<PAGE>   1
                                                                   EXHIBIT 10.5

                      INDUSTRIAL REAL ESTATE LEASE
                      (MULTI-TENANT FACILITY)
                      CB COMMERCIAL REAL ESTATE GROUP, INC.
                      BROKERAGE AND MANAGEMENT
[CB COMMERCIAL LOGO]  LICENSED REAL ESTATE BROKER

ARTICLE ONE: BASIC TERMS

     This Article One contains the Basic Terms of this Lease between the
Landlord and Tenant named below. Other Articles, Sections and Paragraphs of the
Lease referred to in this Article One explain and define the Basic Terms and
are to be read in conjunction with the Basic Terms.

     Section 1.01. DATE OF LEASE:  February 4, 1997

     Section 1.02. LANDLORD (INCLUDE LEGAL ENTITY):  Allred Phoenix Properties,
                                                     LLC, a Delaware limited 
                                                     liability company

Address of Landlord:  1660 Hotel Circle North, #200
                      San Diego, California 92108

     Section 1.03. TENANT (INCLUDE LEGAL ENTITY):  Bowmar Instrument Corp., an
                                                   Indiana corporation

Address of Tenant:  4246 East Wood
                    Phoenix, Arizona 85040

     Section 1.04. PROPERTY: The Property is part of Landlord's multi-tenant
real property development known as Allred Center Southbank

and described or depicted in Exhibit "A" (the "Project"). The Project includes
the land, the buildings and all other improvements located on the land, and the
common areas described in Paragraph 4.05(a). The Property is (include street
address, approximate square footage and description)  3601 East University
                                                      Drive, Phoenix, Arizona
                                                      Approximately 43,129
                                                      square feet

     Section 1.05. LEASE TERM: Ten (10) years zero (0) months BEGINNING ON
August 1, 1997 or such other date as is specified in this Lease, and ENDING ON
July 31, 2007

     Section 1.06. PERMITTED USES: (See Article Five) Administrative office,
design, development, manufacturing and sales and related uses, provided such
uses comply with all applicable zoning restrictions and the existing
restrictions of record against the Property.

     Section 1.07. TENANT'S GUARANTOR: (If none, so state) None

     Section 1.08. BROKERS: (See Article Fourteen) (If none, so state)

Landlord's Broker: CB Commercial
Tenant's Broker: CB Commercial

     Section 1.09. COMMISSION PAYABLE TO LANDLORD'S BROKER: (See Article
Fourteen) $  By separate agreement

     Section 1.10. INITIAL SECURITY DEPOSIT: (See Section 3.03) $  32,778

     Section 1.11. VEHICLE PARKING SPACES ALLOCATED TO TENANT: (See Section
4.05)  See Addendum

     Section 1.12. RENT AND OTHER CHARGES PAYABLE BY TENANT:

     (a) BASE RENT: Thirty-two Thousand Seven Hundred Seventy-eight --- Dollars
($32,778*) per month for the first 24 months, as provided in Section 3.01, and
shall be increased on the first day of the 25th month(s) after the Commencement
Date, at 5% increase every 24 months over the preceding Base Rent amount. (If
(ii) is completed, then (i) and Section 3.02 are inapplicable.)

     (b) OTHER PERIODIC PAYMENTS: (i) Real Property Taxes (See Section 4.02);
(ii) Utilities (See Section 4.03); (iii) Insurance Premiums (See Section 4.04);
(iv) Tenant's Initial Pro Rata Share of Common Area Expenses 34.3% (See Section
4.05); (v) Impounds for Insurance Premiums and Property Taxes (See Section
4.08); (vi) Maintenance, Repairs and Alterations (See Article Six).

     Section 1.13 LANDLORD'S SHARE OF PROFIT ON ASSIGNMENT OR SUBLEASE: (See
Section 9.05)          percent (50%) of the Profit (the "Landlord Share").

     Section 1.14. RIDERS: The following Riders are attached to and made a part
of this Lease: (If none, so state)  Exhibits A, B and C and Addendum

*Plus applicable transaction privilege taxes.

(C) 1988 Southern California Chapter         1         Initials /s/ JGW
         of the Society of Industrial    [SIOR LOGO]
         and Office Realtors(R), Inc.               

                            (Multi-Tenant Net Form)




<PAGE>   2
ARTICLE TWO: LEASE TERM

     Section 2.01. LEASE OF PROPERTY FOR LEASE TERM. Landlord leases the
Property to Tenant and Tenant leases the Property from Landlord for the Lease
Term. The Lease Term is for the period stated in Section 1.05 above and
shall begin and end on the dates specified in Section 1.05 above, unless the
beginning or end of the Lease Term is changed under any provision of this
Lease. The "Commencement Date" shall be the date specified in Section 1.05
above for the beginning of the Lease Term, unless advanced or delayed under any
provision of this Lease.

     Section 2.02. DELAY IN COMMENCEMENT. Landlord shall not be liable to
Tenant if Landlord does not deliver possession of the Property to Tenant on the
Commencement Date. Landlord's non-delivery of the Property to Tenant on that
date shall not affect this Lease or the obligations of Tenant under this Lease
except that the Commencement Date shall be delayed until Landlord delivers
possession of the Property to Tenant and the Lease Term shall be extended for a
period equal to the delay in delivery of possession of the Property to Tenant,
plus the number of days necessary to end the Lease Term on the last day of a
month. If Landlord does not deliver possession of the Property to Tenant within
sixty (60) days after the Commencement Date, Tenant may elect to cancel this
Lease by giving written notice to Landlord within ten (10) days after the sixty
(60)-day period ends. If Tenant gives such notice, the Lease shall be cancelled
and neither Landlord nor Tenant shall have any further obligations to the
other. If Tenant does not give such notice, Tenant's right to cancel the Lease
shall expire and the Lease Term shall commence upon the delivery of possession
of the Property to Tenant. If delivery of possession of the Property to Tenant
is delayed, Landlord and Tenant shall, upon such delivery, execute an amendment
to this Lease setting forth the actual Commencement Date and expiration date of
the Lease. Failure to execute such amendment shall not affect the actual
Commencement Date and expiration date of the Lease.

     Section 2.03. EARLY OCCUPANCY. If Tenant occupies the Property prior to
the Commencement Date, Tenant's occupancy of the Property shall be subject to
all of the provisions of this Lease. Early occupancy of the Property shall not
advance the expiration date of this Lease. Tenant shall pay Base Rent and all
other charges specified in this Lease for the early occupancy period.

     Section 2.04. HOLDING OVER. Tenant shall vacate the Property upon the
expiration or earlier termination of this Lease. Tenant shall reimburse
Landlord for and indemnify Landlord against all damages which Landlord incurs
from Tenant's delay in vacating the Property. If Tenant does not vacate the
Property upon the expiration or earlier termination of the Lease and Landlord
thereafter accepts rent from Tenant, Tenant's occupancy of the Property shall
be a "month-to-month" tenancy, subject to all of the terms of this Lease
applicable to a month-to-month tenancy, except that the Base Rent then in
effect shall be increased by twenty-five percent (25%).

ARTICLE THREE: BASE RENT

     Section 3.01. TIME AND MANNER OF PAYMENT. Upon execution of this Lease,
Tenant shall pay Landlord the Base Rent in the amount stated in Paragraph
1.12(a) above for the first month of the Lease Term. On the first day of the
second month of the Lease Term and each month thereafter, Tenant shall pay
Landlord the Base Rent, in advance, without offset, deduction or prior demand.
The Base Rent shall be payable at Landlord's address or at such other place as
Landlord may designate in writing.

     Section 3.03. SECURITY DEPOSIT; INCREASES.

     (a) Upon the execution of this Lease, Tenant shall deposit with Landlord a
cash Security Deposit in the amount set forth in Section 1.10 above. Landlord
may apply all or part of the Security Deposit to any unpaid rent or other
charges due from Tenant or to cure any other defaults of Tenant. If Landlord
uses any part of the Security Deposit, Tenant shall restore the Security
Deposit to its full amount within ten (10) days after Landlord's written
request. Tenant's failure to do so shall be a material default under this
Lease. No interest shall be paid on the Security Deposit. Landlord shall not be
required to keep the Security Deposit separate from its other accounts and no
trust relationship is created with respect to the Security Deposit.

     (b) Each Time the Base Rent is increased, Tenant shall deposit additional
funds with Landlord sufficient to increase the Security Deposit to an amount
which bears the same relationship to the adjusted Base Rent as the initial
Security Deposit bore to the initial Base Rent.

(C) 1988 Southern California Chapter         2         Initials /s/ JGW
         of the Society of Industrial   [SIOR LOGO]
         and Office Realtors(R), Inc.              

                            (Multi-Tenant Net Form)




<PAGE>   3
     Section 3.04. TERMINATION; ADVANCE PAYMENTS. Upon termination of this
Lease under Article Seven (Damage or Destruction), Article Eight (Condemnation)
or any other termination not resulting from Tenant's default, and after Tenant
has vacated the Property in the manner required by this Lease, Landlord shall
refund or credit to Tenant (or Tenant's successor) the unused portion of the
Security Deposit, any advance rent or other advance payments made by Tenant to
Landlord, and any amounts paid for real property taxes and other reserves which
apply to any time periods after termination of the lease.

ARTICLE FOUR: OTHER CHARGES PAYABLE BY TENANT

     Section 4.01. ADDITIONAL RENT. All charges payable by Tenant other than
Base Rent are called "Additional Rent." Unless this Lease provides otherwise,
Tenant shall pay all Additional Rent then due with the next monthly installment
of Base Rent. The term "rent" shall mean Base Rent and Additional Rent.

     Section 4.02. PROPERTY TAXES.

     (a) REAL PROPERTY TAXES. Tenant shall pay all real property taxes on the
Property (including any fees, taxes or assessments against, or as a result of,
any tenant improvements installed on the Property by or for the benefit of
Tenant) during the Lease Term. Subject to Paragraph 4.02(c) and Section 4.08
below, such payment shall be made at least ten (10) days prior to the
delinquency date of the taxes. Within such ten (10)-day period, Tenant shall
furnish Landlord with satisfactory evidence that the real property taxes have
been paid. Landlord shall reimburse Tenant for any real property taxes paid by
Tenant covering any period of time prior to or after the Lease Term. If Tenant
fails to pay the real property taxes when due, Landlord may pay the taxes and
Tenant shall reimburse Landlord for the amount of such tax payment as Additional
Rent.

     (b) DEFINITION OF "REAL PROPERTY TAX." "Real property tax" means: (i) any
fee, license fee, license tax, business license fee, commercial rental tax,
levy, charge, assessment, penalty or tax imposed by any taxing authority
against the Property; (ii) any tax on the Landlord's right to receive, or the
receipt of, rent or income from the Property or against Landlord's business of
leasing the Property; (iii) any tax or charge for fire protection, streets,
sidewalks, road maintenance, refuse or other services provided to the Property
by any governmental agency; (iv) any tax imposed upon this transaction or based
upon a re-assessment of the Property due to a change of ownership, as defined
by applicable law, or other transfer of all or part of Landlord's interest in
the Property; and (v) any charge or fee replacing any tax previously included
within the definition of real property tax. "Real property tax" does not,
however, include Landlord's federal or state income, franchise, inheritance or
estate taxes.

     (c) PERSONAL PROPERTY TAXES. 

         (i) Tenant shall pay all taxes charged against trade fixtures,
     furnishings, equipment or any other personal property belonging to Tenant.
     Tenant shall try to have personal property taxed separately from the
     Property.

         (ii) If any of Tenant's personal property is taxed with the Property,
     Tenant shall pay Landlord the taxes for the personal property within
     fifteen (15) days after Tenant receives a written statement from Landlord
     for such personal property taxes.

     Section 4.03. UTILITIES. Tenant shall pay, directly to the appropriate
supplier, the cost of all natural gas, heat, light, power, sewer service,
telephone, water, refuse disposal and other utilities and services supplied to
the Property. However, if any services or utilities are jointly metered with
other property, Landlord shall make a reasonable determination of Tenant's
proportionate share of the cost of such utilities and services and Tenant shall
pay such share to Landlord within fifteen (15) days after receipt of Landlord's
written statement. 

     Section 4.04. INSURANCE POLICIES.

     (a) LIABILITY INSURANCE.  During the Lease Term, Tenant shall
maintain a policy of commercial general liability insurance (sometimes known as
broad form comprehensive general liability insurance) insuring Tenant against
liability for bodily injury, property damage (including loss of use of
property) and personal injury arising out of the operation, use or occupancy of
the Property. Tenant shall name Landlord as an additional insured under such
policy. The initial amount of such insurance shall be One Million Dollars
($1,000,000) per occurrence and shall be subject to periodic increase based
upon inflation, increased liability awards, recommendation of Landlord's
professional insurance advisers and other relevant factors. The liability
insurance obtained by Tenant under this Paragraph 4.04(a) shall (i) be primary
and non-contributing; (ii) contain cross-liability endorsements; and (iii)
insure Landlord against Tenant's performance under Section 5.05, if the matters
giving rise to the indemnity under Section 5.05 result from the negligence of
Tenant. The amount and coverage of such insurance shall not limit Tenant's
liability nor relieve Tenant of any other obligation under this Lease. Landlord
may also obtain comprehensive public liability insurance in an amount and with
coverage determined by Landlord insuring Landlord against liability arising out
of ownership, operation, use or occupancy of the Property. The policy obtained
by Landlord shall not be contributory and shall not provide primary insurance.

     (b) PROPERTY AND RENTAL INCOME INSURANCE. During the Lease Term, Landlord
shall maintain policies of insurance covering loss of or damage to the Property
in the full amount of its replacement value. Such policy shall contain an
Inflation Guard Endorsement and shall provide protection against all perils
included within the classification of fire, extended coverage, vandalism,
malicious mischief, special extended perils (all risk), sprinkler leakage and
any other perils which Landlord deems reasonably necessary. Landlord shall have
the right to obtain flood and earthquake insurance if required by any lender
holding a security interest in the Property. Landlord shall not obtain
insurance for Tenant's fixtures or equipment or building improvements installed
by Tenant on the Property. During the Lease Term, Landlord shall also maintain
a rental income insurance policy, with loss payable to Landlord, in an amount
equal to one year's Base Rent, plus estimated real property taxes and insurance
premiums. Tenant shall be liable for the payment of any deductible amount under
Landlord's or Tenant's insurance policies maintained pursuant to this Section
4.04, in an amount not to exceed Ten Thousand Dollars ($10,000). Tenant shall
not do or permit anything to be done which invalidates any such insurance
policies.

     (c) PAYMENT OF PREMIUMS. Subject to Section 4.08, Tenant shall pay all
premiums for the insurance policies described in Paragraphs 4.04(a) and (b)
(whether obtained by Landlord or Tenant) within fifteen (15) days after
Tenant's receipt of a copy of the premium statement or other evidence of the
amount due, except Landlord shall pay all premiums for non-primary
comprehensive public liability insurance which Landlord elects to obtain as
provided in Paragraph 4.04(a). For insurance policies  




(c)1988 Southern California Chapter               3               Initials JGW
        of the Society of Industrial                                      _____
        and Office Realtors, Inc.            [SIOR LOGO]

                                        (Multi-Tenant Net Form)

<PAGE>   4
maintained by Landlord which cover improvements on the entire Project, Tenant
shall pay Tenant's prorated share of the premiums, in accordance with the
formula in Paragraph 4.05(e) for determining Tenant's share of Common Area
costs. If insurance policies maintained by Landlord cover improvements on real
property other than the Project, Landlord shall deliver to Tenant a statement of
the premium applicable to the Property showing in reasonable detail how Tenant's
share of the premium was computed. If the Lease Term expires before the
expiration of an insurance policy maintained by Landlord, Tenant shall be liable
for Tenant's prorated share of the insurance premiums. Before the Commencement
Date, Tenant shall delivery to Landlord a copy of any policy of insurance which
Tenant is required to maintain under this Section 4.04. At least thirty (30)
days prior to the expiration of any such policy, Tenant shall deliver to
Landlord a renewal of such Policy. As an alternative to providing a policy of
insurance, Tenant shall have the right to provide Landlord a certificate of
insurance, executed by an authorized officer of the insurance company, showing
that the insurance which Tenant is required to maintain under this Section 4.04
is in full force and effect and containing such other information which Landlord
reasonably requires.

     (d) GENERAL INSURANCE PROVISIONS.

         (i) Any insurance which Tenant is required to maintain under this Lease
     shall include a provision which requires the insurance carrier to give
     Landlord not less than thirty (30) days' written notice prior to any 
     cancellation or modification of such coverage.

         (ii) If Tenant fails to deliver any policy, certificate or renewal to
     Landlord required under this Lease within the prescribed time period or if
     any such policy is cancelled or modified during the Lease Term without
     Landlord's consent, Landlord may obtain such insurance, in which case
     Tenant shall reimburse Landlord for the cost of such insurance within
     fifteen (15) days after receipt of a statement that indicates the cost of
     such insurance.

         (iii) Tenant shall maintain all insurance required under this Lease
     with companies holding a "General Policy Rating" of A-12 or better, as set
     forth in the most current issue of "Best Key Rating Guide". Landlord and
     Tenant acknowledge the insurance markets are rapidly changing and that
     insurance in the form and amounts described in this Section 4.04 may not be
     available in the future. Tenant acknowledges that the insurance described
     in this Section 4.04 is for the primary benefit of Landlord. If at any time
     during the Lease Term, Tenant is unable to maintain the insurance required
     under the Lease, Tenant shall nevertheless maintain insurance coverage
     which is customary and commercially reasonable in the insurance industry
     for Tenant's type of business, as that coverage may change from time to
     time. Landlord makes no representation as to the adequacy of such insurance
     to protect Landlord's or Tenant's interests. Therefore, Tenant shall obtain
     any such additional property or liability insurance which Tenant deems
     necessary to protect Landlord and Tenant.

         (iv) Unless prohibited under any applicable insurance policies
     maintained, Landlord and Tenant each hereby waive any and all rights of
     recovery against the other, or against the officers, employees, agents or
     representatives of the other, for loss of or damage to its property or the
     property of others under its control, if such loss or damage is covered by
     any insurance policy in force (whether or not described in this Lease) at
     the time of such loss or damage. Upon obtaining the required policies of
     insurance, Landlord and Tenant shall give notice to the insurance carriers
     of this mutual waiver of subrogation.

     Section 4.05.  COMMON AREAS; USE, MAINTENANCE AND COSTS.

         (a) COMMON AREAS.  As used in this Lease, "Common Areas" shall mean all
areas within the Project which are available for the common use of tenants of
the Project and which are not leased or held for the exclusive use of Tenant or
other tenants, including, but not limited to, parking areas, driveways,
sidewalks, loading areas, access roads, corridors, landscaping and planted
areas. Landlord, from time to time, may change the size, location, nature and
use of any of the Common Areas, convert Common Areas into leaseable areas,
construct additional parking facilities (including parking structures) in the
Common Areas, and increase or decrease Common Area land and/or facilities.
Tenant acknowledges that such activities may result in inconvenience to Tenant.
Such activities and changes are permitted if they do not materially affect
Tenant's use of the Property.

         (b) USE OF COMMON AREAS. Tenant shall have the nonexclusive right (in
common with other tenants and all others to whom Landlord has granted or may
grant such rights) to use the Common Areas for the purposes intended, subject to
such reasonable rules and regulations as Landlord may establish from time to
time. Tenant shall abide by such rules and regulations and shall use its best
effort to cause others who use the Common Areas with Tenant's express or implied
permission to abide by Landlord's rules and regulations. At any time, Landlord
may close any Common Areas to perform any acts in the Common Areas as, in
Landlord's judgment, are desirable to improve the Project. Tenant shall not
interfere with the rights of Landlord, other tenants or any other person
entitled to use the Common Areas.

         (c) SPECIFIC PROVISION RE: VEHICLE PARKING. Tenant shall be entitled to
use the number of vehicle parking spaces in the Project allocated to Tenant in
Section 1.11 of the Lease without paying any additional rent. Tenant's parking
shall not be reserved and shall be limited to vehicles no larger than standard
size automobiles or pickup utility vehicles. Tenant shall not cause large trucks
or other large vehicles to be parked within the Project or on the adjacent
public streets. Temporary parking of large delivery vehicles in the Project may
be permitted by the rules and regulations established by Landlord. Vehicles
shall be parked only in striped parking spaces and not in driveways, loading
areas or other locations not specifically designated for parking. Handicapped
spaces shall only be used by those legally permitted to use them. If Tenant
parks more vehicles in the parking area than the number set forth in Section
1.11 of this Lease, such conduct shall be a material breach of this Lease. In
addition to Landlord's other remedies under the Lease, Tenant shall pay a daily
charge determined by Landlord for each such additional vehicle.

         (d) MAINTENANCE OF COMMON AREAS. Landlord shall maintain the Common
Areas in good order, condition and repair and shall operate the Project, in
Landlord's sole discretion, as a first-class industrial/commercial real property
development. Tenant shall pay Tenant's pro rata share (as determined below) of
all costs incurred by Landlord for the operation and maintenance of the Common
Areas. Common Area costs include, but are not limited to, costs and expenses for
the following: gardening and landscaping; utilities, water and sewage charges;
maintenance of signs (other than tenant's signs); premiums for liability,
property damage, fire and other types of casualty insurance on the Common Areas
and worker's compensation insurance; all property taxes and assessments levied
on or attributable to the Common Areas and all Common Area improvements; all
personal property taxes levied on or attributable to personal property used in
connection with the Common Areas; straight-line depreciation on personal
property owned by Landlord which is consumed in the operation or maintenance of
the Common Areas; rental or lease payments paid by Landlord for rented or leased
personal property used in the operation or maintenance



(c)1988 Southern California Chapter               4               Initials JGW
        of the Society of Industrial                                      _____
        and Office Realtors, Inc.            [SIOR LOGO]

                                        (Multi-Tenant Net Form)
<PAGE>   5
of the Common Areas; fees for required licenses and permits; repairing,
resurfacing, repaving, maintaining, painting, lighting, cleaning, refuse
removal, security and similar items; reserves for roof replacement and exterior
painting and other appropriate reserves; and a reasonable allowance to Landlord
for Landlord's supervision of the Common Areas (not to exceed five percent (5%)
of the gross rents of the Project for the calendar year). Landlord may cause
any or all of such services to be provided by third parties and the cost of
such services shall be included in Common Area costs. Common Area costs shall
not include depreciation of real property which forms part of the Common Areas.

     (e) TENANT'S SHARE AND PAYMENT. Tenant shall pay Tenant's annual pro rata
share of all Common Area costs (prorated for any fractional month) upon written
notice from Landlord that such costs are due and payable, and in any event
prior to delinquency. Tenant's pro rata share shall be calculated by dividing
the square foot area of the Property, as set forth in Section 1.04 of the Lease,
by the aggregate square foot area of the Project which is leased or held for
lease by tenants, as of the date on which the computation is made. Tenant's
initial pro rata share is set out in Paragraph 1.12(b). Any changes in the
Common Area costs and/or the aggregate area of the Project leased or held for
lease during the Lease Term shall be effective on the first day of the month
after such change occurs. Landlord may, at Landlord's election, estimate in
advance and charge to Tenant as Common Area costs, all real property taxes for
which Tenant is liable under Section 4.02 of the Lease, all insurance premiums
for which Tenant is liable under Section 4.04 of the Lease, all maintenance and
repair costs for which Tenant is liable under Section 6.04 of the Lease, and all
other Common Area costs payable by Tenant hereunder. At Landlord's election,
such statements of estimated Common Area costs shall be delivered monthly,
quarterly or at any other periodic intervals to be designated by Landlord.
Landlord may adjust such estimates at any time based upon Landlord's experience
and reasonable anticipation of costs. Such adjustments shall be effective as of
the next rent payment date after notice to Tenant. Within sixty (60) days after
the end of each calendar year of the Lease Term, Landlord shall deliver to
Tenant a statement prepared in accordance with generally accepted accounting
principles setting forth, in reasonable detail, the Common Area costs paid or
incurred by Landlord during the preceding calendar year and Tenant's pro rata
share. Upon receipt of such statement, there shall be an adjustment between
Landlord and Tenant, with payment to or credit given by Landlord (as the case
may be) so that Landlord shall receive the entire amount of Tenant's share of
such costs and expenses for such period.

     Section 4.06. LATE CHARGES. Tenant's failure to pay rent promptly may
cause Landlord to incur unanticipated costs. The exact amount of such costs are
impractical or extremely difficult to ascertain. Such costs may include, but
are not limited to, processing and accounting charges and late charges which
may be imposed on Landlord by any ground lease, mortgage or trust deed
encumbering the Property. Therefore, if Landlord does not receive any rent
payment within ten (10) days after it becomes due, Tenant shall pay Landlord a
late charge equal to ten percent (10%) of the overdue amount. The parties agree
that such late charge represents a fair and reasonable estimate of the costs
Landlord will incur by reason of such late payment.

     Section 4.07. INTEREST ON PAST DUE OBLIGATIONS. Any amount owed by Tenant
to Landlord which is not paid when due shall bear interest at the rate of
fifteen percent (15%) per annum from the due date of such amount. However,
interest shall not be payable on late charges to be paid by Tenant under this
Lease. The payment of interest on such amounts shall not excuse or cure any
default by Tenant under this Lease. If the interest rate specified in this
Lease is higher than the rate permitted by law, the interest rate is hereby
decreased to the maximum legal interest rate permitted by law.

     Section 4.08. IMPOUNDS FOR INSURANCE PREMIUMS AND REAL PROPERTY TAXES. If
requested by any ground lessor or lender to whom Landlord has granted a
security interest in the Property, or if Tenant is more than ten (10) days late
in the payment of rent more than once in any consecutive twelve (12)-month
period, Tenant shall pay Landlord a sum equal to one-twelfth (1/12) of the
annual real property taxes and insurance premiums payable by Tenant under this
Lease, together with each payment of Base Rent. Landlord shall hold such
payments in a non-interest bearing impound account. If unknown, Landlord shall
reasonably estimate the amount of real property taxes and insurance premiums
when due. Tenant shall pay any deficiency of funds in the impound account to
Landlord upon written request. If Tenant defaults under this Lease, Landlord
may apply any funds in the impound account to any obligation then due under
this Lease.

ARTICLE FIVE: USE OF PROPERTY

     Section 5.01. PERMITTED USES. Tenant may use the Property only for the
Permitted Uses set forth in Section 1.06 above.

     Section 5.02. MANNER OF USE. Tenant shall not cause or permit the Property
to be used in any way which constitutes a violation of any law, ordinance, or
governmental regulation or order, which annoys or interferes with the rights of
tenants of the Project, or which constitutes a nuisance or waste. Tenant shall
obtain and pay for all permits, including a Certificate of Occupancy, required
for Tenant's occupancy of the Property and shall promptly take all actions
necessary to comply with all applicable statutes, ordinances, rules,
regulations, orders and requirements regulating the use by Tenant of the
Property, including the Occupational Safety and Health Act.

     Section 5.03. HAZARDOUS MATERIALS. As used in this Lease, the term
"Hazardous Material" means any flammable items, explosives, radioactive
materials, hazardous or toxic substances, material or waste or related
materials, including any substances defined as or included in the definition of
"hazardous substances", "hazardous wastes", "hazardous materials" or "toxic
substances" now or subsequently regulated under any applicable federal, state
or local laws or regulations, including without limitation petroleum-based
products, paints, solvents, lead, cyanide, DDT, printing inks, acids,
pesticides, ammonia compounds and other chemical products, asbestos, PCBs and
similar compounds, and including any different products and materials which are
subsequently found to have adverse effects on the environment or the health and
safety of persons. Tenant shall not cause or permit any Hazardous Material to
be generated, produced, brought upon, used, stored, treated or disposed of in
or about the Property by Tenant, its agents, employees, contractors, sublessees
or invitees without the prior written consent of Landlord. Landlord shall be
entitled to take into account such other factors or facts as Landlord may
reasonably determine to be relevant in determining whether to grant or withhold
consent to Tenant's proposed activity with respect to Hazardous Material. In no
event, however, shall Landlord be required to consent to the installation or
use of any storage tanks on the Property.

     Section 5.04. SIGNS AND AUCTIONS. Tenant shall not place any signs on the
Property without Landlord's prior written consent. Tenant shall not conduct or
permit any auctions or sheriff's sales at the Property.

     Section 5.05. INDEMNITY. Tenant shall indemnify Landlord against and hold
Landlord harmless from any and all costs, claims or liability arising from: (a)
Tenant's use of the Property; (b) the conduct of Tenant's business or anything
else done or 

(C)1988 Southern California Chapter
        of the Society of Industrial         5
        and Office Realtors, Inc.     [SIOR LOGO]              Initials    JGW
                                                 
                            (Multi-Tenant Net Form)
<PAGE>   6
permitted by Tenant to be done in or about the Property, including any
contamination of the Property or any other property resulting from the presence
or use of Hazardous Material caused or permitted by Tenant; (c) any breach or
default in the performance of Tenant's obligations under this Lease; (d) any
misrepresentation or breach of warranty by Tenant under this Lease; or (e)
other acts or omissions of Tenant. Tenant shall defend Landlord against any
such cost, claim or liability at Tenant's expense with counsel reasonably
acceptable to Landlord or, at Landlord's election, Tenant shall reimburse
Landlord for any legal fees or costs incurred by Landlord in connection with
any such claim. As a material part of the consideration to Landlord, Tenant
assumes all risk of damage to property or injury to persons in or about the
Property arising from any cause, and Tenant hereby waives all claims in respect
thereof against Landlord, except for any claim arising out of Landlord's gross
negligence or willful misconduct. As used in this Section, the term "Tenant"
shall include Tenant's employees, agents, contractors and invitees, if
applicable. 

     Section 5.06. LANDLORD'S ACCESS. Landlord or its agents may enter the
Property at all reasonable times to show the Property to potential buyers,
investors or tenants or other parties; to do any other act or to inspect and
conduct tests in order to monitor Tenant's compliance with all applicable
environmental laws and all laws governing the presence and use of Hazardous
Material; or for any other purpose Landlord deems necessary. Landlord shall
give Tenant prior notice of such entry, except in the case of an emergency.
Landlord may place customary "For Sale" or "For Lease" signs on the Property.

     Section 5.07. QUIET POSSESSION. If Tenant pays the rent and complies with
all other terms of this Lease, Tenant may occupy and enjoy the Property for the
full Lease Term, subject to the provisions of this Lease.

ARTICLE SIX: CONDITION OF PROPERTY; MAINTENANCE, REPAIRS AND ALTERATIONS

     Section 6.01. EXISTING CONDITIONS. Tenant accepts the Property in its
condition as of the execution of the Lease, subject to all recorded matters,
laws, ordinances, and governmental regulations and orders. Except as provided
herein, Tenant acknowledges that neither Landlord nor any agent of Landlord has
made any representation as to the condition of the Property or the suitability
of the Property for Tenant's intended use. Tenant represents and warrants that
Tenant has made its own inspection of and inquiry regarding the condition of
the Property and is not relying on any representations of Landlord or any
Broker with respect thereto. If Landlord or Landlord's Broker has provided a
Property Information Sheet or other Disclosure Statement regarding the
Property, a copy is attached as an exhibit to the Lease.

     Section 6.02. EXEMPTION OF LANDLORD FROM LIABILITY. Landlord shall not be
liable for any damage or injury to the person, business (or any loss of income
therefrom), goods, wares, merchandise or other property of Tenant, Tenant's
employees, invitees, customers or any other person in or about the Property,
whether such damage or injury is caused by or results from; (a) fire, steam,
electricity, water, gas or rain; (b) the breakage, leakage, obstruction or
other defects of pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures or any other cause; (c) conditions arising in
or about the Property or upon other portions of the Project, or from other
sources or places; or (d) any act or omission of any other tenant of the
Project Landlord shall not be liable for any such damage or injury even though
the cause of or the means of repairing such damage or injury are not accessible
to Tenant. The provisions of this Section 6.02 shall not, however, exempt
Landlord from liability for Landlord's gross negligence or willful misconduct.

     Section 6.03. LANDLORD'S OBLIGATIONS.

     (a) Except as provided in Article Seven (Damage or Destruction) and
Article Eight (Condemnation), Landlord shall keep the following in good order,
condition and repair; the foundations, exterior walls and roof of the Property
(including painting the exterior surface of the exterior walls of the Property
not more often than once every five (5) years, if necessary) and all components
of electrical, mechanical, plumbing, heating and air conditioning systems and
facilities located in the Property which are concealed or used in common by
tenants of the Project. However, Landlord shall not be obligated to maintain or
repair windows, doors, plate glass or the interior surfaces of exterior walls.
Landlord shall make repairs under this Section 6.03 within a reasonable time
after receipt of written notice from Tenant of the need for such repairs.

     (b) Tenant shall pay or reimburse Landlord for all costs Landlord incurs
under Paragraph 6.03(a) above as Common Area costs as provided for in Section
4.05 of the Lease. Tenant waives the benefit of any statute in effect now or in
the future which might give Tenant the right to make repairs at Landlord's
expense or to terminate this Lease due to Landlord's failure to keep the
Property in good order, condition and repair.

     Section 6.04. TENANT'S OBLIGATIONS.

     (a) Except as provided in Section 6.03, Article Seven (Damage or
Destruction) and Article Eight (Condemnation). Tenant shall keep all portions
of the Property (including structural, nonstructural, interior, systems and
equipment) in good order, condition and repair (including interior repainting
and refinishing, as needed). If any portion of the Property or any system or
equipment in the Property which Tenant is obligated to repair cannot be fully
repaired or restored, Tenant shall promptly replace such portion of the
Property or system or equipment in the Property, regardless of whether the
benefit of such replacement extends beyond the Lease Term; but if the benefit
or useful life of such replacement extends beyond the Lease Term (as such term
may be extended by exercise of any options), the useful life of such
replacement shall be prorated over the remaining portion of the Lease Term (as
extended), and Tenant shall be liable only for that portion of the cost which
is applicable to the Lease Term (as extended). Tenant shall maintain a
preventive maintenance contract providing for the regular inspection and
maintenance of the heating and air conditioning system by a licensed heating
and air conditioning contractor, unless Landlord maintains such equipment under
Section 6.03 above. If any part of the Property or the Project is damaged by
any act or omission of Tenant, Tenant shall pay Landlord the cost of repairing
or replacing such damaged property, whether or not Landlord would otherwise be
obligated to pay the cost of maintaining or repairing such property. It is the
intention of Landlord and Tenant that at all times Tenant shall maintain the
portions of the Property which Tenant is obligated to maintain in an
attractive, first-class and fully operative condition.

     (b) Tenant shall fulfill all of Tenant's obligations under this Section
6.04 at Tenant's sole expense. If Tenant fails to maintain, repair or replace
the Property as required by this Section 6.04, Landlord may, upon ten (10)
days' prior notice to Tenant (except that no notice shall be required in the
case of an emergency), enter the Property and perform such maintenance or
repair (including replacement, as needed) on behalf of Tenant. In such case,
Tenant shall reimburse Landlord for all costs incurred in performing such
maintenance or repair immediately upon demand.


(C)1988 Southern California Chapter
        of the Society of Industrial         6
        and Office Realtors, Inc.     [SIOR LOGO]              Initials    JGW
                                                 
                            (Multi-Tenant Net Form)
                                                        
<PAGE>   7
     Section 6.05. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.

     (a) Tenant shall not make any alterations, additions, or improvements to
the Property without Landlord's prior written consent, except for
non-structural alterations which do not exceed Ten Thousand Dollars ($10,000)
in cost cumulatively over the Lease Term and which are not visible from the
outside of any building of which the Property is part. Landlord may require
Tenant to provide demolition and/or lien and completion bonds in form and
amount satisfactory to Landlord. Tenant shall promptly remove any alterations,
additions, or improvements constructed in violation of this Paragraph 6.05(a)
upon Landlord's written request. All alterations, additions, and improvements
shall be done in a good and workmanlike manner, in conformity with all
applicable laws and regulations, and by a contractor approved by Landlord. Upon
completion of any such work, Tenant shall provide Landlord with "as built"
plans, copies of all construction contracts, and proof of payment for all labor
and materials.

     (b) Tenant shall pay when due all claims for labor and material furnished
to the Property. Tenant shall give Landlord at least twenty (20) days' prior
written notice of the commencement of any work on the Property, regardless of
whether Landlord's consent to such work is required. Landlord may elect to
record and post notices of non-responsibility on the Property.

     Section 6.06. CONDITION UPON TERMINATION. Upon the termination of the
Lease, Tenant shall surrender the Property to Landlord, broom clean and in the
same condition as received except for ordinary wear and tear which Tenant was
not otherwise obligated to remedy under any provision of this Lease. However,
Tenant shall not be obligated to repair any damage which Landlord is required
to repair under Article Seven (Damage or Destruction). In addition, Landlord
may require Tenant to remove any alterations, additions or improvements
(whether or not made with Landlord's consent) prior to the expiration of the
Lease and to restore the Property to its prior condition, all at Tenant's
expense. All alterations, additions and improvements which Landlord has not
required Tenant to remove shall become Landlord's property and shall be
surrendered to Landlord upon the expiration or earlier termination of the
Lease, except that Tenant may remove any of Tenant's machinery or equipment
which can be removed without material damage to the Property. Tenant shall
repair, at Tenant's expense, any damage to the Property caused by the removal
of any such machinery or equipment. In no event, however, shall Tenant remove
any of the following materials or equipment (which shall be deemed Landlord's
property) without Landlord's prior written consent: any power wiring or power
panels; lighting or lighting fixtures; wall coverings; drapes, blinds or other
window coverings; carpets or other floor coverings; heaters, air conditioners
or any other heating or air conditioning equipment; fencing or security gates;
or other similar building operating equipment and decorations.

ARTICLE SEVEN: DAMAGE OR DESTRUCTION

     Section 7.01. PARTIAL DAMAGE TO PROPERTY.

     (a) Tenant shall notify Landlord in writing immediately upon the
occurrence of any damage to the Property. If the Property is only partially
damaged (i.e., less than fifty percent (50%) of the Property is untenantable as
a result of such damage or less than fifty percent (50%) of Tenant's operations
are materially impaired) and if the proceeds received by Landlord from the
insurance policies described in Paragraph 4.04(b) are sufficient to pay for the
necessary repairs, this Lease shall remain in effect and Landlord shall repair
the damage as soon as reasonably possible. Landlord may elect (but is not
required) to repair any damage to Tenant's fixtures, equipment, or improvements.

     (b) If the insurance proceeds received by Landlord or not sufficient to
pay the entire cost of repair, or if the cause of the damage is not covered by
the insurance policies which Landlord maintains under Paragraph 4.04(b),
Landlord may elect either to (i) repair the damage as soon as reasonably
possible, in which case this Lease shall remain in full force and effect, or
(ii) terminate this Lease as of the date the damage occurred. Landlord shall
notify Tenant within thirty (30) days after receipt of notice of the occurrence
of the damage whether Landlord elects to repair the damage or terminate the
Lease. If Landlord elects to repair the damage, Tenant shall pay Landlord the
"deductible amount" (if any) under Landlord's insurance policies and, if the
damage was due to an act or omission of Tenant, or Tenant's employees, agents,
contractors or invitees, the difference between the actual cost of repair and
any insurance proceeds received by Landlord. If Landlord elects to terminate
the Lease, Tenant may elect to continue this Lease in full force and effect, in
which case Tenant shall repair any damage to the Property and any building in
which the Property is located. Tenant shall pay the cost of such repairs,
except that upon satisfactory completion of such repairs, Landlord shall
deliver to Tenant any insurance proceeds received by Landlord for the damage
repaired by Tenant. Tenant shall give Landlord written notice of such election
within ten (10) days after receiving Landlord's termination notice.

     (c) If the damage to the Property occurs during the last six (6) months of
the Lease Term and such damage will require more than thirty (30) days to
repair, either Landlord or Tenant may elect to terminate this Lease as of the
date the damage occurred, regardless of the sufficiency of any insurance
proceeds. The party electing to terminate this Lease shall give written
notification to the other party of such election within thirty (30) days after
Tenant's notice to Landlord of the occurrence of the damage.

     Section 7.02. SUBSTANTIAL OR TOTAL DESTRUCTION. If the Property is
substantially or totally destroyed by any cause whatsoever (i.e., the damage to
the Property is greater than partial damage as described in Section 7.01), and
regardless of whether Landlord receives any insurance proceeds, this Lease
shall terminate as of the date the destruction occurred. Notwithstanding the
preceding sentence, if the Property can be rebuilt within six (6) months after
the date of destruction, Landlord may elect to rebuild the Property at
Landlord's own expense, in which case this Lease shall remain in full force and
effect. Landlord shall notify Tenant of such election within thirty (30) days
after Tenant's notice of the occurrence of total or substantial destruction. If
Landlord so elects, Landlord shall rebuild the Property at Landlord's sole
expense, except that if the destruction was caused by an act or omission of
Tenant, Tenant shall pay Landlord the difference between the actual cost of
rebuilding and any insurance proceeds received by Landlord.

     Section 7.03. TEMPORARY REDUCTION OF RENT. If the Property is destroyed or
damaged and Landlord or Tenant repairs or restores the Property pursuant to the
provisions of this Article Seven, any rent payable during the period of such
damage, repair and/or restoration shall be reduced according to the degree, if
any, to which Tenant's use of the Property is impaired. However, the reduction
shall not exceed the sum of one year's payment of Base Rent, insurance
premiums and real property taxes. Except for such possible reduction in Base
Rent, insurance premiums and real property taxes, Tenant shall not be entitled
to any compensation, reduction, or reimbursement from Landlord as a result of
any damage, destruction, repair, or restoration of or to the Property.



                                       7



(c)1988 Southern California Chapter                              Initials JGW
        of the Society of Industrial                                      _____
        and Office Realtors, Inc.            [SIOR LOGO]

                                        (Multi-Tenant Net Form)
<PAGE>   8
     Section 7.04. WAIVER. Tenant waives the protection of any statute, code
or judicial decision which grants a tenant the right to terminate a lease in
the event of the substantial or total destruction of the leased property.
Tenant agrees that the provisions of Section 7.02 above shall govern the rights
and obligations of Landlord and Tenant in the event of any substantial or total
destruction to the Property.

ARTICLE EIGHT: CONDEMNATION

     If all or any portion of the Property is taken under the power of eminent
domain or sold under the threat of that power (all of which are called
"Condemnation"), this Lease shall terminate as to the part taken or sold on the
date the condemning authority takes title or possession, whichever occurs
first. If more than twenty percent (20%) of the floor area of the building in
which the Property is located, or which is located on the Property, is taken,
either Landlord or Tenant may terminate this Lease as of the date the
condemning authority takes title or possession, by delivering written notice to
the other within ten (10) days after receipt of written notice of such taking
(or in the absence of such notice, within ten (10) days after the condemning
authority takes title or possession). If neither Landlord nor Tenant terminates
this Lease, this Lease shall remain in effect as to the portion of the Property
not taken, except that the Base Rent and Additional Rent shall be reduced in
proportion to the reduction in the floor area of the Property. Any Condemnation
award or payment shall be distributed in the following order: (a) first, to any
ground lessor, mortgagee or beneficiary under a deed of trust encumbering the
Property, the amount of its interest in the Property; (b) second, to Tenant,
only the amount of any award specifically designated for loss of or damage to
Tenant's trade fixtures or removable personal property; and (c) third, to
Landlord, the remainder of such award, whether as compensation for reduction in
the value of the leasehold, the taking of the fee, or otherwise. If this Lease
is not terminated, Landlord shall repair any damage to the Property caused by
the Condemnation, except that Landlord shall not be obligated to repair any
damage for which Tenant has been reimbursed by the condemning authority. If
the severance damages received by Landlord are not sufficient to pay for such
repair, Landlord shall have the right to either terminate this Lease or make
such repair at Landlord's expense.

ARTICLE NINE: ASSIGNMENT AND SUBLETTING

     Section 9.01. LANDLORD'S CONSENT REQUIRED. No portion of the Property or
of Tenant's interest in this Lease may be acquired by any other person or
entity, whether by sale, assignment, mortgage, sublease, transfer, operation of
law, or act of Tenant, without Landlord's prior written consent, except as
provided in Section 9.02 below. Landlord has the right to grant or withhold its
consent as provided in Section 9.05 below. Any attempted transfer without
consent shall be void and shall constitute a non-curable breach of this Lease.
If Tenant is a partnership, any cumulative transfer of more than twenty percent
(20%) of the partnership interests shall require Landlord's consent. If Tenant
is a corporation, any change in the ownership of a controlling interest of the
voting stock of the corporation shall require Landlord's consent.

     Section 9.02. TENANT AFFILIATE. Tenant may assign this Lease or sublease
the Property, without Landlord's consent, to any corporation which controls, is
controlled by or is under common control with Tenant, or to any corporation
resulting from the merger of or consolidation with Tenant ("Tenant's
Affiliate"). In such case, any Tenant's Affiliate shall assume in writing all
of Tenant's obligations under this Lease.

     Section 9.03. NO RELEASE OF TENANT. No transfer permitted by this Article
Nine, whether with or without Landlord's consent, shall release Tenant or
change Tenant's primary liability to pay the rent and to perform all other
obligations of Tenant under this Lease. Landlord's acceptance of rent from any
other person is not a waiver of any provision of this Article Nine. Consent to
one transfer is not a consent to any subsequent transfer. If Tenant's
transferee defaults under this Lease, Landlord may proceed directly against
Tenant without pursuing remedies against the transferee. Landlord may consent
to subsequent assignments or modifications of this Lease by Tenant's
transferee, without notifying Tenant or obtaining its consent. Such action
shall not relieve Tenant's liability under this Lease.

     Section 9.04. OFFER TO TERMINATE. If Tenant desires to assign the Lease or
sublease the Property, Tenant shall have the right to offer, in writing, to
terminate the Lease as of a date specified in the offer. If Landlord elects in
writing to accept the offer to terminate within twenty (20) days after notice
of the offer, the Lease shall terminate as of the date specified and all the
terms and provisions of the Lease governing termination shall apply. If
Landlord does not so elect, the Lease shall continue in effect until otherwise
terminated and the provisions of Section 9.05 with respect to any proposed
transfer shall continue to apply.

     Section 9.05. LANDLORD'S CONSENT.

     (a) Tenant's request for consent to any transfer described in Section 9.01
shall set forth in writing the details of the proposed transfer, including the
name, business and financial condition of the prospective transferee, financial
details of the proposed transfer (e.g., the term of and the rent and security
deposit payable under any proposed assignment or sublease), and any other
information Landlord deems relevant. Landlord shall have the right to withhold
consent, if reasonable, or to grant consent based on the following factors: (i)
the business of the proposed assignee or subtenant and the proposed use of the
Property, (ii) the net worth and financial reputation of the proposed assignee
or subtenant; (iii) Tenant's compliance with all of its obligations under the
Lease; and (iv) such other factors as Landlord may reasonably deem relevant. If
Landlord objects to a proposed assignment solely because of the net worth
and/or financial reputation of the proposed assignee, Tenant may nonetheless
sublease (but not assign), all or a portion of the Property to the proposed
transferee, but only on the other terms of the proposed transfer.

     (b) If Tenant assigns or subleases, the following shall apply:

          (i) Tenant shall pay to Landlord as Additional Rent under the Lease
the Landlord's Share (stated in Section 1.13) of the Profit (defined below) on
such transaction as and when received by  Tenant, unless Landlord gives written
notice to Tenant and the assignee or subtenant that Landlord's Share shall be
paid by the assignee or subtenant to Landlord directly. The "Profit" means (A)
all amounts paid to Tenant for such assignment or sublease, including "key"
money, monthly rent in excess of the monthly rent payable under the Lease, and
all fees and other consideration paid for the assignment or sublease, including
fees under any collateral agreements, less (B) costs and expenses directly
incurred by Tenant in connection with the execution and performance of such
assignment or sublease for real estate broker's commissions and costs of
renovation or construction of tenant improvements required under such
assignment or sublease. Tenant is entitled to recover such costs and expenses
before Tenant is obligated to pay the Landlord's Share to Landlord. The Profit
in the


                                       8


(c)1988 Southern California Chapter                              Initials JGW
        of the Society of Industrial                                      _____
        and Office Realtors, Inc.            [SIOR LOGO]

                                        (Multi-Tenant Net Form)
<PAGE>   9
     case of a sublease of less than all the Property is the rent allocable to
     the subleased space as a percentage on a square footage basis.

     (ii) Tenant shall provide Landlord a written statement certifying all
     amounts to be paid from any assignment or sublease of the Property within
     thirty (30) days after the transaction documentation is signed, and
     Landlord may inspect Tenant's books and records to verify the accuracy of
     such statement. On written request, Tenant shall promptly furnish to
     Landlord copies of all the transaction documentation, all of which shall be
     certified by Tenant to be complete, true and correct. Landlord's receipt of
     Landlord's Share shall not be a consent to any further assignment or
     subletting. The breach of Tenant's obligation under this Paragraph 9.05(b)
     shall be a material default of the Lease.

     Section 9.06. NO MERGER. No merger shall result from Tenant's sublease of
the Property under this Article Nine, Tenant's surrender of this Lease or the
termination of this Lease in any other manner. In any such event, Landlord may
terminate any or all subtenancies or succeed to the interest of Tenant as
sublandlord under any or all subtenancies.

ARTICLE TEN: DEFAULTS; REMEDIES

     Section 10.01. COVENANTS AND CONDITIONS. Tenant's performance of each of
Tenant's obligations under this Lease is a condition as well as a covenant.
Tenant's right to continue in possession of the Property is conditioned upon
such performance. Time is of the essence in the performance of all covenants and
conditions.

     Section 10.02. DEFAULTS. Tenant shall be in material default under this
Lease:

     (a) If Tenant abandons the Property or if Tenant's vacation of the Property
results in the cancellation of any insurance described in Section 4.04;

     (b) If Tenant fails to pay rent or any other charge when due;

     (c) If Tenant fails to perform any of Tenant's non-monetary obligations
under this Lease for a period of thirty (30) days after written notice from
Landlord; provided that if more than thirty (30) days are required to complete
such performance, Tenant shall not be in default if Tenant commences such
performance within the thirty (30) -day period and thereafter diligently pursues
its completion. However, Landlord shall not be required to give such notice if
Tenant's failure to perform constitutes a non-curable breach of this Lease. The
notice required by this Paragraph is intended to satisfy any and all notice
requirements imposed by law on Landlord and is not in addition to any such
requirement.

     (d)(i) If Tenant makes a general assignment or general arrangement for the
benefit of creditors; (ii) if a petition for adjudication of bankruptcy or for
reorganization or rearrangement is filed by or against Tenant and is not
dismissed within thirty (30) days; (iii) if a trustee or receiver is appointed
to take possession of substantially all of Tenant's assets located at the
Property or of Tenant's interest in this Lease and possession is not restored to
Tenant within thirty (30) days; or (iv) if substantially all of Tenant's assets
located at the Property or of Tenant's interest in this Lease is subjected to
attachment, execution or other judicial seizure which is not discharged within
thirty (30) days. If a court of competent jurisdiction determines that any of
the acts described in this subparagraph (d) is not a default under this Lease,
and a trustee is appointed to take possession (or if Tenant remains a debtor in
possession) and such trustee or Tenant transfers Tenant's interest hereunder,
then Landlord shall receive, as Additional Rent, the excess, if any, of the rent
(or any other consideration) paid in connection with such assignment or sublease
over the rent payable by Tenant under this Lease.

     (e) If any guarantor of the Lease revokes or otherwise terminates, or
purports to revoke or otherwise terminate, any guaranty of all or any portion of
Tenant's obligations under the Lease. Unless otherwise expressly provided, no
guaranty of the Lease is revocable.

     Section 10.03 REMEDIES. On the occurrence of any material default by
Tenant, Landlord may, at any time thereafter, with or without notice or demand
and without limiting Landlord in the exercise of any right or remedy which
Landlord may have:

     (a) Terminate Tenant's right to possession of the Property by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Property to Landlord. In such event, Landlord shall
be entitled to recover from Tenant all damages incurred by Landlord by reason of
Tenant's default, including (i) the worth at the time of the award of the unpaid
Base Rent, Additional Rent and other charges which Landlord had earned at the
time of the termination; (ii) the worth at the time of the award of the amount
by which the unpaid Base Rent, Additional Rent and other charges which Landlord
would have earned after termination until the time of the award exceeds the
amount of such rental loss that Tenant proves Landlord could have reasonably
avoided, (iii) the worth at the time of the award of the amount by which the
unpaid Base Rent, Additional Rent and other charges which Tenant would have paid
for the balance of the Lease Term after the time of award exceeds the amount of
such rental loss that Tenant proves Landlord could have reasonably avoided; and
(iv) any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under the
Lease or which in the ordinary course of things would be likely to result
therefrom, including, but not limited to, any costs or expenses Landlord incurs
in maintaining or preserving the Property after such default, the cost of
recovering possession of the Property, expenses of reletting, including
necessary renovation or alteration of the Property, Landlord's reasonable
attorneys' fees incurred in connection therewith, and any real estate commission
paid or payable. As used in subparts (i) and (ii) above, the "worth at the time
of the award" is computed by allowing interest on unpaid amounts at the rate of
fifteen percent (15%) per annum, or such lesser amount as may then be the
maximum lawful rate. As used in subpart (iii) above, the "worth at the time of
the award" is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of the award, plus one percent
(1%). If Tenant has abandoned the Property, Landlord shall have the option of
(i) retaking possession of the Property and recovering from Tenant the amount
specified in this Paragraph 10.03(a), or (ii) proceeding under Paragraph
10.03(b);

     (b) Maintain Tenant's right to possession, in which case this Lease shall
continue in effect whether or not Tenant has abandoned the Property. In such
event, Landlord shall be entitled to enforce all of Landlord's rights and
remedies under this Lease, including the right to recover the rent as it becomes
due;

     (c) Pursue any other remedy now or hereafter available to Landlord under
the laws or judicial decisions of the state in which the Property is located.

     Section 10.04. REPAYMENT OF "FREE" RENT. If this Lease provides for a
postponement of any monthly rental payments, a period of "free" rent or other
rent concession, such postponed rent or "free" rent is called the "Abated Rent".
Tenant shall 

(C)1988 Southern California Chapter
        of the Society of Industrial         9
        and Office Realtors, Inc.     [SIOR LOGO]              Initials    JGW
                                                 
                            (Multi-Tenant Net Form)
<PAGE>   10
be credited with having paid all of the Abated Rent on the expiration of the
Lease Term only if Tenant has fully, faithfully, and punctually performed all
of Tenant's obligations hereunder, including the payment of all rent (other
than the Abated Rent) and all other monetary obligations and the surrender of
the Property in the physical condition required by this Lease. Tenant
acknowledges that its right to receive credit for the Abated Rent is absolutely
conditioned upon Tenant's full, faithful and punctual performance of its
obligations under this Lease. If Tenant defaults and does not cure within any
applicable grace period, the Abated Rent shall immediately become due and
payable in full and this Lease shall be enforced as if there were no such rent
abatement or other rent concession. In such case Abated Rent shall be
calculated based on the full initial rent payable under this Lease.

     Section 10.05. AUTOMATIC TERMINATION. Notwithstanding any other term or
provision hereof to the contrary, the Lease shall terminate on the occurrence of
any act which affirms the Landlord's intention to terminate the Lease as
provided in Section 10.03 hereof, including the filing of an unlawful detainer
action against Tenant. On such termination, Landlord's damages for default shall
include all costs and fees, including reasonable attorneys' fees that Landlord
incurs in connection with the filing, commencement, pursuing and/or defending of
any action in any bankruptcy court or other court with respect to the Lease; the
obtaining of relief from any stay in bankruptcy restraining any action to evict
Tenant; or the pursuing of any action with respect to Landlord's right to
possession of the Property. All such damages suffered (apart from Base Rent and
other rent payable hereunder) shall constitute pecuniary damages which must be
reimbursed to Landlord prior to assumption of the Lease by Tenant or any
successor to Tenant in any bankruptcy or other proceeding.

     Section 10.06. CUMULATIVE REMEDIES. Landlord's exercise of any right or
remedy shall not prevent it from exercising any other right or remedy.

ARTICLE ELEVEN: PROTECTION OF LENDERS

     Section 11.01. SUBORDINATION. Landlord shall have the right to subordinate
this Lease to any ground lease, deed of trust or mortgage encumbering the
Property, any advances made on the security thereof and any renewals,
modifications, consolidations, replacements or extensions thereof, whenever made
or recorded. Tenant shall cooperate with Landlord and any lender which is
acquiring a security interest in the Property or the Lease. Tenant shall execute
such further documents and assurances as such lender may require, provided that
Tenant's obligations under this Lease shall not be increased in any material way
(the performance of ministerial acts shall not be deemed material), and Tenant
shall not be deprived of its rights under this Lease. Tenant's right to quiet
possession of the Property during the Lease Term shall not be disturbed if
Tenant pays the rent and performs all of Tenant's obligations under this Lease
and is not otherwise in default. If any ground lessor, beneficiary or mortgagee
elects to have this Lease prior to the lien of its ground lease, deed of trust
or mortgage and gives written notice thereof to Tenant, this Lease shall be
deemed prior to such ground lease, deed of trust or mortgage whether this Lease
is dated prior or subsequent to the date of said ground lease, deed of trust or
mortgage or the date of recording thereof.

     Section 11.02. ATTORNMENT. If Landlord's interest in the Property is
acquired by any ground lessor, beneficiary under a deed of trust, mortgagee, or
purchaser at a foreclosure sale, Tenant shall attorn to the transferee of or
successor to Landlord's interest in the Property and recognize such transferee
or successor as Landlord under this Lease. Tenant waives the protection of any
statute or rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Property upon the transfer
of Landlord's interest.

     Section 11.03. SIGNING OF DOCUMENTS. Tenant shall sign and deliver any
instrument or documents necessary or appropriate to evidence any such attornment
or subordination or agreement to do so. If Tenant fails to do so within ten (10)
days after written request, Tenant hereby makes, constitutes and irrevocably
appoints Landlord, or any transferee or successor of Landlord, the
attorney-in-fact of Tenant to execute and deliver any such instrument or
document.

     Section 11.04. ESTOPPEL CERTIFICATES.

     (a) Upon Landlord's written request, Tenant shall execute, acknowledge and
deliver to Landlord a written statement certifying: (i) that none of the terms
or provisions of this Lease have been changed (or if they have been changed,
stating how they have been changed); (ii) that this Lease has not been cancelled
or terminated; (iii) the last date of payment of the Base Rent and other charges
and the time period covered by such payment; (iv) that Landlord is not in
default under this Lease (or, if Landlord is claimed to be in default, stating
why); and (v) such other representations or information with respect to Tenant
or the Lease as Landlord may reasonably request or which any prospective
purchaser or encumbrancer of the Property may require. Tenant shall deliver such
statement to Landlord within ten (10) days after Landlord's request. Landlord
may give any such statement by Tenant to any prospective purchaser or
encumbrancer of the Property. Such purchaser or encumbrancer may rely
conclusively upon such statement as true and correct.

     (b) If Tenant does not deliver such statement to Landlord within such ten
(10) -day period, Landlord, and any prospective purchaser or encumbrancer, may
conclusively presume and rely upon the following facts: (i) that the terms and
provisions of this Lease have not been changed except as otherwise represented
by Landlord; (ii) that this Lease has not been cancelled or terminated except as
otherwise represented by Landlord; (iii) that not more than one month's Base
Rent or other charges have been paid in advance; and (iv) that Landlord is not
in default under the Lease. In such event, Tenant shall be estopped from denying
the truth of such facts.

     Section 11.05. TENANT'S FINANCIAL CONDITION. Within ten (10) days after
written request from Landlord, Tenant shall deliver to Landlord such financial
statements as Landlord reasonably requires to verify the net worth of Tenant or
any assignee, subtenant, or guarantor of Tenant. In addition, Tenant shall
deliver to any lender designated by Landlord any financial statements required
by such lender to facilitate the financing or refinancing of the Property.
Tenant represents and warrants to Landlord that each such financial statement
is a true and accurate statement as of the date of such statement. All financial
statements shall be confidential and shall be used only for the purposes set
forth in this Lease.

ARTICLE TWELVE: LEGAL COSTS

     Section 12.01. LEGAL PROCEEDINGS. If Tenant or Landlord shall be in breach
or default under this Lease, such party (the "Defaulting Party") shall reimburse
the other party (the "Nondefaulting Party") upon demand for any costs or
expenses that the Nondefaulting Party incurs in connection with any breach or
default of the Defaulting Party under this Lease, whether or not suit is
commenced or judgement entered. Such costs shall include legal fees and costs
incurred for the negotiation of a 


(C)1988 Southern California Chapter
        of the Society of Industrial         10
        and Office Realtors, Inc.     [SIOR LOGO]              Initials    JGW
                                                 
                            (Multi-Tenant Net Form)
<PAGE>   11
settlement, enforcement of rights or otherwise. Furthermore, if any action for
breach of or to enforce the provisions of this Lease is commenced, the court in
such action shall award to the party in whose favor a judgment is entered, a
reasonable sum as attorneys' fees and costs. The losing party in such action
shall pay such attorneys' fees and costs. Tenant shall also indemnify Landlord
against and hold Landlord harmless from all costs, expenses, demands and
liability Landlord may incur if Landlord becomes or is made a party to any claim
or action (a) instituted by Tenant against any third party, or by any third
party against Tenant, or by or against any person holding any interest under or
using the Property by license of or agreement with Tenant; (b) for foreclosure
of any lien for labor or material furnished to or for Tenant or such other
person; (c) otherwise arising out of or resulting from any act or transaction of
Tenant or such other person; or (d) necessary to protect Landlord's interest
under this Lease in a bankruptcy proceeding, or other proceeding under Title 11
of the United States Code, as amended. Tenant shall defend Landlord against any
such claim or action at Tenant's expense with counsel reasonably acceptable to
Landlord or, at Landlord's election, Tenant shall reimburse Landlord for any
legal fees or costs Landlord incurs in any such claim or action.

     Section 12.02. LANDLORD'S CONSENT. Tenant shall pay Landlord's reasonable
attorneys' fees incurred in connection with Tenant's request for Landlord's
consent under Article Nine (Assignment and Subletting), or in connection with
any other act which Tenant proposes to do and which requires Landlord's consent.

ARTICLE THIRTEEN: MISCELLANEOUS PROVISIONS

     Section 13.01. NON-DISCRIMINATION. Tenant promises, and it is a condition
to the continuance of this Lease, that there will be no discrimination against,
or segregation of, any person or group of persons on the basis of race, color,
sex, creed, national origin or ancestry in the leasing, subleasing,
transferring, occupancy, tenure or use of the Property or any portion thereof.

     Section 13.02 LANDLORD'S LIABILITY; CERTAIN DUTIES.

     (a) As used in this Lease, the term "Landlord" means only the current owner
or owners of the fee title to the Property or Project or the leasehold estate
under a ground lease of the Property or Project at the time in question. Each
Landlord is obligated to perform the obligations of Landlord under this Lease
only during the time such Landlord owns such interest or title. Any Landlord who
transfers its title or interest is relieved of all liability with respect to the
obligations of Landlord under this Lease to be performed on or after the date of
transfer. However, each Landlord shall deliver to its transferee all funds that
Tenant previously paid if such funds have not yet been applied under the terms
of this Lease.

     (b) Tenant shall give written notice of any failure by Landlord to perform
any of its obligations under this Lease to Landlord and to any ground lessor,
mortgagee or beneficiary under any deed of trust encumbering the Property whose
name and address have been furnished to Tenant in writing. Landlord shall not be
in default under this Lease unless Landlord (or such ground lessor, mortgagee or
beneficiary) fails to cure such non-performance within thirty (30) days after
receipt of Tenant's notice. However, if such non-performance reasonably requires
more than thirty (30) days to cure, Landlord shall not be in default if such
cure is commenced within such thirty (30)-day period and thereafter diligently
pursued to completion.

     (c) Notwithstanding any term or provision herein to the contrary, the
liability of Landlord for the performance of its duties and obligations under
this Lease is limited to Landlord's interest in the Property and the Project,
and neither the Landlord nor its partners, shareholders, officers or other
principals shall have any personal liability under this Lease.

     Section 13.03. SEVERABILITY. A determination by a court of competent
jurisdiction that any provision of this Lease or any part thereof is illegal or
unenforceable shall not cancel or invalidate the remainder of such provision or
this Lease, which shall remain in full force and effect.

     Section 13.04. INTERPRETATION. The captions of the Articles or Sections of
this Lease are to assist the parties in reading this Lease and are not a part of
the terms or provisions of this Lease. Whenever required by the context of this
Lease, the singular shall include the plural and the plural shall include the
singular. The masculine, feminine and neuter genders shall each include the
other. In any provision relating to the conduct, acts or omissions of Tenant,
the term "Tenant" shall include Tenant's agents, employees, contractors,
invitees, successors or others using the Property with Tenant's expressed or
implied permission.

     Section 13.05. INCORPORATION OF PRIOR AGREEMENTS; MODIFICATIONS. This Lease
is the only agreement between the parties pertaining to the lease of the
Property and no other agreements are effective. All amendments to this Lease
shall be in writing and signed by all parties. Any other attempted amendment
shall be void.

     Section 13.06. NOTICES. All notices required or permitted under this Lease
shall be in writing and shall be personally delivered or sent by certified mail,
return receipt requested, postage prepaid. Notices to Tenant shall be delivered
to the address specified in Section 1.03 above, except that upon Tenant's taking
possession of the Property, the Property shall be Tenant's address for notice
purposes. Notices to Landlord shall be delivered to the address specified in
Section 1.02 above. All notices shall be effective upon delivery. Either party
may change its notice address upon written notice to the other party.

     Section 13.07. WAIVERS. All waivers must be in writing and signed by the
waiving party. Landlord's failure to enforce any provision of this Lease or its
acceptance of rent shall not be a waiver and shall not prevent Landlord from
enforcing that provision or any other provision of this Lease in the future. No
statement on a payment check from Tenant or in a letter accompanying a payment
check shall be binding on Landlord. Landlord may, with or without notice to
Tenant, negotiate such check without being bound to the conditions of such
statement.

     13.08. NO RECORDATION. Tenant shall not record this Lease without prior
written consent from Landlord. However, either Landlord or Tenant may require
that a "Short Form" memorandum of this Lease executed by both parties be
recorded. The party requiring such recording shall pay all transfer taxes and
recording fees.

     13.09. BINDING EFFECT; CHOICE OF LAW. This Lease binds any party who
legally acquires any rights or interest in this Lease from Landlord or Tenant.
However, Landlord shall have no obligation to Tenant's successor unless the
rights or interests of Tenant's successor are acquired in accordance with the
terms of this Lease. The laws of the state in which the Property is located
shall govern this Lease.

     13.10. CORPORATE AUTHORITY; PARTNERSHIP AUTHORITY. If Tenant is a
corporation, each person signing this Lease on behalf of Tenant represents and
warrants that he has full authority to do so and that this Lease binds the
corporation. Within thirty (30) days after this Lease is signed, Tenant shall
deliver to Landlord a certified copy of a resolution of Tenant's Board of
Directors authorizing the execution of this Lease or other evidence of such
authority reasonably acceptable to Landlord. If Tenant is a partnership, each
person or entity signing this Lease for Tenant represents and warrants that he
or it is a general  

1988 Southern California Chapter
     of the Society of Industrial         11
     and Office Realtors, Inc.     [SIOR LOGO]              Initials    JGW
                                                 
                            (Multi-Tenant Net Form)

<PAGE>   12
partner of the partnership, that he or it has full authority to sign for the
partnership and that this Lease binds the partnership and all general partners
of the partnership. Tenant shall give written notice to Landlord of any general
partner's withdrawal or addition. Within thirty (30) days after this Lease is
signed, Tenant shall deliver to Landlord a copy of Tenant's recorded statement
of partnership or certificate of limited partnership.

     Section 13.11. JOINT AND SEVERAL LIABILITY. All parties signing this Lease
as Tenant shall be jointly and severally liable for all obligations of Tenant.

     Section 13.12. FORCE MAJEURE. If Landlord cannot perform any of its
obligations due to events beyond Landlord's control, the time provided for
performing such obligations shall be extended by a period of time equal to the
duration of such events. Events beyond Landlord's control include, but are not
limited to, acts of God, war, civil commotion, labor disputes, strikes, fire,
flood or other casualty, shortages of labor or material, government regulation 
or restriction and weather conditions.

     Section 13.13. EXECUTION OF LEASE. This Lease may be executed in
counterparts and, when all counterpart documents are executed, the counterparts
shall constitute a single binding instrument. Landlord's delivery of this Lease
to Tenant shall not be deemed to be an offer to lease and shall not be binding
upon either party until executed and delivered by both parties.

     Section 13.14. SURVIVAL. All representations and warranties of Landlord and
Tenant shall survive the termination of this Lease.

ARTICLE FOURTEEN: BROKERS

     Section 14.01. BROKER'S FEE. When this Lease is signed by and delivered to
both Landlord and Tenant, Landlord shall pay a real estate commission to
Landlord's Broker named in Section 1.08 above, if any, as provided in the
written agreement between Landlord and Landlord's Broker, or the sum stated in
Section 1.09 above for services rendered to Landlord by Landlord's Broker in
this transaction. Landlord shall pay Landlord's Broker a commission if Tenant
exercises any option to extend the Lease Term or to buy the Property, or any
similar option or right which Landlord may grant to Tenant, or if Landlord's
Broker is the procuring cause of any other lease or sale entered into between
Landlord and Tenant covering the Property. Such commission shall be the amount
set forth in Landlord's Broker's commission schedule in effect as of the
execution of this Lease. If a Tenant's Broker is named in Section 1.08 above,
Landlord's Broker shall pay an appropriate portion of its commission to Tenant's
Broker if so provided in any agreement between Landlord's Broker and Tenant's
Broker. Nothing contained in this Lease shall impose any obligation on Landlord
to pay a commission or fee to any party other than Landlord's Broker.

     Section 14.02. PROTECTION OF BROKERS. If Landlord sells the Property, or
assigns Landlord's interest in this Lease, the buyer or assignee shall, by
accepting such conveyance of the Property or assignment of the Lease, be
conclusively deemed to have agreed to make all payments to Landlord's Broker
thereafter required of Landlord under this Article Fourteen. Landlord's Broker
shall have the right to bring a legal action to enforce or declare rights under
this provision. The prevailing party in such action shall be entitled to
reasonable attorneys' fees to be paid by the losing party. Such attorneys' fees
shall be fixed by the court in such action. This Paragraph is included in this
Lease for the benefit of Landlord's Broker.

     Section 14.03. AGENCY DISCLOSURE; NO OTHER BROKERS. Landlord and Tenant
each warrant that they have dealt with no other real estate broker(s) in
connection with this transaction except: CB COMMERCIAL REAL ESTATE GROUP, INC.,
who represents    Landlord
---------------------------------------------------------------
-----------------------------------------------------------------------------,
and      CB Commercial                                                    , who
--------------------------------------------------------------------------
represents         Tenant
--------------------------------------------------------------------
------------------------------------------------------------------------------.

     In the event that CB COMMERCIAL REAL ESTATE GROUP, INC. represents both
Landlord and Tenant, Landlord and Tenant hereby confirm that they were timely
advised of the dual representation and that they consent to the same, and that
they do not expect said broker to disclose to either of them the confidential
information of the other party.

ARTICLE FIFTEEN: COMPLIANCE
     
     The parties hereto agree to comply with all applicable federal, state and
local laws, regulations, codes, ordinances and administrative orders having
jurisdiction over the parties, property or the subject matter of this Agreement,
including, but not limited to, the 1964 Civil Rights Act and all amendments
thereto, the Foreign Investment In Real Property Tax Act, the Comprehensive
Environmental Response Compensation and Liability Act, and The Americans With
Disabilities Act.

     ADDITIONAL PROVISIONS MAY BE SET FORTH IN A RIDER OR RIDERS ATTACHED
HERETO OR IN THE BLANK SPACE BELOW. IF NO ADDITIONAL PROVISIONS ARE INSERTED,
PLEASE DRAW A LINE THROUGH THE SPACE BELOW.

ARTICLE SIXTEEN: OPTIONS TO RENEW

     Provided Tenant is not in default of the Lease, Tenant will have the option
of renewing the Lease, for all space then under lease by Tenant in the building,
for two (2) additional terms of five (5) years each, upon first giving Landlord
at least twelve (12) months' prior written notice of its exercise of such
options.

ARTICLE SEVENTEEN: LEASE RENEWAL TENANT IMPROVEMENT ALLOWANCE

     Tenant shall receive a lease renewal tenant improvement allowance in the
amount of $2.00 per square foot.

1988 Southern California Chapter
     of the Society of Industrial         12
     and Office Realtors, Inc.     [SIOR LOGO]              Initials    JGW
                                                 
                            (Multi-Tenant Net Form)

<PAGE>   13
     Landlord and Tenant have signed this Lease at the place and on the dates
specified adjacent to their signatures below and have initialled all Riders
which are attached to or incorporated by reference in this Lease.

                                                   "LANDLORD"

Signed on               , 19           Allred Phoenix Properties, LLC,
         ---------------    --         ----------------------------------------
at                                     a Delaware limited liability company
  ----------------------------.        ----------------------------------------

                                       By:  Douglas Allred Investment Company,
                                            a California corporation
                                           ------------------------------------

                                       Its: Managing Member
                                           ------------------------------------

                                       By: David F. Allred
                                           ------------------------------------

                                       Its: Vice President
                                           ------------------------------------


                                                      "TENANT"

Signed on February 6, 1997             Bowmar Instrument Corporation,
         -----------    --             ----------------------------------------

at Phoenix, Arizona                    an Arizona corporation
  ------------------------.            ----------------------------------------

                                       By: /s/ Joseph G. Wanew Jr.
                                          -------------------------------------

                                       Its: Vice President
                                           ------------------------------------

                                       By:
                                          -------------------------------------

                                       Its:
                                           ------------------------------------


     IN ANY REAL ESTATE TRANSACTION, IT IS RECOMMENDED THAT YOU CONSULT WITH
A PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENIST OR OTHER PERSON
WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY, INCLUDING THE
POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS AND UNDERGROUND STORAGE
TANKS.

     THIS PRINTED FORM LEASE HAS BEEN DRAFTED BY LEGAL COUNSEL AT THE DIRECTION
OF THE SOUTHERN CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE
REALTORS(R), INC. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE SOUTHERN
CALIFORNIA CHAPTER OF THE SOCIETY OF INDUSTRIAL AND OFFICE REALTORS(R), INC.,
ITS LEGAL COUNSEL, THE REAL ESTATE BROKERS NAMED HEREIN, OR THEIR EMPLOYEES OR
AGENTS, AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX CONSEQUENCES OF THIS
LEASE OR OF THIS TRANSACTION. LANDLORD AND TENANT SHOULD RETAIN LEGAL COUNSEL
TO ADVISE THEM ON SUCH MATTERS AND SHOULD RELY UPON THE ADVICE OF SUCH LEGAL
COUNSEL.







                                       13
(c) 1988 Southern California Chapter                   Initials /s/ JGW
         of the Society of Industrial  [SIOR LOGO]             ----------------
         and Office Realtors(R), Inc.                          -----------------

                            (Multi-Tenant Net Form)
                                     
<PAGE>   14
ALLRED CENTER SOUTHBANK I               A NEW INDUSTRIAL BACK OFFICE DEVELOPMENT
                                                      3601 EAST UNIVERSITY DRIVE

[MAP OF BUILDING "A" LOCATION]

[MAP OF SITE LOCATION]

Site plan not drawn to scale

Site Features:

- Situated in Southbank Business Park
- Minutes to Sky Harbor International Airport
- Direct access to Interstate 10
- Hotel and restaurants nearby
- Excellent quality labor base
- Fiber optics available to site
- Three freeway interchanges within a one mile radius
- Liquid nitrogen available

[CB COMMERCIAL LOGO]

2346 North Central Avenue
Phoenix, Arizona 85004
(602) 262-5555  FAX (602) 262-5655
http:www.cbcommercial.com


                                   EXHIBIT A
<PAGE>   15
                                  ADDENDUM TO
                          INDUSTRIAL REAL ESTATE LEASE

     This Addendum To Industrial Real Estate Lease ("Addendum") shall be deemed
a part of that certain Industrial Real Estate Lease with Exhibits "A" and "B"
dated of even date hereof ("Lease"), by and between ALLRED PHOENIX PROPERTIES,
L.L.C., a Delaware limited liability company, as "Landlord" and BOWMAR
INSTRUMENT CORP., an Indiana corporation, as "Tenant". To the extent there is
any inconsistency between the terms and provisions hereof and the Lease, the
terms and provisions hereof shall control. The references to numbered Sections
herein refer to the Sections as numbered in the Lease.

                                   AGREEMENT

     NOW, THEREFORE, for valuable considerations, the receipt and sufficiency
of which are hereby acknowledged, Landlord and Tenant agree as follows:

     1.   SECTION 1.11 PARKING. Section 1.11 relative to parking shall be 169
total spaces, which includes one hundred thirty-five (135) designated parking
spaces, said designated parking spaces to be located in the areas highlighted
and depicted on Exhibit "C" attached to the Lease. The designated parking
spaces shall be marked "Reserved -- Bowmar". The remaining thirty-four (34)
spaces to be available for Tenant's use shall be non-reserved and
non-designated. In addition, Landlord shall mark ten (10) parking spaces as
"Visitor", said spaces to be located where indicated on attached Exhibit "C".
The ten (10) Visitor spaces shall be for the general use of all tenants at the
Project.

     2.   SECTION 1.12 RENT AND OTHER CHARGES PAYABLE BY TENANT: This Section
is amended to provide that the Base Rent shall increase five percent (5%) above
the prior Base Rent amount every twenty-four (24) months with the first
increase effective on the twenty-fifth (25th) month after the Commencement Date;
the increase shall not be based upon the Index as provided in Section 3.02.

     3.   SECTION 2.02 DELAY IN COMMENCEMENT. This Section is amended to
provide that Landlord shall be liable to Tenant to the extent Landlord fails to
substantially complete the work to be performed by Landlord under the Work
Letter Agreement attached as Exhibit "B" to the Lease, on or before the
Commencement Date (as extended by the number of Tenant delay days as provided
in the Work Letter Agreement). Landlord's liability in addition to delay in the
Commencement Date, shall be a credit equal one-thirtieth (1/30th) of the Base
Monthly Rent for each day of Landlord's delay beyond the Commencement Date (as
extended by the number of Tenant delay days), said amount to be applied against
the next monthly rental payment under the Lease after the Commencement Date.
The foregoing amount shall be deemed a liquidated damage amount, which Tenant
hereby agrees is a fair and reasonable estimate of the damages Tenant may
suffer from said delay.

     4.   SECTION 3.03 SECURITY DEPOSIT; INCREASES. Section 3.03 is amended to
require Landlord to hold the Security Deposit in one separate account at a
financial institution wherein the account shall be insured by the Federal
Deposit Insurance Corporation, with all interest that accrues to be held as
additional Security Deposit in accordance with the Lease. Tenant shall provide
Landlord with Tenant's Federal Tax Identification Number and shall sign such
documents as reasonably requested by Landlord and the financial institution
holding the Security Deposit, to cause all interest accrual to be reported as
earned by Tenant. No additional Security Deposit shall be required as the Base
Rent increases.

     5.   SECTION 4.02 REAL PROPERTY TAXES. Section 4.02 shall be amended to
provide that Tenant shall pay only its pro rata share of the Real Property
Taxes on the Property. "Pro rata share" (or "pro rata share") as used in the
Lease and this

<PAGE>   16
Addendum currently means thirty-four and 30/100 percent (34.30%), calculated by
dividing the 127,757 rentable square footage of the two (2) Buildings in the
Project (denominator) into the 43,129 rentable square footage of the Property
being leased by Tenant. Notwithstanding the foregoing, Tenant shall be
obligated to pay all Real Property Taxes on the Property attributable to any
and all Tenant improvements of any kind or nature placed in or on the Property
by Tenant. If the Property is not separately assessed, Landlord shall
reasonably determine Tenant's share of the Real Property Tax payable by Tenant,
including the Real Property Tax for said Tenant improvements, based upon the
Assessor's work sheets or other reasonable available information. Landlord's
written statement of Tenant's share of said taxes shall be accompanied by
reasonable evidence of the manner in which Landlord calculated Tenant's share,
including copies of all tax bills affecting the Property (to be provided
promptly following Landlord's receipt of said tax billings). Section 4.02(c)
pertaining to joint assessment for real property taxes, shall be deleted.

     Landlord shall file protests or otherwise object to real property tax
assessments, from time to time when requested by Tenant, provided Tenant places
such request in writing to Landlord a minimum of thirty (30) days prior to the
date the filing of a non-judicial protest is due at the Maricopa County
Assessor's office. All reasonable fees associated with such protest shall be
paid by Tenant, in advance, to the extent Landlord believes such request is
unreasonable. The reasonable costs and expenses of the protest shall be deemed
a part of the Common Area costs under the Lease to the extent a net savings
results from the protest. If Tenant is required to pay any costs in advance to
the Landlord for a protest, to the extent the protest is successful and results
in a net savings (net of the cost of the protest) the Tenant shall be
reimbursed for all but its Pro Rata Share of such costs.

     6.   SECTION 4.04 LIABILITY INSURANCE. Section 4.04 shall be deleted and
the following is inserted:

          a.   During the Lease Term, Tenant will maintain Comprehensive General
               Liability Insurance coverage including premises, operations,
               products, completed operations, and contractual liability
               coverages in an initial amount no less than $1,000,000 per
               occurrence, $1,000,000 personal injury and advertising injury,
               $1,000,000 Products and Completed Operations Aggregate and
               $1,000,000 General Aggregate. The initial amount of such
               insurance shall be subject to reasonable periodic increases based
               upon inflation, increased liability awards, recommendation of
               Landlord's professional insurance advisors and other relevant
               factors. Coverage shall:

               (i)  Include a provision that the policy is primary and
                    non-contributory;

               (ii) Name Landlord as an "additional insured".

               The amount and coverage of such insurance shall not limit
               Tenant's liability nor relieve Tenant of any other obligation
               under this lease. Landlord may also obtain Comprehensive General
               Liability insurance in an amount and coverage determined by
               Landlord. The policy obtained by Landlord shall not be
               contributory and shall not provide primary insurance.

     7.   SECTION 4.05(d) MAINTENANCE OF COMMON AREAS. This Section is amended
to provide that Common Area costs shall exclude the following:

          a.   All reserves for roof replacement;


                                       2
<PAGE>   17
          b.   Capital expenditures required to be capitalized for federal
               income tax purposes shall be amortized over the reasonable life
               of the improvements, with only the amortized portion to be
               allocated annually to Common Area costs.

     8.   SECTION 4.05(e) TENANT'S SHARE AND PAYMENT. Tenant's pro rata share
of 34.30% is calculated by dividing the 125,757 rentable square footage of the
two (2) Buildings in the Project (denominator) into the 43,129 rentable square
footage being leased by Tenant. The pro rata share shall remain fixed for the
Lease Term, as may be extended under Tenant's option to extend the Term of the
Lease, but subject to re-calculation in accordance with Paragraph 24 below.

     9.   SECTION 4.06 LATE CHARGES. This Section shall be amended to provide
that the ten percent (10%) late charge amount shall be decreased to five
percent (5%).

     10.  SECTION 4.08 IMPOUNDS FOR INSURANCE PREMIUMS AND REAL PROPERTY TAXES.
Section 4.08 is amended to provide that no impound for insurance premiums and
real property taxes shall occur unless required or requested by a lender to
whom Landlord has granted a security interest in the Property. Landlord may, at
Landlord's election, estimate in advance and charge Tenant all real property
taxes and insurance premiums payable by Tenant under this Lease with adjustment
following year end, in accordance with the provisions of Section 4.05(e).

     11.  SECTION 5.03 HAZARDOUS MATERIALS. Landlord hereby acknowledges that
Tenant may use certain Hazardous Substances and Hazardous Materials, provided
that Tenant i) shall use such substances and materials only in full compliance
with all requirements of all applicable laws, regulations, statutes,
ordinances, rules and other requirements of all applicable government
authorities; ii) pays all increases in insurance premiums, if any, resulting
from Tenant's use of such substances; iii) immediately provides copies of all
reports which it provides to government entities regulating Hazardous
Substances, all permits, variances and consents received from any government
entities, and all notices, communications, reports, disclosures and other
written communications relating in any manner to any actual, alleged or
probable violation of Hazardous Materials laws.

     12.  SECTION 5.04 SIGNS AND AUCTIONS. Tenant shall have the right to have
a sign on the Building provided it obtains appropriate permits, fully complies
with the rules and regulations of the City of Phoenix, and fully complies with
the Southbank sign guidelines. Tenant shall install and maintain such sign at
Tenant's sole cost and expense. The design and location of the sign shall be
subject to prior written approval by Landlord, not to be reasonably withheld.

     13.  SECTION 5.05 INDEMNITY. This Section shall be amended by adding the
following:

     Landlord shall indemnify Tenant against and hold Tenant harmless from:
     (a) Landlord's use of the Project; (b) any and all costs, claims or
     liability arising from Landlord's failure to perform maintenance and
     repair of the Building and Common Area as required under this Lease,
     including any contamination of the Property from the presence or use of
     Hazardous Material caused or knowingly permitted by Landlord; (c) any
     breach or default in the performance of Landlord's obligations under this
     Lease; (d) any material misrepresentation or material breach of warranty
     by Landlord under this Lease; or (e) other acts or omissions by Landlord
     under this Lease. Landlord shall defend Tenant against any such cost,
     claim or liability at Landlord's expense with counsel reasonably
     acceptable to Tenant. The foregoing provisions of this entire paragraph
     shall relate solely to claims arising out of Landlord's negligence or
     willful misconduct. As used in this Section, "Landlord" shall include
     Landlord's


                                       3
<PAGE>   18
     employees, agents, invitees and contractors, if applicable, while acting
     within the scope of their respective agency. In addition, Landlord shall
     indemnify Tenant against and hold Tenant harmless from any and all
     reasonable costs of Tenant relating to claims wrongfully made against
     Tenant that result from the action or inaction of other tenants at the
     Project and not from events caused or allowed to happen by Tenant.
     Landlord shall defend Tenant against such matters at Landlord's expense
     with counsel reasonably acceptable by Tenant.

     14.  SECTION 6.04 TENANT'S OBLIGATIONS. This Section is amended in
subsection (a) to delete the reference to "structural" as it pertains to
Tenant's improvements to be kept in good repair by Tenant. Further, Tenant's
obligation to maintain the Property in a "first class" condition is deleted.
Tenant shall be obligated to maintain the Property in the same condition that
exists upon the Commencement Date, normal wear and tear excepted. Further,
Landlord shall have no obligation to maintain any improvement or alteration
about this Property constructed by or under the direction of Tenant, including,
but not limited to the improvements being constructed pursuant to the Work
Letter. Upon completion of the improvements under the Work Letter, Landlord
shall assign to Tenant all warranties, guarantees and contractual rights
Landlord may have in connection with said improvements, without warranty from
Landlord.

     15.  SECTION 6.05 ALTERATIONS. This Section is amended to provide that the
$10,000 amount specified in the second line of subpart (a) shall be deleted
with the sum of $50,000 per occurrence inserted therein. Tenant shall have no
right to make any exterior changes to the Building (except for signage as
provided under Section 5.04 of the Lease) without Landlord's prior written
consent. Further, Tenant shall have no authority to make any interior
structural changes to load-bearing walls, to ceiling and roof joists, supports
and related structural components, or to the foundation and concrete flooring
(except for attaching equipment with bolts and similar fasteners), in any
dollar amount without Landlord's prior written consent. Tenant shall be
entitled to make other interior, non-load bearing structural changes to the
interior up to $50,000 per occurrence. Tenant shall supply Landlord with all
plans and specifications for the improvements where Landlord's prior approval
is not required following completion of said improvements. Notwithstanding the
foregoing, upon any assignment or sublease of all or any part of the Property,
said assignee or subtenant shall obtain the prior written consent of Landlord
for all changes to the Property that aggregate more than $10,000 for any
calendar year. The prior notice required pursuant to Section 6.05(b) of the
Lease is hereby deleted.

     16.  SECTION 7.01 PARTIAL DAMAGE. This Section is amended under subpart
(a) to require Landlord to repair the damage as soon as reasonably possible but
no later than 120 days after receiving written demand for such repairs from
Tenant.

     Subpart (b) pertaining to Tenant's obligation to pay the deductible amount
(if any) under the Landlord's insurance is limited to repairs caused by the
gross negligence or willful misconduct of Tenant. If Landlord elects to repair
the damage, such repair shall occur as soon as reasonably possible but not
later than 120 days after receiving written demand for such repairs from
Tenant. Tenant shall be entitled to undertake the repairs in accordance with
the Lease, provided Tenant supplies Landlord with a figure representing the
total expected cost to undertake such repairs and Landlord approves such cost
figure, such approval not to be unreasonably withheld. Tenant shall be entitled
to a credit against accruing rent for the reasonable costs and expenses of the
repairs not covered by insurance, but shall not be entitled to an
administrative or oversee charge for undertaking such repairs. All repairs
undertaken by Tenant shall be completed as soon as reasonably possible but no
later than 120 days after Landlord notifies Tenant that Landlord has elected to
not undertake such repairs.


                                       4
<PAGE>   19
     Subpart (c) is amended to provide that if Landlord elects to terminate the
Lease, Tenant shall have ten (10) days thereafter within which to exercise any
options to extend the Lease Term, and Landlord's election to terminate shall
thereupon become null and void as to said partial destruction and resulting
election to terminate.

     17. SECTION 7.02 SUBSTANTIAL OR TOTAL DESTRUCTION. Section 7.02 is amended
to provide that upon substantial or total destruction of the Property, Landlord
shall have the obligation to rebuild the Property if (a) such rebuilding can be
reasonably completed within a six month period, and (b) the insurance proceeds
made available are sufficient to pay for the rebuilding. In the event the
Property cannot be reasonably rebuilt within six months, Tenant shall have the
right to terminate the Lease. Tenant shall be responsible for the difference
between the actual cost of rebuilding and the insurance proceeds received by
Landlord only if the destruction was caused by the gross negligence or willful
misconduct of Tenant.

     18.  SECTION 9.06 NO MERGER. Section 9.06 is amended to provide that
Landlord shall not terminate any subtenancies for subtenants that received
written approval and provided said subtenants fully and timely perform their
obligations under their respective subleases.

     19.  ARTICLE TEN DEFAULTS; REMEDIES. Article Ten is amended to provide
that upon Landlord's default of a material item under the Lease, following such
notice(s), if any, required under the Lease, Tenant shall be entitled to all
rights and remedies available at law and at equity, including the right to
specific performance. Notwithstanding, the foregoing rights specifically
exclude the right to collect any special or consequential damages of any
nature, relating to Landlord's default, unless such damage is specifically
provided for in the Lease or this Addendum. Further, to the extent a material,
non-monetary, uncured breach by Landlord causes a condition that substantially
prevents Tenant from operating its business and using the Property for its
permitted ongoing uses, Tenant, in addition to all other rights and remedies
available to Tenant under this Lease, shall be entitled to terminate the Lease
following sixty (60) days advance written notice of Tenant's election to so
terminate wherein Tenant states in detail the breach or alleged breach by
Landlord. During said notice period, Landlord shall be entitled to cure said
default, and Tenant's right to terminate the Lease based upon said default(s)
shall be held in abeyance and extended provided Landlord reasonably and
diligently proceeds to cure the default.

     If the Property is at any time subject to a first mortgage or a first deed
of trust and this Lease or the rentals due hereunder are assigned in connection
with such mortgage or deed of trust and Tenant is given written notice thereof,
including the mailing address of Landlord's mortgagee, Tenant agrees that it
will, concurrently with the giving of any notice of default to Landlord, mail a
duplicate of such notice to Landlord's mortgagee. Tenant further agrees that it
will not exercise its right to terminate this Lease because of Landlord's
default without first giving Landlord's mortgagee additional written notice of
Tenant's intention to so terminate and affording Landlord's mortgagee a
reasonable period after the mailing of such notice to cure said default on
behalf of the Landlord.

     20.  SECTION 10.03 REMEDIES. Section 10.03 is amended to provide that
Landlord shall not be entitled to collect any special or consequential damages
from Tenant relating to Tenant's default, except as may reasonably be
foreseeable as a result of a breach by Tenant of the terms, provisions and
requirements under the Lease related to Tenant's obligation to not make
structural changes without Landlord's consent, or as may be related to Tenant's
obligation to fully comply with all environmental laws, rules and regulations.

     21.  SECTION 11.01 CONSENT TO LEASEHOLD MORTGAGE. Tenant, or its
successors or assigns shall have the right, without Landlord's further consent,
to hypothecate its leasehold estate in the Property, from time to time, as
security for any


                                       5
<PAGE>   20
loan made by any "Leasehold Mortgagee" to Tenant, upon such terms and
conditions as are acceptable to Tenant. For purposes of this Lease, the term
"Leasehold Mortgagee" shall refer to any institution which is (a) not
affiliated with Tenant; and (b) makes commercial or real estate loans in the
ordinary course of its business (including any assignee or transferee of said
loan that meets the forgoing qualifications), which makes a loan to Tenant
secured by a first lien on Tenant's leasehold estate in the Property.

     Landlord shall send copies of all notices from Landlord to Tenant (or its
successors in interest under the Lease) to any pertinent approved Leasehold
Mortgagee. Landlord shall have no obligation to provide to a Leasehold
Mortgagee a copy of any notices from Landlord to Tenant unless, prior to
Landlord giving such notice, Landlord has received written notice of the name
and address of the approved Leasehold Mortgagee.

     22.  LEASEHOLD MORTGAGEE'S RIGHTS.

          a.   The Lease shall not terminate or be terminated by Landlord if,
               within thirty (30) days after the later of service of notice of
               default on Leasehold Mortgagee or the end of such time period as
               Tenant may have under the Lease to cure such default, Leasehold
               Mortgagee shall, at Leasehold Mortgagee's option, either:

               (i)   Cure such default if such default can be cured by the
                     payment or expenditure of money or by performance by
                     Leasehold Mortgagee, which performance Landlord will accept
                     as though performed by Tenant and thereafter maintain all
                     obligations of Tenant, including but not limited to timely
                     payment of all amounts as they become due. Landlord will
                     allow Leasehold Mortgagee to enter the Property and to take
                     all such actions as may be necessary to cure such default;
                     or

               (ii)  If such default cannot be cured within such thirty (30) day
                     period, either (A) immediately assume the Lease in full and
                     commence all actions necessary to cure such default, and
                     prosecute same to completion within sixty (60) days
                     thereafter, or (B) assume the Lease in full and cause the
                     prompt initiation of foreclosure or other appropriate
                     proceedings, whether by power of sale or otherwise, so long
                     as Leasehold Mortgagee shall thereafter prosecute such
                     proceedings diligently to conclusion and perform and comply
                     with all other covenants and conditions of the Lease
                     requiring the payment or expenditure of money by Tenant
                     until the leasehold estate shall be released or reconveyed
                     from the effect of the Leasehold Mortgage or until it shall
                     be transferred or assigned pursuant to or in lieu of
                     foreclosure by power of sale or otherwise; provided,
                     however that if Leasehold Mortgagee is prohibited by any
                     process or injunction issued by any court or by reason of
                     any action by any court having jurisdiction of any
                     bankruptcy or insolvency proceeding involving Tenant from
                     commencing or prosecuting foreclosure or other appropriate
                     proceedings in the nature thereof the time periods
                     specified in this subparagraph (ii) above for commencing or
                     prosecuting and completing such foreclosure or other
                     proceedings shall be extended for the period of such
                     prohibition.


                                       6
<PAGE>   21
          b.   If Leasehold Mortgage elects either of the above-mentioned
               options, upon Leasehold Mortgagee's acquisition of the leasehold
               estate by foreclosure, whether by power of sale or otherwise or
               by deed in lieu of foreclosure, the Lease shall continue in full
               force and effect provided that, if Leasehold Mortgagee elects
               option (B) in the paragraph immediately above, upon Leasehold
               Mortgagee's acquisition of the leasehold by foreclosure, whether
               by power or sale or otherwise or by deed in lieu of foreclosure,
               Leasehold Mortgagee shall cure all prior non-monetary defaults of
               Tenant under the Lease that are capable of being cured by
               Leasehold Mortgagee.

          c.   Notwithstanding any restrictions on Tenant's right to assign the
               Lease or its leasehold estate, and provided that any foreclosure
               sale purchaser shall assume all obligations of Tenant under the
               Lease, and provided further that all prior defaults of Tenant
               under the Lease that are capable of being cured shall be cured,
               the foreclosure of the Leasehold Mortgage or any sale thereunder,
               whether by power of sale or otherwise, shall not require any
               consent or approval of Landlord and shall not constitute a breach
               of any provision of the Lese or an event of default thereunder,
               and upon such foreclosure or sale, Landlord shall recognize such
               foreclosure sale purchaser as Tenant under the Lease.
               Notwithstanding, Leasehold Mortgagee shall not be deemed released
               from its assumption of the Lease unless such release is obtained
               in writing from Landlord, such consent to be based upon the
               financial condition, intended operations and other information
               deemed relevant by Landlord, with said consent to not be
               unreasonable withheld.

          d.   In the event that the Lease is terminated for any reason prior to
               the end of the term (the "Lease Term") of the Lese, including
               without limitation, terminated by a trustee in bankruptcy acting
               on behalf of Tenant, Landlord shall enter into a new lease with
               Leasehold Mortgagee covering the Property, provided that
               Leasehold Mortgagee (i) requests such new lease by written notice
               to Landlord within sixty (60) days after termination, and (ii)
               cures all prior defaults of Tenant that are capable of being
               cured by Leasehold Mortgagee. The new lese shall be for the
               remainder of the Lease Term, effective at the date of such
               termination, at the rent and on the covenants, agreements,
               conditions, provisions, restrictions and limitations contained in
               the Lease.

     23.  MERGER OF LEASE.  There shall be no merger of the Lease or any
interest in the Lease nor of the leasehold estate created thereby, with the fee
estate in the Property, by reason of the fact that the Lease or such interest
therein, or such leasehold estate may be directly or indirectly held by or for
the account of any person who shall hold the fee estate in the Property, or any
interest in such fee estate, nor shall there be such a merger by reason of the
fact that all or any part of the leasehold estate created thereby may be
conveyed or mortgaged in a leasehold mortgage to a mortgagee who shall hold the
fee estate in the Property or any interest of the Landlord under the Lease.

     24.  SECTION 11.02 ATTORNMENT.  Section 11.02 is amended by deleting the
last sentence relating to Tenant's waiver of any right to terminate the Lease;
Tenant shall be entitled to terminate the Lease in accordance with the
provisions of Paragraph 18 of this Addendum.

                                       7
<PAGE>   22
     25.  SECTION 11.04 ESTOPPEL CERTIFICATES.  This Section is amended to
delete in subsection (a), item (v) the words "Tenant or" and add the word
"reasonably" prior to the last word "require", in that sentence.

     26.  SECTION 11.05 TENANT'S FINANCIAL CONDITION.  This Section is amended
to provide that Tenant's obligation to deliver financial statements to any
lender designated by Landlord shall be performed by Tenant within ten (10) days
following request by Landlord. The financial information to be provided shall be
limited to public information only.

     27.  SECTION 13.02 LANDLORD'S LIABILITY: CERTAIN DUTIES.  Section 13.02(a)
is amended to provide that upon a transfer of title to the Property by the
Landlord, or its successors or assigns, notwithstanding the limitation on
liability to the transferee, to the extent said transferee fails to cure any
material defaults by Landlord, Tenant shall continue to have its termination
rights as set forth in Paragraph 15 of this Addendum.

     Section 13.02(c) is amended to provide that the liability of Landlord for
performance of its duties and obligations under the Lease is limited to the
assets of Landlord, not just Landlord's interest in the Property and the
Project. Notwithstanding the foregoing, the liability for performance of
Landlord's duties and obligations under the Lease shall again be limited to
Landlord's interest in the Property and any insurance proceeds available to the
Landlord relating to said liability, upon a sale or transfer of the Property to
an unrelated third party.

     28.  SECTION 13.06 NOTICES.  This Section is hereby amended in its entirety
to read as follows: All notices and communications ("Notices") required or
permitted under this Lease shall be made in writing, signed by the party making
the same, shall specify the Section hereunder pursuant to which it is given or
being made, and shall be deemed given or made (i) on the date delivered if
delivered in person, (ii) on the date of the day after delivery to a reputable
overnight courier for delivery to the party to receive such Notice, fees
prepaid, (iii) upon transmission by facsimile if receipt is confirmed by
telephone or (iv) forty-eight (48) hours after it is deposited for registered or
certified mailing, return receipt requested and marked for delivery to addressee
only, if mailed with postage and other fees prepaid, addressed to the party to
whom such Notice is directed at the address specified in Section 1.02 as to
Landlord or in Section 1.03 as to Tenant, except that upon Tenant's taking
possession of the Property, the Property shall be Tenant's address for Notice
purposes. Either party may change its Notice address upon written Notice to the
other party.

     Notices shall be forwarded to the following addresses:

     If to Landlord:     ALLRED PHOENIX PROPERTIES, L.L.C.
                         Attn: David F. Allred
                         1660 Hotel Circle North, Suite 200
                         San Diego, CA  92108
                         Telephone: (619) 299-6760
                         Fax: (619) 299-4928

     With a copy to:     WARNER ANGLE ROPER & HALLAM P.C.
                         Attn: Dean J. Formanek
                         3550 N. Central Ave., Suite 1500
                         Phoenix, AZ 85012
                         Telephone: (602) 264-7101
                         Fax: (602) 234-0419

     If to Tenant:       BOWMAR INSTRUMENT CORP.
                         5080 N. 40th St., Suite 475
                         Phoenix, AZ 85018
                         Telephone: (602) 957-0271

                                       8
<PAGE>   23
                         Fax: (602) 381-1314
     With a copy to:     Derek Sorenson
                         Bryan Cave LLP
                         2800 N. Central Ave., Suite 2100
                         Phoenix, AZ 85004-1098
                         Telephone: (602) 230-7000
                         Fax: (602) 266-5938



     29. SECTION 13.12 FORCE MAJEURE. This Section is hereby amended to read as
follows: If Landlord cannot perform any of its obligations due to events beyond
Landlord's reasonable control, the time provided for performing such obligations
shall be extended by a period of time equal to the duration of such events.
Events beyond Landlord's reasonable control include, but are not limited to,
acts of God, war, civil commotion, labor disputes, strikes, fire, flood or other
casualty, shortages of labor or material, government regulation or restriction
and weather conditions. No penalty, charge or damage shall be assessed against
Landlord for delays caused by force majeure, notwithstanding any of the other
provisions in the Lease and this Addendum.

     Landlord's ability to extend the time for performing its obligations due to
force majeure events is contingent upon Landlord providing Tenant written notice
of the occurrence of any such force majeure event within twenty (20) days after
Landlord becomes aware of the occurrence of such event, such notice to contain
an estimate of the duration of such event; in no event shall Landlord be
entitled to extend its time for performance longer than six (6) months, without
Tenant's consent. Landlord and Tenant agree to meet to attempt to minimize the
impact and delay caused by force majeure events, by modifying the plans and
specifications to allow for substitute equipment, machinery and other materials
that may be more readily available, if the force majeure event relates to those
areas of the Lease. Landlord shall not be required to incur additional costs and
expenses based upon any such reasonable substitution unless Tenant advances the
monies necessary to cover such increased costs and expenses.

     30. ARTICLE SIXTEEN: OPTIONS TO RENEW. Article Sixteen is amended to
provide that the Base Rent initially payable during any extension of the Lease
Term shall be an amount equal to 105% of the Base Rent in effect under the Lease
immediately prior to the commencement of the extended Lease Term, effective as
of the first month of the extended Lease Term. Such Base Rent shall subsequently
continue to be increased every twenty-four (24) months thereafter by an amount
equal to five percent (5%) of the immediately prior Base Rent amount.

     31. DIVISION OF PROJECT INTO SEPARATE PARCELS. Tenant acknowledges that
Landlord has informed Tenant of Landlord's intent to replat the Project and
divide the Project into two (2) separate properties, with one property comprised
of Building A and the other property comprised of Building B, along with their
respective common areas and parking areas. Tenant hereby agrees to reasonably
cooperate with Landlord and sign such documents as reasonably requested to
accomplish said split of the Project, at no costs or expense to Tenant, provided
there is no adverse effect on Tenant's parking, access to the Property and the
amount of Tenant's aggregate Property and operating expenses. Following such
division of the Project, the pro rata share of Tenant shall be recalculated and
adjusted based upon the total rentable square footage of Building A (consisting
of 73,729 square feet). For example, in the event such split occurs, the pro
rata share of Building A shall be calculated by dividing the rentable square
footage of Building A (denominator) into the rentable square footage of Building
A being leased by Tenant. Notwithstanding the foregoing, the division of the
Project into two separate properties shall not decrease the number of parking
spaces made available or to be provided to Tenant as required under this Lease
and shall not materially or adversely interfere with Tenant's access as
heretofore contemplated or allowed onto the Project by Tenant, its employees,

                                       9
<PAGE>   24
suppliers, and invitees. Tenant acknowledges that the access and parking for the
Project when so divided will be provided for pursuant to a recorded agreement
for reciprocal and cross easements for access and parking. Upon such division
and recalculation of pro rata share, the Common Area costs payable by Tenant
under the Lease, such as property taxes and Common Area costs, shall
subsequently be based on such costs relating to the building in which Tenant's
Property is located and the common area within the split parcel surrounding said
Building. Following the division of the Project, the term "Project" as used in
the Lease shall be deemed to include the separate Building in which the Property
is located and the surrounding area as divided by the replatting of the Project,
and shall no longer include the other Building and surrounding area.

     32. MEZZANINE. To the extent Tenant constructs a mezzanine in the interior
of the building in accordance with plans and specifications pre-approved by
Landlord, the additional interior floor space added by said mezzanine shall not
be deemed additional square footage that results in an increase in the Base Rent
during the Lease Term or any extensions thereof. The mezzanine shall remain with
the Property upon Lease termination.

     33. LANDLORD'S LIEN. Landlord agrees to waive all claims and right to any
Landlord's lien available to it with respect to any personal property of Tenant
now or hereafter located at the Property by statute or common law, as the case
may be, for any and all non-payment(s) of rent now due or which may hereafter
become due from Tenant under the Lease, including any right to levy and sale on
distress of said personal property relative to any first lien loan on said
personal property ("Loan"); the foregoing waiver shall continue so long as any
of the Loan remains unpaid. Landlord and Tenant agree that the lender, upon the
default of Tenant in payment or performance of the Loan, may, after actual
notice to Landlord, enter any portion of the Property where the personal
property may be found, and may remove the personal property for the purpose of
enforcing its rights as a secured party therein; provided, however, that the
lender must indemnify Landlord and hold Landlord harmless from any and all
liability and damage that may result from such entry and/or removal.
Notwithstanding the forgoing, such entry and/or removal will be permitted only
prior to the earlier of the following: (a) the expiration of the Lease, or (b)
thirty (30) business days following lender's receipt of written notice from
Landlord that the Lease has been terminated.

     The following shall apply with respect to the foregoing waiver of
Landlord's lien: (A) such waiver shall apply only to the Loan and the subject
personal property and shall automatically terminate upon repayment of the Loan
or termination or expiration of the Lease (subject to lender's right of entry as
set forth above); (B) lender, its successors and assigns shall be a third party
beneficiary of the provisions of this Section (but not of any other provisions
of this Lease) and the provisions of this Section may not be amended or modified
without the prior written consent of lender; (C) nothing herein shall obligate
Lessor to execute any additional waivers of Landlord's lien except as expressly
provided in items (C) and (D) below; (C) in the event the Lease is extended or
renewed, the provisions of this Section shall apply to such extension or renewal
for so long as the Loan is outstanding; (D) in the event Landlord and Tenant
enter into a new lease pertaining to the Property or any portion thereof at a
time when the Loan is outstanding, Lessor and Lessee shall include in such new
Lease provisions substantially the same as the provisions of this Section; and
(E) prior to Landlord's subordination becoming effective, the lender shall agree
and confirm as follows:

        (i)     that, by virtue of the provisions of this Section, the lender
                does not obtain and hereby disclaims any and all right, title,
                interest, lien, claim or encumbrance in, to or on the Property,
                or any portion thereof, and in and to the Landlord's and
                Tenant's interests under the Lease and that the waiver of
                Landlord's lien set forth above pertains only

                                       10
<PAGE>   25
               to personal property of Tenant located at the Property and to
               Tenant's right, title and interest, if any, in fixtures located
               at the Property;

          (ii) upon payment of the Loan, lender shall, at the request of
               Landlord, execute and deliver to Landlord an acknowledgment that
               lender has no further rights under this Section; and

         (iii) from time to time upon request by Landlord, lender shall execute
               and deliver to Landlord a written statement (which may be relied
               upon by any proposed or actual lender of Landlord or proposed or
               actual purchaser of Landlord's interest under the Lease)
               confirming that: (a) the subordination relates solely to personal
               property and Tenant's right, title and interest, if any, in
               fixtures located at the Property; and (b) by virtue of the
               provisions of this Section, the lender does not obtain and
               disclaims any and all right, title, interest, lien, claim or
               encumbrance in, to or on the Property, or any portion thereof,
               and in and to the Landlord's and Tenant's interests under the
               Lease.

          (iv) within thirty (30) days following the expiration of the Lease or
               following lender's receipt of written notice from Landlord that
               the Lease has been terminated, the lender shall remove all
               personal property and fixtures to which this subordination
               relates, and repair all damage, if any, caused by said removal;
               this subordination shall automatically terminate as to all
               personal property and fixtures after said thirty (30) business
               days to the extent not removed, and thereafter, shall sign such
               releases and waivers of its lien rights as may be requested by
               Landlord pertaining to the personal property and fixtures not
               timely removed by lender.

LANDLORD:                               TENANT:

ALLRED PHOENIX PROPERTIES,              BOWMAR INSTRUMENT CORP., an
L.L.C., a Delaware limited              Indiana corporation
liability company

BY:  Douglas Allred Company, a          BY:   /s/ Joseph G. Warner Jr.
     California corporation                   ----------------------------
ITS: Managing Member                    ITS:  Vice President
                                              ----------------------------
                                        Date: February 6, 1997
                                              ----------------------------

     BY: 
           ------------------------
           David Allred
     ITS:  Vice-President
     Date:
           ------------------------




                                       11
<PAGE>   26
                                   EXHIBIT "B"
                              WORK LETTER AGREEMENT


The undersigned Landlord and Tenant are executing concurrently with this Work
Letter Agreement, a written Industrial Real Estate Lease (the "Lease") covering
those certain premises more particularly described in Exhibit "A" to the Lease,
(hereinafter referred to as "Premises"), the address of which is 3601 East
University Drive, Phoenix, Arizona 85034.


1.       REPRESENTATIVES

         Landlord appoints Landlord's Representative to act for Landlord in all
matters covered by this Work Letter. Tenant appoints Tenant's Representative to
act for Tenant in all matters covered by this Work Letter. All inquiries,
requests, instructions, authorizations and other communications with respect to
the matters covered by this Work Letter will be made to Landlord's
Representative or Tenant's Representative, as the case may be. Tenant will not
make any inquiries of or requests to, and will not give any instructions or
authorizations to, any other employee or agent of Landlord, including Landlord's
architect, engineers and contractors or any of their agents or employees, with
regard to matters covered by this Work Letter. Notwithstanding the foregoing,
with respect to Work Letter Agreement matters, only Roger Derse shall have the
authority to execute documents and grant approvals on behalf of Tenant and only
David Allred shall have the authority to execute documents and grant approvals
on behalf of Landlord. Either party may change its Representative under this
Work Letter at anytime with three (3) days prior written notice to the other
party.

Tenant's Representative:  ______________________________________________________
                          Mr. Roger Derse/Mr. Michael Bozarth
                          (Engineering Design Concepts)

Landlord's Representative:______________________________________________________
                          Mr. David Allred/Mr. Scott Price
                          (Triton Builders Company)


         All notices, statements, demands or demands approvals or other
communications (herein referred to as "Notices") to be given under or pursuant
to this Work Letter Agreement, shall be in writing, addressed to the Landlord
representatives and Tenant representatives as provided below, and shall be
delivered in person, by courier, by certified mail, postage prepaid, or by
facsimile transmission. If delivered in person or by courier, said notice shall
be deemed received upon delivery. If mailed as aforesaid, such notice shall be
deemed to have been received 48 hours after the date of mailing. If delivered by
facsimile transmission, such notice shall be deemed to have been received upon
receipt. The addresses of the parties to which notices are to be sent are as
follows:

                  To Landlord:                       Douglas Allred Company
                                                     1660 Hotel Circle North
                                                     Suite 200
                                                     San Diego, CA 92108
                                                     Fax No.:  619-299-4928
                                                     Attn:  David Allred

                  with a copy to:                    Triton Builders Company
                                                     7345 East Acoma Drive
                                                     Suite 200
                                                     Scottsdale, AZ 85260
                                                     Fax No.:  602-998-2382
                                                     Attn:  Scott Price


                                       1
<PAGE>   27
                  To Tenant:                         Bowmar Instrument Corp.
                                                     4246 East Wood Street
                                                     Phoenix, AZ 85040
                                                     Fax No.:  602-437-9120
                                                     Attn:  Roger A. Derse

                  with a copy to:                    Engineering Design Concepts
                                                     3040 North 44th Street
                                                     Phoenix, AZ 85018
                                                     Fax No.:  954-2676
                                                     Attn:    Michael Bozarth


2.       TENANT'S PLANS AND SPECIFICATIONS

         a. Tenant acknowledges and agrees that it has furnished to Landlord,
through Landlord's space planner ("Space Planner"), a space plan and
specifications required for the performance of the work (hereinafter referred to
as the "Tenant Improvements"). Such plans include but are not limited to
partition layout, reflected ceiling plans and electrical outlets, switches and
telephone outlets and locations. Landlord shall have the mechanical, electrical,
sprinkler and plumbing subcontractors provide to the Space Planner the working
drawings and calculations required to secure a permit.

         b. The Space Planner shall be responsible for providing to Landlord a
complete set of documents, which are permit ready and have completed plan check
by the government agency having jurisdiction for construction in the quantity
required for bidding by Triton Builders Company ("Contractor"). The Space
Planner shall be responsible for coordination of the architectural, mechanical,
electrical and plumbing drawings. Landlord and Contractor shall cooperate to the
best of their ability to provide all information required for such coordination.

         c. Landlord will pay the Space Planner's fees in accordance with
Section 8 hereof, but only work performed after December 15, 1996 shall be
charged against the Tenant allowance; however, all interior decorating services,
such as selection of wall paint colors and/or wall coverings, fixtures,
carpeting, and any or all other decorator services and extraordinary work
required by Tenant of the Space Planner shall be paid by the Tenant.


3.       LANDLORD'S APPROVAL (APPLIES TO CHANGES ONLY)

         Landlord may withhold its approval of any Change Orders which require
work which:

         a. adversely affects the structural integrity of the Building, or any
part of the heating, ventilating, air conditioning, plumbing, mechanical,
electrical, communication or other systems of the Building;

         b. is not approved by the holder of any mortgage or deed of trust
encumbering the Building at the time the work is proposed;

         c. would not be approved by a prudent owner of property similar to the
Building;

         d. violates any agreement which affects the Building or binds Landlord;

         e. Landlord reasonably believes will increase the projected cost of
operation or maintenance of any of the systems of the Building;

         f. Landlord reasonably believes will reduce the rental value of the
Premises or the sale value of the Building at the end of the Term;

         g. does not conform to applicable building codes or is not approved by
any governmental authority with jurisdiction over the Premises; or


                                       2
<PAGE>   28
         h. is not consistent with or is inferior to the Building Standard
Tenant Improvements.


4.       SCHEDULE OF TENANT IMPROVEMENT ACTIVITIES

         a. Tenant has furnished to Landlord and Landlord has approved Tenant's
space plan dated January 29, 1997 and identified as Architect Job No. 96066 Plan
#4 prepared by Dickenson Architectural the "Tenant Space Plan"). Tenant
acknowledges that the parking spaces impacted because of Tenant's exterior
construction as depicted on Tenant Space Plan shall reduce the reserved parking
spaces allocated to Tenant under the Lease. Any changes proposed by Tenant to
the Tenant Space Plan shall be subject to approval by Landlord in accordance
with Paragraph 3 of this Work Letter Agreement.

         b. After approval of the Tenant Space Plan, Landlord will promptly
prepare a preliminary estimate of the cost of Tenant's Improvements (the
"Tenant's Estimated Construction Cost") as set forth in the Tenant Space Plan.
Such estimate shall be provided in detail consistent with AIA approved unit
pricing. Tenant shall have five (5) business days after receipt of the Tenant's
Estimated Construction Cost either to:

                  (i) agree in writing to pay the amount by which the Tenant's
Estimated Construction Cost exceeds the Tenant Allowance as though that amount
were Tenant Extra Work, subject to Paragraph 5, or

                  (ii) propose a revision to the Tenant Space Plan in order to
assure that the Tenant's Estimated Construction Cost is either (A) no more than
the Tenant Allowance or (B) in excess of the Tenant Allowance by an amount which
Tenant agrees to pay pursuant to clause (i) immediately above. Each day in
excess of five (5) business days following Tenant's receipt of the Tenant's
Estimated Construction Cost until the fulfillment of Tenant's obligations in
either clause (i) or clause (ii) immediately above will be a day of Tenant's
delay. Upon Tenant's fulfillment of its obligation in either clause (i) or
clause (ii) immediately above, the Tenant's Estimated Construction Cost, as same
may have been modified, will be deemed approved.

         c. After approval of the Tenant's Estimated Construction Cost, Space
Planner will prepare and deliver to Tenant and Contractor working drawings for
the Premises ("Tenant Working Drawings"). Landlord's Contractor shall prepare
from the documents a scope of work and a cost proposal (collectively, the
"Tenant Cost Proposal") for construction of Tenant's Improvements in accordance
with the Tenant Working Drawings, and a Construction Schedule which will be
consistent with the time frames delineated in Schedule 1 attached hereto. Upon
receipt of the Tenant Cost Proposal, Tenant shall respond to Landlord within
five (5) business days with respect to the scope of work and the cost of
construction setting forth in written detail any requested changes. If Tenant
timely disapproves the amount of the cost of construction in excess of the
Tenant Allowance or if Tenant disapproves the scope of work, Tenant shall be
entitled to modify the Tenant Working Drawings and the Tenant Cost Proposal
accordingly; provided that any delay in completion of construction caused by
Tenant changes implemented by Contractor shall be deemed Tenant's delay. Each
day in excess of five (5) business days following Tenant's receipt of the
Tenant's Cost Proposal until the fulfillment of Tenant's obligations as
described in this subparagraph c. will be a day of Tenant's delay.

         d. All work will be performed by one or more contractors selected and
engaged by Landlord. Following approval of the Tenant Working Drawings and the
Tenant Cost Proposal, Landlord's Contractor will cause application to be made to
the appropriate governmental authorities for necessary approvals and building
permits. Upon receipt of the necessary approvals and permits and subject to
performance of Tenant's obligations under Paragraph 5, the Contractor will begin
construction. The Contractor may substitute materials of comparable or better
quality if the materials specified in Tenant's Working Drawings are unavailable
or not available within the time required for timely completion.


                                       3
<PAGE>   29
5.       PAYMENT FOR TENANT EXTRA WORK

         In order to assure payment of the Tenant's share of the Tenant's Cost
Proposal, Tenant shall obtain an irrevocable stand-by letter of credit,, with
Bank One Arizona, NA or another financial institution, in form and substance
reasonably acceptable to Landlord for the full amount of the approved Tenant
Cost Proposal over the amount of the Tenant Allowance. Tenant shall obtain the
Letter of Credit prior to execution by Landlord and Contractor of the
construction contract.

         Once construction has commenced under the construction contract,
payment shall be made to the Contractor in accordance with the construction
contract pursuant to no more than five (5) draw requests approved by Landlord
and Tenant. Each draw request must fully comply with the requirements of the
construction contract. Landlord shall submit copies of each draw request to
Tenant. Tenant shall have ten (10) days after receipt within which to review the
draw request and approve or disapprove same. If Tenant approves the draw
request, Tenant shall pay to Landlord, for payment to the Contractor, Tenant's
pro rata share of the total amount of the approved draw request. Tenant may make
such payment by check made jointly payable to Landlord and Contractor. If Tenant
disapproves the draw request, Tenant shall provide to Landlord a written notice
specifying in detail the reasons for disapproval. Landlord shall then cooperate
with Tenant to resolve with Contractor the basis for Tenant's disapproval.
Failure of Tenant to disapprove any draw request within the 10-day period shall
constitute Tenant's approval. Each day of delay in completion of construction
caused by Tenant wrongfully withholding payment of its pro rata share of a
particular draw request shall be deemed a day of Tenant's delay.

         At any time that Tenant fails to pay its pro rata share of any approved
or deemed approved draw request within any applicable 10-day period, Landlord
shall be entitled to draw against the Letter of Credit the pro rata share of any
draw request owed by Tenant by presenting to the issuer of the Letter of Credit
a draft stating that Tenant has failed to timely pay its pro rata share of a
draw request previously approved by Tenant. Landlord shall have no right to draw
upon the Letter of Credit for payment of any draw request which Tenant has
timely disapproved. In the event Tenant disapproves a draw request which
otherwise would have been approved by Landlord and such disapproval is
determined to have been unjustified, then Tenant shall be responsible to
Landlord for any costs, expenses or penalties assessed against Landlord under
the construction contract as a consequence of such unjustified disapproval. Upon
payment by Tenant of the full amount of its pro rata share of the total
construction costs. Landlord shall provide the issuer of the Letter of Credit
written notice terminating the Letter of Credit.

6.       CHANGE ORDERS

         Tenant may authorize changes in the work during construction only by
written instructions to Landlord's Representative. All such changes will be
subject to Landlord prior written approval in accordance with Paragraph 3.
Landlord may disapprove any change which would materially delay the scheduled
completion of work. Prior to commencing any change, the Landlord will prepare
and deliver to Tenant, for Tenant's approval, a change order (the "Change
Order") setting forth the total cost of such change, which will include
associated architectural, engineering and construction contractor's fees. If
Tenant fails to approve such Change Order within five (5) days after delivery by
Landlord, Tenant will be deemed to have withdrawn the proposed change and
Landlord will not proceed to perform the change. Upon Landlord's receipt of
Tenant's approval, the Contractor will proceed to perform the change and Tenant
shall pay for same in accordance with Paragraph 5.

7.       DELAY

         It is agreed that Tenant's obligation for the payment of rental under
the Lease shall not commence until Landlord has substantially completed the work
to be performed by Landlord hereunder and delivered the Premises to Tenant;
provided, however, that if Landlord shall be delayed in substantially completing
said work as a result of delays caused by Tenant, then the obligation of Tenant
for the payment of rental under the Lease shall be deemed to have


                                       4
<PAGE>   30
commenced as of the "Commencement Date" (as defined in Section 2.01 of the Lease
and the Addendum to the Lease) not withstanding that Landlord may not have
caused completion of the work or delivered possession of the Premises as of such
date. Tenant shall have no right to possession of the Premises until the work is
completed by Landlord. Tenant's remedies for Landlord's failure to timely
complete the work and deliver the Premises are as set forth in the Addendum to
the Lease.


8.       CONSTRUCTION OF THE PREMISES

         a. Landlord's Contractor will construct the tenant improvements within
the Premises under contract with the Landlord. Landlord shall not enter into the
construction contract until such time as Tenant has had opportunity to review
the proposed construction contract and provide its comments to Landlord. Tenant
shall have five (5) business days to review the construction contract and to
provide Landlord with a detailed written disapproval. If no detailed response is
given within said five (5) business days, the construction contract shall be
deemed approved by Tenant. The fees payable for construction of the Tenant
Improvements shall be as follows:

                  (i) to Contractor, 9.5% of the Tenant Cost Proposal covering
general conditions and profit;

                  (ii) to Contractor, a project management fee of $30,000.00 to
be paid by Landlord under paragraph 10 but not subject to the 9.5% fee described
in (i) above;

                  (iii)Dickenson Architectural fees in the amount of $34,700,
which amount shall not be subject to the 9.5% fee described in (i) above; and

                  (iv) Clark Engineering fees in the amount of $49,680, which
amount shall not be subject to the 9.5% fee described in (i) above.

         b. All subcontractors awarded shall be the result of competitively bid
unit price or drawing based contracts which Tenant shall have the right to
review. Tenant may, at its discretion, obtain bids and complete the work at its
direction for nonstandard items limited to millwork, wall covering and carpet.
Tenant shall notify Landlord prior to the bidding of such items of its desire to
assume responsibility for those items. Any delay relating to work performed by
Tenant shall be deemed Tenant's delay.

         c. The construction contract shall require the Contractor to insure the
tenant improvements against casualty or other loss and to provide customary
liability insurance during the construction period naming Landlord and Tenant as
loss payees and additional insureds.

9.       TENANT'S PUNCH LIST

         a. When the Landlord's Contractor believes the Tenant Improvements are
substantially completed, and prior to Landlord's delivery of the Premises to
Tenant, Landlord shall give Tenant three (3) business days prior notification
for Tenant to inspect the Tenant Improvements. Tenant's Representative shall
completely examine the Premises and complete with Landlord's Representative a
list of all items to be completed by Contractor to finish the work. Such list
shall be formalized by Landlord and signed by both Landlord and Tenant. The
Tenant Improvements shall be deemed "substantially completed" when the Premises,
as improved, can be legally occupied by Tenant without material interference
with Tenant's business, with only minor "punch list" items remaining to be
completed. Landlord's good faith and reasonable determination of substantial
completion shall be conclusive. The Tenant Improvements shall not be deemed
"substantially completed" if the outstanding punch list items, in the aggregate,
total more than 1.0% of the Tenant Improvement contract price.

         b. Landlord shall diligently proceed to have all items noted on the
list completed as soon as possible. Any work damaged during Tenant's move in or
occupancy shall be repaired or replaced at Tenant's sole cost and expense.


                                       5
<PAGE>   31
10.      TENANT IMPROVEMENTS AT LANDLORD'S COST AND EXPENSE

         Landlord agrees to provide Tenant an allowance of $862,580.00 to
complete the Tenant Improvements in the Premises ("Tenant Allowance"). The
Tenant allowance shall include any and all city permits, space planning (in the
amount limited by Section 2c), engineering, architectural and construction
costs, (but excluding the fee of Landlord's contractor for project management,
which Landlord shall pay directly to Contractor in an amount not to exceed
$30,000, Tenant to have no obligation with respect to such fee). The Tenant
Allowance shall be used only to plan and construct improvements which are real
property fixtures that will remain with the Premises, and may not be used to
purchase or construct trade fixtures, furniture, or other personal property. All
costs in excess of such amount shall be the sole responsibility of the Tenant
including but not limited to any and all change orders requested by Tenant.

11.      SHELL CONSTRUCTION

         Landlord shall provide as part of the initial construction of the
Building the following items: (i) outside walls, columns and unfinished concrete
floors, broom clean; (ii) building standard power supplied to the Building core,
per building specifications. Tenant shall be entitled to a proportionate share
of building standard power initially supplied to the Building core based upon
the pro rata portion of the Building demised to Tenant under the Lease.


12.      RESPONSIBILITY FOR DESIGN

         Tenant will be responsible for the design, function and maintenance of
all improvements, whether or not approved by Landlord or installed by Landlord's
Contractor at Tenant's request. Landlord's preparation of the Tenant Working
Drawings and performance of Landlord's duties hereunder do not constitute any
representation or warranty as to the adequacy, efficiency, performance or
desirability of the Tenant Improvements in the Premises.


13.      MISCELLANEOUS

         In the event of any conflict between the terms of this Work Letter
Agreement and the remainder of the Lease, as modified by the Addendum thereto,
the terms of the Lease, as modified, will control.


TENANT INITIALS __________                          LANDLORD INITIALS __________


                                       6