STANDARD SUBLEASE
                  American Industrial Real Estate Association
                                     [LOGO]

1. Parties. This Sublease, dated, for reference purposes only, June 20, 1997, is
made by and between  Verticom,  Inc.  (herein called  "Sublessor")  and Arterial
Vascular Engineering, Inc. (herein called "Sublessee").

2.  Premises.  Sublessor  hereby  subleases to Sublessee  and  Sublessee  hereby
subleases  from  Sublessor  for the  term,  at the  rental,  and upon all of the
conditions set forth herein,  that certain real property  situated in the County
of Sonoma, State of California,  commonly known as 1201 Corporate Center Parkway
and described as  approximately  10,000 s.f. of a 47,938 s.f.  building known as
Building B in the complex A.P. #035-133-019 as shown on Exhibit A.

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Said  real  property,  including  the  land  and all  improvements  thereon,  is
hereinafter called the "Premises".

3. Term.

     3.1 Term.  The term of this  Sublease  shall be for  eighteen  (18)  months
commencing  on September  1, 1997 and ending on February 28, 1999 unless  sooner
terminated pursuant to any provision hereof.

     3.2 Delay in Commencement.  Notwithstanding  said commencement date, if for
any reason Sublessor  cannot deliver  possession of the Premises to Sublessee on
said date. Sublessor shall not be subject to any liability therefore,  nor shall
such failure  affect the validity of this Lease or the  obligations of Sublessee
hereunder or extend the term  hereof,  but in such case  Sublessee  shall not be
obligated to pay rent until possession of the Premises is tendered to Sublessee;
provided,  however, that if Sublessor shall not have delivered possession of the
Premises within sixty (60) days from said commencement  date,  Sublessee may, at
Sublessee's  option,  by notice in  writing  to  Sublessor  within ten (10) days
thereafter, cancel this Sublease, in which event the parties shall be discharged
from all  obligations  thereunder.  If Sublessee  occupies the Premises prior to
said  commencement  date,  such  occupancy  shall be subject  to all  provisions
hereof,  such  occupancy  shall not advance the  termination  date and Sublessee
shall pay rent for such period at the initial monthly rates set forth below. See
Exhibit B-1, Paragraph 2.

4. Rent. Sublessee shall pay to Sublessor as rent for the Premises equal monthly
payments  of  $12,500,  in  advance,  on the 1st day of each  month  of the term
hereof.  Sublessee shall pay Sublessor upon the execution hereof $12,500 as rent
for September. See Addendum No. 1, Paragraph 7.

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Rent for any  period  during  the term  hereof  which is for less than one month
shall be a prorata portion of the monthly installment.  Rent shall be payable in
lawful money of the United  States to Sublessor at the address  stated herein or
to such other  persons or at such other  places as  Sublessor  may  designate in
writing.

5. Security  Deposit.  Sublessee  shall deposit with  Sublessor  upon  execution
hereof $12,500 as security for Sublessee's  faithful  performance of Sublessee's
obligations  hereunder.  If  Sublessee  fails to pay rent or other  charges  due
hereunder, or otherwise defaults with respect to any provision of this Sublease,
Sublessor  may use, apply  or retain all or any portion of said  deposit for the
payment of any rent or other  charge in default or for the  payment of any other
sum to which Sublessor may become obligated by reason of Sublessee's default, or
to  compensate  Sublessor  for any loss or damage  which  Sublessor  may  suffer
thereby.  If  Sublessor  so uses or applies all or any portion of said  deposit.
Sublessee shall within ten (10) days after written demand therefore deposit cash
with  Sublessor  in an amount  sufficient  to restore  said  deposit to the full
amount hereinabove  stated and Sublessee's  failure to do so shall be a material
breach of this  Sublease.  Sublessor  shall not be required to keep said deposit
separate from its general  accounts.  If Sublessee  performs all of  Sublessee's
obligations  hereunder,  said deposit, or so much thereof as has not theretofore
been applied by  Sublessor,  shall be returned,  without  payment of interest or
other increment for its use to Sublessee (or at Sublessor's  option, to the last
assignee,  if any, of Sublessee's  interest  hereunder) at the expiration of the
term hereof, and after Sublessee has vacated the Premises. No trust relationship
is created herein between  Sublessor and Sublessee with respect to said Security
Deposit.

6. Use.

     6.1 Use.  The  Premises  shall be used and  occupied  only for research and
development, manufacturing, general office and for no other purpose.

     6.2 Compliance with Law.

         (a) Sublessor warrants to Sublessee that the Premises,  in its existing
state,  but without regard to the use for which Sublessee will use the Premises,
does not violate any  applicable  building  code  regulation or ordinance at the
time that this  Sublease is executed.  In the event that it is  determined  that
this  warranty  has  been  violated,  then it  shall  be the  obligation  of the
Sublessor, after written notice from Sublessee, to promptly, at Sublessor's sole
cost and expense,  rectify any such violation.  In the event that Sublessee does
not give to Sublessor  written notice of the violation of this warranty within 1
year  from  the  commencement  of  the  term  of  this  Sublease,  it  shall  be
conclusively  deemed that such violation did not exist and the correction of the
same shall be the obligation of the Sublessee.

         (b)  Except as  provided  in  paragraph  6.2(a).  Sublessee  shall,  at
Sublessee's expense,  comply promptly with all applicable statutes,  ordinances,
rules, regulations,  orders,  restrictions of record, and requirements in effect
during the term or any part of the term hereof  regulating  the use by Sublessee
of the  Premises.  Sublessee  shall not use or permit the use of the Premises in
any manner  that will tend to create  waste or a nuisance  or, if there shall be
more than one tenant of the building  containing the Premises,  which shall tend
to disturb such other tenants.

     6.3 Condition of Premises. Except as provided in paragraph 6.2(a) Sublessee
hereby  accepts the Premises in their  condition  existing as of the date of the
execution hereof, subject to all applicable zoning, municipal,  county and state
laws,  ordinances,  and  regulations  governing  and  regulating  the use of the
Premises, and accepts this Sublease subject thereto and to all matters disclosed
thereby and by any exhibits attached hereto Sublessee  acknowledges that neither
Sublessor nor Sublessor's  agents have made any representation or warranty as to
the suitability of the Premises for the conduct of Sublessee's business.

7. Master Lease

     7.1  Sublessor  is the  lessee  of  the  Premises  by  virtue  of a  lease,
hereinafter  referred  to as the  "Master  Lease",  a copy of which is  attached
hereto marked  Exhibit 1, dated  October 27, 1995 wherein  Santa Rosa  Corporate
Center Associates is the lessor, hereinafter referred to as the "Master Lessor".

     7.2 This Sublease is and shall be at all times subject and  subordinate  to
the Master Lease.

     7.3 The terms,  conditions  and  respective  obligations  of Sublessor  and
Sublessee to each other under this Sublease shall be the terms and conditions of
the Master Lease. Therefore, for the purposes of this Sublease,  wherever in the
Master Lease the word  "Lessor" is used it shall be deemed to mean the Sublessor
herein and  wherever in the Master  Lease the word  "Lessee" is used it shall be
deemed to mean the Sublessee herein.

     7.4 During the term of this  Sublease  and for all periods  subsequent  for
obligations  which  have  arisen  prior  to the  termination  of this  Sublease,
Sublessee does hereby expressly assume and agree to perform and comply with, for
the benefit of  Sublessor  and Master  Lessor,  each,  and every  obligation  of
Sublessor  under the Master Lease except as otherwise  set forth in Addendum No.
1.

<PAGE>

     7.5 The  obligations  that Sublessee has assumed under paragraph 7.4 hereof
are  hereinafter  referred  to as the  "Sublessee's  Assumed  Obligations".  The
obligations  that  Sublessee  has not  assumed  under  paragraph  7.4 hereof are
hereinafter referred to as the "Sublessor's Remaining Obligations".

     7.6  Sublessee  shall  hold  Sublessor  free and  harmless  of and from all
liability,  judgments,  costs, damages, claims or demands,  including reasonable
attorneys  fees,  arising out of  Sublessee's  failure to comply with or perform
Sublessee's Assumed Obligations.

     7.7 Sublessor agrees to maintain the Master Lease during the entire term of
this Sublease,  subject, however, to any earlier termination of the Master Lease
without the fault of the  Sublessor,  and to comply with or perform  Sublessor's
Remaining  Obligations  and to hold  Sublessee free and harmless of and from all
liability,   judgments,  costs,  damages,  claims  or  demands  arising  out  of
Sublessor's failure to comply with or perform Sublessor's Remaining Obligations.

     7.8  Sublessor  represents  to  Sublessee  that the Master Lease is in full
force  and  effect  and that no  default  exists on the part of any party to the
Master Lease.

8. [Section omitted]

9. Consent of Master Lessor.

     9.1 In the event that the Master Lease requires that  Sublessor  obtain the
consent of Master  Lessor to any  subletting  by Sublessor  then,  this Sublease
shall not be effective unless,  within 10 days of the date hereof, Master Lessor
signs this Sublease thereby giving its consent to this Subletting.

     9.2 [Paragraph omitted]

     9.3 In the event that Master Lessor does give such consent then:

         (a) Such consent will not release Sublessor of its obligations or alter
the primary  liability  of Sublessor to pay the rent and perform and comply with
all of the obligations of Sublessor to be performed under the Master Lease.

         (b) The  acceptance of rent by Master Lessor from  Sublessee or any one
else liable under the Master Lease shall not be deemed a waiver by Master Lessor
of any provisions of the Master Lease.

         (c) The consent to this Sublease  shall not constitute a consent to any
subsequent subletting or assignment.

         (d) In the event of any default of  Sublessor  under the Master  Lease,
Master Lessor may proceed directly against Sublessor,  any guarantors or any one
else liable under the Master Lease or this  Sublease  without  first  exhausting
Master  Lessor's  remedies  against any other person or entity liable thereon to
Master Lessor.

         (e) Master Lessor may consent to subsequent sublettings and assignments
of the Master Lease or this Sublease or any amendments or modifications  thereto
without  notifying  Sublessor nor any one else liable under the Master Lease and
without  obtaining  their consent and such action shall not relieve such persons
from liability.

         (f) In the event that Sublessor shall default in its obligations  under
the Master Lease,  then Master Lessor, at its option and without being obligated
to do so, may require Sublessee to attorn to Master Lessor in which event Master
Lessor shall undertake the obligations of Sublessor under this Sublease from the
time of the exercise of said option to  termination  of this Sublease but Master
Lessor shall not be liable for any prepaid  rents nor any security  deposit paid
by Sublessee,  nor shall Master  Lessor be liable for any other  defaults of the
Sublessor under the Sublease.

     9.4 The  signatures of the Master Lessor and any Guarantors of Sublessor at
the end of this  document  shall  constitute  their consent to the terms of this
Sublease.

     9.5  Master  Lessor  acknowledges  that,  to the  best of  Master  Lessor's
knowledge,  no default presently exists under the Master Lease of obligations to
be performed by Sublessor and that the Master Lease is in full force and effect.

     9.6 In the  event  that  Sublessor  defaults  under its  obligations  to be
performed  under the Master Lease by Sublessor,  Master Lessor agrees to deliver
to  Sublessee  a copy of any such notice of  default.  Sublessee  shall have the
right to cure any default of Sublessor described in any notice of default within
ten days after service of such notice of default on  Sublessee.  If such default
is cured by Sublessee then Sublessee shall have the right of  reimbursement  and
offset from and against Sublessor.

10. Brokers Fee.

     10.1 After execution hereof by all parties and upon occupancy by Sublessee,
Sublessor  shall pay to Keegan and  Coppin Co.  Inc.,  a  licensed  real  estate
broker,  (herein called  "Broker"),  a fee as set forth in a separate  agreement
between  Sublessor  and Broker,  or in the event there is no separate  agreement
between Sublessor and Broker, the sum of $13,500 for brokerage services rendered
by Broker to Sublessor in this transaction.

     10.2  Sublessor  agrees that if Sublessee  exercises any option or right of
first refusal granted by Sublessor herein, or any option or right  substantially
similar  thereto,  either  to extend  the term of this  Sublease, to renew  this
Sublease,  to purchase the Premises,  or to lease or purchase  adjacent property
which Sublessor may own or in which  Sublessor has an interest,  or if Broker is
the procuring cause of any lease,  sublease,  or sale pertaining to the Premises
or any adjacent  property which  Sublessor may own or in which  Sublessor has an
interest,  then as to any of said  transactions  Sublessor shall pay to Broker a
fee, in cash, in accordance with the schedule of Broker in effect at the time of
the execution of this  Sublease.  Notwithstanding   the  foregoing,  Sublessor's
obligation  under  this  Paragraph  10.2 is limited  to a  transaction  in which
Sublessor is acting as a sublessor, lessor or seller.

     10.3 [Paragraph omitted]

     10.4 Any fee due from Sublessor or Master Lessor hereunder shall be due and
payable upon the exercise of any option to extend or renew,  as to any extension
or renewal;  upon the execution of any new lease, as to a new lease  transaction
or the exercise of a right of first refusal to lease; or at the close of escrow,
as to the exercise of any option to purchase or other sale transaction.

     10.5 Any transferee of Sublessor's interest in this Sublease,  or of Master
Lessor's interest in the Master Lease, by accepting an assignment thereof, shall
be deemed to have  assumed the  respective  obligations  of  Sublessor or Master
Lessor  under this  Paragraph  10.  Broker  shall be deemed to be a  third-party
beneficiary of this paragraph 10.

11. Attorney's fees. If any party or the Broker named herein brings an action to
enforce the terms hereof or to declare rights hereunder, the prevailing party in
any such  action,  on trial and  appeal,  shall be  entitled  to his  reasonable
attorney's  fees to be paid by the  losing  party  as fixed  by the  Court.  The
provision  of this  paragraph  shall  inure to the  benefit of the Broker  named
herein who seeks to enforce a right hereunder.

Al1 parties to the Sublease and the Broker agree to the  Arbitration of Disputes
language attached as Exhibit E.

<PAGE>

l2. Additional  Provisions.  [If there are no additional  provisions draw a line
from this point to the next printed word after the space left here. If there are
additional provisions place the same here.]


Addendum #1
Exhibit A - Floor Plan
Exhibit C - Standard Lease Disclosure
Exhibit D - Agency Disclosure
Exhibit E - Arbitration of Disputes




If this Sublease has been filled in it has been prepared for  submission to your
attorney for his approval.  No  representation  or recommendation is made by the
real estate broker or its agents or employees as to the legal sufficiency, legal
effect,  or tax  consequences  of  this  Sublease  or the  transaction  relating
thereto.

Executed at
           ---------------------------  ----------------------------------------
on         July 8, 1997                 By /s/  Douglas G. Dellin CEO
  ------------------------------------    --------------------------------------
address                                 By
       -------------------------------    --------------------------------------

--------------------------------------        "Sublessor" (Corporate Seal)

Executed at                                Arterial Vascular Engineering, Inc.
           ---------------------------  ----------------------------------------
on         July 9, 1997                 By /s/ Lawrence J. Fassler
  ------------------------------------    --------------------------------------
address                                 By     General Counsel and Secretary
       -------------------------------    --------------------------------------

--------------------------------------        "Sublessee" (Corporate Seal)

Executed at
           ---------------------------  ----------------------------------------
on
  ------------------------------------  ----------------------------------------
address                                 By
       -------------------------------    --------------------------------------

--------------------------------------        "Master Lessor" (Corporate Seal)

Executed at
           ---------------------------  ----------------------------------------
on
  ------------------------------------  ----------------------------------------
address                                 By
       -------------------------------    --------------------------------------

--------------------------------------                "Guarantors"



NOTE:  These forms are often modified to meet changing  requirements  of law and
       needs  of the  industry.  Always  write  or  call to  make  sure  you are
       utilizing  the  most  current  form:   AMERICAN  INDUSTRIAL  REAL  ESTATE
       ASSOCIATION,  345 So.  Figueroa  St., M-1, Los Angeles,  CA 90071.  (213)
       687-8777.
<PAGE>
                                  ADDENDUM # 1

                   To Lease dated July 2, 1997 by and between
  Sublessor Verticom, Inc., and Sublessee Arterial Vascular Engineering. Inc.

1.   Tenant Improvement Scope:

     Sublessor and Sublessee have approved plans and specifications covering the
     layout  of the  premises  and the  scope of  responsibility  of the  Tenant
     Improvements between Sublessor and Sublessee as stipulated in lease, in the
     Exhibit  B of lease or Work  Letter.  Said  approval  shall be  forthcoming
     within thirty (30) days of acceptance hereof.

     Sublessee to install  Tenant  Improvements  in a quality  good  workmanlike
     manner in accordance  with approved  plans and  specification  within sixty
     (60) days of acceptance hereof.

     Sublessor  shall  inspect said  premises  within three (3) business days of
     completion to ascertain  that Tenant  Improvements  have been  installed in
     accordance with plans and specifications.  Sublessor shall provide a "punch
     list" of items  not in  accordance  with  plans and  specifications  or not
     installed in a good  workmanlike  manner.  Sublessee shall have thirty (30)
     days to correct said punch list items.

     Sublessee  shall remove all mechanic's  liens,  and will satisfy all claims
     and  meet  all  contract  requirements  with  suppliers,   contractors  and
     employees  arising out of said  installation of improvements.  Sublessee to
     have workman compensation and liability insurance with a minimum $1,000,000
     per  occurrence  for said  installation  and to name  Sublessor  additional
     insured.  Sublessee  shall  indemnify and hold  harmless  Sublessor for all
     claims of employees,  invitees,  materialmen,  supplier arising out of said
     installation.

2.   Financial Information

     Sublessor  has  reviewed  and  approved  financial   statements   regarding
     Sublessee.

3.   Permits

     If required  Sublessee will obtain a use permit and a wastewater  discharge
     permit  from  the  appropriate  municipality  within  thirty  (30)  days of
     acceptance  hereof.  Sublessee  shall use due  diligence  in pursuing  such
     permits and pay all costs  associated  with them.  Sublessee shall have the
     responsibility to maintain any use permits and to comply with all terms and
     conditions  of  said  use  permits  during  the  term  of  this  Lease.  If
     Sublessee's application for a use permit is denied,  Sublessor or Sublessee
     may declare  this lease void,  in which event all deposits and prepaid rent
     shall be returned to Sublessee.

4.   Hazardous Waste

     Sublessee has provided Sublessor with its MSDA on the following chemicals -
     Isopropyl  alcohol,  Posphoric Acid, Nitric Acid,  Synergy CCS, Eposy Resin
     and Oxalic Acid which may be stored on site.  Sublessor  has  reviewed  and
     approved the use of these materials in the premises.

     "If Sublessee, his invitees, employees, agents or associates cause or allow
     a spill, or contamination of the premises, common area, soil or surrounding
     area,  then it will be the  responsibility  of  Sublessee  to clean up said
     hazard to the degree  required  and within the time frame set by any public
     entity which has  jurisdiction  and  particularly  in response to the Super
     Fund Act and Proposition 65."

5.   Area Measurement:

     Sublessee   and   Sublessor   has  reviewed  and  approved  the  system  of
     measurement,  the  useable  and  rentable  square  footage  of the  subject
     premises.

6.   Associations and Expenses:

     Sublessee has reviewed and approved CC&R's, any common area association and
     budget, rules, expenses,  and use conditions pertaining thereto.  Sublessee
     is not required to make any  payments  for common area charges  detailed in
     Paragraph 11.4 of the Master Lease.

<PAGE>


7.   Rent:

     This Sublease is on a Full Service Basis.  There are no additional  charges
     in excess of the  $12,500  per month  rental  charge  contemplated  by this
     Sublease.  The full service sublease  includes the following  services:  
     a. Janitorial  service  on every  weekday  (see  janitorial  below) 
     b. All utility services including sewer,  water,  electrical power, gas and
     compressed air, (see utilities and facility requirements below).

     All additional  payments made by Sublessor to Masterlessor  pursuant to the
     terms of the Master Lease  including the cost of property taxes  (Paragraph
     10.1),  the cost of property  insurance  (Paragraph  8.2) and,  the cost of
     common area charges  (Paragraph  11.4) shall remain the sole  obligation of
     the Sublessor.

8.   Parking:

     Sublessee  shall be entitled to the use of sixty (60) parking  spaces on an
     unreserved basis free of charge.

9.   Facility Requirements:

     Sublessor shall provide the following services to the Sublessee:
     a. Electrical - 225 amp, three phase supply; sublessee will distribute.
     b. Compressed Air - 120PSI, CDA system, maximum 520 SCFH @ 120 PSI
     c. Temperature   and  humidity  support   equipment  to  be  furnished  and
     maintained  by Verticom  to achieve 68 to 73 degrees  and 20%-70%  relative
     humidity.
     d. 10" exhaust duct, AVE to supply fan and roof penetration.

     While every  possible  attempt will be made to guarantee that all services,
     facilities and systems are available for use by AVE at all times,  VertiCom
     will not be responsible  for any charges or damages  relating to mechanical
     failure,  system  performance  issues,  maintenance  downtime  or any other
     conditions that would temporarily prevent the services from being available
     to AVE.

10.  Janitorial Services:

     Sublessor to provide  Sublessee with daily janitorial  service i.e., Monday
     through  Friday  with a  monthly  expense  cap of  $1,200  per  month.  Any
     specialized  cleaning  materials related to AVE's clean room operation will
     be funished by AVE.

11.  Utilities:

     Sublessor  shall  provide   Sublessee  with  all  standard   business  park
     utilities, however, electrical service shall be capped at $2,500 per month.
     Any excess electrical charge attributable to AVE occupancy shall be paid by
     AVE as additional rent with the following months rental payment.

12.  Early Access:

     Upon full  execution  of the Sublease  Agreement,  issuance of an insurance
     certificate and payment of prepaid rent and security  deposit,  AVE will be
     allowed access to the sublet  premises to design and construct the proposed
     interior improvements.

13.  Roll-up Door Access:

     Verticom to approve the use of the shipping and receiving  docks by AVE for
     the  movement of large  pieces of  equipment  with prior  notification  and
     according to security procedures. No shared use of space is contemplated by
     this Sublease.

Agreed by: Sublessee: /s/ Lawrence J. Fassler        Date: 7/9/97
                      ------------------------             ------

Agreed by: Sublessor: /s/ Douglas G. Dellin          Date: 7/8/97
                      ------------------------             ------
                      Chairman & CEO

<PAGE>

                                   WORK LETTER
                                   EXHIBIT B 1

Arterial Vascular Engineering,  Inc. (AVE) and Verticom, Inc. (VI) are executing
simultaneously  with this  Letter  Agreement,  the  written  lease to which this
Letter  Agreement  is attached  covering  the  premises  described in said lease
(hereinafter called "the premises").

To  induce  AVE to enter  into said  lease  (which  is  hereby  incorporated  by
reference to the extent that the provisions of this agreement may apply thereto)
and in consideration of the mutual covenants hereinafter  contained,  VI and AVE
mutually agree as follows:

1. AVE PLANS AND SPECIFICATIONS

(a) Except to the extent otherwise provided in subparagraphs (b) and (c) of this
paragraph,   AVE  agrees  to  furnish  at  its  sole  cost  and   expense,   all
architectural,  mechanical,  and electrical  engineering  plans required for the
performance  of the work herein below  described,  including  complete  detailed
plans and  specifications  for Lessee's  partition layout,  reflective  ceiling,
heating and air  conditioning,  electrical  outlets and switches  and  telephone
outlets.  Eric  Glass  of  Glass  Architecture  has  been  retained  to  perform
architectural  services.  A preliminary  space plan has been attached as Exhibit
B2.
The layout shall be approved by each of the parties  hereto and attached to this
lease and shall become a part thereof and shall be described as Exhibit B2.

(b) It is understood and agreed that any interior  decorating  service,  such as
selection of special wall coverings,  fixtures,  carpeting, and any or all other
decorator  items required by Lessee in the  performance of said work referred to
hereinabove in subparagraph (a) shall be at AVE's sole cost and expense.

(c) It is understood  and agreed that all plans and  specifications  referred to
hereinabove in  subparagraph  (a) are subject to VI's approval,  which VI agrees
shall not be unreasonably  withheld. It is also understood that VI is not making
any  improvements  to the  premises  and that the space is to be subleased on an
"as-is" basis except for seismic bracing of T-bar ceiling.

2. IMPROVEMENT WORK

AVE to install  improvements in a good workmanlike manner and in accordance with
the City approved plans and specifications.  AVE to proceed diligently with said
installation  so as to meet the occupancy date  stipulated in the lease.  If AVE
encounters third party delays in completion of the improvements,  and as long as
AVE maintains a best efforts basis to complete construction,  then the occupancy
date and lease commencement date shall be extended by the amount of such delay.

A general  contractor's  cost breakdown is provided as Exhibit B3 for a scope of
work reference.

Upon  termination  of the Sublease,  VI shall have the right to have AVE restore
the  sublet   premises  to  its  original   condition   except  for  the  toilet
improvements.  AVE shall have the right to remove its trade  fixtures  including
clean room, HEPA filters,  duct fan, chiller,  office  furniture,  etc. AVE will
repair all damage caused by said removal.


SUBLESSOR                               SUBLESSEE

/s/ Douglas G. Dellin                   /s/ Lawrence J. Fassler
-----------------------------           -----------------------------

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

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

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

<PAGE>

                                   EXHIBIT B2
                             Preliminary Space Plan


                               [GRAPHIC OMITTED]


<PAGE>

                          LEASING DISCLOSURE REGARDING
                         REAL ESTATE AGENCY RELATIONSHIP

When you enter into a  discussion  with a real  estate  agent  regarding  a real
estate  transaction,  you should from the outset  understand what type of agency
relationship  or  representation  you  wish  to  have  with  the  agent  in  the
transaction.
                                SUBLESSOR'S AGENT
A Sublessor's  agent under a listing  agreement  with the Sublessor  acts as the
agent for the Sublessor. A Sublessor's agent or a subagent of that agent has the
following affirmative obligations:
To the Sublessor:
(a) A fiduciary duty of utmost care,  integrity,  honesty and loyalty in dealing
    with the Sublessor.
To the Sublessee and the Sublessor:
(a) Diligent exercise of reasonable skill and care in performance of the agent's
    duties.
{b) A duty of honest and fair dealing and good faith.
(c) A duty to disclose  all facts known to the agent  materially  affecting  the
    value or  desirability  of the property that are not known to, or within the
    diligent attention and observation of, the parties.

An agent is not obligated to reveal to either party any confidential information
obtained from the other party which does not involve the affirmative  duties set
forth above.
                               SUBLESSEE'S AGENT
A Sublessee's agent can, with a Sublessee's  consent,  agree to act as agent for
the Sublessee only. In these situations, the agent is not the Sublessor's agent,
even if by agreement the agent may receive  compensation for services  rendered,
either  in full or in part  from  the  Sublessor.  An  agent  acting  only for a
Sublessee has the following affirmative obligations.
To the Sublessee:
(a) A fiduciary duty of utmost care, integrity,  honesty and loyalty in dealings
    with the Sublessee.
To the Sublessee and the Sublessor:
(a) Diligent exercise of reasonable skill and care in performance of the agent's
    duties.
(b) A duty of honest and fair dealing and good faith.
(c) A duty to disclose  all facts known to the agent  materially  affecting  the
    value or  desirability  of the property that are not known to, or within the
    diligent attention and observation of, the parties.

An agent is not obligated to reveal to either party any confidential information
obtained from the other party which does not involve the affirmative  duties set
forth above.
                 AGENT REPRESENTING BOTH SUBLESSOR AND SUBLESSEE
A real estate  agent,  either acting  directly or through one or more  associate
licensees, can legally be the agent of both the Sublessor and the Sublessee in a
transaction,  but only with the knowledge and consent of both the  Sublessor and
the Sublessee.

In a dual agency situation,  the agent has the following affirmative obligations
to both the Sublessor and the Sublessee.

(a) A  fiduciary  duty of utmost  care,  integrity,  honest  and  loyalty in the
    dealings with either Sublessor or Sublessee.
(b) Other  duties to the  Sublessor  and the  Sublessee as stated above in their
    respective sections.

In  representing  both Sublessor and Sublessee,  the agent may not,  without the
express permission of the respective party, disclose to the other party that the
Sublessor  will  accept a rent less than the listed  rent or that the  Sublessee
will pay a rent greater than the rent offered.

The above  duties of the agent in a real  estate  transaction  do not  relieve a
Sublessor or Sublessee from the  responsibility  to protect their own interests.
You should carefully read all agreements to assure that they adequately  express
your understanding of the transaction. A real estate agent is a person qualified
to advise  about  real  estate.  If legal or tax  advice is  desired,  consult a
competent professional.

You should read its contents each time it is presented to you,  considering  the
relationship between you and the real estate agent in your specific transaction.

We acknowledge receipt of a copy of this disclosure.

Sublessor/Sublessee /s/ Douglas G. Dellin                   Date 7/8/97
                    -----------------------------                ---------------
Sublessor/Sublessee /s/ Lawrence J. Fassler                 Date 7/9/97
                    -----------------------------                ---------------
================================================================================
                    SIGN BELOW TO AUTHORIZE TYPE OF AGENCY

Keegan & Coppin Company, Inc., is the agent of (check one).
(Name of Listing Agent)
     The Sublessor exclusively; or
-----
  X  Both the Sublessee and Sublessor
-----

CONFIRMED AND AUTHORIZED:

Sublessor /s/ Douglas G. Dellin                              Date 7/8/97
          -----------------------------                          ---------------
Sublessor                                                    Date
          -----------------------------                          ---------------

Agent                                            By          Date
     -----------------------------------------     --------      ---------------
--------------------------------------------------------------------------------
Keegan & Coppin Company, Inc., is the agent of (check one):
(Name of Sublessee's agent)
     The Sublessee exclusively; or
-----
     The Sublessor exclusively; or
-----
  X  Both the Sublessee and Sublessor
-----

CONFIRMED AND AUTHORIZED:

Sublessee /s/ Lawrence J. Fassler                  Date 7/9/97
          -----------------------------                ---------------
Sublessee                                          Date
          -----------------------------                ---------------

Agent                                            By          Date
     -----------------------------------------     --------      ---------------

<PAGE>

                                   EXHIBIT E

                            ARBITRATION OF DISPUTES

                                   FOR LEASE

Any  dispute  or claim in law or  equity  arising  out of this  contract  or any
resulting  transaction  shall be  decided  by  neutral  binding  arbitration  in
accordance with the rules of the American  Arbitration  Association,  and not by
court  action  except as  provided  by  California  law for  judicial  review of
arbitration  proceedings.  Judgment upon the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction  thereof. The parties shall have
the  right to  discovery  in  accordance  with Code of Civil  Procedure  Section
1283.05.  The following matters are excluded from arbitration  hereunder:  (a) a
judicial or non-judicial  foreclosure or other action or proceeding to enforce a
deed of trust,  mortgage,  or real property  sales  contract as defined in Civil
Code  Section  2985,  (b)  an  unlawful  detainer  action,  (c)  the  filing  or
enforcement  of  a  mechanic's   lien,  (d)  any  matter  which  is  within  the
jurisdiction  of a probate court, or small claims court, or an action for bodily
injury or wrongful death, or for latent or patent defects to which Code of Civil
Procedure  Section  337.1 or Section  337.15  applies.  The filing of a judicial
action to enable  the  recording  of a notice of  pending  action,  for order of
attachment,  receivership,  injunction, or other provisional remedies, shall not
constitute a waiver of the right to arbitrate under this provision.

Any  dispute  or claim by or  against  broker(s)  and/or  associate  licensee(s)
participating in this transaction  shall be submitted to arbitration  consistent
with the provision  above only if the  broker(s)  and/or  associate  licensee(s)
making the claim or against  whom the claim is made shall have  agreed to submit
it to arbitration consistent with this provision.


"NOTICE: BY INITIALLING IN THE SPACE BELOW, YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE  'ARBITRATION OF DISPUTES'  PROVISION
DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW, AND YOU ARE GIVING
UP ANY RIGHTS YOU MIGHT  POSSESS TO HAVE THE DISPUTE  LITIGATED IN COURT OR JURY
TRIAL. BY INITIALLING IN THE SPACE BELOW, YOU ARE GIVING UP YOUR JUDICIAL RIGHTS
TO DISCOVERY AND APPEAL,  UNLESS THOSE RIGHTS ARE  SPECIFICALLY  INCLUDED IN THE
'ARBITRATION  OF  DISPUTES'  PROVISION.  IF YOU REFUSE TO SUBMIT TO  ARBITRATION
AFTER AGREEING TO THIS  PROVISION,  YOU MAY BE COMPELLED TO ARBITRATE  UNDER THE
AUTHORITY OF THE  CALIFORNIA  CODE OF CIVIL  PROCEDURE.  YOUR  AGREEMENT TO THIS
ARBITRATION PROVISION IS VOLUNTARY."


"WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES  ARISING
OUT OF THE MATTERS  INCLUDED  IN THE  'ARBITRATION  OF  DISPUTES'  PROVISION  TO
NEUTRAL ARBITRATION."

(    )  (/s/ LF)  Lessee agrees            (    )  (    ) Lessee does not agrees
 ----    -------                            ----    ----                
(    )  (/s/ DGD) Lessor agrees            (    )  (    ) Lessor does not agrees
 ----    -------                            ----    ----                
(    )  (/s/ FR)  Lessee's Broker agrees             
 ----    -------                
(    )  (      )  Lessor's Broker agrees 
 ----    -------                                                

<PAGE>

<TABLE>
                                   Exhibit B3
Dave Bailey Construction, Inc.
--------------------------------------------------------------------------------
Contractors License No. 550323             55 St. James Drive            5/30/97
(707)579-4334                              Santa Rosa, CA 95403
<CAPTION>
                                  COST BREAKDOWN      NOTES/CHANGES
Job: Applied Vascular Engnieering Circadian Way 
------------------------------------------------------------------------------------------------------------------------------------
       Item                      Cost
<S>  <C>                       <C>           <C>
 1.  Walls - complete           $18,236.     Framing, insulation and sheetrock, patching as required
 2.  HVAC                        $2,000.     Allowance for duct relocation and restroom exhaust
 3.  Electrical                  $4,100.     Allowance for light relocation, plugs, phone jacks and power poles in open areas
 4.  Acoutsic Ceiling            $2,100.     Vinyl tiles in clean room, gown and wash areas
 5.  Fire Sprinklers             $1,550.     Additional heads at new walls - allowance
 6.  Doors, Hdwr & Trim          $4,430.     Relocated doors and frames from Skylane
 7.  Interior glass                $504.     Tempered panels and new windows
 8.  Mini-blinds                     $0.
 9.  Cabinets & Shelves            $540.     Restroom counters
10.  Painting                    $3,876.     Paint new walls, doors and frames
11.  Wallcovering                    $0.
12.  Plumbing                    $8,500.     Restroom plumbing allowance
13.  Carpet/flooring/base        $5,000.     Patch VCT throughout, new rubber base at new walls - allowance
14.  Restroom partitions         $2,400.
15.  Restroom accessories        $1,500.
16.                           0      $0.
17.  Clean Room allowance       $26,000.     $15/sq.ft. allowance for clean room related HVAC, electrical and gas/air
18.                           0      $0.
19.  Concrete cut / patch          $780.     For restroom plumbing
20.  Demolition                    $858.     Wall cap, some walls, minimal floor areas
21.  Dumpsters                     $280.
22.  Lift rental                     $0.
23.  Clean up                    $1,500.
24.  Contingency                 $5,000.     5% for siesmic retrofit on grid and other unknowns.

25.  Sub-contract Total         $89,154.

26.  Supervision and misc.       $4,458.
27.  Overhead and Profit         $8,915.

28.  Total of D.B.C. Costs     $102,527.
29.  Architertural/permit            $0.
                               -----------------------------------------------------------------------------------------------------
30.  ***TOTAL COST             $102,527.
</TABLE>

<PAGE>

                                    EXHIBIT C

                       STANDARD LEASE DISCLOSURE ADDENDUM

Notice to Owners,  Buyers and Tenants Regarding  Hazardous Waste or Substances
and Underground Storage Tanks

Comprehensive  federal and state laws and  regulations  have been enacted in the
the last few years in an  effort  to  develop  controls  over the use,  storage,
handling,  cleanup, removal and disposal of hazardous wastes or substances. Some
of these laws and regulations,  such as, for example,  the so-called "Super Fund
Act", provide for broad liability schemes wherein an owner, tenant or other user
of the property may be liable for cleanup costs and damages regardless of fault.
Other laws and  regulations  set  standards  for the  handling  of  asbestos  or
establish  requirements for the use,  modification,  abandonment,  or closing of
underground storage tanks.

It is not  practical or possible to list all such laws and  regulations  in this
Notice.  Therefore,  lessors and lessees are urged to consult  legal  counsel to
determine their  respective  rights and  liabilities  with respect to the issues
described in this Notice as well as other  aspects of the proposed  transaction.
If various  materials  that have been or may be in the future  determined  to be
toxic,  hazardous or undesirable,  or are going to be used,  stored,  handled or
disposed of on the  property,  or if the  property  has or may have  underground
storage tanks for storage of such  hazardous  materials,  or that such materials
may be in the  equipment,  improvements  or soil, it is essential that legal and
technical advice be obtained to determine,  among other things, what permits and
approvals have been or may be required, if any, the estimated costs and expenses
associated with the use, storage, handling,  cleanup, removal or disposal of the
hazardous  wastes or substances and what  contractual  provisions and protection
are necessary or desirable. It may also be important to obtain expert assistance
for site investigations and building inspections.  The past uses of the property
may provide  valuable  information as to the  likelihood of hazardous  wastes or
substances, or underground storage tanks being on the property.

The term  "hazardous  wastes or  substances"  is used in this Notice in its very
broadest  sense and  includes,  but is not  limited to, all those  listed  under
Proposition 65,  petroleum base products,  paints and solvents,  lead,  cyanide,
DDT, printing inks, acids, pesticides,  ammmonium compounds,  asbestos, PCBs and
other chemical products.  Hazardous wastes or substances and underground storage
tanks may be present on all types of real property.  This Notice is,  therefore,
meant to apply to any transaction  involving any type of real property,  whether
improved or unimproved.

Although  Keegan & Coppin  Co.,  Inc.  or its  salespeople,  will  disclose  any
knowledge  it actually  possesses  with  respect to the  existence  of hazardous
wastes or  substances,  or underground  storage tanks on the property,  Keegan &
Coppin Co., Inc. has not made  investigations  or obtained reports regarding the
subject matter of this Notice,  except as may be described in a separate written
document,  studies or  investigation  by experts.  Therefore,  unless  there are
additional documents or studies attached to this notice, lease or contract, this
will serve as  notification  that Keegan & Coppin Co.,  Inc. or its  salespeople
make no  representation  regarding the existence or  non-existence  of hazardous
wastes or substances,  or underground storage tanks on the property.  You should
contact  a  professional,  such  as  a  civil  engineer,  geologist,  industrial
hygienist  or other  persons  with  experience  in these  matters  to advise you
concerning the property.

Americans with Disabilities Act (ADA)

On  July  26,  1991,  the  federal  legislation  known  as  the  Americans  with
Disabilities Act (ADA) was signed into law by President Bush. The purpose of the
ADA is to  integrate  persons  with  disabilities  into the  economic and social
mainstream of American life. Title III of the ADA applies to Lessors and Lessees
of "places of public  accommodation" and "commercial  facilities",  and requires
that places of public  accommodation  undertake "readily  achievable" removal of
communication and access barriers to the disabled. This requirement of Title III
of the ADA is effective January 26, 1992.

It is important that building owners identify and undertake "readily achievable"
removal of any such  barriers in the common areas,  sidewalks,  parking lots and
other areas of the building under their control.

The lessor and lessee is responsible for compliance with ADA relating to removal
of barriers within the workplace i.e.,  arrangement of interior  furnishings and
access within the premises, and any improvements installed by lessor and lessee.

Keegan & Coppin  Company,  Inc.  recommends that both parties seek expert advice
regarding the implications of the Act as it affects this agreement.

Alquist-Priolo:

"The property which is the subject of this contract may be situated in a Special
Study Zone as designated under the Alquist-Priolo  Geologic Hazard Act, Sections
2621-2625,  inclusive, of the Caifornia Public Resources Code; and, as such, the
construction  or  development  on  this  property  of any  structure  for  human
occupancy  may be subject to the  findings  of  geologic  report  prepared  by a
geologist registered in the State of California, unless such report is waived by
the City or  County  under  the terms of that  act.  No  representations  on the
subject  are made by the  lessor or agent,  and the lessee  should  make his own
inquiry or investigation".

Flood Hazard Area Disclosure:

The subject  property  may be situated in a "Special  Flood  Hazard Area" as set
forth on a Federal Emergency Management Agency (FEMA) "Flood Insurance Rate Map"
(FIRM) or "Flood  Hazard  Boundary  Map"  (FHBM).  The law provides  that,  as a
condition of obtaining financing on most structures located in a "Special Floods
Hazard  Area",  lender  requires  flood  insurance  where  the  property  or its
attachments  are  security  for a  loan.  Lessee  should  consult  with  experts
concerning the possible risk of flooding.


     Acknowledgment:

     Lessee: /s/ Lawrence J. Fassler                      Date:     7/9/97
             ------------------------                          ------------

     Lessor: /s/ Douglas G. Dellin                       Date:   7/8/97
             ------------------------                          ------------
<PAGE>


                                INDUSTRIAL LEASE

                                    BETWEEN

                     Santa Rosa Corporate Center Associates


                                  as LANDLORD

                                      and

                                 Verticom, Inc.

                                   as TENANT





<PAGE>


                               TABLE OF CONTENTS

                                                                            PAGE

                           Defined Terms .................................... ii
Article 1.        Parties ...................................................  1
Article 2.        Premises ..................................................  1
Article 3.        Term ......................................................  1
Article 4.        Rent ......................................................  1
Article 5.        Security Deposit ..........................................  3
Article 6.        Use .......................................................  3
Article 7.        Maintenance, Repairs and Alterations ......................  4
Article 8.        Insurance; Indemnity ......................................  7
Article 9.        Damage or Destruction .....................................  9
Article 10.       Real Property Taxes ....................................... 10
Article 11.       Common Areas .............................................. 11
Article 12.       Utilities ................................................. 12
Article 13.       Assignment and Subletting ................................. 12
Article 14.       Defaults; Remedies ........................................ 14
Article 15.       Condemnation .............................................. 16
Article 16.       General Provisions ........................................ 16
Article 17.       Performance Bond ...... ................................... 18
Article 18.       Brokers ................................................... 18
Article 19.       Interest on Past Due Obligations .......................... 19
Article 20.       Interest Rate ............................................. 19
Article 21.       Signs, etc. ............................................... 19
Article 22.       Notices ................................................... 19
Article 23.       Control of Lease Over Laws of General Application ......... 19

      EXHIBIT A   Map showing Park and Premises
      EXHIBIT B   Sign Criteria
      EXHIBIT C   Subordination, non-disturbance and Attornment Agreement
      ADDENDUM 1  Hazardous Materials

                                        i


<PAGE>


                                 DEFINED TERMS

Defined Term                                            Article in which Defined
Additional Rent ........................................................... 4.4
Adjustment Dates .......................................................... 4.3
Base Rent ................................................................. 4.2
Commencement Date ......................................................... 3.1
Common Areas ............................................................. 11.1
Condemnation ..............................................................  15
Consumer Price Index ...................................................... 4.3
Interest Rate .............................................................  20
Landlord ........................................................... 1 and 16.2
Landlord Delay .......................................................... 3.2(d)
Option Period ............................................................. 3.4
Option Period Adjustment Dates .......................................... 4.5(b)
Park ......................................................................   2
Preliminary Improvement Plan ............................................ 7.6(c)
Premises ..................................................................   2
Real Property Tax ........................................................ 10.2
Special Improvements .................................................... 7.6(a)
Target Date ........................ ...................................... 3.1
Tenant ....................................................................   1
Tenant Allowance ........................................................ 7.6(a)
Tenant Allowance Termination Date ....................................... 4.2(b)
Tenant Delay ............................................................ 3.2(c)
Third Party Delay ....................................................... 3.2(b)
Toxic Materials ........................................................... 6.3

                                       ii



<PAGE>


                                INDUSTRIAL LEASE

                               -- MODIFIED NET --

1. Parties.  This lease,  dated for reference purposes only October 27, 1995, is
made  by  and  between  Santa  Rosa  Corporate  Center  Associates,   a  general
partnership  (hereinafter  called  "Landlord"),  and Verticom Inc., a California
Corporation (hereinafter called "Tenant").

2.  Premises.  Landlord  hereby Leases to Tenant and Tenant Leases from Landlord
for the term, at the rental,  and upon all of the  conditions  set forth herein,
that certain real property situated in the City of Santa Rosa, County of Sonoma,
State of California, and described as approximately 47,938 square feet, known as
Building  B and  located  in the  complex  of  office/research  and  development
buildings and related Common Areas (as  hereinafter  defined)  commonly known as
Santa Rosa Corporate Center and more particularly described as assessor's Parcel
No.  035-133-019  (such  complex  hereinafter  referred to as the  "Park")  Said
Building B, or portion thereof,  is herein called the "Premises." The address of
the  Premises  is 1201  Corporate  Center  Parkway.  A map  showing the Park and
Premises  outlined in blue is attached hereto as EXHIBIT A and by this reference
made a part hereof.

3. Term

     3.1 Term.  The term of this Lease shall be for  One-Hundred-Twenty  ( 120 )
months,  unless sooner  terminated  pursuant to any provision  hereof.  The term
shall   commence  on  December  15,  1995   (hereinafter   referred  to  as  the
"Commencement Date"),  notwithstanding the fact that the Special Improvements to
the Premises (as defined in Section 7.6) may not be completed by said date.

     3.2 Intentionally Omitted

     3.3  Possession.  Tenant  shall be entitled to  possession  of the Premises
immediately upon commencement of the term of this lease, provided, however, that
Tenant shall be granted  early access to the Premises  upon mutual  execution of
this Lease for the purpose of installing  the Special  Improvements  as provided
for in Section 7.6 hereof.  Any such early access shall be subject to the terms,
provisions  and  conditions  of this Lease (except for the payment of Base Rent,
Common  Area  Charges and Real  Property  Taxes and (a) Tenant  shall  indemnify
Landlord  with respect to all claims  arising out of such access and provided in
Article 8.7, and (b) Tenant shall,  prior to such access,  deliver to Landlord a
certificate  evidencing  the  existence and amount of insurance  policies  which
fulfill the requirements set forth in Article 8 but which, in addition, commence
prior to such early access and insure Landlord and Tenant against any liability,
loss or damage arising out of such early access. It is specifically acknowledged
and agreed that Tenant shall be  responsible  for the payment  of utilities (as
defined in Section 12) during any such period of early access.

     3.4 Intentionaily Omitted.

4. Rent

     4.1 Time and Manner of Payment.  Except as provided in the last sentence of
this  Article  4.1, no Base Rent shall be due and owing  hereunder  until on and
after the  Commencement  Date. Tenant  shall pay the  monthly  Base Rent for the
Premises in advance upon the  Commencement  Date and thereafter on the first day
of each month of the term hereof. All rentals shall be paid to Landlord, without
deductions of offset,  in lawful money of the United  States of America,  at the
address set forth herein for  delivery of notices to Landlord,  or to such other
person or at such other place as  Landlord  may from time to time  designate  in
writing.  Base Rent for any period during the term hereof which is for less that
one (1) month shall be a pro-rata portion of the monthly  installment.  Upon the
execution  of this Lease,  Tenant  shall pay  Landlord  the sum of  Thirty-Eight
Thousand Three  Hundred-Fifty  Dollars and Forty Cents ($ 38,350.40 ) as advance
payment of Base Rent for the first month of the initial term hereunder.

4.2 Base Rent

                                       1

<PAGE>

         (a) Subject to the rent  adjustment  provisions of Articles  4.2(b) and
4.3 hereof,  Tenant shall pay to Landlord,  without notice from  Landlord,  Base
Rent each month as follows (such rent, as adjusted from time to time  hereunder,
hereinafter referred to as "Base Rent"):

              MONTHS            BASE RENT
              ------            ---------

              1-120             $38,350.40      (subject to adjustment as
                                                provided in Section 4.3.)

         (b) Tenant shall be responsible  from and after the  Commencement  Date
for all other items  payable by Tenant  hereunder  whether or not such items are
designated as Additional Rent (defined in Article 4.4).

     4.3  Adjustment  of Base Rent During  Initial  Term.  The Base Rent payable
hereunder  shall be subject to an upward  adjustment  during the initial term of
this Lease on the following dates (the "Adjustment Dates"):

December 15, 1998  (thirty-seventh  month) and December 15, 2001  (seventy-third
month).

The Base Rent payable  hereunder  shall be  increased on each of the  Adjustment
Dates to an amount  determined  by  multiplying  $38,350.40  by a fraction,  the
numerator  of which  shall be the  average  of the  three  most  recent  monthly
Consumer Price Index (as  hereinafter  defined)  figures  published prior to the
date of such  adjustment,  and the  denominator of which shall be the average of
the three most recent monthly  Consumer Price Index figures  published  prior to
the Commencement Date; provided,  however,  that in no event shall the Base Rent
for any month be less than the Base Rent for the  immediately  preceding  month,
nor shall the amount of the  increase at each  Adjustment  Date be greater  than
115% of the Base Rent Payable immediately prior to such Adjustment Date. As used
herein,  the term  "Consumer  Price Index" shall mean the monthly  United States
Department of Labor's Bureau of Labor Statistics Consumer Price Index, All Urban
Wage Earners and Clerical Workers,  All Items, for San  Francisco-Oakland  (1967
equals 100).  Should  Landlord lack  sufficient  data to make the  determination
specified  in this  section  on the date of any such  adjustment,  Tenant  shall
continue  to pay  the  monthly  Base  Rent  payable  immediately  prior  to such
Adjustment  Date.  As soon as Landlord  obtains  the  necessary  data,  it shall
determine the Base Rent payable from and after such  Adjustment  Date and notify
Tenant of the adjustment in writing. Should the monthly Base Rent for the period
following such Adjustment  Date exceed the amount  previously paid by Tenant for
such period,  Tenant shall  forthwith  pays the  difference to Landlord.  If the
Consumer  Price Index is changed so that the base year differs from that used as
of the month  immediately  preceding the  Commencement  Date, the Consumer Price
Index shall be converted in accordance with the conversion  factor  published by
the United  States  Department  of Labor's  Bureau of Labor  Statistics.  If the
Consumer Price Index is  discontinued  or revised during the term of this Lease,
such other  government  index or computation  with which it is replaced shall be
used in order to obtain  substantially  the same  result as would be obtained if
the Consumer Price Index had not been discontinued or revised.

     4.4 Net  Rental.  Landlord  shall  receive  the Base Rent set forth in this
Lease  free and  clear of any and all taxes  (other  than  withholding  taxes or
income taxes), utilities, insurance premiums described in Article 8, Common Area
charges described in Article 11.4, impositions, liens, charges or other expenses
of any nature  whatsoever in connection  with the ownership and operation of the
Premises  during the term of this Lease.  All such charges and expenses shall be
deemed  additional rent  ("Additional  Rent")  hereunder and upon the failure of
Tenant to pay any of such  charges  or  expenses  Landlord  shall  have the same
rights and  remedies  as  otherwise  provided  in this Lease for the  failure of
Tenant to pay Base Rent.  In addition  to the  foregoing  charges and  expenses,
Tenant  shall  reimburse  to  Landlord as  Additional  Rent  Landlord's  cost of
administration  and management of this Lease and the Common Areas, to be paid at
such time as other  Additional  Rent is  required  hereunder  to be paid up to a
maximum amount of $300.00 per month.

                                       2

<PAGE>


     5. Security Deposit.  Upon execution of this lease, Tenant shall deliver to
Landlord a  security  deposit in the  amount of  $651,956.80  (Initial  Security
Deposit),  as security for Tenants  performance of all of Tenant's covenants and
obligations  under this Lease;  provided,  however,  that said Initial  Security
Deposit shall not be deemed an advance rent deposit or an advance payment of any
other kind, or a measure of Landlord's damage upon Tenant's  default.  If Tenant
fails to pay Base Rent or Additional  Rent as required  hereunder,  or otherwise
defaults with respect to any provision of this Lease, Landlord may use, apply or
retain all or any portion of said  Initial  Security  Deposit for the payment of
any Base Rent or Additional  Rent in default or for the payment of any other sum
which  Landlord  may  become  obligated  by reason of  Tenant's  default,  or to
compensate  Landlord for any loss or damage which  Landlord may suffer  thereby,
including  without  limitation,  the  cleaning,  restoration  and  repair of the
Premises.  Landlord and Tenant agree that the Initial  Security Deposit shall be
invested  in an  interest  bearing  "money  market"  account  in the name of the
Landlord  and  shall  be  deposited  at a  interest  rate  and  with  a  banking
institution  of  Landlord's  choice,   both  in  Landlord's  sole  and  absolute
discretion.  Tenant  acknowledges  that preservation of the principal balance of
the Initial Secuirty Deposit is an important  consideration  with respect to its
investment,  and as such,  Tenant  hereby  waives any claims,  past,  present or
future with respect to the method of investment of the Initial Security Deposit,
including, but not limited to, any claim that alternative investment options may
have earned a higher rate of interest;  provided,  however,  that Landlord shall
bear all risk with respect to any loss or reduction in the principle  balance of
the Initial Security Deposit.

Provided  that (i) Tenant is not in breach of or in default  under the Lease and
there exists no act or omission on the part of Tenant which, with the passage of
time or the giving of notice,  or both would  constitute  a breach of or default
under the  Lease,  and (ii) the  Initial  Security  Deposit  has not been  used,
applied or retained by Landlord  pursuant to the  foregoing  provisions  of this
Article 5, then (a) as and when the monthly  installments  of Base Rent come due
with respect to each of the second (2nd)  through  seventeenth  (17th) months of
the Term,  the  Initial  Security  Deposit  shall be  reduced  by the  amount of
$38,350.40  and such  amount  will be applied as a credit to pay the  respective
monthly  installments of Base Rent as and when they become due during the second
(2nd) through the seventeenth  (17th) months of the Term and (b) as and when the
monthly installment of Base Rent comes due with respect to the eighteenth (18th)
month of the Term,  the entire  remaining  balance  (including  interest  earned
thereon)  of the  Initial  Security  Deposit  shall be  disbursed  to Tenant (as
opposed to being applied as a credit against Base Rent) provided;  however, that
said  disbursement  shall be conditioned upon Tenant first providing  Landlord a
cash deposit in the amount of  $38,350.40  (Replacement  Security  Deposit),  as
security  for  Tenant's  continued  faithful  performance  of  all  of  Tenant's
covenants and  obligations  under this Lease.  Landlord shall not be required to
keep said $38,350.40  Replacement  Security  Deposit as a separate fund, but may
commingle it with other funds.  If Tenant  performs all of Tenant's  obligations
hereunder,  said Replacement  Security Deposit or so much as has not theretofore
been applied by  Landlord,  shall be  returned,  without  payment of interest or
other  increment for its use, to Tenant (or, at Landlord's  option,  to the last
assignee,  if any, of Tenant's interest hereunder) within thirty (30) days after
the  expiration  of the term hereof,  or after Tenant has vacated the  Premises,
whichever is later.

6. Use.

     6.1 Use.  The  premises  shall be used and  occupied  only for research and
development, manufacturing,  warehousing, sales, general office and related uses
and for no other  purpose  without  prior  written  consent of  Landlord,  which
consent may be withheld or conditioned as Landlord may deem  appropriate  within
the  exercise of its sole  discretion.  Tenant shall at its own cost and expense
obtain any and all licenses and permits necessary for any such use.

     6.2 Compliance with Law. Tenant shall, at Tenant's expense, comply promptly
with all  applicable  statutes,  ordinances,  rules,  regulations,  orders,  and
requirements in effect during the term of any part of the term hereof regulating
the use by Tenant of the Premises; provided that Tenant shall not be responsible
for making  any  structural  changes to the  Building  that may be  required  by
applicable  laws,  unless such changes are  necessitated  by Tenant's  acts,  by
Tenant's  business  or use of the  Premises  or by  improvements  made by or for
Tenant.  Tenant  shall not use or permit the use of the  Premises  in any manner
that will tend to create waste or a nuisance or which shall tend to unreasonably
disturb other tenants in the Park.

     6.3 Hazardous Materials. See Addendum I.

     6.4  Condition of  Premises.  Tenant  hereby  accepts the Premises in their
condition existing as of

                                        3

<PAGE>


the  date  of  the  possession  hereunder,  subject  to all  applicable  zoning,
municipal,  county and state laws,  ordinances  and  regulations  governing  and
regulating the use of the Premises,  and accepts this Lease subject  thereto and
to all matters  disclosed  thereby and by any exhibits  attached hereto.  Tenant
acknowledges   that  neither   Landlord  nor  Landlord's   agent  has  made  any
representation or warranty as to the suitability of the Premises for the conduct
of Tenant's business.

     6.5 Landlord's Rules and Regulations.  Tenant shall faithfully  observe and
comply  with  the  reasonable,  nondiscriminatory  rules  and  regulations  that
Landlord shall from time to time  promulgate.  Landlord  reserves the right from
time to time to make all reasonable modifications to said rules and regulations.
The additions and  modifications to those rules and regulations shall be binding
upon Tenant upon  delivery  of a copy of them to Tenant.  Landlord  shall not be
responsible  to  Tenant  for  the  nonperformance  of  any  of  said  rules  and
regulations  by any other tenants or occupants  provided that Landlord shall use
reasonable  efforts  to  enforce  such  compliance.  Notwithstanding  any  other
provision of this Article 6.5,  Tenant shall in all events comply with all rules
and  regulations  of Landlord  designed to maintain  the  first-class  image and
aesthetically attractive nature of the Park.

7. Maintenance, Repairs and Alterations.

     7.1  Landlord's  Obligations.  Subject  to the  limitations  on  Landlord's
obligations  as set forth in Article  9, and  except  for  damage  caused by any
negligent or intentional act or omission of Tenant, Tenant's agents,  employees,
or  invitees,  Landlord,  at  Landlord's  expense,  shall  keep in  good  order,
condition  and repair the  structural  components of the (i)  foundations,  (ii)
exterior  walls and (iii) roof of the Premises.  Notwithstanding  the foregoing,
Landlord shall not be responsible for any such maintenance, upkeep or repairs of
the Premises to the extent that the same may be made  necessary by or arise from
Tenant's  placement  or  servicing  of, or other  activities  in relation to the
location  of,  equipment  on the  roof  (or  penetration  of the  roof  by  such
equipment) of the Premises (regardless of Tenant's having obtained, prior to the
placement of any such equipment,  the written approval of Landlord in accordance
with Article 7.5 hereof),  and Tenant shall be solely  responsible for and shall
pay the full cost of any such maintenance,  upkeep or repairs. Landlord shall be
obligated to paint such  exterior  walls as reasonably  required,  in Landlord's
sole judgement.  Landlord shall not be required to maintain the interior surface
of exterior walls,  windows,  doors or place glass. In the event Landlord paints
the  exterior  walls of the  Premises,  Landlord  shall  pay the  costs  thereof
provided,  that if the  painting  of such  walls is made  necessary  because  of
Tenant's  extraordinary  or  any  acts  of  Tenant  or  its  agents,  employees,
independent  contractors,  quests or invites  use of the  Premises  or  Tenant's
failure to exercise ordinary care in its use and occupation of the Premises, all
of Landlord's  costs and expenses in connection with painting the exterior walls
shall be borne by Tenant and shall  become due and  payable as  Additional  Rent
together  with  Tenant's next rental  installment.  Landlord  shall make repairs
under this Article 7.1 within a reasonable  time after receipt of written notice
of the need for such repairs,  which notice Tenant shall give promptly  after it
becomes aware of the need for such repairs. Tenant expressly waives the benefits
of any statute now or hereafter in effect which would  otherwise  afford  Tenant
the right to make repairs at Landlord's  expense,  to deduct the cost of repairs
from Base Rent  payable  to  Landlord  or to  terminate  this  Lease  because of
Landlord's failure to keep the Premises in good order, condition and repair.

     7.2  Tenant's  Obligations.  Subject to the  provisions  of Article 7.1 and
Landlord's  obligations under Article 9, Tenant, at Tenant's expense, shall keep
in good  order,  condition  and  repair  the  Premises  and every  part  thereof
(regardless  of whether  the  damaged  portion of the  Premises  or the means of
repairing the same are  accessible to Tenant)  including,  without  limiting the
generality  of  the  foregoing,   all  plumbing,   heating,   air  conditioning,
ventilating,  electrical  and  lighting  facilities  and  equipment  within  the
Premises fixtures,  interior walls, ceilings,  windows,  doors, plate glass, and
roofing membrane and skylights located within the Premises and all truck loading
areas and tank farm areas  adjacent to the  Premises  and other  areas  included
within the Premises,.  Without limiting the generality of the foregoing,  Tenant
shall  be  obligated  to  make  such  repair  or  alterations  to  the  Premises
(including,  without limitation, any improvements therein constructed by Tenant)
in compliance  with all applicable  statutes,  ordinances,  rules,  regulations,
orders  and  requirements  in effect  during  the term of this  Lease,  and such
repairs or alterations shall be constructed in a manner and with materials equal
to or better than the existing  quality of the construction and materials of the
Premises and  performed by a contractor  approved by Landlord.  At Tenant's sole
expense,  Tenant shall hire and contract with a qualified heat,  ventilation and
air   conditioning   maintenance   service   approved  by  Landlord  to  provide
inspections,  repairs and maintenance of all such systems in the Premises.  Such
inspections,  repairs and maintenance  shall be performed at a minimum frequency
of

                                       4

<PAGE>

once  each  quarter.  Tenant  shall  provide  Landlord  with a copy of  Tenant's
maintenance service contract.

     7.3  Surrender.  On the  last  day of the  term  hereof,  or on any  sooner
termination,  Tenant shall surrender the Premises to Landlord in good condition,
broom clean,  uninsured  casualty losses not caused by Tenant or Tenant's agents
or employees,  ordinary wear and tear and repair  obligations  of Landlord under
this Lease excepted.  Tenant shall repair any damage to the Premises  occasioned
by its use thereof,  or by the removal of Tenant's trade  fixtures,  furnishings
and equipment  pursuant to Article 7.5,  which repair shall include the patching
and filling of holes and repair of structural damage.

     7.4  Landlord's  Rights.  If Tenant fails to perform  Tenant's  obligations
under any provision of this Lease, Landlord may, at its option (but shall not be
required to), enter upon the Premises,  after ten (10) days prior written notice
to Tenant or with no prior written  notice of an emergency,  and put the same in
good order,  condition  and repair or  otherwise  perform  Tenant's  obligations
hereunder,  and the cost  thereof  (including,  without  limitation,  Landlord's
out-of-pocket  expenses and reasonable  attorneys'  fees) together with interest
thereon at the  Interest  Rate (as  defined  hereafter)  shall,  after  Landlord
notifies  Tenant of such cost,  become due and  payable  as  Additional  Rent to
Landlord together with Tenant's next rental installment.

     7.5 Alterations and Additions.

         (a) Tenant shall not, without  Landlord's prior written consent,  which
consent shall not be unreasonably withheld, make any alterations,  improvements,
or  additions  in,  on,  or  about  the  Premises,   except  for  non-structural
alterations not exceeding Five Thousand  Dollars  ($5,000) in cost. In the event
Tenant  requests  Landlord  to  consent  to such  alterations,  improvements  or
additions,  Tenant  shall  submit  such  information  as Landlord  may  require,
including  but not  limited  to (i)  plans  and  specifications,  (ii)  permits,
licenses and bonds and (iii) evidence of contractor's  insurance coverage in the
types and amounts as Landlord shall deem  appropriate.  As a condition to giving
such  consent,  Landlord  may require that Tenant  remove any such  alterations,
improvements,  additions or utility installations at the expiration of the term,
and restore the  Premises to their prior  condition,  which  requirement  may be
imposed by Landlord at the time of giving such consent.

         (b) Before  commencing any work relating to alterations,  additions and
improvements affecting the Premises,  Tenant shall notify Landlord in writing of
the expected date of commencement thereof. Landlord shall then have the right at
any time and from time to time to post and maintain on the Premises such notices
as Landlord reasonably deems necessary to protect the Premises and Landlord from
mechanics' liens,  materialmen's liens, or any other liens. In any event, Tenant
shall  pay,  when due,  all claims for labor or  materials  furnished  to or for
Tenant at or for use in the Premises.  Tenant shall not permit any mechanics' or
materialmen's  liens to be levied against the Premises for any labor or material
furnished  to Tenant or claimed to have been  furnished to Tenant or to Tenant's
agents or  contractors  in connection  with work of any  character  performed or
claimed to have been performed on the Premises by or at the direction of Tenant.

         (c) Unless Landlord requires their removal, as set forth in Article 7.5
(a),  all  alterations,  improvements,  or  additions  which  may be made on the
Premises  shall  become  the  property  of  Landlord  and  remain  upon  and  be
surrendered with the Premises at the expiration of the term. Notwithstanding the
provisions  of this Article  7.5(c),  Tenant's  machinery,  equipment  and trade
fixtures  other than that which is affixed to the  Premises so that it cannot be
removed without  material damage to the Premises or which otherwise  constitutes
real property or a fixture under  California  law,  shall remain the property of
Tenant and may be removed by Tenant subject to the provisions of Article 7.3.

     (d)  Notwithstanding  the  provisions  of  subparagraph  (b) above,  if any
mechanics' or materialmen's lien is levied against the Premises for any labor or
material  furnished to Tenant or claimed to have been  furnished to Tenant or to
Tenant's  agents  or  contractors  in  connection  with  work  of any  character
performed  or  claimed  to have  been  performed  on the  Premises  by or at the
direction of Tenant,  and Tenant contests in good faith the subject claim,  then
Tenant shall cause such lien to be released of record within twenty (20) days of
Tenant's  acquiring  knowledge  of its  filing by payment or posting of a proper
bond.  If Tenant has not caused the lien to be so  released  within  such 20-day
period,  Landlord,  in addition to all other remedies provided in this Lease and
by law, shall have the right,  but shall not be obligated,  to cause the lien to
be released by such means as Landlord

                                        5
<PAGE>

deems   proper,  including  payment of the claim  giving  rise to the lien.  All
payments made and expenses incurred by Landlord in connection with lien shall be
considered Additional Rent pursuant to Article 14.5 below.

     7.6 Special Improvements.

         (a) Plans and  Specifications.  Tenant  may cause the  construction  of
special improvements to the Premises ("Special Improvements),  all in accordance
with the provisions set forth below.

     Tenant shall deliver to Landlord  preliminary plans ("Preliminary  Plans"),
to be utilized in the preparation of final working  drawings and  specifications
for any  Special  Improvements.  Promptly  (but in no event  less than three (3)
business days after its receipt of the Preliminary Plans), Landlord shall return
the same to Tenant marked and  accompanied by comments and  Landlord's  required
revisions. Within five (5) days thereafter,  Tenant shall submit two (2) sets of
revised Preliminary Plans, revised to reflect and conform to Landlord's comments
and requirements, to Landlord for its final review and approval. Within five (5)
days following  Landlord's approval of the Preliminary Plans, Tenant shall cause
its  architect  to prepare  and submit  two (2) copies of working  drawings  and
specifications  ("Working  Plans") to  Landlord  for its  review  and  approval.
Landlord shall advise Tenant  promptly after  landlord's  receipt of the Working
Plans,  but in no event less than  three (3)  business  days  after its  receipt
thereof,  of any required  revisions.  Within five (5) days  thereafter,  Tenant
shall  submit two (2) copies of the revised  Working  Plans to Landlord  for its
final review and approval.

     Concurrently  with the above  review and  approval  process,  Tenant  shall
submit  all  plans  and  specifications  to the  City of Santa  Rosa  and  other
applicable  governmental agencies to obtain governmental  approvals and issuance
of necessary permits and licenses to construct any Special Improvements as shown
on the Working Plans.

     (b) Tenant shall cause the  construction of any Special  Improvements to be
carried out in compliance with the Working Plans and all applicable  zoning laws
and  regulations,   applicable  covenants,  conditions,  and  restrictions,  and
otherwise in compliance  with the provisions of Article 7.2 of the Lease.  Prior
to the commencement of construction,  Tenant shall obtain course of construction
and  builder's  "all  risk"  insurance  in such  amounts  and  form as  Landlord
requires,  Liability insurance in the form and amounts required under the Lease,
and such performance bonds in form and amounts as Landlord requires.

     Tenant  shall  cause the  construction  of any Special  Improvements  to be
carried out with such materials,  equipment,  contractors and  subcontractors as
Tenant  shall  select,  all of which shall be subject to  Landlord's  reasonable
approval.  Within ten (10) days after the approval of the final Working Plans in
accordance  with  subparagraph  (a) above or as soon as is  reasonably  possible
thereafter,  Tenant  shall  submit to Landlord  for its review and  approval (i)
copies of all proposed construction contracts between Tenant and all contractors
and  between  such   contractors   and  all   subcontractors   for  any  Special
Improvements,  together with such background information on such contractors and
subcontractors as Landlord may require; (ii) a listing of the make, model, type,
grade, and all other  characteristics  requested by Landlord,  of all materials,
equipment and fixtures which Tenant  proposes to install in or use in connection
with any  Special  Improvements;  and (iii) a budget  setting  forth in itemized
fashion  the  costs  of  all  materials,   equipment,   fixtures,   contractors,
subcontractors,  laborers,  permits,  fees,  licenses,  and all other  costs and
expenses  Tenant  proposes to incur in connection  with the  construction of any
Special Improvements  (hereafter collectively any "Special Improvements Costs").
All such  matters  shall be subject to the  approval  of  Landlord  prior to the
commencement of construction of any Special Improvements, provided that Landlord
shall not  unreasonably  withhold its approval of any such matters and provided,
further,  that Landlord's  failure to respond in writing to Tenant's request for
approval of any such matter  within five (5) business days shall be deemed to be
an approval of such matter.

     Tenant shall have the  responsibility to obtain all necessary  construction
and building permits and licenses  necessary for the construction of any Special
Improvements.  Tenant shall cause construction of any Special  Improvements in a
good and  workmanlike  manner in strict  accordance  with the  approved  Working
Plans. All Special Improvements Costs shall be paid for by and shall be the sole
responsibility  of  the  Tenant,  including  without  limitation  all  costs  of
utilities,   services  and  insurance  on  the  Premises   arising  out  of  the
construction of the Special Improvements. All

                                        6

<PAGE>

construction of the Special  Improvements  shall be performed and completed lien
free, and Tenant hereby  indemnifies  and agrees to defend and hold Landlord and
the Premises free and harmless from any and all claims, losses, damages, actions
and  causes of  action  as may be  incurred  as a result  of work  performed  or
materials furnished in connection with construction of the Special Improvements.
Landlord shall have the right to post notices of non-responsibility prior to the
commencement of construction of the Special Improvements.

         (c)  Tenant may from time to time  request  and  obtain  change  orders
during the course of construction of the Special Improvements, provided that:

                  (i) each  such  request  shall be  reasonable  and in  writing
signed by or on behalf of Tenant;

                  (ii)  each  such  request   shall  not  result  in  any  major
structural change in the Building or Special Improvements;

                  (iii)  Landlord  shall have the right to approve or disapprove
any requested change order, which approval shall not be unreasonably withheld;

                  (iv) all costs arising out of any approved  change  order,  if
any, shall be borne by Tenant;

                  (v) any  resulting  delay  in the  completion  of the  Special
Improvements  arising  out of such  change  order  shall not delay or extend the
Commencement Date.

         (d) Landlord agrees to provide Tenant an allowance,  (the "Allowance"),
in the amount of Three-Hundred and  Fifty-Thousand  Dollars  ($350,000) to defer
costs associated with occupation of the Building;  use of the allowance to be at
the sole  discretion  of Tenant.  Landlord  to  deliver  the  Three-Hundred  and
Fifty-Thousand  Dollars ($350,000) to Tenant within seven (7) business days from
deposit as required in paragraph 5.

         (e) Throughout the course of construction of any Special  Improvements,
Landlord  shall  have  the  unconditional  right  to  review  and  inspect  such
construction  by  and  through  its  agents  and  employees,  including  without
limitation  Landlord's  Architect.  If at any time Landlord  disapproves  of the
materials or workmanship of any Special  Improvements by Tenant,  Landlord shall
promptly give Tenant  written  notice thereof  specifying  the  deficiencies  or
defects  therein.  Upon  receipt of any such notice,  Tenant  shall  immediately
commence  correction  of the defect or deficiency in a manner and to a condition
acceptable  to  Landlord.  Should  Tenant fail to commence to complete  any such
correction as herein provided, or should Landlord deliver to Tenant three (3) or
more such notices during the course of construction of any Special Improvements,
Landlord  shall  have the  immediate  right to order the  discontinuance  of any
further  construction of any Special Improvements by or on behalf of Tenant, and
the Landlord may, but shall not be obligated to,  complete the  construction  of
any such Special  Improvements  in  accordance  with the Working  Plans.  Should
Landlord elect to complete any Special Improvements as herein provided, Landlord
shall be entitled to recover the costs of completing said construction,  and any
additional costs incurred in connection therewith shall be the obligation of and
shall be paid by Tenant within ten (10) days after written demand by Landlord.

8. Insurance; Indemnity.

     8.1 Liability  Insurance.  Tenant shall obtain and keep in force during the
term of this Lease a policy of comprehensive public liability insurance insuring
Landlord and Tenant  against any liability  arising out of the  ownership,  use,
occupancy or maintenance of the Premises and all areas appurtenant thereto. Such
insurance  shall  be in an  amount  of  not  less  than  Three  Million  Dollars
($3,000,000)  combined single limit for injury or death of any person or persons
and damage to property on an occurrence basis. The limit of said insurance shall
not,  however,  limit the liability of Tenant  hereunder.  Said insurance policy
shall  not  be   cancelable  or  subject  to  reduction  of  coverage  or  other
modification except after thirty (30) days prior written notice to Landlord.  In
the even the Premises  constitute  a part of a larger  property  said  insurance
shall have a Landlord's  Protective  Liability  endorsement attached thereto. If
Tenant shall fail to procure and maintain said insurance Landlord may, but shall
not be required to, procure and maintain the same, but at the expense of Tenant.
Tenant  shall,  prior to  possession  of the  Premises,  deliver  to  Landlord a
certificate  evidencing  the  existence  and  amount  of  the  public  liability
insurance required hereunder. Tenant shall be responsible

                                       7
<PAGE>

for payment of any deductible amount required under such policy of insurance.

     8.2 Property Insurance.  Landlord shall obtain and keep in force during the
term of this Lease (i) a policy or policies of insurance covering loss or damage
to the Premises, in the amount of the full replacement value thereof,  providing
protection  against  all  peril  included  within  the  classification  of fire,
extended  coverage,  vandalism,  malicious  mischief,  special  extended  perils
(excluding  earthquake  and flood if not  available at  commercially  reasonable
rates)  (all  risk) and  sprinkler  leakage,  (ii)  full  coverage  plate  glass
insurance on the Premises,  (iii) boiler machinery insurance on all boilers, air
conditioning  equipment,  and other pressure  vessel systems  located in, on, or
about the Premises with limits of not less than One Million Dollars ($1,000,000)
per occurrence, (iv) rent (including Additional Rent as specified in this Lease)
loss insurance in favor of Landlord insuring Landlord against any loss of rental
from damage or  destruction  of the  Premises  for a period of at least one year
from the date of such damage or destruction. Landlord may also obtain (but shall
not be  obligated  to do so) such  other  insurance  as may be  required  by the
holder(s) of a mortgage or deed of trust on the Premises or by prudent  property
management  practices  if  available  at  commercially  reasonable  rates.  Said
insurance  shall  provide for payment for loss  thereunder to Landlord or to the
holder(s) of a mortgage or deed of trust on the Premises.

     8.3 Personal Property Insurance. Tenant shall keep in force during the term
of this Lease  insurance  against loss or damage by fire and such other risk and
hazards as are  insurable  under present and future  standard  forms of fire and
extended  coverage  insurance  policies,  to the personal  property,  furniture,
furnishings  and fixtures  belonging  to Tenant  located in the Premises for not
less  than  100% of the  actual  replacement  value  thereof.  Tenant  shall  be
responsible for payment of any deductible amount required by this Article 8.3.

     8.4 Insurance Policies.  Insurance required hereunder shall be in companies
rated  "A8" or better in "Best  Insurance  Guide" or as  otherwise  approved  by
Landlord.  Whether the insuring  party under the provisions of this Article 8 is
Landlord or Tenant,  Tenant shall, as Additional Rent for the Premises,  pay the
cost of all insurance  required  hereunder.  Tenant shall,  within ten (10) days
following  demand by  Landlord,  reimburse  Landlord  for the cost of  insurance
obtained by Landlord.  Tenant shall, forthwith upon Landlord's demand, reimburse
Landlord  for any  additional  premiums  attributable  to any act or omission or
operation or Tenant causing such increase in the cost of insurance.

     8.5 Waiver of  Subrogation.  Subject  to first  obtaining  approval  of the
insurer and an endorsement to the applicable  policies of insurance,  Tenant and
Landlord each waives any and all rights of recovery against the other or against
the officers,  employees agents and representatives of the other, for loss of or
damage to such waiving party or its property or the property of others under its
control, where such loss or damage is insured against under any insurance policy
in force at the time of such loss or damage.

     8.6  Insurance  Cancellation.  Tenant  shall  not do  anything,  or  permit
anything to be done, in or about the Premises that shall (a) invalidate or be in
conflict with the provisions of any fire or other  insurance  policies  covering
the  Premises  or the Park or any  property  located  therein,  (b)  result in a
refusal by casualty insurance  companies of good standing to insure the Premises
or the part or any such property in amounts reasonably satisfactory to Landlord,
(c) subject Landlord to any liability or responsibility for injury to any person
or property by reason of any business  operation being conducted in or about the
Premises,  (d) cause any increase in the casualty  insurance rates applicable to
the  Premises  at the  beginning  of the  term  of  this  Lease  or at any  time
thereafter  or (e) be in  violation  of any  certificate  of  occupancy  for the
Premises.  Tenant,  at Tenant's  expense,  shall comply with all rules,  orders,
regulations and requirements of the American Insurance Association (formerly the
National  Board  of  Fire  Underwriters)  and of any  similar  body  that  shall
hereafter perform the function of such association.

     8.7 Hold  Harmless.  Tenant  shall  indemnify,  defend  and  hold  Landlord
harmless from any and all claims, losses, costs, damages, liabilities, or causes
of action (including  attorney's fees) arising from Tenant's use of the Premises
or from the conduct of its business or from any  activity,  work or things which
may be permitted  or done by Tenant in or about the  Premises and shall  further
indemnity,  defend  and hold  Landlord  harmless  from and  against  any and all
claims,  losses,  costs,  damages,  liabilities  or cause of  action  (including
attorney's  fees) arising from any breach or default in the  performance  of any
obligation on Tenant's part to be performed under the provisions of this

                                       8
<PAGE>

Lease or arising from any negligence or intentional  act of Tenant or any of its
agents,  contractors,  employees  or  invitees  and  from  any  and  all  costs,
attorney's  fees,  expenses and all  liabilities  incurred in the defense of any
such  claim or  action or  proceeding  brought  thereon.  Without  limiting  the
generality of the foregoing,  the foregoing indemnity and agreement by Tenant to
defend and hold Landlord  harmless  shall extend to any claims,  losses,  costs,
damages,  liabilities,  or causes of action (including  attorney's fees) arising
out of or  pertaining  to  failure  by  Tenant  to  comply  with  all  laws  and
regulations  concerning  the  protection  of or discharge of materials  into the
environment.  Tenant hereby  assumes all risk of damage to property or injury to
persons in or about the Premises  from any cause,  and Tenant  hereby waives all
claims in respect thereof against  Landlord,  excepting where said damage arises
out of  negligence  of Landlord.  Nothing in this article  8.7,  however,  shall
require Tenant to indemnify,  defend or hold Landlord  harmless from any claims,
liabilities  or expenses to the extent such claims,  liabilities or expenses are
due  to  Landlord's  or  Landlord's  agents,  employees  or  contractors  active
negligence or willful misconduct.

9. Damage or Destruction.

     9.1 Partial  Damage--Insured.  If the  Premises are damaged and such damage
was  caused by a casualty  covered  under an  insurance  policy  required  to be
maintained  pursuant to Article 8.2,  Landlord  shall,  at  Landlord's  expense,
repair such damage as soon as reasonably possible, and this Lease shall continue
in full force and effect.  Notwithstanding the foregoing,  Landlord shall not be
required  to expend for repairs  any funds in excess of the  insurance  proceeds
received by Landlord relating to such damage,  nor shall Landlord be responsible
for repair or replacement of any of Tenant's personal  property,  alterations to
the  Premises  not  approved by Landlord  or any other  property of Tenant,  and
Tenant  shall be  required  to pay the  portion of repair  costs  covered by any
deductible  amount under the subject  insurance  policy whether or not the total
cost of repair exceeds such deductible  amount.  In the event that the insurance
proceeds  otherwise  payable  by virtue of the damage  are  reduced or  rendered
completely   unavailable   because  of  acts  or  omissions  of  Tenant  causing
cancellation of, or giving rise to insurer defenses under the insurance  policy,
Tenant shall be obligated to pay such excess.

     9.2  Damage--Uninsured.  In the  event the  Premises  may be  damaged  by a
casualty which is not covered by fire and extended coverage insurance carried by
Landlord,  then Landlord  shall have the option to restore the Premises or elect
not to restore and to terminate  this Lease.  Landlord must give Tenant  written
notice of its  election  not to  restore  within  sixty  (60) days from the date
Landlord  receives notice of such damage,  and, if not given,  Landlord shall be
deemed to have  elected to restore and in such event shall  repair any damage as
soon as reasonably possible, at Landlord's cost. In the event Landlord elects to
give such notice of  Landlord's  intention to cancel and  terminate  this Lease,
Tenant shall have the right within ten (10) days after receipt of such notice to
give written  notice to Landlord of Tenant's  intention to repair such damage at
Tenant's expense, without reimbursement from Landlord, in which event this Lease
shall  continue in full force and effect and Tenant  shall  proceed to make such
repairs as soon as  reasonably  possible.  If Tenant  does not give such  notice
within such ten (10) day period, this Lease shall be cancelled and terminated as
of the date of the occupance of such damage.

     9.3 Total  Destruction.  If at any time during the term hereof the Premises
are totally  destroyed  from any cause  whether or not covered by the  insurance
required to be maintained by Landlord  pursuant to Article 8.2 (including  total
destruction  required by any authorized public  authority).  Landlord shall have
the option to  terminate  this  Lease as of the date of such total  destruction.
Subject to Article  9.6, if Landlord  elects not to  terminate  this Lease,  the
provisions of Article 9.1 and 9.2 shall be applicable.

     9.4 Damage Near End of Term.  If the  Premises are  partially  destroyed or
damaged  during the last twelve (12) months of the term of this Lease,  Landlord
or Tenant may, at Landlord's or Tenant's  option cancel and terminate this Lease
as of the date of occurrence of such damage by giving written notice to Landlord
or Tenant of  Landlord's  or Tenant's  election to do so within thirty (30) days
after Landlord receives notice of the occurrence of such damage.

     9.5 Abatement of Rent.

         (a) If the premises are partially  destroyed or damaged and Landlord or
Tenant  repairs or restores them  pursuant to the  provisions of this Article 9,
the Base Rent payable hereunder for the

                                       9
<PAGE>
period during which such damage, repair or restoration continues shall be abated
in proportion to the degree to which Tenant's  reasonable use of the Premises is
substantially impaired. Except for abatement, if any, of Base Rent, Tenant shall
have no claim  against  Landlord  for any damage  suffered by reason of any such
damage,  destruction,   repair  or  restoration,  unless  Landlord  unreasonably
interferes with the conduct of Tenant's business within the Premises.

         (b) If Landlord  shall be  obligated  to repair or restore the Premises
under the  provisions  of this Article 9 and shall not  commence  such repair or
restoration  within sixty (60) days after such obligations shall accrue,  Tenant
may, at Tenant's  option,  cancel and  terminate  this Lease by giving  Landlord
witten  notice  of  Tenant's  election  to  do so  at  any  time  prior  to  the
commencement  of such  repair or  restoration.  In such event  this Lease  shall
terminate as of the date of such notice.  The  commencement  of  preparation  of
plans and/or specifications or application for permits for repair or restoration
shall be deemed  commencement of repair or restoration within the meaning of the
foregoing provisions of this Article 9.5(b).

     9.6 Tenant's Right to Terminate: If Landlord elects to repair any damage or
destruction  to the  Premises  under this  Article 9, then unless such damage or
destruction  is  caused by an act of Tenant  or  Tenant's  use of the  Premises,
Tenant shall have the right to  terminate  this Lease if  Landlord's  reasonable
estimate of the time required to repair such damage or  destruction  exceeds one
hundred eighty (180) days. Tenant shall exercise such right to terminate,  if at
all,  within ten (10) days  after  receipt of  Landlord's  estimate,  and if not
exercised  within such ten (10) day period such right shall  terminate and be of
no further force or effect.

10. Real Property Taxes.

     10.1 The Payment of Taxes.  Tenant shall pay to Landlord as Additional Rent
all real property taxes  applicable to the Premises and Tenant's  pro-rata share
(computed in accordance with Article 11.4) of all real property taxes applicable
to the Common Areas during the term of this Lease.  All such  payments  shall be
made to  Landlord  on or  before  the  later to  occur of (a) 30 days  following
Landlord's  issuance of a bill  therefore,  accompanied by a copy of Real Estate
Tax  invoice  or (b)  fifteen  (15) days prior to the  delinquency  date of such
payment.  If any such  taxes paid by Tenant  shall  cover any period of the time
prior to or after  expiration of the term hereof,  Tenant's  share of such taxes
shall be  equitably  prorated  to cover only the  period of time  within the tax
fiscal year during which this Lease shall be in effect.  If Tenant shall fail to
pay such taxes to Landlord by the aforesaid  date, the amount due Landlord shall
bear interest at the Interest  Rate from the date the sum is due until  Landlord
is paid by Tenant.  The sum, together with interest,  shall be deemed Additional
Rent hereunder.

     10.2  Definition of "Real  Property  Tax".  As used herein,  the term "real
property tax" shall include any form of assessment  (other than the  improvement
bond assessment existing as of the date of this lease),  license fee, rent, tax,
levy,  penalty,  imposition or tax, of whatever  nature  (other than  franchise,
corporate,  inheritance  or estate taxes)  imposed by any  authority  having the
direct or  indirect  power to tax,  including  city,  county,  state or  federal
government, or any school, agricultural,  lighting, drainage, traffic mitigation
costs or other improvement  district thereof,  as against any legal or equitable
interest  of  Landiord  in the  Premises  or in the real  property  of which the
Premises are a part,  as against  Landlord's  right to Base Rent or other income
therefrom, or as against Landlord's business of leasing the Premises, and Tenant
shall pay any and all  charges and fees which may be imposed by the EPA or other
similar governmental regulations or authorities.

     10.3  Joint  Assessment.  If the  Premises  are  not  separately  assessed,
Tenant's  liability shall be an equitable  proportion of the real property taxes
for all of the land and  improvements  included within the tax parcel  assessed,
such  proportion to be determined  by Landlord  from the  respective  valuations
assigned  in the  assessor's  work  sheets or other such  information  as may be
reasonably  available.  Landlord's  reasonable  determination  thereof,  in good
faith,  shall be  conclusive.  In the  event  that  the  Premises  and  related,
supporting  Common  Areas are not the  subject of a separate  legal  parcel and,
accordingly,  separate  real  property tax  assessment,  then Tenant shall pay a
portion of the real property taxes for all land and improvements included within
the  Common  Areas,  Tenant's  share of Common  Area real  property  taxes to be
determined on the basis of the percentage set forth in Article 11.4.

     10.4 Personal Property Taxes. 

                                       10
<PAGE>

          (a) Tenant shall pay prior to delinquency  all taxes assessed  against
and levied upon Leasehold improvements, fixtures, furnishings, equipment and all
other personal property of Tenant contained in the Premises or elsewhere. Tenant
shall use its best  efforts to cause  Leasehold  improvements,  trade  fixtures,
furnishings,  equipment,  and all other  personal  property to be  assessed  and
billed separately from the real property of Landlord.

         (b) If any of Tenant's  personal  property  shall be assessed  with the
real property, Tenant shall pay Landlord the taxes attributable to Tenant within
ten (10) days  after  receipt  of a written  statement  setting  forth the taxes
applicable to Tenant's property.

11. Common  Areas.  When,  in fact,  there are Common Areas,  then the following
shall apply:

     11.1 Definitions.  The phrase "Common Areas" means all areas and facilities
outside of the Premises  that are provided  and  designated  for general use and
convenience of Tenant and other tenants and their  respective  officers,  agents
and employees, customers and invitees. Common Areas include (but are not limited
to) pedestrian sidewalks, landscaped areas, roadways, parking areas and railroad
tracks,  if any,  but  specifically  do not include  areas  covered by or within
building  improvements  constructed  from time to time by  Landlord in the Park.
Landlord  reserves  the right  from time to time to make  changes  in the shape,
size, location,  number and extent of the land and improvements constituting the
Common  Areas  provided,  however,  that no such  change  shall  (a)  materially
increase the  obligations or decrease the benefits of Tenant  hereunder,  or (b)
impair Tenant's access to the Premises,  and, if appropriate,  Tenant's pro rata
share of Common Area Charges shall be properly adjusted.  Landlord may designate
from time to time additional  parcels of land for use as a part thereof; and any
additional  land so designated by Landlord for such use shall be included  until
such designation is revoked by Landlord.

     11.2  Maintenance.  During the term of this Lease,  Landlord shall operate,
manage,  repair and  maintain  the Common  Areas so that they are clean and free
from accumulation of debris, filth, rubbish and garbage. Landlord shall maintain
the Common Areas in a good,  safe and clean  condition and the use of the Common
Areas shall be subject to such  reasonable  regulations  and changes  therein as
Landlord shall make from time to time,  including (but not by way of limitation)
the right to close from time to time,  if  necessary,  all or any portion of the
Common  Areas to such  extent as may be legally  sufficient,  in the  opinion of
Landlord's  counsel, to prevent a dedication thereof or the accrual of rights of
any person or the public therein,  or to close temporarily all or any portion of
such Common Areas for such purposes.

     11.3 Tenant's  Rights and  Obligations.  Landlord  hereby grants to Tenant,
during the term this Lease, the  non-exclusive  right to use, for the benefit of
Tenant and its officers,  agents, employees,  customers, and invitees, in common
with the others entitled to such use, the Common Areas as they from time to time
exist,  subject  to the  rights,  powers,  and  privileges  herein  reserved  to
Landlord.  Tenant shall not use the Common Areas for the conduct of its business
other  than  for  parking.  Without  limiting  the  foregoing,  storage,  either
permanent or temporary, of any materials,  supplies,  equipment or refuse in the
Common Areas is strictly prohibited. Should Tenant violate this provision of the
Lease,  then in such event,  Landlord  may,  at its  option,  upon five (5) days
written notice to Tenant either terminate this Lease, or, without further notice
to Tenant,  remove said  materials,  supplies or equipment from the Common Areas
and place such items in storage,  the cost  thereof to be  reimbursed  by Tenant
within ten (10) days from  receipt of a statement  submitted  by  Landlord.  All
subsequent  costs in connection  with the storage of said items shall be paid to
Landlord by Tenant as accrued. Failure of Tenant to pay these charges within ten
(10) days from receipt of statement  shall  constitute a material breach of this
Lease. Tenant and its officers, agents, employees,  customers and invitees shall
park their motor vehicles only in areas  designated by Landlord for that purpose
from time to time.  Tenants  shall not at any time park or permit the parking of
motor  vehicles,  belonging  to it or to  others,  so as to  interfere  with the
pedestrian  sidewalks,  roadways,  and loading  areas,  or in any portion of the
parking areas not  designated by Landlord for such use by Tenant.  Tenant agrees
that  receiving  and shipping  goods and  merchandise  and all removal of refuse
shall  be  made  only  by way of the  loading  areas  constituting  part  of the
Premises.  Tenant shall repair,  at its cost, all deterioration or damage to the
Common Areas occasioned by its lack of ordinary care.  Tenant  acknowledges that
the  Premises  are  burdened  by  certain  recorded  covenants,  conditions  and
restrictions and agrees to comply with the provisions thereof.

     11.4  Common Area  Charges.  Tenant  shall pay to  Landlord  within 10 days
following demand

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<PAGE>

by Landlord,  as Additional Rent, (a) Tenant's pro rata share of the cost of (i)
operation  and  management  of the Common Areas,  including  without  limitation
utility and insurance charges, (ii) maintenance, repairs and replacements (other
than  those   replacements   which  by  their  nature  are  considered   capital
improvements)  to  Common  Areas  or to any  property  or  improvements  located
thereon,  and (iii)  maintenance of storm drains located  outside the Park which
are maintained by Landlord, and which service the Park and (b) the entire amount
of such costs and charges to the extent  required by reason of any negligent act
or  omission  by  Tenant  or  its  agents,  invitees,  licensees,  employees  or
contractors.  Tenant's  pro rata share  shall be  computed  by  multiplying  the
aforementioned  costs and charges  times a  percentage  obtained by dividing the
total square footage of the Premises by the total building square footage of the
whole of Landlord's  buildings and improvements  within the Park. The percentage
will  initially  be  Twenty  and  six-five  tenths  percent  (20.65%).  Anything
contained  in the Lease to the  contrary  notwithstanding,  Common Area  charges
described in this Article shall exclude:  (i) additions to the Common Area; (ii)
depreciation on the Premises or any of the Common Areas, other than depreciation
on personal  property  actually  used in the  maintenance  and  operation of the
Premises or the Common  Areas;  (iii) all costs of tenant  improvements  and the
cost of any  special  utility or VAC  services  supplied  to Tenant or any other
tenants;  (iv)  attorneys'  fees incurred in  preparing,  reviewing or enforcing
leases; (v) real estate brokerage commissions;  (vi) fines and penalties;  (vii)
loan fees,  points and other financing costs; and (viii) any costs reimbursed to
Landlord by other tenants or from insurance of condemnation proceeds.

     11.5  Construction.  Landlord  or  Tenant,  while  engaged  in  constucting
improvements  or making  repairs or  alterations  in or about the Premises or in
their vicinity, shall have the right to make reasonable use of the Common Areas.

12.  Utilities.  Tenant shall pay for, as Additional Rent, all water, gas, heat,
light  power,  telephone  and  other  utilities  and  services  supplied  to the
Premises,  together  with  any  taxes  thereon.  If any  such  services  are not
separately  metered to Tenant.  Tenant shall pay a reasonable  proportion  to be
determined by Landlord of all charges jointly metered with other premises.

13. Assignment and Subletting.

     13.1 Assignment, Mortgage and Subletting.

         (a) Neither Tenant, nor Tenant's legal  representatives,  successors or
assigns,  shall assign,  mortgage or encumber this Lease, or sublease, or use or
occupy or permit  the  Premises  or any part  thereof to be  occupied  by others
without the prior written  consent of Landlord,  and any  assignment,  mortgage,
encumbrance  or sublease  without  Landlord's  prior  written  consent  shall be
voidable,  at the option of  Landlord,  and, at the further  option of Landlord,
shall terminate this Lease. Landlord shall consent to an assignment of the Lease
or subletting to any corporation  which  controls,  is controlled by or is under
common  control with  Tenant,  or to a transfer of the Lease by operation of law
resulting from a merger, consolidation,  liquidation, or change in fifty percent
(50%) or more of the voting control of Tenant,  or to any person or entity which
acquires  all of the assets of Tenant's  business as a going  concern,  provided
that (i) the business reputations,  creditworthiness and net worth of the person
or entity to which the Lease is  assigned or  transferred  or the  Premises  are
sublet are  reasonably  acceptable to Landlord,  (ii) such person or entity uses
the Premises for the purposes  specified in the Lease and for no other  purpose,
and (iii)  Tenant  remains  fully  liable  under  this  Lease.  If this Lease be
assigned, or if the Premises or any part thereof be subleased or occupied by any
other party other than Tenant,  Landlord may,  after default by Tenant,  collect
Base Rent and Additional Rent from the Assignee,  Sublease or occupant and apply
the net amount  collected to the Base Rent and Additional Rent herein  reserved,
but no such  assignment,  sublease  occupancy  or  collection  shall be deemed a
waiver of this covenant or the acceptance of the assignee, sublessee or occupant
as Tenant,  or release of Tenant from the further  performance  by Tenant of the
obligations on the part of Tenant herein contained.  Any sale or other transfer,
including consolidation,  merger, or reorganization, of a majority of the voting
stock of Tenant, if Tenant is a corporation,  or any sale or other transfer of a
majority of the partnership interests in the Tenant, if Tenant is a partnership,
shall be an  assignment  for  purposes  of this  Article  13.1.  As used in this
Article 13.1 the term  "Tenant"  shall also mean any entity that has  guaranteed
Tenant's  obligations  under this Lease,  and the  prohibition  hereof  shall be
applicable  to any sales or transfers of the stock or  partnership  interests of
said guarantor.

         (b)  Notwithstanding  any  contrary  provision  of the  foregoing,  but
subject to Article 13.1(d),

                                       12
<PAGE>

Tenant may assign this Lease or sublease the Premises upon the following express
conditions:

         (1) that Tenant  provide  Landlord with written notice of its intent to
         assign or sublease the Premises,  which notice is accompanied by copies
         of the proposed assignment or sublease to be executed by Tenant and the
         proposed assignee or sublessee and all documents  relating thereto,  at
         least  ten  (10)  days  before  the  effective  date  of  the  proposed
         assignment or sublease;

         (2) that the  proposed  assignee or  sublessee  shall be subject to the
         prior  written   consent  of  landlord,   which  consent  will  not  be
         unreasonably  withheld,  but without  limiting  the  generality  of the
         foregoing, it shall be reasonable for Landlord to deny such consent if:

                  (i)  the  use to be  made  of  the  Premises  by the  proposed
                  assignee or sublease (x) is not generally  consistent with the
                  character  and nature of all other  tenancies in the Park,  or
                  (y) conflicts with any so-called "exclusive" then in favor of,
                  or for any  use  which  is the  same  as  that  stated  in any
                  percentage  Lease to, another tenant of the Park, or (z) would
                  be prohibited by any other portion of this Lease; or

                  (ii) the character, creditworthiness, reputation and financial
                  responsibility  of the proposed  assignee or sublessee are not
                  satisfactory to Landlord;

         (3)  that  Tenant  shall  pay  to  Landlord  Landlord's  then  standard
         processing  fee  and  shall  reimburse   Landlord  for  all  reasonable
         attorney's  fees incurred by Landlord in connection  therewith,  not to
         exceed $1,000,  whether or not such proposed  assignment or sublease is
         consented to by Landlord;

         (4)  that  any  proposed  assignee  shall  execute  an  assignment  and
         assumption  agreement on  Landlord's  then standard  form,  pursuant to
         which it shall agree to perform  faithfully  and be bound by all of the
         terms, covenants, conditions,  provisions and agreements of this Lease.
         Any such agreement shall be delivered to Landlord not later than 5 days
         after the effective date thereof;

         (5) that any proposed  subleasee shall execute a sublease  agreement in
         form  satisfactory  to  Landlord,   pursuant  to  which  it  agrees  to
         faithfully perform and to be bound by all of the terms,  conditions and
         agreements of this Lease as the same relate to the subleased  Premises.
         Any such  agreement  shall be delivered to Landlord not later than five
         days after the effective  date thereof;  provided,  however,  that such
         agreement shall not be binding upon Landlord until the delivery thereof
         to  Landlord  and  the  execution  and  provided,  however,  that  such
         agreement shall not be binding upon Landlord until the delivery thereof
         to  Landlord  and the  execution  and  delivery of  Landlord's  consent
         thereto; and;

         (6) that the consent by Landlord to an assignment or sublease shall not
         in any way be  construed  to  relieve  Tenant  or the  assignee  or the
         sublessee from obtaining the express  consent in writing of Landlord to
         any  further  assignment  or  sublease  or to release  Tenant  from any
         liability  whether  past,  present  or future  under  this  lease or to
         release  Tenant  from  any  liability   under  this  Lease  because  of
         Landlord's failure to give notice of default under or in respect of any
         of the terms, covenants,  conditions,  provisions or agreements of this
         Lease.

         (7) that Tenant shall not be in default under the terms and  provisions
         of this Lease as of the date of the proposed assignment or sublease.

     (c) In the event  Landlord  consents  to an  assignment  of this  Lease and
Tenant  receives  cash or other  consideration,  in respect of such  assignment,
Tenant shall pay to Landlord,  upon receipt thereof,  seventy-five percent (75%)
of any such cash or other  consideration  received  by Tenant  which is properly
attributable  to the  assignment,  after first  deducting  therefrom any leasing
commission  paid for by Tenant  and the cost of  necessary  improvements  to the
Premises approved by Landlord and paid for by Tenant, and Tenant's out of pocket
costs incurred in connection  with such assignment  sublease.  In the event that
Landlord  consents to a sublease of the Premises,  Tenant shall pay to Landlord,
upon  receipt  thereof,   seventy-five  percent  (75%)  of  any  rent  or  other
consideration  received  by  Tenant as a result of such  Sublease,  after  first
deducting therefrom any leasing commissions paid for

                                       13

<PAGE>

by Tenant in connection  with such sublease,  whether  denominated as rent under
the  sublease  or  otherwise,  and  Tenant's  out of pocket  costs  incurred  in
connection with such  assignment  sublease which exceed,  in the aggregate,  the
Base Rent and Additional Rent (prorated to reflect obligations allocable to that
portion of the Premises subject to such sublease).

         (d) Notwithstanding the foregoing  provisions of this Article 13, it is
expressly agreed and understood that Landlord shall have the option to terminate
this Lease  rather  than  approve the  assignment  or  sublease  hereof.  Tenant
understands  and  acknowledges  that such  option is a material  inducement  for
Landlord's  agreeing  to  lease  the  Premises  to  Tenant  upon the  terms  and
conditions  herein set forth.  Should  Landlord  elect to  terminate  the Lease,
Tenant  shall  have  three  (3)  business  days  to  withdraw  the  request  for
Assignment.

14. Defaults; Remedies.

     14.1  Defaults.  The occurrence of any one or more of the following  events
shall constitute a default and breach of this Lease by Tenant:

         (a) The vacating or abandonment of the Premises by Tenant.

         (b) The failure by Tenant to make any payment  Base Rent or  Additional
Rent  required to be made by Tenant  hereunder  as when due,  except that Tenant
shall have a grace period of five (5) days after delivery of written notice from
Landlord  (which  notice  Tenant agrees shall be inclusive of and in lieu of the
notice  requirements of California  Civil  Code sec. 1161). Notwithstanding  the
foregoing,  Landlord  shall not be required to provide such written  notice more
than two (2) time in each twelve (12) month period after the commencement Date.

         (c) The failure by Tenant to observe or perform  any of the  covenants,
conditions,  or  provisions of this Lease to be observed or performed by Tenant,
other than  described in paragraph (b) above,  where such failure shall continue
for a period of thirty (30) days after written  notice  thereof from Landlord to
Tenant  provided,  however,  that if the nature of Tenant's default is such that
more than thirty (30) days are  reasonably  required  for its cure,  then Tenant
shall not be deemed to be in default if Tenant  commenced  such cure within said
thirty  (30) day  period  and  thereafter  diligently  prosecutes  such  cure to
completion.

         (d) (i) The  making by Tenant of any  general  assignment,  or  general
assignment for the benefit of creditors; (ii) the filing by or against Tenant of
a petition to have Tenant adjudged  bankrupt or petition for  reorganization  or
arrangement  under any law  relating  to  bankruptcy  (unless,  in the case of a
petition filed against  Tenant,  the same is dismissed  within sixty (60) days);
(iii)  the   appointment  of  a  trustee  or  receiver  to  take  possession  of
substantially  all of  Tenant's  assets  located at the  Premises or of Tenant's
interest in this Lease, where possession is not restored to Tenant within thirty
(30)  days;  or (iv) the  attachment,  execution  or other  judicial  seizure of
substantially  all of  Tenant's  assets  located at the  Premises or of Tenant's
interest in this Lease,  where such seizure is not discharged within thirty (30)
days.

              (e) The failure by Tenant to  substantially  complete the  Special
Improvements to the Premises on or before March l, 1996.

     14.2  Remedies  in Default.  In the event of any such  default or breach by
Tenant,  Landlord may at any time  thereafter,  with or without notice or demand
and  without  limiting  Landlord in the  exercise  of any right or remedy  which
Landlord may have by reason of such default or breach:

         (a)  Terminate  Tenant's  right to  possession  of the  Premises by any
lawful  means,  in which  case this  Lease  shall  terminate  and  Tenant  shall
immediately  surrender  possession  of the Premises to  Landlord.  In such event
Landlord  shall be  entitled  to recover  from  Tenant all  damages  incurred by
Landlord by reason of Tenant's default, including be not limited to:

                  (i) the cost of recovering possession of the Premises; and

                  (ii) expenses of reletting, including necessary renovation and
alteration of the Premises; and

                                       14
<PAGE>

                  (iii) reasonable  attorney's fees, any real estate  commission
actually  paid,  and that  portion of the leasing  commission,  if any,  paid by
Landlord  pursuant to Article 18 applicable to the unexpired term of this Lease;
and

                  (iv) the  worth at the time of award of the  unpaid  Base Rent
and  Additional  Rent that had been  earned at the time of  termination  of this
Lease; and

                  (v) the worth at the time of award of the  amount by which the
unpaid Base Rent and Additional  Rent that could have been earned after the date
of  termination  of this Lease until the time of award exceeds the amount of the
loss of rental that Tenant proves could have been reasonably avoided; and

                  (vi) the worth at the time of award of the amount by which the
unpaid Base Rent and Additional Rent that could have been earned for the balance
of the term of this Lease after the time of award exceeds the amount of the loss
of Base Rent that Tenant proves could have been reasonably avoided; and

                  (vii)  any  other  amount,  and  court  costs,   necessary  to
compensate  Landlord for all detriment  proximately  caused by Tenant's default.
Unpaid installments of Base Rent or Additional Rent shall bear interest from the
date due at the Interest  Rate.  In the event Tenant  shall have  abandoned  the
Premises,  Landlord  shall have the  option of (1)  retaking  possession  of the
Premises and recovering from Tenant the amount specified in this Article 14.2(a)
or (2) proceeding  under article  14.2(b).  As used in this paragraph,  the term
"the worth at the time of award" is to be computed by discounting  the amount of
award by the discount  rate of the Federal  Reserve Bank of San Francisco at the
time of the award, plus one percent (1%).

         (b) Maintain  Tenant's  right to  possession,  in which case this Lease
shall  continue  in effect  whether  or not  Tenant  shall  have  abandoned  the
Premises.  In such event, Landlord shall be entitled to all of Landlord's rights
and  remedies  under this  Lease  including  the right to recover  Base Rent and
Additional Rent as it becomes due hereunder.

         (c) Pursue any other  remedy now or  hereafter  available  to  Landlord
under the laws or judicial decisions of the State of California.

     14.3 Default by Landlord.  Landlord shall not be in default unless Landlord
fails to perform obligations  required by Landlord within a reasonable time, but
in no event  later  than  thirty  (30) days  after  written  notice by Tenant to
Landlord and to holder of any mortgage or deed of trust  covering the  Premises,
whose  name and  address  shall have  theretofore  been  furnished  to Tenant in
writing,  specifying  wherein  Landlord has failed to perform  such  obligation;
provided,  however, that if the nature of the Landlord's obligation is such that
more than (30) days are required for performance,  then Landlord shall not be in
default if Landlord or any such  lienholder  commences  performance  within such
thirty (30) period and thereafter diligently prosecutes the same to completion.

     14.4 Late Charges. Tenant hereby,  acknowledges that late payment by Tenant
to Landlord of Base Rent or Additional Rent due hereunder will cause Landlord to
incur costs not  contemplated  by this Lease,  the exact amount of which will be
extremely  difficult to ascertain.  Such costs include,  but are not limited to,
processing  and  accounting  charges,  and late charges  which may be imposed on
Landlord  by the term of any  mortgage  or trust  deed  covering  the  Premises.
Accordingly,  if any installment of Base Rent or Additional Rent due from Tenant
shall not be received by Landlord or  Landlord's  designee  within ten (10) days
after said amount is past due,  then Tenant  shall pay to Landlord a late charge
of five percent (5%) of such overdue  amount,  and interest  shall accrue on the
overdue  installment at the Interest Rate  calculated from the time that payment
was first due under the terms of this Lease.  The parties hereby agree that such
late charge represents a fair and reasonable  estimate of the cost Landlord will
incur by reason of late  payment by Tenant.  Acceptance  of such late  charge by
Landlord shall in no event  constitute a waiver of Tenant's default with respect
to such overdue  amount,  nor prevent  Landlord from exercising any of the other
rights and remedies granted hereunder.

     14.5  Cure by  Landlord.  Landlord,  at any time  after  Tenant  commits  a
default,  which remains uncured after any applicable cure period, may take steps
to remedy the default at Tenant's  cost.  If Landlord at any time,  by reason of
Tenant's default, pays any sum or does any act that requires the

                                       15

<PAGE>


payment of any sum,  the sum paid by  Landlord at the time the sum is paid shall
be due  immediately  from Tenant to Landlord,  and if paid at a later date shall
bear  interest  at the  Interest  Rate from the date the sum is paid by Landlord
until Landlord is reimbursed by Tenant. The sum, together with interest shall be
deemed Additional Rent hereunder.

15. Condemnation.

         If the  Premises  or any  portion  thereof are taken under the power of
eminent  domain,  or sold by Landlord  under the threat of the  exercise of said
power (all of which is herein referred to as  "condemnation"),  this Lease shall
terminate as to the part so taken as of the date the condemning  authority takes
title or possession,  whichever occurs first. If more than  twenty-five  percent
(25%) of the floor area of the Premises is taken by condemnation,  or parking is
taken such that 25% or more of the floor area of the Premises  becomes  unusable
by Tenant, either Landlord or Tenant may terminate this Lease as of the date the
condemning  authority  takes  possession  by notice in writing of such  election
within twenty (20) days after Landlord shall have notified Tenant of the taking,
or, in the  absence  of such  notice,  then  within  twenty  (20) days after the
condemning  authority  shall  have  taken  possession.  If  this  Lease  is  not
terminated  by either  Landlord or Tenant then it shall remain in full force and
effect as to the portion of the  Premises  remaining,  provided  that unless and
until the Premises are restored as provided in the next sentence,  the Base Rent
shall be reduced in the proportion  that the floor area taken bears to the total
original  floor  area  of  the  Premises.  In the  event  this  Lease  is not so
terminated, then Landlord agrees, at Landlord's sole cost, as soon as reasonably
possible,  to restore  the  Premises  to a  complete  unit of like  quality  and
character as existed prior to the condemnation. All awards for the taking of any
part of the  Premises  or any payment  made under the Threat of the  exercise of
power of eminent  domain  shall be the  property of  Landlord,  whether  made as
compensation  for  diminution of value of the Leasehold or for the taking of the
fee or as severance damages; provided, however, that Tenant shall be entitled to
any separate award for loss of or damage to Tenant's trade  fixtures,  removable
personal property, and moving expenses.

16. General Provisions.

     16.1 Tenant Estoppel; Financial Statements.

         (a) Tenant shall at any time upon not less than fifteen (15) days prior
written notice from  landlord,  execute,  acknowledge  and deliver to Landlord a
statement in writing  certifying that this Lease is unmodified and in full force
and effect  without  any claim by Tenant  against  Landlord  (or,  if  modified,
stating the nature of such  modification  and certifying  that this Lease, as so
modified,  is in full force and effect) and the date to which the rent, security
deposit,  and other charges are paid in advance,  if any. Any such statement may
be conclusively relied upon by any prospective  purchaser or encumbrancer of the
Premises.

         (b) Tenant's  failure to deliver such statement within such time period
shall be conclusive  upon Tenant that (i) this Lease is in full force and effect
and without any claim of Tenant against Landlord, without modification except as
may be represented by Landlord,  and (ii) not more than one (1) month's rent has
been paid in advance.

         (c) If Landlord  desires to finance or refinance the  Premises,  or any
part  thereof,  Tenant  hereby  agrees to deliver to any  lender  designated  by
Landlord such  financial  statements of Tenant as may be reasonably  required by
such lender.  Such statements  shall include the past three (3) years' financial
statements  of  Tenant.  All such  financial  statements  shall be  received  by
Landlord and/or  Landlord's  lender in confidence and shall be used only for the
purposes herein set forth.

     16.2  Landlord's  Interest.  The term  "Landlord" as used herein shall mean
only the owner or owners at the time in  question of the fee title or a tenant's
interest in a ground Lease of the Premises. In the event of any transfer of such
title or interest,  and  assumption  of the  Landlord's  interest  herein by the
transferee Landlord herein named (and in case of any subsequent  transfers,  the
then  grantor)  shall be  relieved  from and after the date of such  transfer of
liability  as  respects  Landlord's  obligations  thereafter  to  be  performed,
provided that any funds in the hands of Landlord or the then grantor at the time
of such  transfer,  in which Tenant has an  interest,  shall be delivered to the
grantee.  The  obligations  contained  in this Lease to be performed by Landlord
shall, subject as aforesaid,  be binding upon Landlord's successors and assigns,
only during their  respective  periods of  ownership.  Tenant  hereby  agrees to
attorn any assignee of Landlord's interest hereunder, whether such assignment is

                                       16
<PAGE>


voluntary or by operation of law.

     16.3 Severability. In the event any term, covenant, condition, provision or
agreement  herein  is held to be  invalid  or void  by any  court  of  competent
jurisdiction, the invalidity of any such term, covenant, condition, provision or
agreement shall in no way affect any other term, covenant, condition,  provision
or agreement herein contained.

     16.4 Time of Essence. Time is of the essence.

     16.5 Captions. Article and paragraph captions are not a part hereof.

     16.6 Incorporation of Prior Agreement;  Amendments. This Lease contains all
agreements of the parties with respect to any matter mentioned  herein. No prior
agreement or  understanding  pertaining  to any such matter shall be  effective.
This Lease may me modified in writing only,  signed by the paries in interest at
the time of the modification.

     16.7 Waivers. No waiver by Landlord of any provision hereof shall be deemed
a waiver of any other provision hereof or of any subsequent  breach by Tenant of
the same or any other  provision.  Landlord's  consent to or approval of any act
shall not be deemed to render unnecessary the obtaining of Landlord's consent to
or approval of any  subsequent  act by Tenant.  The  acceptance  of Base Rent or
Additional  Rent  hereunder  by Landlord  shall not be a waiver of any  existing
breach by Tenant of any  provision  hereof,  other than the failure of Tenant to
pay the  particular  Base Rent or  Additional  Rent so accepted,  regardless  of
Landlord's  knowledge of such existing  breach at the time of acceptance of such
Base Rent or Additional Rent.

     16.8 Short Form Lease.  Tenant agrees to execute,  deliver and acknowledge,
at the request of Landlord,  a short form of this Lease  satisfactory to counsel
for Landlord,  and Landlord may in its sole discretion record this Lease or such
short form in the county where the Premises are located. Tenant shall not record
this Lease,  or a short form of this Lease,  without  Landlord's  prior  written
consent.

     16.9 Holding Over.  If Tenant  remains in possession of the premises or any
part thereof after the  expiration  of the term hereof with the express  written
consent of Landlord,  such occupancy shall be a tenancy from month to month at a
rental  equal to 125% of the amount of the last monthly Base Rent plus all other
charges  payable  hereunder,  and upon the terms hereof  applicable  to month to
month  tenancy.  If Tenant  remains in  possession  of the  Premises or any part
thereof  after the  expiration  of the term hereof  without the express  written
consent of Landlord, Tenant shall be in default of this Lease and Landlord shall
be entitled to pursue any remedy now or hereafter  available  to Landlord  under
the laws or judgment decisions of the State of California.

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

     16.11 Covenants and Conditions. Each provision of this Lease performable by
Tenant shall be deemed both a covenant and a condition.

     16.12 Binding Effect;  Choice of Law; Proration.  Subject to any provisions
hereof  restricting  assignment  or  subletting  by Tenant  and  subject  to the
provisions of Article 13.1,  this Lease shall bind the parties,  their  personal
representatives,  successors  and  assigns.  This Lease shall be governed by and
construed in accordance with the laws of the State of California. All prorations
shall be on the basis of a thirty (30) day month.

     16.13 Subordination.  Tenant agrees that this Lease shall be subordinate to
any  mortgages or deeds of trust that may  hereafter be placed upon the Premises
and to any and all advances to be made thereunder,  and to the interest thereon,
and all renewals,  replacements and extensions thereof. Within fifteen (15) days
after written request from Landlord, Tenant shall execute any documents that may
be necessary or desirable to effectuate the  subordination  of this Lease to any
such  mortgages or deeds of trust and shall  execute  estoppel  certificates  as
requested  by  Landlord  from  time  to time in the  standard  form of any  such
mortgagee  or  beneficiary.  Anything  contained  in the  Lease to the  contrary
notwithstanding,  Tenant's  obligation to subordinate its rights under the Lease
to a subsequent ground lessor, mortgagee,  beneficiary under a deed of trust, or
any lending  entity,  shall be  conditioned  upon Landlord  first  delivering to
Tenant a nondisturbance agreement from such ground lessor, mortgagee,

                                       17

<PAGE>

beneficiary or lender  substantially in the form of Exhibit "C" attached hereto,
which form is hereby approved by Tenant.

     16.14  Attorney's  Fees.  If either party named herein  brings an action to
enforce the terms hereof or declare rights  hereunder,  the prevailing  party in
any such  action,  on trial or  appeal,  shall  be  entitled  to his  reasonable
attorney's  fees and court costs to be paid by the losing  party as fixed by the
court.

     16.15  Landlord's  Access.  Landlord and  Landlord's  agents shall have the
right to enter the  Premises at  reasonable  times upon  reasonable  notice (or,
during emergencies, at any time) for the purpose of inspecting the same, showing
the  same  to  prospective  tenants,  purchasers  or  lender,  and  making  such
alterations,  repairs,  improvements  or  additions  to the  Premises  or to the
building of which they are a part as Landlord may deem necessary or desirable.

     16.16  Quiet  Enjoyment.  Upon  Tenant's  paying  the  Base  Rent  and  any
Additional  Rent required  hereunder and performing all of Tenant's  obligations
under this Lease,  Tenant may peacefully  and quietly enjoy the Premises  during
the term of this Lease as against all persons or entities  lawfully  claiming by
or through Landlord.

     16.17 Merger.  The voluntary or other  surrender of this Lease by Tenant or
termination of this Lease by Tenant's default, or a mutual cancellation thereof,
shall not work a merger, and shall, at the option of Landlord,  terminate all or
any  existing  subtenancies,  or may at the  option of  Landlord,  operate as an
assignment to Landlord of any or all of such subtenancies.

     16.18 Authority.  Each individual executing this Lease on behalf of a party
hereto represents and warrants that he is duly authorized to execute and deliver
this Lease on behalf of said  party,  and that this  Lease is binding  upon said
party corporation in accordance with its terms.

     16.19  Landlord's  Liability.  The  liability  of Landlord  hereunder or in
connection with the Premises shall be limited to its interest therein, and in no
event shall any other assets Landlord or any constituent  partner of Landlord be
subject to any claim arising out of or in connection with this Lease.

     16.20 Financing. Tenant shall not execute any document purporting to affect
the Premises or any other property of which the Premises are a part,  including,
without limitation,  any financing  statement,  without prior written consent of
Landlord, which may be withheld or conditioned in Landlord's sole discretion.

     16.21 Landlord's Approval. The review, approval,  inspection or examination
by  Landlord  of any item to be  reviewed,  approved,  inspected  or examined by
Landlord under the terms of this Lease or the exhibits attached hereto shall not
constitute  the  assumption  of any  responsibility  by Landlord  for either the
accuracy or  sufficiency  of any such item or the quality or suitability of such
item for its intended use. Any such review, approval,  inspection or examination
by Landlord is for the sole  purpose of  protecting  Landlord's  interest in the
Park and under this Lease, and no third parties, including,  without limitation,
Tenant  or any  person  or  entity  claiming  through  or under  Tenant,  or the
contractors, agents, servants, employees, visitors or licensees of Tenant or any
such person or entity, shall have any rights hereunder.

17.  Performance  Bond. At any time Tenant  either  desires to or is required to
make any repairs, alterations,  additions,  improvements or utility installation
thereon, pursuant to Articles 7.2, 7.5 or 9.2 herein or otherwise, Landlord may,
at its sole option, require Tenant, at Tenant's sole cost and expense, to obtain
and provide to Landlord  payment and  performance  bonds in amounts equal to one
and one-half  (1-1/2) times the estimated cost of such repairs or  improvements,
to insure Landlord against any liability for mechanics' and materialmen's  liens
and to insure completion of the work.

18. Brokers.  It is acknowledged and agreed by both parties that C.B. Commercial
and Wayne Mascia & Associates are the only brokers  representing either party in
this  transaction.  It is agreed that  Landlord  will pay a commission  for this
Lease transaction and CB Commercial and Wayne Mascia  Associates  split,  50/50,
the commission for the remaining term of the existing  Tenant's (Henkel Research
Corporation)  lease term.  For the  remaining  term of the Lease,  Wayne  Mascia
Associates will receive 100% of the proceeds. The commission shall be calculated
at the rate of 5% of the Base Rent for the first 60 months of the Lease Term and
2% of the Base Rent for the  remaining  60 months of the Lease Term.  Apart from
the foregoing, each party represents that it

                                       18
<PAGE>

has not had any dealings with any real estate broker,  finder,  or other person,
with respect to this Lease in any manner and that no commissions  are due to any
brokers  whatsoever  other than such commissions as may be due or may become due
to the  above-named  brokers.  Each party  agrees to defend  indemnify  and hold
harmless the other party from and against all costs,  expenses,  and/or damages,
resulting  from any claims that my be asserted  against  such other party by any
broker,  finder,  or other  person,  with  whom the  indemnifying  party  has or
purportedly has dealt.

19. Interest on Past Due Obligations.  Except as expressly herein provided,  any
amount due to Landlord  not paid when due shall bear  interest  at the  Interest
Rate from the due date.  Payment of such  interest  shall not excuse or cure any
default by Tenant under this Lease.

20.  Interest Rate. As used herein,  the term  "Interest  Rate" shall mean a per
annum rate of interest equal to three percentage points (3%) above the rate most
recently announced by Wells Fargo Bank, National  Association,  at its principal
office in San  Francisco  as its  "Prime  Rate"  serving as the basis upon which
effective  rates of  interest  are  calculated  for  those  transactions  making
reference  thereto,  but in no event in  excess of the then  highest  applicable
usury limit, if any, under Federal or state law.

21.  Signs,  etc.  Tenant may affix and maintain on the exterior of the Premises
only such signs, names,  insignia,  trademarks and other descriptive material of
any kind as shall have first  received  the  written  approval of Landlord as to
type,  size,  color,  location and other design  qualities.  Landlord  review of
proposed  signs and other items  described  in this  Article 21 shall be made in
accordance  with the sign criteria  attached hereto as EXHIBIT B. The provisions
of this Article 21 shall  likewise apply to any signs or other item as aforesaid
which may be placed in any window area within and which shall be visible for the
exterior of the Premises.  Notwithstanding any other provision of this Lease, in
no event shall Tenant make any other  alterations or additions to or improvement
on  or visible  from the  exterior  of the  Premises  without  Landlord's  prior
written  consent,  which  may  be  withheld  in  Landlord's  sole  and  absolute
discretion.

22. Notices.  Whenever under this Lease provision is made for any demand, notice
or  declaration  of any kind,  or where it is deemed  desirable  or necessary by
either  party to give or serve any such  notice,  demand or  declaration  to the
other  party,  it shall be in writing and served  either  personally  or sent by
registered  United  States mail,  postage  prepaid,  return  receipt  requested,
addressed at the address set forth hereinbelow:

             To Landlord:         Santa Rosa Corporate Center Associates
                                  Attention: John W. Hopkins
                                  2255 Challenger Way, Suite 101
                                  Santa Rosa, CA 95407

             with a copy to:      Metropolitan Life Insurance Company
                                  Attention: Assistant Vice President & Regional
                                  Manager
                                  101 Lincoln Centre Drive, 6th Floor
                                  Foster City, CA 94404

             with a copy to:      O'Donnell, Hopkins & Partners
                                  Attention: Mr. Donald Grant
                                  2201 Dupont Drive, Suite 100
                                  Irvine, CA 92715

             To Tenant:           H.O.H. Burkhardt
                                  Vice President
                                  Verticom, Inc.
                                  1269 Corporate Center Parkway
                                  Santa Rosa, CA 95407

23.  Control  of  Lease  Over  Laws  of  General   Application.   Tenant  hereby
acknowledges and agrees that the terms, covenants,  conditions and provisions of
the Lease shall control the rights and  obligations  of Landlord and Tenant with
regard to the subject matter of the Lease, and shall

                                       19
<PAGE>

supersede any laws of general  application  which would otherwise control if the
Lease was silent as to such matters, including but not limited to the provisions
of  Sections  1941 and 1942 of the  California  Civil  Code and any  similar  or
successor laws  regarding  Tenant's right to make repairs to the Premises at the
expense of Landlord  (governed  by Article 7 of the Lease);  the  provisions  of
Sections 1932 (2) and 1933 (4) of the  California  Civil Code and any similar or
successor  laws  regarding  the  termination  of  leases  based  upon  damage or
destruction  of  leased  premises  (governed  by  Article 9 of the  Lease);  the
provisions  of  Section  1265.130  of the  California  Code of  Civil  Procedure
regarding  petitions  to  courts of law to  terminate  a lease in the event of a
partial taking by  condemnation  (governed by Article 15 of the Lease);  and the
provisions of California code of Civil Procedure

     The  parties  hereto  have  executed  this  Lease  on the  dates  specified
immediately adjacent to their respective signatures.


Executed at Santa Rosa, California on Nov 3, 1995.

LANDLORD:                              TENANT:

SANTA ROSA CORPORATE CENTER            VERTICOM, INC.
ASSOCIATES, a California
general partnership                     
                                       
By:                                    By: /s/ Richard E. Hejmanowski
    O'Donnell, Hopkins &                   --------------------------
    Partners/San Francisco                     Richard E. Hejmanowski
    a California partnership           Its:    CEO and President
                              
                                       
By: /s/ Donald S. Grant                By: /s/ H.O.H. Burkhardt
    ----------------------------          ---------------------------
    Donald S. Grant                            H.O.H. Burkhardt
    Trustee of the                     Its:    Vice President and CFO
    Donald S. Grant Revocable
    Trust dated May 5, 1987,
    partner

         -OR-

By:  /s/ John W. Hopkins
    ---------------------------
     John W. Hopkins, Partner

                                       20