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                                                                   EXHIBIT 10.16
                              TUCSON OFFICE PLAZA

                                LEASE AGREEMENT


This Lease between Diamond Management, Inc., an Arizona Corporation, as Agent
for the Owners (defined below) as "Landlord" and "Lessor", and SatCon Technology
Corporation, a Delaware corporation, as "Tenant" and "Lessee", is dated
February 27, 1996.

1.  LEASE OF PREMISES.

In consideration of the Rent (as defined in Section 5.4) and the provisions of
this Lease, Landlord leases to Tenant and Tenant leases from Landlord the
Premises shown by diagonal lines on the floor plan attached hereto as Exhibit
"A" and further described at Section 2.m. The Premises are located within the
Building and Project described in Section 2.n. Tenant shall have the non-
exclusive right (unless otherwise provided herein) in common with Landlord,
other tenants, subtenants and invitees to use of the Common Areas (as defined
at Section 2.e).

2.  DEFINITIONS

As used in this Lease, the following terms shall have the following meanings:

A. BASE RENT: The amount Tenant is to pay to Landlord during the Term of this
   Lease for the Rentable Area of the Premises in accordance with the terms of
   Article 5 of the Lease and in accordance with the following schedule:

   Months 1-6:    Rent free
   Months 7-24:   Fifteen and 00/100 Dollars ($15.00) per square foot per 
                  year.
   Months 25-48:  Fifteen and 50/100 Dollars ($15.50) per square foot per
                  year.
   Months 49-60:  Sixteen and 00/100 Dollars ($16.00) per square foot per
                  year.

B. BASE YEAR:     The calendar year of 1996.

C. BROKER(S)

   LANDLORD'S:    Richard Shenkarow, CB Commercial Real Estate Group, Inc.

   TENANT'S:      Robert Davis, CB Commercial Real Estate Group, Inc.

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.

D. COMMENCEMENT DATE: April 1, 1996

E. COMMON AREAS: The building lobbies, common corridors and hallways, restrooms,
   garage and parking areas, stairways, elevators and other generally understood
   public or common areas. Landlord shall have the right to regulate or restrict
   the use of the Common Areas.

F. EXPENSE STOP: (fill in if applicable): N/A

G. EXPIRATION DATE: March 31, 2001

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H. LANDLORDS'S MAILING ADDRESS: c/o Partners Management Consultants, Inc.,
   5055 E. Broadway, Suite C220, Tucson, Arizona 85711

I. TENANT'S MAILING ADDRESS: SatCon Technology Corporation, 6245 East
   Broadway Boulevard, Suite 350, Tucson, Arizona 85711

J. MONTHLY INSTALLMENTS OF BASE RENT: One-twelfth (1/12th) of the then
   applicable annual Base Rent calculated pursuant to Section 2.a. or Article
   44, if applicable.

K. OWNERS: Diamond Management, Inc., Auriga Properties, Inc., and Rocking K
   Holdings Limited Partnership, as tenants in common.

L. PARKING: Tenant shall be permitted, to park cars on a non-exclusive basis in
   the area(s) designated by Landlord for parking. Tenant shall abide by any
   and all parking regulations and rules established from time to time by
   Landlord or Landlord's parking operator. The Lessee, its agents, employees
   and invitees shall be entitled to park in common with other lessees of
   Lessor in the uncovered and unreserved parking spaces at the Project,
   providing that it agrees not to overburden the parking facilities of the
   Project and agrees to cooperate with the Lessor and other lessees in the use
   of the parking facilities. The Lessor specifically reserves the right, in
   its absolute discretion, to determine whether parking facilities are
   becoming overburdened and in such event to allocate the parking spaces among
   the Lessee and other lessees, their agents, employees, and business invitees
   using the parking facilities. All loading operations for receipt or shipment
   of goods, wares and merchandise by the Lessee shall be done in the rear of
   the Premises or in such area therein which is specifically designated in
   writing by the Lessor.

M. PROMISES: That portion of the Building containing approximately 8,343
   square feet of Rentable Area shown by diagonal lines on Exhibit "A" located
   on the third floor of the Building and known as Suite 350.

N. PROJECT: The building of which the Premises are a part (the "Building") and
   any other buildings or improvements on the real property (the "Property")
   located at 6235 East Boadway Boulevard, 6245 East Broadway Boulevard and 75
   North Wilmot Road, further described at Exhibit "B". The Project is known as
   the Tucson Office Plaza.

O. RENTABLE AREA: As to both the Premises and the Project, the respective
   measurements of floor area as may from time to time be subject to lease by
   Tenant and all tenants of the Project, respectively, as determined by
   Landlord and applied on a consistent basis throughout the Project.

P. SECURITY DEPOSIT: Nine Thousand Three Hundred seventy-five and OO/lOO
   Dollars($9,375.00).

Q. STATE: The State of Arizona

R. TENANT'S PROPORTIONATE SHARE: 8.6%. Such share is based on a fraction, the
   numerator of which is the Rentable Area of the Premises, and the denominator
   of which is the Rentable Area of the Project, as determined by Landlord from
   time to time. The Project consists of three (3) buildings containing a total
   Rentable Area of 97,120 square feet.

S. TERM: The period commencing at l2:0l a.m. on the Commencement Date and
   expiring at ll:59 p.m. on the Expiration Date, or as extended pursuant to
   Article 44.

3.  EXHIBITS AND ADDENDA.

The exhibits and addenda listed below (unless lined out) are incorporated by
reference in this Lease:

a. Exhibit "A"-Floor Plan showing the Premises.

b. Exhibit "B"-Site Plan of the Project.

c. Exhibit "C"-Tenant Improvements.

d. Exhibit "D"-Rules and Regulations.

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4. DELIVERY OF POSSESSION.

If for any reason Landlord does not deliver possession of the Premises to Tenant
on the Commencement Date, Landlord shall not be subject to any liability for
such failure, the Expiration Date shall not change and the validity of this
Lease shall not be impaired, but Rent shall be abated until delivery of
possession and free rent period shall commence on such date.  "Delivery of
possession" shall be deemed to occur on the date Landlord completes the tenant
improvements described in Exhibit "C".  If Landlord permits Tenant to enter into
possession of the Premises before the Commencement Date, such possession shall
be subject to the provisions of this Lease, including, without limitation, the
payment of Rent.  Tenant shall have the right to cancel this Lease by written
notice to Landlord in the event possession of the Premises is not delivered to
Tenant within one hundred fifty (150) days after execution of this Lease by both
parties.

5.  RENT.

5.1  PAYMENT OF BASE RENT. Tenant agrees to pay the Base Rent for the Premises.
Monthly Installments of Base Rent shall be payable in advance on the first day
of each calendar month of the Term. If the Term begins (or ends) on other than
the first (or last) day of a calendar month, the Base Rent for the partial month
shall be prorated on a per diem basis. Tenant shall pay Landlord the first
Monthly Installment of Base Rent when Tenant executes the Lease.

5.2  [OMITTED]

5.3  PROJECT OPERATING COSTS.

a. In order that the Rent payable during the Term reflect any increase in
   Project Operating Costs, Tenant agrees to pay to Landlord as Rent, Tenant's
   Proportionate Share of all increases in costs, expenses and obligations
   attributable to the Project and its operation, all as provided below.

b. If, during any calendar year during the Term, Project Operating Costs
   exceed the Project Operating Costs for the Base Year, Tenant shall pay to
   Landlord, in addition to the Base Rent and all other payments due under this 
   Lease, an amount equal to Tenant's Proportionate Share of such excess Project
   Operating Costs in accordance with the provisions of this Section 5.3.b.

(1) The term "Project Operating Costs" shall include all those items described
    in the following subparagraphs (a) and (b).

(a) All taxes, assessments, water and sewer charges and other similar
    governmental charges levied on or attributable to the Building or Project
    or their operation, including without litigation, (i) real property taxes
    or assessments levied or assessed against the Building or Project, (ii)
    assessments or charges levied or assessed against the Building or Project
    by any redevelopment agency, and (iii) any tax measured by gross rentals
    received from the leasing of the Premises, Building or Project, excluding
    any such tax for which Landlord is reimbursed by the tenant paying the
    rental on which the tax is based and any income, excess profits, single
    business, succession, transfer, franchise, capital stock, estate or
    inheritance taxes imposed by the State or federal government or their
    agencies, branches or departments; provided that if at any time during the
    Term any governmental entity levies, assesses or imposes on Landlord any
    (1) general or special, ad valorem or specific, excise, capital levy or
    other tax, assessment, levy or charge directly on the Rent received under
    this Lease, or (2) any license fee, excise or franchise tax, assessment,
    levy or charge measured by or based, in whole or in part, upon such rent, or
    (3) any transfer, transaction, or similar tax, assessment, levy or charge
    based directly upon the transaction represented by this Lease, or (4) any
    occupancy, use, per capita or other tax, assessment, levy or charge based
    directly upon the use or occupancy of the Premises, then any such taxes,
    assessments, levies and charges shall be deemed to be included in the term
    Project Operating Costs to the extent not otherwise payable by Tenant
    pursuant to Section 5.6.

(b) Operating costs incurred by Landlord in maintaining and operating the
    Building and Project, including without limitation the following: costs of
    (1) utilities; (2) supplies; (3) insurance (including public liability,
    property damage, earthquake, and fire and extended coverage insurance for
    the full replacement cost of the 

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    Building and Project as required by Landlord or its lenders for the
    Project); (4) services of independent contractors; (5) compensation
    (including employment taxes and fringe benefits) of all persons who perform
    duties connected with the operation, maintenance, repair or overhaul of the
    Building or Project, and equipment, improvements and facilities located
    within the Project, including without limitation engineers, janitors,
    painters, floor waxers, window washers, security and parking personnel and
    gardeners (but excluding persons performing services not uniformly available
    to or performed for substantially all Building or Project tenants); (6)
    operation and maintenance of a room for delivery and distribution of mail to
    tenants of the Building or Project as required by the U S Postal Service
    (including, without limitation, an amount equal to the fair market rental
    value of the mail room premises); (7) management of the Building or Project,
    whether managed by Landlord or an independent contractor (including, without
    limitation, an amount equal to the fair market value of any on-site
    manager's office) not to exceed 10% of the total operating costs; (8) rental
    expenses for (or a reasonable depreciation allowance on) personal property
    used in the maintenance, operation or repair of the Building or Project; (9)
    costs, expenditures or charges (not capitalized) required by any
    governmental or quasi-governmental authority; (10) expenditures (including
    financing costs) (i) required by a governmental entity for energy
    conservation or life safety purposes, or (ii) made by Landlord to reduce
    Project Operating Costs; and (11) any other costs or expenses incurred by
    Landlord under this Lease and not otherwise reimbursed by tenants of the
    Project.

(2) Tenant's Proportionate Share of Project Operating Costs shall be payable by
    Tenant to Landlord as follows:

(a) Beginning with the calendar year following the Base Year and for each
    calendar year thereafter ("Comparison Year"), Tenant shall pay Landlord an
    amount equal to Tenant's Proportionate Share of the Project Operating Costs
    incurred by Landlord in the Comparison Year which exceeds the total amount
    of Project Operating Costs payable by Landlord for the Base Year. This
    excess is referred to as the "Excess Expenses".

(b) To provide for current payments of Excess Expenses, Tenant shall, at
    Landlord's request, pay as additional rent during each Comparison Year, an
    amount equal to Tenant's Proportionate Share of the Excess Expenses payable
    during such Comparison Year, as estimated by Landlord from time to time.
    Such payments shall be made in monthly installments, commencing on the
    first day of the month following the month in which Landlord notifies
    Tenant of the amount it is to pay hereunder and continuing until the first
    day of the month following the month in which Landlord gives Tenant a new
    notice of estimated Excess Expenses. It is the intention hereunder to
    estimate from time to time the amount of the Excess Expenses for each
    Comparison Year and Tenant's Proportionate Share thereof, and then to make
    an adjustment in the following year based on the actual Excess Expenses
    incurred for that Comparison Year.

(c) On or before April 1 of each Comparison Year after the first Comparison
    Year (or as soon thereafter as is practical), Landlord shall deliver to
    Tenant a statement setting forth Tenant's Proportionate Share of the Excess
    Expenses for the preceding Comparison Year. If Tenant's Proportionate Share
    of the actual Excess Expenses for the previous Comparison Year exceeds the
    total of the estimated monthly payments made by Tenant for such year,
    Tenant shall pay Landlord the amount of the deficiency within thirty (30)
    days of the receipt of the statement. If such total exceeds Tenant's
    Proportionate Share of the actual Excess Expenses for such Comparison Year,
    then Landlord shall immediately pay Tenant an amount equal to the
    difference. The obligations of Tenant and Landlord to make payments
    required under this Section 5.3 shall survive the Expiration Date.

(d) Tenant's Proportionate Share of Excess Expenses in any Comparison Year
    having less than 365 days shall be appropriately prorated.

(e) If any dispute arises as to the amount of any additional rent due hereunder,
    Tenant shall have the right after reasonable notice and at reasonable times
    to inspect Landlord's accounting records at Landlord's accounting office
    and, if after such inspection Tenant still disputes the amount of additional
    rent owed, a certification as to the proper amount shall be made by a
    certified public accountant mutually acceptable to both Tenant and Landlord,
    which certification shall be final and conclusive. Tenant agrees to pay the
    cost of such certification unless it is determined that Landlord's original
    statement overstated Project Operating Costs by more than five percent (5%).

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(f) If this Lease sets forth an Expense Stop at Section 2.f.,then during the
    Term Tenant shall be liable for Tenants Proportionate Share of any actual
    Project Operating Costs which exceed the amount of the Expense Stop. Tenant
    shall make current payments of such excess costs during the Term in the
    same manner as is provided for payment of Excess Expenses under the
    applicable provisions of Section 5.3.b.(2)(b) and (c) above.

5.4  Definition of Rent.  All costs and expenses which Tenant assumes or agrees
to pay to Landlord under this Article 5 shall be deemed additional rent (which,
together with the Base Rent is sometimes referred to as the "Rent"). The Rent
shall be paid to the Building manager (or other person) and at such place, as
Landlord may from time to time designate in writing, without any prior demand
therefor and without deduction or offset, in lawful money of the United States
of America.

5.5  Rent Control.  If the amount of Rent or any other payment due under this
Lease violates the terms of any governmental restrictions on such Rent or
payment, then the Rent or payment due during the period of such restrictions
shall be the maximum amount allowable under those restrictions. Upon
termination of the restrictions, Landlord shall, to the extent it is legally
permitted, recover from Tenant the difference between the amounts received
during the period of the restrictions and the amounts Landlord would have
received had there been no restrictions.

5.6  Taxes Payable by Tenant. In addition to the Rent and any other charges to
be paid by Tenant hereunder, Tenant shall reimburse Landlord upon demand for any
and all taxes payable by Landlord (other than net income taxes), whether or not
now customary or within the contemplation of the parties, where such taxes are
upon, measured by or reasonably attributable to (a) the cost or value of
Tenant's equipment, furniture, fixtures and other personal property located in
the Premises, or the cost or value of any leasehold improvements made in or to
the Premises by or for Tenant, other than the tenant improvements made by
Landlord, regardless of whether title to such improvements is held by Tenant or
Landlord; the gross or net Rent payable under this Lease, including, without
limitation, any transaction privilege, rental or gross receipts tax levied by
any taxing authority with respect to the receipt of the Rent hereunder; (c) the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any portion thereof; or (d) this
transaction or and document to which Tenant is a party creating or transferring
an interest or an estate in the Premises.  If it becomes unlawful for Tenant to
reimburse Landlord for any costs as required under this Lease, the Base Rent
shall be revised to net Landlord the same net Rent after imposition of any tax
or other charge upon Landlord as would have been payable to Landlord but for the
reimbursement being unlawful.
 
6.  INTEREST AND LATE CHARGES.

If Tenant fails to pay when due any Rent or other amounts or charges which
Tenant is obligated to pay under the terms of this Lease, the unpaid amounts
shall bear Interest at the prime commercial rate then being charged by Bank of
America NT & SA plus three percent (3%) per annum. Tenant acknowledges that the
late payment of any Monthly Installment of Base Rent will cause Landlord to lose
the use of that money and incur costs and expenses not contemplated under this
Lease, including without limitation, administrative and collection costs and
processing and accounting expenses, the exact amount of which is extremely
difficult to ascertain.  Therefore, in addition to interest, if any such
installment is not received by Landlord within ten (10 days from the date it
is due, Tenant shall pay Landlord a late charge equal to ten percent (10%) of
such installment.  Landlord and Tenant agree that this late charge represents a
reasonable estimate of such costs and expenses and is fair compensation to
Landlord for the loss suffered from such nonpayment by Tenant.  Acceptance of
any interest or late charge shall not constitute a waiver of Tenant's default
with respect to such nonpayment by Tenant nor prevent Landlord from exercising
any other rights or remedies available to Landlord under this Lease.

7. SECURITY DEPOSIT.

Tenant agrees to deposit with Landlord the Security Deposit set forth at Section
2.p. upon execution of this Lease, as security for Tenant's faithful performance
of its obligations under this Lease.  Landlord and Tenant agree that the
Security Deposit may be commingled with funds of Landlord and Landlord shall
have no obligation or liability for payment of interest on such deposit.  Tenant
shall not mortgage, assign, transfer or 

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encumber the Security Deposit without the Prior written consent of Landlord and
any attempt by Tenant to do so shall be void, without force or effect and shall
not be binding upon Landlord.

If Tenant fails to pay any Rent or other amount when due and payable under this
Lease, or fails to perform any of the terms hereof, Landlord may appropriate and
apply or use all or any portion of the Security Deposit for Rent payments or any
other amount then due and unpaid, for payment of any amount for which Landlord
has become obligated as a result of Tenant's default or breach, and for any loss
or damage sustained by Landlord as a result of Tenant's default or breach, and
Landlord may so apply or use this deposit without prejudice to any other remedy
Landlord may have by reason of Tenant's default or breach.  If Landlord so uses
any of the Security Deposit, Tenant shall, within ten (10) days after written
demand therefor, restore the Security Deposit to the full amount originally
deposited; Tenant's failure to do so shall constitute an act of default
hereunder and Landlord shall have the right to exercise any remedy provided for
at Article 27 hereof.  Within fifteen (15) days after the Term (or any
extension thereof) has expired or Tenant has vacated the Premises, whichever
shall last occur, and provided Tenant is not then in default on any of its
obligations hereunder, Landlord shall return the Security Deposit to Tenant, or,
if Tenant has assigned its interest under this Lease, to the last assignee of
Tenant.  If Landlord sells its interest in the Premises, Landlord may deliver
this deposit to the Purchaser of Landlord's interest and thereupon be relieved
of any further liability or obligation with respect to the Security Deposit.

8.  TENANT'S USE OF THE PREMISES.

a. The Premises are to be used only for administrative offices, electronics,
   and optics R&D labs ("Permitted Use") and for no other business or purpose
   whatsoever without the prior written consent of Lessor. No act shall be done
   in or about the Premises that is unlawful or that will increase the existing
   rate of insurance on the Project. in the event of a breach of this covenant,
   Lessee shall pay to Lessor any and all increases in insurance premiums
   resulting from such breach upon demand, and Lessor shall have all additional
   remedies provided for herein to redress such breach. Lessee shall not commit
   or allow to be committed any waste upon the Premises, or any public or
   private nuisance or other act or thing which disturbs the quiet enjoyment of
   any other lease in the Project. If any of Lessee's machines or equipment
   disturb any other lessee in the Project, then Lessee shall provide adequate
   insulation, or take such other action as may be necessary to eliminate the
   noise or disturbance. Lessee, at its expense, shall comply with all laws
   relating to its use and occupancy of the Premises and shall observe such
   reasonable rules and regulations as may be adopted and made available to
   Lessee by Lessor from time to time for the safety, care and cleanliness of
   the Premises or the Project and for the preservation of good order therein.

b. Lessee warrants that the operation of its business shall be conducted in
   strict compliance with all applicable private covenants, conditions and
   restrictions and all applicable federal, state and local environmental,
   safety and other pertinent laws, rules, regulations and ordinances,
   including, without limitation, the Americans With Disabilities Act ("ADA"),
   and that any alterations necessary to the Premises because Tenant's business
   as conducted is not in compliance with such covenants, conditions,
   restrictions, laws, rules, regulations and ordinances, shall be at Lessee's
   sole cost and expense. Lessee represents and warrants to Lessor that there
   is not risk to Lessee, Lessee's visitors and others using the Premises
   arising from Lessee's operations. Lessee shall indemnify, defend and hold
   harmless Lessor from and against any claim, liability, expense, lawsuit,
   loss or other damage, including reasonable attorneys' fees, arising from or
   relating to Lessee's use of the Premises, Lessee's activities within the
   Project or because Tenant's business as conducted or the use of the Premises
   by Lessee, its employees, subtenants, agents, guests or invitees is not in
   compliance with the ADA. Notwithstanding the foregoing, Tenant shall have no
   liability for any claim, liability expense, lawsuit, loss, or other damage
   arising prior to Tenant's occupancy of the Premises.

   Tenant shall use the Premises solely for the purposes set forth in Tenant's
   Use Clause. Tenant shall not use or occupy the Premises in violation of law
   or any covenant, condition or restriction affecting the Building or Project
   or the certificate of occupancy issued for the Building or Project, and
   shall, upon notice from Landlord, immediately discontinue any use of the
   Premises which is declared by any governmental authority having jurisdiction
   to be a Violation of law or the certificate of occupancy. Tenant, at
   Tenant's own cost and expense, shall comply with all laws, ordinances,
   regulations, rules and/or any directions of any governmental agencies or
   authorities having jurisdiction which shall, by reason of the nature of
   Tenant's use or occupancy of the Premises, impose any duty upon Tenant or
   Landlord with respect to the Premises or its use or 

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   occupation. A judgment of any court of competent jurisdiction or the
   admission by Tenant in any action or proceeding against Tenant that Tenant
   has Violated any such laws, ordinances, regulations, rules and/or directions
   in the use of the Premises shall be deemed to be a conclusive determination
   of that fact as between Landlord and Tenant. Tenant shall not do or permit to
   be done anything which will invalidate or increase the cost of any fire,
   extended coverage or other insurance policy covering the Building or Project
   and/or property located therein, and shall comply with all rules, orders,
   regulations, requirements and recommendations of the Insurance Services
   Office or any other organization performing a similar function. Tenant shall
   promptly upon demand reimburse Landlord for any additional premium charged
   for such policy by reason of Tenant's failure to comply with the provisions
   of this Article. Tenant shall not do or permit anything to be done in or
   about the Premises which will in any way obstruct or interfere with the
   rights of other tenants or occupants of the Building or Project, or injure or
   annoy them, or use or allow the Premises to be used for any improper,
   immoral, unlawful or objectionable purpose, nor shall Tenant cause, maintain
   or permit any nuisance in, on or about the Premises. Tenant shall not commit
   or suffer to be committed any waste in or upon the Premises.

9. SERVICES AND UTILITIES.

Provided that Tenant is not in default hereunder, beyond applicable grace and
cure periods, Landlord agrees to furnish to the Premises during generally
recognized business days, and during such additional hours as may be determined
by Landlord in its sole discretion, and subject to the Rules and Regulations of
the Building or Project, electricity for normal desk top office equipment and
normal copying equipment, and heating, ventilation and air conditioning ("HVAC"
as required in Landlord's judgment for the comfortable use and occupancy of the
Premises.  If Tenant desires HVAC at any other time, Landlord shall use
reasonable efforts to furnish such service upon reasonable notice from Tenant
and Tenant shall pay Landlord's charges there or on demand.  Landlord shall also
maintain and keep lighted the common stairs, common entries and restrooms in the
Building.  Landlord shall not be in default hereunder or be liable for any
damages directly or indirectly resulting from, nor shall the Rent be abated by
reason of (i) the installation, use or interruption of use of any equipment in
connection with the furnishing of any of the foregoing services, (ii) failure to
furnish or delay in furnishing any such services where such failure or delay is
caused by accident or any condition or event beyond the reasonable control of
Landlord, or by the making of necessary repairs or improvements to the Premises,
Building or Project, or (iii) the limitation, curtailment or rationing of, or
restrictions on, use of water, electricity, gas or any other form of energy
serving the Premises, Building or Project provided that if such services are not
provided for a period of five (5) consecutive days, Rent shall thereafter abate
until the provision thereof is resumed. Landlord shall not be liable under any
circumstances for a loss of or injury to property or business, however
occurring, through or in connection with or incidental to failure to furnish any
such services, unless such failure is not excused under Article 34 and continues
for more than thirty (30) consecutive days. If Tenant uses heat generating
machines or equipment in the Premises which affect the temperature otherwise
maintained by the HVAC system, Landlord reserves the right to install
supplementary air conditioning units in the Premises and the cost thereof,
including the cost of installation, operation and maintenance thereof, shall be
paid by Tenant to Landlord upon demand by Landlord.

Subject to Section 8.a. above, Tenant shall not, without the written consent of
Landlord, use any apparatus or device in the Premises, including without
limitation, electronic data processing machines or machines using in excess of
120 volts, which consumes more electricity than is usually furnished or supplied
for the use of premises as general office space, as determined by Landlord.
Tenant shall not connect any apparatus with electric current except through
existing electrical outlets in the Premises. Tenant shall not consume water or
electric current in excess of that usually furnished or supplied for the use of
premises as general office space (as determined by Landlord), without first
procuring the written consent of Landlord, which Landlord may refuse, subject to
Section 8.a. above (which permits Tenant to use the Premises as an optics R&D
lab), and in the event of consent, Landlord may have installed a water meter or
electrical current meter in the Premises to measure the amount of water or
electric current consumed. The cost of any such meter and of its installation,
maintenance and repair shall be paid for by the Tenant and Tenant agrees to pay
to Landlord promptly upon demand for all such water and electric current
consumed as shown by said meters, at the rates charged for such services by the
local public utility plus any additional expense incurred in keeping account of
the water and electric current so consumed. If a separate meter is not
installed, the excess cost for such water and electric current shall be
established by an estimate made by a utility company or electrical engineer
hired by Landlord at Tenant's expense.

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Nothing contained in this Article shall restrict Landlord's right to require at
any time separate metering of utilities furnished to the Premises.  In the
event utilities are separately metered, Tenant shall pay promptly upon demand
for all utilities consumed at utility rates charged by the local public utility
plus any additional expense incurred by Landlord in keeping account of the
utilities so consumed.  Tenant shall be responsible for the maintenance and
repair of any such meters at its sole cost.

Landlord shall furnish elevator service, lighting replacement for building
standard lights, restroom supplies, window washing and janitor services in a
manner that such services are customarily furnished to comparable office
buildings in the area.

10.  CONDITION OF THE PREMISES.

Tenant's taking possession of the Premises shall be deemed conclusive evidence
that as of the date of taking possession the Premises are in good order and
satisfactory condition, except for such matters as to which Tenant gave Landlord
notice on or before the Commencement Date. No promise of Landlord to alter,
remodel, repair or improve the Premises, the Building or the Project and no
representation, express or implied, respecting any matter or thing relating to
the Premises, Building, Project or this Lease (including, without limitation,
the condition of the Premises, the Building or the Project) have been made to
Tenant by Landlord or its Broker or Sales Agent, other than as may be contained
herein or in a separate exhibit or addendum signed by Landlord and Tenant.

11.  CONSTRUCTION, REPAIRS AND MAINTENANCE.

a. Landlord's Obligations.  Landlord shall at its sole cost and expense make
   the tenant improvements to the Premises as described in Exhibit "C".
   Landlord's cost shall include the cost of preparation and obtaining
   governmental approval for the plans and specifications for the tenant
   improvements. In the event Landlord's cost for such improvements exceeds the
   sum of $12.50 per square foot of Rentable Area, as shown by Landlord's
   invoices, copies of which shall be furnished upon request, Tenant shall
   reimburse Landlord for such excess costs within fifteen (15) days after
   Tenant is given notice thereof. Landlord shall maintain in good order,
   condition and repair the Building and all other portions of the Premises not
   the obligation of Tenant or of any other tenant in the Building.

b. Tenant's Obligations.

(1) (Omitted)

(2) Tenant at Tenant's sole expense shall, except for services furnished by
    Landlord pursuant to Article 9 hereof, maintain the Premises in good order,
    condition and repair, including the interior surfaces of the ceilings, walls
    and floors, all doors, all interior windows, all plumbing, pipes and
    fixtures, electrical wiring, switches and fixtures, Building Standard
    furnishings and special items and equipment installed by or at the expense
    of Tenant.

(3) Tenant shall be responsible for all repairs and alterations in and to the
    Premises, Building and Project and the facilities and systems thereof, the
    need for which arises out of (i) Tenant's use or occupancy of the Premises,
    (ii) the installation, removal, use or operation of Tenant's Property (as
    defined in Article 13) in the Premises, (iii) the moving of Tenant's
    Property into or out of the Building, or (iv) the act, omission, misuse or
    negligence of Tenant, its agents, contractors, employees or invitees.

(4) If Tenant falls to maintain the Premises in good order, condition and
    repair, Landlord shall give Tenant notice to do such acts as are reasonably
    required to so maintain the Premises. If Tenant falls to promptly commence
    such work and diligently prosecute it to completion, then Landlord shall
    have the right to do such acts and expend such funds at the expense of
    Tenant as are reasonably required to perform such work. Any amount so
    expended by Landlord shall be paid by Tenant promptly after demand with
    interest at the prime commercial rate then being charged by Bank of America
    NT & SA plus two percent (2%) per annum, from the date of such work, but not
    to exceed the maximum rate then allowed by law. Landlord shall have no
    liability to Tenant for any damage, inconvenience, or interference with the
    use of the Premises by Tenant as a result of performing any such work.

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<PAGE>
 
c. Compliance with Law. Landlord and Tenant shall each do all acts required to
   comply with all applicable laws, ordinances, and rules of any public
   authority relating to their respective maintenance obligations as set forth
   herein.

d. Waiver by Tenant. Tenant expressly waives the benefits of any statute now or
   here after in effect which would otherwise afford the Tenant the right to
   make repairs at Landlord's expense or to terminate this Lease because of
   Landlord's failure to keep the Premises in good order, condition and repair.

e. Load and Equipment Limits. Tenant shall not place a load upon any floor of
   the Premises which exceeds the load per square foot which such floor was
   designed to carry, as determined by Landlord or Landlord's structural
   engineer. The cost of any such determination made by Landlord's structural
   engineer shall be paid for by Tenant upon demand. Tenant shall not install
   business machines or mechanical equipment which cause noise or vibration to
   such a degree as to be objectionable to Landlord or other Building tenants.

f. Except as otherwise expressly provided in this Lease, Landlord shall have no
   liability to Tenant nor shall Tenant's obligations under this Lease be
   reduced or abated in any manner whatsoever by reason of any inconvenience,
   annoyance, interruption or injury to business arising from Landlord's making
   any repairs or changes which Landlord is required or permitted by this Lease
   or by any other tenant's lease or required by law to make in or to any
   portion of the Project, Building or the Premises. Landlord shall nevertheless
   use reasonable efforts to minimize any interference with Tenant's business in
   the Premises.

g. Tenant shall give Landlord prompt notice of any damage to or defective
   condition in any part or appurtenance of the Building's mechanical,
   electrical, plumbing, HVAC or other systems serving, located in, or passing
   through the Premises.

h. Upon the expiration or earlier termination of this Lease, Tenant shall return
   the Premises to Landlord clean and in the same condition as on the date
   Tenant took possession, except for normal wear and tear. Any damage to the
   Premises, including any structural damage, resulting from Tenant's use or
   from the removal of Tenant's fixtures, furnishings and equipment pursuant to
   Section 13.b. shall be repaired by Tenant at Tenant's expense.

12. ALTERATIONS AND ADDITIONS.

a. Tenant shall not make any additions, alterations or improvements to the
   Premises or which alter or affect the utilities and operating systems of the
   Premises without obtaining the prior written consent of Landlord. Landlord's
   consent may be conditioned on Tenant's removing any such additions,
   alterations or improvements upon the expiration of the Term and restoring the
   Premises to the same condition as on the date Tenant took possession. All
   work with respect to any addition, alteration or improvement shall be done In
   a good and workmanlike manner by properly qualified and licensed personnel
   approved by Landlord, and such work shall be diligently prosecuted to
   completion. Landlord may, at Landlord's option, require that any such work be
   performed by Landlord's contractor, in which case the cost of such work shall
   be paid for before commencement of the work. Tenant shall pay to Landlord
   upon completion of any such work by Landlord's contractor, an administrative
   fee of five percent (5%) of the cost of the work. Any modifications made by
   Tenant shall be in full compliance with the Americans With Disabilities Act
   (ADA). Further, any modifications required to be made to the Leased Premises
   due to Tenant's employees shall be at the Tenant's sole expense.

b. Tenant shall pay the costs of any work done on the Premises pursuant to
   Section l2.a.,and shall keep the Premises, Building and Project free and
   clear of liens of any kind. Tenant shall indemnify, defend against and keep
   Landlord free and harmless from all liability, loss, damage, costs,
   attorneys' fees and any other expense incurred on account of claims by any
   person performing work or furnishing materials or supplies for Tenant or any
   person claiming under Tenant.

   Tenant shall keep Tenant's leasehold interest, and any additions or
   improvements which are or become the property of Landlord under this Lease,
   free and clear of all attachment or judgment liens. Before the actual
   commencement of any work for which a claim or lien may be levied. Tenant
   shall give Landlord notice of the intended commencement date a sufficient
   time before that date to enable Landlord to post notices 

                                       9
<PAGE>
 
   of non-responsibility or any other notices which Landlord deems necessary for
   the proper notice of Landlord's interest in the Premises, Building or the
   Project, and Landlord shall have the right to enter the Premises and post
   such notices at any reasonable time.

c. Landlord may require, at Landlord's sole option, that Tenant provide to
   Landlord, at Tenant's expense, lien and completion bond in an amount equal to
   at least one and one-half (1 1/2%) times the total estimated cost of any
   additions, alterations or improvements to be made in or to the Premises,
   costing over Twenty-Five Thousand and No/100 Dollars ($25,000.00) to protect
   Landlord against any liability for mechanics' and materialmen's liens and to
   insure timely completion of the work. Nothing contained in this Section 12.c.
   shall relieve Tenant of its obligation under Section 12.b. to keep the
   Premises, Building and Project free of all liens.

d. Unless their removal is required by Landlord as provided In Section 12.a.,
   all additions, alterations and improvements made to the Premises shall become
   the property of Landlord and be surrendered with the Premises upon the
   expiration of the Term; provided, however, Tenant's equipment, machinery and
   trade fixtures which can be removed without damage to the Premises shall
   remain the property of Tenant and may be removed, subject to the provisions
   of Section 13.b.

13.  LEASEHOLD IMPROVEMENTS; TENANT'S PROPERTY.

a. All fixtures, equipment, improvements and appurtenances attached to or
   built into the Premises at the commencement of or during the Term, whether or
   not by or at the expense of Tenant ('Leasehold Improvements'), shall be and
   remain a part of the Premises, shall be the property of Landlord and shall
   not be removed by Tenant, except as expressly provided in Section 13.b.

b. All movable partitions, business and trade fixtures, machinery and equipment,
   communications equipment and office equipment located in the Premises and
   acquired by or for the account of Tenant, without expense to Landlord, which
   can be removed without structural damage to the Building, and all furniture,
   furnishings and other articles of movable personal property owned by Tenant
   and located in the Premises (collectively 'Tenant's Property') shall be and
   shall remain the property of Tenant and may be removed by Tenant at any time
   during the Term; provided that if any of Tenant's Property is removed, Tenant
   shall promptly repair any damage to the Premises or to the Building resulting
   from such removal.

14. RULES AND REGULATIONS.

Tenant agrees to comply with (and cause its agents, contractors, employees and
invitees to comply with) the rules and regulations attached hereto as Exhibit
"D" and with such reasonable modifications thereof and additions thereto as
Landlord may from time to time make. Landlord shall not be responsible for any
violation of said rules and regulations by other tenants or occupants of the
Building or Project.

15. CERTAIN RIGHTS RESERVED BY LANDLORD.

Landlord reserves the following rights, exercisable without liability to Tenant
for (a) damage or injury to property, person or business, (b) causing an actual
or constructive eviction from the Premises, or (c) disturbing Tenant's use or
possession of the Premises:

a. To name the Building and Project and to change the name or street address
   of the Building or Project;

b. To install and maintain all signs on the exterior and interior of the
   Building and Project;

c. To have pass keys to the Premises and all doors within the Premises,
   excluding Tenant's vaults and safes;

d. At any time during the Term, and on reasonable prior notice to Tenant, to
   inspect the Premises, and to show the Premises to any prospective purchaser
   or mortgagee of the Project, or to any assignee of any mortgage on the
   Project, or to others having an interest in the Project or Landlord, and
   during the last six months of the Term, to show the Premises to prospective
   tenants thereof; and

                                       10
<PAGE>
 
e.  To enter the Premises for the purpose of making inspections, repairs,
    alterations, additions or improvements to the Premises or the Building
    (including, without limitation, checking, calibrating, adjusting or
    balancing controls and other parts of the HVAC system), and to take all
    steps as may be necessary or desirable for the safety, protection,
    maintenance or preservation of the Premises or the Building or Landlord's
    interest therein, or as may be necessary or desirable for the operation or
    improvement of the Building or in order to comply with laws, orders or
    requirements of governmental or other authority. Landlord agrees to use its
    best efforts (except in an emergency) to minimize interference with Tenant's
    business in the Premises in the course of any such entry.

f.  Tenant shall be entitled to have his employee or representative accompany
    Landlord during any inspection or entry described in sub-section d. or e.
    above, provided that if Tenant does not designate such person within a
    reasonable time, Landlord shall not be subject to this obligation, and
    further provided that this obligation shall not be applicable in the event
    of an emergency.

16. ASSIGNMENT AND SUBLETTING.

No assignment of this Lease or sublease of all or any part of the Premises shall
be permitted, except as provided in this Article 16.

a.  Tenant shall not, without the prior written consent of Landlord, assign or
    hypothecate this Lease or any interest herein or sublet the Premises or any
    part thereof, or permit the use of the Premises by any party other than
    Tenant. Any of the foregoing acts without such consent shall be void and
    shall, at the option of Landlord, terminate this Lease. This Lease shall
    not, nor shall any interest of Tenant herein, be assignable by operation of
    law without the written consent of Landlord.

b.  If at any time or from time to time during the Term Tenant desires to assign
    this Lease or sublet all or any part of the Premises. Tenant shall give
    notice to Landlord setting forth the terms and provisions of the proposed
    assignment or sublease, and the identity of the proposed assignee or
    subtenant. Tenant shall promptly supply Landlord with such information
    concerning the business background and financial condition of such proposed
    assignee or subtenant as Landlord may reasonably request. Landlord shall
    have the option, exercisable by notice given to Tenant within twenty (20)
    days after Tenant's notice is given, either to sublet such space from Tenant
    at the rental and on the other terms set forth in this Lease for the term
    set forth in Tenant's notice, or, in the case of an assignment, to terminate
    this Lease. If Landlord does not exercise such option, Tenant may assign the
    Lease or sublet such space to such proposed assignee or subtenant on the
    following further conditions:

(1) Landlord shall have the right to approve such proposed assignee or
    subtenant, which approval shall not be unreasonably withheld;

(2) The assignment or sublease shall be on the same terms set forth in the
    notice given to Landlord;

(3) No assignment or sublease shall be valid and no assignee or sublessee shall
    take possession of the Premises until an executed counterpart of such
    assignment or sublease has been delivered to Landlord;

(4) No assignee or sublessee shall have a further right to assign or sublet
    except on the terms herein contained; and

(5) Any sums or other economic consideration received by Tenant as a result of
    such assignment or subletting, however denominated under the assignment or
    sublease, which exceed, in the aggregate, (I) the total sums which Tenant
    is obligated to pay Landlord under this Lease (prorated to reflect
    obligations allocable to any portion of the Premises subleased), plus (II)
    any real estate brokerage commissions or fees payable in connection with
    such assignment or subletting, shall be paid to Landlord as additional rent
    under this Lease without affecting or reducing any other obligations of
    Tenant hereunder.

c. Notwithstanding the provisions of paragraphs a and b above, Tenant may
   assign this Lease or sublet the Premises or any portion thereof, without
   Landlord's consent and without extending any recapture or termination option
   to Landlord, to any corporation which controls, is controlled by or is under
   common 

                                       11
<PAGE>
 
   control with Tenant, or to any corporation resulting from a merger or
   consolidation with Tenant, or to any person or entity which acquires all the
   assets of Tenant's business as a going concern, provided that (i) the
   assignee or sublessee assumes, in full, the obligations of Tenant under this
   Lease, (ii) Tenant remains fully liable under this Lease, and (iii) the use
   of the Premises under Article 8 remains unchanged.

d. No subletting or assignment shall release Tenant of Tenant's obligations
   under this Lease or alter the primary liability of Tenant to pay the Rent
   and to perform all other obligations to be performed by Tenant hereunder.
   The acceptance of Rent by Landlord from any other person shall not be deemed
   to be a waiver by Landlord of any provision hereof. Consent to one
   assignment or subletting shall not be deemed consent to any subsequent
   assignment or subletting. In the event of default by an assignee or
   subtenant of Tenant or any successor of Tenant in the performance of any of
   the terms hereof, Landlord may proceed directly against Tenant without the
   necessity of exhausting remedies against such assignee, subtenant or
   successor. Landlord may consent to subsequent assignments of the Lease or
   sublettings or amendments or modifications to the Lease with assignees of
   Tenant, without notifying Tenant, or any successor of Tenant, and without
   obtaining its or their consent thereto and any such actions shall not
   relieve Tenant of liability under this Lease.

e. If Tenant assigns the Lease or sublets the Premises or requests the consent
   of Landlord to any assignment or subletting or if Tenant requests the consent
   of Landlord for any act that Tenant proposes to do, then Tenant shall, upon
   demand, pay Landlord an administrative fee of One Hundred Fifty and No/ 
   100ths Dollars ($150.00) plus any attorneys' fees reasonably incurred by
   Landlord in connection with such act or request.

17.  HOLDING OVER.

If after expiration of the Term, Tenant remains in possession of the Premises
with Landlord's permission (express or implied) unless otherwise agreed, Tenant
shall become a tenant from month to month only, upon all the provisions of this
Lease (except as to term and Base Rent), but the "Monthly Installments of Base
Rent" payable by Tenant shall be increased to one hundred fifty percent (I 50%)
of the Monthly Installments of Base Rent payable by Tenant at the expiration of
the Term.  Such monthly rent shall be payable in advance on or before the first
day of each month.  If either party desires to terminate such month to month
tenancy, it shall give the other party not less than thirty (30) days advance
written notice of the date of termination.

18. SURRENDER OF PREMISES.

a. Tenant shall peaceably surrender the Premises to Landlord on the Expiration
   Date, in broom-clean condition and in as good condition as when Tenant took
   possession, except for (i) reasonable wear and tear, (ii) loss by fire or
   other casualty, and (iii) loss by condemnation. Tenant shall, on Landlord's
   request, remove Tenant's Property on or before the Expiration Date and
   promptly repair all damage to the Premises or Building caused by such
   removal.

b. If Tenant abandons or surrenders the Premises, or is dispossessed by process
   of law or otherwise, any of Tenant's Property left on the Premises shall be
   deemed to be abandoned, and, at Landlord's option, title shall pass to
   Landlord under this Lease as by a bill of sale. If Landlord elects to remove
   all or any part of such Tenant's Property, the cost of removal, Including
   repairing any damage to the Premises or Building caused by such removal,
   shall be paid by Tenant. On the Expiration Date Tenant shall surrender all
   keys to the Premises.

19. DESTRUCTION OR DAMAGE.

a. If the Premises or the portion of the Building necessary for Tenant's
   occupancy is damaged by fire, earthquake, act of God, the elements of other
   casualty, Landlord shall, subject to the, provisions of this Article,
   promptly repair the damage, If such repairs can, in Landlord's opinion, be
   completed within ninety (90) days. If Landlord determines that repairs can be
   completed within ninety (90) days, this Lease shall remain in full force and
   effect, except that if such damage is not the result of the gross negligence
   or willful misconduct of Tenant or Tenant's agents, employees, contractors,
   licensees or invitees, the Rent shall be abated to the extent Tenant's use of
   the Premises is impaired, commencing with the date of damage and 

                                       12
<PAGE>
 
   continuing until completion of the repairs required of Landlord under Section
   19.d. If Landlord commences repairs under this Section 1 9.a. but fails to
   complete such repairs within one hundred twenty (120) days after their
   commencement, Tenant shall have the right to cancel this Lease by notice to
   Landlord.

b. If in Landlord's opinion, such repairs to the Premises or portion of the
   Building necessary for Tenant's occupancy cannot be completed within ninety
   (90) days, Landlord may elect, upon notice to Tenant to that effect given
   within thirty (30) days after the date of such fire or other casualty, to
   repair such damage, whereupon Tenant shall have the right to cancel this
   Lease, exercisable by Tenant giving notice of termination to Landlord within
   fifteen (15) days after Landlord's notice is given. If Tenant does not give
   such notice within such time period, this Lease shall continue in full force
   and effect, but the Rent shall be partially abated as provided in Section
   19.a. If Landlord does not so elect to make such repairs, this Lease shall
   terminate as of the date of such fire or other casualty.

c. If any other portion of the Building or Project is totally destroyed or
   damaged to the extent that in Landlord's opinion repair thereof cannot be
   completed within ninety (90) days, Landlord may elect upon notice to Tenant
   given within thirty (30) days after the date of such fire or other casualty,
   to repair such damage, in which event this Lease shall continue in full force
   and effect, but the Rent shall be partially abated as provided in Section
   19.a. If Landlord does not elect to make such repairs, this Lease shall
   terminate as of the date of such fire or other casualty.

d. If the Premises are to be repaired under this Article, Landlord shall repair
   at its cost any injury or damage to the Building and the tenant improvements
   described in Exhibit "C" in the Premises. Tenant shall be responsible at its
   sole cost and expense for the repair, restoration and replacement of any
   other Leasehold Improvements and Tenant's Property. Landlord shall not be
   liable for any loss of business, inconvenience or annoyance arising from any
   repair or restoration of any portion of the Premises, Building or Project as
   a result of any damage from fire or other casualty.

e. This Lease shall be considered an express agreement governing any case of
   damage to or destruction of the Premises, Building or Project by fire or
   other casualty, and any present or future law which purports to govern the
   rights of Landlord and Tenant in such circumstances in the absence of express
   agreement, shall have no application.

20. EMINENT DOMAIN.

a. If the whole of the Building or Premises is lawfully taken by condemnation or
   in any other manner for any public or quasi-public purpose, this Lease shall
   terminate as of the date of such taking, and Rent shall be prorated to such
   date. If less than the whole of the Building or Premises is so taken, this
   Lease shall be unaffected by such taking, provided that (i) Tenant shall have
   the right to terminate this Lease by notice to Landlord given within
   Ninety(90) days after the date of such taking if twenty percent (20%) or more
   of the Premises is taken and the remaining area of the Premises is not
   reasonably sufficient for Tenant to continue operation of its business, and
   (ii) Landlord shall have the right to terminate this Lease by notice to
   Tenant given within ninety (90) days after the date of such taking. If either
   Landlord or Tenant so elects to terminate this Lease, the Lease shall
   terminate on the thirtieth (30th) day after either such notice. The Rent
   shall be prorated to the date Tenant is required to surrender occupancy. If
   this Lease continues in force upon such partial taking, the Base Rent and
   Tenant's Proportionate Share shall be equitably adjusted retroactive to the
   date of the taking according to the remaining Rentable Area of the Premises
   and Project.

b. In the event of any taking, partial or whole, all of the proceeds of any
   award, judgment or settlement payable by the condemning authority shall be
   the exclusive property of Landlord, and Tenant hereby assigns to Landlord
   all of its right, title and interest in any award, judgment or settlement
   from the condemning authority. Tenant, however, shall have the right, to the
   extent that Landlord's award is not reduced or prejudiced, to claim from the
   condemning authority(but not from Landlord) such compensation as may be
   recoverable by Tenant in its own right for relocation expenses and damage to
   Tenant's personal property.

c. In the event of a partial taking of the Premises which does not result in a
   termination of this Lease, Landlord shall restore the remaining portion of
   the Premises as nearly as practicable to its condition prior to the
   condemnation or taking, but only to the extent of the tenant improvements
   described in Exhibit "C". 

                                       13
<PAGE>
 
   Tenant shall be responsible at its sole cost and expense for the repair,
   restoration and replacement of any other Leasehold Improvements and Tenant's
   Property.

21. INDEMNIFICATION.

a. Tenant shall indemnify and hold Landlord harmless against and from liability
   and claims of any kind for loss or damage to property of Tenant or any other
   person, or for any injury to or death of any person, arising out of: (1)
   Tenant's use and occupancy of the Premises, or any work, activity or other
   things allowed or suffered by Tenant to be done in, on or about the Premises;
   (2) any breach or default by Tenant of any of Tenant's obligations under this
   Lease; or (3) any negligent or otherwise tortious act or omission of Tenant,
   its agents, employees, invitees or contractors, unless caused by Landlord's
   gross negligence or willful misconduct. Tenant shall at Tenant's expense, and
   by counsel satisfactory to Landlord, defend Landlord in any action or
   proceeding arising from any such claim and shall indemnify Landlord against
   all costs, attorneys' fees, expert witness fees and any other expenses
   incurred in such action or proceeding. As a material part of the
   consideration for Landlord's execution of this Lease, Tenant hereby assumes
   all risk of damage or injury to any person or property in, on or about the
   Premises from any cause.

b. Landlord shall not be liable for injury or damage which may be sustained by
   the person or property of Tenant, its employees, invitees or customers, or
   any other person in or about the Premises, caused by or resulting from fire,
   steam, electricity, gas, water or rain which may leak or flow from or into
   any part of the Premises, or from the breakage, leakage, obstruction or other
   defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning
   or lighting fixtures, whether such damage or injury results from conditions
   arising upon the Premises or upon other portions of the Building or Project
   or from other sources, unless such injury or damage is caused by Landlord's
   gross negligence or wilful misconduct. Landlord shall not be liable for any
   damages arising from any act or omission of any other tenant of the Building
   or Project.

22. TENANT'S INSURANCE.

a. All insurance required to be carried by Tenant hereunder shall be issued by
   responsible insurance companies acceptable to Landlord and Landlord's lender
   and qualified to do business in the State. Each policy shall name Landlord,
   and at Landlord's request any mortgagee of Landlord, as an additional
   insured, as their respective interests may appear. Each policy shall contain
   (i) a cross-liability endorsement, (ii) a provision that such policy and the
   coverage evidenced thereby shall be primary and non-contributing with respect
   to any policies carried by Landlord and that any coverage carried by Landlord
   shall be excess Insurance, and (iii) a waiver by the insurer of any right of
   subrogation against Landlord, its agents, employees and representatives,
   which arises or might arise by reason of any payment under such policy or by
   reason of any act or omission of Landlord, its agents, employees or
   representatives. A copy of each paid up policy (authenticated by the insurer)
   or certificate of the Insurer evidencing the existence and amount of each
   insurance policy required hereunder shall be delivered to Landlord before the
   date Tenant is first given the right of possession of the Premises, and
   thereafter within thirty (30) days after any demand by Landlord therefor.
   Landlord may, at any time and from time to time, inspect and/or copy any
   insurance policies required to be maintained by Tenant hereunder. No such
   policy shall be cancelable except after twenty (20) days written notice to
   Landlord and Landlord's lender. Tenant shall furnish Landlord with renewals
   or 'binders' of any such policy at least ten (10) days prior to the
   expiration thereof. Tenant agrees that if Tenant does not take out and
   maintain such insurance, Landlord may (but shall not be required to) procure
   said insurance on Tenant's behalf and charge the Tenant the premiums, payable
   upon demand. Tenant shall have the right to provide such insurance coverage
   pursuant to blanket policies obtained by the Tenant, provided such blanket
   policies expressly afford coverage to the Premises, Landlord, Landlord's
   mortgagee and Tenant as required by this Lease.

b. Beginning on the date Tenant is given access to the Premises for any purpose
   and continuing until expiration of the Term, Tenant shall procure, pay for
   and maintain in effect policies of casualty insurance covering (i) all
   Leasehold Improvements (including any alterations, additions or improvements
   as may be made by Tenant pursuant to the provisions of Article 12 hereof),
   and (ii) trade fixtures, merchandise and other personal property from time to
   time in, on or about the Premises, in an amount not less than one hundred
   percent (100%) of their actual replacement cost from time to time, providing
   protection against any peril included within the classification "Fire and
   Extended Coverage" together with insurance against sprinkler 

                                       14
<PAGE>
 
   damage, vandalism and malicious mischief. The proceeds of such insurance
   shall be used for the repair or replacement of the property so insured. Upon
   termination of this Lease following a casualty as set forth herein, the
   proceeds under (i) shall be paid to Landlord, and the proceeds under (ii)
   above shall be paid to Tenant.

c. Beginning on the date Tenant is given access to the Premises for any purpose
   and continuing until expiration of the term, Tenant shall procure, pay for
   and maintain in effect workers' compensation insurance as required by law and
   comprehensive public liability and property damage insurance with respect to
   the construction of improvements on the Premises, the use, operation or
   condition of the Premises and the operations of Tenant in, on or about the
   Premises, providing personal injury and broad form property damage coverage
   for not less than One Million Dollars ($ 1,000,000.00) combined single limit
   for bodily injury, death and property damage liability.

d. Not less than every three (3) years during the Term, Landlord and Tenant
   shall mutually agree to increases in all of Tenant's insurance policy limits
   for all insurance to be carried by Tenant as set forth in this Article. In
   the event Landlord and Tenant cannot mutually agree upon the amounts of said
   increases, then Tenant agrees that all insurance policy limits as set forth
   in this Article shall be adjusted based on increases in the cost of living
   since the Base Year.

23. WAIVER OF SUBROGATION.

Landlord and Tenant each hereby waive all rights of recovery against the other
and against the officers, employees, agents and representatives of the other,
on account of loss by or damage to the waiving party of its property or the
property of others under its control, to the extent that such loss or damage is
insured against under any fire and extended coverage insurance policy which
either may have in force at the time of the loss or damage.  Tenant shall, upon
obtaining the policies of insurance required under this Lease, give notice to
its insurance carrier or carriers that the foregoing mutual waiver of
subrogation is contained in this Lease.

24. SUBORDINATION AND ATTORNMENT.

Upon written request of Landlord, or any mortgagee or deed of trust beneficiary
of Landlord, or ground lessor of Landlord, Tenant shall, in writing, subordinate
its rights under this Lease to the lien of any mortgage or deed of trust, or to
the interest of any lease in which Landlord is lessee, and to all advances made
or hereafter to be made thereunder. However, before signing any subordination
agreement, Tenant shall have the right to obtain from any lender or lessor or
Landlord requesting such subordination, an agreement in writing providing that,
as long as Tenant is not in default hereunder, this Lease shall remain in effect
for the full Term. The holder of any security interest may, upon written notice
to Tenant, elect to have this Lease prior to its security interest regardless of
the time of the granting or recording of such security interest.

In the event of any foreclosure sale, transfer in lieu of foreclosure or
termination of the lease in which Landlord is lessee, Tenant shall attorn to
the purchaser, transferee or lessor as the case may be, and recognize that
party as Landlord under this Lease, provided such party acquires and accepts
the Premises subject to this Lease.

25. ESTOPPEL CERTIFICATES.

Within ten (10) days after written request from Landlord, Tenant shall execute
and deliver to Landlord or Landlord's designee, a written statement certifying
(a) that this Lease is unmodified and in full force and effect, or is in full
force and effect as modified and stating the modifications; (b) the amount of
Base Rent and the date to which Base Rent and additional rent have been paid in
advance; (c) the amount of any Security Deposit; and (d) that Landlord is not
in default hereunder or, if Landlord is claimed to be in default, stating the
nature of any claimed default. Any such statement may be relied upon by a
Purchaser, assignee or lender. Tenant's failure to execute and deliver such
statement within the time required shall be conclusive upon Tenant that: (1)
this Lease is in full force and effect and has not been modified except as
represented by Landlord; (2) there are no uncured defaults in Landlord's
performance and that Tenant has no right of 

                                       15
<PAGE>
 
offset, counter-claim or deduction against Rent; and (3) not more than one
month's Rent has been paid in advance.

Within ten (10) days after written request from Tenant, Landlord shall execute
and deliver to Tenant or Tenant's designee, a written statement certifying (a)
that this Lease is unmodified and in full force and effect, or is in full force
and effect as modified and stating the modifications; (b) the amount of Base
Rent and the date to which Base Rent and additional rent have been paid in
advance; (c) the amount of any Security Deposit; and (d) that Tenant is not in
default hereunder or, if Tenant is claimed to be in default, stating the nature
of any claimed default.  Any such statement may be relied upon by a Purchaser,
assignee or lender.  Landlord's failure to execute and deliver such statement
within the time required shall be conclusive upon Landlord that: (1) this Lease
is in full force and effect and has not been modified except as represented by
Tenant; (2) there are no uncured defaults in Tenant's performance and that
Landlord has no right of offset, counter-claim or deduction against Rent; and
(3) not more than one month's Rent has been paid in advance.

26. TRANSFER OF LANDLORD'S INTEREST.

In the event of any sale or transfer by Landlord of the Premises, Building or
Project, and assignment of this Lease by Landlord, Landlord shall be and is
hereby entirely freed and relieved of any and all liability and obligations
contained in or derived from this Lease arising out of any act, occurrence or
omission relating to the Premises, Building, Project, or Lease occurring after
the consummation of such sale or transfer, providing the Purchaser shall
expressly assume all of the covenants and obligations of Landlord under this
Lease.  If any Security Deposit or prepaid Rent has been paid by Tenant,
Landlord may transfer the Security Deposit or prepaid Rent to Landlord's
successor and upon such transfer, Landlord shall be relieved of any and all
further liability with respect thereto.

27. DEFAULT.

27.1 Tenant's Default.  The occurrence of any one or more of the following
events shall constitute a default and breach of this Lease by Tenant:

a. If Tenant falls to pay any Rent or any other charges required to be paid by
   Tenant under this Lease and such failure continues for five (5) days after
   such payment is due and payable, provided that the first late payment of rent
   in any calendar year shall not constitute a default if payment is made within
   five (5) days after written notice of default from Landlord to Tenant; or

b. If Tenant fails to promptly and fully perform any other covenant, condition
   or agreement contained in this Lease and such failure continues for thirty
   (30) days after written notice thereof from Landlord to Tenant or unless such
   failure is not curable within such thirty (30) day period, in which event
   Tenant shall, provided it is using its best efforts and utmost due diligence
   to cure such failure, have an additional fifteen (1 5) day period to
   accomplish such cure; or

c. If a writ of attachment or execution is levied on this Lease or on any of
   Tenant's Property; or

d. If Tenant makes a general assignment for the benefit of creditors, or
   provides for an arrangement, composition, extension or adjustment with its
   creditors; or

e. If Tenant files a voluntary petition for relief or if a petition against
   Tenant in a proceeding under the federal bankruptcy laws or other insolvency
   laws is filed and not withdrawn or dismissed within forty-five (45) days
   thereafter, of if under the provisions of any law providing for
   reorganization or winding up of corporations, any court of competent
   jurisdiction assumes jurisdiction, custody or control of Tenant or any
   substantial part of its property and such jurisdiction, custody or control
   remains in force unrelinquished, unstayed or unterminated for a period of
   forty-five (45) days; or

f. If in any proceeding or action in which Tenant is a party, a trustee,
   receiver, agent or custodian is appointed to take charge of the Premises or
   Tenant's Property (or has the authority to do so) for the purpose of
   enforcing a lien against the Premises or Tenant's Property; or

                                       16
<PAGE>
 
g. If Tenant fails to perform its obligations under Article 25.

27.2 Remedies. In the event of Tenant's default hereunder, then in addition to
any other rights or remedies Landlord may have under any law, Landlord shall
have the right, at Landlord's option, without further notice or demand of any
kind to do the following:

a. Terminate this Lease and Tenant's right to possession of the Premises and
   reenter the Premises and take possession thereof, and Tenant shall have no
   further claim to the Premises or under this Lease; or

b. Continue this Lease in effect, reenter and occupy the Premises for the
   account of Tenant, and collect any unpaid Rent or other charges which have
   or thereafter become due and payable; or

c. Reenter the Premises under the provisions of subparagraph b, and thereafter
   elect to terminate this Lease and Tenant's right to possession of the
   Premises.

If Landlord reenters the Premises under the provisions of subparagraphs b or c
above, Landlord shall not be deemed to have terminated this Lease or the
obligation of Tenant to pay any Rent or other charges thereafter accruing,
unless Landlord notifies Tenant in writing of Landlord's election to terminate
this Lease.  In the event of any reentry or retaking of possession by Landlord,
Landlord shall have the right, but not the obligation, to remove all or any part
of Tenant's Property in the Premises and to place such property in storage at a
public warehouse at the expense and risk of Tenant.  If Landlord elects to
relate the Premises for the account of Tenant, the rent received by Landlord
from such reletting shall be applied as follows: first, to the payment of any
indebtedness other than Rent due hereunder from Tenant to Landlord; second, to
the payment of any costs of such reletting; third, to the payment of the cost of
any alterations or repairs to the Premises; fourth to the payment of Rent due
and unpaid hereunder; and the balance, if any, shall be held by Landlord and
applied in payment of future Rent as it becomes due.  If that portion of rent
received from the reletting which is applied against the Rent due hereunder is
less than the amount of the Rent due, Tenant shall pay the deficiency to
Landlord promptly upon demand by Landlord.  Such deficiency shall be calculated
and paid monthly.  Tenant shall also pay to Landlord, as soon as determined, any
costs and expenses incurred by Landlord in connection with such reletting or in
making alterations and repairs to the Premises, which are not covered by the
rent received from the reletting.

Should Landlord elect to terminate this Lease under the provisions of
subparagraph a or c above, Landlord may recover as damages from Tenant the
following:

1. Past Rent. The worth at the time of the award of any unpaid Rent which had
   been earned at the time of termination; plus

2. Rent Prior to Award. The worth at the time of the award of the amount by
   which the unpaid Rent which would have been earned after termination until
   the time of award exceeds the amount of such rental loss that Tenant proves
   could have been reasonably avoided; plus

3. Rent AfterAward. The worth at the time of the award of the amount by which
   the unpaid Rent for the balance of the Term after the time of award exceeds
   the amount of the rental loss that Tenant proves could be reasonably
   avoided; plus

4. Proximately Caused Damages. Any other amount necessary to compensate Landlord
   for all detriment proximately caused by Tenant's failure to perform its
   obligations under this Lease or which in the ordinary course of things would
   be likely to result therefrom, including, but not limited to, any costs or
   expenses (including attorneys' fees), incurred by Landlord in (a) retaking
   possession of the Premises, (b) maintaining the Premises after Tenant's
   default, (c) preparing the Premises for reletting to a new tenant, including
   any repairs or alterations, and (d) reletting the Premises, including
   broker's commissions.

"The worth at the time of the award" as used in subparagraphs 1 and 2 above, is
to be computed by allowing interest at a rate equal to the discount rate of the
Federal Reserve Bank situated nearest to the Premises plus two percent (2%). 
"The worth at the time of the award" as used in subparagraph 3 above, 

                                       17
<PAGE>
 
is to be computed by discounting the amount at the discount rate of the Federal
Reserve Bank situated nearest to the Premises at the time of the award plus two
percent (2%).

The waiver by Landlord of any breach of any term, covenant or condition of this
Lease shall not be deemed a waiver of such term, covenant or condition or of any
subsequent breach of the same or any other term, covenant or condition.
Acceptance of Rent by Landlord subsequent to any breach hereof shall not be
deemed a waiver of any preceding breach other than the failure to pay the
particular Rent so accepted, regardless of Landlord's knowledge of any breach at
the time of such acceptance of Rent.  Landlord shall not be deemed to have
waived any term, covenant or condition unless Landlord gives Tenant written
notice of such waiver.

27.3  Landlord's Default.  If Landlord fails to perform any covenant, condition
or agreement contained in this Lease (except Landlord's obligation under Article
25) within thirty (30) days after receipt of written notice from Tenant
specifying such default, or if such default cannot reasonably be cured within
thirty (30) days, if Landlord fails to commence to cure within that thirty (30)
day period, then Landlord shall be liable to Tenant for any damages sustained by
Tenant as a result of Landlord's breach; provided, however, it is expressly
understood and agreed that if Tenant obtains a money judgment against Landlord
resulting from any default or other claim arising under this Lease, Including
one based on Article 25, that judgment shall be satisfied only out of the rents,
issues, profits, and other income actually received on account of Landlord's
right, title and interest in the Premises, Building or Project, and no other
real, personal or mixed property of Landlord (or of any of the partners which
comprise Landlord, if any) wherever situated, shall be subject to levy to
satisfy such judgment.  If, after notice to Landlord of default, Landlord (or
any first mortgagee or first deed of trust beneficiary of Landlord) fails to
cure the default as provided herein, then Tenant shall have the right to cure
that default at Landlord's expense.  Tenant shall not have the right to
terminate this Lease or to withhold, reduce or offset any amount against any
payments of Rent or any other charges due and payable under this Lease except as
otherwise specifically provided herein.

28. BROKERAGE FEES.

Tenant and Landlord each mutually warrants and represents that it has not dealt
with any real estate broker or agent in connection with this Lease or its
negotiation except those noted in Section 2.c. Each party shall indemnify and
hold the other harmless from any cost, expense or liability (including costs of
suit and reasonable attorneys' fees) for any compensation, commission or fees
claimed by any other real estate broker or agent in connection with this Lease
or its negotiation by reason of the act of the indemnifying party.  Landlord
shall be solely responsible for payment of the commissions of the brokers listed
in Section 2.c. of this Lease.

29. NOTICES.

All notices, approvals and demands permitted or required to be given under this
Lease shall be in writing and deemed duly served or given if personally
delivered or sent by certified or registered U.S. mail, postage prepaid, and
addressed as follows: (a) if to Landlord, to Landlord's Mailing Address and to
the Building manager, and (b) if to Tenant, to Tenant's Mailing Address; 
provided, however, notices to Tenant shall be deemed duly served or given if
delivered or mailed to Tenant at the Premises. Landlord and Tenant may from time
to time by notice to the other designate another place for receipt of future
notices.

30. GOVERNMENT ENERGY OR UTILITY CONTROLS.

In the event of imposition of federal, state or local government controls,
rules, regulations, or restrictions on the use or consumption of energy or other
utilities during the Term, both Landlord and Tenant shall be bound thereby.  In
the event of a difference in interpretation by Landlord and Tenant of any such
controls, the interpretation of Landlord shall prevail, and Landlord shall have
the right to enforce compliance therewith, including the right of entry into the
Premises to effect compliance.

31. (OMITTED]

                                       18
<PAGE>
 
32. QUIET ENJOYMENT.

Tenant, upon paying the Rent and performing all of its obligations under this
Lease, shall peaceably and quietly enjoy the Premises, subject to the terms of
this Lease and to any mortgage, lease, or other agreement to which this Lease
may be subordinate.

33. OBSERVANCE OF LAW.

Tenant shall not use the Premises or permit anything to be done in or about the
Premises which will in any way conflict with any law, statute, ordinance or
governmental rule or regulation now in force or which may hereafter be enacted
or promulgated.  Tenant shall, at its sole cost and expense, promptly comply
with all laws, statutes, ordinances and governmental rules, regulations or
requirements now in force or which may hereafter be in force, and with the
requirements of any board of fire insurance underwriters or other similar bodies
now or hereafter constituted, relating to, or affecting the condition, use or
occupancy of the Premises, excluding structural changes not related to or
affected by Tenant's improvements or acts.  The final judgment of any court of
competent jurisdiction or the admission of Tenant in any action against Tenant,
whether Landlord is a party thereto or not, that Tenant has violated any law,
ordinance or governmental rule, regulation or requirement, shall be conclusive
of that fact as between Landlord and Tenant.

34. FORCE MAJEURE.

Any prevention, delay or stoppage of work or services to be performed by
Landlord or Tenant which is due to strikes, labor disputes, inability to obtain
labor, materials, equipment or reasonable substitutes therefor, acts of God,
governmental restrictions or regulations or controls, judicial orders, enemy or
hostile government actions, civil commotion, fire or other casualty, or other
causes beyond the reasonable control of the party obligated to perform
hereunder, shall excuse performance of the work by that party for a period equal
to the duration of that prevention, delay or stoppage.  Nothing in this Article
34 shall excuse or delay Tenant's obligation to pay Rent or other charges under
this Lease.

35. CURING TENANT'S DEFAULTS.

If Tenant defaults in the performance of any of its obligations under this
Lease, Landlord may (but shall not be obligated to) without waiving such
default, perform the same for the account at the expense of Tenant.  Tenant
shall pay Landlord all costs of such performance promptly upon receipt of a
bill therefor.
 
36. SIGN CONTROL.

Tenant shall not affix, paint, erect or inscribe any sign, projection, awning,
signal or advertisement of any kind to any part of the Premises, Building or
Project, including without limitation, the inside or outside of windows or
doors, without the written consent of Landlord.  Landlord shall have the right
to remove any signs or other matter, installed without Landlord's permission,
without being liable to Tenant by reason of such removal, and to charge the cost
of removal to Tenant as additional rent hereunder, payable within ten
(10) days of written demand by Landlord.

37.  MISCELLANEOUS.

a. Accord and Satisfaction; Allocation of Payments. No payment by Tenant or
   receipt by-Landlord of a lesser amount than the Rent provided for in this
   Lease shall be deemed to be other than on account of the earliest due Rent,
   nor shall any endorsement or statement on any check or letter accompanying
   any check or payment as Rent be deemed an accord and satisfaction, and
   Landlord may accept such check or payment without prejudice to Landlord's
   right to recover the balance of the Rent or pursue any other remedy provided
   for in this Lease. In connection with the foregoing, Landlord shall have the
   absolute right in its sole discretion to apply any payment received from
   Tenant to any account or other payment of Tenant then not current and due or
   delinquent.

                                       19
<PAGE>
 
b. Addenda. If any provision contained in an addendum to this Lease is
   inconsistent with any other provision herein, the provision contained in the
   addendum shall control, unless otherwise provided in the addendum.

c. Attorneys' Fees. If any action or proceeding is brought by either party
   against the other pertaining to or arising out of this Lease, the finally
   prevailing party shall be entitled to recover all costs and expenses,
   including reasonable attorneys' fees, incurred on account of such action or
   proceeding.

d. Captions; Article and Section Numbers. The captions appearing within the body
   of this Lease have been inserted as a matter of convenience and for reference
   only and in no way define, limit or enlarge the scope or meaning of this
   Lease. All references to Article and Section numbers refer to Articles and
   Sections in this Lease.

e. Changes Requested by Lender. Neither Landlord or Tenant shall unreasonably
   withhold its consent to changes or amendments to this Lease requested by the
   lender on Landlord's interest, so long-as these changes do not alter the
   basic business terms of this Lease or otherwise materially diminish any
   rights or materially increase any obligations of the party from whom consent
   to such charge or amendment is requested.

f. Choice of Law.  This Lease shall be construed and enforced in accordance with
   the laws of the State.

g. Consent.  Notwithstanding anything contained in this Lease to the contrary,
   Tenant shall have no claim, and hereby waives the right to any claim against
   Landlord for money damages by reason of any refusal, withholding or delaying
   by Landlord of any consent, approval or statement of satisfaction, and in
   such event, Tenant's only remedies therefor shall be an action for specific
   performance, injunction or declaratory judgment to enforce any right to-such
   consent, approval or statement.

h. Corporate Authority. If Tenant is a corporation, each individual signing this
   Lease on behalf of Tenant represents and warrants that he is duly authorized
   to execute and deliver this Lease on behalf of the corporation, and that this
   Lease is binding on Tenant in accordance with its terms. Tenant shall, at
   Landlord's request, deliver a certified copy of a resolution of its board of
   directors authorizing such execution.

I. Counterparts.  This Lease may be executed in multiple counterparts, all of
   which shall constitute one and the same Lease.
 
j. Execution of Lease; No Option. The submission of this Lease to Tenant shall
   be for examination purposes only, and does not and shall not constitute a
   reservation of or option for Tenant to lease, or otherwise create any
   interest of Tenant in the Premises or any other premises within the Building
   or Project. Execution of this Lease by Tenant and its return to Landlord
   shall not be binding on Landlord notwithstanding any time interval, until
   Landlord has in fact signed and delivered this Lease to Tenant.

k. Furnishing of Financial Statements; Tenant's Representations. In order to
   induce Landlord to enter into this Lease Tenant agrees that it shall promptly
   furnish Landlord, from time to time, upon Landlord's written request, with
   financial statements reflecting Tenant's current financial condition. Tenant
   represents and warrants that all financial statements, records and
   information furnished by Tenant to Landlord in connection with this Lease are
   true, correct and complete in all material respects.

l. Further Assurances.  The parties agree to promptly sign all documents
   reasonably requested to give effect to the provisions of this Lease.

m. Mortgagee Protection. Tenant agrees to send by certified or registered mail
   to any first mortgagee or first deed of trust beneficiary of Landlord whose
   address has been furnished to Tenant, a copy of any notice of default served
   by Tenant on Landlord. If Landlord fails to cure such default within the time
   provided for in this Lease, such mortgagee or beneficiary shall have an
   additional thirty (30) days to cure such default; provided that if such
   default cannot reasonably be cured within that thirty (30) day period, then
   such 

                                       20
<PAGE>
 
   mortgagee or beneficiary shall have such additional time to cure the
   default as is reasonably necessary under the circumstances.

n. Prior Agreements; Amendments. This Lease contains all of the agreements of
   the parties with respect to any matter covered or mentioned in this Lease,
   and no prior agreement or understanding pertaining to any such matter shall
   be effective for any purpose. No provisions of this Lease may be amended or
   added to except by an agreement in writing signed by the parties or their
   respective successors in interest.

o. Recording.  Tenant shall not record this Lease without the prior written
   consent of Landlord.  Tenant, upon the request of Landlord, shall execute and
   acknowledge a "short form" memorandum of this Lease for recording purposes.

p. Severability.  A final determination by a court of competent jurisdiction
   that any provision of this Lease is invalid shall not affect the validity of
   any other provision, and any provision so determined to be invalid shall, to
   the extent possible, be construed to accomplish its intended effect.

q. Successors and Assigns. This Lease shall apply to and bind the heirs,
   personal representatives, and permitted successors and assigns of the
   parties.

r. Time of the Essence.  Time is of the essence of this Lease.

s. Waiver. No delay or omission in the exercise of any right or remedy of
   Landlord upon any default by Tenant shall impair such right or remedy or be
   construed as a waiver of such default. The receipt and acceptance by Landlord
   of delinquent Rent shall not constitute a waiver of any other default; it
   shall constitute only a waiver of timely payment for the particular Rent
   payment involved. No act or conduct of Landlord, including, without
   limitation, the acceptance of keys to the Premises, shall constitute an
   acceptance of the surrender of the Premises by Tenant before the expiration
   of the Term. Only a written notice from Landlord to Tenant shall constitute
   acceptance of the surrender of the Premises and accomplish a termination of
   the Lease. Landlord's consent to or approval of any act by Tenant requiring
   Landlord's consent or approval shall not be deemed to waive or render
   unnecessary Landlord's consent to or approval of any subsequent act by
   Tenant. Any waiver by Landlord of any default must be in writing and shall
   not be a waiver of any other default concerning the same or any other
   provision of the Lease.

38. SAFETY.

Lessee shall maintain on the Premises at all times during the Term hereof an
adequate number, size and type of fire extinguishers as are appropriate to
Lessee's business.  Lessee will at all times adhere to good safety practices or
as may be required by safety inspectors.  No goods, merchandise or materials
shall be kept, stored or sold by Lessee on or about the Premises which are in
any way hazardous, and Lessee shall not suffer, permit or perform any acts on or
about the Premises which will increase the existing rate of fire insurance.  If
the said insurance rate is increased by such an act, then the increased cost of
such insurance shall be paid by Lessee to Lessor with the next succeeding
installment of rental.  Lessee, at its sole expense, shall comply with any and
all requirements of any insurance organization or company necessary for the
maintenance of reasonable fire and public liability insurance covering the
Premises, the Project or any portion thereof.

39. NO ACCESS TO ROOF.

Lessee shall have not right of access to the roof of the Premises or the
building in which the Premises are located and shall not install, repair or
replace any aerial, fan, air conditioner or other device on the roof of the
Premises or the building in which the Premises are located without the prior
written consent of Lessor.  Any aerial, fan, air conditioner or device installed
without such written consent shall be subject to removal, at Lessee's expense,
without notice, at any time.

                                       21
<PAGE>
 
40. ALTERATIONS AND COMMON AREAS.

Lessor shall have the right to make changes in the Common Areas or any part
thereof, including, without limitation, changes in the location of driveways,
entrances, exits, vehicular parking spaces and the direction of traffic flow,
and designation of restricted areas, as Lessor deems necessary or advisable for
the proper and efficient operation and maintenance of the Common Areas.
Notwithstanding the foregoing, Lessor shall not make changes in the Common Areas
which materially and adversely affect access to, or visibility of, the Premises,
except temporarily during periods of construction.

41. OTHER TENANTS.

Lessor reserves the absolute right to permit such other tenancies and businesses
in the Project as Lessor, in the exercise of its sole business judgement, shall
determine to best promote the interests of the Project.  Lessee is not relying
on the understanding, nor does Lessor represent, any specific lessee or number
of lessees shall during the Term occupy any space in the Project.

42. NAME OF PROPERTY.

Lessor shall have the right to change the name of the Property upon not less
than thirty (30) days prior written notice to Lessee.  Lessee agrees that the
name of the Project shall be the sole property of and belong to Lessor.  From
and after the termination or expiration of the Term for any reason whatsoever,
Lessee shall cease using the name of the Project for any purpose.

43. ARMS-LENGTH TRANSACTION.

This Lease has been negotiated with both parties being represented by their
respective attorneys.  Each party acknowledges that it has had full opportunity
to consult with tax, engineering and other advisors of its choosing.  All terms
and provisions hereof shall be given their plain meaning, and shall not be
construed for or against either party.

44. OPTION TO RENEW.

Tenant shall have two five-year renewal options, each exercisable by giving
Landlord notice to that effect no less than one-hundred eighty (180) days prior
to the expiration of the then current Term.  All terms and conditions of this
Lease will remain in full force and effect should Tenant desire to extend its
occupancy, with the exception of the Base Rate, which shall be as follows:

    First Five-Year Option Term
    ----------------------     

    Months 1-12: Seventeen and 50/100 Dollars ($17.50) per square foot per year.

    Months 13-24: Eighteen and 00/100 Dollars ($18.00) per square foot per year.

    Months 25-36: Eighteen and 50/100 Dollars ($18.50) per square foot per year.

    Months 37-48: Nineteen and 00/100 Dollars ($19.00) per square foot per year.

    Months 49-60: Nineteen and 50/100 Dollars ($19.50) per square foot per year.

    Second Five-Year Option Term
    ----------------------------
    Months 1-1 2: Twenty and 00/100 Dollars ($20.00) per square foot per year.

    Months 13-24: Twenty and 50/100 Dollars ($20.50) per square foot per year.

    Months 25-36: Twenty-One and 00/100 Dollars ($21.00) per square foot per
                  year.

                                       22
<PAGE>
 
    Months 37-48: Twenty-One and 50/100 Dollars ($21.50) per square foot per
                  year.

    Months 49-60: Twenty-Two and 00/100 Dollars ($22.00) per square foot per
                  year.

45. RIGHT OF FIRST REFUSAL.

During the initial sixty (60) months of the Term, providing that Tenant shall
not be in default hereunder beyond applicable grace and cure periods, if
Landlord shall receive a bona fide offer from a party (herein called the
"Outside Tenant"), for the lease of the first right of refusal space, which
shall be the "First Refusal Premises", as referenced on Exhibit "A" which offer
Landlord desires to accept (herein called the "Outside Offer"), or if Landlord
shall make a bona fide offer to a party (such offeree also herein called the
"Outside Tenant"), for the lease of the First Refusal Premises, which the
Outside Tenant desires to accept (also called the "Outside Offer"), Landlord
shall give written notice of such Outside Offer to Tenant. Tenant then shall
have five (5) business days from the date Landlord's written notice is given in
which to give written notice to Landlord electing to lease the First Refusal
Premises at the then existing rental rate specified in this Lease, for a lease
term and rental rate which shall be commensurate with and expire at the same
time as those set forth in this Lease, and upon the same other material terms
and conditions as set forth in this Lease document. In the event Tenant shall
elect to lease the First Refusal Premises, this Lease shall automatically be
deemed amended to include the First Refusal Premises as part of the Premises
leased. In the event Tenant shall not elect to lease the First Refusal Premises,
then Landlord may lease such First Refusal Premises to the Outside Tenant on any
terms Landlord deems appropriate in its sole discretion, and Tenant shall have
no further rights with respect thereto, provided that if the rental rate to be
paid by the Outside Tenant is less than ninety percent (90%) of the rental rate
originally specified in the Outside Offer, Landlord shall give notice of this
fact to Tenant and Tenant shall have an additional five (5) business days within
which to extend the terms of this Lease to cover the First Refusal Premises.
Tenant's right of first refusal as set forth in this Section 45 shall be subject
to the pre-existing rights of the other tenants in the Project.

46. SIGNAGE.

Landlord, at its expense will place the approved Tenant's signage on the
Project's monument signs located on Wilmot Road and Broadway Boulevard and the
monument sign at the main entranceway of the Building.
 
47. COVERED PARKING.

Landlord shall supply Tenant with one (1) free covered parking space per 1,000
square feet of Rentable Area at no charge to the Tenant for the initial sixty
(60) months of the Term.  During any renewal term pursuant to Section 44,
covered parking will be charged at the then-prevailing rate for the Project.

48. CONSENT.

Whenever this Lease requires the consent or approval of a party, such consent or
approval shall not be unreasonably withheld or delayed.

The parties hereto have executed this Lease as of the dates set forth below:

LANDLORD:                                     TENANT:

Diamond Management, Inc.,                     SatCon Technology Corporation
as Agent for the Owner                        a Delaware Corporation

By: /s/ David Goldstein                       By: /s/ Michael C. Turmelle
   --------------------                          --------------------------
   David Goldstein                               Michael C. Turmelle

Its: President                                Its: Vice President, CFO

Date: 2/27/96                                 Date: 2/27/96

                                       23
<PAGE>
 
                                  Exhibit "A"


[Floor plan showing the Premises]

 
<PAGE>
 
                                  Exhibit "B"


[Site plan of the Project]


<PAGE>
 
EXHIBIT "D"
RULES AND REGULATIONS
TUCSON OFFICE PLAZA


1.   NO SMOKING AREAS. No smoking is allowed in the building common areas
     including elevators, restrooms, hallways, and lobby areas.  Tenant shall
     instruct its employees of this regulation and inform them of designated
     smoking zones.

2.   TELEPHONE AND COMPUTER CABLING.  Telecommunications wiring and maintenance
     shall not be done above the acoustic ceiling without coordinating through
     Building Management.  Any damage to any acoustic ceiling tile caused by
     Tenant and/or it's vendors shall be the responsibility of Tenant.  All
     telephone/data cable shall be plenum rated wire.

     Additionally, Tenant is not to attach anything to the suspended acoustic
     ceiling grid including hanging plants.

3.   FLOOR COVERING MAINTENANCE.  Landlord, as part of it's janitorial
     services, shall provide routine spot cleaning of floor covering surfaces
     incurred during normal business occupancy.  However, all service
     maintenance of floor covering surfaces including shampooing and/or
     polishing of hard floor surfaces shall be the responsibility of Tenant but
     shall be done by a vendor approved by Building Management.

4.   REKEYING THE PREMISES.  In the event the Tenant requires to have it's
     leased premises rekeyed for any reason, then Tenant shall use the
     authorized building locksmith.  Any rekeying shall keep the applicable
     lock on the existing building master keyway.  Further, Tenant shall be
     financially responsible for the expense of each rekeying, unless the
     rekeying is requested by Landlord.  Any specialty locks installed by
     Tenant (i.e. cipher locks) shall be at Tenant's sole expense.  Any repairs
     to such specialty lock hardware shall be at Tenant's expense.

TO REKEY - NOTIFY BUILDING MANAGEMENT.