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                                                                   EXHIBIT 10.27

[LOGO OF AIR]

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

1.     Basic Provisions ("Basic Provisions").

       1.1    Parties: This Lease ("Lease"), dated for reference purposes only
November 2002, is made by and between The Richard Oppenheimer Living Trust, the
Maurice Oppenheimer Living Trust, and the Helene Oppenheimer Living Trust
("Lessor") and Tut Systems, Inc. ("Lessee"), (collectively the "Parties", or
individually a "Party").

       1.2(a) Premises: That certain portion of the Project (as defined below),
including all improvements therein or to be provided by Lessor under the terms
of this Lease, commonly known by the street address of 5200 Franklin Drive,
located in the City of Pleasanton, County of Alameda, State of California, with
zip code 94588, as outlined on Exhibit A attached hereto ("Premises") and
generally described as (describe briefly the nature of the
Premises):______________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________.
In addition to Lessee's rights to use and occupy the Premises as hereinafter
specified, Lessee shall have non-exclusive rights to the Common Areas (as
defined in Paragraph 2.7 below) as hereinafter specified, but shall not have any
rights to the roof, exterior walls or utility raceways of the building
containing the Premises ("Building") or to any other buildings in the Project.
The Premises, the Building, the Common Areas, the land upon which they are
located, along with all other buildings and improvements thereon, are herein
collectively referred to as the "Project." (See also Paragraph 2)

       1.2(b) Parking:_________________ unreserved vehicle parking spaces
("Unreserved Parking Spaces"); and ___________________ reserved vehicle parking
spaces ("Reserved Parking Spaces"). (See also Paragraph 2.6)

       1.3    Term: One (1) years and .5 months ("Original Term") commencing
12/15/02 ("Commencement Date") and ending 12/31/03 ("Expiration Date"). (See
also Paragraph 3)

       1.4    Early Possession: See Addendum ("Early Possession Date"). (See
also Paragraphs 3.2 and 3.3)

       1.5    Base Rent: $1.15/RSF/Mo. or $19,665 per month ("Base Rent"),
payable on the 1st day of each month commencing February 1, 2003 (See Addendum).
(See also Paragraph 4) [ ] If this box is checked, there are provisions in this
Lease for the Base Rent to be adjusted.

       1.6.   Lessee's Share of Common Area Operating Expenses:_______percent
(__%) ("Lessee's Share").

       1.7.   Base Rent and Other Monies Paid Upon Execution:

              (a)    Base Rent: $29,497.50 for the period 12/15/02 - 1/31/03.

              (b)    Common Area Operating Expenses: $12,788 for the period
                     12/15/02 - 1/31/03.

              (c)    Security Deposit: $28,190 ("Security deposit"). (See also
                     Paragraph 5).

              (d)    Other: $_____________ for_________________________________.

              (e)    Total Due Upon Execution of this lease: $ 70,475.50.

       1.8    Agreed Use: General office, light assembly and testing. (See also
Paragraph 6)

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

       1.10   Real Estate Brokers: (See also Paragraph 15)

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

[X] CM Realty, Inc.  represents Lessor exclusively ("Lessor's Broker");

[X] Cushman & Wakefield represents Lessee exclusively ("Lessee's Broker"); or

[ ] ________________ represents both Lessor and Lessee ("Dual Agency").

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

       1.11.  Guarantor. The obligations of the Lessee under this Lease are to
be guaranted by n/a ("Guarantor"). (See also Paragraph 37)

       1.12.  Addenda and Exhibits. Attached hereto is an Addendum or Addenda
consisting of Paragraphs ____ through ____ and Exhibits______, all of which
constitute a part of this Lease.

2.     Premises.

       2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases
from Lessor, the Premises, for the term, at the rental, and upon all of the
terms, covenants and conditions set forth in this Lease. Unless otherwise
provided herein, any statement of size set forth in this Lease, or that may have
been used in calculating Rent, is an approximation which the Parties agree is
reasonable and any payments based thereon are not subject to revision whether or
not the actual size is more or less.

       2.2 Condition. Lessor shall deliver that portion of the Premises
contained within the Building ("Unit") to Lessee broom clean and free of debris
on the Commencement Date or the Early Possession Date, whichever first occurs
("Start Date"), and, so long as the required service contracts described in
Paragraph 7.1 (b) below are obtained by Lessee and in effect within thirty days
following the Start Date, warrants that the existing electrical, plumbing, fire
sprinkler, lighting, heating, ventilating and air conditioning systems ("HVAC"),
loading doors, if any, and all other such elements in the Unit, other than those
constructed by Lessee, shall be in good operating condition on said date and
that the structural elements of the roof, bearing walls and foundation of the
Unit shall be free of material defects. If a non-compliance with such warranty
exists as of the Start Date, or if one of such systems or elements should
malfunction or fail within the appropriate warranty period, Lessor shall, as
Lessor's sole obligation with respect to such matter, except as otherwise
provided in this Lease, promptly after receipt of written notice from Lessee
setting forth with specificity the nature and extent of such non-compliance,
malfunction or failure, rectify same at Lessor's expense. The warranty periods
shall be as follows: (i) 6 months as to the HVAC systems, and (ii) 30 days as to
the remaining systems and other elements of the Unit. If Lessee does not give
Lessor the required notice within the appropriate warranty period, correction of
any such non-compliance, malfunction or failure shall be the obligation of
Lessee at Lessee's sole cost and expense (except for the repairs to the fire
sprinkler systems, roof, foundations, and/or bearing, walls - see Paragraph 7).

       2.3    Compliance. Lessor warrants that the improvements on the Premises
and the Common Areas comply with the building codes that were in effect at the
time that each such improvement, or portion thereof, was constructed, and also
with all applicable laws, covenants or restrictions of record, regulations, and
ordinances in effect on the Start Date ("Applicable Requirements"). Said
warranty does not apply to the use to which Lessee will put the Premises or to
any Alterations or Utility Installations (as defined in Paragraph 7.3(a)) made
or to be made by Lessee. NOTE: Lessee is responsible for determining whether or
not the Applicable Requirements,

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and especially the zoning, are appropriate for Lessee's intended use, and
acknowledges that past uses of the Premises may no longer be allowed. If the
Premises do not comply with said warranty, Lessor shall, except as otherwise
provided, promptly after receipt of written notice from Lessee setting forth
with specificity the nature and extent of such non-compliance, rectify the same
at Lessor's expense. If Lessee does not give Lessor written notice of a
non-compliance with this warranty within 6 months following the Start Date,
correction of that non-compliance shall be the obligation of Lessee at Lessee's
sole cost and expense. If the Applicable Requirements are hereafter changed so
as to require during the term of this Lease the construction of an addition to
or an alteration of the Unit, Premises and/or Building, the remediation of any
Hazardous Substance, or the reinforcement or other physical modification of the
Unit, Premises and/or Building ("Capital Expenditure"), Lessor and Lessee shall
allocate the cost of such work as follows:

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

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

       (c)    Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to nonvoluntary, 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 the Americans with Disabilities Act), and their
suitability for Lessee's intended use, (b) Lessee has made such investigation as
it deems necessary with reference to such matters and assumes all responsibility
therefor as the same relate to its occupancy of the Premises, and (c) neither
Lessor, Lessor's agents, nor Brokers have made any oral or written
representations or warranties with respect to said matters other than as set
forth in this Lease. In addition, Lessor acknowledges that: (i) Brokers have
made no representations, promises or warranties concerning Lessee's ability to
honor the Lease or suitability to occupy the Premises, and (ii) it is Lessor's
sole responsibility to investigate the financial capability and/or suitability
of all proposed tenants.

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

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

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

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

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

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

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

       2.9    Common Areas - Rules and Regulations. Lessor or such other
person(s) as Lessor may appoint shall have the exclusive control and management
of the Common Areas and shall have the right, from time to time, to establish,
modify, amend and enforce reasonable rules and regulations ("Rules and
Regulations") for the management, safety, care, and cleanliness of the grounds,
the parking and unloading of vehicles and the preservation of good order, as
well as for the convenience of other occupants or tenants of the Building and
the Project and their invitees. Lessee agrees to abide by and conform to all
such Rules and Regulations, and to cause its employees, suppliers, shippers,
customers, contractors and invitees to so abide and conform. Lessor shall not be
responsible to Lessee for the non-compliance with said Rules and Regulations by
other tenants of the Project.

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

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

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

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

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

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

3.     Term.

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

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

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

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

4.     Rent.

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

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

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

                     (i)    The operation, repair and maintenance, in neat,
                            clean, good order and condition of the following:
                            (aa) The Common Areas and Common Area improvements,
                            including parking areas, loading and unloading
                            areas, trash areas, roadways, parkways, walkways,
                            driveways, landscaped areas, bumpers, irrigation
                            systems, Common Area lighting facilities, fences and
                            gates, elevators, roofs, and roof drainage systems.
                            (bb) Exterior signs and any tenant directories.
                            (cc) Any fire detection and/or sprinkler systems.

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

                     (iii)  Trash disposal, pest control services, property
                            management, security services, and the costs of any
                            environmental inspections.

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

                     (v)    Real Property Taxes (as defined in Paragraph 10).

                     (vi)   The cost of the premiums for the insurance
                            maintained by Lessor pursuant to Paragraph 8.

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

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

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

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

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

              (d)    Lessee's Share of Common Area Operating Expenses shall be
payable by Lessee within 10 days after a reasonably detailed statement of actual
expenses is presented to Lessee. At Lessor's option, however, an amount may be
estimated by Lessor from time to time of Lessee's Share of annual Common Area
Operating Expenses and the same shall be payable monthly or quarterly, as Lessor
shall designate, during each 12 month period of the Lease term, on the same day
as the Base Rent is due hereunder. Lessor shall deliver to Lessee within 60 days
after the expiration of each calendar year a reasonably detailed statement
showing Lessee's Share of the actual Common Area Operating Expenses incurred
during the preceding year. If Lessee's payments under this Paragraph 4.2(d)
during the preceding year exceed Lessee's Share as indicated on such statement,
Lessor shall credit the amount of such over-payment against Lessee's Share of
Common Area Operating Expenses next becoming due. If Lessee's payments under
this Paragraph 4.2(d) during the preceding year were less than Lessee's Share as
indicated on such statement, Lessee shall pay to Lessor the amount of the
deficiency within 10 days after delivery by Lessor to Lessee of the statement.
See Addendum

       4.3    Payment. Lessee shall cause payment of Rent to be received by
Lessor in lawful money of the United States, without offset or deduction (except
as specifically permitted in this Lease), on or before the day on which it is
due. Rent for any period during the term hereof which is for less than one full
calendar month shall be prorated based upon the actual number of days of said
month. Payment of Rent shall be made to Lessor at its address stated herein or
to such other persons or place as Lessor may from time to time designate in
writing. Acceptance of a payment which is less than the amount then due shall
not be a waiver of Lessor's rights to the balance of such Rent, regardless of
Lessor's endorsement of any check so stating. In the event that any check,
draft, or other instrument of payment given by Lessee to Lessor is dishonored
for any reason, Lessee agrees to pay to Lessor the sum of $25 in addition to any
late charges which may be due. See Addendum

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,

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

6.     Use.

       6.1    Use. Lessee shall use and occupy the Premises only for the Agreed
Use, or any other legal use which is reasonably comparable thereto, and for no
other purpose. Lessee shall not use or permit the use of the Premises in a
manner that is unlawful, creates damage, waste or a nuisance, or that disturbs
occupants of or causes damage to neighboring premises or properties. Lessor
shall not unreasonably withhold or delay its consent to any written request for
a modification of the Agreed Use, so long as the same will not impair the
structural integrity of the improvements on the Premises or the mechanical or
electrical systems therein, and/or is not significantly more burdensome to the
Premises. If Lessor elects to withhold consent, Lessor shall within 7 days after
such request give written notification of same, which notice shall include an
explanation of Lessor's objections to the change in the Agreed Use.

       6.2    Hazardous Substances.

              (a)    Reportable Uses Require Consent. The term "Hazardous
Substance" as used in this Lease shall mean any product, substance, or waste
whose presence, use, manufacture, disposal, transportation, or release, either
by itself or in combination with other materials expected to be on the Premises,
is either: (i) potentially injurious to the public health, safety or welfare,
the environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for potential liability of Lessor to any
governmental agency 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 areas outside of the Project).
Lessee's obligations shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or
suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of
this Lease. No termination, cancellation or release agreement entered into by
Lessor and Lessee shall release Lessee from its obligations under this Lease
with respect to Hazardous Substances, unless specifically so agreed by Lessor in
writing at the time of such agreement.

              (e)    Lessor Indemnification. Lessor and its successors and
assigns shall indemnify, defend, reimburse and hold Lessee, its employees and
lenders, harmless from and against any and all environmental damages, including
the cost of remediation, which existed as a result of Hazardous Substances on
the Premises prior to the Start Date 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 the Start Date, unless such
remediation measure is required as a result of Lessee's use (including
"Alterations", as defined in paragraph 7.3(a) below) of the Premises, in which
event Lessee shall be responsible for such payment. Lessee shall cooperate fully
in any such activities at the request of Lessor, including allowing Lessor and
Lessor's agents to have reasonable access to the Premises at reasonable times in
order to carry out Lessor's investigative and remedial responsibilities.

              (g)    Lessor Termination Option. If a Hazardous Substance
Condition (see Paragraph 9.1 (e)) occurs during the term of this Lease, unless
Lessee is legally responsible therefor (in which case Lessee shall make the
investigation and remediation thereof required by the Applicable Requirements
and this Lease shall continue in full force and effect, but subject to Lessor's
rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor's option,
either (i) investigate and remediate such Hazardous Substance Condition, if
required, as soon as reasonably possible at Lessor's expense, in which event
this Lease shall continue in full force and effect, or (ii) if the estimated
cost to remediate such condition exceeds 12 times the then monthly Base Rent or
$100,000, whichever is greater, give written notice to Lessee, within 30 days
after receipt by Lessor of knowledge of the occurrence of such Hazardous
Substance Condition, of Lessor's desire to terminate this Lease as of the date
60 days following the date of such notice. In the event Lessor elects to give a
termination notice, Lessee may, within 10 days thereafter, give written notice
to Lessor of Lessee's commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount equal to 12
times

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the then monthly Base Rent or $100,000, whichever is greater. Lessee shall
provide Lessor with said funds or satisfactory assurance thereof within 30 days
following such commitment. In such event, this Lease shall continue in full
force and effect, and Lessor shall proceed to make such remediation as soon as
reasonably possible after the required funds are available. If Lessee does not
give such notice and provide the required funds or assurance thereof within the
time provided, this Lease shall terminate as of the date specified in Lessor's
notice of termination.

       6.3.   Lessee's Compliance with Applicable Requirements. Except as
otherwise provided in this Lease, Lessee shall, at Lessee's sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor's engineers and/or consultants
which relate in any manner to the Premises, without regard to whether said
requirements are now in effect or become effective after the Start Date. Lessee
shall, within 10 days after receipt of Lessor's written request, provide Lessor
with copies of all permits and other documents, and other information evidencing
Lessee's compliance with any Applicable Requirements specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving the failure of Lessee or
the Premises to comply with any Applicable Requirements.

       6.4    Inspection; Compliance. Lessor and Lessor's "Lender" (as defined
in Paragraph 30) and consultants shall have the right to enter into Premises at
any time, in the case of an emergency, and otherwise at reasonable times, for
the purpose of inspecting the condition of the Premises and for verifying
compliance by Lessee with this Lease. The cost of any such inspections shall be
paid by Lessor, unless a violation of Applicable Requirements, or a
contamination is found to exist or be imminent, or the inspection is requested
or ordered by governmental authority. In such case, Lessee shall upon request
reimburse Lessor for the cost of such inspection, so long as such inspection is
reasonably related to the violation or contamination.

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

       7.1    Lessee's Obligations.

       (a)    In General. Subject to the provisions of Paragraph 2.2
(Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable
Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14
(Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises,
Utility Installations (intended for Lessee's exclusive use, no matter where
located), and Alterations in good order, condition and repair (whether or not
the portion of the Premises requiring repairs, or the means of repairing the
same, are reasonably or readily accessible to Lessee, and whether or not the
need for such repairs occurs as a result of Lessee's use, any prior use, the
elements or the age of such portion of the Premises), including, but not limited
to, all equipment or facilities, such as plumbing, HVAC equipment, electrical,
lighting facilities, boilers, pressure vessels, fixtures, interior walls,
interior surfaces of exterior walls, ceilings, floors, windows, doors, plate
glass, and skylights but excluding any items which are the responsibility of
Lessor pursuant to Paragraph 7.2. Lessee, in keeping the Premises in good order,
condition and repair, shall exercise and perform good maintenance practices,
specifically including the procurement and maintenance of the service contracts
required by Paragraph 7.1(b) below. Lessee's obligations shall include
restorations, replacements or renewals when necessary to keep the Premises and
all improvements thereon or a part thereof in good order, condition and state of
repair.

       (b)    Service Contracts. Lessee shall, at Lessee's sole expense, procure
and maintain contracts, with copies to Lessor, in customary form and substance
for, and with contractors specializing and experienced in the maintenance of the
following equipment and improvements, if any, if and when installed on the
Premises: (i) HVAC equipment, (ii) boiler and pressure vessels, (iii)
clarifiers, and (iv) any other equipment, if reasonably required by Lessor.
However, Lessor reserves the right, upon notice to Lessee, to procure and
maintain any or all of such service contracts, and if Lessor so elects, Lessee
shall reimburse Lessor, upon demand, for the cost thereof.

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

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

       7.2    Lessor's Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6 (Use),
7.1 (Lessee's Obligations), 9 (Damage or Destruction) and 14 (Condemnation),
Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good
order, condition and repair the foundations, exterior walls, structural
condition of interior bearing walls, exterior roof, fire sprinkler system,
Common Area fire alarm and/or smoke detection systems, fire hydrants, parking
lots, walkways, parkways, driveways, landscaping, fences, signs and utility
systems serving the Common Areas and all parts thereof, as well as providing the
services for which there is a Common Area Operating Expense pursuant to
Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior
surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or
replace windows, doors or plate glass of the Premises. Lessee expressly waives
the benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease.

       7.3    Utility Installations; Trade Fixtures; Alterations.

              (a)    Definitions. The term "Utility Installations" refers to all
floor and window coverings, air 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).

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

              (c)    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
mechanics or materialman's lien against the Premises or any interest therein.
Lessee shall give Lessor not less than 10 days notice prior to the commencement
of any

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work in, on or about the Premises, and Lessor shall have the right to post
notices of non-responsibility. If Lessee shall contest the validity of any such
lien, claim or demand, then Lessee shall, at its sole expense defend and protect
itself, Lessor and the Premises against the same and shall pay and satisfy any
such adverse judgment that may be rendered thereon before the enforcement
thereof. If Lessor shall require, Lessee shall furnish a surety bond in an
amount equal to 150% of the amount of such contested lien, claim or demand,
indemnifying Lessor against liability for the same. If Lessor elects to
participate in any such action, Lessee shall pay Lessor's attorneys' fees and
costs.

       7.4    Ownership; Removal: Surrender; and Restoration.

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

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

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

8.     Insurance; Indemnity.

       8.1    Payment of Premiums. The cost of the premiums for the insurance
policies required to be carried by Lessor, pursuant to Paragraphs 8.2(b), 8.3(a)
and 8.3(b), shall be a Common Area Operating Expense. Premiums for policy
periods commencing prior to, or extending beyond, the term of this Lease shall
be prorated to coincide with the corresponding Start Date or Expiration Date.

       8.2    Liability Insurance.

              (a)    Carried by Lessee. Lessee shall obtain and keep in force a
Commercial General Liability policy of insurance protecting Lessee and Lessor as
an additional insured against claims for bodily injury, personal injury and
property damage based upon or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such insurance
shall be on an occurrence basis providing single limit coverage in an amount not
less than $2,000,000 per occurrence with an annual aggregate of not less than
$2,000,000, 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. Lessor shall obtain and keep in
force a policy or policies of insurance in the name of Lessor, with loss payable
to Lessor, any ground-lessor, and to any Lender insuring loss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exist from time to time, or the amount
required by any Lender, but in no event more than the commercially reasonable
and available insurable value thereof. Lessee Owned Alterations and Utility
Installations, Trade Fixtures, and Lessee's personal property shall be insured
by Lessee under Paragraph 8.4. If the coverage is available and commercially
appropriate, such policy or policies shall insure against all risks of direct
physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for debris removal and the enforcement
of any Applicable Requirements requiring the upgrading, demolition,
reconstruction or replacement of any portion of the Premises as the result of a
covered loss. Said policy or policies shall also contain an agreed valuation
provision in lieu of any coinsurance clause, waiver of subrogation, and
inflation guard protection causing an increase in the annual property insurance
coverage amount by a factor of not less than the adjusted U.S. Department of
Labor Consumer Price Index for All Urban Consumers for the city nearest to where
the Premises are located. If such insurance coverage has a deductible clause,
the deductible amount shall not exceed $1,000 per occurrence.

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

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

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

       8.4    Lessee's Property; Business Interruption Insurance.

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

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

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

       8.5    Insurance Policies. Insurance required herein shall be by
companies duly licensed or admitted to transact business in the state where the
Premises are located, and maintaining during the policy term a "General
Policyholders Rating" of at least B+, V, 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

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policy shall be cancelable or subject to modification except after 30 days prior
written notice to Lessor. Lessee shall, at least 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 Lessor's gross negligence or willful
misconduct, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or
liabilities arising out of, involving, or in connection with, the use and/or
occupancy of the Premises by Lessee. If any action or proceeding is brought
against Lessor by reason of any of the foregoing matters, Lessee shall upon
notice defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be defended or indemnified.

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

9.     Damage or Destruction.

       9.1    Definitions.

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

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

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

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

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

       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 $5,000 or less, and, in such event, Lessor shall make any applicable
insurance proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required insurance was not in force or the
insurance proceeds are not sufficient to effect such repair, the Insuring Party
shall promptly contribute the shortage in proceeds as and when required to
complete said repairs. In the event, however, such shortage was due to the fact
that, by reason of the unique nature of the improvements, full replacement cost
insurance 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 10 days following
receipt of written notice of such shortage and request therefor. If Lessor
receives said funds or adequate assurance thereof within said 10 day period, the
party responsible for making the repairs shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect. If
such funds or assurance are not received, Lessor may nevertheless elect by
written notice to Lessee within 10 days thereafter to: (i) make such restoration
and repair as is commercially reasonable with Lessor paying any shortage in
proceeds, in which case this Lease shall remain in full force and effect, or
(ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled
to reimbursement of any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be subject
to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but
the net proceeds of any such insurance shall be made available for the repairs
if made by either Party.

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

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

       9.5    Damage Near End of Term. If at any time during the last 6 months
of this Lease there is damage for which the cost to repair exceeds one month's
Base Rent, whether or not an Insured Loss, Lessor may terminate this Lease
effective 60 days following the date of occurrence of such damage by giving a
written termination notice to Lessee within 30 days after the date of occurrence
of such damage. Notwithstanding the foregoing, if Lessee at that time has an
exercisable option to extend this Lease or to purchase the Premises, then Lessee
may preserve this Lease by, (a) exercising such option and (b) providing Lessor
with any shortage in insurance proceeds (or adequate assurance thereof) needed
to make the repairs on or before the earlier of (i) the date which is 10 days
after Lessee's receipt of Lessor's written notice purporting to terminate this
Lease, or (ii) the day prior to the date upon which such option expires. If
Lessee duly exercises such option during such period and provides Lessor with
funds (or adequate assurance thereof) to cover any shortage in insurance
proceeds, Lessor shall, at Lessor's commercially reasonable expense, repair such
damage as soon as

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reasonably possible and this Lease shall continue in full force and effect. If
Lessee fails to exercise such option and provide such funds or assurance during
such period, then this Lease shall terminate on the date specified in the
termination notice and Lessee's option shall be extinguished.

       9.6    Abatement of Rent; Lessee's Remedies.

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

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

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

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

10.    Real Property Taxes.

       10.1   Definition. As used herein, the term "Real Property Taxes" shall
include any form of assessment; real estate, general, special, ordinary or
extraordinary, or rental levy or tax (other than inheritance, personal income or
estate taxes); improvement bond; and/or license fee imposed upon or levied
against any legal or equitable interest of Lessor in the Project, Lessor's right
to other income therefrom, and/or Lessor's business of leasing, by any authority
having the direct or indirect power to tax and where the funds are generated
with reference to the Project address and where the proceeds so generated are to
be applied by the city, county or other local taxing authority of a jurisdiction
within which the Project is located. The term "Real Property Taxes" shall also
include any tax, fee, levy, assessment or charge, or any increase therein,
imposed by reason of events occurring during the term of this Lease, including
but not limited to, a change in the ownership of the Project or any portion
thereof or a change in the improvements thereon. In calculating Real Property
Taxes for any calendar year, the Real Property Taxes for any real estate tax
year shall be included in the calculation of Real Property Taxes for such
calendar year based upon the number of days which such calendar year and tax
year have in common.

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

       10.3   Additional Improvements. Common Area Operating Expenses shall not
include Real Property Taxes specified in the tax assessor's records and work
sheets as being caused by additional improvements placed upon the Project by
other lessees or by Lessor for the exclusive enjoyment of such other lessees.
Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at
the time Common Area Operating Expenses are payable under Paragraph 4.2, the
entirety of any increase in Real Property Taxes if assessed solely by reason of
Alterations, Trade Fixtures or Utility Installations placed upon the Premises by
Lessee or at Lessee's request.

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

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

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

12.    Assignment and Subletting.

       12.1   Lessor's Consent Required.

              (a)    Lessee shall not voluntarily or by operation of law assign,
transfer, mortgage or encumber (collectively, "assign or assignment") or sublet
all or any part of Lessee's interest in this Lease or in the Premises without
Lessor's prior written consent.

              (b)    A change in the control of Lessee shall constitute an
assignment requiring consent. The transfer, on a cumulative basis, of 50% or
more 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 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 30 days
written notice, increase the monthly Base Rent to 110% of the Base Rent then in
effect. Further, in the event of such Breach and rental adjustment, (i) the
purchase price of any option to purchase the Premises held by Lessee shall be
subject to similar adjustment to 110% of the price previously in effect, and
(ii) all fixed and non-fixed rental adjustments scheduled during the remainder
of the Lease term shall be increased to 110% of the scheduled adjusted rent.

       12.2   Terms and Conditions Applicable to Assignment and Subletting.

              (a)    Regardless of Lessor's consent, no assignment or subletting
shall: (i) be effective without the express written assumption by such assignee
or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee
of any obligations

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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 Lessor's right to exercise its remedies for Lessee's Default or Breach.

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

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

              (e)    Each request for consent to an assignment or subletting
shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any,
together with a fee of $500 whichever is greater, as consideration for Lessor's
considering and processing said request. Lessee agrees to provide Lessor with
such other or additional information and/or documentation as may be reasonably
requested. *

              (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.

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

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

              (a)    Lessee hereby assigns and transfers to Lessor all of
Lessee's interest in all Rent payable on any sublease, and Lessor may collect
such Rent and apply same toward Lessee's obligations under this Lease; provided,
however, that until a Breach shall occur in the performance of Lessee's
obligations, Lessee may collect said Rent. Lessor shall not, by reason of the
foregoing or any assignment of such sublease, nor by reason of the collection of
Rent, be deemed liable to the sublessee for any failure of Lessee to perform and
comply with any of Lessee's obligations to such sublessee. Lessee hereby
irrevocably authorizes and directs any such sublessee, upon receipt of a written
notice from Lessor stating that a Breach exists in the performance of Lessee's
obligations under this Lease, to pay to Lessor all Rent due and to become due
under the sublease. Sublessee shall rely upon any such notice from Lessor and
shall pay all Rents to Lessor without any obligation or right to inquire as to
whether such Breach exists, notwithstanding any claim from Lessee to the
contrary.

              (b)    In the event of a Breach by Lessee, Lessor may, at its
option, require sublessee to attorn to Lessor, in which event Lessor shall
undertake the obligations of the sublessor under such sublease from the time of
the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit
paid by such sublessee to such sublessor or for any prior Defaults or Breaches
of such sublessor.

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

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

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

13.    Default; Breach; Remedies.

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

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

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

              (c)    The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized assignment or subletting, (iv) an
Estoppel Certificate, (v) a requested subordination, (vi) evidence concerning
any guaranty and/or Guarantor, (vii) any document requested under Paragraph 41
(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 10 days following written notice to Lessee.

              (d)    A Default by Lessee as to the terms, covenants, conditions
or provisions of this Lease, or of the rules adopted under Paragraph 2.9 hereof,
other than those described in subparagraphs 13.1 (a), (b) or (c), above, where
such Default continues for a period of 30 days after written notice; provided,
however, that if the nature of Lessee's Default is such that more than 30 days
are reasonably required for its cure, then it shall not be deemed to be a Breach
if Lessee commences such cure within said 30 day period and thereafter
diligently prosecutes such cure to completion.

              (e)    The occurrence of any of the following events: (i) the
making of any general arrangement or assignment for the benefit of creditors;
(ii) becoming a "debtor" as defined in 11 U.S.C. Section 101 or any successor
statute thereto (unless, in the case of a petition filed against Lessee, the
same is dismissed within 60 days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where possession is not
restored to Lessee within 30 days; or (iv) the attachment, execution or other
judicial seizure of substantially all of Lessee's assets located at the Premises
or of Lessee's interest in this Lease, where such seizure is not discharged
within 30 days; provided, however, in the event that any provision of this
subparagraph (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
Guarantor's liability with respect to this Lease other than in accordance with
the terms of such guaranty, (iii) a Guarantor's becoming insolvent or the
subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the
guaranty, or (v) a Guarantor's breach of its guaranty obligation on an
anticipatory basis, and Lessee's failure, within 60 days following written
notice of any such event, to provide written alternative assurance or security,
which, when coupled with the then existing resources of Lessee, equals or
exceeds the combined financial resources of Lessee and the Guarantors that
existed at the time of execution of this Lease.

       13.2   Remedies. If Lessee fails to perform any of its affirmative duties
or obligations, within 10 days after written notice (or in case of an emergency,
without notice), Lessor may, at its option, perform such duty or obligation on
Lessee's behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. 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

          *   Lessor must respond to said request within ten (10) days following
              receipt of all relevant information and data.

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limiting Lessor in the exercise of any right or remedy which Lessor may have by
reason of such Breach:

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

              (b)    Continue the Lease and Lessee's right to possession and
recover the Rent as it becomes due, in which event Lessee may sublet or assign,
subject only to reasonable limitations. Acts of maintenance, efforts to relet,
and/or the appointment of a receiver to protect the Lessor's interests, shall
not constitute a termination of the Lessee's right to possession.

              (c)    Pursue any other remedy now or hereafter available under
the laws or judicial decisions of the state wherein the Premises are located.
The expiration or termination of this Lease and/or the termination of Lessee's
right to possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee's occupancy of the Premises.

       13.4   Late Charges. Lessee hereby acknowledges that late payment by
Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease,
the exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be received by Lessor within 5 days after such amount shall be due,
then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a
one-time late charge equal to 10% of each such overdue amount or $100, whichever
is greater. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of such late
payment. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected,
for 3 consecutive installments of Base Rent, then notwithstanding any provision
of this Lease to the contrary, Base Rent shall, at Lessor's option, become due
and payable quarterly in advance.

       13.5   Interest. Any monetary payment due Lessor hereunder, other than
late charges, not received by Lessor, when due as to scheduled payments (such as
Base Rent) or within 30 days following the date on which it was due for
non-scheduled payment, shall bear interest from the date when due, as to
scheduled payments, or the 31st day after it was due as to non-scheduled
payments. The interest ("Interest") charged shall be equal to the prime rate
reported in the Wall Street Journal as published closest prior to the date when
due plus 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 a reasonable time to perform an obligation
required to be performed by Lessor. For purposes of this Paragraph, a reasonable
time shall in no event be less than 30 days after receipt by Lessor, and any
Lender whose name and address shall have been furnished Lessee in writing for
such purpose, of written notice specifying wherein such obligation of Lessor has
not been performed; provided, however, that if the nature of Lessor's obligation
is such that more than 30 days are reasonably required for its performance, then
Lessor shall not be in breach if performance is commenced within such 30 day
period and thereafter diligently pursued to completion.

              (b)    Performance by Lessee on Behalf of Lessor. In the event
that neither Lessor nor Lender cures said breach within 30 days after receipt of
said notice, or if having commenced said cure they do not diligently pursue it
to completion, then Lessee may elect to cure said breach at Lessee's expense and
offset from Rent an amount equal to the greater of one month's Base Rent or the
Security Deposit, and to pay an 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 10% of the floor area of the Unit, or more than 25%
of Lessee's Reserved Parking Spaces, is taken by Condemnation, Lessee may, at
Lessee's option, to be exercised in writing within 10 days after Lessor shall
have given Lessee written notice of such taking (or in the absence of such
notice, within 10 days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessee's
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.

/s/ [ILLEGIBLE]                                                 /s/ [ILLEGIBLE]
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15.    Brokerage Fees.

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

16.    Estoppel Certificates.

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

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

              (c)    If Lessor desires to finance, refinance, or sell the
Premises, or any part thereof, Lessee 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 Lessee's financial statements for the past 3 years. All such
financial statements shall be received by Lessor and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.

17.    Definition of Lessor. The term "Lessor" as used herein shall mean the
owner or owners at the time in question of the fee title to the Premises, or, if
this is a sublease, of the Lessee's interest in the prior lease. In the event of
a transfer of Lessor's title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined. Notwithstanding the above, and subject to the provisions of Paragraph
20 below, the original Lessor under this Lease, and all subsequent holders of
the Lessor's interest in this Lease shall remain liable and responsible with
regard to the potential duties and liabilities of Lessor pertaining to Hazardous
Substances as outlined in Paragraph 6.2 above.

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

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

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

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

22.    No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the use, nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party. The liability (including court costs and attorneys'
fees), of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or
modification hereto shall be limited to an amount up to the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation
on each Broker's liability shall not be applicable to any gross negligence or
willful misconduct of such Broker.

23.    Notices.

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

       23.2   Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, or if no delivery date is shown, the postmark thereon. If sent
by regular mail the notice shall be deemed given 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 24 hours after delivery of the same to the Postal
Service or courier. Notices transmitted by facsimile transmission or similar
means shall be deemed delivered upon telephone confirmation of receipt
(confirmation report from fax machine is sufficient), provided a copy is also
delivered via delivery or mail. If notice is received on a Saturday, Sunday or
legal holiday, it shall be deemed received on the next business day.

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

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such payment.

25.    Disclosures Regarding The Nature of a Real Estate Agency Relationship.

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

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

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

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

       (b)    Brokers have no responsibility with respect to any default or
breach hereof by either Party. The liability (including court costs and
attorneys' fees), of any Broker with respect to any breach of duty, error or
omission relating to this Lease shall not exceed the fee received by such Broker
pursuant to this Lease; provided, however, that the foregoing limitation on each
Broker's liability shall not be applicable to any gross negligence or willful
misconduct of such Broker.

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

26.    No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
150% of the Base Rent applicable immediately preceding the expiration or
termination. Nothing contained herein shall be construed as consent by Lessor to
any holding over by Lessee.

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

28.    Covenants and Conditions; Construction of Agreement. All provisions of
this Lease to be observed or performed by Lessee are both covenants and
conditions. In construing this Lease, all headings and titles are for the
convenience of the Parties only and shall not be considered a part of this
Lease. Whenever required by the context, the singular shall include the plural
and vice versa. This Lease shall not be construed as if prepared by one of the
Parties, but rather according to its fair meaning as a whole, as if both Parties
had prepared it.

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

30.    Subordination; Attornment; Non-Disturbance.

       30.1   Subordination. This Lease and any Option granted hereby shall be
subject and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as "Lender") shall have no liability or obligation to perform any of
the obligations of Lessor under this Lease. Any Lender may elect to have this
Lease and/or any Option granted hereby superior to the lien of its Security
Device by giving written notice thereof to Lessee, whereupon this Lease and such
Options shall be deemed prior to such Security Device, notwithstanding the
relative dates of the documentation or recordation thereof.

       30.2   Attornment. In the event that Lessor transfers title to the
Premises, or the Premises are acquired by another upon the foreclosure or
termination of a Security Device to which this Lease is subordinated (i) Lessee
shall, subject to the non-disturbance provisions of Paragraph 30.3, attorn to
such new owner, and upon request, enter into a new lease, containing all of the
terms and provisions of this Lease, with such new owner for the remainder of the
term hereof, or, at the election of such new owner, this Lease shall
automatically become a new Lease between Lessee and such new owner, upon all of
the terms and conditions hereof, for the remainder of the term hereof, and (ii)
Lessor shall thereafter be relieved of any further obligations hereunder and
such new owner shall assume all of Lessor's obligations hereunder, except that
such new owner shall not: (a) be liable for any act or omission of any prior
lessor or with respect to events occurring prior to acquisition of ownership;
(b) be subject to any offsets or defenses which Lessee might have against any
prior lessor, (c) be bound by prepayment of more than one month's rent, or (d)
be liable for the return of any security deposit paid to any prior lessor.

       30.3   Non-Disturbance. With respect to Security Devices entered into by
Lessor after the execution of this Lease, Lessee's subordination of this Lease
shall be subject to receiving a commercially reasonable non-disturbance
agreement (a "Non-Disturbance Agreement") from the Lender which Non-Disturbance
Agreement provides that Lessee's possession of the Premises, and this Lease,
including any options to extend the term hereof, will not be disturbed so long
as Lessee is not in Breach hereof and attorns to the record owner of the
Premises. Further, within 60 days after the execution of this Lease, Lessor
shall use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee's
option, directly contact Lender and attempt to negotiate for the execution and
delivery of a Non-Disturbance Agreement.

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

31.    Attorneys' Fees. If any Party or Broker brings an action or
proceeding involving the Premises whether founded in tort, contract or equity,
or to declare rights hereunder, the Prevailing Party (as hereafter defined) in
any such proceeding, action, or appeal thereon, shall be entitled to reasonable
attorneys' fees. Such fees may be awarded in the same suit or recovered in a
separate suit, whether or not such action or proceeding is pursued to decision
or judgment. The term, "Prevailing Party" shall include, without limitation, a
Party or Broker who substantially obtains or defeats the relief sought, as the
case may be, whether by compromise, settlement, judgment, or

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the abandonment by the other Party or Broker of its claim or defense. The
attorneys' fees award shall not be computed in accordance with any court fee
schedule, but shall be such as to fully reimburse all attorneys' fees reasonably
incurred. In addition, Lessor shall be entitled to attorneys' fees, costs and
expenses incurred in the preparation and service of notices of Default and
consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such Default or resulting Breach ($200
is a reasonable minimum per occurrence for such services and consultation).

32.    Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents
shall have the right to enter the Premises at any time, in the case of an
emergency, and otherwise at reasonable times for the purpose of showing the same
to prospective purchasers, lenders, or tenants, 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 6 months of the term hereof place on the Premises any
ordinary "For Lease" signs. Lessee may at any time place on the Premises any
ordinary "For Sublease" sign.

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

34.    Signs. Except for ordinary "For Sublease" signs which may be placed only
on the Premises, Lessee shall not place any sign upon the Project without
Lessor's prior written consent. All signs must comply with all Applicable
Requirements.

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

36.    Consents. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs
and expenses (including but not limited to architects', attorneys', engineers'
and other consultants' fees) incurred in the consideration of, or response to, a
request by Lessee for any Lessor consent, including but not limited to consents
to an assignment, a subletting or the presence or use of a Hazardous Substance,
shall be paid by Lessee upon receipt of an invoice and supporting documentation
therefor. Lessor's consent to any act, assignment or subletting shall not
constitute an acknowledgment that no Default or Breach by Lessee of this Lease
exists, nor shall such consent be deemed a waiver of any then existing Default
or Breach, except as may be otherwise specifically stated in writing by Lessor
at the time of such consent. The failure to specify herein any particular
condition to Lessor's consent shall not preclude the imposition by Lessor at the
time of consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within 10 business days following such request.

37.    Guarantor.

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

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

38.    Quiet Possession. Subject to payment by Lessee of the Rent and
performance of all of the covenants, conditions and provisions on Lessee's part
to be observed and performed under this Lease, Lessee shall have quiet
possession and quiet enjoyment of the Premises during the term hereof.

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

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

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

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

       39.4   Effect of Default on Options.

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

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

              (c)    An Option shall terminate and be of no further force or
effect, notwithstanding Lessee's due and timely exercise of the Option, if,
after such exercise and prior to the commencement of the extended term, (i)
Lessee fails to pay Rent for a period of 30 days after such Rent becomes due
(without any necessity of Lessor to give notice thereof), (ii) Lessor gives to
Lessee 3 or more notices of separate Default during any 12 month period, whether
or not the Defaults are cured, or (iii) if Lessee commits a Breach of this
Lease.

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

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

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

43.    Authority. If either Party hereto is a corporation, trust, limited
liability company, partnership, or similar entity, each individual executing
this Lease on behalf of such entity represents and warrants that he or she is
duly authorized to execute and deliver this Lease on its behalf. Each party
shall, within 30 days after request, deliver to the other party satisfactory
evidence of such authority.

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

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

46.    Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As

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long as they do not materially change Lessee's obligations hereunder, Lessee
agrees to make such reasonable non-monetary modifications to this Lease as may
be reasonably required by a Lender in connection with the obtaining of normal
financing or refinancing of the Premises.

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

48.    Waiver of Jury Trial. The Parties hereby waive their respective rights to
trial by jury in any action or proceeding involving the Property or arising out
of this Agreement.

49.    Mediation and Arbitration of Disputes. An Addendum requiring the
Mediation and/or the Arbitration of all disputes between the Parties and/or
Brokers arising out of this Lease is 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,
COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE
PREMISES FOR LESSEE'S INTENDED USE.

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

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

Executed at: Pleasonton                   Executed at: Pleasanton, CA
            ------------------------                  -------------------------
on:     12/03/02                          on:      12/02/02
   ---------------------------------         ----------------------------------
By LESSOR: /s/ Richard Oppenheimer        By LESSEE:  /s/ Sal D'Auria
------------------------------------      -------------------------------------

------------------------------------      -------------------------------------

By:                                       By:
   ---------------------------------         ----------------------------------
Name Printed: Richard Oppenheimer         Name Printed:Sal D'Auria
             -----------------------                   ------------------------
Title:    Trustee                         Title:  President
      ------------------------------            -------------------------------

By:                                       By:
   ---------------------------------         ----------------------------------
Name Printed:                             Name Printed:
             -----------------------                   ------------------------
Title:                                    Title:
      ------------------------------            -------------------------------
Address:                                  Address:
        ----------------------------              -----------------------------

------------------------------------      -------------------------------------

------------------------------------      -------------------------------------

Telephone: (  )___________________         Telephone: (  )_____________________

Facsimile: (  )___________________         Facsimile: (  )_____________________

Federal ID No. ____________________        Federal ID No. _____________________

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

        (C) Copyright 1999-By American Industrial Real Estate Association.
                              All rights reserved.
              No part of these works may be reproduced in any form
                         without permission in writing.

                                     PAGE 14

<PAGE>

                                    ADDENDUM

50.    Prepaid Rent. On January 15, 2003, Lessee shall deliver a check in the in
       the amount of six (6) months rent and operating expenses or $169,140.
       ("Prepaid Rent"). The Prepaid Rent shall be applicable to the Base Rent
       and operating expenses for months seven through twelve of the Term. In
       the event of any monetary default by Lessee under the Lease, Lessor shall
       have the right to draw against the Prepaid Rent and demand that Lessee
       restore the balance of the Prepaid Rent to its pre-default condition
       within three (3) business days following receipt of written notice of
       such default.

51.    Early Occupancy. Lessee shall have the right to early occupancy of the
       Premises upon execution of a signed Lease to install its furniture,
       fixtures and equipment and begin construction of its approved Tenant
       Improvements. The obligation to pay rent and commencement of the Term
       shall be triggered by commencement of operations in the Premises. In no
       event shall the date for commencement of the Term be later than December
       15, 2002.

52.    Common Area, Operating Expenses. Lessee shall pay its estimated share of
       Common Area Operating Expenses as set forth in Exhibit B.

53.    Tenant Improvements. Lessee shall accept the Premises in its "as-is"
       condition. Lessee shall have the right to make the following
       modifications by a licensed contractor subject to a permit from the City
       of Pleasanton and meeting the code and regulations of all governing
       agencies at Lessee's sole cost: provided that the Lessor may require
       removal of any or all of the improvements at Lessee's sole cost and
       expense and Lessee shall restore the building to its original
       configuration. Lessee shall be responsible for any code compliance issues
       and tax increases triggered by installation of any of the following
       Tenant Improvements:

       1.     If permitted by the City of Pleasanton, create a double door entry
       between the warehouse space and the adjacent 5,000 square feet space.
       2.     Add a satellite dish on the roof including all necessary
       connections to the interior of the Premises; the roof work must be
       completed by a licensed roofing contractor and provide a warranty to
       Lessor against leaks.
       3.     Remove the carpet in the north side of the 5,000 square feet
       space. The carpet shall be stored at Lessee's expense and replaced at the
       termination of the lease. Lessee shall use best efforts to make the
       replaced carpet look as though it has not been patched in place.
       4.     Add power drops to the 5,000 square feet space; The drops must be
       completed in a manner that does not detract from the space.
       5.     Install racks in the warehouse and the north portion of the 5,000
       square feet space. In the event Lessor decides he does not want the racks
       removed, they shall become the property of the Lessor upon expiration of
       the Term.
       6.     Any reconfiguring of the existing telephone system shall at
       Landlord's option be removed and the telephone system be restored to the
       condition upon commencement of the Term.
       7.     Lessee shall have the right to use the Lightspeed signage that
       currently exists on the Project. All signage plans shall be subject to
       the reasonable review and approval of the Lessor and shall be installed
       at Lessee's sole cost and expense.

54.    Periodic Financials. Upon Lessor's request, Lessee shall deliver company
       prepared financial statements to Lessor.

55.    Forklift. Lessee shall take commercially reasonable efforts to protect
       the Premises, Building and the Project from damage caused by Lessee's
       forklift. Any damage caused by the forklift shall be subject to Lessor's
       restoration obligation.

56.    Furniture Inventory. Lessee acknowledges that the Premises contains
       Lessor's furniture, fixtures and equipment as specified in Exhibit C and
       Lessee shall ensure that at the end of the term each item of this
       inventory is returned to Lessor in good working order and condition.

57.    Removal of Personal Property. Prior to the Commencement Date, Lessor
       shall remove all its personal property from the warehouse and all
       unassembled furniture and companion chairs located in the Premises.

58.    Indemnity. Except for Lessee's gross negligence or willful misconduct,
       Lessor shall indemnify, protect, defend and hold harmless the Premises,
       Lessee and its agents, from and against any and all claims, loss of rents
       and/or damages, liens, judgments, penalties, attorneys' and consultants'
       fees, expenses and/or liabilities arising out of, involving, or in
       connection with, the use and/or occupancy of the Premises or the Project
       by Lessor: provided however that this indemnity by Lessor shall not
       extend to any liability or damages arising out of, involving or in
       connection with the use and/or occupancy of the Project or Premises by
       any other tenants in the Project. If any action or proceeding is brought
       against Lessee by reason of any of the foregoing matters, Lessor shall
       upon notice defend the same at Lessor's expense by counsel reasonably
       satisfactory to Lessee and Lessee shall cooperate with Lessor in such
       defense. Lessee need not have first paid any such claim in order to be
       defended or indemnified.

<PAGE>

                         ACKNOWLEDGEMENT OF COMMENCEMENT

This Acknowledgment is made as of December 5, 2002, with reference to the
certain Lease Agreement (hereinafter referred to as the "Lease") by and between
Oppenheimer Trust as "Lessor" therein, and TUT Systems Inc., as "Lessee", for
the demised premises situated at 5200 Franklin Drive, Suite 100, Pleasanton,
California, 94566

       1.     That the Lessee accepted possession of the demised premises (as
              described in said Lease) on December 5, 2002, and acknowledges
              that the premises are as represented by the Lessor and in good
              order, condition and repair, and that the improvements, if any,
              required to be constructed of Lessee by Lessor under this Lease
              have been constructed and are in satisfactorily completed in all
              respects.
       2.     That all conditions of said Lease to be performed by Lessor
              prerequisite to the full effectiveness of said Lease have been
              satisfied and that Lessor has fulfilled all of its duties of an
              inducement nature.
       3.     That in accordance with the provisions of Article 1.5, Base Rent,
              and Article 1.7, Rent Paid Upon Execution, of said Lease the
              commencement date of the Lease is December 15, 2002.
       4.     That said Lease is in full force and effect and that the same
              represents the entire agreement between Lessor and Lessee
              concerning said Lease.
       5.     That there are no existing defenses which Lessee has against the
              enforcement of said Lease by Lessor, and no offsets or credits
              against rentals.
       6.     That the minimum rental obligation of said Lease is presently in
              effect and that all rentals, charges and other obligations on the
              part of Lessee under said Lease commenced to accrue on December
              15, 2002 and that Lease terminates on December 31,2003.
       7.     Lessor will come in after possession date of December 12, 2002 and
              complete any minor details of the Lease.
       8.     Lessee paid $70,475.50 in advance. This was for Rent for the
              period of December 15, 2002 through January 31, 2003, $29,497.50,
              CAM for the period of December 15, 2002 though January 31, 2003,
              $12,788.00 and a security deposit in the amount of $28,190.00

Lessee:/s/ [ILLEGIBLE]
       ----------------

Date: Dec. 5, 2002
     ------------------

<PAGE>

                                    Exhibit A

                             [GRAPHIC APPEARS HERE]

<PAGE>

     Exhibit C: to lease dated: 12/4/02   Oppenheimer Trust and Tut Systems
     Detailed inventory of Furniture included in the Lease.

<TABLE>
<CAPTION>
 #   LOCATION/ ROOM #  FURNITURE         TYPE                              AMOUNT
 <S> <C>               <C>               <C>                                    <C>
 1   Lobby             Cabinet           File 3 Drawer                           1
 1   Lobby             Chair             Black                                   1
 1   Lobby             Chair             Lounge                                  4
 1   Lobby             Chair Pads        Carpet                                  2
 1   Lobby             Chair Pads        Carpet                                  1
 1   Lobby             Desk              Reception                               1
 1   Lobby             Garbage Can       Garbage Can                             1
 1   Lobby             Plant             Artificial                              1
 1   Lobby             Table             Coffee                                  1
 1   Lobby             Table             End                                     2
 1   Lobby             Telephone         Large                                   1
 1   Lobby             Tree              Artificial Fiohus                       1
 2   Room 2            Chair             Black                                   2
 2   Room 2            Chair             Executive                               1
 2   Room 2            Desk              Office                                  1
 2   Room 2            Garbage Can       Garbage Can                             1
 2   Room 2            Table             3 Drawer                                1
 2   Room 2            Table             Corner                                  1
 2   Room 2            Table             Side                                    1
 3   Room 3 A          Chair             Black                                   2
 3   Room 3 A          Chair             Grey                                    3
 3   Room 3 B          Chair             Grey                                    1
 3   Room 3 B          Chair             Red                                     3
 3   Room 3 A          Desk              Corner                                  1
 3   Room 3 B          Desk              Corner                                  1
 3   Room 3 B          Desk              Side Desk W/ 2 Drawer File Cabinet      1
 3   Room 3 B          Desk              Side w/ 2 - 3 Drawer File Cabinet       1
 3   Room 3 A          Desk              Side W/3 Drawers                        1
 3   Room 3 A          Desk              W/2 Cabinets                            1
 3   Room 3 B          Storage           Overhead Cubby's W/O Closing Front      2
 3   Room 3 A          Storage           Upper / Overhead                        2
 3   Room 3 B          Storage           Upper / Overhead                        2
 3   Room 3 A          Telephone         Standard Desk                           1
 3   Room 3 B          Telephone         Standard Desk                           1
 4   Room 4            Cabinet           File 2 Drawer                           2
 4   Room 4            Chair             Green                                   3
 4   Room 4            Desk              Corner                                  3
 4   Room 4            Desk              Side W/3 Drawers                        3
 4   Room 4            Garbage Can       Garbage Can                             4
 4   Room 4            Storage           Overhead Cubby's                        1
 4   Room 4            Storage           Upper / Overhead                        3
 4   Room 4            Telephone         Standard Desk                           3
 5   Room 5            Chair             Green                                  20
</TABLE>

                                   Page 1 of 6

<PAGE>

<TABLE>
<S>  <C>               <C>               <C>                                    <C>
 5   Room 5            Easel             Large                                   2
 5   Room 5            Easel             Small                                   1
 5   Room 5            Garbage Can       Garbage Can                             1
 5   Room 5            Table             Small Conference                        5
 6   Room 6            White Board       White Board                             1
 6   Room 6            Cabinet           Large two door Black                    1
 6   Room 6            Chair             Green Side                              6
 6   Room 6            Clock             Wall                                    1
 6   Room 6            Coffee Pot        Large Commercial                        1
 6   Room 6            Dishwasher        Dishwasher                              1
 6   Room 6            First Aid Kit     First Aid Kit                           1
 6   Room 6            Garbage Can       Large Garbage Can                       1
 6   Room 6            Holder            Paper Towel                             1
 6   Room 6            Microwave         Microwave                               1
 6   Room 6            Refrigerator      Refrigerator                            1
 6   Room 6            Table             Kitchen                                 1
 7   Room 7                              Electrical room                         0
 8   Room 8            Cabinet           File 2 Drawer                           1
 8   Room 8            Cabinet           File 2 Drawer                           1
 8   Room 8            Cabinet           File 3 Drawer                           1
 8   Room 8            Cabinet           Small 2 Book Shelf                      1
 8   Room 8            Chair             Director's                              2
 8   Room 8            Chair             Green                                   1
 8   Room 8            Chair             Green                                   1
 8   Room 8            Chair             Green                                   1
 8   Room 8            Chair             Green                                   1
 8   Room 8            Chair             Green                                   2
 8   Room 8            Chair             Green                                   3
 8   Room 8            Chair             Red                                     3
 8   Room 8            Chair Pads        Carpet                                  1
 8   Room 8            Chair Pads        Carpet                                  1
 8   Room 8            Chair Pads        Carpet                                  1
 8   Room 8            Chair Pads        Carpet                                  2
 8   Room 8            Chair Pads        Carpet                                  3
 8   Room 8            Chair Pads        Carpet                                  3
 8   Room 8            Copy Machine      Savin (leased) 9835dp (t.b. removed)    1
 8   Room 8            Cubicle           Full Work Station                       1
 8   Room 8            Cubicle           Full Work Station                       1
 8   Room 8            Cubicle           Full Work Station                       1
 8   Room 8            Cubicle           Full Work Station                       1
 8   Room 8            Cubicle           Full Work Station                       1
 8   Room 8            Cubicle           Full Work Station                       1
 8   Room 8            Cubicle           Full Work Station                       2
 8   Room 8            Garbage Can       Garbage Can                             1
 8   Room 8            Garbage Can       Garbage Can                             1
 8   Room 8            Garbage Can       Garbage Can                             1
 8   Room 8            Garbage Can       Garbage Can                             1
 8   Room 8            Garbage Can       Garbage Can                             1
 8   Room 8            Love Seat         Black Leather                           1
</TABLE>

                                   Page 2 of 6

<PAGE>

<TABLE>
<S>  <C>               <C>               <C>                                     <C>
 8   Room 8            Table             Chrome / Gold                           1
 8   Room 8            Telephone         Standard Desk                           1
 8   Room 8            Telephone         Standard Desk                           1
 9   Room 9            Chair             Green                                   6
 9   Room 9            Chair Pads        Carpet                                  2
 9   Room 9            Credenza          File 4 Drawer Ash                       1
 9   Room 9            Desk              Large Ash                               1
 9   Room 9            Garbage Can       Garbage Can                             2
 9   Room 9            Shredder          Paper Fellows 220C                      1
 9   Room 9            Table             Conference Round                        1
 9   Room 9            Telephone         Standard Desk                           1
 9   Room 9            White Board       White Board                             1
10   Room 10           Chair             Green                                   4
10   Room 10           Chair Pads        Carpet                                  1
10   Room 10           Credenza          File 4 Drawer Ash                       1
10   Room 10           Desk              Large Ash                               1
10   Room 10           Telephone         Standard Desk                           1
10   Room 10           White Board       White Board                             1
11   Room 11           Chair             Green                                   3
11   Room 11           Chair Pads        Carpet                                  1
11   Room 11           Credenza          File 4 Drawer                           1
11   Room 11           Desk              Large Ash                               1
11   Room 11           Telephone         Standard Desk                           1
12   Room 12           Cabinet           File 2 Drawer                           1
12   Room 12           Chair             Green                                   3
12   Room 12           Chair Pads        Carpet                                  1
12   Room 12           Desk              Large Ash                               1
12   Room 12           Desk              Particle Board Wood                     1
12   Room 12           Telephone         Standard Desk                           1
12   Room 12           White Board       White Board                             1
13   Room 13           Cabinet           File 2 Drawer                           1
13   Room 13           Chair             Green                                   3
13   Room 13           Chair Pads        Carpet                                  1
13   Room 13           Desk              Particle Board Wood Corner              1
13   Room 13           Telephone         Standard Desk                           1
13   Room 13           White Board       White Board                             1
14   Room 14           Cabinet           File 2 Drawer                           1
14   Room 14           Chair             Green                                   3
14   Room 14           Chair Pads        Carpet                                  1
14   Room 14           Credenza          File 4 Drawer Ash                       1
14   Room 14           Desk              Large Ash                               1
14   Room 14           Telephone         Standard Desk                           1
15   Room 15           Cabinet           2 Drawer                               13
15   Room 15           Cabinet           2 Drawer / Black                        2
15   Room 15           Cabinet           2 Drawer / Grey                         2
15   Room 15           Cabinet           2 Drawer / White                        3
15   Room 15           Cabinet           3 Drawer                               13
15   Room 15           Cabinet           3 Drawer / Grey                         2
15   Room 15           Cabinet           File 2 Lateral White                    3
</TABLE>

                                   Page 3 of 6

<PAGE>

<TABLE>
<S>  <C>               <C>               <C>                                    <C>
15   Room 15           Cabinet           Large / 4 drawer / Black                1
15   Room 15           Chair             Green                                  15
15   Room 15           Chair Pads        Carpet                                 12
15   Room 16           Desk              Corner work station                    15
15   Room 16           Desk              Side work station                      29
15   Room 16           Garbage Can       Garbage Can                            15
15   Room 16           Lift              Panel Jack                              1
15   Room 16           Love Seat         Black Leather                           1
15   Room 16           Storage           Upper / Overhead/ open                 14
15   Room 16           Storage           Upper / Overhead/closed                14
15   Room 16           Surge             Protector                              15
15   Room 16           Telephone         Standard Desk                          15
16   Room 16           Cabinet           6 Shelves Book Shelf                    1
16   Room 16           Chair             Black                                   2
16   Room 16           Chair             Dark Grey High Back                     1
16   Room 16           Credenza          File 4 Drawer Ash                       1
16   Room 16           Desk              Large Ash                               1
16   Room 16           Garbage Can       Garbage Can                             1
16   Room 16           Telephone         Standard Desk                           1
16   Room 16           White Board       White Board                             1
17   Room 17           Chair             Conference                             10
17   Room 17           Pedestal                                                  1
17   Room 17           Table             Conference Oblong                       1
17   Room 17           Table             Work                                    1
17   Room 17           Tree              Artificial Fiohus                       1
18   Room 18           Warehouse         Empty Room                              1
19   Room 19           Cabinet           4 Shelves Book Shelf                    1
19   Room 19           Cabinet           File 2 Drawer                           2
19   Room 19           Cabinet           File 4 Drawer                           2
19   Room 19           Cabinet           Metal Book Shelf w/ Telephone Eq.       1
19   Room 19           Chair             Blue                                    8
19   Room 19           Desk              Butcher Block Type                      4
19   Room 19           Garbage Can       Garbage Can                             2
20   Server Room       Cabinet           File 3 Drawer                           2
20   Server Room       Cabinet           File Tall                               2
20   Server Room       Server            Security Computer Equipment             1
21   Room 21           Cabinet           2 Drawer                                5
21   Room 21           Cabinet           3 Drawer                                6
21   Room 21           Cabinet           File 2 Lateral white                    4
21   Room 21           Chair             Grey                                    7
21   Room 21           Chair Pads        Carpet                                  4
21   Room 21           Chair Pads        Carpet                                  8
21   Room 21           Cubicle           Full Work Station                       5
21   Room 21           Desk              Corner work station                     4
21   Room 21           Desk              Side work station                       4
21   Room 21           Garbage Can       Garbage Can                             4
21   Room 21           Garbage Can       Garbage Can                             5
21   Room 21           Storage           Upper / Overhead/ open                  3
21   Room 21           Storage           Upper / Overhead/closed                 3
</TABLE>

                                   Page 4 of 6

<PAGE>

<TABLE>
<S>  <C>               <C>               <C>                                    <C>
21   Room 21           Surge             Protector                               4
21   Room 21           Telephone         Standard Desk                           4
21   Room 21           Telephone         Standard Desk                           1
22   Room 22           Cabinet           Book Shelf                              1
22   Room 22           Chair             Green                                   3
22   Room 22           Chair Pads        Carpet                                  1
22   Room 22           Desk              Corner Oak                              1
22   Room 22           Garbage Can       Garbage Can                             1
22   Room 22           Telephone         Standard Desk                           1
23   Room 23           Cabinet           File 2 Drawer                           1
23   Room 23           Cabinet           Tall Book Shelf                         1
23   Room 23           Chair                                                     4
23   Room 23           Chair Pads        Carpet                                  1
23   Room 23           Credenze          File 4 Credenza Oak Particle Board      1
23   Room 23           Desk              Oak Desk                                1
23   Room 23           Telephone         Standard Desk                           1
23   Room 23           White Board       White Board                             1
24   Room 24           Empty             Empty Room
25   Room 25           Chair             Belge                                   8
25   Room 25           Garbage Can       Garbage Can                             1
25   Room 25           Table             Conference Oblong                       1
25   Room 25           Telephone         Standard Desk                           1
25   Room 25           Tree              Artificial Fiohus                       1
25   Room 25           White Board       White Board                             1
26   Room 26           Cabinet           Book Shelf                              2
26   Room 26           Chair Pads        Carpet                                  3
26   Room 26           Desk              Ash Desk Executive                      2
26   Room 26           Desk              Particle Board Wood                     1
26   Room 26           Garbage Can       Garbage Can                             1
26   Room 26           Surge             Protector                               1
26   Room 26           Telephone         Standard Desk                           1
27   Room 27           Chair             Stack                                   6
27   Room 27           Table             Small                                   1
28   Room 28           Chair Pads        Carpet                                  2
28   Room 28           Cubicle           Full Work Station                       2
28   Room 28           Garbage Can       Garbage Can                             2
28   Room 28           Telephone         Charger                                 1
28   Room 28           Telephone         Standard Desk                           2
29   Small Hall        Copier            Cannon hp6030                           1
29   Small Hall        Copier            Sharp SF - 7850                         1
29   Room 29           Table
30   Room 30 Kitchen   Cabinet           2 Door Cabinet Small                    1
30   Room 30 Kitchen   Dishwasher        Dishwasher                              1
30   Room 30 Kitchen   Holder            Towel                                   1
30   Room 30 Kitchen   Microwave         Microwave                               1
30   Room 30 Kitchen   Refrigerator      Refrigerator                            1
31   Room 31           Desk              Computer wrapped in plastic/w tops      2
32   Room 32           Cabinet           Grey                                    1
32   Room 32           Chair             Grey                                    5
</TABLE>

                                   Page 5 of 6

<PAGE>

<TABLE>
<S>  <C>               <C>               <C>                                   <C>
32   Room 32           Desk              Computer                                1
32   Room 32           Desk              Corner Grey                             2
32   Room 32           Desk              Grey Executive                          2
32   Room 32           Telephone         Standard Desk                           1
33   Room 33           Computer          Computer supplies & accessories         1
34   Room 34           Table             Conference Oblong Grey                  1
34   Room 34           Telephone         Standard Desk                           1
35   Room 34           Chair             Grey Conference                         8
35   Room 35           Chair             Stationery                              1
35   Room 35           Chair Pads        Carpet                                  2
36   Room 36           Credenza          File 4 Drawer Oak Particle Board        1
36   Room 36           Desk              Oak Particle Board Desk                 1
                                                                     Total:    618
</TABLE>

      Lessee: /s/ [ILLEGIBLE]                    Dated:12/6/2002
              ------------------------
      Lessor: /s/ Richard Oppenheimer            Dated:12/9/02
              ------------------------

*     See attached page # 7 for room numbers

                                   Page 6 of 6

<PAGE>

                             [GRAPHIC APPEARS HERE]

<PAGE>

                     RETAIL, OFFICE, COMMERCIAL & INDUSTRIAL
                      MOVE-IN / MOVE-OUT INSPECTION REPORT

PROJECT NAME:                                                      UNIT # 100

5200 FRANKLIN #100*                        Tenant Name(s): TUT SYSTEM

Lease Started: DEC 15, 2002

Date of Notice Given: _______________      Date of Move-out:  _________________

<TABLE>
<CAPTION>
                                          CONDITION
                                       UNLESS EXCEPTION      MOVE-IN         MOVE-OUT
                 ITEM                      IS NOTED        EXCEPTIONS       EXCEPTIONS
------------------------------------------------------------------------------------------
  <S>                                 <C>                 <C>           <C>
  Cabinet Kitchen Door                clean / no damage   Fix
------------------------------------------------------------------------------------------
  Kitchen Furniture                   clean / no damage   Fix
------------------------------------------------------------------------------------------
  Remove Leased Copier                clean / no damage   Remove.
------------------------------------------------------------------------------------------
  Remove items WARE HOUSE             clean / no damage   Remove.
------------------------------------------------------------------------------------------
  ("SERVER" Room Empty)?              clean / no damage   Ask Dick         RE: #19/20
------------------------------------------------------------------------------------------
                                      clean / no damage
------------------------------------------------------------------------------------------
                                      clean / no damage
------------------------------------------------------------------------------------------
                                      clean / no damage
------------------------------------------------------------------------------------------
                                      clean / no damage
------------------------------------------------------------------------------------------
                                      clean / no damage
------------------------------------------------------------------------------------------
                                      clean / no damage
------------------------------------------------------------------------------------------
                                      clean / no damage
------------------------------------------------------------------------------------------
                                      clean / no damage
------------------------------------------------------------------------------------------
                                      clean / no damage
------------------------------------------------------------------------------------------
</TABLE>

       175 Other Exceptions & Conditions: _________________________________

       I have inspected the above unit prior to occupancy and found everything
clean with no damage, except when noted different. I understand that a Move-Out
Inspection will be made after I vacate the apartment. I have the right to be
present for this inspection at the last date of my occupancy and it is my
responsibility to make myself available during regular office hours. Any trash
removal or cleaning required will be charged to me and if repairs or
replacements are necessary due to my negligence, then such expenses will also be
charged to me. My liability for work required is not limited by the amount of
security deposit.

/s/ [ILLEGIBLE]                   12/5/02                   /s/ [ILLEGIBLE]
--------------------------        -------------------      ---------------------
Tenant(s)                         Date                      Manager

                               MOVE-OUT INSPECTION
<TABLE>
<CAPTION>
Tenant(s)                                                  Date                      Manager
--------------------------------------------------------------------------------------------------------------
  Item Numbers                VENDOR              Parts    Labor        Amount              IN-HOUSE
   from Above                                     P.O. #  P.O. #
                                                                                  Maintenance     Cleaning
--------------------------------------------------------------------------------------------------------------
<S>                          <C>                  <C>     <C>                   <C>              <C>

--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------
                                                                                          hours         hours
                                                                                 -----------------------------
                                                                                 $              $
                                                                                 -----------------------------
                                                          Subtotal
                                                                    ------------------------------------------
                                                                      GRAND TOTAL $
                                                                    ------------------------------------------
</TABLE>

-----------------------------------------------------------
                  FOR MANAGER'S USE ONLY
-----------------------------------------------------------
  Security Deposit .................   $________________
  Pet Deposit  .........................________________
  Key Deposit  .........................________________
  Recreation Center Deposit  .......    ________________
  Rent Credit (if any)  ................________________
  From___________ To______________      ________________
                        Total Credits  $________________
  Grand Total Charges from Above....   $________________
  Key Replacement @ $______ x ______    ________________
  Door Lock Change  ....................________________
  Mailbox Lock Change  .................________________
  Other  ...............................________________
  Legal Fees and Cost  .................________________
  Rent Due (if any)  ...................________________
  From______________To___________       ________________
                        Total Charges  $________________
              BALANCE DUE FROM TENANT  $________________
                     REFUND TO TENANT  $________________
-----------------------------------------------------------

FORWARDING ADDRESS OF TENANT
 ----------------------------------------------------------

 ----------------------------------------------------------

 ----------------------------------------------------------

 ----------------------------------------------------------

Comments:
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                                                                     Page 2 of 2Employment Agreement between Registrant and Michael A. Bent

 
EXHIBIT 10.27

 
EMPLOYMENT AGREEMENT 
 
THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into by and
between Heska Corporation, a Delaware corporation with its principal office at 1613 Prospect Parkway, Fort Collins, Colorado 80525 (“Company”) and Michael Bent (“Employee”), effective as of May 1, 2000. 
 
W I T N E S S E T H: 
 
Whereas Company desires to employ Employee to act as its Corporate Controller in an at-will capacity; and 
 
Whereas Employee wishes to act as Company’s Corporate Controller as an employee in an at-will capacity; 
 
NOW, THEREFORE, in consideration of the mutual covenants and warranties
contained herein, the parties agree as follows: 
 
1.    Employment.    Company hereby employs Employee as its Corporate Controller, and Employee hereby accepts such employment. 
 
2.    Duties and
Responsibilities.    Employee shall serve as Corporate Controller of Company, with such duties and responsibilities as may be assigned to him from time to time by his superior officers (the “Senior Management”)
and/or the Board of Directors of Company, and with such on-going daily duties and responsibilities as are typically entailed in such position. The Senior Management and/or the Board of Directors shall be entitled to change such title, duties and
responsibilities from time to time, in their discretion. Employee shall devote his full time and energies to such duties. 
 
3.    Compensation.    Company shall pay Employee, as compensation for services rendered under this
Agreement, a “base salary” per year, the amount of which shall initially be $115,500, which may be increased from time-to-time by the Company in its discretion. If for any reason during any given year, Employee does not work an entire
year, other than normal vacations as provided hereunder, the compensation will be prorated to compensate only for the actual time worked. 
 
4.    Expenses.    Company shall reimburse Employee for his reasonable out-of-pocket expenses incurred in
connection with the business of Company, including travel away from the Company’s facilities, upon presentation of appropriate written receipts and reports and subject to the customary practices and limitations of Company. 
 
5.    Employee
Benefits.    During the term of his employment hereunder, Employee shall be entitled to receive the same benefits that the Board of Directors establishes generally for the officers and other employees of Company. These may
include, from time to time, medical insurance, life insurance, paid vacation time and medical disability insurance. 
 

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	6.	 	Termination. 

 
(a)    At-Will. This is an at-will employment agreement and does not bind either of the parties to any specific
term or duration. 
 
(i)    Employee is free to terminate employment with Company at any time, for any reason, or for no reason, for cause or without cause, and without any prior notice. 
 
(ii)    Company is free to terminate the
employment of Employee at any time, for any reason or for no reason, for cause or without cause, and without any prior notice. 
 
(b)    Termination “Without Cause” – Separation Benefits. 
 
(i)    Upon “involuntary
termination” of his employment with Heska Corporation for other than a “change of control”, as defined in Paragraph 6(c)(iii) below, Employee will be entitled to severance pay as provided in Paragraph 6(b)(ii) below, unless he is
terminated for “cause”, as defined in Paragraph 6(d)(ii) below. Employee’s entitlement to any severance pay is dependent on his execution of a complete release of claims against Company and its affiliates. 
 
(ii)    In the event that severance pay is
due to Employee as a result of the “involuntary termination” of his employment “without cause”, Employee will be paid six months’ “base salary” at the rate in effect immediately prior to the termination in
six equal monthly installments (subject to all applicable taxes and other deductions), with the first such installment due 15 days after the date of such termination and with the following five installments due no later than monthly thereafter on
Company’s then regular payroll dates. The Company will also pay the employer contribution and administrative cost of the health insurance premiums for the medical and dental insurance coverage previously maintained by the Company for Employee
and his eligible dependents during this six month period or until Employee is provided or obtains medical and dental insurance coverage by another employer or entity, whichever first occurs. 
 
(c)    Change of Control –
Separation Benefits. 
 
(i)    Upon “involuntary termination” of his employment due to a “change of control” of Heska Corporation, Employee will be entitled to severance pay as provided in Paragraph 6(c)(iv) below,
unless he is terminated for “cause”, as defined in Paragraph 6(d)(ii) below. Employee’s entitlement to any severance pay is dependent on his execution of a complete release of claims against Company and its affiliates. 
 
(ii)    For the purposes of this
Employment Agreement, “change of control” is defined as the merger, acquisition or sale of Company or all or substantially all of its assets with, into, or to a previously unaffiliated third party entity, other than a merger in which the
shareholders of Company prior to the merger, by reason of such shareholdings, own more than 50% of the outstanding shares of the company after the merger. 
 
(iii)    The parties agree that for the purposes of this Employment Agreement, an “involuntary termination”
due to a “change of control” will be deemed to have 
 

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occurred when Employee is no longer employed by the Company’s successor following a
“change of control” because the Employee’s position is eliminated within nine (9) months of the “change of control” or when Employee’s job responsibilities are materially and negatively changed within nine (9) months of
the “change of control”, and Employee elects to resign. 
 
(iv)    In the event that severance pay is due to Employee as a result of the “involuntary termination” of his employment without “cause” due to a “change of control”,
Employee will be paid one (1) year’s “base salary” at the rate in effect immediately prior to the termination in twelve equal monthly installments (subject to all applicable taxes and other deductions), with the first such installment
due 15 days after the date of such termination and with the following eleven installments due no later than monthly thereafter on Company’s then regular payroll dates. The Company will also pay the employer contribution and administrative cost
of the health insurance premiums for the medical and dental insurance coverage previously maintained by the Company for Employee and his eligible dependents during this one year period or until Employee is provided or obtains medical and dental
insurance coverage by another employer or entity, whichever first occurs. 
 

	 	(d)    Termination	 	“For Cause”; Voluntary Resignation. 

 
(i)    If Company or its successor terminates Employee for “cause” or if Employee’s employment
terminates for any reason other than a termination by the Company “without cause” (as set forth in paragraph 6(b)) or due to a “change of control” (as set forth in Paragraph 6(c)), Employee will not be entitled to any severance
pay and shall only receive pay and benefits which Employee earned as of the date of termination. 
 
(ii)    The parties agree that for the purposes of this Employment Agreement, a termination for “cause” will be deemed to have occurred when Company terminates
Employee’s employment because of the occurrence of any of the following events: 
 
(A)    Employee shall refuse to accept a change or modification of his title, duties or responsibilities by senior management and/or the Board of Directors; 
 
(B)    Employee shall refuse to accept a
reasonable transfer not arising from a change in control to a position with comparable responsibility and salary with any affiliated company that does not involve commuting more than fifty (50) miles each way from the Company headquarters in the
Fort Collins, Colorado area; 
 
(C)    Employee shall die, be adjudicated to be mentally incompetent or become mentally or physically disabled to such an extent that Employee is unable to perform his duties under this Employment Agreement for a
period of ninety (90) consecutive days; 
 
(D)    Employee shall commit any breach of his obligations under this Agreement; 
 

3 

 
(E)    Employee shall commit any breach of any material fiduciary duty to Company; 
 
(F)    Employee shall be convicted of, or enter a plea of nolo contendere to, any crime involving moral
turpitude or dishonesty, whether a felony or misdemeanor, or any crime which reflects so negatively on Company as to be detrimental to Company’s image or interests; 
 
(G)    Employee shall commit insubordination or refusal to comply with any request of
his supervisor or the Board of Directors of Company relating to the scope or performance of Employee’s duties; 
 
(H)    Employee shall possess any illegal drug on Company premises or Employee shall be under the influence of
illegal drugs or abusing prescription drugs or alcohol while on Company business or on Company premises; or 
 
(I)    Employee shall conduct himself in a manner that, in the good faith and reasonable determination of the Senior
Management and/or the Board of Directors, demonstrates Employee’s unfitness to serve. 
 
7.    Proprietary Information.    Employee agrees that, if he has not already done so, he will promptly execute Company’s standard employee
proprietary information and assignment of inventions agreement. 
 
8.    Arbitration; Attorneys’ Fees.    If any dispute arises under this Agreement or by reason of any asserted breach of it, or from the Parties’ employment relationship or any
other relationship, the Company, at its sole discretion, may elect to have the dispute resolved through arbitration, so long as all of the arbitrator’s fees and expenses are borne exclusively by the Company. The arbitration shall be conducted
pursuant to the rules of the American Arbitration association, with the arbitrator being selected by mutual agreement of the parties. Regardless of whether the dispute is resolved through arbitration or litigation, the prevailing party shall be
entitled to recover all costs and expenses, including reasonable attorneys’ fees, incurred in enforcing or attempting to enforce any of the terms, covenants or conditions, including costs incurred prior to commencement of arbitration or legal
action, and all costs and expenses, including reasonable attorneys’ fees, incurred in any appeal from an action brought to enforce any of the terms, covenants or conditions. For purposes of this section, “prevailing party” includes,
without limitation, a party who agrees to dismiss a suit or proceeding upon the other’s payment or performance of substantially the relief sought. 
 
9.    Notices.    Any notice to be given to Company under the terms of this Agreement shall be addressed to
Company at the address of its principal place of business. Any notice to be given to Employee shall be addressed to him at his home address last shown on the records of Company, or to such other address as Employee shall have given notice of
hereunder. 
 
10.    Miscellaneous.    This Agreement shall be governed by the laws of the State of Colorado as applied to contracts between residents of that state to be performed wholly within that
state. This Agreement is the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior understandings and agreements. This Agreement may be modified only by a written document signed by both parties, except
that the Company, in its discretion, may modify any policies, guidelines or other directives, none of which shall constitute a binding 
 

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agreement or impose any contractual obligations. This Agreement shall be binding upon and shall inure to
the benefit of the successors and assigns of the parties. 
 
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year hereinabove written. 
 

	 HESKA CORPORATION

	
	 By:
	 	 /s/    Robert B.
Grieve        

	
	 Title:
	 	 Chief Executive Officer

 

	
	 EMPLOYEE 

	
	 Name:
	 	 /s/    Michael A.
Bent        

	 	 	 Michael A. Bent

 

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