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                                                                  EXHIBIT 10.44


         STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE-MODIFIED NET
                   AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION



1.      BASIC PROVISIONS ("BASIC PROVISIONS").

        1.1 PARTIES: This Lease ("LEASE"), dated for reference purposes only,
February 16, 2001, is made by and between Medtronic PS Medical, Inc., a
California corporation ("LESSOR") and PharmChem, Inc., a Delaware corporation
("LESSEE"), (collectively the "PARTIES," or individually a "PARTY").

        1.2 (a) PREMISES: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this Lease,
commonly known by the street address of 4600 Beach Street, located in the City
of Haltom City, County of Tarrant, State of Texas, with zip code 76137, as
outlined on Exhibit A attached hereto ("PREMISES"). The "BUILDING" is that
certain building containing the Premises: the Premises consist of 44,728
rentable square feet. In addition to Lessee's rights to use and occupy the
Premises as hereinafter specified, Lessee shall have non-exclusive rights to the
Common Areas (as defined in Paragraph 2.7 below) as hereinafter specified, but
shall not have any rights to the roof, exterior walls or utility raceways of the
Building or to any other buildings in the Industrial Center. The Premises, the
Building, the Common Areas, the land upon which they are located, are herein
collectively referred to as the "INDUSTRIAL CENTER." (Also see Paragraph 2.)

        1.2(b) PARKING: 130 unreserved vehicle parking spaces ("UNRESERVED
PARKING SPACES"); and 10 reserved vehicle parking spaces ("RESERVED PARKING
SPACES"). (Also see Paragraph 2.6.) See Addendum Paragraph 70.

        1.3 TERM: 10 years and 0 months ("ORIGINAL TERM") commencing See
Addendum Paragraph 50 ("COMMENCEMENT DATE") and ending See Addendum Paragraph 50
("EXPIRATION DATE"). (Also see Paragraph 3.)

        1.4 EARLY POSSESSION: 3 days after Lease execution ("EARLY POSSESSION
DATE"). (Also see Paragraphs 3.2 and 3.3.)

        1.5 BASE RENT: $31,682.33 per month ("BASE RENT"), payable on the first
day of each month commencing on the Commencement Date. (Also see Paragraph 4.)
See Addendum Paragraph 51.

        [X] If this box is checked, this Lease provides for the Base Rent to be
adjusted per Addendum Paragraph 52, attached hereto.

        1.6 (a) BASE RENT PAID UPON EXECUTION: $31,682.33 as Base Rent for the
period of the first full lease month.

        1.6(b) LESSEE'S SHARE OF COMMON AREA OPERATING EXPENSES: Thirty-Six
percent (36%) ("LESSEE'S SHARE") as determined by

        [X] pro rata square footage of the Premises as compared to the total
square footage of the Building or [ ] other criteria as described in Addendum .

        1.7 SECURITY DEPOSIT: $31,682.33 ("SECURITY DEPOSIT"). (Also see
Paragraph 5.)

        1.8 PERMITTED USE: General office, laboratory, research and development,
warehouse and related uses provided said uses do not violate Applicable Laws
("PERMITTED USE") (Also see Paragraph 6.)

        1.9 INSURING PARTY. Lessor is the "INSURING PARTY." (Also see Paragraph
8.)

        1.10 (a) REAL ESTATE BROKERS. The following real estate broker(s)
(collectively, the "BROKERS") and brokerage relationships exist in this
transaction and are consented to by the Parties (check applicable boxes):

[X] Trammell Crow Company represents Lessor exclusively ("LESSOR'S BROKER");

[X] Cushman & Wakefield of Texas, Inc. represents Lessee exclusively ("LESSEE'S
BROKER"); or

[ ] _______________________ represents both Lessor and Lessee ("DUAL AGENCY").
(Also see Paragraph 15.)

        1.10(b) PAYMENT TO BROKERS. Upon the execution of this Lease by both
Parties, Lessor shall pay to said Broker(s) jointly, or in such separate shares
as they may mutually designate in writing, a fee as set forth in a separate
written agreement between Lessor and said Broker(s) for brokerage services
rendered by said Broker(s) in connection with this transaction.


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        1.11 GUARANTOR. The obligations of the Lessee under this Lease are to be
guaranteed by N/A ("GUARANTOR"). (Also see Paragraph 37.)

        1.12 ADDENDA AND EXHIBITS. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 49 through 79, and Exhibits A through H, all of which
constitute a part of this Lease.

2.      PREMISES, PARKING AND COMMON AREAS.

        2.1 LETTING. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of square footage set forth in this Lease, or
that may have been used in calculating rental and/or Common Area Operating
Expenses, is an approximation which Lessor and Lessee agree is reasonable and
the rental and Lessee's Share (as defined in Paragraph 1.6(b)) based thereon is
not subject to revision whether or not the actual square footage is more or
less.

        2.2 CONDITION. Lessor shall deliver the Premises to Lessee clean and
free of debris on the Commencement Date and warrants to Lessee that the existing
plumbing, electrical systems, fire sprinkler system, lighting, air conditioning
and heating systems and loading doors, it any, in the Premises, other than those
constructed by Lessee, shall be in good operating condition on the Early
Possession Date. If a non-compliance with said warranty exists as of the Early
Possession Date, Lessor shall, except as otherwise provided in this Lease,
promptly after receipt of written notice from Lessee setting forth with
specificity the nature and extent of such non-compliance, rectify same at
Lessor's expense. If Lessee does not give Lessor written notice of a
non-compliance with this warranty within thirty (30) days after the Early
Possession Date, correction of that non-compliance shall be the obligation of
Lessee at Lessee's sole cost and expense.

        2.3 COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE. Lessor
warrants that any improvements (other than those constructed by Lessee or at
Lessee's direction) on or in the Premises which have been constructed or
installed by Lessor or at Lessor's direction shall comply with all applicable
covenants or restrictions of record and applicable building codes, regulations
and ordinances in effect on the Commencement Date. Lessor further warrants to
Lessee that Lessor has no knowledge of any clam having been made by any
governmental agency that a violation or violations of applicable building codes,
regulations, or ordinances exist with regard to the Premises as of the
Commencement Date. Said warranties shall not apply to any Alterations or Utility
Installations (defined in Paragraph 7 3(a)) made or to be made by Lessee. If the
Premises do not comply with said warranties, Lessor shall, except as otherwise
provided in this Lease, promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such non-compliance,
take such action, at Lessor's expense, as may be reasonable or appropriate to
rectify the non-compliance. Lessor makes no warranty that the Permitted Use in
Paragraph 1.8 is permitted for the Premises under Applicable Laws (as defined in
Paragraph 2 4).

        2.4 ACCEPTANCE OF PREMISES. Lessee hereby acknowledges: (a) that it has
been advised by the Broker(s) to satisfy itself with respect to the condition of
the Premises (including but not limited to the electrical and fire sprinkler
systems, security, environmental aspects, seismic and earthquake requirements,
and compliance with the Americans with Disabilities Act and applicable zoning,
municipal, county, state and federal laws, ordinances and regulations and any
covenants or restrictions of record (collectively, "APPLICABLE LAWS") and the
present and future suitability of the Premises for Lessee's intended use; (b)
that Lessee has made such investigation as it deems necessary with reference to
such matters, is satisfied with reference thereto, and assumes all
responsibility therefore as the same relate to Lessee's occupancy of the
Premises and/or the terms of this Lease; and (c) that neither Lessor, nor any of
Lessor's agents, has made any oral or written representations or warranties with
respect to said matters other than as set forth in this Lease.

        2.5

        2.6 VEHICLE PARKING. Lessee shall be entitled to use the number of
Unreserved Parking Spaces and Reserved Parking Spaces specified in Paragraph
1.2(b) on those portions of the Common Areas designated from time to time by
Lessor for parking. Lessee shall not use more parking spaces than said number.
Said parking spaces shall be used for parking by vehicles no larger than
full-size passenger automobiles or pick-up trucks, herein, called "PERMITTED
SIZE VEHICLES." Vehicles other than Permitted Size Vehicles shall be parked and
loaded or unloaded as directed by Lessor in the Rules and Regulations (as
defined in Paragraph 40) issued by Lessor. (Also see Paragraph 2.9.)

           (a) Lessee shall not permit or allow any vehicles that belong to or
are controlled by Lessee or Lessee's employees, suppliers, shippers, customers,
contractors or invitees to be loaded, unloaded, or parked in areas other than
those designated by Lessor for such activities.

           (b) If Lessee permits or allows any of the prohibited activities
described in this Paragraph 2.6, then Lessor shall have the right, without
notice, in addition to such other rights and remedies that it may have, to
remove or tow away the vehicle involved and charge the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.

           (c) Lessor shall at the Commencement Date of this Lease, provide the
parking facilities required by Applicable Law. See Addendum Paragraph 70.


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        2.7 COMMON AREAS - DEFINITION. The term "COMMON AREAS" is defined as all
areas and facilities outside the Premises and within the exterior boundary line
of the Industrial Center and interior utility raceways within the Premises that
are provided and designated by the Lessor from time to time for the general
non-exclusive use of Lessor, Lessee and other lessees of the Industrial Center
and their respective employees, suppliers, shippers, customers, contractors and
invitees, including parking areas, loading and unloading areas, trash areas,
roadways, sidewalks, walkways, parkways, driveways and landscaped areas.

        2.8 COMMON AREAS - LESSEE'S RIGHTS. Lessor hereby grants to Lessee, for
the benefit of Lessee and its employees, suppliers, shippers, contractors,
customers and invitees, during the term of this Lease, the non-exclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Lessor under the terms hereof or under the terms of any rules and regulations
or restrictions governing the use of the Industrial Center. Under no
circumstances shall the right herein granted to use the Common Areas be deemed
to include the right to store any property, temporarily or permanently, in the
Common Areas. Any such storage shall be permitted only by the prior written
consent of Lessor or Lessor's designated agent, which consent may be revoked at
any time. In the event that any unauthorized storage shall occur then Lessor
shall have the right, without notice, in addition to such other rights and
remedies that it may have, to remove the property and charge the cost to Lessee,
which cost shall be immediately payable upon demand by Lessor.

        2.9 COMMON AREAS - RULES AND REGULATIONS. Lessor or such other person(s)
as Lessor may appoint shall have the exclusive control and management of the
Common Areas and shall have the right, from time to time, to establish, modify,
amend and enforce reasonable Rules and Regulations with respect thereto in
accordance with Paragraph 40. Lessee agrees to abide by and conform to all such
Rules and Regulations, and use reasonable efforts to cause its employees,
suppliers, shippers, customers, contractors and invitees to so abide and
conform. Lessor shall not be responsible to Lessee for the non-compliance with
said rules and regulations by other lessees of the Industrial Center.

        2.10 COMMON AREAS - CHANGES. Provided the same do not interfere with
Lessee's use of or access to the Premises, Lessor shall have the right, in
Lessor's sole discretion, from time to time:

             (a) To make changes to the Common Areas, including, without
limitation, changes in the location, size, shape and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, walkways and utility raceways;

             (b) To close temporarily any of the Common Areas for maintenance
purposes so long as reasonable access to the Premises remains available;

             (c) To designate other land outside the boundaries of the
Industrial Center to be a part of the Common Areas;

             (d) To add additional buildings and improvements to the Common
Areas;

             (e) To use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Industrial Center, or any portion
thereof; and

             (f) To do and perform such other acts and make such other changes
in, to or with respect to the Common Areas and Industrial Center as Lessor may,
in the exercise of sound business judgment, deem to be appropriate.

3.      TERM.

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

        3.2 EARLY POSSESSION. If an Early Possession Date is specified in
Paragraph 1.4 and if Lessee totally or partially occupies the Premises after the
Early Possession Date but prior to the Commencement Date, the obligation to pay
Base Rent and Lessee's share of Common Area Operating Expenses shall be abated
for the period of such early occupancy. All other terms of this Lease, however,
(including but not limited to the obligations to carry the insurance required by
Paragraph 8 and to pay for utilities) shall be in effect during such period. Any
such early possession shall not affect nor advance the Expiration Date of the
Original Term.

        3.3 DELAY IN POSSESSION. If for any reason Lessor cannot deliver
possession of the Premises to Lessee by the Early Possession Date, if one is
specified in Paragraph 1.4, or if no Early Possession Date is specified, by the
Commencement Date, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease, or the obligations of
Lessee hereunder, or extend the term hereof, but in such case, Lessee shall not,
except as otherwise provided herein, be obligated to pay rent or perform any
other obligation of Lessee under the terms of this Lease until Lessor delivers
possession of the Premises to Lessee. If possession of the Promises is not
delivered to Lessee within sixty (60) days after the Early Possession Date,
Lessee may, at its option, by notice in writing to Lessor at any time prior to
delivery of the Premises, cancel this Lease, in which event the parties shall be
discharged from all obligations hereunder; provided further, however, that if
such written notice of Lessee is not received by Lessor at any time prior to
delivery of the Premises, Lessee's right to cancel this Lease hereunder shall
terminate and be of no further force or effect. Except as may be otherwise
provided, and regardless



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of when the Original Term actually commences, if possession is not tendered to
Lessee when required by this Lease and Lessee does not terminate this Lease, as
aforesaid, the period free of the obligation to pay Base Rent, if any, that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to the period during which the Lessee
would have otherwise enjoyed under the terms hereof, but minus any days of delay
caused by the acts, changes or omissions of Lessee.

4.      RENT.

        4.1 BASE RENT. Lessee shall pay Base Rent and other rent or charges, as
the same may be adjusted from time to time, to Lessor in lawful money of the
United States, without offset or deduction, on or before the day on which it is
due under the terms of this Lease. Base Rent and all other rent and charges for
any period during the term hereof which is for less than one full month shall be
prorated based upon the actual number of days of the month involved. Payment of
Base Rent and other charges shall be made to Lessor at its address stated herein
or to such other persons or at such other addresses as Lessor may from time to
time designate in writing to Lessee.

        4.2 COMMON AREA OPERATING EXPENSES. Lessee shall pay to Lessor during
the term hereof, in addition to the Base Rent, Lessee's Share (as specified in
Paragraph 1.6(b)) of all Common Area Operating Expenses, as hereinafter defined,
during each calendar year of the term of this Lease, in accordance with the
following provisions: See Addendum Paragraph 53.

            (a) "COMMON AREA OPERATING EXPENSES" are defined, for purposes of
this Lease, as all costs incurred by Lessor relating to the ownership and
operation of the Industrial Center, including, but not limited to, the
following:

                (i) The operation, repair and maintenance, in neat, clean, good
order and condition, of the following:

                    (aa) The Common Areas, including parking areas, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, parkways,
driveways, landscaped areas, striping, bumpers, irrigation systems, Common Area
lighting facilities, fences and gates, elevators and roof.

                    (bb) Exterior signs and any tenant directories.

                    (cc) Fire detection and sprinkler systems.

               (ii) The cost of water, gas, electricity and telephone to service
the Common Areas.

               (iii) Trash disposal, property management and security services
and the costs of any environmental inspections.

               (iv) Reserves set aside for maintenance and repair of Common
Areas.

               (v) Real Property Taxes (as defined in Paragraph 10.2) to be paid
by Lessor for the Building and the Common Areas under Paragraph 10 hereof.

               (vi) The cost of the premiums for the insurance policies
maintained by Lessor under Paragraph 8 hereof.

               (vii) Any deductible portion of an insured loss concerning the
Building or the Common Areas. See Addendum Paragraph 64.

               (viii) Any other services to be provided by Lessor that are
stated elsewhere in this Lease to be a Common Area Operating Expense.

           (b) Any Common Area Operating Expenses and Real Property Taxes that
are specifically attributable to the Building or to any other building in the
Industrial Center or to the operation, repair and maintenance thereof, shall be
allocated entirely to the Building or to such other building. However, any
Common Area Operating Expenses and Real Property Taxes that are not specifically
attributable to the Building or to any other building or to the operation,
repair and maintenance thereof, shall be equitably allocated by Lessor to all
buildings in the Industrial Center.

               (c) The inclusion of the improvements, facilities and services
set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation
upon Lessor to either have said improvements or facilities or to provide those
services unless the Industrial Center already has the same, Lessor already
provides the services, or Lessor has agreed elsewhere in this Lease to provide
the same or some of them.

               (d) Lessee's Share of Common Area Operating Expenses shall be
payable by Lessee within thirty (30) days after a reasonably detailed statement
of actual expenses is presented to Lessee by Lessor. At Lessor's option,
however, an amount may be estimated by Lessor from time to time of Lessee's
Share of annual Common Area Operating Expenses and the same shall be payable
monthly or quarterly, as Lessor shall designate, during each 12-month period of
the Lease term, on the same day as the Base Rent is due hereunder. Lessor shall
deliver to Lessee within sixty (60) days after the expiration of each calendar
year a reasonably detailed statement showing Lessee's Share of the actual Common
Area Operating Expenses incurred during the preceding year. If



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Lessee's payments under this Paragraph 4.2(d) during said preceding year exceed
Lessee's Share as indicated on said statement, Lessee shall be credited the
amount of such overpayment against Lessee's Share of Common Area Operating
Expenses next becoming due. If Lessee's payments under this Paragraph 4.2(d)
during said preceding year were less than Lessee's Share as indicated on said
statement, Lessee shall pay to Lessor the amount of the deficiency within thirty
(30) days after delivery by Lessor to Lessee of said statement. See Addendum
Paragraph 58.

5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon Lessee's execution
hereof the Security Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful performance of Lessee's obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder, or otherwise Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain
all or any portion of said Security Deposit for the payment of any amount due
Lessor or to reimburse or compensate Lessor for any liability, cost, expense,
loss or damage (including attorneys' fees) which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of said Security
Deposit, Lessee shall within ten (10) days after written request therefore
deposit monies with Lessor sufficient to restore said Security Deposit to the
full amount required by this Lease. Any time the Base Rent increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit
additional monies with Lessor as an addition to the Security Deposit so that the
total amount of the Security Deposit shall at all times bear the same proportion
to the then current Base Rent as the initial Security Deposit bears to the
initial Base Rent set forth in Paragraph 1.5. Lessor shall not be required to
keep all or any part of the Security Deposit separate from its general accounts.
Lessor shall, at the expiration or earlier termination of the term hereof and
after Lessee has vacated the Premises, return to Lessee (or, at Lessor's option,
to the last assignee, if any, of Lessee's interest herein), that portion of the
Security Deposit not used or applied by Lessor. Unless otherwise expressly
agreed in writing by Lessor, no part of the Security Deposit shall be considered
to be held in trust, to bear interest or other increment for its use, or to be
prepayment for any monies to be paid by Lessee under this Lease. See Addendum
Paragraph 66.

6.      USE.

        6.1 PERMITTED USE.

            (a) Lessee shall use and occupy the Premises only for the Permitted
Use set forth in Paragraph 1.8, or any other legal use which is reasonably
comparable thereto, and for no other purpose. Lessee shall not use or permit the
use of the Premises in a manner that is unlawful, creates waste or a nuisance,
or that disturbs owners and/or occupants of, or causes damage to the Premises or
neighboring premises or properties.

            (b)

        6.2 HAZARDOUS SUBSTANCES.

            (a) REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS SUBSTANCE"
as used in this Lease shall mean any product, substance, chemical, material or
waste whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment, or the Premises; (ii) regulated or monitored by any governmental
authority; or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products or by-products thereof. Lessee
shall not engage in any activity in or about the Premises which constitutes a
Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Lessor and compliance in a timely manner (at
Lessee's sole cost and expense) with all Applicable Requirements (as defined in
Paragraph 6.3). "REPORTABLE USE" shall mean (i) the installation or use of any
above or below ground storage tank, (ii) the generation, possession, storage,
use, transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority, and (iii) the presence
in, on or about the Premises of a Hazardous Substance with respect to which any
Applicable Laws require that a notice be given to persons entering or occupying
the Premises or neighboring properties. Notwithstanding the foregoing, Lessee
may, without Lessor's prior consent, but upon notice to Lessor and in compliance
with all Applicable Requirements, use any ordinary and customary materials
reasonably required to be used by Lessee in the normal course of the Permitted
Use, so long as such use does not expose the Premises or neighboring properties
to any meaningful risk of contamination or damage or expose Lessor to any
liability therefor. In addition, Lessor may (but without any obligation to do
so) condition its consent to any Reportable Use of any Hazardous Substance by
Lessee upon Lessee's giving Lessor such additional assurances as Lessor, in its
reasonable discretion, deems necessary to protect itself, the public, the
Premises and the environment against damage, contamination or injury and/or
liability therefor, including but not limited to the installation (and, at
Lessor's option, removal on or before Lease expiration or earlier termination)
of reasonably necessary protective modifications to the Premises (such as
concrete encasements) and/or the deposit of an additional Security Deposit under
Paragraph 5 hereof.


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           (b) DUTY TO INFORM LESSOR. Except as permitted under Paragraph
6.2(a), if Lessee knows, or has reasonable cause to believe, that a Hazardous
Substance has come to be located in, on, under or about the Premises or the
Building, other than as previously consented to by Lessor, Lessee shall
immediately give Lessor written notice thereof, together with a copy of any
statement, report, notice, registration, application, permit, business plan,
license, claim, action, or proceeding given to, or received from, any
governmental authority or private party concerning the presence, spill, release,
discharge of, or exposure to, such Hazardous Substance including but not limited
to all such documents as may be involved in any Reportable Use involving the
Premises. Lessee shall not cause or permit any Hazardous Substance to be spilled
or released in, on, under or about the Premises (including, without limitation,
through the plumbing or sanitary sewer system). See Addendum Paragraph 73.

           (c) INDEMNIFICATION. Lessee shall indemnify, protect, defend and hold
Lessor, its agents, employees, lenders and ground lessor, if any, and the
Premises, harmless from and against any and all damages, liabilities, judgments,
costs, claims, liens, expenses, penalties, loss of permits and attorneys' and
consultants' fees arising out of or involving any Hazardous Substance brought
onto the Premises by or for Lessee or by anyone under Lessee's control. Lessee's
obligations under this Paragraph 6.2(c) shall include, but not be limited to,
the effects of any contamination or injury to person, property or the
environment created or suffered by Lessee, and the cost of investigation
(including consultants' and attorneys' fees and testing), removal, remediation,
restoration and/or abatement thereof, or of any contamination therein involved,
and shall survive the expiration or earlier termination of this Lease. No
termination, cancellation or release agreement entered into by Lessor and Lessee
shall release Lessee from its obligations under this Lease with respect to
Hazardous Substances, unless specifically so agreed by Lessor in writing at the
time of such agreement. See Addendum Paragraph 63.

        6.3 LESSEE'S COMPLIANCE WITH REQUIREMENTS. Lessee shall, at Lessee's
sole cost and expense, fully, diligently and in a timely manner, comply with all
"APPLICABLE REQUIREMENTS," which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Lessor's
engineers and/or consultants, relating in any manner to the Premises (including
but not limited to matters pertaining to (i) industrial hygiene, (ii)
environmental conditions on, in, under or about the Premises, including soil and
groundwater conditions, and (iii) the use, generation, manufacture, production,
installation, maintenance. removal, transportation, storage, spill, or release
of any Hazardous Substance), now in effect or which may hereafter come into
effect. Lessee shall, within thirty (30) days after receipt of Lessor's written
request, provide Lessor with copies of all documents and information, including
but not limited to permits, registrations, manifests, applications, reports and
certificates, evidencing Lessee's compliance with any Applicable Requirements
reasonably specified by Lessor, and shall immediately upon receipt, notify
Lessor in writing (with copies of any documents involved) of any threatened or
actual claim, notice, citation, warning, complaint or report pertaining to or
involving failure by Lessee or the Premises to comply with any Applicable
Requirements.

        6.4 INSPECTION; COMPLIANCE WITH LAW. Lessor, Lessor's agents, employees,
contractors and designated representatives, and the holders of any mortgages,
deeds of trust or ground leases on the Premises ("LENDERS") shall have the right
to enter the Premises at any time in the case of an emergency, and otherwise at
reasonable times upon reasonable prior notice to Lessee, for the purpose of
inspecting the condition of the Premises and for verifying compliance by Lessee
with this Lease and all Applicable Requirements (as defined in Paragraph 6.3),
and Lessor shall be entitled to employ experts and/or consultants in connection
therewith to advise Lessor with respect to Lessee's activities, including but
not limited to Lessee's installation, operation, use, monitoring, maintenance,
or removal of any Hazardous Substance on or from the Premises. The costs and
expenses of any such inspections shall be paid by the party requesting same,
unless a Default or Breach of this Lease by Lessee or a violation of Applicable
Requirements or a contamination, caused or materially contributed to by Lessee,
is found to exist or to be imminent, or unless the inspection is requested or
ordered by a governmental authority as the result of any such existing or
imminent violation or contamination. In such case, Lessee shall upon request
reimburse Lessor or Lessor's Lender, as the case may be, for the costs and
expenses of such inspections.

7.      MAINTENANCE, REPAIRS, UTILITY INSTALLATIONS, TRADE FIXTURES AND
        ALTERATIONS.

        7.1 LESSEE'S OBLIGATIONS.

            (a) Subject to the provisions of Paragraphs 2.2 (Condition), 2.3
(Compliance with Covenants, Restrictions and Building Code), 7.2 (Lessor's
Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at
Lessee's sole cost and expense and at all times, keep the Premises and every
part thereof in good order, condition and repair (whether or not such portion of
the Premises requiring repair, or the means of repairing the same, are
reasonably or readily accessible to Lessee, and whether or not the need for such
repairs occurs as a result of Lessee's use, any prior use, the elements or the
age of such portion of the Premises), including, without limiting the generality
of the foregoing, all equipment or facilities specifically serving the Premises,
such as plumbing, heating, air conditioning, ventilating, electrical, lighting
facilities, boilers, fired or unfired pressure vessels, fire hose connections if
within the Premises, fixtures, interior walls, interior surfaces of exterior
walls, ceilings, floors, windows, doors, plate glass, and skylights, but
excluding any items which are the responsibility of Lessor pursuant to Paragraph
7.2 below. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair.

           (b) Lessee shall, at Lessee's sole cost and expense, procure and
maintain a contract, with copies to Lessor, in customary form and substance for
and with a contractor specializing and experienced in the inspection,
maintenance and service of the heating, air conditioning and ventilation system
for the Premises. However, Lessor reserves the right, upon notice to Lessee
following a Default by Lessee hereunder, to procure and


<PAGE>   7

maintain the contract for the heating, air conditioning and ventilating systems,
and if Lessor so elects, Lessee shall reimburse Lessor, upon demand, for the
cost thereof.

            (c) If Lessee fails to perform Lessee's obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after thirty (30) days' prior
written notice to Lessee (except in the case of an emergency, in which case no
notice shall be required), perform such obligations on Lessee's behalf, and put
the Premises in good order, condition and repair, in accordance with Paragraph
13.2 below.

        7.2 LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance with Covenants, Restrictions and Building Code),
4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Obligations), 9
(Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement
pursuant to Paragraph 4.2, shall keep in good order, condition and repair the
foundations, exterior walls, structural condition of interior bearing walls,
exterior roof, fire sprinkler and/or standpipe and hose (if located in the
Common Areas) or other automatic fire extinguishing system including fire alarm
and/or smoke detection systems and equipment; fire hydrants, parking lots,
walkways, parkways driveways, landscaping, fences, signs and utility systems
serving the Common Areas and all parts thereof, as well as providing the
services for which there is a Common Area Operating Expense pursuant to
Paragraph 4.2. Lessor shall be obligated to paint the exterior or interior
surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or
replace windows, doors or plate glass of the Premises. See Addendum Paragraph
68.

        7.3 UTILITY INSTALLATIONS, TRADE FIXTURES, ALTERATIONS.

            (a) DEFINITIONS; CONSENT REQUIRED. The term "UTILITY INSTALLATIONS"
is used in this Lease to refer to all air lines, power panels, electrical
distribution, security, fire protection systems, communications systems,
lighting fixtures, heating, ventilating and air conditioning equipment,
plumbing, and fencing in, on or about the Premises. The term "TRADE FIXTURES"
shall mean Lessee's machinery and equipment which can be removed without doing
material damage to the Premises. The term "ALTERATIONS" shall mean, any
modification of the improvements on the Premises which are provided by Lessor
under the terms of this Lease, other than Utility Installations or Trade
Fixtures. "LESSEE-OWNED ALTERATIONS AND/OR UTILITY INSTALLATIONS" are defined as
Alterations and/or Utility Installations made by Lessee that are not yet owned
by Lessor pursuant to Paragraph 7.41(a). Lessee shall not make nor cause to be
made any Alterations or Utility Installations in, on, under or about the
Premises without Lessor's prior written consent. Lessee may, however, make
non-Structural Utility Installations to the interior of the Premises (excluding
the roof) without Lessor's consent but upon written notice to Lessor, so long as
they are not visible from the outside of the Premises, do not involve
puncturing, relocating or removing the roof or any existing walls, or changing
or interfering with the fire sprinkler or fire detection systems and the cost
thereof does not exceed $25,000.00 in each instance and Lessee provides Lessor
with plans and specifications for such Alterations or Utility Installations
prior to commencing construction.

            (b) CONSENT. Any Alterations or Utility installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. All consents given by
Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent specific consent,
shall be deemed conditioned upon: (i) Lessee's acquiring all applicable permits
required by governmental authorities; (ii) the furnishing of copies of such
permits together with a copy of the plans and specifications for the Alteration
or Utility Installation to Lessor prior to commencement of the work thereon; and
(iii) the compliance by Lessee with all conditions of said permits in a prompt
and expeditious manner. Any Alterations or Utility Installations by Lessee
during the term of this Lease shall be done in a good and workmanlike manner,
with good and sufficient materials, and be in compliance with all Applicable
Requirements. Lessee shall promptly upon completion thereof furnish Lessor with
as-built plans and specifications therefor for any Alteration or Utility
Installation costing in excess of $25,000.00.

            (c) LIEN PROTECTION. Lessee shall pay when due all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at or
for use on the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on, or about the Premises, and Lessor shall have the right to post
notices of non-responsibility in or on the Premises as provided by law. If
Lessee shall, in good faith, contest the validity of any such lien, claim or
demand, then Lessee shall, at its sole expense, defend and protect itself,
Lessor and the Premises against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement thereof
against the Lessor or the Premises. If Lessor shall require, Lessee shall
furnish to Lessor a surety bond satisfactory to Lessor in an amount equal to one
and one-half times the amount of such contested lien claim or demand,
indemnifying Lessor against liability for the same, as required by law for the
holding of the Premises free from the effect of such lien or claim. In addition,
if Lessee is in default hereunder, Lessor may require Lessee to pay Lessor's
attorneys' fees and costs in participating in such action if Lessor shall decide
it is to its best interest to do so.

        7.4 OWNERSHIP, REMOVAL, SURRENDER, AND RESTORATION.

            (a) OWNERSHIP. Subject to Lessor's right to require their removal
and to cause Lessee to become the owner thereof as hereinafter provided in this
Paragraph 7.4, all Alterations and Utility Installations made to the Premises by
Lessee shall be the property of and owned by Lessee, but considered a part of
the Premises.



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<PAGE>   8

Lessor may, at the time it consents to the same (or if no consent is required,
at any time prior to lease expiration) and at its option, elect in writing to
Lessee to be the owner of all or any specified part of the Lessee-Owned
Alterations and Utility Installations. Unless otherwise instructed per
Subparagraph 7.4(b) hereof, all Lessee-Owned Alterations and Utility
Installations shall, at the expiration or earlier termination of this Lease,
become the property of Lessor and remain upon the Premises and be surrendered
with the Premises by Lessee.

           (b) REMOVAL. Unless otherwise agreed in writing, Lessor may at the
time it consents to the same (or if no consent is required, at any time prior to
lease expiration) require that any or all Lessee-Owned Alterations or Utility
Installations be removed by the expiration or earlier termination of this Lease,
notwithstanding that their installation may have been consented to by Lessor.
Lessor may require the removal at any time of all or any part of any Alterations
or Utility Installations made without the required consent of Lessor.

           (c) SURRENDER/RESTORATION. Lessee shall surrender the Premises by the
end of the last day of the Lease term or any earlier termination date, clean and
free of debris and in good operating order, condition and state of repair,
ordinary wear and tear excepted. Ordinary wear and tear shall not include any
damage or deterioration that would have been prevented by good maintenance
practice or by Lessee performing all of its obligations under this Lease. Except
as otherwise agreed or specified herein, the Premises, as surrendered, shall
include the Alterations and Utility Installations. The obligation of Lessee
shall include the repair of any damage occasioned by the installation,
maintenance or removal of Lessee's Trade Fixtures, furnishings, equipment, and
Lessee-Owned Alterations and Utility Installations, as well as the removal of
any storage tank installed by or for Lessee, and the removal, replacement, or
remediation of any soil, material or ground water contaminated by Lessee, all as
may then be required by Applicable Requirements and/or good practice. Lessee's
Trade Fixtures shall remain the property of Lessee and shall be removed by
Lessee subject to its obligation to repair and restore the Premises per this
Lease.

8.      INSURANCE; INDEMNITY.

        8.1 PAYMENT OF PREMIUMS. The cost of the premiums for the insurance
policies maintained by Lessor under this Paragraph 8 shall be a Common Area
Operating Expense pursuant to Paragraph 4.2 hereof. Premiums for policy periods
commencing prior to, or extending beyond, the term of this Lease shall be
prorated to coincide with the corresponding Commencement Date or Expiration
Date.

        8.2 LIABILITY INSURANCE.

            (a) CARRIED BY LESSEE. Lessee shall obtain and keep in force during
the term of this Lease a Commercial General Liability policy of insurance
protecting Lessee, Lessor and any Lender(s) whose names have been provided to
Lessee in writing (as additional insureds) against claims for bodily injury,
personal injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than $ $2,000,000 per occurrence
with an "Additional Insured-Managers or Lessors of Premises" endorsement and
contain the "Amendment of the Pollution Exclusion" endorsement for damage caused
by heat, smoke or fumes from a hostile fire. In addition, Lessee shall maintain
umbrella coverage of not less than $3,000,000. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall
include coverage for liability assumed under this Lease as an "INSURED CONTRACT"
for the performance of Lessee's indemnity obligations under this Lease. The
limits of said insurance required by this Lease or as carried by Lessee shall
not, however, limit the liability of Lessee nor relieve Lessee of any obligation
hereunder. All insurance to be carried by Lessee shall be primary to and not
contributory with any similar insurance carried by Lessor, whose insurance shall
be considered excess insurance only.

            (b) CARRIED BY LESSOR. Lessor shall also maintain liability
insurance described in Paragraph 8.2(a) above, in addition to and not in lieu
of; the insurance required to be maintained by Lessee. Lessee shall not be named
as an additional insured therein. See Addendum Paragraph 71.

        8.3 PROPERTY INSURANCE-BUILDING, IMPROVEMENTS AND RENTAL VALUE.

            (a) BUILDING AND IMPROVEMENTS. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies in the name of Lessor, with
loss payable to Lessor and to any Lender(s), insuring against loss or damage to
the Premises. Such insurance shall be for full replacement cost, as the same
shall exist from time to time, or the amount required by any Lender(s), but in
no event more than the commercially reasonable and available insurable value
thereof if, by reason of the unique nature or age of the improvements involved,
such latter amount is less than full replacement cost. Lessee-Owned Alterations
and Utility Installations, Trade Fixtures and Lessee's personal property shall
be insured by Lessee pursuant to Paragraph 8.4. If the coverage is available and
commercially appropriate, Lessor's policy or policies shall insure against all
risks of direct physical loss or damage (except the perils of flood and/or
earthquake unless required by a Lender), including coverage for any additional
costs resulting from debris removal and reasonable amounts of coverage for the
enforcement of any ordinance or law regulating the reconstruction or replacement
of any undamaged sections of the Building required to be demolished or removed
by reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered loss, but not including plate glass insurance. See
Addendum Paragraph 75.


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<PAGE>   9

           (b)

           (c) ADJACENT PREMISES. Lessee shall pay for any increase in the
premiums for the property insurance of the Building and for the Common Areas or
other buildings in the industrial Center if said increase is caused by Lessee's
acts, omissions, use or occupancy of the Premises.

           (d) LESSEE'S IMPROVEMENTS. Since Lessor is the Insuring Party, Lessor
shall not be required to insure Lessee's initial improvement or Lessee-Owned
Alterations and Utility Installations unless the item in question has become the
property of Lessor under the terms of this Lease.

        8.4 LESSEE'S PROPERTY INSURANCE. Subject to the requirements of
Paragraph 8.5, Lessee at its cost shall either by separate policy or, at
Lessor's option, by endorsement to a policy already carried, maintain insurance
coverage on all of Lessee's personal property, Trade Fixtures and Lessee-Owned
Alterations and Utility Installations in, on, or about the Premises similar in
coverage to that carried by Lessor as the Insuring Party under Paragraph 8.3(a).
Such insurance shall be full replacement cost coverage with a deductible not to
exceed $100,000.00 per occurrence. The proceeds from any such insurance shall be
used by Lessee for the replacement of personal property and the restoration of
Trade Fixtures and Lessee-Owned Alterations and Utility Installations. Upon
request from Lessor, Lessee shall provide Lessor with written evidence that such
insurance is in force.

        8.5 INSURANCE POLICIES. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the Premises are
located, and maintaining during the policy term a "General Policyholders Rating"
of at least A, X, or such other rating as may be required by a Lender, as set
forth in the most current issue of "Best's Insurance Guide." Lessee shall not do
or permit to be done anything which shall invalidate the insurance policies
referred to in this Paragraph 8. Lessee shall cause to be delivered to Lessor,
within seven (7) days after the earlier of the Early Possession Date or the
Commencement Date, certified copies of, or certificates evidencing the existence
and amounts of, the insurance required under Paragraph 8.2(a) and 8.4. No such
policy shall be cancelable or subject to modification except after thirty (30)
days' prior written notice to Lessor. Lessee shall at least ten (10) days prior
to the expiration of such policies, furnish Lessor with evidence of renewals or
"insurance binders" evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand.

        8.6 WAIVER OF SUBROGATION. Without affecting any other rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages (whether in contract or in tort) against
the other, for loss or damage to their property arising out of or incident to
the perils required to be insured against under Paragraph 8. The effect of such
releases and waivers of the right to recover damages shall not be limited by the
amount of insurance carried or required, or by any deductibles applicable
thereto. Lessor and Lessee agree to have their respective insurance companies
issuing property damage insurance waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the
insurance is not invalidated thereby.

        8.7 INDEMNITY. Except for Lessor's gross negligence and/or breach of
express warranties, Lessee shall indemnify, protect, defend and hold harmless
the Premises, Lessor and its agents, Lessor's master or ground lessor, partners
and Lenders, from and against any and all claims, loss of rents and/or damages,
costs, liens, judgments, penalties, loss of permits, attorneys' and consultants'
fees, expenses and/or liabilities arising out of, involving, or in connection
with, the occupancy of the Premises by Lessee, the conduct of Lessee's business,
any act, omission or neglect of Lessee, its agents, contractors, employees or
invitees, and out of any Default or Breach by Lessee in the performance in a
timely manner of any obligation on Lessee's part to be performed under this
Lease. The foregoing shall include, but not be limited to, the defense or
pursuit of any claim or any action or proceeding involved therein, and whether
or not (in the case of claims made against Lessor) litigated and/or reduced to
judgment. In case any action or proceeding be brought against Lessor by reason
of any of the foregoing matters, Lessee upon notice from Lessor shall defend the
same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be so indemnified.

        8.8 EXEMPTION OF LESSOR FROM LIABILITY. Except for Lessor's gross
negligence and/or willful misconduct or breach of this Lease, Lessor shall not
be liable for injury or damage to the person or goods, wares, merchandise or
other property of Lessee, Lessee's employees, contractors, invitees, customers,
or any other person in or about the Premises, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, or from
the breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from any
other cause, whether said injury or damage results from conditions arising upon
the Premises or upon other portions of the Building of which the Premises are a
part, from other sources or places, and regardless of whether the cause of such
damage or injury or the means of repairing the same is accessible or not. Lessor
shall not be liable for any damages arising from any act or neglect of any other
lessee of Lessor nor from the failure by Lessor to enforce the provisions of any
other lease in the Industrial Center.



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                               PAGE 9 of 22 PAGES

<PAGE>   10

Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall under
no circumstances be liable for injury to Lessee's business or for any loss of
income or profit therefrom.

9.      DAMAGE OR DESTRUCTION.

        9.1 DEFINITIONS.

            (a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to
the Premises, other than Lessee-Owned Alterations and Utility Installations, the
repair cost of which damage or destruction is less than fifty percent (50%) of
the then Replacement Cost (as defined in Paragraph 9.1(d)) of the Premises
(excluding Lessee-Owned Alterations and Utility Installations and Trade
Fixtures) immediately prior to such damage or destruction.

            (b) "PREMISES TOTAL DESTRUCTION" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility Installations, the
repair cost of which damage or destruction is fifty percent (50%) or more of the
then Replacement Cost of the Premises (excluding Lessee Owned Alterations and
Utility Installations and Trade Fixtures) immediately prior to such damage or
destruction. In addition, damage or destruction to the Building, other than
Lessee-Owned Alterations and Utility Installations and Trade Fixtures of any
lessees of the Building, the cost of which damage or destruction is fifty
percent (50%) or more of the then Replacement Cost (excluding Lessee-Owned
Alterations and Utility Installations and Trade Fixtures of any lessees of the
Building) of the Building shall, at the option of Lessor, be deemed to be
Premises Total Destruction.

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

            (d) "REPLACEMENT COST" shall mean the cost to repair or rebuild the
improvements owned by Lessor at the time of the occurrence to their condition
existing immediately prior thereto, including demolition, debris removal and
upgrading required by the operation of applicable building codes, ordinances or
laws, and without deduction for depreciation.

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

        9.2 PREMISES PARTIAL DAMAGE - INSURED LOSS. If Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair
such damage (but not Lessee's Trade Fixtures or Lessee-Owned Alterations and
Utility Installations) as soon as reasonably possible and this Lease shall
continue in full force and effect. In the event, however, that there is a
shortage of insurance proceeds and such shortage is due to the fact that, by
reason of the unique nature of the improvements in the Premises, full
replacement cost insurance coverage was not commercially reasonable and
available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee
provides Lessor with the funds to cover same, or adequate assurance thereof,
within ten (10) days following receipt of written notice of such shortage and
request therefor. If Lessor receives said funds or adequate assurance thereof
within said ten (10) day period, Lessor shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect. If
Lessor does not receive such funds or assurance within said period, Lessor may
nevertheless elect by written notice to Lessee within ten (10) days thereafter
to make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full
force and effect. If Lessor does not receive such funds or assurance within such
ten (10) day period, and if Lessor does not so elect to restore and repair, then
this Lease shall terminate sixty (60) days following the occurrence of the
damage or destruction. Unless otherwise agreed, Lessee shall in no event have
any right to reimbursement from Lessor for any funds contributed by Lessee to
repair any such damage or destruction. Premises Partial Damage due to flood or
earthquake shall be subject to Paragraph 9.3 rather than Paragraph 9.2,
notwithstanding that there may be some insurance coverage, but the net proceeds
of any such insurance shall be made available for the repairs if made by either
Party.

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

        9.4 TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the damage
or destruction is an Insured



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<PAGE>   11
Loss or was caused by a negligent or willful act of Lessee. In the event,
however, that the damage or destruction was caused by Lessee, Lessor shall have
the right to recover Lessor's damages from Lessee except as released and waived
in Paragraph 9.7.

        9.5 DAMAGE NEAR END OF TERM. If at any time during the last six (6)
months of the term of this Lease there is damage for which the cost to repair
exceeds one month's Base Rent, whether or not an Insured Loss, Lessor may, at
Lessor's option, terminate this Lease effective sixty (60) days following the
date of occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by (a) exercising such option, and (b) providing Lessor with any shortage
in insurance proceeds (or adequate assurance thereof) needed to make the repairs
on or before the earlier of (i) the date which is ten (10) days after Lessee's
receipt of Lessor's written notice purporting to terminate this Lease, or (ii)
the day prior to the date upon which such option expires. If Lessee duly
exercises such option during such period and provides Lessor with funds (or
adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor
shall, at Lessor's expense repair such damage as soon as reasonably possible and
this Lease shall continue in full force and effect. If Lessee fails to exercise
such option and provide such funds or assurance during such period, then this
Lease shall terminate as of the date set forth in the first sentence of this
Paragraph 9.5.

        9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.

            (a) In the event of (i) Premises Partial Damage or (ii) Hazardous
Substance Condition for which Lessee is not legally responsible, the Base Rent,
Common Area Operating Expenses and other charges, if any, payable by Lessee
hereunder for the period during which such damage or condition, its repair,
remediation or restoration continues, shall be abated in proportion to the
degree to which Lessee's use of the Premises is impaired. Except for abatement
of Base Rent, Common Area Operating Expenses and other charges, if any, as
aforesaid, all other obligations of Lessee hereunder shall be performed by
Lessee, and Lessee shall have no claim against Lessor for any damage suffered by
reason of any such damage, destruction, repair, remediation or restoration.

            (b) If Lessor shall be obligated to repair or restore the Premises
under the provisions of this Paragraph 9 and shall not commence, in a
substantial and meaningful way, the repair or restoration of the Premises within
sixty (60) days after such obligation shall accrue, Lessee may, at any time
prior to the commencement of such repair or restoration, give written notice to
Lessor and to any Lenders of which Lessee has actual notice of Lessee's election
to terminate this Lease on a date not less than thirty (30) days following the
giving of such notice. If Lessee gives such notice to Lessor, this Lease shall
terminate as of the date specified in said notice. If Lessor or a Lender
commences the repair or restoration of the Premises within thirty (30) days
after the receipt of such notice, this Lease shall continue in full force and
effect. "COMMENCE" as used in this Paragraph 9.6 shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever occurs first.

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

        9.8 TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this Paragraph 9, Lessor shall return to Lessee any advance payment
made by Lessee to Lessor and so much of Lessee's Security Deposit as has not
been, or is not then required to be, used by Lessor under the terms of this
Lease.

        9.9 WAIVER OF STATUTES. Lessor and Lessee agree that the terms of this
Lease shall govern the effect of any damage to or destruction of the Premises
and the Building with respect to the termination of this Lease and hereby waive
the provisions of any present or future statute to the extent it is inconsistent
herewith.

10.     REAL PROPERTY TAXES.

        10.1 PAYMENT OF TAXES. Lessor shall pay Lessee's share of the Real
Property Taxes, as defined in Paragraph 10.2, applicable to the Industrial
Center, and except as otherwise provided in Paragraph 10.3, any such


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amounts shall be included in the calculation of Common Area Operating Expenses
in accordance with the provisions of Paragraph 4.2.

        10.2 REAL PROPERTY TAX DEFINITION. As used herein, the term "REAL
PROPERTY TAXES" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed upon the Industrial Center by any
authority having the direct or indirect power to tax, including any city, state
or federal government, or any school, agricultural, sanitary, fire, street,
drainage, or other improvement district thereof, levied against any legal or
equitable interest of Lessor in the Industrial Center or any portion thereof,
Lessor's right to rent or other income therefrom, and/or Lessor's business of
leasing the Premises. The term "REAL PROPERTY TAXES" shall also include any tax,
fee, levy, assessment or charge, or any increase therein, imposed by reason of
events occurring, or changes in Applicable Law taking effect, during the term of
this Lease, including but not limited to a change in the ownership of the
Industrial Center or in the improvements thereon, the execution of this Lease,
or any modification, amendment or transfer thereof, and whether or not
contemplated by the Parties. In calculating Real Property Taxes for any calendar
year, the Heal Property Taxes for any real estate tax year shall be included in
the calculation of Real Property Taxes for such calendar year based upon the
number of days which such calendar year and tax year have in common. See
Addendum Paragraph 62.

        10.3 ADDITIONAL IMPROVEMENTS. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional improvements placed upon the Industrial
Center by other lessees or by Lessor for the exclusive enjoyment of such other
lessees. Notwithstanding Paragraph 10.1 hereof, Lessee shall, however, pay to
Lessor at the time Common Area Operating Expenses are payable under Paragraph
4.2, the entirety of any increase in Real Property Taxes if assessed solely by
reason of Alterations, Trade Fixtures or Utility Installations placed upon the
Premises by Lessee or at Lessee's request.

        10.4 JOINT ASSESSMENT. If the Building is not separately assessed, Real
Property Taxes allocated to the Building 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 Lessor from the respective
valuations assigned in the assessor's work sheets or such other information as
may be reasonably available. Lessor's reasonable determination thereof, in good
faith, shall be conclusive.

        10.5 LESSEE'S PROPERTY TAXES. Lessee shall pay prior to delinquency all
taxes assessed against and levied upon Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or stored within the Industrial Center. When
possible, Lessee shall cause its Lessee-Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all other personal
property to be assessed and billed separately from the real property of Lessor.
If any of Lessee's said property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee's property within ten
(10) days after receipt of a written statement setting forth the taxes
applicable to Lessee's property. See Addendum Paragraph 67.

11.     UTILITIES. Commencing on the Early Possession Date, Lessee shall
separately meter and pay directly for all utilities and services supplied to the
Premises, including but not limited to electricity, telephone, security, gas and
cleaning of the Premises, together with any taxes thereon. See Addendum
Paragraph 74.

12.     ASSIGNMENT AND SUBLETTING.

        12.1 LESSOR'S CONSENT REQUIRED.

             (a) Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or otherwise transfer or encumber (collectively, "assign") or
sublet all or any part of Lessee's interest in this Lease or in the Premises
without Lessor's prior written consent given under and subject to the terms of
Paragraph 36 which consent shall not be unreasonably withheld.

            (b)

            (c)

            (d) An assignment or subletting of Lessee's interest in this Lease
without Lessor's specific prior written consent shall be a Default curable after
notice per Paragraph 13.1.



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<PAGE>   13
If Lessor elects to treat such unconsented to assignment or subletting as a
Default and Lessee fails to cure the Default within the period specified in
Paragraph 13.1, Lessor shall have the right to either: (i) terminate this Lease,
or (ii) upon thirty (30) days' written notice ("LESSOR'S NOTICE"), increase the
monthly Base Rent for the Premises to the greater of the then fair market rental
value of the Premises, as reasonably determined by Lessor, or one hundred ten
percent (110%) of the Base Rent then in effect. Pending determination of the new
fair market rental value, if disputed by Lessee, Lessee shall pay the amount set
forth in Lessor's Notice, with any overpayment credited against the next
installments) of Base Rent coming due, and any underpayment for the period
retroactively to the effective date of the adjustment being due and payable
immediately upon the determination thereof. Further, in the event of such Breach
and rental adjustment, (i) the purchase price of any option to purchase the
Premises held by Lessee shall be subject to similar adjustment to the then fair
market value as reasonably determined by Lessor (without the Lease being
considered an encumbrance or any deduction for depreciation or obsolescence, and
considering the Premises at its highest and best use and in good condition) or
one hundred ten percent (110%) of the price previously in effect, (ii) any
index-oriented rental or price adjustment formulas contained in this Lease shall
be adjusted to require that the base index be determined with reference to the
index applicable to the time of such adjustment, and (iii) any fixed rental
adjustments scheduled during the remainder of the Lease term shall be increased
in the same ratio as the new rental bears to the Base Rent in effect immediately
prior to the adjustment specified in Lessor's Notice.

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

        12.2 TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING. See
Addendum Paragraph 76.

             (a) Regardless of Lessor's consent, any assignment or subletting
shall not (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease, (ii)
release Lessee of any obligations hereunder, nor (iii) alter the primary
liability of Lessee for the payment of Base Rent and other sums due Lessor
hereunder or for the performance of any other obligations to be performed by
Lessee under this Lease.

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

             (c) The consent of Lessor to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Lessee or to
any subsequent or successive assignment or subletting by the assignee or
sublessee. However, Lessor may consent to subsequent sublettings and assignments
of the sublease or any amendments or modifications thereto without notifying
Lessee or anyone else liable under this Lease or the sublease and without
obtaining their consent, and such action shall not relieve such persons from
liability under this Lease or the sublease.

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

             (e) Each request for consent to an assignment or subletting shall
be in writing, accompanied by information relevant to Lessor's determination as
to the financial and operational responsibility and appropriateness of the
proposed assignee or sublessee, including but not limited to the intended use
and/or required modification of the Premises, if any. Following the second
request for consent to an assignment or subletting, Lessee shall pay to Lessor a
non-refundable deposit of $500, as reasonable consideration for Lessor's
considering and processing the request for consent. Lessee agrees to provide
Lessor with such other or additional information and/or documentation as may be
reasonably requested by Lessor.

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

             (g)

             (h)



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<PAGE>   14

        12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

            (a) Lessee hereby assigns and transfers to Lessor all of Lessee's
interest in all rentals and income arising from any sublease of all or a portion
of the Premises heretofore or hereafter made by Lessee, and Lessor may collect
such rent and income and apply same toward Lessee's obligations under this
Lease; provided, however, that until a Breach (as defined in Paragraph 13.1)
shall occur in the performance of Lessee's obligations under this Lease, Lessee
may, except as otherwise provided in this Lease, receive, collect and enjoy the
rents accruing under such sublease. Lessor shall not, by reason of the foregoing
provision or any other assignment of such sublease to Lessor, nor by reason of
the collection of the rents from a sublessee, be deemed liable to the sublessee
for any failure of Lessee to perform and comply with any of Lessee's obligations
to such sublessee under such Sublease. Lessee hereby irrevocably authorizes and
directs any such sublessee, upon receipt of a written notice from Lessor stating
that a Breach exists in the performance of Lessee's obligations under this
Lease, to pay to Lessor the rents and other charges due and to become due under
the sublease. Sublessee shall rely upon any such statement and request from
Lessor and shall pay such rents and other charges to Lessor without any
obligation or right to inquire as to whether such Breach exists and
notwithstanding any notice from or claim from Lessee to the contrary. Lessee
shall have no right or claim against such sublessee, or, until the Breach has
been cured, against Lessor, for any such rents and other charges so paid by said
sublessee to Lessor.

             (b) In the event of a Breach by Lessee in the performance of its
obligations under this Lease, Lessor, at its option and without any obligation
to do so, may require any sublessee to attorn to Lessor, in which event Lessor
shall undertake the obligations of the sublessor under such sublease from the
time of the exercise of said option to the expiration of such sublease;
provided, however, Lessor shall not be liable for any prepaid rents or security
deposit paid by such sublessee to such sublessor or for any other prior defaults
or breaches of such sublessor under such sublease.

             (c) Any matter or thing requiring the consent of the sublessor
under a sublease shall also require the consent of Lessor herein.

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

             (e) Lessor shall deliver a copy of any notice of Default or Breach
by Lessee to the sublessee, who shall have the right to cure the Default of
Lessee within the grace period, if any, specified in such notice. The sublessee
shall have a right of reimbursement and offset from and against Lessee for any
such Defaults cured by the sublessee. See Addendum Paragraph 77.

13.     DEFAULT; BREACH; REMEDIES.

        13.1 DEFAULT; BREACH. Lessor and Lessee agree that if an attorney is
consulted by Lessor in connection with a Lessee Default or Breach (as
hereinafter defined), $350.00 is a reasonable minimum sum per such occurrence
for legal services and costs in the preparation and service of a notice of
Default, and that Lessor may include the cost of such services and costs in said
notice as rent due and payable to cure said default. A "DEFAULT" by Lessee is
defined as a failure by Lessee to observe, comply with or perform any of the
terms, covenants, conditions or rules applicable to Lessee under this Lease. A
"BREACH" by Lessee is defined as the occurrence of any one or more of the
following Defaults, and, where a grace period for cure after notice is specified
herein, the failure by Lessee to cure such Default prior to the expiration of
the applicable grace period, and shall entitle Lessor to pursue the remedies set
forth in Paragraphs 13.2 and/or 13.3:

        (a) The vacating of the Premises without the intention to reoccupy same,
or the abandonment of the Premises and in each case coupled with the failure to
pay Rent.

        (b) Except as expressly otherwise provided in this Lease, the failure by
Lessee to make any payment of Base Rent, Lessee's Share of Common Area Operating
Expenses, or any other monetary payment required to be made by Lessee hereunder
within ten (10) days after notice from Lessor that the same was not received
when due, the failure by Lessee to provide Lessor with reasonable evidence of
insurance or surety bond required under this Lease, or the failure of Lessee to
fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of ten (10) days following
written notice thereof by or on behalf of Lessor to Lessee.

        (c) Except as expressly otherwise provided in this Lease, the failure by
Lessee to provide Lessor with reasonable written evidence (in duly executed
original form, if applicable) of (i) compliance with Applicable Requirements per
Paragraph 6.3, (ii) the inspection, maintenance and service contracts required
under Paragraph 7.1(b), (iii) the rescission of an unauthorized assignment or
subletting per Paragraph 12.1, (iv) a Tenancy Statement per Paragraphs 16 or 37,
(v) the subordination or non-subordination of this Lease per Paragraph 30, (vi)
the guaranty of the performance of Lessee's obligations under this Lease if
required under Paragraphs 1.11 and 37, (vii) the execution of any document
requested under Paragraph 42 (easements), or (viii) any other documentation or
information which Lessor may reasonably require of Lessee under the terms of
this lease, where any such failure continues for a period of ten (10) days
following written notice by or on behalf of Lessor to Lessee.

        (d) A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof that
are to be observed, complied with or performed by Lessee, other than those
described in Subparagraphs 13.1(a), (b) or (c), above, where such Default
continues for a period of thirty



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(30) days after written notice thereof by or on behalf of Lessor to Lessee;
provided, however, that if the nature of Lessee's Default is such that more than
thirty (30) days are reasonably required for its cure, then it shall not be
deemed to be a Breach of this Lease by Lessee if Lessee commences such cure
within said thirty (30) day period and thereafter diligently prosecutes such
cure to completion.

           (e) The occurrence of any of the following events: (i) the making by
Lessee of any general arrangement or assignment for the benefit of creditors;
(ii) Lessee's becoming a "debtor" as defined in 11 U.S. Code Section 101 or any
successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within sixty (60) days); (iii) the appointment of
a trustee or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to Lessee within thirty (30) days; or (iv) the attachment,
execution or other judicial seizure of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within thirty (30) days; provided, however, in the
event that any provision of this Subparagraph 13.1(e) is contrary to any
applicable law, such provision shall be of no force or effect, and shall not
affect the validity of the remaining provisions.

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

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

        13.2 REMEDIES. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without obligation to do so), perform such duty or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice therefor. If any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at its own
option, may require all future payments to be made under this Lease by Lessee to
be made only by cashier's check. In the event of a Breach of this Lease by
Lessee (as defined in Paragraph 13.1), with or without further notice or demand,
and without limiting Lessor in the exercise of any right or remedy which Lessor
may have by reason of such Breach, Lessor may:

           (a) Terminate Lessee's right to possession of the Premises by any
lawful means, in which case this Lease and the term hereof shall terminate and
Lessee shall immediately surrender possession of the Premises to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the worth at the time
of the award of the unpaid rent which had been earned at the time of
termination; (ii) the worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that the Lessee proves could have
been reasonably avoided; (iii) the worth at the time of award of the amount by
which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the detriment proximately caused by the Lessee's failure to perform its
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary
renovation and alteration of the Premises, reasonable attorneys' fees, and that
portion of any leasing commission paid by Lessor in connection with this Lease
applicable to the unexpired term of this Lease. The worth at the time of award
of the amount referred to in provision (iii) of the immediately preceding
sentence shall be computed by discounting such amount at the discount rate of
the Federal Reserve Bank of San Francisco or the Federal Reserve Bank District
in which the Premises are located at the time of award plus one percent (1%).
Efforts by Lessor to mitigate damages caused by Lessee's Default or Breach of
this Lease shall not waive Lessor's right to recover damages under this
Paragraph 13.2. If termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover in such
proceeding the unpaid rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit for such
rent and/or damages. If a notice and grace period required under Subparagraph
13.1(b), (c) or (d) was not previously given, a notice to pay rent or quit, or
to perform or quit, as the case may be, given to Lessee under any statute
authorizing the forfeiture of leases for unlawful detainer shall also constitute
the applicable notice for grace period purposes required by Subparagraph
13.1(b),(c) or (d). In such case, the applicable grace period under the unlawful
detainer statue shall run concurrently after the one such statutory notice, and
the failure of Lessee to cure the Default within the greater of the two (2) such
grace periods shall constitute both an unlawful detainer and a Breach of this
Lease entitling Lessor to the remedies provided for in this Lease and/or by said
statute.

           (b) Continue the Lease and Lessee's right to possession in effect
after Lessee's Breach and recover the rent as it becomes due, provided Lessee
has the right to sublet or assign, subject only to reasonable limitations.
Lessor and Lessee agree that the limitations on assignment and subletting in
this Lease are reasonable. Acts of maintenance or preservation, efforts to relet
the Premises, or the appointment of a receiver to protect the Lessor's interest
under this Lease, shall not constitute a termination of the Lessee's right to
possession.



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           (c) Pursue any other remedy now or hereafter available to Lessor
under the laws or judicial decisions of the state wherein the Premises are

           (d) The expiration or termination of this Lease and/or the
termination of Lessee's right to possession shall not relieve Lessee from
liability under any indemnity provisions of this Lease as to matters occurring
or accruing during the term hereof or by reason of Lessee's occupancy of the
Premises.

        13.3 INDUCEMENT RECAPTURE IN EVENT OF BREACH. Any agreement by Lessor
for free or abated rent or other charges applicable to the Premises, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus,
inducement or consideration for Lessee's entering into this Lease, all of which
concessions are hereinafter referred to as "INDUCEMENT PROVISIONS" shall be
deemed conditioned upon Lessee's full and faithful performance of all of the
terms, covenants and conditions of this Lease to be performed or observed by
Lessee during the term hereof as the same may be extended. Upon the occurrence
of a Breach (as defined in Paragraph 13.1) of this Lease by Lessee, any such
Inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor,
and recoverable by Lessor, as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this
Paragraph 13.3 shall not be deemed a waiver by Lessor of the provisions of this
Paragraph 13.3 unless specifically so stated in writing by Lessor at the time of
such acceptance.

        13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of rent and other sums due hereunder will cause Lessor to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges, and late charges which may be imposed upon
Lessor by the terms of any ground lease, mortgage or deed of trust covering the
Premises. Accordingly, if any installment of rent or other sum due from Lessee
shall not be received by Lessor or Lessor's designee within ten (10) days after
notice from Lessor that such amount was not received when due, then, Lessee
shall pay to Lessor a late charge equal to six percent (6%) of such overdue
amount. Notwithstanding the foregoing, if any installment of Rent or other sum
due from Lessee shall not be received by Lessor within ten (10) days after such
amount shall be due more than once in any twelve (12) month period, Lessor may
impose the late charge provided hereinabove without any requirements for notice
to Lessee. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of late payment by
Lessee. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent Lessor from exercising any of the other rights and remedies granted
hereunder. In the event that a late charge is payable hereunder, whether or not
collected, for three (3) consecutive installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary, Base Rent shall, at Lessor's option, become due and payable quarterly
in advance.

        13.5 BREACH BY LESSOR. Lessor shall not be deemed in breach of this
Lease unless Lessor fails within a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph 13.5, a
reasonable time shall in no event be less than thirty (30) days after receipt by
Lessor, and by any Lender(s) whose name and address shall have been furnished to
Lessee in writing for such purpose, of written notice specifying wherein such
obligation of Lessor has not been performed; provided, however, that if the
nature of Lessor's obligation is such that more than thirty (30) days after such
notice are reasonably required for its performance, then Lessor shall not be in
breach of this Lease if performance is commenced within such thirty (30) day
period and thereafter diligently pursued to completion.

14.     CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(all of which are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than ten percent (10%) of the floor
area of the Premises, or more than twenty-five percent (25%) of the portion of
the Common Areas designated for Lessee's parking, is taken by condemnation,
Lessee may, at Lessee's option, to be exercised in writing within ten (10) days
after Lessor shall have given Lessee written notice of such taking (or in the
absence of such notice, within ten (10) days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in the same proportion as the rentable floor area of the Premises taken
bears to the total rentable floor area of the Premises. No reduction of Base
Rent shall occur if the condemnation does not apply to any portion of the
Premises. Any award for the taking of all or any part of the Premises under the
power of eminent domain or any payment made under threat of the exercise of such
power shall be the property of Lessor, whether such award shall be made as
compensation for diminution of value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that Lessee shall be entitled
to any compensation, separately awarded to Lessee for Lessee's relocation
expenses and/or loss of Lessee's Trade Fixtures. In the event that this Lease is
not terminated by reason of such condemnation, Lessor shall to the extent of its
net severance damages received, over and above Lessee's Share of the legal and
other expenses incurred by Lessor in the condemnation matter, repair any damage
to the Premises caused by such condemnation authority. Lessee shall be
responsible for the payment of any amount in excess of such net severance
damages required to complete such repair.

15.

        15.1



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<PAGE>   17

        15.2

        15.3

        15.4

16.     TENANCY AND FINANCIAL STATEMENTS.

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

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

17.     LESSOR'S LIABILITY. The term "LESSOR" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises. In the
event of a transfer of Lessor's title or interest in the Premises or in this
Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Lessor at the time of such transfer or
assignment. Except as provided in Paragraph 15.3, upon such transfer or
assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor
shall be relieved of all liability with respect to the obligations and/or
covenants under this Lease thereafter to be performed by the Lessor. Subject to
the foregoing, the obligations and/or covenants in this Lease to be performed by
the Lessor shall be binding only upon the Lessor as hereinabove defined.

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

19.     INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within ten (10) days
following the date on which it was due, shall bear interest from the date due at
the prime rate charged by the largest state chartered bank in the state in which
the Premises are located, but not exceeding the maximum rate allowed by law, in
addition to the potential late charge provided for in Paragraph 13.4.

20.     TIME OF ESSENCE. Time is of the essence with respect to the performance
of all obligations to be performed or observed by the Parties under this Lease.

21.     RENT DEFINED. All monetary obligations of Lessee to Lessor under the
terms of this Lease are deemed to be rent.

22.     NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. Each Broker shall be an intended third party beneficiary
of the provisions of this Paragraph 22.



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<PAGE>   18

23.     NOTICES.

        23.1 NOTICE REQUIREMENTS. All notices required or permitted by this
Lease shall be in writing and may be delivered in person (by hand or by
messenger or courier service) or may be sent by certified or registered mail or
U.S. Postal Service Express Mail, with postage prepaid, return receipt
requested, or by facsimile transmission during normal business hours or by
nationally recognized overnight carrier, and shall be deemed sufficiently given
if served in a manner specified in this Paragraph 23. The addresses noted
adjacent to a Party's signature on this Lease shall be that Party's address for
delivery or mailing of notice purposes. Either Party may by written notice to
the other specify a different address for notice purposes, except that upon
Lessee's taking possession of the Premises, the Premises shall constitute
Lessee's address for the purpose of mailing or delivering notices to Lessee. A
copy of all notices required or permitted to be given to Lessor hereunder shall
be concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate by written notice to Lessee. See
Addendum Paragraph 72.

        23.2 DATE OF NOTICE. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card. Notices delivered by United States Express Mail or overnight
courier that guarantees next day delivery shall be deemed given twenty-four (24)
hours after delivery of the same to the United States Postal Service or courier.
If any notice is transmitted by facsimile transmission or similar means, the
same shall be deemed served or delivered upon telephone or facsimile
confirmation of receipt of the transmission thereof, provided a copy is also
delivered via delivery or mail. If notice is received on a Saturday or a Sunday
or a legal holiday, it shall be deemed received on the next business day.

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

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

26.     NO RIGHT TO HOLDOVER. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this Paragraph
26 then the Base Rent payable from and after the time of the expiration or
earlier termination of this Lease shall be increased to one hundred fifty
percent (150%) of the Base Rent applicable during the month immediately
preceding such expiration or earlier termination. Nothing contained herein shall
be construed as a consent by Lessor to any holding over by Lessee. IF LESSEE
WITHOUT LESSOR'S CONSENT FAILS TO SURRENDER THE PREMISES FOR MORE THAN 60 DAYS
AFTER THE EXPIRATION OF THE LEASE (OTHER THAN THE EXPIRATION FOLLOWING THE
EXERCISE OF LESSEE'S TERMINATION OPTION PURSUANT TO ADDENDUM PARAGRAPH 79),
LESSEE SHALL INDEMNIFY LESSOR FOR ANY LOSS OR LIABILITY INCURRED BY LESSOR ON
ACCOUNT OF SUCH FAILURE, INCLUDING BUT NOT LIMITED TO, ANY CLAIM MADE BY ANY
SUCCEEDING OCCUPANT ON ACCOUNT OF SUCH DELAY. IF LESSEE WITHOUT LESSOR'S CONSENT
FAILS TO SURRENDER THE PREMISES FOR MORE THAN 5 DAYS AFTER THE EXPIRATION OF THE
LEASE FOLLOWING THE EXERCISE OF LESSEE'S TERMINATION OPTION PURSUANT TO ADDENDUM
PARAGRAPH 79, LESSEE SHALL INDEMNIFY LESSOR FOR ANY LOSS OR LIABILITY INCURRED
BY LESSOR ON ACCOUNT OF SUCH FAILURE, INCLUDING BUT NOT LIMITED TO, ANY CLAIM
MADE BY ANY SUCCEEDING OCCUPANT ON ACCOUNT OF SUCH DELAY.

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

28.     COVENANTS AND CONDITIONS. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.

29.     BINDING EFFECT; CHOICE OF LAW. This Lease shall be binding upon the
Parties, their personal representatives, successors and assigns and be governed
by the laws of the State in which the Premises are located.

30.     SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

        30.1 SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "SECURITY DEVICE"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of Lessor's default with


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<PAGE>   19

respect to any such obligation, Lessee will give any Lender whose name and
address have been furnished Lessee in writing for such purpose notice of
Lessor's default pursuant to Paragraph 13.5. If any Lender shall elect to have
this Lease and/or any Option granted hereby superior to the lien of its Security
Device and shall give written notice thereof to Lessee, this Lease and such
Options shall be deemed prior to such Security Device, notwithstanding the
relative dates of the documentation or recordation thereof.

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

        30.3 NON-DISTURBANCE. With respect to Security Devices entered into by
Lessor before or after the execution of this lease, Lessee's subordination of
this Lease shall be subject to receiving assurance (a "non-disturbance
agreement") from the Lender that Lessee's possession and this Lease, including
any options to extend the term hereof, will not be disturbed so long as Lessee
is not in Breach hereof and attorns to the record owner of the Premises.

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

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

32.     LESSOR'S ACCESS; SHOWING PREMISES; REPAIRS. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times following reasonable prior notice
for the purpose of showing the same to prospective purchasers, lenders, or
lessees, and making such alterations, repairs, improvements or additions to the
Premises or to the Building, as Lessor may reasonably deem necessary. Lessor may
at any time place on or about the Premises or Building any ordinary "For Sale"
signs and Lessor may at any time during the last one hundred eighty (180) days
of the term hereof place on or about the Premises any ordinary "For Lease"
signs. All such activities of Lessor shall be without abatement of rent or
liability to Lessee.

33.     AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.

34.     SIGNS. Lessee shall not place any sign upon the exterior of the Premises
or the Building, except that Lessee may, with Lessor's prior written consent,
install (but not on the roof) such signs as are reasonably required to advertise
Lessee's own business so long as such signs are in a location designated by
Lessor and comply with Applicable Requirements and the signage criteria
established for the Industrial Center by Lessor. The installation of any sign on
the Premises by or for Lessee shall be subject to the provisions of Paragraph 7
(Maintenance, Repairs, Utility Installations, Trade Fixtures and Alterations).
Unless otherwise expressly agreed herein, Lessor reserves all rights to the use
of the roof of the Building, and the right to install advertising signs on the
Building, including the roof, which do not unreasonably interfere with the
conduct of Lessee's business; Lessor shall be entitled to all revenues from such
advertising signs.

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

36.     CONSENTS.

        (a) Except for Paragraph 33 hereof (Auctions) or as otherwise provided
herein, wherever in this Lease the consent of a Party is required to an act by
or for the other Party, such consent shall not be unreasonably withheld or
delayed.



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<PAGE>   20

           (b) All conditions to Lessor's consent authorized by this Lease are
acknowledged by Lessee as being reasonable. The failure to specify herein any
particular condition to Lessor's consent shall not preclude the impositions by
Lessor at the time of consent of such further or other conditions as are then
reasonable with reference to the particular matter for which consent is being
given.

37.     GUARANTOR.

        37.1 FORM OF GUARANTY. If there are to be any Guarantors of this Lease
per Paragraph 1.11, the form of the guaranty to be executed by each such
Guarantor shall be in the form most recently published by the American
Industrial Real Estate Association, and each such Guarantor shall have the same
obligations as Lessee under this lease, including but not limited to the
obligation to provide the Tenancy Statement and information required in
Paragraph 16.

        37.2 ADDITIONAL OBLIGATIONS OF GUARANTOR. It shall constitute a Default
of the Lessee under this Lease if any such Guarantor fails or refuses, upon
reasonable request by Lessor to give: (a) evidence of the due execution of the
guaranty called for by this Lease, including the authority of the Guarantor (and
of the party signing on Guarantor's behalf) to obligate such Guarantor on said
guaranty, and resolution of its board of directors authorizing the making of
such guaranty, together with a certificate of incumbency showing the signatures
of the persons authorized to sign on its behalf, (b) current financial
statements of Guarantor as may from time to time be requested by Lessor, (c) a
Tenancy Statement, or (d) written confirmation that the guaranty is still in
effect.

38.     QUIET POSSESSION. Upon payment by Lessee of the rent for the Premises
and the performance of all of the covenants, conditions and provisions on
Lessee's part to be observed and performed under this Lease, Lessee shall have
quiet possession of the Premises for the entire term hereof subject to all of
the provisions of this Lease.

39.     OPTIONS.

        39.1 DEFINITION. As used in this Lease, the word "OPTION" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first offer to lease the Premises or the right of first refusal to lease other
property of Lessor or the right of first offer to lease other property of
Lessor; (c) the right to purchase the Premises, or the right of first refusal to
purchase the Premises, or the right of first offer to purchase the Premises, or
the right to purchase other property of Lessor, or the right of first refusal to
purchase other property of Lessor, or the right of first offer to purchase other
property of Lessor.

        39.2 OPTIONS PERSONAL TO ORIGINAL LESSEE. Each Option granted to Lessee
in this Lease is personal to the original Lessee named in Paragraph 1.1 hereof,
and cannot be voluntarily or involuntarily assigned or exercised by any person
or entity other than said original Lessee while the original Lessee is in full
and actual possession of the Premises and without the intention of thereafter
assigning or subletting. The Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or separately or
apart therefrom, and no Option may be separated from this Lease in any manner,
by reservation or otherwise.

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

        39.4 EFFECT OF DEFAULT ON OPTIONS.

             (a) Lessee shall have no right to exercise an Option,
notwithstanding any provision in the grant of Option to the contrary: (i) during
the period commencing with the giving of any notice of Default under Paragraph
13.1 and continuing until the noticed Default is cured, or (ii) during the
period of time any monetary obligation due Lessor from Lessee is unpaid (without
regard to whether notice thereof is given Lessee), or (iii) during the time
Lessee is in Breach of this Lease, or (iv) in the event that Lessor has given to
Lessee three (3) or more notices of separate Defaults under Paragraph 13.1
during the twelve (12) month period immediately preceding the exercise of the
Option, whether or not the Defaults are cured.

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

             (C) All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due and
timely exercise of the Option, if, after such exercise and during the term of
this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee
for a period of thirty (30) days



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<PAGE>   21

after such obligation becomes due (without any necessity of Lessor to give
notice thereof to Lessee), or (ii) Lessor gives to Lessee three (3) or more
notices of separate Defaults under Paragraph 13.1 during any twelve (12) month
period, whether or not the Defaults are cured.

40.     RULES AND REGULATIONS. Lessee agrees that it will abide by, and keep and
observe all reasonable rules and regulations ("RULES AND REGULATIONS") which
Lessor may make from time to time for the management, safety, care, and
cleanliness of the grounds, the parking and unloading of vehicles and the
preservation of good order, as well as for the convenience of other occupants or
tenants of the Building and the Industrial Center and their invitees.

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

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

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

44.     AUTHORITY. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority.

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

46.     OFFER. Preparation of this Lease by either Lessor or Lessee or Lessor's
agent or Lessee's agent and submission of same to Lessee or Lessor shall not be
deemed an offer to lease. This Lease is not intended to be binding until
executed and delivered by all Parties hereto.

47.     AMENDMENTS. This Lease may be modified only in writing, signed by the
parties in interest at the time of the modification. The Parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an institutional insurance company or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.

48.     MULTIPLE PARTIES. Except as otherwise expressly provided herein, if more
than one person or entity is named herein as either Lessor or Lessee, the
obligations of such multiple parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or Lessee.



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<PAGE>   22

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

        IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR YOUR
        ATTORNEY'S REVIEW AND APPROVAL. FURTHER, EXPERTS SHOULD BE CONSULTED TO
        EVALUATE THE CONDITION OF THE PROPERTY FOR THE POSSIBLE PRESENCE OF
        ASBESTOS, UNDERGROUND STORAGE TANKS OR HAZARDOUS SUBSTANCES. NO
        REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL
        ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKERS OR THEIR CONTRACTORS,
        AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX
        CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES; THE
        PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO THE
        LEGAL AND TAX CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS IN
        A STATE OTHER THAN CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE
        PROPERTY IS LOCATED SHOULD BE CONSULTED.

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

Executed at : Memphis, TN                    Executed at: Villa Park, CA
              ---------------------                       ---------------------
on:    2/26/01                               on:       2/17/2001
   --------------------------------             -------------------------------



BY LESSOR:                                   BY LESSEE:

MEDTRONIC PS MEDICAL, INC.                   PHARMCHEM, INC.


By:  /S/ CARMEN DIERSEN                      By:   /S/ JOSEPH HALLIGAN
   --------------------------------             -------------------------------
Name Printed: CARMEN DIERSEN                 Name Printed: JOSEPH HALLIGAN
              ---------------------                        --------------------
Title: VP OF FINANCE                         Title: C.E.O.
       ----------------------------                 ---------------------------


Address: c/o Medtronic, Inc.                 Address: PharmChem, Inc.
3850 Victoria St., N.                        1505A O'Brien Drive
Shoreview MN, 55126                          Menlo Park, CA 94025
Attention: Real Estate Dept. MS V320         Attention: Joseph W. Halligan
Facsimile: 763-514-2347                      Facsimile: 650-617-9201

                                             With a copy to:

                                             Sonnenschein Nath & Rosenthal
                                             601 S. Figueroa St., Suite 1500
                                             Los Angeles, CA 90017
                                             Attention: J.A. Shafran
                                             Facsimile: 2130623-9924



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, 700 South Flower Street, Suite 600, Los Angeles, CA 90017.
        (213) 687-8777.



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<PAGE>   23

                   ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL
                         MULTI-TENANT LEASE-MODIFIED NET

                                     between

                      MEDTRONIC PS MEDICAL, INC., as Lessor

                                       and

                           PHARMCHEM, INC., as Lessee

                         Dated as of February 16, 2001



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


        The terms of this Addendum shall supplement, amend and, to the extent in
conflict with the provisions of the above referenced Lease, supersede the above
referenced Lease to which this Addendum is attached. All capitalized terms not
otherwise defined in this Addendum shall have the meanings specified in the
Lease.

        49. Intentionally Deleted.

        50. Term. Lessor shall deliver possession of the Premises to Lessee on
or before the Early Possession Date for the purpose of installing Lessee's
initial improvements described in Exhibit B attached to the Lease. The
Commencement Date shall be the date that is 120 days after delivery of the
Premises to Lessee. The Expiration Date shall be the 10th anniversary of the
Commencement Date. Following delivery of the Premises to Lessee, Lessee and
Lessor shall mutually execute and deliver a confirmation of the square footage
of the Premises, the Commencement Date and Expiration Date in the form of
Exhibit C attached to the Lease.

        51. Base Rent. Base Rent shall be payable in the amount set forth in
Paragraph 1.5 of the Lease beginning on the Commencement Date and thereafter on
the first day of each month throughout the balance of the term of the Lease. The
Base Rent for any fractional part of a calendar month at the commencement or
expiration of the Lease shall be prorated.

        52. Adjustments to Base Rent. Base Rent shall be adjusted throughout the
Original Term of the Lease as follows:


<TABLE>
<CAPTION>
            Lease Year                              Monthly Base Rent
            ----------                              -----------------
<S>                                                <C>
                1-5                       $31,682.33 (based on $8.50 per rsf)
               6-10                       $34,477.83 (based on $9.25 per rsf)
</TABLE>

        53. Cap on Common Area Operating Expenses. Notwithstanding anything to
the contrary set forth in the Lease: (a) Controllable Common Area Operating
Expenses (as hereinafter defined) for the first twelve (12) months of the
Original Term of the Lease shall not exceed $60,830.08, and (b) Controllable
Common Area Operating Expenses for the second year of the Lease and each year of
the Lease thereafter shall not be greater than 105% of the Controllable Common
Area Operating Expenses for the year immediately prior to each such year of the
Lease. For the purposes of this Paragraph 53 "Controllable Common Area Operating
Expenses" shall mean Common Area Operating Expenses other than Real Property
Taxes, insurance premiums and utilities.

        54. Lessee's Maintenance and Repair Obligations. Notwithstanding
anything to the contrary set forth in the Lease, in no event shall Lessee be
required to make any changes to the Premises on account of Applicable Laws
unless the same pertain to Lessee Owned Alterations or Utility Installations
installed by Lessee or are required due to Lessee's particular use of the
Premises for laboratory research and development.


                                  Addendum - 1
<PAGE>   24

        55. Assignment and Subletting Profits. In the event of an assignment or
sublease of all or any part of Lessee's interest in the Lease or the Premises
pursuant to Paragraph 12 of the Lease, Lessor shall be entitled to receive fifty
percent (50%) of all rent or other consideration received by Lessee which
exceeds the rent payable under the Lease after deduction by Lessee of its
subleasing or assignment expenses, including but not limited to brokerage
commissions, reasonable attorneys' fees, tenant improvement allowances and
similar incentives or concessions granted to the assignee or sublessee.

        56. Completion of Shell Building. Lessor represents that is has
completed the core and shell of the Premises, including but not limited to,
restrooms upstairs and downstairs, 30-ton rooftop HVAC unit, electrical service
of 600 amps/480 volt/3 phase, and elevator. Lessee acknowledges that said core
and shell have been completed and accepts the same in its present condition.

        57. Operation of Industrial Center. Lessor represents and warrants that
the Building and the Premises, including but not limited to the roof, truck
doors, concrete flooring and subflooring, windows and glazing, elevator and
other mechanical systems, are in good condition and repair as of the
Commencement Date. Lessor hereby assigns to Lessee all contractor warranties and
guaranties applicable to the Premises. Lessor shall operate, lease, manage and
maintain all aspects of the Building, Common Areas and those portions of the
Premises which Lessor is responsible for in a first class manner. Lessor shall
keep and maintain the Building, Common Areas and those portions of the Premises
which Lessor is responsible for in compliance with all general Applicable Laws
now in force or which may hereafter be enacted or promulgated, including but not
limited to, bringing the Industrial Center into compliance with the provisions
of the Americans With Disabilities (ADA), 42 USC Section 12101, et seq.

        58. Audit Right. Lessor shall maintain for a period of at least two (2)
years following the end of the period to which they pertain complete and
accurate books and records of all Common Area Operating Expenses paid or
incurred by Lessor and all payments of Common Area Operating Expenses received
from Lessee or any other tenant or occupant of any portion of the Industrial
Center. Such books and records shall be kept at a location in the continental
United States. Upon notice delivered to Lessor within one hundred twenty (120)
days of Lessee's receipt of Lessor's annual statement of actual Common Area
Operating Expenses for any year, Lessee or its auditors shall have the right to
inspect, copy and audit such books and records at any time during normal
business hours. Lessor shall promptly repay Lessee for any overpayments or
Lessee will repay Lessor for any underpayment which Lessee or its auditors
identify. Lessee shall provide Lessor with a copy of its audit results. If such
overpayments exceed five percent (5%) of the Lessee's Share of Common Area
Operating Expenses for the period, Lessor shall pay for the reasonable cost of
the audit within ten (10) days following receipt of Lessee's invoice therefor.

        59. Use of the Premises. The Premises shall be used and occupied for the
purposes set forth in Paragraph 1.8 of the Lease. There shall be no requirement
for Lessee to occupy continuously and conduct business within or upon the
Premises, nor shall such failure to use or occupy the Premises be deemed a
default by Lessee under the Lease so long as Lessee shall continue to pay all
rent due under the Lease.

        60. Tenant's Right of Repair. Notwithstanding anything to the contrary
contained in the Lease, in the event that Lessor fails to repair and maintain
the Building as required under the terms of the Lease within fifteen (15) days
after written notice from Lessee (provided Lessor shall have a longer time if
reasonably necessary if Lessor commences cure within such fifteen (15) day
period and diligently prosecutes such cure to completion) and such failure to
repair materially and adversely affects Lessee's use of the Premises, then
Lessee shall give Lessor an additional three (3) business days prior written
notice. If Lessor has not commenced repair of such problem within such three (3)
business day period, Lessee shall have the right to conduct such repair or
maintenance to the Building on Lessor's behalf, and Lessor shall reimburse
Lessee for the reasonable cost thereof within thirty (30) days after the
presentation of reasonably detailed invoice demonstrating the expenses incurred
by Lessee. If Lessor shall fail to reimburse Lessee within such thirty (30) day
period, Lessee may deliver a second request for reimbursement to Lessor. If
Lessor fails to reimburse Lessee within ten (10) days after delivery of such
second request, Lessee may deduct the amounts so expended by Lessee from the
next or succeeding payments of Base Rent or any other amount otherwise payable
by Lessee to Lessor under the Lease.



                                  Addendum - 2
<PAGE>   25

        61. Indemnity. Except for Lessee's negligence or willful misconduct or
breach of the Lease, Lessor shall indemnify and hold harmless Lessee and its
agents, from and against any and all claims for damage to the person or property
of anyone or any entity arising from Lessor's operations and maintenance of the
Industrial Center, permitted or suffered by Lessor, or any of Lessor's agents,
contractors, employees or invitees and from and against all costs, attorney's
fees, expenses and liabilities incurred by Lessee as the result of any such use,
conduct, activity, work, things done, permitted or suffered, breach, default or
negligence, and in dealing reasonably therewith, including but not limited to
the defense or pursuit of any claim or any action or defend the same at Lessor's
expense by counsel reasonably satisfactory to Lessee and Lessee shall cooperate
with Lessor in such defense. Lessee need not have first paid any such claim in
order to be so indemnified.

        62. Real Property Taxes. The following items shall be specifically
excluded from the definition of "Real Property Taxes:" (i) Any excess profits
taxes, franchise taxes, gift taxes, capital stock taxes, inheritance and
succession taxes, estate taxes, federal and state income or corporate taxes,
capital gains taxes, taxes personally owed by Lessor, taxes on rents or gross
receipts and other taxes to the extent applicable to Lessor's general or net
income (as opposed to rents or receipts), (ii) penalties incurred as the result
of Lessor's negligence, inability or unwillingness to make payment of, and/or to
file any tax or informational returns with respect to, any real estate taxes,
when due, (iii) any cost or expenses incurred by Lessor for real and personal
property taxes, leasehold taxes in lieu thereof and any assessments upon any
off-site parking areas or land upon which it is located, or taxes or assessments
levied in lieu thereof, or in addition thereto, and (iv) any real estate taxes
directly payable by Lessee or any other tenant in the Building under the
applicable provisions in their respective leases.

        63. Hazardous Substances. Lessor hereby represents and warrants to
Lessee, to the best of Lessor's knowledge after due inquiry, that there are no
Hazardous Substances in or about the Premises, Building, or Industrial Center
(including but not limited to, asbestos, radon or PCB's) nor has Lessor received
notice of any violation of any federal, state or local laws relating to adverse
environmental conditions nor the presence of Hazardous Substances in, on, under
or about the Premises, Building, or Industrial Center. After the date hereof and
thereafter throughout the Lease Term, Lessor shall at Lessor's sole cost and
expense (and such cost and expense shall not be included as a Common Area
Operating Expense to be passed through to Lessee) be responsible for removal or
encapsulation of any Hazardous Substances as necessary to comply with all
applicable Laws, unless caused by Lessee. Lessor shall indemnify, defend and
hold harmless Lessee from and against any and all claims, judgments, damages,
penalties, fines, costs, liabilities or losses (including but not limited to,
attorneys' fees, consultant fees and expert fees) which arise during or after
the Lease Term from or in connection with Hazardous Substances not introduced by
Lessee. The covenants contained in this Paragraph shall survive the expiration
or earlier termination of the Lease.

        64. Exclusions from Common Area Operating Expenses. Notwithstanding
anything to the contrary in the definition of Common Area Operating Expenses in
the Lease, Common Area Operating Expenses shall not include the items set forth
in Exhibit D attached to the Lease.

        65. Option to Extend. Lessee shall have the option (the "Extension
Options") to extend the Term for two periods of five (5) years each (the
"Extension Term") commencing on the 10th anniversary of the Commencement Date
and ending on the date that is five (5) years later (the "Scheduled Extension
Term Expiration Date") as follows:

                (a) Lessee may exercise the Extension Options by delivering a
        written extension notice (an "Extension Term Exercise Notice") to Lessor
        on or before the date (the "Extension Notice Deadline") that is twelve
        months before the then-established Expiration Date of the current Lease
        Term. If Lessee fails to deliver the Extension Term Exercise Notice
        before the Extension Notice Deadline, the Extension Option shall be
        deemed waived and of no further force and effect, time being of the
        essence.

                (b) The Base Rent payable by Lessee during the Extension Term
        shall be ninety percent (90%) of the "Extension Market Rate", as that
        term is defined in this Paragraph 65(b). The term "Extension Market
        Rate" means the annual rental rate at which the entirety of the
        Premises, in its then "AS-IS" condition, would be leased to a single
        non-renewal, non-expansion tenant on a basis for a five-year term
        commencing on the day after the then-established Expiration Date of the
        current Lease Term, assuming an



                                  Addendum - 3
<PAGE>   26

        arms-length transaction between a prudent landlord and a prudent
        tenant, each of which is willing to enter into such a lease but without
        any compulsion to do so, and assuming the other applicable terms and
        conditions of the Lease. Lessor will have no obligation to make or pay
        for any tenant improvements or other work in the Premises or provide any
        allowance or similar inducement to or on behalf of Lessee in connection
        with Lessee's exercise of the Extension Option. In considering any
        comparable lease transactions, all relevant factors shall be taken into
        consideration. The Extension Market Rate shall be determined as of the
        date when the parties mutually agree upon such rate or, in the event
        such rate is determined by experts under Paragraph 65(c), as of the
        later of (i) the date the expert or experts render their opinions or
        (ii) the date which is twelve months prior to the then-established
        expiration date of the current Lease Term.

                (c) The Extension Market Rate shall be determined as follows:

                        (i) Lessor shall, within fifteen (15) days after
                receiving the Extension Term Exercise Notice, deliver to Lessee
                a written notice ("Lessor's Extension Rate Notice") of Lessor's
                determination of the Extension Market Rate.

                        (ii) If Lessee does not agree with Lessor's
                determination of the Extension Market Rate, Lessee shall, within
                fifteen (15) days after receiving the Lessor's Extension Rate
                Notice, deliver to Lessor a written notice stating its
                disagreement with Lessor's determination and the amount that
                Lessee believes the Extension Market Rate actually is ("Lessee's
                Disagreement Notice"), and Lessor and Lessee shall endeavor in
                good faith to agree on the Extension Market Rate. If Lessee
                fails to deliver to Lessor a Lessee's Disagreement Notice within
                fifteen (15) days after receiving Lessor's Extension Rate
                Notice, Lessee shall be deemed not to have accepted the
                Extension Market Rate stated in the Lessor's Extension Rate
                Notice.

                        (iii) If Lessee timely delivers a Lessee's Disagreement
                Notice or is deemed not to have accepted the Extension Market
                Rate and Lessor and Lessee have not agreed as to the Extension
                Market Rate within fifteen (15) days after Lessor received the
                Lessee's Disagreement Notice or Lessee was deemed not to have
                accepted the Extension Market Rate, either party may deliver to
                the other party a written demand (the "Valuation Demand") that
                the Extension Market Rate be determined by an expert. Upon the
                delivery of a Valuation Demand, the parties shall endeavor in
                good faith to agree upon the identity of an expert to be jointly
                appointed by the parties in accordance with this Paragraph
                65(c)(iii), provided that the expert (and, in the event multiple
                experts are appointed as provided below, all experts) must be a
                reputable real estate expert who has not less than ten years of
                experience in appraising, brokering suburban office properties
                in the Dallas-Ft. Worth metropolitan area which are similar to
                the Premises in size and are used by large tenants.

                        (iv) If the parties can agree in writing upon the
                identity of one expert to be jointly appointed by the parties,
                the parties shall jointly appoint such expert within ten (10)
                days after the delivery of the Valuation Demand and shall direct
                the expert to deliver to both parties, within fifteen (15) days
                after his or her appointment, written notice of his or her
                determination of the Extension Market Rate, and such
                determination shall be binding on the parties.

                        (v) If the parties cannot agree to jointly appoint one
                expert as provided above in Paragraph 65(c)(iv), each party
                shall, within fifteen (15) days after the delivery of the
                Valuation Demand, appoint its own expert, deliver a written
                notice to the other party identifying the expert it has
                appointed, and direct its expert to reach agreement with the
                other party's expert on the identity of a third expert within
                ten (10) days after both parties' appointment of their expert.

                        (vi) If one of the parties fails to deliver a written
                notice to the other party identifying the expert it has
                appointed within fifteen (15) days after the delivery of the
                Valuation Demand, the one expert appointed shall be the sole
                expert and shall deliver to both parties, within twenty (20)
                days after his or her



                                  Addendum - 4
<PAGE>   27

                appointment, written notice of his or her determination of the
                Extension Market Rate, and such determination shall be binding
                on the parties.

                        (vii) When the experts appointed by the parties have
                agreed upon a third expert, the three experts shall, within
                twenty (20) days after the appointment of the third expert,
                simultaneously deliver all three experts' determinations to both
                parties. Immediately upon the appointment of the third expert,
                the parties shall direct the third expert to deliver to both
                parties, within twenty (20) days after his or her appointment,
                written notice of his or her determination of the Extension
                Market Rate.

                        (viii) In the event three experts have been appointed,
                the Extension Market Rate binding upon the parties shall be
                determined as follows: (A) if none of the three experts'
                determinations deviates from the mean of all three
                determinations by more than ten percent (10%), the mean of all
                three determinations shall be the Extension Market Rate; (B) if
                only one of the three determinations deviates from the mean of
                all three determinations by more than ten percent (10%), such
                determination shall be discarded and the Extension Market Rate
                shall be the mean of the other two; and (C) if two or all three
                of the determinations deviate from the mean of all three
                determinations by more than ten percent (10%), the parties shall
                discard all three determinations and start the appraisal process
                over by appointing new experts as provided above in Paragraph
                65(c)(v) within ten (10) days after the receipt of the three
                determinations which have been discarded.

                        (ix) All necessary and reasonable costs and expenses of
                any valuations performed pursuant to this Paragraph 65 shall be
                shared equally by Lessor and Lessee.

                (d) If Lessee effectively exercises the Extension Option, Lessor
        and Lessee shall, within ten (10) days after the Extension Market Rate
        has been determined in accordance with Paragraph 65(c), execute and
        deliver an amendment to the Lease, in mutually agreeable form, stating:
        (i) that the Term has been extended for the Extension Term; (ii) the
        annual Base Rent during the Extension Term; and (iii) any other
        amendments to the Lease which the parties have agreed to.

                (e) Lessor shall not be obligated to perform any leasehold
        improvement work in the Premises or give Lessee an allowance for any
        such work or for any other purpose during or with respect to the
        Extension Term. Except for the increase, if any, in the Base Rent and
        any other amendments the parties have mutually agreed to as stated in
        the amendment executed in accordance with Paragraph 65(d), all of the
        terms and provisions of the Lease shall remain the same and in full
        force and effect during the Extension Term.

        66. Return of Security Deposit. So long as Lessee has not committed a
Breach under the Lease, Lessor shall return the Security Deposit to Lessee
within ten (10) business days following the first anniversary of the
Commencement Date.

        67. Tax Contests. Notwithstanding Paragraph 10 of the Lease, Lessee
shall have the right to contest Real Property Taxes or other taxes or
assessments payable in whole or in part by Lessee so long as (i) such contest
does not cause a lien to be placed on the Industrial Center or any part thereof
or any interest therein, and (ii) Lessee has obtained the written consent of
Lessor prior to such contest, which consent shall not be unreasonably withheld.

        68. Structural Maintenance. Notwithstanding anything to the contrary set
forth in the Lease, Lessor shall repair and maintain the roof, exterior walls,
foundation and other structural elements of the Premises and the Building at
Lessor's sole cost and expense (not to be included in Common Area Operating
Expenses).

        69. Non-Solicitation. Lessor and Lessee agree not to solicit or recruit
each other's employees during the term of the Lease or any extension thereof.



                                  Addendum - 5
<PAGE>   28

        70. Additional Parking.

                (a) Lessee acknowledges that Lessor must purchase land and
        construct additional parking surface (the "Additional Parking") to
        accommodate forty-four (44) spaces of Lessee's parking requirement as
        shown on Exhibit G to the Lease. Said Additional Parking shall be
        surfaced with concrete of similar design to the existing parking serving
        the Premises, and shall be completed as soon as is practically and
        reasonably possible by Lessor at Lessor's cost. Notwithstanding the
        foregoing, if Lessor has not closed purchase of the land necessary for
        the Additional Parking by the date that is the later of (i) forty-five
        (45) days after the date of full execution of the Lease, or (ii) seven
        (7) days after the date on which Lessee's Permit Drawings are approved
        by the applicable governmental authorities pursuant to Paragraph 1.4 of
        Exhibit B to the Lease, Lessee shall not be obligated to accept the
        Additional Parking from Lessor. If Lessee so elects not to accept the
        Additional Parking, the monthly Base Rent payable under the Lease
        throughout the Term (including any Extension Options) shall be reduced
        by Three Thousand Three Hundred Fifty Four and 60/100 Dollars
        ($3,354.60) per month.

                (b) If Lessor proceeds with constructing the Additional Parking
        pursuant to subparagraph (a) above, but has failed to complete and
        deliver the Additional Parking to Lessee by the date that is six (6)
        months after the date on which Lessee's Permit Drawings are approved by
        the applicable governmental authorities pursuant to Paragraph 1.4 of
        Exhibit B to the Lease, Lessor shall reimburse the reasonable costs and
        expenses incurred by Lessee to obtain alternate parking until the
        Additional Parking is delivered.

        71. Insurance. Lessee will supply evidence of worker's compensation in
the statutorily required amount, and employer's liability insurance of not less
than $5,000,000 per occurrence, of which $3,000,000 may be provided by means of
an umbrella policy.

        72. Notices. All notices to Lessor shall be sent to:

                          Medtronic, Inc.
                          3850 Victoria St., N.
                          Shoreview, MN  55126
                          Attn:  Real Estate Dept. MS  V320

        73. Lessee's Use of Hazardous Substances. Attached to the Lease as
Exhibit E is a list of the Hazardous Substances lawfully used by Lessee in the
operation of its business.

        74. Water. Notwithstanding Paragraph 11 of the Lease, water service to
the Premises shall not be separately metered and Lessee shall pay its reasonable
share of water provided to the Building based upon invoices and reasonable
backup documentation provided by Lessor from time to time. Lessor reserves the
right, at Lessor's sole cost, to submeter Lessee's water usage in the Premises.

        75. Self-Insurance. Lessor may choose to satisfy all or part of its
obligations under Paragraph 8 of the Lease through self-insurance, provided that
(a) Lessor and its parent, Medtronic, Inc., a Minnesota corporation
("Medtronic") at all times while Lessor is self-insured maintains a consolidated
net worth of at least $10,000,000, calculated according to generally accepted
accounting principles, and (b) Medtronic shall guaranty Lessor's self-insurance
obligations pursuant to the guaranty attached as Exhibit F to the Lease. It is
understood that if Lessor elects to self-insure as herein provided, Lessee shall
have the same benefits and protections as if Lessor carried insurance with
third-party insurance companies satisfying the requirements of the Lease
(including, without limitation, waiver of subrogation provisions).

        76. Assignment and Subletting. Lessor's consent, with regard to
subleases and assignments, shall not be considered unreasonably withheld if: (i)
the proposed subtenant's or assignee's financial responsibility does not meet
the same criteria Lessor uses to select comparable Building tenants; (ii) the
proposed subtenant's or assignee's business is not suitable for the Building
considering the business of the other tenants and the Building's prestige; (iii)
the proposed use is inconsistent with the use permitted by Paragraph 1.8 of the
Lease; (iv) the proposed use violates an exclusive use granted to a prior
tenant; and (v) any term of the Lease is in Breach. All subleases and
assignments by Lessee shall be subject to the following requirements: (i) all
terms of the Lease shall be applicable to such assignee or subtenant; (ii) the




                                  Addendum - 6
<PAGE>   29


Term shall not extend beyond the Original Term; (iii) Lessee shall not be
released and shall remain liable for all Lease obligations; (iv) Lessor's
consent to one sublease or assignment does not waive the consent requirement for
future assignments or subleases.

        77. Permitted Controlled Transfers. Notwithstanding the provisions of
Article 12 of the Lease to the contrary, Lessee may assign the Lease or sublet
the Premises or any portion thereof ("Permitted Transfer"), without Lessor's
consent and without extending any sublease termination option to Lessor, to any
parent, subsidiary or affiliate entity (collectively, a "Permitted Transferee")
which controls, is controlled by or is under common control with Lessee, or to
any corporation resulting from a merger or consolidation with Lessee, or to any
person or entity which acquires all the assets of Lessee's business as a going
concern, provided that: (i) at least twenty (20) days prior to such assignment
or sublease, Lessee delivers to Lessor the financial statements and other
financial and background information of the assignee or sublessee; (ii) if an
assignment, the assignee assumes, in full, the obligations of Lessee under the
Lease (or if a sublease, the sublessee of a portion of the premises or Term
assumes, in full, the obligations of Lessee with respect to such portion); (iii)
the financial net worth of the assignee or sublessee as of the time of the
proposed assignment or sublease equals or exceeds that of Lessee; (iv) Lessee
remains fully liable under the Lease (so long as Lessee continues its existence
after such Permitted Transfer); and (v) the use of the Premises under Paragraph
1.8 remains unchanged. Notwithstanding anything to the contrary set forth in the
Lease, Lessee's Extension Options under Paragraph 65 shall be available to any
Permitted Transferee.

        78. Termination Option. Lessee may elect to terminate the Lease, without
payment or penalty, at any time after the sixtieth (60th) month of the Lease
Term by giving written notice of such election to Lessor not less than twelve
(12) months prior to the date on which Lessee wishes the termination to be
effective. If Lessee gives notice to Lessor of its election to terminate the
Lease pursuant to this Paragraph 78, the Term shall expire on the date specified
in Lessee's notice as if such date were the Expiration Date provided in the
Lease, and Lessor and Lessee shall have no further obligations under the Lease.

        79. Damage and Destruction. If following any casualty Lessor is required
to or elects to restore the Premises, and Lessor does not restore the Premises
within one hundred twenty (120) days of the occurrence of such casualty, Lessee
may terminate the Lease upon written notice to Lessor. If fifty percent (50%) or
more of the Premises are damaged and Lessee in its reasonable business judgment
determines that the remainder of the Premises are unsuitable for the conduct of
its business, and Lessee in fact ceases to conduct business from the Premises,
Lessee will receive a complete abatement of rent due under the Lease until
Lessor has substantially completed repair or restoration of a sufficient portion
of the Premises to cause fifty percent (50%) or more thereof to be tenantable.



                               LESSOR:

                                        Medtronic PS Medical, Inc.


                                        By:   /S/ CARMEN DIERSEN
                                           ------------------------------------
                                        Print Name: Carmen Diersen
                                                    ---------------------------
                                        Print Title: VP of Finance
                                                     --------------------------



                               LESSEE:
                                        PharmChem, Inc.


                                        By:   /S/ JOE HALLIGAN
                                           ------------------------------------
                                        Print Name: Joe Halligan
                                                    ---------------------------
                                        Print Title: C.E.O.
                                                     --------------------------


                                  Addendum - 7