by the Toxic  Substances  Control Act, as amended  ("TSCA") (15 U.S.C.
ss. 2601 et seq.) or any  regulations  promulgated  under TSCA;  (4)  petroleum,
petroleum by-products,  gasoline,  diesel fuel, or other petroleum hydrocarbons;
(5) asbestos and  asbestos-containing  material, in any form, whether friable or
non-friable;   (6)  polychlorinated  biphenyls;  (7)  lead  and  lead-containing
materials;  or (8) any additional substance,  material or waste (A) the presence
of which on or about the  Premises  (i)  requires  reporting,  investigation  or
remediation under any Environmental Laws (as hereinafter  defined),  (ii) causes
or  threatens  to cause a  nuisance  on the  Premises  or any  adjacent  area or
property  or poses or  threatens  to pose a hazard  to the  health  or safety of
persons on the Premises or any adjacent area or property,  or (iii) which, if it
emanated or migrated  from the  Premises,  could  constitute a trespass,  or (B)
which is now or is hereafter  classified  or considered to be hazardous or toxic
under any Environmental Laws.

         (b) As used in this Lease, the term "Environmental Laws" shall mean and
include (1) CERCLA,  RCRA and TSCA;  and (2) any other  federal,  state or local
laws, ordinances,  statutes, codes, rules, regulations, orders or decrees now or
hereinafter  in  effect  relating  to  (A)  pollution,  (B)  the  protection  or
regulation  of human  health,  natural  resources  or the  environment,  (C) the
treatment,  storage or disposal of  Hazardous  Materials,  or (D) the  emission,
discharge,  release  or  threatened  release  of  Hazardous  Materials  into the
environment.

         (c) Tenant  agrees that during its use and occupancy of the Premises it
will (1)) not release, store, transport,  generate,  discharge or dispose of any
Hazardous  Materials on, in, at, under,  or emanating  from,  the Premises,  the
Building or the Property;  or authorize Tenant's Agents or anyone else under its
control to do so, (2) comply with all Environmental Laws relating and the use of
Hazardous  Materials on or about the  Premises by Tenant or Tenant's  Agents and
not engage in or permit  others  under its control to engage in any  activity at
the Premises in violation of any Environmental  Laws; and (3) immediately notify
Landlord of (A) any inquiry,  test,  investigation or enforcement  proceeding by
any governmental  agency or authority against Tenant,  Landlord or the Premises,
Building  or  Property  relating  to  any  Hazardous   Materials  or  under  any
Enviornmental  Laws or (B) the  occurrence  of any  event  or  existence  of any
condition  that would cause a breach of any of the  covenants  set forth in this
Section 5.6.

         (d) If Tenant's  use of  Hazardous  Materials  on or about the Premises
results in a release,  discharge or disposal of Hazardous  Materials on, in, at,
under,  or emanating  from, the Premises,  the Building or the Property,  Tenant
agrees to investigate, clean up, remove or remediate such Hazardous Materials in
full compliance with (1) the requirements of (A) all Environmental  Laws and (B)
any  governmental  agency or authority  responsible  for the  enforcement of any
Environmental  Laws;  and (2) any additional  requirements  of Landlord that are
reasonably  necessary to protect the value of the Premises,  the Building or the
Property.

         (e) If  Tenant's  business  operations  involve  the  use of  Hazardous
Materials other than the normal use of customary  household and office supplies,
Tenant also agrees at Tenant's expense:  (1) to install such Hazardous Materials
monitoring,  storage  and  containment  devices  as  Landlord  reasonably  deems
necessary  (Landlord  shall have no obligation to evaluate the need for any such
installation or to require any such  installation);  and (2) to retain each year
by no later than the  Anniversary  Date a  qualified  environmental  consultant,
acceptable to Landlord,  to evaluate  whether  Tenant is in compliance  with all
applicable  Environmental Laws. Tenant, at its expense, shall submit to Landlord
a report from such  environmental  consultant which discusses the  environmental
consultant's  findings  within  sixty  (60) days after  each  Anniversary  Date.
Tenant,


                                      -7-
<PAGE>


at its  expense,  shall  promptly  undertake  and  complete  any and  all  steps
necessary,  and in full compliance with applicable  Environmental Laws, to fully
correct any and all problems or  deficiencies  identified  by the  environmental
consultant   that  were  caused  by  Tenant  or  Tenant's   agents,   employees,
contractors,  or invitees or the agents,  employees,  contractors or invitees of
Tenant's  subtenants  (collectively,  "Tenant's  Agents") and  promptly  provide
Landlord with documentation of all such corrections.

         (f) Upon reasonable notice to Tenant, Landlord may inspect the Premises
and surrounding areas for the purpose of determining  whether there exists on or
about the Premises any Hazardous Material or other condition or activity that is
in violation of the  requirements  of this Lease or of any  Environmental  Laws.
Such  inspections may include,  but are not limited to, entering the Premises or
adjacent  property  with  drill  rigs or  other  machinery  for the  purpose  of
obtaining  laboratory  samples.  Landlord  shall not be limited in the number of
such  inspections  during  the  Term  of  this  Lease.  In the  event  (1)  such
inspections  reveal  the  presence  of any  such  Hazardous  Material  or  other
condition  or activity  caused by Tenant or Tenant's  Agents in violation of the
requirements  of this Lease or of any  Environmental  Laws, or (2) Tenant or its
Agents cause or permit the presence of any  Hazardous  Materials  in, on, under,
through or about the Premises,  the Building or the Property or  exacerbate  the
condition of or the conditions caused by any Hazardous  Materials in, on, under,
through or about the  Premises,  the  Building  or the  Property,  Tenant  shall
reimburse  Landlord  for the cost of such  inspections  within  ten (10) days of
receipt of a written  statement  therefor.  Tenant will supply to Landlord  such
historical and  operational  information  regarding the Premises and surrounding
areas as may be reasonably  requested to facilitate any such inspection and will
make  available  for meetings  appropriate  personnel  having  knowledge of such
matters.  Tenant  agrees to give Landlord at least sixty (60) days' prior notice
of its  intention  to  vacate  the  Premises  so  that  Landlord  will  have  an
opportunity  to perform such an  inspection  prior to such  vacation.  The right
granted to  Landlord  herein to perform  inspections  shall not create a duty on
Landlord's  part to inspect the  Premises,  or liability on the part of Landlord
for Tenant's  use,  storage,  treatment or disposal of Hazardous  Materials,  it
being  understood  that Tenant shall be solely  responsible for all liability in
connection therewith.

         (g) Landlord shall have the right,  but not the obligation,  prior to a
Default upon five (5) days written  notice (or without notice in the event of an
emergency or to prevent  imminent  injury or damage) or subsequent to a Default,
without in any way limiting  Landlord's  other  rights and  remedies  under this
Lease,  to enter upon the  Premises,  or to take such other  actions as it deems
necessary or  advisable,  to  investigate,  clean up,  remove or  remediate  any
Hazardous  Materials or contamination by Hazardous Materials present on, in, at,
under,  or  emanating  from,  the  Premises,  the  Building  or the  Property in
violation of Tenant's  obligations  under this Lease or under any  Environmental
Laws.  Notwithstanding  any other  provision of this Lease,  Landlord shall also
have the  right,  at its  election,  in its own name or as  Tenant's  agent,  to
negotiate,  defend, approve and appeal, at Tenant's expense, any action taken or
order issued by any  governmental  agency or  authority  with regard to any such
Hazardous  Materials  caused by Tenant or Tenant's  Agents or  contamination  by
Hazardous  Materials  caused by Tenant or  Tenant's  Agents.  To the extent such
costs and  expenses  are not  incurred in response to any action  taken or order
issued by any governmental agency or authority,  Landlord agrees to exercise its
rights under this Section 5.6(g) prudently and to incur reasonable  expenditures
in  connection  therewith.  All such  costs and  expenses  paid or  incurred  by
Landlord in the exercise of the rights set forth in this  Section 5.6,  shall be
payable by Tenant upon demand.

         (h) Tenant shall surrender the Premises to Landlord upon the expiration
or  earlier  termination  of this  Lease  free of  debris,  waste  or  Hazardous
Materials  placed on, about or near the  Premises by Tenant or Tenant's  Agents,
including,  without  limitation,  the obtaining of any closure  permits or other
governmental permits or approvals related to Tenant's use of Hazardous Materials
in or about the Premises.  Tenant's  obligations and liabilities pursuant to the
provisions  of  this  Section  5.6  shall  survive  the  expiration  or  earlier
termination of this Lease. If it is determined by Landlord that the condition of
all or any portion of the Premises, the Building,  and/or the Property is not in
compliance with the provisions of this Lease with respect to Hazardous Materials
caused  by  Tenant  or  Tenant's  Agents,  including,  without  limitation,  all
Environmental Laws, at the expiration or earlier termination of this Lease, then
at Landlord's  sole option,  Landlord may require Tenant to hold over possession
of the  Premises  until  Tenant can  surrender  the  Premises to Landlord in the
condition in which the Premises existed as of the Commencement Date and prior to
the appearance of such Hazardous Materials caused by Tenant


                                      -8-
<PAGE>


or  Tenant's  Agents  except  for  normal  wear  and  tear,  including,  without
limitation,  the  conduct or  performance  of any  closures  as  required by any
Environmental  Laws.  The burden of proof  hereunder  shall be upon Tenant.  For
purposes  hereof,  the term  "normal  wear  and  tear"  shall  not  include  any
deterioration  in the condition or diminution of the value of any portion of the
Premises, the Building,  and/or the Property in any manner whatsoever related to
directly, or indirectly,  Hazardous Materials.  Any such holdover by Tenant will
be with  Landlord's  consent,  will not be  terminable by Tenant in any event or
circumstance  and will  otherwise be subject to the  provisions of Section 19 of
this Lease.

         (i) Tenant  agrees to indemnify  and hold  harmless  Landlord  from and
against any and all claims, losses (including, without limitation, loss in value
of  the  Premises,  the  Building  or the  Property,  liabilities  and  expenses
(including  reasonable  attorney's fees)) sustained by Landlord  attributable to
(1) any  Hazardous  Materials  caused or  permitted to be placed on or about the
Premises,  the  Building or the  Property by Tenant or Tenant's  Agents,  or (2)
Tenant's  breach  of any  provision  of this  Section  5.6.  Landlord  agrees to
indemnify and hold harmless  Tenant from and against any and all claims,  losses
(including  reasonable  attorney's fees) sustained by Tenant attributable to any
Hazardous  Materials  caused or permitted to be placed on or about the Premises,
the  Building  or the  Property by Landlord  or  Landlord's  agents,  employees,
contractors or invitees.

        (j)  Landlord  represents  and warrants to Tenant that (A) to its actual
knowledge  as of the  Lease  Date  specified  in the  Basic  Lease  Information,
Landlord has not received any written notice of any action,  proceeding or claim
that is pending or threatened  regarding the presence of any Hazardous Materials
on the Property or the failure of the Property to comply with any  Environmental
Laws;  and (B) Landlord has not caused any  Hazardous  Materials to be released,
used, stored or disposed of in violation of Environmental Laws in those Premises
delivered to Tenant on the Commencement Date of this Lease.

         (k) The  provisions of this Section 5.6 shall survive the expiration or
earlier termination of this Lease.

6.       TENANT IMPROVEMENTS & ALTERATIONS.

         6.1 Alterations. Tenant shall not make any alterations, improvements or
changes  to the  Premises,  including  installation  of any  security  system or
telephone or data  communication  wiring,  ("Alterations"),  without  Landlord's
prior  written  consent.  Any such  Alterations  shall be completed by Tenant at
Tenant's  sole  cost  and  expense:  (i)  with  due  diligence,  in a  good  and
workmanlike  manner,  using new  materials;  (ii) in  compliance  with plans and
specifications  approved by Landlord;  (iii) in compliance with the construction
rules  and  regulations  promulgated  by  Landlord  from  time to time;  (iv) in
accordance with all Applicable Laws (including all work,  whether  structural or
non-structural,  inside or outside the  Premises,  required to comply fully with
all Applicable Laws and  necessitated by Tenant's work);  and (v) subject to all
conditions which Landlord may in Landlord's  discretion impose.  Such conditions
may include requirements for Tenant to: (i) provide payment or performance bonds
or additional insurance (from Tenant or Tenant's contractors,  subcontractors or
design  professionals);  (ii) use  contractors or  subcontractors  designated by
Landlord;  and  (iii)  remove  all or part of the  Alterations  prior to or upon
expiration or  termination  of the Term, as designated by Landlord.  If any work
outside  the  Premises,  or any  work on or  adjustment  to any of the  Building
Systems,  is required in connection  with or as a result of Tenant's work,  such
work shall be  performed  at  Tenant's  expense  by  contractors  designated  by
Landlord.  Landlord's  right to review and approve  (or  withhold  approval  of)
Tenant's plans,  drawings,  specifications,  contractor(s)  and other aspects of
construction work proposed by Tenant is intended solely to protect Landlord, the
Property and Landlord's  interests.  No approval or consent by Landlord shall be
deemed or  construed  to be a  representation  or warranty by Landlord as to the
adequacy, sufficiency, fitness or suitability thereof or compliance thereof with
Applicable  Laws  or  other  requirements.   Except  as  otherwise  provided  in
Landlord's  consent,  all Alterations shall upon installation become part of the
realty and be the  property of  Landlord.  No consent  shall be required for any
Alteration  which does not affect basic Building  Systems,  the structure of the
Building or any portion of the Building other than the interior of the Building,
provided that the particular Alteration together with all other Alterations made
within twelve (12) months of the particular Alteration,  does not cost more than
$25,000.00. Tenant shall be required to provide


                                      -9-
<PAGE>


Landlord with thirty (30) days prior  written  notice of its intent to construct
any Alteration so that Landlord may post a notice of nonresponsibility.

         6.2 Additional  Requirements.  Before making any  Alterations for which
Landlord's  consent is required,  Tenant shall submit to Landlord for Landlord's
prior approval reasonably detailed final plans and specifications  prepared by a
licensed architect or engineer, a copy of the construction  contract,  including
the name of the contractor and all subcontractors proposed by Tenant to make the
Alterations  and a copy of the  contractor's  license.  Tenant  shall  reimburse
Landlord upon demand for any expenses  incurred by Landlord in  connection  with
any Alterations made by Tenant,  including reasonable fees charged by Landlord's
contractors or consultants to review plans and specifications prepared by Tenant
and to update the existing as-built plans and  specifications of the Building to
reflect  the   Alterations.   Tenant  shall  obtain  all   applicable   permits,
authorizations  and  governmental  approvals  and deliver  copies of the same to
Landlord before commencement of any Alterations.

         6.3 Liens.  Tenant shall keep the  Premises  and the Property  free and
clear of all liens  arising out of any work  performed,  materials  furnished or
obligations incurred by Tenant. If any such lien attaches to the Premises or the
Property, and Tenant does not cause the same to be released by payment,  bonding
or otherwise within ten (10) days after the attachment  thereof,  Landlord shall
have the right but not the obligation to cause the same to be released,  and any
sums expended by Landlord in connection  therewith shall be payable by Tenant on
demand with  interest  thereon from the date of  expenditure  by Landlord at the
Interest  Rate (as  defined  in  Section  16.2 -  Interest).  Tenant  shall give
Landlord  at least  ten (10)  days'  notice  prior  to the  commencement  of any
Alterations  and cooperate with Landlord in posting and  maintaining  notices of
non-responsibility in connection therewith.

         6.4 Trade  Fixtures.  Subject to the  provisions of Section 5 - Use and
Compliance  with Laws and the foregoing  provisions of this Section,  Tenant may
install  and  maintain  furnishings,  equipment,  movable  partitions,  business
equipment and other trade fixtures ("Trade Fixtures") in the Premises,  provided
that the Trade  Fixtures do not become an integral  part of the  Premises or the
Building.  Tenant  shall  promptly  repair  any  damage to the  Premises  or the
Building caused by any installation or removal of such Trade Fixtures.

7.       REAL PROPERTY TAXES

         7.1 Real Property Taxes Defined:  The term "Real Property  Taxes" shall
mean all taxes,  assessments,  levies,  and other  charges of any kind or nature
whatsoever,   general  and  special,  foreseen  and  unforeseen  (including  all
installments  of principal  and interest  required to pay any existing or future
general or special  assessments for public  improvements,  services or benefits,
and any  increases  resulting  from  reassessments  resulting  from a change  in
ownership,  new construction,  or any other cause),  now or hereafter imposed by
any governmental or quasi-governmental  authority or special district having the
direct  or  indirect  power to tax or levy  assessments,  which  are  levied  or
assessed against,  or with respect to the value,  occupancy or use of all or any
portion of the Property (as now  constructed  or as may at any time hereafter be
constructed,  altered, or otherwise changed) or Landlord's interest therein, the
fixtures,  equipment and other property of Landlord,  real or personal, that are
an integral part of and located on the Property, the gross receipts,  income, or
rentals from the Property,  or the use of parking areas,  public  utilities,  or
energy within the  Property.  If at any time during the Lease Term the method of
taxation or assessment of the Property prevailing as of the Effective Date shall
be altered so that in lieu of or in addition to any Real  Property Tax described
above there shall be levied,  assessed or imposed (whether by reason of a change
in the method of taxation or assessment, creation of a new tax or charge, or any
other cause) an alternate or additional  tax or charge (i) on the value,  use or
occupancy of the Property or Landlord's interest therein, or (ii) on or measured
by the gross  receipts,  income or  rentals  from the  Property,  on  Landlord's
business of leasing the Property,  or computed in any manner with respect to the
operation  of the  Property,  then any such tax or charge,  however  designated,
shall be  included  within the  meaning of the term  "Real  Property  Taxes" for
purposes of this Lease.  Notwithstanding the foregoing,  the term "Real Property
Taxes" shall not include estate, inheritance,  transfer, gift or franchise taxes
of Landlord or the federal or state net income tax imposed on Landlord's  income
from all sources. Notwithstanding the foregoing, during the initial term of this
Lease, Landlord agrees that Tenant


                                      -10-
<PAGE>


shall  not be  responsible  to pay for any tax or charge  measured  by the gross
receipts, income or rentals from the Property.

         7.2  Payment  of  Taxes.  Tenant  shall  pay the  Real  Property  Taxes
applicable  to the  Property  during the term of this Lease.  Subject to Section
7.3,  all  such  payments  shall be made at least  ten  (10)  days  prior to any
delinquency  date.  Tenant shall  promptly  furnish  Landlord 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 or  termination  of this Lease,
Tenant's share of such taxes shall be prorated to cover only that portion of the
tax bill applicable the period that this Lease is in effect,  and Landlord shall
reimburse  Tenant for any  overpayment  within thirty (30) days after receipt of
the tax bill  establishing  the  overpayment.  If Tenant  shall  fail to pay any
required Real Property Taxes,  Landlord shall have the right to pay the same and
Tenant shall  reimburse  Landlord  therefor  upon demand  together with interest
thereon at the Interest Rate.

         7.3  Advance  Payment.  In the event  Tenant  incurs a  penalty  on any
delinquent payment of Real Property Taxes, Landlord may, at its option, estimate
the current Real  Property  Taxes and require that such taxes be paid in advance
to Landlord by Tenant, either: (i) in a lump sum amount equal to the installment
due, at least twenty (20) days prior to the applicable delinquency date, or (ii)
monthly in advance  with the  payment of the Base Rent.  If  Landlord  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  installment  of 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  applicabl  taxes.  If the amount  collected  by  Landlord  is
insufficient to pay such Real Property Taxes when due, Tenant shall pay Landlord
upon demand, such additional sums as are necessary to pay such obligations.  All
moneys paid to Landlord  under this Section 7.3 may be  intermingled  with other
moneys of Landlord and shall not bear interest.

         8.  TENANT'S  TAXES.   "Tenant's  Taxes"  shall  mean  (a)  all  taxes,
assessments,  license fees and other governmental  charges or impositions levied
or  assessed  against or with  respect to  Tenant's  personal  property or Trade
Fixtures in the Premises, whether any such imposition is levied directly against
Tenant or levied against Landlord or the Property, (b) all rental, excise, sales
or transaction  privilege taxes arising out of this Lease  (excluding,  however,
state and federal  personal or corporate  income taxes measured by the income of
Landlord from all sources) imposed by any taxing authority upon Landlord or upon
Landlord's  receipt of any rent payable by Tenant  pursuant to the terms of this
Lease ("Rental Tax"), and (c) any increase in Taxes attributable to inclusion of
a value placed on Tenant's  personal  property,  Trade Fixtures or  Alterations.
Tenant  shall pay any Rental Tax to Landlord in addition to and at the same time
as Base Rent is payable under this Lease, and shall pay all other Tenant's Taxes
before  delinquency  (and,  at  Landlord's   request,   shall  furnish  Landlord
satisfactory  evidence thereof).  If Landlord pays Tenant's Taxes or any portion
thereof,  Tenant  shall  reimburse  Landlord  upon demand for the amount of such
payment, together with interest at the Interest Rate from the date of Landlord's
payment to the date of Tenant's  reimbursement.  Notwithstanding  the foregoing,
during the initial term of this Lease,  Landlord agrees that Tenant shall not be
responsible to pay for any Rental Tax.

9.       UTILITIES.

         9.1 Payment for Utilities and Services.  Tenant shall  promptly pay, as
the same become due, all charges for water, gas, electricity,  telephone,  sewer
service, waste pick-up and any other utilities,  materials or services furnished
directly  to or used by Tenant on or about the  Premises  during the Lease Term,
including,  without  limitation,  (i) meter, use and/or connection fees, hook-up
fees, or standby fee (excluding any connection fees or hook-up fees which relate
to making the  existing  electrical,  gas,  and water  service  available to the
Premises as of the  Commencement  Date),  and (ii) penalties for discontinued or
interrupted service.

         9.2  Interruption  of Services.  In the event of an  interruption in or
failure or  inability  to provide any  services or  utilities to the Premises or
Building  for any reason,  such service  failure  shall not,  regardless  of its
duration, impose upon Landlord any liability whatsoever,  constitute an eviction
of Tenant, constructive or otherwise,  entitle Tenant to an abatement of rent or
to terminate


                                      -11-
<PAGE>


this Lease or otherwise  release Tenant from any of Tenant's  obligations  under
this Lease.  Tenant  hereby  waives any benefits of any  applicable  existing or
future Law,  including the provisions of California  Civil Code Section 1932(1),
permitting the  termination of this Lease due to such  interruption,  failure or
inability.

10.      EXCULPATION AND INDEMNIFICATION.

         10.1  Tenant's  Indemnification  of Landlord.  Tenant shall  indemnify,
protect,  defend and hold  Landlord and  Landlord's  authorized  representatives
harmless from and against any claims,  actions,  liabilities,  damages, costs or
expenses,  including reasonable  attorneys' fees and costs incurred in defending
against the same (the "Claims") arising from (a) the acts or omissions of Tenant
or Tenant's  Agents in or about the Property,  or (b) any  construction or other
work undertaken by Tenant on the Property (including any design defects), or (c)
any breach or default  under  this Lease by Tenant,  or (d) any loss,  injury or
danmge, howsoever and by whomsoever caused, to any person or property, occurring
in or about the Property  during the Term,  excepting  only Claims  described in
this  clause (d) to the  extent  they are caused by the  willful  misconduct  or
grossly   negligent   acts  or   omissions   of  Landlord   or  its   authorized
representatives.

         10.2  Damage to Tenant and  Tenant's  Property.  Landlord  shall not be
liable to Tenant for any loss,  injury or other  damage to Tenant or to Tenant's
property in or about the  Premises  or the  Property  from any cause  (including
defects in the Property or in any equipment in the Property;  fire, explosion or
other casualty;  bursting, rupture, leakage or overflow of any plumbing or other
pipes or lines, sprinklers,  tanks, drains, drinking fountains or washstands in,
above,  or about the Premises or the Property).  Tenant hereby waives all claims
against Landlord for any such loss, injury or damage and the cost and expense of
defending against claims relating thereto,  excluding any loss, injury or damage
caused  solely  by   Landlord's   gross   negligence   or  willful   misconduct.
Notwithstanding  any other provision of this Lease to the contrary,  in no event
shall Landlord be liable to Tenant for any punitive or consequential  damages or
damages for loss of business by Tenant.

         10.3 Survival. The obligations of the parties under this Section 10
shall survive the expiration or termination of this Lease.

11.      INSURANCE

        11.1   Tenant's Insurance.

                  (a) Liability  Insurance.  Tenant shall maintain in full force
throughout the Term,  commercial general liability  insurance providing coverage
on an  occurrence  form basis with limits of not less than Two  Million  Dollars
($2,000,000.00)  each occurrence for bodily injury and property damage combined,
Four Million Dollars  ($4,000,000.00) annual general aggregate,  and One Million
Dollars  ($1,000,000.00)  products and completed  operations  annual  aggregate.
Tenant's liability  insurance policy or policies shall: (i) include premises and
operations  liability  coverage,  products and  completed  operations  liability
coverage,  broad form property damage coverage including  completed  operations,
blanket  contractual  liability  coverage  including,   to  the  maximum  extent
possible,  coverage  for the  indemnification  obligations  of Tenant under this
Lease,  and  personal and  advertising  injury  coverage;  (ii) provide that the
insurance  company has the duty to defend all insureds  under the policy;  (iii)
provide that defense costs are paid in addition to and do not deplete any of the
policy limits;  (iv) cover liabilities  arising out of or incurred in connection
with  Tenant's  use or occupancy  of the  Premises or the  Property;  (v) extend
coverage  to cover  liability  for the  actions  of  Tenant's  Agents;  and (iv)
designate separate limits for the Property.  Each policy of liability  insurance
required by this Section  shall:  (i) contain a cross  liability  endorsement or
separation  of insureds  clause;  (ii)  provide  that any waiver of  subrogation
rights or release prior to a loss does not void coverage;  (iii) provide that it
is primary to and not  contributing  with,  any policy of  insurance  carried by
Landlord  covering  the same loss;  (iv) provide that any failure to comply with
the reporting  provisions  shall not affect coverage  provided to Landlord,  its
partners, property managers and Mortgagees; and (v) name Landlord, its partners,
and such other parties in interest as Landlord may from time to time  reasonably
designate to Tenant in writing, as additional insureds. Such additional insureds
shall be  provided at least the same extent of coverage as is provided to Tenant
under such policies. All endorsements effecting such additional insured status


                                      -12-
<PAGE>


shall be at least as broad as additional  insured  endorsement form number CG 20
11 11 85 promulgated by the Insurance Services Office.

                  (b) Property Insurance; Business Interruption. Tenant shall at
all times maintain in effect with respect to any  Alterations and Tenant's Trade
Fixtures  and  personal  property,   commercial   property  insurance  providing
coverage,  on an "all risk" or "special  form"  basis,  in an amount equal to at
least 90% of the full replacement cost of the covered property. Tenant may carry
such  insurance  under a blanket  policy,  provided  that such  policy  provides
coverage equivalent to a separate policy. During the Term, the proceeds from any
such policies of insurance  shall be used for the repair or  replacement  of the
Alterations,  Trade Fixtures and personal property so insured. Landlord shall be
provided  coverage under such insurance to the extent of its insurable  interest
and, if requested by Landlord, both Landlord and Tenant shall sign all documents
reasonably necessary or proper in connection with the settlement of any claim or
loss under such  insurance.  Landlord will have no obligation to carry insurance
on any  Alterations or on Tenant's Trade Fixtures or personal  property.  Tenant
also shall carry business  interruption  insurance  covering  direct or indirect
loss of Tenant=s  earnings  attributable  to Tenant=s  inability to use fully or
obtain access to the Premises,  or as a result of the  interruption  of Tenant=s
business for any reason.

                  (c)  Requirements  For All Policies.  Each policy of insurance
required  under this  Section  11.1 shall:  (i) be in a form,  and written by an
insurer,  reasonably acceptable to Landlord, (ii) be maintained at Tenant's sole
cost and expense, and (iii) require at least thirty (30) days' written notice to
Landlord  prior to any  cancellation,  nonrenewal or  modification  of insurance
coverage.   Insurance   companies   issuing  such  policies  shall  have  rating
classifications of "A" or better and financial size category ratings of "VII" or
better  according to the latest  edition of the A.M. Best Key Rating Guide.  All
insurance companies issuing such policies shall be admitted carriers licensed to
do business in the state where the Property is located.  Any  deductible  amount
under such insurance shall not exceed $5,000.  Tenant shall provide to Landlord,
upon  request,  evidence  that the  insurance  required  to be carried by Tenant
pursuant to this Section,  including any  endorsement  effecting the  additional
insured status, is in full force and effect and that premiums therefor have been
paid.

                  (d) Updating  Coverage.  Tenant shall  increase the amounts of
insurance as required by any Mortgagee, and, not more frequently than once every
three (3) years,  as  recommended  by Landlord's  insurance  broker,  if, in the
reasonable  opinion of either of them,  the amount of  insurance  then  required
under  this  Lease is not  adequate.  Any  limits set forth in this Lease on the
amount or type of coverage  required by Tenant's  insurance  shall not limit the
liability of Tenant under this Lease.

                  (e)  Certificates  of  Insurance.  Prior to  occupancy  of the
Premises by Tenant,  and not less than thirty (30) days prior to  expiration  of
any policy  thereafter,  Tenant  shall  furnish to  Landlord  a  certificate  of
insurance  reflecting  that the insurance  required by this Section is in force,
accompanied  by  an  endorsement   showing  the  required   additional  insureds
satisfactory to Landlord in substance and form. Notwithstanding the requirements
of this  paragraph,  Tenant shall at  Landlord's  request  provide to Landlord a
certified  copy of each  insurance  policy  required  to be in force at any time
pursuant to the requirements of this Lease or its Exhibits.

         11.2 Landlord's  Insurance.  Subject to  reimbursement by Tenant within
ten (10) days after  delivery of written  demand,  during the Term of this Lease
Landlord  shall  maintain in effect  insurance on the Building with  responsible
insurers,  on an "all risk" or "special form" basis, insuring the Building in an
amount  equal  to  100%  of  the  replacement  cost  thereof,   excluding  land,
foundations, footings and underground installations. Landlord may, but shall not
be obligated to, carry  insurance  against  additional  perils and/or in greater
amounts.

         11.3 Release and Waiver of Subrogation: The parties hereto release each
other, and their respective agents and employees,  from any liability for injury
to any person or damage to property  that is caused by or results  from any risk
insured against under any valid and collectible  insurance policy is required to
be  carried  by either  of the  parties  hereunder  which  contains  a waiver of
subrogation by the insurer and is in force at the time of such injury or damage;
subject to the  following  limitations:  (i) the foregoing  provision  shall not
apply to the commercial general


                                      -13-
<PAGE>


liability  insurance  described by Section 11.1; (ii) such  release  shall apply
to  liability   resulting   from  any  risk   insured   against  or  covered  by
self-insurance  maintained or provided by Tenant to satisfy the  requirements of
Section 11.1 to  the  extent permitted by this Lease; and (iii) Tenant shall not
be released  from any such  liability to the extent any damages  resulting  from
such injury or damage are not covered by the recovery  obtained by Landlord from
such  insurance,  but only if the  insurance  in question  permits  such partial
release in connection  with obtaining a waiver of subrogation  from the insurer.
This release shall be in effect only so long as the applicable  insurance policy
contains a clause to the effect that this release  shall not affect the right of
the  insured  to recover  under such  policy.  Each party  shall use  reasonable
efforts to cause  each  insurance  policy  obtained  by it to  provide  that the
insurer  waives all right of  recovery by way of  subrogation  against the other
party and its  agents  and  employees  in  connection  with any injury or damage
covered by such policy. However, if any insurance policy cannot be obtained with
such a waiver of subrogation, or if such waiver of subrogation is only available
at additional  cost and the party for whose benefit the waiver is to be obtained
does not pay such additional cost, then the party obtaining such insurance shall
notify  the other  party of that fact and  thereupon  shall be  relieved  of the
obligation  to obtain such waiver of  subrogation  rights from the insurer  with
respect to the particular insurance involved.

12.       DAMAGE OR DESTRUCTION.

         12.1 Landlord's Duty to Repair.

                  (a) If all or a substantial  part of the Premises are rendered
untenantable  or  inaccessible by damage to all or any part of the Property from
fire or other  casualty  then,  unless either party is entitled to and elects to
terminate this Lease  pursuant to Sections 12.2 - Landlord's  Right to Terminate
and 12.3 - Tenant's  Right to Terminate,  Landlord  shall,  at its expense,  use
reasonable  efforts to repair and restore the Premises  and/or the Property,  as
the case may be, to substantially their former condition to the extent permitted
by then Applicable Laws; provided, however, that in no event shall Landlord have
any  obligation  for repair or  restoration  beyond the extent of (i)  insurance
proceeds which are actually received by Landlord for such repair or restoration,
or for any of Tenant's personal  property,  Trade Fixtures or Alterations,  plus
(ii)  deductibles  which  shall be paid by Tenant  upon  demand in the event the
casualty is caused by the  negligent  act or omission or willful  misconduct  of
Tenant or Tenant's Agents.

                  (b) If Landlord is required or elects to repair  damage to the
Premises and/or the Property,  this Lease shall continue in effect, but Tenant's
Base Rent and Additional  Rent shall be abated with regard to any portion of the
Premises  that  Tenant is  prevented  from using by reason of such damage or its
repair from the date of the casualty until substantial  completion of Landlord's
repair of the affected  portion of the Premises as required under this Lease. In
no event  shall  Landlord  be liable  to  Tenant  by reason of any  injury to or
interference  with  Tenant's  business  or property  arising  from fire or other
casualty or by reason of any repairs to any part of the Property necessitated by
such casualty.

         12.2  Landlord's  Right to  Terminate.  Landlord may elect to terminate
this  Lease  following  damage by fire or other  casualty  under  the  following
circumstances:

                  (a) If, in the reasonable  judgment of Landlord,  the Building
cannot be  substantially  repaired and restored under Applicable Laws within one
(1) year from the date of the casualty;

                  (b) If,  in the  reasonable  judgment  of  Landlord,  adequate
proceeds are not, for any reason,  made  available to Landlord  from  Landlord's
insurance  policies  (and/or  from  Landlord's  funds  made  available  for such
purpose, at Landlord's sole option) to make the required repairs;

                  (c) If the  Building  is  damaged or  destroyed  to the extent
that, in the reasonable judgment of Landlord, the cost to repair and restore the
Building would exceed twenty-five  percent (25%) of the full replacement cost of
the Property; or

                  (d) If the fire or other casualty  occurs during the last year
of the Term (including any extension thereof),  provided that the cost to repair
and restore the Building would exceed five percent (5%) of the full  replacement
cost of the Building.


                                      -14-
<PAGE>


If any of the circumstances  described in subparagraphs  (a), (b), (c) or (d) of
this Section 12.2 occur or arise, Landlord shall give Tenant notice within sixty
(60) days after the date of the casualty,  specifying whether Landlord elects to
terminate this Lease as provided above and, if not,  Landlord's  estimate of the
time required to complete Landlord's repair obligations under this Lease.

         12.3 Tenant's Right to Terminate.  If all or a substantial  part of the
Premises are rendered  untenantable or inaccessible by damage to all or any part
of the Property  from fire or other  casualty,  and  Landlord  does not elect to
terminate as provided  above,  then Tenant may elect to terminate  this Lease if
Landlord's   estimate  of  the  time  required  to  complete  Landlord's  repair
obligations  under this Lease is greater  than two  hundred  seventy  (270) days
after the date of the  casualty,  in which event  Tenant may elect to  terminate
this Lease by giving Landlord notice of such election to terminate within thirty
(30)  days  after  Landlord's  notice  to  Tenant  pursuant  to  Section  12.2 -
Landlord's Right to Terminate.

         12.4 Waiver.  Landlord and Tenant each hereby waive the  provisions  of
California  Civil  Code  Sections  1932(2),  1933(4)  and any  other  applicable
existing or future Law  permitting the  termination of a lease  agreement in the
event of damage or destruction under any circumstances other than as provided in
Sections  12.2 -  Landlord's  Right to  Terminate  and 12.3 - Tenant's  Right to
Terminate.

13.      CONDEMNATION.

         13.1 Definitions.

                  (a) "Award" shall mean all compensation,  sums, or anything of
value awarded, paid or received on a total or partial Condemnation.

                  (b)  "Condemnation"  shall mean (i) a  permanent  taking (or a
temporary  taking for a period extending beyond the end of the Term) pursuant to
the  exercise of the power of  condemnation  or eminent  domain by any public or
quasi-public  authority,  private  corporation  or individual  having such power
("Condemnor"),  whether by legal  proceedings or otherwise,  or (ii) a voluntary
sale or  transfer  by Landlord to any such  authority,  either  under  threat of
condemnation or while legal proceedings for condemnation are pending.

                  (c) "Date of Condemnation"  shall mean the earlier of the date
that  title to the  property  taken is vested in the  Condemnor  or the date the
Condemnor has the right to possession of the property being condemned.

         13.2 Effect on Lease.

                  (a) If the Premises are totally  taken by  Condemnation,  this
Lease shall terminate as of the Date of  Condemnation.  If a portion but not all
of the  Premises is taken by  Condemnation,  this Lease shall  remain in effect;
provided,  however,  that if the  portion of the  Premises  remaining  after the
Condemnation will be unsuitable for Tenant's  continued use, then upon notice to
Landlord  within  thirty  (30)  days  after  Landlord  notifies  Tenant  of  the
Condemnation,  Tenant  may  terminate  this  Lease  effective  as of the Date of
Condemnation.

                  (b) If twenty-five percent (25%) or more of the Property or of
the  parcel(s) of land on which the Building is situated or of the floor area in
the Building is taken by Condemnation, or if as a result of any Condemnation the
Building is no longer  reasonably  suitable for use as an  industrial  building,
whether  or not any  portion of the  Premises  is taken,  Landlord  may elect to
terminate  this Lease,  effective as of the Date of  Condemnation,  by notice to
Tenant within thirty (30) days after the Date of Condemnation.

                  (c) If all or a portion of the Premises is  temporarily  taken
by a Condemnor for a period not extending beyond the end of the Term, this Lease
shall remain in full force and effect.

                  13.3 Restoration.  If this Lease is not terminated as provided
in Section 13.2 - Effect on Lease,  Landlord,  at its expense,  shall diligently
proceed to repair and restore the Premises to substantially its former condition
(to the extent permitted by then Applicable Laws) and/or repair


                                      -15-
<PAGE>


and  restore  the  Building  to an  architecturally  complete  office  building;
provided, however, that Landlord's obligations to so repair and restore shall be
limited to the amount of any Award  received by Landlord  and not required to be
paid to any  Mortgagee  (as defined in Section  20.2  below).  In no event shall
Landlord  have any  obligation  to repair or  replace  any  improvements  in the
Premises  beyond the amount of any Award received by Landlord for such repair or
to repair or replace any of  Tenant's  personal  property,  Trade  Fixtures,  or
Alterations.

         13.4 Abatement and Reduction of Rent. If any portion of the Premises is
taken in a  Condemnation  or is  rendered  permanently  untenantable  by repairs
necessitated by the  Condemnation,  and this Lease is not  terminated,  the Base
Rent and  Additional  Rent  payable  under  this Lease  shall be  proportionally
reduced as of the Date of  Condemnation  based upon the  percentage  of rentable
square feet in the Premises so taken or rendered  permanently  untenantable.  In
addition,  if this Lease remains in effect following a Condemnation and Landlord
proceeds to repair and restore the Premises,  the Base Rent and Additional  Rent
payable  under this Lease  shall be abated  during the period of such  repair or
restoration to the extent such repairs prevent Tenant's use of the Premises.

         13.5  Awards.  Any Award  made  shall be paid to  Landlord,  and Tenant
hereby  assigns to  Landlord,  and waives all  interest in or claim to, any such
Award,  including  any  claim  for the value of the  unexpired  Term;  provided,
however,  that Tenant  shall be entitled to receive,  or to prosecute a separate
claim for, an Award for a temporary  taking of the Premises or a portion thereof
by a  Condemnor  where this Lease is not  terminated  (to the extent  such Award
relates  to the  unexpired  Term),  or an Award or  portion  thereof  separately
designated for relocation  expenses or the interruption of or damage to Tenant's
business or as compensatlon  for Tenant's  personal  property, Trade Fixtures or
Alterations.

         13.6 Waiver.  Landlord and Tenant each hereby waive the  provisions  of
California Code of Civil  Procedure  Section  1265.130 and any other  applicable
existing or future Law allowing  either party to petition for a  termination  of
this Lease upon a partial taking of the Premises and/or the Property.

14.      ASSIGNMENT AND SUBLETTING

         14.1 Landlord's Consent Required. Tenant shall not assign this Lease or
any interest therein, or sublet or license or permit the use or occupancy of the
Premises or any part  thereof by or for the benefit of anyone other than Tenant,
or in any other manner transfer all or any part of Tenant's  interest under this
Lease  (each  and all a  "Transfer"),  without  the  prior  written  consent  of
Landlord,  which  consent  (subject to the other  provisions of this Section 14)
shall not be unreasonably  withheld.  If Tenant is a business entity, any direct
or indirect transfer of fifty percent (50%) or more of the ownership interest of
the entity  (whether in a single  transaction  or in the aggregate  through more
than one transaction) shall be deemed a Transfer;  provided,  however,  that any
sale of Tenant's  capital stock through a public exchange shall not be deemed an
assignment  subletting or other transfer of this Lease or the Premises requiring
Landlord's consent. Notwithstanding any provision in this Lease to the contrary,
Tenant shall not mortgage,  pledge, hypothecate or otherwise encumber this Lease
or all or any part of Tenant's interest under this Lease.

         14.2 Reasonable Consent.

                  (a) Prior to any  proposed  Transfer,  Tenant  shall submit in
writing to Landlord (i) the name and legal composition of the proposed assignee,
subtenant,  user or other  transferee (each a "Proposed  Transferee");  (ii) the
nature of the  business  proposed  to be  carried  on in the  Premises;  (iii) a
current balance sheet,  income  statements for the last two years and such other
reasonable financial and other information concerning the Proposed Transferee as
Landlord may request;  and (iv) a copy of the proposed  assignment,  sublease or
other agreement  governing the proposed  Transfer.  Within fifteen (15) Business
Days after Landlord receives all such information it shall notify Tenant whether
it  approves  or  disapproves  such  Transfer  or if it elects to proceed  under
Section 14.7 - Landlord's Right to Space.

                  (b)  Tenant   acknowledges   and  agrees  that,   among  other
circumstances for which Landlord could reasonably withhold consent to a proposed
Transfer, it shall be reasonable for


                                      -16-
<PAGE>

Landlord to withhold  consent where (i) the Proposed  Transferee does not intend
itself to occupy the entire  portion of the  Premises  assigned or sublet,  (ii)
Landlord reasonably  disapproves of the Proposed Transferee's business operating
ability or history, reputation or creditworthiness or the nature or character of
the business to be conducted by the Proposed  Transferee at the Premises,  (iii)
the Proposed  Transferee is a governmental  agency or unit or an existing tenant
in the Property,  (iv) the use of the Premises by the Proposed Transferee is not
included within the uses permitted by Tenant under this Lease;  (v) Tenant is in
default of any obligation of Tenant under this Lease beyond any applicable  cure
period,  or Tenant has defaulted under this Lease on three (3) or more occasions
at any time during the Lease Term; (vi) the Proposed  Transferee intends to use,
store or generate  Hazardous  Materials  which  Landlord in its sole  discretion
determines  may  violate  the terms of  Section  5.6  hereof,  or (vi)  Landlord
otherwise  determines  that the  proposed  Transfer  would  have the  effect  of
decreasing the value of the Property or increasing the expenses  associated with
operating, maintaining and repairing the Property.

         14.3 Excess Consideration. If Landlord consents to the Transfer, Tenant
shall pay to Landlord as additional rent,  within ten (10) days after receipt by
Tenant,  fifty percent (50%) of any  consideration  paid by any transferee  (the
"Transferee") for the Transfer, including, in the case of a sublease, the excess
of the rent and other consideration  payable by the subtenant over the amount of
Base Rent and  Additional  Rent payable  hereunder  applicable  to the subleased
space.  Notwithstanding  the  foregoing,  during the initial term of this Lease,
Tenant  shall not be  obligated  to pay to  Landlord  any  excess  consideration
arising out of a Transfer.

         14.4 No Release Of Tenant. No consent by Landlord to any Transfer shall
relieve  Tenant of any  obligation  to be  performed by Tenant under this Lease,
Whether occurring before or after such consent, assignment,  subletting or other
Transfer. Each Transferee shall be jointly and severally liable with Tenant (and
Tenant  shall be jointly  and  severally  liable with each  Transferee)  for the
payment of rent (or, in the case of a sublease,  rent in the amount set forth in
the sublease) and for the  performance of all other terms and provisions of this
Lease.  The consent by Landlord to any Transfer  shall not relieve Tenant or any
such Transferee from the obligation to obtain  Landlord's  express prior written
consent to any subsequent  Transfer by Tenant or any Transferee.  The acceptance
of rent by  Landlord  from any other  person  (whether  or not such person is an
occupant of the Premises)  shall not be deemed to be a waiver by Landlord of any
provision of this Lease or to be a consent to any Transfer.

         14.5  Expenses  and  Attorneys'  Fees.  Tenant shall pay to Landlord on
demand all costs and expenses (including reasonable attorneys' fees) incurred by
Landlord in connection  with  reviewing or  consenting to any proposed  Transfer
(including  any request for  consent to, or any waiver of  Landlord's  rights in
connection  with,  any  security  interest  in any of  Tenant's  property at the
Premises).

         14.6  Effectiveness  of  Transfer.  Prior  to the  date  on  which  any
permitted  Transfer  (whether  or  not  requiring  Landlord's  consent)  becomes
effective,  Tenant shall deliver to Landlord a counterpart of the fully executed
Transfer  document and  Landlord's  standard  form of Consent to  Assignment  or
Consent  to  Sublease  executed  by Tenant and the  Transferee  in which each of
Tenant and the  Transferee  confirms  its  obligations  pursuant  to this Lease.
Failure or refusal of a  Transferee  to execute  any such  instrument  shall not
release or discharge  the  Transferee  from  liability as provided  herein.  The
voluntary,  involuntary or other surrender of this Lease by Tenant,  or a mutual
cancellation  by  Landlord  and  Tenant,  shall not work a merger,  and any such
surrender or cancellation shall, at the option of Landlord, either terminate all
or any existing  subleases or operate as an assignment to Landlord of any or all
of such subleases.

         14.7  Landlord's  Right to Space.  In addition to  Landlord's  right to
approve or disapprove any proposed Transfer, if Tenant notifies Landlord that it
desires  to enter  into a  Transfer,  Landlord,  in lieu of  consenting  to such
Transfer, may elect (i) in the case of an assignment or a sublease of the entire
Premises,  to  terminate  this Lease,  or (ii) in the case of a sublease of less
than the entire  Premises,  to  terminate  this Lease as it relates to the space
proposed to be subleased by Tenant. In such event, this Lease will terminate (or
the space proposed to be subleased will be removed from the Premises  subject to
this Lease and the Base Rent and Tenant's  share of  Additional  Rent under this
Lease shall be proportionately reduced) on the date the Transfer was proposed to
be  effective,  and  Landlord may lease such space to any party,  including  the
prospective  Transferee  identified by Tenant.  However,  no termination of this
Lease with respect to part or all of the Premises shall


                                      -17-
<PAGE>


become  effective  without the prior written consent,  where  necessary,  of the
holder of each  deed of trust  encumbering  the  Premises.  Notwithstanding  the
foregoing, during the initial term of this Lease, Landlord shall not be entitled
to make either of the elections set forth in this Section 14.7.

         14.8  Assignment  of  Sublease  Rents.  Tenant  hereby  absolutely  and
irrevocably  assigns to  Landlord  any and all rights to receive  rent and other
consideration  from any  sublease  and agrees that  Landlord,  as assignee or as
attorney-in-fact  for  Tenant for  purposes  hereof,  or a  receiver  for Tenant
appointed on Landlord's  application may (but shall not be obligated to) collect
such  rents  and  other   consideration  and  apply  the  same  toward  Tenant's
obligations  to Landlord  under this Lease;  provided,  however,  that  Landlord
grants to Tenant at all times  prior to  occurrence  of any breach or default by
Tenant  a  revocable   license  to  collect  such  rents  (which  license  shall
automatically  and  without  notice be and be deemed  to have been  revoked  and
terminated immediately upon any Event of Default).

         14.9  Permitted  Transfers.  Notwithstanding  anything to the  contrary
herein,  Tenant  may,  without  Landlord's  prior  written  consent,  sublet the
Premises  or assign  the Lease to  ("Permitted  Transferee")  (a) a  subsidiary,
affiliate,  franchisee,  division  or  corporation  controlled  or under  common
control with Tenant;  (b) a successor  corporation  related to Tenant by merger,
consolidation, non-bankruptcy reorganization or government action, provided such
successor  corporation has a net worth at the time of the applicable sublease or
assignment of no less than Tenant's net worth on the  Commencement  Date of this
Lease;  and (c) a purchaser of  substantially  all of Tenant's assets as a going
concern. Except for the requirement that Tenant first obtain the written consent
of Landlord,  all other terms and  provisions of this Lease,  including  Section
14.3, shall apply to any assignment or sub1ease to a Permitted  Transferee as if
Landlord had consented to or approved such assignment or sublease,  and any such
assignment or subletting  shall in no way relieve Tenant of any liability  under
this Lease.  Tenant shall provide  Landlord with the following no later than ten
(10) days prior to the effective  date of the proposed  assignment or subletting
to a permitted Transferee: (x) the name and address of the Permitted Transferee,
(y) a copy  of the  proposed  sublet  or  assignment  agreement,  including  the
material  terms and  conditions  thereof,  and (z) with respect to any Permitted
Transferees described in subsection (b) above,  satisfactory evidence of the net
worth of the Permitted  Transferee.  In no event shall any Permitted  Transferee
conduct any use in the  Premises or portion  thereof  which  conflicts  with the
provisions of Section 5.1 of this Lease.

15.      DEFAULT AND REMEDIES.

         15.1 Events of Default.  The  occurrence of any of the following  shall
constitute an "Event of Default" by Tenant:

                  (a) Tenant  fails to make any payment of rent on the date when
due, or any amount  required to replenish  the  security  deposit as provided in
Section 4 above,  if payment in full is not received by Landlord  within fifteen
(15) days after written demand.

                  (b) Tenant abandons the Premises.

                  (c) Tenant fails timely to deliver any subordination document,
estoppel  certificate or financial  statement  requested by Landlord within five
(5)  days  after  the  applicable  time  period   specified  in  Sections  20  -
Encumbrances - and 21 - Estoppel Certificates and Financial Statements - below.

                  (d) Tenant violates the  restrictions on Transfer set forth in
Section 14 - Assignment and Subletting.

                  (e) Tenant ceases doing business as a going concern;  makes an
assignment for the benefit of creditors;  is  adjudicated an insolvent,  files a
petition (or files an answer  admitting the material  allegations of a petition)
seeking relief under any under any state or federal bankruptcy or other statute,
law or regulation  affecting  creditors'  rights;  all or  substantially  all of
Tenant's  assets are  subject to  judicial  seizure  or  attachment  and are not
released  within 30 days, or Tenant consents to or acquiesces in the appointment
of a trustee,  receiver or liquidator  for Tenant or for all or any  substantial
part of Tenant's assets.


                                      -18-
<PAGE>


                  (f)  Tenant   fails,   within   ninety  (90)  days  after  the
commencement of any proceedings against Tenant seeking relief under any state or
federal  bankruptcy or other  statute,  law or regulation  affecting  creditors'
rights, to have such proceedings dismissed,  or Tenant fails, within ninety (90)
days after an appointment,  without  Tenant's  consent or  acquiescence,  of any
trustee, receiver or liquidator for Tenant or for all or any substantial part of
Tenant's assets, to have such appointment vacated.

                  (g) Tenant  fails to perform or comply with any  provision  of
this Lease other than those  described  in (a)  through (f) above,  and does not
fully cure such failure  within  fifteen (15) days after notice to Tenant or, if
such failure cannot be cured within such fifteen (15)-day  period,  Tenant fails
within such fifteen  (15)-day  period to  commence,  and  thereafter  diligently
proceed with,  all actions  necessary to cure such failure as soon as reasonably
possible but in all events  within  ninety (90) days of such  notice;  provided,
however, that if Landlord in Landlord's reasonable judgment determines that such
failure cannot or will not be cured by Tenant within such ninety (90) days, then
such failure shall  constitute an Event of Default  immediately upon such notice
to Tenant.

                  (h) Tenant  commits a default under any provision of the Suite
100 Lease which is not cured  within any  applicable  cure period  provided  for
therein.

         15.2  Remedies.  Upon the  occurrence of an Event of Default,  Landlord
shall have the  following  remedies,  which shall not be exclusive  but shall be
cumulative  and shall be in  addition  to any other  remedies  now or  hereafter
allowed by law:

                  (a) Landlord may terminate Tenant's right to possession of the
Premises at any time by written notice to Tenant. Tenant expressly  acknowledges
that in the  absence  of such  written  notice  from  Landlord,  no other act of
Landlord,  including re-entry into the Premises,  efforts to relet the Premises,
reletting of the Premises for  Tenant's  account,  storage of Tenant's  personal
property and Trade  Fixtures,  acceptance of keys to the Premises from Tenant or
exercise of any other rights and remedies under this Section,  shall  constitute
an acceptance of Tenant's  surrender of the Premises or constitute a termination
of this Lease or of Tenant's  right to  possession  of the  Premises.  Upon such
termination  in writing of Tenant's  right to  possession  of the  Premises,  as
herein  provided,  this Lease shall  terminate and Landlord shall be entitled to
recover damages from Tenant as provided in California  Civil Code Section 1951.2
and any other  applicable  existing  or future Law  providing  for  recovery  of
damages for such breach,  including the worth at the time of award of the amount
by which the rent which would be payable by Tenant  hereunder  for the remainder
of the Term after the date of the award of damages, including Additional Rent as
reasonably  estimated  by  Landlord,  exceeds  the amount of such rental loss as
Tenant  proves could have been  reasonably  avoided,  discounted at the discount
rate published by the Federal  Reserve Bank of San Francisco for member banks at
the time of the award plus one percent (1%).

                  (b) Landlord  shall have the remedy  described  in  California
Civil Code Section  1951.4  (Landlord  may  continue  this Lease in effect after
Tenant's  breach and  abandonment  and recover rent as it becomes due, if Tenant
has the right to sublet or assign, subject only to reasonable limitations).

                  (c)  Landlord  may  cure  the  Event of  Default  at  Tenant's
expense.  If Landlord  pays any sum or incurs any expense in curing the Event of
Default,  Tenant  shall  reimburse  Landlord  upon demand for the amount of such
payment or expense with  interest at the Interest  Rate from the date the sum is
paid or the expense is incurred until Landlord is reimbursed by Tenant.

                  (d)  Landlord  may  remove  all  Tenant's  property  from  the
Premises,  and such property may be stored by Landlord in a public  warehouse or
elsewhere at the sole cost and for the account of Tenant.  If Landlord  does not
elect to store any or all of Tenant's  property left in the  Premises,  Landlord
may consider such property to be abandoned by Tenant, and Landlord may thereupon
dispose of such  property in any manner  deemed  appropriate  by  Landlord.  Any
proceeds  realized  by Landlord on the  disposal of any such  property  shall be
applied first to offset all expenses of storage and sale, then credited  against
Tenant's  outstanding  obligations to Landlord under this Lease, and any balance
remaining after satisfaction of all obligations of Tenant under this Lease shall
be delivered to Tenant.


                                      -19-
<PAGE>

16.      LATE CHARGE AND INTEREST.

         16.1 Late Charge. If any payment of Base Rent or Additional Rent is not
received by Landlord  within five (5) days after the date when due, Tenant shall
pay to Landlord on demand as a late charge an  additional  amount  equal to five
percent  (5%) of the overdue  payment.  The parties  agree that this late charge
represents  a  reasonable  estimate of the  expenses  that  Landlord  will incur
because of any late payment of Base Rent or Additional Rent (other than interest
and attorneys' fees and costs).  Landlord's  acceptance of any late charge shall
not  constitute a waiver of Tenant's  default with respect to the overdue amount
or prevent  Landlord from exercising any of the rights or remedies  available to
Landlord under this Lease.  Tenant shall pay the late charge as Additional  Rent
with the next installment of Rent.

         16.2 Interest. In addition to the late charges referred to above, which
are  intended to defray  Landlord's  costs  resulting  from late  payments,  any
payment  from  Tenant to  Landlord  not paid within ten (10) days after the date
when due shall at  Landlord's  option bear interest from the date due until paid
to Landlord by Tenant at the lesser of eighteen  percent  (18%) per annum or the
maximum  lawful rate that  Landlord may charge to Tenant under  Applicable  laws
(the "Interest  Rate").  Acceptance of any late charge and/or interest shall not
constitute  a waiver of  Tenant's  default  with  respect to the  overdue sum or
prevent Landlord from exercising any of its other rights and remedies under this
Lease.

17.      WAIVER. No  provisions   of  this  Lease  shall  be  deemed  waived  by
either party unless such waiver is in a writing signed by such party. The waiver
by Landlord of any breach of any  provision  of this Lease shall not be deemed a
waiver of such  provision or of any  subsequent  breach of the same or any other
provision  of this Lease.  No delay or omission in the  exercise of any right or
remedy of Landlord  upon any default by Tenant shall impair such right or remedy
or be construed as a waiver.  Landlord's  acceptance of any payments of rent due
under this  Lease  shall not be deemed a waiver of any  default by Tenant  under
this Lease (including  Tenant's recurrent failure to timely pay rent) other than
Tenant's nonpayment of the accepted sums, and no endorsement or statement on any
check or payment or in any letter or document  accompanying any check or payment
shall be deemed an accord and satisfaction. Landlord's consent to or approval of
any act by Tenant requiring  Landlord's  consent or approval shall not be deemed
to  waive  or  render  unnecessary  Landlord's  consent  to or  approval  of any
subsequent act by Tenant.

18.      ENTRY, INSPECTION AND CLOSURE. Upon at least 48  hours  prior  oral  or
written notice to Tenant (and without notice in  emergencies),  Landlord and its
authorized  representatives  may enter the Premises at all reasonable  times to:
(a) determine whether the Premises are in good condition,  (b) determine whether
Tenant is  complying  with its  obligations  under this  Lease,  (c) perform any
maintenance  or repair of the  Premises or the  Building  that  Landlord has the
right or obligation  to perform,  (d) install or repair  improvements  for other
tenants  where  access to the  Premises is  required  for such  installation  or
repair, (e) serve, post or keep posted any notices required or allowed under the
provisions of this Lease, (f) show the Premises to prospective brokers,  agents,
buyers,  transferees,  Mortgagees  or tenants,  or (g) do any other act or thing
necessary for the safety or preservation  of the Premises or the Building.  When
reasonably necessary Landlord may temporarily close entrances, doors, corridors,
elevators or other  facilities  in the Building  without  liability to Tenant by
reason of such closure. Landlord shall conduct its activities under this Section
in a manner  that  will  minimize  inconvenience  to  Tenant  without  incurring
additional  expense to  Landlord.  In no event  shall  Tenant be  entitled to an
abatement of rent on account of any entry by Landlord, and Landlord shall not be
liable in any manner for any inconvenience,  loss of business or other damage to
Tenant or other  persons  arising  out of  Landlord's  entry on the  Premises in
accordance with this Section.  No action by Landlord  pursuant to this paragraph
shall  constitute  an eviction of Tenant,  constructive  or  otherwise,  entitle
Tenant to an abatement of rent or to terminate  this Lease or otherwise  release
Tenant from any of Tenant's obligations under this Lease.

19.      SURRENDER AND HOLDING OVER.

         19.1  Surrender.  Upon the  expiration  or  termination  of this Lease,
Tenant shall surrender the Premises and all Alterations to Landlord  broom-clean
and in their original  condition,  except for reasonable  wear and tear,  damage
from  casualty  or  condemnation,  Hazardous  Materials  not caused by Tenant or
Tenant's Agents and any changes resulting from approved Alterations; provided,


                                      -20-
<PAGE>


however,  that prior to the expiration or termination of this Lease Tenant shall
remove all telephone  and other cabling  installed in the Building by Tenant and
remove from the Premises all Tenant's  personal  property and any Trade Fixtures
and all  Alterations  that  Landlord has elected to require  Tenant to remove as
provided  in Section 6.1 - Tenant  Improvements  &  Alterations,  and repair any
damage  caused by such  removal.  If such  removal is not  completed  before the
expiration or  termination  of the Term,  Landlord  shall have the right (but no
obligation)  to remove the same, and Tenant shall pay Landlord on demand for all
costs of removal and storage  thereof and for the rental  value of the  Premises
for the period from the end of the Term  through the end of the time  reasonably
required  for such  removal.  Landlord  shall  also  have the right to retain or
dispose of all or any  portion of such  property if Tenant does not pay all such
costs and retrieve the property  within ten (10) days after notice from Landlord
(in which event title to all such property  described in Landlord's notice shall
be  transferred  to and vest in  Landlord).  Tenant  waives all  Claims  against
Landlord for any damage or loss to Tenant  resulting  from  Landlord's  removal,
storage,  retention,  or disposition of any such  property.  Upon  expiration or
termination  of this Lease or of Tenant's  possession,  whichever  is  earliest,
Tenant  shall  surrender  all  keys to the  Premises  or any  other  part of the
Building  and shall  deliver to Landlord  all keys for or make known to Landlord
the  combination of locks on all safes,  cabinets and vaults that may be located
in the  Premises.  Tenant's  obligations  under this Section  shall  survive the
expiration or termination of this Lease.

         19.2 Holding  Over.  If Tenant  (directly or through any  Transferee or
other  successor-in-interest of Tenant)  remains in possession of  the  Premises
after the expiration or termination of this Lease, Tenant's continued possession
shall be on the basis of a tenancy  at the  sufferance  of  Landlord.  No act or
omission by Landlord,  other than its specific written consent, shall constitute
permission  for Tenant to continue in possession  of the  Premises,  and if such
consent is given or  declared to have been given by a court  judgment,  Landlord
may terminate  Tenant's holdover tenancy at any time upon seven (7) days written
notice.  In such event,  Tenant shall continue to comply with or perform all the
terms and  obligations of Tenant under this Lease,  except that the monthly Base
Rent during  Tenant's  holding  over shall be twice the Base Rent payable in the
last full month prior to the termination hereof.  Acceptance by Landlord of rent
after such  termination  shall not  constitute  a renewal or  extension  of this
Lease;  and  nothing  contained  in this  provision  shall  be  deemed  to waive
Landlord's  right of  re-entry or any other right  hereunder  or at law.  Tenant
shall indenmify,  defend and hold Landlord  harmless from and against all Claims
arising or resulting  directly or  indirectly  from  Tenant's  failure to timely
surrender the Premises,  including (i) any rent payable by or any loss, cost, or
damages claimed by any prospective  tenant of the Premises,  and (ii) Landlord's
damages as a result of such prospective  tenant  rescinding or refusing to enter
into the  prospective  lease of the Premises by reason of such failure to timely
surrender the Premises.

20.      ENCUMBRANCES.

         20.1   Subordination.   This  Lease  is  expressly   made  subject  and
subordinate to any mortgage,  deed of trust,  ground lease,  underlying lease or
like encumbrance  affecting any part of the Property or any interest of Landlord
therein which is now existing or hereafter executed or recorded ("Encumbrance");
provided, however, that such subordination shall only be effective, as to future
Encumbrances,  if the holder of the  Encumbrance  agrees  that this Lease  shall
survive the  termination  of the  Encumbrance  by lapse of time,  foreclosure or
otherwise  so long as Tenant is not in default  under this Lease.  Provided  the
conditions of the  preceding  sentence are  satisfied,  Tenant shall execute and
deliver to Landlord,  within fifteen (15) days after written request therefor by
Landlord  and  in a  form  reasonably  requested  by  Landlord,  any  additional
documents  evidencing the  subordination  of this Lease with respect to any such
Encumbrance  and  the  nondisturbance  agreement  of  the  holder  of  any  such
Encumbrance. If the interest of Landlord in the Property is transferred pursuant
to or in lieu of proceedings  for enforcement of any  Encumbrance,  Tenant shall
immediately  and  automatically  attorn to the new owner,  and this Lease  shall
continue in full force and effect as a direct lease between the  transferee  and
Tenant on the terms and conditions set forth in this Lease.

         20.2  Mortgagee  Protection.  Tenant  agrees to give any  holder of any
Encumbrance covering any part of the Property ("Mortgagee"), by registered mail,
a copy of any notice of default  served upon  Landlord,  provided  that prior to
such notice  Tenant has been notitied in writing (by way of notice of assignment
of rents and leases, or otherwise) of the address of such Mortgagee. If Landlord
shall  have  failed  to cure  such  default  within  thirty  (30)  days from the
effective date of


                                      -21-
<PAGE>


such notice of default,  then the Mortgagee shall have an additional thirty (30)
days within which to cure such default or if such default cannot be cured within
that time,  then such  additional  time as may be necessary to cure such default
(including  the  time   necessary  to  foreclose  or  otherwise   terminate  its
Encumbrance,  if  necessary  to effect such  cure),  and this Lease shall not be
terminated so long as such remedies are being diligently pursued.

21.      ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS.

         21.1 Estoppel Certificates.  Within ten (10) days after written request
therefor, Tenant shall execute and deliver to Landlord, in a form provided by or
satisfactory to Landlord, a certificate stating that this Lease is in full force
and effect,  describing any amendments or  modifications  hereto,  acknowledging
that this Lease is subordinate or prior,  as the case may be, to any Encumbrance
and stating any other information Landlord may reasonably request, including the
Term, the monthly Base Rent, the date to which Rent has been paid, the amount of
any security deposit or prepaid rent,  whether either party hereto is in default
under  the  terms  of  the  Lease,   and  whether  Landlord  has  completed  its
construction  obligations  hereunder (if any). Tenant  irrevocably  constitutes,
appoints and authorizes Landlord as Tenant's special  attorney-in-fact  for such
purpose to complete, execute and deliver such certificate if Tenant fails timely
to execute and deliver such  certificate as provided above. Any person or entity
purchasing,  acquiring an interest in or extending financing with respect to the
Property shall be entitled to rely upon any such certificate.
If  Tenant  fails  to  deliver  such  certificate  within  ten (10)  days  after
Landlord's second written request  therefor,  Tenant shall be liable to Landlord
for any damages  incurred by Landlord  including  any profits or other  benefits
from any  financing of the Property or any  interest  therein  which are lost or
made  unavailable as a result,  directly or indirectly,  pf Tenant's  failure or
refusal to timely execute or deliver such estoppel certificate.

         21.2 Financial  Statements.  Within ten (10) days after written request
therefor, but not more than once a year, Tenant shall deliver to Landlord a copy
of the financial  statements  (including at least a year end balance sheet and a
statement  of profit  and loss) of Tenant  (and of each  guarantor  of  Tenant's
obligations  under this  Lease) for each of the three  most  recently  completed
years,  prepared in accordance  with generally  accepted  accounting  principles
(and, if such is Tenant's normal practice,  audited by an independent  certified
public accountant),  all then available subsequent interim statements,  and such
other  financial  information  as may  reasonably  be  requested  by Landlord or
required by any Mortgagee.

22. NOTICES.   Any   notice,   demand,  request,   consent   or  approval   that
either party  desires or is required to give to the other party under this Lease
shall be in writing and shall be served  personally,  delivered  by messenger or
courier  service,  or sent by U.S.  certified  mail,  return receipt  requested,
postage prepaid, addressed to the other party at the party's address for notices
set forth in the Basic Lease  Information.  Any notice required  pursuant to any
Laws may be incorporated  into, given concurrently with or given separately from
any notice required under this Lease. Notices shall be deemed to have been given
and be  effective  on the  earlier of (a)  receipt  (or  refusal of  delivery or
receipt);  or (b) one (1)  business  day  after  acceptance  by the  independent
service for delivery,  if sent by independent  messenger or courier service,  or
three (3) business days after  mailing if sent by mail in  accordance  with this
Section.  Either party may change its address for notices  hereunder,  effective
fifteen (15) days after notice to the other party  complying  with this Section.
If Tenant sublets the Premises,  notices from Landlord shall be effective on the
subtenant when given to Tenant pursuant to this Section.

23.      ATTORNEYS' FEES. In  the  event  of  any dispute between  Landlord  and
Tenant in any way related to this Lease, the  non-prevailing  party shall pay to
the prevailing  party all reasonable  attorneys'  fees and costs and expenses of
any type  incurred  by the  prevailing  party in  connection  with any action or
proceeding  (including any appeal and the enforcement of any judgment or award),
whether or not the dispute is litigated or prosecuted to final judgment.

24.      QUIET POSSESSION.  Subject to Tenant's full and timely  performance  of
all of  Tenant's  obligations  under this Lease and subject to the terms of this
Lease,  including  Section  20 -  Encumbrances,  Tenant  shall  have  the  quiet
possession  of the  Premises  throughout  the Term as  against  any  persons  or
entities lawfully claiming by, through or under Landlord.


                                      -22-
<PAGE>


25.      SECURITY MEASURES. Tenant  shall  be  responsible   for  all   security
measures for the  Premises,  such as the  registration  or search of all persons
entering or leaving the  Building,  requiring  identification  for access to the
Building,  evacuation of the Building for cause,  suspected  cause, or for drill
purposes,  and for  Building  access to prevent any threat of  property  loss or
damage, bodily injury or business interruption.  Landlord shall have no security
responsibility  for the  Premises  or the  Property.  Landlord,  its  agents and
employees  shall  have  no  liability  to  Tenant  or  Tenant's  Agents  for the
implementation  or exercise of, or the failure to  implement  or  exercise,  any
security  measures  for the  Premises  or the  Property,  or for  any  resulting
disturbance of Tenant's use or enjoyment of the Premises.

26.      FORCE MAJEURE.  If   Landlord  is  delayed,  interrupted  or  prevented
from  performing  any of its  obligations  under  this  Lease,  and such  delay,
interruption  or  prevention  is due to fire,  act of God,  governmental  act or
failure to act, labor dispute,  unavailability of materials or any cause outside
the  reasonable  control  of  Landlord,  then the time  for  performance  of the
affected  obligations of Landlord  shall be extended for a period  equivalent to
the period of such delay, interruption or prevention.

27.      RULES AND  REGULATIONS.  Tenant  shall  be  bound  by and  shall comply
with any reasonable rules and regulations  hereafter adopted by Landlord for all
tenants of the Property,  upon notice to Tenant  thereof.  Landlord shall not be
responsible to Tenant or to any other person for any violation of, or failure to
observe, the rules and regulations by any other tenant or other person.

28.      LANDLORD'S LIABILITY.  The  term  "Landlord,"  as  used  in this Lease,
shall mean only the owner or owners of the Property at the time in question.  In
the event of any  conveyance of title to the  Property,  then from and after the
date of such  conveyance,  the  transferor  Landlord  shall be  relieved  of all
liability  with respect to  Landlord's  obligations  to be performed  under this
Lease  after the date of such  conveyance.  Notwithstanding  any  other  term or
provision of this Lease,  the  liability of Landlord for its  obligations  under
this Lease is limited solely to Landlord's  interest in the Property as the same
may from time to time be encumbered, and no personal liability shall at any time
be  asserted  or  enforceable  against  any other  assets of Landlord or against
Landlord's   partners   or  members  or  its  or  their   respective   partners,
shareholders,  members,  directors,  officers  or  managers on account of any of
Landlord's obligations or actions under this Lease.

29.      CONSENTS AND APPROVALS

         29.1 Determination.  Wherever the consent, approval,  determination, or
judgment of Landlord is required or permitted  under this Lease,  such  consent,
approval,  determination or judgment is not to be unreasonably withheld,  unless
the specific provision contained in this Lease otherwise specifies the standards
under which Landlord may withhold its consent. If it is determined that Landlord
failed to give its  consent  where it was  required  to do so under this  Lease,
Tenant  shall be entitled to  injunctive  relief but shall not to be entitled to
monetary damages or to terminate this Lease for such failure.

         29.2 No Liability  Imposed on Landlord.  The review and/or  approval by
Landlord of any item or matter to be reviewed or approved by Landlord  under the
terms of this Lease or any  Exhibits  or Addenda  hereto  shall not impose  upon
Landlord  any  liability  for the  accuracy or  sufficiency  of any such item or
matter or the quality or suitability of such item for its intended use. Any such
review or approval is for the sole purpose of protecting  Landlord's interest in
the Property,  and no third parties,  including Tenant or Tenant's Agents or any
person or entity claiming by, through or under Tenant,  shall have any rights as
a consequence thereof.

30.      BROKERS.  Landlord has not  engaged any broker in connection  with this
Lease.  Tenant shall  indemnify  and hold  Landlord  harmless  from any claim or
claims,  including  costs,  expenses and  attorney's  fees  incurred by Landlord
asserted by any other  broker or finder for a fee or  commission  based upon any
dealings with or statements made by Tenant or Tenant's Agents.

31.      ENTIRE  AGREEMENT.  This   Lease,   including  the   Exhibits  and  any
Addenda  attached  hereto,  and  the  documents  referred  to  herein,  if  any,
constitute the entire agreement  between Landlord and Tenant with respect to the
leasing  of  space  by  Tenant  in the  Building,  and  supersede  all  prior or
contemporaneous agreements, understandings,  proposals and other representations
by or between  Landlord and Tenant,  whether  written or oral,  all of which are
merged herein. Neither


                                      -23-
<PAGE>


Landlord nor Landlord's agents have made any  representations or warranties with
respect to the  Premises,  the  Building,  the  Property or this Lease except as
expressly  set forth  herein,  and no rights,  easements  or  licenses  shall be
acquired  by Tenant by  implication  or  otherwise  unless  expressly  set forth
herein.  The  submission of this Lease for  examination  does not  constitute an
option for the  Premises  and this Lease  shall  become  effective  as a binding
agreement only upon execution and delivery thereof by Landlord to Tenant.

32.      EXPANSION OPTION.

         32.1 Exercise of Option.  Subject to the  remaining  provisions of this
         Section  32,  Tenant  shall have the  option and right (the  "Expansion
         Option") to lease from  Landlord  the  remaining  space in the Building
         consisting  of  33,972  rentable  square  feet  and  more  particularly
         described on Exhibit B A attached hereto (the  "Expansion  Space") when
         it becomes  available  on June 1, 2000.  Tenant shall have the right to
         exercise its Expansion  Option by delivering to Landlord written notice
         of its election  ("Tenant Exercise Notice") not less than six (6)months
         nor more than nine (9) months prior to June 1, 2000. If Tenant fails to
         so exercise the Expansion  Option,  the Expansion Option shall be of no
         further force or effect.

         32.2  Terms and  Conditions.  The  Expansion  Space  shall be leased to
         Tenant upon all terms and  conditions  of the Lease with the  following
         exceptions:

                  (a) The  Expansion  Space shall be  delivered to Tenant in "as
                  is" condition.

                  (b) Base  Rent for the  Expansion  Space  will be equal to the
                  product of the per square foot rent  applicable to the current
                  Premises (at the time such Base Rent is calculated)  under the
                  Basic Lease Provisions  multiplied by the rentable area of the
                  Expansion Space,  subject to annual adjustment as set forth in
                  the Basic Lease Provisions.

                  (c) Base  Rent and  Additional  Rent for the  Expansion  Space
                  shall commence on June 1, 2000.

         32.3  Amendment of Lease.  Within  fifteen  (15) days after  Landlord's
         receipt of Tenant's  Expansion  Notice,  Landlord and Tenant will enter
         into an  amendment  to this Lease  reflecting  (i) the  addition of the
         Expansion  Space to the  Premises,  (ii) the  increase in Base Rent and
         Additional  Rent  payable  under  this  Lease,  and  (iii)  such  other
         amendments as are necessary.

         32.4  Possession.  Landlord shall not be liable for the failure to give
         possession of any of the  Expansion  Space by reason of holding over or
         retention  of any third  party  tenant,  tenants or  occupants  if such
         holding over or retention  of  possession  is contrary to the terms and
         provisions  of the lease of any such  third  party  tenant,  tenants or
         occupants with Landlord.  The Landlord shall also not be liable for the
         failure to give  possession of any  Expansion  Space by reason of force
         majeure as defined in the Lease.  Any rent otherwise due by Tenant with
         respect  to such  Expansion  Space  shall,  however,  be  abated  until
         possession is delivered to Tenant and such abatement  shall  constitute
         full  settlement of all claims that Tenant might otherwise have against
         Landlord by reason of any failure of Landlord to timely give possession
         of such  Expansion  Space to Tenant during such holdover  period and/or
         during such time period as such force majeure is continuing.

         32.5  Notwithstanding  any other  provision or inference  herein to the
contrary, Tenant's rights and Landlord's obligations with respect to this option
shall  expire and be of no further  force or effect on the  earliest  of (i) the
occurrence  of an Event of Default  (as defined in Section 15 of the Lease) more
than two (2) times in any  thirty-six  (36) month period  during the Term of the
Lease,  (iii) an  assignment  of this  Lease by Tenant  (except  to a  Permitted
Transferee), or (iv) a sublease of all or any portion of the Premises by Tenant.

33.      MISCELLANEOUS.   This  Lease  may  not be amended or modified except by
a writing signed by Landlord and Tenant.  Subject to Section 14 - Assignment and
Subletting and Section 28 - Landlord's Liability, this Lease shall be binding on
and shall inure to the benefit of the parties and


                                      -24-
<PAGE>


their   respective   successors,   assigns   and  legal   representatives.   The
determination  that any  provisions  hereof  may be void,  invalid,  illegal  or
unenforceable  shall not impair any other  provisions  hereof and all such other
provisions   of  this  Lease  shall  remain  in  full  force  and  effect.   The
unenforceability,  invalidity or illegality of any provision of this Lease under
particular  circumstances  shall not  render  unenforceable,  invalid or illegal
other   provisions  of  this  Lease,   or  the  same   provisions   under  other
circumstances.  This Lease shall be construed and interpreted in accordance with
the laws  (excluding  conflict  of laws  principles)  of the  State in which the
Building  is  located.  The  provisions  of this  Lease  shall be  construed  in
accordance  with the fair meaning of the language used and shall not be strictly
construed  against  either  party,  even if such party  drafted the provision in
question.  When required by the context of this Lease, the singular includes the
plural.  Wherever  the  term  "including"  is used in this  Lease,  it  shall be
interpreted  as meaning  "including,  but not  limited to" the matter or matters
thereafter enumerated.  The captions contained in this Lease are for purposes of
convenience  only and are not to be used to interpret or construe this Lease. If
more  than  one  person  or  entity  is  identified  as  Tenant  hereunder,  the
obligations of each and all of them under this Lease shall be joint and several.
Time is of the essence with respect to this Lease,  except as to the  conditions
relating  to the  delivery of  possession  of the  Premises  to Tenant.  Neither
Landlord nor Tenant shall record this Lease.

34.      AUTHORITY.  If    Tenant  is  a   corporation,   partnership,   limited
liability  company or other  form of  business  entity,  Tenant  represents  and
warrants  that Tenant is a duly  organized  and validly  existing  entity,  that
Tenant  has full  right and  authority  to enter  into  this  Lease and that the
persons  signing on behalf of Tenant are  authorized to do so and have the power
to bind Tenant to this Lease.  Tenant shall  provide  Landlord upon request with
evidence   reasonably   satisfactory   to  Landlord   confirming  the  foregoing
representations.

         IN WITNESS WHEREOF, Landlord and Tenant have entered into this Lease as
of the date first above written.

TENANT:                                 LANDLORD:

BELL MICROPRODUCTS, INC.,               ACBEL TECI-INOLOGIES, INC.,
a California corporation                DBA SUN MOON STAR, a California
                                        corporation

By:
   --------------------------------
        Name:                           By:
             ----------------------
        Title:  VP OPERATIONS
              ---------------------     --------------------------------
                                        Name:
                                             ---------------------------
                                        Title:
                                              --------------------------

By:
   --------------------------------
        Name:
             ----------------------
        Title:
              ---------------------


                                      -25-
<PAGE>



                                   EXHIBIT A

                                  THE PREMISES








                                                             INITIALS:

                                                              Landlord  ________

                                                                Tenant  ________

                                      B-1
<PAGE>


                                    EXHIBIT B

                                 EXPANSION SPACE

                                                             INITIALS:

                                                              Landlord  ________

                                                                Tenant  ________


                                      -2-