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


1.       Basic Provisions ("Basic Provisions").

         1.1 Parties:  This Lease ("Lease"),  dated for reference  purposes only
January 5, 2004,  is made by and between  James N.  Ditmer,  d.b.a.  as Cordelia
Edison  Partners  ("Lessor")  and North Bay Bancorp,  a  California  corporation
("Lessee"), (collectively the "Parties", or individually a "Party").

         1.2(a)  Premises:  That  certain  portion of the  Project  (as  defined
below), including all improvements therein or to be provided by Lessor under the
terms of this Lease,  commonly  known by the street address of 499 Edison Court,
Suite  A-1  located  in the  City of  Fairfield,  County  of  Solano.  State  of
California,  with zip code  94533,  as  outlined  on Exhibit A  attached  hereto
("Premises")  and  generally  described as  (describe  briefly the nature of the
Premises):  an  approximately  +3,460 square foot  warehouse  unit improved with
plus/minus  520 square feet of office  space  within a larger  concrete  tilt-up
building.

In  addition to Lessee's  rights to use and occupy the  Premises as  hereinafter
specified, Lessee shall have non-exclusive rights to any utility raceways of the
building  containing  the  Premises  ("  Building")and  to the Common  Areas (as
defined in Paragraph  2.7 below),  but shall not have any rights to the roof, or
exterior  walls of the Building or to any other  buildings  in the Project.  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 "Project" (See also Paragraph 2)

         1.2(b) Parking:  Three (3) unreserved  vehicle parking spaces;  and -0-
reserved vehicle parking spaces (Reserved Parking Spaces").  (See also Paragraph
2.6)

         1.3 Term: 3 years and 1 months ("Original Term") commencing Upon mutual
lease execution and delivery on or about January 19, 2004 ("Commencement  Date")
and  ending  on or about  February  18,  2007  ("Expiration  Date").  (See  also
Paragraph 3)

         1.4 Early  Possession:  January  19,  2004-February  18,  2004  ("Early
Possession Date"). (See also Paragraphs 3.2 and 3.3)

         1.5 Base Rent: $1,900.00 per month ("Base Rent"),  payable on the first
day of each month commencing February 19, 2004. (See also Paragraph 4)

[X] If this box is checked, there are provisions in this Lease for the Base Rent
to be adjusted.

         1.6 Lessee's Share of Common Area Operating Expenses : Eleven percent (
11%) ("Lessee's Share").

         1.7 Base Rent and Other Monies Paid Upon Execution :

                  (a) Base Rent:  $1,900.00  for the period  February  19,2004 -
March 18, 2004

                  (b)  Common  Area  Operating  Expenses  : $  See  Addendum  I,
Paragraph #51 & 52.

                  (c) Security Deposit:  $2,000.00  ("Security  Deposit").  (See
also Paragraph 5)

                  (d) ***deleted***

                  (e) Total Due Upon Execution of this Lease : $ 3,900.000.

         1.8 Agreed Use:  storage of files,  furniture and other related  office
items. (See also Paragraph 6)

         1.9 Insuring Party. Lessor is the "Insuring Party". (See also Paragraph
8)

         1.10 Real Estate Brokers : (See also Paragraph 15)

                  (a)  Representation:  The following  real estate  brokers (the
"Brokers")  and  brokerage   relationships  exist  in  this  transaction  (check
applicable boxes):

[ ]________________________ represents Lessor exclusively ( "Lessor's Broker" );

[ ]______________________ represents Lessee exclusively ("Lessee's Broker" ); or

[X] Colliers  International,  a California general  partnership  represents both
Lessor and Lessee ( "Dual Agency").

                  (b) Payment to Brokers:  Upon  execution  and delivery of this
Lease by both Parties,  Lessor shall pay to the Brokers the brokerage fee agreed
to in a separate written agreement (or if there is no such agreement, the sum of
____ or 5 % of the total Base Rent for the  brokerage  services  rendered by the
Brokers).

         1.11 ***deleted***

         1.12  Attachments.  Attached  hereto  are the  following,  all of which
constitute a part of this Lease: an Addendum consisting of Paragraphs 50 through
57; and Exhibits A through ***deleted***, all of which constitute a part of this
Lease.

2.       Premises.

         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 size set forth in this Lease, or that may have
been used in calculating  Rent, is an  approximation  which the Parties agree is
reasonable and any payments based thereon are not subject to revision whether or
not the  actual  size is more or less.  NOTE:  Lessee is  advised  to verify the
actual size prior to executing this Lease.

         2.2  Condition.  Lessor  shall  deliver  that  portion of the  Premises
contained within the Building (" Unit") to Lessee broom clean and free of debris
on the Commencement Date or the Early Possession Date, whichever first occurs ("
Start  Date"),  and, so long as the  required  service  contracts  described  in
Paragraph  7.1(b) below are obtained by Lessee and in effect  within thirty days
following the Start Date, warrants that the existing electrical,  plumbing, fire
sprinkler,  lighting,  heating,  ventilating  and air  conditioning  systems  ("
HVAC"),  loading doors,  sump pumps,  if any, and all other such elements in the
Unit,  other  than  those  constructed  by  Lessee,  shall be in good  operating
condition on said date, that the structural  elements of the roof, bearing walls
and

EXHIBIT 10.11
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foundation of the Unit shall be free of material  defects.  If a  non-compliance
with such  warranty  exists as of the Start Date,  or if one of such  systems or
elements  should  malfunction or fail within the  appropriate  warranty  period,
Lessor shall, as Lessor's sole obligation with respect to such matter, 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,  malfunction or failure,  rectify same at Lessor's expense.  The
warranty  periods shall be as follows:  (i) one (1) year as to the HVAC systems,
and (ii) 90 days as to the remaining  systems and other elements of the Unit. If
Lessee does not give Lessor the required notice within the appropriate  warranty
period,  correction of any such non-compliance,  malfunction or failure shall be
the  obligation  of Lessee at  Lessee's  sole cost and  expense  (except for the
repairs to the fire sprinkler systems, roof, foundations, and/or bearing walls -
see Paragraph 7).

         2.3  Compliance.  Lessor warrants that to the best of its knowledge the
improvements on the Premises and the Common Areas comply with the building codes
that were in effect at the time that each such improvement,  or portion thereof,
was constructed, and also with all applicable laws, covenants or restrictions of
record,  regulations,  and  ordinances in effect on the Start Date ( "Applicable
Requirements"  ). Said  warranty  does not apply to the use to which Lessee will
put the  Premises,  modifications  which may be required by the  Americans  with
Disabilities  Act or any similar laws as a result of Lessee's use (see Paragraph
49), or to any  Alterations  or Utility  Installations  (as defined in Paragraph
7.3(a))  made  or  to be  made  by  Lessee.  NOTE:  Lessee  is  responsible  for
determining  whether or not the  Applicable  Requirements,  and  especially  the
zoning are appropriate  for Lessee's  intended use, and  acknowledges  that past
uses of the  Premises  may no longer be allowed.  If the  Premises do not comply
with said warranty,  Lessor shall, except as otherwise provided,  promptly after
receipt of written notice from Lessee setting forth with  specificity the nature
and extent of such  non-compliance,  rectify  the same at Lessor's  expense.  If
Lessee  does not give  Lessor  written  notice  of a  non-compliance  with  this
warranty  within  6  months  following  the  Start  Date,   correction  of  that
non-compliance  shall be the  obligation  of  Lessee at  Lessee's  sole cost and
expense.  If the Applicable  Requirements are hereafter changed so as to require
during  the  term  of  this  Lease  the  construction  of an  addition  to or an
alteration  of the  Unit,  Premises  and/or  Building,  the  remediation  of any
Hazardous Substance,  or the reinforcement or other physical modification of the
Unit,  Premises  and/or  Building ( "Capital  Expenditure"  ), Lessor and Lessee
shall allocate the cost of such work as follows:

                  (a)  Subject  to  Paragraph  2.3(c)  below,  if  such  Capital
Expenditures  are  required  as a result of the  specific  and unique use of the
Premises by Lessee as compared with uses by tenants in general,  Lessee shall be
fully responsible for the cost thereof, provided,  however, that if such Capital
Expenditure  is  required  during  the last 2 years of this  Lease  and the cost
thereof  exceeds 6 months' Base Rent,  Lessee may instead  terminate  this Lease
unless  Lessor  notifies  Lessee,  in writing,  within 10 days after  receipt of
Lessee's  termination  notice  that  Lessor has  elected  to pay the  difference
between the actual cost thereof and the amount equal to 6 months' Base Rent.  If
Lessee  elects  termination,  Lessee  shall  immediately  cease  the  use of the
Premises which requires such Capital  Expenditure  and deliver to Lessor written
notice  specifying  a  termination  date  at  least  90  days  thereafter.  Such
termination date shall,  however,  in no event be earlier than the last day that
Lessee  could  legally  utilize the  Premises  without  commencing  such Capital
Expenditure.

                  (b) If  such  Capital  Expenditure  is not the  result  of the
specific  and  unique use of the  Premises  by Lessee  (such as,  governmentally
mandated  seismic  modifications),  then Lessor and Lessee  shall  allocate  the
obligation to pay for the portion of such costs  reasonably  attributable to the
Premises pursuant to the formula set out in Paragraph 7.1(d); provided, however,
that if such  Capital  Expenditure  is required  during the last 2 years of this
Lease or if Lessor reasonably determines that it is not economically feasible to
pay its share thereof, Lessor shall have the option to terminate this Lease upon
90 days  prior  written  notice to Lessee  unless  Lessee  notifies  Lessor,  in
writing, within 10 days after receipt of Lessor's termination notice that Lessee
will pay for such Capital  Expenditure.  If Lessor does not elect to  terminate,
and  fails to tender  its  share of any such  Capital  Expenditure,  Lessee  may
advance  such funds and deduct same,  with  Interest,  from Rent until  Lessor's
share of such  costs  have been  fully  paid.  If  Lessee  is unable to  finance
Lessor's  share, or if the balance of the Rent due and payable for the remainder
of this Lease is not  sufficient to fully  reimburse  Lessee on an offset basis,
Lessee shall have the right to terminate  this Lease upon 30 days written notice
to Lessor.

                  (c)  Notwithstanding  the  above,  the  provisions  concerning
Capital  Expenditures are intended to apply only to  non-voluntary,  unexpected,
and  new  Applicable  Requirements.  If the  Capital  Expenditures  are  instead
triggered by Lessee as a result of an actual or proposed  change in use,  change
in intensity of use, or  modification  to the Premises  then, and in that event,
Lessee shall either:  (i) immediately cease such changed use or intensity of use
and/or take such other steps as may be necessary to  eliminate  the  requirement
for such Capital  Expenditure,  or (ii) complete such Capital Expenditure at its
own expense. Lessee shall not have any right to terminate this Lease.

         2.4 Acknowledgements. Lessee acknowledges that: (a) it has been advised
by Lessor and/or  Brokers to satisfy itself with respect to the condition of the
Premises  (including but not limited to the electrical,  HVAC and fire sprinkler
systems,  security,   environmental  aspects,  and  compliance  with  Applicable
Requirements and the Americans with Disabilities Act), and their suitability for
Lessee's  intended  use,  (b)  Lessee  has made such  investigation  as it deems
necessary with reference to such matters and assumes all responsibility therefor
as the same relate to its  occupancy of the  Premises,  and (c) neither  Lessor,
Lessor's agents,  nor Brokers have made any oral or written  representations  or
warranties  with respect to said matters  other than as set forth in this Lease.
In addition, Lessor acknowledges that: (i) Brokers have made no representations,
promises  or  warranties  concerning  Lessee's  ability  to honor  the  Lease or
suitability to occupy the Premises,  and (ii) it is Lessor's sole responsibility
to  investigate  the financial  capability  and/or  suitability  of all proposed
tenants.

         2.5 Lessee as Prior  Owner/Occupant.   The warranties made by Lessor in
Paragraph  2 shall be of no force or  effect if  immediately  prior to the Start
Date  Lessee was the owner or occupant of the  Premises.  In such event,  Lessee
shall be responsible for any necessary corrective work.

         2.6  Vehicle  Parking. Lessee   shall be  entitled to use the number of
Parking  Spaces  specified in Paragraph  1.2(b) on those  portions of the Common
Areas  designated from time to time by Lessor for parking.  Lessee shall not use
more  parking  spaces than said number.  Said  parking  spaces shall be used for
parking by vehicles no larger than  full-size  passenger  automobiles or pick-up
trucks, herein called "Permitted Size Vehicles." Lessor may regulate the loading
and  unloading  of  vehicles by adopting  Rules and  Regulations  as provided in
Paragraph  2.9. No vehicles  other than Permitted Size Vehicles may be parked in
the Common Area without the prior written permission of Lessor. In addition:

                  (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)  Lessee  shall not  service or store any  vehicles  in the
Common Areas.

                  (c)  If  Lessee  permits  or  allows  any  of  the  prohibited
activities  described  in this  Paragraph2.6,  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.

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

         2.8 Common Areas - Lessee's  Rights.  Lessor 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 Project. 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.

         2.9  Common  Areas - Rules  and  Regulations.    Lessor  or such  other
person(s) as Lessor may appoint shall have the exclusive  control and management
of the Common Areas and shall have the right,  from time to time,  to establish,
modify,   amend  and  enforce  reasonable  rules  and  regulations  ("Rules  and
Regulations" ) 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 Project  and their  invitees.  Lessee  agrees to abide by and conform to all
such  Rules  and  Regulations,  and  shall  use its best  efforts  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 tenants of the Project.

         2.10 Common Areas - Changes.  Lessor shall have the right,  in Lessor's
sole discretion, from time to time:

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

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

                  (c) To  designate  other land  outside the  boundaries  of the
Project 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 Project, 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 Project 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 Lessee  totally or  partially  occupies  the
Premises prior to the  Commencement  Date, the obligation to pay Base Rent shall
be abated for the period of such early possession. All other terms of this Lease
(including  but not limited to the  obligations  to pay Lessee's Share of Common
Area  Operating  Expenses,  Real Property  Taxes and  insurance  premiums and to
maintain the  Premises)  shall be in effect  during such period.  Any such early
possession shall not affect the Expiration Date.


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         3.3 Delay In  Possession.  Lessor  agrees to use its best  commercially
reasonable  efforts  to  deliver  possession  of the  Premises  to Lessee by the
Commencement  Date.  If,  despite  said  efforts,  Lessor is  unable to  deliver
possession as agreed, Lessor shall not be subject to any liability therefor, nor
shall such failure  affect the  validity of this Lease or change the  Expiration
Date. Lessee shall not,  however,  be obligated to pay Rent or perform its other
obligations  until Lessor delivers  possession of the Premises and any period of
rent abatement that Lessee would  otherwise have enjoyed shall run from the date
of the  delivery of  possession  and  continue for a period equal to what Lessee
would otherwise have enjoyed,  but minus any days of delay caused by the acts or
omissions of Lessee.  If possession  is not  delivered  within 60 days after the
Commencement  Date,  Lessee may, at its option,  by notice in writing  within 10
days after the end of such 60 day period,  cancel this Lease, in which event the
Parties  shall be discharged  from all  obligations  hereunder.  If such written
notice is not received by Lessor  within said 10 day period,  Lessee's  right to
cancel shall  terminate.  Except as otherwise  provided,  if  possession  is not
tendered to Lessee by the Start Date and Lessee does not  terminate  this Lease,
as aforesaid,  any period of rent  abatement  that Lessee would  otherwise  have
enjoyed  shall run from the date of delivery of  possession  and  continue for a
period equal to what Lessee would otherwise have enjoyed under the terms hereof,
but  minus any days of delay  caused  by the acts or  omissions  of  Lessee.  If
possession  of  the  Premises  is  not  delivered  within  4  months  after  the
Commencement  Date,  this Lease shall  terminate  unless  other  agreements  are
reached between Lessor and Lessee, in writing.

         3.4  Lessee  Compliance.    Lessor  shall  not be  required  to  tender
possession of the Premises to Lessee until Lessee  complies with its  obligation
to provide  evidence of  insurance  (Paragraph  8.5).  Pending  delivery of such
evidence,  Lessee shall be required to perform all of its obligations under this
Lease  from  and  after  the  Start  Date,   including   the  payment  of  Rent,
notwithstanding Lessor's election to withhold possession pending receipt of such
evidence  of  insurance.  Further,  if Lessee is  required  to perform any other
conditions  prior to or  concurrent  with the Start  Date,  the Start Date shall
occur but Lessor may elect to  withhold  possession  until such  conditions  are
satisfied.

4.       Rent.

         4.1. Rent Defined.  All monetary  obligations of Lessee to Lessor under
the terms of this Lease (except for the Security  Deposit) are deemed to be rent
( "Rent").

         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) of all Common Area  Operating  Expenses that exceed the amount of
Common Area  Operating  Expenses for the base year (2004) only,  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 Project, including, but not limited to, the following:

                           (i) The operation,  repair and maintenance,  in neat,
clean, good order and condition, but not the replacement (see subparagraph (e)),
of the following:

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

                                   (bb)   Exterior    signs   and   any   tenant
directories.

                                   (cc) Any fire sprinkler systems.

                           (ii)  The  cost  of  water,   gas,   electricity  and
telephone to service the Common Areas and any utilities not separately metered.

                           (iii) Trash disposal, pest control services, property
management,  security services,  owner's  association dues and fees, the cost to
repaint  the  exterior  of any  structures  and the  cost  of any  environmental
inspections.

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

                           (v) Any increase  above the Base Real Property  Taxes
(as defined in Paragraph 10).

                           (vi) Any  "Insurance  Cost  Increase"  (as defined in
Paragraph 8).

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

                           viii)  The  cost of any  Capital  Expenditure  to the
Building or the  Project  not covered  under the  provisions  of  Paragraph  2.3
provided;  however,  that Lessor  shall  allocate  the cost of any such  Capital
Expenditure  over a 12 year period and Lessee  shall not be required to pay more
than Lessee's  Share of 1/144th of the cost of such Capital  Expenditure  in any
given month.

                           (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 Unit,  the Building or to any other
building in the Project or to the  operation,  repair and  maintenance  thereof,
shall be allocated entirely to such Unit, Building, or 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 Project.

                  (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 Project 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  is
payable monthly on the same day as the Base Rent is due hereunder. The amount of
such  payments  shall be based on Lessor's  estimate  of the annual  Common Area
Operating Expenses. Within 60 days after written request (but not more than once
each year)  Lessor  shall  deliver  to Lessee a  reasonably  detailed  statement
showing  Lessee's  Share of the actual Common Area Operating  Expenses  incurred
during the preceding year. If Lessee's payments during such year exceed Lessee's
Share,  Lessor shall  credit the amount of such  over-payment  against  Lessee's
future payments.  If Lessee's  payments during such year were less than Lessee's
Share,  Lessee shall pay to Lessor the amount of the  deficiency  within 10 days
after delivery by Lessor to Lessee of the statement.

                  (e) When  capital  components  such as the roof,  foundations,
exterior  walls or Common  Area  capital  improvements,  such as the parking lot
paving,  elevators,  fences,  etc.  requires  replacement  rather than repari or
maintenance,  Lessor  shall,  at  Lessor's  expense,  be  responsible  for  such
replacement. Such expenses and/or costs are not Common Area Operating Expenses.

         4.3  Payment.  Lessee  shall  cause  payment of Rent to be  received by
Lessor in lawful money of the United States, without offset or deduction (except
as  specifically  permitted in this Lease),  on or before the day on which it is
due. All monetary  amounts shall be rounded to the nearest whole dollar.  In the
event  that any  statement  or invoice  prepared  by Lessor is  inaccurate  such
inaccuracy  shall not  constitute  a waiver and Lessee shall be obligated to pay
the amount set forth in this Lease.  Rent for any period  during the term hereof
which is for less than one full calendar  month shall be prorated based upon the
actual number of days of said month.  Payment of Rent shall be made to Lessor at
its address  stated  herein or to such other persons or place as Lessor may from
time to time  designate in writing.  Acceptance  of a payment which is less than
the amount then due shall not be a waiver of  Lessor's  rights to the balance of
such Rent,  regardless of Lessor's  endorsement of any check so stating.  In the
event that any check,  draft, or other  instrument of payment given by Lessee to
Lessor is dishonored  for any reason,  Lessee agrees to pay to Lessor the sum of
$25 in addition to any Late  Charge and Lessor,  at its option,  may require all
future  Rent be paid by  cashier's  check.  Payments  will be  applied  first to
accrued late charges and attorney's fees,  second to accrued  interest,  then to
Base Rent and Common Area Operating  Expenses,  and any remaining  amount to any
other outstanding charges or costs.

5.         Security  Deposit.  Lessee shall  deposit with Lessor upon  execution
hereof the Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this  Lease,  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,  expense,  loss or damage which Lessor may
suffer or incur by reason thereof.  If Lessor uses or applies all or any portion
of the  Security  Deposit,  Lessee shall  within 10 days after  written  request
therefor deposit monies with Lessor  sufficient to restore said Security Deposit
to the full amount required by this Lease. ***deleted***.  Should the Agreed Use
be amended to  accommodate  a material  change in the  business  of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary,  in Lessor's reasonable  judgment,  to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such  change  the  financial  condition  of Lessee  is, in  Lessor's  reasonable
judgment,  significantly  reduced,  Lessee shall deposit such additional  monies
with  Lessor as shall be  sufficient  to cause the  Security  Deposit to be at a
commercially  reasonable  level  based on such  change in  financial  condition.
Lessor  shall not be required to keep the  Security  Deposit  separate  from its
general  accounts.  Within 14 days after the  expiration or  termination of this
Lease,  if Lessor elects to apply the Security  Deposit only to unpaid Rent, and
otherwise  within 30 days  after the  Premises  have been  vacated  pursuant  to
Paragraph 7.4(c) below, Lessor shall return that portion of the Security Deposit
not  used or  applied  by  Lessor.  No part of the  Security  Deposit  shall  be
considered to be held in trust,  to bear  interest or to be  prepayment  for any
monies to be paid by Lessee under this Lease.

6.       Use.

         6.1 Use.  Lessee shall use and occupy the Premises  only for the Agreed
Use, 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 damage, waste or a nuisance,  or that disturbs
occupants of or causes damage to neighboring premises or properties.  Other than
guide,  signal  and  seeing  eye  dogs,  Lessee  shall  not keep or allow in the
Premises  any  pets,  animals,  birds,  fish,  or  reptiles.  Lessor  shall  not
unreasonably  withhold  or  delay  its  consent  to any  written  request  for a
modification  of the  Agreed  Use,  so long as the  same  will  not  impair  the
structural  integrity of the Building or the  mechanical or  electrical  systems
therein,  and/or is not significantly more burdensome to the Project.  If Lessor
elects to withhold  consent,  Lessor shall within 7 days after such request give
written  notification  of same,  which notice shall  include an  explanation  of
Lessor's objections to the change in the Agreed Use.

         6.2 Hazardous Substances.

                  (a)  Reportable  Uses  Require  Consent. The  term  "Hazardous
Substance"  as used in this Lease shall mean any  product,


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substance, or waste whose presence, use, manufacture,  disposal, transportation,
or release,  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  Substances shall include,  but not be limited to,
hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products
or  fractions  thereof.  Lessee  shall not engage in any  activity  in or on the
Premises which constitutes a Reportable Use of Hazardous  Substances without the
express  prior  written  consent of Lessor and timely  compliance  (at  Lessee's
expense) with all Applicable  Requirements.  "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/or (iii) the presence at the Premises of a Hazardous
Substance  with respect to which any  Applicable  Requirements  requires  that a
notice be given to persons  entering or occupying  the  Premises or  neighboring
properties.  Notwithstanding  the  foregoing,  Lessee may use any  ordinary  and
customary  materials  reasonably required to be used in the normal course of the
Agreed Use,  ordinary office supplies (copier toner,  liquid paper,  glue, etc.)
and common household  cleaning  materials,  so long as such use is in compliance
with all Applicable  Requirements,  is not a Reportable Use, and does not expose
the Premises or neighboring  property to any meaningful risk of contamination or
damage or expose  Lessor to any  liability  therefor.  In  addition,  Lessor may
condition  its consent to any  Reportable  Use upon  receiving  such  additional
assurances as Lessor  reasonably deems necessary to protect itself,  the public,
the Premises and/or the environment against damage, contamination, injury and/or
liability,  including,  but not limited to, the installation  (and removal on or
before Lease  expiration or  termination) of protective  modifications  (such as
concrete encasements) and/or increasing the Security Deposit.

                  (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,  other than as  previously  consented to by Lessor,
Lessee shall immediately give written notice of such fact to Lessor, and provide
Lessor with a copy of any report,  notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance.

                  (c) Lessee  Remediation.  Lessee shall not cause or permit any
Hazardous  Substance  to be spilled or  released  in,  on,  under,  or about the
Premises  (including  through the plumbing or sanitary  sewer  system) and shall
promptly, at Lessee's expense,  comply with all Applicable Requirements and take
all investigatory and/or remedial action reasonably recommended,  whether or not
formally ordered or required,  for the cleanup of any  contamination of, and for
the  maintenance,  security  and/or  monitoring  of the Premises or  neighboring
properties,  that  was  caused  or  materially  contributed  to  by  Lessee,  or
pertaining  to or involving any  Hazardous  Substance  brought onto the Premises
during the term of this Lease, by or for Lessee, or any third party.

                  (d) Lessee  Indemnification.   Lessee shall indemnify,  defend
and hold  Lessor,  its agents,  employees,  lenders and ground  lessor,  if any,
harmless from and against any and all loss of rents and/or damages, liabilities,
judgments,  claims,  expenses,  penalties,  and attorneys' and consultants' fees
arising out of or involving any Hazardous Substance brought onto the Premises by
or for Lessee, or any third party (provided,  however, that Lessee shall have no
liability  under  this  Lease  with  respect  to  underground  migration  of any
Hazardous  Substance  under the Premises  from areas  outside of the Project not
caused or contributed to by Lessee). Lessee's obligations shall include, but not
be limited to, the effects of any contamination or injury to person, property or
the environment  created or suffered by Lessee,  and the cost of  investigation,
removal,  remediation,  restoration  and/or  abatement,  and shall  survive  the
expiration or 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.

                  (e) Lessor  Indemnification.   Lessor and its  successors  and
assigns shall indemnify,  defend,  reimburse and hold Lessee,  its employees and
lenders, harmless from and against any and all environmental damages,  including
the  cost of  remediation,  which  suffered  as a  direct  result  of  Hazardous
Substances on the Premises prior to Lessee taking possession or which are caused
by the  gross  negligence  or  willful  misconduct  of  Lessor,  its  agents  or
employees.  Lessor's  obligations,  as  and  when  required  by  the  Applicable
Requirements,  shall include,  but not be limited to, the cost of investigation,
removal,  remediation,  restoration  and/or  abatement,  and shall  survive  the
expiration or termination of this Lease.

                  (f)  Investigations and Remediations.  Lessor shall retain the
responsibility and pay for any  investigations or remediation  measures required
by governmental  entities having  jurisdiction  with respect to the existence of
Hazardous  Substances on the Premises prior to Lessee taking possession,  unless
such  remediation  measure is required as a result of  Lessee's  use  (including
"Alterations",  as defined in paragraph 7.3(a) below) of the Premises,  in which
event Lessee shall be responsible for such payment. Lessee shall cooperate fully
in any such activities at the request of Lessor,  including  allowing Lessor and
Lessor's agents to have reasonable access to the Premises at reasonable times in
order to carry out Lessor's investigative and remedial responsibilities.

                  (g)  Lessor  Termination  Option.  If a  Hazardous   Substance
Condition  (see Paragraph  9.1(e)) occurs during the term of this Lease,  unless
Lessee is legally  responsible  therefor  (in which case  Lessee  shall make the
investigation  and remediation  thereof required by the Applicable  Requirements
and this Lease shall continue in full force and effect,  but subject to Lessor's
rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor's option,
either (i)  investigate  and remediate such Hazardous  Substance  Condition,  if
required,  as soon as reasonably  possible at Lessor's  expense,  in which event
this Lease shall  continue in full force and  effect,  or (ii) if the  estimated
cost to remediate such condition  exceeds 12 times the then monthly Base Rent or
$100,000,  whichever is greater,  give written notice to Lessee,  within 30 days
after  receipt  by Lessor  of  knowledge  of the  occurrence  of such  Hazardous
Substance  Condition,  of Lessor's desire to terminate this Lease as of the date
60 days following the date of such notice.  In the event Lessor elects to give a
termination notice,  Lessee may, within 10 days thereafter,  give written notice
to  Lessor of  Lessee's  commitment  to pay the  amount by which the cost of the
remediation of such Hazardous  Substance Condition exceeds an amount equal to 12
times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall
provide Lessor with said funds or satisfactory  assurance thereof within 30 days
following  such  commitment.  In such event,  this Lease shall  continue in full
force and effect,  and Lessor shall proceed to make such  remediation as soon as
reasonably  possible after the required funds are available.  If Lessee does not
give such notice and provide the required funds or assurance  thereof within the
time provided,  this Lease shall  terminate as of the date specified in Lessor's
notice of termination.

         6.3  Lessee's  Compliance  with  Applicable  Requirements.    Except as
otherwise provided in this Lease, Lessee shall, at Lessee's sole expense, fully,
diligently  and in a  timely  manner,  materially  comply  with  all  Applicable
Requirements,  the requirements of any applicable fire insurance  underwriter or
rating bureau, and the  recommendations of Lessor's engineers and/or consultants
which relate in any manner to such Requirements,  without regard to whether said
Requirements are now in effect or become effective after the Start Date.  Lessee
shall, within 10 days after receipt of Lessor's written request,  provide Lessor
with copies of all permits and other documents, and other information 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 the failure of Lessee or
the Premises to comply with any Applicable Requirements.  Likewise, Lessee shall
immediately  give  written  notice to  Lessor  of:  (i) any water  damage to the
Premises  and any  suspected  seepage,  pooling,  dampness  or  other  condition
conducive to the  production  of mold; or (ii) any mustiness or other odors that
might indicate the presence of mold in the Premises.

         6.4 Inspection;  Compliance.  Lessor and Lessor's  "Lender" (as defined
in Paragraph 30) and consultants  shall have the right to enter into Premises at
any time, in the case of an emergency,  and otherwise at reasonable  times after
reasonable  notice,  for the purpose of inspecting the condition of the Premises
and for  verifying  compliance  by Lessee with this Lease.  The cost of any such
inspections  shall  be  paid  by  Lessor,   unless  a  violation  of  Applicable
Requirements, or a Hazardous Substance condition (see Paragraph 9.1) is found to
exist  or  be  imminent,  or  the  inspection  is  requested  or  ordered  by  a
governmental authority. In such case, Lessee shall upon request reimburse Lessor
for the  cost of such  inspection,  so  long as such  inspection  is  reasonably
related to the  violation or  contamination.  In addition,  Lessee shall provide
copies of all relevant  material  safety data sheets  (MSDS) to Lessor within 10
days of the receipt of written request therefor.

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

         7.1 Lessee's Obligations.

                  (a) In General.  Subject to the  provisions  of Paragraph  2.2
(Condition),   2.3  (Compliance),   6.3  (Lessee's  Compliance  with  Applicable
Requirements),  7.2 (Lessor's  Obligations),  9 (Damage or Destruction),  and 14
(Condemnation),  Lessee  shall,  at Lessee's  sole  expense,  keep the Premises,
Utility  Installations  (intended  for Lessee's  exclusive  use, no matter where
located),  and  Alterations in good order,  condition and repair (whether or not
the portion of the Premises  requiring  repairs,  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, but not limited
to, all equipment or facilities,  such as plumbing, HVAC equipment,  electrical,
lighting  facilities,  boilers,  pressure  vessels,  fixtures,  interior  walls,
interior surfaces of exterior walls,  ceilings,  floors,  windows,  doors, plate
glass,  and skylights but  excluding any items which are the  responsibility  of
Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good order,
condition and repair,  shall  exercise and perform good  maintenance  practices,
specifically  including the procurement and maintenance of the service contracts
required  by  Paragraph  7.1(b)  below.   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) Service Contracts. Lessee shall, at Lessee's sole expense,
procure and maintain  contracts,  with copies to Lessor,  in customary  form and
substance  for,  and  with  contractors  specializing  and  experienced  in  the
maintenance  of the following  equipment and  improvements,  if any, if and when
installed on the Premises: (i) HVAC equipment, (ii) boiler and pressure vessels,
(iii)  clarifiers,  and (iv) any other  equipment,  if  reasonably  required  by
Lessor.  However,  Lessor reserves the right,  upon notice to Lessee, to procure
and maintain any or all of such service  contracts,  and Lessee shall  reimburse
Lessor, upon demand, for the cost thereof.

                  (c) Failure to Perform. If Lessee  fails to perform   Lessee's
obligations  under this Paragraph 7.1,  Lessor may enter upon the Premises after
10 days' prior written notice to Lessee (except in the case of an emergency,  in
which case no notice shall be required),  perform such  obligations  on Lessee's
behalf,  and put the Premises in good order,  condition  and repair,  and Lessee
shall promptly pay to Lessor a sum equal to 115% of the cost thereof.

                  (d) Replacement. Subject to Lessee's indemnification of Lessor
as set forth in Paragraph 8.7 below,  and without  relieving Lessee of liability
resulting  from  Lessee's  failure to  exercise  and  perform  good  maintenance
practices,  if an item  described in Paragraph  7.1(b) cannot be repaired  other
than at a cost  which is in excess of 50% of the cost of  replacing  such  item,
then such item  shall be  replaced  by  Lessor,  and the cost  thereof  shall be
prorated  between the Parties and Lessee shall only be  obligated  to pay,  each
month during the remainder of the term of this Lease,  on the date on which Base
Rent is due,  an amount  equal to the  product of  multiplying  the cost of such
replacement by a fraction, the numerator of which is one, and the denominator of
which is 144 (ie.  1/144th of the cost per month).  Lessee shall pay interest on
the  unamortized  balance  at a rate  that  is  commercially  reasonable  in the
judgement of


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Lessor's accountants. Lessee may, however, prepay its obligation at any time.

         7.2 Lessor's  Obligations.  Subject to the provisions of Paragraphs 2.2
(Condition),  2.3 (Compliance),  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  system,
Common Area fire alarm and/or smoke detection  systems,  fire hydrants,  parking
lots,  walkways,  parkways,  driveways,  landscaping,  fences, signs and utility
systems serving the Common Areas and all parts thereof, as well as providing the
services  for  which  there is a  Common  Area  Operating  Expense  pursuant  to
Paragraph  4.2.  Lessor shall not be obligated to paint the exterior or interior
surfaces of exterior walls nor shall Lessor be obligated to maintain,  repair or
replace windows,  doors or plate glass of the Premises.  Lessee expressly waives
the  benefit  of any  statute  now or  hereafter  in effect to the  extent it is
inconsistent with the terms of this Lease.

         7.3 Utility Installations; Trade Fixtures; Alterations.

                  (a) Definitions.  The term "Utility  Installations"  refers to
all  floor  and  window  coverings,  air  and/or  vacuum  lines,  power  panels,
electrical  distribution,  security and fire protection  systems,  communication
cabling,  lighting fixtures, HVAC equipment,  plumbing, and fencing in or on the
Premises.  The term "Trade Fixtures" shall mean Lessee's machinery and equipment
that can be removed  without doing  material  damage to the  Premises.  The term
"Alterations"  shall  mean any  modification  of the  improvements,  other  than
Utility  Installations  or Trade  Fixtures,  whether by  addition  or  deletion.
"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).

                  (b) Consent.  Lessee shall not make any Alterations or Utility
Installations to 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 such consent but upon notice to Lessor, as
long as they  are not  visible  from the  outside,  do not  involve  puncturing,
relocating  or  removing  the roof or any  existing  walls,  will not affect the
electrical,  plumbing, HVAC, and/or life safety systems, and the cumulative cost
thereof  during this Lease as extended  does not exceed a sum equal to 3 month's
Base Rent in the  aggregate  or a sum equal to one month's  Base Rent in any one
year.  Notwithstanding  the foregoing,  Lessee shall not make or permit any roof
penetrations  and/or  install  anything on the roof  without  the prior  written
approval of Lessor.  Lessor may, as a  precondition  to granting such  approval,
require  Lessee to utilize a contractor  chosen and/or  approved by Lessor.  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.  Consent shall be deemed  conditioned  upon Lessee's:  (i)
acquiring all  applicable  governmental  permits,  (ii)  furnishing  Lessor with
copies  of  both  the  permits  and  the  plans  and  specifications   prior  to
commencement  of the work,  and (iii)  compliance  with all  conditions  of said
permits and other  Applicable  Requirements in a prompt and expeditious  manner.
Any  Alterations  or Utility  Installations  shall be performed in a workmanlike
manner with good and sufficient materials. Lessee shall promptly upon completion
furnish Lessor with as-built plans and  specifications.  For work which costs an
amount in excess of one month's Base Rent, Lessor may condition its consent upon
Lessee  providing a lien and  completion  bond in an amount equal to 150% of the
estimated cost of such Alteration or Utility  Installation  and/or upon Lessee's
posting an additional Security Deposit with Lessor.

                  (c) Liens;  Bonds.  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 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.  If Lessee shall 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. If Lessor shall require, Lessee shall furnish a surety bond
in an  amount  equal to 150% of the  amount  of such  contested  lien,  claim or
demand,  indemnifying Lessor against liability for the same. If Lessor elects to
participate in any such action,  Lessee shall pay Lessor's  attorneys'  fees and
costs.

         7.4 Ownership; Removal; Surrender; and Restoration.

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

                  (b)  Removal.  By  delivery  to Lessee of written  notice from
Lessor  not  earlier  than 90 and not later than 30 days prior to the end of the
term of this Lease,  Lessor may require that any or all Lessee Owned Alterations
or Utility  Installations  be removed by the  expiration or  termination of this
Lease.  Lessor  may  require  the  removal at any time of all or any part of any
Lessee  Owned  Alterations  or Utility  Installations  made without the required
consent.

                  (c)  Surrender;  Restoration.    Lessee  shall  surrender  the
Premises by the Expiration Date or any earlier termination date, with all of the
improvements,  parts and surfaces thereof broom clean and free of debris, and in
good  operating  order,  condition  and state of repair,  ordinary wear and tear
excepted. "Ordinary wear and tear" shall not include any damage or deterioration
that would have been prevented by good maintenance practice. Notwithstanding the
foregoing,  if this Lease is for 12 months or less,  then Lessee shall surrender
the Premises in the same condition as delivered to Lessee on the Start Date with
NO  allowance  for  ordinary  wear and tear.  Lessee  shall  repair  any  damage
occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee
owned Alterations and/or Utility  Installations,  furnishings,  and equipment as
well as the removal of any storage tank installed by or for Lessee. Lessee shall
also  completely  remove  from the  Premises  any and all  Hazardous  Substances
brought onto the Premises by or for Lessee, or any third party (except Hazardous
Substances which were deposited via underground  migration from areas outside of
the Premises)  even if such removal  would require  Lessee to perform or pay for
work that  exceeds  statutory  requirements.  Trade  Fixtures  shall  remain the
property  of Lessee and shall be removed by Lessee.  Any  personal  property  of
Lessee not removed on or before the Expiration  Date or any earlier  termination
date shall be deemed to have been  abandoned by Lessee and may be disposed of or
retained by Lessor as Lessor may desire.  The failure by Lessee to timely vacate
the  Premises  pursuant to this  Paragraph  7.4(c)  without the express  written
consent of Lessor shall  constitute a holdover under the provisions of Paragraph
26 below.

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/or the Project 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, Building and/or
Project, increased valuation of the Premises,  Building and/or Project, 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 tenant of the  Building.  If the parties  insert a dollar
amount in Paragraph 1.9, such amount shall be considered the "Base Premium." The
Base  Premium  shall be the annual  premium  applicable  to the 12 month  period
immediately  preceding the Start Date. If, however,  the Project was not insured
for the entirety of such 12 month  period,  then the Base  Premium  shall be the
lowest annual premium reasonably obtainable for the Required Insurance as of the
Start 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 $2,000,000  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 Start Date or Expiration Date.

         8.2 Liability Insurance.

                  (a) Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability policy of insurance protecting Lessee and Lessor as
an additional  insured  against  claims for bodily injury,  personal  injury and
property  damage based upon or arising out of the ownership,  use,  occupancy or
maintenance of the Premises and all areas  appurtenant  thereto.  Such insurance
shall be on an occurrence basis providing single limit coverage in an amount not
less than  $1,000,000 per occurrence  with an annual  aggregate of not less than
$2,000,000.  Lessee  shall add  Lessor as an  additional  insured by means of an
endorsement  at  least  as  broad  as  the  Insurance   Service   Organization's
"Additional  Insured-Managers  or Lessors of Premises"  Endorsement and coverage
shall also be extended to include  damage caused by heat,  smoke or fumes from a
hostile  fire.  The policy  shall not contain any  intra-insured  exclusions  as
between  insured  persons  or  organizations,  but shall  include  coverage  for
liability assumed under this Lease as an "insured  contract" for the performance
of Lessee's indemnity obligations under this Lease. The limits of said insurance
shall not,  however,  limit the  liability  of Lessee nor relieve  Lessee of any
obligation  hereunder.  Lessee shall  provide an  endorsement  on its  liability
policy(ies)  which  provides  that its  insurance  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  maintain  liability
insurance as described in Paragraph  8.2(a), 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 a policy or  policies  of  insurance  in the name of Lessor,  with loss
payable to Lessor, any ground-lessor,  and to any Lender insuring loss or damage
to the  Premises.  The  amount  of such  insurance  shall  be  equal to the full
insurable replacement cost of the Premises, as the same shall exist from time to
time,  or the  amount  required  by any  Lender,  but in no event  more than the
commercially  reasonable and available  insurable  value  thereof.  Lessee Owned
Alterations and Utility  Installations,  Trade Fixtures,  and Lessee's  personal
property  shall be insured by Lessee  under  Paragraph  8.4. If the  coverage is
available and  commercially  appropriate,  such policy or policies  shall insure
against all risks of direct  physical loss or damage (except the perils of flood
and/or  earthquake unless required by a Lender),  including  coverage for debris
removal  and  the  enforcement  of any  Applicable  Requirements  requiring  the
upgrading,  demolition,  reconstruction  or  replacement  of any  portion of the
Premises as the result of a covered  loss.  Said  policy or policies  shall also
contain an agreed valuation provision in lieu of any coinsurance 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. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $1,000 per occurrence.


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                  (b) Rental Value. Lessor shall also obtain and keep in force a
policy or  policies  in the name of Lessor  with loss  payable to Lessor and any
Lender,  insuring the loss of the full Rent for one year with an extended period
of  indemnity  for an  additional  180 days ( "Rental  Value  insurance").  Said
insurance shall contain an agreed valuation provision in lieu of any coinsurance
clause,  and the amount of coverage  shall be  adjusted  annually to reflect the
projected Rent otherwise payable by Lessee, for the next 12 month period.

                  (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 Project 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; Business Interruption Insurance.

                  (a)  Property   Damage.   Lessee  shall  obtain  and  maintain
insurance  coverage on all of Lessee's personal  property,  Trade Fixtures,  and
Lessee Owned Alterations and Utility Installations. Such insurance shall be full
replacement  cost  coverage  with  a  deductible  of not to  exceed  $1,000  per
occurrence. The proceeds from any such insurance shall be used by Lessee for the
replacement of personal  property,  Trade Fixtures and Lessee Owned  Alterations
and Utility  Installations.  Lessee shall provide  Lessor with written  evidence
that such insurance is in force.

                  (b) Business  Interruption.   Lessee shall obtain and maintain
loss of income and extra expense  insurance in amounts as will reimburse  Lessee
for direct or indirect  loss of  earnings  attributable  to all perils  commonly
insured  against by prudent lessees in the business of Lessee or attributable to
prevention of access to the Premises as a result of such perils.

                  (c) No  Representation  of Adequate Coverage.  Lessor makes no
representation  that the  limits or forms of  coverage  of  insurance  specified
herein  are  adequate  to  cover  Lessee's  property,   business  operations  or
obligations under this Lease.

         8.5 Insurance Policies. Insurance required herein shall be by companies
duly  licensed or admitted to transact  business in the state where the Premises
are located,  and  maintaining  during the policy term a "General  Policyholders
Rating"  of at least A-, VI, as set forth in the most  current  issue of "Best's
Insurance  Guide",  or such other rating as may be required by a Lender.  Lessee
shall  not do or permit  to be done  anything  which  invalidates  the  required
insurance  policies.  Lessee shall,  prior to the Start Date,  deliver to Lessor
certified  copies of policies of such insurance or  certificates  evidencing the
existence  and  amounts  of the  required  insurance.  No such  policy  shall be
cancelable or subject to modification  except after 30 days prior written notice
to  Lessor.  Lessee  shall,  at least 10 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. Such policies shall be for a term of at least one year, or the length of
the remaining term of this Lease,  whichever is less. If either Party shall fail
to procure and  maintain the  insurance  required to be carried by it, the other
Party may, but shall not be required to, procure and maintain the same.

         8.6 Waiver of  Subrogation.    Without  affecting  any other  rights or
remedies, Lessee and Lessor each hereby release and relieve the other, and waive
their entire right to recover damages  against the other,  for loss of or damage
to its property  arising out of or incident to the perils required to be insured
against  herein.  The effect of such  releases and waivers is not limited by the
amount of  insurance  carried  or  required,  or by any  deductibles  applicable
hereto.  The Parties agree to have their  respective  property damage  insurance
carriers  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  gross  negligence  or  willful
misconduct,  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,
liens, judgments,  penalties,  attorneys' and consultants' fees, expenses and/or
liabilities  arising out of,  involving,  or in connection  with, the use and/or
occupancy  of the  Premises by Lessee.  If any action or  proceeding  is brought
against  Lessor by reason of any of the  foregoing  matters,  Lessee  shall upon
notice 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 defended or indemnified.

         8.8 Exemption of Lessor from Liability.  Lessor shall not be liable for
injury or damage to the person or goods, wares, merchandise or other property of
Lessee,  Lessee's  employees,  contractors,  invitees,  customers,  or any other
person in or about the  Premises,  whether such damage or injury is caused by or
results from fire, steam,  electricity,  gas, water or rain, indoor air quality,
the presence of mold or from the breakage, leakage, obstruction or other defects
of  pipes,  fire  sprinklers,  wires,  appliances,  plumbing,  HVAC or  lighting
fixtures,  or from any other  cause,  whether the said injury or damage  results
from  conditions  arising  upon  the  Premises  or upon  other  portions  of the
Building,  or from other  sources or places.  Lessor shall not be liable for any
damages  arising  from any act or neglect of any other tenant of Lessor nor from
the  failure  of Lessor to  enforce  the  provisions  of any other  lease in the
Project.  Notwithstanding  Lessor's  negligence or breach of this Lease,  Lessor
shall under no  circumstances  be liable for injury to Lessee's  business or for
any loss of income or profit therefrom.

         8.9 Failure to Provide Insurance.  Lessee acknowledges that any failure
on its part to obtain or  maintain  the  insurance  required  herein will expose
Lessor to risks and potentially  cause Lessor to incur costs not contemplated by
this  Lease,  the  extent of which will be  extremely  difficult  to  ascertain.
Accordingly,  for any month or portion thereof that Lessee does not maintain the
required  insurance  and/or does not provide Lessor with the required binders or
certificates  evidencing the existence of the required insurance,  the Base Rent
shall be automatically increased,  without any requirement for notice to Lessee,
by an amount equal to 10% of the then existing  Base Rent or $100,  whichever is
greater.  The parties agree that such increase in Base Rent  represents fair and
reasonable  compensation for the additional risk/costs that Lessor will incur by
reason of Lessee's failure to maintain the required insurance.  Such increase in
Base Rent shall in no event  constitute  a waiver of Lessee's  Default or Breach
with respect to the failure to maintain such insurance,  prevent the exercise of
any of the other rights and remedies  granted  hereunder,  nor relieve Lessee of
its obligation to maintain the insurance specified in this Lease.

9.       Damage or Destruction.

         9.1 Definitions.

                  (a) "Premises Partial Damage" shall mean damage or destruction
to the  improvements  on the Premises,  other than Lessee Owned  Alterations and
Utility Installations, which can reasonably be repaired in 3 months or less from
the date of the damage or  destruction,  and the cost  thereof does not exceed a
sum equal to 6 month's Base Rent.  Lessor shall notify Lessee in writing  within
30 days from the date of the  damage or  destruction  as to  whether  or not the
damage is Partial or Total.  Notwithstanding  the  foregoing,  Premises  Partial
Damage shall not include  damage to windows,  doors,  and/or other similar items
which  Lessee  has the  responsibility  to repair  or  replace  pursuant  to the
provisions of Paragraph 7.1.

                  (b)  "Premises  Total   Destruction"   shall  mean  damage  or
destruction  to the  improvements  on the  Premises,  other  than  Lessee  Owned
Alterations  and  Utility   Installations  and  Trade  Fixtures,   which  cannot
reasonably  be  repaired  in 3 months  or less  from the date of the  damage  or
destruction  and/or the cost thereof exceeds a sum equal to 6 month's Base Rent.
Lessor shall notify Lessee in writing within 30 days from the date of the damage
or destruction as to whether or not the damage is Partial or Total.

                  (c)  "Insured  Loss"  shall  mean  damage  or  destruction  to
improvements  on 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 Requirements,  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 which requires repair, remediation, or restoration.

         9.2 Partial  Damage - Insured Loss.  If a 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;  provided,  however,  that  Lessee  shall,  at  Lessor's
election,  make the repair of any damage or destruction the total cost to repair
of  which  is  $10,000  or less,  and,  in such  event,  Lessor  shall  make any
applicable insurance proceeds available to Lessee on a reasonable basis for that
purpose.  Notwithstanding  the foregoing,  if the required  insurance was not in
force or the insurance  proceeds are not  sufficient to effect such repair,  the
Insuring  Party shall  promptly  contribute the shortage in proceeds as and when
required to complete said repairs. In the event,  however, such shortage was due
to the fact  that,  by reason of the  unique  nature of the  improvements,  full
replacement  cost  insurance   overage  was  not  commercially   reasonable  and
available,  Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully  restore the unique  aspects of the Premises  unless Lessee
provides  Lessor with the funds to cover same,  or adequate  assurance  thereof,
within 10 days following  receipt of written notice of such shortage and request
therefor.  If Lessor  receives said funds or adequate  assurance  thereof within
said 10 day period,  the party responsible for making the repairs shall complete
them as soon as  reasonably  possible  and this Lease shall remain in full force
and effect. If such funds or assurance are not received, Lessor may nevertheless
elect by written  notice to Lessee within 10 days  thereafter  to: (i) 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,  or (ii) have this Lease terminate 30 days thereafter.  Lessee shall not
be entitled to  reimbursement  of 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,  notwithstanding  that  there may be some
insurance  coverage,  but the net proceeds of any such  insurance  shall be made
available for the repairs if made by either Party.

         9.3 Partial Damage - Uninsured Loss.  If a Premises Partial Damage that
is not an Insured  Loss occurs,  unless  caused by a negligent or willful act of
Lessee (in which  event  Lessee  shall make the  repairs at  Lessee's  expense),
Lessor may  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)  terminate this Lease by giving written notice to Lessee within
30 days after  receipt by Lessor of knowledge of the  occurrence of such damage.
Such  termination  shall be effective 60 days following the date of such notice.
In the event Lessor elects to terminate this Lease,  Lessee shall have the right
within 10 days after receipt of the termination notice to give written notice to
Lessor of  Lessee's  commitment  to pay for the  repair of such  damage  without
reimbursement  from  Lessor.  Lessee  shall  provide  Lessor  with said funds or
satisfactory  assurance thereof within 30 days after making such commitment.  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 make the required commitment, this Lease
shall terminate as of the date specified in the termination notice.

         9.4 Total Destruction. Notwithstanding any other provision hereof, if a
Premises Total Destruction  occurs, this Lease shall terminate 60 days following
such  Destruction.  If the  damage  or  destruction  was  caused  by  the  gross
negligence  or  willful  misconduct  of Lessee,  Lessor  shall have the right to
recover Lessor's damages from Lessee, except as provided in Paragraph 8.6.

         9.5 Damage  Near End of Term.  If at any time  during the last 6 months
of this Lease  there is damage for which the cost to repair  exceeds one month's
Base Rent,  whether  or not an Insured  Loss,  Lessor may  terminate  this Lease
effective 60 days  following  the date of  occurrence of such damage by giving a
written termination notice to Lessee within 30 days after the date of occurrence
of such damage.  Notwithstanding  the  foregoing,  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


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which is 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 commercially  reasonable 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 on
the date  specified  in the  termination  notice and  Lessee's  option  shall be
extinguished.

         9.6 Abatement of Rent; Lessee's Remedies.

                  (a)  Abatement.  In the event of  Premises  Partial  Damage or
Premises Total Destruction or a Hazardous  Substance  Condition for which Lessee
is not responsible  under this Lease,  the Rent payable by Lessee for the period
required  for the repair,  remediation  or  restoration  of such damage shall be
abated in  proportion  to the degree to which  Lessee's  use of the  Premises is
impaired,  but not to  exceed  the  proceeds  received  from  the  Rental  Value
insurance.  All other  obligations  of Lessee  hereunder  shall be  performed by
Lessee,  and Lessor  shall have no liability  for any such damage,  destruction,
remediation, repair or restoration except as provided herein.

                  (b)  Remedies.  If  Lessor  shall be  obligated  to  repair or
restore the Premises and does not commence, in a substantial and meaningful way,
such repair or restoration  within 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 60
days  following the giving of such notice.  If Lessee gives such notice and such
repair or restoration  is not commenced  within 30 days  thereafter,  this Lease
shall  terminate  as of the date  specified  in said  notice.  If the  repair or
restoration is commenced  within such 30 days, this Lease shall continue in full
force and effect.  "Commence" shall mean either the unconditional  authorization
of the preparation of the required plans, or the beginning of the actual work on
the Premises, whichever first occurs.

              9.7 termination; Advance Payments.  Upon termination of this Lease
pursuant to Paragraph  6.2(g) or Paragraph 9, an equitable  adjustment  shall be
made concerning  advance Base Rent and any other advance payments made by Lessee
to Lessor.  Lessor  shall,  in  addition,  return to Lessee so much of  Lessee's
Security Deposit as has not been, or is not then required to be, used by Lessor.

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

10. Real Property Taxes.

         10.1 Definitions.

                  (a) "Real  Property  Taxes." As used  herein,  the term " Real
Property  Taxes" shall  include any form of  assessment;  real estate,  general,
special,  ordinary  or  extraordinary,   or  rental  levy  or  tax  (other  than
inheritance,  personal income or estate taxes); improvement bond; and/or license
fee imposed upon or levied against any legal or equitable  interest of Lessor in
the Project, Lessor's right to other income therefrom,  and/or Lessor's business
of leasing,  by any  authority  having the direct or  indirect  power to tax and
where the funds are generated  with  reference to the Project  address and where
the proceeds so generated  are to be applied by the city,  county or other local
taxing authority of a jurisdiction within which the Project is located. The term
"Real  Property  Taxes" shall also include any tax,  fee,  levy,  assessment  or
charge,  or any  increase  therein:  (i)  imposed by reason of events  occurring
during the term of this  Lease,  including  but not  limited to, a change in the
ownership  of the Project,  (ii) a change in the  improvements  thereon,  and/or
(iii) levied or assessed on machinery or equipment  provided by Lessor to Lessee
pursuant to this Lease.

                  (b) "Base Real Property Taxes." As used herein, the term "Base
Real  Property  Taxes"  shall be the amount of Real  Property  Taxes,  which are
assessed against the Premises, Building, Project 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.

         10.2 Payment of Taxes.  Except as otherwise provided in Paragraph 10.3,
Lessor shall pay the Real Property  Taxes  applicable  to the Project,  and said
payments shall be included in the calculation of Common Area Operating  Expenses
in accordance with the provisions of Paragraph 4.2.

         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 Project by
other  lessees or by Lessor for the exclusive  enjoyment of such other  lessees.
Notwithstanding  Paragraph 10.2 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 or by reason of any alterations or improvements to
the Premises  made by Lessor  subsequent  to the  execution of this Lease by the
Parties.

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

         10.5 Personal  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.  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 10 days after  receipt of a written
statement setting forth the taxes applicable to Lessee's property.

11.       Utilities  and Services.   Lessee shall pay for all water,  gas, heat,
light,  power,  telephone,  trash  disposal  and other  utilities  and  services
supplied to the Premises,  together with any taxes thereon.  Notwithstanding the
provisions of Paragraph  4.2, if at any time in Lessor's sole  judgment,  Lessor
determines that Lessee is using a disproportionate amount of water,  electricity
or other commonly metered  utilities,  or that Lessee is generating such a large
volume of trash as to require an  increase  in the size of the trash  receptacle
and/or an  increase  in the number of times per month that it is  emptied,  then
Lessor may  increase  Lessee's  Base Rent by an amount  equal to such  increased
costs.

12.      Assignment and Subletting.

         12.1 Lessor's Consent Required.

                  (a)  Lessee  shall  not  voluntarily  or by  operation  of law
assign, transfer, mortgage or encumber (collectively, "assign or assignment") or
sublet all or any part of  Lessee's  interest  in this Lease or in the  Premises
without Lessor's prior written consent.  Notwithstanding  the foregoing,  Lessee
may assign this Lease or sublease the Premises  without the Lessor's  consent to
(i) any financial  institution  regulated by state and/or federal  agencies,  or
(ii) any parent or subsidiary of Lessee (collectively, "Permitted Assignee").

                  (b) A change in the  control  of Lessee  shall  constitute  an
assignment  requiring Lessor's consent. A change in control occurs when there is
a transfer of more than 50%  ***deleted***  of the voting  control of Lessee and
Lessee's  Net  Worth,  as  compared  to  Lessee's  Net  Worth at the time of the
execution  of this  Lease,  is  reduced  by more than 25%.  Notwithstanding  the
foregoing,  a change in control  shall not be  considered  to have  occurred  by
reason of this transfer,  on a cumulative  basis, or more than 50% of the voting
control  of the  Lessee  on  account  of  trading  in the stock of Lessee in the
ordinary course of business.

                  (c)  The   involvement   of  Lessee  or  its   assets  in  any
transaction,  or series of transactions  (by way of merger,  sale,  acquisition,
financing,  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 by an amount
greater  than 25% of such Net  Worth  as it was  represented  at the time of the
execution  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,  whichever was or is greater, shall be
considered an assignment of this Lease to which Lessor may withhold its consent.
"Net  Worth of  Lessee"  shall  mean  the net  worth of  Lessee  (excluding  any
guarantors) established under generally accepted accounting principles.

                  (d)  An  assignment  or  subletting   ***deleted***  requiring
Lessor's consent  hereunder,  where such consent has not been obtained shall, at
Lessor's option, be a Default curable after notice per Paragraph  13.1(c),  or a
noncurable  Breach  without the  necessity  of any notice and grace  period.  If
Lessor elects to treat such unapproved  assignment or subletting as a noncurable
Breach,  Lessor may  either:  (i)  terminate  this  Lease,  or (ii) upon 30 days
written notice,  increase the monthly Base Rent to 110% of the Base Rent then in
effect.  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 110% of the price  previously  in effect,  and
(ii) all fixed and non-fixed rental  adjustments  scheduled during the remainder
of the Lease term shall be increased to 110% of the scheduled adjusted rent.

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

         12.2 Terms and Conditions Applicable to Assignment and Subletting.

                  (a)   Regardless  of  Lessor's   consent,   no  assignment  or
subletting  shall : (i) be effective  without the express written  assumption by
such assignee or sublessee of the  obligations of Lessee under this Lease,  (ii)
release  Lessee  of any  obligations  hereunder,  or  (iii)  alter  the  primary
liability of Lessee for the payment of Rent or for the  performance of any other
obligations to be performed by Lessee.

                  (b)  Lessor  may  accept  Rent  or   performance  of  Lessee's
obligations from any person other than Lessee pending approval or disapproval


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of an  assignment.  Neither  a delay  in the  approval  or  disapproval  of such
assignment nor the acceptance of Rent or performance  shall  constitute a waiver
or estoppel of Lessor's  right to exercise its remedies for Lessee's  Default or
Breach.

                  (c) Lessor's consent to any assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting.

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

                  (e) Each request for consent to an  assignment  or  subletting
where such consent is required  hereunder  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  fee  of  $500  as
consideration  for Lessor's  considering  and  processing  said request.  Lessee
agrees to  provide  Lessor  with such  other or  additional  information  and/or
documentation as may be reasonably requested. (See also Paragraph 36)

                  (f) Any assignee of, or sublessee under,  this Lease shall, by
reason of accepting such  assignment,  entering into such sublease,  or entering
into  possession  of the  Premises  or any  portion  thereof,  be deemed 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 to in writing.

                  (g) Lessor's consent to any assignment or subletting shall not
transfer to the assignee or sublessee any Option granted to the original  Lessee
by this Lease  unless such  transfer is  specifically  consented to by Lessor in
writing. (See Paragraph 39.2)

         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 Rent payable on any  sublease,  and Lessor may collect
such Rent and apply same toward Lessee's obligations under this Lease; provided,
however,  that  until a  Breach  shall  occur  in the  performance  of  Lessee's
obligations,  Lessee  may  collect  said  Rent.  In the  event  that the  amount
collected by Lessor  exceeds  Lessee's  then  outstanding  obligations  any such
excess shall be refunded to Lessee. Lessor shall not, by reason of the foregoing
or any assignment of such sublease,  nor by reason of the collection of Rent, be
deemed  liable to the  sublessee for any failure of Lessee to perform and comply
with any of Lessee's  obligations to such sublessee.  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  all Rent due and to become  due under the
sublease.  Sublessee  shall rely upon any such  notice from Lessor and shall pay
all Rents to Lessor  without  any  obligation  or right to inquire as to whether
such Breach exists, notwithstanding any claim from Lessee to the contrary.

                  (b) In the event of a Breach by  Lessee,  Lessor  may,  at its
option,  require  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 prior Defaults or Breaches
of such sublessor.

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

                  (d) No  sublessee  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.

13.      Default; Breach; Remedies.

         13.1 Default; Breach. A "Default" is defined as a failure by the Lessee
to comply with or perform any of the terms,  covenants,  conditions or Rules and
Regulations  under this Lease. A "Breach" is defined as the occurrence of one or
more of the following  Defaults,  and the failure of Lessee to cure such Default
within any applicable grace period:

                  (a) The  abandonment  of the Premises;  or the vacating of the
Premises without providing a commercially reasonable level of security, or where
the coverage of the property insurance described in Paragraph 8.3 is jeopardized
as a result  thereof,  or without  providing  reasonable  assurances to minimize
potential vandalism.

                  (b) The  failure of Lessee to make any  payment of Rent or any
Security Deposit required to be made by Lessee  hereunder,  whether to Lessor or
to a third  party,  when due, to provide  reasonable  evidence of  insurance  or
surety bond, or to fulfill any  obligation  under this Lease which  endangers or
threatens  life or  property,  where such  failure  continues  for a period of 3
business days following  written notice to Lessee.

                  (c) The  failure by Lessee to provide (i)  reasonable  written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the  rescission  of an  unauthorized  assignment  or  subletting,  (iv) an
Estoppel Certificate,  (v) a requested  subordination,  (vi) evidence concerning
any guaranty and/or Guarantor,  (vii) any document requested under Paragraph 41,
(viii) material data safety sheets (MSDS),  or (ix) 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 10 days following
written notice 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 2.9 hereof,
other than those  described in  subparagraphs  13.1(a),  (b), (c) or (d), above,
where  such  Default  continues  for a period of 30 days after  written  notice;
provided, however, that if the nature of Lessee's Default is such that more than
30 days are reasonably  required for its cure, then it shall not be deemed to be
a Breach if Lessee  commences such cure within said 30 day period and thereafter
diligently prosecutes such cure to completion.

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

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

                  (g) If the  performance  of  Lessee's  obligations  under this
Lease is  guaranteed:  (i) the death of a Guarantor,  (ii) the  termination of a
Guarantor's  liability with respect to this Lease other than in accordance  with
the  terms of such  guaranty,  (iii) a  Guarantor's  becoming  insolvent  or the
subject  of a  bankruptcy  filing,  (iv) a  Guarantor's  refusal  to  honor  the
guaranty,  or  (v)  a  Guarantor's  breach  of  its  guaranty  obligation  on an
anticipatory  basis,  and Lessee's  failure,  within 60 days  following  written
notice of any such event, to provide written alternative  assurance or 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 of its affirmative duties
or obligations, within 10 days after written notice (or in case of an emergency,
without notice),  Lessor may, at its option,  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.  Lessee  shall pay to Lessor an amount equal to 115% of the costs and
expenses  incurred  by Lessor in such  performance  upon  receipt  of an invoice
therefor.  In the event of a Breach,  Lessor may, 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:

                  (a) Terminate  Lessee's right to possession of the Premises by
any lawful  means,  in which case this Lease shall  terminate  and Lessee  shall
immediately  surrender  possession  to  Lessor.  In such event  Lessor  shall be
entitled to recover  from  Lessee:  (i) the unpaid Rent which had been earned at
the time of  termination;  (ii) the worth at the time of award of the  amount by
which the unpaid rent which would have been earned after  termination  until the
time of award  exceeds  the amount of such  rental  loss that the Lessee  proves
could have been reasonably avoided;  (iii) the worth at the time of award of the
amount by which the  unpaid  rent for the  balance of the term after the time of
award  exceeds the amount of such rental  loss that the Lessee  proves  could be
reasonably avoided; and (iv) any other amount necessary to compensate Lessor for
all the  detriment  proximately  caused by the  Lessee's  failure to perform its
obligations  under this Lease or which in the ordinary course of things would be
likely to result therefrom,  including but not limited to the cost of recovering
possession  of  the  Premises,   expenses  of  reletting,   including  necessary
renovation and alteration of the Premises,  reasonable attorneys' fees, and that
portion of any leasing  commission  paid by Lessor in connection with this Lease
applicable to the unexpired  term of this Lease.  The worth at the time of award
of the  amount  referred  to in  provision  (iii) of the  immediately  preceding
sentence  shall be computed by  discounting  such amount at the discount rate of
the Federal  Reserve Bank of the District  within which the Premises are located
at the time of award plus one  percent.  Efforts by Lessor to  mitigate  damages
caused by  Lessee's  Breach of this  Lease  shall  not waive  Lessor's  right to
recover  damages under  Paragraph 12. If  termination  of this Lease is obtained
through the provisional remedy of unlawful detainer, Lessor shall have the right
to recover in such  proceeding  any 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. If a notice and grace period  required  under  Paragraph 13.1 was
not previously  given, a notice to pay rent or quit, or to perform or quit given
to Lessee under the unlawful  detainer  statute shall also constitute the notice
required by Paragraph  13.1. In such case, the applicable  grace period required
by Paragraph 13.1 and the unlawful detainer statute shall run concurrently,  and
the  failure of Lessee to cure the  Default  within the  greater of the two 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  and
recover the Rent as it becomes  due, in which event Lessee may sublet or assign,
subject only to reasonable limitations.  Acts of maintenance,  efforts to relet,
and/or the  appointment of a receiver to protect the Lessor's  interests,  shall
not constitute a termination of the Lessee's right to possession.

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


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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.  Any  agreement for free or abated rent or
other  charges,  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.  Upon
Breach  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,  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 shall not
be  deemed a  waiver  by  Lessor  of the  provisions  of this  paragraph  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 of Rent 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 any Lender. Accordingly, if any Rent
shall not be  received by Lessor  within 5 days after such amount  shall be due,
then, without any requirement for notice to Lessee, Lessee shall immediately pay
to Lessor a one-time  late charge  equal to 10% of each such  overdue  amount or
$100,  whichever  is  greater.  The parties  hereby  agree that such late charge
represents  a fair and  reasonable  estimate  of the costs  Lessor will incur by
reason of such late  payment.  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 the exercise of any of the other rights and remedies
granted hereunder. In the event that a late charge is payable hereunder, whether
or  not  collected,   for  3  consecutive   installments   of  Base  Rent,  then
notwithstanding any provision of this Lease to the contrary, Base Rent shall, at
Lessor's option, become due and payable quarterly in advance.

         13.5 Interest.  Any monetary payment due Lessor  hereunder,  other than
late charges, not received by Lessor, when due as to scheduled payments (such as
Base  Rent)  or  within  30 days  following  the  date on  which  it was due for
non-scheduled  payment,  shall  bear  interest  from the date  when  due,  as to
scheduled  payments,  or the  31st  day  after  it was  due as to  non-scheduled
payments.  The interest ("  Interest")  charged shall be computed at the rate of
10% per annum but shall not exceed the maximum rate allowed by law.  Interest is
payable in addition to the potential late charge provided for in Paragraph 13.4.

         13.6 Breach by Lessor.

                  (a) Notice of Breach.  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, a reasonable
time  shall in no event be less than 30 days after  receipt  by Lessor,  and any
Lender whose name and address  shall have been  furnished  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 30 days are reasonably required for its performance, then
Lessor shall not be in breach if  performance  is  commenced  within such 30 day
period and thereafter diligently pursued to completion.

                  (b)  Performance  by Lessee on Behalf of Lessor.  In the event
that neither Lessor nor Lender cures said breach within 30 days after receipt of
said notice,  or if having commenced said cure they do not diligently  pursue it
to completion, then Lessee may elect to cure said breach at Lessee's expense and
offset from Rent the actual and reasonable  cost to perform such cure,  provided
however, that such offset shall not exceed an amount equal to the greater of one
month's  Base  Rent  or  the  Security  Deposit,  reserving  Lessee's  right  to
reimbursement from Lessor for any such expense in excess of such offset.  Lessee
shall document the cost of said cure and supply said documentation to Lessor.

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 (collectively  "Condemnation" ), this Lease shall terminate as to the part
taken  as of the date  the  condemning  authority  takes  title  or  possession,
whichever first occurs.  If more than 10% of the floor area of the Unit, or more
than 25% of Lessee's Reserved Parking Spaces,  is taken by Condemnation,  Lessee
may, at Lessee's option,  to be exercised in writing within 10 days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice,  within  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 proportion
to the  reduction  in  utility  of the  Premises  caused  by such  Condemnation.
Condemnation  awards and/or  payments  shall be the property of Lessor,  whether
such  award  shall  be made as  compensation  for  diminution  in  value  of the
leasehold,  the value of the part taken,  or for  severance  damages;  provided,
however,  that  Lessee  shall  be  entitled  to any  compensation  for  Lessee's
relocation  expenses,  loss of business goodwill and/or Trade Fixtures,  without
regard to whether or not this Lease is terminated  pursuant to the provisions of
this Paragraph.  All Alterations and Utility  Installations made to the Premises
by Lessee,  for purposes of Condemnation  only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation  which is
payable  therefor.  In the event that this Lease is not  terminated by reason of
the Condemnation,  Lessor shall repair any damage to the Premises caused by such
Condemnation.

15.      Brokerage Fees.

         15.1 Additional  Commission.  In addition to the payments owed pursuant
to Paragraph 1.10 above,  and unless Lessor and the Brokers  otherwise  agree in
writing,  Lessor agrees that: (a) if Lessee exercises any Option,  (b) if Lessee
acquires  from  Lessor any rights to the  Premises  or other  premises  owned by
Lessor and located  within the Project,  (c) if Lessee  remains in possession of
the Premises, with the consent of Lessor, after the expiration of this Lease, or
(d) if  Base  Rent  is  increased,  whether  by  agreement  or  operation  of an
escalation  clause  herein,  then,  Lessor shall pay Brokers a fee in accordance
with the schedule of the Brokers in effect at the time of the  execution of this
Lease.

         15.2  Assumption  of  Obligations.  Any buyer or transferee of Lessor's
interest  in this  Lease  shall be deemed to have  assumed  Lessor's  obligation
hereunder.  Brokers  shall be third party  beneficiaries  of the  provisions  of
Paragraphs  1.10,  15, 22 and 31. If Lessor  fails to pay to Brokers any amounts
due as and for  brokerage  fees  pertaining  to this Lease  when due,  then such
amounts shall accrue Interest.  In addition,  if Lessor fails to pay any amounts
to Lessee's  Broker when due,  Lessee's Broker may send written notice to Lessor
and Lessee of such  failure and if Lessor  fails to pay such  amounts  within 10
days after said  notice,  Lessee  shall pay said monies to its Broker and offset
such amounts against Rent. In addition,  Lessee's Broker shall be deemed to be a
third party  beneficiary  of any  commission  agreement  entered  into by and/or
between  Lessor and Lessor's  Broker for the limited  purpose of collecting  any
brokerage fee owed.

         15.3  Representations and Indemnities of Broker  Relationships.  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 the  Brokers,  if any) in
connection  with this  Lease,  and that no one other than said named  Brokers is
entitled to any  commission or finder's fee in connection  herewith.  Lessee and
Lessor do each hereby  agree to  indemnify,  protect,  defend and hold the other
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, attorneys' fees reasonably incurred with respect thereto.

16.      Estoppel Certificates.

                  (a) Each Party (as  "Responding  Party")  shall within 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 form
similar to the then most current  "Estoppel  Certificate"  form published by the
AIR  Commercial  Real  Estate  Association,  plus such  additional  information,
confirmation and/or statements as may be reasonably  requested by the Requesting
Party.

                  (b) If the  Responding  Party shall fail to execute or deliver
the Estoppel  Certificate  within such 10 day period,  the Requesting  Party may
execute an Estoppel Certificate stating that: (i) the Lease is in full force and
effect  without  modification  except as may be  represented  by the  Requesting
Party, (ii) there are no uncured defaults in the Requesting Party's performance,
and (iii) if Lessor is the Requesting  Party, not more than one month's rent has
been paid in advance. Prospective purchasers and encumbrancers may rely upon the
Requesting  Party's  Estoppel  Certificate,  and the  Responding  Party shall be
estopped from denying the truth of the facts contained in said Certificate.

                  (c) If  Lessor  desires  to  finance,  refinance,  or sell the
Premises,  or any part thereof,  Lessee shall deliver to any potential lender or
purchaser  designated by Lessor such publicly available financial  statements as
contained in annual and quarterly  reports  filed by Lessee with the  Securities
and  Exchange  Commission  (the  "Financial  Statements")  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 set forth. ***deleted***

17.       Definition  of Lessor. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or, if
this is a sublease, of the Lessee's interest in the prior lease. In the event of
a transfer of Lessor's  title or interest in the Premises or this Lease,  Lessor
shall  deliver to the  transferee  or assignee (in cash or by credit) any unused
Security  Deposit held by Lessor.  Except as provided in Paragraph 15, 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.  Notwithstanding  the above, and subject to the provisions of Paragraph
20 below,  the original Lessor under this Lease,  and all subsequent  holders of
the Lessor's  interest in this Lease shall remain  liable and  responsible


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with regard to the  potential  duties and  liabilities  of Lessor  pertaining to
Hazardous substances as outlined in Paragraph 6.2 above.

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.       Days.  Unless otherwise  specifically  indicated to the contrary,  the
word " days" as used in this Lease shall mean and refer to calendar days.

20.       Limitation  on Liability.  The  obligations of Lessor under this Lease
shall not constitute personal  obligations of Lessor, or its partners,  members,
directors, officers or shareholders,  and Lessee shall look to the Premises, and
to no other assets of Lessor,  for the  satisfaction  of any liability of Lessor
with  respect  to this  Lease,  and shall  not seek  recourse  against  Lessor's
partners, members, directors, officers or shareholders, or any of their personal
assets for such satisfaction.

21.       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.

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 use, 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.  The  liability  (including  court costs and  attorneys'
fees),  of any  Broker  with  respect to  negotiation,  execution,  delivery  or
performance  by either  Lessor or Lessee  under this Lease or any  amendment  or
modification hereto shall be limited to an amount up to the fee received by such
Broker pursuant to this Lease; provided,  however, that the foregoing limitation
on each Broker's  liability  shall not be applicable to any gross  negligence or
willful misconduct of such Broker.

23.      Notices.

         23.1 Notice  Requirements.   All notices  required or permitted by this
Lease or  applicable  law shall be in writing and may be delivered in person (by
hand or by courier) or may be sent by regular,  certified or registered  mail or
U.S.  Postal  Service  Express  Mail,  with  postage  prepaid,  or by  facsimile
transmission,  and  shall be  deemed  sufficiently  given if  served 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
notices.  Either  Party may by written  notice to the other  specify a different
address for notice, except that upon Lessee's taking possession of the Premises,
the Premises shall constitute Lessee's address for notice. A copy of all notices
to Lessor  shall be  concurrently  transmitted  to such party or parties at such
addresses as Lessor may from time to time hereafter designate in writing.

         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 72 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  guarantee  next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal
Service or courier.  Notices  transmitted by facsimile  transmission  or similar
means  shall  be  deemed  delivered  upon  telephone   confirmation  of  receipt
(confirmation  report from fax machine is  sufficient),  provided a copy is also
delivered via delivery or mail.  If notice is received on a Saturday,  Sunday or
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 of any other term, covenant or condition hereof.  Lessor's
consent  to, or approval  of, any 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.  The acceptance of
Rent by Lessor  shall not be a waiver of any  Default or Breach by  Lessee.  Any
payment by Lessee may be  accepted by Lessor on account of monies 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.       Disclosures Regarding The Nature of a Real Estate Agency Relationship.

                  (a) When entering  into a discussion  with a real estate agent
regarding a real estate  transaction,  a Lessor or Lessee should from the outset
understand what type of agency  relationship or  representation  it has with the
agent or agents in the transaction.  Lessor and Lessee acknowledge being advised
by the Brokers in this transaction, as follows:

                           (i) Lessor's  Agent. A Lessor's agent under a listing
agreement  with the  Lessor  acts as the agent for the Lessor  only.  A Lessor's
agent or subagent has the following  affirmative  obligations:  To the Lessor: A
fiduciary duty of utmost care, integrity,  honesty, and loyalty in dealings with
the Lessor.  To the Lessee and the Lessor : a.  Diligent  exercise of reasonable
skills and care in  performance of the agent's  duties.  b. A duty of honest and
fair dealing and good faith.  c. A duty to disclose all facts known to the agent
materially  affecting  the value or  desirability  of the property  that are not
known to, or within the diligent  attention and observation of, the Parties.  An
agent is not  obligated to reveal to either Party any  confidential  information
obtained from the other Party which does not involve the affirmative  duties set
forth above.

                           (ii)  Lessee's  Agent.  An agent  can agree to act as
agent for the Lessee only.  In these  situations,  the agent is not the Lessor's
agent,  even if by  agreement  the agent may receive  compensation  for services
rendered,  either in full or in part from the Lessor. An agent acting only for a
Lessee has the following  affirmative  obligations.  To the Lessee:  A fiduciary
duty of utmost  care,  integrity,  honesty,  and  loyalty in  dealings  with the
Lessee. To the Lessee and the Lessor : a. Diligent exercise of reasonable skills
and care in  performance  of the  agent's  duties.  b. A duty of honest and fair
dealing  and good  faith.  c. A duty to  disclose  all facts  known to the agent
materially  affecting  the value or  desirability  of the property  that are not
known to, or within the diligent  attention and observation of, the Parties.  An
agent is not  obligated to reveal to either Party any  confidential  information
obtained from the other Party which does not involve the affirmative  duties set
forth above.

                           (iii) Agent  Representing  Both Lessor and Lessee.  A
real estate  agent,  either  acting  directly  or through one or more  associate
licenses,  can  legally  be the  agent of both the  Lessor  and the  Lessee in a
transaction,  but only with the knowledge and consent of both the Lessor and the
Lessee.  In a dual agency  situation,  the agent has the  following  affirmative
obligations  to both the Lessor and the Lessee:  a. A  fiduciary  duty of utmost
care,  integrity,  honesty and loyalty in the dealings with either Lessor or the
Lessee.  b.  Other  duties to the  Lessor  and the  Lessee  as  stated  above in
subparagraphs (i) or (ii). In representing both Lessor and Lessee, the agent may
not without the express  permission  of the  respective  Party,  disclose to the
other  Party  that the  Lessor  will  accept  rent in an  amount  less than that
indicated in the listing or that the Lessee is willing to pay a higher rent than
that offered.  The above duties of the agent in a real estate transaction do not
relieve  a Lessor  or  Lessee  from the  responsibility  to  protect  their  own
interests. Lessor and Lessee should carefully read all agreements to assure that
they adequately  express their  understanding of the transaction.  A real estate
agent is a person qualified to advise about real estate.  If legal or tax advice
is desired, consult a competent professional.

                  (b) Brokers have no responsibility  with respect to anydefault
or breach  hereof by either  Party.  The Parties  agree that no lawsuit or other
legal  proceeding  involving any breach of duty,  error or omission  relating to
this Lease may be brought against Broker more than one year after the Start Date
and that the  liability  (including  court costs and  attorneys'  fees),  of any
Broker with respect to any such lawsuit and/or legal proceeding shall not exceed
the fee received by such Broker pursuant to this Lease; provided,  however, that
the foregoing  limitation on each Broker's  liability shall not be applicable to
any gross negligence or willful misconduct of such Broker.

                  (c)  Buyer  and  Seller   agree  to  identify  to  Brokers  as
"Confidential" any communication or information given Brokers that is considered
by such Party to be confidential.

26.       No Right To Holdover.  Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee  holds over,  then the Base Rent shall be  increased to
150% of the  Base  Rent  applicable  immediately  preceding  the  expiration  or
termination. Nothing contained herein shall be construed as 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;  Construction of Agreement. All  provisions
of this Lease to be  observed  or  performed  by Lessee are both  covenants  and
conditions.  In  construing  this  Lease,  all  headings  and titles are for the
convenience  of the  Parties  only and  shall not be  considered  a part of this
Lease.  Whenever required by the context,  the singular shall include the plural
and vice versa.  This Lease shall not be  construed as if prepared by one of the
Parties, but rather according to its fair meaning as a whole, as if both Parties
had prepared it.

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.


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         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 upon the Premises, to any and all advances made on the security
thereof,  and to all renewals,  modifications,  and extensions  thereof.  Lessee
agrees that the  holders of any such  Security  Devices (in this Lease  together
referred to as "Lender") shall have no liability or obligation to perform any of
the  obligations  of Lessor under this Lease.  Any Lender may elect to have this
Lease  and/or any Option  granted  hereby  superior to the lien of its  Security
Device by giving written notice thereof to Lessee, whereupon 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.  In the event that Lessor transfers title to the
Premises,  or the  Premises  are  acquired by another  upon the  foreclosure  or
termination of a Security Devise to which this Lease is subordinated  (i) Lessee
shall,  subject to the  non-disturbance  provisions of Paragraph 30.3, attorn to
such new owner, and upon request, enter into a new lease,  containing all of the
terms and provisions of this Lease, with such new owner for the remainder of the
term hereof, or, at the election of the new owner, this Lease will automatically
become a new lease  between  Lessee and such new owner,  and (ii)  Lessor  shall
thereafter be relieved of any further  obligations  hereunder and such new owner
shall assume all of Lessor's obligations,  except that such new owner shall not:
(a) be liable for any act or  omission  of any prior  lessor or with  respect to
events  occurring  prior to  acquisition  of  ownership;  (b) be  subject to any
offsets or defenses  which Lessee might have  against any prior  lessor,  (c) be
bound by  prepayment  of more than one  month's  rent,  or (d) be liable for the
return of any security deposit paid to any prior lessor.

              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 a  commercially  reasonable  non-disturbance
agreement (a "Non-Disturbance Agreement" ) from the Lender which Non-Disturbance
Agreement  provides  that Lessee's  possession of the Premises,  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.  Further,  within 60 days after the  execution  of this Lease,  Lessor
shall  use its  commercially  reasonable  efforts  to  obtain a  Non-Disturbance
Agreement from the holder of any  pre-existing  Security Device which is secured
by  the   Premises.   In  the  event  that  Lessor  is  unable  to  provide  the
Non-Disturbance  Agreement  within  said 60 days,  then  Lessee may, at Lessee's
option,  directly  contact Lender and attempt to negotiate for the execution and
delivery of a Non-Disturbance  Agreement.

              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 the Premises,  Lessee and Lessor shall execute
such further writings as may be reasonably  required to separately  document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

31.       Attorneys' Fees. If any Party or Broker brings an action or proceeding
involving  the  Premises  whether  founded in tort,  contract  or equity,  or to
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'  fees 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. In addition,
Lessor shall be entitled to attorneys' fees, costs and expenses  incurred in the
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  ($200 is a  reasonable  minimum  per
occurrence for such services and consultation).

32.       Lessor's   Access;  Showing  Premises;  Repairs.    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
after reasonable prior notice for the purpose of showing the same to prospective
purchasers,   lenders,  or  tenants,  and  making  such  alterations,   repairs,
improvements  or  additions  to the  Premises  as Lessor may deem  necessary  or
desirable and the erecting, using and maintaining of utilities,  services, pipes
and conduits  through the Premises  and/or other premises as long as there is no
material  adverse  effect on Lessee's use of the Premises.  All such  activities
shall be without abatement of rent or liability to Lessee.

33.         Auctions.  Lessee shall not conduct, nor permit to be conducted, any
auction upon the Premises without  Lessor's prior written consent.  Lessor shall
not be  obligated  to exercise any  standard of  reasonableness  in  determining
whether to permit an auction.

34.       Signs.  Lessor may place on the Premises  ordinary "For Sale" signs at
any time and  ordinary  "For Lease"  signs  during the last 6 months of the term
hereof. Except for ordinary "For Sublease" signs which may be placed only on the
Premises,  Lessee  shall not place any sign upon the  Project  without  Lessor's
prior written consent. All signs must comply with all Applicable Requirements.

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,  that Lessor may elect to continue any one or all
existing subtenancies.  Lessor's failure within 10 days following any such event
to elect 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.  Except 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,
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 upon receipt
of an invoice and supporting  documentation  therefor.  Lessor's  consent to any
act,  assignment or subletting  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.
The failure to specify herein any particular condition to Lessor's consent shall
not preclude the  imposition 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.  In the event that either Party disagrees with
any  determination  made by the other  hereunder  and  reasonably  requests  the
reasons for such determination,  the determining party shall furnish its reasons
in writing and in  reasonable  detail  within 10 business  days  following  such
request.

37.      Guarantor.

         37.1 Execution.  The Guarantors,  if any, shall each execute a guaranty
in  the  form  most  recently  published  by  the  AIR  Commercial  Real  Estate
Association,.

         37.2  Default.  It shall  constitute  a  Default  of the  Lessee if any
Guarantor  fails or  refuses,  upon  request to  provide:  (a)  evidence  of the
execution of the  guaranty,  including  the  authority  of the party  signing on
Guarantor's  behalf  to  obligate  Guarantor,  and in the  case  of a  corporate
Guarantor,  a  certified  copy  of  a  resolution  of  its  board  of  directors
authorizing the making of such guaranty,  (b) current financial statements,  (c)
an Estoppel Certificate,  or (d) written confirmation that the guaranty is still
in effect.

38.       Quiet  Possession.    Subject  to  payment  by  Lessee of the Rent and
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 and quiet enjoyment of the Premises during the term hereof.

39.       Options.  If Lessee is granted an option,  as defined below,  then the
following provisions shall apply.

         39.1 Definition.  "Option" shall mean: (a) the right to extend the term
of or renew this Lease or to extend or renew any lease that  Lessee has on other
property  of  Lessor;  (b) the right of first  refusal  or first  offer to lease
either the  Premises or other  property of Lessor;  (c) the right to purchase or
the right of first refusal to purchase the Premises or other property of Lessor.

         39.2 Options Personal To Original Lessee.  Any Option granted to Lessee
in this Lease is  personal  to the  original  Lessee,  and cannot be assigned or
exercised by anyone other than said original  Lessee and only while the original
Lessee is in full  possession of the Premises and, if requested by Lessor,  with
Lessee  certifying  that Lessee has no  intention  of  thereafter  assigning  or
subletting.

         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 have been validly exercised.

         39.4 Effect of Default on Options.

                  (a) Lessee  shall  have no right to  exercise  an Option:  (i)
during the  period  commencing  with the  giving of any  notice of  Default  and
continuing until said Default is cured,  (ii) during the period of time any Rent
is unpaid  (without  regard to whether notice  thereof is given  Lessee),  (iii)
during  the time  Lessee is in Breach of this  Lease,  or (iv) in the event that
Lessee has been given 3 or more notices of separate Default,  whether or not the
Defaults  are  cured,  during  the 12 month  period  immediately  preceding  the
exercise of the Option.

                  (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) 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 prior to the  commencement  of the  extended  term or
completion of the purchase, (i) Lessee fails to pay Rent for a period of 30 days
after such Rent  becomes due  (without  any  necessity  of Lessor to give notice
thereof), or (ii) if Lessee commits a Breach of this Lease.

40.       Security Measures. Lessee hereby acknowledges that the Rent 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.


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41.       Reservations.  Lessor  reserves the right:  (i) to grant,  without the
consent or joinder of Lessee, such easements, rights and dedications that Lessor
deems necessary,  (ii) to cause the recordation of parcel maps and restrictions,
and  (iii) to  create  and/or  install  new  utility  raceways,  so long as such
easements, rights, dedications,  maps, restrictions, and utility raceways do not
unreasonably  interfere with the use of the Premises by Lessee. Lessee agrees to
sign any documents reasonably requested by Lessor to effectuate such rights.

42.       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 sum or so much  thereof as it was not legally  required to pay. A Party who
does not initiate  suit for the recovery of sums paid "under  protest"  within 6
months shall be deemed to have waived its right to protest such payment.

43.       Authority.  If either Party hereto is a  corporation,  trust,  limited
liability company,  partnership,  or similar entity,  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.  Each Party
shall,  within 30 days after  request,  deliver to the other Party  satisfactory
evidence of such authority.

44.       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.

45.       Offer.  Preparation  of this Lease by either  party or their agent and
submission  of same to the other  Party shall not be deemed an offer to lease to
the other  Party.  This Lease is not intended to be binding  until  executed and
delivered by all Parties hereto.

46.       Amendments.  This Lease may be modified only in writing, signed by the
Parties  in  interest  at the time of the  modification.  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 a Lender in  connection  with the  obtaining of normal  financing or
refinancing of the Premises.

47.       Multiple Parties. If more than one person or entity is named herein as
either  Lessor or Lessee,  such  multiple  Parties  shall have joint and several
responsibility to comply with the terms of this Lease.

48.       Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO TRIAL BY JURY IN ANY ACTION OR  PROCEEDING  INVOLVING THE PROPERTY OR ARISING
OUT OF THIS AGREEMENT.

49.       Mediation  and  Arbitration  of Disputes.  An Addendum  requiring  the
Mediation  and/or the  Arbitration  of all disputes  between the Parties  and/or
Brokers arising out of this Lease [ ] is [X] is not attached to this Lease.

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.

ATTENTION:  NO  REPRESENTATION  OR  RECOMMENDATION IS MADE BY THE AIR COMMERCIAL
REAL  ESTATE  ASSOCIATION  OR BY ANY BROKER AS TO THE LEGAL  SUFFICIENCY,  LEGAL
EFFECT,  OR TAX  CONSEQUENCES  OF THIS  LEASE  OR THE  TRANSACTION  TO  WHICH IT
RELATES. THE PARTIES ARE URGED TO:

1. SEEK ADVICE OF COUNSEL AS TOTHE LEGALAND TAXCONSEQUENCES OF THIS LEASE.

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES.  SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS  SUBSTANCES,  THE ZONING OF THE PREMISES,  THE  STRUCTURAL
INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS,  COMPLIANCE WITH THE
AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S
INTENDED USE.

WARNING:  IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA,  CERTAIN
PROVISIONS  OF THE LEASE MAY NEED TO BE REVISED  TO COMPLY  WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES ARE LOCATED.

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

Executed at: Fairfield California                Executed at: NAPA, CA
             --------------------------          -------------------------------
On:          1-22-2004                           On:  1/21/2004
             --------------------------          -------------------------------

By LESSOR:                                       By LESSEE:

James N. Ditmer d.b.a. Cordelia Edison           North Bay Bancorp, a California
Partners                                         corporation
---------------------------------------          -------------------------------

By:          /s/ James N. Ditmer                 By: /s/ Terry L. Robinson
             --------------------------          -------------------------------
Name Printed:    James N. Ditmer                 Name Printed: Terry L. Robinson
             --------------------------          -------------------------------
Title:                                           Title: President/CEO
             --------------------------          -------------------------------

By:                                              By:
             --------------------------          -------------------------------
Name Printed:                                    Name Printed:
             --------------------------          -------------------------------
Title:                                           Title:
             --------------------------          -------------------------------
Address:     2534 Derby Drive                    Address: 1190 Airport Road,
             --------------------------          -------------------------------
             San Ramon, California               Suite 101, P.O. Box 2200
             --------------------------          -------------------------------
             94583                               Napa, California 94558
             --------------------------          -------------------------------

Telephone:   (925) 327-1754                      Telephone:(707) 252-5024
             --------------------------          -------------------------------
Facsimile:   (925) 327-1777                      Facsimile:(707) 252-5025
             --------------------------          -------------------------------
Federal ID No.                                   Federal ID No.
             --------------------------          -------------------------------

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: AIR COMMERCIAL REAL ESTATE  ASSOCIATION,  700 South Flower Street,
Suite 600, Los Angeles, CA 90017. (213) 687-8777.

          (c)Copyright 1998 By AIR Commercial Real Estate Association.
                              All rights reserved.

          No part of these works may be reproduced in any form without
                             permission in writing.


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   Initials                                                         Initials
                                  Page 12 of 12
(c)1998-American Industrial Real Estate Association            FORM MTG-2-11/98E

                                    REVISED

<PAGE>

                                   ADDENDUM I
                                       TO
            STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT LEASE - GROSS


This  Addendum I to Standard  Industrial/Commercial  Multi-Tenant  Lease - Gross
(the  "Addendum I") is attached to, made a part of, and  incorporated  into that
certain Standard Industrial/Commercial Multi-Tenant Lease - Gross (the "Standard
Lease") dated January 5, 2004 by and between  James N. Ditmer,  d.b.a.  Cordelia
Edison  Partners  ("Lessor"),  as Lessor,  and North Bay  Bancorp,  a California
corporation  ("Lessee"),  as Lessee, covering the premises located at 499 Edison
Court, Suite A-1, City of Fairfield, County of Solano, State of California.

If any portion of the  Standard  Lease  should  conflict  with the terms of this
Addendum I, the terms of this Addendum I shall control.

Defined terms not  otherwise  defined in this Addendum I shall have the meanings
ascribed to such terms in the Standard Lease.

All  references to the "Lease" in the Standard Lease or in this Addendum I shall
mean, collectively, the Standard Lease as modified by this Addendum I.

50.       Rent:
          Months                Monthly Rent Schedule, Industrial Gross
          ------                ---------------------------------------
          01-12                 $1,900.00
          13-24                 $1,957.00
          25-36                 $2,015.00

51.       Lessor's Obligations:

                  Lessor  shall  be  responsible  for the  following  costs  and
                  obligations:

                  o  Base year real estate taxes;

                  o  Base year property insurance; and

                  o  Base year common area maintenance,  included in common area
                     maintenance;  landscaping,  fencing,  lighting,  driveways,
                     parking lot, roof and wall maintenance.

52.       Lessee's Obligations:

                  Lessee shall be responsible  for the following  pro-rata costs
                  and obligations:

                  o  Any increase over base year (2004) property taxes, property
                     insurance and CAM charges.

53.       Lessor's Improvements:

                  Lessor,  at Lessor's sole cost and expense,  shall provide the
                  following improvements prior to lease commencement:

                  o  Frame in the wall; and

                  o  install carpet in the downstairs office.

54.       Lessee's Improvements:

                  Any work  performed  by Lessee  shall be subject  to  Lessor's
                  prior approval, which shall not be unreasonably withheld.

55.       Condition of Premises:

                  Prior to Occupancy, Lessor shall deliver the Premises in broom
                  clean condition with all structural,  mechanical,  electrical,
                  HVAC, fire sprinklers,  warehouse lights, and plumbing systems
                  In good working order and operating condition.

56.       Lessor's Right of Entry:

                  Notwithstanding   any  provision   within  the  Lease  to  the
                  contrary,  Lessor's  only  right  of entry  onto the  Premises
                  during the lease term is  limited to the rights  contained  in
                  this  Section.  Lessee shall  permit  Lessor  and/or  Lessor's
                  authorized  representatives  to enter the Premises at any time
                  in the case of emergency,  and  otherwise at reasonable  times
                  for the purpose of  inspecting  the  condition of the Premises
                  and for  verifying  compliance by Lessee with the Lease during
                  usual  business  hours  and  upon  reasonable  advance  notice
                  provided that an officer of the Lessee will be present  during
                  such entry. Any entry onto the Premises  conducted pursuant to
                  this  section  shall be  conducted  in a manner which will not
                  unreasonably   interfere   with  the   operation  of  Lessee's
                  business.  In the event of any entry onto the  Premises in the
                  case  of  an  emergency,   Lessor's  representative  shall  be
                  permitted  to enter the  Premises  for the limited  purpose of
                  admitting fire,  police, or other public safety officials onto
                  the Premises.  Lessor's  representatives shall be permitted to
                  remain  on the  premises  in the event of an  emergency  while
                  public safety officials are on the Premises.

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                                                                      Initials
                                   Page 1 of 3

<PAGE>

57.       Dual Agency:

                   Lessee  and Lessor  understand,  acknowledge  and  consent to
                   Colliers International acting in the capacity of a dual agent
                   in this  transaction.  Lessor shall be responsible for paying
                   the real estate commission per the Lease Agreement.


LESSOR:                                        LESSEE:

James N. Pitmer, d.b.a.                        North Bay Bancorp, a California
Cordelia Edison Partners                       corporation


By:  /s/ James N. Ditmer                       By:  /s/ Terry Robinson
   --------------------------------               ------------------------------
     James N. Ditmer-Owner                          Terry Robinson-President/CEO

Date:     1-22-2004                            Date:  1/22/2004


                                                                  --------------
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                                                                  --------------
                                                                      Initials
                                   Page 2 of 3

<PAGE>

                                    EXHIBIT A


                           499 Edison Court, Suite A-1


                                  [FLOOR PLAN]


                                   Page 3 of 3


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                                                                      Initials