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                                                                    Exhibit 10.1

                  AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

           STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE -- NET
               (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

1.   Basic Provisions ("Basic Provisions").

     1.1  Parties: This Lease ("Lease"), dated for reference purposes only,
December 1, 1999, is made by and between York Moorpark Industrial, L.L.C.
("Lessor") and Variflex, Inc. ("Lessee"), (collectively the "Parties," or
individually a "Party").

     1.2  Promises: That certain real property, including all improvements
therein and commonly known as 5152 North Commerce Avenue, located in the County
of Ventura, State of California, and generally described as (describe briefly
the nature of the property and, if applicable, the "Project", if the property is
located within a Project) approximately 4.36 acres containing a 104,000 sf.
free-standing building ("Building") (the "Premises") which is a part of a larger
Project consisting of the Building and another free-standing building commonly
known as 5156 North Commerce Avenue, Moorpark, CA consisting of approximately
31,233 sf. The Premises represents 76.9% of the Project, based on square footage
of the two buildings. (See also Paragraph 2)

     1.3  Term: Six (6) years and one (1) months ("Original Term") commencing
December 1, 1999 ("Commencement Date") and ending December 31, 2005 ("Expiration
Date").  (See also Paragraph 3.54(c)(ii), and 58)

     1.4  Early Possession: Tenant currently in possession ("Early Possession
Date") (See also Paragraphs 3.2 and 3.3)

     1.5  Base Rent: $31,731.84 per month ("Base Rent"), payable on the first
each month commencing December 1, 1999. (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  Base Rent previously paid pursuant to the Original Lease (defined in
the Addendum hereto): $33,280 to be applied as a portion of the Base Rent for
the last month of the Lease, including any extensions thereof.

     1.7  Security Deposit: $42,640 of which $33,280 has been paid by Lessor
pursuant to the Original Lease. An additional deposit in the amount of $9,360
("Additional Security Deposit") is due and payable on or before January 1, 2001.
The deposit of $33,280 and the Additional Security Deposit total $42,640 and are
collectively referred to as ("Security Deposit"). (See also Paragraph 5)

     1.8  Agreed Use: General office use, warehouse, assembly, distribution and
light manufacturing of sports and recreational equipment. (See also Paragraph 6)

     1.9  Insuring Party: Lessee is the "Insuring Party" unless otherwise stated
herein.  (See also Paragraph 8)

     1.10 Real Estate Brokers:  (See also Paragraph 15)

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

* N/A                      represents Lessor exclusively ("Lessor's Broker");
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* N/A                      represents Lessee exclusively ("Lessee's Broker"); or
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* N/A                      represents both Lessor and Lessee ("Dual Agency").
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          (b)  Payment to Brokers: Upon execution and delivery of this Lease by
both Parties, Lessor shall pay to the Broker the fee agreed to in  N/A %  of
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the total Base Rent for the brokerage services rendered by Broker).

     1.11 Guarantor.  The obligations of the Lessee under this Lease are to be
guaranteed by  N/A               ("Guarantor").  (See also Paragraph 37)
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     1.12 Addenda and Exhibits.  Attached hereto is an Addendum or Addenda
consisting of Paragraphs 50 through 60 and Exhibit "A" - Site Plan of Project,
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 rental, is an approximation which the Parties agree is
reasonable and the rental based thereon is not subject to revision whether or
not the actual size is more or less.

     2.2  Condition. Lessor shall deliver the Premises to Lessee in its current
"AS IS" condition, except as set forth in Paragraph 59 below.

     2.3  Compliance. Lessor warrants that the improvements on the Premises
comply with all applicable laws, covenants or restrictions of record, building
codes, regulations and ordinances ("Applicable Requirements") in effect on the
Start Date. Said warranty does not apply to the use to which Lessee will put the
Premises or to any Alterations or Utility Installations (as defined in Paragraph
7.3(a)) made or to be made by Lessee. NOTE: Lessee is for determining whether or
not the zoning is 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 Lessors expense.
If Lessee does not give Lessor written notice of a non-compliance with this
warranty prior to execution of this Lease, 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 (as opposed to being in existence
at the Start Date, which is addressed in Paragraph 6.2(e) below) so as to
require during the term of this Lease the construction of an addition to or an
alteration of the Building, the remediation of any Hazardous Substance, or the
reinforcement or other physical modification of the 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.

          (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
such costs pursuant to the provisions of Paragraph 7.1(c); provided however,
that the useful lives of such Capital Expenditures shall not exceed ten (10)
years; provided, however, that if such Capital Expenditure is required during
the last two years of this Lease, including any extensions, whether or not
exercised, and the cost of such Capital Improvement Expenditure exceeds
$100,000, Lessor shall have the option to terminate this Lease upon ninety days
prior written notice to Lessee unless Lessee notifies Lessor, in writing, within
ten (10) days after receipt of Lessors termination notice that Lessee will pay
for such Capital Expenditure.

          (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 be
fully responsible for the cost thereof, and 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 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)

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neither Lessor, Lessor's agents, nor any Broker has made any oral or written
representations or warranties with respect to said matters other than as set
forth in this Lease.

     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.

3.   Term.

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

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  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.
Rent for any period during the term hereof which is for less than one (1) 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
Lessors endorsement of any check so stating.

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 said Security Deposit, Lessee shall within ten (10) days after written
request therefor deposit monies with Lessor sufficient to restore said Security
Deposit to the full amount required by this Lease.  If the Base Rent increases
during the term of this Lease, Lessee shall, upon written request from Lessor,
deposit additional monies with Lessor so that the total amount of the Security
Deposit shall at all times bear the same proportion to the Increased Base Rent
as the Initial Security Deposit bore to the initial Base Rent.  Should the
Agreed Use be amended to accommodate a material change in the business of Lessee
or to accommodate a subleases or assignee, Lessor shall have the right to
increase the Security Deposit to the extent necessary, in Lessors 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 said change in
financial condition.  Lessor shall not be required to keep the Security Deposit
separate from its general accounts.  Within fourteen (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 thirty (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,
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 owners and/or occupants of, or causes damage to other tenants of the
Project, or neighboring properties. 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 is legal, will not impair the structural integrity of the
improvements on the Premises or the Building, Including Alterations, and/or
Utility Installations,

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or the mechanical or electrical systems therein, is not significantly more
burdensome to the Premises or the Project, does not conflict with any other
tenant's use of the Project, does not involve any more dangerous product than
the Agreed Use or any Hazardous Substance, and does not increase the insurance
premiums for the Premises, the Building or the Project. If Lessor elects to
withhold consent, Lessor shall within five (5) business days after such request
give written notification of same, which notice shall include an explanation of
lessor's objections to the change in use.

     6.2  Hazardous Substances.

          (a)  Reportable Uses Require Consent. The term "Hazardous Substance"
as used in this Lease shall mean any product, substance, 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: (1) 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, 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, 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 adjacent properties). 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,

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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 existed as a result of Hazardous Substances on the
Premises prior to June 8, 1992 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 June 8, 1992, 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
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 $100,000 give written notice to Lessee, within thirty (30) days after
receipt by Lessor of knowledge of the occurrence of such Hazardous Substance
Condition, of Lassoes desire to terminate this Lease as of the date sixty (60)
days following the date of such notice. In the event Lessor elects to give a
termination notice, Lessee may, within ten (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 $100,000. Lessee
shall provide Lessor with said funds or satisfactory assurance thereof within
thirty (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 the Premises, without regard to whether said
requirements are now in effect or become effective after the Start Date.  Lessee
shall, within ten (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.

     6.4  Inspection; Compliance.  Lessor and Lessors "Lender" (as defined in
Paragraph 30 below) and consultants shall have the right to enter into Premises
at any time, in the case of an emergency, and otherwise at reasonable times, 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 by Lessee, its employees, agents, or invitees
of Applicable Requirements, or a contamination is found to exist or be imminent
as is created by Lessee, its employees, agents, invitee, or the inspection is
requested or ordered by a

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governmental authority as a result of Lessee's use of the Premises or any other
act or failure to act of Lessee, its employees, agents or Invitees. In such
case, Lessee shall upon request reimburse Lessor for the cost of such
inspections, so long as such inspection is reasonably related to the foregoing
violation, contamination or government request or order.

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

     7.1  Lessee's Obligations.

          (a)  In General. Subject to the provisions of Paragraph 6.3 (Lessee's
Compliance with Applicable Requirements), 7.2 (Lessors Obligations), 9 (Damage
or Destruction), and 14 (Condemnation), Lessee shall, at Lessee's sole expense,
keep the Premises, Utility Installations, 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, heating, ventilating, air-conditioning, electrical, lighting
facilities, boilers, pressure vessels, fire protection system, fixtures, walls
(interior and exterior), foundations, ceilings, roofs, floors, windows, doors,
plate glass, skylights, landscaping, driveways, parking lots, fences, retaining
walls, signs, sidewalks and parkways located in, on, or adjacent to the Premises
and Lessee's pro-rata share, as get forth in Paragraph 1.2 herein, of Project
parking and drive areas. 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. Lessee shall, during the term of this Lease, keep the exterior
appearance of the Building in a first-class condition consistent with the
exterior appearance of other similar facilities of comparable age and size in
the vicinity, including, when necessary, the exterior repainting of the
Building.

          (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) fire extinguishing systems, including fire alarm and/or smoke
detection, (iv) landscaping and irrigation systems, (v) roof covering and
drains, (vi) driveways and parking lots, (vii) clarifiers (viii) basic utility
feed to the perimeter of the Building, and (ix) any other equipment, if
reasonably required by Lessor.

          (c)  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 the Basic Elements 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 Basic Elements, then such Basic Elements 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 the number of months of the useful life
of such replacement as such useful life is specified pursuant to Federal income
tax regulations or guidelines for depreciation thereof (including interest on
the unamortized balance as is then commercially reasonable in the judgment of
Lessors accountants), with Lessee reserving the right to prepay its obligation
at any time.

     7.2  Lessor's Obligations. Subject to the provisions of Paragraphs 9
(Damage or Destruction) and 14 (Condemnation), it is Intended by the Parties
hereto that Lessor have no obligation, in any manner whatsoever, to repair and
maintain the Premises, or the equipment therein, all of which obligations are
Intended to be that of the Lessee. It is the intention of the Parties that the
terms of this Lease govern the respective obligations of the Parties as to
maintenance and repair of the Premises, and they expressly waive 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.

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          (a)  Definitions; Consent Required. The term "Utility Installations"
refers to all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems, communication systems,
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). Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessors 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, and the cumulative cost
thereof during this Lease as extended does not exceed $50,000 in the aggregate
or $10,000 in any one year.

          (b)  Consent. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be
presented to Lessor in written form with detailed plans. 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 equal to the greater of one month's Base Rent, or
$10,000, Lessor may condition its consent upon Lessee providing a lien and
completion bond in an amount equal to one and one-half times the estimated cost
of such Alteration or Utility Installation and/or upon Lessee's posting an
additional Security Deposit with Lessor.

          (c)  Indemnification. Lessee shall pay, when due, all claims for labor
or materials furnished or alleged to have been furnished to or for Lessee at or
for use on the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post
notices of non-responsibility. 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 one and one-half times 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 Lessors attorneys' fees and
costs.

     7.4  Ownership; Removal; Surrender; and Restoration.

          (a)  Ownership. Subject to Lassoes 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. If Lessor becomes the Insuring Party, or if Lessee fails to maintain
the insurance required hereunder, 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 ninety (90) and not later than thirty (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

                                       7
<PAGE>

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. 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, and the removal, replacement, or
remediation of any soil, material or groundwater contaminated by Lessee. Trade
Fixtures shall remain the property of Lessee and shall be removed by Lessee. 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 For Insurance. Lessee shall pay for all insurance required
under Paragraph 8 except to the extent of the cost attributable to liability
insurance carried by Lessor under Paragraph 8.2(b) in excess of $5,000,000 per
occurrence.

     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
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 $5,000,000 per
occurrence with an "Additional Insured-Managers or Lessors of Premises
Endorsement" and contain the "Amendment of the Pollution Exclusion Endorsement"
for damage caused by heat, smoke or fumes from a hostile fire. The Policy shall
not contain any 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. All
insurance carried by Lessee shall be primary to and not contributory with any
similar insurance carried by Lessor, whose Insurance shall be considered excess
insurance only.

          (b)  Carried by Lessor. Lessor shall 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. The Insuring Party shall obtain and
keep in force a policy or policies in the name of Lessor, with loss payable to
Lessor, any ground lessor, and to any Lender(s) insuring loss or damage to the
Premises. So long as Lessee actually obtains the Insurance, Lessee may be named
as an additional Insured and loss payee. In such event, Lessee shall promptly
turn over Insurance proceeds to Lessor for Lessor to complete any repairs which
Lessor is required to make under this Lease. The amount of such Insurance shall
be equal to the full replacement cost of the Premises, as the same shall exist
from time to time, or the amount required by any Lenders, but in no event more
than the commercially reasonable and available insurable value thereof. If
Lessor is the Insuring Party, however, Lessee Owned Alterations and Utility
Installations, Trade Fixtures, and Lessee's personal property shall be insured
by Lessee under Paragraph 8.4 rather than by Lessor. 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 during the extension of the Term
pursuant to Paragraph 58), 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, and Lessee shall
be liable for such deductible amount in the event of an Insured Loss.

                                       8
<PAGE>

          (b)  Rental Value. The Insuring Party shall 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 (1) year. Said insurance
shall provide that in the event the Lease is terminated by reason of an insured
loss, the period of indemnity for such coverage shall be extended beyond the
date of the completion of repairs or replacement of the Premises, to provide for
one full year's loss of Rent from the date of any such loss. 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 twelve (12) month period. Lessee
shall be liable for any deductible amount in the event of such loss.

          (c)  Adjacent Premises. If the Premises are part of a larger building,
or of a group of buildings owned by Lessor which are adjacent, to the Premises,
the Lessee shall pay for any Increase in the premiums for the property insurance
of such building or buildings if said increase is caused by Lessee's acts,
omissions, use or occupancy of the Premises.

     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, VIII, 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 thirty (30) days prior
written notice to Lessor. Lessee shall, at least thirty (30) days prior to the
expiration of such policies, furnish Lessor with evidence of renewals or
"insurance binders" evidencing renewal thereof, or Lessor may order such
insurance and charge the cost thereof to Lessee, which amount shall be payable
by Lessee to Lessor upon demand. 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 Lessors gross negligence or willful misconduct
and except for claims and actions by Lessee against Lessor for Lessor's breach
of this Lease, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessors master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents

                                       9
<PAGE>

and/or damages, liens, judgments, penalties, reasonable 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. Except for Lessor's gross
negligence, willful misconduct or breach of this Lease, Lessor shall not be
liable for injury or damage to the person or goods, wares, merchandise or other
property of Lessee, Lessee's employees, contractors, invitees, customers, or any
other person in or about the Premises, whether such damage or injury is caused
by or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
wires, appliances, plumbing, 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 of which the Premises are a
part, 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.
Notwithstanding anything contained herein or otherwise provided by law, except
for Lessor's willful misconduct or intentional 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.

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 coin reasonably be repaired in six (6) months or less from
the date of the damage or destruction. Lessor shall notify Lessee in writing
within thirty (30) days from the date of the damage or destruction as to whether
or not the damage is Partial or Total.

          (b)  "Premises Total Destruction" shall mean damage or destruction to
the Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which cannot reasonably be repaired in six (6) months or less
from the date of the damage or destruction. Lessor shall notify Lessee in
writing within thirty (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.

     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 $50,000 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 (except as to
the deductible which is Lessee's responsibility) 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

                                       10
<PAGE>

improvements, full replacement cost insurance coverage was not commercially
reasonable and available, Lessor shall have no obligation to pay for the
shortage in insurance proceeds or to fully restore the unique aspects of the
Premises unless Lessee provides Lessor with the funds to cover same, or adequate
assurance thereof, within ten (10) days following receipt of written notice of
such shortage and request therefor. If Lessor receives said funds or adequate
assurance thereof within said ten (10) day period, 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 ten
(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 have this Lease terminate thirty (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
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
damage. Such termination shall be effective sixty (60) days following the date
of such notice. In the event Lessor elects to terminate this Lease, Lessee shall
have the right within ten (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 thirty (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 sixty (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 Lessors damages from Lessee, except as provided in Paragraph 8.6.

     9.5  Damage Near End of Term. If at any time during the last six (6) months
of this Lease there is damage for which the cost to repair exceeds one (1)
month's Base Rent, whether or not an Insured Loss, Lessor may terminate this
Lease effective sixty (60) days following the date of occurrence of such damage
by giving a written termination notice to Lessee within thirty (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 which is ten days after Lessee's receipt of Lessors 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

                                       11
<PAGE>

shall have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein.

          (b)  Remedies. Provided insurance proceeds have been made available to
Lessor, 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 ninety (90) sixty (60) days after such obligation shall accrue, Lessee
may, at any time prior to the commencement of such repair or restoration, give
written notice to Lessor and to any Lenders of which Lessee has actual notice,
of Lessee's election to terminate this Lease on a date not less than Sixty (60)
thirty (30) days following the giving of such notice. If Lessee gives such
notice and such repair or restoration is not commenced within thirty (30) days
thereafter, this Lease shall terminate as of the date specified in said notice.
If the repair or restoration is commenced within said thirty (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 Definition of "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 Premises, Lessor's business of leasing the Premises, by any authority having
the direct or indirect power to tax and where the funds are generated with
reference to the Building 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 Premises are located.  The term "Real Property Taxes" shall
also include any tax, fee, levy, assessment or charge, or any increase therein,
imposed by reason of events occurring during the term of this Lease, including
but not limited to, a change in the ownership of the Premises.

     10.2

          (a)  Payment of Taxes. Lessee shall pay the Real Property Taxes
applicable to the Premises during the term of this Lease. Subject to Paragraph
10.2(b), all such payments shall be made at least ten (10) days prior to any
delinquency date. Lessee shall promptly furnish Lessor with satisfactory
evidence that such taxes have been paid. If any such taxes shall cover any
period of time prior to or after the expiration or termination of this Lease,
Lessee's share of such taxes shall be prorated to cover only that portion of the
tax bill applicable to the period that this Lease is in effect, and Lessor shall
reimburse Lessee, upon demand, for any overpayment. If Lessee shall fail to pay
any required Real Property Taxes, Lessor shall have the right to pay the same,
and Lessee shall reimburse Lessor therefor upon demand.

          (b)  Advance Payment. In the event Lessee Incurs a late charge on any
Rent payment, Lessor may, at Lessors option, estimate the current Real Property
Taxes, and require that such taxes be paid in advance to Lessor by Lessee,
either: (i) in a lump sum amount equal to the installment due, at least twenty
(20) days prior to the applicable delinquency date, or (ii) monthly in advance
with the payment of the Base Rent. If Lessor elects to require payment monthly
in advance, the monthly payment shall be an amount equal to the amount of the
estimated installment of taxes divided by the number of months remaining before
the month in which said installment becomes delinquent. When the actual amount
of the applicable tax bill is known, the amount of such equal monthly advance
payments shall be adjusted as required to provide the funds needed to pay the
applicable taxes. If the amount collected by Lessor is

                                       12
<PAGE>


insufficient to pay such Real Property Taxes when due, Lessee shall pay Lessor,
upon demand, such additional sums as are necessary to pay such obligations. All
monies paid to Lessor under this Paragraph may be intermingled with other monies
of Lessor and shall not bear interest. In the event of a Breach by Lessee 16 the
performance of Its obligations under this Lease, then any balance of funds paid
to Lessor under the provisions of this Paragraph may, at the option of Lessor,
be treated as an additional Security Deposit.

     10.3  Joint Assessment. If the Premises are not separately assessed,
Lessee's liability 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 conclusively determined by Lessor from the respective
valuations assigned in the assessors work sheets or such other information as
may be reasonably available.

     10.4  Personal Property Taxes. Lessee shall pay, prior to delinquency, all
taxes assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee. When possible, Lessee shall cause such property to be assessed and
billed separately from the real property of Lessor. If any of Lessee's said
personal property shall be assessed with Lessor's real property, Lessee shall
pay Lessor the taxes attributable to Lessee's property within ten (10) days
after receipt of a written statement.

11.  Utilities. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services, including termite
and pest control, supplied to the Premises, together with any taxes thereon. If
any such services are not separately metered to Lessee, Lessee shall pay a
reasonable proportion, to be determined by Lessor, of all charges jointly
metered.

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.

           (b)  A change in the control of Lessee shall constitute an assignment
requiring consent. The transfer, on a cumulative basis, of more than fifty
percent (50%) of the voting control of Lessee shall constitute a change in
control for this purpose.

           (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
twenty-five percent (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 without consent 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 thirty (30) days written
notice, increase the monthly Base Rent to one hundred ten percent (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 one hundred ten percent
(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 One Hundred Ten Percent (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.

                                       13
<PAGE>



     12.2  Terms and Conditions Applicable to Assignment and Subletting.

           (a)  Regardless of Lessor's consent, any assignment or subletting
shall not: (i) be effective without the express written assumption by such
assignee or sublessee of the obligations of Lessee under this Lease; (ii)
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 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 Lessors 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. 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 Lessors 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 shall be
in writing, accompanied by information relevant to Lessors 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. Lessee shall reimburse Lessor an
amount not to exceed Lessor's actual, third-party costs associated with each
request or $1000, whichever is less. Lessee agrees to provide Lessor with such
other or additional information and/or documentation as may be reasonably
requested.

           (f)  Any assignee of, or sublessee under, this Lease shall, by reason
of accepting such assignment or entering into such sublease, 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.

     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. 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.

                                       14
<PAGE>



           (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 Lassoes 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 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 three
(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) a Estoppel Certificate, (v) a requested subordination, (vi) evidence
concerning any guaranty and/or Guarantor, (vii) any document requested under
Paragraph 42 (easements), or (viii) any other documentation or information which
Lessor may reasonably require of Lessee under the terms of this Lease, where any
such failure continues for a period of ten (10) days following written notice to
Lessee.

           (d)  A Default by Lessee as to the terms, covenants, conditions or
provisions of this Lease, or of the rules adopted under Paragraph 40 hereof,
other than those described in subparagraphs 13.1(a), (b) or (c), above, where
such Default continues for a period of thirty (30) days after written notice;
provided, however, that if the nature of Lessee's Default is such that more than
thirty (30) days are reasonably required for its cure, then it shall not be
deemed to be a Breach if Lessee commences such cure within said thirty (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. (S) 101 or any successor statute
thereto (unless, in the case of a petition filed against Lessee, the same is
dismissed within sixty (60) days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where possession is not
restored to Lessee within thirty (30) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease, where such seizure is not
discharged within thirty (30) days; provided, however, in the event that any
provision of this subparagraph 13.1 (e) is contrary to any applicable law, such
provision shall be of no force or effect, and 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 Guarantors
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;

                                       15
<PAGE>


or (v) a Guarantor's breach of its guaranty obligation on an anticipatory basis,
and Lessee's failure, within sixty (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 falls to perform any of its affirmative duties or
obligations, within ten (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. The costs and expenses of any such performance by Lessor shall be
due and payable by Lessee upon receipt of invoice therefor. If any check given
to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
Lessor, at its option, may require all future payments to be made by Lessee to
be by cashier's check. 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 (1%). 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
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

                                       16
<PAGE>


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 five (5) days after such amount shall be
due, then, without any requirement for notice to Lessee, Lessee shall pay to
Lessor a one-time late charge equal to ten percent (10%) of each such overdue
amount. The Parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of 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 three (3) consecutive installments of Base Rent, then notwithstanding any
provision of this Lease to the contrary, Base Rent shall, at Lessors 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 thirty (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 thirty-first (31st) day after it was due as to non-scheduled
payments. The interest ("Interest") charged shall be equal to the prime rate
reported in the Wall Street Journal as published closest prior to the date when
due plus four percent (4%), 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 the time period provided herein. after notice,
or If no time period is provided, 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 thirty (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 thirty (30) days are
reasonably required for its performance, then Lessor shall not be in breach if
performance is commenced within such thirty (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 the time period specified
herein, after notice, or if no time period is provided, within thirty (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 an amount equal to Lessee's costs and
expense of the cure of Lessor's breach not to exceed one month's Base Rent and
to pay any excess of such expense under protest, reserving Lessee's right to
reimbursement from Lessor. 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 ten percent (10%) of any building portion of the
Premises, or more than twenty-five percent (25%) of the land area portion of the
Premises not occupied by any building, is taken by Condemnation, Lessee may, at
Lessee's option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after

                                       17
<PAGE>


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.  Estoppel Certificates.

           (a)  Each Party (as "Responding Party") shall within ten (10) days
after written notice from execute, acknowledge and deliver to the Requesting
Party a statement in writing in form similar to the then published by the
American Industrial Real Estate Association, plus such additional information,
confirmation requested by the Requesting Party.

           (b)  If the Responding Party shall fall to execute or deliver the
Estoppel Certificate within such 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, any permitted assignee, sublessee or successor of Lessee
and all Guarantors shall deliver to any potential lender or purchaser designated
by Lessor such financial statements as may be reasonably required by such lender
or purchaser, including, but not limited to, financial statements for the past
three (3) years. All such financial statements shall be received by Lessor and
such lender or purchaser in confidence and shall be used only for the purposes
herein set forth.

16.  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. 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 with regard to the potential duties
and liabilities of Lessor pertaining to Hazardous Substances as outlined in
Paragraph 6 above.

17.  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.

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

19.  Limitation on Liability. Subject to the provisions of Paragraph 17 above,
the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners, members of Lessor or its or
their individual partners, members, directors, officers or shareholders, and
Lessee shall look to the Premises, and to no other assets of Lessor,

                                       18
<PAGE>


for the satisfaction of any liability of Lessor with respect to this Lease, and
shall not seek recourse against the individual partners, members of Lessor, or
its or their Individual partners, members, directors, officers or shareholders,
or any of their personal assets for such satisfaction.

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

21.  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.

22.  Notices.

     22.1  Notice Requirements. All notices required or permitted by this Lease
shall be in writing and may be delivered in person (by hand or by 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.

     22.2  Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed given forty-eight (48) hours after
the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that
guarantee next day delivery shall be deemed given twenty-four (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, 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.

23.  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 Lessors 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.

24.  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
one hundred fifty percent (150%) of the Base Rent applicable during the month
immediately preceding the expiration or termination. Nothing contained herein
shall be construed as consent by Lessor to any holding over by Lessee.

25.  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.

26.  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.

                                       19
<PAGE>


27.  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.

28.  Subordination; Attornment; Non-Disturbance.

     28.1  Subordination. Subject to the non-disturbrance provisions of
Paragraph 30.3, 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
"Lessor's Lender') shall have no liability or obligation to perform any of the
obligations of Lessor under this Lease. Subject to the non-disturbance provision
of Paragraph 30.3, 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.

     28.2  Attornment. Subject to the non-disturbance provisions of Paragraph
30.3, Lessee agrees to attorn to a Lender or any other party who acquires
ownership of the Premises by reason of a foreclosure of a Security Device, and
that in the event of such foreclosure, such new owner shall not: (i) be liable
for any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (ii) be subject to any offsets or defenses
which Lessee might have against any prior lessor; or (iii) be bound by
prepayment of more than one (1) month's rent.

     28.3  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 sixty (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 sixty (60) days, then Lessee may, at Lessee's
option, directly contact Lessor's lender and attempt to negotiate for the
execution and delivery of a Non-Disturbance Agreement.

     28.4  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.

29.  Attorneys' Fees. If any Party or Broker brings an action or proceeding
involving the Premises to enforce the terms hereof 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, in the event of
a Default or Breach by Lessee, 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.

                                       20
<PAGE>


30.  Lessor's Access; Showing Promises; Repairs. Lessor and Lessors agents shall
have the right to enter the Premises at any time, in the case of an emergency,
and otherwise at reasonable times for the purpose of showing the same to
prospective purchasers, lenders, or lessees, and making such alterations,
repairs, Improvements or additions to the Premises as Lessor may deem necessary.
All such activities shall be without abatement of rent or liability to Lessee.
Lessor may at any time place on the Premises any ordinary "For Sale" signs and
Lessor may during the last six (6) months of the term hereof place on the
Premises any ordinary "For Lease" signs. Lessee may at any time place on or
about the Premises any ordinary "For Sublease" sign.

31.  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.

32.  Signs. Except for ordinary "For Sublease" signs, Lessee shall not place any
sign upon the Premises without Lessor's prior written consent. All signs must
comply with all Applicable Requirements.

33.  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 ten (1 0) 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.

34.  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 ten (1 0) business days following such request.

35.  Guarantor.

     35.1  Execution. The Guarantors, if any, shall each execute a guaranty in
the form most recently published by the American Industrial Real Estate
Association, and each such Guarantor shall have the same obligations as Lessee
under this Lease.

     35.2  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 Guarantors 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) a Tenancy Statement, or (d)
written confirmation that the guaranty is still in effect.

36.  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.

37.  Options.

                                       21
<PAGE>

     37.1  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:
(d) the right to Increase the Premises to include the Option Premises, described
in Paragraph 54 of the Addendum; and (e) the Right of First Offer to Purchase as
set forth in Paragraph 57.

     37.2  Options Personal To Original Lessee. Each 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.

     37.3  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.

     37.4  Effect of Default on Options.

           (a)  Lessee shall have no right to exercise an Option: (i) during the
period commencing with the occurrence of any 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 committed three
(3) or more Defaults, whether or not the Defaults are cured, during the twelve
(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, (i) Lessee falls to
pay Rent for a period of thirty (30) days after such Rent becomes due (without
any necessity of Lessor to give notice thereof), (ii) three (3) or more Defaults
occur during any twelve (12) month period, whether or not the Defaults are
cured, or (iii) if Lessee commits a Breach of this Lease.

38.  Multiple Buildings. If the Premises are a part of a group of buildings
controlled by Lessor, Lessee agrees that it will observe all reasonable rules
and regulations which Lessor may make from time to time for the management,
safety, and care of said properties, including the care and cleanliness of the
grounds and Including the parking, loading and unloading of vehicles, and that
Lessee will pay its fair share of common expenses incurred in connection
therewith.

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

40.  Reservations. Lessor reserves to itself the right, from time to time, to
grant, without the consent or joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not interfere with Lessee's operation of its business at the
Premises. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.

41.  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

                                       22
<PAGE>

thereof, said Party shall be entitled to recover such sum or so much thereof as
it was not legally required to pay.

42.  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 thirty days after request, deliver to the other Party satisfactory
evidence of such authority.

43.  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.

44.  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.

45.  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.

46.  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.

47.  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 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 AMERICAN
INDUSTRIAL 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 TO THE LEGAL AND TAX CONSEQUENCES 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, AND
    THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.

WARNING: IF THE PREMISES IS 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 IS LOCATED.
--------------------------------------------------------------------------------

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

                                       23
<PAGE>

<TABLE>
<S>                                                           <C>
Executed at:   RanchoPalos Verdes, California                 Executed at:  Moorpark, California
               ------------------------------                               ------------------------
on:  December 27, 1999                                        on:  December 22, 1999
     ----------------------------------------                      ---------------------------------

By LESSOR:                                                    By LESSEE:

YORK MOORPARK INDUSTRIAL, L.L.C.,                             VARIFLEX, INC., a Delaware Corporation
an Arizona limited liability company

By:    Arizona Land Associates, L.P.,
       a California limited partnership,
       its sole member and sole manager


By:    York Arizona Corporation,
       a California corporation,
       its sole general partner

By: /s/  James York                                           By: /s/  Roger M. Wasserman
    ------------------------------------------                    ----------------------------------
Name Printed: James York                                      Name Printed:  Roger M. Wasserman
              --------------------------------                               -----------------------
Title:  President                                             Title: Chief Financial Officer
        --------------------------------------                       -------------------------------

By:___________________________________________                By:
Name Printed: ________________________________                Name Printed:
Title: _______________________________________                Title:
Address:  6610 Palos Verdes Drive South                       Address:  5152 North Commerce Avenue
          ------------------------------------                          ----------------------------
          Rancho Palos Verdes, CA 90275                                 Moorpark, CA 93021
          ------------------------------------                          ----------------------------
Telephone:  (310) 544-6177                                    Telephone:  (805) 523-0322
            -----------------------------------                         ----------------------------
Facsimile:  (310) 544-6179                                    Facsimile: (805) 523-7384
            -----------------------------------                          ---------------------------
Federal ID No.  86-0734549 (Arizona Land Associates)          Federal ID No. 95-3164466
                ------------------------------------                         -----------------------
</TABLE>


NOTE:   These forms are often modified to meet the changing requirements of law
        and industry needs. Always write or call to make sure you are utilizing
        the most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700
        So. Flower Street, Suite 600, Los Angeles, California 90017. (213) 687-
        8777. Fax No. (213) 687-8616

                                       24
<PAGE>


                  ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL
                           SINGLE-TENANT LEASE -NET

                           DATED:  December 1, 1999

                   YORK MOORPARK INDUSTRIAL, L.L.C., LESSOR
                            VARIFLEX, INC., LESSEE

                            5152 N. COMMERCE AVENUE

Lessee has by a written lease dated June 8, 1992, as amended by First Amendment
to Standard Industrial Lease - Net dated March 20, 1995 and Second Amendment to
Standard Industrial Lease - Net dated November 18, 1996, leased from Lessor's
predecessor in interest the Premises ("Original Lease"). Said Original Lease is
the subject of that certain Subordination, Non-disturbance and Attornment
Agreement between Lessor, Lessee and Lessor's lender dated July 17, 1998
("Subordination Agreement").

Lessee desires to extend the term of its Original Lease and Lessor is willing to
extend the term, provided that the terms and provisions of the Original Lease
are modified and restated in accordance with this Lease of which this Addendum
is a part.

Lessor and Lessee agree that Lessee's tenancy under the Original Lease shall
continue, but the Original Lease shall be modified in all respects to modify and
restate the provisions contained in the Original Lease with the provisions in
this Lease. Upon execution of this Lease, all of the provisions of the Original
Lease shall be superseded by the provisions of this Lease.

All of the terms of the Subordination Agreement shall continue in full force and
effect and apply to this Lease. The following provisions are added to, and shall
become a part of, this Lease:

50.  Premises.  For purposes of Paragraph 1.2, "Premises" shall include the
     --------
     exclusive right to use that certain exclusive use parking area designated
     on Exhibit A and the non-exclusive right to use other parking, driveways
     and common areas within the Project, so long as such use does not interfere
     with other tenants of the Project.

51.  Base Rent Increases.  Base Rent shall increase on January 1, 2000, in
     -------------------
     accordance with the Rent Adjustment Standard Lease Addendum Paragraph
     55(A)I, based upon cost of living adjustment (COLA) as provided therein.
     Base Rent shall increase on January 1, 2001, in accordance with the Rent
     Adjustment Standard Lease Addendum Paragraph 56 A III. On July 1, 2002,
     January 1, 2004, and, if extended as provided in paragraphs 54(C) or 58,
     July 1, 2005, January 1, 2007. July 1, 2008 and January 1, 2010, Base Rent
     shall increase in accordance with Rent Adjustment Standard Lease Addendum
     Paragraph 56(A)I, based upon COLA as provided therein.

52.  Assignment/Sublease.  In the event that Lessee assigns this Lease or
     -------------------
     subleases the [Premises pursuant to the terms of this Lease, for a rental
     in excess of the Rent payable by Lessee under this Lease, after deducting
     all of Lessee's costs of such assignment or subleasing prorated over the
     balance of this Lease Term, Lessee shall pay to Lessor as additional Rent
     payable under this Lease an amount equal to one-half (1/2) of the excess of
     the rental receivable by Lessee over the Rent payable by Lessee under this
     Lease. Such additional Rent shall be payable to Lessor in installments
     coinciding with and on or before the due dates of the respective rental
     payments under such assignment or sublease.

53.  Lessor's Property.  The following property shall not be considered Lessee's
     -----------------
     trade fixtures, but shall become the property of Lessor and be surrendered
     by Lessee with the Premises upon termination of the Lease: alarm system,
     rolling rack and air compressor.

54.  Option for Additional Space.
     ---------------------------

     A.   The Project includes a separate 31,233 square foot concrete tilt-up
          building located at 5156 North Commerce Avenue, Moorpark, California,
          on approximately 87,199 square feet of land (the "Option Premises").
          The Option Premises are subject to a Standard Industrial/Commercial
          Single-Tenant Lease - Net dated May 21, 199 1, between Lessor (as the
          successor in interest to S & B Mortgage Investment Company) and Rolls-
          Royce Motor Cars Inc. ("RR") as

                                       25
<PAGE>


          lessee (the "Original RR Lease"). The term "RR Lease" shall mean the
          Original RR Lease and any present or future amendments, modifications,
          extensions and restatements of the Original RR Lease, and any new
          lease of the Option Premises entered into during the term of this
          Lease in which RR is the tenant.

     B.   If, during the term of this Lease, the RR Lease terminates or expires,
          or if RR fails to timely exercise any option to extend the RR Lease
          term, or if Lessor receives a written notice from RR that it intends
          to terminate, or if Lessor gives RR notice of termination of the RR
          Lease, Lessor shall promptly notify Lessee of such termination or
          intent to terminate ("Lessor's Notice").

     C.   Lessee shall have twenty (20) days after receipt of Lessor's Notice to
          elect by written notice to Lessor to modify this Lease to include the
          Option Premises, which shall be included effective upon the
          termination or expiration of the RR Lease.  If Lessee does not so
          elect, this option to lease the Option Premises shall terminate and
          this Lease shall continue in full force and effect as to the original
          Premises only.  If Lessee so elects. this Lease shall remain in full
          force and effect with the following modifications effective ten (10)
          days after Lessor receives Lessee's election:

          (i)    The Option Premises shall be added to and become part of the
                 Premises which will then comprise the entire Project.

          (ii)   If, at commencement of the term for the Option Premises, there
                 is less than 42 months remaining on the Term of this Lease,
                 then the Term of this Lease and the Expiration Date shall be
                 extended for five (5) years (to December 31, 201 0).

          (iii)  Base Rent under this Lease shall be increased by an amount
                 which reflects the addition of the Option Premises, which
                 amount shall be determined by establishing the Market Rental
                 Value of the Option Premises only as of the date the Option
                 Premises are added to the Premises of this Lease, in accordance
                 with the provisions of the Rent Adjustment Standard Lease
                 Addendum, Paragraph 56(A)II. Once the Market Rental Value of
                 the Option Premises is determined, the greater of (i)
                 $18,739.80 ($0.60 per square foot); or (ii) 90% of the Market
                 Rental Value of the Option Premises shall be added to and
                 become a part of Base Rent. Provided, however, there shall be
                 no COLA adjustment on the Option Premises component of Base
                 Rent (but there shall be required COLA adjustments on the
                 balance of the Base Rent) prior to one year after the date the
                 Base Rent is increased by the Option Premises component.

          (iv)   The Security Deposit shall be increased to an amount equal to
                 the full amount of the Base Rent including the Option Premises
                 component.

          (v)    The amount of prepaid Rent which is for the last month's Base
                 Rent as provided in Paragraph 1.6, shall be increased to the
                 same amount as the increased Security Deposit.

          (vi)   All of the terms of the Subordination Agreement shall continue
                 to apply, except that Lessee agrees to enter into a
                 modification or new subordination agreement, if requested by
                 Lessor's lender, with substantially the same provisions as the
                 Subordination Agreement.

          (vii)  This Paragraph 54 shall be considered an option within the
                 definition of Paragraph 39.1 and subject to Paragraph 39. Once
                 exercised, this option may not be revoked by Lessee. If Lessee
                 fails to timely exercise this option, this option shall
                 terminate and be of no further force and effect.

                                       26
<PAGE>


                              RENT ADJUSTMENT(S)

                            Standard Lease Addendum


<TABLE>
<S>                       <C>                            <C>
                                            Dated:       December 1, 1999
                          By and Between  (Lessor)       York Moorpark Industrial, L.L.C., an
                                                         Arizona limited liability company

                                          (Lessee)       Variflex, Inc.

                              Address of Premises:       5152 North Commerce Avenue
                                                         Moorpark, California  93021
</TABLE>

Paragraph 55

A.    Rent Adjustments:

The monthly rent for each month of the adjustment period(s) specified below
shall be increased using the method(s) indicated below:


(Check Method(s) to be Used and Fill in Appropriately)

[X]   I.     Cost of Living Adjustment(s) (COLA)

             a.  On (Fill in COLA Dates): January 1, 2000, the Base rent shall
be adjusted by the change, if any, from the Base Month specified below, in the
Customer Price Index of the Bureau of Labor Statistics of the U.S. Department of
Labor for (select one): CPI W (Urban Wage Earners and Clerical Workers) or CPI U
(All Urban Consumers), for (Fill in Urban Area): Los Angeles Metropolitan area.
All Items (1982-1984 = 100), herein referred to as "CPI."

             b.  The monthly rent payable in accordance with paragraph A.I.a of
this Addendum shall be calculated as follows: the Base Rent set forth in
paragraph 1.5 of the attached Lease, shall be multiplied by a fraction the
numerator of which shall be the CPI of the calendar month specified in paragraph
A.I.a above during which the adjustment is to take effect, and the denominator
of which shall be the CPI of the calendar month which is (select one): the first
month of the term of this Lease as set forth in paragraph 1.3 ("Base Month") or
(Fill in Other "Base Month"): January 1, 1999. The sum so calculated shall
constitute the new monthly rent hereunder, but in no event, shall any such new
monthly rent be less than the rent payable for the month immediately preceding
the rent adjustment.

             c.  In the event the compilation and/or publication of the CPI
shall be transferred to any other governmental department or bureau or agency or
shall be discontinued, then the index most nearly the same as the CPI shall be
used to make such calculation. In the event that the Parties cannot agree on
such alternative index, then the matter shall be submitted for decision to the
American Arbitration Association in accordance with the then rules of said
Association and the decision of the arbitrators shall be binding upon the
parties. The cost of said Arbitration shall be paid equally by the Parties.

[_]   II.    Market Rental Value Adjustment(s) (MRV)

             a.  On (Fill in MRV Adjustment Date(s): _________________________
the Base Rent shall be adjusted to the "Market Rental Value" of the property as
follows:

                 1)   Four months prior to each Market Rental Value Adjustment
Date described above, the Parties shall attempt to agree upon what the new MRV
will be on the adjustment date. If agreement cannot be reached within thirty
days, then:

                      (a)   Lessor and Lessee shall immediately appoint a
mutually acceptable appraiser or broker to establish the new MRV within the next
thirty days. Any associated costs will be split equally between the Parties, or

                                       27
<PAGE>

                      (b)   Both Lessor and Lessee shall each immediately make a
reasonable determination of the MRV and submit such determination, in writing,
to arbitration in accordance with the following provisions:

                            (i)     Within fifteen days thereafter, Lessor and
Lessee shall each select an appraiser or broker ("Consultant" - check one) of
their choice to act as an arbitrator. The two arbitrators so appointed shall
immediately select a third mutually acceptable Consultant to act as a third
arbitrator.

                            (ii)    The Three arbitrators shall within thirty
days of the appointment of the third arbitrator reach a decision as to what the
actual MRV for the Premises is, and whether Lessor's or Lessee's submitted MRV
is the closest thereto. The decision of a majority of the arbitrators shall be
binding on the Parties. The submitted MRV which is determined to be the closest
to the actual MRV shall thereafter be used by the Parties.

                            (iii)   If either of the Parties fails to appoint an
arbitrator within the specified fifteen days, the arbitrator timely appointed by
one of them shall reach a decision on his or her own, and said decision shall be
binding on the Parties.

                            (iv)    The entire cost of such arbitration shall be
paid by the party whose submitted MRV is not selected, i.e., the one that is NOT
the closest to the actual MRV.

                 2)   Notwithstanding the foregoing, the new MRV shall not be
less than the rent payable for the month immediately preceding the rent
adjustment.
             b.  Upon the establishment of each New Market Rental Value:

                 1)   the new MRV will become the new "Base Rent" for the
purpose of calculating any further adjustments, and

                 2)   the first month of each Market Rental Value term shall
become the new `Base Month' for the purpose of calculating any further
Adjustments.

[_]   III.   Market Rental Value Adjustment(s) (MRV)

The Base Rent shall be increased to the following amounts on the dates set forth
below:

On (Fill in FRA Adjustment Date(s)):               The New Base Rent shall be:

___________________________________________        $____________________________

___________________________________________        $____________________________

___________________________________________        $____________________________



B.   NOTICE:

Unless specified otherwise herein, notice of any such adjustment, other than
Fixed Rental Adjustments, shall be made as specified in paragraph 23 of the
Lease.

                                       28
<PAGE>

                              RENT ADJUSTMENT(S)

                            Standard Lease Addendum


                                  Dated:    December 1, 1999

                 By and Between (Lessor)    York Moorpark Industrial, L.L.C., an
                                            Arizona limited liability company

                                (Lessee)    Variflex, Inc.

                    Address of Premises:    5152 North Commerce Avenue
                                            Moorpark, California  93021

Paragraph 56

A.    Rent Adjustments:

The monthly rent for each month of the adjustment period(s) specified below
shall be increased using the method(s) indicated below:

(Check Method(s) to be Used and Fill in Appropriately)

[X]   I.  Cost of Living Adjustment(s) (COLA)

          a.   On (Fill in COLA Dates): July 1, 2000, January 1, 2004, July 1,
2005, January 1, 2007, July 1, 2008, and January 1, 2010 during the term of the
Lease, the Base rent shall be adjusted by the change, if any, from the Base
Month specified below, in the Customer Price Index of the Bureau of Labor
Statistics of the U.S. Department of Labor for (select one): [X] CPIW (Urban
Wage Earners and Clerical Workers) or CPIU (All Urban Consumers), for (Fill in
Urban Area): Los Angeles Metropolitan area. All Items (1982-1984 = 100), herein
referred to as "CPI."

          b.   The monthly rent payable in accordance with paragraph A.I.a of
this Addendum shall be calculated as follows: the New Base Rent set forth in
paragraph A.(III) below, shall be multiplied by a fraction the numerator of
which shall be the CPI of the calendar month specified in paragraph A.I.a above
during which the adjustment is to take effect, and the denominator of which
shall be the CPI of the calendar month which is (select one): [_] the first
month of the term of this Lease as set forth in paragraph 1.3 ("Base Month") or
[X] (Fill in Other "Base Month"): January 1, 2001. The sum so calculated shall
constitute the new monthly rent hereunder, but in no event, shall any such new
monthly rent be less than the rent payable for the month immediately preceding
the rent adjustment.

          c.   In the event the compilation and/or publication of the CPI shall
be transferred to any other governmental department or bureau or agency or shall
be discontinued, then the index most nearly the same as the CPI shall be used to
make such calculation. In the event that the Parties cannot agree on such
alternative index, then the matter shall be submitted for decision to the
American Arbitration Association in accordance with the then rules of said
Association and the decision of the arbitrators shall be binding upon the
parties. The cost of said Arbitration shall be paid equally by the Parties.

[X]   II. Market Rental Value Adjustment(s) (MRV)

          a.   In the event the Option for Additional Space is exercised
pursuant to Paragraph 54 of the Addendum the Base Rent shall increase by the
greater of (I) $0.60 per square foot (of Additional Space) per month; or (ii)
90% of the MRV for the Option Premises only. The MRV of the Option Premises
shall be determined as follows: ________________________________________________
_______________________________________________________________________________.

               1)   The Parties shall attempt to agree upon what the MRV will be
on the exercise date of the Option. If agreement cannot be reached within thirty
days after the date Lessee exercises its Option, then:

                                       29
<PAGE>

                    (a)  Lessor and Lessee shall immediately appoint a mutually
acceptable appraiser or broker to establish the new MRV within the next thirty
days. Any associated costs will be split equally between the Parties, or

                    (b)  Both Lessor and Lessee shall each immediately make a
reasonable determination of the MRV and submit such determination, in writing,
to arbitration in accordance with the following provisions:

                         (i)   Within fifteen days thereafter, Lessor and Lessee
shall each select an [_] appraiser or [X] broker ("Consultant" - check one) of
their choice to act as an arbitrator. The two arbitrators so appointed shall
immediately select a third mutually acceptable Consultant to act as a third
arbitrator.

                         (ii)  The Three arbitrators shall within thirty days of
the appointment of the third arbitrator reach a decision as to what the actual
MRV for the Premises is, and whether Lessor's or Lessee's submitted MRV is the
closest thereto. The decision of a majority of the arbitrators shall be binding
on the Parties. The submitted MRV which is determined to be the closest to the
actual MRV shall thereafter be used by the Parties.

                         (iii) If either of the Parties fails to appoint an
arbitrator within the specified fifteen days, the arbitrator timely appointed by
one of them shall reach a decision on his or her own, and said decision shall be
binding on the Parties.

                         (iv)  The entire cost of such arbitration shall be paid
by the party whose submitted MRV is not selected, i.e., the one that is NOT the
closest to the actual MRV.

               2)   Notwithstanding the foregoing, the new MRV shall not be less
than the rent payable for the month immediately preceding the rent adjustment.

[X]   III.  Market Rental Value Adjustment(s) (MRV)

The Base Rent shall be increased to the following amounts on the dates set forth
below:

On (Fill in FRA Adjustment Date(s)):        The New Base Rent shall be:

January 1, 2001                             $42,640.00
---------------------------------------     ---------------------------------

_______________________________________     $________________________________

_______________________________________     $________________________________

B.  NOTICE:

Unless specified otherwise herein, notice of any such adjustment, other than
Fixed Rental Adjustments, shall be made as specified in paragraph 23 of the
Lease.

                                       30
<PAGE>

                  ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL
                            SINGLE-TENANT LEASE-NET

                        RIGHT OF FIRST OFFER TO PURCHASE

                            DATED:  December 1, 1999

                    YORK MOORPARK INDUSTRIAL, L.L.C., LESSOR
                             VARIFLEX, INC., LESSEE

                            5152 N. COMMERCE AVENUE

Paragraph 57

Subject to Paragraph 39 of the Lease,

(a)  Lessor agrees prior to the termination of this Lease, to first give Lessee
     prior written notice of Lessor's intent to sell all or a portion of the
     Premises and/or the Option Premises (as to the Option Premises, only if any
     one of the following conditions is satisfied (i) the option to lease the
     Option Premises has been exercised pursuant to Paragraph 54, or (ii) the
     option to lease the Option Premises has not terminated as described in
     Paragraph 54C, or (iii) Lessee is rightfully subleasing a portion of the
     Option Premises), which notice is hereafter referred to as "Notice of
     Intent to Sell".

     Notwithstanding anything set forth in this Lease, Lessor may, in its sole
     and absolute discretion, withhold its consent to any request of Lessee or
     any tenant of the Option Premises to sublease all or a portion of the
     Option Premises to Lessee.

(b)  The Notice of Intent to Sell shall include the portion (if not all) of the
     Premises and/or the Option Premises (as to the Option Premises, only if any
     one of the following conditions is satisfied (i) the option to lease the
     Option Premises has been exercised pursuant to Paragraph 54, or (ii) the
     option to lease the Option Premises has not terminated as described in
     Paragraph 54C, or (iii) Lessee is subleasing a portion of the Option
     Premises), to be sold (the "Sale Property"), the basic terms under which
     Lessor would be willing to sell the Premises, including but not limited to
     asking price; seller financing terms, if any; and the terms of assumable
     existing financing, if any.

(c)  Lessee shall have fifteen (15) days, after Lessee's receipt of the Notice
     of Intent to Sell, to deliver to Lessor a written, offer to purchase the
     Sale Property setting forth the terms and conditions under which Lessee
     would be willing to purchase the Sale Property (the "Letter of Intent").
     Terms shall include, but not be limited to the following:

     (i)    Purchase Price.

     (ii)   Whether the Purchase Price is in cash, or if Lessee requests Seller
            financing or to assume existing financing, if any.

     (iii)  Earnest Money.

     (iv)   Term of Inspection Period.

     (v)    Closing Date.

     (vi)   Indemnification of Lessor for any real estate brokerage fees or
            commissions resulting from Lessee's use of a real estate broker.

     (vii)  Any other terms and conditions that would induce Lessor to accept
            the offer.

     In the event that Lessor does not receive the Letter of Intent within said
     fifteen (15) days, there shall be a conclusive presumption that Lessee
     elected not to exercise Lessee's right hereunder, and Lessor may proceed to
     market the Sale Property in whatever commercially reasonable manner Lessor
     shall determine, and Lessee's rights hereunder shall expire.

                                       31
<PAGE>

     In the event Lessor timely receives the Letter of Intent, Lessor shall
     provide Lessee written notice of Lessor's acceptance or rejection of the
     Letter of Intent within ten (10) days of Lessor's receipt. Lessor's failure
     to provide such notice shall be deemed a rejection of the Letter of Intent
     and Lessee's rights hereunder shall expire.

(d)  In the event Lessor approves Lessee's Letter of Intent, Lessor shall cause
     a definitive purchase and sale agreement to be drafted, incorporating the
     terms of the Letter of Intent, (the "Sale Agreement") for negotiation by
     Lessor and Lessee. So long as good faith, reasonable efforts are made to
     negotiate the terms of the Sale Agreement, Lessor and Lessee shall
     negotiate the terms of the Sale Agreement until the earliest to occur of
     (the "Negotiating Period"): (i) the Sale Agreement has been executed by
     both parties; (ii) written notice is received by either party from the
     other party that the other party determined that agreement cannot be
     reached; or (iii) expiration of 21 days after Lessee's receipt of the Sale
     Agreement from Lessor. Upon expiration of the Negotiating Period, Lessee's
     rights under this Paragraph 57 shall expire.

     The Sale Property will be sold on an "AS IS" basis, with limited
     representations and warranties as to the seller's organization and
     authorization to sell.

     Seller agrees not to accept any other offers to purchase the Sale Property
     during the Negotiation Period.

(e)  If Lessee's rights expire pursuant to Paragraphs (c) or (d) above, Lessee
     shall have no further rights and Lessor shall have no further obligation
     hereunder. Nothing in this section shall prevent Lessee from attempting to
     acquire the property through Lessor's marketing efforts.

(f)  Notwithstanding the foregoing, (1) the rights and obligations hereunder
     apply only to voluntary sales (e.g., not foreclosure, trustee, in lieu,
     reorganization or bankruptcy transfers) to third party transferees; and (2)
     with respect to the Option Premises, the rights and obligations hereunder
     are subordinate and subject to any existing rights of the tenant of the
     Option Premises.

                                       32
<PAGE>

                              OPTION(S) TO EXTEND

                            Standard Lease Addendum

                                   Dated:   December 1, 1999

                  By and Between (Lessor)   York Moorpark Industrial, L.L.C., an
                                            Arizona limited liability company

                                 (Lessee)   Variflex, Inc.

                     Address of Premises:   5152 North Commerce Avenue
                                            Moorpark, California  93021

Paragraph 58

A.   OPTION(S) TO EXTEND:

Provided that the Lease has not been extended pursuant to Paragraph 54(C) of the
Lease, in which case this Paragraph shall be of no force or effect, Lessor
hereby grants to Lessee the option to extend the term of this Lease for 1
additional 60 month period(s) commencing when the prior term expires upon each
and all of the following terms and conditions:

     (i)   In order to exercise an option to extend, Lessee must give written
notice of such irrevocable election to Lessor and Lessor must receive the same
at least 6 but not more than N/A months prior to the date that the option period
wood commence, time being of the essence. If proper notification of the exercise
of an option is not given and/or received, such option shall automatically
expire. Options (if there are ore than one) may only be exercised consecutively.

     (ii)  The provisions of paragraph 39, including those relating to Lessee's
Default set forth in paragraph 39.4 of this Lease, are conditions of this
Option.

     (iii) Except for the provisions of this Lease granting an option or
options to extend the term, all of the terms and conditions of this Lease except
were specifically modified by this option shall apply.

     (iv)  This Option 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 without the
intention of thereafter assigning or subletting.

     (v)   The monthly rent for each month of the option period shall be
calculated as follows, using the method(s) indicated below:  (Check Method(s) to
be Used and Fill in Appropriately).

(Check Method(s) to be Used and Fill in Appropriately)

[X]   I.  Cost of Living Adjustment(s) (COLA)

          a.  On (Fill in COLA Dates):  __________________________________
__________________________________________________________________________ the
Base rent shall be adjusted by the change, if any, from the Base Month specified
below, in the Customer Price Index of the Bureau of Labor Statistics of the U.S.
Department of Labor for (select one): [_] CPI W (Urban Wage Earners and Clerical
Workers) or [_] CPI U (All Urban Consumers), for (Fill in Urban Area):
____________________________________________ All Items (1982-1984 = 100), herein
referred to as "CPI."

          b.  The monthly rent payable in accordance with paragraph A.I.a of
this Addendum shall be calculated as follows: the Base Rent set forth in
paragraph 1.5 of the attached Lease, shall be multiplied by a fraction the
numerator of which shall be the CPI of the calendar month specified in paragraph
A.I.a above during which the adjustment is to take effect, and the denominator
of which shall be the CPI of the calendar month which is (select one): [_] the
first month of the term of this Lease as set forth in paragraph 1.3 ("Base
Month") or [_] (Fill in Other "Base Month"):___________________________________.

                                       33
<PAGE>

The sum so calculated shall constitute the new monthly rent hereunder, but in no
event, shall any such new monthly rent be less than the rent payable for the
month immediately preceding the rent adjustment.

          c.  In the event the compilation and/or publication of the CPI shall
be transferred to any other governmental department or bureau or agency or shall
be discontinued, then the index most nearly the same as the CPI shall be used to
make such calculation. In the event that the Parties cannot agree on such
alternative index, then the matter shall be submitted for decision to the
American Arbitration Association in accordance with the then rules of said
Association and the decision of the arbitrators shall be binding upon the
parties. The cost of said Arbitration shall be paid equally by the Parties.

[X]   II. Market Rental Value Adjustment(s) (MRV)

          a.  On (Fill in MRV Adjustment Date(s): ____________________________
the Base Rent shall be adjusted to the "Market Rental Value" of the property as
follows:

              1)    Four months prior to each Market Rental Value Adjustment
Date described above, the Parties shall attempt to agree upon what the new MRV
will be on the adjustment date. If agreement cannot be reached within thirty
days, then:

                    (a)  Lessor and Lessee shall immediately appoint a mutually
acceptable appraiser or broker to establish the new MRV within the next thirty
days. Any associated costs will be split equally between the Parties, or

                    (b)  Both Lessor and Lessee shall each immediately make a
reasonable determination of the MRV and submit such determination, in writing,
to arbitration in accordance with the following provisions:

                         (i)   Within fifteen days thereafter, Lessor and Lessee
shall each select [_] an appraiser or [_] broker ("Consultant" - check one) of
their choice to act as an arbitrator. The two arbitrators so appointed shall
immediately select a third mutually acceptable Consultant to act as a third
arbitrator.

                         (ii)  The Three arbitrators shall within thirty days of
the appointment of the third arbitrator reach a decision as to what the actual
MRV for the Premises is, and whether Lessor's or Lessee's submitted MRV is the
closest thereto. The decision of a majority of the arbitrators shall be binding
on the Parties. The submitted MRV which is determined to be the closest to the
actual MRV shall thereafter be used by the Parties.

                         (iii) If either of the Parties fails to appoint an
arbitrator within the specified fifteen days, the arbitrator timely appointed by
one of them shall reach a decision on his or her own, and said decision shall be
binding on the Parties.

                         (iv)  The entire cost of such arbitration shall be paid
by the party whose submitted MRV is not selected, i.e., the one that is NOT the
closest to the actual MRV.

              2)    Notwithstanding the foregoing, the new MRV shall not be less
than the rent payable for the month immediately preceding the rent adjustment.

          b.  Upon the establishment of each New Market Rental Value:

              1)    the new MRV will become the new "Base Rent" for the purpose
of calculating any further adjustments, and

              2)    the first month of each Market Rental Value term shall
become the new "Base Month" for the purpose of calculating any further
Adjustments.

[_]   III. Market Rental Value Adjustment(s) (MRV)

The Base Rent shall be increased to the following amounts on the dates set forth
below:

                                       34
<PAGE>

On (Fill in FRA Adjustment Date(s)):          The New Base Rent shall be:

_________________________________________     $_______________________________

_________________________________________     $_______________________________

_________________________________________     $_______________________________


B.  NOTICE:

Unless specified otherwise herein, notice of any such adjustment, other than
Fixed Rental Adjustments, shall be made as specified in paragraph 23 of the
Lease.

                                       35
<PAGE>

                  ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL
                            SINGLE-TENANT LEASE-NET
                           DATED:  DECEMBER 1, 1999

                   YORK MOORPARK INDUSTRIAL, L.L.C., LESSOR
                            VARIFLEX, INC., LESSEE

                            5152 N. COMMERCE AVENUE


Paragraph 59

Lessor shall reimburse to Lessee an amount not to exceed $35,000 for carpet and
painting ("Improvements") of the Premises, upon completion and acceptance of the
Improvements by Lessor and Lessee.

All Improvements to be installed by Lessee must be approved in advance by Lessor
in writing, pursuant to the provisions of Paragraph 7.3.

Paragraph 60

All of the terms of the Subordination Agreement shall continue to apply, except
that Lessee agrees to enter into a modification or new subordination agreement,
if requested by Lessor's lender, in substantially the same form as set forth on
Exhibit "B" attached hereto and incorporated by this reference.

<TABLE>
<S>                                                 <C>
YORK MOORPARK INDUSTRIAL, L.L.C.                    VARIFLEX, INC., a Delaware corporation
An Arizona limited liability company

By:  Arizona Land Associates, L.P., a               By:  /s/ Roger M. Wasserman
     California limited partnership, Manager           ------------------------------------

     By:  York Arizona Corporation, a               Name:  Roger M. Wasserman
          California corporation, General                ----------------------------------
          Partner

          By: /s/ James York                        Title:  Chief Financial Officer
             -----------------------------                ---------------------------------
             James York, President
</TABLE>

                                       36