DATE:        7/31/00
          ----------------------------------

LANDLORD:    GEOMAX
          ----------------------------------

TENANT:      SIERRA MONITOR CORPORATION
          ----------------------------------

PREMISES:    1991 Tarob Ct, Milpitas, CA
          ----------------------------------

                                 LEASE AGREEMENT

                                TABLE OF CONTENTS

Paragraph...................................................................Page
---------                                                                   ----

1.   FUNDAMENTAL LEASE PROVISIONS..............................................2
2.   PREMISES..................................................................2
3.   USE.......................................................................2
4.   RENT......................................................................3
5.   TERM......................................................................4
6.   POSSESSION................................................................4
7.   COMMON AREAS..............................................................4
8.   PARKING...................................................................4
9.   EXPENSES OF OPERATION AND MAINTENANCE OF THE COMPLEX......................4
10.  ACCEPTANCE AND SURRENDER OF PREMISES......................................4
11.  ALTERATIONS AND ADDITIONS.................................................5
12.  REPAIR AND MAINTENANCE OF THE PREMISES....................................5
13.  UTILITIES.................................................................5
14.  TAXES.....................................................................5
15.  LIABILITY INSURANCE.......................................................6
16.  TENANT'S PROPERTY INSURANCE AND WORKER'S COMPENSATION.....................6
17.  LANDLORD'S INSURANCE; WAIVER OF SUBROGATION...............................6
18.  INDEMNIFICATION; EXEMPTION OF LANDLORD FROM LIABILITY.....................6
19.  COMPLIANCE................................................................6
20.  LIENS.....................................................................6
21.  ASSIGNMENT AND SUBLETTING.................................................6
22.  SUBORDINATION AND MORTGAGES...............................................7
23.  ENTRY BY LANDLORD.........................................................7
24.  TENANT'S DEFAULT..........................................................7
25.  LANDLORD'S REMEDIES AND RIGHTS............................................7
26.  DESTRUCTION...............................................................8
27.  EMINENT DOMAIN............................................................8
28.  SALE OR CONVEYANCE BY LANDLORD............................................8
29.  ATTORNMENT TO LENDER OR THIRD PARTY.......................................8
30.  HOLDING OVER..............................................................8
31.  CERTIFICATE OF ESTOPPEL...................................................8
32.  CONSTRUCTION CHANGES......................................................9
33.  RIGHT OF LANDLORD TO PERFORM..............................................9
34.  ATTORNEY'S FEES...........................................................9
35.  WAIVER....................................................................9
36.  NOTICES...................................................................9
37.  EXAMINATION OF LEASE......................................................9
38.  DEFAULT BY LANDLORD.......................................................9
39.  AUTHORITY.................................................................9
40.  LIMITATION OF LIABILITY...................................................9
41.  BROKERS...................................................................9
42.  SIGNS....................................................................10
43.  HAZARDOUS MATERIALS......................................................10
44.  INTEREST.................................................................10
45.  MISCELLANEOUS AND GENERAL PROVISIONS.....................................10

Exhibits
--------
     A Legal Description
     B Site Plan of Complex and Building
     C Tenant Improvements Work Letter
     D Acknowledgment of Commencement
     E Hazardous Materials

Riders
------

                                      -1-

<PAGE>



                                 LEASE AGREEMENT

DATED:            7/31/00

LANDLORD:         GEOMAX, a California general partnership

TENANT:           SIERRA MONITOR CORPORATION, a California corporation

1.       FUNDAMENTAL LEASE PROVISIONS.

         A.       PREMISES: Approximately 15,788 square feet of leasable area in
                  the building containing  approximately  37,264 leasable square
                  feet  located on a parcel of land in the County of Santa Clara
                  , State of California,  as more particularly  described in the
                  legal description  attached as Exhibit A hereto, with a common
                  address of 1991 Tarob Court,  Milipitas,  CA . The location of
                  Premises is indicated  on the site plan  attached as Exhibit B
                  hereto. (Paragraph 2)


         B.       LEASE TERM: 60 full calendar months, plus any partial month at
                  the beginning of the Lease Term. (Paragraph 5)

         C.       COMMENCEMENT  DATE:  April 1 , 2001, or twenty four (24) hours
                  after  substantial  completion  of  the  Tenant  Improvements,
                  whichever is later. (Paragraph 5)
<TABLE>
<CAPTION>
         D.       INITIAL BASIC RENT: (Paragraph 4.A)
                  Lease Months (inclusive)   Basic Rent (per leasable sq.ft.)  Basic Rent (total)
                  ------------------------   --------------------------------  ------------------
<S>                      <C>                         <C>                              <C>
                         01 - 12                     2.3500 NNN                       37,102
                         -------                     ----------                       ------
                         13 - 24                     2.4440 NNN                       38,586
                         -------                     ----------                       ------
                         25 - 36                     2.5417 NNN                       40,734
                         -------                     ----------                       ------
                         37 - 48                     2.6433 NNN                       41,734
                         -------                     ----------                       ------
                         49 - 60                     2.7490 NNN                       43,404
                         -------                     ----------                       ------
</TABLE>

      E. ADDITIONAL  RENT:  Real  Property  Taxes,  insurance  premiums,  tenant
         association  dues (if any),  maintenance  and other costs and  expenses
         under this Lease. (Paragraph 4.E)

      F. TENANT'S SHARE: Forty-two 4/10 percent (42.4%). (Paragraph 4.E)

      G. PREPAID  RENT:  $ None for the  month(s) of the Lease Term.  (Paragraph
         4.H)

      H. BASIC  RENT  ADJUSTMENT:  The  Basic  Rent  shall be  subject  to a CPI
         adjustment  on the first  day of each of the  following  full  calendar
         months of the Lease Term: None . (Paragraph 4.B)

      I. SECURITY  DEPOSIT:  $ 40,000.00.  (Paragraph  4.G) $8,641 from previous
         lease dated 1/29/86. Balance to be paid by 04/01/01.

      J. PERMITTED USE: Research & development, light manufacturing, and related
         activities  including  admin,  manufacturing & design of instruments to
         monitor hazardous gases . (Paragraph 3)

      K. NUMBER OF PARKING SPACES: Sixty (60). (Paragraph 8)
<TABLE>
<CAPTION>
      L. ADDRESSES FOR NOTICES AND PAYMENT OF RENT (Paragraphs 4.F and 36):
<S>                                                                <C>
         To Landlord:  GEOMAX                                      To Tenant:   SIERRA MONITOR CORPORATION
                     ------------------------------------------                 ------------------------------------------
                     2025 Gateway Place #124                                    1991 Tarob Court
                     ------------------------------------------                 ------------------------------------------

                     San Jose, CA 95110                                         Milpitas, CA 95035
                     ------------------------------------------                 ------------------------------------------

         Facsimile No.:  408-452-0268                             Facsimile No.: 408-262-9042
                       ---------------------------------------                  ------------------------------------------
</TABLE>
      M. TENANT'S BROKER: None. (Paragraph 41)

      N. GUARANTORS: None.

      O. OTHER PROVISIONS: The following Riders are added hereto and included as
         part of this Lease:

           Rider No.               Paragraph No.                  Title
           --------                -------------                  -----

Each  reference in this Lease to any of the provisions in this Paragraph 1 shall
be  construed to  incorporate  all of the terms of each such  provision.  In the
event of any conflict between this Paragraph 1 and the balance of the Lease, the
balance of the Lease shall control.

2.       PREMISES.

         A. Premises.  Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord for the Lease Term, at the Rent and upon the terms and  conditions
hereinafter  set forth,  that  certain  space  ("Premises")  within that certain
building ("Building")  described in Paragraph 1.A. As used herein, the "Complex"
shall  mean and  include  all of the land  described  in  Exhibit A and shown on
Exhibit B attached hereto, and all of the buildings, improvements,  fixtures and
equipment now or hereafter situated on said land.

         Said letting and hiring is upon and subject to the terms, covenants and
conditions hereinafter set forth, and Tenant covenants as a material part of the
consideration  for this Lease to perform and observe each and all of said terms,
covenants  and  conditions.  This  Lease  is made  upon  the  condition  of such
performance and observance.

         Landlord agrees to construct any improvements to the Premises  ("Tenant
Improvements") as may be described in Exhibit C attached hereto and incorporated
herein by  reference,  upon such terms and  conditions  as are set forth in such
Exhibit C. The Tenant Improvements shall be deemed  substantially  complete when
Landlord  notifies Tenant in writing that the Tenant  Improvements  (if any) are
substantially  completed  in  accordance  with Exhibit C, subject only to "punch
list" items that do not materially diminish the usefulness of the Premises.

         B. Square  Footage.  Landlord  and Tenant  conclusively  agree that the
statements of rentable  square  footage  contained  herein shall be deemed to be
correct and binding upon the parties for all purposes under this Lease,  even if
subsequent measurements determine that one or more of such figures is incorrect.

3.       USE.

         Tenant  shall use the  Premises  only in  conformance  with  applicable
governmental  laws,  regulations,   rules  and  ordinances,   including  without
limitation the Americans With  Disabilities Act of 1990 (the "ADA"),  and solely
for the purpose  specified in  Paragraph  1.J and for no other  purpose.  Tenant
shall not do or permit to be done in or about the  Premises  or the  Complex nor
bring or keep or permit to be  brought or kept in or about the  Premises  or the
Complex anything which is prohibited by or will in any way increase the existing
rate of (or otherwise affect) fire or any insurance covering the Premises or the
Complex  or any  part  thereof,  or  any  of  its  contents,  or  will  cause  a
cancellation  of any insurance  covering the Premises or the Complex or any part


                                      -2-

<PAGE>

thereof,  or any of its  contents.  Tenant  shall  not do or  permit  to be done
anything  in, on or about the  Premises  or the  Complex  which  will in any way
obstruct  or  interfere  with the rights of other  tenants or  occupants  of the
Complex or injure or annoy them, or use or allow the Premises to be used for any
improper,  immoral,  unlawful or objectionable  purpose, nor shall Tenant cause,
maintain or permit any nuisance in, on or about the Premises or the Complex.  No
sale by auction shall be permitted on the  Premises.  Tenant shall not place any
loads upon the floors, walls, or ceiling, which endanger the structure, or place
any harmful  fluids or other  materials in the  drainage  system of the Building
therein,  or overload existing  electrical or other mechanical systems. No waste
materials or refuse shall be dumped upon or permitted to remain upon any part of
the  Premises  or outside of the  Premises,  except in trash  containers  placed
inside exterior enclosures  designated by Landlord for that purpose or inside of
the  Building  proper where  designated  by Landlord.  No  materials,  supplies,
equipment,  finished  products  or  semi-finished  products,  raw  materials  or
articles of any nature shall be stored upon or  permitted to remain  outside the
Premises. No loudspeaker or other device, system or apparatus which can be heard
outside  the  Premises  shall be used in or at the  Premises  without  the prior
written  consent of Landlord.  Tenant shall not commit or suffer to be committed
any waste in or upon the  Premises.  Tenant  shall  comply  with any  covenants,
conditions,  or restrictions  ("CC&R's") affecting the Premises, as the same may
hereafter  be amended  from time to time,  as well as any  reasonable  rules and
regulations   promulgated  by  Landlord  from  time  to  time  (the  "Rules  and
Regulations").  Landlord  reserves the right to reasonably  amend such Rules and
Regulations from time to time as Landlord may deem appropriate,  which amendment
shall be binding upon Tenant upon  delivery of a copy thereof to Tenant.  Tenant
shall use its best  efforts  to cause its  agents,  employees,  contractors  and
invitees to cooperate in observance of such Rules and  Regulations,  as the same
may be amended from time to time.  The  provisions of this Paragraph are for the
benefit of Landlord only and shall not be construed to be for the benefit of any
tenant or occupant of the Complex.  Landlord  shall not be responsible to Tenant
for the breach of the Rules and  Regulations  by any other tenant or occupant of
the Complex.

4.       RENT

         A. Basic Rent.  Tenant  agrees to pay to Landlord  the sum set forth in
Paragraph  1.D hereof as monthly basic rent ("Basic  Rent"),  in lawful money of
the United  States of America,  without  deduction,  offset,  prior  notice,  or
demand, on the first day of every calendar month of the Lease Term, and Landlord
agrees to accept such sum as Basic Rent for the Premises.

         B. Basic Rent  Adjustment.  Basic Rent "per  leasable  square foot" and
"total" shall be adjusted annually per paragraph 1D.

         C. Partial Months. In the event that the Lease Term commences on a date
other than the first day of a calendar  month, on the  Commencement  Date Tenant
shall pay to Landlord as Basic Rent for the period from such  Commencement  Date
to the first day of the first full calendar month that proportion of the monthly
Basic Rent hereunder which the number of days between such Commencement Date and
the first day of the next  succeeding  calendar  month bears to thirty (30), and
such  partial  first month  shall not be counted  when  computing  the number of
months in the term of this Lease. In the event that the Lease Term is terminated
for any reason on a date other  than the last day of a  calendar  month,  on the
first day of the last  calendar  month of the  Lease  Term  Tenant  shall pay to
Landlord as Basic Rent for the period from said first day of said last  calendar
month to and  including  the last day of the Lease Term that  proportion  of the
monthly Basic Rent hereunder  which the number of days between said first day of
said last  calendar  month and the last day of the term  hereof  bears to thirty
(30).

         D. Late Charge.  Notwithstanding  any other provision of this Lease, if
Tenant is delinquent in the payment of Rent as set forth in this Paragraph 4, or
any part thereof,  Tenant agrees to pay Landlord,  in addition to the delinquent
Rent due, a late charge for each Rent payment which is not actually  received by
Landlord  within  ten (10)  days  after  due date  for  such  payment,  it being
understood  that  postmarking a payment by such deadline shall not be sufficient
to meet this requirement. Said late charge shall equal ten (10%) percent of each
Rent payment so in default. In the event that a late charge is payable hereunder
and not paid by Tenant  for  three  (3)  consecutive  months,  then  Rent  shall
automatically  become due and payable  three (3) months in advance,  rather than
monthly notwithstanding  Paragraph 4 or any other provision of this Lease to the
contrary.

         E. Additional Rent.  Beginning with the Commencement Date, Tenant shall
pay to Landlord, in addition to the Basic Rent, the following additional amounts
("Additional Rent"):

                  (1)  Tenant's   proportionate   share  ("Tenant's  Share")  as
specified in Paragraph  1.F, of all Real Property Taxes relating to the Complex,
as set forth in Paragraph 14, and

                  (2) Tenant's Share of all property insurance premiums relating
to the Complex, as set forth in Paragraph 15, and

                  (3) Tenant's Share of expenses for the operation,  management,
maintenance and repair of the Building  (including Common Areas of the Building)
and Common Areas of the Complex in which the Premises are located,  as set forth
in Paragraph 9, and

                  (4) The sums  required to  reimburse  Landlord for the cost of
repairs and maintenance to the Premises, as set forth in Paragraph 12; and

                  (5) All charges, costs and expenses,  which Tenant is required
to pay hereunder,  together with all interest and penalties,  costs and expenses
including without limitation attorneys' fees and legal expenses, that may accrue
thereto in the event of Tenant's  failure to pay such amounts,  and all damages,
reasonable  costs and expenses  which Landlord may incur by reason of default of
Tenant or failure on Tenant's  part to comply  with the terms of this Lease.  In
the event of nonpayment by Tenant of Additional  Rent,  Landlord  shall have all
the rights and remedies with respect  thereto as Landlord has for  nonpayment of
Basic Rent.

                  The Additional Rent due hereunder shall be paid to Landlord or
Landlord's agent (i) within ten (10) days for taxes and insurance and within ten
(10) days for all other  Additional Rent items after  presentation of an invoice
from Landlord or Landlord's  agent setting forth such  Additional  Rent,  and/or
(ii) at the option of Landlord, directly to the designated recipient thereof, as
and when such  amounts  are due,  in  accordance  with  statements  or  invoices
presented  to  Tenant;  and/or  (iii) at the  option of  Landlord,  to  Landlord
monthly,  in  advance,  in an amount  estimated  by  Landlord  to be  Landlord's
approximate  average monthly  expenditure for such Additional Rent items,  which
estimated  amount  shall  be  reconciled  at the  end of each  calendar  year as
compared to Landlord's  actual  expenditure for said Additional Rent items, with
Tenant paying to Landlord,  upon demand,  any amount of actual expenses expended
by Landlord in excess of said estimated  amount, or Landlord applying any amount
of estimated payments made by Tenant in excess of Landlord's actual expenditures
for said  Additional  Rent  items to Basic  Rent  and/or  Additional  Rent  next
becoming due.

                  The  respective  obligations of Landlord and Tenant under this
Paragraph shall survive the expiration or other  termination of this Lease,  and
if the Lease Term shall expire or shall otherwise  terminate on a day other than
the last day of a calendar  year,  the actual  Additional  Rent incurred for the
calendar year in which the Lease Term expires or otherwise  terminates  shall be
determined and settled on the basis of the statement of actual  Additional  Rent
for such calendar year and shall be prorated in the proportion  which the number
of days in such calendar year preceding such expiration or termination  bears to
365.

         F.  Place and Time of Payment of Rent and  Additional  Rent.  All Basic
Rent hereunder and all payments  hereunder for Additional  Rent shall be paid to
Landlord at the address of Landlord as specified in Paragraph  1.L or such other
place as  Landlord  may from  time to time  designate  in  writing.  It shall be
Tenant's  responsibility  to ensure that all Rent payments are mailed or sent in
time for Landlord to receive them by the specified deadline,  and Landlord shall
not be responsible for any delays in delivery of payments by mail or otherwise.

         G.  Security  Deposit.  Concurrently  with  Tenant's  execution of this
Lease,  Tenant shall  deposit with  Landlord the sum  specified in Paragraph 1.I
hereof as a security  deposit (the "Security  Deposit"),  which shall be held by
Landlord as security for the faithful performance by Tenant of all of the terms,
covenants,  and conditions of this Lease to be kept and performed by Tenant, and
shall not in any event be used or applied by Tenant as "last  month's  rent." If
Tenant defaults with respect to any provision of this Lease, including,  but not
limited to, the  provisions  relating to the payment of Rent,  Landlord may (but
shall not be required  to) use,  apply or retain all or any part of the Security
Deposit  for the  payment of any amount  which  Landlord  may spend by reason of
Tenant's  default or to  compensate  Landlord for any other loss or damage which
Landlord  may  suffer by reason of  Tenant's  default.  If any  portion  of said
Security Deposit is so used or applied, Tenant shall, within ten (10) days after
written demand therefor,  deposit cash with Landlord in the amount sufficient to
restore the Security Deposit to its original  amount.  Tenant's failure to do so
shall be a material breach of this Lease. Landlord shall not be required to keep
this Security  Deposit  separate from its general funds, and Tenant shall not be
entitled to interest on such Security  Deposit.  If Tenant fully and  faithfully
performs  every  provision  of this Lease to be  performed  by it, the  Security
Deposit or any balance  thereof  shall be  returned to Tenant (or at  Landlord's
option, to the last assignee of Tenant's  interest  hereunder) at the expiration
of the Lease Term and after  Tenant has  vacated the  Premises.  In the event of
termination of Landlord's  interest in this Lease,  Landlord shall transfer said
Security Deposit to Landlord's successor in interest whereupon Landlord shall be
released  from  liability  for  the  return  of  such  Security  Deposit  or any
accounting therefor.

         H. Prepaid Rent.  Concurrently  with Tenant's  execution of this Lease,
Tenant shall pay to Landlord the sum  specified in Paragraph 1.G as prepaid Rent
for the months designated therein.

         I. Definition of Rent. The term "Rent" as used in this Lease shall mean
Basic Rent,  Additional  Rent, and any and all other sums,  however  designated,
required to be paid by Tenant under this Lease,  whether  payable to Landlord or
third parties.

         J.  Additional  Rights of Landlord.  In addition to any late payment or
interest charges payable to Landlord  hereunder and any other rights or remedies
that Landlord may have under this Lease or  applicable  law, all of which rights
and  remedies  shall  be  cumulative,   Tenant,   as  a  material  part  of  the
consideration for this Lease, hereby agrees as follows:

                  (1) If Tenant makes any payment  under this Lease by check and
such  check is  dishonored  or  otherwise  returned  unpaid to  Landlord  due to
insufficient funds, then Landlord, at its option, may require Tenant to make all
future  payments  under  this  Lease  by  cashier's  check or wire  transfer  in
accordance with wiring instructions given to Tenant by Landlord.


                                       -3-

<PAGE>

                  (2) If Landlord  fails to receive  any payment  that Tenant is
required to make under this Lease when due and Landlord thereafter, and prior to
receiving such payment,  proceeds to serve a "3-Day Notice" or similar notice to
Tenant  as  permitted  under  Section  1162  of the  California  Code  of  Civil
Procedure,  then in  each  such  instance,  and  regardless  of  whether  Tenant
thereafter  makes such payment,  Tenant shall pay to Landlord,  upon demand,  as
Additional  Rent,  an  administrative  charge  in the  amount  of  $200.  Tenant
acknowledges that such charge  constitutes  liquidated damages and not a penalty
and represents a reasonable estimate of the additional administrative costs that
Landlord will incur in serving such notice.

                  (3) If Landlord  fails to receive  any payment  that Tenant is
required  to make under  this Lease  within ten (10) days after the due date for
such payment,  and such delinquency occurs on two (2) separate occasions,  then,
at  Landlord's  election,  exercisable  by written  notice to Tenant at any time
after the  second  such  delinquency,  any and all  rights of first  offer  with
respect to any premises in the Building or Complex, rights of first refusal with
respect to any such  premises,  and  options to renew or extend the term of this
Lease,  which in any case may be  granted  to  Tenant  under  this  Lease or any
exhibit,  rider  or  amendment  hereto  (each  referred  to in this  Lease as an
"Option") shall terminate.  In such event, Tenant shall execute a quitclaim deed
or other  similar  document as may be  requested  by  Landlord  to evidence  the
termination of such Option.

                  (4) If Landlord  fails to receive  any payment  that Tenant is
required  to make under  this Lease  within ten (10) days after the due date for
such payment, and such delinquency occurs on three (3) separate occasions,  then
Landlord, at its election,  exercisable by one or more written notices to Tenant
at any time  after the third such  delinquency,  may  require  any or all of the
following:  (i) that all future  payments of Basic Rent be paid three (3) months
in advance; (ii) that, subject to annual reconciliation as provided in Paragraph
4.E above,  all future  payments of  Additional  Rent shall be payable three (3)
months in advance  based upon an amount  estimated by Landlord to be  Landlord's
average quarterly  expenditure for such items of Additional Rent; and (iii) that
the Security Deposit specified in Paragraph 1.H be immediately  increased by one
hundred percent (100%), in which event Tenant shall,  within ten (10) days after
written demand therefor, deposit such additional amount in cash with Landlord.

5.       TERM.

         The term of this Lease (the  "Lease  Term")  shall be for the period of
time  specified  in  Paragraph  1.B (unless  sooner  terminated  as  hereinafter
provided) and, subject to Paragraph 6, shall commence on the  commencement  date
("Commencement  Date")  specified in Paragraph 1.C. Within 10 days following the
Commencement Date of the Lease Term, Tenant will execute and deliver to Landlord
a certificate  substantially  in the form of Exhibit D indicating any exceptions
thereto  which may exist at that time.  Tenant's  failure to execute and deliver
such  certificate  within  such  time  limit  shall  constitute  an  unqualified
acceptance of the Premises and acknowledgement  that the statements contained in
Exhibit D are true and correct without exception.

6.       POSSESSION.

         If Landlord,  for any reason  whatsoever,  cannot deliver possession of
said  Premises  to Tenant on the date set  forth in  Paragraph  1.C or any other
date, this Lease shall not be void or voidable; no obligation of Tenant shall be
affected  thereby;  nor shall Landlord or Landlord's  agents be liable to Tenant
for any loss or damage resulting  therefrom;  but in that event the commencement
and termination  dates of the Lease,  and all other dates affected thereby shall
be revised to conform to the date of Landlord's delivery to Tenant of possession
of the Premises,  and the Lease Term shall be extended for a period equal to the
delay in delivery of  possession,  plus the number of days  necessary to end the
Lease  Term on the last day of a month.  The above is,  however,  subject to the
provision  that the period of delay of delivery of the Premises shall not exceed
180 days from the date specified in Paragraph 1.C (except those delays caused by
Acts of God, strikes, war, utilities,  governmental bodies, weather, unavailable
materials, and delays beyond Landlord's control shall be excluded in calculating
such period) in which instance Tenant, at its option,  may, by written notice to
Landlord  within ten (10) days after the end of the  180-day  period,  terminate
this Lease and the parties shall have no further liability  thereafter  accruing
under this Lease.

7.       COMMON AREAS.

         Subject  to the terms and  conditions  of this  Lease and any Rules and
Regulations,  Tenant  shall have the  non-exclusive  right in common  with other
occupants of the Complex, to use the access roads, parking areas, and facilities
provided and  designated by Landlord for the general use and  convenience of the
occupants of the Complex,  which areas and  facilities are referred to herein as
"Common  Areas".  This right shall terminate upon the termination of this Lease.
Landlord  reserves  the right  from time to time to make  changes  in the shape,
size, location, amount and extent of Common Areas.

8.       PARKING.

         Subject to the terms and  conditions  of this Lease and  subject to the
Rules  and   Regulations,   during  the  Lease  Term,   Tenant  shall  have  the
non-exclusive  right,  in common with other tenants or occupants of the Complex,
to use the number of parking  spaces in the common  parking areas of the Complex
as is specified in Paragraph 1.K. Neither Tenant nor Tenant's employees, agents,
representatives  and/or  invitees  shall  use  parking  spaces in excess of said
number of spaces allocated to Tenant hereunder. Tenant acknowledges that certain
other  tenants  of the  Complex  may have  exclusive  parking  rights to certain
parking  spaces in the parking areas of the Complex,  and that Tenant shall have
no right to use such exclusive  spaces upon receiving  notice of the location of
such exclusive spaces from Landlord.  Landlord shall have the right (but not the
obligation),  at Landlord's sole discretion,  to designate the specific location
of Tenant's  parking  spaces  within the common  parking  areas of the  Complex.
Landlord  shall also have the right to  implement  a system of parking  charges,
vouchers,  fines or other  parking  control fees to be paid by Tenant and/or the
users  of  the  Complex,  if so  required  by  any  governmental  agency  having
jurisdiction  over the Complex or if required to meet parking programs  mandated
by government.

         Tenant's  rights under this Paragraph 8 shall be personal to Tenant and
strictly  appurtenant  to the  occupation  by Tenant of the Premises  during the
Lease  Term.  Tenant  shall have no right to assign or license its rights to use
the  parking  spaces in any  manner  whatsoever,  except in  connection  with an
assignment of this Lease or subletting of the Premises  consented to by Landlord
in accordance with Paragraph 21.

         Tenant shall not, at any time, park, or permit to be parked, any trucks
or vehicles adjacent to the loading areas so as to interfere in any way with the
use of such areas,  nor shall Tenant at any time park,  or permit the parking of
Tenant's  trucks or other  vehicles  or the  trucks  and  vehicles  of  Tenant's
suppliers  or  others,  in any  portion  of the common  area not  designated  by
Landlord for such use by Tenant.  Tenant shall not park nor permit to be parked,
any  inoperative  vehicles or  equipment  on any portion of the parking  area or
outside  areas of the  Complex,  or use the same for storage.  Tenant  agrees to
assume   responsibility  for  compliance  by  its  employees  with  the  parking
provisions contained herein.

         If Tenant or its employees park in other than such  designated  parking
areas, then Landlord may charge Tenant, as Additional Rent, and Tenant agrees to
pay, ten ($10.00)  dollars per day for each day or partial day each such vehicle
is parked in any area  other  than that  designated.  Tenant  hereby  authorizes
Landlord  at  Tenant's  sole  expense to tow away from the  Complex  any vehicle
belonging  to  Tenant  or  Tenant's  employees  parked  in  violation  of  these
provisions, or to attach violation stickers or notices to such vehicles and levy
fines for such violations. Landlord shall have no obligation to Tenant to police
the parking areas or enforce any private or public parking  restrictions,  which
enforcement shall be at Landlord's sole and absolute discretion.

9.       EXPENSES OF OPERATION AND MAINTENANCE OF THE COMPLEX.

         As Additional  Rent and in accordance with Paragraph 4.E of this Lease,
and except for those expenses  required to be paid  exclusively by Tenant as set
forth in  Paragraphs  12 and 13 or elsewhere in this Lease,  Tenant shall pay to
Landlord  Tenant's Share of all expenses of operation,  management,  maintenance
and repair of the Building,  Complex and Common Areas including, but not limited
to, all sums expended in connection with the Common Areas and Building exteriors
for all general maintenance and repairs;  license,  permit, and inspection fees;
security;  utility  charges  associated  with exterior  landscaping and lighting
(including water and sewer charges);  janitorial services;  trash removal;  fire
protection  systems;  general  liability  insurance  protecting  against  claims
related to the condition,  use or occupancy of the Common Areas (in such amounts
and  providing  such coverage as  determined  in  Landlord's  sole  discretion);
exterior window cleaning;  maintenance of landscaped areas,  irrigation systems,
parking lots, sidewalks,  driveways, and stairways, including without limitation
resurfacing,   restriping,   cleaning  and  sweeping;  maintenance,  repair  and
replacement of all Building systems and fixtures,  including without  limitation
electrical,   mechanical,  lighting,  plumbing,  and  telecommunication  systems
including without limitation  intra-Building  telephone,  telecommunication  and
network  cabling  which  telecommunication  systems are  located  outside of the
Premises,  except as  otherwise  provided  in  Paragraph  12 below;  repair  and
replacement  of roofs and  structural  elements of the buildings  (excluding new
capital improvements);  salaries and employee benefits of personnel (and payroll
taxes  applicable  thereto)  to the extent  they are  engaged in the  operation,
supervision,  and/or maintenance of the Complex; reasonable attorneys' fees with
respect to matters of common interest to occupants of the Complex or relating to
the Complex;  fees for accounting,  bookkeeping,  expense collection,  and other
management services rendered by Landlord and/or by a third party manager engaged
by Landlord (which may be a party  affiliated  with  Landlord),  except that the
total amount charged for such management services and included in Tenant's share
of expenses  shall not exceed three  percent (3%) of the then current Basic Rent
payable  by  Tenant  for each  respective  month;  taxes on  personal  property,
equipment  and  machinery  utilized in the  operation of the Complex;  supplies,
materials,  equipment and tools; maintenance and/or insurance contracts covering
all or any of the repairs or maintenance  described in this Paragraph 9; and the
cost  of  complying  with  rules,   regulations   and  orders  of   governmental
authorities,  including without limitation maintenance,  alterations and repairs
required in connection therewith. At Landlord's election, Landlord may determine
that with respect to certain  recurring  items of major  repair and  maintenance
("Major  Repairs"),  Landlord  will not  charge  the costs  thereof  as  current
expenses  when  such  costs are  incurred,  but  instead  will  charge  Tenant a
reasonable  monthly fee to be used by Landlord for performing such Major Repairs
as and when the need therefor shall arise. Such Major Repairs shall include,  at
Landlord's  election,  any or  all of the  following:  (i)  replacing  (but  not
repairing)  the roof (ii) repaving (but not  resealing)  the parking lot;  (iii)
replacing  (but not  repairing)  the HVAC  compressors  or  other  major  system
components;  (iv) painting the exterior of the  Building;  and (v) other similar
items as may be determined by Landlord from time to time.

         "Additional  Rent" as used  herein  shall not include  Landlord's  debt
repayments;  interest on charges;  expenses  directly or indirectly  incurred by
Landlord  for the  benefit of any other  tenant;  cost for the  installation  of
partitioning  or any other  tenant  improvements;  cost of  attracting  tenants;
depreciation; interest; or executive salaries.

10.      ACCEPTANCE AND SURRENDER OF PREMISES.

         By taking possession hereunder, Tenant accepts the Premises as being in
good and sanitary  order,  condition  and repair and accepts the  Building,  the
Premises  and the Common  Areas in their then  existing  condition  and  without
representation or warranty by Landlord as to its condition, the use or occupancy
which may be made thereof,  or the precise square footage of the Building or the
Premises.  Any exceptions to the foregoing must be by written agreement executed
by Landlord and Tenant.  Subject to  Paragraphs  26 and 27, Tenant agrees on the
last day of the Lease  Term,  or on the sooner  termination  of this  Lease,  to
surrender the Premises  promptly and peaceably to Landlord in good condition and
repair (normal wear and tear  excepted),  with all interior  walls  painted,  or
cleaned so that they appear  freshly  painted,  and  repaired and  replaced,  if
damaged;  all floors cleaned and waxed;  all carpets cleaned and


                                      -4-

<PAGE>

shampooed;  the air conditioning and heating  equipment  serviced by a reputable
and  licensed  service  firm  and in  good  operating  condition  (provided  the
maintenance of such equipment has been Tenant's  responsibility  during the term
of this Lease) together with all alterations,  additions, and improvements which
may have been made in, to, or on the Premises  (except  movable  trade  fixtures
installed  at the  expense of Tenant);  provided,  however,  that  Tenant  shall
ascertain from Landlord within thirty (30) days before the end of the Lease Term
whether  Landlord  desires  to have the  Premises  or any part or parts  thereof
restored  to  their  condition  and  configuration  as when  the  Premises  were
delivered to Tenant and if Landlord  shall so desire,  then Tenant shall restore
said  Premises  or such part or parts  thereof  before  the end of this Lease at
Tenant's sole cost and expense.  Tenant,  on or before the end of the Lease Term
or sooner  termination  of this Lease,  shall  remove all of  Tenant's  personal
property and trade  fixtures from the Premises,  and all property not so removed
on or before the end of the Lease Term or sooner termination of this Lease shall
be deemed abandoned by Tenant and title to same shall thereupon pass to Landlord
without  compensation to Tenant.  Landlord may, upon  termination of this Lease,
remove all moveable  furniture and equipment so abandoned by Tenant, at Tenant's
sole cost,  and repair any damage  caused by such removal at Tenant's sole cost.
If the Premises are not surrendered at the end of the term or sooner termination
of this  Lease,  Tenant  shall  indemnify  Landlord  against  loss or  liability
resulting from the delay by Tenant in so  surrendering  the Premises  including,
without  limitation,  consequential  damages to Landlord caused,  in whole or in
part, by such delay. Nothing contained herein shall be construed as an extension
of the term hereof or as a consent of  Landlord  to any holding  over by Tenant.
The  voluntary  or other  surrender of this Lease or the Premises by Tenant or a
mutual  cancellation of this Lease shall not work as a merger and, at the option
of Landlord,  shall either terminate all or any existing subleases or operate as
an assignment to Landlord of all or any such subleases.

11.      ALTERATIONS AND ADDITIONS.

         Tenant shall not make, or suffer to be made, any alteration or addition
to the  Premises,  or any part  thereof,  without the prior  written  consent of
Landlord. All work with respect to any alteration or addition shall be done in a
good and  workmanlike  manner,  shall be under the  supervision  of a  competent
architect or competent licensed  structural  engineer approved by Landlord,  and
shall be made in accordance  with all  applicable  laws,  ordinances,  codes and
regulations  related  thereto  and the plans  and  specifications  with  respect
thereto shall be approved in writing by Landlord  before  commencement  of work.
Landlord's  approval  of  Tenant's  plans  and  specification  shall  create  no
responsibility  or  liability  on the part of Landlord  for their  completeness,
design sufficiency or compliance with governmental laws, rules or regulations.

         Tenant  agrees  that it will not  proceed  to make such  alteration  or
additions  without having obtained consent from Landlord to do so, and until ten
(10) days after the receipt of such  consent,  in order that  Landlord  may post
appropriate  notices to avoid any liability to contractors or material suppliers
for  payment for  Tenant's  improvements.  Tenant will at all times  permit such
notices to be posted and to remain posted until the  completion of work.  Tenant
shall,  if required by  Landlord,  secure at Tenant's  own cost and  expense,  a
completion and lien indemnity  bond,  satisfactory  to Landlord,  for such work.
Tenant further  covenants and agrees that any mechanic's  lien filed against the
Premises  or against  the  Complex  for work  claimed to have been done for,  or
materials  claimed to have been  furnished  to,  Tenant  will be  discharged  by
Tenant, by bond or otherwise, within ten (10) days after the imposition thereof,
at the cost and expense of Tenant.  Any exceptions to the foregoing must be made
in writing and executed by both  Landlord  and Tenant.  Upon  completion  of the
work, Tenant shall file a Notice of Completion as permitted by law in the Office
of the County Recorder where the Premises is located.

         Any  addition  to, or  alteration  of, the  Premises,  except  moveable
furniture  and trade  fixtures,  shall at once become a part of the Premises and
belong to Landlord.  Tenant shall  retain  title to all moveable  furniture  and
trade fixtures placed in the Premises. All heating,  lighting,  electrical,  air
conditioning,  floor to  ceiling  partitioning,  drapery,  carpeting,  and floor
installations  made by Tenant,  together  with all  property  that has become an
integral part of the Premises, shall not be deemed trade fixtures.

12.      REPAIR AND MAINTENANCE OF THE PREMISES.

         A. Landlord's  Obligations.  So long as no Event of Default (as defined
in Paragraph 24) has occurred,  which remains uncured beyond the applicable cure
period (if any) set forth in this Lease,  Landlord  shall,  at its sole cost and
expense,  maintain and repair the building  foundations,  structural elements of
the exterior walls and structural  elements of the roof, except to the extent of
any non-insured damage (or deductible portion of any insured damage) that is the
result of the negligence or willful act of Tenant or Tenant's employees,  agents
or contractors,  in which case Tenant shall be liable for the repair at Tenant's
sole cost and  expense.  Landlord  shall also  maintain  and repair (i) the roof
membrane,  (ii) the exterior surface of the building (including,  maintenance of
equipment  located  on the  roof  top,  exterior  window  washing  and  exterior
painting),  and (iii) at  Landlord's  election,  the HVAC  equipment  (through a
contract with a service company of Landlord's choice);  provided,  however, that
Tenant  shall  reimburse  Landlord for the cost  thereof as  Additional  Rent in
accordance with Paragraph 4.E. Landlord shall have no obligation to make repairs
under this  Paragraph  until a reasonable  time after receipt of written  notice
from Tenant of the need for such repairs. In no event shall any payments owed by
Tenant  under  this Lease be abated on  account  of  Landlord's  failure to make
repairs under this Paragraph.  Tenant hereby waives all statutory rights to make
repairs for or at the expense of Landlord.

         B. Tenant's  Obligations.  Except to the extent of  Landlord's  express
obligations  under Paragraph  12.A,  Tenant shall, at its sole cost and expense,
keep and maintain the Premises (including  appurtenances) and every part thereof
in a high  standard  of  maintenance  and  repair,  and  in  good  and  sanitary
condition.  Tenant's maintenance and repair  responsibilities herein referred to
include,  but are not limited  to, all  windows,  window  frames,  plate  glass,
glazing,  truck doors,  plumbing systems (such as water and drain lines,  sinks,
toilets, faucets, drains, showers and water fountains), electrical systems (such
as panels, conduits, outlets, lighting fixtures, lamps, bulbs, tubes, ballasts),
heating and air conditioning  distribution and temperature control systems (such
as fans, air handlers, ducts, mixing boxes, thermostats, time clocks, supply and
return grills), telecommunication systems within the Premises (including without
limitation  all  distribution  throughout  the Premises from  Tenant's  computer
closets),  and  telecommunication   systems  located  outside  of  the  Premises
(including without limitation intra Building  telephone,  telecommunication  and
network  cabling)  installed  to  exclusively  serve all or any  portion  of the
Premises,  all  interior  improvements  within the  Premises  including  but not
limited  to  wall  coverings,   window  coverings,   carpet,   floor  coverings,
partitioning,  ceilings,  doors (both interior and exterior,  including  closing
mechanisms,   latches,   and  locks),   skylights  (if  any),   automatic   fire
extinguishing  systems,  and  all  other  interior  improvements  of any  nature
whatsoever.  Tenant also agrees to provide janitorial  services for the Premises
as  well  as  carpet  shields  under  all  rolling  chairs  or to  otherwise  be
responsible  for wear and tear of the carpet  caused by such  rolling  chairs if
such wear and tear  exceeds  that caused by normal foot  traffic in  surrounding
areas.  Areas of excessive  wear in the  Premises  shall be replaced at Tenant's
sole expense upon Lease  termination.  If Landlord  elects to require  Tenant to
maintain the HVAC  equipment,  Tenant shall contract with a service  company for
the quarterly maintenance of the heating and air conditioning equipment,  with a
copy of the service  contract to be furnished  to Landlord  within ten (10) days
after  opening  for  business,  and a copy  of any  subsequent  contracts  to be
furnished  from  time to time.  If  Tenant  needs  to  access  Building  system,
including without limitation the Building telecommunication system, Tenant shall
have the right to do so only upon the prior  written  consent of Landlord and by
utilization of a contractor consented to by Landlord,  provided that despite any
such consent by Landlord,  Tenant shall remain fully  responsible  for the acts,
omissions and negligence of any such contractor.

13.      UTILITIES.

         Tenant  shall pay,  directly to the provider of such  services,  as the
same shall become due, all charges for water, gas, electricity, telephone, telex
and other electronic  communications  service,  sewer service, waste pick-up and
any other  utilities,  materials  or services  furnished  directly to or used by
Tenant on or about  the  Premises  during  the Lease  Term,  including,  without
limitation,  any  temporary or permanent  utility  surcharge or other  exactions
whether or not  hereinafter  imposed.  If any such  services and  utilities  are
jointly metered and not directly billed to Tenant, Tenant shall pay an equitable
portion of all charges as Additional  Rent, with the  determination  of Tenant's
equitable portion to be made by Landlord.  At Landlord's  request,  Tenant shall
pay Landlord for the cost of installing  separate  meters.  Tenant shall pay for
any and all telecommunication or other utility system modifications or additions
which it may require and which Landlord  expressly agrees to provide pursuant to
the terms of this Lease or any subsequent written agreement;  provided, however,
that nothing in this Lease shall require Landlord to provide,  modify or install
any utility  system or utility  system  component for Tenant's use except to the
extent  that the same is  required  by law or by an  express  written  agreement
between Landlord and Tenant.  Landlord shall not be liable for, and Tenant shall
not be entitled to, any abatement or reduction of Rent or other  compensation by
reason of any interruption or failure of utility services to the Premises.

14.      TAXES.

         A. Real  Property  Taxes.  As Additional  Rent and in  accordance  with
Paragraph 4.E of this Lease,  Tenant shall pay to Landlord Tenant's Share of all
Real Property Taxes that accrue during the Lease Term and which  constitute Real
Property  Taxes  pertaining to the Complex.  This  obligation  shall survive the
expiration or earlier  termination of this Lease, and if any Real Property Taxes
are  imposed by the County  Assessor  or other  governmental  authority  for the
period of time  constituting  the Lease Term,  whether or not Landlord is billed
for the same during the Lease Term,  Tenant shall pay such Real  Property  Taxes
when they are  ultimately  billed,  in accordance  with  Paragraph 4.E. The term
"Real Property  Taxes," as used herein,  shall mean (i) all taxes,  assessments,
levies and other charges of any kind or nature whatsoever,  general and special,
foreseen and unforeseen  (including all  installments  of principal and interest
required to pay any general or special  assessments for public  improvements and
any increases resulting from reassessments caused by any new improvements or any
change in ownership of the Complex) now or hereafter imposed by any governmental
or  quasi-governmental  authority  or  special  district  having  the  direct or
indirect power to tax or levy assessments, which are levied or assessed against,
or with  respect to the value,  occupancy  or use of, all or any  portion of the
Complex (as now  constructed  or as may at any time  hereafter  be  constructed,
altered, or otherwise changed) or Landlord's interest therein;  any improvements
located within the Complex  (regardless of ownership);  the fixtures,  equipment
and other property of Landlord,  real or personal,  that are an integral part of
and located in the Complex; or parking areas, public utilities, or energy within
the Complex; (ii) all charges, levies or fees imposed by reason of environmental
regulation or other governmental control of the Complex; and (iii) all costs and
fees  (including  attorneys'  fees)  incurred by Landlord in contesting any Real
Property Tax and in negotiating with public  authorities as to any Real Property
Tax. If at any time during the term of this Lease the taxation or  assessment of
the  Complex  prevailing  as of the  commencement  date of this  Lease  shall be
altered so that in lieu of or in addition  to any Real  Property  Tax  described
above there shall be levied,  assessed or imposed (whether by reason of a change
in the method of taxation or assessment, creation of a new tax or charge, or any
other cause) an alternate or additional  tax or charge (i) on the value,  use or
occupancy of the Complex or Landlord's  interest  therein or (ii) on or measured
by the gross  receipts,  income  or  rentals  from the  Complex,  on  Landlord's
business of leasing the  Complex,  or computed in any manner with respect to the
operation of the Complex, then any such tax or charge, however designated, shall
be included within the meaning of the term "Real Property Taxes" for purposes of
this Lease.  If any Real Property Tax is based upon property or rents  unrelated
to the  Complex,  then only that part of such Real  Property  Tax that is fairly
allocable to the Complex shall be included  within the meaning of the term "Real
Property Taxes."  Notwithstanding the foregoing,  the term "Real Property Taxes"
shall not include  estate,  inheritance,  gift or franchise taxes of Landlord or
the  federal or state net  income tax  imposed  on  Landlord's  income  from all
sources.


                                      -5-

<PAGE>

         B.       Taxes on Tenant's Property.

                  (1)  Tenant  shall be  liable  for and shall pay ten (10) days
before delinquency, taxes levied against any personal property or trade fixtures
placed  by  Tenant  in or about  the  Premises.  If any such  taxes on  Tenant's
personal  property or trade fixtures are levied  against  Landlord or Landlord's
property or if the assessed  value of the Premises is increased by the inclusion
therein of a value  placed  upon such  personal  property  or trade  fixtures of
Tenant and if Landlord,  after written notice to Tenant, pays the taxes based on
such increased assessment,  which Landlord shall have the right to do regardless
of the validity  thereof (but only under proper protest if requested by Tenant),
Tenant  shall upon  demand,  as the case may be,  repay to Landlord the taxes so
levied against  Landlord,  or the  proportion of such taxes  resulting from such
increase in the  assessment;  provided  that in any such event Tenant shall have
the right,  in the name of Landlord and with Landlord's  full  cooperation  (but
without cost to Landlord),  to bring suit in any court of competent jurisdiction
to recover the amount of any such taxes so paid under protest, and any amount so
recovered shall belong to Tenant.

                  (2) If  the  Tenant  improvements  in  the  Premises,  whether
installed,  and/or  paid for by Landlord or Tenant and whether or not affixed to
the real property so as to become a part thereof, are assessed for real property
tax purposes at a valuation  higher than the valuation at which standard  office
improvements in other space in the Complex are assessed,  then the real property
taxes and assessments  levied against  Landlord or the Complex by reason of such
excess assessed  valuation  shall be deemed to be taxes levied against  personal
property of Tenant and shall be governed by the provisions of Paragraph 14.B (1)
above.  If the records of the County  Assessor are  available  and  sufficiently
detailed to serve as a basis for  determining  whether said Tenant  improvements
are assessed at a higher  valuation than standard  office  improvements in other
space in the Complex, such records shall be binding on both the Landlord and the
Tenant.  If the records of the County Assessor are not available or sufficiently
detailed to serve as a basis for making said  determination,  the actual cost of
construction shall be used.

15.      LIABILITY INSURANCE.

         Tenant, at Tenant's expense,  agrees to obtain and keep in force during
the term of this  Lease a policy of  comprehensive  public  liability  insurance
against any and all claims for personal injury, death, property damage, or other
liabilities  related to the  condition,  use or  occupancy of the Premises or to
Tenant's operations on the Premises, including an extended liability endorsement
providing  contractual  liability and broad form property damage coverage.  Such
insurance shall also contain a cross-liability  clause and shall insure Tenant's
performance  of the  indemnity  agreement  set forth in Paragraph  18,  although
Tenant's  obligations  pursuant  to such  indemnity  shall not be limited to the
amount of any  insurance  required of, or  otherwise  carried by,  Tenant.  Such
liability  insurance  shall  have a combined  single  limit of not less than Two
Million Dollars ($2,000,000) and certificates evidencing such insurance shall be
furnished to Landlord prior to Tenant's occupancy of the Premises. The policy or
policies  affecting  such insurance  shall name Landlord and the  beneficiary or
mortgagee of any deed of trust or mortgage  affecting the Premises as additional
insureds,  and shall insure any liability of Landlord,  contingent or otherwise,
with respect to any act or omission of Tenant, its agents, employees or invitees
or otherwise by any conduct or  transactions  of any of said persons in or about
or  concerning  the  Premises,  including  any  failure  of Tenant to observe or
perform  any of its  obligations  hereunder;  shall be  issued  by an  insurance
company admitted to transact business in the State of California having a rating
of A or better in "Best's Insurance Guide"; and shall provide that the insurance
effected  thereby  shall not be  canceled,  except  upon thirty (30) days' prior
written notice to Landlord.  Said liability  insurance  shall be primary and not
contributing to any insurance  available to Landlord,  and Landlord's  insurance
shall be in excess thereto. If, during the Lease Term, in the considered opinion
of Landlord's  lender,  insurance advisor,  or counsel,  the amount of insurance
described in this  Paragraph 15 is not adequate,  Tenant agrees to increase said
coverage to such reasonable amount as Landlord's lender,  insurance advisor,  or
counsel shall deem adequate.

16.      TENANT'S PROPERTY INSURANCE AND WORKER'S COMPENSATION.

         Tenant shall maintain a policy or policies of fire and property  damage
insurance in "all risk" form with a sprinkler leakage  endorsement  insuring the
personal property,  inventory, trade fixtures, and leasehold improvements within
the Premises for the full  replacement  value thereof.  The proceeds from any of
such  policies  shall be used for the  repair or  replacement  of such  items so
insured.   Tenant  shall  also   maintain  a  policy  or  policies  of  worker's
compensation  insurance and any other employee benefit  insurance  sufficient to
comply with all laws.

17.      LANDLORD'S INSURANCE; WAIVER OF SUBROGATION.

         A. Landlord's Property  Insurance.  Landlord shall purchase and keep in
force, a policy or policies of casualty insurance covering loss or damage to the
Premises,  Building and related  Common Area  improvements  in the amount of the
full  replacement  value  thereof,  providing  protection  against  those perils
covered by "all risk" insurance,  and including such other casualty endorsements
as Landlord may elect.  Landlord shall also maintain at Landlord's election,  or
if required by  Landlord's  lender from time to time,  earthquake  and/or  flood
damage insurance,  worker's compensation insurance,  sprinkler leakage insurance
and rental  income  insurance  in the amount of one  hundred  (100%)  percent of
twelve (12) months Basic Rent, plus sums paid as Additional  Rent.  Tenant shall
pay to Landlord Tenant's Share of the cost of Landlord's insurance, as described
herein,  as Additional  Rent in accordance  with  Paragraph 4.E hereof.  If such
insurance  cost is increased due to Tenant's use of the Premises or the Complex,
Tenant  agrees to pay to Landlord the full cost of such  increase.  Tenant shall
have no interest in nor any right to the proceeds of any  insurance  procured by
Landlord as described in this Paragraph 17.

         B. Waiver of  Subrogation.  Each party hereby releases the other party,
and its partners,  officers,  agents,  employees, and servants, from any and all
claims, demands, loss, expense, or injury to the Premises or to the furnishings,
fixtures,  equipment,  inventory,  or  other  property  in,  about,  or upon the
Premises, which is caused by or results from perils, events, or happenings which
are the subject of fire or other casualty insurance in force at the time of such
loss  irrespective of any negligence on the part of the released party which may
have contributed to or caused such loss;  subject to the following  limitations:
(i) the party being  released  shall not be released  from any  liability to the
extent that such damages are not covered by the insurance  recovery  obtained by
the releasing  party, and (ii) the party being released shall be responsible for
reimbursing  the  releasing  party for any  deductible  owed as a result of such
damages.  Each party shall use  commercially  reasonable  efforts to obtain,  if
needed,  appropriate  endorsements  to its policies of insurance with respect to
the  foregoing  releases;   provided,  however,  that  failure  to  obtain  such
endorsements shall not affect the releases hereinabove given.

18.      INDEMNIFICATION; EXEMPTION OF LANDLORD FROM LIABILITY.

         A.  Indemnification.  Subject to Section 2782 of the  California  Civil
Code, Tenant shall defend, protect, indemnify, and hold Landlord and its agents,
contractors  and  employees  harmless  (except for gross  negligence  or willful
misconduct  of Landlord and then only to the extent that such loss is not waived
under Paragraph 17.B) from and against any and all obligations,  losses,  costs,
expenses,  liabilities,  claims, damages, demands, fines, penalties,  attorneys'
fees,  investigation  costs,  court  costs or expert  witness  fees  incurred in
connection  with or on  account  of,  or  arising  from any  injury  or death or
property  damage  resulting  from (i) the use,  condition  or  occupancy  of the
Premises or (ii) any act or omission or negligence of Tenant or Tenant's agents,
contractors,  employees,  or invitees or (iii) any occurrence in, upon or at the
Premises  from  any  cause   whatsoever   or  (iv)  any  breach,   violation  or
non-performance by Tenant of any of its obligations hereunder.

         B.  Exemption  of Landlord  from  Liability.  Neither  Landlord nor its
agents or contractors or employees shall be liable to Tenant,  and Tenant waives
all claims  against  Landlord,  and its agents,  contractors  and  employees for
injury or death to any person (including  without limitation Tenant and Tenant's
employees) or for damage or loss to Tenant's business  (including  consequential
damages) or for damage or loss to any  property  (including  without  limitation
Tenant's personal property) by and from all causes, including without limitation
(i) any latent or patent  defect in the Premises,  Building or Complex,  or (ii)
fire, steam,  electricity,  gas, dampness,  water or rain which may leak or flow
from or into any part of the  Premises or the  Complex,  or (iii)  interruption,
breakage,  leakage,   obstruction  or  defects  of  pipes,  sprinklers,   wires,
appliances, or Building Systems, including without limitation plumbing, heating,
air conditioning,  telecommunications  or lighting systems or fixtures,  whether
the damage or injury  results from  conditions  arising in,  upon,  or about the
Premises,  Building or Complex or from other sources or (iv) any act or omission
or  neglect  of any other  tenant  of the  Building  or  Complex.  Tenant  shall
immediately notify Landlord in writing of any known defect in the Premises.  The
provisions of this Paragraph 18.B shall not apply to any damage or injury caused
by Landlord's willful  misconduct or gross negligence,  except to the extent the
same is waived under Paragraph 17.B.

19.      COMPLIANCE.

         Tenant,  at its sole cost and expense,  shall promptly  comply with all
laws, statutes,  ordinances and governmental rules,  regulations or requirements
now or  hereafter  in  effect;  with  the  requirements  of any  board  of  fire
underwriters  or other similar body now or hereafter  constituted;  and with any
direction or occupancy certificate issued pursuant to law by any public officer;
provided,  however,  that no such  failure  shall be  deemed  a breach  of these
provisions  if Tenant,  immediately  upon  notification,  commences to remedy or
rectify said failure. The judgment of any court of competent jurisdiction or the
admission by Tenant in any action against  Tenant,  whether  Landlord be a party
thereto or not,  that Tenant has  violated any such law,  statute,  ordinance or
governmental rule,  regulation,  requirement,  direction or provision,  shall be
conclusive of that fact as between Landlord and Tenant. This Paragraph shall not
be  interpreted  as requiring  Tenant to make  structural  changes or structural
improvements,  except to the extent such changes or improvements are required as
a result of Tenant's use or  alteration of the  Premises.  Tenant shall,  at its
sole cost and expense,  comply with any and all requirements  pertaining to said
Premises,  of  any  insurance   organization  or  company,   necessary  for  the
maintenance  of  reasonable  fire and public  liability  insurance  covering the
Premises.

20.      LIENS.

         Tenant  shall keep the  Premises  and the  Complex  free from any liens
arising out of any work performed, materials furnished or obligation incurred by
Tenant.  In the event that Tenant shall not,  within ten (10) days following the
imposition  of such lien,  cause the same to be released  of record,  by bond or
otherwise,  Landlord  shall have,  in addition  to all other  remedies  provided
herein and by law, the right,  but not the  obligation,  to cause the same to be
released by such means as it shall deem proper,  including  payment of the claim
giving rise to such lien.  All sums paid by Landlord for such  purpose,  and all
expenses incurred by it in connection therewith, shall be payable to Landlord by
Tenant on demand with interest thereon as specified in Paragraph 44 below.

21.      ASSIGNMENT AND SUBLETTING.

         A. Landlord's Consent Required.  Tenant shall not assign,  transfer, or
hypothecate the leasehold estate under this Lease, or any interest  herein,  and
shall not sublet the Premises,  or any part  thereof,  or any right or privilege
appurtenant  thereto  (including,  but not limited to, the parking  spaces to be
used in  connection  with  Tenant's  occupancy),  or suffer any other  person or
entity to occupy or use the Premises,  or any portion thereof,  without, in each
case,  the  prior  written  consent  of  Landlord,  which  consent  will  not be
unreasonably  withheld. Any attempt to do so without such prior consent shall be
wholly void and shall  constitute a default by Tenant  under this Lease.  In the
event Landlord consents to any assignment or subletting,  such consent shall not
constitute a waiver of any of the restrictions of this Paragraph 21 and the same
shall apply to each successive assignment or subletting hereunder, if any. In no
event  shall  Landlord's  consent  to an  assignment  or  subletting  affect the
continuing primary liability of Tenant (which,  following  assignment,  shall be
joint  and  several  with  the  assignee),  or  relieve  Tenant  of  any  of its
obligations  hereunder  without  an  express  written  release  being  given  by
Landlord.  In  the  event  that  Landlord  shall


                                      -6-

<PAGE>

consent to an assignment or subletting  under this Paragraph 21, such assignment
or  subletting  shall not be effective  until the  assignee or  sublessee  shall
assume  all of the  obligations  of  this  Lease  on the  part of  Tenant  to be
performed or observed and whereby the assignee or sublessee shall agree that the
provisions  contained in this Lease shall,  notwithstanding  such  assignment or
subletting,  continue  to  be  binding  upon  it  with  respect  to  all  future
assignments and sublettings. Such assignment or sublease agreement shall be duly
executed and a fully  executed copy thereof shall be delivered to Landlord,  and
Landlord may collect Rent due hereunder directly from the assignee or sublessee.
Collection of Rent directly from an assignee or sublessee shall not constitute a
consent  or a  waiver  of  the  necessity  of  consent  to  such  assignment  or
subletting,  nor shall such collection constitute a recognition of such assignee
or sublessee as the Tenant hereunder or a release of Tenant from the performance
of all of its obligations hereunder.

         B.   Reasonable   Consent.   If  Tenant  complies  with  the  following
conditions,  Landlord  shall  not  unreasonably  withhold  its  consent  to  the
assignment  of the  Lease  or the  subletting  of the  Premises  or any  portion
thereof:  Tenant  shall  submit in  writing to  Landlord  (a) the name and legal
composition  of the  proposed  assignee  or  subtenant;  (b) the  nature  of the
proposed  assignee's or  subtenant's  business to be carried on in the Premises;
(c) the terms and  provisions of the proposed  assignment or sublease;  (d) such
reasonable financial information as Landlord may request concerning the proposed
assignee or subtenant including,  without limitation,  financial history, credit
rating and business  experience.  Tenant  acknowledges that Landlord has entered
into this Lease in reliance on the particular  skills,  knowledge and experience
of Tenant and/or the principal  officer of Tenant with respect to the conduct of
business in the Premises.  Without  limiting  Landlord's right to refuse to give
such consent on any other  reasonable  grounds,  Landlord  reserves the right to
refuse to give such consent if in Landlord's  reasonable  business  judgment (i)
the quality of  operation  of the Complex may be in any way  adversely  affected
during the Lease Term; (ii) the proposed assignee or subtenant is a governmental
or  quasi-governmental  department  or agency (iii) the  financial  worth of the
proposed new tenant is less than that of Tenant  executing this Lease;  (iv) the
proposed assignee's or subtenant's use of the Premises involves the storage, use
or disposal of any Hazardous  Materials;  (v) the proposed assignee or subtenant
has been required by any governmental authority to clean up Hazardous Materials;
(vi)  the  proposed  assignee  or  subtenant  is  subject  to  investigation  or
enforcement by any governmental  authority in connection with the use,  disposal
or storage of a  Hazardous  Material;  or (vii)  investigation  discloses  other
information reasonably unsatisfactory to Landlord.

         C. Bonus Rent.  Tenant  agrees that fifty  percent (50%) of any amounts
paid by the  assignee  or  sublessee  as Basic Rent or its  equivalent,  however
described,  in excess of the Basic Rent payable by Tenant  hereunder (or, in the
case of  sublease  of a portion  of the  Premises,  in excess of the Basic  Rent
reasonably  allocable  to such  portion),  shall be the property of Landlord and
such amounts shall be payable directly to Landlord by the assignee or sublessee.
At Landlord's  request,  a written  agreement shall be entered into by and among
Tenant,   Landlord  and  the  proposed  assignee  or  sublessee  confirming  the
requirements of this paragraph.

         D. Recapture. If the proposed assignment or subletting shall affect 80%
or more of the Premises,  Landlord  shall have the options to (I) terminate this
Lease  as of  the  proposed  effective  date  for  the  assignment  or  for  the
commencement of the term of the proposed sublease,  and this Lease shall then be
terminated  accordingly,  or (ii) take  assignment  of or sublet from Tenant the
affected  portion of the Premises  pursuant to the same terms and  conditions as
set forth in the executed assignment of sublease submitted by Tenant.

         E.  Certain  Transactions.  The  sale  of all or  substantially  all of
Tenant's assets (other than bulk sales in the ordinary course of business),  or,
if  Tenant  is a  corporation,  limited  liability  company,  an  unincorporated
association, or a partnership, the transfer,  assignment or hypothecation of any
stock or interest in such  corporation,  company,  association or partnership in
the aggregate in excess of twenty-five percent (25%) (except for publicly traded
shares of stock constituting a transfer of twenty-five  percent (25%) or more in
the  aggregate,  so long as no change  in the  controlling  interests  of Tenant
occurs as a result thereof) shall be deemed an assignment within the meaning and
provisions of this Paragraph 21.

         F. Costs; Acknowledgment of Reasonableness.  Tenant agrees to reimburse
Landlord for Landlord's expenses (including  attorneys' fees and costs) incurred
in connection  with  processing and  documentation  associated with any consents
requested by Tenant under this  Paragraph 21. Tenant agrees that the  provisions
of this  Paragraph  21 are not  unreasonable  standards  or  conditions  for any
purpose, including for purposes of the California Civil Code Section 1951.4(b).

22.      SUBORDINATION AND MORTGAGES.

         In the event Landlord's title or leasehold  interest in the Premises or
the Complex is now or hereafter  encumbered  by the lien of any mortgage or deed
of trust to secure a loan from a lender (hereinafter  referred to as a "Lender")
to  Landlord,  Tenant  shall,  at the request of Landlord or Lender,  execute in
writing an  agreement  subordinating  its rights under this Lease to the lien of
such mortgage or deed of trust,  or, if so requested,  agreeing that the lien of
Lender's mortgage or deed of trust shall be or remain subject and subordinate to
the rights of Tenant under this Lease.  Notwithstanding  any such subordination,
Tenant's  possession under this Lease shall not be disturbed if Tenant is not in
default  and so long as  Tenant  shall  pay all Rent and  fully  and  faithfully
observe  and  perform  all of the  provisions  set forth in this  Lease.  Tenant
acknowledges  that upon  receipt from a lender of a "Demand to Pay Rent to Party
other than  Landlord"  under Section 2938 of the California  Civil Code,  Tenant
shall be required to pay all Rents to the Lender as they become due.

23.      ENTRY BY LANDLORD.

         At all  reasonable  times  after  24  hours  prior  notice  (except  in
emergencies, in which case no notice is required) Landlord shall have, the right
to enter the Premises to inspect them; to perform any services to be provided by
Landlord hereunder; to submit the Premises to prospective  purchasers,  lenders,
or tenants and to post "For Rent" or "For Sale" or other  signs  relative to the
same; to post notices of non-responsibility; and to alter, improve or repair the
Premises,  all without  abatement of Rent; and may erect  scaffolding  and other
necessary structures in or through the Premises where reasonably required by the
character of the work to be performed;  provided,  however that  Landlord  shall
endeavor not to  unreasonably  interfere with Tenant's use of the Premises.  For
each of the foregoing  purposes,  Landlord  shall at all times have and retain a
key with  which to  unlock  all of the doors in an  emergency.  Any entry to the
Premises  obtained by Landlord by any of said  means,  or  otherwise,  shall not
under any  circumstances  be  construed  or deemed to be a forcible  or unlawful
entry into or a detainer of the Premises or an eviction, actual or constructive,
of Tenant from the Premises or any portion thereof. Landlord shall also have the
right  at any time to  change  the  arrangement  or  location  of  entrances  or
passageways, doors and doorways, corridors,  elevators, stairs, toilets or other
public  parts of the Complex and to change the name,  number or  designation  by
which the Complex is commonly  known,  and none of the foregoing shall be deemed
an actual or  constructive  eviction of Tenant,  or shall entitle  Tenant to any
damages or reduction of Rent hereunder.

24.      TENANT'S DEFAULT.

         The  occurrence of any of the following  shall be an "Event of Default"
(sometimes referred to herein as a "default") by Tenant and a material breach of
this Lease:

                  (1) Tenant shall fail to make any payment owed by Tenant under
this Lease, as and when due, and such failure is not cured within three (3) days
after Tenant receives written notice from Landlord  specifying such failure.  At
Landlord's  election,  any such  notice  shall be  concurrent  with,  and not in
addition to, any notice  required under Section 1161 of the  California  Code of
Civil Procedure;

                  (2) Tenant  shall fail to observe,  keep or perform any of the
terms,  covenants,  agreements  or  conditions  under this Lease that  Tenant is
obligated to observe or perform,  other than that  described in  subsection  (1)
above,  for a period of thirty (30) days after Tenant  receives  written  notice
from Landlord of said failure; provided, however, that if the nature of Tenant's
default is such that more than thirty (30) days are reasonably  required for its
cure,  then  Tenant  shall not be deemed to be in  default  under  this Lease if
Tenant  shall  commence  the cure of such  default  within  said thirty (30) day
period and diligently  prosecute the same to completion  within such time period
as is  reasonably  needed  but not to exceed  ninety  (90) days from the date of
Landlord's notice. At Landlord's  election,  any such notice from Landlord shall
be concurrent  with,  and not in addition to, any notice  required under Section
1161 of the California Code of Civil Procedure;

                  (3)  Tenant  shall  (i)  make  any  general   arrangement   or
assignment for the benefit of creditors; (ii) become a "debtor" as defined in 11
U.S.C.  Section  101 or any  successor  statute  thereto  (unless,  in case of a
petition  filed against  Tenant,  the same is dismissed  within 60 days);  (iii)
suffer  the  appointment  of  a  trustee  or  receiver  to  take  possession  of
substantially  all of  Tenant's  assets  located at the  Premises or of Tenant's
interest in this Lease,  where  possession  is not restored to Tenant  within 30
days;  or (iv) suffer the  attachment,  execution or other  judicial  seizure of
substantially  all of  Tenant's  assets  located at the  Premises or of Tenant's
interest in this Lease, where such seizure is not discharged within 30 days. The
provisions of this subparagraph  24(3) shall also apply to any Guarantor of this
Lease. However, in the event that any provision of this subparagraph is contrary
to any applicable law, such provision shall be of no force or effect; or

                  (4) Tenant  shall  vacate or abandon the  Premises at any time
during the Lease Term  (except  that  Tenant may vacate so long as it pays Rent,
provides an on site  security  guard during  normal  business  hours from Monday
through Friday, and otherwise performs its obligations hereunder).

25.      LANDLORD'S REMEDIES AND RIGHTS

         A.  Termination  of Lease.  In case of an Event of  Default  by Tenant,
Landlord  shall have the right,  in addition to all other  rights  available  to
Landlord under this Lease or now or hereafter  permitted by law or in equity, to
terminate  this Lease by  providing  Tenant with a notice of  termination.  Upon
termination,  Landlord  may recover any damages  proximately  caused by Tenant's
failure to perform under this Lease,  or which are likely in the ordinary course
of business to be incurred,  including any amount  expended or to be expended by
Landlord in an effort to mitigate  damages,  as well as any other  damages which
Landlord is entitled to recover  under any statute now or  hereafter  in effect.
Landlord's damages include, without limitation, the following:

                  (1) the  worth at the time of the  award  of any  unpaid  Rent
which had been earned at the time of termination;

                  (2) the worth at the time of the award of the  amount by which
the unpaid Rent which would have been earned after termination until the time of
the award  exceeds the amount of the loss of such Rent that Tenant  proves could
have been reasonably avoided; and

                  (3) the worth at the time of the award of the  amount by which
the unpaid Rent for the balance of the term after the time of the award  exceeds
the  amount  of the  loss of such  Rent  that  Tenant  proves  could  have  been
reasonably avoided.

                  As used in subparagraphs  (1) and (2) above, the "worth at the
time of award" shall be determined  by allowing  interest at the maximum rate of
interest permitted by applicable law. As used in subparagraph (3), the "worth at
the time of award" shall be  determined  by  discounting  to present  value such


                                      -7-

<PAGE>

amount at one percent  (1%) more than the discount  rate of the Federal  Reserve
Bank in San Francisco in effect at the time of the award.

         B.  Continuation of Lease.  In accordance  with  California  Civil Code
Section 1951.4 (or any successor statute), Tenant acknowledges that in the event
Tenant has breached  this Lease and  abandoned  the  Premises,  this Lease shall
continue in effect for so long as Landlord does not terminate  Tenant's right to
possession,  and  Landlord  may enforce all its rights and  remedies  under this
Lease,  including  the right to recover  the Rent as it  becomes  due under this
Lease.  Acts of maintenance or  preservation or efforts to relet the Premises or
the appointment of a receiver upon initiative of Landlord to protect  Landlord's
interest  under this Lease shall not  constitute a termination of Tenant's right
to possession.

         C. Right of Entry.  In case of an Event of Default by Tenant,  Landlord
shall also have the right, with or without  terminating this Lease, to enter the
Premises and remove all persons and personal  property from the  Premises,  such
property being removed and stored in a public warehouse or elsewhere at Tenant's
sole cost and expense for at least thirty (30) days,  and after such thirty (30)
day period,  Landlord  shall have the right to discard or  otherwise  dispose of
such property in accordance  with  California law. No removal by Landlord of any
persons or property in the Premises  shall  constitute  an election to terminate
this  Lease.  Such an  election  to  terminate  may only be made by  Landlord in
writing,  or  decreed by an  arbitrator  or a court of  competent  jurisdiction.
Landlord's  right of entry shall  include the right to remodel the  Premises and
relet the Premises. All costs incurred in such entry and reletting shall be paid
by Tenant.  Rents collected by Landlord from any other tenant which occupies the
Premises shall be offset against the amounts owed to Landlord by Tenant.  Tenant
shall be  responsible  for any amounts not  recovered by Landlord from any other
tenant  which  occupies  the  Premises.  Any  payments  made by Tenant  shall be
credited  to the  amounts  owed by Tenant in the sole  order and  discretion  of
Landlord,  irrespective  of any  designation  or request by Tenant.  No entry by
Landlord  shall prevent  Landlord from later  terminating  this Lease by written
notice.

         D. Remedies.  Tenant hereby waives, for itself and all persons claiming
by, through or under Tenant, all rights and privileges which it might have under
any present or future law to redeem the Premises or to continue this Lease after
being legally dispossessed or ejected from the Premises. The rights and remedies
of Landlord set forth in this Lease are not exclusive, and Landlord may exercise
any other right or remedy available to it under this Lease, at law or in equity.

26.      DESTRUCTION.

         In the event the  Premises  are  destroyed in whole or in part from any
cause, except damage and destruction caused from vandalism or accident for which
Tenant is responsible for under Paragraph 12, Landlord may, at its option:

        (a) Rebuild or restore  the  Premises  to their  condition  prior to the
damage or destruction, or

        (b) Terminate  this Lease,  provided that the Premises is damaged to the
extent of thirty three percent (33%) of the  replacement  cost thereof or to any
extent if (i) the damage is not  covered by  insurance,  and/or  (ii) the damage
occurs during the last twelve (12) months of the Lease Term.

        Landlord  shall give Tenant  notice in writing  within  thirty (30) days
from the  destruction  of the  Premises of its  election  to either  rebuild and
restore  them,  or to  terminate  this Lease.  In the event  Landlord  agrees to
rebuild or restore the Premises,  Landlord  shall do so promptly at its expense.
Unless  such  damage  is  caused by Tenant  or  Tenant's  agents,  employees  or
contractors,  Tenant  shall be entitled to a reduction in Rent while such repair
is  being  made  in the  proportion  that  the  area  of the  Premises  rendered
untenantable by such damage bears to the total area of the Premises. If Landlord
initially  estimates that the rebuilding or restoration  will exceed 180 days or
if Landlord does not complete the rebuilding or  restoration  within one hundred
eighty (180) days following the date of  destruction  (such period of time to be
extended for delays  caused by the fault or neglect of Tenant or because of Acts
of God,  acts of  public  agencies,  labor  disputes,  strikes,  fires,  freight
embargoes, rainy or stormy weather,  inability to obtain materials,  supplies or
fuels,  acts of contractors or  subcontractors,  or delay of the  contractors or
subcontractors due to such causes or other  contingencies  beyond the control of
Landlord),  then Tenant shall have the right to  terminate  this Lease by giving
thirty (30) days prior  written  notice to  Landlord.  Notwithstanding  anything
herein to the  contrary,  Landlord's  obligation to rebuild or restore shall not
include   restoration  of  Tenant's  trade   fixtures,   equipment,   (including
telecommunication  equipment,  whether  or not  located  within  the  Premises),
merchandise,  or any improvements,  alterations,  or additions made by Tenant to
the Premises,  which Tenant shall forthwith  replace or fully repair at Tenant's
sole cost and expense  provided  this Lease is not  cancelled  according  to the
provisions above.

        Unless this Lease is terminated  pursuant to the  foregoing  provisions,
this Lease shall remain in full force and effect. Tenant hereby expressly waives
any statutory rights of termination  which may arise by reason of any partial or
total destruction of the Premises.

        In the event the  damage or  destruction  of the  Premises  is caused by
Tenant or Tenant's employees,  agents or independent  contractors,  Tenant shall
pay the deductible portion of Landlord's insurance proceeds.

27.      EMINENT DOMAIN.

         If all or any part of the  Premises  shall be  taken by any  public  or
quasi-public  authority  under the power of eminent domain or conveyance in lieu
thereof,  this Lease shall  terminate as to any portion of the Premises so taken
or conveyed on the date when title vests in the condemnor, and Landlord shall be
entitled to any and all payment,  income,  rent,  award, or any interest therein
whatsoever  which  may be paid  or  made  in  connection  with  such  taking  or
conveyance, and Tenant shall have no claim against Landlord or otherwise for the
value  or any  unexpired  term  of this  Lease.  Notwithstanding  the  foregoing
Paragraph, any compensation specifically awarded to Tenant for loss of business,
Tenant's personal property, moving cost or loss of goodwill, shall be and remain
the property of Tenant.

        If (i) any action or  proceeding  is  commenced  for such  taking of the
Premises or any part thereof, or if Landlord is advised in writing by any entity
or body having the right or power of  condemnation  of its  intention to condemn
the Premises or any portion  thereof,  or (ii) any of the foregoing events occur
with respect to the taking of any other space in the Complex,  or (iii) any such
spaces are taken or conveyed  in lieu of such  taking,  Landlord  shall have the
right to terminate  this Lease by giving Tenant  written  notice  thereof within
sixty (60) days of the date of receipt of said written  advice,  or commencement
of said action or proceeding, taking or conveyance, which termination shall take
place as of the  first to occur  of the  last  day of the  calendar  month  next
following  the month in which such notice is given or the date on which title to
the Premises shall vest in the condemnor.

        In the event of a partial  taking or conveyance of the Premises,  if the
portion of the Premises taken or conveyed is so substantial  that the Tenant can
no longer  reasonably  conduct its business,  Tenant shall have the privilege of
terminating  this Lease  within  sixty (60) days from the date of such taking or
conveyance,  upon written notice to Landlord of its intention to do so, and upon
giving of such notice this Lease shall terminate on the last day of the calendar
month next  following  the month in which such notice is given,  upon payment by
Tenant of the Rent from the date of such  taking  or  conveyance  to the date of
termination.

        If a  portion  of  the  Premises  shall  be  taken  by  condemnation  or
conveyance in lieu thereof and neither  Landlord nor Tenant terminate this Lease
as provided herein, this Lease shall continue in full force and effect as to the
part of the  Premises  not so taken or  conveyed,  and the Rent herein  shall be
apportioned  as of the date of such taking or conveyance so that  thereafter the
Rent to be paid by Tenant  shall be in the ratio that the area of the portion of
the  Premises  not so taken or conveyed  bears to the total area of the Premises
prior to such taking.

28.      SALE OR CONVEYANCE BY LANDLORD.

         In the event of a sale or  conveyance  of the  Complex or any  interest
therein,  by  any  owner  of  the  reversion  then  constituting  Landlord,  the
transferor shall thereby be released from any further  liability upon any of the
terms, covenants or conditions (express or implied) herein contained in favor of
Tenant, and in such event, insofar as such transfer is concerned,  Tenant agrees
to look  solely to the  responsibility  of the  successor  in  interest  of such
transferor  in and to the  Complex  and this  Lease.  This  Lease  shall  not be
affected  by any such sale or  conveyance,  and  Tenant  agrees to attorn to the
successor in interest of such transferor.

29.      ATTORNMENT TO LENDER OR THIRD PARTY.

         In the event the interest of Landlord in the Complex is  encumbered  by
mortgage  or deed of trust,  and such  interest is acquired by the lender or any
third  party  through  judicial  foreclosure,   non-judicial   foreclosure,   or
conveyance in lieu thereof,  Tenant hereby agrees to attorn to such purchaser or
transferee  and to recognize  such purchaser or transferee as the landlord under
this Lease.  In the event the lien of the deed of trust securing the loan from a
lender to  Landlord  is prior and  paramount  to the  Lease,  this  Lease  shall
nonetheless continue in full force and effect for the remainder of the unexpired
term hereof,  at the same rental  herein  reserved and upon all the other terms,
conditions and covenants herein contained.

30.      HOLDING OVER.

         Any holding over by Tenant after expiration or other termination of the
Lease Term shall not constitute a renewal of the Lease or give Tenant any rights
to the  Premises  except as expressly  provided in this Lease.  Any holding over
after the  expiration  or other  termination  of the Lease Term,  with the prior
written  consent of  Landlord,  shall be construed to be a tenancy from month to
month, on the same terms and conditions  herein specified  insofar as applicable
except that the monthly  Basic Rent shall be increased to an amount equal to one
hundred fifty (150%) percent of the monthly Basic Rent required  during the last
month of the Lease Term.

31.      CERTIFICATE OF ESTOPPEL.

         Tenant shall,  within ten (10) days after written notice from Landlord,
at any time, execute, acknowledge and deliver to Landlord a statement in writing
(i)  certifying  that this Lease is unmodified and in full force and effect (or,
if modified,  stating the nature of such  modification  and certifying that this
Lease,  as so  modified,  is in full force and effect) and the date to which the
rent and other  charges are paid in advance,  if any;  (ii)  acknowledging  that
there are not,  to  Tenant's  knowledge,  any  uncured  defaults  on the part of
Landlord hereunder,  or specifying such defaults,  if any are claimed; and (iii)
certifying to such other matters concerning the Premises,  the Lease or Tenant's
tenancy as Landlord may request.  Any such statement may be conclusively  relied
upon by any  prospective  purchaser or  encumbrancer  of the Premises.  Tenant's
failure to deliver  such  statement  within such time shall be  conclusive  upon
Tenant that this Lease is in full force and effect,  without modification except
as may be  represented  by  Landlord,  that  there are no  uncured  defaults  in
Landlord's performance, and that not more than one month's Rent has been paid in
advance.


                                      -8-

<PAGE>

32.      CONSTRUCTION CHANGES.

         It is understood  that the description of the Premises and the location
of  ductwork,  plumbing and other  facilities  therein are subject to such minor
changes as Landlord or  Landlord's  architect  determines to be desirable in the
course of construction of the Premises,  and no such changes,  or any changes in
plans for any other  portions of the  Premises or the Complex  shall affect this
Lease or entitle  Tenant to any  reduction  of Rent  hereunder  or result in any
liability of Landlord to Tenant. Landlord does not guarantee the accuracy of any
drawings  supplied to Tenant and  verification  of the accuracy of such drawings
rests with Tenant.

33.      RIGHT OF LANDLORD TO PERFORM.

         All terms,  covenants  and  conditions of this Lease to be performed or
observed by Tenant  shall be  performed  or observed by Tenant at Tenant's  sole
cost and expense and without any  reduction of Rent. If Tenant shall fail to pay
Rent,  required to be paid by it  hereunder,  or shall fail to perform any other
term or covenant  required to be  performed  by it  hereunder,  and such failure
shall  continue for five (5) days after written  notice  thereof from  Landlord,
Landlord,  without  waiving or releasing  Tenant from any  obligation  of Tenant
hereunder,  may, but shall not be obligated to, make any such payment or perform
any such other term or covenant on Tenant's  part to be  performed.  All sums so
paid by  Landlord  and all  necessary  costs  of such  performance  by  Landlord
together with interest thereon at the rate of interest specified in Paragraph 44
below,  shall be paid to Landlord on demand as  Additional  Rent,  and  Landlord
shall  have (in  addition  to any other  right or remedy of  Landlord)  the same
rights and remedies in the event of nonpayment by Tenant of Rent hereunder.

34.      ATTORNEY'S FEES.

         In the event that either Landlord or Tenant should bring suit or become
involved in any proceeding for the possession of the Premises,  for the recovery
of any sum due under this Lease,  or because of the breach of any  provision  of
this Lease, or for any other relief against the other party hereunder,  then all
costs and  expenses,  including  reasonable  attorneys'  fees,  incurred  by the
prevailing  party therein shall be paid by the other party,  which obligation on
the part of the other party  shall be deemed to have  accrued on the date of the
commencement  of such action or proceeding and shall be  enforceable  whether or
not the action or proceeding is prosecuted to judgment. Should Landlord be named
as a defendant in any suit brought  against Tenant in connection with or arising
out of Tenant's occupancy hereunder,  Tenant shall pay to Landlord its costs and
expenses incurred in such suit, including a reasonable attorneys' fees.

35.      WAIVER.

         No covenant,  term or condition or the breach  thereof  shall be deemed
waived,  except by  written  consent  of the party  against  whom the  waiver is
claimed,  and any waiver of the breach of any covenant,  term or condition shall
not be deemed to be a waiver of any other  covenant,  term or  condition  or any
subsequent  failure of the party  failing to perform or observe  the same or any
other  such  term,  covenant  or  condition.   Acceptance  by  Landlord  of  any
performance  by Tenant  after the time the same shall have  become due shall not
constitute a waiver by Landlord of the breach or default of any  covenant,  term
or condition unless otherwise expressly agreed to by Landlord in writing.

36.      NOTICES.

         All notices, demands,  requests,  advises or designations (collectively
"Notices") which may be or are required to be given by either party to the other
party  hereunder shall be in writing.  All Notices shall be sufficiently  given,
made or delivered if (i) to Tenant,  personally  served on Tenant by leaving the
same at the Premises,  or (ii) to Landlord,  if personally  served on a Landlord
Owner (defined  below)  executing this Lease.  Notice shall also be sufficiently
given,  made or delivered if sent by (a) postage  prepaid  United States mail or
overnight  courier,  addressed as specified in Paragraph  1.L, or (b)  facsimile
transmission  to the numbers  specified in Paragraph 1.L, with  confirming  copy
sent by United States mail.  Each Notice  referred to in this Paragraph shall be
deemed received on the date of the personal service, the next business day after
sending via overnight courier or facsimile  transmission,  or on the third (3rd)
day after mailing thereof by United States mail,  postage  prepaid,  as the case
may be.

37.      EXAMINATION OF LEASE.

         Submission of this  instrument  for  examination or signature by Tenant
does not constitute a reservation of or option for a lease,  and this instrument
is not  effective as a lease or otherwise  until its  execution  and delivery by
both Landlord and Tenant.

38.      DEFAULT BY LANDLORD.

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

39.      AUTHORITY.

         If Tenant is a corporation (or other entity) each individual  executing
this  Lease on  behalf of said  corporation  (or other  entity)  represents  and
warrants that he or she is duly  authorized to execute and deliver this Lease on
behalf of said  corporation  (or other entity) in accordance with the by-laws of
said  corporation (or in accordance with the agreement of such other entity) and
that this Lease is binding upon said corporation (or other entity) in accordance
with its terms.  Tenant  shall,  within sixty (60) days after  execution of this
Lease,  deliver to Landlord a certified  copy of the  resolution of the Board of
Directors  or other  governing  members of said  corporation  (or other  entity)
authorizing or ratifying the execution of this Lease.

40.      LIMITATION OF LIABILITY.

         In consideration  of the benefits  accruing  hereunder,  Tenant and all
successors  and assigns  covenant and agree that,  in the event of any actual or
alleged failure, breach or default hereunder by Landlord:

         (i)      the sole and  exclusive  remedy and source of recovery for any
                  judgment or award shall be against Landlord's  interest in the
                  Premises;

         (ii)     no  partner,  member,  shareholder  or other owner of Landlord
                  (collectively,  "Landlord  Owner") shall be sued or named as a
                  party in any suit or action  (except  as may be  necessary  to
                  secure jurisdiction of the partnership);

         (iii)    no service of process shall be made against any Landlord Owner
                  (except  as  may  be  necessary  to  secure   jurisdiction  of
                  Landlord);

         (iv)     no Landlord  Owner  shall be  required to answer or  otherwise
                  plead to any service of process;

         (v)      no judgment will be taken against any Landlord Owner;

         (vi)     any judgment  taken against any Landlord  Owner may be vacated
                  and set aside at any time without hearing;

         (vii)    no writ of execution will ever be levied against the assets of
                  any Landlord Owner;

         (viii)   these  covenants  and  agreements  are  enforceable   both  by
                  Landlord and also by any Landlord Owner.

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

41.      BROKERS.

         Tenant  warrants  that it has had  dealings  with only the real  estate
broker(s)  or  agent(s)  specified  in  Paragraph  1.M in  connection  with  the
negotiation  of this Lease and that it knows of no other real  estate  broker or
agent who is entitled to a  commission  in  connection  with this Lease.  Tenant
shall  indemnify,  defend,  protect and hold  harmless  Landlord and  Landlord's
agents,  employees  and  independent  contractors  from and  against any and all
liabilities,  losses, costs, expenses and damages (including attorneys' fees and
costs) arising out of any  allegations  or claim by any third party,  other than
the broker(s)  specified  above,  for a commission or fee in connection with the
negotiation of this Lease.

42.      SIGNS.

         No sign,  placard,  picture,  advertisement,  name or  notice  shall be
inscribed,  displayed  or printed or affixed on or to any part of the outside of
the Premises or any exterior  windows of the Premises  without the prior written
consent of Landlord.  If Tenant does not obtain Landlord's prior written consent
pursuant to the preceding sentence,  Landlord shall have the right to remove any
such sign, placard, picture, advertisement, name or notice without notice to and
at the  expense of Tenant.  If Tenant is allowed to print or affix or in any way
place a sign in, on, or about the  Premises,  upon  expiration  or other  sooner
termination  of this Lease,  Tenant at Tenant's sole cost and expense shall both
remove  such sign and  repair  all  damage in such a manner  as to  restore  all
aspects  of  the  appearance  of the  Premises  to the  condition  prior  to the
placement of said sign.

All  approved  signs or lettering  on outside  doors shall be printed,  painted,
affixed or  inscribed  at the  expense of Tenant or by a person  approved  of by
Landlord.


                                      -9-

<PAGE>

Tenant shall not place anything or allow anything to be placed near the glass of
any window,  door  partition or wall which may, in Landlord's  judgment,  appear
unsightly from outside the Premises.

43.      HAZARDOUS MATERIALS.
         A.  Definitions.  As used herein,  the term "Hazardous  Material" shall
mean any substance or material which has been determined by any state,  federal,
or local  government  authority  to be  capable  of  posing a risk of  injury to
health,  safety or property  including  all of those  materials  and  substances
designated as hazardous or toxic by the  Environmental  Protection  Agency,  the
California  Water Quality Control Board, the Department of Labor, the California
Department of  Industrial  Relations,  the  Department  of  Transportation,  the
Department of Agriculture,  the Department of Human Services,  the Food and Drug
Agency or any other  governmental  agency  which  regulates  hazardous  or toxic
substances in the environment. Without limiting the generality of the foregoing,
the term  "Hazardous  Material"  shall  include (i) all of those  materials  and
substances listed as hazardous or toxic in Sections 66261.1 through 66261.126 of
Title 22 of the California  Code of  Regulations,  Article 4, Chapter 11, as the
same shall be amended from time to time,  or any other  federal,  state or local
statute, law, ordinance,  resolution,  code, rule,  regulation,  order or decree
regulating,   relating  to,  or  imposing  liability  or  standards  of  conduct
concerning,  any hazardous,  toxic or dangerous waste,  substance or material as
now or at any time hereafter in effect,  (ii) any substance,  product,  waste or
other material of any nature  whatsoever  which may give rise to liability under
any statutory or common law theory based on  negligence,  trespass,  intentional
tort, nuisance or strict liability or under any reported decisions of a state or
federal  court,  or (iii)  petroleum  or crude  oil  other  than  petroleum  and
petroleum products which are contained within regularly operated motor vehicles.

         B.  Restriction on Use.  Tenant shall not cause or permit any Hazardous
Material to be used, generated,  released,  discharged,  transported to or from,
stored, or disposed of in or about the Premises,  the Complex, or any other land
or  improvements  in the vicinity of the  Premises or the  Complex,  without the
prior written  consent of Landlord,  which consent may be withheld in Landlord's
sole and absolute discretion.  However,  subject to the terms and conditions set
forth herein, Landlord agrees that so long as the original party named herein as
Tenant  remains the Tenant under this Lease,  and so long as no uncured Event of
Default  exists under this Lease,  Tenant shall be permitted to use and store in
the Premises only the substances  listed on Exhibit E attached hereto  (however,
the inclusion of Exhibit E shall in no way be deemed to create any obligation on
Landlord's  part to review the list of Hazardous  Materials  for  conformity  to
laws).  Without  limiting the generality of the foregoing,  Tenant,  at its sole
cost and  expense,  shall  comply with all laws  relating to the  storage,  use,
generation,  release, transportation and disposal of Hazardous Materials. If the
presence of any Hazardous Material on the Premises caused or permitted by Tenant
results in contamination of the Premises,  the Complex,  or any nearby premises,
Tenant, at its sole cost and expense,  shall promptly take all actions necessary
to return the same to the condition existing prior to such contamination.

Tenant  shall  indemnify,   defend,  protect  and  hold  harmless  Landlord  and
Landlord's  agents,  employees and independent  contractors from and against any
and all claims,  judgments,  damages (including,  without  limitation,  punitive
damages),  losses,  penalties,  fines,  demands,  liabilities  (including strict
liability), encumbrances, liens, costs and expenses of investigation and defense
of any claim,  including,  without  limitation,  reasonable  attorneys' fees and
disbursements  and consultants'  fees,  arising out of, relating to or resulting
from any storage, use, generation, discharge, treatment, transportation, release
or disposal by Tenant, or Tenant's agents, employees or independent contractors,
of any  Hazardous  Material  upon,  about,  above or beneath the  Premises,  the
Complex or any nearby  premises.  This indemnity shall survive the expiration or
earlier  termination  of this  Lease.  Tenant  shall not  suffer  any lien to be
recorded  against the  Premises or the Complex as a  consequence  of a Hazardous
Material,  including  any  so-called  state,  federal or local "super fund" lien
related to the "clean up" of a Hazardous Material in or about the Premises,  the
Complex or any other premises.

         C. Compliance. Tenant shall immediately notify Landlord of any inquiry,
test,  investigation,  or  enforcement  proceeding  by or against  Tenant or the
Premises concerning a Hazardous Material.  Tenant acknowledges that Landlord, as
the owner of the  Premises,  at its  election,  shall  have the sole  right,  at
Tenant's expense, to negotiate,  defend,  approve and appeal any action taken or
order issued with regard to a Hazardous  Material by an applicable  governmental
authority.  Landlord  shall have the right to appoint a consultant,  at Tenant's
expense, to conduct an investigation to determine whether any Hazardous Material
is being used, stored and disposed of in an appropriate  manner.  Tenant, at its
expense, shall comply with all recommendations of the consultant.

         D.  Certification  Upon  Termination  of Lease.  Upon the expiration or
earlier  termination of the Lease,  Tenant,  at its sole cost,  shall remove all
Hazardous  Materials  from the  Premises  and  shall  provide a  certificate  to
Landlord at Landlord's request certifying that there is no contamination of soil
in or about the Premises and that there is no other  contamination  of Hazardous
Materials in the Premises. If Tenant fails to so surrender the Premises,  Tenant
shall,  in addition to its obligations  under  Paragraph 43.B above,  indemnify,
defend, protect and hold harmless Landlord and Landlord's agents,  employees and
independent  contractors  from and against  any and all damages  arising out of,
related to or  resulting  from  Tenant's  failure to  surrender  the Premises as
required by this Paragraph,  including without  limitation any claims or damages
in connection  with the condition of the Premises such as damages  occasioned by
the  inability to relet the  Premises or a reduction  in the fair market  and/or
rental  value of the  Premises  by  reason  of the  existence  of any  Hazardous
Material upon, about,  above or beneath the Premises,  the Complex or any nearby
premises.

         E.  Clean-up  Activities.  If any action is  required  to be taken by a
governmental  authority to clean-up  Hazardous  Materials  from the Premises and
such action is not completed  prior to the expiration or earlier  termination of
the Lease,  Tenant  shall be deemed to have  impermissibly  held over until such
time as such required action is completed,  and in addition to the  requirements
of  Paragraph  30,  Landlord  shall  be  entitled  to all  damages  directly  or
indirectly  incurred in  connection  with such holding over,  including  without
limitation,  damages  occasioned  by the  inability  to relet the  Premises or a
reduction of the fair market and/or rental value of the Premises.

44.      INTEREST.

         Any sum accruing to Landlord  under the  provisions of this Lease which
shall not be paid by Tenant  within thirty (30) days after such sum becomes due,
shall bear  interest from the  expiration of such 30 day period,  until paid, at
the rate of twelve  percent (12%) per annum,  or the maximum rate then permitted
under applicable law, whichever is less.

45.      MISCELLANEOUS AND GENERAL PROVISIONS.

         A. Use of Building Name.  Tenant shall not, without the written consent
of  Landlord,  use the name of the  Building  for any purpose  other than as the
address of the business conducted by Tenant in the Premises.

         B. Governing Law; Partial Invalidity.  This Lease shall in all respects
be  governed  by and  construed  in  accordance  with the  laws of the  State of
California  If any  provision of this Lease shall be invalid,  unenforceable  or
ineffective for any reason whatsoever,  all other provisions hereof shall be and
remain in full force and effect.

         C. Definitions;  Binding Effect. The term "Premises" includes the space
leased  hereby  and any  improvements  now or  hereafter  installed  therein  or
attached  thereto.  The term  "Landlord"  or any pronoun  used in place  thereof
includes the plural as well as the singular  and the  successors  and assigns of
Landlord.  The term "Tenant" or any pronoun used in place  thereof  includes the
plural  as  well  as  the  singular  and   individuals,   firms,   associations,
partnerships and  corporations,  and their and each of their  respective  heirs,
executors,  administrators,  successors and permitted assigns,  according to the
context  hereof,  and the provisions of this Lease shall inure to the benefit of
and  bind  such  heirs,  executors,  administrators,  successors  and  permitted
assigns.

The term "person"  includes the plural as well as the singular and  individuals,
firms,  associations,  partnerships and  corporations.  Words used in any gender
include other  genders.  If there be more than one Tenant,  the  obligations  of
Tenant hereunder are joint and several. The paragraph headings of this Lease are
for convenience of reference only and shall have no effect upon the construction
or interpretation of any provision hereof.

         D. Time of the  Essence.  Time is of the  essence  of this Lease and of
each and all of its provisions.

         E.  Quitclaim  of  Leasehold  Interest.  At the  expiration  or earlier
termination  of this Lease,  Tenant shall  execute,  acknowledge  and deliver to
Landlord, within ten (10) days after written demand from Landlord to Tenant, any
quitclaim  deed or  other  document  required  by any  reputable  title  company
licensed  to  operate  in the  State  of  California,  to  remove  the  cloud or
encumbrance  created  by this  Lease from the real  property  of which  Tenant's
Premises are a part.

         F. Entire Agreement. All exhibits, riders and attachments referenced in
this Lease are hereby  incorporated  into this Lease. This instrument along with
any exhibits,  riders and attachments  hereto  constitutes the entire  agreement
between  Landlord and Tenant relative to the Premises and this agreement and the
exhibits  and  attachments  may  be  altered,  amended  or  revoked  only  by an
instrument in writing  signed by both  Landlord and Tenant.  Landlord and Tenant
hereby  acknowledge  that  neither  party  has  relied  upon any  representation
concerning  the Premises  that is not set forth in this Lease and agree that all
prior or contemporaneous  oral agreements between and among themselves and their
agents or representatives  relative to the leasing of the Premises are merged in
or revoked by this agreement.

         G.  Recording of Lease.  Neither  Landlord nor Tenant shall record this
Lease or a short form memorandum hereof without the consent of the other.

         H. Amendments Required by Lender.  Tenant further agrees to execute any
amendments required by a lender to enable Landlord to obtain financing,  so long
as Tenant's rights hereunder are not substantially affected.

         I. Air Rights Retained by Landlord. Tenant covenants and agrees that no
diminution or shutting off of light,  air or view by any structure  which may be
hereafter  erected  (whether  or not by  Landlord)  shall in any way affect this
Lease,  entitle  Tenant  to any  reduction  of Rent  hereunder  or result in any
liability of Landlord to Tenant.

         J.  Early  Occupancy.  If Tenant  occupies  the  Premises  prior to the
Commencement  Date,  such occupancy shall be subject to all of the provisions of
this  Lease,  and Tenant  shall pay Basic  Rent,  Additional  Rent and all other
charges specified in this Lease for the early occupancy period.  Early occupancy
of the Premises by Tenant shall not advance the termination date of this Lease.


                                      -10-

<PAGE>

         K. Options Personal to Tenant. Any Options shall (i) be personal to the
original  Tenant  executing this Lease,  (ii) not be assignable and (iii) not be
separated  from this Lease in any manner,  whether by  reservation or otherwise.
Any such Option may be exercised  only by the  original  Tenant  executing  this
Lease while  occupying  the  Premises  and  provided  that such Option  shall be
exercised in good faith without the intent of thereafter assigning this Lease or
subletting  the Premises,  or any portion  thereof,  and may not be exercised or
assigned, voluntarily or involuntarily, by or to any other person or entity.
<TABLE>
IN WITNESS  WHEREOF,  Landlord and Tenant have executed and delivered this Lease
as of the day and year first above written.
<CAPTION>
<S>      <C>                                                <C>
LANDLORD:   GEOMAX                                          TENANT:   SIERRA MONITOR CORPORATION
            a California general partnership                          a California corporation

 By      Max Gahrahmat                                      By         Gordon Arnold
    ------------------------------------------------------      -----------------------------------------------
         Print  Name                                                   Print Name


         /s/ Max Gahrahmat                                             /s/ Gordon R. Arnold
    ------------------------------------------------------      -----------------------------------------------
             Signature                                                     Signature


             Partner                                                       President
    ------------------------------------------------------      -----------------------------------------------
        Title of Signatory                                                 Title of Signatory


 By      George L. Quinn, Jr.                               By
    ------------------------------------------------------
        Print  Name                                                  Print Name


        /s/ George L. Quinn, Jr.
    ------------------------------------------------------
            Signature                                                Signature


            Partner
    ------------------------------------------------------
        Title of Signatory                                           Title of Signatory

</TABLE>


                                                     -11-

<PAGE>

                                    EXHIBIT A

                          LEGAL DESCRIPTION OF COMPLEX

The real  property  referred  to in this Lease as the  "Complex"  shall mean and
include all that certain real  property  situated in the County of Santa Clara ,
State of California, more particularly described as follows:


                                      -12-

<PAGE>

                                    EXHIBIT B

                        SITE PLAN OF COMPLEX AND BUILDING



                  GRAPHIC OMITTED




                                      -13-

<PAGE>




                                    EXHIBIT C

                         TENANT IMPROVEMENTS WORKLETTER

                                  [To Be Added]





                          None.



                                      -14-

<PAGE>




                                    EXHIBIT D

                         ACKNOWLEDGMENT OF COMMENCEMENT


Landlord:          GEOMAX
           -----------------------------------------------
Tenant:            SIERRA MONITOR CORPORATION
           -----------------------------------------------
Complex:           Tarob Court Business Park
           -----------------------------------------------
Premises:          1991 Tarob Court, Milpitas, CA
           -----------------------------------------------

For the Lease dated  7/31,  2000, the undersigned hereby certifies:



      I.    That the undersigned  Tenant occupies the  above-described  Premises
            consisting of approximately 15,788 square feet.

      II.   That  the  initial  Lease  term  commenced  on 4/01 , 2001  and will
            terminate on 3/31 , 2006.

      III.  That Tenant's  obligation to pay monthly Basic Rent in the amount of
            $37,102.00 commenced or will commence on 4/01 , 2001.

      IV.   That a security  deposit of $  40,000.00  has been paid by Tenant to
            Landlord. Balance of $31,359.00 to be paid by 4/1/01

      V.    That all  construction  to be  performed by Landlord is complete and
            has been accepted by Tenant.


<TABLE>
Dated as of this  18  day of  August , 2000 .
<CAPTION>
<S>      <C>                                                <C>
LANDLORD:  GEOMAX                                           TENANT:   SIERRA MONITOR CORPORATION


 By      Max Gahrahmat                                      By        Gordon Arnold
    ------------------------------------------------------       -------------------------------------------------
         Print  Name                                                  Print Name


         /s/ Max Gahrahmat                                            /s/ Gordon Arnold
    ------------------------------------------------------       -------------------------------------------------
         Signature                                                    Signature


         Partner                                                      President
    ------------------------------------------------------       --------------------------------------------------
         Title of Signatory                                           Title of Signatory


 By      George L. Quinn, Jr.                               By
    ------------------------------------------------------
         Print  Name                                             Print Name


         /s/ George L. Quinn, Jr.
    ------------------------------------------------------
         Signature                                               Signature


         Partner
    ------------------------------------------------------
         Title of Signatory                                      Title of Signatory
</TABLE>

                                                        -15-

<PAGE>

<TABLE>
                                    EXHIBIT E

                               HAZARDOUS MATERIALS
<CAPTION>

        Subject to the terms and  conditions  set forth in  Paragraph  43 of the
Lease,  so long as the original party named therein as Tenant remains the Tenant
under the Lease,  and so long as no uncured  Event of Default  exists  under the
Lease,  Tenant  shall be  permitted  to use and store in the  Premises  only the
substances  listed  below.  If no items are  listed,  then  Tenant  shall not be
entitled to use or store any Hazardous Material on or about the Premises.

                           CHEMICAL INVENTORY LISTING

Hazard Class                       Physical State                     *Manner of Storage               **Note
------------                       --------------                     ------------------               ------
<S>                                <C>                                        <C>                         <C>
Non Flammable Gas                  Gas                                        E
Flammable Gas                      Gas                                        E
Oxidizer                           Gas                                        E
Poison                             Liquid                                     A                           1
N/A                                Liquid                                     A                           2
N/A                                Liquid                                     A                           3
N/A                                Liquid                                     A                           4
N/A                                Liquid                                     A                           5
<FN>
* Indicated as:  E - Pressurized Vessels
                 A - Container on Shelf

**Note

1 - Various aerosol canisters (quarter) of urethane, acrylic

2 - Cleaning fluids (quart and smaller) ie. Household ammonia, soaps

3 - Adhesives and glues in tubes and pint containers

4 - Blue line activator

5 - Laboratory   chemicals   including   alcohols,   acids,  acids,  base  (pint
    containers)
</FN>
</TABLE>
                                                       -16-

<PAGE>

                                    RIDER #1

                                 LEASE AGREEMENT

                       GEOMAX / SIERRA MONITOR CORPORATION

FIRST  ADDENDUM TO LEASE DATED JULY 31,  2000 BY AND BETWEEN  GEOMAX,  A GENERAL
PARTNERSHIP, AS LESSOR AND SIERRA MONITOR CORPORATION, A CALIFORNIA CORPORATION,
AS LESSEE.

OPTION TO RENEW;

Landlord grants to Tenant an Option to Renew this Lease for a period of five (5)
years on the same terms and  conditions,  except  monthly  rental  which will be
determined by market  conditions  for like property,  and mutually  agreed to by
both  parties at the time option is  exercised.  This Option to Renew is granted
only  to  Sierra  Monitor  Corporation  and  shall  not be  transferable  to any
sub-tenant,  affiliated  Company or new parent  company owner of Sierra  Monitor
Corporation.  In order to avail  himself of said  option,  Tenant  shall  notify
Landlord  in writing of the intent to exercise  such  option one hundred  twenty
(120) days prior to the expiration of the original term of this Lease.

NOTIFICATION OF HAZARDOUS MATERIALS EVENTS;

Landlord  shall  protect  Tenant  and  Tenant's  employees  from the  human  and
financial risks associated with Hazardous Materials by (1) providing Tenant with
a copy of co-tenant's listing of Hazardous Materials stored on the premises, (2)
immediate  notification to Tenant of any  non-compliance by co-tenant as soon as
observed by, or reported to, Landlord  regarding  Hazardous  Materials rules and
regulations,  and (3) by taking reasonable actions to avoid Hazardous  Materials
infringements by co-tenants, neighbors and visitors to the complex.
<TABLE>
<CAPTION>
SIGNED & ACCEPTED:
<S>      <C>                                                          <C>
SIERRA MONITOR CORPORATION:                                   GEOMAX:

By:      /s/ Gordon Arnold                                    By:     /s/ Max Gahrahmat    /s/ George L. Quinn, Jr.
     -------------------------------------------                   ------------------------------------------------

Its:     President                                            Its:     Parners
     -------------------------------------------                   ------------------------------------------------

Date:    8/18/2000                                             Date:   8/21/2000
     -------------------------------------------                   ------------------------------------------------
</TABLE>

                                                      -17-