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


1.   Basic Provisions ("Basic Provisions").

     1.1 Parties: This Lease ("Lease"),  dated for reference purposes only, June
5,  1997,  is  made by and  between  Chaboya  ranch,  a  California  partnership
("Lessor")  and Zomax  Optical Media Inc., a Minnesota  corporation  ("Lessee"),
(collectively the "Parties," or individually a "Party").

     1.2(a)  Premises:  That  certain  portion of the  Building,  including  all
improvements  therein or to be provided by Lessor under the terms of this Lease,
commonly  known by the street  address of 2070 South 7th Street,  #E, located in
the City of San Jose, County of Santa Clara, State of California,  with zip code
95112, as outlined on Exhibit A attached hereto ("Premises").  The "Building" is
that  certain  building  containing  the  Premises  and  generally  described as
(describe  briefly the nature of the Building):  an  approximate  108,060 square
foot area portion of a larger building,  and attached  yard/parking.  Lessee may
verify size but this will not alter base rent,  etc., but may alter Lessee's Pro
Rata share in  1.6(b).  In  addition  to  Lessee's  rights to use and occupy the
Premises as hereinafter specified, Lessee shall have non-exclusive rights to the
Common Areas (as defined in Paragraph 2.7 below) as hereinafter  specified,  but
shall not have any rights to the roof, exterior walls or utility raceways of the
Building or to any other buildings in the Industrial Center.  The Premises,  the
Building, the Common Areas, the land upon which they are located, along with all
other buildings and improvements thereon, are herein collectively referred to as
the "Industrial Center." (Also see Paragraph 2.)

     1.2(b)  Parking:   Addendum  Item  55  unreserved  vehicle  parking  spaces
("Unreserved  Parking Spaces")' and Addendum A, Item 55 reserved vehicle parking
spaces ("Reserved Parking Spaces"). (Also see Paragraph 2.6.)

     1.3 Term: 5 years and 1 months ("Original Term") commencing August 15, 1997
("Commencement  Date") and ending August 14, 2002 ("Expiration Date"). (Also see
Paragraph 3.) See Addendum A, Item 57.

     1.4 Early Possession:  N/A ("Early Possession Date").  (Also see Paragraphs
3.2 and 3.3.)

     1.5 Base Rent:  $27,550.00 per month ("Base Rent"),  payable on the 1st day
of each month commencing See Addendum A, Item 57 (Also see Paragraph 4.)

[X]      If this box is  checked,  this Lease  provides  for the Base Rent to be
         adjusted per Addendum Item 49, attached hereto.

     1.6(a)  Base  Rent  Paid Upon  Execution:  $27,550.00  as Base Rent for the
period second months rent.

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     1.6(b) Lessee's Share of Common Area Operating Expenses: thirty-six percent
(+/- 36%) ("Lessee's  Share") as determined by [X] prorata square footage of the
Premises as compared to the total  square  footage of the  Building or [ ] other
criteria as described in Addendum ___.

     1.7 Security Deposit:  $31,008.00 ("Security Deposit"). (Also see Paragraph
5.)

     1.8 Permitted Use:  manufacture  and  distribution of compact disk products
("Permitted Use") (Also see Paragraph 6.)

     1.9 Insuring Party. Lessor is the "Insuring Party." (Also see Paragraph 8.)

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

[X]  Colliers Parrish International, Inc. represents Lessor exclusively
     ("Lessor's Broker");
[X]  Saratoga Investments represents Lessee exclusively ("Lessee's Broker"); or
[  ] ________________ represents both Lessor and Lessee ("Dual Agency").  
     (Also see Paragraph 15.)

     1.10(b)  Payment  to  Brokers.  Upon the  execution  of this  Lease by both
Parties,  Lessor shall pay to said Broker(s) jointly, or in such separate shares
as they may  mutually  designate  in  writing,  a fee as set forth in a separate
written agreement between Lessor and said Broker(s) (or in the event there is no
separate  written  agreement  between  Lessor and said  Broker(s),  the sum of $
separate  agreement  ) for  brokerage  services  rendered by said  Broker(s)  in
connection with this transaction.

     1.11  Guarantor.  The  obligations of the Lessee under this Lease are to be
guaranteed by N/A ("Guarantor"). (Also see Paragraph 37.)

     1.12  Addenda  and  Exhibits.  Attached  hereto is an  Addendum  or Addenda
consisting  of  Paragraphs 49 through 67, and Exhibits A through F, all of which
constitute a part of this Lease.

2.   Premises, Parking and Common Areas.

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

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     2.2  Condition.  Lessor shall deliver the Premises to Lessee clean and free
of debris on the  Commencement  Date and  warrants to Lessee  that the  existing
plumbing,  electrical systems, fire sprinkler system, lighting, air conditioning
and heating systems and loading doors, if any, in the Premises, other than those
constructed by Lessee,  shall be in good operating condition on the Commencement
Date. See Addendum Item 52. If a non-compliance  with said warranty exists as of
the Commencement Date, Lessor shall, except as otherwise provided in this Lease,
promptly  after  receipt  of  written  notice  from  Lessee  setting  forth with
specificity  the  nature  and  extent of such  non-compliance,  rectify  same at
Lessor's  expense.   If  Lessee  does  not  give  Lessor  written  notice  of  a
non-compliance  with this warranty  within thirty (30) days after the completion
of Lessor's  improvements under Addendum Item 52 b, c, and d, correction of that
non-compliance  shall be the  obligation  of  Lessee at  Lessee's  sole cost and
expense.

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

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

     2.5  Vehicle  Parking.  Lessee  shall  be  entitled  to use the  number  of
Unreserved  Paring  Spaces and Reserved  Parking  Spaces  specified in Paragraph
1.2(b) on those  portions of the Common  Areas  designated  from time to time by

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Lessor for parking.  Lessee shall not use more parking  spaces than said number.
Said  parking  spaces  shall be used for  parking  by  vehicles  no larger  than
full-size  passenger  automobiles  or  pick-up  trucks,  full  size  trucks  and
trailers, herein called "Permitted Size Vehicles." Vehicles other than Permitted
Size  Vehicles  shall be parked and loaded or  unloaded as directed by Lessor in
the Rules and Regulations  (as defined in Paragraph 40) issued by Lessor.  (Also
see Paragraph 2.9.) Addendum Item 55.

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

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

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

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

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

     2.8 Common Areas - Rules and Regulations. Lessor or such other person(s) as
Lessor may appoint shall have the exclusive control and management of the Common
Areas and shall have the right, from time to time, to establish,  modify,  amend

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and enforce  reasonable Rules and Regulations with respect thereto in accordance
with  Paragraph  40. Lessee agrees to abide by and conform to all such Rules and
Regulations,  and  to  cause  its  employees,  suppliers,  shippers,  customers,
contractors  and  invitees  to  so  abide  and  conform.  Lessor  shall  not  be
responsible to Lessee for the non-compliance  with said rules and regulations by
other lessees of the Industrial Center.

     2.9 Common Areas - Changes.  Lessor shall have the right,  in Lessor's sole
discretion,  from time to time,  so long as Lessee's  use of the Premises is not
unreasonably disturbed:

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

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

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

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

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

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

3.   Term.

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

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

     3.3 Delay in Possession. If for any reason Lessor cannot deliver possession
of the Premises to Lessee by the Early  Possession  Date, if one is specified in

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Paragraph 1.4, or if no Early Possession Date is specified,  by the Commencement
Date,  Lessor  shall not be subject to any  liability  therefor,  nor shall such
failure  affect  the  validity  of this  Lease,  or the  obligations  of  Lessee
hereunder, or extend the term hereof, but in such case, Lessee shall not, except
as  otherwise  provided  herein,  be  obligated to pay rent or perform any other
obligation  of Lessee  under  the  terms of this  Lease  until  Lessor  delivers
possession  of the  Premises to Lessee.  If  possession  of the  Premises is not
delivered to Lessee within sixty (60) days after the Commencement  Date,  Lessee
may,  at its option,  by notice in writing to Lessor  within ten (10) days after
the end of said sixty (60) day period,  cancel  this  Lease,  in which event the
parties shall be discharged from all obligations  hereunder;  provided  further,
however,  that if such written notice of Lessee is not received by Lessor within
said ten (10) day period,  Lessee's right to cancel this Lease  hereunder  shall
terminate  and be of no  further  force or  effect.  Except as may be  otherwise
provided,  and  regardless  of when the Original  Term  actually  commences,  if
possession is not tendered to Lessee when required by this Lease and Lessee does
not terminate this Lease, as aforesaid, the period free of the obligation to pay
Base Rent, if any, that Lessee would  otherwise  have enjoyed shall run from the
date of delivery of  possession  and  continue  for a period equal to the period
during which the Lessee would have otherwise enjoyed under the terms hereof, but
minus any days of delay caused by the acts, changes or omissions of Lessee.

4.   Rent.

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

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

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

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

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

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                                    (bb)  Exterior signs and any tenant 
directories.

                                    (cc)  Fire detection and sprinkler systems.

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

                           (iii)    Property management and security services 
and the costs of any environmental inspections.

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

                           (v)      Any increase above the Base Real Property 
Taxes (as defined in Paragraph 10.2(b)) for the Building and the Common Areas.

                           (vi)     Any "Insurance Cost Increase" (as defined 
in Paragraph 8.1).

                           (vii) The cost of  insurance  carried by Lessor  with
respect to the Common Areas.

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

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

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

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

                  (d) Lessee's Share of Common Area Operating  Expenses shall be
payable by Lessee within ten (10) days after a reasonably  detailed statement of
actual expenses is presented to Lessee by Lessor.  At Lessor's option,  however,
an amount may be  estimated  by Lessor  from time to time of  Lessee's  Share of

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annual Common Area Operating  Expenses and the same shall be payable  quarterly,
as Lessor shall designate, during each 12-month period of the Lease term, on the
same day as the Base  Rent is due  hereunder.  Lessor  shall  deliver  to Lessee
within sixty (60) days after the  expiration  of each calendar year a reasonably
detailed  statement  showing  Lessee's Share of the actual Common Area Operating
Expenses  incurred  during the preceding  year. If Lessee's  payments under this
Paragraph  4.2(d) during said preceding year exceed  Lessee's Share as indicated
on said  statement,  Lessee  shall be  credited  the amount of such  overpayment
against  Lessee's Share of Common Area Operating  Expenses next becoming due. If
Lessee's  payments under this  Paragraph  4.2(d) during said preceding year were
less than  Lessee's  Share as indicated on said  statement,  Lessee shall pay to
Lessor the amount of the  deficiency  within  ten (10) days  after  delivery  by
Lessor to Lessee of said statement. See Addendum Item 61.

5. Security  Deposit.  Lessee shall deposit with Lessor upon Lessee's  execution
hereof the Security  Deposit set forth in Paragraph 1.7 as security for Lessee's
faithful  performance of Lessee's  obligations under this Lease. If Lessee fails
to pay Base Rent or other rent or charges due hereunder,  or otherwise  Defaults
under this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain
all or any  portion of said  Security  Deposit for the payment of any amount due
Lessor or to reimburse or compensate  Lessor for any liability,  cost,  expense,
loss or damage  (including  attorneys' fees) which Lessor may suffer or incur by
reason  thereof.  If Lessor uses or applies all or any portion of said  Security
Deposit,  Lessee  shall  within ten (10) days after  written  request  therefore
deposit  monies with Lessor  sufficient to restore said Security  Deposit to the
full amount required by this Lease.  Lessor shall not be required to keep all or
any part of the Security  Deposit  separate  from its general  accounts.  Lessor
shall,  at the  expiration or earlier  termination  of the term hereof and after
Lessee has vacated the Premises,  return to Lessee (or, at Lessor's  option,  to
the last assignee,  if any, of Lessee's  interest  herein),  that portion of the
Security  Deposit  not used or  applied by lessor.  Unless  otherwise  expressly
agreed in writing by Lessor, no part of the Security Deposit shall be considered
to be held in trust,  to bear interest or other  increment for its use, or to be
prepayment for any monies to be paid by Lessee under this Lease.

6.   Use.

     6.1 Permitted Use.

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

                  (b) Lessor hereby agrees to not unreasonably withhold or delay
its consent to any written request by Lessee,  Lessee's assignees or subtenants,
and by  prospective  assignees  and  subtenants  of Lessee,  its  assignees  and
subtenants,  for a modification  of said Permitted Use, so long as the same will
not impair the structural  integrity of the  improvements  on the Premises or in

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the Building or the mechanical or electrical systems therein,  does not conflict
with uses by other lessees, is not significantly more burdensome to the Premises
or the  Building and the  improvements  thereon,  and is  otherwise  permissible
pursuant to this Paragraph 6. If Lessor elects to withhold such consent,  Lessor
shall  within  five  (5)  business  days  after  such  request  give  a  written
notification  of same,  which notice shall  include an  explanation  of Lessor's
reasonable objections to the change in use.

     6.2 Hazardous Substances.

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

                  (b) Duty to Inform Lessor.  If lessee knows, or has reasonable
cause to  believe,  that a  Hazardous  Substance  has come to be located in, on,
under or about the Premises or the Building,  other than as previously consented
to by Lessor,  Lessee shall  immediately  give Lessor  written  notice  thereof,
together  with  a  copy  of  any  statement,   report,   notice,   registration,

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application,  permit, business plan, license, claim, action, or proceeding given
to, or received from, any governmental authority or private party concerning the
presence, spill, release, discharge of, or exposure to, such Hazardous Substance
including  but not  limited  to all such  documents  as may be  involved  in any
Reportable  Use  involving  the  Premises.  Lessee shall not cause or permit any
Hazardous  Substance  to be  spilled  or  released  in,  on,  under or about the
Premises (including,  without limitation, through the plumbing or sanitary sewer
system).

                  (c) Indemnification.  Lessee shall indemnify,  protect, defend
and hold Lessor, its agents,  employees,  lenders and ground lessor, if any, and
the  Premises,  harmless  from and  against  any and all  damages,  liabilities,
judgments,  costs,  claims,  liens,  expenses,  penalties,  loss of permits  and
attorneys'  and  consultants'  fees  arising out of or involving  any  Hazardous
Substance brought onto the Premises by or for Lessee or by anyone under Lessee's
control. Lessee's obligations under this Paragraph 6.2(c) shall include, but not
be limited to, the effects of any contamination or injury to person, property or
the  environment  created of suffered by Lessee,  and the cost of  investigation
(including consultants' and attorneys' fees and testing), removal,  remediation,
restoration and/or abatement thereof, or of any contamination  therein involved,
and shall  survive the  expiration  or earlier  termination  of this  Lease.  No
termination, cancellation or release agreement entered into by Lessor and Lessee
shall  release  Lessee  from its  obligations  under this Lease with  respect to
Hazardous Substances,  unless specifically so agreed by Lessor in writing at the
time of such agreement.

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

     6.4 Inspection;  Compliance with Law. Lessor,  Lessor's agents,  employees,
contractors  and designated  representatives,  and the holders of any mortgages,
deeds of trust or ground leases on the Premises ("Lenders") shall have the right
to enter the Premises at any time in the case of an emergency,  and otherwise at

<PAGE>

reasonable  times,  for the purpose of inspecting  the condition of the Premises
and for  verifying  compliance  by  Lessee  with this  Lease and all  Applicable
Requirements  (as defined in  Paragraph  6.3),  and Lessor  shall be entitled to
employ experts and/or consultants in connection  therewith to advise Lessor with
respect  to  Lessee's   activities,   including  but  not  limited  to  Lessee's
installation,  operation,  use,  monitoring,  maintenance,  or  removal  of  any
Hazardous Substance on or from the Premises.  The costs and expenses of any such
inspections  shall be paid by the party  requesting  same,  unless a Default  or
Breach of this Lease by Lessee or a violation of  Applicable  Requirements  or a
contamination,  caused or materially contributed to by Lessee, is found to exist
or to be  imminent,  or unless  the  inspection  is  requested  or  ordered by a
governmental  authority as the result of any such existing or imminent violation
or  contamination.  In such case,  Lessee shall upon request reimburse Lessor or
Lessor's  Lender,  as the  case  may be,  for the  costs  and  expenses  of such
inspections,  Lessee to be given 24 hours  notice of  inspection,  except in the
case of an emergency.

7.   Maintenance, Repairs, Utility Installations, Trade Fixtures and 
     Alterations.

     7.1 Lessee's Obligations.

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

                  (b) Lessee shall,  at Lessee's sole cost and expense,  procure
and maintain a contract,  with copies to Lessor, in customary form and substance
for and  with a  contractor  specializing  and  experienced  in the  inspection,
maintenance and service of the heating,  air conditioning and ventilation system
for the Premises or Lessee may do work themselves  without reduction of Lessee's
responsibilities.  However, Lessor reserves the right, upon notice to Lessee, to
procure  and  maintain  the  contract  for the  heating,  air  conditioning  and
ventilating  systems,  and if Lessor so elects,  Lessee shall reimburse  Lessor,
upon demand, for the cost thereof.

                  (c) If Lessee fails to perform Lessee's obligations under this
Paragraph  7.1,  Lessor may enter upon the  Premises  after ten (10) days' prior

<PAGE>

written notice to Lessee  (except in the case of an emergency,  in which case no
notice shall be required),  perform such obligations on Lessee's behalf, and put
the Premises in good order,  condition and repair,  in accordance with Paragraph
13.2 below.

     7.2 Lessor's  Obligations.  Subject to the  provisions  of  Paragraphs  2.2
(Condition),  2.3 (Compliance  with Covenants,  Restrictions and Building Code),
4.2 (Common Area Operating  Expenses),  6 (Use), 7.1 (Lessee's  Obligations),  9
(Damage or Destruction) and 14 (Condemnation),  Lessor, subject to reimbursement
pursuant to Paragraph  4.2,  shall keep in good order,  condition and repair the
foundations,  exterior walls,  structural  condition of interior  bearing walls,
exterior  roof,  fire  sprinkler  and/or  standpipe  and hose (if located in the
Common Areas) or other automatic fire extinguishing  system including fire alarm
and/or smoke  detection  systems and  equipment,  fire  hydrants,  parking lots,
walkways, parkways,  driveways,  landscaping,  fences, signs and utility systems
serving  the  Common  Areas  and all parts  thereof,  as well as  providing  the
services  for  which  there is a  Common  Area  Operating  Expense  pursuant  to
Paragraph 4.2. Foundations, exterior walls (except initial painting), structural
conditions of interior bearing walls and roof (including skylights) shall not be
a part of the common area  expense.  Lessor  shall not be obligated to paint the
exterior or interior surfaces of exterior walls nor shall Lessor be obligated to
maintain,  repair or  replace  windows,  doors or plate  glass of the  Premises.
Lessee  expressly  waives the benefit of any statute now or  hereafter in effect
which  would  otherwise  afford  Lessee the right to make  repairs  at  Lessor's
expense or to  terminate  this Lease  because  of  Lessor's  failure to keep the
Building, Industrial Center or Common Areas in good order, condition and repair.

     7.3 Utility Installations, Trade Fixtures, Alterations.

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

                  (b) Consent.  Any  Alterations or Utility  Installations  that
Lessee shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed  plans.  All consents given by

<PAGE>

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

                  (c) Lien Protection.  Lessee shall pay when due all claims for
labor or materials  furnished or alleged to have been furnished to or for Lessee
at or  for  use on the  Premises,  which  claims  are or may be  secured  by any
mechanic's or materialmen's  lien against the Premises or any interest  therein.
Lessee  shall  give  Lessor  not less than ten (10)  days'  notice  prior to the
commencement  of any work in, on, or about the  Premises,  and Lessor shall have
the  right  to post  notices  of  non-responsibility  in or on the  Premises  as
provided by law. If Lessee  shall,  in good faith,  contest the  validity of any
such lien, claim or demand,  then Lessee shall, at its sole expense,  defend and
protect  itself,  Lessor  and the  Premises  against  the same and shall pay and
satisfy  any such  adverse  judgment  that may be  rendered  thereon  before the
enforcement thereof against the Lessor or the Premises. If Lessor shall require,
Lessee shall furnish to Lessor a surety bond satisfactory to Lessor in an amount
equal to one and  one-half  times the  amount of such  contested  lien  claim or
demand,  indemnifying  Lessor against liability for the same, as required by law
for the holding of the Premises  free from the effect of such lien or claim.  In
addition, Lessor may require Lessee to pay Lessor's attorneys' fees and costs in
participating  in such action if Lessor shall decide it is to its best  interest
to do so.

     7.4 Ownership, Removal, Surrender, and Restoration.

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

                  (b) Removal.  Unless otherwise  agreed in writing,  Lessor may
require that any or all  Lessee-Owned  Alterations or Utility  Installations  be
removed by the expiration or earlier termination of this Lease,  notwithstanding
that their installation may have been consented to by Lessor. Lessor may require

<PAGE>

the  removal  at any  time of all or any  part  of any  Alterations  or  Utility
Installations  made without the required  consent of Lessor.  Lessor will inform
Lessee at the time it  consents  to an  alteration,  if Lessor  will  require it
removed at the end of the Lease.

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

8.   Insurance; Indemnity.

     8.1 Payment of Premium Increases.

                  (a) As used  herein,  the term  "Insurance  Cost  Increase" is
defined as any increase in the actual cost of the  insurance  applicable  to the
Building and  required to be carried by Lessor  pursuant to  Paragraphs  8.2(b),
8.3(a) and 8.3(b),  ("Required Insurance"),  over and above the Base Premium, as
hereinafter  defined,  calculated on an annual basis.  "Insurance Cost Increase"
shall include,  but not be limited to,  requirements of the holder of a mortgage
or deed of trust  covering the  Premises,  increased  valuation of the Premises,
and/or a general premium rate increase. The term "Insurance Cost Increase" shall
not,  however,  include any premium  increases  resulting from the nature of the
occupancy of any other lessee of the  Building.  If the parties  insert a dollar
amount in Paragraph 1.9, such amount shall be considered the "Base  Premium." If
a dollar  amount has not been  inserted in Paragraph 1.9 and if the Building has
been  previously  occupied  during the  twelve  (12)  month  period  immediately
preceding the Commencement  Date, the "Base Premium" shall be the annual premium
applicable  to such  twelve (12) month  period.  If the  Building  was not fully
occupied  during such twelve (12) month period,  the "Base Premium" shall be the
lowest annual premium reasonably obtainable for the Required Insurance as of the
Commencement Date, assuming the most nominal use possible of the Building. In no
event, however,  shall Lessee be responsible for any portion of the premium cost
attributable to liability insurance coverage in excess of $1,000,000 Primary and
$1,000,000 Umbrella procured under Paragraph 8.2(b).

                  (b) Lessee  shall pay any  Insurance  Cost  Increase to Lessor
pursuant to Paragraph 4.2.  Premiums for policy periods  commencing prior to, or
extending beyond,  the term of this Lease shall be prorated to coincide with the
corresponding Commencement Date or Expiration Date.

<PAGE>

     8.2 Liability Insurance.

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

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

     8.3 Property Insurance-Building, Improvements and Rental Value.

                  (a) Building and Improvements. Lessor shall obtain and keep in
force  during the term of this Lease a policy or policies in the name of Lessor,
with loss  payable  to Lessor and to any  Lender(s),  insuring  against  loss or
damage to the Premises.  Such insurance shall be for full  replacement  cost, as
the same shall exist from time to time, or the amount required by any Lender(s),
but in no event more than the  commercially  reasonable and available  insurable
value  thereof  if, by reason of the  unique  nature or age of the  improvements
involved,  such latter amount is less than full replacement  cost.  Lessee-Owned
Alterations  and Utility  Installations.  Trade  Fixtures and Lessee's  personal
property  shall be insured by lessee  pursuant to Paragraph 8.4. If the coverage
is available and  commercially  appropriate,  Lessor's  policy or policies shall
insure against all risks of direct physical loss or damage (except the perils of
flood  and/or  earthquake  unless  required  by a Lender or included in the Base
Premium),  including  coverage for any  additional  costs  resulting from debris
removal and reasonable  amounts of coverage for the enforcement of any ordinance
or law regulating the reconstruction or replacement of any undamaged sections of
the Building  required to be demolished or removed by reason of the  enforcement
of any  building,  zoning,  safety  or land use laws as the  result of a covered
loss,  but not including  plate glass  insurance.  Said policy or policies shall
also contain an agreed valuation  provision in lieu of any co-insurance  clause,
waiver of subrogation, and inflation guard protection causing an increase in the
annual  property  insurance  coverage  amount  by a factor  of not less than the
adjusted U.S.  Department of Labor Consumer Price Index for All Urban  Consumers
for the city nearest to where the Premises are located.

<PAGE>


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

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

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

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

     8.5 Insurance Policies.  Insurance required hereunder shall be in companies
duly licensed to transact  business in the state where the Premises are located,
and maintaining  during the policy term a "General  Policyholders  Rating" of at
least B+, V, or such other  rating as may be required by a Lender,  as set forth
in the most current issue of "Best's  Insurance  Guide."  Lessee shall not do or
permit  to be done  anything  which  shall  invalidate  the  insurance  policies
referred to in this  Paragraph  8. Lessee shall cause to be delivered to Lessor,

<PAGE>

within  seven (7) days  after the  earlier of the Early  Possession  Date or the
Commencement Date, certified copies of, or certificates evidencing the existence
and amounts of, the insurance  required under Paragraph  8.2(a) and 8.4. No such
policy shall be cancelable or subject to  modification  except after thirty (30)
days' prior  written  notice to Lessor.  Lessee  shall at least thirty (30) days
prior to the  expiration  of such  policies,  furnish  Lessor  with  evidence of
renewals or "insurance  binders" evidencing renewal thereof, or Lessor may order
such  insurance  and charge the cost  thereof to Lessee,  which  amount shall be
payable by Lessee to Lessor upon demand.

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

     8.7  Indemnity.  Except for Lessor's  negligence  and/or  breach of express
warranties,  Lessee  shall  indemnify,  protect,  defend and hold  harmless  the
Premises,  Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders,  from and  against any and all claims,  loss of rents  and/or  damages,
costs, liens, judgments, penalties, loss of permits, attorneys' and consultants'
fees,  expenses and/or liabilities  arising out of, involving,  or in connection
with, the occupancy of the Premises by Lessee, the conduct of Lessee's business,
any act, omission or neglect of Lessee,  its agents,  contractors,  employees or
invitees,  and out of any  Default or Breach by Lessee in the  performance  in a
timely  manner of any  obligation  on Lessee's  part to be performed  under this
Lease.  The  foregoing  shall  include,  but not be limited  to, the  defense or
pursuit of any claim or any action or proceeding  involved therein,  and whether
or not (in the case of claims made against Lessor)  litigated  and/or reduced to
judgment.  In case any action or proceeding be brought  against Lessor by reason
of any of the foregoing matters, Lessee upon notice from Lessor shall defend the
same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be so indemnified. See Addendum Item 62.

     8.8  Exemption  of Lessor from  Liability.  Except to the extent  caused by
Lessor's  gross  negligence,  Lessor shall not be liable for injury or damage to
the person or goods,  wares,  merchandise or other property of Lessee,  Lessee's
employees, contractors, invitees, customers, or any other person in or about the
Premises, whether such damage or injury is caused by or results from fire, steam
electricity,  gas, water or rain, or from the breakage, leakage,  obstruction or
other  defects of pipes,  fire  sprinklers,  wires,  appliances,  plumbing,  air
conditioning or lighting fixtures,  or from any other cause, whether said injury
or damage  results  from  conditions  arising  upon the  Premises  or upon other
portions of the Building of which the Premises are a part, from other sources or
places,  and  regardless  of whether  the cause of such  damage or injury of the
means of repairing the same is accessible or not. Lessor shall not be liable for
any damages  arising  from any act or neglect of any other  lessee of Lessor nor
from the failure by Lessor to enforce the  provisions  of any other lease in the
Industrial  Center.  Except for  Lessor's  negligence  or breach of this  Lease,
Lessor shall under no circumstances be liable for injury to Lessee's business or
for any loss of income or profit therefrom.

<PAGE>

9.   Damage or Destruction.

     9.1 Definitions.

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

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

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

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

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

     9.2 Premises Partial Damage - Insured Loss. If Premises Partial Damage that
is an Insured Loss occurs,  then Lessor shall, at Lessor's expense,  repair such
damage (but not Lessee's Trade Fixtures or Lessee-Owned  Alterations and Utility
Installations)  as soon as reasonably  possible and this Lease shall continue in
full force and  effect.  In the  event,  however,  that  there is a shortage  of
insurance  proceeds and such  shortage is due to the fact that, by reason of the

<PAGE>

unique  nature  of the  improvements  in the  Premises,  full  replacement  cost
insurance coverage was not commercially  reasonable and available,  Lessor shall
have no  obligation  to pay for the  shortage in  insurance  proceeds or to full
restore the unique aspects of the Premises  unless Lessee  provides  Lessor with
the funds to cover same,  or adequate  assurance  thereof,  within ten (10) days
following  receipt of written notice of such shortage and request  therefor.  If
Lessor  receives said funds or adequate  assurance  thereof within said ten (10)
day period,  Lessor shall complete them as soon as reasonably  possible and this
Lease  shall  remain in full force and effect.  If Lessor does not receive  such
funds or assurance within said period,  Lessor may nevertheless elect by written
notice to Lessee within ten (10) days  thereafter to make such  restoration  and
repair  as is  commercially  reasonable  with  Lessor  paying  any  shortage  in
proceeds,  in which case this Lease shall  remain in full force and  effect.  If
Lessor does not receive such funds or assurance within such ten (10) day period,
and if Lessor  does not so elect to restore  and  repair,  then this Lease shall
terminate   ninety  (90)  days   following  the  occurrence  of  the  damage  or
destruction. Unless otherwise agreed, Lessee shall in no event have any right to
reimbursement from Lessor for any funds contributed by Lessee to repair any such
damage or destruction.  Premises Partial Damage due to flood or earthquake shall
be subject to Paragraph  9.3 rather than  Paragraph  9.2,  notwithstanding  that
there may be some insurance coverage, but the net proceeds of any such insurance
shall be made  available for the repairs if made by either  Party.  See Addendum
Item 63.

     9.3 Partial Damage - Uninsured Loss. If Premises Partial Damage that is not
an Insured Loss occurs, greater than $50,000.00,  Lessor may at Lessor's option,
either  (i)  repair  such  damage as soon as  reasonably  possible  at  Lessor's
expense,  in which event this Lease shall continue in full force and effect,  or
(ii) give  written  notice to Lessee  within  thirty (30) days after  receipt by
Lessor of  knowledge  of the  occurrence  of such damage of  Lessor's  desire to
terminate  this Lease as of the date sixty (60) days  following the date of such
notice. In the event Lessor elects to give such notice of Lessor's  intention to
terminate this Lease, Lessee shall have the right within ten (10) days after the
receipt of such notice to give written  notice to Lessor of Lessee's  commitment
to pay for the repair of such  damage  totally at  Lessee's  expense and without
reimbursement  from Lessor.  Lessee shall provide Lessor with the required funds
or  satisfactory  assurance  thereof  within  thirty  (30) days  following  such
commitment  from Lessee.  In such event this Lease shall  continue in full force
and effect,  and Lessor shall proceed to make such repairs as soon as reasonably
possible after the required  funds are  available.  If Lessee does not give such
notice and  provide the funds or  assurance  thereof  within the time  specified
above, this Lease shall terminate as of the date specified in Lessor's notice of
termination.

     9.4 Total  Destruction.  Notwithstanding  any other  provision  hereof,  if
Premises Total  Destruction  occurs  (including any destruction  required by any
authorized  public  authority),  this  Lease  shall  terminate  sixty  (60) days
following the date of such Premises Total Destruction, whether or not the damage
or destruction is an Insured Loss or was caused by a negligent or willful act of
Lessee.  In the event,  however,  that the damage or  destruction  was caused by
Lessee,  Lessor  shall have the right to recover  Lessor's  damages  from Lessee
except as released and waived in Paragraph 9.7.

     9.5 Damage Near End of Term.  If at any time during the last six (6) months
of the term of this Lease  there is damage for which the cost to repair  exceeds

<PAGE>

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

     9.6 Abatement of Rent; Lessee's Remedies.

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

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

     9.7 Hazardous  Substance  Conditions.  If a Hazardous  Substance  Condition
occurs,  unless  Lessee is legally  responsible  therefor  (in which case Lessee
shall make the  investigation  and  remediation  thereof  required by Applicable

<PAGE>

Requirements and this Lease shall continue in full force and effect, but subject
to Lessor's  rights  under  Paragraph  6.2(c) and  Paragraph  13),  Lessor shall
investigate and remediate such Hazardous Substance  Condition,  if required,  as
soon as reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect.

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

10.  Real Property Taxes.

     10.1 Payment of Taxes. Lessor shall pay the Real Property taxes, as defined
in  Paragraph  10.2(a),  applicable  to the  Industrial  Center,  and  except as
otherwise  provided in Paragraph  10.3,  any  increases in such amounts over the
Base Real  Property  Taxes shall be included in the  calculation  of Common Area
Operating Expenses in accordance with the provisions of Paragraph 4.2.

     10.2 Real Property Tax Definitions.

                  (a) As used  herein,  the term  "Real  Property  Taxes"  shall
include any form of real estate tax or assessment, general, special, ordinary or
extraordinary,  and any license fee, commercial rental tax,  improvement bond or
bonds,  levy or tax (other than  inheritance,  personal  income or estate taxes)
imposed  upon the  Industrial  Center  by any  authority  having  the  direct or
indirect power to tax, including any city, state or federal  government,  or any
school,  agricultural,  sanitary,  fire, street,  drainage, or other improvement
district  thereof,  levied against any legal or equitable  interest of Lessor in
the Industrial  Center or any portion  thereof,  Lessor's right to rent or other
income  therefrom,  and/or Lessor's  business of leasing the Premises.  The term
"Real  Property  Taxes" shall also include any tax,  fee,  levy,  assessment  or
charge,  or any  increase  therein,  imposed by reason of events  occurring,  or
changes  in  Applicable  Law  taking  effect,  during  the  term of this  Lease,
including but not limited to a change in the ownership of the Industrial  Center
or  in  the  improvements   thereon,   the  execution  of  this  Lease,  or  any
modification,  amendment or transfer thereof, and whether or not contemplated by
the Parties.

                  (b) As used herein,  the term "Base Real Property Taxes" shall
be the amount of Real Property Taxes,  which are assessed  against the Premises,
Building  or  Common  Areas in the  calendar  year  during  which  the  Lease is
executed.  In  calculating  Real Property  Taxes for any calendar year, the Real
Property Taxes for any real estate tax year shall be included in the calculation
of Real  Property  Taxes for such  calendar  year  based upon the number of days
which such calendar year and tax year have in common.

     10.3  Additional  Improvements.  Common Area  Operating  Expenses shall not
include Real Property  Taxes  specified in the tax  assessor's  records and work
sheets as being caused by  additional  improvements  placed upon the  Industrial
Center by other lessees or by Lessor for the  exclusive  enjoyment of such other

<PAGE>

lessees.  Notwithstanding  Paragraph 10.1 hereof,  Lessee shall, however, pay to
Lessor at the time Common Area  Operating  Expenses are payable under  Paragraph
4.2, the entirety of any increase in Real Property  Taxes if assessed  solely by
reason of Alterations,  Trade Fixtures or Utility  Installations placed upon the
Premises by Lessee or at Lessee's request.

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

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

11. Utilities. Lessee shall pay directly for all utilities and services supplied
to the Premises, including but not limited to electricity,  telephone, security,
gas and cleaning of the Premises,  together with any taxes thereon.  If any such
utilities or services are not  separately  metered to the Premises or separately
billed to the Premises, Lessee shall pay to Lessor a reasonable proportion to be
determined  by Lessor of all such charges  jointly  metered or billed with other
premises in the Building, in the manner and within the time periods set forth in
Paragraph 4.2(d). Addendum Item 56.

12.  Assignment and Subletting.

     12.1 Lessor's Consent Required.

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

                  (b) A change in the  control  of Lessee  shall  constitute  an
assignment  requiring  Lessor's  consent.  The transfer,  on a cumulative basis,
fifty-one  (51%) or more of the voting  control  of Lessee  shall  constitute  a
change in control for this purpose.

<PAGE>

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

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

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

     12.2  Terms  and  Conditions   Applicable  to  Assignment  and  Subletting.
Notwithstanding  the foregoing,  Lessee shall have the right to assign or sublet
this Lease to any entity  controlling,  controlled  by, or under common  control
with Lessee,  or any entity that acquires all or  substantially  all of Lessee's
assets or stock,  without obtaining Lessor's consent,  as long as Lessee remains
fully liable for all terms of the Lease.

                  (a)  Regardless  of  Lessor's   consent,   any  assignment  or
subletting shall not (i) be effective without the express written  assumption by
such assignee or sublessee of the  obligations of Lessee under this Lease,  (ii)

<PAGE>

release  Lessee  of any  obligations  hereunder,  nor (iii)  alter  the  primary
liability  of Lessee  for the  payment  of Base Rent and other  sums due  Lessor
hereunder or for the  performance  of any other  obligations  to be performed by
Lessee under this Lease.

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

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

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

                  (e) Each request for consent to an  assignment  or  subletting
shall  be  in  writing,   accompanied  by   information   relevant  to  Lessor's
determination   as  to  the  financial  and   operational   responsibility   and
appropriateness of the proposed assignee or sublessee, including but not limited
to the  intended  use and/or  required  modification  of the  Premises,  if any,
together with a  non-refundable  deposit of $500.00 as reasonable  consideration
for Lessor's  considering and processing the request for consent.  Lessee agrees
to provide Lessor with such other or additional information and/or documentation
as may be reasonably requested by Lessor.

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

                  (g)  Lessor,  as a  condition  to giving  its  consent  to any
assignment or  subletting  shall receive 50% of the amount by which the sublease
rent exceeds the rent payable under this Lease, after Lessee recovers its actual
and reasonable costs of subleasing.

<PAGE>

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

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

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

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

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

                  (e)  Lessor  shall  deliver a copy of any notice of Default or
Breach by Lessee to the sublessee,  who shall have the right to cure the Default
of Lessee  within  the grace  period,  if any,  specified  in such  notice.  The
sublessee shall have a right of reimbursement and offset from and against Lessee
for any such Defaults cured by the sublessee.

<PAGE>

13.  Default; Breach; Remedies.

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

                  (a)      The abandonment of the Premises.

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

                  (c) Except as expressly  otherwise provided in this Lease, the
failure by Lessee to provide Lessor with  reasonable  written  evidence (in duly
executed  original  form,  if  applicable)  of (i)  compliance  with  Applicable
Requirements  per Paragraph 6.3, (ii) the  inspection,  maintenance  and service
contracts   required  under  Paragraph  7.1(b),   (iii)  the  rescission  of  an
unauthorized  assignment  or  subletting  per  Paragraph  12.1,  (iv) a  Tenancy
Statement per Paragraphs 16 or 37, (v) the subordination or non-subordination of
this Lease per  Paragraph 30, (vi) the guaranty of the  performance  of Lessee's
obligations under this Lease if required under Paragraphs 1.11 and 37, (vii) the
execution of any document  requested under  Paragraph 42 (easements),  or (viii)
any other  documentation or information  which Lessor may reasonably  require of
Lessee  under the terms of this lease,  where any such failure  continues  for a
period of ten (10) days  following  written  notice by or on behalf of Lessor to
Lessee.

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

                  (e) The  occurrence  of any of the following  events:  (i) the
making by Lessee of any general  arrangement  or  assignment  for the benefit of
creditors;  (ii) Lessee's becoming a "debtor" as defined in 11 U.S. Code Section

<PAGE>

101 or any successor  statute thereto  (unless,  in the case of a petition filed
against  Lessee,  the  same is  dismissed  with  sixty  (60)  days);  (iii)  the
appointment of a trustee or receiver to take possession of substantially  all of
Lessee's  assets  located at the  Premises of  Lessee's  interest in this Lease,
where  possession is not restored to Lessee within thirty (30) days; or (iv) the
attachment, execution or other judicial seizure of substantially all of Lessee's
assets located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged  within thirty (30) days;  provided,  however,  in the
event  that any  provision  of this  Subparagraph  13.1(e)  is  contrary  to any
applicable  law, such  provision  shall be of no force or effect,  and shall not
affect the validity of the remaining provisions.

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

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

     13.2  Remedies.  If  Lessee  fails  to  perform  any  affirmative  duty  or
obligation of Lessee under this Lease, within ten (10) days after written notice
to Lessee (or in case of an emergency, without notice), Lessor may at its option
(but without  obligation to do so),  perform such duty or obligation on Lessee's
behalf, including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental  licenses,  permits or approvals.  The costs
and  expenses  of any such  performance  by Lessor  shall be due and  payable by
Lessee to Lessor upon invoice  therefor,  if any check given to Lessor by Lessee
shall not be  honored  by the bank upon  which it is drawn,  Lessor,  at its own
option, may require all future payments to be made under this Lease by Lessee to
be made only by  cashier's  check.  In the  event of a Breach of this  Lease (as
defined in  Paragraph  13.1),  with or  without  further  notice or demand,  and
without  limiting Lessor in the exercise of any right or remedy which Lessor may
have by reason of such Breach, Lessor may:

                  (a) Terminate  Lessee's right to possession of the Premises by
any lawful means,  in which case this Lease and the term hereof shall  terminate
and Lessee shall immediately  surrender possession of the Premises to Lessor. In
such event Lessor shall be entitled to recover from Lessee: (i) the worth at the
time  of the  award  of  unpaid  rent  which  had  been  earned  at the  time of
termination;  (ii) the  worth at the time of award of the  amount  by which  the
unpaid  rent which would have been earned  after  termination  until the time of
award  exceeds the amount of such rental loss that the Lessee  proves could have
been reasonably  avoided;  (iii) the worth at the time of award of the amount by

<PAGE>

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

                  (b)  Continue the Lease and Lessee's  right to  possession  in
effect (in California under California Civil Code Section 1951.4) after Lessee's
Breach and recover the rent as it becomes due,  provided Lessee has the right to
sublet or assign,  subject  only to  reasonable  limitations.  Lessor and Lessee
agree  that the  limitations  on  assignment  and  subletting  in this Lease are
reasonable. Acts of maintenance or preservation,  efforts to relet the Premises,
or the  appointment  of a receiver to protect the Lessor's  interest  under this
Lease, shall not constitute a termination of the Lessee's right to possession.

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

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

     13.3 Inducement  Recapture in Event of Breach.  Any agreement by Lessor for
free or abated rent or other  charges  applicable  to the  Premises,  or for the
giving  or  paying  by  Lessor  to or for  Lessee  of any cash or  other  bonus,
inducement or consideration  for Lessee's entering into this Lease, all of which
concessions  are  hereinafter  referred to as "Inducement  Provisions"  shall be
deemed  conditioned  upon Lessee's full and faithful  performance  of all of the
terms,  covenants  and  conditions  of this Lease to be performed or observed by

<PAGE>

Lessee during the term hereof as the same may be extended.  Upon the  occurrence
of a Breach (as  defined in  Paragraph  13.1) of this Lease by Lessee,  any such
inducement  Provision shall  automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus,  inducement or
consideration  theretofore  abated,  given  or  paid  by  Lessor  under  such an
Inducement  Provision  shall be immediately due and payable by Lessee to Lessor,
and   recoverable  by  Lessor,   as  additional   rent  due  under  this  Lease,
notwithstanding  any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which  initiated  the operation of this
Paragraph  13.3 shall not be deemed a waiver by Lessor of the provisions of this
Paragraph 13.3 unless specifically so stated in writing by Lessor at the time of
such acceptance.

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

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

14.  Condemnation.  If the  Premises or any portion  thereof are taken under the
power of eminent  domain or sold under the threat of the  exercise of said power
(all of which are herein called  "condemnation"),  this Lease shall terminate as
to the part so taken as of the date  the  condemning  authority  takes  title or
possession,  whichever first occurs. If more than ten percent (10%) of the floor
area of the Premises,  or more than twenty-five  percent (25%) of the portion of
the Common Areas designed for Lessee's parking, is taken by condemnation, Lessee

<PAGE>

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

15.  Brokers' Fees.

     15.1  Procuring  Cause.  The Broker(s)  named in Paragraph  1.10 is/are the
procuring cause of this Lease.

     15.2  Representations and Warranties.  Lessee and Lessor each represent and
warrant to the other that it has had no dealings with any person,  firm,  broker
or finder  other  than as named in  Paragraph  1.10(a)  in  connection  with the
negotiation  of  this  Lease  and/or  the   consummation   of  the   transaction
contemplated  hereby,  and that no broker or other person,  firm or entity other
than said named  Broker(s)  is entitled  to any  commission  or finder's  fee in
connection  with said  transaction.  Lessee and Lessor do each  hereby  agree to
indemnify,  protect,  defend and hold  harmless  from and against  liability for
compensation or charges which may be claimed by any such unnamed broker,  finder
or other similar party by reason of any dealings or actions of the  indemnifying
Party, including any costs, expenses, and/or attorneys' fees reasonably incurred
with respect thereto.

16.  Tenancy and Financial Statements.

     16.1 Tenancy Statement. Each Party (as "Responding Party") shall within ten
(10) days after  written  notice from the other Party (the  "Requesting  Party")
execute,  acknowledge and deliver to the Requesting Party a statement in writing
in a form similar to the then most current "Tenancy Statement" form published by
the  American   Industrial  Real  Estate   Association,   plus  such  additional
information,  confirmation  and/or statements as may be reasonably  requested by
the Requesting Party.

<PAGE>

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

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

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

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

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

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

22. No Prior or other  Agreements;  Broker  Disclaimer.  This Lease contains all
agreements  between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each  represents and warrants to the Brokers that it has made,
and is relying solely upon,  its own  investigation  as to the nature,  quality,
character and financial  responsibility  of the other Party to this Lease and as
to  the  nature,  quality  and  character  of  the  Premises.  Brokers  have  no
responsibility  with  respect  thereto or with  respect to any default or breach
hereof by either Party. Each Broker shall be an intended third party beneficiary
of the provisions of this Paragraph 22.

<PAGE>

23.  Notices.

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

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

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

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

<PAGE>

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

26.  No Right To  Holdover.  Lessee  has no right to  retain  possession  of the
Premises or any part thereof  beyond the  expiration or earlier  termination  of
this Lease.  In the event that Lessee holds over in violation of this  Paragraph
26 then the Base  Rent  payable  from and after  the time of the  expiration  or
earlier  termination  of this Lease  shall be  increased  to one  hundred  fifty
percent  (150%)  of the  Base  Rent  applicable  during  the  month  immediately
preceding such expiration or earlier termination. Nothing contained herein shall
be construed as a consent by Lessor to any holding over by Lessee.

27. Cumulative Remedies.  No remedy or election hereunder shall be deemed 
exclusive but shall, wherever possible, be cumulative with all other remedies
at law or in equity.

28. Covenants and Conditions.  All provisions of this Lease to be observed or 
performed by Lessee are both covenants and conditions.

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

30. Subordination; Attornment; Non-Disturbance.  Lessor will use best effort to
obtain a non-disturbance agreement from any existing holder of a security 
device.

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

     30.2  Attornment.  Subject to the  non-disturbance  provisions of Paragraph
30.3,  Lessee  agrees to attorn  to a Lender  or any  other  party who  acquires
ownership of the Premises by reason of a foreclosure of a Security  Device,  and
that in the event of such  foreclosure,  such new owner shall not: (i) be liable

<PAGE>

for any act or omission of any prior lessor or with respect to events  occurring
prior to  acquisition  of ownership,  (ii) be subject to any offsets or defenses
which  Lessee  might  have  against  any  prior  lessor,  or  (iii)  be bound by
prepayment of more than one month's rent.

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

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

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

32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall
have the right to enter the Premises at any time,  in the case of an  emergency,
and  otherwise  at  reasonable  times for the  purpose  of  showing  the same to
prospective  purchasers,  lenders,  or  lessees,  and making  such  alterations,
repairs, improvements or additions to the Premises or to the Building, as Lessor
may  reasonably  deem  necessary.  Lessor  may at any time place on or about the
Premises or Building  any  ordinary  "For Sale" signs and Lessor may at any time
during the last one hundred  eighty  (180) days of the term  hereof  place on or
about the Premises any ordinary "For Lease" signs. All such activities of Lessor
shall be without abatement of rent or liability to Lessee.
Lessee to be given 24 hour notice except in case of emergency.

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

<PAGE>

34. Signs.  Lessee shall not place any sign upon the exterior of the Premises or
the  Building,  except that Lessee may, with  Lessor's  prior  written  consent,
install (but not on the roof) such signs as are reasonably required to advertise
Lessee's  own  business  so long as such signs are in a location  designated  by
Lessor  and  comply  with  Applicable  Requirements  and  the  signage  criteria
established for the Industrial Center by Lessor. The installation of any sign on
the Premises by or for Lessee shall be subject to the  provisions of Paragraph 7
(Maintenance,  Repairs, Utility Installations,  Trade Fixtures and Alterations).
Unless otherwise expressly agreed herein,  Lessor reserves all rights to the use
of the roof of the Building,  and the right to install  advertising signs on the
Building,  including  the roof,  which do not  unreasonably  interfere  with the
conduct of Lessee's business; Lessor shall be entitled to all revenues from such
advertising signs.

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

36.  Consents.

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

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


<PAGE>

37.  Guarantor.

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

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

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

39.   Options.

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

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

<PAGE>

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

     39.4 Effective of Default on Options.

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

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

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

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

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

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

<PAGE>

43.  Performance  Under Protest.  If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment  "under  protest"  and such payment  shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to  institute  suit for recovery of such sum. If it shall be adjudged
that there was no legal  obligation on the part of said Party to pay such sum or
any part  thereof,  said Party  shall be  entitled  to  recover  such or so much
thereof  as it was not  legally  required  to pay under the  provisions  of this
Lease.

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

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

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

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

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

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

<PAGE>

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

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

Executed at:  San Jose, CA                 Executed at:  Plymouth, MN

on: June 11, 1997                          on:  June 10, 1997


By LESSOR:                                 By LESSEE:


CHABOYA RANCH, a California Partnership    ZOMAX OPTICAL MEDIA, INC.



By:                                        By:

Name Printed:                              Name Printed:

Title:                                     Title:

By:                                        By:

Name Printed:                              Name Printed:

Title:                                     Title:

<PAGE>

Address:   2150 Monterey Road          Address:   5353 Nathan Lane
           San Jose, CA  95112                    Minneapolis, Minnesota  55422

Telephone (408) 292-0791                          Telephone: (612) 553-9300

Facsimile: (    )                                 Facsimile: (612) 557-7772


BROKER:  COLLIERS PARRISH                         BROKER:  SARATOGA INVESTMENTS
                    INTERNATIONAL, INC.

Executed at:                                      Executed at:

on:                                               on:

By:                                               By:

Name Printed:                                     Name Printed:

Title:                                            Title:

Address:   1960 The Alameda, Suite 100        Address:  4125 Blackford Avenue 
           San Jose, CA  95126                          Suite 250
                                                        San Jose, CA  95117

Telephone (408) 554-8181                         Telephone: (408) 249-8100 x315
                
Facsimile: (408) 247-2317                        Facsimile: (612)
                

NOTE:  These forms are often modified to meet changing requirements of law and
       needs of the industry.  Always write or call to make sure you are 
       utilizing the most current form:  AMERICAN INDUSTRIAL REAL ESTATE
       ASSOCIATION, 700 South Flower Street, Suite 600, Los Angeles, CA 90017.
      (213) 687-8777.

<PAGE>

                 ADDENDUM "A" TO STANDARD INDUSTRIAL/COMMERCIAL

                            MULTI-TENANT LEASE-GROSS
      DATEDJUNE 5,  1997 FOR  PROPERTY  LOCATED  AT 2070  SOUTH  7TH  STREET  #D
           BETWEEN CHABOYA RANCH, A CALIFORNIA  PARTNERSHIP ("LESSOR") AND ZOMAX
           OPTICAL MEDIA, INC., A MINNESOTA CORPORATION, AS ("LESSEE").


49.      Monthly base rent for the sixty one (61) month term of this lease 
         shall be as follows:

                  Month's 01                         No Rent
                  Month's 02 - 12                    $27,550.00
                  Month's 13 - 24                    $28,377.00
                  Month's 25 - 36                    $29,228.00
                  Month's 37 - 48                    $30,105.00
                  Month's 49 - 61                    $31,008.00

50.      Prior to execution of this Lease, Lessee shall procure all governmental
         permits to operate for its intended use. Upon Lessee's execution of the
         Lease,  it shall be  conclusively  presumed  that Lessee has  satisfied
         itself concerning this matter.

51.      Any partial month's occupancy shall be prorated in the third month of 
         the lease.

52.      Lessor,  at Lessor's cost and in compliance with applicable laws, codes
         and  ordinances,  shall  provide  the  following  improvements  to  the
         Premises shown on the attached Exhibit B:

         a.       Four (4) interior  loading  docks,  +/- 80' in overall  length
                  with  standard  load  revelers.  Docks to be  similar to those
                  installed  for  Trotter  Technologies  at the north end of the
                  property  however the roof  support  will need to remain m the
                  center  of the  dock.  Lessor  will  use its best  efforts  to
                  complete the docks in a timely manner.  Docks to be located as
                  per attached Exhibit B.
         b.       Upgrade  warehouse  lights in  Sections A and C to match  
                  standard in  warehouse  adjacent to the Premises to the north.
         c.       Install  ordinary  hazard  fire  sprinklers in Section A and
                  in Section C if  required  by fire marshal.
         d.       Seal upper window openings currently open in Section A.

Lessor shall complete (b) and (d) above by approximately June 30, 1997. Item (a)
shall be completed by  approximately  July 31, 1997 and item c) by approximately
August 15, 1997.

Except as provided herein, other than the above improvements,  the Premises will
be deliver in its  current  "as is"  condition.  Item 2.2 of the lease shall not
apply to Section C and D. These sections will be delivered "as is". Lessee shall
not be obligated to bring Sections C and D into compliance with any laws, codes,
or ordinances unless Lessee remodels such space. Lessor discloses that Section C
is a covered  parking  area that will  house  the  loading  docks.  This area is
subject to water entering the building during rain storms.

<PAGE>

53.      Lessee  shall  pay for all of its  trash/debris  removal.  The  outside
         placement of any trash bins shall be subject to the approval of Lessor.
         Except for vehicle parking  provided under item 2.6., there shall be no
         outside  storage  allowed in the front of the  premises  or the subject
         property. All storage shall be inside the Premises.

54.      Lessee's  share of the Common Area as specified  in paragraph  1.6.a. 
         above is an  approximation.  Lessor reserves the right to modify  
         Lessee's  share based on the actual square  footage of the Premises.  
         Lessee has the right to confirm the size of the Premises as it relates
         to Lessee's  share of the  pro-rata  share of the subject property.

55.      Lessee  shall be allowed  unreserved  parking  along the front of the 
         Premises  facing  South 7th Street.  Lessee may,  at Lessee's  cost,  
         install  signs and other  identification  to  designate  that the 
         parking spaces  identified on Exhibit A are for the exclusive use of 
         Lessee.  Lessor shall not be  responsible  to enforce  any  parking  
         designations.  Lessee  shall be allowed to park trucks in front of 
         section C and in the yard area  portion of the  Premises  adjacent to
         section C. The  Premises  shall  include  the yard/parking  area south
         of the  Premises as shown on Exhibit A. The  balance of the yard is for
         the  exclusive use of the future  tenant in the wooden  building at the
         south end of the  property.  Lessor  reserves the right to separate 
         these yards with a fence at a later date.

56.      Lessor and Lessor agree and  understand  that  currently the utilities
         to the Premises are not  separately metered.  Lessor shall, at Lessor's
         cost,  within ninety (90) days of lease  commencement  install a house
         meter or individual  electrical  meter for  electrical  usage by the
         Premises.  If Lessor fails to do so, Lessor shall be entitled to charge
         Lessee for only those prior  electrical  costs  incurred in the ninety
         (90) day period prior to such metering.  Lessor shall have the option 
         to send the entire  electrical  bill for the property to Zomax,  less
         the sub metered amount to be paid by third party tenants not associated
         with Unit A (Trotter  Technologies) and Unit E, the Premises or the 
         successors in interest.  Lessee shall not receive a bill until after 
         said meter is operating to measure Lessee's usage.

57.      The  actual  date of  Lease  commencement  shall  be  upon  substantial
         completion  by  Lessor  of  items a, b, c and d of  Paragraph  52 above
         estimated to be August 15, 1997.  Rent shall commence  thirty (30) days
         thereafter.  The term of the lease shall  expire  sixty one (61) months
         after  commencement.  . Lessee  shall be allowed to occupy the Premises
         July 1, 1997, not to interfere with Lessor's  improvements  and subject
         to all other terms and  conditions of the lease except rent. The actual
         lease  expiration  date of this lease shall be identical to that of the
         Trotter  technologies Lease dated May 3, 1996 for space located at 2070
         So. 7th Street, #A, San Jose.

<PAGE>

58.      Option To Extend:

Provided  that Lessee is not in default in the  performance  in any of the terms
and conditions set forth herein,  Lessee shall have one (1) five (5) year option
to extend the term of this Lease  ("Option").  Lessee shall provide no less than
one hundred  eighty (180) days written  notice  prior to the  expiration  of the
original Lease Term of its intention to extend the term of the Lease.  If Lessor
does not receive from Lessee written notice of Lessee's  exercise of the Options
within the time stipulated,  all rights under these Options shall  automatically
terminate. Time is of the essence herein.

The monthly rent for the Option Period shall be at one hundred percent (100%) of
the then  prevailing  market  rent  for the  highest  and best use for  premises
similar to the Premises  (the "Fair  Market  Rental  Value") with market  rental
escalations.  The monthly Base Rent for the Option Period shall be determined as
follows:

         a. The  parties  shall have ten (10) days  after  Lessor  receives  the
Option  Notice  within  which to agree on the  monthly  Base Rent for the Option
Period.  If the  parties  agree on the monthly  Base Rent for the Option  Period
within  ten (10) days  after  Lessor  receives  the  Option  Notice,  they shall
immediately execute an amendment to this Lease stating the monthly Base Rent for
the Option Period.

         b. If the parties are unable to agree on the monthly  Base Rent for the
Option Period within ten (10) days after Lessor receives the Option Notice,  the
then current fair market  rental value of the Premises  shall be  determined  in
accordance with Paragraph c below:

         c. The "Fair Market Rental  Value" of the Premises  shall be defined to
mean the fair market rental value of the Premises as of the  commencement of the
Option Period, taking into consideration all relevant factors,  including length
of term,  the uses  permitted  under the Lease,  the quality,  size,  design and
location of the Premises, and the monthly base rent paid by Lessees for premises
comparable to the Premises located in the same general area as the Premises, and
concessions  being granted to such Lessees.  Consideration  will not be given to
improvements within the Premises made at Lessee's sole expense.

         d. Within five (5) days after the expiration of the ten (10) day period
set forth in Paragraph a, each party,  at its sole cost and by giving  notice to
the other party,  shall appoint a real estate  appraiser  with at least five (5)
years'  full-time  commercial  appraisal  experience  in the area in  which  the
Premises  are located to appraise  and set the then fair market  rental value of
the  Premises  for the Option  Period.  If a party does not appoint an appraiser
within this five (5) day time period,  the single  appraiser  appointed shall be
the sole  appraiser  and  shall  set the then fair  market  rental  value of the
Premises.  If the two  appraisers arc appointed by the parties as stated in this
Paragraph  d, they shall meet  promptly  and attempt to set the then fair market
rental value of the  Premises.  If they are unable to agree within  fifteen (15)

<PAGE>

days after the second appraiser has been appointed,  they shall attempt to elect
a third appraiser meeting the  qualifications  stated in this Paragraph d within
five (5) days  after the last day the two  appraisers  are given to set the then
fair market  rental  value of the  Premises.  If they are unable to agree on the
third  appraiser,  either of the parties to this Lease,  by giving  five(5) days
notice to the other  party can apply to the then  president  of the real  estate
board for the city in which the Premises are located,  or the Presiding Judge of
the Santa Clara County  Superior  Court,  for the selection of a third appraiser
who meets the  qualifications  stated in this  Paragraph  d. Each of the parties
shall bear one-half (1/2) of the cost of appointing  the third  appraiser and of
paying the third  appraiser's fee. The third appraiser however selected shall be
a person who has not previously acted in any capacity for either party.

Within  twenty (20) days after the  election of the third  appraiser,  the three
appraisals shall be added together and their total divided by three (3); subject
to the next  sentence,  the  resulting  quotient  shall be the then fair  market
rental  value of the  Premises.  If,  however,  the low  appraisal  and/or  high
appraisal are/is more than ten percent (10%) lower and/or higher than the middle
appraisal,  the low appraisal  and/or high  appraisal  shall be  disregarded  as
stated in this Paragraph d, the middle  appraisal  shall be the then fair market
rental  value of the  Premises.  After the then fair market  rental value of the
Premises has been set, the appraisers  shall  immediately  notify the parties of
such value and the monthly  Base Rent for the Option  Period shall be the amount
which is one  hundred  percent  (100%) of the fair  market  rental  value of the
Premises so set. In no event, however, shall the new monthly rental rate be less
than the monthly rent applicable to the Premises prior to the particular  Rental
Adjustment date.

         e.  Notwithstanding  anything to the contrary  contained in this Lease,
this  Option is  personal  to Lessee  and may not be  assigned,  voluntarily  or
involuntarily, separate from or as a part of the Lease without consent of Lessor
which consent shall not be unreasonably withheld.

         f.  Notwithstanding  the exercise by Lessee of an Option,  in the event
that  Lessee is in  default  or breach of the Lease at any time from the date of
the  Option  Notice  through  the date on which  the  Option  Period  commences,
provided  that Lessee has been given notice of such default and such default has
remained uncured for ten (10) days, then, at Lessor's election, and upon written
notice by Lessor to  Lessee,  Lessee's  exercise  of an Option  may be voided by
Lessor and Lessee shall  thereafter have no rights  hereunder to extend the term
through the Option Period.

59.  Lessee  shall  not use in any way the top  level of the  exterior  concrete
mezzanine  at the rear of the  Premises  shown on  Exhibit  A  without  Lessor's
consent which shall not be unreasonably withheld, delayed or conditioned.

60.      Common Area Operating Expenses:

Common  Area  Expenses  shall  exclude  Lessor's  executive  salaries,   capital
expenditures  or  depreciation  or  amortization  thereof,  costs resulting from
defective  design or construction  of the building or Premises,  amounts paid to
the affiliates of Lessor at rates in excess of fair market value, cost resulting
from the  negligence of Lessor or its agents and employees,  costs  incurring in
connection  with  entering  in new leases or  disputes  under  existing  leases,
special  assessments related to initial  construction of the building,  costs of
removal or abatement of Hazardous Substances or asbestos other than those placed
or released by Lessee, cost recovered through insurance or other reimbursements,
costs of travel, entertainment,  promotions,  disproportionate use of the Common
Areas by other tenants and accounting fees and attorney's fees unless related to
actions of Lessee.

<PAGE>

Lessee's  Common Area  Operating  Expense  shall not  increase by more than ten
percent  (10%) over the cost of the previous year.

Lessee shall provide and pay for all of Lessee's trash disposal.

Base Real Property  Taxes equal  $27,629.96  and the Base  Insurance  Premium is
$13,422.00.

61. Except for Lessee's gross  negligence  and/or breach of express  warranties,
Lessor shall  indemnify,  protect defend and hold harmless the Premises,  Lessee
and its agents  from and  against any and all  claims,  damages,  costs,  liens,
judgments arising out of Lessor's breach of the Lease, Lessor's gross negligence
or any occurrence in the Building not caused or created by Lessee.

62.  Notwithstanding  the forgoing,  in the event that any  causality  cannot be
repaired within 180 days, the Lessee shall have the right to terminate the lease
on thirty (30) days notice to Lessor. The effective date of termination shall be
the date of the casualty.

63. First Right to Negotiate:  Provided  Lessee is not in default,  Lessee shall
have the first  right to  negotiate  for the lease of the  adjacent  30,000  and
54,000 square foot spaces adjacent to the Premises as indicated on Exhibit A. In
the event that Lessor intends to offer the property for lease, other than to the
existing tenant of the spaces,  Lessor will advise Lessee or the price and terms
of the intended lease.  Lessor shall be required to offer the available space to
Lessee at the same rental  rate as it will to the  general  public at that time.
Lessee  will  have  ten  (10)  days in which  to  negotiate  for a lease.  If no
agreement is reached during this time, the First Right to Negotiate will expire.

64. Concerning  item  2.3,  Lessor shall rectify such  non-compliance  issues  
within  sixty  (60)  days of notification by Lessee.

65.  Concerning  item 6.2,  Lessor  shall not  unreasonably  withhold,  delay or
condition  it's  consent to a Hazardous  Material by Lessee that  constitutes  a
"Reportable  use".  Lessor  shall  respond  within  two  (2)  business  days  of
notification by Lessee.

66.  Concerning item 7.3 (b), Lessor shall not unreasonably  withhold,  delay or
condition  it's consent to an  alteration.  Lessor shall respond  within two (2)
business days of notification by Lessee.

67.  Concerning  item 34,  Lessor  shall  not  unreasonably  withhold,  delay or
condition  it's consent.  Lessor shall  respond  within two (2) business days of
notification by Lessee.

<PAGE>



AGREED & ACCEPTED:


LESSOR:  CHABOYA RANCH                       LESSEE:  ZOMAX OPTICAL MEDIA, INC.
         A CALIFORNIA PARTNERSHIP                     A MINNESOTA CORPORATION


By:                                          By:


By:                                          Title:


By:                                          Date:  June 10, 1997


Date:  June 11, 1997