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                                                                 Exhibit 10.8


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

                                    [LOGO]

1.  BASIC PROVISIONS ("BASIC PROVISIONS").

    1.1       PARTIES: This Lease ("LEASE"), dated for reference purposes
only, December 20, 2000, is made by and between POMERADO LEASING NO. 8 L.P.,
a California limited partnership ("LESSOR") and TECHNETICS, INC., dba SMTEK
INTERNATIONAL, INC., a Delaware corporation ("LESSEE"), (collectively the
"PARTIES," or individually a "PARTY").

    1.2(a)    PREMISES: That certain portion of the Building, including all
improvements therein or to be provided by Lessor under the terms of this
Lease, commonly known by the street address of 13200 Danielson Street,
located in the City of Poway, County of San Diego, State of California, with
zip code 92064 as outlined on Exhibit 2 attached hereto ("PREMISES"). The
"BUILDING" is that certain building containing the Premises and generally
described as (describe briefly the nature of the Building): an approximate
45,619 sq. ft. industrial space in an approximately 97,500 square foot
industrial concrete tilt-up building. In addition to Lessee's rights to use
and occupy the Premises as hereinafter specified, Lessee shall have non-
exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as
hereinafter specified, but shall not have any rights to the roof, exterior
walls or utility raceways of the Building or to any other buildings in the
Industrial Center. The Premises, the Building, the Common Areas, the land
upon which they are located, along with all other buildings and improvements
thereon, are herein collectively referred to as the "Industrial Center."
(Also see Paragraph 2.)

    1.2(b)    PARKING: 150 unreserved vehicle parking spaces ("UNRESERVED
PARKING SPACES"); and -0- reserved vehicle parking spaces ("RESERVED PARKING
SPACES"). (Also see Paragraph 2.6.)

    1.3       TERM: 10 (ten) years and -0- months ("ORIGINAL TERM")
commencing (see Section 4.2 of Addendum to Lease) ("COMMENCEMENT DATE") and
ending (see Addendum 4.3) ("EXPIRATION DATE"). (Also see Paragraph 3)

    1.4       EARLY POSSESSION: N/A ("EARLY POSSESSION DATE"). (Also see
Paragraphs 3.2 and 3.3.)

    1.5       BASE RENT: $(per Sect. 2.1 of Addendum to Lease) per month
("BASE RENT"), payable on the 1st day of each month commencing per Section
4.2 of Addendum to Lease. (Also see Paragraph 4.)

/X/ If this box is checked, this Lease provides for the Base Rent to be
adjusted per Addendum 4.4.3, attached hereto.

    1.6(a)    BASE RENT PAID UPON EXECUTION: $-0- as Base Rent for the period
N/A.

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    1.6(b)    LESSEE'S SHARE OF COMMON AREA OPERATING EXPENSES: 45.86 percent
(45.86%) ("LESSEE'S SHARE") as determined by /X/ prorata square footage of
the Premises as compared to the total square footage of the Building or / /
other criteria as described in Addendum    .

    1.7       SECURITY DEPOSIT: $68,164.00 per Section 2.5 of Addendum
("SECURITY DEPOSIT"). (Also see Paragraph 5.)

    1.8       PERMITTED USE: design, manufacture, and storage of electronic
assemblies and contract manufacturing services. ("PERMITTED USE") (Also see
Paragraph 6.)

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

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

/X/  CB Richard Ellis   represents Lessor exclusively ("LESSOR'S BROKER");
/X/  ECP Commercial     represents Lessee exclusively ("LESSEE'S BROKER"); or
/ /                     represents both Lessor and Lessee ("DUAL AGENCY").
                       (Also see Paragraph 15.)

    1.11      GUARANTOR. The obligations of the Lessee under this Lease are
to be guaranteed by SMTEK INTERNATIONAL, INC., a Delaware corporation
("GUARANTOR"). (Also see Paragraph 37.)

    1.12      ADDENDA AND EXHIBITS. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 1 through 25, and Exhibits 1 through 9, all of which
constitute a part of this Lease.

2.  PREMISES, PARKING AND COMMON AREAS.

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

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

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Date, correction of that non-compliance shall be the obligation of Lessee at
Lessee's sole cost and expense.

    2.3       COMPLIANCE WITH COVENANTS, RESTRICTIONS AND BUILDING CODE.
Lessor warrants that any improvements (other than those constructed by Lessee
or at Lessee's direction) on or in the Premises which have been constructed
or installed by Lessor or with Lessor's consent or at Lessor's direction
shall comply with all applicable covenants or restrictions of record and
applicable building codes, regulations and ordinances in effect on the
Commencement Date. Lessor further warrants to Lessee that Lessor has no
knowledge of any claim having been made by any governmental agency that a
violation or violations of applicable building codes, regulations, or
ordinances exist with regard to the Premises as of the Commencement Date.
Said warranties shall not apply to any Alterations or Utility Installations
(defined in Paragraph 7.3(a)) made or to be made by Lessee. If the Premises
do not comply with said warranties, Lessor shall, except as otherwise
provided in this Lease, promptly after receipt of written notice from Lessee
given within six (6) months following the Commencement Date and setting forth
with specificity the nature and extent of such non-compliance, take such
action, at Lessor's expense, as may be reasonable or appropriate to rectify
the non-compliance. Lessor makes no warranty that the Permitted Use in
Paragraph 1.8 is permitted for the Premises under Applicable Laws (as defined
in Paragraph 2.4).

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

    2.5       LESSEE AS PRIOR OWNER/OCCUPANT. The warranties made by Lessor
in this Paragraph 2 shall be of no force or effect if immediately prior to
the date set forth in Paragraph 1.1 Lessee was the owner or occupant of the
Premises. In such event, Lessee shall, at Lessee's sole cost and expense,
correct any non-compliance of the Premises with said warranties.

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

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Regulations (as defined in Paragraph 40) issued by Lessor. (Also see
Paragraph 2.9.)

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

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

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

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

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

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

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    2.10      COMMON AREAS -- CHANGES. Lessor shall have the right, in
Lessor's sole discretion, from time to time:

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

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

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

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

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

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

3.  TERM.

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

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

    3.3       DELAY IN POSSESSION. If for any reason Lessor cannot deliver
possession of the Premises to Lessee by the Early Possession Date, if one is
specified in Paragraph 1.4, or if no Early Possession Date is specified, by
the Commencement Date, Lessor shall not be subject to any liability therefor,
nor shall such failure affect the validity of this Lease, or the obligations
of Lessee hereunder, or extend the term hereof, but in such case, Lessee
shall not, except as otherwise provided herein, be obligated to pay rent or
perform any other obligation of Lessee under the terms of this Lease until
Lessor delivers possession of the Premises to Lessee. If possession of the
Premises is not delivered to Lessee within sixty (60) days after the
Commencement Date, Lessee may, at its option, by notice in writing to Lessor
within ten (10) days after the end of said sixty (60) day period, cancel this

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Lease, in which event the parties shall be discharged from all obligations
hereunder; provided further, however, that if such written notice of Lessee
is not received by Lessor within said ten (10) day period, Lessee's right to
cancel this Lease hereunder shall terminate and be of no further force or
effect. Except as may be otherwise provided, and regardless of when the
Original Term actually commences, if possession is not tendered to Lessee
when required by this Lease and Lessee does not terminate this Lease, as
aforesaid, the period free of the obligation to pay Base Rent, if any, that
Lessee would otherwise have enjoyed shall run from the date of delivery of
possession and continue for a period equal to the period during which the
Lessee would have otherwise enjoyed under the terms hereof, but minus any
days of delay caused by the acts, changes or omissions of Lessee.

4.  RENT.

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

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

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

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

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

                          (bb)  Exterior signs and any tenant directories.

                          (cc)  Fire detection and sprinkler systems.

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

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

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

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

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

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

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

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

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

              (d)   Lessee's Share of Common Area Operating Expenses shall be
payable by Lessee within ten (10) days after a reasonably detailed statement
of actual expenses is presented to Lessee by Lessor. At Lessor's option,
however, an amount may be estimated by Lessor from time to time of Lessee's
Share of annual Common Area Operating Expenses and the same shall be payable
monthly or quarterly, as Lessor shall designate, during each 12-month period
of the Lease term, on the same day as the Base Rent is due hereunder. Lessor
shall deliver to Lessee within ninety (90) days after the expiration of each
calendar year a reasonably detailed statement showing Lessee's Share of the
actual Common Area Operating Expenses incurred during the preceding year. If
Lessee's payments under this Paragraph 4.2(d) during said preceding year
exceed Lessee's Share as indicated on said statement, Lessee shall be
credited the amount of such over-payment against Lessee's Share of Common
Area Operating Expenses next becoming due. If Lessee's payments under this
Paragraph 4.2(d) during said preceding year were less than Lessee's Share as
indicated on said statement, Lessee shall pay to Lessor the amount of the
deficiency within ten (10) days after delivery by Lessor to Lessee of said
statement.

5.  SECURITY DEPOSIT. Lessee shall deposit with Lessor upon Lessee's
execution hereof the Security Deposit set forth in Paragraph 1.7 as security
for Lessee's faithful performance of Lessee's obligations under this Lease.
If Lessee fails to pay Base Rent or other rent or charges due hereunder, or

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

6.  USE.

    6.1       PERMITTED USE.

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

              (b)     Lessor hereby agrees to not unreasonably withhold or
delay its consent to any written request by Lessee, Lessee's assignees or
subtenants, and by prospective assignees and subtenants of Lessee, its
assignees and subtenants, for a modification of said Permitted Use, so long
as the same will not impair the structural integrity of the improvements on
the Premises or in the Building or the mechanical or electrical systems
therein, does not conflict with uses by other lessees, is not significantly
more burdensome to the Premises or the Building and the improvements thereon,
and is otherwise permissible pursuant to this Paragraph 6. If Lessor elects
to withhold such consent, Lessor shall within five (5) business days after
such request give a written notification of same, which notice shall include
an explanation of Lessor's reasonable objections to the change in use.

    6.2       HAZARDOUS SUBSTANCES.

              (a)    REPORTABLE USES REQUIRE CONSENT. The term "HAZARDOUS
SUBSTANCE" as used in this Lease shall mean any product, substance, chemical,
material or waste whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation, spill, release or
effect, either by itself or in combination with other materials expected to
be on the Premises, is either: (i) potentially injurious to the public

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

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

              (c)    INDEMNIFICATION. Lessee shall indemnify, protect, defend
and hold Lessor, its agents, employees, lenders and ground lessor, if any,
and the Premises, harmless from and against any and all damages, liabilities,
judgments, costs, claims, liens, expenses, penalties, loss of permits and
attorneys' and consultants' fees arising out of or involving any Hazardous
Substance brought onto the Premises by or for Lessee or by anyone under

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Lessee's control. Lessee's obligations under this Paragraph 6.2(c) shall
include, but not be limited to, the effects of any contamination or injury to
person, property or the environment created or suffered by Lessee, and the
cost of investigation (including consultants' and attorneys' fees and
testing); removal, remediation, restoration and/or abatement thereof, or of
any contamination therein involved, and shall survive the expiration or
earlier termination of this Lease. No termination, cancellation or release
agreement entered into by Lessor and Lessee shall release Lessee from its
obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such agreement.

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

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

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

<PAGE>

    7.1       LESSEE'S OBLIGATIONS.

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

              (b)  Lessee shall, at Lessee's sole cost and expense, procure
and maintain a contract, with copies to Lessor, in customary form and
substance for and with a contractor specializing and experienced in the
inspection, maintenance and service of the heating, air conditioning and
ventilation system for the Premises. However, Lessor reserves the right, upon
notice to Lessee, to procure and maintain the contract for the heating, air
conditioning and ventilating systems, and if Lessor so elects, Lessee shall
reimburse Lessor, upon demand, for the cost thereof.

              (c)  If Lessee fails to perform Lessee's obligations under this
Paragraph 7.1, Lessor may enter upon the Premises after ten (10) days' prior
written notice to Lessee (except in the case of an emergency, in which case
no notice shall be required), perform such obligations on Lessee's behalf,
and put the Premises in good order, condition and repair, in accordance with
Paragraph 13.2 below.

    7.2       LESSOR'S OBLIGATIONS. Subject to the provisions of Paragraphs
2.2 (Condition), 2.3 (Compliance with Covenants, Restrictions and Building
Code), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's
Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor,
subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order,
condition and repair the foundations, exterior walls, structural condition of
interior bearing walls, exterior roof, fire sprinkler and/or standpipe and
hose (if located in the Common Areas) or other automatic fire extinguishing
system including fire alarm and/or smoke detection systems and equipment,
fire hydrants, parking lots, walkways, parkways, driveways, landscaping,
fences, signs and utility systems serving the Common Areas and all parts
thereof, as well as providing the services for which there is a Common Area
Operating Expense pursuant to Paragraph 4.2. Lessor shall not be obligated to
paint the exterior or interior surfaces of exterior walls nor shall Lessor be
obligated to maintain, repair or replace windows, doors or plate glass of the

<PAGE>

Premises. Lessee expressly waives the benefit of any statute now or hereafter
in effect which would otherwise afford Lessee the right to make repairs at
Lessor's expense or to terminate this Lease because of Lessor's failure to
keep the Building, Industrial Center or Common Areas in good order, condition
and repair.

    7.3       UTILITY INSTALLATIONS, TRADE FIXTURES, ALTERATIONS.

              (a)  DEFINITIONS; CONSENT REQUIRED.  The term "UTILITY
INSTALLATIONS" is used in this Lease to refer to all air lines, power panels,
electrical distribution, security, fire protection systems, communications
systems, lighting fixtures, heating, ventilating and air conditioning
equipment, plumbing, and fencing in, on or about the Premises. The term
"TRADE FIXTURES" shall mean Lessee's machinery and equipment which can be
removed without doing material damage to the Premises. The term "ALTERATIONS"
shall mean any modification of the improvements on the Premises which are
provided by Lessor under the terms of this Lease, other than Utility
Installations or Trade Fixtures, "LESSEE-OWNED ALTERATIONS AND/OR UTILITY
INSTALLATIONS" are defined as Alterations and/or Utility Installations made
by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a).
Lessee shall not make nor cause to be made any Alterations or Utility
Installations in, on, under or about the Premises without Lessor's prior
written consent. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof) without
Lessor's consent but upon notice to Lessor, so long as they are not visible
from the outside of the Premises, do not involve puncturing, relocating or
removing the roof or any existing walls, or changing or interfering with the
fire sprinkler or fire detection systems and the cumulative cost thereof
during the term of this Lease as extended does not exceed $2,500.00.

              (b)  CONSENT. Any Alterations or Utility Installations that
Lessee shall desire to make and which require the consent of the Lessor shall
be presented to Lessor in written form with detailed plans. All consents
given by Lessor, whether by virtue of Paragraph 7.3(a) or by subsequent
specific consent, shall be deemed conditioned upon: (i) Lessee's acquiring
all applicable permits required by governmental authorities; (ii) the
furnishing of copies of such permits together with a copy of the plans and
specifications for the Alteration or Utility Installation to Lessor prior to
commencement of the work thereon; and (iii) the compliance by Lessee with all
conditions of said permits in a prompt and expeditious manner. Any
Alterations or Utility Installations by Lessee during the term of this Lease
shall be done in a good and workmanlike manner, with good and sufficient
materials, and be in compliance with all Applicable Requirements. Lessee
shall promptly upon completion thereof furnish Lessor with as-built plans and
specifications therefor, Lessor may, (but without obligation to do so)
condition its consent to any requested Alteration or Utility Installation
that costs $2,500.00 or more upon Lessee's providing Lessor with a lien and
completion bond in an amount equal to one and one-half times the estimated
cost of such Alteration or Utility Installation.

              (c)  LIEN PROTECTION.  Lessee shall pay when due all claims for
labor or materials furnished or alleged to have been furnished to or for
Lessee at or for use on the Premises, which claims are or may be secured by
any mechanic's or materialmen's lien against the Premises or any interest
therein. Lessee shall give Lessor not less than ten (10) days' notice prior

<PAGE>

to the commencement of any work in, on, or about the Premises, and Lessor
shall have the right to post notices of non-responsibility in or on the
Premises as provided by law. If Lessee shall, in good faith, contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense, defend and protect itself, Lessor and the Premises against the same
and shall pay and satisfy any such adverse judgment that may be rendered
thereon before the enforcement thereof against the Lessor or the Premises. If
Lessor shall require, Lessee shall furnish to Lessor a surety bond
satisfactory to Lessor in an amount equal to one and one-half times the
amount of such contested lien claim or demand, indemnifying Lessor against
liability for the same, as required by law for the holding of the Premises
free from the effect of such lien or claim. In addition, Lessor may require
Lessee to pay Lessor's attorneys' fees and costs in participating in such
action if Lessor shall decide it is to its best interest to do so.

    7.4       OWNERSHIP, REMOVAL, SURRENDER, AND RESTORATION.

              (a)  OWNERSHIP. Subject to Lessor's right to require their
removal and to cause Lessee to become the owner thereof as hereinafter
provided in this Paragraph 7.4, all Alterations and Utility Installations
made to the Premises by Lessee shall be the property of and owned by Lessee,
but considered a part of the Premises. Lessor may, at any time and at its
option, elect in writing to Lessee to be the owner of all or any specified
part of the Lessee-Owned Alterations and Utility Installations. Unless
otherwise instructed per Subparagraph 7.4(b) hereof, all Lessee-Owned
Alterations and Utility Installations shall, at the expiration or earlier
termination of this Lease, become the property of Lessor and remain upon the
Premises and be surrendered with the Premises by Lessee.

              (b)  REMOVAL. Unless otherwise agreed in writing, Lessor may
require that any or all Lessee-Owned Alterations or Utility Installations be
removed by the expiration or earlier termination of this Lease,
notwithstanding that their installation may have been consented to by Lessor.
Lessor may require the removal at any time of all or part of any Alterations
or Utility Installations made without the required consent of Lessor.

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

<PAGE>

8.  INSURANCE; INDEMNITY.

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

    8.2       LIABILITY INSURANCE.

              (a)  CARRIED BY LESSEE. Lessee shall obtain and keep in force
during the term of this Lease a Commercial General Liability policy of
insurance protecting Lessee, Lessor and any Lender(s) whose names have been
provided to Lessee in writing (as additional insureds) against claims for
bodily injury, personal injury and property damage based upon, involving or
arising out of the ownership, use, occupancy or maintenance of the Premises
and all areas appurtenant thereto. Such insurance shall be on an occurrence
basis providing single limit coverage in an amount not less than $1,000,000
per occurrence with an "Additional Insured-Managers or Lessors of Premises"
endorsement and contain the "Amendment of the Pollution Exclusion"
endorsement for damage caused by heat, smoke or fumes from a hostile fire.
The policy shall not contain any intra-insured exclusions as between insured
persons or organizations, but shall include coverage for liability assumed
under this Lease as an "INSURED CONTRACT" for the performance of Lessee's
indemnity obligations under this Lease. The limits of said insurance required
by this Lease or as carried by Lessee shall not, however, limit the liability
of Lessee nor relieve Lessee of any obligation hereunder. All insurance to be
carried by Lessee shall be primary to and not contributory with any similar
insurance carried by Lessor, whose insurance shall be considered excess
insurance only.

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

    8.3       PROPERTY INSURANCE-BUILDING, IMPROVEMENTS AND RENTAL VALUE.

              (a)  BUILDING AND IMPROVEMENTS. Lessor shall obtain and keep in
force during the term of this Lease a policy or policies in the name of
Lessor, with loss payable to Lessor and to any Lender(s), insuring against
loss or damage to the Premises. Such insurance shall be for full replacement
cost, as the same shall exist from time to time, or the amount required by
any Lender(s), but in no event more than the commercially reasonable and
available insurable value thereof if, by reason of the unique nature or age
of the improvements involved, such latter amount is less than full
replacement cost. Lessee-Owned Alterations and Utility Installations, Trade
Fixtures and Lessee's personal property shall be insured by Lessee pursuant
to Paragraph 8.4. If the coverage is available and commercially appropriate,
Lessor's policy or policies shall insure against all risks of direct physical
loss or damage (except the perils of flood and/or earthquake unless required
by a Lender), including coverage for any additional costs resulting from
debris removal and reasonable amounts of coverage for the enforcement of any
ordinance or law regulating the reconstruction or replacement of any

<PAGE>

undamaged sections of the Building required to be demolished or removed by
reason of the enforcement of any building, zoning, safety or land use laws as
the result of a covered loss, but not including plate glass insurance. Said
policy or policies shall also contain an agreed valuation provision in lieu
of any co-insurance clause, waiver of subrogation, and inflation guard
protection causing an increase in the annual property insurance coverage
amount by a factor of not less than the adjusted U.S. Department of Labor
Consumer Price Index for All Urban Consumers for the city nearest to where
the Premises are located.

              (b)  RENTAL VALUE. Lessor shall also obtain and keep in force
during the term of this Lease a policy or policies in the name of Lessor,
with loss payable to Lessor and any Lender(s), insuring the loss of the full
rental and other charges payable by all lessees of the Building to Lessor for
one year (including all Real Property Taxes, insurance costs, all Common Area
Operating Expenses and any scheduled rental increases). Said insurance may
provide that in the event the Lease is terminated by reason of an insured
loss, the period of indemnity for such coverage shall be extended beyond the
date of the completion of repairs or replacement of the Premises, to provide
for one full year's loss of rental revenues from the date of any such loss.
Said insurance shall contain an agreed valuation provision in lieu of any co-
insurance clause, and the amount of coverage shall be adjusted annually to
reflect the projected rental income, Real Property Taxes, insurance premium
costs and other expenses, if any, otherwise payable, for the next 12-month
period. Common Area Operating Expenses shall include any deductible amount in
the event of such loss.

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

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

    8.4       LESSEE'S PROPERTY INSURANCE. Subject to the requirements of
Paragraph 8.5, Lessee at its cost shall either by separate policy or, at
Lessor's option, by endorsement to a policy already carried, maintain
insurance coverage on all of Lessee's personal property, Trade Fixtures and
Lessee-Owned Alterations and Utility Installations in, on, or about the
Premises similar in coverage to that carried by Lessor as the Insuring Party
under Paragraph 8.3(a). Such insurance shall be full replacement cost
coverage with a deductible not to exceed $1,000 per occurrence. The proceeds
from any such insurance shall be used by Lessee for the replacement of
personal property and the restoration of Trade Fixtures and Lessee-Owned
Alterations and Utility Installations. Upon request from Lessor, Lessee shall
provide Lessor with written evidence that such insurance is in force.

    8.5       INSURANCE POLICIES. Insurance required hereunder shall be in
companies duly licensed to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at lease B+, V, or such other rating as may be required by a
Lender, as set forth in the most current issue of "Best's Insurance Guide."

<PAGE>

Lessee shall not do or permit to be done anything which shall invalidate the
insurance policies referred to in this Paragraph 8, Lessee shall cause to be
delivered to Lessor, within seven (7) days after the earlier of the Early
Possession Date or the Commencement Date, certified copies of, or
certificates evidencing the existence and amounts of, the insurance required
under Paragraph 8.2(a) and 8.4. No such policy shall be cancelable or subject
to modification except after thirty (30) days' prior written notice to
Lessor. Lessee shall at least thirty (30) days prior to the expiration of
such policies, furnish Lessor with evidence of renewals or "insurance
binders" evidencing renewal thereof, or Lessor may order such insurance and
charge the cost thereof to Lessee, which amount shall be payable by Lessee to
Lessor upon demand.

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

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

    8.8    EXEMPTION OF LESSOR FROM LIABILITY. Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property
of Lessee, Lessee's employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by
or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from
any other cause, whether said injury or damage results from conditions
arising upon the Premises or upon other portions of the Building of which the
Premises are a part, from other sources or places, and regardless of whether

<PAGE>

the cause of such damage or injury or the means of repairing the same is
accessible or not. Lessor shall not be liable for any damages arising from
any act or neglect of any other lessee of Lessor nor from the failure by
Lessor to enforce the provisions of any other lease in the Industrial Center.
Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall
under no circumstances be liable for injury to Lessee's business or for any
loss of income or profit therefrom.

9.  DAMAGE OR DESTRUCTION.

    9.1    DEFINITIONS.

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

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

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

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

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

    9.2    PREMISES PARTIAL DAMAGE - INSURED LOSS. If Premises Partial Damage
that is an Insured Loss occurs, then Lessor shall, at Lessor's expense,
repair such damage (but not Lessee's Trade Fixtures or Lessee-Owned
Alterations and Utility Installations) as soon as reasonably possible and
this Lease shall continue in full force and effect. In the event, however,

<PAGE>

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

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

    9.4    TOTAL DESTRUCTION. Notwithstanding any other provision hereof, if
Premises Total Destruction occurs (including any destruction required by any
authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the
damage or destruction is an Insured Loss or was caused by a negligent or
willful act of Lessee. In the event, however, that the damage or destruction

<PAGE>

was caused by Lessee, Lessor shall have the right to recover Lessor's damages
from Lessee except as released and waived in Paragraph 9.7.

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

    9.6    ABATEMENT OF RENT; LESSEE'S REMEDIES.

           (a)    In the event of (i) Premises Partial Damage or (ii)
Hazardous Substance Condition for which Lessee is not legally responsible,
the Base Rent, Common Area Operating Expenses and other charges, if any,
payable by Lessee hereunder for the period during which such damage or
condition, its repair, remediation or restoration continues, shall be abated
in proportion to the degree to which Lessee's use of the Premises is
impaired, but not in excess of proceeds from insurance required to be carried
under Paragraph 8.3(b). Except for abatement of Base Rent, Common Area
Operating Expenses and other charges, if any, as aforesaid, all other
obligations of Lessee hereunder shall be performed by Lessee, and Lessee
shall have no claim against Lessor for any damage suffered by reason of any
such damage, destruction, repair, remediation or restoration.

           (b)    If Lessor shall be obligated to repair or restore the
Premises under the provisions of this Paragraph 9 and shall not commence, in
a substantial and meaningful way, the repair or restoration of the Premises
within ninety (90) days after such obligation shall accrue, Lessee may, at
any time prior to the commencement of such repair or restoration, give
written notice to Lessor and to any Lenders of which Lessee has actual notice
of Lessee's election to terminate this Lease on a date not less than sixty
(60) days following the giving of such notice. If Lessee gives such notice to
Lessor and such Lenders and such repair or restoration is not commenced
within thirty (30) days after receipt of such notice, this Lease shall
terminate as of the date specified in said notice. If Lessor or a Lender
commences the repair or restoration of the Premises within thirty (30) days
after the receipt of such notice, this Lease shall continue in full force and
effect. "Commence" as used in this Paragraph 9.6 shall mean either the

<PAGE>

unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever occurs first.

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

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

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

10. REAL PROPERTY TAXES.

    10.1   PAYMENT OF TAXES. Lessor shall pay the Real Property Taxes, as
defined in Paragraph 10.2, applicable to the Industrial Center, and except as
otherwise provided in Paragraph 10.3, any such amounts shall be included in
the calculation of Common Area Operating Expenses in accordance with the
provisions of Paragraph 4.2.

    10.2   REAL PROPERTY TAX DEFINITION. As used herein, the term "REAL
PROPERTY TAXES" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial

<PAGE>

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

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

    10.4   JOINT ASSESSMENT. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of
the Real Property Taxes for all of the land and improvements included within
the tax parcel assessed, such proportion to be determined by Lessor from the
respective valuations assigned in the assessor's work sheets or such other
information as may be reasonably available. Lessor's reasonable determination
thereof, in good faith, shall be conclusive.

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

11. UTILITIES. Lessee shall pay directly for all utilities and services
supplied to the Premises, including but not limited to electricity,
telephone, security, gas and cleaning of the Premises, together with any
taxes thereon. If any such utilities or services are not separately metered
to the Premises or separately billed to the Premises, Lessee shall pay to
Lessor a reasonable proportion to be determined by Lessor of all such charges

<PAGE>

jointly metered or billed with other premises in the Building, in the manner
and within the time periods set forth in Paragraph 4.2(d).

12. ASSIGNMENT AND SUBLETTING.

    12.1   LESSOR'S CONSENT REQUIRED.

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

           (b)  A change in the control of Lessee shall constitute an
assignment requiring Lessor's consent. The transfer, on a cumulative basis,
of twenty-five percent (25%) or more of the voting control of Lessee shall
constitute a change in control for this purpose.

           (c)  The involvement of Lessee or its assets in any transaction,
or series of transactions (by way of merger, sale, acquisition, financing,
refinancing, transfer, leveraged buy-out or otherwise), whether or not a
formal assignment or hypothecation of this Lease or Lessee's assets occurs,
which results or will result in a reduction of the Net Worth of Lessee, as
hereinafter defined, by an amount equal to or greater than twenty-five
percent (25%) of such Net Worth of Lessee as it was represented to Lessor at
the time of full execution and delivery of this Lease or at the time of the
most recent assignment to which Lessor has consented, or as it exists
immediately prior to said transaction or transactions constituting such
reduction, at whichever time said Net Worth of Lessee was or is greater,
shall be considered an assignment of this Lease by Lessee to which Lessor may
reasonably withhold its consent. "Net Worth of Lessee" for purposes of this
Lease shall be the net worth of Lessee (excluding any Guarantors) established
under generally accepted accounting principles consistently applied.

           (d)  An assignment or subletting of Lessee's interest in this
Lease without Lessor's specific prior written consent shall, at Lessor's
option, be a Default curable after notice per Paragraph 13.1, or a non-
curable Breach without the necessity of any notice and grace period. If
Lessor elects to treat such unconsented to assignment or subletting as a non-
curable Breach, Lessor shall have the right to either: (i) terminate this
Lease, or (ii) upon thirty (30) days' written notice ("Lessor's Notice"),
increase the monthly Base Rent for the Premises to the greater of the then
fair market rental value of the Premises, as reasonably determined by Lessor,
or one hundred ten percent (110%) of the Base Rent then in effect. Pending
determination of the new fair market rental value, if disputed by Lessee,
Lessee shall pay the amount set forth in Lessor's Notice, with any
overpayment credited against the next installment(s) of Base Rent coming due,
and any underpayment for the period retroactively to the effective date of
the adjustment being due and payable immediately upon the determination
thereof. Further, in the event of such Breach and rental adjustment, (i) the
purchase price of any option to purchase the Premises held by Lessee shall be
subject to similar adjustment to the then fair market value as reasonably
determined by Lessor (without the Lease being considered an encumbrance or
any deduction for depreciation or obsolescence, and considering the Premises
at its highest and best use and in good condition) or one hundred ten percent

<PAGE>

(110%) of the price previously in effect, (ii) any index-oriented rental or
price adjustment formulas contained in this Lease shall be adjusted to
require that the base index be determined with reference to the index
applicable to the time of such adjustment, and (iii) any fixed rental
adjustments scheduled during the remainder of the Lease form shall be
increased in the same ratio as the new rental bears to the Base Rent in
effect immediately prior to the adjustment specified by Lessor's Notice.

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

    12.2   TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND SUBLETTING.

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

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

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

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

           (e)  Each request for consent to an assignment or subletting shall
be in writing, accompanied by information relevant to Lessor's determination
as to the financial and operational responsibility and appropriateness of the
proposed assignee or sublessee, including but not limited to the intended use
and/or required modification of the Premises, if any, together with a non-
refundable deposit of $1,000 or ten percent (10%) of the monthly Base Rent
applicable to the portion of the Premises which is the subject of the
proposed assignment or sublease, whichever is greater, as reasonable
consideration for Lessor's considering and processing the request for

<PAGE>

consent, Lessee agrees to provide Lessor with such other or additional
information and/or documentation as may be reasonably requested by Lessor.

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

              (g)  The occurrence of a transaction described in Paragraph
12.2(c) shall give Lessor the right (but not the obligation) to require that
the Security Deposit be increased by an amount equal to six (6) times the
then monthly Base Rent, and Lessor may make the actual receipt by Lessor of
the Security Deposit increase a condition to Lessor's consent to such
transaction.

              (h)  Lessor, as a condition to giving its consent to any
assignment or subletting, may require that the amount and adjustment schedule
of the rent payable under this Lease be adjusted to what is then the market
value and/or adjustment schedule for property similar to the Premises as then
constituted, as determined by Lessor.

     12.3     Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of all
or any part of the Premises and shall be deemed included in all subleases
under this Lease whether or not expressly incorporated therein;

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

<PAGE>

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

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

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

13.  DEFAULT; BREACH; REMEDIES.

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

              (a)  The vacating of the Premises without the intention to
reoccupy same, or the abandonment of the Premises.

              (b)  Except as expressly otherwise provided in this Lease, the
failure by Lessee to make any payment of Base Rent, Lessee's Share of Common
Area Operating Expenses, or any other monetary payment required to be made by
Lessee hereunder as and when due, the failure by Lessee to provide Lessor
with reasonable evidence of insurance or surety bond required under this
Lease, or the failure of Lessee to fulfill any obligation under this Lease
which endangers or threatens life or property, where such failure continues
for a period of three (3) days following written notice thereof by or on
behalf of Lessor to Lessee.

              (c)  Except as expressly otherwise provided in this Lease, the
failure by Lessee to provide Lessor with reasonable written evidence (in duly
executed original form, if applicable) of (i) compliance with Applicable
Requirements per Paragraph 6.3, (ii) the inspection, maintenance and service
contracts required under Paragraph 7.1(b), (iii) the rescission of an
unauthorized assignment or subletting per Paragraph 12.1, (iv) a Tenancy
Statement per Paragraphs 16 or 37, (v) the subordination or non-subordination
of this Lease per Paragraph 30, (vi) the guaranty of the performance of
Lessee's obligations under this Lease if required under Paragraphs 1.11 and
37, (vii) the execution of any document requested under Paragraph 42

<PAGE>

(easements), or (viii) any other documentation or information which Lessor
may reasonably require of Lessee under the terms of this lease, where any
such failure continues for a period of ten (10) days following written notice
by or on behalf of Lessor to Lessee.

              (d)  A Default by Lessee as to the terms, covenants, conditions
or provisions of this Lease, or of the rules adopted under Paragraph 40
hereof that are to be observed, complied with or performed by Lessee, other
than those described in Subparagraphs 13.1(a), (b) or (c), above, where such
Default continues for a period of thirty (30) days after written notice
thereof by or on behalf of Lessor to Lessee; provided, however, that if the
nature of Lessee's Default is such that more than thirty (30) days are
reasonably required for its cure, then it shall not be deemed to be a Breach
of this Lease by Lessee if Lessee commences such cure within said thirty (30)
day period and thereafter diligently prosecutes such cure to completion.

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

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

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

     13.2     REMEDIES. If Lessee fails to perform any affirmative duty or
obligation of Lessee under this Lease, within ten (10) days after written
notice to Lessee (or in case of an emergency, without notice), Lessor may at
its option (but without obligation to do so), perform such duty or obligation
on Lessee's behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or

<PAGE>

approvals. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee to Lessor upon invoice therefor. If any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its own option, may require all future payments to be made under
this Lease by Lessee to be made only by cashier's check. In the event of a
Breach of this Lease by Lessee (as defined in paragraph 13.1), with or
without further notice or demand, and without limiting Lessor in the exercise
of any right or remedy which Lessor may have by reason of such Breach, Lessor
may:

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

              (b)  Continue, the Lease and Lessee's right to possession in
effect (in California Under California Civil Code Section 1951.4) alter
Lessee's Breach and recover the rent as it becomes due, provided Lessee has

<PAGE>

the right to sublet or assign, subject only to reasonable limitations. Lessor
and Lessee agree that the limitations on assignment and subletting in this
Lease are reasonable. Acts of maintenance or preservation, efforts to relet
the Premises, or the appointment of a receiver to protect the Lessor's
interest under this Lease, shall not constitute a termination of the Lessee's
right to possession.

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

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

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

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

<PAGE>

provision of this Lease to the contrary, Base Rent shall, at Lessor's option,
become due and payable quarterly in advance.

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

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

15.  BROKERS' FEES.

16.  TENANCY AND FINANCIAL STATEMENTS.

     16.1     TENANCY STATEMENT. Each Party (as "Responding Party") shall
within ten (10) days after written notice from the other Party (the
"Requesting Party") execute, acknowledge and deliver to the Requesting Party

<PAGE>

a statement in writing in a form similar to the then most current "Tenancy
Statement" form published by the American Industrial Real Estate Association,
plus such additional information, confirmation and/or statements as may be
reasonably requested by the Requesting Party.

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

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

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

19.  INTEREST ON PAST-DUE OBLIGATIONS. Any monetary payment due Lessor
hereunder, other than late charges, not received by Lessor within ten (10)
days following the date on which it was due, shall bear interest from the
date due at the prime rate charged by the largest state chartered bank in the
state in which the Premises are located plus four percent (4%) per annum, but
not exceeding the maximum rate allowed by law, in addition to the potential
late charge provided for in Paragraph 13.4.

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

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

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

<PAGE>

default or breach hereof by either Party. Each Broker shall be an intended
third party beneficiary of the provisions of this Paragraph 22.

23.  NOTICES.

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

     23.2     DATE OF NOTICE. Any notice sent by registered or certified
mail, return receipt requested, shall be deemed given on the date of delivery
shown on the receipt card, or if no delivery date is shown, the postmark
thereon. If sent by regular mail, the notice shall be deemed given forty-
eight (48) hours after the same is addressed as required herein and mailed
with postage prepaid. Notices delivered by United States Express Mail or
overnight courier that guarantees next day delivery shall be deemed given
twenty-four (24) hours after delivery of the same to the Unites States Postal
Service or courier. If any notice is transmitted by facsimile transmission or
similar means, the same shall be deemed served or delivered upon telephone or
facsimile confirmation of receipt of the transmission thereof, provided a
copy is also delivered via delivery or mail. If notice is received on a
Saturday or a Sunday or a legal holiday, it shall be deemed received on the
next business day.

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

25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this

<PAGE>

Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.

26. NO RIGHT TO HOLDOVER. Lessee has no right to obtain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease. In the event that Lessee holds over in violation of this
Paragraph 26 than the Base Rent payable from and after the time of the
expiration or earlier termination of this Lease shall be increased to two
hundred percent (200%) of the Base Rent applicable during the month
immediately preceding such expiration or earlier termination. Nothing
contained herein shall be construed as a consent by Lessor to any holding
over by Lessee.

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

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

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

30. SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

    30.1 SUBORDINATION. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or
other hypothecation of security device (collectively, "SECURITY DEVICE"), now
or hereafter placed by Lessor upon the real property of which the Premises
are a part, to any and all advances made on the security thereof, and to all
renewals, modifications, consolidations, replacements and extensions thereof.
Lessee agrees that the Lenders holding any such Security Device shall have no
duty, liability or obligation to perform any of the obligations of Lessor
under this Lease, but that in the event of Lessor's default with respect to
any such obligation, Lessee will give any Lender whose name and address have
been furnished Lessee in writing for such purpose notice of Lessor's default
pursuant to Paragraph 13.5. If any Lender shall elect to have this Lease
and/or any Option granted hereby superior to the lien of its Security Device
and shall give written notice thereof to Lessee, this Lease and such Options
shall be deemed prior to such Security Device, notwithstanding the relative
dates of the documentation or recordation thereof.

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

<PAGE>

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

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

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

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

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

34. SIGNS. Lessee shall not place any sign upon the exterior of the Premises
or the Building, except that Lessee may, with Lessor's prior written consent,
install (but not on the roof) such signs as are reasonably required to
advertise Lessee's own business so long as such signs are in a location

<PAGE>

designated by Lessor and comply with Applicable Requirements and the signage
criteria established for the Industrial Center by Lessor. The installation of
any sign on the Premises by or for Lessee shall be subject to the provisions
of Paragraph 7 (Maintenance, Repairs, Utility installations, Trade Fixtures
and Alterations). Unless otherwise expressly agreed herein, Lessor reserves
all rights to the use of the roof of the Building, and the right to install
advertising signs on the Building, including the roof, which do not
unreasonably interfere with the conduct of Lessee's business; Lessor shall be
entitled to all revenues from such advertising signs.

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

36. CONSENTS.

         (a)  Except for Paragraph 33 hereof (Auctions) or as otherwise
provided herein, wherever in this Lease the consent of a Party is required to
an act by or for the other Party, such consent shall not be unreasonably
withheld or delayed. Lessor's actual reasonable costs and expenses (including
but not limited to architects', attorneys', engineers' and other consultants'
fees) incurred in the consideration of, or response to, a request by Lessee
for any Lessor consent pertaining to this Lease or the Premises, including
but not limited to consents to an assignment a subletting or the presence or
use of a Hazardous Substance, shall be paid by Lessee to Lessor upon receipt
of an invoice and supporting documentation therefor. In addition to the
deposit described in Paragraph 12.2(e), Lessor may, as a condition to
considering any such request by Lessee, require that Lessee deposit with
Lessor an amount of money (in addition to the Security Deposit held under
Paragraph 5) reasonably calculated by Lessor to represent the cost Lessor
will incur in considering and responding to Lessee's request. Any unused
portion of said deposit shall be refunded to Lessee without interest.
Lessor's consent to any act, assignment of this Lease or subletting of the
Premises by Lessee shall not constitute an acknowledgement that no Default or
Breach by Lessee of this Lease exists, nor shall such consent be deemed a
waiver of any then existing Default or Breach, except as may be otherwise
specifically stated in writing by Lessor at the time of such consent.

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

<PAGE>

37. GUARANTOR.

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

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

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

39. OPTIONS.

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

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

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

<PAGE>

    39.4  EFFECT OF DEFAULT ON OPTIONS.

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

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

          (c)  All rights of Lessee under the provisions of an Option shall
terminate and be of no further force or effect, notwithstanding Lessee's due
and timely exercise of the Option, if, after such exercise and during the
term of this Lease, (i) Lessee fails to pay to Lessor a monetary obligation
of Lessee for a period of thirty (30) days after such obligation becomes due
(without any necessity of Lessor to given notice thereof to Lessee), or (ii)
Lessor gives to Lessee three (3) or more notices of separate Defaults under
Paragraph 13.1 during any twelve (12) month period, whether or not the
Defaults are cured, or (iii) if Lessee commits a Breach of this Lease.

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

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

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

43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the
provisions hereof, the Party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such
payment shall not be regarded as a voluntary payment and there shall survive

<PAGE>

the right on the part of said Party to institute suit for recovery of such
sum. If it shall be adjudged that there was no legal obligation on the part
of said Party to pay such sum or any part thereof, said Party shall be
entitled to recover such sum or so much thereof as it was not legally
required to pay under the provisions of this Lease.

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

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

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

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

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

                  THIS SECTION INTENTIONALLY LEFT BLANK

                  THIS SECTION INTENTIONALLY LEFT BLANK
-----------------------------------------------------------------------------

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


<PAGE>

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

<PAGE>

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

Executed at: El Cajon, California       Executed at: El Cajon, CA
            ------------------------                -------------------------
on:    1/4/01                           on:    1/4/01
   ---------------------------------       ----------------------------------
By LESSOR:                              By LESSEE:
POMERADO LEASING NO. 8 L.P.,            TECHNETICS, INC.,
------------------------------------    -------------------------------------
a California limited partnership        dba SMTEK INTERNATIONAL, INC., a
                                            Delaware corp.
------------------------------------    -------------------------------------
By: WHITMANN, INC.,                     By:
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    a California corporation,           Name Printed:  MICHAEL E. PERRY
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    It's General Partner                Title:  PRESIDENT
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By:  /s/ Jeffrey  C. Hamann             By:  /s/ Michael E. Perry
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Name Printed:  Jeffrey C. Hamann        Name Printed:
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Title:                                  Title:
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Address:  475 West Bradley Avenue       Address:
          El Cajon, CA 92020
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Telephone: (619) 440-7424               Telephone: (   )
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Facsimile: (619) 440-8914               Facsimile: (   )
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BROKER:                                 BROKER:
Executed at:                            Executed at:
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on:                                     on:
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By:                                     By:
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Name Printed:                           Name Printed:
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Title:                                  Title:
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Address:                                Address:
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Telephone: (   )                         Telephone: (   )
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Facsimile: (   )                        Facsimile: (   )
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Note: These forms are often modified to meet changing requirements of law and
      needs of the Industry. Always write or call to make sure you are
      utilizing the most current form: AMERICAN INDUSTRIAL REAL ESTATE
      ASSOCIATION, 345 So. Figueroa St., M-1, Los Angeles, CA 90071.
      (213) 687-8777.

(c) 1993 by American Industrial Real Estate Association. All rights reserved.
No part of these words maybe reproduced in any form without permission in
writing.


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                               ADDENDUM TO LEASE

     This Addendum to Lease ("Addendum") is made by and between POMERADO
LEASING NO. 8 L.P., a California limited partnership ("LESSOR") and
TECHNETICS, INC. DBA SMTEK SAN DIEGO, a California corporation ("LESSEE") and
is intended to supplement that certain Standard Industrial/Commercial Multi-
Tenant Lease Modified Net between LESSOR and LESSEE dated December 20, 2000
("Lease") to which this Addendum is annexed and all references to "Lease"
shall be deemed to include this Addendum unless otherwise stated or the
context indicates otherwise. Any word or phrase defined in the Lease shall
have the same meaning when used in this Addendum. If there is any
inconsistency between this Addendum and the Lease, the terms of this Addendum
shall supersede and control. LESSOR and LESSEE agree as follows:

     1. BUILDING AND PREMISES DESCRIPTION. The premises shall consist of the
real property described in EXHIBIT "1" annexed to this Addendum together with
all of the improvements described in this Addendum. The Building shall be
designed and constructed substantially in accordance with the general design
elements shown on the drawings prepared by Kenneth D. Smith and Associates,
AIA, which LESSEE hereby approves ("Approved Drawings"); a copy of the
Approved Drawings is attached as EXHIBIT "2" to this Addendum. The components
of the Building construction shall substantially conform to the
specifications attached as EXHIBIT "3" to this Addendum ("Specifications").

        1.1 PLANNED SIZE AND FINAL MEASUREMENT. It is planned that the
Building will contain approximately 45,619 Rentable Square Feet, which,
except in the event of any modifications as described in section 1.2 of this
Addendum, shall be the agreed Rentable Square Footage of the Premises for
purposes of determining the Rent regardless of the actual area of the
Premises. If any such modifications are made, following Substantial
Completion of the Building and Premises, LESSOR will, in good faith, certify
the actual Rentable Square Feet of the Building and Premises to establish the
exact Rentable Square Feet for purposes of the Lease.

        1.2 MODIFICATIONS. LESSEE agrees that LESSOR may make modifications
to the Building design on account of government or lender requirements and
otherwise as reasonably determined by LESSOR; provided, however any such
modifications shall not; (a) increase or decrease the Rentable Square Feet of
the Premises by more than 2%; (b) materially relocate the Premises from the
area shown in the Approved Drawings; or (c) materially change the
Specifications.

        1.3 "RENTABLE SQUARE FOOTAGE" DEFINED. The term "Rentable Square
Footage" or "Rentable Square Feet" means the area of the Premises comprising
a portion of the area of the Building on the ground level and, if applicable,
mezzanine calculated as follows: (a) measurements are to the outside finished
surface of each permanent outer Building wall and surface where it intersects
the floor (or, in the case of the mezzanine, to the outside surface of the
interior outer wall); (b) in the case of roof overhangs or protrusions, the
area underlying the overhang to the roof "drip line" shall be measured and
added to the area determined under preceding clause (a); (c) in the case of
any interior common demising wall between the Premises and any other rentable
area of the Building, to the middle of any such interior demising wall; (d)
no deduction for (i) columns or projections, (ii) vertical penetrations such
as stairs, elevator shafts, flues, pipe shafts, vertical ducts, and the like,

<PAGE>

and their enclosing walls, (iii) corridors, equipment rooms, rest rooms,
entrance ways, elevator lobbies, and the like, and their enclosing walls,
(iv) recessed entryways, doorways and windows, and (v) any other unusable
area of any nature shall be made. The term "Rentable Square Foot" shall refer
to each square foot within the Rentable Square Footage; and (e) shall
otherwise be determined in accordance with other industry standards for
industrial/commercial projects in San Diego County, California.

     2. RENT. "Rent" for the Premises shall be the sum of (a) the Base Rent
described in subsection 2.1 of this Addendum, subject to adjustment as
provided in subsections 2.1 and 2.2 of this Addendum, (b) LESSEE's Share of
Common Area Operating Expenses as defined in subsection 3 of this Addendum,
and (c) any other amounts becoming payable by LESSEE under the Lease.

        2.1 BASE RENT. The monthly "Base Rent" means the amount set forth in
Paragraph 1.5 of the Lease for the first Lease Year (as defined below) of the
Original Term consisting of (a) the agreed monthly rental determined by
multiplying the amount of $.53 per Rentable Square Foot by the agreed total
45,619 Rentable Square Feet of the Premises, and (b) the amount of $9,904 per
month for Allowance Amortization Charge described in subsection 2.3 of this
Addendum. If there is a variance in the Rentable Square Footage of the
Premises as determined by LESSOR under section 1.2 of this Addendum, the Base
Rent for the first Lease Year shall be adjusted based on the actual Rentable
Square Feet within the Premises multiplied times $.53 per Rentable Square
Foot.

        2.2 INCREASE IN BASE RENT. The Base Rent shall be increased at the
beginning of the second Lease Year and at the beginning of each Lease Year
thereafter during the Original Term, in an amount equal to three percent (3%)
of the amount of the scheduled Base Rent for the immediately preceding Lease
Year.

        2.3 TENANT IMPROVEMENT ALLOWANCE AMORTIZATION. As more particularly
provided in section 5 of this Addendum, LESSOR will provide a Tenant
Improvement Allowance in the amount of up to $969,000.000 to pay for a
portion of the Tenant Improvement Costs (as defined below) for Tenant
Improvements requested by LESSEE. The term "Allowance Amortization Charge"
means an amount to be included in the Base Rent calculated as follows: (a)
from and after the Commencement Date, determine the aggregate amount of the
Allowance expended by LESSOR for Tenant Improvements; (b) deduct $250,000
from the amount expended; (c) amortize the remaining amount of the Allowance
actually used based on an economic return equivalent to eleven percent (11%)
per annum to derive a monthly payment sufficient to pay in full the Allowance
and such economic return over a period of time equal to one hundred and
twenty (120) months beginning on the Commencement Date; and (d) the resulting
monthly payment shall equal the Allowance Amortization Charge. If the amount
of the Allowance Amortization Charge is determined after the Commencement
Date on account of a delay in finalizing the Tenant Improvement Costs, then
LESSEE shall pay LESSOR the amount accruable from the Commencement Date to
the end of the then current month, within fifteen (15) days after LESSOR'S
billing for such accrued amounts, and shall thereafter pay the monthly
Allowance Amortization Charge as a part of the monthly of Base Rent.

<PAGE>

        2.4 DUE DATE/PAYMENT. The monthly Base Rent, Allowance Amortization
Charge and the Operating Expenses shall be due and payable on the first day
of each month without notice, except that the first month's Base Rent and the
first month's Allowance Amortization Charge shall be payable as provided in
section 2.5 of this Addendum. If the Commencement Date is other than the
first day of a calendar month, the Base Rent and Allowance Amortization
Charge shall be prorated based on the number of days between the Commencement
Date and the first day of the first full calendar month thereafter and such
amount shall be due and payable by LESSEE on or before the Commencement Date.
The remaining Rent shall be payable in accordance with the other provisions
of the Lease.

        2.5 SECURITY DEPOSIT/FIRST MONTH'S RENT. Concurrently with the
execution of the Lease, LESSEE shall pay the Security Deposit set forth in
Paragraph 1.7 of the Lease, which has been calculated based on two (2) months
Base Rent and Tenant Improvement Allowance Amortization Charge. So long as
LESSEE does not commit a Default, LESSOR agrees to apply one-half of such
Security Deposit to the Base Rent and Tenant Improvement Allowance
Amortization becoming due for the first full month of the Lease following the
Commencement Date, subject to adjustment as provided in section 2.5.1 of this
Addendum.

            2.5.1 ADJUSTMENTS. If, as a result of an adjustment under section
2.1 or 2.3 of this Addendum, the Base Rent is different than the amount shown
in Paragraph 1.5 of the Lease or the Allowance Amortization Charge is
different than the amount shown in section 2.3 of this Addendum, then; (a)
then portion of the Security Deposit set forth in Paragraph 1.7 of the Lease
to be applied to the first month's Base Rent and Allowance Amortization
Charge shall be recalculated as follows: (i) determine the actual amount of
the Base Rent and the Allowance Amortization Charge payable for the first
full month as adjusted, which amount shall equal the Security Deposit to be
held and applied by LESSOR from and after the Commencement Date as the
Security Deposit under Paragraph 5 of the Lease; (ii) subtract such amount
from the original Security Deposit set forth in Paragraph 1.7 of the Lease;
and (iii) the resulting sum shall equal the amount of the portion of the
original Security Deposit to be applied to the first full months Base Rent
and Allowance Amortization Charge: (b)if the amount applied to the first full
months Base Rent and Allowance Amortization Charge in accordance with
preceding clause (a) is less than the first full months Base Rent and
Allowance Amortization Charge actually becoming due for the first full month,
LESSEE shall pay to LESSOR any deficiency within ten (10) days of notice from
LESSOR, or (c) if the amount applied to the first full months Base Rent and
Allowance Amortization Charge in accordance with preceding clause (a) is more
than the first full months Base Rent and Allowance Amortization Charge
actually becoming due for the first full month, LESSOR shall credit any
excess to the Base Rent and Allowance Amortization Charge payable for the
second month. Upon LESSOR's request, LESSEE and LESSOR shall execute an
amendment to the Lease setting for the exact Base Rent and Allowance
Amortization Charge, provided that failure of LESSOR and LESSEE to execute
such amendment shall not effect the validity of the Lease.

     3. ADDITION PROVISIONS REGARDING COMMON AREA OPERATING EXPENSES.
Beginning on the Commencement Date, in addition to payment of the Base Rent,
LESSEE shall be responsible for payment of LESSEE's share of all Common Area
Operating Expenses as defined in Paragraph 4.2 of the Lease. LESSEE shall pay

<PAGE>

to LESSOR monthly, as additional rent, an amount equal to 1/12 of the
projected annual Common Area Operating Expenses. Such amount shall be due and
payable concurrently with the payment of the applicable Base Rent. Prior to
the beginning of each Lease Year, LESSOR will provide LESSEE an annual
estimated Operating Budget ("Estimated Operating Budget") for each calendar
year or partial year. Subject to LESSEE's payment to LESSOR of the Operating
Expenses as provided in this Addendum, LESSOR shall make prompt payment of
the Operating Expenses. A copy of the Estimated Operating Expenses Budget for
the First Lease Year is annexed to this Addendum as EXHIBIT "4". LESSEE
acknowledges that (a) this estimate is being provided only to illustrate the
projected amounts and categories of expense and that actual results may be
different than the estimates; and (b) it is aware that amounts and categories
of expense may vary in future years as the Building ages. Without limiting
the definition of "Common Area Operating Expenses" as defined in the Lease,
LESSEE specifically acknowledges and agrees that such Common Area Operating
Expenses will include (i) reasonable reserves, as reasonably determined by
LESSOR, for repair, maintenance or replacement of the Building HVAC systems,
nonstructural roof membrane, exterior painting, paving and restriping of the
parking lot, and (ii) payment of Mollo Roos Bond installments.

        3.1 ENVIRONMENTAL INSPECTIONS. For purposes of subparagraph
4.2(a)(iii) of the Lease, the costs of any environmental inspections shall
only be included in the Common Area Operating Expenses to the extent such
inspections are required by any governmental authority or LESSOR's lender;
provided, however, that costs attributable to inspections required on account
of the acts or omissions of another tenant of the Building or Industrial
Center causing Hazardous Substance contamination at the Industrial Center or
Building shall not be included.

     4. EFFECTIVE DATE/TERM/COMMENCEMENT DATE. Subject to section 4.5 of this
Addendum and notwithstanding any other provision of the Lease, this Lease
shall be effective upon execution by LESSOR and LESSEE ("Effective Date") and
shall constitute a legally binding contract for LESSOR to deliver possession
of the Premises in accordance with the requirements of this Lease and for
LESSEE to accept possession and pay the Rent beginning on the Commencement
Date. Notwithstanding that the Effective Date of this Lease is the date of
execution of this Lease, LESSEE's obligation to being payment of the Rent
payable under this Lease shall not commence until the occurrence of the
Commencement Date.

        4.1 AMENDMENT. Following the Commencement Date and upon LESSOR's
request, LESSEE and LESSOR shall execute an amendment to the Lease setting
for the exact Commencement Date and the exact Expiration Date of the Original
Term, provided that failure of LESSOR and LESSEE to executive such amendment
shall not effect the validity of the Lease.

        4.2. COMMENCEMENT DATE. Except as otherwise provided in subsection
5.5 of this Addendum concerning LESSEE Delays and subject to the provisions
of Paragraph 3.3 of the Lease, the Commencement Date of the Lease shall be
the date of the Substantial Completion (as defined below) of the Building
Shell and the Tenant Improvements for the Premises; provided, however, the
Commencement Date shall not be earlier than March 15, 2001 nor later than
June 15, 2001 except (a) with LESSEE's consent, in its sole discretion, (b)
on account of delays caused by LESSEE as described in subsection 5.5 of this
Addendum, or (c) for delays caused by fire, earthquake or other unavoidable

<PAGE>

casualties or inclement weather conditions not reasonably anticipatable,
extraordinary governmental action other than usual permit and inspection
procedures, delays encountered in processing building permits and other
governmental approvals or inspections, delays encountered as a result of the
discovery of any unknown or concealed conditions affected the Premises,
delays causes by general area wide labor or material shortages or labor
disputes (such as strikes or lock-outs), or any other causes not the fault of
LESSOR or LESSOR's Contractor, subcontractors, agents or employees.

        4.3 LEASE TERM/"LEASE YEAR" DEFINED. Unless otherwise provided, the
initial Term of the Lease ("Original Term") shall be a period of ten (10)
years beginning on the Commencement Date; provided, however, if the
Commencement Date occurs other than on the first day of a calendar month, the
Original Term shall be deemed extended for a period of time equal to the
number of days between the Commencement Date and the beginning of the first
full calendar month following the Commencement Date. The term "Lease Year"
means each consecutive period of twelve (12) months during the Lease Term,
provided that if the "Commencement Date" is other than the first day of a
calendar month, then the first Lease Year shall be a period of (12) months
plus the period between the Commencement Date and the first day of the first
full calendar month thereafter.

        4.4 OPTION TO EXTEND TERM. The following option is subject to, and
the terms of this section are additive to, and do not modify the terms and
provisions of Paragraph 39 of the Lease.

            4.4.1 GRANT. LESSOR grants to LESSEE the option to extend the
Lease for one five (5) year period beginning upon the expiration of the
Original Term ("Extension Term").

            4.4.2 EXERCISE. If LESSEE desires to extend the Lease Term, such
option shall be exercised only by written notice ("Election Notice")
delivered to LESSOR no earlier than 360 days and no later than 270 days
before the expiration of the Original Term. Regardless of cause, if LESSEE
fails to timely give an Election Notice, all options rights will
automatically lapse and terminate and be of no further force or effect
without any requirement of notice or demand by LESSOR.

            4.4.3 ADJUSTMENT TO BASE RENT. Except as otherwise provided in
this section, the Base Rent for the first Lease Year of the Extension Term
shall be adjusted at the beginning of the Extension Term to the "fair rental
value" of the Premises as determined in the following manner.

            (a) Within thirty (30) days from LESSEE's notice, LESSOR and
      LESSEE shall meet in an effort to negotiate, in good faith, the fair
      rental value of the Premises as of the beginning of the Extension Term.
      If LESSOR and LESSEE have not agreed upon the fair rental value of the
      Premises at least one hundred twenty (120) days prior to the beginning
      of the Extension Term, the fair rental value shall be determined by
      appraisal, by one or more appraisers ("Appraisers(s)"). The Appraisers
      shall have at least five (5) years experience in the appraisal of
      commercial/industrial real property in the area in which the Premises
      are located and shall be members of professional organizations such as
      M.A.I. or equivalent

<PAGE>

            (b) If LESSOR and LESSEE are not able to agree upon the fair
      rental value of the Premises within the prescribed time period, then
      LESSOR and LESSEE shall attempt to agree in good faith upon a single
      Appraiser not later than one hundred (100) days prior to the beginning
      of the applicable Extension Term. If LESSOR and LESSEE are unable to
      agree upon a single Appraiser within such time period, then LESSOR and
      LESSEE shall each appoint one Appraiser not later than ninety (90) days
      prior to the beginning of the applicable Extension Term. Within ten
      (10) days thereafter, the two (2) appointed Appraisers shall appoint a
      third Appraiser. If either LESSOR or LESSEE fails to appoint its
      Appraiser within the prescribed time period, the single Appraiser
      appointed shall determine the fair rental value of the Premises. If
      both parties fail to appoint Appraisers within the prescribed time
      periods, then the first Appraiser thereafter selected by a party shall
      determine the fair rental value of the Premises. Each party shall bear
      the cost of its own Appraiser and the parties shall share equally the
      cost of the single or third Appraiser, if applicable.

            (c) For the purpose of such appraisal, the term "fair rental
      value" shall mean the price that a ready and willing tenant would pay,
      as of the beginning of the Extension Term, as monthly rent to a ready
      and willing landlord of property comparable to the Premises if such
      property were exposed for lease on the open market for a reasonable
      period of time and taking into account all of the purposes for which
      such property may be used and taking into account all material
      attributes and benefits of the Premises. Fair rental value shall take
      into consideration all monetary concessions being granted in connection
      with such comparable property, including without limitation, rent
      abatement concessions and tenant improvements or allowances provided
      therefore. If a single Appraiser is chosen, then such Appraiser shall
      determine the fair rental value of the Premises. Otherwise, the fair
      rental value of the Premises shall be the average of the two (2) of the
      three (3) appraisals which are closest in amount, and the third
      appraisal shall be disregarded. LESSOR and LESSEE shall instruct the
      Appraiser(s) to complete the determination of the fair rental value not
      later than forty-five (45) days prior to the beginning of the
      applicable option period. If the fair rental value is not determined
      prior to the beginning of the Extension Term, then LESSEE shall
      continue to pay to LESSOR the Base Rent applicable to the Premises
      immediately prior to such extension, until the fair rental value is
      determined. When the fair rental value of the Premises is determined,
      LESSOR shall deliver notice thereof to LESSEE, and if the fair rental
      value is higher, LESSEE shall pay to LESSOR, within ten (10) days after
      receipt of such notice, the difference between the Base Rent actually
      paid by LESSEE to LESSOR and the new Base Rent determined under this
      section.

            (d) Notwithstanding any other provision of this Lease, in no
      event shall the Base Rent for the first Lease Year of the Extension
      Term be less than an amount equal to 103% of the Base Rent in effect
      for the Lease Year immediately preceding the beginning of the Extension
      Term ("Prior Base Rent"). If the fair rental value of the Premises
      determined under this section is less than the Prior Base Rent, then
      the Base Rent for the first Lease Year of an Extension Term shall equal
      the Prior Base Rent.

<PAGE>

            (e) The Base Rent shall be increased at the beginning of the
      second Lease Year of the Extension Term and at the beginning of each
      Lease Year thereafter in an amount equal to three percent (3%) of the
      Base Rent in effect for the immediately preceding Lease Year.

            4.4.4 IMPLEMENTATION. Promptly upon the parties' approval of, or
the Appraisers establishment of, the fair rental value, the LESSOR and LESSEE
shall execute an amendment to this Lease setting out the starting and ending
dates and the starting Base Rent for the Extension Term.

            4.4.5 AFFILIATE TRANSACTION. Notwithstanding the provisions of
Paragraph 39.2 of the Lease providing that any option rights granted are
personal to LESSEE and not assignable, LESSOR agrees that the option rights
to extend the Term of the Lease under this section 4.4 may be assigned to an
assignee of the Lease in an Affiliate Transaction (as defined below).

            4.4.6 REMAINING LEASE TERMS. If LESSEE elects to extend the
Original Term, all other terms and conditions of the Lease shall remain in
effect during such extended term except: (a) no tenant improvements or
allowances shall be provided by LESSOR, and LESSEE shall be deemed to have
extended the term of the Lease and accepted the Premises "AS IS" in their
then existing conditions and without representation or warranty from LESSOR;
and (b) upon expiration of the last Extension Term, LESSEE shall have no
further right to extend the term of the Lease.

     5. BUILDING SHELL AND TENANT IMPROVEMENTS. LESSOR, at its expense, shall
cause the construction of the Building Shell. The phrase "Building Shell"
means the improvements to be constructed as shown in the Approved Drawings
and Specifications, including (a) roofing, fascia, exterior walls, doors and
windows, (b) footing and concrete floors, (c) "shell" fire sprinkler system
in accordance with minimum code requirements for ESFR fire sprinklers, (d)
conduits and pipes for telephone, electricity, water, fire sprinklers and
sewage brought to "stub out" termination points in or above a perimeter wall
of the Premises, (e) a main electrical termination panel for the Building,
(f) paving and finish of parking areas, entrance areas and walkways, (g)
landscaping as reasonably determined by LESSOR and (h) site improvements
consisting of street, gutters, sidewalks, curbs, storms drains and erosion
control  (construction period and permanent) as required to comply with
governmental requirements.

        5.1 TENANT IMPROVEMENTS DESCRIPTION. The phrase "Tenant Improvements"
means all interior improvements for LESSEE's Premises which are not a part of
the Building Shell, including (a) partitions, walls (including any interior
demising walls between the Premises and any other rentable area of the
Building), and doors, (b) all surface finishes, including wall coverings,
paint, floor coverings, suspended ceilings and other similar items, (c) duct
work, heat pumps, vents, diffusers, terminal boxes and accessories for
completion of heating, ventilation and air conditioning systems within the
Premises, (d) electrical distribution systems (including panels, subpanels,
wires and outlets), lighting fixtures, outlets, switches and other electrical
work to be installed in the Premises, (e) plumbing lines, fixtures and
accessories, (f) all fire and life safety control systems such as fire walls
and fire alarms (including piping, wiring and accessories) to be located in
the Premises, and the fire sprinklers and lines attributable to the Tenant
Improvements and/or LESSEE's fixture, furnishing or equipment, (g) entrance

<PAGE>

door signage and directory listings, as authorized by LESSOR, (h)
improvements required for compliance with Title 24, and (i) other
improvements shown on the "Cost Breakdown Tenant Improvement" form attached
to this Addendum as EXHIBIT "5"; provided LESSEE's trade fixtures, equipment
and Personal Property (including telephone systems, chairs, tables, furniture
and other equipment used in LESSEE'S business) shall not be considered part
of the Tenant Improvements.

        5.2 DESIGN OF TENANT IMPROVEMENTS/PERMITS. LESSEE shall furnish to
LESSOR, a complete set of plans and specifications detailing all Tenant
Improvements no later than January 1, 2000 ("Tenant Improvement Plans"). In
addition, TENANT shall be responsible for procuring the necessary building
permits for construction of the Tenant Improvements no later than February 1,
2001. Unless OTHERWISE approved by LESSOR, the Tenant Improvements Plans will
be prepared by the Paul Giese, AIA or Kenneth D. Smith and Associates. If
LESSEE delays in providing the Tenant Improvement Plans or permits, such
delay shall not change the Commencement Date of the Lease, which shall be the
date the Premises would have been available for occupancy, but for any such
delay. The Tenant Improvement Plans shall be subject to LESSOR's prior
approval, which will not be unreasonably withheld; provided, however, LESSOR
shall have the absolute right of disapproval, in its sole discretion, of any
Tenant Improvements which (a) alter or otherwise affect any structural
component of the Building, (b) are visible from the exterior of the Premises,
(c) the Tenant Improvement Plans specify materials which are not readily
available or customarily and ordinarily used in similarly situated
construction work where the procurement of such materials would cause a delay
in Substantial Completion (as defined below), (d) if the Tenant Improvement
Plans do not provide for the construction of approximately 20,000 Rentable
Square Feet of Improved Office Space (as defined below) or (e) the Improved
Office Space improvements are not comparable in quality to similar
improvements at the premises of Aetrium, Inc., located at 13000 Gregg Street,
Poway. LESSOR shall have thirty (30) days after receipt of the Tenant
Improvement Plans in which to approve or disapprove the Tenant Improvement
Plans. If LESSOR does not disapprove the Tenant Improvement Plans within such
thirty (30) day period, LESSOR shall be deemed to have approved the Tenant
Improvement Plans. If LESSOR reasonably disapproves the Tenant Improvement
Plans, LESSEE, at its expenses, shall promptly cause the Tenant Improvement
Plans to be revised and resubmitted to LESSOR for its review and approval
within fifteen (15) days from notice of LESSOR's disapproval. Following
LESSOR's approval, LESSOR will have the Architect submit the Tenant
Improvement Plans for government plan checking and a building permit, if
required, provided, LESSOR shall have the right to approve any changes
required by such governmental authorities. The final Tenant Improvement Plans
shall be subject to any changes required by governmental authorities.

            5.2.1 "IMPROVED OFFICE SPACE" DEFINED. The term "Improved Office
Space" means portions of the rentable area of the Premises other than those
to be used for manufacturing, warehousing, storage or shipping which are
improved with suspended ceilings, air conditioning and heating systems,
finished flooring and walls other than the perimeter walls forming the
Building Shell and which is located in the area denoted as "Office Space on
the Site Plan (EXHIBIT "2").

<PAGE>

            5.2.2 NO LESSOR LIABILITY. The rights granted LESSOR to approve
the Tenant Improvements and the Tenant Improvement Plans are solely for the
benefit of LESSOR. LESSOR shall have no obligation or liability whatsoever to
LESSEE or any other person on account of LESSOR's approvals in the event the
Tenant Improvements do not conform to Applicable Requirements or otherwise
contain defect or deficiencies. LESSEE agrees that it is solely responsible
for the compliance of designing the Tenant Improvement with all Applicable
Requirements and the provision of this Lease.

        5.3 APPROVED CONTRACTOR. Hamann Construction, a licensed general
contractor, will be the general contractor for construction of the Building
Shell Improvements and Tenant Improvements. LESSOR and LESSEE hereby approve
Hamann Construction acting as the general contractor ("Contractor"). The
Contractor's agreed-upon markup (profit and overhead) for the Tenant
Improvements will be 12% of the actual costs incurred in the development and
construction of the Tenant Improvements exclusive only of the costs of the
preparation of the Tenant Improvement Plans and government permits.

            5.3.1 LESSEE's REVIEW OF SUBCONTRACTORS' BIDS. LESSEE shall have
the right to review the subcontracted proposals ("Bids") for the Major Trades
(as defined below) required for construction of the Tenant Improvements. No
later than thirty (30) days prior to the commencement of construction, LESSOR
shall cause Contractor to deliver to LESSEE Bids for each Major Trade from no
less than three (3) licensed and qualified subcontractors together with a
written notice specifying the Bids which Contractor recommends for
acceptance. LESSEE shall have the right to reasonably disapprove one of the
Bids for each of the Major Trades selected by Contractor by giving LESSOR
written notice of any objection that LESSEE may have to such Bids within five
(5) days from LESSEE's receipt of the Bids from Contractor, provided,
however, LESSEE shall not have the right to disapprove more than one (1) bid
within a Major Trade and Contractor shall have the right to select any of the
remaining Bids in such Major Trade category. LESSEE's notice of disapproval
shall explain in detail the basis for the disapproval of any Bid recommended
by Contractor. Contractor shall have the right to utilize any subcontractors
submitting Bids for which LESSEE does not timely give notice of its
disapproval. The term "Major Trends" means portions of the construction work
consisting of the supply or installation of electrical, heating and air
conditioning, fire sprinkler system, framing, drywall, plumbing, painting,
floor coverings, suspended ceilings, glass, doors and ceramic tile.

        5.4 PAYMENT OF TENANT IMPROVEMENT COSTS. The phrase "Tenant
Improvement Costs" means all direct and indirect costs of designing,
furnishing, constructing and installing the Tenant Improvements, including
(a) costs for design and/or architectural services of the Architect in
preparing the Tenant Improvement Plans, (b) government permit costs
applicable to the Tenant Improvements, (c) amounts payable to the Contractor
for overhead/profit, job site supervision, cleanup, trash and janitorial
services as shown in the Cost Breakdown Tenant Improvement (EXHIBIT "5"), (d)
the actual "hard costs" of construction of the Tenant Improvements, (e)
financing costs attributable to financing to pay the Tenant Improvement
Costs, including, construction period interest from the initial loan funding
until the Commencement Date, loan points, fees and other costs, such as
appraisals, environmental surveys, legal fees and other costs customarily
incurred in connection with such financing; and (f) leasing brokerage
commissions based on the portion of rentals attributable to the amortization

<PAGE>

of the LESSOR's payment of the Allowance described in subparagraph 5.4.2 of
this Addendum over the Lease Term.

            5.4.1 ESTIMATE FOR TENANT IMPROVEMENT COSTS. Prior to the
commencement of construction, LESSOR shall cause the Contractor to make a
final selection of the Bids for each Major Trade and LESSOR, shall provide
final estimates of all other Tenant Improvement Costs ("Estimated Tenant
Improvement Costs"). LESSOR shall provide LESSEE written notice of such
Estimated Tenant Improvement Costs, which notice will include copies of the
Bids for the Major Trades.

            5.4.2 LESSOR'S ALLOWANCE. LESSOR agrees to pay a maximum of Nine
Hundred Sixty Nine Thousand Dollars ($969,000.00) for the Tenant Improvement
Costs ("Allowance"). The Allowance shall be applied solely to pay the cost of
the Tenant Improvements, and under no circumstances shall LESSEE be entitled
to any payment on account of any unused portion of the Allowance following
completion of the Tenant Improvements and payment of the Tenant Improvement
Costs. The amount of the Allowance actually expended for payment of Tenant
Improvement Costs shall be the amount used to determine the amount of the
Tenant Improvement Allowance Amortization Charge described in section 2.3 of
this Addendum. LESSOR shall pay its share of the Tenant Improvement Costs as
construction progresses.

            5.4.3 LESSEE'S PAYMENT/INITIAL CONTRIBUTION. Except for LESSOR's
Allowance, LESSEE shall be responsible for the payment of all Tenant
Improvement Costs. The amount of LESSEE's initial contribution will be
determined based on the Estimated Tenant Improvement Costs, and LESSEE shall
pay to LESSOR, as provided in this subsection, an amount equal to the
difference between LESSOR's Allowance and the Estimated Tenant Improvement
Costs ("Initial Contribution"). LESSEE shall pay such Initial Contribution to
an institutional fund control established by LESSOR for payment of the Tenant
Improvement Costs within ten (10) days from LESSOR's notice requesting such
payment. Such funds shall be disbursed on a pro rated basis with LESSOR's
Allowance based on the percentage of completion of the Tenant Improvements,
as reasonably determined by LESSOR.

            5.4.4 FINAL RECONCILIATION. Following completion of the
construction of the Tenant Improvements, LESSOR shall to deliver to LESSEE a
final accounting of the Tenant Improvement Costs. If additional amounts are
due from LESSEE on account of differences between the Estimated Tenant
Improvement Costs and the actual costs incurred, LESSEE shall reimburse
LESSOR in the amount of such difference following completion of the
construction of the Tenant Improvements and within fifteen (15) days from
receipt of a written notice and accounting from LESSOR's accounting. If such
final accounting shows that the actual Tenant Improvement Costs are less than
the Estimated Tenant Improvement Costs, then LESSEE shall be entitled to a
credit in the amount of any excess paid by LESSEE, which credit shall be
applied to the next payment of Base Rent then becoming due.

            5.4.5 COSTS ATTRIBUTABLE TO CHANGES. LESSEE will be responsible
for payment of any excess Tenant Improvement Costs resulting from any changes
to the Work requested by LESSEE or necessitated by government requirements,
following LESSOR's approval of the Tenant Improvement Plans. Any such changes
shall be subject to LESSOR's approval and LESSEE shall deposit funds with
LESSOR to pay such costs within thirty (30) days following notice from LESSOR

<PAGE>

of the Contractor's estimated cost for any change. If the actual cost of the
change is less than the estimate, LESSOR shall refund the difference to
LESSEE upon LESSEE's occupancy, and if the actual cost is more than the
estimate, LESSEE shall pay the difference within thirty (30) days of a notice
from LESSOR documenting such actual costs.

         5.4.6  INSPECTION OF RECORDS. LESSEE, or its designated
representative, shall have the right during the course of performance of the
construction of the Building Shell and the Tenant Improvements and in
connection with the final reconciliation of the Tenant Improvement Costs as
provided in subsection 5.4.4 of this Addendum to a reasonable review of books
and records maintained by LESSOR and Contractor relating to such costs. Such
right of inspection is exercisable on reasonable written notice to LESSOR and
during the regular business hours of LESSOR or Contractor, whichever is
applicable.

         5.5    COMPLETION OF TENANT IMPROVEMENTS. The Commencement Date of
the Lease shall not occur until Substantial Completion of construction of the
Tenant Improvements, except if Substantial Completion is delayed on account
of LESSEE's failure to timely submit the Tenant Improvement Plans and Permits
(or any revisions thereto), LESSEE's request for special materials, finishes
or installations other than those readily available and customarily and
ordinarily used in similarly situated construction work, changes to the
approved Tenant Improvement Plans, LESSEE's failure to timely pay its Initial
Contribution and any other amounts required to be paid by LESSEE in
connection with such construction or other delays caused by LESSEE ("LESSEE
Delays"). If such LESSEE Delays are encountered, the Commencement Date of
this Lease shall occur prior to Substantial Completion of the Tenant
Improvements and as of the date such Tenant Improvements would have been
substantially complete but for such delays.

         5.5.1  "SUBSTANTIAL COMPLETION" DEFINED. The term "Substantial
Completion" means the date upon which LESSOR reasonably satisfies all of the
following requirements: (a) the construction of the applicable Building Shell
Improvements and Tenant Improvements are substantially completed, subject
only to minor corrective work which does not materially affect or limit
LESSEE's use of the Premises; provided, LESSOR shall complete any such minor
work within thirty (30) days following Substantial Completion; (b) LESSOR has
procured a certificate of occupancy (whether temporary or permanent) or other
applicable permit permitting LESSEE's immediate use and occupancy of the
Premises; and (c) LESSOR has given LESSEE written notice stating that such
Substantial Completion has occurred and that the Premises are available for
LESSEE's immediate possession and occupancy ("Notice of Possession"). LESSOR
shall give LESSEE at least ten (10) days written notice in advance of the
estimated date of Substantial Completion.

         6.      LIMITATIONS ON LESSOR'S WARRANTIES. Notwithstanding the
provisions of Paragraphs 2.2 and 2.3 of the Lease, LESSOR's warranties in
Paragraphs 2.2 and 2.3 of the Lease apply only to the improvements included
in the Building Shell and LESSOR is not making any warranty concerning the
Tenant Improvements nor the suitability of such Tenant Improvements for use
by LESSEE since LESSEE is responsible for the design of the Tenant
Improvements.

<PAGE>

         6.1     COMPLIANCE WITH APPLICABLE REQUIREMENTS. Notwithstanding the
provisions of Paragraph 2.3 of the Lease, LESSOR's warranty in Paragraph 2.3
is subject to the following limitations: (a) the warranty applies only to the
improvements included in the Building Shell, and LESSOR is not making any
warranty concerning the compliance of the design of the Tenant Improvements
with such codes, regulations, ordinances and restrictions; (b) the warranty
only applies to any condition which (i) violates building codes, regulations
or ordinances, and (ii) has a material, adverse impact on LESSEE's use of the
Premises for office, distribution and warehousing use; and (c) LESSEE, not
LESSOR, shall be responsible for any modifications or improvements required
on account of special Americans With Disabilities Act ("ADA") requirements
resulting from any unusual use or employment practices of LESSEE which are
not ordinary and customary to the use or practices of tenants generally in
similarly situated real estate projects. If LESSEE does not give LESSOR
written notice of the Premises non-compliance, as of the Commencement Date,
with the warranty within one (1) year after the Commencement Date, correction
of any non-compliance shall be the obligation of LESSEE, at LESSEE's sole
cost and expense.

         6.2     SPECIAL PROVISIONS REGARDING HAZARDOUS MATERIALS. Except as
expressly provided in this subsection, LESSOR is not making any
representation, warranty or agreement concerning the absence of Hazardous
Substance contamination of the Premises and LESSEE is assuming all risk of
loss arising from the presence of any Hazardous Substance contamination,
whether existing now or in the future. Promptly following Substantial
Completion of the Premises, LESSOR shall procure a Phase I Environment Site
Assessment Report prepared by a qualified investigator ("Phase I Report"). If
the Phase I Report discloses the existence of any Hazardous Substance
contamination of the Premises, LESSOR, subject to the limitation in
subsection 6.2.1 of this Addendum, shall be responsible to conduct and pay
for any additional investigation or further inquiry concerning such Hazardous
Substances and the cost of investigation removal, remediation, restoration
and/or abatement of such Hazardous Substance contamination; provided,
however, LESSOR shall not otherwise be liable to LESSEE for any loss, damage,
cost or expense suffered or incurred as a consequence of such Hazardous
Substance contamination. If the Phase I Report does not disclose the
existence of any Hazardous Substance contamination, then LESSOR shall not
thereafter have any further responsibility or liability with respect to any
Hazardous Substance Contamination.

         6.2.1   LESSOR'S TERMINATION OPTION. If a Hazardous Substance
contamination is identified in the Phase I Report, (unless LESSEE is legally
responsible therefore, in which case LESSEE shall make the investigation and
remediation thereof required by the Applicable Requirements and this Lease
shall continue in full force and effect), and if the estimated cost to
remediate such condition exceeds Two Hundred Fifty Thousand dollars
($250,000.00), as determined by LESSOR in good faith, then LESSOR shall have
the right to terminate the Lease by giving written notice to LESSEE within
ninety (90) days after receipt by LESSOR of the Phase I Report disclosing the
Hazardous Substance condition of LESSOR's desire to terminate this Lease. In
the event LESSOR elects to give a termination notice, LESSEE may, within
thirty (30) days thereafter, give written notice to LESSOR of LESSEE's
commitment to pay the amount by which the cost of the remediation of such
Hazardous Substance Condition exceeds $250,000.00. LESSEEshall provide LESSOR
with adequate funds or satisfactory assurance thereof within thirty (30) days

<PAGE>

following such commitment. In such event, this Lease shall continue in full
force and effect, and LESSOR shall proceed to make such remediation as soon
as reasonably possible after the required funds are available. If LESSEE does
not give such notice and provide the required funds or assurance thereof
within the time provided, this Lease shall terminate as of the date specified
in LESSOR's notice of termination.

          6.3    LESSOR'S ENFORCEMENT OF CONTRACTOR'S WARRANTIES. LESSOR has
obtained from Contractor the following warranties ("Contractor's
Warranties"):

          "CONTRACTOR unconditionally warrants all materials and equipment
     furnished under this Contract will be new, unless otherwise specified,
     and that all Work will be of good quality, free from material faults and
     defects and in conformance with the Contract Documents. CONTRACTOR, at
     its expense, shall repair or replace any Work requiring replacement or
     repair within one (1) year from completion of the Project, except with
     respect to the roof maintenance only, which CONTRACTOR will repair or
     replace within two (2) years as required to prevent water penetration.
     In the event CONTRACTOR fails to timely perform its warranty obligation,
     OWNER shall have the right to cause such repairs or replacements and
     CONTRACTOR shall be liable for the reasonable costs of such repairs or
     replacements."

Notwithstanding the limitation on the LESSOR's warranties under Paragraphs
2.2 and 2.3 of the Lease and under this section or the time for enforcement
of LESSOR's warranties has expired, to the extent that any warranties
provided by the Contractor in connection with the construction of the
Premises cover any of the items described in Paragraphs 2.2 or 2.3 of the
Lease or LESSOR has any claim against the Contractor on account of any defect
or deficiency in the construction of the Premises, upon the written request
of LESSEE, LESSOR shall either (a) take such commercially reasonable action
as necessary to enforce any such warranties or claims for the benefit of
LESSEE to the extent LESSEE incurs or will incur any out-of-pocket expense or
cost in the performance of its obligations under this Lease for the repair or
maintenance of the Premises on account of any items covered by the
Contractor's warranty or as a result of any such defects or deficiencies,
provided that LESSOR shall first be entitled to recover its Legal Expenses
(as defined below) prior to any reimbursement to LESSEE of any such out-of-
pocket expenses, or (b) assign to LESSEE the right to enforce any such
warranties or claims, provided any such assignment shall be effective only to
the extent LESSEE incurs or will incur any out-of-pocket expense or cost in
the performance of its obligations under this Lease for the repair or
maintenance of the Premises on account of any items covered by the
Contractor's warranty or as a result of any such defects or deficiencies, and
LESSOR shall be entitled to receive any excess recovery after deduction of
LESSEE's Legal Expenses (as defined below).

          6.3.1  "LEGAL EXPENSES" DEFINED.  For purposes of this section, the
term "Legal Expenses" means reasonable attorneys' fees and costs (including
any expert witness fees), including attorneys' fees and costs in connection
with the enforcement of any award or judgment or any appellate proceedings,
which Legal Expenses are incurred by LESSOR in the event LESSOR elects to
enforce warranties or claims in any legal proceedings against the Contractor,

<PAGE>
or incurred by LESSEE, in the event LESSOR assigns the right to LESSEE to
enforce such warranties or claims directly against the Contractor.

          6.3.2  LIMITATIONS.  Nothing in this section shall be construed or
applied to expand the scope of LESSOR's warranties under Paragraph 2 of the
Lease or otherwise extend the time for LESSEE's enforcement of LESSOR's
warranties.

     7.   USE OF PREMISES. LESSEE shall be solely responsible for determining
that the Premises are suitable and feasible for LESSEE's intended use and for
determining all Applicable Requirements. LESSOR, by giving its consent to any
use, shall not be deemed to warrant that such use is permissible under the
Applicable Requirements nor shall such consent constitute a waiver of any
other condition or requirement of this Lease and under no circumstance
whatsoever shall LESSOR have any liability to LESSEE (nor shall the validity
of this Lease be effected) if it is determined that any intended use is not
permitted or is in some manner subject to restrictions or limitations.

          7.1    EXCEPTION/HAZARDOUS MATERIALS. Without limiting LESSEE's
obligations under Paragraph 6 of the Lease regarding compliance with
Hazardous Substance Laws, LESSEE has completed and delivered to LESSOR, a
Hazardous Materials Questionnaire in the form as set forth in EXHIBIT "6"
annexed to the Lease, which LESSOR may use for filing with applicable
government authorities in the event that LESSOR is required to make any such
filing. Within fifteen (15) days of a written request by LESSOR, LESSEE
agrees to complete and deliver to LESSOR an updated Hazardous Materials
Questionnaire. Notwithstanding any other provisions of the Lease, LESSEE
shall not use or otherwise engage in any activity upon the Premises that
would constitute a Reportable Use as defined in Paragraph 6.2(a) of the Lease
or otherwise significantly increase the risk of and/or potential severity of
contamination of Hazardous Substances, without LESSOR's prior written consent
in its sole discretion, including, without limitation engaging in any
business primarily involving the transport, storage, processing, packaging or
manufacture of Hazardous Substances.

     8.   ADDITIONAL PROVISIONS REGARDING REMOVAL OF PERSONAL PROPERTY. For
all purposes of the Lease (including Paragraph 7.4 of the Lease), the Tenant
Improvements shall constitute "Alterations and Utility Installations" and,
unless LESSOR otherwise ejects, shall become the property of LESSOR and shall
not be removed by LESSEE upon expiration or earlier termination of the Lease.
The term "Personal Property" means trade fixtures, personal property,
inventory, business equipment and furnishings supplied, owned or leased by
LESSEE, including, without limitation, components of LESSEE's telephone
system, computer and computer network systems and security systems; provided,
however, cabling and conduits for such systems shall not be removed by LESSEE
and shall be surrendered with the Premises upon expiration of the Lease.
Notwithstanding any other provision, LESSEE may not remove any property,
including any Personal Property, if such removal would cause material damage
to the Premises, unless such damages can be and are repaired by LESSEE.
Furthermore, LESSEE shall repair any damage to the Premises caused by
LESSEE's removal of any such Personal Property, and shall, prior to the
expiration or earlier termination of this Lease, restore and return the
Premises to the condition they were in when first occupied by LESSEE upon the
Commencement Date, reasonable ordinary wear and tear excepted. The provisions
of Paragraph 73 of the Lease shall apply to any restoration work under this
section the same as if the restoration was an Alteration or Utility

<PAGE>

Installation.

          8.1   FAILURE TO REMOVE PERSONAL PROPERTY. If LESSEE shall fail to
remove any personal property which it is entitled to remove under this Lease
prior to termination or expiration of this Lease, then LESSOR may retain
ownership of such property or may dispose of the property under the
provisions of Section 1980 ET SEQ. of the California Civil Code, as such
provisions may be modified from time to time, or under any other applicable
provisions of California law, without further notice or liability to LESSEE.

          8.2   LEASE/SECURITY INTEREST FILING. In the event LESSEE shall
lease of finance the acquisition of Personal Property utilized by LESSEE in
the operation of LESSEE's business, LESSEE warrants that any Uniform
Commercial Code financing statement executed by LESSEE will upon its face or
by exhibit clearly indicate that such financing statement is applicable only
to Personal Property of LESSEE specifically described in the financing
statement that is subject to removal on the expiration or earlier termination
of this Lease. In no event shall the address of the Building (or other
information identifying the Premises) be furnished on the financing statement
without qualifying language as to applicability of the lien only to Personal
Property of LESSEE described in the financing statement. Should any holder of
a security agreement executed by LESSEE record or place of record a financing
statement which appears to constitute a lien against any interest of LESSOR
in the Premises, LESSEE shall within ten (10) days after the filing of such
financing statement cause (i) copies of the security agreement or other
documents to which the financing statement pertains to be furnished to LESSOR
to facilitate LESSOR's being in a position to show such lien is not
applicable to any interest of LESSOR, and (ii) the holder of the security
interest to amend documents or record so as to clarify that such lien is not
applicable to any interest of LESSOR in the Premises.

      9.   LESSOR'S INDEMNITY OBLIGATION. Notwithstanding the exemption from
LESSOR's liability provided in Paragraph 8.8 of the Lease, LESSOR agrees to
indemnify, defend and hold harmless LESSEE from any loss, damage, cost or
expense (including reasonable attorneys' fees and legal expenses) suffered or
incurred by LESSEE as a result of any personal injury or property damage
caused by LESSOR's employees, agents or contractor while such employees,
agent or contractors are present on the Premises.

      10.  ADDITIONAL INSURANCE PROVISIONS. The provisions of this section
supplement the provisions of Paragraph 8 of the Lease, provided in the event
of any inconsistency, the provisions in this section shall supersede and
control.

          10.1   ADJUSTMENT OF LESSEE'S LIABILITY INSURANCE. The liability
insurance to be maintained by LESSEE in accordance with Paragraph 8.2 of the
Lease shall be subject to increase no more frequently than each three (3)
Lease Years as reasonably determined by LESSOR's insurance advisor taking
into account prevailing industry practices for similar businesses.

          10.2   LIMITATION ON WAIVER OF SUBROGATION. As between LESSOR and
LESSEE, the waiver and release set forth in Paragraph 8.6 of the Lease shall
only apply to the extent of the actual amount of the insurance proceeds
received.

<PAGE>

          10.3   SPECIAL DEDUCTIBLE/EARTHQUAKE INSURANCE. In the event
earthquake insurance coverage is required by LESSOR's lender, such insurance
shall be subject to reasonable deductibles. In accordance with industry
practices in the locale as reasonably determined by LESSOR's professional
insurance advisor, provided, LESSOR shall be responsible for payment of any
such deductible amounts.

      11.  ADDITIONAL PROVISIONS REGARDING ASSIGNMENT/SUBLEASE. This section
includes provisions that modify and/or supplement the provisions of Paragraph
12 of the Lease concerning the assignment and subleasing of the Premises.
Except as expressly set forth in subsections 11.1 to 11.3 of this Addendum,
the provisions of Paragraph 12 of the Lease shall be enforced in accordance
with their terms.

          11.1   AFFILIATE TRANSACTION. Subject to compliance with Paragraph
12.2 of the Lease and the requirements of sections 11.1.1 to 11.1.4 of this
Addendum, LESSOR's consent to an Affiliate Transaction shall not be required,
and the provisions of Paragraph 12.1(d) of the Lease shall not apply to an
Affiliate Transaction so long as LESSEE is not otherwise in Default under
this Lease at the time of the proposed transaction. The term "Affiliate
Transaction" means (a) any assignment or sublease to an entity controlling,
controlled by or under common control with LESSEE; or (b) any assignment
resulting from a bona fide consolidation, merger or purchase of substantially
all of LESSEE's assets; provided, however, any such assignment or sublease
shall not release or otherwise affect LESSEE's liability for its obligations
under the Lease.

               11.1.1  NOTICE AND TRANSFER DOCUMENTATION TRANSACTION. Any
Affiliate Transaction shall comply with all conditions and requirements in
this section 11.1.1. No later than ten (10) days following the consummation
of an Affiliate Transaction, any assignee or sublessee shall (a) execute and
deliver to LESSOR a copy of this Lease to confirm such assignee's or
sublessee's assumption of any and all obligations of LESSEE under this Lease,
and (b) deliver to LESSOR, Transfer Documentation as described in clauses
(a), (b) and (c) of section 11.2.2 of this Addendum.

               11.1.2   ADDITIONAL REQUIREMENTS. In the case of an Affiliate
Transaction described in clause (b) of section 11.1 of this Addendum in
addition to compliance with the requirements in section 11.1.1 of this
Addendum, such assignee or sublessee, shall: deliver to LESSOR the additional
Transfer Documentation as described in clause (d) of section 11.2.2 of this
Addendum evidencing satisfaction of the Financial Standard (as defined below)
to qualify as an Affiliate Transaction. The term "Financial Standard" means:
(a) immediately prior to and after the sale and transfer of assets or stock
to such the assignee or sublessee, such assignee or sublessee has a net
worth, determined in accordance with generally accepted accounting
principles, which exceeds $5,000,000.00; and (b) for the fiscal year
immediately preceding the sale and transfer of such assets or stock such
assignee or sublessee has realized a net profit, determined by generally
accepted accounting principles consistently applied, of not less than
$1,000,000.00. If the proposed assignee or sublessee does not satisfy such
Financial Standard than such transaction shall not constitute an Affiliate
Transaction and shall require LESSOR's consent in accordance with section
11.2 of this Addendum.

<PAGE>

               11.1.3  NO CHANGE IN HAZARDOUS SUBSTANCE USE. In order to
qualify as an Affiliate Transaction, the assignee's or sublessee's use of the
Premises shall not  increase the risk of contamination of any Hazardous
Substance from the risk presented by LESSEE's use of the Premises as
determined by a qualified environmental consultant designated by LESSOR.

               11.1.4   NON-COMPLIANCE/DEFAULT. If a purported Affiliate
Transaction does not comply with all requirements and conditions for a
qualified Affiliate Transaction, such transaction shall require LESSOR's
consent in accordance with the procedures in section 11.2 of this Addendum
and the occurrence of such transaction without such consent shall constitute
a Default under this Lease.

          11.2   NON-AFFILIATE TRANSACTIONS. The provisions in this section
are in addition to the provisions of Paragraph 12 of the Lease, provided such
provisions do not apply to an Affiliate Transaction except as stated in
section 11.1 of this Addendum.

               11.2.1   PRESUMPTION OF REASONABLENESS. To the extent that the
Lease provides for LESSOR's reasonable consent to an assignment or sublease
of the Lease, LESSEE acknowledges and agrees that LESSOR shall be
conclusively deemed to have reasonably withheld such consent If (a) a
proposed assignee does not comply with the Financial Standards described in
section 11.1 of this Addendum as of the date of the proposed assignment or
sublease, or (b) the assignee's or sublessee's use of the Premises would
increase the risk of contamination of any Hazardous Substance from the risk
presented by LESSEE's use of the Premises as determined by a qualified
environmental consultant designated by LESSOR. LESSEE shall be responsible
for the fees of such consultant. Nothing in this section shall be construed
or applied to restrict LESSOR from withholding its consent for other
reasonable grounds, and this provision is included solely to provide LESSOR
the benefit of the conclusive presumption with respect to one or both of the
above described conditions.

               11.2.2 "TRANSFER DOCUMENTATION" DEFINED. The term "Transfer
Documentation" means and includes the following documentation, which shall be
certified in writing as true, correct and complete by the LESSEE and any
assignee or sublessee: (a) the name, address, telephone number and
responsible representative of the assignee or sublessee; (b) written reports,
government filings and other relevant documentation, if any, describing the
extent of the use of Hazardous Substances in assignee's or sublessee's
general business operations and, if different, the use of the Premises
proposed by assignee or sublessee; (c) all written contracts and agreements,
including lease assignments, signed between LESSEE (or any of its affiliates)
and the assignee or sublessee relating to or in any way concerning the
assignment or subletting or any contemporaneous transaction, which in the
case of a purported Affiliate Transaction, such contracts and agreements must
evidence that the assignment or sublease conform to all requirements of an
Affiliate Transaction; and (d) audited financial statements prepared by a
certified public accountant or equivalent, for the last three (3) years of
assignee's operation, including balance sheet, income statements and any
other statement prepared in the ordinary course of assignee's or sublessee's
operations.

<PAGE>

               11.2.3   TIME FOR CONSENT. LESSOR shall give LESSEE written
notice of its consent or refusal to consent to a proposed assignment no later
than forty five (45) days following receipt from LESSEE of the last of the
Transfer Documentation and LESSEE's payment under Paragraph 12.2(e) of the
Lease ("LESSOR's Notice"). If LESSOR does not timely give LESSOR's Notice,
LESSOR shall be deemed to have given its consent to the assignment as
disclosed in the Transfer Documentation.

               11.2.4   RIGHT OF FIRST REFUSAL. In the event LESSEE desires
to assign this Lease or enter into a Major Sublease of the Premises other
than in an Affiliate Transaction, LESSOR shall have a period equal to the
period for LESSOR to consent  or not consent under section 11.2.3 of this
Addendum ("Election Period") to notify LESSEE of LESSOR's election to
terminate this Lease as to the entire Premises, in which event Tenant shall
be released from all further obligations under the Lease and LESSOR shall be
free to enter into a new lease with the proposed assignee or sublessee;
provided, however, in the case of a Major Sublease, such termination shall
only apply with respect to the portion of the Premises subject to such
sublease and this Lease shall remain in full effect with respect to the
remaining portion of the Premises. The provisions of this section apply
regardless of whether or not LESSOR agrees to consent to such transfer. The
term "Major Sublease" means a sublease (a) for 25% or more of the Rentable
Square Footage of the Premises then used by LESSEE taking into account any
prior sublease(s) for a term of (a) three (3) years or more, or (b) if the
remaining Term of the Lease is less than five (5) years,  then substantially
all of the remaining Term of the Lease. If LESSOR does not give LESSEE notice
of its election to exercise its right to terminate all or a portion of the
Lease as provided in this provision on or before expiration of the Election
Period, then LESSOR's rights under this section shall expire with respect to
the proposed transaction and the provisions of section 11.2.5 below shall
apply.

               11.2.5   RENT ADJUSTMENT. If LESSEE subleases the Premises
(regardless of whether such sublease is consented to by LESSOR) and, if
applicable, LESSOR does not elect to terminate the Lease in accordance with
section 11.2.4 of this Addendum, the Rent due under this Lease shall be
automatically increased as follows: (a) in the case of a Major Sublease, in
an amount equal to fifty percent (50%) of the Net Profit (as defined below)
received by LESSEE from such sublessee; or (b) in the case of a sublease
other than a Major Sublease, in an amount equal to twenty five percent (25%)
of the Net Profit (as defined below) received by LESSEE from such sublessee.
"Net Profit" shall mean the excess in Base Rent or other consideration
received by LESSEE for the portion of the Premises sublet, over the Base Rent
and other Rent payable by LESSEE to LESSOR for such portion of the Premises,
after deducting reasonable brokerage commissions actually paid by LESSEE for
such. Such amounts shall be due and payable within fifteen (15) days from
LESSEE's receipt. In the event of subletting of only a portion of the
Premises, in calculating whether the rent received by LESSEE exceeds the Rent
payable under this Lease, the Rent payable under the Lease shall be prorated
according to the Rentable Square Feet subject to the sublease. In the case of
a permitted assignment LESSOR's only right is to elect to terminate the Lease
in accordance with section 11.2.4 above, and if LESSOR does not elect to
terminate the Lease, no adjustment in Rent shall be made under this section
on account of such assignment. In no event shall the Rent due under the Lease
be reduced as a result of the operation of this section.

<PAGE>

               11.2.6   NONCOMPLIANCE WITH CONSENT REQUIREMENT. In the case
of an assignment or sublease which requires LESSOR's consent but for which
LESSEE  did not obtain LESSOR's consent in addition to all other rights and
remedies, LESSOR may elect, by giving LESSEE written notice, to adjust the
Rental payable under this Lease to an amount equal to the then fair rental
value of the Premises.

               11.2.7   LESSEE'S ACKNOWLEDGEMENTS.  LESSEE acknowledges and
agrees that LESSEE is entering into this Lease to acquire the right to occupy
and possess the Premises for the operation of its business and not for the
purpose of or with a view to realizing a speculative economic return from an
increase in the value of the Premises by subleasing or assignment. LESSEE
agrees that, except as expressly provided, any such increase in value shall
belong to and constitute the property of LESSOR and, thus, the provisions of
section 11.2.4 providing for LESSOR's right to terminate the Lease and the
provisions of section 11.2.5 providing for the adjustment of Rent in certain
circumstances are fair, just and equitable and a part of the negotiated
bargain between LESSOR and LESSEE.

          11.3   NO RELEASE OF LIABILITY. Notwithstanding any subletting or
assignment, LESSEE shall remain fully and primarily liable for the payment of
all Rent and other sums due, or to become due hereunder, and for the full
performance of all other terms, conditions, and covenants to be kept and
performed by LESSEE, except as provided in section 11.2.4 above. The
acceptance of rent or any other sum due hereunder, or the acceptance of
performance of any other term, covenant, or condition hereof, from any other
person or entity shall not be deemed to be a waiver of any of the provisions
of this Lease or a consent to any subletting or assignment of the Premises.
To the extent that LESSEE may contend that it is a surety or guarantor of the
obligations of the assignee or sublessee in contravention of the provisions
of this section, LESSEE freely, voluntarily and unconditionally waivers and
releases any and all defenses of a surety or guarantor, including without
limitation, rights, defenses or benefits which might otherwise be available
to any surety guarantor under California Civil Code Sections 2787 through
2855, inclusive, 2899 and 3433, and California Code of Civil Procedure
Sections 580a, 580b, 580d and 726, and any successor sections to such
sections of the Civil Code and Code of Civil Procedure.

          11.4   SUBLEASE.   In addition to the provisions of Paragraph 12.3
of the Lease, any sublease of the Premises shall be subject and subordinate
to the provisions of this Lease, shall not extend beyond the term of this
Lease. LESSOR's consent to any sublease shall not be deemed a waiver of the
requirement that LESSEE obtain LESSOR's consent for any further subletting by
any sublessee of LESSEE. In addition to any other provisions, LESSOR's
consent under this Lease shall be required with respect to any manner that
LESSEE specifies to a sublease as requiring LESSEE's consent.

     12.  NO RESTRICTION ON LESSOR'S REMEDIES. In the event that LESSEE
commits a Breach of the Lease by failing or refusing to take possession of
the Premises and commencing payment of the Rent, nothing in the Lease is
intended to nor shall it be applied to restrict any rights or remedies that
LESSOR may have on account of such Breach, including, without limitation,
LESSOR's entitlement to recover consequential and incidental damages from
LESSEE on account of such breach. LESSEE acknowledges that it is aware that,
based upon LESSEE's inducement in entering into this Lease, LESSOR is making

<PAGE>

a substantial investment of its own funds and creditworthiness to develop the
Building, and, in the event of such Default by LESSEE, LESSOR will suffer
substantial damages and losses, including lost profits and loss of use of its
invested funds and credits and potential loss of its creditworthiness and
business reputation.

     13.  ADDITIONAL PROVISIONS REGARDING INDUCEMENT RECAPTURE.
Notwithstanding the provisions of Paragraph 13.3 of the Lease, neither the
Tenant Improvement Allowance or the Tenant Improvements provided by LESSOR
shall be deemed a part of the "Inducement Provisions" since the Tenant
Improvement Allowance Amortization Charge separately payable by LESSEE
already includes such amounts.

     14.  ADDITIONAL PROVISIONS REGARDING TENANCY STATEMENT. In addition to
the information required under Paragraph 16 of the Lease, LESSOR may also
require that LESSEE certify to the absence of any violations of any Hazardous
Substance Laws and require that LESSEE provide and certify to an updated
Hazardous Materials Questionnaire. In addition, in lieu of the form of the
Estoppel Certificate described in Paragraph 16 of the Lease, LESSOR shall
have the right, at its election, to require LESSEE to deliver an Estoppel
Certificate in the form of the Estoppel Certificate annexed to this Addendum
as EXHIBIT "7" and LESSEE agrees to execute and deliver to LESSOR from time
to time as requested by LESSOR.

     15.  PROHIBITION AGAINST RECOGNITION. LESSEE shall not record nor accept
to record this Lease or any memorandum referencing its option rights.

     16.  ADDITIONAL PROVISIONS REGARDING SUBORDINATION/NON-DISTURBANCE.
Without limiting the generality of LESSEE's obligations under Paragraph 30 of
the Lease, LESSEE approves the form of the Subordination, Nondisturbance and
Attornment Agreement annexed to the Lease as EXHIBIT "8" for use in
connection with any of LESSOR's financing of the Building which may, if
elected by LESSOR, be used in lieu of the form described in Paragraph 30 of
the Lease. LESSEE agrees to execute, acknowledge and deliver to LESSOR from
time to time as requested by LESSOR, such documents in favor of LESSOR's
lender(s) within ten (10) days of LESSOR's request and the failure to timely
provide such documentation shall constitute a non-curable Default under this
Lease.

     17.  SIGNAGE. LESSEE shall be entitled to one sign displaying its name
on the exterior facade of the building immediately in from of the entrance to
the premises subject to LESSOR's approval of the design, method of
installation and construction. LESSEE shall include such proposed signage
plans as a part of the Tenant Improvement Plans to be submitted for LESSOR's
approval. All installation and maintenance signage costs will be born by the
LESSEE. LESSEE shall be responsible for all its expense, causing all signage
to be permitted by the City of [ineligible] and conform to the Covenants
Conditions and Restrictions for the Pomerade Business Park and any other
Applicable Requirements.

     18.  CORPORATE RESOLUTION. Within ten (10) days of Lease execution,
LESSEE shall provide LESSOR with a certified copy of a Corporate Resolution
authorizing the person(s) designated below to execute this Lease on the
behalf of LESSEE and thereupon become a binding contractual obligation of
LESSEE.

<PAGE>

     19.  RIGHT OF FIRST OFFER. After the expiration of the first Lease Year
and during the remaining Original Term or any Extended Term, LESSEE shall
have a Right of First Offer to lease the remaining space in the building
(Remaining Space) strictly in accordance with the terms and conditions of
subsections 19.1 to 19.6 of this Addendum.

          19.1   OFFER NOTICE. If LESSOR desires to lease the Remaining Space
to a third party ("Third Party Lease"), LESSOR agrees to provide LESSEE with
a written notice ("Offer Notice") of LESSOR's interest to lease the Remaining
Space before entering into any binding agreement to lease the Remaining Space
to a third party. The Offer Notice shall set forth all of the material terms
("Offer Terms") of the proposed lease offering, including the proposed rent
payable by the tenant and commencement date.

          19.2  ACCEPTANCE OF OFFER TERMS. LESSEE shall have five (5) days
after the deliver of the Offer Notice described above to elect to lease the
Remaining Space by (a) giving written notice to LESSOR of such election, and
(b) executing and delivering to LESSOR within such ten (10) day period
written acceptance of the Offer Terms. If LESSEE does not elect to lease the
LESSOR in accordance with the Lease.

         25.      RESTRICTIVE COVENANT.  Subject to the limitations provided
in sections 25.1 to 25.4 below, LESSOR agrees to include in any lease of
other space in the Building of which the Premises are a part, the following
provision restricting the use of such other space:

         "Notwithstanding any other provision of this Lease, LESSEE shall not
         use, nor permit any Sublessee to use, the Premises for the purpose
         of conducting a Primary Business consisting of an electronics
         manufacturing services business specializing in box-build or
         sub-assemblies for original equipment manufacturers primarily using
         or distributing their products in the United States ("EMS"). The
         term "Primary Business" means that during any calendar year more
         than fifty percent (50%) of LESSEE's revenues are derived from
         engaging in the restricted EMS business.

         LESSEE acknowledges and agrees that LESSOR has included this
         provision in this Lease in fulfillment of certain requirements in
         LESSOR's lease with Technetics, Inc., DBA Smtek San Diego ("Smtek")
         and this provision is expressly intended for the benefit of and
         shall be enforceable by Smtek through injunction relief or other
         equitable remedies in the event of LESSEE's violation of these
         provisions."

         25.1     NO LESSOR ENFORCEMENT OBLIGATION.  LESSOR shall not be
responsible for undertaking any legal action to enforce such restrictive
covenant against such other tenant nor shall LESSOR be obligated to terminate
the lease of such other tenant or otherwise declare such lease in default or
breach on account of the failure of such other tenant to abide by such
restrictive covenant. LESSEE shall be solely responsible for the enforcement
of such restrictive covenant and LESSOR is not making any representation,
warranty or other covenant that such restrictive covenant is, or will be,
under any circumstances enforceable by LESSEE.

<PAGE>

         25.2     NO LIABILITY/NO TERMINATION.  Under no circumstances
whatsoever shall LESSOR have any liability to LESSEE as a result of the
breach or default of such other tenant of such restrictive covenant and no
such breach or default shall constitute a basis for LESSEE's termination of
this Lease or any adjustment or other modification of any of the terms or
conditions of this Lease.

         25.3     NON-TRANSFERABLE RIGHT.  LESSEE's rights under this section
and under the restrictive covenants are solely for the benefit of Smtek, the
original LESSEE, and shall not be subject to assignment or sublease or
enforceable by any assignee or sublessee.

         25.4     SUBORDINATE TO LENDER'S INTEREST.  The rights of LESSEE
under this section are subordinate and inferior to any lender holding a
mortgage, deed of trust or other security interest in the Building. In the
event ownership of the Building is acquired by any such lender of LESSOR,
whether by foreclosure, deed-in-lieu of foreclosure or other similar
transactions as a result of LESSOR's default on any of its obligations to
such lender, or LESSOR's ownership is otherwise divested by any action of
such lender, then all of LESSEE's rights under this section 25 shall
immediately terminate without further notice or demand.

         25.5     TERMINATION ON DEFAULT.  The restrictive covenant provided
in this section shall terminate automatically and without notice or demand
from LESSOR in the event LESSEE commits a Default or Breach under this Lease.

         26.      NO BINDING OFFER.  LESSOR'S SUBMISSION OF THIS DOCUMENT FOR
EXAMINATION, NEGOTIATION AND/OR SIGNATURE BY LESSEE DOES NOT CONSTITUTE AN
OFFER TO LEASE, NOR A RESERVATION OF, NOR AN OPTION FOR THE LEASE OF THE
PREMISES. THE DOCUMENT SHALL NOT BE BINDING AND IN EFFECT AGAINST EITHER
PARTY UNTIL AT LEAST ONE COUNTERPART OF THIS LEASE IS FULLY EXECUTED AND
DELIVERED BY LESSOR AND LESSEE.

<PAGE>

                                       "LESSOR"

                                       POMERADO LEASING NO. 8 L.P.,
                                       a California limited partnership

                                       By:      WHITMANN, INC.,
                                                a California corporation,
                                                Its General Partner


                                       By:   /s/ Jeffrey C. Hamann
                                          -----------------------------------
                                             Jeffrey C. Hamann, President

                                       By:   /s/ Daniel M. Whitaker
                                          -----------------------------------
                                             Daniel M. Whitaker, Secretary


                                       "LESSEE"

                                       Technetics, Inc. dba Smtek San Diego,
                                       a California corporation


                                       By:   /s/ Michael E. Perry
                                          -----------------------------------
                                            [Signature]


                                             Michael E. Perry
                                          -----------------------------------
                                            [Print Name], President


                                       By:
                                          -----------------------------------
                                            [Signature]



                                          -----------------------------------
                                            [Print Name], Secretary


<Page>

EXHIBIT 99.4

                               GUARANTY OF LEASE

     THIS GUARANTY OF LEASE ("Guaranty") is dated as of December 20, 2000, by
POMERADO LEASING NO. 8 L.P., a California limited partnership ("LESSOR"), and
SMTEK INTERNATIONAL, INC., a Delaware corporation ("GUARANTOR"), and is made
with reference to the following facts, which are a material part of this
Guaranty:

     A.     LESSOR and Technetics, Inc. DBA Smtek San Diego, a California
corporation, ("TENANT"), are parties to that certain Standard
Industrial/Commercial Multi-Tenant Lease-Net dated December 20, 2000, as
amended ("Lease"), wherein, among other obligations, TENANT is renting and
occupying the Premises described in the Lease. Any words or phrases defined
in the Lease shall have the same meaning when used in this Agreement unless
otherwise expressly provided.

     B.     As a material and essential inducement to LESSOR's consent as
provided in the Assignment Consent and for other sufficient consideration,
GUARANTOR has offered and agreed to guaranty the payment of all obligations
and the performance of all covenants as set forth in the Lease as provided in
this Guaranty.

            IT IS THEREFORE AGREED, in consideration for the representations,
warranties and covenants of the parties and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged,
as follows:

     1.     GUARANTEED OBLIGATIONS. GUARANTOR hereby unconditionally and
irrevocably guarantees to LESSOR the payment of, and promises to pay to
LESSOR, or order, upon demand after any Default or Breach under the Lease,
all indebtedness and obligations, of any nature whatsoever, of TENANT under
the Lease and any and all extensions, renewals, substitutions, replacements
and modifications thereof, and additionally promises to timely perform all
other obligations as set forth in the Lease.  For purposes of reference in
this Guaranty, all of the obligations described in this section being
guaranteed by GUARANTOR are referred to as the "Guaranteed Obligations".

     2.     LIMIT OF GUARANTEED OBLIGATIONS. GUARANTOR's liability for the
Guaranteed Obligations will be limited to the first $969,000 accruing on
account of the Guaranteed Obligations, together with legal interest thereon
and legal expenses (i.e. reasonable attorneys' fees and other legal costs)
incurred by LESSOR in (a) obtaining possession of the Premises from LESSEE in
the event LESSOR becomes entitled to obtain such possession on account of
LESSEE's Breach of the Lease, and (b) in enforcing GUARANTOR's obligations
("Liability Limitation"). Additionally this Liability Limitation will decline
by $100,000 on each anniversary of the Commencement Date of the Lease unless
(i) there has been a Breach of the Lease or (ii) the Tenant is in Default of
the Lease at the time such reduction would otherwise be effective. If the
Tenant at any time has committed a Breach of the Lease, there will be no
further reduction in the Liability Limitation. If the Tenant has committed a
Default under the Lease, the reduction of the Liability Limitation will not
occur until the Default is fully cured and the next reduction will then occur
on the anniversary date such Default was cured. The GUARANTOR will have no

<PAGE>

obligation for any Guaranteed Obligations accruing after the end of the
initial term of the Lease.

     3.     INDEPENDENT OBLIGATIONS. This Guaranty is a guaranty of payment
and not of collection. GUARANTOR's obligations under this Guaranty are
independent of those of TENANT and of the obligations of any other guarantor,
and are not conditioned or contingent upon the validity, regularity, or
enforceability of the Guaranteed Obligations or of the obligations of any
other guarantor. LESSOR may bring a separate action against GUARANTOR without
first proceeding against TENANT, any other guarantor, or any other person or
entity. LESSOR's rights under this Guaranty in respect of the Guaranteed
Obligations shall not be exhausted by any action of LESSOR until all of the
Guaranteed Obligations have been fully and indefeasibly paid.

     4.     WAIVER OF DEFENSES. GUARANTOR hereby waives all other rights and
defenses that are or may become available to GUARANTOR by reason of
California Civil Code Sections 2787 to 2839 inclusive. GUARANTOR waives all
rights under California Civil Code Section 2849 and any other benefit of or
right to participate in any security now or hereafter held by LESSOR. Without
limiting the generality of the preceding provision, GUARANTOR waives and
agrees not to assert or take advantage of:

     (a)    any right to require LESSOR to proceed against TENANT, any other
            guarantor, or any other person or entity, or to pursue any other
            remedy whatsoever, including, without limitation, any such right
            or any other right set forth in or arising out of any of Sections
            2845, 2847, 2848, 2849, and 2855 of the California Civil Code;

     (b)    any defense based upon any legal disability of TENANT or of any
            other guarantor or any discharge or limitation of the liability
            of TENANT or of any other guarantor to LESSOR, or any restraint
            or stay applicable to actions against TENANT or against any other
            guarantor, whether such disability, discharge, limitation,
            restraint, or stay is consensual, arises by order of a court or
            other governmental authority, or arises by operation of law or
            any liquidation, reorganization, receivership, bankruptcy,
            insolvency or debtor-relief proceeding, or from any other cause,
            including, without limitation, any defense to the payment of
            interest, attorneys' fees and costs, and other charges that
            otherwise would accrue or become payable in respect of the
            Guaranteed Obligations after the commencement of any such
            proceeding;

     (c)    setoffs or counterclaims (except as otherwise available to
            TENANT), presentment, demand, protest, notice of protest, notice
            of non-payment, or other notice of any kind;

     (d)    any defense based upon the modification, renewal, extension, or
            other alteration of the Guaranteed Obligations;

     (e)    any defense based upon LESSOR's delay that constitutes laches in
            enforcing this Guaranty; LESSOR agrees that GUARANTOR does not
            waive its right to a defense of the statute of limitations under
            California law for breach of a written contract, said statute of
            limitations being four (4) years after GUARANTOR's default under

<PAGE>

            this Guaranty;

     (f)    any defense based upon the death, incapacity, lack of authority,
            or termination of existence of, or revocation of this Guaranty
            by, any person or entity or persons or entities, or the
            substitution of any party to this Guaranty;

     (g)    any defense based upon or related to GUARANTOR'S lack of
            knowledge as to TENANT's financial condition; and

     (h)    any defense based upon the impairment of any subrogation or
            reimbursement rights that GUARANTOR might have.

     5.     TENANT'S FINANCIAL CONDITION. GUARANTOR acknowledges that
GUARANTOR is relying upon GUARANTOR's own knowledge and is fully informed
with respect to TENANT's financial condition. GUARANTOR assumes full
responsibility for keeping fully informed of the financial condition of
TENANT and all other circumstances affecting TENANT's ability to perform its
obligations to LESSOR, and agrees that LESSOR will have no duty to report to
GUARANTOR any information that LESSOR receives about TENANT's financial
condition or any circumstances bearing on TENANT's ability to perform all or
any portion of the Guaranteed Obligations, regardless of whether LESSOR has
reason to believe that any such facts materially increase the risk beyond
that which GUARANTOR intends to assume or has reason to believe that such
facts are unknown to GUARANTOR or has a reasonable opportunity to communicate
such facts to GUARANTOR.

     6.     SUBROGATION AND ADDITIONAL WAIVER. Until all the covenants and
conditions in the Lease on TENANT's part to be performed and observed, are
fully performed and observed, GUARANTOR (a) shall have no right of
subrogation against TENANT by reason of any payments or acts of performance
by GUARANTOR hereunder; and (b) subordinates any liability or indebtedness of
TENANT now or hereafter held by GUARANTOR to the obligations of TENANT to
LESSOR under the Lease. GUARANTOR waives all rights and defenses arising out
of an election of remedies by LESSOR, even though that election of remedies
has destroyed or diminished GUARANTOR's rights of subrogation and
reimbursement against TENANT.

     7.     LIABILITY OF GUARANTOR. The liability of GUARANTOR under this
Guaranty shall in no way be affected by (a) the release or discharge of
TENANT in any creditor's receivership, bankruptcy or similar proceeding; (b)
the impairment, limitation or bankruptcy, or of any remedy for the
enforcement of TENANT's liability under the Lease resulting from the
operation of any present or future provision of the bankruptcy code or
similar statute or similar decision in any court; (c) the rejection or
disaffirmance of the Lease in any such proceedings; (d) the assignment or
transfer of the Lease by TENANT; (e) any disability of TENANT; (f) the
exercise by LESSOR of any of its rights or remedies reserved under the Lease
or by law; or (g) any termination of the Lease (except to the extent that
LESSOR otherwise specifically agrees in writing).

     8.     FINANCIAL STATEMENTS. If LESSOR desires to sell, finance or
refinance the property which compromises in whole or in part the Premises
which are the subject of the Lease, GUARANTOR agrees to deliver to any LESSOR
or buyer designated by LESSOR financial statements of GUARANTOR (in such form

<PAGE>

as customarily prepared by or for GUARANTOR, including all audited statements
prepared, if any) as may be reasonably required by such LESSOR or buyer. Such
statements shall include the past three (3) years' financial statements of
GUARANTOR. And such financial statements shall be received by LESSOR in
confidence and shall be used only for the foregoing purposes.

     9.     ATTORNEYS FEES. In the event of any litigation between GUARANTOR
and LESSOR to enforce or interpret this Guaranty or in connection with the
Lease, the unsuccessful party to such litigation agrees to pay to the
successful party all fees, costs and expenses, including reasonable
attorneys' fees, expert witness fees and expenses.

    10.     BINDING EFFECT/ASSIGNMENT. This Guaranty shall be binding upon
GUARANTOR and GUARANTOR's heirs, executors, personal representatives,
successors, and assigns, and shall inure to the benefit of, and be
enforceable by, LESSOR and LESSOR's successors and assigns, including any
lender of LESSOR receiving such assignment as security. The benefit of this
Guaranty shall be assignable by LESSOR to successors and assigns and
enforceable by them, and the term "LESSOR" as used in this Guaranty includes
such successors and assigns. Any assignment of the Lease shall be deemed to
include the assignment of this Guaranty notwithstanding that this Guaranty is
not separate described in the instrument of assignment.

    11.     NOTICES. All notices and other communications shall be in writing
and provided to LESSOR at the address set forth in the Lease and to GUARANTOR
at the address set forth under GUARANTOR's signature, unless either party
gives the other written notice of a different address for notices and
communications.

    12.     SEVERABILITY. If any provision of this Guaranty shall be deemed
or held to be invalid or unenforceable for any reason, such provision shall
be adjusted, if possible, rather than voided, so as to achieve the intent of
the parties to the fullest extent possible. In any event such provision shall
be severable from, and shall not be construed to have any effect on, the
remaining provisions of this Guaranty, which shall continue in full force and
effect.

    13.     MULTIPLE OBLIGORS. If "GUARANTOR" refers to more than one person
or entity, then (i) the obligations of each such person or entity shall be
joint and several; (ii) all references to the "GUARANTOR" shall, unless the
context otherwise requires, refer to all such parties jointly and severally;
and (iii) each such person or entity named as GUARANTOR waives any and all
defenses based upon suretyship or guaranty or impairment of collateral. If
GUARANTOR is a partnership, the partnership and all general partners therein
shall be jointly and severally liable under this Guaranty. Where "TENANT" is
more than one person or entity, the word "TENANT" shall mean all and any one
or more of them.

    14.     GOVERNING LAW; JURISDICTION. This Guaranty shall be governed by
and construed in accordance with the laws of the State of California
applicable to contracts to be wholly performed within the State of
California. GUARANTOR, by execution of this Guaranty, irrevocably consents to
the jurisdiction of the Courts of the State of California and of any Federal
Court located in such State in connection with any action or proceeding
arising out of or relating to this Guaranty.

<PAGE>

    15.     RIGHTS CUMULATIVE; NO WAIVER. LESSOR's options, powers, rights,
privileges, and immunities specified herein or arising hereunder are in
addition to, and not exclusive of, those otherwise created or existing now or
at any time, whether by contract, by statute, or by rule of law. LESSOR shall
not, by any act, delay, omission or otherwise, be deemed to have modified,
discharged, or waived any of the LESSOR's options, powers, or rights in
respect of this Guaranty, and no modification, discharge, or waiver of any
such option, power, or right shall be valid unless set forth in writing
signed by LESSOR or LESSOR's authorized agent, and then only to the extent
therein set forth. A waiver by LESSOR of any right or remedy hereunder on any
one occassion shall be effective only in the specific instance and for the
specific purpose for which given, and shall not be construed as a bar to any
right or remedy that LESSOR would otherwise have on any other occasion.

    16.     ENTIRE AGREEMENT. This Guaranty contains the entire agreement
between GUARANTOR and LESSOR with respect to its subject matter, and
supersedes all prior communications relating thereto, including, without
limitation, all oral statements or representations. No supplement to or
modification of this Guaranty shall be binding unless executed in writing by
GUARANTOR and LESSOR.

    17.     NO EXECUTION BY LESSOR. LESSOR, by acceptance of the delivery of
this Guaranty from GUARANTOR shall be deemed to have accepted the terms and
conditions of this Guaranty. This Guaranty does not require LESSOR to execute
this GUARANTY as a condition to its effectiveness.

    18.     EFFECTIVENESS. Notwithstanding any other provision hereof: (i)
this Guaranty shall not be or become effective unless and until the
Assignment shall become effective; (ii) this Guaranty shall become effective
automatically and immediately upon the effectiveness of the Assignment
without further notice; and (iii) if the Assignment does not become effective
within ninety (90) days of the date hereof this Guaranty shall automatically
be cancelled as provided in the Assignment Consent.

    19.     RELEASE OF GUARANTY. This Guaranty shall be subject to
termination or, if applicable, partial termination, as provided in this
section in the event that LESSOR exercises its right to terminate the Lease
pursuant to section 11.2.4 of the Addendum to the Lease in the event of a
proposed assignment or Major Sublease. In such event, GUARANTOR will be
released from any further liabilities under this Guaranty accuring from and
after the date of the Lease termination. In the case of a Major Sublease,
this Guaranty will only terminate with respect to the portion of the space
subject to the Major Sublease for which TENANT is released from liability
pursuant to the operation of section 11.2.4 of the Addendum to Lease and
shall continue in full force and effect with respect to the Lease for the
remaining portion of the Premises.

     IN WITNESS WHEREOF, GUARANTOR has executed this Guaranty to be effective
as of the date first set forth above.


<PAGE>

                                       "GUARANTOR"

                                       SMTEK INTERNATIONAL, INC.,
                                       a Delaware corporation


                                       By:  /s/ GREGORY L. HORTON
                                          --------------------------------
                                          [Signature]


                                          Gregory L. Horton
                                          --------------------------------
                                          [Print Name], President


                                       By:  /s/ MITCHELL J. FREEDMAN
                                          --------------------------------
                                          [Signature]


                                          Mitchell J. Freedman
                                          --------------------------------
                                          [Print Name], Secretary



<PAGE>

                                   EXHIBITS


Exhibit "1"        Legal Description
Exhibit "2"        Building Shell Drawings
Exhibit "3"        Specifications
Exhibit "4"        Triple Net Calculations
Exhibit "5"        Cost Breakdown--Tenant Improvement
Exhibit "6"        Hazardous Materials Questionnaire
Exhibit "7"        Estoppel Certificates
Exhibit "8"        Subordination, Non-Disturbance, and Attornment Agreement
Exhibit "9"        Rules and Regulations




<PAGE>

                                 EXHIBIT "1"

                             LEGAL DESCRIPTION


Losts 96/97 of City of Poway Tract No. 85-04, Unit II, in the City of Poway,
State of California, according to map thereof no. 12572, filed in the office
of the County Recorder of San Diego County, February 28, 1990, as Instrument
No. 90-107515.




<PAGE>

                                  EXHIBIT "3"
                                 SPECIFICATIONS
                    Concrete Tilt-Up Building for Smtek
                                 July 20, 2000

1.  DESIGN, ENGINEERING, AND PERMITS:

     1.1. Building has be drawn, engineered and permitted by Kenneth D. Smith
          Architect & Associates, Inc.

     1.2. Landscaping drawings and civil engineering are included. Title 24
          calculations will be a part of the Tenant Improvement Allowance.

     1.3. Building to be built in accordance with all existing city, state
          and federal codes.

     1.4. All Permits and Utility fees are included.

2.  SITE WORK:

     2.1. We include staking as required by the city of Poway.

     2.2. We include grading of the building pad (to balance) and soils
          testing.

     2.3. We include the installation of two 30' wide standard City of Poway
          drive aprons.

     2.4. We include on site fire hydrants.

     2.5. We include on site storm drains.

     2.6. We exclude the fencing of the site either temporary or permanent.

     2.7. We include landscaping to City standards with adequate soil
          amendments, automatic sprinkler systems and plantings as required.

     2.8. We include building numbers and handicap signs but exclude other
          signage and lettering such as tenant identification signage.

     2.9. We exclude streetlights, street improvements and offsite curbs and
          sidewalks.

3.  CONCRETE WORK:

     3.1. Footings will be approximately 12'x18'. The concrete slab will
          be 3 1/2 thick, 4,000 psi concrete, reinforced with [ILLEGIBLE] at
          18' on center. We exclude the sealing of slab joints and smooth
          dowels at control joints.

     3.2. We exclude Visqueen or other waterproofing in the slab areas. With
          or without Visqueen, we do not recommend storing boxes or filing
          cabinets directly on the floor or the use of plastic chair mats in
          offices. If LESSEE desires to install vapor sensitive floorings
          such as vinyl-reinforced tiles, sheet vinyl or epoxy coatings, then

<PAGE>

          waterproofing alternative concrete mixes, and/or vapor testing must
          be considered.

     3.3. We exclude piles or cassions, grade beams and structural
          slabs if required.

     3.4. The walls will be 6 1/2' to 7 1/2' thick concrete panels 30"0'
          high, formed on the ground, poured with 3,000 psi concrete and
          lifted into a vertical position using a crane. There will be a
          minimal amount of medium sandblast at the concrete panels to match
          Kellogg.

     3.5. All parking and drive areas to be non-reinforced, 2,500 psi,
          broom-finished concrete on native, 5 1/2' thick in car parking
          areas and 7' thick in truck traffic areas.

     3.6. Sidewalks will be 3 1/2" thick.


<PAGE>

                              EXHIBIT "3", PAGE 1
                                 SPECIFICATIONS


                                                             [STAMP]

     3.7. Dock area to be paved with 7" of concrete. Dock walls will be
          concrete tilt-up to 36" above grade where railing would be
          required. We exclude trench drains and waterproofing at dock.

     3.8. Onsite curbs will be 6"x6", extruded and cemented to the top of the
          concrete paving.

4.  ROOF:

     4.1. Roof to be panelized roof structure 27' clear, with 8" round metal
          interior posts to the roof structure per plan. Minimum roof slope
          will be 1/4" per foot.

     4.2. Roofing to be a four-ply built-up roofing system with a two-year
          guarantee.

     4.3. Roof to include 92 curb mounted, 4'x8', non-ventilated Tri-Star,
          acrylic skylights, 47 curb mounted 4'x 8' Tri-Star smoke hatches
          and 139 14" rotary vents.

     4.4. Roof to be surrounded by parapet on all sides and drain to 6"
          A85 plastic roof drains.

     4.5. It has been our intention to provide parapet on all sides high
          enough to hide standard air conditioning equipment; however, we
          exclude additional roof screening if required by the City for other
          LESSEE's roof-top equipment or for the screening of any equipment
          required by the City because it is visible from above.

5.  MECHANICAL:

     5.1. Our shell-building price includes one 4" plastic sewer line, one 1'
          copper waterline in the ceiling and one backflow prevention device.
          All rough and finish plumbing will be a part of the tenant
          Improvement allowance.

     5.2. All HVAC will be a part of the tenant improvement allowance. We
          exclude natural gas.

     5.3. Shell Building Fire Sprinklers are included to a density of
         .45/3000.  We include the fire service and fire service (but exclude
          Knox boxes or other special locking mechanisms, fire extinguishers
          and supervisory alarm service.

6.  ELECTRICAL:

     6.1. Building to be served with 4000 amps of 460/277 three-phase power
          with four tenant meters and one house meter. Please be aware that
          San Diego Gas and Electric Company does not always install

<PAGE>

          transformers of sufficient size to power the electrical panels
          provided by the Contractor. Before installing machinery upon move-
          in or making any significant increase in your power consumption in
          the future, you must notify SDG&E of your usage so that they can
          make any necessary equipment changes.

     6.2. All subfeed conductors and branch wiring to be copper, t.h.h.n.,
          600 volt.

     6.3. Panel Boards to be Challenger or ITE with bolt-on switches or
          circuit breakers depending upon usage.

     6.4. All interior wiring and lighting will be a part of the Tenant
          Improvement Allowance.

     6.5. The exterior of the building will be lit with 160 volt low pressure
          sodium wall packs mounted on the building. We exclude parking lot
          light standards.

     6.6. Power distribution and hook-up for machinery is excluded.

7.  EXTERIOR FINISH:

    7.1.  Exterior of building will be painted with two coats of Frazee
          paint. We exclude waterproofing of sandblast areas.

    7.2.  Soffit areas will be finished with exterior gypsum ceiling board
          and skim coat. We exclude fire molding.


<PAGE>

                              EXHIBIT "3", PAGE 2
                                 SPECIFICATIONS


                                                             [STAMP]

    7.3.  Exterior personnel doors will be 3'x7" 1 3/4", 18 gauge, metal
          doors with Schlage "L" series, lever-handled, mortise locks.

    7.4.  Overhead doors to be 26 gauge Porveno Roll-ups or equal.

    7.5.  We include 7,500 square feet of medium-performance, LOF glass
          (including filling in all unused dock doors with glass). We exclude
          openable windows.

8.  INTERIOR FINISH

    8.1.  The Interior Improvements will be accomplished under the Tenant
          improvement and Warehouse Improvement allowances.

    8.2.  Warehouse ceiling insulation is excluded and not recommended.

    8.3.  Our price includes no mezzanine.

9.  GENERAL INFORMATION

    9.1.  Lessor will supply all necessary Course of Construction,
          Contractor's Liability and Worker's Compensation insurance.

    9.2.  Security fencing and security guards are excluded.



<PAGE>

                              EXHIBIT "3", PAGE 3
                                 SPECIFICATIONS


                                                             [STAMP]

HAMANN CONSTRUCTION
EXHIBIT 5
475 W. BRADLEY AVE.
EL CAJON, CA 92020                              353,700 SQ. FT. OF LAND
                                                 44,214 SQ. FT. OF SLAB
COST BREAKDOWN                                    1,144 SQ. FT. OF MEZZ
CONCRETE TILT-UP BUILDING                        11,397 SQ. FT. OF OFFICE
DATED: NOVEMBER 7, 2000                          34,500 SQ. FT. OF PRODUCTION
                                                 45,358 TOTAL SQ. / AMOUNT
JOB: Smtek International                         25.13% IMPROVED
                                                 12.82% COVERAGE 11/08/00
FILE: SMTEK8D5                                                    T.I.


<PAGE>
<Table>
<Caption>

ITEM #                                                      UNIT     PRICE    AMOUNT
------------------------------------------------------------------------------------
<C>     <S>                                                <C>     <C>      <C>
   110  DRAWINGS FOR FIELD USE                             45,358      0.03   1,361
   110  LANDSCAPING DRAWINGS                               44,214      0.04       0
   114  ENERGY CALCULATIONS                                     1   1500.00       0
   120  CIVIL ENGINEERING/STAKING                               1   9500.00       0
   130  BUILDING LAYOUT                                    44,214      0.02       0
   200  PERMITS (ALLOWANCE)                                45,358      2.00       0
   310  GRADING                                            44,214      0.50       0
   312  EROSION CONTROL                                         0      0.00       0
   320  SOILS TESTING                                           1   9000.00       0
   410  WATER & SEWER FEES                                      0      0.00       0
   420  G & E HOOK-UP FEES                                      1   4000.00       0
   430  TEMPORARY UTILITIES                                44,214      0.05   2,211
   510  FOOTINGS AND FOUNDATIONS                           44,214      3.00       0
   510  CONCRETE CURBS UNDER WALL                              72     12.50     900
   510  LOCKER BASES                                            0      0.00     Nlc
   510  SHEAR WALL GRADE BEAM                                  24    102.50       0
   511  EARTH SHIELD                                       44,214      0.55  24,318
   512  4000 LB. CONCRETE                                  44,214      0.14       0
   517  LIGHTWEIGHT CONCRETE                                1,144      1.05       0
   519  EPOXY PAINT FLR. FIN @ COATING                        366      2.50     915
   510  SEAL CONCRETE FLOOR @ SHOP                            615      0.50     408
   520  CONCRETE PANELS                                    26,699      5.75       0
   520  CONC. COL. BOX PANELS                               2,304      6.50       0
   520  CONCRETE LINTEL PANELS                              1,888      6.50       0
   520  CONCRETE SHEAR PANELS                               1,204      6.75       0
   521  CONCRETE TEXTURE                                        0      0.00       0
   522  CONCRETE COLUMNS                                        0      0.00       0
   530  ONSITE SIDEWALKS                                    2,054      4.35       0
   530  COMPRESSOR & HAZ. MAT SLAB                            329      4.00   1,316
   530  RAMP & TRASH SLABS                                  1,466      2.96       0
   540  CONTAINMENT CURB @ HAZ. MAT.                            6     12.60      76
   540  ONSITE CURBS                                        2,480      5.94       0
   550  ONSITE CONC. PAVING 5 1/2"                         66,931      1.82       0
   550  ONSITE CONC. PAVING 7" (premium)                   49,655      0.45       0
   580  SWALES                                                  0      0.00       0
   570  COMPRESSOR / HAZ. MAT PANELS                          670      7.00   4,690
   570  DOCK/RAMP/TRASH PANELS                                708      7.00       0
   570  PATIO SCREEN PANELS                                   152      7.00       0
   570  RAMP & HANDICAP RAMP PANELS                         1,403      7.00       0
   580  POURED IN PLACE STAIRS                                  0     85.00       0
   610  ON-SITE FOOTINGS                                      142     17.00       0
   610  RETAINING WALL FOOTINGS                                 0     20.00       0
   612  MASONRY BLOCK                                           0      8.75       0
   614  BACKFILL RETAINING WALLS                              222     12.00       0
   700  FORM LUMBER                                        45,358      0.07       0
   610  SOFFITS & OVERHANGS (HIGH)                            353      8.50       0
   610  SOFFITS & OVERHANGS (LOW)                             486      7.50       0
   612  SIDING                                                  0      0.00       0
   614  EQUIPMENT SCREENS                                       0      0.00       0
   820  ELECTRICAL ROOM FRAMING TO 12'                         31     12.50       0
   820  LOW WALLS @ STAIRS                                     66     11.60     759
   820  FURRED WALLS @ CONCRETE                               226      9.50   2,147
   820  CLOSURE @ OPEN STAIRWELL                               37     11.50     426
   820  SKYLIGHT FRAMING TO 6'                                 33     11.50     380
   820  OFFICE FRAMING TO 9'                                    0     11.50       0
   820  OFFICE FRAMING TO 10'                                 716     11.50   8,234
   820  OFFICE FRAMING TO 12'                                  68     12.50     850
   820  OFFICE FRAMING TO 14'                                   0     13.60       0
   830  OFFICE FRAMING TO 16'                                   0     15.50       0
   820  OFF. FRAMING TO ROOF STRUCTURE                         45     17.00     765
   822  MEZZANINE                                           1,144      6.50       0
   824  STAIRWAYS                                               1   2800.00       0
   820  DEMISING WALLS @ OFF./PROD.                           590     27.00  16,930
   830  DEMISING WALLS @ LEASE AREA                           138     27.00       0
   843  MECHANICAL PLATFORMS                                   28    200.00   5,800
   850  CARPENTRY HARDWARE                                 45,358      0.04   1,814
   860  DRAFT STOPS LOW                                         0      6.00       0
   860  DRAFT STOPS HIGH                                        0     36.00       0
   899  BOTTOM NAILERS @ TRUSSES                              835      5.25   3,334
   899  CRICKETS @ SKYLIGHTS                                    0     13.50       0
   910  PANELIZED ROOF                                          0      3.35       0
   910  2X6 SUB PURLINS                                    45,897      0.12       0
   910  LOW ROOFS                                             329      4.75   1,563
   910  ROOF WELDING INSPECTION                                 0      0.12       0
   920  BUILT-UP ROOFING                                      329      0.85     280
   922  WATERPROOFING                                           0      2.50       0
   930  SKYLITES @ (dual glzed premium only)                   54    100.00   5,400
   930  SMOKE HATCHES                                           0    295.00       0
   930  4' X 4' SKYLIGHT AT STAIRWELL                           1    350.00       0
   920  6' X 6' SKYLIGHT AT STAIRWELL                           1  1,250.00   1,250
   932  ROTARY VENTS                                           69     45.00       0
   934  ROOF LADDERS                                            1    450.00       0
  1010  PLUMBING                                               34    725.00  24,650
  1330  LATH & PLASTER                                          0      0.00       0
  1410  RUBBER TREADS @ STAIRS                                  0     85.00       0
  1410  VINYL COMPOSITION TILE                              3,920      1.10   4,312
  1410  CONDUCTIVE TILE FLOOR (ALLOW)                      31,148      1.10  34,263
  1415  TOP-SET BASE                                        4,150      1.10   4,565
  1420  SHEET VINYL                                           887      2.45   1,683
  1420  COVE BASE @ PROD. RESTROOMS                           186      5.25     977
  1430  FRP BOARD @ PROD. RESTROOMS                           744      2.40   1,786
  1440  TILE @ RECEPTION AREA (ALLOW)                         159      7.50   1,193
  1440  CERAMIC TILE @ OFFICE R.R. (ALLOW)                  1,782      7.50  13,364
  1450  CARPET (ALLOWANCE)                                  8,363      1.95  16,308
  1460  WALLPAPER (ALLOWANCE)                                   0      0.00       0
  1470  ACOUSTIC CEILING                                   10,145      1.20  12,174
  1510  GLASS & GLAZING (6' UPPER)                          1,548     17.00       0
  1510  GLASS & GLAZING (9' LOWER)                          2,664     17.00       0
  1510  GLASS & GLAZING (17' CURTAIN)                         867     17.00       0
  1530  GLASS @ OVERHEAD DOORS                                900     15.00  13,500
  1530  INTERIOR GLASS AND GLAZING                            670     13.00   8,710
  1610  MTL DRS, FRMS & HW (SHELL)                              9    650.00       0
  1610  MTL DRS, FRMS & HW (3' X 8' INT)                        1    625.00     625
  1610  ADD FOR CARD READER @ VAULT                             1    350.00     350
  1610  DRS, FRMS, HW 3' X 8' PRE-FINISHED                      9    700.00   6,300
  1610  DRS, FRMS, HW 3' X 8' W / VISION LITE                   7    775.00   5,425
  1610  DRS, FRMS, HW 3' X 8' W / SIDE LITE                     9    992.00   8,928
  1610  DRS, FRMS, HW 3' X 8' (PAINT GRD.)                      0    527.00       0
  1610  DRS, FRMS, HW 4' X 8' (PAINT GRD.)                      2    627.00   1,254
  1610  DRS, FRMS, HW 4' X 8' (PT GRD. PR.)                     2   1254.00   2,808
  1610  DRS, FRMS, HW 4' X 8' (PT GRD. OUT.)                    2    865.00   1,730
  1610  IMPACT DOORS, FRAMES                                    2   1900.00   3,800
  1610  STRIP CURTAINS @ ESS 16' X 10'                          1   1506.00   1,506
  1630  INSULATED O/H DOOR                                      2   3000.00   6,000
  1630  ADD ELEC. OPER. / SAFETY EDGE                           2   1200.00   2,400
  1630  OVERHEAD DOOR 12' X 14'                                 5   1050.00       0
  1630  OVERHEAD DOOR 16' X 10'                                 1   1350.00       0
  1710  TOILET ACCESSORIES                                     17    325.00   5,525
  1720  TOILET PARTITIONS                                      15    425.00   6,375
  1720  URINAL SCREENS                                          3    176.00     525
  1730  RECEPTION CABINETS & COUNTERS                          30    300.00   9,000
  1730  CONFER, CABINETS & COUNTERS                             0    200.00       0
  1730  COPY RM. CABINETS & COUNTERS                           22    200.00   4,400
  1730  COFFEE RM. CABINETS & COUNTERS                          8    200.00   1,600
  1730  LUNCH RM. CABINETS & COUNTERS                          30    200.00   6,000
  1730  RESTROOM COUNTERS                                      31     75.00   2,325
  1730  SHELVING @ STORAGE                                     14    150.00   2,100
  1730  CAP @ STAIRS & LOW WALLS                               78     30.00   2,340
  1740  INSULATION                                         45,897      0.45  20,654
  1742  PREMIUM FOR WHITE FOIL                             34,116      0.15   5,117
  1750  PROJECTION SCREEN (ALLOWANCE)                           1   2800.00   2,800
  1730  PATIO TABLES                                            3   1500.00       0
  1750  LOCKERS                                                 0   2500.00     Nlc
  1750  FLAGPOLE                                                0   2500.00     Nlc
  1810  CURB CUTS & DRIVE APRONS                                1   3250.00       0
  1816  OFFSITE CURBS & SIDEWALK                                0     27.00       0
  1824  OFFSITE PAVING PATCH                                    1   4500.00       0
  1830  STORM DRAINS                                          500     54.50       0
  1832  FRENCH DRAINS                                           0      7.00       0
  1834  CHANNEL TO ST. W/UNDER WALK                            50     32.50       0
  1840  FIRE HYDRANTS & WATER                               1,111     57.50       0
  1850  OFFSITE ELECTRICAL                                      0  25000.00       0
  1852  STREETLIGHTS                                            0   2000.00       0
  1910  CITY RIGHT OF WAY                                   3,531      0.00       0
  1914  STRIPING & BUMPERS                                 66,931      0.02       0
  1920  LANDSCAPING GRADING                                19,996      0.10       0
  1930  LANDSCAPING                                        19,985      2.50       0
  1930  LANDSCAPING SLOPE                                  15,864      0.50       0
  1930  LANDSCAPING FUTURE EXPANSION                            0      0.12       0
  1950  FENCING                                                 0     27.00       0
  1952  TRASH ENCLOSURE GATES                                   4    400.00       0
  1960  MONUMENT SIGN (ALLOWANCE)                               0   2500.00     Nlc
  2000  CLEAN-UP                                           44,214      0.10   4,421
  2100  TEMPORARY EXPENSE                                  44,214      0.10   4,421
  2200  SUPERVISION                                        44,214      0.40  17,686
  2500  SUBLET TENANT IMPROVEMENT                               0      0.00
------  ------------------------------------------------   ------  -------- -------
        SUBTOTAL                                                            865,249
  5075  PROFIT & OVERHEAD                                      12           103,830
------  ------------------------------------------------   ------  -------- -------
        TOTAL                                                               969,079
        GRAND TOTAL                                                         969,079

        PER SQUARE FOOT OF SLAB                                             $ 21.92
        PER SQUARE FOOT OF BLDG INC. MEZZANINE                              $ 21.37

</Table>


<Page>

Triple Net Calculations for Pomerado Business Park, Lots 96/97    12/06/2000
SMTEK

<Table>
<Caption>

<S>                                                           <C>
Leased SF                                                     45,818
Total Bldg. SF -                                              99,471
Percentage of Project                                         45.86%

</Table>

<Table>
<Caption>

                                               ANNUALLY     MONTHLY       MONTHLY
DESCRIPTION                      ANNUAL       /SF OF BLDG   /SF OF BLDG     NNN
-----------                   -------------   -----------   -----------  ---------
<S>                           <C>             <C>           <C>          <C>
Bonds                         $ 87,239.06      $0.6700      $0.0583     $2,569.74
LMD                           $  5,692.10      $0.0062      $0.0047     $  213.72
Property Taxes                $ 54,710.49      $0.5500      $0.0458     $2,090.83
Owners Association            $  1,391.00      $0.0140      $0.0812     $   53.16
Administrative Fee            $ 18,815.89      $0.1590      $0.0133     $  604.45
Insurance                     $  4,774.51      $0.0480      $0.0040     $  182.48
Utilities:
  Electricity                   BY TENANT      $0.0000      $0.0000     $    0.00
  Telephone                   $    358.10      $0.0038      $0.0003     $   13.69
  Alarm                       $    904.71      $0.0100      $0.0008     $   38.02
  Landscape Water             $  7,161.91      $0.0720      $0.0080     $  273.71
Security                        BY TENANT      $0.0000      $0.0000     $    0.00
HVAC Maint.                   $  1,492.07      $0.0150      $0.0013     $   57.02
Elevator Maint. & Reserve             N/A      $0.0000      $0.0000     $    0.00
Landscape                     $  7,460.33      $0.0750      $0.0063     $  205.12
Roof Maint. & Reserve         $  7,460.33      $0.0750      $0.0083     $  285.12
Painting Reserve              $  2,257.99      $0.0227      $0.0019     $   88.30
Paving Maint. & Reserve       $  4,973.55      $0.0500      $0.0042     $  180.06
                              -----------      -------      -------     ---------
TOTAL                         $181,662.12      $1.6285      $0.1522     $6,943.53
                              ===========      =======      =======     =========
    Per month for SMTEK       $ 15,140.18      $0.1523

</Table>

<PAGE>
<Table>
<Caption>

ASSUMPTIONS
-----------
<S>                                   <C>             <C>                  <C>
Saleable Acreage                            7,105
Net Acreage                                 6.639
Bonds                                  $10,127.09     Annually
Landscape Maint. District              $   842.31     Annually
Prop Taxes                                  1.12%     of Appraised Value   $1,864,685
Owners Association                     $   209.52     Annually
Monthly Rental rate                    $     0.83
Monthly NNN Rent                       $24,178.00
Management Fee Percentage                   2.50%
Management Fee                         $   0.1590     Annually/sf
Insurance                              $   0.0480     Annually/sf
Utilities:
  Electricity                           BY TENANT     Annually/sf
  Telephone                            $   0.0038     Annually/sf
  Alarm                                $   0.0160     Annually/sf
  Landscape Water                      $   0.0720     Annually/sf
Security                                BY TENANT     Annually/sf
HVAC Maint.                            $   0.0100     Annually/sf
Elevator Maint. & Reserve              $   0.0234     Annually/sf
Landscape                              $   0.0750     Annually/sf
Roof Maint. & Reserve                  $   0.0750     Annually/sf
Painting Reserve                       $   0.0227     Annually/sf
Paving Maint. & Reserve                $   0.0500     Annually/sf

</Table>

<PAGE>

                                  EXHIBIT "4"

<Table>

<C>     <S>                                          <C>      <C>       <C>
  1010  FLOOR SINKS                                       5     300.00     1,600
  1010  HANDICAP SHOWER                                   0    2150.00         0
  1010  ADD ROUGH PLUMBING                                1   13310.00    13,310
  1010  ADD TRENCH DRAIN @ FILTER ROOM                    6      85.00       680
  1011  PLUMBING TRENCHING                                0       7.50  See 1010
  1012  ROOF DRAINS                                       0     450.00         0
  1020  AIR CONDITIONING                                146    1250.00   182,500
  1022  AIR VENTS                                         5     200.00     1,000
  1022  MAKE-UP AIR UNITS (ALLOW)                         4     950.00     3,800
  1022  EXHAUST FAN @ PROD. (ALLOW)                       1    1500.00     1,500
  1030  FIRE SPRINKLERS                              45,687       0.80         0
  1030  FIRE SPRINKLERS @ OFFICE                     11,781       0.70     8,247
  1030  ADD FOR ESFR                                      0       0.35         0
  1032  FIRE SERVICE (ALLOWANCE)                          1   12000.00         0
  1034  FIRE EXTINGUISHER CABINETS                       10     105.00     1,050
  1040  DOCK LEVELERS (ALLOWANCE)                         0    4000.00         0
  1040  EDGE OF DOCK LEVELERS (ALLOW)                     0     950.00         0
  1110  ELECTRICAL & PHONE SHELL                     45,358       0.86         0
  1110  UNDERGROUND CONDUITS                              1   23481.00    23,481
  1110  SUB FEED CONDUCTORS                               1   37500.00    37,500
  1110  SWITCHGEAR                                        1   37000.00    37,000
  1110  ELECTRICAL & PHONE OFFICE                    11,397       6.00    68,382
  1110  PRODUCTION LTG/ELECTRICAL                    34,500       2.00    69,000
  1110  EQUIPMENT HOOK-UP                                 0       0.00       N/c
  1110  PARKING LOT STANDARDS                             0    2200.00         0
  1210  STRUCTURAL STEEL LONG                            15     750.00         0
  1210  STRUCTURAL STEEL SHORT                           13     375.00         0
  1210  STRUC. STL. BEAMS @ MEZZANINE                23,540       1.05         0
  1220  MISC. IRON                                   34,954       0.55         0
  1222  BARRICADES                                        4     150.00         0
  1224  DOCK BUMPERS                                      4     105.00         0
  1225  LINTEL BRACES (10' O.C.)                          0     100.00         0
  1226  STEEL COL. PREP/INSTALL                          28      80.00         0
  1230  REBAR & MESH                                 34,954       2.10         0
  1232  PICK-UP STEEL                                34,954       0.10         0
  1240  SHT MTL FLASHING @ LOW ROOFS                     73       4.25       309
  1240  SHEET METAL ROOF SCUPPERS                         0      55.00         0
  1250  DOCK AREA STAIRWAYS                               0    1050.00         0
  1250  SINGLE-RAIL HANDRAILING                          80      29.00         0
  1310  PAINT SHELL                                  35,814       0.28         0
  1310  PAINT OUTDOOR MECH. ENCL.RES                  5,185       0.28     1,462
  1310  PAINT T.I.                                   80,282       0.28    16,878
  1320  DRYWALL                                      52,042       0.65    35,389
  1320  HARD LID @ ELECTRICAL ROOM                      226       2.50         0
  1320  HARD LIDS @ EXIT CORR. (ASSUMED)                590       1.35         0
  1320  HARD LIDS @ R.R./JANITOR/STAIRS               1,244       2.50     3,110
  1320  EXPANDED MESH @ VAULT                           270       2.35       634
  1320  COFFERED CEILING                                  0       4.50         0

</Table>