# 800
MIRAMONTE DRIVE
SANTA BARBARA, CALIFORNIA
TRIPLE NET MONTH-TO-MONTH REAL PROPERTY LEASE

THIS
TRIPLE NET MONTH-TO-MONTH REAL PROPERTY LEASE (the Lease) is
made and entered into by and between DE ETTA M. NANCARROW, TRUSTEE OF THE
NANCARROW FAMILY LIVING TRUST DATED 9/25/91 (hereinafter referred to as the
Landlord), and EARTHSHELL CORPORATION, a Delaware
corporation (hereinafter referred to as the Tenant), who,
intending to be legally bound, do hereby agree as follows:

1.
     LEASED PREMISES.The Landlord hereby leases to the Tenant,
and the Tenant hereby leases from the Landlord, the building located at 800
Miramonte Drive, Santa Barbara, California (the Building) as
described in Exhibit A hereto (the
Premises) in the City of Santa Barbara, County of Santa
Barbara, State of California, together with all furniture and fixtures described
in Exhibit B hereto. The Premises are accepted as
is by the Tenant, after the Tenants inspection, without any express
or implied warranties by the Landlord, and the Tenant is responsible for all
changes of whatever nature necessary for the Tenants intended use of the
Premises. The Tenant agrees that notwithstanding any other provisions in this
Lease, the Landlord and its brokers may enter the Premises to show the Premises
to prospective purchasers upon twenty-four (24) hours notice.

2.
     TERM. This month-to-month lease shall commence on April 1, 2001 (the
Commencement Date) and may terminate by either party upon one
hundred eighty (180) days prior written notice. The Tenant acknowledges
that the Premises is for sale by the Landlord and this termination provision was
an essential condition of the Landlord agreeing to enter into this Lease.

3.
     INTENTION OF THE PARTIES

3.1
   Negation  of Joint  Venture.  Nothing  in this  Lease  shall  cause  the
Landlord in any way to be construed as an employer,  employee,  fiduciary,  a partner, a joint
venturer,  or  otherwise  associated  in any way  with  the  Tenant  in the  operation  of the
Premises,  or to subject the Landlord to any  obligation,  loss,  charge or expense  connected
with or arising  from the  Tenant's  operation or use of the  Premises,  except for  excessive
Operating Costs as set forth in Paragraph 4.2.3 hereof.

3.2
   Triple  Net  Lease.  Pursuant  to  Section  1652 of the
California  Civil Code, it is understood  and agreed that the general intent and
purpose  of  this  Lease  is  that,  subject  to the  limitation  set  forth  in
Paragraph  4.2.3 hereof, this Lease shall be an absolute triple net lease
with  respect  to  the  Landlord.   Subject  to  the  limitation  set  forth  in
Paragraph  4.2.3  hereof,  the Tenant shall pay the actual Real  Property
Taxes, assessments, insurance, utilities and all maintenance and other Operating
Costs,  together  with the Premises and all  repairs,  remodeling,  renovations,
alterations and  improvements  shall be paid by the Tenant,  provided the square
footage of the Building is not increased. The Operating Costs will be consistent
with prior  practices  between  Landlord  and the prior  Tenant  except that the
Operating Costs will be for the entire Premises.

4.
     RENT.

4.1
       Minimum Monthly Rent. The minimum monthly
rent will be THIRTY SIX THOUSAND  DOLLARS  ($36,000)  (the  "Minimum  Monthly
Rent"),  payable in advance,  commencing on the  Commencement  Date, and the
first day of each month  thereafter,  without reduction or set off. The Landlord
may increase the Minimum  Monthly Rent upon one hundred eighty (180) days' prior
written notice to the Tenant.  The rent for April,  2001 will be due and payable
at the  execution  of this  Lease.  The  Tenant  will pay all  triple  net items
commencing as of the  Commencement  Date. Rent shall be prorated for any partial
rent and common area expenses.

4.2
     Operating Costs.

4.2.1
     Payment of Rent.

A.
     In  addition to any other  payments due hereunder,
the Tenant shall pay to the Landlord as additional rent, on the first day of the
date specified in Paragraph 4.1 for the commencement of rent and for each
full  calendar  month of the Lease term,  all of the  Landlords  estimated
total  Operating  Costs for the Premises,  including  common area expenses.  The
basis for Tenants  initial  payment of Operating  Costs shall be consistent with
those payable in 2000, but for the entire Premises and may be modified as herein
provided.

B.
       Operating Costs for any portion of an accounting
period not included  within the term of this Lease,  or  occurring  prior to the
Tenants  obligation to pay rent for any portion of the Premises,  shall be
prorated on a 365-day year.

C.
     The  accounting period for determining  Landlord's
total  Operating  Costs  shall be the  calendar  year,  except  that  the  first
accounting  period shall  commence on the date the Lease term  commences and the
last  accounting  period  shall  end on the  date  the  Lease  term  expires  or
terminates.

4.2.2
     Estimated Costs; Reconciliation of Payments.

A.
        Landlord   shall   furnish  to  Tenant  at  the
commencement  of each  month  an  estimate  of the  Operating  Costs  reasonably
anticipated by Landlord for the ensuing month, and Tenants monthly payment
will be based on the monthly estimate.

B.
     If  the actual  Operating  Costs for the preceding
month exceeds the estimated  payments made by Tenant,  then Tenant shall pay any
deficiency  to  Landlord  within  ten (10) days after  Tenants  receipt of
Landlords  statement.  Should the estimated payments made by Tenant during
the preceding accounting period exceed the Operating Costs, Landlord shall repay
Tenant the excess  through  adjustments  to the next  monthly  payments due from
Tenant.

4.2.3
     Operating  Costs  Defined.  As used herein,
the term Operating  Costs  shall include, without limitation,
all amounts paid or incurred by the Landlord  after the  Commencement  Date for:
Real  Property  Taxes and  assessments  and other taxes and  assessments  of any
nature levied and assessed  against the Building  and/or the Premises and common
areas,  (if any) or  assessed  against  the  Landlord  as a result of the common
areas,  Building  and/or the  Premises;  repair,  replacement,  improvement  and
operation of the common areas,  including trash removal and disposal,  supplies,
equipment,  plumbing, sewers, heating,  ventilating,  air-conditioning and glass
and doors.  Costs for maintenance and operation of the common area, the Premises
and/or the Building shall include, without limitation,  cleaning,  sweeping, and
other  janitorial  services,   policing,  purchase  and  maintenance  of  refuse
receptacles,  directional signs and other markers, car stops, lighting and other
utilities,  premiums on public liability and property damage insurance,  and all
other  required  insurance  purchased  by the  Landlord  at the  Landlords
absolute discretion,  together with reimbursement of all deductible amounts, and
all other costs  necessary in the  Landlords  judgment for the maintenance
and operation of the common areas and the Building. Operating Costs also include
all Real Property Taxes, as that term is defined in Paragraph 5.2 hereof.
Operating  Costs shall also  include all items of cost  related to  maintenance,
operation  and  management  of the  Building in which the  Premises are located,
including   maintaining   and   operating   the   heating,    ventilating,   and
air-conditioning  equipment  and related  distribution  facilities  and controls
providing  climatic  control of the common areas, the Building and the Premises,
utilities, as provided in Paragraph 6. hereof, and all costs of utilities
used in  connection  with  the  maintenance,  operation  and  management  of the
Building. It is hereby intended that all costs of operating the Premises, of any
kind or nature,  will be charged as an Operating  Cost. Any  improvements  which
have  useful life ever six (6) months will be prorated on a month to month basis
over its useful life. The roof repairs described in Paragraph  7.1.3 will
not be considered an Operating Cost.

4.2.4
     Books  and Records. The Landlord shall keep
at the  Premises,  or at her  principal  place of business,  full,  accurate and
separate books of account covering the Landlords  Operating Costs, and the
statements  of the  Landlord to the Tenant  shall  accurately  reflect the total
Operating  Costs shown on such books of account.  Said books of account shall be
retained  by the  Landlord  for at least six (6) months  after the close of each
accounting  period,  and the  Tenant  shall have the right at  reasonable  times
during the term of the Lease to inspect said books of account.

4.2.5
     Water  Use Surcharge.  Notwithstanding  the
foregoing, Landlord reserves the right to bill Tenant, as an Operating Cost, for
any  surcharge  or penalty  incurred by Landlord as a result of water use in the
Premises or the Building. If such surcharge or penalty pertains to the Premises,
Tenant shall pay all of such penalty or surcharge.  If such surcharge or penalty
relates to the Building,  or common area,  Tenant shall pay its pro rata portion
thereof. Such payment shall be payable as an Operating Cost.

4.3
     Late Payment Charges.

A.
     Should the Tenant fail to make any payment of rent
or any other amount payable to the Landlord by the Tenant  hereunder within five
(5) days of the date when such  payment  first  becomes due, or should any check
tendered  to the  Landlord  by the Tenant be  returned  to the  Landlord  by the
Tenants  bank for insufficient  funds, or if the rent remains unpaid after
said five (5) day period and twenty-four  (24) hours after written demand by the
Landlord,  then the  Tenant  shall  pay to the  Landlord,  in  addition  to such
payment,  a late charge in the amount of Five  Percent (5%) of the rent or other
payment  due which the  parties  agree is a  reasonable  estimate  of the amount
necessary to reimburse  damages and additional  costs not  contemplated  by this
Lease  that the  Landlord  will incur as a result of the  delinquent  payment or
returned  check,  including  processing and accounting  charges and late charges
that may be imposed on the  Landlord by its lender.  Upon notice of  non-payment
given by the Landlord to the Tenant,  the entire amount then due, including such
late charge, shall thereafter bear interest at the highest rate permitted by law
on the due date for said payment, until paid in full.

B.
     Acceptance  of any payment by the Landlord  shall not  constitute
waiver of any late charges or interest which may be due.

4.4
     Security  Deposit. At the execution of this
Lease,  the Tenant shall deposit with the Landlord  FORTY FIVE THOUSAND  DOLLARS
($45,000) (the "Security Deposit"). If the Tenant is in default in any of
its obligations  hereunder,  the Landlord can use the Security  Deposit,  or any
portion of it, to cure the default or to compensate the Landlord for all damages
sustained by the Landlord resulting from the Tenant's default.  The Tenant shall
immediately,  upon demand, pay to the Landlord a sum equal to the portion of the
Security  Deposit  expended  or  applied by the  Landlord  as  provided  in this
paragraph so as to maintain the Security Deposit in the sum initially  deposited
with  the  Landlord.  If the  Tenant  is not in  default  at the  expiration  or
termination of this Lease, the Landlord shall return the Security Deposit to the
Tenant. The Landlord's obligation with respect to the Security Deposit are those
of a debtor,  and not a trustee.  The Landlord can maintain the Security Deposit
separate and apart from the  Landlord's  general  funds,  or can  commingle  the
Security Deposit with the Landlord's general and other funds. The Landlord shall
pay the Tenant  interest on the  Security  Deposit at the rate of Three  Percent
(3%) per annum,  to be paid at the end of the term of this Lease, or any renewal
period, so long as the Tenant is not in default of this Lease.

5.
PROPERTY TAXES AND ASSESSMENTS

5.1
     Personal  Property  Taxes. The Tenant shall
pay before  delinquency all taxes assessed against any personal  property of the
Tenant installed or located in or upon the Premises and that are attributable to
the term of this Lease, whether or not they are actually payable during the term
of this Lease.

5.2
     Taxes  Defined;  Special  Assessments.  The
term "Real Property Taxes," as used in this paragraph shall mean and include all
taxes, assessments and other governmental charges, general and special, ordinary
and extraordinary, of any kind and nature whatsoever, levied or assessed against
the  Premises  and other  improvements  and the  Building  and land of which the
Premises  are a part,  including  but not  limited  to,  assessment  for  public
improvements or benefits which shall be levied or assessed against the Premises,
or any part thereof, but excluding franchise,  estate, inheritance,  succession,
capital levy, transfer,  income or excess profits tax imposed upon the Landlord.
If at any time during the term of this Lease,  under the laws of California,  or
any political  subdivision thereof in which the Premises are situated,  a tax or
excise on rents or other tax, however  described,  is levied or assessed against
the Landlord on account of the rent expressly reserved hereunder, in addition to
or as a  substitute  in  whole or in part  for  taxes  assessed  or  imposed  by
California or such political  subdivision on land and/or buildings,  such tax or
excise shall be included  within the  definition of "Real Property  Taxes",  but
only to the extent of the amount  thereof which is lawfully  assessed or imposed
as a direct result of the Landlord's  ownership of this Lease,  or of the rental
accruing under this Lease.  With respect to any  assessment  which may be levied
against  or upon the  Premises,  Building,  land or  improvements  of which  the
Premises are a part and which, under the laws then in force, may be evidenced by
improvement or other bonds, or may be paid in installments,  the Tenant shall be
required  to pay each year  only the  amount  of such  installments  in a manner
specified by the Landlord,  or portion thereof as the Landlord shall be required
to pay during such year (with  appropriate  proration  for any partial year) and
shall have no obligation to continue such payments after the termination of this
Lease.

6.
     UTILITIES.  The  Tenant  shall pay when due
all utility  charges when  separately  billed to the Tenant  because of separate
installation  and  connection of service by the Tenant,  which payments shall be
deducted  from  the  Operating  Costs  and the  limitation  of  payment  of such
Operating Costs as set forth in Paragraph  4.2.3  hereof shall be reduced
correspondingly.   The  Tenant  shall  comply  with  all  applicable   laws  and
regulations  and rules  regarding  utilities.  The suspension or interruption in
utility  services to the Premises for reasons beyond the ability of the Landlord
to control shall not  constitute a default by the Landlord or entitle the Tenant
to any  reduction or abatement of rent.  The Tenant may have  installed,  at its
expense,  separate  meters for such  utilities  as light and power and for other
utilities as may be practical and possible.

7.
     LANDLORD'S MANAGEMENT OF THE BUILDING

7.1
     Management  of the  Building.  The Landlord
shall  have the right,  at her sole cost and  expense  payable to a third  party
which will be reimbursed by the Tenant as provided in Paragraph 4 hereof,
to:

7.1.1
     Close  the  common  areas  when and to the  extent
necessary for  maintenance or renovation  purposes or to prevent a dedication of
any part thereof or the accrual of any rights  therein in favor of the public or
any third person;

7.1.2
     Make  changes  to  the  common  areas,  including,
without  limitation,  changes in the location or nature of driveways,  entrances
and exits; and

7.1.3
     Change  the  plan of the  Building  to the  extent
necessary for its expansion, or the remodeling or renovation thereof, so long as
the changes do not  substantially  interfere with ingress to and egress from the
Premises.

Any work due by Landlord or
their agents will be due in a manner which does not intfer with Tenants
utilization of the Premises. Notwithstanding the foregoing, Tenant acknowledges
that Landlord expects to be doing substantial repairs to the roof in the next
eighteen (18) weeks, especially on the executive wing of the Premises and
Landlord will endeavor to minimize the disruption created by the loss repairs
and Tenant agrees that the rent has been established including any inconvenience
or disruption to Tenants operations from these repairs.

7.2
     Rules  and  Regulations. The Landlord shall
have the right, from time to time, to promulgate,  amend and enforce against the
Tenant and all persons upon the Building,  reasonable  rules and regulations for
the safety,  care and cleanliness of the Building,  but do not restrict the time
of usage of the Premises,  or for the  preservation of good order;  provided,
however,   that  all  such  rules  and   regulations   shall  apply  without
discrimination to all tenants of the Landlord in the Building,  and no such rule
or regulation shall require the Tenant to pay additional rent. The Tenant agrees
to conform to and abide by such rules and regulations, and a violation of any of
them shall constitute a default by the Tenant under this Lease.

7.3
     Tenant's Use of Premises. The Tenant agrees
that the  Premises  shall be used and  occupied  only for office and  laboratory
space,  prototype development and subject to all applicable zoning requirements,
and for no other  purpose or  purposes  without  the  Landlord's  prior  written
consent.  The Tenant,  at its expense,  agrees that it shall meet all applicable
requirements  imposed by the City of Santa  Barbara (the  "City")  on the
Building  including,  but not  limited  to,  the  restrictions  on the number of
employees on the Premises or the number of parking spaces.

7.4
     Insurance Hazards. The Tenant shall neither
engage in nor permit others to engage in any activity or conduct that will cause
the  cancellation  of or an  increase  in the  premium  for any  fire  or  other
insurance  maintained  by the Landlord.  The Tenant shall,  at the Tenant's sole
cost,  comply  promptly  and at all times with all laws,  statutes,  ordinances,
regulations, covenants, servitudes, conditions,  encumbrances,  restrictions and
other  rights or  obligations  affecting  or  applicable  to the Premises or the
Tenant's  business,  and all fire and other insurance  rating  requirements  for
obtaining and maintaining  regular or  preferential  insurance rates required by
the Landlord.

7.5
     Compliance  with  Law. In its  contemplated
and actual use of the Premises for its proposed office and research  laboratory,
the Tenant shall, at the Tenant's sole cost and expense,  comply promptly and at
all times with all laws, requirements,  ordinances, statutes, and regulations of
all municipal, state or federal authorities and, specifically,  all requirements
of the  City,  or any board of fire  insurance  underwriters,  or other  similar
bodies,  now in force,  or which may  hereafter be in force,  pertaining  to the
Building and the  Premises and the  occupancy  thereof,  including  any law that
requires alteration, maintenance or restoration of the Premises as the result of
the  Tenant's  particular  use  thereof.  The Tenant  shall  cooperate  with the
Landlord  in  filing  its  Annual  Report  to the City as  required  by the City
regarding  occupants  and the number of employees of occupants of the  Building,
and any other  requirements  of the City. The judgment of any court of competent
jurisdiction, or the admission of the Tenant in any action or proceeding against
the Tenant,  whether the  Landlord  be a party  thereto or not,  that the Tenant
violated  any  such  ordinances  or  statutes  in the  use of  the  Premises  be
conclusive of that fact as between the Landlord and the Tenant.  The Tenant,  at
its sole expense, shall also comply with all requirements for fire extinguishers
or fire extinguisher systems required in the Premises.

7.6
     Waste,   Nuisance.  The  Tenant  shall  not
commit, or suffer to be committed,  any waste of the Premises,  or any nuisance,
annoyance or other unreasonable  annoyance which may disturb the quiet enjoyment
of adjoining Premises or of the Building by the owners or occupants thereof.

8.
     CARE AND MAINTENANCE

8.1
     Landlord's Maintenance. Except as otherwise
provided in this Lease, the Landlord agrees to maintain, at her expense, in good
condition and repair the structural components of the Building, which structural
components include the foundation,  roof,  interior  load-bearing walls, and the
exterior  walls.  The Landlord  also agrees to maintain,  in good  condition and
repair,  (1) the common  areas and the  exterior  of the  Premises;  and (2) any
heating,  ventilating and air conditioning systems furnished by the Landlord for
common areas or the Premises,  and any machinery or equipment  owned by Landlord
and utilized in  connection  with the  operation of the  Premises,  and all such
costs  (excluding  repair and  maintenance  of structural  components)  shall be
Operating  Costs to be repaid by Tenant as  provided in  Paragraph  4.2.3
hereof.

8.2
     Tenant's Maintenance.

A.
     Except   as  otherwise  provided  in  this  Lease,
Tenant, at its own cost and expense, agrees to:

(1)
     maintain  throughout  the  Lease  term in good and
sanitary order,  condition and repair,  all portions of the Premises  (except as
set  forth in  Paragraph  8.1),  including,  without  limitation  (a) the
interior of the Premises, including flooring, exposed plumbing and wiring, paint
and finish; (b) any windows,  lights or skylights;  (c) any storefront;  and (d)
any personal property of Tenant situated in or upon the Premises;

(2)
     notify  the Landlord promptly of any damage to the
Premises  resulting from or attributable to the acts or omissions of the Tenant,
its  invitees  or  its  authorized  representatives,  or  any  other  party  and
thereafter to promptly repair all such damage; and

(3)
     keep the Premises clean and neat at all times, and
to  remove  immediately  therefrom  any  litter,  debris or other  unsightly  or
offensive  matter placed or deposited  thereon by the agents or customers of the
Tenant.

9.
     IMPROVEMENT   TO   LEASED   PREMISES.   Any
improvements to be constructed by the Tenant subsequent to the Commencement Date
(i.e.,  excluding other improvements to be made prior to the Commencement Date),
or its designated  agent,  in the manner  hereinafter  set forth shall be at the
cost and expense of the Tenant.

9.1
     Conditions to Commencement of Construction.
Before construction of the aforesaid  improvements is commenced on the Premises,
and before any building  materials have been delivered thereto by or pursuant to
the  authority  or  request of the  Tenant,  the Tenant  shall  comply  with the
following conditions, or obtain the Landlord's written waiver thereof:

A.
     Plans and Specifications.

(1)
     The  Tenant  shall  prepare  and  deliver  to  the
Landlord  for  approval a complete  set of all  preliminary  and final plans and
specifications  to be utilized by the Tenant for the purpose of constructing the
new improvements.

(2)
     The  Tenant's plans and specifications  shall
provide for  separate  metering of gas,  electricity,  water and  telephone,  if
practical  and  possible.  If any of the  above  services  are  supplied  by the
Landlord, they shall be included in the prorated common area charge.

(3)
     The  Landlord  may  disapprove  of the  plans  and
specifications  by written  notice  given  within  fifteen  (15) days  following
delivery thereof.  The Landlord shall not unreasonably  withhold approval of the
plans and  specifications,  and the same shall be deemed  approved  if notice of
disapproval is not given within said fifteen (15) day period.

(4)
     No review, inspection or approval by the Landlord,
or its  architect,  shall  relieve  the  Tenant of any  liability  or create any
obligation or responsibility for the Landlord.

B.
     Notice  of  Non-Responsibility.  The Tenant
shall give the Landlord at least fifteen (15) days written notice prior to
(a) the  commencement  of  construction  of any Tenant  improvements  or (b) the
delivery of any building  materials to the site.  As the agent of the  Landlord,
shall   post   on   and   affix   to   the   Premises   a   Notice   of
Non-Responsibility  in the  name and on  behalf  of the  Landlord,  as
provided in Sections 3094 and 3129 of the California Civil Code, and shall cause
such  Notice to be  recorded  promptly  following  posting  in the Office of the
County Recorder of the County in which the Premises are located.

C.
     Evidence of Construction Insurance.

(1)
     The  Tenant shall purchase and maintain in effect,
until a Notice of  Completion  is filed and  recorded,  insurance  coverage  for
all-risk  Builders   Risk  insurance  and  Workers
Compensation  insurance  covering all persons  employed in connection with
the  construction of the  improvements  and with respect to whom claims could be
asserted against the Landlord or the Premises.

(2)
     The   Tenant   shall   furnish  to  the   Landlord
certificates  of  such  insurance,  and  evidence  of the  payment  of  premiums
therefor,  and for any other insurance  required by the provisions of this Lease
to be furnished by the Tenant.

D.
     No  Liens.  The Tenant shall pay, when due,
all claims for labor or materials furnished or alleged to have been furnished to
or for the Tenant,  and promptly shall cause the  elimination and removal of any
mechanics,   materialmens   or  other  liens   arising  out  of  any
improvements  performed,  materials  furnished or obligations  incurred by or on
behalf of the Tenant in connection with any Tenant improvements.

9.2
     Construction  of  Improvements.  The Tenant
warrants and covenants to the Landlord that:

A.
     The   aforesaid  improvements  shall  be  of  good
quality and the development and  construction  work shall be performed in a good
and workmanlike manner,  consistent with and comparable to standards of practice
in  the  City  of  Santa  Barbara  for  similar   office  space  of  first-class
construction;

B.
     The Tenant shall secure or cause to be secured all
permits and licenses necessary for the proper construction and completion of the
aforesaid improvements, and shall assume full responsibility for compliance with
all governmental laws, codes,  ordinances,  regulations and standards pertaining
thereto; and

C.
     The aforesaid improvements shall be constructed in
accordance  with the plans and  specifications  and  shall be  completed  by the
Tenant or its  designated  agent and ready for occupancy  within sixty (60) days
after  construction  commences,  subject to  extensions  for  delays  beyond the
control of the Tenant and its  agents  and not  attributable  to their  fault or
neglect.

9.3
     Cooperation  by the  Landlord. The Landlord
agrees,  upon the request of the Tenant,  to join with the Tenant to execute and
deliver  such  documents  and  instruments  as may be  necessary  or proper,  as
determined by the Tenant,  for applying for or obtaining any permits,  licenses,
approvals or records as may be necessary or appropriate to the  construction  of
the aforesaid improvements and operation of the office space. The Landlord shall
incur no expense and no liability as a result of such cooperation.  The Landlord
shall  have the right to approve  any  conditions  imposed  by any  governmental
agency in connection with obtaining any such permits,  etc. which may impact the
Premises separate and apart from the Tenant's occupancy thereof,  which approval
shall not be unreasonably withheld.

9.4
     Inspection and Notices. The Landlord or her
representative  shall  have  the  right  to go upon and  inspect  the  Premises,
including the improvements being constructed  thereon,  at all reasonable times,
and shall have the right to post and keep posted  thereon  notices such as those
provided for by Section 3094 of the California Civil Code, or which the Landlord
may deem to be proper  for the  protection  of the  Landlord's  interest  in the
Premises.

9.5
     Notice of Completion. The Tenant shall give
notice to the Landlord of the imminent  completion of the  improvements not less
than ten  (10)  days  prior to their  expected  completion,  and  shall  cause a
"Notice of  Completion,"  as described in Section 3093 of the  California
Civil Code,  to be filed and  recorded in the manner  provided by said  Section.
Upon such completion,  the Tenant shall deliver to the Landlord one complete set
of "as built" plans and specifications  for the improvements  constructed by the
Tenant.

9.6
     Ownership   of  Improvements.   Subject  to
Paragraph  10.1 hereof, all of the Tenant's improvements  hereunder,  and
all subsequent additions and alterations thereto and replacements thereof, shall
be deemed  affixed to, become and remain a part of the Premises and shall not be
removed,  encumbered,  transferred or materially altered,  except as provided by
this Lease.  Upon the expiration of the Lease term, or any renewal  thereof,  or
upon the sooner  termination of this Lease, all of the improvements,  other than
the Tenant's  removable trade fixtures and equipment,  shall become the property
of the Landlord without further obligation to the Tenant.

10.
     ALTERATIONS

10.1
     Changes  by the  Tenant.  Any  alterations,
additions,  improvements or changes,  including any remodeling or  redecorating,
that the Tenant may desire to make in, to or upon the Premises, shall be made at
the Tenant's sole cost and expense,  and only after first  submitting  the plans
and  specifications  therefor to the Landlord and  obtaining  the consent of the
Landlord thereto in writing.  The Landlord's rights and remedies with respect to
such alterations, additions, improvements or changes shall be identical to those
rights and remedies concerning the Tenant construction and improvements,  as set
forth in  Paragraph  9  hereof.  Should the  Landlord so elect,  any such
alterations,  additions,  improvements  or  changes  shall  become a part of the
Premises at the  expiration or sooner  termination  of this Lease,  and shall be
surrendered  to the Landlord upon the  expiration or sooner  termination of this
Lease.  Alternatively,  at any time  prior to the ten (10)  days  following  the
expiration or sooner  termination of this Lease,  the Landlord may elect to have
the Tenant remove any such alterations,  additions, improvements or changes made
by the Tenant or its predecessor.  In such case, the Tenant shall so remove such
items ten (10) days following the Tenant's  receipt of the Landlord's  notice of
election,  and shall restore the Premises to their condition at the commencement
of this Lease.

10.2
     Mechanics' Liens. The Tenant agrees to keep
the  Premises,  and any  improvements  thereon,  at all times free of mechanic's
liens and other  liens for labor,  services,  supplies,  equipment  or  material
purchased  by or directly or  indirectly  furnished  to the Tenant.  The Tenant,
however, shall have the right to contest the validity or amount of any such lien
as filed upon posting a bond in an amount  sufficient to discharge the lien, and
upon  the  final  determination  of  such  contest,  shall  immediately  pay and
discharge any judgment rendered,  together with all costs and charges incidental
thereto,  and shall  cause the lien  thereof to be released  from the  Premises.
Should the Tenant  fail,  within  thirty (30) days after notice of the filing of
any such lien,  to discharge or cause the release of such liens or charges or to
contest the same and post bond as above provided for, then the Landlord,  at the
Landlord's option, may satisfy said liens by payment thereof, and in such event,
the amount of such payment,  together with interest  thereon at the maximum rate
permitted by law, from the time the payment is so made until repayment  thereof,
shall be payable by the Tenant at the time  installment  of rental  shall be due
and payable.

11.
     TENANT'S PERSONAL PROPERTY

11.1
     Installation   of  Property.  The  Landlord
shall have no interest in any removable  equipment,  furniture or trade fixtures
owned by the Tenant or installed in or upon the Premises  solely at the cost and
expense of the Tenant.  Prior to creating or permitting the creation of any lien
or security or reversionary  interest in any removable  personal  property to be
placed in or upon the Premises, the Tenant shall obtain the written agreement of
the party holding such interest to make such repairs necessitated by the removal
of such  property  and any damage  resulting  therefrom  as may be  necessary to
restore the Premises to good  condition and repair,  excepting  only  reasonable
wear and  tear,  in the event  said  property  is  thereafter  removed  from the
Premises by said party, or by any agent or  representative  thereof or purchaser
therefrom, pursuant to the exercise or enforcement of any rights incident to the
interest so created, without any cost or expense to the Landlord.

11.2
     Removal  of Personal  Property.  The Tenant
shall have the right to remove, at its own cost and expense, upon the expiration
of this Lease all removable  equipment,  furniture or trade fixtures owned by or
installed at the expense of the Tenant on the  Premises  during the term of this
Lease (and not owed by the  predecessor to Tenant).  All such personal  property
shall be  removed  prior to the close of  business  on the last day of the Lease
term, and the Tenant shall make such repairs necessitated by the removal of said
property and any damage  resulting  therefrom as may be necessary to restore the
Premises to good condition and repair,  excepting only  reasonable wear and tear
since the  inception of the Lease.  Any such  property  not so removed  shall be
deemed  to have been  abandoned  or, at the  option  of the  Landlord,  shall be
removed and placed in storage for the account and at the cost and expense of the
Tenant.

12.
     WAIVER AND INDEMNITY.

12.1
     Indemnification  Agreement.  This  Lease is
made  upon the  express  condition  that  the  Landlord  is to be free  from all
liability  and  claims  for  damages  by reason of any  injury to any person and
damage  to any  property  (including  the  Tenant's),  resulting  from any cause
whatsoever  while in, upon,  about, or in any way connected with the Premises or
the Building, during the term of this Lease. The Tenant hereby waives all claims
against the  Landlord  for,  and agrees to defend  with  counsel  acceptable  to
Landlord,  and to indemnify and hold the Landlord harmless from, any actual loss
or  liability,  and from all costs or expenses,  including  attorneys'  fees and
costs of defense, arising from or attributable to any such injury or damage from
any cause at any time, other than those caused solely by the fault or neglect of
the Landlord.

13.
     INSURANCE, PUBLIC LIABILITY AND PROPERTY DAMAGE

13.1.A.
     Insurance  Coverage.  The Tenant  agrees to
maintain in force  throughout  the term hereof,  at the  Tenant's  sole cost and
expense, public liability insurance insuring against any liability to the public
for any claim  for  damages  due to death,  bodily  injury  or  property  damage
incident to the use of or resulting from any accident  occurring in or about the
Premises,  with  single  limit  coverage  of not less than ONE  MILLION  DOLLARS
($1,000,000)  for any loss and FIVE MILLION DOLLARS  ($5,000,000) for any policy
period.  Said policy shall insure the  contingent  liability of the Landlord and
the performance by the Tenant of its indemnity obligations under this Lease. The
Landlord shall be named as an additional insured in such policy, and such policy
shall contain a cross-liability endorsement.

B.
     Adjustment  to Coverage. The Tenant further
agrees that the amount of the insurance  coverage  shall be reviewed every three
(3) years,  at least sixty (60) days before the  expiration  of a three (3) year
period. If the parties are unable to agree upon the amount of said coverage, the
Tenant  shall be  required  to  maintain  for the next three (3) year period (or
prior to the expiration of the term of this Lease, whichever is less) the amount
of coverage shall be adjusted to the amounts of coverage  recommended in writing
by an insurer selected by the Landlord.

13.2
     Tenant's  Property  Insurance.  Unless  the
Tenant  elects to  self-insure,  the  Tenant,  at its own cost,  shall  maintain
insurance on its personal property and removable fixtures and equipment situated
in, on or about the Premises,  a policy of standard  fire and extended  coverage
insurance,  to the extent of at least One Hundred Percent (100%) of their actual
cash value. The proceeds of any such policy that become payable due to damage or
loss  shall be used by the Tenant for the  repair or  replacement  thereof.  The
Landlord will maintain  insurance on the Landlord's  personal property described
in Exhibit B hereto, and subject to the limitations set forth in
Paragraph  4.2.3 hereof, the cost of this insurance may be included as an
Operating Cost.

13.3
     Miscellaneous Insurance Provisions.

A.
     Proof   of   Insurance.   Each   policy  of
insurance required of the Tenant by this Lease shall be a primary policy, issued
by an insurance  company  reasonably  satisfactory  to the  Landlord,  and shall
contain an endorsement requiring thirty (30) days  written notice from the
insurer to the Landlord before  cancellation  or change in the nature,  scope or
amount of coverage.  Each policy, or a certificate of the policy,  together with
evidence of the payment of premiums, shall be deposited with the Landlord at the
Commencement Date, and at the commencement of any renewal term.

B.
     Waiver of Subrogation. The Landlord and the
Tenant each release the other, and their respective agents and  representatives,
from any claims for damage to any person or to the  Premises and to the fixtures
and personal property  situated  therein,  resulting from or attributable to any
risk insured under any insurance policies carried by the parties and in force at
the time of the damage.  Each party shall cause any insurer providing  insurance
to it  pursuant  to this  Lease  to  waive  all  rights  or  recovery  by way of
subrogation against either party by virtue of the payment of any loss under such
insurance,  such waiver to be  effective  as long as such  insurance is required
under the provisions of this Lease.

13.4
     Casualty Insurance; Damage or Destruction.

A.
     Replacement  Cost  Insurance.  The Landlord
shall,  at all  times  during  the term of this  Lease,  keep the  Building  and
improvements in which the Premises is situated insured against loss or damage by
fire and the perils  covered by an  extended  coverage or  all  risk
insurance,  with inflation guard, vandalism and malicious mischief endorsements,
zoning ordinance coverage,  and any other endorsements selected by the Landlord,
and the  Landlord,  at its  discretion,  may  purchase an  earthquake  policy of
insurance and zoning  ordinance  coverage,  in any amount  sufficient to prevent
either  the  Landlord  or the  Tenant  from  becoming  a  co-insured  under  the
provisions  of the  policies,  and in no event in an  amount  less  than  Eighty
Percent (80%) of the actual costs of  replacement or restoration of the building
and other  improvements  in which the Premises is situated.  All such  insurance
shall be  payable  to the  Landlord  and the  holder  of any  trust  deed on the
Premises as their interests may appear.  The Tenant shall reimburse its share of
the costs and expenses paid for said insurance pursuant to the percentage of the
common area costs allocated to the Tenant as provided in
Paragraph 4.2 hereof, subject to the limitation set forth in Paragraph
4.2.3 hereof.

13.5
     Insurable Casualty Loss.

A.
     Landlord  to Restore. Except as provided in
Subparagraph  B,  below,  in the event the  Premises  or the  Building is
damaged or destroyed as the result of any risk required to be insured against by
this Paragraph 13, then the Landlord shall forthwith restore the Premises
or the Building to substantially the same condition as existed immediately prior
to such damage or destruction,  and any insurance  proceeds  remaining after the
completion  of said work  shall  belong  to the  Landlord.  Except as  otherwise
provided in Subparagraph  B,  below, any amount by which the cost of such
repair and the deductible amount required by such insurance  policies exceed the
amount of such insurance proceeds shall be deemed a common area cost pursuant to
Paragraph 4.2 hereof.

B.
     Landlord's  Option  to  Terminate.  In  the
event  that,  at any time  during the term of this  Lease,  the  Building or the
Premises  are  totally  destroyed,  or are  sufficiently  damaged to render them
unusable  without  substantial  repair  or  reconstruction,  due  to a  casualty
required to be insured  against as provided  herein,  or should then  applicable
laws or zoning ordinances  preclude the restoration or repair of the Building or
the  Premises,  or should  the costs of  restoration  exceed  the  amount of the
insurance  proceeds,  then the Landlord  shall have the option,  exercisable  by
giving at least ten (10)  days  prior written  notice to the Tenant within
sixty (60) days after the  occurrence of any such  casualty,  to terminate  this
Lease.

13.6
     Uninsured Casualty Loss.

A.
     Minor  Damage.  If,  during the Lease term,
the Premises or the Building are damaged or partially  destroyed from a risk not
required to be insured against by this Paragraph  13,  the Landlord shall
restore the Premises to substantially the same condition as existed  immediately
prior to such damage or destruction. The costs of repair or restoration incurred
by the Landlord pursuant to this provision will be common area costs pursuant to
Paragraph  4.2  hereof,  and  subject  to the  limitations  set  forth in
Paragraph4.2.3 hereof.

B.
     Substantial  Damage. If the costs of repair
or restoration  necessitated by an uninsurable casualty loss exceed Five Percent
(5%) of the then  replacement  value of the Building or the  Premises,  then the
Landlord  shall  have the  option,  exercisable  by  giving  at  least  ten (10)
days  prior written  notice to the Tenant within sixty (60) days after the
occurrence of any such casualty, to terminate this Lease.

13.7
     Termination; Abatement of Rent.

A.
     This  Lease shall not be  terminated by any damage
to or  destruction of the Premises or other  improvements  of which the Premises
are a part,  unless notice of termination is given by the Landlord to the Tenant
as  provided  by this  Paragraph  13,  and the Tenant  hereby  waives the
provisions  of Section  1932(2)  and 1933(4) of the  California  Civil Code with
respect to any such damage or destruction.

B.
     Should  the Premises or the Building be damaged or
destroyed at any time during the term of this Lease, there shall be an abatement
or reduction of the Minimum  Monthly Rent,  between the date of destruction  and
the date of  completion  of  restoration,  based  on the  extent  to  which  the
destruction interferes with the Tenants use of the Premises.

C.
     Should  then-applicable  laws or zoning ordinances
preclude the  restoration  or replacement of the Building or the Premises in the
manner  hereinbefore  provided,  then  the  Landlord  shall  have  the  right to
terminate this Lease immediately by giving notice to the Tenant.

14.
     CONDEMNATION

14.1
     Entire Premises. Should title or possession
of the  whole of the  Premises  or the  Building  be  taken by duly  constituted
authority in condemnation proceedings under the exercise of the right of eminent
domain,  or should a partial taking render the remaining portion of the Premises
wholly  unacceptable  for  occupation,  then this Lease shall terminate upon the
vesting of title or taking of possession.

14.2
     Partial Taking.

A.
     The  Landlord  shall  have the right to  terminate
this Lease upon such thirty (30) days notice if any such partial taking is
such as to prevent the Tenant from using the Premises,  or the remaining portion
thereof,  in  substantially  the same  manner as they  were  used  prior to such
taking.  If the Landlord does not terminate this Lease as provided herein,  then
this Lease shall  remain in full force and effect.  In such event,  the Landlord
shall promptly make any necessary repairs or restoration at the cost and expense
of the  Landlord,  and the minimum  monthly  rent from and after the date of the
taking  shall be  reduced  in the  proportion  that the value of the area of the
portion  of  the  Premises  taken  bears  to the  total  value  of the  Premises
immediately prior to the date of such taking or conveyance.

B.
     Each  party waives the provisions of Code of Civil
Procedure  Section 1265.130 allowing either party to petition the Superior Court
to terminate  this Lease in the event of a partial  taking of the Premises.  Any
dispute  between the parties  concerning the extent to which a partial taking by
eminent  domain  interferes  with the use and  occupancy  of the Premises by the
Tenant  shall be  settled  by  arbitration  in  Santa  Barbara,  California,  in
accordance  with  the  rules of the  American  Arbitration  Association  then in
effect.

14.3
     Conveyance  Under  Threat of  Condemnation.
Any sale or  conveyance by the Landlord to any person or entity having the power
of eminent domain,  either under threat of  condemnation  or while  condemnation
proceedings are pending,  shall be deemed to be a taking by eminent domain under
this Paragraph 14.

14.4
     Awards  and  Damages.  All payments made on
account of any taking by eminent  domain shall be made to the  Landlord,  except
that  the  Tenant  shall  be  entitled  to any  payment  or  award  made  for or
attributable  to the reasonable  removal and  relocation  costs of any removable
property that the Tenant has the right to remove,  or for loss and damage to any
such property that the Tenant elects or is required not to remove.

15.
     ASSIGNING, MORTGAGING, SUBLETTING OR CHANGE IN OWNERSHIP.

15.1
     Limitation.  The Tenant shall not transfer,
assign,  sublet,  mortgage,  hypothecate,  share  rights  in this  Lease  or the
Tenant's interest in the Premises,  or permit any other person or entity,  other
than an affiliated or controlled entity, to utilize the Premises,  without first
procuring  the  written  consent of the  Landlord,  which  consent  shall not be
unreasonably  withheld.  The  Tenant  shall pay to the  Landlord  the sum of ONE
THOUSAND  DOLLARS  ($1,000)  with each such  request  for  consent  to cover the
Landlord's  expenses  in  connection  with  processing  each such  request.  Any
attempted transfer, assignment,  subletting,  mortgage, hypothecation or sharing
of rights, other than an affiliated or controlled entity, without the Landlord's
written  consent shall be void and confer no rights upon any third  person.  Any
such event  shall  constitute  a material  default  under  this  Lease,  and the
Landlord  reserves  the  right of  immediate  re-entry  in the event of any such
attempted  transfer.  The Tenant also agrees to  reimburse  the Landlord for the
Landlord's  reasonable  attorneys' fees (if any) incurred in connection with the
documentation  of any transfer by the Tenant of the Tenant's  rights  hereunder,
which  reimbursement  shall be in addition to, and not a part of, the processing
fee referred to above.

15.2
     Conditions.   Each  transfer,   assignment,
subletting, mortgage, hypothecation or sharing of rights to which there has been
consent  shall be by an  instrument in writing,  in a form  satisfactory  to the
Landlord,  and in each instance shall be executed by the  transferor,  assignor,
sublessor,  hypothecator or mortgagor and the transferee,  assignee,  sublessee,
mortgagee  or other  person  or  entity,  as the case may be.  Each  transferee,
assignee, sublessee,  mortgagee or other person or entity shall agree in writing
for the benefit of the  Landlord  to assume,  to be bound by, and to perform the
terms,  covenants and conditions of this lease to be done, kept and performed by
the Tenant,  including  the payment of all amounts due, or to become due,  under
this Lease. In addition,  as conditions  precedent to the Landlord's  consent to
any transfer, assignment,  subletting,  mortgage or hypothecation of this Lease,
or the Tenant's interest in the Premises, the Landlord may require any or all of
the following:

15.2.1
     The  Tenant  shall  remain fully liable under this
Lease during the unexpired term thereof;

15.2.2
     The   Tenant  shall   provide  the  Landlord  with
evidence  reasonably  satisfactory  to  the  Landlord  that  the  value  of  the
Landlords  interest  under this Lease will not  thereby be  diminished  or
reduced.  Such  evidence  shall  include,  but not need be limited to,  evidence
respecting the relevant  business  experience and financial  responsibility  and
status of the third party concerned;

15.2.3
     If  the Tenant's  transfer of rights or sharing of
the  Premises  provides  for the  receipt by, on behalf of, or on account of the
Tenant of any consideration or any kind whatsoever (including, but not by way of
limitation,  a  premium  rental  for the  sublease  or lump sum  payment  for an
assignment)  in excess of the rental and other sums due the Landlord  under this
Lease, the Tenant shall pay said excess, less the Tenants reasonable costs
(not to exceed  Five  Percent  (5%) of said  excess)  to the  Landlord.  If said
consideration consists of cash paid to the Tenant, payment to the Landlord shall
be made upon receipt by the Tenant of the cash payment;

15.2.4
     Written  agreement from any third party  concerned
that, in the event the Landlord gives such third party notice that the Tenant is
in default  under this  Lease,  such third  party  shall  thereinafter  make all
payments otherwise due the Tenant directly to the Landlord,  which payments will
be received by the Landlord  without any  liability on the  Landlord,  except to
credit such payments against those due under the Lease, and any such third party
shall agree to attorn to the Landlord,  or its  successors  and assigns,  should
this Lease be terminated for any reason;  provided,  however,  that in no
event shall the Landlord,  or its successors or assigns,  be obligated to accept
such attornment;

15.2.5
     The  Tenant shall not be then in default hereunder
in any respect;

15.2.6
     Such  third  party's  proposed use of the Premises
shall be similar to, and consistent with, the Tenant's permitted use;

15.2.7
     The  Landlord  shall not be bound by any provision
of any agreement pertaining to the Tenant's transfer of rights or sharing of the
Premises; and

15.2.8
     The  Tenant shall  deliver to the Landlord one (1)
executed copy of any and all written  instruments  evidencing or relating to the
Tenant's assignment, transfer or sharing of the Premises.

15.2.9
     Landlord  hereby consents to any Sublease  license
or tenancy  created in Tenant to Condas  International,  LLC and E. K. Khashoggi
Industries, LLC.

The
Tenant hereby agrees and acknowledges  that the conditions  permitted to be
imposed upon the granting of the Landlord's consent hereunder are reasonable and
the Landlord's imposition of such conditions shall under no circumstances impair
or limit the Landlord's  rights and remedies under California Civil Code Section
1951.4, or any related successor similar provision of law.

15.3
     Limitation   on  Consent.   The  Landlord's
consent to the  Tenant's  transfer of rights,  or sharing of the Premises on any
one occasion,  shall apply only to the specific  transaction thereby authorized.
Such consent  shall not be  construed as a waiver of the duty of the Tenant,  or
any  transferee,  to obtain the  Landlord's  consent to any other or  subsequent
transfer of rights or sharing of the  Premises,  or as modifying or limiting the
Landlord's  rights  hereunder in any way. The Landlord's  acceptance of rent, or
any other  payment  directly  from any third party,  shall not be construed as a
waiver of any of the Landlord's rights or as the Landlord's  agreement to accept
the attornment of any third party,  in the event of a termination of this Lease.
In no event shall the  Landlord's  enforcement  of any  provision  of this Lease
against  any third party be deemed a waiver of the  Landlord's  right to enforce
any term of this Lease against the Tenant or any other person.

15.4
     Applicability  to  Successors. In the event
that the  Landlord  gives  consent  to a  transfer  of rights or  sharing of the
Premises,  such third  party in respect of which said  consent  was given may in
turn apply to the Landlord for its consent to subsequent  transfers of rights or
sharing of the  Premises,  in which  case the  provisions  of this  Paragraph
15  shall apply as fully as possible  to such third  party  (including  this
Paragraph  15.4  in the  case of  more  remote  transfers);  provided,
however,  that as an additional  condition of the granting of the Landlord's
consent, the Premises will not, in the Landlord's opinion, thereby become unduly
fractionalized.

Any such  transfer  shall be  subject to all the terms and  conditions  of this
Lease,  and  each  such  successive  transfer  shall  be  made  only  upon  like
conditions.  Tenant  agrees to remain  fully  responsible  to  Landlord  for the
performance of all of the Tenant's  obligations  under this Lease.  Tenant shall
pay Landlord's reasonable legal fees and costs incurred in reviewing any request
of Tenant pursuant to Paragraph 15.1 above.

16.
     DEFAULT BY TENANT; LANDLORD'S REMEDIES

16.1
     Insolvency by the Tenant. In the event all,
or  substantially  all,  of the  Tenant's  assets  are  placed in the hands of a
receiver or trustee, and such receivership or trusteeship continues for a period
of thirty (30) days, or should the Tenant make an assignment  for the benefit of
creditors, or be finally adjudicated as bankrupt, or should the Tenant institute
any proceedings  under the Bankruptcy Act, as the same now exists,  or under any
amendment  thereof  which may  hereinafter  be  enacted,  or under any other act
relating to the subject of bankruptcy wherein the Tenant seeks to be adjudicated
as a  bankrupt,  or to be  discharged  of its  debts,  or to  effect  a plan  of
liquidation, composition or reorganization, or should any involuntary proceeding
be filed against the Tenant under any such  bankruptcy  laws and such proceeding
not be recovered  within thirty (30) days  thereafter,  then this Lease,  or any
interest of the Tenant in and to the Premises,  shall not become an asset in any
of such  proceedings  and,  in any such  events and in  addition  to any and all
rights or remedies of the Landlord  hereunder,  or by law provided,  it shall be
lawful for the  Landlord to declare the terms  hereof  ended and to re-enter the
Premises, and take possession thereof, and remove all persons therefrom, and the
Tenant shall have no further claim thereon or hereunder.

16.2
     Bankruptcy.  Notwithstanding the foregoing,
a  Debtor-in-Possession,  or a Trustee  in  bankruptcy,  shall have the right to
assume or assign this Lease, but only if any default hereunder is cured promptly
and  adequate  assurance  of future  performance  of the terms of this  Lease is
concurrently  therewith  provided to the  Landlord.  Adequate  assurance of such
performance is hereby defined as requiring (a) that the source of rent and other
consideration due and owing to the Landlord under the Lease will be assured; (b)
that the assumption or assignment of the Lease will not substantially breach any
provisions of any agreement relating to the Premises,  whether the Landlord is a
party thereto or not (including,  but not limited to, any other lease, financing
agreement,  master  agreement or lease  relating to the Premises,  or underlying
property);  and (c) that an  assumption  or  assignment  of the  Lease  will not
disrupt substantially any Tenant mix or balance of occupants in the Building.

16.3
     Breach  of Covenant; Abandonment,  Etc. If,
during the term of this Lease, the Tenant (1) shall default in fulfilling any of
the  covenants or  conditions  of this Lease (other than the  covenants  for the
payment of rent or other charges payable by the Tenant hereunder);  or (2) shall
abandon the Premises for a period of three (3) days, and if at the expiration of
three (3) days after the service of such notice the default or contingency  upon
which said notice was based shall continue to exist, or in the case of a default
or contingency which cannot with due diligence be cured within a period of three
(3) days,  if the Tenant  fails to proceed  promptly  after the  service of such
notice to prosecute  the curing of such default with all due  diligence,  and to
actually cure such default within a reasonable  period of time, the Landlord may
terminate  this  Lease and,  upon such  termination,  the Tenant  shall quit and
surrender the Premises and the  improvements  thereon to the  Landlord,  but the
Tenant shall remain liable as hereinafter  provided.  "Abandonment"
shall not occur so long as the Tenant is otherwise  performing  its  obligations
hereunder and is attempting to sublease the Premises.

16.4
     Failure  to Pay Rent,  Etc.  If the  Tenant
shall make default in the payment of the rent expressly reserved  hereunder,  or
any part of the same,  or shall make default in the payment of any other rent or
charge required to be paid by the Tenant hereunder, or any part of the same, and
such default  shall  continue for three (3) days after written  notice  thereof,
which will also serve as notice by the Landlord under  California  Code of Civil
Procedure  Section  1161(2)  and shall not be in addition  to such  notice,  the
Landlord may terminate  this Lease and upon such  termination,  the Tenant shall
quit and  surrender the Premises and the  improvements  thereon to the Landlord,
but the Tenant shall remain liable as hereinafter provided.

16.5
     Termination  of Lease. It is understood and
agreed that all the covenants and conditions of this Lease herein  contained are
covenants  by the Tenant and the  conditions  of the  Tenant's  occupancy of the
Premises.  In  default  of the  Tenant's  fulfillment  of any of the  same,  the
Landlord may, at any time  thereafter,  unilaterally  terminate this Lease.  Any
holding  over  thereafter  by the Tenant shall be construed to be a tenancy from
month to month only, for the rental payable  pursuant to Paragraph  23.2,
below. It is further agreed that in the event of any breach of this Lease by the
Tenant,  then the  Landlord,  besides  other rights or remedies the Landlord may
have,  shall have the immediate right of re-entry and may remove all persons and
property from the Premises.

16.6
     Landlord's  Damages. If the Tenant breaches
this Lease and  abandons  the  Premises  before  the end of the term,  or if the
Tenant's rights of possession is terminated by the Landlord because of breach of
this Lease  pursuant to any of the foregoing  provisions of this  paragraph,  or
otherwise,  then in any such case,  the Landlord may recover from the Tenant all
damages  suffered by the Landlord as a result of the Tenant's failure to perform
the Tenant's obligations hereunder,  including, but not limited to, the worth at
the time of the award  (computed in  accordance  with  paragraph  (b) of Section
1951.2 of the California Civil Code) of the amount by which the rent then unpaid
hereunder  for the balance of this Lease term  exceeds the amount of such rental
loss for the same period which the Tenant proves could be reasonably  avoided by
the Landlord. It is further agreed that even though the Tenant has breached this
Lease and abandoned the property,  this Lease may continue in effect for as long
as the Landlord  does not terminate the Tenant's  right to  possession,  and the
Landlord may enforce all of the rights and remedies under this Lease,  including
the right to recover the rent as it becomes  due under the lease (in  accordance
with  paragraph (b) of Section  1951.4 of the  California  Civil Code).  Nothing
contained  herein  shall  diminish  the right of the  Landlord  to  obtain  such
equitable  relief  against  the  Tenant as may be  appropriate.  In  calculating
damages, a maximum base term of six (6) months will be utilized.

16.7
     Remedies  Not Exclusive.  The Landlord,  in
addition  to the rights  hereinbefore  given in case of the  Tenant's  breach or
default,  may pursue any other  remedy  available  to the  Landlord at law or in
equity.

17.
     POWER   OF  RECEIVER.   If  a  receiver  be
appointed at the  instance of the  Landlord in any action  against the Tenant to
take  possession of the Premises  and/or to collect the rents or profits derived
therefrom,  the Tenant  irrevocably  agrees  that said  receiver  may,  if it be
necessary or convenient in order to collect such rents and profits,  conduct the
business  then being  carried on by the  Tenant on said  Premises  and that said
receiver may take  possession of any personal  property  belonging to the Tenant
and used in the  conduct of such  business,  and may use the same in  conducting
such  business  on the  Premises  without  compensation  to the  Tenant for such
business,  and may use the same in  conducting  such  business  on the  Premises
without compensation to the Tenant for such use. Neither the application for nor
the  appointment  of such a receiver  shall be  construed  as an election on the
Landlords  part to terminate  this Lease  unless a written  notice of such
intention is given by the Landlord.

18.
     LANDLORDS RIGHT TO CURE DEFAULTS. The
Landlord,  at any time after the Tenant commits a default in the  performance of
any of the Tenants obligations under this Lease, shall be entitled to (but
is not obligated to) cure such default, or to cause such default to be cured, at
the sole cost and  expense of the  Tenant.  If, by reason of any  default by the
Tenant,  the  Landlord  incurs any expense or pays any sum, or performs  any act
requiring  the  Landlord  to incur  any  expenses  or to pay any sum,  including
reasonable  fees and  expenses  paid or  incurred  by the  Landlord  in order to
prepare and post or deliver any notice  permitted or required by the  provisions
of this Lease, or otherwise permitted or contemplated by law, then the amount so
paid or incurred by the  Landlord  shall be  immediately  due and payable to the
Landlord by the Tenant as  additional  rent.  The Tenant hereby  authorizes  the
Landlord to deduct said sums from any security deposit held by the Landlord.  If
there is no security deposit,  said sums shall be paid by the Tenant immediately
upon demand by the Landlord,  and shall bear interest at the rate of Ten Percent
(10%) per annum, or such greater sum as may be permitted by law from the date of
such demand until paid in full.

19.
     WAIVER  OF BREACH.  Any waiver,  express or
implied,  by any party  hereto,  of any breach by any party or any  covenant  or
provision  of this Lease,  shall not be, nor be construed to be, a waiver of any
subsequent  breach of the same or any other term or provision hereof. No payment
by the Tenant or receipt by the  Landlord of a lesser  amount of rent,  or other
payments due hereunder,  shall  constitute a waiver of any breach of this Lease.
Any such  payment  actually  received by the  Landlord  shall be deemed to be on
account of the earliest rent or other payment due.

20.
     SUBORDINATION OF LEASE

20.1
     Subordination  Agreement. The Tenant agrees
to execute,  acknowledge and deliver to the Landlord upon request such documents
and  instruments  that may be  necessary  to  subordinate  this Lease to (1) any
mortgages  or trust  deeds that now exist or may  hereafter  be placed  upon the
Premises  by the  Landlord,  (2) to any  and  all  advances  made  or to be made
thereunder,  (3) to the interest on all obligations secured thereby,  and (4) to
all  renewals,  modifications,   consolidations,   replacements  and  extensions
thereof; provided, however, that in each case the mortgagee or beneficiary named
in any such  mortgage or trust deed shall agree in writing  that, as long as the
Tenant performs its obligations under this Lease, no foreclosure or deed in lieu
of foreclosure, or sale under the encumbrance or other procedures to enforce the
rights incident  thereto,  shall affect the Tenant's rights under this Lease. If
the Tenant shall fail at any time to execute,  acknowledge  and deliver any such
subordination  instrument,  then the Landlord, in addition to any other remedies
available  to it, may execute,  acknowledge  and deliver the  instrument  as the
attorney-in-fact  of the Tenant and in the Tenant's name,  place and stead,  and
the Tenant hereby irrevocably makes,  constitutes and appoints the Landlord, its
successors and assigns, such attorney-in-fact for that purpose.

20.2
     Attornment.  The Tenant shall attorn to any
purchaser at any foreclosure sale or to any grantee or transferee  designated in
any deed given in lieu of foreclosure.

20.3
     Estoppel  Certificate. Within ten (10) days
after  receipt  of a written  request  therefor,  the  Tenant  shall  deliver in
recordable form a written  statement  certifying (if such be the case) that this
Lease is in full  force and effect  and that  there are no  defenses  or offsets
thereto,  or stating  those claimed to exist and such other  information  as the
Landlord may reasonably  request be included in such  statement.  The failure of
the Tenant to deliver  such  certificate  within  said  15-day  period  shall be
conclusive  upon  the  Tenant  for the  benefit  of the  Landlord,  its  lender,
mortgagee or assignee,  and their respective  successors in interest,  that this
Lease is in full  force and effect  and has not been  modified  except as may be
represented by the Landlord in its written  request for such  statement.  If the
Tenant  shall fail at any time to  execute,  acknowledge  and  deliver  any such
estoppel  certificate,  then the  Landlord,  in addition  to any other  remedies
available to it, may execute,  acknowledge,  and deliver the  instrument  as the
attorney-in-fact  of the Tenant and in the Tenant's name,  place and stead,  and
the Tenant hereby irrevocably makes,  constitutes and appoints the Landlord, its
successors and assigns, such attorney-in-fact for that purpose.

21.
     LANDLORD'S ENTRY ON PREMISES.

21.1
     Right   of  Entry.  The  Landlord  and  its
authorized  representatives  shall have the right without  liability and without
abatement of rent to enter the  Premises at all  reasonable  times for,  without
limitation, any of the following purposes:

A.
     to  determine  whether  the  Premises  and/or  the
Building are in good  condition,  and whether the Tenant is  complying  with its
obligations under this Lease;

B.
     to   do  any   necessary   maintenance,   repairs,
restoration or remodeling to the Premises  and/or the Building that the Landlord
has the right or obligation to perform;

C.
     to   serve,  post,  or  keep  posted  any  notices
required or allowed  under the  provisions  of this Lease,  including  for
rent  or for  lease  notices during the term of the Lease,  or
during any period  while the Tenant is in default,  and any notices  provided by
law  for  the  protection  of the  Landlords  interest  in  the  Premises;

D.
     to  shore the  foundations,  footings and walls of
the Building,  and to erect  scaffolding  and protective  barricades  around and
about the Building is located,  but not so as to prevent  entry to the Premises,
and to do any other act or thing necessary for the safety or preservation of the
Premises if any excavation or other construction is undertaken or is about to be
undertaken on any adjacent property or area; and

E.
     to  show  the  Premises  and/or  the  Building  to
prospective  purchasers,  lenders,  tenants,  brokers  and others  for  business
purposes,  and for such other  purposes as the  Landlord  may deem  appropriate.

21.2
     Exercise   of  Right.  The  Landlord  shall
exercise  her rights  under this  Paragraph  21 in a manner that will not
interfere  unreasonably  with the  Tenant's use and  occupancy of the  Premises;
provided  that the  Landlord's  entry  and  activities  do not  result  from the
Tenant's  default.  The Landlord shall not be liable in any other manner for any
inconvenience,  disturbance, loss of business, nuisance, or other damage arising
out of the Landlord's  entry on the Premises as provided  herein,  except damage
resulting  from  the  acts  or  omissions  of the  Landlord  or  her  authorized
representatives.

22.
     SALE   OR  TRANSFER  OF  PREMISES.  If  the
Landlord sells or transfers all or any portion of the Premises, or the Building,
improvements  and land of which the Premises is a part,  then the Landlord shall
be released from any liability thereafter accruing under this Lease upon (a) the
consummation  and (b) the Landlord  accounting  to any such  transferee  for any
security deposit and prepaid rent of the Tenant hereunder.

23.
     SURRENDER ON TERMINATION; HOLDING OVER

23.1
     Surrender.  On the last day of the term, or
upon  sooner  termination  of this  Lease,  the Tenant  shall  surrender  to the
Landlord  the  Premises and all Tenant's  improvements  and  alterations,  broom
clean, maintained and repaired in accordance with Paragraph 8 hereof, and
otherwise in the same condition as when  received,  except  reasonable  wear and
tear and except for  improvements  and alterations that the Tenant has the right
to remove under the provisions of this Lease. The Tenant shall remove all of its
personal  property  within the above stated time, but any such removal shall not
affect the Landlord's lien on such personal  property until all amounts owing by
the Tenant  hereunder are paid in full.  The Tenant shall  promptly  perform all
restoration  made necessary by the removal of any improvements or alterations or
Tenant's personal property within the time periods stated in this paragraph. The
Tenant shall promptly  repair any physical  damage to the Premises  arising as a
result of the Tenant's vacation of the Premises.

The
Landlord  can elect to retain or dispose of in any  manner any  improvements  or
alterations  or the  Tenants  personal  property  that the Tenant does not
remove from the Premises on expiration or  termination of the term as allowed or
required by this Lease by giving at least ten (10) days  written notice to
the Tenant.  Title to any such  improvements or alterations or the Tenants
personal property that the Landlord elects to retain or dispose of on expiration
of the ten (10) day period  shall vest in the  Landlord.  The Tenant  waives all
claims  against the  Landlord  for any damage to the Tenant  resulting  from the
Landlords  retention  or  disposition  of  any  such  alterations  of  the
Tenants personal property.

23.2
     Holding  Over.  If the Tenant,  without the
Landlord's  consent,  remains in possession of the Premises after  expiration or
termination  of the Lease  term,  or after the date in any  notice  given by the
Landlord to the Tenant  terminating  this Lease,  such  possession by the Tenant
shall be deemed to be a month to month  tenancy  terminable on thirty (30) days'
notice  given at any time by either party at a minimum rent equal to one and one
half (1 1/2) times the  Minimum  Monthly  Rent and  monthly  operating  costs in
effect  on the date of such  expiration  for the  first  month of hold  over and
thereafter three (3) times the Minimum Monthly Rent and monthly Operating Costs.
Such  Minimum  Monthly  Rent and  monthly  Operating  Costs  shall be subject to
adjustment as provided hereunder. Such tenancy shall otherwise be subject to all
of the terms and conditions of this Lease,  except those  pertaining to term and
option to extend, if any. Any holding over without the Landlord's  consent shall
not give the Tenant tenure hereunder.

24.
     NOTICES.   Any  and  all   notices  by  the
Landlord to the Tenant,  or by the Tenant to the  Landlord,  shall be in writing
and delivered  personally or by U.S.  certified mail, return receipt  requested,
addressed  to the parties at the  addresses  specified  on the  signature  page.
Either party may, at any time, change the address by written notice to the other
party in accordance with this paragraph. If notice is mailed, it shall be deemed
received on the third  business  day  following  the date on which it is mailed.

25.
     BINDING  ON  SUCCESSORS,  ETC. The Landlord
and the Tenant agree that each of the terms,  conditions and obligations of this
Lease  shall  extend to and bind,  or inure to the  benefit  of (as the case may
require),  the  respective  parties  hereto,  and  each and  every  one of their
respective heirs,  executors,  administrators,  representatives,  successors and
assigns.

26.
     ATTORNEYS FEES. In the event that any
legal  action is  instituted  by  either of the  parties  hereto to  enforce  or
construe  any of the  terms,  conditions  or  covenants  of this  Lease,  or the
validity  thereof,  the party prevailing in any such action shall be entitled to
recover from the other party all court costs and reasonable attorneys fees
to be set by the  court,  and the  costs  and fees  incurred  in  enforcing  any
judgment entered therein. Attorneys  fees and costs, whenever mentioned in
this  Lease,   shall  include  those   incurred  with  respect  to   arbitration
proceedings, if any.

27.
     PARTIAL   INVALIDITY.   If  any   term   or
provision,  in whole or in part, of this Lease or the application thereof to any
person or  circumstance  shall,  to any extent,  be invalid,  unenforceable,  or
inapplicable  in  the  stated  circumstances  or  for  stated  purposes,  in any
jurisdiction,  then the remainder of this Lease, or the application of such term
or  provision to persons or  circumstances  other than those to which it is held
invalid, unenforceable or inapplicable,  shall not be affected thereby, and each
term and  provision  of this  Lease  shall be valid  and be  enforceable  to the
fullest extent permitted by law.

28.
     RECORDATION; QUITCLAIM.

28.1
     Memorandum  of  Lease.  Neither party shall
record this Lease. Upon the request of either party, the Landlord and the Tenant
shall  execute and  acknowledge  in  recordable  form a  Memorandum  of Lease in
content  mutually  agreeable to the parties.  The reasonable costs and expenses,
including  attorneys'  fees,  incurred by the parties in  preparing,  filing and
recording  the  Memorandum of Lease shall be borne by the party  requesting  the
same.

28.2
     Quitclaim   Deed.   Concurrent   with   the
execution  of any  Memorandum  of Lease as  provided in  Paragraph  28.1,
above,  the Tenant  shall  execute  and deliver to the  Landlord  for filing and
recording,  upon the  expiration or  termination of this Lease, a quitclaim deed
designating the Landlord,  its successors and assigns,  as the transferee of the
Premises.

29.
     COMPLETE  AGREEMENT.  This  Lease,  and the
attachments and exhibits  hereto,  constitute the entire  agreement  between the
parties and may not be altered,  amended,  modified  or  extended,  except by an
instrument in writing  signed by all parties  hereto.  The parties  respectively
acknowledge and agree that neither has made any representations or warranties to
the other not expressly set forth herein.

30.
     CONSENT  OF PARTY.  If this Lease  requires
the consent of a party hereto,  such consent shall not be unreasonably  withheld
or delayed.

31.
     AUTHORITY.  If the Tenant is a partnership,
each individual  executing this Lease on behalf of said  partnership  represents
and warrants that he or she is duly authorized to execute and deliver this Lease
on behalf of said  partnership,  and that all future  forms,  reports,  fees and
other documents necessary to comply with applicable laws will be filed when due.

32.
     TIME.  Time is of the essence of this Lease
and each and every term, covenant and condition hereof.

33.
     SIGNS. The Tenant shall not place, or cause
to be placed or maintained, on any exterior door, wall or window of the Premises
any sign,  awning or canopy,  or advertising  matter or other thing of any kind,
and will not place or maintain any decoration,  lettering or advertising  matter
on the glass of any window or door of the Premises,  without first obtaining the
Landlords prior written approval and consent in each instance.  The Tenant
further  agrees  to  maintain  at all  times  any  such  sign,  awning,  canopy,
decoration,  lettering, advertising matter or other thing as may be approved, in
good  condition,  and  in  full  compliance  with  all  applicable  governmental
regulations  and the sign  criteria  for the Building  established  from time to
time.

The
Tenant agrees that the Landlord may post in  conspicuous  places "For Sale"
or "For Rent" signs on the Premises.

34.
     ACCORD  AND SATISFACTION. No payment by the
Tenant or  receipt  by the  Landlord  of a lesser  amount  than the rent  herein
stipulated  shall  be  deemed  to be  other  than  on  account  of the  earliest
stipulated  rent,  nor shall any  endorsement  or  statement on any check or any
letter  accompanying  any check or  payment  as rent be  deemed  an  accord  and
satisfaction,  and the  Landlord  may  accept  such  check  or  payment  without
prejudice  to the  Landlords  right to recover the balance of such rent or
pursue any other remedy provided in this Lease.

35.
     CONSTRUCTION  OF LEASE. The language in all
parts of this Lease shall in all cases be construed as a whole  according to its
fair meaning and not strictly for nor against the Landlord or the Tenant.

36.
     LIMITATION  OF  LANDLORDS  LIABILITY.
The Tenant hereby  acknowledges and agrees that (i) no present or future general
or limited  partner of the  Landlord,  or its  assign,  shall have any  personal
liability  of any kind or nature  whatsoever  for or by reason of any  matter or
thing  whatsoever  arising under,  related to, or in any way connected with this
Lease,  and the rights and  obligations of the parties  hereunder,  and (ii) the
Tenant  shall look solely to the  building in which the  Premises is located and
any other  property  owned by the Landlord (as opposed to property  owned by the
individual  partners  of  the  Landlord)  for  the  enforcement  of  its  rights
hereunder.

37.
     SUPERSEDES  PROPOSAL TO LEASE; INTEGRATION.
This Lease  supersedes  any  proposals  regarding  the leasing of the  Premises,
whether  written or oral, and any such  proposals will be terminated,  and of no
force or effect, effective upon the execution of this Lease. This Lease contains
the entire understanding and agreements of the parties.

38.
     ENVIRONMENTAL  MATTERS.  The Tenant  hereby
acknowledges that the Premises are being leased in as is  condition.
The  Landlord  does  not  have  actual  knowledge  of any  toxic  contamination,
including  asbestos,  but has not conducted an investigation  into such matters.
The Tenant has had sufficient  opportunity to satisfy itself of the condition of
the Premises  prior to the execution  hereof.  Accordingly,  the Tenant shall be
responsible  for any and all  liability,  and shall  indemnify the Landlord with
respect to the same to the extent  provided  in  subparagraph  (c)  below
(relating  to  toxic  contamination  matters),  unless  the  Tenant  is  able to
establish,  upon the basis of  reasonable  proof,  that any toxic  contamination
which is  discovered  after the Tenant goes into  occupancy  of the  Premises is
attributable  to a  condition  which  pre-existed  the  Tenants  occupancy
hereunder.  In such  event,  the  Landlords  liability  will be limited to
complying  with  all  applicable   environmental  laws,  without  any  liability
whatsoever to the Tenant including,  but not limited to, relocation  expenses or
loss of business damages.

The
Tenant also covenants as follows:

(a)
     The  Tenant shall at all times and in all respects
comply with all federal,  state and local laws,  ordinances and regulations (the
Hazardous  Material  Laws)  relating to  industrial  hygiene,
environmental protection or the use, analysis, generation, manufacture, storage,
disposal or transportation of any oil,  flammable  explosives,  asbestos,  urea,
formaldehyde,  radioactive  materials  or  wastes  or  other  hazardous,  toxic,
contaminated or polluting materials,  substances or wastes,  including,  without
limitation,  any  hazardous  substances  which are the subject of any such laws,
ordinances    or    regulations     (collectively,     the    Hazardous
Materials).

(b)
     The  Tenant  shall,  at its own expense,  procure,
maintain  in effect,  and comply  with all  conditions  of any and all  permits,
licenses  and  other  governmental  and  regulatory  approval  required  for the
Tenants use of the Premises,  including, without limitation,  discharge of
(appropriately  treated)  materials  or wastes which may be  discharged  into or
through any  sanitary  sewer  serving the  Premises.  The Tenant  shall,  in all
respects,  deal with the Hazardous  Materials in  conformity  with the Hazardous
Materials Laws.

(c)
     The  Tenant  shall  indemnify,  defend (by counsel
reasonably acceptable to the Landlord),  protect, and hold the Landlord and each
of the Landlords partners,  employees,  agents, attorneys,  successors and
assigns,  free and  harmless  from and against any and all claims,  liabilities,
penalties,  forfeitures,  losses or expenses (including  attorneys  fees),
damages  or  death  of or  injury  to any  person  or  damage  to  any  property
whatsoever,  arising from or caused in whole or in part, directly or indirectly,
by the  Tenants  failure to comply with any  Hazardous  Materials  Law, or
other  health  or  safety  law,  regulation  or  ordinance.   The  Tenants
obligations hereunder shall include, without limitation, and whether foreseeable
or  unforeseeable,  all costs of any required or necessary  repair,  clean-up or
detoxification  or  decontamination  of the Premises,  and the  preparation  and
implementation  of any  closure,  remedial  action  or other  required  plans in
connection therewith, and shall survive the expiration or earlier termination of
the term of this Lease.  For purposes of this indemnity  provision,  any acts or
omission of the Tenant,  or by  employees,  agents,  assignees,  contractors  or
subcontractors  of the Tenant,  or others  acting for or on behalf of the Tenant
(whether or not they are negligent,  intentional,  willful or unlawful) shall be
strictly attributable to the Tenant.

39.
     BROKERS. The Tenant will indemnify and hold
harmless the Landlord from any brokers' claims for  compensation or a commission
related to this Lease.

40.
     IMPROVEMENTS   BY   PRIOR   OCCUPANT.   The
Tenants  affiliate,  E. KHASHOGGI  INDUSTRIES was the previous occupant of
the Premises.  The Tenant has executed a Letter  Agreement  dated March 30made a
part hereof by this reference, including, without limitation, the obligation for
such  repairs  up to a  maximum  of  TWENTY  FIVE  THOUSAND  DOLLARS  ($25,000).

41.
     INDEPENDENT   COUNSEL.   The   Tenant   has
received the advice of counsel prior to executing this Lease.

42.
     BOARD  OF  DIRECTORS.  At the  execution of
this Lease,  the Tenant will  deliver a certified  resolution  from the Tenant's
Board of Directors authorizing the execution of this Lease.

IN
WITNESS WHEREOF, the parties hereto have executed this Lease on this ____ day of
________________, 2001 at Santa Barbara, California.

`LANDLORD:

                           DE ETTA M. NANCARROW,
                           Trustee of the Nancarrow Family Living Trust
                           Dated 9/25/91


                           By:    /s/ De Etta M. Nancarrow            
                                  De Etta M. Nancarrow, Trustee

                           Address:
                           6326-A Lindmar Drive
                           Goleta, CA 93117



                           TENANT:

                           EARTHSHELL CORPORATION,
                           A Delaware Corporation


                           By:    /s/ Scott Houston                   
                                  Name:  Scott Houston
                                  Title: CFO

                           Address:
                           800 Miramonte Drive
                           Santa Barbara, CA 93109`

# EXHIBIT A

# DESCRIPTION
OF PREMISES

# EXHIBIT B

# FURNITURE
AND FIXTURES

# EXHIBIT C

# LETTER
AGREEMENT DATED MARCH 30, 2001