Document:

Master Demand Business Loan Note

Due on Demand                                      $2,500,000.00

No. ___________________                            Date:   June 21, 1999

Promise to Pay.  For value received, Alternate Marketing Networks, Inc. (the
"Borrower") promises to pay On Demand to Bank One, Michigan (the "Bank"), or
order, at any office of the Bank in the State of Michigan, the sum of TWO
MILLION FIVE HUNDRED THOUSAND AND NO/100  DOLLARS ($2,500,000.00), or such
lesser sum as is indicated on Bank records, plus interest computed on the
basis of the actual number of days elapsed in a year of 360 days at the rate
of:

     1/2 % per annum above the rate announced from time to time by the Bank as
     its "prime" rate (the "Note Rate"), which rate may not be the lowest rate
     charged by the Bank to any of its customers, until maturity, whether by
     demand, acceleration or otherwise, and at the rate of 3% per annum above
     the Note Rate on overdue principal from the date when due until paid.
     Each change in the "prime" rate will immediately change the Note Rate.

In no event shall the interest rate exceed the maximum rate allowed by law;
any interest payment which would for any reason be deemed unlawful under
applicable law shall be applied to principal.

Interest will be computed on the unpaid principal balance from the date of
each borrowing.

The Borrower will pay this sum on demand.  Until demand, the Borrower will pay
consecutive monthly installments of interest only commencing July 31, 1999.

Late Fee.  If any payment is not received by the Bank within fifteen days
after its due date, the Bank may assess and the Borrower agrees to pay a late
fee equal to the lesser of five percent of the past due amount or $350.00.

Master Demand Note. The Bank has authorized a discretionary credit facility to
the Borrower in a principal amount not to exceed the face amount of this note.
The credit facility is in the form of loans made from time to time by the Bank
to the Borrower at the Bank's sole discretion.  This note evidences the
Borrower's obligation to repay those loans.  The aggregate principal amount of
debt evidenced by this note shall be the amount reflected from time to time in
the records of the Bank but shall not exceed the face amount of this note.
The Borrower acknowledges and agrees that no provision of this note and no
course of dealing by the Bank shall commit the Bank to make loans to the
Borrower and that notwithstanding any provision of this note or any other
instrument or document, all loans evidenced by this note are due and payable
on demand, which may be made by the Bank at any time, whether or not any event
of acceleration then exists.

Credit Agreement.  This note evidences a debt under the terms of a Credit
Authorization Agreement between the Bank and the Borrower dated of even date,
and any amendments.

Security.  To secure the payment of this note and any other present or future
liability of the Borrower, whether several, joint, or joint and several, the
Borrower pledges and grants to the Bank a continuing security interest in the
following described property and all of its additions, substitutions,
increments, proceeds and products, whether now owned or later acquired
("Collateral"):

1.  All securities and other property of the Borrower in the custody,
    possession or control of the Bank (other than property held by the Bank
    solely in a fiduciary capacity);
2.  All property or securities declared or acknowledged to constitute security
    for any past, present or future liability of the Borrower to the Bank;
3.  All balances of deposit accounts of the Borrower with the Bank;
4.  The following additional property: Accounts Receivable of Borrower and
    Guarantors as defined in the Credit Agreement.

Bank's Right to Setoff.  The Bank shall have the right at any time to apply
its own debt or liability to the Borrower or to any other party liable on this
note in whole or partial payment of this note or other present or future
liabilities, without any requirement of mutual maturity.

Representations by Borrower.  Each Borrower represents:  (a) that the
execution and delivery of this note and the performance of the obligations it
imposes do not violate any law, conflict with any agreement by which it is
bound, or require the consent or approval of any governmental authority or any
third party; (b) that this note is a valid and binding agreement, enforceable
according to its terms; and (c) that all balance sheets, profit and loss
statements, and other financial statements furnished to the Bank are accurate
and fairly reflect the financial condition of the organizations and persons to
which they apply on their effective dates, including contingent liabilities of
every type, which financial condition has not changed materially and adversely
since those dates.  Each Borrower, other than a natural person, further
represents:  (a) that it is duly organized, existing and in good standing
pursuant to the laws under which it is organized; and (b) that the execution
and delivery of this note and the performance of the obligations it imposes
(i) are within its powers and have been duly authorized by all necessary
action of its governing body; and (ii) do not contravene the terms of its
articles of incorporation or organization, its by laws, or any partnership,
operating or other agreement governing its affairs.

Events of Default/Acceleration.  If any of the following events occurs, this
note shall be due immediately without notice at the Bank's option whether or
not the Bank has made demand.
1.  The Borrower or any guarantor of this note ("Guarantor") fails to pay when
    due any amount payable under this note or under any agreement or
    instrument evidencing debt to any creditor;
2.  The Borrower or any Guarantor (a) fails to observe or perform any other
    term of this note; (b) makes any materially incorrect or misleading
    representation, warranty, or certificate to the Bank; (c) makes any
    materially incorrect or misleading representation in any financial
    statement or other information delivered to the Bank; or (d) defaults
    under the terms of any agreement or instrument relating to any debt for
    borrowed money (other than the debt evidenced by this note) such that the
    creditor declares the debt due before its maturity;
3.  There is a default under the terms of any loan agreement, mortgage,
    security agreement, or any other document executed as part of the loan
    evidenced by this note, or any guaranty of the loan evidenced by this note
    becomes unenforceable in whole or in part, or any Guarantor fails to
    promptly perform under its guaranty;
4.  A "reportable event" (as defined in the Employee Retirement Income
    Security Act of 1974 as amended) occurs that would permit the Pension
    Benefit Guaranty Corporation to terminate any employee benefit plan of the
    Borrower or any affiliate of the Borrower;
5.  The Borrower or any Guarantor becomes insolvent or unable to pay its debts
    as they become due;
6.  The Borrower or any Guarantor (a) makes an assignment for the benefit of
    creditors; (b) consents to the appointment of a custodian, receiver, or
    trustee for itself or for a substantial part of its assets; or (c)
    commences any proceeding under any bankruptcy, reorganization,
    liquidation, insolvency or similar laws of any jurisdiction;
7.  A custodian, receiver, or trustee is appointed for the Borrower or any
    Guarantor or for a substantial part of its assets without the consent of
    the party against which the appointment is made and is not removed within
    60 days after such appointment;
8.  Proceedings are commenced against the Borrower or any Guarantor under any
    bankruptcy, reorganization, liquidation, or similar laws of any
    jurisdiction, and such proceedings remain undismissed for 60 days after
    commencement; or the Borrower or Guarantor consents to the commencement of
    such proceedings;
9.  Any judgment is entered against the Borrower or any Guarantor, or any
    attachment, levy, or garnishment is issued against any property of the
    Borrower or any Guarantor;
10. The Borrower or any Guarantor dies;
11. The Borrower or any Guarantor, without the Bank's written consent, (a) is
    dissolved, (b) merges or consolidates with any third party, (c) leases,
    sells or otherwise conveys a material part of its assets or business
    outside the ordinary course of business, (d) leases, purchases or
    otherwise acquires a material part of the assets of any other corporation
    or business entity except in the ordinary course of business, or (e)
    agrees to do any of the foregoing (notwithstanding the foregoing, any
    subsidiary may merge or consolidate with any other subsidiary, or with the
    Borrower so long as the Borrower is the survivor);
12. The loan-to-value ratio of any pledged securities at any time exceeds
    %, and such excess continues for five (5) days after notice from the Bank
    to the Borrower;
13. There is a substantial change in the existing or prospective financial
    condition of the Borrower or any Guarantor which the Bank in good faith
    determines to be materially adverse;
14. The Bank in good faith deems itself insecure.

Remedies.  If this note is not paid at maturity, whether by acceleration or
otherwise, the Bank shall have all of the rights and remedies provided by any
law or agreement.  Any requirement of reasonable notice shall be met if the
Bank sends the notice to the Borrower at least seven (7) days prior to the
date of sale, disposition or other event giving rise to the required notice.
The Bank is authorized to cause all or any part of the Collateral to be
transferred to or registered in its name or in the name of any other person,
firm or corporation, with or without designation of the capacity of such
nominee.  The Borrower shall be liable for any deficiency remaining after
disposition of any Collateral.  The Borrower is liable to the Bank for all
reasonable costs and expenses of every kind incurred in the making or
collection of this note, including, without limitation, reasonable attorneys'
fees and court costs.  These costs and expenses shall include, without
limitation, any costs or expenses incurred by the Bank in any bankruptcy,
reorganization, insolvency or other similar proceeding.

Waiver.  Each endorser and any other party liable on this note severally
waives demand, presentment, notice of dishonor and protest, and consents to
any extension or postponement of time of its payment without limit as to the
number or period, to any substitution, exchange or release of all or part of
the Collateral, to the addition of any party, and to the release or discharge
of, or suspension of any rights and remedies against, any person who may be
liable for the payment of this note.  No delay on the part of the Bank in the
exercise of any right or remedy shall operate as a waiver.  No single or
partial exercise by the Bank of any right or remedy shall preclude any other
future exercise of it or the exercise of any other right or remedy.  No waiver
or indulgence by the Bank of any default shall be effective unless in writing
and signed by the Bank, nor shall a waiver on one occasion be construed as a
bar to or waiver of that right on any future occasion.

Miscellaneous.  The Borrower, if more than one, shall be jointly and severally
liable, and the term "Borrower" shall mean any one or more of them.  This note
shall be binding on the Borrower and its successors, and shall inure to the
benefit of the Bank, its successors and assigns.  Any reference to the Bank
shall include any holder of this note.  This note is delivered in the State of
Michigan and governed by Michigan law.  Section headings are for convenience
of reference only and shall not affect the interpretation of this note.

Waiver of Jury Trial.  The Bank and the Borrower knowingly and voluntarily
waive any right either of them have to a trial by jury in any proceeding
(whether sounding in contract or tort) which is in any way connected with this
or any related agreement, or the relationship established under them.  This
provision may only be modified in a written instrument executed by the Bank
and the Borrower.

Address:                              Borrower:

One Ionia, S.W.                       Alternate Marketing Networks, Inc.
Suite 300
Grand Rapids, MI  49503-4145          By:/s/Sandra J. Smith
___________________________________   Sandra J. Smith, Chief Financial Officer

Credit Authorization Agreement

Bank One, Michigan (the "Bank"), whose address is 611 Woodward Avenue,
Detroit, Michigan 48226-3947, has approved the credit facilities listed below
(collectively, the "Credit Facilities," and individually, as designated below)
to Alternate Marketing Networks, Inc. (the "Borrower"), whose address is One
Ionia, S.W., Suite 300, Grand Rapids, MI 49503-4145, subject to the terms and
conditions set forth in this agreement.

1.0  Credit Facilities.

     1.1 Uncommitted Credit Authorizations.  The Bank has approved the
         uncommitted credit authorizations listed below (collectively, the
         "Credit Authorizations," and individually, as designated below)
         subject to the terms and conditions of this agreement and the Bank's
         continuing satisfaction with the Borrower's financial status.
         Disbursements under the Credit Authorizations are solely at the
         Bank's discretion.  Any disbursement on one or more occasions shall
         not commit the Bank to make any subsequent disbursement.

         A. Facility A.  The Bank has approved an uncommitted Credit
            Authorization to the Borrower in the principal sum not to exceed
            $2,500,000.00 in the aggregate at any one time outstanding
            ("Facility A").  Credit under Facility A shall be in the form of
            disbursements evidenced by credits to the Borrower's account and
            shall be repayable as set forth in a Master Demand Note executed
            concurrently (referred to in this agreement both singularly and
            together with any other promissory notes referenced in this
            Section 1 as the "Notes").  The proceeds of Facility A shall be
            used for the following purpose: working capital.  Facility A shall
            expire on June 30, 2000 unless earlier withdrawn.

2.0  Conditions Precedent.

     2.1 Conditions Precedent to Initial Extension of Credit.  Before the
         first extension of credit under this agreement, whether by
         disbursement of a loan, issuance of a letter of credit, the funding
         of a Lease or otherwise, the Borrower shall deliver to the Bank, in
         form and substance satisfactory to the Bank:

         A. Loan Documents.  The Notes, and if applicable, the Leases, the
            letter of credit applications, the security agreement, financing
            statements, mortgage, guaranties, subordination agreements and any
            other loan documents which the Bank may reasonably require to give
            effect to the transactions described by this agreement;

         B. Evidence of Due Organization and Good Standing.  Evidence
            satisfactory to the Bank of the due organization and good standing
            of the Borrower and every other business entity that is a party to
            this agreement or any other loan document required by this
            agreement;

         C. Evidence of Authority to Enter into Loan Documents.  Evidence
            satisfactory to the Bank that (i) each party to this agreement and
            any other loan document required by this agreement is authorized
            to enter into the transactions described by this agreement and the
            other loan documents, and (ii) the person signing on behalf of
            each party is authorized to do so; and
         D. Year 2000 Assessment.  If requested by the Bank, information
            satisfactory to the Bank regarding the Borrower's plan for
            addressing Year 2000 issues.  "Year 2000 Issues" means anticipated
            costs, problems and uncertainties associated with the inability of
            certain computer applications to effectively handle data including
            dates on and after January 1, 2000, as such inability affects the
            business, operations, and financial condition of the Borrower and
            of the Borrower's material customers, suppliers and vendors.

     2.2 Conditions Precedent to Each Extension of Credit.   Before any
         extension of credit under this agreement, whether by disbursement of
         a loan, issuance of a letter of credit, the funding of a Lease or
         otherwise, the following conditions shall have been satisfied:

         A. Representations.  The Representations contained in this agreement
            shall be true on and as of the date of the extension of credit;

         B. No Event of Acceleration.  No event of acceleration shall have
            occurred and be continuing or would result from the extension of
            credit;

         C. Continued Satisfaction.  The Bank shall have remained satisfied
            with the Borrower's managerial and financial status;

         D. Additional Approvals, Opinions, and Documents.  The Bank shall
            have received such other approvals, opinions and documents as it
            may reasonably request.

3.0  Borrowing Base/Annual Pay Down.

     3.1 Borrowing Base. Notwithstanding any other provision of this
         agreement, the aggregate principal amount outstanding at any one time
         under Facility A shall not exceed the lesser of the Borrowing Base or
         $2,500,000.  Borrowing Base means:

         A. 70% of the Borrower's and Guarantors' trade accounts receivable in
            which the Bank has a perfected, first priority security interest,
            excluding accounts more than 90 days past due from the date of
            invoice, accounts subject to offset or defense, government,
            bonded, affiliate and foreign accounts, accounts from trade
            debtors of which more than 50% of the aggregate amount owing from
            the trade debtor to the Borrower is more than 90 days past due,
            and accounts otherwise unacceptable to the Bank.

4.0  Fees and Expenses.

     4.1 Out-of-Pocket Expenses.  The Borrower shall reimburse the Bank for
         its out-of-pocket expenses and reasonable attorney's fees (including
         the fees of in-house counsel) allocated to the Credit Facilities.

5.0  Security.

     5.1 Payment of the borrowings and all other obligations under the Credit
         Facilities shall be secured by a first security interest and/or real
         estate mortgage, as the case may be, covering the following property
         and all its additions, substitutions, increments, proceeds and
         products, whether now owned or later acquired ("Collateral"):

         A. Accounts Receivable. All of the Borrower's and Guarantors'
            accounts, chattel paper, general intangibles, instruments, and
            documents (as those terms are defined in the Michigan Uniform
            Commercial Code), rights to refunds of taxes paid at any time to
            any governmental entity, and any letters of credit and drafts
            under them given in support of the foregoing, wherever located.
            The Borrower shall deliver to the Bank executed security
            agreements and financing statements in form and substance
            satisfactory to the Bank.

     5.2 No forbearance or extension of time granted any subsequent owner of
         the Collateral shall release the Borrower from liability.

     5.3 Additional Collateral/Setoff. To further secure payment of the
         borrowings and all other obligations under the Credit Facilities and
         all of the Borrower's other liabilities to the Bank, the Borrower
         grants to the Bank a continuing security interest in: (i) all
         securities and other property of the Borrower in the custody,
         possession or control of the Bank (other than property held by the
         Bank solely in a fiduciary capacity) and (ii) all balances of deposit
         accounts of the Borrower with the Bank. The Bank shall have the right
         at any time to apply its own debt or liability to the Borrower, or to
         any other party liable for payment of the obligations under the
         Credit Facilities, in whole or partial payment of such obligations or
         other present or future liabilities, without any requirement of
         mutual maturity.

     5.4 Cross Lien. Any of the Borrower's other property in which the Bank
         has a security interest to secure payment of any other debt, whether
         absolute, contingent, direct or indirect, including the Borrower's
         guaranties of the debts of others, shall also secure payment of and
         be part of the Collateral for the Credit Facilities.

6.0  Guaranties. Payment of the Borrower's obligations under the Credit
     Facilities shall be guaranteed by National Home Delivery, Inc. and
     Alternate Postal Direct, Inc., by execution of the Bank's form of
     guaranty agreement. The liability of the guarantors, if more than one,
     shall be joint and several.

7.0  Subordination. Reserved.

8.0  Affirmative Covenants. So long as any debt or obligation remains
     outstanding under the Credit Facilities, the Borrower, and each of its
     subsidiaries, if any, shall:

     8.1  Insurance. Maintain insurance with financially sound and reputable
          insurers covering its properties and business against those
          casualties and contingencies and in the types and amounts as shall
          be in accordance with sound business and industry practices.

     8.2  Existence. Maintain its existence and business operations as
          presently in effect in accordance with all applicable laws and
          regulations, pay its debts and obligations when due under normal
          terms, and pay on or before their due date, all taxes, assessments,
          fees and other governmental monetary obligations, except as they may
          be contested in good faith if they have been properly reflected on
          its books and, at the Bank's request, adequate funds or security has
          been pledged to insure payment.
     8.3  Financial Records. Maintain proper books and records of account, in
          accordance with generally accepted accounting principles where
          applicable, and consistent with financial statements previously
          submitted to the Bank. The Bank retains the right to inspect the
          Collateral and business records related to it at such times and at
          such intervals as the Bank may reasonably require.

     8.4  Notice. Give prompt notice to the Bank of the occurrence of (i) any
          Event of Acceleration, and (ii) any other development, financial or
          otherwise, which would affect the Borrower's business, properties or
          affairs in a materially adverse manner.

     8.5  Collateral Audits.  Reserved.

     8.6  Management.  Reserved.

     8.7  Financial Reports. Furnish to the Bank whatever information, books,
          and records the Bank may reasonably request, including at a minimum:
          If the Borrower has subsidiaries, all financial statements required
          will be provided on a consolidated and on a separate basis.

          A. Within 45 days after each quarterly period, a balance sheet as of
             the end of that period and statements of income, cash flows, and
             retained earnings from the beginning of that fiscal year to the
             end of that period, certified as correct by one of its authorized
             agents.

          B. Within 90 days after, and as of the end of, each of its fiscal
             years, a detailed audit including a balance sheet and statements
             of income, retained earnings, and cash flows certified by an
             independent certified public accountant of recognized standing.

          C. Within 30 days after and as of the end of each calendar month,
             the following lists, each certified as correct by one of its
             authorized agents:
                 (1) a list of accounts receivable of Borrower and Guarantors,
                     aged from date of invoice;
                 (2) a list of accounts payable of Borrower and Guarantors,
                     aged from date of receipt.

     8.8  Environmental Certificate.  Reserved.

     8.9  Year 2000 Issues.  The Borrower will take all actions reasonably
          necessary to assure that Year 2000 Issues will not have a material
          adverse effect on the business operations or financial condition of
          the Borrower.  Upon the Bank's request, the Borrower will provide
          the Bank with a description of its plan to address Year 2000 Issues,
          including updates and progress reports.  Borrower will advise the
          Bank of any reasonably anticipated material adverse effect on the
          business operations or financial condition of the Borrower as a
          result of Year 2000 Issues.

9.0  Negative Covenants.  Reserved.

10.0 Representations by Borrower. Each Borrower represents that: (a) the
     execution and delivery of this agreement, the Notes, and the Leases and
     the performance of the obligations they impose do not violate any law,
     conflict with any agreement by which the Borrower is bound, or require
     the consent or approval of any governmental authority or other third
     party; (b) this agreement, the Notes, and the Leases are valid and
     binding agreements, enforceable in accordance with their terms; and (c)
     all balance sheets, profit and loss statements, and other financial
     statements furnished to the Bank are accurate and fairly reflect the
     financial condition of the organizations and persons to which they apply
     on their effective dates, including contingent liabilities of every type,
     which financial condition has not changed materially and adversely since
     those dates.  Each Borrower, if other than a natural person, further
     represents that: (a) it is duly organized, existing and in good standing
     under the laws of the jurisdiction under which it was organized; and (b)
     the execution and delivery of this agreement, the Notes, and the Leases
     and the performance of the obligations they impose (i) are within its
     powers; (ii) have been duly authorized by all necessary action of its
     governing body; and (iii) do not contravene the terms of its articles of
     incorporation or organization, its bylaws, or any partnership, operating
     or other agreement governing its affairs.

11.0 Acceleration.

     11.1 Events of Acceleration. If any of the following events occurs, the
          Credit Facilities shall terminate and all borrowings and other
          obligations under them shall be due immediately, without notice, at
          the Bank's option, whether or not the Bank has made demand.

          A. The Borrower or any guarantor of any of the Credit Facilities,
             the Notes or the Leases ("Guarantor") fails to pay when due any
             amount payable under the Credit Facilities or under any agreement
             or instrument evidencing debt to any creditor;
          B. The Borrower or any Guarantor (a) fails to observe or perform any
             other term of this agreement, the Notes or the Leases; (b) makes
             any materially incorrect or misleading representation, warranty,
             or certificate to the Bank; (c) makes any materially incorrect or
             misleading representation in any financial statement or other
             information delivered to the Bank; or (d) defaults under the
             terms of any agreement or instrument relating to any debt for
             borrowed money (other than borrowings under the Credit
             Facilities) such that the creditor declares the debt due before
             its maturity;
          C. There is a default under the terms of any loan agreement,
             mortgage, security agreement or any other document executed as
             part of the Credit Facilities, or any guaranty of the obligations
             under the Credit Facilities becomes unenforceable in whole or in
             part, or any Guarantor fails to promptly perform under its
             guaranty;
          D. A "reportable event" (as defined in the Employee Retirement
             Income Security Act of 1974 as amended) occurs that would permit
             the Pension Benefit Guaranty Corporation to terminate any
             employee benefit plan of the Borrower or any affiliate of the
             Borrower;
          E. The Borrower or any Guarantor becomes insolvent or unable to pay
             its debts as they become due;
          F. The Borrower or any Guarantor (a) makes an assignment for the
             benefit of creditors; (b) consents to the appointment of a
             custodian, receiver or trustee for it or for a substantial part
             of its assets; or (c) commences any proceeding under any
             bankruptcy, reorganization, liquidation or similar laws of any
             jurisdiction;
          G. A custodian, receiver or trustee is appointed for the Borrower or
             any Guarantor or for a substantial part of its assets without its
             consent and is not removed within 60 days after such appointment;
          H. Proceedings are commenced against the Borrower or any Guarantor
             under any bankruptcy, reorganization, liquidation, or similar
             laws of any jurisdiction, and such proceedings remain undismissed
             for 60 days after commencement; or the Borrower or Guarantor
             consents to the commencement of such proceedings;
          I. Any judgment is entered against the Borrower or any Guarantor, or
             any attachment, levy or garnishment is issued against any
             property of the Borrower or any Guarantor;
          J. The Borrower or any Guarantor dies;
          K. The Borrower or any Guarantor, without the Bank's written
             consent, (a) is dissolved, (b) merges or consolidates with any
             third party, (c) leases, sells or otherwise conveys a material
             part of its assets or business outside the ordinary course of
             business, (d) leases, purchases, or otherwise acquires a material
             part of the assets of any other corporation or business entity,
             except in the ordinary course of business, or (e) agrees to do
             any of the foregoing, (notwithstanding the foregoing, any
             subsidiary may merge or consolidate with any other subsidiary, or
             with the Borrower, so long as the Borrower is the survivor);
          L. The loan-to-value ratio of any pledged securities at any time
             exceeds  %, and such excess continues for five (5) days after
             notice from the Bank to the Borrower;
          M. There is a substantial change in the existing or prospective
             financial condition of the Borrower or any Guarantor which the
             Bank in good faith determines to be materially adverse; or
          N. The Bank in good faith shall deem itself insecure.

     11.2 Remedies. If the borrowings and all other obligations under the
          Credit Facilities are not paid at maturity, whether by demand,
          acceleration or otherwise, the Bank shall have all of the rights and
          remedies provided by any law or agreement. Any requirement of
          reasonable notice shall be met if the Bank sends the notice to the
          Borrower at least seven (7) days prior to the date of sale,
          disposition or other event giving rise to the required notice. The
          Bank is authorized to cause all or any part of the Collateral to be
          transferred to or registered in its name or in the name of any other
          person, firm or corporation, with or without designation of the
          capacity of such nominee. The Borrower shall be liable for any
          deficiency remaining after disposition of any Collateral. The
          Borrower is liable to the Bank for all reasonable costs and expenses
          of every kind incurred in the making or collection of the Credit
          Facilities, including, without limitation, reasonable attorney's
          fees and court costs (whether attributable to the Bank's in-house or
          outside counsel). These costs and expenses shall include, without
          limitation, any costs or expenses incurred by the Bank in any
          bankruptcy, reorganization, insolvency or other similar proceeding.

12.0 Miscellaneous.

     12.1 Notice from one party to another relating to this agreement shall be
          deemed effective if made in writing (including telecommunications)
          and delivered to the recipient's address, telex number or fax number
          set forth under its name below by any of the following means: (a)
          hand delivery, (b) registered or certified mail, postage prepaid,
          with return receipt requested, (c) first class or express mail,
          postage prepaid, (d) Federal Express, or like overnight courier
          service or (e) fax, telex or other wire transmission with request
          for assurance of receipt in a manner typical with respect to
          communication of that type. Notice made in accordance with this
          section shall be deemed delivered upon receipt if delivered by hand
          or wire transmission, 3 business days after mailing if mailed by
          first class, registered or certified mail, or one business day after
          mailing or deposit with an overnight courier service if delivered by
          express mail or overnight courier.

     12.2 No delay on the part of the Bank in the exercise of any right or
          remedy shall operate as a waiver. No single or partial exercise by
          the Bank of any right or remedy shall preclude any other future
          exercise of it or the exercise of any other right or remedy. No
          waiver or indulgence by the Bank of any default shall be effective
          unless in writing and signed by the Bank, nor shall a waiver on one
          occasion be construed as a bar to or waiver of that right on any
          future occasion

     12.3 This agreement, the Notes, the Leases and any related loan documents
          embody the entire agreement and understanding between the Borrower
          and the Bank and supersede all prior agreements and understandings
          relating to their subject matter. If any one or more of the
          obligations of the Borrower under this agreement, the Notes or the
          Leases shall be invalid, illegal or unenforceable in any
          jurisdiction, the validity, legality and enforceability of the
          remaining obligations of the Borrower shall not in any way be
          affected or impaired, and such invalidity, illegality or
          unenforceability in one jurisdiction shall not affect the validity,
          legality or enforceability of the obligations of the Borrower under
          this agreement, the Notes or the Leases in any other jurisdiction.

     12.4 The Borrower, if more than one, shall be jointly and severally
          liable.

     12.5 This agreement is delivered in the State of Michigan and governed by
          Michigan law. This agreement is binding on the Borrower and its
          successors, and shall inure to the benefit of the Bank, its
          successors and assigns.

     12.6 Section headings are for convenience of reference only and shall not
          affect the interpretation of this agreement.

13.0 Waiver of Jury Trial.  The Bank and the Borrower knowingly and
     voluntarily waive any right either of them have to a trial by jury in any
     proceeding (whether sounding in contract or tort) which is in any way
     connected with this or any related agreement, or the relationship
     established under them.  This provision may only be modified in a written
     instrument executed by the Bank and the Borrower.

Executed by the parties on:  June 21, 1999.

Bank One, Michigan                    Borrower:

By: /s/ Kevin M. Paul                 By: /s/ Sandra J. Smith
 Kevin M. Paul, First Vice President  Sandra J. Smith, Chief Financial Officer

Address for Notices:                  Address for Notices:

200 Ottawa Ave., N.W.                 One Ionia, S.W., Suite 300
Grand Rapids, MI  49503               Grand Rapids, MI  49503-4145

Fax/Telex No.(616)771-7231            Fax/Telex No.  (616)235-3405Exhibit 10.3

  Lease by and between B&C Stocking LLC, as Lessor, and North Bay Bancorp, as
  Lessee, with respect to premises at 403 Davis Street, Vacaville, California.

                                      -32-

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                                     [LOGO]

            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
December 1, 1999 is  made by and between B&C Stocking LLC  ("Lessor")  and North
Bay  Bancorp  or its  Assignee  ("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 403 Davis Street, located
in the City of Vacaville,  County of Solano, State of California,  with zip code
95688,  as outlined on Exhibit "A" attached  hereto  ("Premises")  and generally
described as (describe briefly the nature of the Premises):  approximately 5,000
square feet of floor space on the first floor of a 20,000  square foot two story
building located at 403 Davis Street (subject to adjustment  pursuant to Section
50).  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:   see  para.  49  unreserved   vehicle  parking  spaces
("Unreserved Parking Spaces");  and see para. 49 reserved vehicle parking spaces
("Reserved Parking Spaces"). (See also Paragraph 2.6)

        1.3  Term:  five  (-5-)  years  and no  (-0-)  months  ("Original  Term"
commencing  March 1, 2000  ("Commencement  Date") and ending  February  28, 2005
("Expiration Date"). (See also Paragraph 3)

        1.4 Eariy  Possession:  Jan. 3, 2000 - see para. 3.2 ("Early  Possession
Date"). (See also Paragraphs 3.2 and 3.3)

        1.5 Base Rent:  $5,210.00 per month ("Base Rent"),  payable on or before
the first day of each month commencing April 1, 2000. (See also Paragraph 4)

[X] If this box is checked, there are provisions in this Lease for the Base Rent
to be adjusted. (SEE ALSO PARAGRAPH 50)

        1.6 Lessee's Share of Common Area Operating Expenses: twenty six percent
(26%) ("Lessee's Share").

        1.7 Base Rent and Other Monies Paid Upon Execution:

            (a) Base  Rent:  $5,210.00  (SEE ALSO  PARAGRAPH  5O) for the period
March 1, ____.

            (b) Common Area Operating Expenses: $ none for the period N/A.

            (c) Security   Deposit:  $5,210.00 ("Security  Deposit").  (See also
Paragraph 5)

            (d) Other: $ none for N/A.

            (e) Total Due Upon Execution of this Lease: $10,420.00.

        1.8 Agreed Use:  Banking  facility and related  office  uses.  (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 AND PARAGRAPH 51)

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

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

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

[X]  Coldwell  Banker  Commercial  North Bay  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
$19,444.82 or 6% of the total Base Rent for the brokerage  services  rendered by
the Brokers).

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

        1.12  Addenda and  Exhibits.  Attached  hereto is an Addendum or Addenda
consisting of Paragraphs  -49- through -63- and Exhibits "A" through "D", 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. (SEE ALSO PARAGRAPH 55) 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,  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 LEAKS AND material defects. If
a  non-compliance  with such  warranty  exists as of the Start  Date,  OR IF THE
CONDITION OF THE ROOF SHOULD FALL INTO  NONCOMPLIANCE  WITH SUCH WARRANTY WITHIN
SIXTY (60) DAYS  FOLLOWING  THE START  DATE,  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

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non-compliance,  malfunction  or failure,  REPAIR same at Lessor's  expense.  If
Lessee does not give Lessor the  required  notice (I) WITHIN  SIXTY (6O) DAYS OF
THE START DATE,  WITH RESFECT TO THE  CONDITION OF THE ROOF, OR (II) WITHIN FIVE
(5) BUSINESS DAYS OF THE  START DATE AS TO THE REMAINING SYSTEMS,  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).
LESSOR  MAKES NO WARRANTY OR  REFRESENTATION  REGARDING  THE ADEQUACY OF SYSTEMS
REFERENCED IN THIS SECTION FOR LESSEE'S INTENDED USE OF PREMISES.

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

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

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

            (c)  Notwithstanding  the above, the provisions  concerning  Capital
Expenditures are intended to apply only to  non-voluntary,  unexpected,  and new
Applicable  Requirements.  If the Capital  Expenditures are instead triggered by
Lessee as a result of an actual or proposed  change 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.  EXCEPT FOR CONDITIONS SUBJECT TO SECTIONS 2.2 AND
2.3 HEREIN,  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. (SEE ALSO PARAGRAPH 49) 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 lime 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, EXCEPT AS OTHERWISE EXFRESSLY PROVIDED BELOW from time to time:

            (a) UPON  RECEIPT OF THE PRIOR  APPROVAL OF LESSEE,  WHICH  APPROVAL
SHALL NOT BE  UNREASONABLY  WITHHELD OR DELAYED,  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)

            (d) To add additional buildings and improvements to the Common Areas
SO LONG AS THERE IS (I) NO  REDUCTION  IN THE  NUMBER 0F  PARKING  SPACES IN THE
PROJECT AND (II) NO MATERIAL  OBSTRUCTION OF THE VISIBILITY OF THE PREMISES FROM
ADJACENT PUBLIC STREETS;

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

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

3.      Term.

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

        3.2 Early  Possession.  If Lessee  totally  or  partially  occupies  the
Premises prior to the Commencement Date, the obligation to pay ALL 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 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 10 days after
the Commencement Date, Lessee may, at its option, by notice in writing within 10
days after the end of such 10 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 6.5). Pending delivery of such evidence, Lessee
shall be required to perform  all of its  obligations  under this Lease from and
after the Start Date,  including the payment of Rent,  notwithstanding  Lessor's
election to withhold  possession  pending receipt of such evidence of insurance.
Further,  if Lessee is  required  to perform  any other  conditions  prior to or
concurrent  with the Start Date, the Start Date shall occur but Lessor may elect
to withhold possession until such conditions are satisfied.

4.      Rent.

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

        4.2 Common Area  Operating  Expenses.  Lessee shall pay to Lessor during
the term hereof,  in addition to the Base Rent,  Lessee's Share (as specified in
Paragraph 1.6) of all Common Area Operating  Expenses,  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,  electricity  and  telephone to
                        service  the  Common   Areas  and  any   utilities   not
                        separately metered (SEE ALSO PARAGRAPH 57).

                (iii)   Trash   disposal,   pest  control   services,   property
                        management,  security  services,  and  the  cost  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  INCLUDING  BUT NOT  LIMITED  TO THE HVAC
                        SYSTEM AND THE ROOF 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.

                (X)     THE INITIAL DESIGN, SITE PREPARATION,  LAYOUT, PURCHASE,
                        PLANTING  AND/OR  INSTALLATION  OF  LANDSCAPING  IN  AND
                        AROUND THE PROJECT AND ALL OTHER IMPROVEMENTS OR WORK TO
                        BE INSTALLED  OR  PERFORMED  AT OR AROUND THE  COURTYARD
                        LOCATION,  ALL OF WHICH TO BE  MUTUALLY  AGREED UPON AND
                        PAID FOR PORPORTIONALLY AS NOTED IN PARA. 1.6.

            (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 (i) Lessee's Share of the actual Common Area Operating Expenses incurred
during  the  preceding  year.  AND (II) THE  TOTAL  AMOUNT  OF THE  COMMON  AREA
OFERATING  EXPENSES FOR 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. LESSOR SHALL KEEP AT ITS PRINCIPAL OFFICE FULL AND ACCURATE BOOKS
OF ACCOUNT,  RECORDS,  RECEIPTS AND OTHER  PERTINENT DATA  REFLECTING THE COMMON
AREA OPERATING EXPENSES  ("BUSINESS  RECORDS").  LESSEE SHALL SE ENTITLED DURING
THE TERM AND WITHIN TWO YEARS AFTER  EXPIRATION OR  TERMINATION OF THIS LEASE TO
INSPECT AND EXAMINE ALL OF LESSOR'S  BUSINESS  RECORDS NOT MORE  FREQUENTLY THAN
ONCE  DURING  EACH LEASE YEAR AND ONCE AFTER  TERMINATION  OF THIS  LEASE.  SAID
INSPECTION AND  EXAMINATION  MAY BE CONDUCTED ON LESSEE'S  BEHALF BY A CERTIFIED
PUBLIC  ACCOUNTING  FIRM SELECTED BY LESSEE.  IF THE INSPECTION AND  EXAMINATION
SHOWS THAT LESSEE HAS SEEN BILLED AND PAID MORE THAN LESSEE'S SHARE,  THE EXCESS
AMOUNT PAID SHALL BECOME  IMMEDIATELY  DUE AND PAYABLE BY LESSOR TO LESSEE.  THE
COST OF THE AUDIT SHALL BE BORNE BY LESSEE UNLESS IT IS  DETERMINED  THAT LESSEE
HAS SEEN BILLED AND PAID MORE THAN 110% OF LESSEE'S SHARE IN WHICH CASE LESSEE'S
COSTS OF THE AUDIT SHALL BECOME IMMEDIATELY DUE AND PAYABLE BY LESSOR TO LESSEE.
IN THE EVENT  LESSOR  FAILS TO PROMPTLY  REMIT ANY AMOUNT DUE TO LESSEE,  LESSEE
SHALL HAVE THE RIGHT TO DEDUCT THE AMOUNT DUE FROM FUTURE RENT AND OTHER AMOUNTS
PAYABLE BY LESSEE TO LESSOR UNDER THIS LEASE,

            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.

            5. Security Deposit. Lessee shall deposit with Lessor upon execution
hereof the Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this  Lease,  Lessor may use,  apply or retain all or any  portion of said
Security  Deposit  for the payment of any amount due Lessor or to  reimburse  or
compensate Lessor for any liability, expense, loss or damage which Lessor

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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.  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 or third party under any  applicable  statute or common law
theory. Hazardous Substances shall include, but not be limited to, hydrocarbons,
petroleum,  gasoline, and/or crude oil or any products, by-products or fractions
thereof.  Lessee shall not engage in any  activity in or on the  Premises  which
constitutes a Reportable Use of Hazardous  Substances  without the express prior
written consent of Lessor and timely  compliance (at Lessee's  expense) with all
Applicable Requirements. "Reportable Use" shall mean (i) the installation or use
of any above or below ground  storage  tank,  (ii) the  generation,  possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit  from,  or with  respect  to which a report,  notice,  registration  or
business plan is required to be filed with, any governmental  authority,  and/or
(iii) the  presence at the  Premises of a Hazardous  Substance  with  respect to
which any  Applicable  Requirements  requires  that a notice be given to persons
entering or occupying the Premises or  neighboring  properties.  Notwithstanding
the foregoing,  Lessee may use any ordinary and customary  materials  reasonably
required to be used in the normal  course of the Agreed Use, so long as such use
is in compliance with all Applicable Requirements,  is not a Reportable Use, and
does not expose the Premises or neighboring  property to any meaningful  risk of
contamination or damage or expose Lessor to any liability therefor. In addition,
Lessor may  condition  its consent to any  Reportable  Use upon  receiving  such
additional  assurances as Lessor  reasonably  deems necessary to protect itself,
the public, the Premises and/or the environment  against damage,  contamination,
injury and/or  liability,  including,  but not limited to, the installation (and
removal  on  or  before  Lease   expiration   or   termination)   of  protective
modifications  (such as concrete  encasements)  and/or  increasing  the Security
Deposit.

        (b) Duty to Inform Lessor.  If Lessee knows, or has reasonable  cause to
believe,  that a Hazardous  Substance  has come to be located  in, on,  under or
about the  Premises,  other than as  previously  consented to by Lessor,  Lessee
shall immediately give written notice of such fact to Lessor, and provide Lessor
with a copy of any report,  notice,  claim or other  documentation  which it has
concerning the presence of such Hazardous Substance.

            (c)  Lessee  Remedlation.  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 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 ANYONE  UNDER  LESSEE'S
CONTROL.

            (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 HEREBY REPRESENTS AND WARRANTS TO
LESSEE THAT LESSOR HAS NO KNOWLEDGE OF ANY HAZARDOUS  SUBSTANCES ON THE PREMISES
OR IN OR ON THE PROJECT IN WHICH THE PREMISES ARE LOCATED EXCEPT AS DESCRISED IN
THE REPORT PREPARED BY PENN ENVIRONMENTAL DATED JANUARY 4, 1999, A COPY OF WHICH
IS ATTACHED HERETO AS EXHIBIT "D". LESSOR SHALL INDEMNIFY,  PROTECT,  DEFEND AND
HOLD LESSEE, ITS AGENTS, EMPLOYEES, LENDERS IF ANY HARMLESS FROM AND AGAINST ANY
AND  ALL  DAMAGES,  LIABILITIES,   JUDGEMENT,  COSTS,  CLAIM,  LIENS,  EXPENSES,
PENALTIES,  LOSS OF PERMITS AND ATTORNEYS' AND CONSULTANTS'  FEES ARISING OUT OF
OR INVOLVING ANY HAZARDOUS  SUBSTANCES  (I) EXISTING ON THE PREMISES OR IN OR ON
THE  PROJECT IN WHICH THE  PREMISES  ARE  LOCATED IN  CONTRAVENTION  OF LESSOR'S
WARRANTY  GIVEN IN THE  PRECEDING  SENTENCE OR (II) BROUGHT ONTO THE PREMISES OR
THE  PROJECT  BY OR FOR LESSOR OR BY ANYONE  UNDER  LESSOR'S  CONTROL.  LESSOR'S
OBLIGATIONS  UNDER THIS PARAGRAPH  6.2(c) SHALL INCLUDE,  BUT NOT BE LIMITED TO,
THE  EFFECTS  OF  ANY  CONTAMINATION  OR  INJURY  TO  PERSON,  PROPERTY  OR  THE
ENVIRONMENT  CREATED  OR  SUFFERED  BY  LESSEE,  AND THE  COST OF  INVESTIGATION
(INCLUDING  CONSULTANTS' AND ATTORNEYS' FEES AND TESTING) REMOVAL,  REMEDIATION,
RESTORATION AND/OR ABATEMENT THEREOF, OR OF ANY CONTAMINATION  THEREIN INVOLVED,
AND SHALL SURVIVE THE EXPIRATION OR EARLIER TERMINATION OF THIS LEASE.

            (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  (i)  prior to the Start  Date,  OR (ii)
BROUGHT  ONTO THE  PREMISES OR THE  PROJECT BY OR FOR LESSOR OR BY ANYONE  UNDER
LESSOR'S  CONTROL,  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
remediatlon of such Hazardous  Substance Condition exceeds an amount equal to 12
times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall
provide Lessor with said funds or satisfactory  assurance thereof within 30 days
following  such  commitment.  In such event,  this Lease shall  continue in full
force and effect,  and Lessor shall proceed to make such  remediation as soon as
reasonably  possible after the required funds are available.  If Lessee does not
give such notice and provide the required funds or assurance  thereof within the
time provided,  this Lease shall  terminate as of the date specified in Lessor's
notice of  termination.  IN THE EVENT OF ANY  INVESTIGATION  OF THE  PREMISES OR
PROJECT DUE TO THE OCCURRENCE OF A HAZARDOUS SUBSTANCE  CONDITION,  LESSOR SHALL
PROMPTLY  PROVIDE  LESSEE  WITH A COPY  OF  ANY  AND  ALL  REPORTS  GENERATED IN
CONNECTION WITH THE  INVESTIGATION OR REMEDIATION OF SAME. LESSEE SHALL HAVE THE
RIGHT TO TERMINATE THIS LEASE EFFECTIVE UPON DELIVERY OF

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(C)1999 - American Industrial Real Estate Association  REVISED  FORM MTN-2-2/99E

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WRITTEN  NOTICE TO LESSOR IF REMEDIATION  OF THE HAZARDOUS  SUBSTANCE  CONDITION
WILL  MATERIALLY  INTERFERE WITH THE CONDUCT OF ITS BUSINESS ON THE PREMISES AND
IN THE PROJECT IN WHICH THE PREMISES ARE LOCATED.

        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 UPON THREE
(3) DAYS ADVANCE WRITTEN NOTICE,  for the purpose of inspecting the condition of
the Premises and for verifying compliance by Lessee with this Lease. The cost of
any such inspections  shall be paid by Lessor,  unless a violation of Applicable
Requirements,  or a  contamination  is found to  exist  or be  imminent,  or the
inspection is requested or ordered by a  governmental  authority.  In such case,
Lessee shall upon request  reimburse Lessor for the cost of such inspection,  so
long as such inspection is reasonably related to the violation or contamination.
ANY INSPECTION CONDUCTED PURSUANT TO THIS SECTION SHALL BE CONDUCTED IN A MANNER
WHICH WILL NOT UNREASONABLY  INTERFERE WITH THE OPERATION OF LESSEE'S  BUSINESS.
IN THE EVENT OF ANY ENTRY ONTO THE PREMISES IN THE CASE OF EMERGENCY, SUCH ENTRY
SHALL BE PERMISSIBLE ONLY FOR THE LIMITED PURPOSE OF ADMITTING FIRE,  POLICE, OR
OTHER PUBLIC SAFETY OFFICALS ONTO THE PREMISES.

7.      Maintenance;   Repairs,   Utlilty  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.

            (c)  Failure  to  Perform.  If  Lessee  fails  to  perform  Lessee's
obligations  under this Paragraph 7.1,  Lessor may enter upon the Premises after
10 days' prior written notice to Lessee (except in the case of an emergency,  in
which case no notice shall be required),  perform such  obligations  on Lessee's
behalf,  and put the Premises in good order,  condition  and repair,  and Lessee
shall promptly 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 shall pay interest on
the  unamortized  balance  at a rate  that  is  commercially  reasonable  in the
judgment of Lessor's accountants.  Lessee may, however, prepay its obligation at
any time.

        7.2 Lessor's  Obligations.  Subject to the  provisions of Paragraphs 2.2
(Condition),  2.3 (Compliance),  4.2 (Common Area Operating Expenses),  6 (Use),
7.1 (Lessee's  Obligations),  9 (Damage or Destruction)  and 14  (Condemnation),
Lessor,  subject to  reimbursement  pursuant to  Paragraph  4.2,  AND EXCEPT FOR
DEFECTS OR CONDITIONS CAUSED BY LESSEE'S  IMPROVEMENTS shall keep in good order,
condition and repair the foundations,  exterior walls,  structural  condition of
interior bearing wails,  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,
BUT SHALL BE REQUIRED TO MAINTAIN EXTERIOR WALLS IN FIRST CLASS CONDITION EXCEPT
FOR DEFECTS OR CONDITIONS CAUSED BY LESSEE'S  IMPROVEMENTS,  Lessor SHALL NOT be
obligated to maintain,  repair or replace  windows,  doors or plate glass of the
Premises.

        7.3  UtilIty  Installations;  Trade  Fixtures;  Alterations.  (SEE  ALSO
PARAGRAPH 58)

            (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.

            (c)  IndemnificatIon.  Lessee  shall pay,  when due,  all claims for
labor or materials  furnished or alleged to have been furnished to or for Lessee
at or  for  use on the  Premises,  which  claims  are or may be  secured  by any
mechanic's or 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 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.  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. (SEE PARAGRAPH 58 AND 59]

            (c) Surrender;  Restoration.  Lessee shall surrender the Premises by
the Expiration Date or any earlier termination date, with all

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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 ANYONE
UNDER LESSEE'S  CONTROL (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  $1,000,000 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 additiqn 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)

            (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  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 FOR  LESSOR'S  GROSS
NEGLIGENCE  OR  WILLFUL  MISCONDUCT,  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.

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            (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  PROVIDED  SUCH  DAMAGE IS NOT THE
RESULT OF LESSOR'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT 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. IF PREMISES
PARTIAL  DAMAGE  THAT IS NOT AN INSURED  LOSS  OCCURS AS THE RESULT OF  LESSOR'S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT,  LESSOR SHALL BE REQUIRED TO REPAIR SUCH
DAMAGE AS SOON AS REASONABLY POSSIBLE AT LESSOR'S EXPENSE.

        9.4 Total Destruction.  Notwithstanding any other provision hereof, if a
Premises Total Destruction  occurs, this Lease shall terminate AS OF THE DATE OF
such PREMISES TOTAL 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. IN
THE EVENT THE DAMAGE OR DESTRUCTION  WAS CAUSED BY LESSOR'S GROSS  NEGLIGENCE OR
WILLFUL MISCONDUCT, LESSEE SHALL HAVE THE RIGHT TO RECOVER LESSEE'S DAMAGES FROM
LESSOR EXCEPT AS RELEASED OR WAIVED 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) IF SUCH
DAMAGE IS NOT DUE TO LESSOR'S GROSS  NEGLIGENCE OR WILLFUL  MISCONDUCT (IN WHICH
EVENT  LESSOR  SHALL PAY ANY SUCH  SHORTAGE)  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  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 60 days after  such  obligation  shall accrue, Lessee may,
at any time prior to the  commencement of such repair or  restoration,  (i) 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 30 days
following the giving of such notice, (ii) SEEK SPECIFIC PERFORMANCE BY LESSOR OF
LESSOR'S  OBLIGATIONS  UNDER THE PROVlSIONS OF SECTIONS HEREOF,  OR (iii) LESSEE
MAY REPAIR OR RESTORE THE PREMISES.  IF LESSEE  REPAIRS OR RESTORES THE PREMISES
PURSUANT TO (iii) IN THE PRECEDING SENTENCE, LESSOR SHALL REIMBURSE LESSEE FULLY
FOR THE COSTS OF SUCH  REPAIRS AND  RESTORATION  TO THE EXTENT SUCH  REPAIRS AND
RESTORATION  ARE FOR AN  UNINSURED  LOSS,  AND TO THE  EXTENT  THE  REPAIRS  AND
RESTORATION  ARE FOR AN  INSURED  LOSS  LESSOR  FORTHWITH  SHALL  TURN  OVER ANY
APPLICABLE  INSURANCE  PROCEEDS AND REIMBURSE LESSEE FULLY FOR THE COSTS OF SUCH
REPAIRS AND  RESTORATION TO THE EXTENT THE COST OF SUCH REPAIRS AND  RESTORATION
EXCEED ANY APPLICABLE  INSURANCE PROCEEDS.  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  assessors  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

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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.  [SEE
ALSO PARAGRAPH 60]

12.     Assignment and Subletting.

        12.1    Lessor's Consent Required.

            (a) Lessee  shall HAVE THE RIGHT TO 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 TO A WHOLLY OWNED SUBSIDIARY
OF LESSEE  without  Lessor's  consent.  UPON  OBTAINING  THE WRITTEN  CONSENT OF
LESSOR,  LESSEE  SHALL  HAVE THE  RIGHT TO  SUBLET  ALL OR ANY PART OF  LESSEE'S
INTEREST IN THIS LEASE. [ALSO SEE PARAGRAPH 60]

            (b) A CHANGE IN THE  CONTROL  OF LESSEE  OR ANY  PARENT  CORPORATION
SHALL NOT  CONSTITUTE AN  ASSIGNMENT  REQUIRING  LESSORS  CONSENT SO LONG AS THE
STOCK OF LESSEE OR ANY PARENT  CORPORATION IS TRADED  THROUGH AN EXCHANGE,  OVER
THE COUNTER OR THE OTC BULLETIN BOARD.

            (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   EXCEPT  AS
PERMISSIBLE  PURSUANT TO SECTION 12.1(a)  ABOVE AND SECTION 60 BELOW  shall,  at
Lessor's option, be a Default curable after notice per Paragraph  13.1(c),  or a
noncurable  Breach  without the  necessity  of any notice and grace  period.  If
Lessor elects to treat such unapproved  assignment or subletting as a noncurable
Breach,  Lessor may  either:  (i)  terminate  this  Lease,  or (ii) upon 30 days
written notice,  increase the monthly Base Rent to 110% of the Base Rent then in
effect.  Further,  in the event of such  Breach and rental  adjustment,  (i) the
purchase  price of any option to purchase the  Premises  held by Lessee shall be
subject to similar  adjustment to 110% of the price  previously  in effect,  and
(ii) all fixed and non-fixed rental  adjustments  scheduled during the remainder
of the Lease term shall be increased to 110% of the scheduled adjusted rent.

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

        12.2 Terms and Conditions Applicable to Assignment and Subletting

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

            (b) Lessor may accept Rent or  performance  of Lessee's  obligations
from any  person  other  than  Lessee  pending  approval  or  disapproval  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  shall not  constitute  a
consent to any subsequent assignment.

            (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  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  including  but  not  limited  to  the  intended  use  and/or  required
modification  of the Premises,  if any,  together with a fee of $1,000 or 10% of
the current monthly Base Rent applicable to the portion of the Premises which is
the subject of the proposed  assignment  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) ANY OPTION  GRANTED TO LESSEE IN THIS LEASE MAY BE ASSIGNED  TO,
OR EXERCISED BY, ANY PARTY TO WHICH THE LEASE IS ASSIGNED  PURSUANT TO THE TERMS
OF THIS LEASE. (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. [ALSO SEE PARAGRAPH 60]

13.     Default; Breach; Remedies.

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

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

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

            (c) The failure by Lessee to provide (i) reasonable written evidence
of compliance with Applicable  Requirements,  (ii) the service contracts,  (iii)
the rescission of an  unauthorized  assignment or  subletting,  (iv) an Estoppel
Certificate, (v) a requested subordination, (vi) evidence concerning

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any guaranty andlor 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. 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 seizure is not discharged within 30 days; provided, however, in
the  event  that any  provision  of this  subparagraph  (e) is  contrary  to any
applicable  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  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.

        13.3  Inducement  Recapture.  Any  agreement  for free or abated rent or
other  charges,  or for the  giving or paying by Lessor to or for  Lessee of any
cash or other bonus, inducement or consideration for Lessee's entering into this
Lease,  all of which  concessions  are  hereinafter  referred to as  "inducement
Provisions",  shall be  deemed  conditioned  upon  Lessee's  full  and  faithful
performance of all of the terms,  covenants and  conditions of this Lease.  Upon
Breach  of  this  Lease  by  Lessee,   any  such   Inducement   Provision  shall
automatically  be deemed  deleted  from this  Lease and of no  further  force or
effect,  and  any  rent,  other  charge,  bonus,   inducement  or  consideration
theretofore abated,  given or paid by Lessor under such an inducement  Provision
shall be immediately  due and payable by Lessee to Lessor,  notwithstanding  any
subsequent  cure of said Breach by Lessee.  The  acceptance by Lessor of rent or
the cure of the Breach which initiated the operation of this paragraph shall not
be  deemed a  waiver  by  Lessor  of the  provisions  of this  paragraph  unless
specifically so stated in writing by Lessor at the time of such acceptance.

        13.4 Late  Charges.  Lessee  hereby  acknowledges  that late  payment by
Lessee of Rent will cause Lessor to incur costs not  contemplated by this Lease,
the exact amount of which will be extremely  difficult to ascertain.  Such costs
include,  but are not limited to,  processing and accounting  charges,  and late
charges which may be imposed upon Lessor by any Lender. Accordingly, if any Rent
shall not be  received by Lessor  within 5 days after such amount  shall be due,
then, without any requirement for notice to Lessee, Lessee shall 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

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provisions of this Paragraph.  All Alterations and Utility Installations made to
the Premises by Lessee,  for purposes of Condemnation  only, shall be considered
the  property  of the  Lessee  and  Lessee  shall  be  entitled  to any  and all
compensation  which is  payable  therefor.  In the event  that this Lease is not
terminated by reason of the Condemnation,  Lessor shall repair any damage to the
Premises caused by such Condemnation.

15.     Brokerage Fees. (ALSO SEE PARAGRAPH 51)

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

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

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

16.     Estoppel Certificates.

            (a) Each Party (as  "Responding  Party")  shall within 10 days after
written  notice  from  the  other  Party  (the   "Requesting   Party")  execute,
acknowledge  and deliver to the Requesting  Party a statement in writing in form
similar to the then most current  "Estoppel  Certificate"  form published by the
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 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 mall.  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 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

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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  Attainment.  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  pro-existing  Security Device which is secured
by  the   Premises.   In  the  event  that  Lessor  is  unable  to  provide  the
Non-Disturbance  Agreement  within  said 60 days,  then  Lessee may, at Lessee's
option,  directly  contact Lender and attempt to negotiate for the execution and
delivery of a Non-Disturbance Agreement.

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

31.  Attorneys'  Fees.  If any  Party or Broker  brings an action or  proceeding
involving  the  Premises  whether  founded in tort,  contract  or equity,  or to
declare rights  hereunder,  the Prevailing  Party (as hereafter  defined) in any
such  proceeding,  action,  or appeal  thereon,  shall be entitled to reasonable
attorneys'  fees.  Such fees may be awarded in the same suit or  recovered  in a
separate  suit,  whether or not such action or proceeding is pursued to decision
or judgment. The term, "Prevailing Party" shall include,  without limitation,  a
Party or Broker who  substantially  obtains or defeats the relief sought, as the
case may be, whether by compromise,  settlement, judgment, or the abandonment by
the other Party or Broker of its claim or  defense.  The  attorneys'  fees award
shall not be computed in accordance  with any court fee  schedule,  but shall be
such as to fully reimburse all attorneys' fees reasonably incurred. In addition,
Lessor shall be entitled to attorneys' fees, costs and expenses  incurred in the
preparation  and service of notices of Default and  consultations  in connection
therewith, whether or not a legal action is subsequently commenced in connection
with  such  Default  or  resulting  Breach  ($200 is a  reasonable  minimum  per
occurrence for such services and consultation).

32. Lessor's Access; Showing Premises; Repairs. 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  UPON THREE (3) BUSINESS DAYS ADVANCE WRITTEN NOTICE
for the  purpose of showing  the same to  prospective  purchasers,  lenders,  or
LESSEES, and making such alterations,  repairs, improvements or additions to the
Premises  as Lessor may deem  necessary.  All such  activities  shall be without
abatement of rent or  liability  to Lessee.  Lessor may at any time place on the
Premises any ordinary "For Sale" signs and Lessor may during the last TWO 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.  All signs must comply with all  Applicable  Requirements.  (SEE ALSO
PARAGRAPH 52)

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

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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) vritten 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.
(ALSO SEE PARAGRAPH 53)

        39.2

        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 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
disputes between the Parties and/or Brokers arising out of this Lease [ ] is [X]
is not attached to this Lease.

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

ATTENTION:   NO  REPRESENTATION  OR  RECOMMENDATION  IS  MADE  BY  THE  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: Vacaville, California        Executed at: Vacaville, California
            --------------------------                --------------------------
on: 12/6/99                               on: 12/13/99
   -----------------------------------       -----------------------------------

By LESSOR:                                By LESSEE:

B&C Stocking LLC                          North Bay Bancorp or its Assignee
--------------------------------------    --------------------------------------

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

By: /s/ Curtis Stocking                   By: /s/ Terry Robinson
   -----------------------------------       -----------------------------------

Name Printed:   Curtis Stocking           Name Printed:   Terry Robinson
             -------------------------                 -------------------------
Title: Manager                            Title:          President & CEO
      --------------------------------          --------------------------------

By:                                       By:
   -----------------------------------       -----------------------------------

Name Printed:                             Name Printed:
             -------------------------                 -------------------------
Title:                                    Title:
      --------------------------------          --------------------------------

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   ???                                                                    ???
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Initials                                                               Initials

                                  Page 12 of 13

(C)1999 - American Industrial Real Estate Association  REVISED  FORM MTN-2-2/99E

<PAGE>

Address: 401 Davis Street, Vacaville,     Address:  1500 Soscol Ave., Napa,
        ------------------------------            ------------------------------
Ca. 95688                                 Ca. 94558
--------------------------------------    --------------------------------------

Telephone: (707)        448 2313          Telephone: (707)    257 8535
          ----------------------------              ----------------------------
Facsimile: (707)        678 7321          Facsimile: (707)    226 1247
          ----------------------------              ----------------------------

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.

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Initials                                                               Initials

                                  Page 13 of 13

(C)1999 - American Industrial Real Estate Association  REVISED  FORM MTN-2-2/99E

<PAGE>

                               ADDENDUM TO LEASE
                                 BY AND BETWEEN
                            B&C STOCKING LLC, LESSOR
                                      AND
                   NORTH BAY BANCORP OR ITS ASSIGNEE, LESSEE

49. Parking.  Both Lessor and Lessee  acknowledge that all parking  available to
the Premises and the Project is subject to reciprocal  parking  agreements  with
adjacent  landowners.  Both Lessor and Lessee agree to require their  respective
employees  to  park  in  spaces  that  allow  Lessee's  customers  the  greatest
convenience  in  parking.  Lessor  agrees to use its best  efforts to obtain the
approval for six (6) 1 hour parking spaces immediately  adjacent to the entrance
of the Premises  from all  applicable  parties with parking  rights in the event
that Lessee notifies Lessor of Lessee's need for said parking.

50. Base Rent  Adjustment;  Increase.  Lessee  shall occupy 5,000 square feet of
floor  space on the first  floor of 403 Davis  Street.  Lessee  may  utilize  an
additional  210 square feet on the second floor of 403 Davis Street as an arched
entrance to the Premises (the "Entrance Area"). Lessee shall have until March 1,
2000 to  determine in its sole  discretion  whether it will utilize the Entrance
Area.  In the event that Lessee  elects to utilize the Entrance  Area,  the Base
Rent shall be $5,210 per month on the  Commencement  Date.  In the event  Lessee
elects not to utilize the Entrance Area, the Base Rent shall be $5,000 per month
on the  Commencement  Date.  The  determination  of the Base Rent is based  upon
Lessee's willingness to improve the Premises pursuant to the elevations prepared
by Robert Sesar attached hereto as Exhibit "B". If the Lessee makes any material
deviation from said plans the Lessor and Lessee shall  renegotiate  the terms of
the Base Rent. The Base Rent shall be increased annually on the anniversary date
of the Commencement Date by three percent (3%) beginning with the payment on the
first  anniversary  of the  Commencement  Date,  that being March 1, 2001.  Such
increase in the Base Rent shall occur every  twelve (12) months  thereafter  for
the  duration  of the term of the  Lease,  as the same  may be  extended  by the
exercise of Lessee's options hereunder.

51. Commissions. Six percent (6%) of the total lease amount to be paid by Lessor
to Coldwell  Banker  Commercial  North Bay for the term of the Lease and for any
extensions and/or options.  Commissions to be paid upon rent commencement (March
1, 2000),  at the rate of $5,000 per month  until paid in full.  If and when any
extensions  or options are  exercised,  at the beginning of such option period a
lease commission of six percent (6%) for that particular  option period shall be
paid at the rate of $5,000 per month until paid in full.  If escrow is opened by
Lessee and a purchase completed, Lessor agrees to pay Coldwell Banker Commercial
North Bay a commission  equal to six percent  (6%) of the sales price,  less any
leasing commissions paid.

52. Signage.  Lessee is granted building  signage rights to the north,  west and
south ends of the Building,  and to any monument sign if approved by the City of
Vacaville.  Lessor  shall have the right to approve the size and location of any
such signage,  which consent shall not be unreasonably  withheld or delayed. All
other  signage,  if any, shall be permitted by the sign ordinance of the City of
Vacaville.

53. Options to Extend; Covenant to Negotiate.

         (a) Lessor  grants to Lessee three (3) options to extend the lease term
for a period of five (5) years  each  subject  to the  conditions  described  in
Paragraph 39 of the Lease but otherwise on all the provisions  contained in this
Lease.  In order to exercise the options  described  above,  Lessee shall notify
Lessor in writing no less than one  hundred  and twenty  (120) days prior to the
expiration  of the  lease  term or any  extension  thereof  of its  election  to
exercise such option.

         (b) The Lessor  covenants  and agrees to  negotiate  in good faith with
Lessee in the event Lessor  intends to sell all or any part of the  Project.  If
the parties are unable to enter into a

   ???                                                                    ???
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                                 (Page 1 of 4)
<PAGE>

contractual  relationship  regarding  such  sale  within  60  days  of  Lessor's
notification  of its intent to sell,  Lessor  shall  thereafter  be  entitled to
negotiate  with any  third  party  buyer.  If Lessor is unable to secure a buyer
within the twelve month period following Lessor's  notification to Lessee of its
intent to sell all or any part of the Project,  this covenant to negotiate shall
be reinstated.

54.  Exclusive Use.  Lessor grants Lessee the exclusive right within the Project
(a) to install  and  operate  any form of  automated  teller  machine or similar
device which dispenses currency to its user ("ATM"),  and (b) to operate a bank.
Lessor covenants for the term of this Lease,  including any extended terms, that
it shall not  permit  any  other  tenant to  operate  a bank,  savings  and loan
association,  credit union or other  similar  financial  institution  within the
Project.

55. Tenant Improvements. Lessee to take the Premises as is subject to Paragraphs
2.2, 2.3 and 2.4 of the Lease with the following stipulations:  (i) Lessor shall
have all HVAC, duct work,  thermostats,  lighting,  electrical  panels and light
switches  separated  and  independent  from the adjacent  portion of the Project
(being 401 Davis Street) at Lessor's  sole cost and expense,  (ii) all such work
described in  subsection  (i) above shall be completed  in  compliance  with all
Applicable Requirements,  completed in a good workman-like quality and completed
no  later  than the  Start  Date,  (iii)  Lessor  warrants  all  heating,  HVAC,
electrical,  roof,  and  plumbing  systems are  adequate  for the current  size,
configuration  and use of the  Premises  as office  space,  (iv) all first story
windows  to be  purchased  and  installed  by Lessee at  Lessee's  sole cost and
expense,  (v) all  second  story  windows  (excluding  arch way  windows)  to be
installed on the courtyard  side of the building by Lessor at Lessor's sole cost
and expense,  (vi) the location,  size and type of second story windows shall be
mutually  agreed upon by both Lessor and Lessee,  and (vii) Lessee  acknowledges
that the Premises is absent a fire  sprinkler  system and Lessor does not assume
any  responsibility  for the  installation of a fire sprinkler  system if such a
system should be required by the City of Vacaville.

56.  Contingency.  This Lease is contingent upon the Lessee to obtain regulatory
approval for the Premises as noted  herein for its  intended  use.  Lessee shall
have the right to  terminate  the  Lease if  Lessee  is  unable  to obtain  such
approval, and Lessee notifies Lessor of its inability to obtain such approval in
writing on or before March 1, 2000. In the event Lessee so terminates  the Lease
Lessor  shall be entitled to retain the Security  Deposit and the first  month's
Base Rent (totaling  approximately  $10,420.00) as compensation for (i) Lessee's
use of the  Premises  during the period of Early  Possession  and (ii)  Lessor's
taking the Premises off the market from the date of this Lease. In the event the
Lease is terminated because Lessee is unable to obtain said regulatory approval,
Lessor may require that the Premises,  or any portion  thereof,  be restored (at
Lessee's cost) to their  original  condition,  or Lessor may elect,  in Lessor's
sole and absolute discretion,  to retain any improvements made by Lessee. In the
event Lessee is unable to obtain the  necessary  regulatory  approvals  prior to
March 1, 2000 and  Lessee  assigns  this  Lease or  sublets  any  portion of the
Premises to an entity that is not affiliated  with Lessee,  all rent received by
Lessee  from its  subtenants  in excess of the rent  payable by Lessee to Lessor
under this Lease shall be paid to Lessor,  or any sums to be paid by an assignee
to Lessee in  consideration  of the  assignment  of this Lease  shall be paid to
Lessor.

All improvements completed by Lessee prior to March 1, 2000 shall be at the sole
cost and  expense  of  Lessee.  If Lessee if  unable to obtain  said  regulatory
approval,  Lessee shall immediately  vacate the Premises with no compensation to
Lessee from Lessor for Lessee's improvements.

57.  Metering and Billing of Utilities.  (a) Lessor and Lessee  acknowledge  and
agree that individual metering of all utilities to each tenant in the Project is
financially  impractical  at this time.  The Project  consists of two  buildings
separated  by a common  wall (two  stories  each)  located  at 401 and 403 Davis
Street respectively.  Each address encompasses approximately 10,000 square feet,
of which  approximately  5,000 square feet is first floor space and 5,000 square
feet is second floor space.  Lessee shall occupy  approximately  5,000 or, 5,210
square feet  depending  upon whether Lessee elects to utilize the Entrance Area.
This  shall  include  the first  floor  space  located  at 403 Davis  Street and
potentially  210  square  feet of the  second  floor  area of 403  Davis  Street
(previously

   ???                                                                    ???
--------                                                               --------

                                 (Page 2 of 4)
<PAGE>

defined as the "Entrance  Area").  Both parties  acknowledge  and agree that one
water meter has been installed to serve the Project,  and one electric meter and
one gas meter have been  installed  to serve the  building  located at 403 Davis
Street.

(b) For the  purpose of billing of  utilities,  Lessee  shall pay for a prorated
share of utilities (gas,  water,  electric) based on the square footage occupied
and/or  utilized for the metered  area in addition to any Common Area  Operating
Expenses for  utilities  (See  Paragraph  4.2).  This  formula  assumes that any
adjacent space the Premises are metered with is used as office space with normal
business hours (8am - 6pm six days a week),  without an unusually high number of
employees or customers in or on such adjacent space on a regular  basis,  or any
use that would use an unusually high amount of gas, water or electricity. If any
abnormal uses become  evident to Lessee,  Lessee shall have the right to request
that the Lessor and Lessee  re-calculate  the billing to derive a more equitable
billing  formula with the goal being a fair share of utilities being paid by all
parties.  If the parties cannot  mutually  agree upon a more  equitable  billing
formula, either party may initiate binding arbitration to establish such billing
formula.   Such   arbitration   shall  be  conducted  by  a  single   arbitrator
knowledgeable in the field of real estate using the Commercial Arbitration Rules
of the American Arbitration Association.  Each party shall bear its own expenses
and one half of the aggregate amount of the arbitration costs.

58. Interior  Alterations.  Lessee may make such alterations as Lessee may elect
to the interior of the Premises in order to make same  suitable in Lessee's sole
opinion  for  Lessee's  intended  use of the  Premises.  Lessee  shall  have  no
obligation to remove any of its interior  improvements or otherwise  restore the
Premises upon the expiration of the Lease  excepting only that Lessee shall,  at
Lessee's  sole cost and expense,  remove its Trade  Fixtures  (including  safes,
vaults,  automated  teller  machines)  and repair any damage  occasioned by such
removal.

59. Exterior Improvements. Upon the expiration or the Lease, Lessee shall not be
required to restore any improvements or alterations  Lessee made or caused to be
made to the Entrance  Area but Lessee shall remove any ATM and replace same with
matching wall or glazing.

60. Assignment. Notwithstanding anything in the Lease to the contrary and except
as provided in Section 56, Lessee shall have the unfettered  right to assign its
rights  under  this  Lease,  including  the right to  exercise  any  options  to
extend/renew  and rights of first  refusal  contained  herein,  to any financial
institution  regulated by state and/or federal agencies without having to obtain
any form of approval or payment of any type of fee to Lessor or its agents.  The
right shall  include  the right to assign the Lease to a  financial  institution
with which  Lessee may merge or  consolidate,  to any  parent or  subsidiary  of
Lessee or  subsidiary  of Lessee's  parent  corporation,  or to a  purchaser  of
substantially as of Lessee's assets.

61. Covenants, Conditions and Restrictions. Lessee acknowledges that it has read
and approved the Declaration of Reciprocal Easements,  Covenants, Conditions and
Restrictions  for  Basic  American  Foods  Site  recorded  September  4, 1997 as
Instrument  No.  97-57528  (the  "CC&R's")  pertaining to the Project and Lessee
agrees not to violate any of the terms and  conditions  of the CC&R's during the
term of the Lease. A copy of the CC&R's is attached hereto as Exhibit "C".

62. Notice of Default; Option to Purchase. In the event that a notice of default
is recorded  against the  Premises or the  building of which the  Premises are a
part ("Notice  Recordation"),  Lessor shall forthwith  deliver a copy of same to
Lessee and Lessee shall have the right to purchase the Premises, or the building
of which the Premises are a part,  in  accordance  with the  provisions  of this
Section. Lessee shall exercise this option to purchase by giving notice ("Option
Notice") to Lessor no sooner than thirty (30) days after the Notice Recordation.
The  purchase  price of the Premises or the building of which the Premises are a
part shall be payable in cash in lawful money of the United  States to Lessor by
Lessee at the close of escrow with the closing to occur  within ten (10) days of
the determination of the purchase price pursuant to the process described below.
The parties shall

   ???                                                                    ???
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                                 (Page 3 of 4)
<PAGE>

have five (5) days after Lessor  receives the Option Notice in which to agree on
the purchase  price.  If the parties are unable to agree on the  purchase  price
within  that  period,  then within  five (5) days after the  expiration  of that
period the parties  shall attempt to agree upon a single  qualified  real estate
appraiser with at least 5 years' full time  commercial  appraisal  experience in
the area in which the  Premises  are  located to appraise  and set the  purchase
price of the Premises or the  building of which the Premises are a part.  In the
event the parties agree upon a single  appraiser  each of the parties shall bear
one half of the cost of appointing such appraiser and of paying such appraiser's
fee.  If the  parties  are  unable to agree on a single  appraiser  within  that
period,  then within five (5) days after the  expiration  of that  period,  each
party at its  respective  cost and by giving  notice to the other  party,  shall
appoint an appraiser  meeting the  qualifications  stated in this Section.  If a
party does not appoint an appraiser  within the stipulated time period and other
party  has given  notice  of the name of its  appraiser,  the  single  appraiser
appointed  shall be the sole  appraiser and shall set the purchase price for the
Premises or the building of which the Premises are a part. If two appraisers are
appointed by the parties as stated in this Section, they shall meet promptly and
attempt to set the  purchase  price of the Premises or the building of which the
Premises are a part.  If they are unable to agree on the  purchase  price within
ten (10) days after the second appraiser has been appointed, they shall select a
third appraiser  meeting the  qualifications  stated in this Section within five
(5) days  after the last day the two  appraisers  are given to set the  purchase
price. If they are unable to agree on the third appraiser, either of the parties
to this Lease by giving  five (5) days'  notice to the other  party can apply to
the presiding judge of the superior court of that county, for the selection of a
third appraiser who meets the qualifications stated in this Section. Each of the
parties shall bear one half of the cost of appointing the third appraiser and of
paying the third appraiser's fee. The third appraiser,  however selected,  shall
be a person who has not previously acted in any capacity for either party.

Within ten (10) days after the selection of the third appraiser, majority of the
appraisers shall set the purchase price of the Premises or the building of which
the Premises are a part. If a majority of the  appraisers  are unable to set the
purchase price within the stipulated  period of time, the three appraisals shall
be added together and their total divided by three; the resulting quotient shall
be the purchase price of the Premises or the building of which the Premises area
part.

In appraising the Premises or the building of which the Premises are a part, the
appraisers shall not take into  consideration the existence of this Lease. After
the purchase price has been set, the  appraisers  shall  immediately  notify the
parties. If Lessee objects to the purchase price that has been set, Lessee shall
have the right to elect not to purchase  the  Premises or the  building of which
the Premises are a part, as long as Lessee pays all the costs in connection with
the appraisal  procedure that set the purchase price.  Lessee's  election not to
purchase  the  Premises or the building of which the Premises are a part must be
exercised  within ten (10) days after  receipt of notice from the  appraisers of
the purchase price. If Lessee does not exercise its election within the ten (10)
day period,  Lessee  shall  purchase  the  Premises or the building of which the
Premises are a part as provided in this Section.  In the event the default which
is the subject of the Notice  Recordation  is cured by Lessor  within sixty (60)
days after Notice  Recordation or prior to the consummation of Lessee's purchase
of the Premises or the  building of which the  Premises  are a part  pursuant to
this  Section,  the  exercise  of this  option by Lessee  shall be null and void
provided  that  Lessor  reimburses  Lessee  for all out of  pocket  expenses  in
connection with its exercise of the option.  If escrow is opened by Lessee and a
purchase of the  Premises or the  building of which the  Premises  are a part is
completed,  Lessor shall agree to pay  Coldwell  Banker  Commercial  North Bay a
commission  equal to six  percent  (6%) of the  sales  price,  less any  leasing
commissions paid.

The option  provided to Lessee  pursuant to this Section shall not be applicable
in  the  event  that  Lessee  receives  a  nondisturbance  agreement  reasonably
satisfactory to Lessee from any lender having a lien against the Premises or the
building of which the Premises that has priority over this Lease.

63. Access to Premises.  Lessee, Lessee's agents and authorized  representatives
shall  have the right to enter the  Premises  upon  prior  notice to Lessor  for
planning and design  inspections of the Premises and related  activities for the
period commencing with the full execution of the Lease by Lessor until the Early
Possession Period.

   ???                                                                    ???
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                                 (Page 4 of 4)

<PAGE>

                                  EXHIBIT "A"

                                GRAPHIC OMITTED

   ???                                                                    ???
--------                                                               --------

<PAGE>

                                  EXHIBIT "B"

                                GRAPHIC OMITTED

   ???                                                                    ???
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