Exhibit 10.4
                                                                  ------------

                            BUSINESS PARK GROSS LEASE

                         48834 MILMONT DRIVE, UNIT 103-A
                               FREMONT, CALIFORNIA



                                 BY AND BETWEEN

                        BEDFORD PROPERTY INVESTORS INC.,
                             A MARYLAND CORPORATION
                                    (LESSOR)

                                       AND

                               ION NETWORKS, INC.
                                    (LESSEE)

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                            BUSINESS PARK GROSS LEASE

                                TABLE OF CONTENTS

1.  SALIENT LEASE TERMS.................................................1
2.  PREMISES............................................................3
3.  TERM ...............................................................4
4.  PRE-TERM POSSESSION.................................................4
5.  DELAY IN DELIVERY OF POSSESSION.....................................5
6.  MINIMUM RENT........................................................5
7.  TAXES...............................................................6
8.  COMMON AREAS AND COMMON AREA COSTS..................................8
9.  ASSIGNMENT AND SUBLETTING..........................................11
10.  PROPERTY INSURANCE................................................15
11.  LIABILITY INSURANCE...............................................17
12.  INSURANCE POLICY REQUIREMENTS.....................................18
13.  LESSEE INSURANCE DEFAULT..........................................18
14.  INDEMNIFICATION, WAIVER OF CLAIMS AND SUBROGATION.................19
15.  DESTRUCTION.......................................................21
16.  ACCORD AND SATISFACTION...........................................22
17.  SECURITY DEPOSIT..................................................22
18.  USE ..............................................................23
19.  COMPLIANCE WITH LAWS AND REGULATIONS..............................24
20.  UTILITIES.........................................................31
21.  ALTERATIONS.......................................................32
22.  MAINTENANCE AND REPAIRS...........................................34
23.  CONDEMNATION......................................................35
24.  EMPLOYEE PARKING..................................................37
25.  ABANDONMENT.......................................................37
26.  ENTRY BY LESSOR...................................................37
27.  SIGNS.............................................................38
28.  DEFAULT...........................................................38
29.  REMEDIES UPON DEFAULT.............................................39
30.  FORFEITURE OF PROPERTY AND LESSOR'S LIEN..........................42
31.  SURRENDER OF LEASE................................................43
32.  LESSOR'S EXCULPATION..............................................43
33.  ATTORNEYS' FEES...................................................43
34.  NOTICES...........................................................44
35.  SUBORDINATION.....................................................45
36.  ESTOPPEL, CERTIFICATES............................................46
37.  WAIVER............................................................46
38.  HOLDING OVER......................................................46
39.  SUCCESSORS AND ASSIGNS............................................47

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40.  TIME...............................................................47
41.  EFFECT OF LESSOR'S CONVEYANCE......................................47
42.  TRANSFER OF SECURITY...............................................47
43.  CORPORATE AUTHORITY................................................47
44.  WAIVER OF CALIFORNIA CODE SECTIONS.................................48
45.  WASTE..............................................................48
46.  BANKRUPTCY.........................................................48
47.  LATE CHARGES.......................................................50
48.  MORTGAGEE PROTECTION...............................................50
49.  MISCELLANEOUS PROVISIONS...........................................51

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                            BUSINESS PARK GROSS LEASE


                             1. SALIENT LEASE TERMS

         THIS LEASE (the "Lease") is dated for reference purposes only this 17th
day of May, 1999.

         1.1      RENT PAYMENT:         Bedford Property Investors, Inc. Lock
                                        Box#: 73048 - "Bedford-Fremont" P.O. Box
                                        60000 San Francisco, California
                                        94160-3048

         1.2      PARTIES AND NOTICE ADDRESS:

                                        Lessor: BEDFORD PROPERTY INVESTORS, INC.
                                        A MARYLAND CORPORATION 270 LAFAYETTE
                                        CIRCLE LAFAYETTE, CALIFORNIA 94549

                                        Lessee: ION-NETWORKS, INC. A DELAWARE
                                        CORPORATION 48834 KATO ROAD, UNIT 103A
                                        FREMONT, CALIFORNIA 94538 (If more than
                                        one party, then the obligations
                                        hereunder shall be joint and several.)
                                        (Section 49.12)

         1.3      PREMISES:             (A) Name and Location of Complex:
                                        BEDFORD FREMONT BUSINESS CENTER
                                        CONSISTING OF FIVE (5) BUILDINGS LOCATED
                                        AT (I) 48810 KATO ROAD, (II) 48820 KATO
                                        ROAD, (III) 48334 KATO ROAD, (IV) 48860
                                        MILMONT DRIVE AND (V) 48890 MILMONT
                                        DRIVE, FREMONT, CALIFORNIA 94538.
                                        (B) Leased Premises: 48834 KATO ROAD,
                                                       UNIT 103-A
                                                       FREMONT, CALIFORNIA 94538
                                        (C) Approximately 4,600 square feet.
                                        (Section 2.2) 1.4 TERM: (A) Commencing
                                        June 1, 1999. (B) Sixty (60) Months
                                        (Section 3. 1)

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         1.5      RENT:                  (A) Minimum Rent:
                                         Months 01-12:  $7,360.00
                                         Months 13-24:  $7,5900.00
                                         Months 25-36:  $7,820.00

                                         Months 37-48: $8,050.00
                                         Months 49-60: $8,280.00
                                                                  (Section 6.1)

                                         (B) Advance Rent:  $7,360.00
                                                                  (Section 6.2)

         1.6      BASE COSTS FOR THE COMPLEX:


                                        (A) Real Property Taxes: Base amount
                                        shall be the actual Real Property Taxes
                                        incurred during the calendar year 1999.
                                        (Section 7.4)

                                        (B) Base Insurance Cost: Base amount
                                        shall be the actual Complex Insurance
                                        Premium incurred during calendar year
                                        1999.
                                                                 (Section 10.3)

                                        (C) Base Common Area Costs: Base amount
                                        shall be the Complex Common Area Costs
                                        incurred during the calendar year 1999.
                                        (Section 8.3)



         1.7      SECURITY DEPOSIT:     $8,280.00
                                                                  (Section 17.1)

         1.8      USE:                  Premises used solely for General office,
                                        light assembly and distribution.
                                        (Section 18.1)

         1.9      INITIAL PRO RATA %:   3.14% (4,600 sq. ft. + 146,509 sq. ft.)
                                                                  (Section 8.3)

         1.10     DECLARATION OF RESTRICTIONS:

                                        Date of Recordation June 30, 1989 Book
                                        126 and 153 Pages 30-33 and Page 43
                                        Document Number

                                        2

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                                                                  (Section 2.4)

         1.11     CONTENTS:           This Lease consists of
                                      Pages 1 through 4)
                                      Sections 1 through 43
                                      Addenda: None
                                      Exhibits:
                                      A- Legal Description of Complex
                                      B - Plan of the Complex
                                      B1 - Floor Plan of the Leased Premises
                                      C - Construction Obligations
                                      D - Acknowledgment of Commencement of Term
                                      E - Rules and Regulations

         The above terms are incorporated in this Lease as indicated above and
referenced herein. Definitions of the terms in this Lease appear in the
following sections: bankruptcy event, 46. 1; alterations, 21.2; Award, 23.1(c);
Building, 2.2; Capital Costs, 8.4; Common Area Costs, 8.4; Common Areas, 8. 1;
Complex, 2.2; Complex Insurance Premium, 10.3(a); Condemnation, 23. 1 (a);
Condemnor, 23. 1 ((d); Date of taking, 23. 1 (b); Decision Period, 23.4; debtor,
46. 1 (a); employee parking, 24. 1; Environmental Laws, 19.3(a); Hazardous
Materials, 19.3(a); Hazardous Use, 19.3(b); HVAC, 22.2; Leased Premises, 2.2;
Minimum Rent, 6.1; Nonterminating Party, 23.4; notice, 34.2; obligor, 34.3;
Order for Relief, 46. 1 (a); person, 49.2; Plans, 21.2(b); pro rata %, 8.3; Real
Property Taxes, 7. 1; rent or rental, 29.2(a); Rentable Area, 9.6(a); Report,
19.3(c); restrictions, 2.3; Security Deposit, 6.2; tax bill, 7.4; Taxes, 7. 1;
Term, 1.4; Terminating Party, 23.4; Termination Notice, 9.6; Transfer or
Transfer of the Leased Premises, 9.2; uninsured property loss property loss, 15.
1; Usable Area, 9.6; Wetlands Laws, 19.4; Wetlands, 19.4; worth at the time of
award, 29.2(b).

                                   2. PREMISES

         2.1      DEMISING CLAUSE.

         Lessor hereby leases to Lessee, and Lessee hires from Lessor a portion
of the Complex as hereinafter defined.

         2.2      DESCRIPTION.

         The term "Complex" shall refer to that parcel of real property of which
the Leased Premises forms a part, together with the parcel or parcels in common
ownership therewith and contiguous thereto. The Complex is described with
particularity in Exhibit A attached hereto and made a part hereof by reference,
and described generally in Section 1.3(A) hereof. The Complex contains, among
other things, communications, computer, audio and video, security and electrical
(other than electrical wiring terminating at or connected to Building standard
electrical outlets), cables, wires, duct work, sensors, switching equipment,
control boxes and related improvements at the Complex, Building or

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the Leased Premises ("Lines"). The premises leased herein are described in
Section 1.3(B) and delineated on Exhibit B, which is attached hereto and made a
part hereof by reference, consisting of the approximate amount of square footage
as specified in Section 1.3(C) hereof. The term "Building" shall refer to the
Building in which the Leased Premises are located. The portion leased herein to
Lessee is hereinafter referred to as the "Leased Premises." Lessee acknowledges
that Lessor may change the shape, size, location, number and extent of the
improvements to any portion of the Complex without consent of Lessee and without
affecting Lessee's obligations hereunder. Lessor reserves the area beneath and
above the Building as well as the exterior thereof together with the right to
install, maintain, rise, repair and replace pipes, ducts, conduits, wires, and
structural elements leading through the Leased Premises serving other parts of
the Complex, so long as such items are concealed by walls, flooring or ceilings.
Such reservation in no way affects the maintenance obligations imposed herein,
nor shall such reservation alter the parties' responsibilities and obligations
set forth in this Lease regarding "Hazardous Materials" (as defined in Section
19.3(a) below).

         2.3      COVENANTS, CONDITIONS AND RESTRICTIONS.

         The parties agree that this Lease is subject to the effect of (a) any
covenants, conditions, restrictions, easements, mortgages or deeds of trust,
ground leases, rights of way of record, and any other matters or documents of
record; (b) any zoning laws of the city, county and state where the Complex is
situated; and (c) general and special taxes not delinquent. Lessee agrees that
as to its leasehold estate, Lessee and all persons in possession or holding
under Lessee will conform to and will not violate the terms of any covenants,
conditions or restrictions of record which may now of hereafter encumber the
property (hereinafter the "restrictions"). This Lease is subordinate to the
restrictions and any amendments or modifications thereto.

         2.4      DECLARATION OF RESTRICTIONS.

         The Leased Premises are subject to a Declaration of Restrictions as
referenced in Section 1. 10 hereof.

                                     3. TERM

         3.1      COMMENCEMENT DATE.

         The term of this Lease shall commence on the date specified in Section
1.4(A) hereof and shall be for the Term specified in Section 1.4(B) hereof, plus
any partial month at the commencement of the Term.

         3.2      ACKNOWLEDGMENT OF COMMENCEMENT.

         After delivery of the Leased Premises to Lessee, Lessee shall execute a
written acknowledgment of the date of commencement in the form attached hereto
as Exhibit D and by this reference it shall be incorporated herein.

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                             4. PRE-TERM POSSESSION

         4.1      CONDITIONS OF ENTRY.

         In the event the Leased Premises are to be constructed or remodeled by
Lessor, Lessor may notify Lessee when the Leased Premises are ready for Lessee's
fixturing or Lessee's work, which may be prior to substantial completion of the
Leased Premises by Lessor. Lessee may thereupon enter the Leased Premises for
such purposes at its own risk, to make such improvements as Lessee shall have
the right to make, to install fixtures, supplies, inventory and other property.
Lessee agrees that it shall not in any way interfere with the progress of
Lessor's work by such entry. Should such entry prove an impediment to the
progress of Lessor's work, in Lessor's judgment, Lessor may demand that Lessee
forthwith vacate the Leased Premises until such time as lessor's work is
complete, and Lessee shall immediately comply with this demand.

         During the course of any pre-term possession, whether such pre-term
period arises because of an obligation of construction on the part of Lessor, or
otherwise, all terms and conditions of this Lease, except for rent and
commencement, shall apply, particularly with reference to indemnity by Lessee of
lessor under Article 14 herein for all occurrences within or about the Leased
Premises.

                       5. DELAY IN DELIVERY OF POSSESSION

         5.1      DELAY.

         If Lessor, for any reason whatsoever, cannot deliver possession of the
Leased Premises to Lessee at the commencement of the Term, this Lease shall not
be void or voidable, nor shall Lessor be liable for any loss or damage resulting
therefrom, but in that event, there shall be an abatement of rent covering the
period between the commencement of the Term and the time when Lessor can deliver
possession. The Term shall be extended by such delay for an equal period.

                                 6. MINIMUM RENT

         6.1      PAYMENT.

         Lessee shall pay to Lessor at the address specified in Section 1.1, or
at such other place as Lessor may otherwise designate, as "Minimum Rent" for the
Leased Premises the amount specified in Section 1.5(A) hereof, payable in
advance on the first day of each month during the Term. If the Term commences on
other than the first day of a calendar month, the rent for the first partial
month shall be prorated accordingly. All payments of Minimum Rent (including sum
defined as rent in Section 29.2) shall be in lawful money of the United States,
and payable without deduction, setoff, offset, counterclaim, recoupment, notice
or demand.

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         6.2      ADVANCE RENT.

         The amount specified in Section 1.5(B) hereof is paid herewith to
Lessor upon execution of this Lease as advance rent, receipt of which is hereby
acknowledged, provided, however, that such amount shall be held by Lessor as a
"Security Deposit" pursuant to Section 17.1 hereof until it is applied by Lessor
to the first Minimum Rent due hereunder.

         6.3      LATE PAYMENT.

         If during any twelve (12) month period Lessee fails on more than one
occasion to make any payment of Minimum Rent to Lessor on the date when it is
due, then Lessor may, by giving written notice to Lessee, require that Lessee
pay the Minimum Rent to Lessor quarterly in advance.

                                    7. TAXES

         7.1      DEFINITION.

         In this Article 7 the terms "Real Property Taxes" and "Taxes" are used
interchangeably. "Real Property Taxes" as used in this Lease shall include all
Real Property Taxes on the Building, the Complex, the land on which the Building
is situated, and the various estates in the Building and the Land, including
this Lease, as well as all personal property taxes levied on the property used
in the operation of the Building or land, whether or not now customary or within
the contemplation of the parties to this Lease. "Taxes" also shall include the
reasonable cost to Lessor of contesting the amount, validity, or applicability
of any Taxes mentioned in this Section. Further included in the definition of
Taxes herein shall be general and special assessments, fees of every kind and
nature, commercial rental tax, levy, penalty or tax (other than inheritance or
estate taxes) imposed by any authority having the direct or indirect power to
tax, as against any legal or equitable interest of Lessor in the Leased Premises
or in the real property of which the Leased Premises are a part, as against
Lessor's right to rent or other income therefrom, or as against Lessor's
business of leasing the Leased Premises, any tax, fee, or charge with respect to
the possession, leasing, transfer of interest, operation, management,
maintenance, alteration, repair, use, or occupancy by Lessee, of the Leased
Premises or any portion thereof, the Building, or the Complex, or any tax
imposed in substitution, partially or totally, for any tax previously included
within the definition of Taxes herein, or any additional tax, the nature of
which may or may not have been previously included within the definition of
Taxes. The term "Real Property Taxes" or "Taxes" shall not include any tax which
may be levied upon or against the net income or profits of Lessor or its
successors or assigns.

         7.2      ASSESSMENTS.

         With respect to any general or special assessments which may be levied
upon or against the Leased Premises, the Building, the Complex, or the
underlying realty, or which may be evidenced by improvement or other bonds, and
which may be paid in annual or semiannual installments, only the

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current amount of such installment, prorated for any partial year, and statutory
interest, shall be included within the computation of Taxes for which Lessee is
responsible hereunder.

         7.3      SEPARATE ASSESSMENT.

         If the Leased Premises are assessed separately by the county assessor
or other taxing agency, Lessee shall pay to Lessor as additional rent at least
ten (10) days prior to the date when such Taxes would be delinquent, all
increases in Real Property Taxes as hereinabove defined applicable to the Leased
Premises or arising under Section 7.1 above. In the event the Leased Premises
share parking and Common Areas with other Premises, the provisions of Section
7.4 below shall apply to Taxes thereon.

         7.4      PRORATION.

         If the Leased Premises are not separately assessed as all individual
tax unit as described in the previous Section, Lessee shall pay, as additional
rent, to Lessor, within ten (10) days after receipt of billing, its pro rata
share of all Real Property Taxes stated in the tax bill in which the Leased
Premises are included, including the parking and Common Areas, as well as the
improvements on all of said land, or otherwise arising under the provisions of
this Article, less the base specified in Section 1.6(A) hereof. The term "tax
bill" as used herein shall mean the tax bill which includes the Leased Premises,
or a group of tax bills aggregated at the option of Lessor, as long as all such
bills relate to the Complex. Pro rata share is defined as that fraction the
numerator of which is the square footage in the Leased Premises and the
denominator of which is the net leasable area included within the tax bill.

         7.5      ESTIMATED PAYMENTS.

         Lessor may, at its option, estimate the amount of Taxes next due and
collect from Lessee on a monthly or quarterly basis at Lessor's option, the
amount of Lessee's estimated tax obligation. On or before March 1 of each year
during the Term, Lessor shall provide Lessee with a reconciliation of Lessee's
account with respect to such estimated tax payments. In event it is established
upon such reconciliation that Lessee has not paid sufficient amount in estimated
tax payments to cover its pro rata share for the year in question, Lessee shall
pay to Lessor the full amount of any such shortage within ten (10) days of date
of billing. If it is established that Lessee has made an overpayment of its tax
shortage within the (10) days of date of billing. If it is established that
Lessee has made an overpayment of its tax obligation upon such reconciliation,
Lessee shall receive, at Lessor's option, either a credit applicable to the next
ensuing estimated tax payments, or a credit to a tax reserve account to be held
by Lessor for application to sums due in respect of reassessment or escape
assessments applicable to the period in question, but yet to be billed.

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         7.6      PERSONAL PROPERTY AND OTHER TAXES.

         Lessee shall pay prior to delinquency all Taxes assessed against and
levied upon trade fixtures, furnishings, equipment and all other personal
property of Lessee contained in the Leased Premises or elsewhere. When possible,
Lessee shall cause such trade fixtures, furnishings, equipment and all other
personal property to be assessed and billed separately from the real property of
Lessor. Lessee shall also pay prior to delinquency all Taxes and other taxes in
connection with any testing, investigation, abatement, remediation, removal,
transportation and/or disposal of any Hazardous Materials by Lessee (or by
Lessor, pursuant to any provision of this Lease granting to Lessor the right to
do any of the foregoing and to bill Lessee therefor). For purposes of this
Section 7.6, the terms "Taxes" and "taxes" shall include, but not be limited to,
any fees, charges, fines, penalties and costs (including, without limitation,
permit, approval or licensing fees, charges or costs). If any of Lessee's said
personal property shall be assessed with Lessor's real property, or if any other
Taxes or taxes which are payable by Lessee pursuant to this Lease or otherwise
are assessed against Lessor or Lessor's real property, Lessee shall pay Lessor
the Taxes and other taxes attributable to Lessee within ten (10) days after
receipt of a written statement setting forth in the Taxes and other taxes
attributable to Lessee.

                      8. COMMON AREAS AND COMMON AREA COSTS

         8.1      DEFINITION OF COMMON AREAS.

         The term "Common Areas" as used herein means all areas and facilities
outside the Leased Premises, within the exterior boundaries of the Complex, that
are provided and designated by Lessor from time to time for the general use and
convenience of Lessee and of other tenants of Lessor having the common use of
such areas, and their respective authorized representatives and invitees. Common
Areas include, without limitations driveways, parking areas, sidewalks, and
landscaped areas, all as generally described on Exhibit B attached hereto.
Exhibit B is tentative, and Lessor reserves the right to make alterations
thereto from time to time.

         8.2      RIGHTS AND DUTIES OF LESSOR.

         Lessor shall, in a manner it deems proper in its opinion, maintain the
Common Areas, establish and enforce reasonable rules and regulations concerning
such areas, close any of the Common Areas to whatever extent required in the
opinion of Lessor's counsel to prevent a dedication of any of the Common Areas
or the accrual of any rights of any person or of the public to the Common Areas,
close temporarily any of the Common Areas for maintenance purposes, and make
changes to the Common Areas including, without limitation, changes in the
location of driveways, entrances, exits, vehicular parking spaces, parking area,
the designation of areas for the exclusive use of others, the direction of the
flow of traffic or construction of additional Buildings thereupon. Lessee hereby
acknowledges that Lessor is under no obligation to provide security for the
Common Areas but may do so at its option.

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         8.3      PAYMENT BY LESSEE.

         Lessee shall pay to Lessor, as additional rent its proportionate share
of Common Area Costs as hereinafter defined, within ten (10) days of receiving a
bill therefor from Lessor, but no more frequently than monthly. Lessee's
proportionate share (or "pro rata %") shall be that fraction of Common Area
Costs the numerator of which is the number of square feet in the Leased Premises
and the denominator of which is the net leasable area of buildings in the
Complex having the use of the Common Areas. Lessee's initial pro rata % of
Common Area Costs is stated in Section 1.9. Lessor may bill Lessee estimated
charges in accordance with Section 8.5. Notwithstanding the preceding provisions
of this Section 8.3, Lessee's proportionate share as to certain expenses
included in Common Area Costs may be calculated differently to yield a higher
percentage share for Lessee as to certain expenses in the event Lessor permits
other tenants or occupants in the Complex to incur such expenses directly rather
than have Lessor incur the expense in common for the Complex. In such case
Lessee's proportionate share of the applicable expense shall be calculated as
having as its denominator the net leasable area of all Premises in the Complex
less the net leasable area of tenants who have incurred such expense directly.
Furthermore, in the event Lessee consumes extraordinary amounts of any provided
utility or other service as determined in Lessor's good faith judgment, Lessee's
Proportionate Share for such utility or service may, at Lessor's election, be
based on usage as opposed to Occupied Floor Area, that is, Lessee's
Proportionate Share of such a utility or service would be calculated as having
as its denominator the total usage of such utility or service in the Complex (or
Building as the case may be), and having as its numerator Lessee's usage of such
utility or service, as determined by Lessor in its sole good faith judgment. In
any case where Lessee, with Lessor's consent, incurs such expenses directly,
Lessee's proportionate share of Common Area Costs will be calculated specially
so that expenses of the same character which are incurred by Lessor for the
benefit of other tenants in the Complex shall not be prorated to Lessee. If
repairs are required for systems exclusively serving the Leased Premises
(whether within or outside of said Leased Premises), Lessee shall pay one
hundred percent (100%) of such repair costs. Nothing herein shall imply that
Lessor will permit Lessee or any other tenant of the Complex to incur Common
Area Costs. Any such permission shall be in the sole discretion of Lessor, which
Lessor may grant or withhold in its arbitrary judgment.

         8.4      DEFINITION OF COMMON AREA COSTS.

         "Common Area Costs" means all sums (including "Capital Costs" as
hereinafter defined and to the extent stated herein) expanded by Lessor, its
agents, contractors and employees for operating, maintaining, repairing,
replacing and administering of the Complex, including, without limitation,
painting the exterior walls of the buildings in the Complex, equipping, policing
and protecting, lighting, providing sanitation and sewer and other services,
insuring (including self-insurance and the payment of deductible amounts under
insurance policies), repairing, replacing and maintaining the (i) Common Areas
and (ii) all buildings and roofs within the Complex, and (iii) all other areas,
facilities and buildings, vertical transportation facilities, retention ponds
(if applicable), and any and all facilities and improvements connecting the
Complex to off-site buildings or areas, which are used in connection with the
maintenance and/or operation of, and whether located within or outside of, the

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Complex; such costs and expenses shall include, but shall not be limited to, the
full cost of: illumination and maintenance of Complex signs, whether located on
or off the Complex; refuse disposal, water, gas, sewage, electricity and other
utilities (without limitation), including any and all usage, service, hook up,
connection, availability and/or standby fees or charges pertaining to same, and
including all costs associated with the provision, maintenance and operation of
any central telephone service for the Complex and/or utility system and/or Lines
for the Complex; the operation, maintenance, repair and replacement of all or
any part of the parking areas; snow removal, maintenance and operation of any
temporary or permanent utility and/or utility system, including a sewage
disposal system, within or without the Complex, together with hook up or
connection fees and service charges; compliance with rules, regulations and
orders of governmental authorities pertaining to air pollution control,
including the cost of monitoring air quality; maintenance for wooded areas,
retention ponds, lakes and shoreline areas (if applicable); cleaning, lighting,
striping and landscaping; curbs, gutters, sidewalks, drainage and irrigation
ditches, conduits, pipes and canals located on or adjacent to the Complex;
premiums for liability, casualty, and property insurance; personal property
taxes; licensing fees and taxes, audit fees and expenses; supplies; costs of
complying with all governmental regulations, rules, laws, ordinances and codes;
cost, lease payment or depreciation of any equipment, improvements or facilities
used in the operation or maintenance of the Common Areas or project areas; total
compensation and benefits (including premiums for workers' compensation or any
other insurance or other retirement or employee benefits, and including all
costs incurred in providing such benefits) paid to or on behalf of employees
involved in the performance of the work specified in this Section or employees
otherwise providing services to tenants or customers of the Complex; public
transit or car pooling facilities; management fees paid to independent
contractors; reserve accounts established for the purchasing and/or replacement
of equipment; community association and/or property owner's association dues and
assessments which may be imposed upon Lessor by virtue of any recorded
instrument affecting title to the Complex; plus a management fee not to exceed
five percent (5%) of gross revenues. Common Area Costs shall also include,
without limitation, the repair and replacement, resurfacing and repaving of any
paved areas, curbs, gutters or other surfaces or areas within the Complex, the
repair and replacement of any equipment or facilities located within or serving
the Complex, and the cost of any capital repairs, replacements or improvements
made by Lessor to the Complex ("Capital Costs"). However, certain Capital Costs
(the "Restricted Capital Costs") shall be includable in Common Area Costs each
year only to the extent of that fraction allocable to the year in question
calculated by amortizing such Restricted Capital Costs over the reasonably
useful life of the improvement resulting therefrom, as determined by Lessor,
with interest on the unamortized balance at the higher of (i) tell percent (10%)
per annum; or (ii) the interest rate as may have been paid by Lessor for the
fluids borrowed for the purpose of performing the work for which the Restricted
Capital Costs have been expended, but in no event to exceed the highest rate
permissible by law. The Restricted Capital Costs subject to such amortization
procedure are the following: (x) those costs for capital improvements to the
Complex of a type which do not normally recur more frequently than every five
(5) years in the normal course of operation and maintenance of facilities such
as the Complex (specifically excluding painting of all or a portion of the
Complex); (y) costs incurred for the purpose of reducing other operating
expenses or utility costs, from which Lessee can expect a reduction in the
amounts it would otherwise expend, or reimburse Lessor, and (z) expenditures by
Lessor that are required by governmental law,

                                       10

<PAGE>



ordinance, regulation or mandate, including, without limitation, any
"Environmental Laws" or "Wetlands Laws" (as such terms are defined in Article
19), which were not-applicable to the Complex at the time of the original
constriction

         8.5      ESTIMATED PAYMENTS.

         Lessor shall have the right, at its option, to estimate Lessee's pro
rata share of Common Area Costs due in the future from Lessee and to collect
from Lessee on a monthly or quarterly basis, as Lessor may elect, the amount of
Lessee's estimated pro rata share of such costs. Lessor shall provide Lessee
with a reconciliation of Lessee's account at least annually, and if such
reconciliation shall indicate that Lessee's account is insufficient to satisfy
Lessee's pro rata share of Common Area Costs for the period estimated, Lessee
shall immediately pay to Lessor any deficiency. Any excess in such account
indicated by the reconciliation shall be credited to Lessee's account to reduce
the estimated payments for the next ensuing period.

         8.6      REFUSE DISPOSAL.

         Lessee shall arrange and pay for Refuse Disposal service at the Leased
Premises. Lessee shall pay Lessor, within ten (10)days of being billed therefore
for the removal from the Common Areas, the Complex, or the Building of any
refuse or rubbish which Lessee may have permitted to accumulate therein to an
unreasonable extent.

                          9. ASSIGNMENT AND SUBLETTING

         9.1      LEASE IS PERSONAL.

         The purpose of this Lease is to transfer possession of the Leased
Premises to Lessee for Lessee's personal use in return for certain benefits,
including rent, to be transferred to the Lessor. Lessee's right to assign or
sublet as stated in this Article is subsidiary and incidental to the underlying
purpose of this Lease. Lessee acknowledges and agrees that it has entered into
this Lease in order to acquire the Leased Premises for its own personal use and
not for the purpose of obtaining the right to convey the leasehold to others.

         9.2      "TRANSFER OF THE LEASED PREMISES" DEFINED.

         The terms "Transfer of the Leased Premises" or "Transfer" as used
herein shall include any assignment of all or any part of this Lease (including
assignment by operation of law), subletting of all or any part of the Leased
Premises or transfer of possession, or granting of the right of possession or
contingent right of possession of all or any portion of the Leased Premises
including, without limitations license, concessions mortgage, devise,
hypothecation, agency, franchise or management agreement, or suffering any other
person (the agents and servants of Lessee excepted) to occupy or rise the Leased
Premises or any portion thereof. If Lessee is a corporation which is not deemed
a public corporation, or is an unincorporated association or partnership, or
Lessee consists of more

                                       11

<PAGE>



than one party, the transfer, assignment or hypothecation of any stock or
interest in such corporation, association, partnership or ownership interest, in
the aggregate in excess of twenty-five percent (25%) shall be deemed a Transfer
of the Leased Premises.

         9.3      NO TRANSFER WITHOUT CONSENT.

         Lessee shall not suffer a Transfer of the Leased Premises or any
interest therein, or any part thereof, or any right or privilege appurtenant
thereto without the prior written consent of Lessor, and a consent to one
Transfer of the Leased Premises shall not be deemed to be a consent to any
subsequent Transfer of the Leased Premises. Any Transfer of the Leased Premises
without such consent shall (i) be voidable, and (ii) terminate this Lease, in
either case, at the option of Lessor.

         9.4      WHEN CONSENT GRANTED.

                  (a) The consent of Lessor to a Transfer may not be
unreasonably withheld, provided that it is agreed to be reasonable for Lessor to
consider any of the following reasons, which list is not exclusive, in electing
to consent or to deny consent:

                           (i) Financial strength of the proposed transferee is
not at least equal to that of Lessee at the time of execution of this Lease;

                           (ii) proposed transferee whose occupation of the
Leased Premises would cause a diminution in the reputation of the Complex or the
other businesses located therein;

                           (iii) A proposed transferee whose impact of the
common facilities or the other occupants of the Complex would be
disadvantageous;

                           (iv) A proposed transferee whose rise presents a risk
of violation of Article 19;

                           (v) A proposed transferee whose occupancy will
require a variation in the terms of this Lease (for example, a variation in the
use clause) or which otherwise adversely affects any interest of Lessor;

                           (vi) Lessee agrees that its personal business skills
and philosophy were an important inducement to Lessor for entering into this
Lease agreement and that Lessor may reasonably object to the transfer of the
Leased Premises to another whose proposed use, while permitted by the use clause
of this Lease, would involve a quality manner or type of business skills
different from those of Lessee;

                           (vii) That the validity of the Transfer is not
conditioned on the conformity of the Lessee and transferee with all provisions
of this Lease at the time of Transfer, including,

                                       12

<PAGE>



without limitations the requirement that there be no uncured notices of default
under the terms of this Lease; or

                           (viii) A proposed transferee who is or is likely to
be, or whose business is or is likely to be, subject to compliance with
additional laws or other governmental requirements beyond those to which Lessee
or Lessee's business is subject.

                  (b) Notwithstanding the foregoing, Lessee shall have the
right, without the consent of Lessor, but upon prior written notice to Lessor,
to assign this Lease to a company incorporated or to be incorporated by Lessee,
provided that Lessee owns or beneficially controls all the issued and
outstanding shares of capital stock of the company; further provided, however,
that in the event that at any time following such assignment, Lessee wishes to
sell, mortgage, devise, hypothecate or in any other manner whatsoever transfer
any portion of the ownership or beneficial control of the issued and outstanding
shares in the capital stock of such company, such transaction shall be deemed to
constitute a Transfer and shall be subject to all of the provisions of this
Article 9 with respect to a Transfer of the Premises including, by specific
reference, the provisions of Section 9.8.

         9.5      PROCEDURE FOR OBTAINING CONSENT.

                  (a) Lessor need not commence its review of any proposed
Transfer, or respond to any request by Lessee with respect to such, unless and
until it has received from Lessee adequate descriptive information concerning
the transferee, the business to be conducted by the transferee, the transferee's
financial capacity, and such other information as may reasonably be required in
order to form a prudent judgment as to the acceptability of the proposed
Transfer, including, without limitation, the following:

                           (i) The past two years' federal income tax returns of
the proposed transferee (or, in the alternative, the past two years' audited
annual balance sheets and profit and loss statements, certified correct by a
Certified Public Accountant);

                           (ii) Banking references of the proposed transferee;

                           (iii) A resume of the business background and
experience of the proposed transferee;

                           (iv) At least five (5) business and three (3)
personal references for the proposed transferee;

                           (v) An executed copy of the instrument by which
Lessee proposes to effectuate the Transfer,

                           (vi) A certified statement, including the
calculation, of the amount of unamortized cost of Lessee's leasehold
improvements to the Leased Premises.

                                       13

<PAGE>

                  (b) Lessee shall reimburse Lessor as additional rent for
Lessor's reasonable costs and attorneys' fees incurred in conjunction with the
processing and documentation of any proposed Transfer of the Leased Premises,
whether or not consent is granted.

         9.6      RECAPTURE.

                  (a) By written notice to Lessee (the "Termination Notice")
within twenty (20) business days following submission to Lessor by Lessee of the
information specified in Section 9.5, Lessor may terminate this Lease in the
event of an assignment of this Lease or sublet of the entire Leased Premises, or
terminate this Lease as to the portion of the Leased Premises to be sublet, if
the sublet is to be of less than the entire Leased Premises. fit the event
Lessor elects to terminate this Lease as to that portion of the Leased Premises
to be sublet, an amendment to this Lease shall be executed whereby the
description of the Leased Premises is restated and Lessee's obligations for rent
and other charges are reduced in proportion to the reduction in Rentable Area of
the Leased Premises caused thereby.

         For purposes hereof, the term "Rentable Area" of a floor shall mean all
areas available or held for the exclusive use and occupancy of the occupants or
future occupants of the Complex, measured from the inside finished surface of
the dominant portion of the permanent outer Building walls, excluding stairs,
elevator shafts, flues, pipe shafts, vertical ducts, and the like, and their
enclosing walls, which serve more than one floor of the Building, but not
stairs, dumbwaiters, lifts, and the like, exclusively serving a tenant occupying
offices on more than one floor. No deductions shall be made for columns and
projections necessary to the Building. For purposes hereof, the Rentable Area of
all office or other space on a floor shall be computed by multiplying (a) the
number of square feet computed by measuring to the finished surface of the
office side of corridor and other permanent walls, to the center of partitions
that separate the office from similar adjoining areas, and to the inside
finished surface of the permanent outer Building walls ("Usable Area") by (b)
that fraction the numerator of which is Rentable Area and the denominator of
which is Usable Area.

                  (b) In the event that Lessor terminates this Lease or
terminates this Lease as to that portion of the Premises to be sublet, Lessor
may, if it elects, enter into a new lease covering the Premises or the affected
portion thereof with the intended assignee or sublessee on such terms as Lessor
and such person may agree or enter into a new lease covering the Premises with
any other person; in such event, Lessee shall not be entitled to any portion of
the profit if any which Lessor may realize on account of such termination and
reletting. From and after the date of such termination of this Lease, the
parties shall have no further obligations to each other under this Lease except
for matters occurring or obligations arising prior to the date of such
termination.

         9.7      REASONABLE RESTRICTION,

         The restrictions on Transfer described in this Article 9 are
acknowledged by Lessee to be reasonable for all purposes, including, without
limitation, the provisions of California Civil Code (the

                                       14

<PAGE>



"Code") Section 195 1.4(b)(2). Lessee expressly waives any rights which it might
otherwise be deemed to possess pursuant to applicable law, including, without
limitation, Section 1997.040 of the Code, to limit any remedy of Lessor pursuant
to Section 1951.2 or 1951.4 of the Code by means of proof that enforcement of a
restriction on use of the Leased Premises would be unreasonable.

         9.8      EFFECT OF TRANSFER.

         If Lessor consents to a Transfer, the following conditions shall apply:

                  (a) Each and every covenant, condition or obligation imposed
upon Lessee by this Lease and each and every right, remedy or benefit afforded
Lessor by this Lease shall not be impaired or diminished as a result of such
transfer.

                  (b) Lessee shall pay to Lessor on a monthly basis, eighty
percent (80%) of the excess of any sum of money, or other economic consideration
received by Lessee from the Transferee in such month (whether or not for a
period longer than one month), including higher rent, bonuses, key money, or the
like over the aggregate, of (i) the amortized portion of the reasonable expenses
actually paid by Lessee to unrelated third parties for brokerage commissions,
tenant improvements to the Premises, or design fees incurred as a direct
consequence of the Transfer, and, (ii) the total sums which Lessee pays Lessor
under this Lease in such month, or the prorated portion thereof if the Leased
Premises transferred is less than the entire Leased Premises. The amount so
derived shall be paid with Lessee's payment of Minimum Rent. The term "amortized
portion" is that portion of the applicable expenses derived by dividing such
expenses by the number of months in the original term of the Transfer
transaction.

                  (c) No Transfer, whether or not consent of Lessor is required
hereunder, shall relieve Lessee of its primary obligation to pay the rent and to
perform all other obligations to be performed by Lessee hereunder. The
acceptance of rent by Lessor from any person shall not be deemed to be a waiver
by Lessor of any provision of this Lease or to be a consent to any Transfer of
the Leased Premises.

                  (d) If Lessor consents to a sublease, such sublease shall not
extend beyond the expiration of the Term.

                  (e) No Transfer shall be valid and no transferee shall take
possession of the Leased Premises or any part thereof unless, within tell (10)
days after the execution of the documentary evidence thereof, Lessee shall
deliver to Lessor a duly executed duplicate original of the Transfer instrument
in form satisfactory to Lessor which provides that (i) the transferee assumes
lessee's obligations for the payment of rent and for the full and faithful
observance and performance of the covenants, terms and conditions contained
herein, (ii) such transferee will, at Lessor's election, attorn directly to
Lessor in the event Lessee's Lease is terminated for any reason on the terms set
forth in the instrument of transfer and (iii) such instrument of transfer
contains such other assurances as Lessor reasonably deems necessary.

                                       15

<PAGE>



                             10. PROPERTY INSURANCE

         10.1     USE OF PREMISES.

         No use shall be made or permitted to be made on the Leased Premises,
nor acts done, which will increase the existing rate of insurance upon the
Building in which the Leased Premises are located or upon any other Building in
the Complex or cause the cancellation of any insurance policy covering the
Building, or any part thereof, nor shall Lessee sell, or permit to be kept, used
or sold, in or about the Leased Premises, any article which may be prohibited by
the standard form of "All Risk" fire insurance policies. Lessee shall, at its
sole cost and expense, comply with any and all requirements pertaining to the
Leased Premises, of any insurance organization or company, necessary for the
maintenance of reasonable property damage and commercial general liability
insurance, covering the Leased Premises, the Building, or the Complex.

         10.2     INCREASE IN PREMIUMS.

         Lessee agrees to pay to Lessor, as additional rent, any increase in
premiums on policies which may he carried by Lessor on the Leased Premises, the
Building or the Complex, or any blanket policies which include the Building or
Complex, covering damage thereto and loss of rent caused by fire and other
perils above the rates for the least hazardous type of occupancy for industrial
warehousing, office and distribution operations. Lessee further agrees to pay
Lessor, as additional rent, any increases in such premiums resulting from the
nature of Lessee's occupancy or any act or omission of Lessee. All payments of
additional rent by Lessee to Lessor pursuant to this Section 10.2 shall be made
within ten (10) days after receipt by Lessee of Lessor's billing therefor.

         10.3     PRO RATA SHARE OF PREMIUMS.

                  (a) Lessee shall pay to Lessor, during the Term hereof, as
additional rent, its pro rata share of all increases in the insurance premiums
for any property insurance carried by Lessor covering the Complex (the "Complex
Insurance Premium"), over and above the Base Insurance Cost specified in 1.6(B)
hereof, irrespective of the nature or cause of such increase. Such pro rata
share is defined as that fraction of the insurance premiums the numerator of
which is the total square footage in the Leased Premises and the denominator of
which is the total square footage in all premises to which the Complex Insurance
Premium is applicable. In the event that the property insurance carried by
Lessor covering the Complex is a blanket policy in which other properties not
related to the Complex are included, the Complex Insurance Premium shall be
calculated as that portion of such blanket policy insurance premium which, in
Lessor's good faith judgment, is properly allocable to the Complex. The sum due
under this subsection shall be in addition to that which may be due under the
previous Section of this Lease.

                  (b) Lessee shall pay any such premium portion to Lessor within
ten (10) days after receipt by Lessee of Lessor's billing therefore.

                                       16

<PAGE>




         10.4     ESTIMATED PAYMENTS.

         Lessor may, at its option, estimate the amount of insurance premiums
for property insurance to be due in the future from Lessee and collect from
Lessee on a monthly or quarterly basis, at Lessor's option, the amount of
Lessee's estimated insurance premium obligation. Prior to March 1 of each year,
Lessor shall provide Lessee with a reconciliation of Lessee's account along with
a billing for any shortage in the event of a deficiency or statement for credit
applicable to the next ensuing insurance premium payments, if an overpayment has
been made by Lessee.

         10.5     PERSONAL PROPERTY INSURANCE.

         Lessee shall maintain in full force and effect on all of its fixtures,
furniture, equipment and other business personal property in the Leased Premises
a policy or policies providing protection against any peril included in the
classification "All Risk" to the extent of at least ninety percent (90%) of
their replacement cost, or that percentage of the replacement cost required to
negate the effect of a coinsurance provision, whichever is greater. No such
policy shall have a deductible in a greater amount than One Thousand Dollars
($1,000.00). Lessee shall also insure in the same manner the physical value of
all its leasehold improvements and alterations in the Leased Premises. During
the Term, the proceeds from any such policy or policies of insurance shall be
used for the repair or replacement of the fixtures, equipment, and leasehold
improvements so insured. Lessor shall have no interest in said insurance, and
will sign all documents necessary or proper in connection with the settlement of
any claim or loss by Lessee. Lessee shall also maintain business interruption
insurance and insurance for all plate glass upon the Leased Premises. All
insurance specified in this Section 10.5 to be maintained by Lessee shall be
maintained by Lessee at its sole cost.

                             11. LIABILITY INSURANCE

         11.1     LESSEE'S INSURANCE.

         Lessee shall, at Lessee's expense, obtain and keep in force during the
Term, a commercial general liability insurance policy insuring Lessee against
the risks of bodily injury and property damage, personal injury, contractual
liability, completed operations, products liability, host liquor liability, and
owned and non-owned automobile liability arising out of the ownership, rise,
occupancy or maintenance of the Leased Premises and all areas appurtenant
thereto. Such insurance shall be a combined single limit policy in an amount not
less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence with a TWO MILLION
DOLLAR ($2,000,000.00) annual aggregate; and an umbrella policy of THREE MILLION
DOLLARS ($3,000,000.00) any one occurrence. Lessor and any lender or other party
in interest designated by Lessor shall be named as additional insureds. The
policy shall contain cross liability endorsements and shall insure performance
by Lessee of the indemnity provisions of this Lease; shall be primary, not
contributing with, and not in excess of coverage which Lessor may carry; shall
state that Lessor is entitled to recovery for the negligence of Lessee even
though Lessor is named as all additional insured; shall provide for severability
of interest; shall
                                       17

<PAGE>



provide that an act or omission of one of the insured or additional insureds
which would void or otherwise reduce coverage shall not void or reduce coverages
as to the other insured or additional insured; and shall afford coverage after
the Term (by separate policy or extension if necessary) for all claims based on
acts, omissions, injury or damage which occurred or arose (or the onset of which
occurred or arose) in whole or in part during the Term. The limits of said
insurance shall not limit any liability of Lessee hereunder. Not more frequently
than every three (3) years, if, in the reasonable opinion of Lessor, the amount
of liability insurance required hereunder is not adequate, Lessee shall promptly
increase said insurance coverage as required by Lessor.

         11.2     WORKERS' COMPENSATION INSURANCE.

         Lessee shall carry Workers' Compensation insurance as required by law,
including all employers' liability endorsement.

         11.3     RENT LOSS/BUSINESS INTERRUPTION INSURANCE.

         Lessee shall carry Rental Loss/Business Interruption insurance covering
those risks referred to in Section 11.1 in an amount equal to all Rent payable
under this Lease for a period of twelve (12) months at the their current rate of
charges.

                        12. INSURANCE POLICY REQUIREMENTS

         12.1     GENERAL REQUIREMENTS.

         All insurance policies required to be carried by Lessee hereunder shall
conform to the following requirements:

                  (a) The insurer in each case shall carry a designation in
"Best's Insurance Reports" as issued from time to time throughout the Term as
follows: Policyholders' rating of A; financial rating of not less than VII;

                  (b) The insurer shall be qualified to do business in the state
in which the Leased Premises are located;

                  (c) The policy shall be in a form and include such
endorsements as are acceptable to Lessor;

                  (d) Certificates of insurance shall be delivered to Lessor at
commencement of the Term and certificates of renewal at least thirty (30) days
prior to the expiration of each policy;

                  (e) Each policy shall require that Lessor be notified in
writing by the insurer at least thirty (30) days prior to any cancellation or
expiration of such policy, or any reduction in the amounts of insurance carried.

                                       18

<PAGE>




                          13. LESSEE INSURANCE DEFAULT

         13.1     RIGHTS OF LESSOR.

         In the event that Lessee fails to obtain any insurance required of it
under the terms of this Lease, Lessor may, at its option, but is not obligated
to, obtain such insurance on behalf of Lessee and bill Lessee, as additional
rent, for the cost thereof. Payment shall be due within ten (10) days of receipt
of the billing therefor by Lessee.

              14. INDEMNIFICATION, WAIVER OF CLAIMS AND SUBROGATION

         14.1     INTENT AND PURPOSE.

         This Article 14 is written and agreed to in respect of the intent of
the parties to assign the risk of loss, whether resulting from negligence of the
parties or otherwise, to the party who is obligated hereunder to cover the risk
of shelf loss with insurance. Thus, the indemnity and waiver of claims
provisions of this Lease have as their object, so long as such object is not in
violation of public policy, the assignment of risk for a particular casualty to
the party carrying the insurance for such risk, without respect to the causation
thereof.

         14.2     WAIVER OF SUBROGATION.

         Lessor and Lessee release each other, and their respective authorized
representatives, from any claims for damage to the Leased Premises and the
Building and other improvements in which the Leased Premises are located, and to
the furniture, fixtures, and other business personal property, Lessee's
improvements and alterations of either Lessor or Lessee, in or on the Leased
Premises and the Building and other improvements in which the Leased Premises
are located, including loss of income, that are caused by or result from risks
insured or required under the terms of this Lease to be insured against under
any property insurance policies carried or to be carried by either of the
parties.

         14.3     FORM OF POLICY.

         Each party shall cause each such insurance policy obtained by it to
provide that the insurance company waives all rights of recovery by way of
subrogation against either party in connection with any damage covered by such
policy. Neither party shall be liable to the other for any damage caused by any
peril included within the classification "All Risk" which is insured against
under any property insurance policy carried under the terms of this Lease.


                                       19

<PAGE>



         14.4     INDEMNITY.

         Lessee, as a material part of the consideration to be rendered to
Lessor, shall indemnify, defend, protect and hold harmless Lessor against all
actions, claims, demands, damages, liabilities, losses, penalties, or expenses
of any kind which may be brought or imposed upon Lessor or which Lessor may pay
or incur by reason of injury to person or property or business, from whatever
cause, all or in any way connected with the acts and emissions of Lessee, and
the condition or use of the Leased Premises, or the improvements or personal
property therein or thereon, including without limitation any liability or
injury to the person or property or business of Lessee, its agents, officers,
employees or invitees. Lessee agrees to indemnify, defend and protect Lessor and
hold it harmless from any and all liability, loss, cost or obligation on account
of, or arising out of, any such injury or loss however occurring, including
breach of the provisions of this Lease and the negligence of the parties hereto.
Nothing contained herein shall obligate Lessee to indemnity Lessor against its
own sole or gross negligence or willful acts, for which Lessor shall indemnity
Lessee.

         14.5     DEFENSE OF CLAIMS.

         In the event any action, suit or proceeding is brought against Lessor
by reason of any such occurrence, Lessee, upon Lessor's request, will at
Lessee's expense resist and defend such action, suit or proceeding, or cause the
same to be resisted and defended by counsel designated either by Lessee or by
the insurer whose policy covers the occurrence and in either case approved by
Lessor. The obligations of Lessee under this Section arising by reason of any
occurrence taking place during the Term shall survive any termination of this
Lease.

         14.6     WAIVER OF CLAIMS.

         Lessee, as a material part of the consideration to be rendered to
Lessor, hereby waives all claims against Lessor for damages or injury, as
described below, from any cause arising at any time, including breach of the
provisions of this Lease and the negligence of the parties hereto:

                  (a) damages to goods, wares, merchandise and loss of business
in, upon or about the Leased Premises and injury to Lessee, its agents,
employees, invitees or third persons, in, upon, or about the Leased Premises;
and

                  (b) (notwithstanding anything to the contrary contained in
this Lease, including, without limitation, the definition of "Common Area Costs"
in Section 8.4, which includes "policing") damages to goods, wares, merchandise
and loss of business in, upon or about the Leased Premises or the Complex, and
injury to Lessee, its agents, employees, invites or third persons in, upon or
about the Leased Premises or the Complex, where such damage or injury results
from Lessor's failure to police or provide security for the Complex or Lessor's
negligence in connection therewith.

         Lessee expressly acknowledges and agrees that the provisions of Section
19.6(b) below apply fully with respect to the matters waived pursuant to this
Section 14.6, and, for such purpose, the term

                                       20

<PAGE>



"Released Matters," as used in Section 19.6(b), shall be deemed to include the
matters waived pursuant to this Section 14.6.

         14.7     REFERENCES.

         Wherever int his Article the term Lessor or Lessee is used and such
party is to receive the benefit of a provision contained in this Article, such
term shall refer not only to that party but also to its officers, directors,
shareholders, employees, partners, contractors, agents and mortgagees or other
lienholders.

                                 15. DESTRUCTION

         15.1     RIGHTS OF TERMINATION.

         In the event the Leased Premises suffers (a) an uninsured property loss
(as hereinafter defined) or (b) a property loss which cannot be repaired within
one hundred twenty (120) days from the date of destruction under the laws and
regulations of state, federal, county or municipal authorities, or other
authorities with jurisdiction, Lessor may terminate this Lease as at the date of
the damage upon written notice to Lessee following the property loss. In the
event of a property loss to the Leased Premises which cannot be repaired within
one hundred ninety five (195) days of the occurrence thereof, Lessee shall have
the right to terminate the Lease by written notice to Lessor within twenty (20)
days following notice from Lessor that the time for restoration shall exceed one
hundred ninety five (195) days. For purposes of this Lease, the term "uninsured
property loss" shall mean any loss arising from a peril not covered by the
standard form of "All Risk" property insurance policy.

         15.2     REPAIRS

         In the event of a property loss which may be repaired within one
hundred twenty (120) days from the date of the damage, or, in the alternative,
in the event the parties do not elect to terminate this Lease under the terms of
Section 15.1 above, then this Lease shall continue in full force and effect and
Lessor shall forthwith undertake to make such repairs to reconstitute the Leased
Premises to as near the condition as existed prior to the property loss as
practicable. Such partial destruction shall in no way annul or void this Lease
except that Lessee shall be entitled to a proportionate reduction of Minimum
Rent following the property loss and until the time the Leased Premises are
restored. Such reduction shall be an amount which reflects the degree of
interference with lessee's business. So long as Lessee conducts its business in
the Leased Premises, there shall be no abatement until the parties agree on the
amount thereof. If the parties cannot agree within forty-five (45) days of the
property loss, the matter shall be submitted to arbitration under the rules of
the American Arbitration Association. Upon the resolution of the dispute, the
settlement shall be retroactive and Lessor shall within ten (10) days thereafter
refund to Lessee any sums due in respect of the reduced rental from the date of
the property loss. Lessor's obligations to restore shall in no way include any
construction originally performed by lessee or subsequently undertaken by
Lessee, but shall include solely that property constructed by Lessor prior to
commencement of the Term.

                                       21

<PAGE>



         15.3     REPAIR COSTS.

         The cost of any repairs to be made by Lessor, pursuant to Section 15.2
of this Lease, shall be paid by Lessor utilizing available insurance proceeds.
Lessee shall reimburse Lessor upon completion of the repairs for any deductible
for which no insurance proceeds will be obtained under Lessor's insurance
policy, or if other premises are also repaired, a pro rata share based on total
costs of repair equitably apportioned to the Leased Premises. Lessee shall,
however, not be responsible to pay any deductible or its share of any deductible
to the extent that Lessee's payment would be in excess of $ $10,000 if Lessee's
consent has not been received by Lessor, unless such denial of consent by Lessee
is unreasonable.

         15.4     WAIVER.

         Lessee hereby waives all statutory or common law rights of termination
in respect to any partial destruction or property loss which Lessor is obligated
to repair or may elect to repair under the terms of this Article. Further, in
event of a property loss occurring during the last two (2) years of the original
Term hereof or of any extension, Lessor need not undertake any repairs and may
cancel this Lease unless Lessee has the right under the terms of this Lease to
extend the Term for an additional period of at least five (5) years and does so
within thirty (30) days of the date of the property loss.

         15.5     LESSOR'S ELECTION.

         In the event that the Complex or Building in which the Leased Premises
is situated be destroyed to the extent of not less than thirty-three and
one-third percent (33-1/3%) of the replacement cost thereof, Lessor may elect to
terminate this Lease, whether the Leased Premises be injured or not, in the same
manner as in Section 15.1 above. At all events, a total destruction of the
Complex of which the Leased Premises form a part, or the Leased Premises itself,
shall terminate this Lease.

                           16. ACCORD AND SATISFACTION

         16.1     ACCEPTANCE OF PAYMENT.

         No payment by Lessee or receipt by Lessor of a lesser amount of Minimum
Rent or any other sum due hereunder shall be deemed to be other than on account
of the earliest due rent or payment, nor shall any endorsement or statement on
any check or any letter accompanying any such check or payment be deemed an
accord and satisfaction, and Lessor may accept such check or payment without
prejudice to Lessor's right to recover the balance of such rent or payment or
pursue any other remedy available in this Lease, at law or in equity. Lessor may
accept any partial payment from Lessee without invalidation of any contractual
notice required to be given therein (to the extent such contractual notice is
required) and without invalidation of any notice required to be given pursuant
to California Code of Civil Procedure Section 1161, et seq., or of any successor
statute thereto.

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<PAGE>

                              17. SECURITY DEPOSIT

         17.1     PAYMENT ON LEASE EXECUTION.

         Lessee shall pay Lessor upon execution hereof the sum specified in
Section 1.7. This sum is designated as a Security Deposit and shall remain the
sole and separate property of Lessor until actually repaid to Lessee (or at
Lessor's option the last assignee, if any, of Lessee's interest hereunder), said
sum not being earned by Lessee until all conditions precedent for its payment to
Lessee have been fulfilled. As this sum both in equity and at law is Lessor's
separate property, Lessor shall not be required to (1) keep said deposit
separate from its general accounts, or (2) pay interest, or other increment for
its use. If Lessee fails to pay rent or other charges when due hereunder, or
otherwise defaults with respect to any provision of this Lease, inclining and
not limited to Lessee's obligation to restore or clean the Leased Premises
following vacation thereof, Lessee, at Lessor's election, shall be deemed not to
have earned the right to repayment of the Security Deposit, or those portions
thereof used or applied by Lessor for the payment of any rent or other charges
in default, or for the payment of any other sum to which Lessor may become
obligated by reason of Lessee's default, or to compensate Lessor for any loss or
damage which Lessor may suffer thereby. Lessor may retain such portion of the
Security Deposit as it reasonably deems necessary to restore or clean the Leased
Premises following vacation by Lessee. The Security Deposit is not to be
characterized as rent until and unless so applied in respect of a default by
Lessee.

         17.2     RESTORATION OF DEPOSIT.

         If Lessor elects to use or apply all or any portion of the Security
Deposit as provided in Section 17. 1, Lessee shall within ten (10) days after
written demand therefor pay to Lessor in cash, an amount equal to that portion
of the Security Deposit used or applied by Lessor, and Lessee's failure to so do
shall be a material breach of this Lease. The ten (10) day notice specified in
the preceding sentence shall insofar as not prohibited by law, constitute full
satisfaction of notice of default provisions required by law or ordinance.

                                     18. USE

         18.1     PERMITTED USE.

         The Leased Premises may be used and occupied only for the purposes
specified in Section 1.8 hereof, and for no other purpose or purposes. Lessee
shall promptly comply with all laws, ordinances, orders and regulations
affecting the Leased Premises, their cleanliness, safety, occupation and rise.

         18.2     HAZARDOUS ACTIVITIES.

         Lessee shall not engage in any activities or permit to be kept, used,
or sold in or about the Leased Premises, any article which may be prohibited by
the standard form of fire insurance policies.

                                       23
<PAGE>

Lessee shall, at its sole cost and expense, comply with any and all
requirements, pertaining to the Leased Premises, of any insurance organization
or company, necessary for the maintenance of reasonable fire and public
liability insurance covering the Building and appurtenances.

                    19. COMPLIANCE WITH LAWS AND REGULATIONS

         19.1 LESSEE'S OBLIGATIONS. Lessee, shall, at its sole cost and expense,
comply with all of the requirements of all municipal, state and federal
authorities now in force, or which may hereafter be in force, pertaining to the
Leased Premises, and shall faithfully observe in the rise of the Leased premises
all municipal ordinances and state and federal statutes and regulations now in
force or which may hereafter be in force, including, without limitation,
"Environmental Laws" (as hereinafter defined), and the Americans with
Disabilities Act, 42 U.S.C. ss.ss. 12101-12213 (and any rules, regulations,
restrictions, guidelines, requirements or publications promulgated or published
pursuant thereto, collectively herein referred to as the "ADA"), whether or not
any of the foregoing were foreseeable or unforeseeable at the time of the
execution of this Lease. Lessee's obligation to comply with and observe such
requirements, ordinances, statutes and regulations shall apply to the extent
that such requirements, ordinances, statutes and regulations regulate or relate
to Lessee's particular use or occupancy of the Leased Premises or to any
employee, vendor or invitee of Lessee, and regardless of the cost thereof. The
judgment of any court of competent jurisdiction, or the admission of Lessee in
any action or proceeding against Lessee, whether Lessor be a party thereto or
not, that any such requirement, ordinance, statute or regulation pertaining to
the Leased Premises has been violated, shall be conclusive of that fact as
between Lessor and Lessee. Within five (5) days after receipt of notice or
knowledge of any violation or alleged violation of any Environmental Law(s)
and/or the ADA pertaining to the Complex, any governmental or regulatory
proceedings, investigations, sanctions and/or actions threatened or commenced
with respect to any such violation or alleged violation, and any claim made or
commenced with respect to such violation or alleged violation, Lessee share
notify Lessor thereof and provide Lessor with copies of any written notices or
information in Lessee's possession.

         19.2 CONDITION OF LEASED PREMISES. Lessee hereby accepts the Leased
Premises in the condition existing as of the date of occupancy, subject to the
provisions of Exhibit C hereto and to all applicable zoning, municipal, county
and state laws, ordinances, rules, regulations, orders, restrictions of record,
and requirements in effect during the Term or any part of the Term hereof
regulating the Leased Premises, and without representation, warranty or covenant
by Lessor, express or implied, as to the condition, habitability or safety of
the Leased Premises, the suitability or fitness thereof for their intended
purposes, or any other matter, except as specifically set forth therein.

         19.3     HAZARDOUS MATERIALS.

                  (a) Hazardous Materials Defined. As used herein, the Term
"Hazardous Materials" shall mean any wastes, materials or substances (whether in
the form of liquids, solids or gases, and whether or not air-borne), which are
or are deemed to be pollutants or contaminants, or which are or are deemed to be
hazardous, toxic, ignitable, reactive, corrosive, dangerous, harmful or

                                       24

<PAGE>



injurious, or which present a risk, to public health or to the environment, or
which are or may become regulated by or under the authority of any applicable
local, state or federal laws, judgments, ordinances, orders, rules, regulations,
codes or other governmental restrictions, guidelines or requirements, any
amendments or successor(s) thereto, replacements thereof or publications
promulgated pursuant thereto (collectively "Environmental Laws"), including,
without limitation, any waste, material or substance which is:

                           (i) defined as "hazardous waste," "extremely
hazardous waste," or "restricted hazardous waste" under Sections 25115, 25117 or
25122.7, or listed pursuant to Section 25 140, of the California Health and
Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law);

                           (ii) defined as a "hazardous substance" under Section
25316 of the California Health and Safety Code, Division 20, Chapter 6.8
(Carpenter-Presley-Tanner Hazardous Substance Account Act);

                           (iii) defined as a "hazardous material", "hazardous
substance," or "hazardous waste" under Section 25501 of the California Health
and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response
Plans and Inventory);

                           (iv) defined as a "hazardous substance" under Section
25281 of the California Health and Safety Code, Division 20, Chapter 6.7
(Underground Storage of Hazardous Substances);

                           (v) defined as a "waste" or "hazardous substance"
under Section 13050 of the California Water Code, Division 7, Chapter 2
(Porter-Cologne Water Quality Control Act);

                           (vi) listed as a chemical known to the State of
California to cause cancer or reproductive toxicity pursuant to Section 25249.8
of the California Health and Safety Code, Division 20, Chapter 6.6 (Safe
Drinking Water and Toxic Enforcement Act of 1986);

                           (vii) defined as a "hazardous substance" or
"pollutant or contaminant" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. ss. 9601 et seq.;

                           (viii) listed as an "extremely hazardous substance,"
"hazardous chemical," or "toxic chemical" pursuant to the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. ss. 11001 et seq.;

                           (ix) listed as a "hazardous substance" in the United
States Department of Transportation Table, 49 C.F.R. 172.101 and amendments
thereto, or by the Environmental Protection Agency (or any successor agency) in
40 C.F.R. Part 302 and amendments thereto;


                                       25

<PAGE>



                           (x) defined, listed or designated by regulations
promulgated pursuant to any Environmental Law; or

                           (xi) any of the following: a pesticide; a flammable
explosive; petroleum, including crude on or any fraction thereof; asbestos or
all asbestos-containing material; a polychlorinated biphenyl; a radioactive
material; or urea formaldehyde.

         In addition to the foregoing, the term "Environmental Laws" shall be
deemed to include, without limitation, local, state and federal laws, judgments,
ordinances, orders, rules, regulations, codes and other governmental
restrictions, guidelines and requirements, any amendments and successors
thereto, replacements thereof and publications promulgated pursuant thereto,
which deal with or otherwise in any manner relate to, air or water quality, air
emissions, soil or ground conditions or other environmental matters of any kind.

                  (b) Use, etc., of Hazardous Materials. Lessee agrees that
during the Term, there shall be no use, presence, disposal, storage, generation,
leakage, treatment, manufacture, import, handling, processing, release, or
threatened release of Hazardous Materials on, from or under the Leased Premises
by Lessee, its employees, agents, representatives, contractors, invitees,
subtenants and/or assigns (collectively, "Lessee's Parties"). Lessee shall not
be entitled to install any tanks under, on or about the Leased Premises for the
storage of Hazardous Materials without the express written consent of Lessor,
which may be given or withheld in Lessor's sole arbitrary judgment. The use,
presence, disposal, storage, generation, leakage, treatment, manufacture,
import, handling, processing, release or threatened release of Hazardous
Materials by Lessee's Parties are sometimes hereinafter individually or
collectively referred to as "Hazardous Use."

                  (c) Hazardous Materials Report; When Required, In the event
that Lessor consents in writing to Lessee's Hazardous Use in the Leased
Premises, Lessee shall submit to Lessor a written report with respect to
Hazardous Materials ("Report") in the form prescribed in subparagraph (d) below
on the following dates:

                           (i) Within ten (10) days prior to the commencement of
any Hazardous Use;

                           (ii) Within ten (10) days after each anniversary of
any Hazardous Use;

                           (iii) At any time within ten (10) days after written
request by Lessor, and

                           (iv) At any time when there has been or is planned
any condition which constitutes or would constitute a change in the information
submitted in the most recent Report, including any notice of violation as
referred to in subparagraph (d)(vii) below.

                  (d) Hazardous Materials Report; Contents. The Report shall
contain, without limitation, the following information:

                                       26

<PAGE>




                           (i) Whether on the date of the Report and (if
applicable) during the period since the last Report there has been any Hazardous
Use on, from or under the Leased Premises.

                           (ii) If there was such Hazardous Use, the exact
identify of the Hazardous Materials, the dates upon which such materials were
brought upon the Leased Premises, the dates upon which the Hazardous Materials
were removed therefrom, and the quantity, location, use and purpose thereof.

                           (iii) If there was such Hazardous Use, any
governmental permits maintained by Lessee with respect to such Hazardous
Materials, the issuing agency, original date of issue, renewal dates (if any)
and expiration date. Copies of any such permits and applications therefor shall
be attached,

                           (iv) If there was such Hazardous Use, any
governmental reporting or inspection requirements with respect to such Hazardous
Materials, the governmental agency to which reports are made and/or which
conducts inspections, and the dates of all such reports and/or inspections (if
applicable) since the last Report. Copies of any such Reports shall be attached.

                           (v) If there was such Hazardous Use, identification
of any operation or business plan prepared for any government agency with
respect to Hazardous Use.

                           (vi) Any liability insurance carried by Lessee with
respect to Hazardous Materials, the insurer, policy number, date of issue,
coverage amounts, and date of expiration. Copies of any such policies or
certificates of coverage shall be attached.

                           (vii) Any notices of violation of Environmental Laws,
written or oral, received by Lessee from any governmental agency since the last
Report, the date, name of agency, and description of violation. Copies of any
such written notices shall be attached.

                           (viii) Any knowledge, information or communication
which Lessee has acquired or received relating to (x) any enforcement, cleanup,
removal or other governmental or regulatory action threatened or commenced
against Lessee or with respect to the Leased Premises pursuant to any
Environmental Laws; (y) any claim made or threatened by any person or entity
against Lessee or the Leased Premises on account of any alleged loss or injury
claimed to result from any alleged Hazardous Use on or about the Leased
Premises; or (z) any report, notice or complaint made to or filed with any
governmental agency concerning any Hazardous Use on or about the Leased
Premises. The Report shall be accompanied by copies of any such claim, report,
complaint, notice, warning or other communication that is in the possession of
or is available to Lessee.

                           (ix) Such other pertinent information or documents as
are requested by Lessor in writing.


                                       27

<PAGE>



                  (e) Release of Hazardous Materials; Notification and Cleanup.
If at any time during the Term Lessee knows or believes that (i) any Hazardous
Materials have been or may be released onto the Leased Premises or the Complex
by Lessee's Parties, or (ii) any Hazardous Materials brought onto the Leased
Premises or the Complex by or for the benefit of Lessee's Parties have been or
may be released onto the Leased Premises or the Complex by ally party
whatsoever, then Lessee shall immediately, either prior to the release or
following the discovery thereof by Lessee, give verbal and follow-up written
notice of that condition to Lessor. Lessee covenants to investigate, clean up
and otherwise remediate any such release of Hazardous Materials at Lessee's cost
and expense; such investigation, clean up and remediation shall be performed
only after Lessee has obtained Lessor's written consent, which shall not be
unreasonably withheld; provided, however, that Lessee shall be cited to respond
immediately to an emergency without first obtaining Lessor's written consent.
All cleanup and remediation shall be done in compliance with Environmental Laws
and to the reasonable satisfaction of Lessor. Notwithstanding the foregoing,
whether or not such work is prompted by the foregoing notice from Lessee or is
undertaken by Lessor for any other reason whatsoever, Lessor shall have the
right, but not the obligation, in Lessor's sole and absolute discretion,
exercisable by written notice to Lessee at any time, to undertake within or
outside the Leased Premises all or any portion of any such investigation,
clean-up or remediation with respect to Hazardous Materials (or, once having
undertaken any of such work, to cease same, in which case Lessee shall perform
the work), all at Lessee's cost and expense, which shall be paid by Lessee as
additional rent within ten (10) days after receipt of written request therefor
by Lessor (and which Lessor may require to be paid prior to commencement of any
work by Lessor). No such work by Lessor shall create any liability on the part
of Lessor to Lessee or any other party in connection with such Hazardous
Materials or constitute an admission by Lessor of any responsibility with
respect to such hazardous Materials. It is the express intention of the parties
hereto that Lessee shall be liable under this Section 19.3(e) for any and all
conditions covered hereby which were caused or created by (a) any Hazardous
Materials brought onto the Leased Premises or the Complex by or for the benefit
of Lessee's Parties, whether released by Lessee's Parties or by third parties,
or (b) Lessee's Parties. Lessee shall not enter into any settlement agreement,
consent decree or other compromise with respect to any claims relating to any
(1) any Hazardous Materials brought onto the Leased Premises or the Complex by
or for the benefit of Lessee's Parties, or (2) any Hazardous Materials released
onto the Leased Premises or the Complex by Lessee's Parties, without first (A)
notifying Lessor of Lessee's intention to do so and affording Lessor the
opportunity to participate in any such proceedings, and (B) obtaining Lessor's
written consent.

                  (f) INSPECTION AND TESTING BY LESSOR. Lessor shall have the
right at all times during the Term to (i) inspect the Leased Premises, as well
as Lessee's books and records relating to Hazardous Materials, and to (ii)
conduct tests and investigations to determine whether Lessee is in compliance
with the provisions of this Section. Except in case of emergency, Lessor shall
give reasonable notice to Lessee before conducting any inspections, tests, or
investigations. The cost of all such inspections, tests and investigations shall
be borne by Lessee, if such test or inspections reveal a violation by Lessee's
Parties of the provisions of this Article 19. Neither any action nor inaction on
the part of Lessor pursuant to this Section 19.3(f) shall be deemed in any way
to release Lessee from,

                                       28

<PAGE>



or in any way modify or alter, Lessee's responsibilities, obligations, and/or
liabilities incurred pursuant to Section 19.3 hereof.

         19.4 INDEMNITY. Lessee shall indemnify, hold harmless, and, at Lessor's
option (with such attorneys as Lessor may approve in advance and in writing),
defend Lessor and Lessor's officers, directors, shareholders, trustees,
partners, employees, contractors, agents and mortgagees or other lien holders,
from and against any and all claims, demands, expenses, actions, judgments,
damages (whether consequential, direct or indirect, known or unknown, foreseen
or unforeseen), penalties, fines, liabilities, losses of every kind and nature
(including, without limitation, property damage, diminution in value of Lessor's
interest in the Leased Premises or the Complex, damages for the loss or
restriction on use of any space or amenity within the Leased Premises or the
Complex, damages arising from any adverse impact on marketing space in the
Complex, sum paid in settlement of claims and any costs and expenses associated
with injury, illness or death to or of any person), suits, administrative
proceedings, costs and fees, including, but not limited to, attorneys' and
consultants' fees and expenses, and the costs of cleanup, remediation, removal
and restoration (all of the foregoing being hereinafter sometimes collectively
referred to as "Losses"), arising from or related to (i) any violation or
alleged violation of any of the requirements, ordinances, statutes, regulations
or other laws referred to in this Article by Lessee's Parties, including,
without limitations the Environmental Laws and ADA, or (ii) any breach of the
provisions of this Article by Lessee's parties, or (iii) any Hazardous Use on,
about or from the Leased Premises by Lessee's Parties, or (iv) any release of
Hazardous Materials brought onto the Leased Premises or the Complex by or for
the benefit of Lessee's Parties, whether released by Lessee or by third parties
unrelated to Lessee. Lessee warrants that it is leasing the Leased Premises
"as-is, where-is," that it has thoroughly inspected the Leased Premises prior to
execution of this Lease, and that it intends to act as an insurer with respect
to any Hazardous Use on, under or about the Leased Premises by Lessee's Parties.

         19.5 INDOOR AIR QUALITY. To prevent the generation, growth or deposit
of any mold, mildew, bacillus, virus, pollen or other microorganism
(collectively, "Biologicals") and the deposit, release or circulation of any
indoor contaminants, including, but not limited to, emissions from paint, carpet
and drapery treatments, cleaning, maintenance and construction materials and
supplies, pesticides, pressed wood products, insulation, tobacco and other
materials and products (collectively with Biologicals, "Contaminants"), that
could adversely affect the health, safety or welfare of any tenant, employee, or
other occupant of the Complex or their invitees (each, an "Occupant"), Lessee
shall, at Lessee's sole cost and expense, at all times during the Term (i)
maintain, operate and repair the HVAC system servicing the Leased Premises (to
the extent that Lessee is otherwise obligated to perform such maintenance,
operation and repair pursuant to this Lease) in a manner consistent with
preventing or minimizing the generation, growth, circulation, release or deposit
of any Contaminants, (ii) maintain the humidity level and the air exchange rate
within the Leased Premises (to the extent that Lessee has control thereof) at a
level recommended to prevent or minimize the growth of any Biologicals and the
circulation of any other Contaminants, (iii) maintain, operate and repair the
Leased Premises in such a manner to prevent or minimize the accumulation of
stagnant water all moisture in planters, kitchen appliances and vessels,
carpeting, insulation, water coolers and any other locations where stagnant
water and moisture could accumulate, and (iv) otherwise maintain, operate

                                       29

<PAGE>



and repair the Leased Premises to prevent the generation, growth, deposit,
release or circulation of any Contaminants. If any governments entity or any
Occupant alleges that health, safety or welfare has been or could be adversely
affected by any such Contaminants, Lessee shall notify Lessor in writing within
twenty-four (24) hours of the time the allegation is made. Lessor may then elect
to engage the services of an industrial hygiene testing laboratory (or
alternatively or concurrently require Lessee to do the same) to determine
whether the cause of any alleged adverse health effect is or could be
attributable to any Contaminants present within the Leased Premises. Lessee
shall be responsible for all such testing costs and for any consequential
damages and costs (including, without limitations any third-party claims, loss
of rental, remediation, removal and/or abatement costs, and increases in
insurance premiums) resulting from Lessee's failure to comply in whole or in
part with the terms of this Section 19.5. The indemnity set forth in Section
19.4 above shall apply to Lessee's failure to comply with any of the terms of
this Section.

         19.6     RELEASE AND ASSUMPTION OF RISK.

                  (a) Lessee, for itself, and its officers, directors,
shareholders, partners, agents, contractors, attorneys, brokers, servants,
employees, sublessee, lessees, invitees, concessionaires, licensees and
representatives (hereinafter referred to as "Releasors"), hereby waives,
releases, acquits and forever discharges Lessor and its officers, directors,
trustees, shareholders, partners, agents, contractors, attorneys, brokers,
servants, employees, lessees, invitees, licensees and representatives
(hereinafter referred to as "Releasees") of and from any and all Losses, which
are in any way connected with, based upon, related to or arising out of (i) any
Hazardous Use or Hazardous Materials on or about the Leased Premises or the
Complex, (ii) any violation by or relating to the Leased Premises or the Complex
(or the ownership, use, condition, occupancy or operation thereof), or by the
Releasors or any other persons or entities, of any Environmental or Wetlands
Laws affecting the Leased Premises or the Complex, or (iii) any investigation,
inquiry, order, hearing, action or other proceeding by or before any
governmental agency or any court in connection with any of the matters referred
to in clauses (i) or (ii) above (collectively, the "Released Matters"), except
to the extent caused by the gross negligence or wilful misconduct of the
Releasees. Releasors hereby expressly assume any and all risk of Losses based on
or arising out of or pertaining to the Released Matters.

                  (b) Lessee agrees, represents and warrants that the Released
Matters are not limited to matters which are known, disclosed or foreseeable,
and Lessee waives any and all rights and benefits which are conferred upon
Lessee by virtue of the provisions of Section 1542 of the California Civil Code,
which provides:

         A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
         KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
         RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED THIS
         SETTLEMENT WITH THE DEBTOR.

         Lessee agrees, represents and warrants that it is familiar with, has
read, understands, and has consulted legal counsel of its choosing with respect
to California Civil Code Section 1542 and Lessee

                                       30

<PAGE>



realizes and acknowledges that factual matters now unknown to it may have given,
or may hereinafter give, rise to Losses which are presently unknown,
unanticipated and unsuspected. Lessee further agrees, represents and warrants
that the provisions of this Section 19.6 have been negotiated and agreed upon in
light of that realization and that Lessee nevertheless hereby intends to
release, discharge and acquit the Releasees from any such unknown Losses which
are in any way related to this Lease or the Complex.

                                  20. UTILITIES

         20.1     PAYMENT BY LESSEE.

         Lessee, from the time it first enters the Leased Premises for the
purpose of setting fixtures, or from the commencement of this Lease, whichever
date shall first occur, and throughout the Term, shall pay all charges including
connection fees for water, gas, heat, sewer, power, telephone services and any
other utility supplied to or consumed in or on the Leased Premises. Lessee shall
not allow refuse, garbage or trash to accumulate outside of the Leased Premises
except on the day of scheduled scavenger pick-tip services, and then only in
areas designated for that purpose by Lessor. Lessor shall not be responsible or
liable for any interruption in utility services, nor shall such interruption
affect the continuation or validity of this Lease. Lessor does not warrant that
any of the utilities supplied to the Leased Premises will be free of
interruption or that any of the utility systems serving the Complex will be free
from the need for maintenance, repairs and/or replacements. Lessee acknowledges
that any one or more services may be suspended or reduced by reason of repairs,
alterations or improvements necessary to be made, by strikes or accidents, by
any cause beyond the reasonable control of Lessor, or by orders or regulations
of any federal, state, county or municipal authority. In addition, Lessor shall
have no liability for damages arising from, and Lessor does not warrant that
Lessee's use of any Lines will be from, (a) any eavesdropping or wiretapping by
unauthorized parties, (b) any failure of the Lines to satisfy Lessee's
requirements, or (c) any shortages, failures, variations, interruptions,
disconnections, loss or damage caused by installation, maintenance, replacement,
use or removal of Lines by or for other occupants of the Complex, by any failure
of the environmental conditions or the power supply for the Building to conform
to any requirements for the Lines or any associated equipment or any other
problems associated with any Lines by any other cause.

         20.2     SEPARATE METERS.

         Lessor reserves the right to install separate meters for any utility
servicing the Leased Premises for which a meter is not presently installed, in
which event Lessee shall make payments, when due, directly to the utility
involved.

         20.3     JOINT METERS.

         If any utility services are not separately metered to Lessee, Lessee
shall pay a proportion to be determined by Lessor of all charges jointly metered
with other leased premises or occupants in the

                                       31

<PAGE>



Complex. All payments to Lessor in respect thereof shall be due within ten (10)
days after receipt of the billing by Lessee.

                                 21. ALTERATIONS

         21.1     CONSENT OF LESSOR; OWNERSHIP.

         Lessee shall not make, or suffer to be made, any alterations to the
Leased Premises, the Building, or the Complex, and/or systems and facilities
therein, or any part thereof, without the written consent of Lessor first had
and obtained. Any additions to or alterations of the Leased Premises, the
Building, or the Complex, and/or systems and facilities therein, (except trade
fixtures) shall, immediately upon being made, constitute a part of the realty
and Lessor's property, and shall, at the expiration or earlier termination of
this Lease, remain upon the Leased Premises without compensation to Lessee.
Except as otherwise provided in this Lease, Lessee shall have the right to
remove its trade fixtures placed upon the Leased Premises provided that Lessee
restores the Leased Premises as indicated below. Any and all costs incurred by
Lessor, whether in complying with laws, governmental requirements or otherwise,
as a result of any "alterations" (as hereinafter defined), or as a result of
request by Lessee for increased telephone or other utility capacity above that
presently existing (or, in the event the Building is to be constructed or
substantially altered by Lessor prior to the delivery date, above that which is
planned by Lessor for the Building) shall be paid by Lessee within ten (10) days
after demand therefor by Lessor.

         21.2     REQUIREMENTS.

         Any alterations, additions or installations performed by Lessee
(hereinafter collectively "alterations") shall be subject to strict conformity
with the following requirements:

                  (a) All alterations shall be at the sole cost and expense of
Lessee;

                  (b) Prior to commencement of any work of alterations Lessee
shall submit detailed plans and specifications, including working drawings
(hereinafter referred to as "Plans"), of the proposed alterations, which shall
be subject to the consent of Lessor in accordance with the terms of Section 2 1.
1 above;

                  (c) Following approval of the Plans by Lessor, Lessee shall
give Lessor at least ten (10) days' prior written notice of commencement of work
in the Leased Premises so that Lessor may post notices of non-responsibility in
or upon the Leased Premises as provided by law;

                  (d) No alterations shall be commenced without Lessee having
previously obtained all appropriate permits and approvals required by and of
governmental agencies;

                  (e) All alterations shall be performed in a skillful and
workmanlike manner, consistent with the best practices and standards of the
construction industry, and pursued with

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diligence in accordance with fire Plans previously approved by Lessor and in
full accord with all applicable laws and ordinances. All material, equipment,
and articles incorporated in the alterations are to be new and of recent
manufacture and of the most suitable grade for the purpose intended;

                  (f) Lessee must obtain the prior written approval from Lessor
for Lessee's contractor prior to commencement of the work. Lessor may require
that Lessee use subcontractors designated by Lessor as to specified portions of
the work. Lessee's contractor shall maintain all of the insurance reasonably
required by Lessor, including, without limitation, commercial general liability,
workers' compensation, builder's risk and course of constriction insurance. The
limits of such insurance shall be the same as those specified in Article 11;

                  (g) As a condition of approval of the alterations, Lessor may
require performance and labor and materialmen's payment bonds issued by a surety
approved by Lessor, in a sum equal to the cost of the alterations guarantying
the completion of the alterations free and clear of all liens and other charges
in accordance with the Plans. Such bonds shall name Lessor as beneficiary;

                  (h) The alterations must be performed in a manner such that
they will not interfere with the quiet enjoyment of the other lessees in the
Complex;

                  (i) Lessor shall have the right to condition any approval of
the alterations upon (i) submission by Lessee of a Report with respect to
Hazardous Materials, and/or (ii) the performance by Lessee at Lessee's cost and
expense of such investigation, clean-up and remediation with respect to
Hazardous Materials as Lessor may request, in Lessor's sole and absolute
discretion; provided, however, that Lessor shall have the right, but not the
obligation, to undertake all or any portion of such investigation, cleanup or
remediation at Lessee's cost and expense in accordance with the provisions of
Section 19.3(e) above. Lessee acknowledges and agrees that Lessor shall have the
right, in its sole and absolute discretion, to disapprove the making of any such
alterations based upon the results of any investigation with respect to
Hazardous Materials.

         21.3     LIENS.

         Lessee shall keep the Leased Premises and the Complex in which the
Leased Premises are situated free from any liens arising out of any work
performed, materials furnished or obligations incurred by Lessee. In the event a
mechanic's or other lien is filed against the Leased Premises or the Complex of
which the Leased Premises forms a part as a result of a claim arising through
Lessee, Lessor may demand that Lessee furnish to Lessor a surety bond
satisfactory to Lessor in an amount equal to at least one hundred fifty percent
(150%) of the amount of the contested lien claim or demand, indemnifying Lessor
against liability for the same and holding the Leased Premises free from the
effect of such lien or claim. Such bond must be posted within ten (10) days
following notice from Lessor. In addition, Lessor may require Lessee to pay
Lessor's attorneys' fees and costs in participating in any action to foreclose
such lien if Lessor shall decide it is to its best interest to do so. Lessor may
pay the claim prior to the enforcement thereof, in which event Lessee shall
reimburse

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<PAGE>



Lessor in full, including attorneys' fees, for any such expense, as additional
rent, with the next due rental.

         21.4     RESTORATION

         Lessee shall return the Leased Premises to Lessor at the expiration or
earlier termination of this Lease in good and sanitary order, condition and
repair, free of rubble and debris, broom clean, reasonable wear and fear
excepted. However, Lessee shall ascertain from Lessor at least thirty (30) days
prior to the termination of this Lease, whether Lessor desires the Leased
Premises, or any part thereof, restored to its condition prior to the making of
permitted alterations, installations and improvements, and if Lessor shall so
desire, then Lessee shall forthwith restore said Leased Premises or the
designated portions thereof, as the case may be, to its original condition,
entirely at its own expense, excepting normal wear and tear. All damage to the
Leased Premises caused by the removal of such trade fixtures and other personal
property that Lessee is permitted to remove under the terms of this Lease and/or
such restoration shall be repaired by Lessee at its sole cost and expense prior
to termination.

                           22. MAINTENANCE AND REPAIRS

         22.1     OBLIGATIONS OF LESSOR AND LESSEE.

         Lessee shall, at its sole cost and expense, keep and maintain the
Leased Premises and appurtenances, and every part thereof in good, clean and
sanitary order, condition and repair including all necessary replacements, and
shall maintain the appearance of the Leased Premises in a manner consistent with
the character, use and appearance of the Complex. Subject to the obligations of
Lessee pursuant to this Article and pursuant to Article 19 above, Lessor shall
perform all necessary repairs, maintenance and replacement of the foundation,
roof and structural parts of the Building. Lessee shall, at its sole cost, keep
and maintain all utilities, fixtures and mechanical equipment used by Lessee in
good order, condition and repair. In the case of equipment installed by Lessor
for Lessee, or installed by Lessee and being or to become the property of
Lessor, such as heating, ventilating and air conditioning equipment, or other
mechanical equipment, Lessee shall maintain a service contract for its regular
maintenance with a service company acceptable to Lessor, at Lessee's expense.
Evidence of such a service contract will be provided to Lessor at its request.
Prior to commencement of any repairs, Lessee shall give Lessor at least ten (10)
days' prior written notice thereof so that Lessor may post notices of
non-responsibility in or upon the Leased Premises as provided by law. Lessee
must obtain the prior written approval from Lessor for Lessee's contractor
before the commencement of the repair. Lessor may require that Lessee use a
specific contractor for certain types of repairs. Notwithstanding the foregoing,
Lessee shall not make any repairs to the equipment, facilities or systems of the
Building or Complex which are outside of the Leased Premises or which serve
other portions of the Building and/or Complex.

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<PAGE>



         22.2     HVAC SYSTEM.

         Notwithstanding the provisions of the preceding Section, Lessor may
elect at any time upon written notice to Lessee to perform the maintenance of
the heating, ventilating and air conditioning system (hereinafter "HVAC") for
the account of Lessee. In such event, Lessee shall pay the full cost of the
maintenance contract for the HVAC in the Leased Premises within ten (10) days of
receipt of billing therefor from Lessor, as well as for costs of repair or
replacement of parts thereof as necessary, in the reasonable judgment of Lessor.
Lessor may, at its option, elect to have the HVAC in the Leased Premises
maintained in common with other equipment in the Complex. In such event Lessee
shall pay its pro rata share of such maintenance costs which share shall be
established in air equitable manner by Lessor based upon the relative tonnage in
the Leased Premises compared to the total tonnage under contract, or some other
reasonable means of allocation as selected by Lessor. Lessor's good faith
judgment as to the allocation of the charges described in this paragraph shall
be conclusive. Included in the charges to be allocated to Lessee shall be,
without limitation: the maintenance contract upon the HVAC, extended warranties
and any repairs and replacements not covered by the maintenance contract or
warranty. Lessor may elect to replace the HVAC system, if necessary, and in such
event the cost thereof shall be amortized in the manner provided in this Lease
with respect to amortization of other Capital Costs, Lessee shall pay to Lessor,
within ten (10) days after receipt of billing, its pro rata share of such
amortization, established on all equitable basis according to the relative
tonnage in the Leased Premises as compared to the entire area served by the
system.

         22.3     CONDITION OF PREMISES.

         Except as to the construction obligations of Lessor, if any, stated in
Exhibit C to this Lease, Lessee shall accept the Leased Premises in "as is"
condition as of the date of execution of this Lease by Lessee, and Lessee
acknowledges that the Leased Premises in such condition are in good and sanitary
order, condition and repair.

         22.4     WAIVER.

         Lessee waives all rights it may have under law to make repairs at
Lessor's expense.

                                23. CONDEMNATION

         23.1     DEFINITIONS.

                  (a) "Condemnation" means (i) the exercise of any governmental
power, whether by legal proceedings or otherwise, by a condemnor and/or (ii) a
voluntary sale or transfer by Lessor to any condemnor, either under threat of
condemnation or while legal proceedings for condemnation are pending.


                                       35

<PAGE>



                  (b) "Date of taking" means the date the condemnor has the
right to possession of the property being condemned.

                  (c) "Award" means all compensation, stairs or anything of
value awarded, paid or received on a total or partial condemnation.

                  (d) "Condemnor" means any public or quasi-public authority, or
private corporation or individual, having the power of condemnation.

         23.2     TOTAL TAKING.

         If the Leased Premises are totally taken by condemnation, this Lease
shall terminate on the date of taking.

         23.3     PARTIAL TAKING; COMMON AREAS.

                  (a) If any portion of the Leased Premises is taken by
condemnation, this Lease shall remain in effect, except that Lessee can elect to
terminate this Lease if 33-1/3% or more of the total number of square feet in
the Leased Premises is taken.

                  (b) If any part of the Common Areas of the Complex is taken by
condemnation, this Lease shall remain in full force and effect so long as there
is no material interference with the access to the Leased Premises, except that
if thirty percent (30%) or more of the Common Areas is taken by condemnation,
either party shall have the election to terminate this Lease pursuant to this
Section.

                  (c) If fifty percent (50%) or more of the Building in which
the Leased Premises are located is taken, Lessor shall have the election to
terminate this Lease in the manner prescribed herein.

         23.4     TERMINATION OR ABATEMENT.

         If either party elects to terminate this Lease under the provisions of
Section 23.3 (such party is hereinafter referred to as the "Terminating Party"),
it must terminate by giving notice to the other party (the "Nonterminating
Party") within thirty (30) days after the nature and extent of the taking have
been finally determined (the "Decision Period"). The Terminating Party shall
notify the Nonterminating Party of the date of termination, which date shall not
be earlier than sixty (60) days after the Terminating Party has notified the
Nonterminating Party of its election to terminate nor later than the date of
taking. If Notice of Termination is not given within the Decision Period, the
Lease shall continue in full force and effect except that Minimum Rent shall be
reduced by subtracting therefrom an amount calculated by multiplying the Minimum
Rent in effect prior to the taking by a fraction the numerator of which is the
number of square feet taken from the Leased Premises and the denominator of
which is the number of square feet in the Leased Premises prior to the taking.

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<PAGE>



         23.5     RESTORATION.

         If there is a partial taking of the Leased Premises and this Lease
remains in full force and effect pursuant to this Article, Lessor, at its cost,
shall accomplish all necessary restoration so that the Leased Premises is
returned as near as practical to its condition immediately prior to the date of
the taking, but in no event shall Lessor be obligated to expend more for such
restoration than the extent of funds actually paid to Lessor by the condemnor.

         23.6     AWARD.

         Any award arising from the condemnation or the settlement thereof shall
belong to and be paid to Lessor except that Lessee shall receive from the award
compensation for the following if specified in the award by the condemning
authority, so long as it does not reduce Lessor's award in respect of the real
property: Lessee's trade fixtures, tangible personal property, loss of business
and relocation expenses. At all events, Lessor shall be solely entitled to all
award in respect of the real property, including the bonus value of the
leasehold. Lessee shall not be entitled to any award until Lessor has received
the above sum in full.

                              24. EMPLOYEE PARKING

         24.1     DESIGNATED AREAS.

         Lessor shall have the right by written notice to Lessee, to designate
specific areas of the Complex for employee parking. If Lessor so designates an
employee parking area, then automobiles of Lessee, its employees and agents
shall not park within the parking area except in areas delineated by Lessor as
"employee parking." Lessee shall be entitled to park in common with other
tenants of Lessor. Lessee agrees not to overburden the parking facilities and
agrees to cooperate with Lessor and other tenants in the use of parking
facilities. Lessor reserves the right in its absolute discretion to determine
whether parking facilities are becoming crowded and, in such event, to allocate
and assign parking spaces among Lessee and other Lessees. Upon request, Lessee
shall provide Lessor with the license plate numbers of all employees,

                                 25. ABANDONMENT

         25.1     LESSEE TO OCCUPY.

         Lessee shall not abandon the Leased Premises at any time during the
Term, nor permit the Leased Premises to remain unoccupied for a period longer
than ten (10) consecutive days during the Term, and if Lessee shall abandon,
vacate or surrender the Leased Premises, or be dispossessed by process of law,
or otherwise, any personal property belonging to Lessee and remaining on the
Leased Premises after such ten (10) day period shall, at the option of Lessor,
be deemed abandoned.

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<PAGE>



                               26. ENTRY BY LESSOR

         26.1     RIGHTS OF LESSOR.

         Lessee shall permit Lessor and Lessor's agents to enter the Leased
Premises at all reasonable times for the purpose of inspecting the same or for
the purpose of maintaining the Building, the Complex, Lines and the systems and
facilities therein, or for the purpose of making repairs, replacements,
alterations or additions to any portion of the Building, the Complex, Lines and
the systems and facilities herein, including the erection and maintenance of
such scaffolding, canopies, fences and props as may be required, or for the
purpose of posting notices of responsibility for alterations, additions or
repairs, or for the purpose of placing upon the Building any usual or ordinary
"for sale" signs, without any rebate of rent and without any liability to Lessee
for any loss of occupation or quiet enjoyment of the Leased Premises thereby
occasioned, and shall permit Lessor, at any time within ninety (90) days prior
to the expiration of this Lease, to place upon the Leased Premises any usual or
ordinary "to let" or "to lease" signs. This Section in no way affects the
maintenance obligations of the parties hereto.

                                    27. SIGNS

         27.1     APPROVAL, INSTALLATION AND MAINTENANCE.

         Lessee shall not place on the Leased Premises or on the Complex any
exterior signs or advertisements nor any interior signs or advertisements that
are visible from the exterior of the Leased Premises, without lessor's prior
written consent, which Lessor reserves the right to withhold for any aesthetic
reason in its sole judgment. The cost of installation and regular maintenance of
any such signs approved by Lessor shall be at the sole expense of Lessee. At the
termination of this Lease, or any extension thereof, Lessee shall remove all his
signs, and all damage caused by such removal shall be repaired at Lessee's
expense.

                                   28. DEFAULT

         28.1     DEFINITION.

         The occurrence of any of the following shall constitute a material
default and breach of this Lease by Lessee;

                  (a) Any failure by Lessee to pay the rental or to make any
other payment required to be made by Lessee hereunder when due;

                  (b) The abandonment of the Leased Premises by Lessee in
violation of Section 25.1 hereof;

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<PAGE>



                  (c) Any failure by Lessee to provide executed documents as and
when required under the provisions of Section 35.2 and/or Article 36;

                  (d) A failure by Lessee to observe and perform any other
provision of this Lease to be observed or performed by Lessee, where such
failure continues for ten (10) days after written notice thereof by Lessor to
Lessee; provided, however, that if the nature of the default is such that the
same cannot reasonably be cured within the ten (10) day period allowed, Lessee
shall not be deemed to be in default if Lessee shall, within such ten (10) day
period, commence to cure and thereafter diligently prosecute the same to
completion;

                  (e) Either (1) the appointment of a receiver (except a
receiver appointed at the instance or request of Lessor) to take possession of
all or substantially all of the assets of Lessee, or (2) a general assignment by
Lessee for the benefit of creditors, or (3) any action taken or suffered by
Lessee under any insolvency or bankruptcy act shall constitute a breach of this
Lease by Lessee. In such event, Lessor may, at its option, declare this Lease
terminated and forfeited by Lessee, and Lessor shall be entitled to immediate
possession of the Leased Premises. Upon such notice of termination, this Lease
shall terminate immediately and automatically by its own limitation;

                  (f) Any two (2) failures by Lessee to observe and perform any
provision of this Lease during any twelve (12) month period of the Term, as such
may be extended, shall constitute at the option of Lessor, a separate and
noncurable default.

                            29. REMEDIES UPON DEFAULT

         29.1     TERMINATION AND DAMAGES.

         In the event of any default by Lessee, then in addition to any other
remedies available to Lessor herein or at law or in equity, Lessor shall have
the immediate option to terminate this Lease and all rights of Lessee hereunder
by giving written notice of such intention to terminate. In the event that
Lessor shall elect to so terminate this Lease, then Lessor may recover from
Lessee:

                  (a) The worth at the time of award of any unpaid rent which
had been earned at the time of such termination; plus

                  (b) The worth at the time of award of the amount by which the
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss Lessee proves could have been
reasonably avoided; plus

                  (c) The worth at the time of award of the amount by which the
unpaid rent for the balance of the Term after the time of award exceeds the
amount of such rental loss that Lessee proves could be reasonably avoided; plus

                                       39

<PAGE>



                  (d) Any other amount necessary to compensate Lessor for all
the detriment proximately caused by Lessee's failure to perform its obligations
under this Lease or which in the ordinary course of events would be likely to
result therefrom; and

                  (e) At Lessor's election, such other amounts in addition to or
in lieu of the foregoing as may be permitted from time to time by the applicable
law in the state in which the Leased Premises are located.

         29.2     DEFINITIONS

                  (a) The terms "rent" or "rental," as used in this Lease, shall
be deemed to be and to mean the Minimum Rent and all other sums required to be
paid by Lessee pursuant to the terms of this Lease.

                  (b) As used in subsections 29.1(a) and (b) above, the "worth
at the time of award" is computed by allowing interest at the rate of ten
percent (10%) per annum. As used in subsection 29.1(c) above, the "worth at the
time of award" is computed by discounting such amount at the discount rate of
the Federal Reserve Bank for the region in which the Complex is located at the
time of award plus one percent (1%).

         29.3     PERSONAL PROPERTY.

                  (a) In the event of any default by Lessee, Lessor shall also
have the right, with or without terminating this Lease, to reenter the Leased
Premises and remove all persons and property from the Leased Premises; such
property may be removed and stored in a public warehouse or elsewhere at the
cost of and for the account of Lessee.

                  (b) In the event of default, all of Lessee's fixtures,
furniture, equipment, improvements, additions, alterations and other personal
property shall remain upon the Leased Premises and, in that event, and
continuing during the length of such default, Lessor shall have the sole right
to take exclusive possession of such property and to use it, rent or charge
free, until all defaults are cured or, at Lessor's option, at any time during
the Term, to require Lessee to forthwith remove such property. The rights stated
herein are in addition to Lessor's rights described in Section 30.1.

         29.4     RECOVERY OF RENT; RELETTING.

                  (a) In the event of the vacation or abandonment of the Leased
Premises by Lessee or in the event that Lessor shall elect to reenter as
provided in Section 29.3 above, or shall take possession of the Leased Premises
pursuant to legal proceeding or pursuant to any notice provided by law, then if
Lessor does not elect to terminate this Lease as provided in Section 29.1 above,
this Lease shall continue in effect for so long as Lessor does not terminate
Lessee's right to possession, and Lessor may enforce all its rights and remedies
under this Lease, including, without limitation,

                                       40

<PAGE>



Lessor's right from time to time, without terminating this Lease, to either
recover all rental as it becomes due or relet the Leased Premises or any part
thereof for such term or terms and at such rental or rentals and upon such other
terms and conditions as Lessor, in its sole discretion may deem advisable with
the right to make alterations and repairs to the Leased Premises. Acts of
maintenance or preservation or efforts to relet the Leased Premises or the
appointment of a receiver upon initiation of Lessor or other legal proceeding
granting Lessor or its agent possession to protect Lessor's interest under this
Lease shall not constitute a termination of Lessee's right to possession.

                  (b) In the event that Lessor shall elect to so relet, then
rentals received by Lessor from such reletting shall be applied: first, to the
payment of any indebtedness other than rent due hereunder from Lessee to Lessor;
second, to the payment of any cost of such reletting; third, to the payment of
the cost of any alterations and repairs to the Leased Premises; fourth, to the
payment of rent due and unpaid hereunder; and the residue, if any, shall be held
by Lessor and applied in payment of future rent as the same may become due and
payable hereunder. Should that portion of such rentals received from such
reletting during any month, which is applied by the payment of rent hereunder,
be less than the rent payable during that month by Lessee hereunder, then Lessee
shall pay such deficiency to Lessor immediately upon demand therefor by Lessor.
Such deficiency shall be calculated and paid monthly. Lessee shall also pay to
Lessor, as soon as ascertained, any costs and expenses incurred by Lessor in
such reletting or in making such alterations and repairs not covered by the
rentals received from such reletting.

                  (c) No reentry or taking possession of the Leased Premises or
any other action under this Section shall be construed as an election to
terminate this Lease unless a written notice of such intention be given to
Lessee or unless the termination thereof be decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by Lessor
because of any default by Lessee, Lessor may at any time after such reletting
elect to terminate this Lease for any such default.

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

         29.5     NO WAIVER.

         Efforts by Lessor to mitigate the damages caused by Lessee's default in
this Lease shall not constitute a waiver of Lessor's right to recover damages
hereunder, nor shall Lessor have any obligation to mitigate damages hereunder.

         29.6     CURING DEFAULTS.

         Should Lessee fail to repair, maintain, keep clean, and/or service the
Leased Premises, or any part or contents thereof at any time or times, or
perform any other obligations imposed by this Lease or otherwise, their after
having given Lessee reasonable notice of the failure or failures and a

                                       41

<PAGE>



reasonable opportunity, which in no case shall exceed ten (10) days, to remedy
the failure, Lessor may enter upon the Leased Premises and perform or contract
for the performance of the repair, maintenance, or other Lessee obligation, and
Lessee shall pay Lessor for all direct and indirect costs incurred in connection
therewith within ten (10) days of receiving a bill therefor from Lessor.

         29.7     NO RIGHT TO CURE.

         Notwithstanding anything to the contrary set forth in Section 28.1
above, Lessee shall be deemed to have committed a material default and breach of
this Lease, Without any right on Lessee's part to cure such default and breach,
upon the failure by Lessee to observe and perform the provisions of any one or
more of the following Sections (or indicated portions thereof) of this Lease:
9.3, 19.1, 2 1.1 (first sentence), 26.1, 35.2, 36.1 and 36.2.

         29.8     CUMULATIVE REMEDIES.

         The various rights, options, election powers, and remedies of Lessor
contained in this Article and elsewhere in this Lease shall be construed as
cumulative and no one of them exclusive of any others or of any legal or
equitable remedy which Lessor might otherwise have in the event of breach or
default, and the exercise of one right or remedy by Lessor shall not in any way
impair its right to any other right or remedy.

                  30. FORFEITURE OF PROPERTY AND LESSOR'S LIEN

         30.1     REMOVAL OF PERSONAL PROPERTY.

         Lessee agrees that as of the date of termination of this Lease or
repossession of the Leased Premises by Lessor, by way of default or otherwise,
it shall remove all personal property to which it has the right to ownership
pursuant to the terms of this Lease. Any and all such property of Lessee not
removed by such date shall, at the option of Lessor, irrevocably become the sole
property of Lessor. Lessee waives all rights to notice and all common law and
statutory claims and causes of action which it may have against Lessor
subsequent to such date as regards the storage, destruction, damage, loss of use
and ownership of the personal property affected by the terms of this Article.
Lessee acknowledges Lessor's need to relet the Leased Premises upon termination
of this Lease or repossession of the Leased Premises and understands that the
forfeitures and waivers provided herein are necessary to aid said reletting, and
to prevent Lessor incurring a loss for liability to deliver the Leased Premises
to a prospective lessee.

         30.2     LESSOR'S LIEN.

         Lessee hereby grants to Lessor a lien upon and security interest in all
fixtures, chattels and personal property of every kind now or hereafter to be
placed or installed in or on the Leased Premises and agrees that in the event of
any default on the part of Lessee, Lessor shall have all the rights and remedies
afforded the secured party by the chapter on "Default" of Division 9 of the

                                       42

<PAGE>



Uniform Comniercial Code of the state in which the Leased Premises are located
and may, in connection therewith, also (a) enter on the Leased Premises to
assemble and take possession of the collateral, (b) require Lessee to assemble
the collateral and make its possession available to Lessor at the Leased
Premises, and (c) enter the Leased Premises, render the collateral, if
equipment, unusable and dispose of it in a manner provided by the Uniform
Commercial Code of the state in which the Leased Premises are located. Lessee
hereby designates Lessor as his attorney-in-fact for purposes of executing such
documents as may be necessary to perfect the lien and security interest granted
hereunder.

                             31. SURRENDER OF LEASE

         31.1     NO MERGER.

         The voluntary or other surrender of this Lease by Lessee, or a mutual
cancellation thereof, shall not work as a merger, and shall, at the option of
Lessor, terminate all or any existing subleases or subtenancies, or may, at the
option of Lessor, operate as an assignment to it of any or all such subleases or
subtenancies.

                            32. LESSOR'S EXCULPATION

         32.1     LIMITED LIABILITY.

         In the event of default, breach, or violation by Lessor (which term
includes Lessor's partners, co-venturers, co-tenants, officers, directors,
trustees, employees, agents, or representatives) of any of Lessor's obligations
under this Lease, Lessor's liability to Lessee shall be limited to its ownership
interest in the Leased Premises (or its interest in the Complex, if applicable)
or the proceeds of a public sale of such interest pursuant to foreclosure of a
judgment against Lessor. Lessor may, at its option, and among its other
alternatives, relieve itself of all liability under this Lease by conveying the
Leased Premises to Lessee. Notwithstanding any such conveyance, Lessee's
leasehold and ownership interest shall not merge.

         32.2     NO RECOURSE.

         Lessor (as defined in Section 32.1) shall not be personally liable for
any deficiency beyond its interest in the Leased Premises. All personal
liability of all trustees, their employees, agents or representatives, is
expressly waived by Lessee.


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                               33. ATTORNEYS' FEES

         33.1     ACTIONS, PROCEEDINGS, ETC.

         Lessee hereby agrees to pay, as additional rent, all attorneys' fees
and disbursements, and all other court costs or expenses of legal proceedings or
other legal services which Lessor may incur or pay out by reason of, or in
connection with:

                  (a) any action or proceeding brought by Lessor wherein Lessor
obtains a final judgment or award against Lessee (including arbitration) on
account of any default by Lessee in the observance or performance of any
obligation under this Lease including, but not limited to, matters involving
payment of rent and additional rent, Alterations or other Lessee's work and
subletting or assignment;

                  (b) any action or proceeding brought by Lessee against Lessor
(or any officer, partner, or employee of Lessor) in which Lessee fails to secure
a trial judgment against Lessor;

                  (c) any other appearance by Lessor (or any officer, partner,
or employee of Lessor) as a witness or otherwise in any action or proceeding
whatsoever involving or affecting Lessee or this Lease;

                  (d) any assignment, sublease, or leasehold mortgage proposed
or granted by Lessee (whether or not permitted under this Lease), and all
negotiations with respect thereto; and

                  (e) any alteration of the Leased Premises by Lessee, and all
negotiations with respect thereto.

         In any action or proceeding referred to in subsection (a), Lessee shall
be entitled to recover its attorneys' fees and costs if Lessee is the prevailing
party against Lessor.

         33.2     SURVIVAL.

         Lessee's obligations under this Section shall survive the expiration or
any other termination of this Lease. This Section is intended to supplement (and
not to limit) other provisions of this Lease pertaining to indemnities and/or
attorneys' fees.

         33.3     COUNSEL FEES.

         Should it be necessary for Lessor to employ legal counsel to enforce
any of the provisions of this Lease, Lessee agrees to pay, as additional rent,
all attorneys' fees and court costs reasonably incurred thereby, whether or not
Lessor commences any legal action or proceeding.

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                                   34. NOTICES

         34.1     WRITING.

         All notices, demands and requests required or permitted to be given or
made under any provision of this Lease, shall be in writing and shall be (i)
given or made by personal service, or (ii) by telephone facsimile upon which the
date and time are imprinted in the course of transmission to the number
indicated in Section 1.2, or (iii) by mailing same by registered or certified
mail, return receipt requested, postage prepaid, or (iv) by reputable courier
which provides written evidence of delivery, addressed to the respective party
at the address set forth in Section 1.2 of this Lease or at such other address
as the party may from time to time designate, by a written notice sent to the
other in the manner aforesaid.

         34.2     EFFECTIVE DATE.

         Any such notice, demand or request ("notice") shall be deemed given or
made on the third day after the date so mailed. Notwithstanding the foregoing,
notice given by personal delivery to the party at its address as aforesaid shall
be deemed given on the day on which delivery is made. Notice given by a
reputable courier service which provides written evidence of delivery shall be
deemed given on the business day immediately following deposit with the courier
service.

         34.3     AUTHORIZATION TO RECEIVE.

         Each person and/or entity whose signature is affixed to this Lease as
Lessee or as guarantor of Lessee's obligations ("obligor") designates such other
obligor its agent for the purpose of receiving any notice pertaining to this
Lease or service of process in the event of any litigation or dispute arising
from any obligation imposed by this Lease.

                                35. SUBORDINATION

         35.1     PRIORITY OF ENCUMBRANCES.

         Lease, at Lessor's option, shall be subordinate to any ground lease,
mortgage, deed of trust, or any other hypothecation for security now or
hereafter placed upon the real property of which the Leased Premises are a part
and to any and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Lessee's right to quiet possession of the
Leased Premises shall not be disturbed if Lessee is not in default and so long
as Lessee shall pay the rent and observe and perform all the provisions of this
Lease, unless this Lease is otherwise terminate pursuant to its terms. If any
mortgagee, trustee or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust or ground lease, and shall give written
notice thereof to Lessee, this Lease shall be deemed prior to such mortgage,
deed of trust or ground lease, whether this Lease is dated prior or

                                       45

<PAGE>



subsequent to the date of said mortgage, deed of trust or ground lease or the
date of recording thereof.

         35.2     EXECUTION OF DOCUMENTS.

         Lessee agrees to execute any documents required to effectuate such
subordination or to make this Lease prior to the lien of any mortgage, deed of
trust or ground lease, as the case may be, and failing to do so within ten (10)
days after written demand, does hereby make, constitute and irrevocably appoint
Lessor as Lessee's attorney-in-fact and in Lessee's name, place and stead, to do
so. It is understood by all parties that Lessee's failure to execute the
subordination documents referred to above may cause Lessor serious financial
damage by causing the failure of a financing or sale transaction.

         35.3     ATTORNMENT.

         Lessee shall attorn to any purchaser at any foreclosure sale, or to any
grantee or transferee designated in any Deed given in lieu of foreclosure.

                           36. ESTOPPEL, CERTIFICATES

         36.1     EXECUTION BY LESSEE.

         Within ten (10) days of request therefor by Lessor, Lessee shall
execute a written statement acknowledging the commencement and termination dates
of this Lease, that it is in full force and effect, has not been modified (or if
it has, stating such modifications), and providing any other pertinent
information as Lessor or its agent might reasonably request. Failure to comply
with this Article shall be a material breach of this Lease by Lessee giving
Lessor all rights and remedies under Article 29 hereof, as well as a right to
damages caused by the loss of a loan or sale which may result from such failure
by Lessee.

         36.2     FINANCING, SALE OR TRANSFER.

         If Lessor desires to finance, refinance, sell, ground lease or
otherwise transfer the Leased Premises, or any part thereof, or the Building,
Lessee hereby agrees, within ten (10) days of request therefor by Lessor, to
deliver to any lender or to any prospective buyer, ground lessor or other
transferee designated by Lessor such financial statements of Lessee, its
Guarantor and its parent company, if any, as may be reasonably required by such
party. Such statements shall include the past three (3) years' financial
statements of Lessee. All such financial statements shall be received by Lessor
in confidence and shall be used only for the purposes herein set forth.

                                       46

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                                   37. WAIVER

         37.1     EFFECT OF WAIVER.

         The waiver by Lessor of any breach of any Lease provision shall not be
deemed to be a waiver of such Lease provision or any subsequent breach of the
same or any other term, covenant or condition therein contained. The subsequent
acceptance of rent hereunder by Lessor shall not be deemed to be a waiver of any
preceding breach by Lessee of any provision of this Lease, other than the
failure of Lessee to pay the particular rental so accepted, regardless of
Lessor's knowledge of such preceding breach at the time of acceptance of such
rent.

                                38. HOLDING OVER

         38.1     MONTH-TO-MONTH TENANCY ON ACCEPTANCE.

         If Lessee should remain in possession of the Leased Premises after the
expiration of the Term and without executing a new Lease, then, upon acceptance
of rent by Lessor, such holding over shall be construed as a tenancy from month
to month, subject to all the conditions, provisions and obligations of this
Lease as existed during the last month of the Term hereof, so far as applicable
to a month to month tenancy, except that the Minimum Rent shall be equal to
twice the Minimum Rent payable immediately prior to the expiration or sooner
termination of the Lease.

                           39. SUCCESSORS AND ASSIGNS

         39.1     BINDING EFFECT.

         The covenants and conditions herein contained shall, subject to the
provisions as to assignment, apply to and bind the heirs, successors, executors,
administrators and assigns of all of the parties hereto; and all of the parties
hereto shall be jointly and severally liable hereunder.

                                    40. TIME

         40.1     TIME OF THE ESSENCE.

         Time is of the essence of this Lease with respect to each and every
article, section and subsection hereof.

                        41. EFFECT OF LESSOR'S CONVEYANCE

         41.1     RELEASE OF LESSOR.

         If, during the Term, Lessor shall sell its interest in the Building or
Complex of which the Leased Premises forms a part, or the Leased Premises, then
from and after the effective date of the

                                       47

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sale or conveyance, Lessor shall be released and discharged from any and all
obligations and responsibilities under this Lease, except those already accrued.

                            42. TRANSFER OF SECURITY

         42.1     TRANSFER TO PURCHASER.

         If any security be given by Lessee to secure the faithful performance
of all or any of the covenants of this Lease on the part of Lessee, Lessor may
transfer and/or deliver the security, as such, to the purchaser of the
reversion, in the event that the reversion be sold, and thereupon Lessor shall
be discharged from any and all liability in reference thereto.

                             43. CORPORATE AUTHORITY

         43.1     AUTHORIZATION TO EXECUTE.

         If Lessee is a corporation, each individual executing this Lease on
behalf of said corporation represents and warrants that he is duly authorized to
execute and deliver this Lease on behalf of said corporation in accordance with
a duly adopted resolution of the Board of Directors of said corporation or in
accordance with the Bylaws of said corporation, and that this Lease is binding
upon said corporation in accordance with its terms. Further, Lessee shall,
within thirty (30) days after execution of this Lease, deliver to Lessor a
certified copy of a resolution of the Board of Directors of said corporation
authorizing or ratifying the execution of this Lease.

                     44. WAIVER OF CALIFORNIA CODE SECTIONS

         44.1     WAIVER BY LESSEE.

         In this Lease, numerous provisions have been negotiated by the parties,
some of which provisions are covered by statute. Whenever a provision of this
Lease and a provision of any statute or other law cover the same matter, the
provisions of this Lease shall control. Therefore, Lessee waives (for itself and
all persons claiming under Lessee) the provisions of Civil Code Sections 1932(2)
and 1933(4) with respect to the destruction of the Leased Premises; Civil Code
Sections 1941 and 1942 with respect to Lessor's repair duties and Lessee's right
to repair; Civil Code Section 1995.310, granting to a tenant all remedies
provided by law fol- breach of contract (including, without limitations the
right to contract damages and the right to terminate the lease) in the event
that the landlord unreasonably withholds consent to a transfer in violation of
the tenant's rights under the lease; Code of Civil Procedure Section 1265.130,
allowing either party to petition the Superior Court to terminate this Lease in
the event of a partial taking of the Leased Premises by condemnation as herein
defined; and any right of redemption or reinstatement of Lessee under any
present or future case law or statutory provision (including Code of Civil
Procedure Sections 473 and 1179 and Civil Code Section 3275) in the event Lessee
is dispossessed from the Leased Premises for any reason.

                                       48

<PAGE>



This waiver applies to future statutes enacted in addition to or in substitution
for the statutes specified herein.

                                    45. WASTE

         45.1     WASTE OR NUISANCE.

         Lessee shall not commit, or suffer to be committed, any waste upon the
Leased Premises, or any nuisance, or other act or thing which may disturb the
quiet enjoyment of any other tenant or occupant of the Complex in which the
Leased Premises are located.

                                 46. BANKRUPTCY

         46.1     BANKRUPTCY EVENTS.

         If at any time during the Term there shall be filed by or against
Lessee in any court pursuant to any statute either of the United States or of
any State a petition in bankruptcy or insolvency or for reorganization or for
the appointment of a receiver or trustee of all or a portion of Lessee's
property, or if a receiver or trustee takes possession of any of the assets of
Lessee, or if the leasehold interest herein passes to a receiver, or if Lessee
makes an assignment for the benefit of creditors or petitions for or enters into
an arrangement (any of which are referred to herein as "a bankruptcy event"),
then the following provisions shall apply:

                  (a) At all events any receiver or trustee in bankruptcy or
Lessee as debtor in possession ("debtor") shall either expressly assume or
reject this Lease within sixty (60) days following the entry of an "Order for
Relief."

                  (b) In the event of an assumption of the Lease by a debtor,
receiver, or trustee, such debtor, receiver, or trustee shall immediately after
such assumption (1) cure any default or provide adequate assurances that
defaults will be promptly cured; and (2) compensate Lessor for actual pecuniary
loss or provide adequate assurances that compensation will be made for actual
pecuniary loss; and (3) provide adequate assurance of future performance.

         For the purposes of this paragraph 46.1 (b), adequate assurance of
future performance of all obligations under this Lease shall include, but is not
limited to:

                           (i) written assurance that rent and any other
consideration due under the Lease shall first be paid before any other of
Lessee's costs of operation of its business in the Leased Premises are paid;

                           (ii) written agreement that assumption of this Lease
will not cause a breach of any provision hereof including, but not limited to,
any provision relating to use or exclusivity in this or any other Lease, or
agreement relating to the Leased Premises, or if such a breach is caused,

                                       49

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the debtor, receiver or trustee will indemnify Lessor against such loss
(including costs of suit and attorneys' fees), occasioned by such breach;

                           (iii) where a default exists under the Lease, the
party assuming the Lease may not require Lessor to provide services or supplies
incidental to the Lease before its assumption by such trustee or debtor, unless
Lessor is compensated under the terms of the Lease for such services and
supplies provided before the assumption of such Lease.

                  (c) The debtor, receiver, or trustee may only assign this
Lease in accordance with the terms of Article 30 and if adequate assurance of
future performance by the assignee is provided, whether or not there has been a
default under the Lease. For the purpose hereof, adequate assurance of future
performance means written agreement that assignment of this Lease will not cause
a breach of any provision hereof including, but not limited to, any provision
relating to use or exclusivity in this or any other Lease or agreement relating
to the Leased Premises, and that if such a breach is caused, the debtor,
receiver or trustee will indemnify Lessor against such loss (including costs of
suit and attorney's fees), occasioned by such breach. Any consideration paid by
any assignee in excess of the rental reserved in the Lease shall be the sole
property of, and paid to, Lessor. Upon assignment by the debtor or trustee, the
obligations of the Lease shall be deemed to have been assumed and the assignee
shall execute an assumption agreement on request of Lessor.

                  (d) Lessor shall be entitled to the fair market value for the
Leased Premises and the services provided by Lessor (but in no event less than
the rental reserved in the Lease) subsequent to the commencement of a bankruptcy
event.

                  (e) Lessor specifically reserves any and all remedies
available to Lessor in Article 29 hereof or at law or in equity in respect of a
bankruptcy event by Lessee to the extent such remedies are permitted by law.

                                47. LATE CHARGES

         47.1     LATE PAYMENT BY LESSEE.

         Lessee acknowledges that late payment by Lessee to Lessor of rent or
any other payment due hereunder will cause Lessor to incur costs not
contemplated by this Lease, the exact amount of such costs being extremely
difficult and impractical to fix. Such costs include, without limitation,
processing and accounting charges, and late charges that may be imposed on
Lessor by the terms of any encumbrance and note secured by any encumbrance
covering the Leased Premises. Therefore, if any installment of rent, or any
other payment due hereunder from Lessee is not received by Lessor when due,
Lessee shall pay to Lessor an additional sum of ten percent (10%) of such rent
or other charge as a late charge. The parties agree that this late charge
represents a fair and reasonable estimate of the cost that Lessor will incur by
reason of late payment by Lessee. Acceptance of any late charge shall not
constitute a waiver of Lessee default with respect to the overdue amount, or
prevent Lessor from exercising any other rights or remedies available to Lessor.

                                       50

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                            48. MORTGAGEE PROTECTION

         48.1     NOTICE AND RIGHT TO CURE DEFAULT.

         Lessee agrees to give any mortgagee(s) and/or trust deed holders, by
registered mail, a copy of any notice of default served upon Lessor, provided
that prior to such notice Lessee has been notified, in writing (by way of Notice
of Assignment of Rents and Leases, or otherwise), of the address of such
mortgages and/or trust deed holders. Lessee further agrees that if Lessor shall
have failed to cure such default within the time provided for in this Lease,
then the mortgagees and/or trust deed holders shall have an additional thirty
(30) days within which to cure such default or, if such default cannot be cured
within that time, then such additional time as may be necessary if, within such
thirty (30) days, any mortgagee and/or trust deed holder has commenced and is
diligently pursuing the remedies necessary to cure such default (including but
not limited to commencement of foreclosure proceedings, if necessary to effect
such cure), in which event this Lease shall not be terminated while such
remedies are being so diligently pursued.

                          49. MISCELLANEOUS PROVISIONS

         49.1     CAPTIONS.

         The captions of this Lease are for convenience only and are not a part
of this Lease and do not in any way limit or amplify the terms and provisions of
this Lease.

         49.2     NUMBER AND GENDER.

         Whenever the singular number is used in this Lease and when required by
the context, the same shall include the plural, the plural shall include the
singular, and the masculine gender shall include the feminine and neuter
genders, and the word "person" shall include corporation, firm or association.
If there be more than one Lessee the obligations imposed under this Lease upon
Lessee shall be joint and several.

         49.3     MODIFICATIONS.


         This instrument contains all of the agreements, conditions and
representations made between the parties to this Lease and may not be modified
orally or in any other manner than by an agreement in writing signed by all of
the parties to this Lease.

         49.4     PAYMENTS.

         Except as otherwise expressly stated, each payment required to be made
by Lessee shall be in addition to and not in substitution for other payments to
be made by Lessee.


                                       51

<PAGE>



         49.5     SEVERABILITY.

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

         49.6     NO OFFER.

         The preparation and submission of a draft of this Lease by either party
to the other shall not constitute an offer, nor shall either party be bound to
any terms of this Lease or the entirety of the Lease itself until both parties
have fully executed a final document and an original signature document has been
received by both parties. Until such time as described in the previous sentence,
either party is free to terminate negotiations with no obligation to the other.

         49.7     DISPUTED SUMS.

         Under the terms of this Lease numerous charges are and may be due from
Lessee to Lessor including, without limitation, Common Area charges, real estate
taxes, insurance reimbursement and other items of a similar nature including
advances made by Lessor in respect of Lessee's default at Lessor's option. In
the event that at any time during the Term there is a bona fide dispute between
the parties as to the amount due for any of such charges claimed by Lessor to be
due, the amount demanded by Lessor shall be paid by Lessee until the resolution
of the dispute between the parties or by litigation. Failure by Lessee to pay
the disputed sums until resolution shall constitute a default under the terms of
the Lease.

         49.8     LESSEE'S REMEDIES.

         Notwithstanding anything to the contrary contained in this Lease, if
any provision of this Lease expressly or impliedly obligates Lessor not to
unreasonably withhold its consent or approval, an action for declaratory
judgment or specific performance will be Lessee's sole right and remedy in any
dispute as to whether Lessor has breached such obligation.

         49.9     LIGHT, AIR AND VIEW.

         No diminution of light, air, or view by any structure which may
hereafter be erected (whether or not by Lessor) shall entitle Lessee to any
reduction of Rent, result in any liability of Lessor to Lessee, or in any other
way affect this Lease or Lessee's obligations hereunder.

         49.10    PUBLIC TRANSPORTATION INFORMATION.

         Lessee shall establish and maintain during the Term hereof a program to
encourage maximum use of public transportation by personnel of Lessee employed
on the Leased Premises, including without limitation the distribution to such
employees of written materials explaining the convenience and availability of
public transportation facilities adjacent or proximate to the Complex,
staggering

                                       52

<PAGE>



working hours of employees, and encouraging use of such facilities, all at
Lessee's sole reasonable cost and expense. Lessee shall comply with all
requirements of any local transportation management ordinance.

         49.11    RULES AND REGULATIONS.

         Lessee agrees to comply with all reasonable rules and regulations
adopted and promulgated by Lessor and applicable to all tenants in the Complex
for the lawful, orderly, clean, safe, aesthetic, quiet, and beneficial use,
operation, maintenance, management, and enjoyment of the Complex. The initial
rules and regulations concerning the Complex are attached hereto as Exhibit E.
Lessor reserves the right to make additional rules affecting the Complex
throughout the Term hereof. Lessor shall have no liability for violation by any
other lessee in the Complex of any rules or regulations nor shall such violation
or waiver thereof excuse Lessee from compliance. All delivery and dispatch of
supplies, fixtures, equipment and furniture shall be by means and during hours
established by Lessor. Lessee shall not at any time park its trucks or other
delivery vehicles in the Common Areas, except in such parts thereof as from time
to time designated by Lessor.

         49.12    JOINT AND SEVERAL LIABILITY.

         Should Lessee consist of more than one person or entity, they shall be
         jointly and severally liable on this Lease.

         49.13    SURVIVAL OF OBLIGATIONS.

         All obligations of Lessee which may accrue or arise during the Term or
as a result of any act or emission of Lessee during said Term shall, to the
extent they have not been fully performed, satisfied or discharged, survive the
expiration or termination of this Lease.

         49.14    REAL ESTATE BROKERS.

         Lessor and Lessee each represents and warrants to the other party that
it has not authorized or employed, or acted by implication to authorize or
employ, any real estate broker or salesman to act for it in connection with this
Lease. Lessor and Lessee shall each indemnify, defend and hold the offer party
harmless from and against any and all claims by any real estate broker or
salesman whom the indemnifying party authorized or employed, or acted by
implication to authorize or employ, to act for the indemnifying party in
connection with this Lease.

         49.15    NONLIABILITY OF LESSOR FOR APPROVALS.

         Except as may otherwise be expressly stated by a provision of this
Lease, and only to the extent so stated, the consent or approval, whether
express or implied, or the act, failure to act or failure to object, by Lessor
in connection with any plan, specification, drawing, proposal, request, act,
emission, notice or communication (collectively, "act") by or for, or prepared
by or for, Lessee, shall

                                       53

<PAGE>



not create any responsibility or liability of the part of Lessor, and shall not
Constitute a representation by Lessor, with respect to the completeness,
sufficiency, efficacy, propriety, quality or legality of such act.

         49.16    INTEREST ON PAST DUE AMOUNTS.

         If any sum due Lessor from Lessee is not received by Lessor within five
(5) calendar days after the date such sum is due and payable, such sum shall
bear interest from the due date until paid by Lessee at the rate of two percent
(2%) above the Prime Rate (as herein defined), not to exceed the maximum rate of
interest allowed by law in the state where the Leased Premises are located, and
such interest shall be deemed to be additional rent. "Prime Rate" means the
highest rate charged by Bank of America NT&SA, San Francisco Main Office, on
short-term unsecured loans to its most creditworthy corporate borrowers.

         49.17    CONVERSION TO A LIMITED LIABILITY ENTITY.

                  (a) No Conversion Without Consent. Anything to the contrary in
this Lease notwithstanding, if Lessee is currently a partnership (either general
or limited), joint venture, cotenancy, joint tenancy or an individual, Lessee
may not convert (the "Conversion") the Lessee entity or person into any type of
entity which possesses the characteristic of limited liability such as, by way
of example only, a corporation, a limited liability company, limited liability
partnership or limited liability limited partnership (singularly and
collectively, "Limited Entity"), without the consent of Lessor, which consent,
subject to fulfillment of the conditions below, shall not be unreasonably
withheld.

                  (b) Conditions to Lessor's Consent. The following are
conditions precedent to Lessor's obligation to act reasonably with respect to a
Conversion to a Limited Entity:

                           (i) The Limited Entity assumes all of lessee's
liabilities and is assigned all of Lessee's assets as of the effective date of
the Conversion;

                           (ii) As of the effective date of the Conversion, the
Limited Entity shall have a net worth ("Net Worth"), which is not less than the
greater of (i) Lessee's Net Worth on the date of execution of the Lease or (ii)
Lessee's Net Worth as of the date Lessee requests Lessor's consent to the
Conversion;

                           (iii) Lessee has timely fulfilled all its obligations
under any of the terms, covenants or conditions of this Lease during the term of
the Lease;

                           (iv) Lessee delivers to Lessor an agreement, in form
and substance satisfactory to Lessor and executed by each equity interest holder
of Lessee, wherein each equity interest holder of Lessee agrees to remain
personally liable for all of the terms, covenants and conditions of the Lease
that are to be observed and performed by the Limited Entity; and

                                       54

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                           (v) Lessee shall reimburse Lessor within ten (10)
days following Lessor's written demand therefor for any and all reasonable costs
and expenses that may be incurred by Lessor in connection with the Conversion
including, without limitations reasonable attorney's fees.

                  (c) Nothing in this section shall modify or reduce the
obligations of Lessee under this Lease.

         IN WITNESS WHEREOF, Lessor and Lessee leave executed this Lease as of
the day and year first written

LESSOR:                               LESSEE:


Bedford Property Investors, Inc.      Ion Networks, Inc.
a Maryland Corporation                a Delaware Corporation


By:                                   By:   /s/ Mark A. Simmons
      --------------------------            --------------------------------
         James R. Moore                    (PRINT): Mark A. Simmons

ITS: Executive Vice President/COO     ITS:  Chief Financial Officer
     ----------------------------           --------------------------------

DATE:                                 DATE:      5/26/99
     ----------------------------           --------------------------------

FOR OFFICE USE ONLY:
PREPARED BY:
REVIEWED BY:
APPROVED BY:

                                       55

<PAGE>



                                   EXHIBIT "A"
                                LEGAL DESCRIPTION

REAL PROPERTY in the City of Fremont, County of Alameda, State of California,
described as follows:

All of Lots 7 and 8 and a portion of Lot 5 and 6 as numbered and designated on
Tract Map 4642 recorded in Book 126 of Maps at Pages 30 through 33 in Alameda
County Records and a portion of Lot 3 of Parcel Map 4205 recorded in Book 152 of
Maps at Page 43 of Alameda County Records, further described as follows:

Beginning at the Southeasterly comer of Lot 5 in said Tract, thence South
67(degree) 28' 25" West, a distance of 200.05 feet;

Thence South 68(degree) 37' 10" West, a distance of 541.85 feet to a tangent
curve;

Thence along said curve, concave to the Northeast, having a radius of 40.00 feet
through a central angle of 90(degree)00' 00", an arc length of 62.83 feet;

Thence North 21(degree) 22' 50" West, a distance of 160.47 feet to a tangent
curve;

Thence along said curve, concave to the East, having a radius of 468.00 feet,
through a central angle of 27(degree) 53' 05", an arc length of 227.77 feet;

Thence North 6(degree) 30' 15" East, a distance of 68.67 feet;

Thence South 83(degree) 29' 45" East, a distance of 53.00 feet;

Thence North 6(degree) 30' 15" East, a distance of 155.00 feet;

Thence South 87(degree) 26' 19" East, a distance of 54.663 feet;

Thence North 68(degree) 37' 1 0" East, a distance of 384.32 feet;

Thence South 66(degree) 22' 50" East, a distance of 88.949 feet;

Thence North 69(degree) 37' 10" East, a distance of 78.89 feet;

Thence South 21(degree) 22' 50" East, a distance of 503.18 feet to the point of
beginning, as described in the Declaration of Merger, by New England Mutual Life
Insurance Company, recorded June 30, 1989, Series No. 89-177153, Official
Records.

A.P. Nos.         519-1010-078-03

                                       56

<PAGE>



                  519-1010-080-01
                  519-1010-081-03

                                       57

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                                    EXHIBIT B
                               PLAN OF THE COMPLEX



                                       58

<PAGE>



                                   EXHIBIT B-1
                        FLOOR PLAN OF THE LEASED PREMISES



                                       59

<PAGE>



                                   EXHIBIT "C"
                            CONSTRUCTION OBLIGATIONS

Lessor shall, at Lessor's sole cost and expense, perform the following tenant
improvements in the Leased Premises:

         1) Lessor to install new carpet and base throughout office area as
shown below.

         2) Lessor to install vinyl tile (VCT) in the area as shown below.

         3) Lessor to ensure that all mechanical, electrical (except data
            and phone) and plumbing systems are good working order prior
            to occupancy.

Except as stated above, the Leased Premises shall be delivered to Lessee in its
"As-Is, Where-is" condition. Any additional improvements, alterations or
modifications must obtain Lessor's written approval, upon which approval shall
not be reasonably withheld. Any and all improvements, alterations or
modifications shall be at Lessee's sole cost and expense and must be performed
in strict compliance with all laws and ordinances relating thereto and shall not
constitute a delay in term commencement. Lessor at its discretion reserves the
right to have Lessee, upon the expiration or earlier termination of the Lease,
restore any or all of Lessee's improvements, alterations or modifications to the
Leased Premises to its original condition prior to the making of any such
improvements, alterations or modifications all at Lessee's sole cost and
expense.


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                                   EXHIBIT "D"
                         ACKNOWLEDGMENT OF COMMENCEMENT

This Acknowledgment is made as of May 26, 1999 with reference to that certain
Lease Agreement (hereinafter referred to as the "Lease") dated, May 17, 1999 by
and between BEDFORD PROPERTY INVESTORS, INC., A MARYLAND CORPORATION "Lessor"
therein, and ION NETWORKS, INC., A CORPORATION "Lessee", for the Leased Premises
situated at 48834 KATO ROAD, UNIT 103-A, FREMONT, CALIFORNIA 94538

The undersigned hereby confirms the following:

1. That the Lessee accepted possession of the Leased Premises (as described in
said Lease) on June 1, 1999, and acknowledges that the Leased Premises are as
represented by the Lessor and in good order, condition and repair, and that the
improvements, if any, required to be constructed for Lessee by Lessor under this
Lease have been so constructed and are satisfactorily completed in all respects.

2. That all conditions of said Lease to be performed by Lessor prerequisite to
the full effectiveness of said Lease have been satisfied and that Lessor has
fulfilled all of its duties of an inducement nature.

3. That in accordance with the provisions of said Lease the commencement date of
the term is June 1, 1999, and that, unless sooner terminated, the original term
thereof expires on May 31, 2004.

4. That said Lease is in full force and effect and that the same represents the
entire agreement between Lessor and Lessee concerning said Lease.

5. That there are no existing defenses which Lessee has against the enforcement
of said Lease by Lessor, and no offsets or credits against rentals.

6. That the minimum rental obligations of said Lease is presently in effect and
that all rentals, charges and other obligations on the part of Lessee under said
Lease commenced to accrue on June 1, 1999.

7. That the undersigned has not made any prior assignment, hypothecation or
pledge of said Lease or of the rents hereunder.


LESSEE:

ION NETWORKS, INC.,
A Delaware Corporation

By:/s/ Mark A. Simmons
-----------------------------
(Print) Mark A. Simmons
Its: Chief Financial Officer
Date: 5/26/99

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                                   EXHIBIT "E"
                   RULES AND REGULATIONS ATTACHED TO AND MADE
                              A PART OF THIS LEASE

1.       No sign, placard, picture, advertisement, name of notice shall be
         inscribed, displayed or printed or affixed on the Building or to any
         part thereof, or which is visible from the outside of the Building,
         without the written consent of Lessor, first had and obtained and
         Lessor shall have the right to remove any such sign, placard, picture,
         advertisement, name or notice without notice and at the expense of
         Lessee.

         All approved signs or lettering on doors shall be printed, affixed or
         inscribed at the expense of Lessee by a person approved by Lessor.

         Lessee shall not place anything or allow anything to be placed near the
         glass of any window, door, partition or wall which may appear unsightly
         from outside the Premises.

2.       If a directory is located at the Building, it is provided exclusively
         for the display of the name and location of Lessee only and Lessor
         reserves the right to exclude any other names therefrom.

3.       The sidewalks, passages, exits, entrances, and stairways in and around
         the Building shall not be obstructed by Lessee or used by it for any
         purpose other than for ingress to and egress from the Premises. The
         passages, exits, entrances, stairways, and roof are not for the use of
         the general public and Lessor shall in all cases retain the right to
         control and prevent access thereto by all persons whose presence in the
         judgement of Lessor shall be prejudicial to the safety, character,
         reputation and interests of the Building and its Lessees, provided that
         nothing herein contained shall be construed to prevent such access to
         person with whom Lessee normally deals in the ordinary course of
         Lessee's business unless such persons are engaged in illegal
         activities. Neither Lessee nor any employees or invitees of Lessee
         shall go upon the roof of the Building.

4.       Lessee shall not be permitted to install any additional lock or locks
         on any door in the Building unless written consent of Lessor shall have
         first been obtained. Two keys will be furnished by Lessor for every
         room.

5.       The toilets and urinals shall not be used for any purpose other than
         those for which they were constricted, and no rubbish, newspapers or
         other substances of any kind shall be thrown into them. Wastes and
         excessive or unusual rise of water shall not be allowed. Lessee shall
         be responsible for any breakage, stoppage or damage resulting from the
         violation of this rule by Lessee or its employees or invitees.

6.       Lessee shall not overload the floor of the Premises or mark, drive
         nails, screw or drill into the partitions, woodwork or plaster or in
         any way deface the Premises or any part thereof

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7.       Lessee shall not use, keep or permit to be used or kept any foul or
         noxious gas or substance in the Premises, or permit or suffer the
         Premises to be occupied or used in a manner offensive or objectionable
         to Lessor or other occupants of the Building by reason of noise, odors
         and/or vibrations, or interfere in any way with other Lessees or those
         having business therein.

8.       The Premises shall not be used for the storage of merchandise, for
         washing clothes, for lodging, or for any improper objectionable or
         immoral purposes.

9.       Lessee shall not use or keep in the Premises or the Building any
         kerosene, gasoline, or inflammable or combustible fluid or material, or
         use any method of heating or air conditioning other than that supplied
         by Lessor.

10.      Lessor will direct electricians as to the manner and location in which
         telephone and telegraph wires are to be introduced. No boring or
         cutting for wires will be allowed without the consent of Lessor. The
         location of telephones, call boxes and other office equipment affixed
         to the Premises shall be subject to the approval of Lessor.

11.      Lessee shall not lay linoleum, tile, carpet or other similar floor
         covering so that the same shall be affixed to the floor of the Premises
         in any manner except as approved by Lessor. The expense of repairing
         any damage resulting from a violation of this rule or removal of any
         floor covering shall be borne by Lessee.

12.      Exterior blinds are furnished for each window by Lessor. Any additional
         window covering desired by Lessee shall be approved by Lessor.

13.      Lessor reserves the right to exclude or expel from the Building any
         person who, in the judgement of Lessor, is intoxicated or under the
         influence of liquor or drugs, or who shall in any manner do any act in
         violation of any of the rules and regulations of the Building.

14.      Lessee shall not disturb, solicit, or canvass any Occupant of the
         Building .

15.      Without the written consent of Lessor, Lessee shall not use the name of
         the Building in connection with or in promoting or advertising the
         business of Lessee except as Lessee's address.

16.      Lessee shall not permit any contractor or other person making any
         alterations, additions or installations within the Premises to use the
         hallways, lobby or corridors as storage or work areas without the prior
         consent of Lessor. Lessee shall be liable for and shall pay the expense
         of any additional cleaning or other maintenance required to be
         performed by Lessor as a result of the transportation or storage of
         materials or work performed within the Building by or for Lessee.

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17.      Lessee shall be entitled to use parking spaces as mutually agreed upon
         between Lessee and Lessor subject to such reasonable conditions and
         regulations, as may be imposed from time to time by Lessor. Lessee
         agrees that vehicles of Lessee or its employees or agents shall not
         park in driveways nor occupy parking spaces or other areas reserved for
         any use such as Visitors, Delivery, Loading, or other tenants. Lessor
         or its agents shall have the right to cause or be removed any car or
         Lessee, its employees or agents, that may be parked in unauthorized
         areas, and Lessee agrees to save and hold harmless Lessor, its agents
         and employees from any and all claims, losses, damages and demands
         asserted or arising in respect to or in connection with the removal of
         any such, vehicle. Lessee, its employees, or agents shall not park
         campers, trucks or cars on the Building parking areas overnight or over
         weekends. Lessee will from time to time, upon request of Lessor, supply
         Lessor with a list of license plate numbers of vehicles owned or
         operated by its employees and agents.

18.      Lessor reserves the right to make modifications hereto and such other
         and further rules and regulations as in its sole judgement may be
         required for the safety, care and cleanliness of the Premises and the
         Building and for the preservation of good order therein. Lessee agrees
         to abide by all such rules and regulations.

19.      Canvassing, soliciting and peddling is prohibited in the Building and
         each Lessee shall cooperate to prevent the same.

20.      Lessor is not responsible for the violation of any rule contained
         therein by any other Lessee.

21.      Lessor may waive any one or more of these rules for the benefit of any
         particular Lessee, but no such waiver shall be construed as a waiver of
         lessor's right to enforce these rules against any or all Lessees
         occupying the Building.

22.      Lessee is responsible for purchasing and installing a security system
         if required by the City of Fremont The cost of purchasing and
         installation of any such system is the sole costs and expense of the
         Lessee.

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