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                                                                    Exhibit 10.6

             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
July 3, 2002, is made by and between Nancy Ridge Technology Center, L.P.
("Lessor") and MicroIslet, Inc., a Nevada corporation ("Lessee"), (collectively
the "Parties", or individually a "Party").

         1.2 (a) PREMISES: That certain portion of the Project (as defined
below), including all improvements therein or to be provided by Lessor under the
terms of this Lease, commonly known by the street address of 6370 Nancy Ridge
Drive, Suite #122, located in the City of San Diego, County of San Diego, State
of California, with zip code 92121, as outlined on Exhibit B & C attached hereto
("Premises") and generally described as (describe briefly the nature of the
Premises): Approximate 7,074 square feet of office and biotech lab space. 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: Pro rata share of unreserved vehicle parking spaces
("Unreserved Parking Spaces"); and no reserved vehicle parking spaces ("Reserved
Parking Spaces"). (See also Paragraph 2.6)

         1.3 TERM: Three (3) years and no months ("Original Term") commencing
October 1, 2002 ("Commencement Date") and ending September 30, 2005 ("Expiration
Date"). (See also Paragraph 3)

         1.4 EARLY POSSESSION: Upon completion of construction ("Early
Possession Date"). (See also Paragraphs 3.2 and 3.3)

         1.5 BASE RENT: $16,623.90 per month ("Base Rent"), payable on the first
(1st) day of each month commencing October 1, 2002. The base rent shall increase
by four percent (4%) on each twelve (12) month anniversary of the lease
commencement. (See also Paragraph 4 and Addendum Paragraph 58)

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

         1.6 LESSEE'S SHARE OF COMMON AREA OPERATING EXPENSES: Approximately
four percent (4.0%) ("Lessee's Share").

         1.7 BASE RENT AND OTHER MONIES PAID UPON EXECUTION:

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                  (a) BASE RENT: $16,623.90 for the period October 1-31, 2002.

                  (b) COMMON AREA OPERATING EXPENSES: $1,500 for the period
October 1 31, 2002.

                  (c) SECURITY DEPOSIT: $49,871.70 ("Security Deposit"). (See
also Paragraph 5)

                  (d) OTHER: None.

                  (e) Total Due Upon Execution of this Lease: $67,995.60.

         1.8 AGREED USE: General office, biotech research and development.
Lessee shall not create any health or safety risks, odors, or nuisance to any
other tenants in the project. (See also Paragraph 6)

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

         1.10 REAL ESTATE BROKERS: (See also Paragraph 15)

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

|X|      NONE              represents Lessor exclusively ("Lessor's Broker");
         -----------------

|X|      BRIAN MULVANEY    represents Lessee exclusively ("Lessee's Broker");
         -----------------
or
|_|                        represents both Lessor and Lessee ("Dual Agency").
         -----------------

                  (b) PAYMENT TO BROKERS: Upon execution and delivery of this
Lease by both Parties, Lessor shall pay to the Brokers the sum of 2.5 percent or
2.50% of the total Base Rent for the brokerage services rendered by the Brokers.
Half of this fee will be paid upon execution of this lease by both parties, and
the other half will be paid once Lessee has taken possession of the premises and
begun paying full rent. Broker shall not be paid on any lease extensions,
options or expansions.

         1.11 ADDENDA AND EXHIBITS. Attached hereto is an Addendum or Addenda
consisting of Paragraphs 50 through 70 and Exhibits A through C, 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.

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

         2.3 COMPLIANCE. (See also Addendum Paragraph 59) Lessor warrants that
to the best of Lessor's actual knowledge and without duty to investigate, 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

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between the actual cost thereof and the amount equal to 6 months' Base Rent. If
Lessee elects termination, Lessee shall immediately cease the use of the
Premises which requires such Capital Expenditure and deliver to Lessor written
notice specifying a termination date at least 90 days thereafter. Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure.

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

                  (c) Notwithstanding the above, the provisions concerning
Capital Expenditures are intended to apply only to non-voluntary, unexpected,
and new Applicable Requirements. If the Capital Expenditures are instead
triggered by Lessee as a result of an actual or proposed change in use, change
in intensity of use, or modification to the Premises then, and in that event,
Lessee shall be fully responsible for the cost thereof, and Lessee shall not
have any right to terminate this Lease.

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

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

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

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

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

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

         2.7 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.

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

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Lessor shall not be responsible to Lessee for the non-compliance with said Rules
and Regulations by other tenants of the Project.

         2.9 COMMON AREAS - CHANGES. Lessor shall have the right, in Lessor's
sole discretion, from time to time:

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

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

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

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

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

3.       TERM.

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

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

         3.3 DELAY IN POSSESSION. (See Addendum Paragraph 60) Lessor agrees to
use its best commercially reasonable efforts to deliver possession of the
Premises to Lessee by the Commencement Date. If, despite said efforts, Lessor is
unable to deliver possession as agreed, Lessor shall not be subject to any
liability therefor, nor shall such failure affect the validity of this Lease.
Lessee shall not, however, be obligated to pay Rent or perform its other
obligations until it receives possession of the Premises. If possession is not
delivered within 60 days after the Commencement Date, Lessee may, at its option,
by notice in writing within 10 days after the end of such 60 day period, cancel
this Lease, in which event the Parties shall be discharged from all obligations
hereunder. If such written notice is not received by Lessor within said 10 day

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period, Lessee's right to cancel shall terminate. Except as otherwise provided,
if possession is not tendered to Lessee by the Start Date and Lessee does not
terminate this Lease, as aforesaid, any period of rent abatement that Lessee
would otherwise have enjoyed shall run from the date of delivery of possession
and continue for a period equal to what Lessee would otherwise have enjoyed
under the terms hereof, but minus any days of delay caused by the acts or
omissions of Lessee. If possession of the Premises is not delivered within 4
months after the Commencement Date, this Lease shall terminate unless other
agreements are reached between Lessor and Lessee, in writing.

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

4.       RENT.

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

         4.2 COMMON AREA OPERATING EXPENSES. Lessee shall pay to Lessor during
the term hereof, in addition to the Base Rent, Lessee's Share (as specified in
Paragraph 1.6) of all Common Area Operating Expenses, 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.

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

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

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

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

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

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

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

                  (b) Any Common Area Operating Expenses and Real Property Taxes
that are specifically attributable to the LLPA Premises (which shall
specifically include the tax assessment on the existing improvements, and any
new improvements to the Premises), the Building or to any other building in the
Project or to the operation, repair and maintenance thereof, shall be allocated
entirely to such Premises, 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) 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 during each 12 month period of the Lease term, on the same day
as the Base Rent is due hereunder. Lessor shall deliver to Lessee within 60 days
after the expiration of each calendar year a reasonably detailed statement
showing Lessee's Share of the actual Common Area Operating Expenses incurred
during the preceding year. If Lessee's payments under this Paragraph 4.2(d)
during the preceding year exceed Lessee's Share as indicated on such statement,
Lessor shall credit the amount of such over-payment against Lessee's Share of
Common Area Operating Expenses next becoming due. If Lessee's payments under
this Paragraph 4.2(d) during the preceding year were less than Lessee's Share as
indicated on such statement, Lessee shall pay to Lessor the amount of the
deficiency within 10 days after delivery by Lessor to Lessee of the statement.

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                  (e) Exclusions to Common Area Operating Expenses: (See Also
Addendum Paragraph 61) The "Common Area Operating Expenses" shall exclude the
following:

                           (i) depreciation, interest and/or amortization on
mortgages or ground lease payments;

                           (ii) legal fees and other costs incurred in
negotiating and enforcing other tenant leases affecting the Project;

                           (iii) real estate broker commissions;

                           (iv) initial improvements or alterations to tenant
spaces;

                           (v) the cost of providing any service directly to,
and paid directly by, any other tenant;

                           (vi) Cost of any items for which Lessor receives
reimbursement from insurance proceeds or from any third party (other than
reimbursement from the other tenants of the Building based upon such tenants'
pro rata share of Common Area Operating Expenses);

                           (vii) costs and expenses incurred with respect to the
removal of Hazardous Substances not attributable to the acts of Lessee;

                           (viii) any management fee in excess of four percent
(4%) of the Base Rent; and

                           (ix) any federal and state income taxes, and other
taxes applied or measured by Lessor's general or net income (as opposed to
rents, receipts, or income directly attributable to operation of the Project and
excluding real property taxes and assessments which are Lessee's responsibility
under the 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.

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5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit as security for Lessee's faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may
suffer or incur by reason thereof. If Lessor uses or applies all or any portion
of the Security Deposit, Lessee shall within 10 days after written request
therefor deposit monies with Lessor sufficient to restore said Security Deposit
to the full amount required by this Lease. If the Base Rent increases during the
term of this Lease, Lessee shall, upon written request from Lessor, deposit
additional monies with Lessor so that the total amount of the Security Deposit
shall at all times bear the same proportion to the increased Base Rent as the
initial Security Deposit bore to the initial Base Rent. Should the Agreed Use be
amended to accommodate a material change in the business of Lessee or to
accommodate a sublessee or assignee, Lessor shall have the right to increase the
Security Deposit to the extent necessary, in Lessor's reasonable judgment, to
account for any increased wear and tear that the Premises may suffer as a result
thereof. If a change in control of Lessee occurs during this Lease and following
such change the financial condition of Lessee is, in Lessor's reasonable
judgment, significantly reduced, Lessee shall deposit such additional monies
with Lessor as shall be sufficient to cause the Security Deposit to be at a
commercially reasonable level based on such change in financial condition.
Lessor shall not be required to keep the Security Deposit separate from its
general accounts. Within 14 days after the expiration or termination of this
Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and
otherwise within 30 days after the Premises have been vacated pursuant to
Paragraph 7.4(c) below, Lessor shall return that portion of the Security Deposit
not used or applied by Lessor. No part of the Security Deposit shall be
considered to be held in trust, to bear interest or to be prepayment for any
monies to be paid by Lessee under this Lease. If Lessee's net worth falls below
$1,000,000 the security deposit shall be increased to an amount equal to four
(4) months of the then current rent and CAM charges, and Lessee shall
immediately deposit the additional funds required with Lessor.

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,

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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. Lessee may use amounts and types of Hazardous Substances which are
reasonable and customary for purposes of conducting its business operations in
accordance with its Permitted Use of the Premises and in accordance with all
Applicable Requirements.

                  (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, or
in violation of Applicable Requirements, and/or Law, Lessee shall immediately
give written notice of such fact to Lessor, and provide Lessor with a copy of
any report, notice, claim or other documentation which it has concerning the
presence of such Hazardous Substance.

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

                                       11
<PAGE>

                  (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. (See Addendum Paragraph 62)

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

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

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

                                       12
<PAGE>

7. MAINTENANCE; REPAIRS, UTILITY INSTALLATIONS; TRADE FIXTURES AND ALTERATIONS.

         7.1 LESSEE'S OBLIGATIONS. (See also Addendum Paragraph 63)

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

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

                  (c) FAILURE TO PERFORM. If Lessee fails to perform Lessee's
obligations under this Paragraph 7.1, Lessor may enter upon the Premises after
10 days' prior written notice to Lessee (except in the case of an emergency, in
which case no notice shall be required), perform such 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

                                       13
<PAGE>

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 (i.e. 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, shall keep in good
order, condition and repair the foundations, exterior walls, structural
condition of interior bearing walls, exterior roof, fire sprinkler system,
Common Area fire alarm and/or smoke detection systems, fire hydrants, parking
lots, walkways, parkways, driveways, landscaping, fences, signs and utility
systems serving the Common Areas and all parts thereof, as well as providing the
services for which there is a Common Area Operating Expense pursuant to
Paragraph 4.2. Lessor shall not be obligated to paint the exterior or interior
surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or
replace windows, doors or plate glass of the Premises. Lessee expressly waives
the benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease.

         7.3 UTILITY INSTALLATIONS; TRADE FIXTURES; ALTERATIONS.

                  (a) DEFINITIONS. The term "Utility Installations" refers to
all floor and window coverings, air lines, power panels, electrical
distribution, security and fire protection systems, communication systems,
lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises.
The term "Trade Fixtures" shall mean Lessee's machinery and equipment that can
be removed without doing material damage to the Premises. The term "Alterations"
shall mean any modification of the improvements, other than Utility
Installations or Trade Fixtures, whether by addition or deletion, "Lessee Owned
Alterations and/or Utility Installations" are defined as Alterations and/or
Utility Installations made by Lessee that are not yet owned by Lessor pursuant
to Paragraph 7.4(a).

                  (b) CONSENT. Lessee shall not make any Alterations or Utility
Installations to the Premises without Lessor's prior written consent. Lessee
may, however, make non-structural Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor, as
long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof or any existing walls, and the cumulative cost
thereof during this Lease as extended does not exceed a sum equal to 3 month's
Base Rent in the aggregate or a sum equal to one month's Base Rent in any one
year. Notwithstanding the foregoing, Lessee shall not make or permit any roof
penetrations and/or install anything on the roof without the prior written
approval of Lessor. Lessor may, as a precondition to granting such approval,
require Lessee to utilize a contractor chosen and/or approved by Lessor. Any
Alterations or Utility Installations that Lessee shall desire to make and which
require the consent of the Lessor shall be presented to Lessor in written form
with detailed plans. Consent shall be deemed conditioned upon Lessee's: (i)
acquiring all applicable governmental permits, (ii) furnishing Lessor with
copies of both the permits and the plans and specifications prior to

                                       14
<PAGE>

commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike
manner with good and sufficient materials. Lessee shall promptly upon completion
furnish Lessor with as-built plans and specifications. For work which costs an
amount in excess of one month's Base Rent, Lessor may condition its consent upon
Lessee providing a lien and completion bond in an amount equal to 150% of the
estimated cost of such Alteration or Utility Installation and/or upon Lessee's
posting an additional Security Deposit with Lessor.

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

                  (b) REMOVAL. (See also Addendum Paragraph 64) By delivery to
Lessee of written notice from Lessor not earlier than 90 and not later than 30
days prior to the end of the term of this Lease, Lessor may require that any or
all Lessee Owned Alterations or Utility Installations be removed by the
expiration or termination of this Lease. Lessor may require the removal at any
time of all or any part of any Lessee Owned Alterations or Utility Installations
made without the required consent.

                  (c) SURRENDER; RESTORATION. Lessee shall surrender the
Premises by the Expiration Date or any earlier termination date, with all of the
improvements, parts and surfaces thereof broom clean and free of debris, and in
good operating order, condition and state of repair, ordinary wear and tear
excepted, "Ordinary wear and tear" shall not include any damage or deterioration
that would have been prevented by good maintenance practice. Notwithstanding the

                                       15
<PAGE>

foregoing, if this Lease is for 12 months or less, then Lessee shall surrender
the Premises in the same condition as delivered to Lessee on the Start Date with
NO allowance for ordinary wear and tear. Lessee shall repair any damage
occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee
owned Alterations and/or Utility Installations, furnishings, and equipment as
well as the removal of any storage tank installed by or for Lessee. Lessee shall
also completely remove from the Premises any and all Hazardous Substances
brought onto the Premises by or for Lessee, or any third party (except Hazardous
Substances which were deposited via underground migration from areas outside of
the Project) even if such removal would require Lessee to perform or pay for
work that exceeds statutory requirements. Trade Fixtures shall remain the
property of Lessee and shall be removed by Lessee. The failure by Lessee to
timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express
written consent of Lessor shall constitute a holdover under the provisions of
Paragraph 26 below.

8.       INSURANCE; INDEMNITY.

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

         8.2 LIABILITY INSURANCE.

                  (a) CARRIED BY LESSEE. Lessee shall obtain and keep in force a
Commercial General Liability policy of insurance protecting Lessee and Lessor as
an additional insured against claims for bodily injury, personal injury and
property damage based upon or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such insurance
shall be on an occurrence basis providing single limit coverage in an amount not
less than $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 addition to, and not in lieu of,
the insurance required to be maintained by Lessee. Lessee shall not be named as
an additional insured therein.

         8.3 PROPERTY INSURANCE - BUILDING, IMPROVEMENTS AND RENTAL VALUE.

                                       16
<PAGE>

                  (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.

                                       17
<PAGE>

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

                  (c) NO REPRESENTATION OF ADEQUATE COVERAGE. Lessor makes no
representation that the limits or forms of coverage of insurance specified
herein are adequate to cover Lessee's property, business operations or
obligations under this Lease.

         8.5 INSURANCE POLICIES. Insurance required herein shall be by companies
duly licensed or admitted to transact business in the state where the Premises
are located, and maintaining during the policy term a "General Policyholders
Rating" of at least B+, V, as set forth in the most current issue of "Best's
Insurance Guide", or such other rating as may be required by a Lender. Lessee
shall not do or permit to be done anything which invalidates the required
insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor
certified copies of policies of such insurance or certificates evidencing the
existence and amounts of the required insurance. No such 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.

                                       18
<PAGE>

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

         8.9 PAYMENT OF DEDUCTIBLE AMOUNTS. Lessee's obligation with respect to
payment of any "deductible amount" under Lessor's liability, fire and/or
casualty policies of insurance shall be as follows:

                           (i) If the damage or destruction is caused by a
negligent or intentional act or omission by Lessee or Lessee's agents, employees
or contractors or otherwise occurred as a direct result of the operation of the
Lessee's business and/or occupancy of the Premises, then Lessee shall pay the
full "deductible amount".

                           (ii) If the damage or destruction is Caused by a
negligent or intentional act or omission by another tenant of the Building or
such other tenant's agents, employees or contractors or otherwise arises out of
the operation of such other tenant's business and/or such other tenant's
occupancy of another portion of the Building, then such other tenant shall pay
the full "deductible amount" and Lessee shall have no responsibility or
liability therefore and such amount shall not be included as an element of
Common Area Operating Expenses.

                           (iii) If the damage or destruction arises from any
other cause other than a cause described in either of the preceding
sub-paragraphs (i) or (ii), then the "deductible amount" shall be an item of
Common Area Operating Expenses.

9.       DAMAGE OR DESTRUCTION. (See also Addendum Paragraph 65)

         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.

                                       19
<PAGE>

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

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

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

         9.2 PARTIAL DAMAGE - INSURED LOSS. If a Premises Partial Damage that is
an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such
damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor's
election, make the repair of any damage or destruction the total cost to repair
of which is $5,000 or less, and, in such event, Lessor shall make any applicable
insurance proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required insurance was not in force or the
insurance proceeds are not sufficient to effect such repair, the Insuring Party
shall promptly contribute the shortage in proceeds as and when required to
complete said repairs. In the event, however, such shortage was due to the fact
that, by reason of the unique nature of the improvements, full replacement cost
insurance coverage was not commercially reasonable and available, Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within 10 days following
receipt of written notice of such shortage and request therefor. If Lessor
receives said funds or adequate assurance thereof within said 10 day period, the
party responsible for making the repairs shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect. If
such funds or assurance are not received, Lessor may nevertheless elect by
written notice to Lessee within 10 days thereafter to: (i) make such restoration
and repair as is commercially reasonable with Lessor paying any shortage in
proceeds, in which case this Lease shall remain in full force and effect, or
(ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled
to reimbursement of any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be subject
to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but
the net proceeds of any such insurance shall be made available for the repairs
if made by either Party.

         9.3 PARTIAL DAMAGE - UNINSURED LOSS. If a Premises Partial Damage that
is not an Insured Loss occurs, unless caused by a negligent or willful act of
Lessee (in which event Lessee shall make the repairs at Lessee's expense),
Lessor may either: (i) repair such damage as soon as reasonably possible at
Lessor's expense, in which event this Lease shall continue in full force and
effect, or (ii) terminate this Lease by giving written notice to Lessee within
30 days after receipt by Lessor of knowledge of the occurrence of such damage.

                                       20
<PAGE>

Such termination shall be effective 60 days following the date of such notice.
In the event Lessor elects to terminate this Lease, Lessee shall have the right
within 10 days after receipt of the termination notice to give written notice to
Lessor of Lessee's commitment to pay for the repair of such damage without
reimbursement from Lessor. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within 30 days after making such commitment. In
such event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible after the required
funds are available. If Lessee does not make the required commitment, this Lease
shall terminate as of the date specified in the termination notice.

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

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

         9.6 ABATEMENT OF RENT; LESSEE'S REMEDIES.

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

                  (b) REMEDIES. If Lessor shall be obligated to repair or
restore the Premises and does not commence, in a substantial and meaningful way,
such repair or restoration within 90 days after such obligation shall accrue,
Lessee may. at any time prior to the commencement of such repair or restoration,
give written notice to Lessor and to any Lenders of which Lessee has actual

                                       21
<PAGE>

notice, of Lessee's election to terminate this Lease on a date not less than 60
days following the giving of such notice. If Lessee gives such notice and such
repair or restoration is not commenced within 30 days thereafter, this Lease
shall terminate as of the date specified in said notice. If the repair or
restoration is commenced within such 30 days, this Lease shall continue in full
force and effect. "Commence" shall mean either the unconditional authorization
of the preparation of the required plans, or the beginning of the actual work on
the Premises, whichever first occurs.

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

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

10.      REAL PROPERTY TAXES.

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

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

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

                                       22
<PAGE>

         10.4 JOINT ASSESSMENT. (See Addendum Paragraph 66)

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

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

12.      ASSIGNMENT AND SUBLETTING.  (See also Addendum Paragraph 67)

         12.1 LESSOR'S CONSENT REQUIRED.

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

                  (b) A change in the control of Lessee shall constitute an
assignment requiring consent. The transfer, on a cumulative basis, of 25% or
more of the voting control of Lessee shall constitute a change in control for
this purpose.

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

                                       23
<PAGE>

                  (d) An assignment or subletting without consent shall, at
Lessor's option, be a Default curable after notice per Paragraph 111(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 or subletting shall not
constitute a consent to any subsequent assignment or subletting.

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

                  (e) Each request for consent to an assignment or subletting
shall be in writing, accompanied by information relevant to Lessor's
determination as to the financial and operational responsibility and
appropriateness of the proposed assignee or sublessee, including but not limited
to the intended use and/or required modification of the Premises, if any,
together with a fee of $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
or sublease, 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.

                                       24
<PAGE>

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

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

         12.3 ADDITIONAL TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. The
following terms and conditions shall apply to any subletting by Lessee of all or
any part of the Premises and shall be deemed included in all subleases under
this Lease whether or not expressly incorporated therein:

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

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

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

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

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

                                       25
<PAGE>

13.      DEFAULT; BREACH; REMEDIES.  (See also Addendum Paragraph 68)

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

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

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

                  (c) The failure by Lessee to provide (i) reasonable written
evidence of compliance with Applicable Requirements, (ii) the service contracts,
(iii) the rescission of an unauthorized assignment or subletting, (iv) an
Estoppel Certificate, (v) a requested subordination, (vi) evidence concerning
any guaranty and/or Guarantor, (vii) any document requested under Paragraph 41
(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. ss. 101 or any successor
statute thereto (unless, in the case of a petition filed against Lessee, the
same is dismissed within 60 days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where possession is not
restored to Lessee within 30 days; or (iv) the attachment, execution or other
judicial seizure of substantially all of Lessee's assets located at the Premises
or of Lessee's interest in this Lease, where such seizure is not discharged
within 30 days; provided, however, in the event that any provision of this
subparagraph (e) is contrary to any applicable law, such provision shall be of
no force or effect, and not affect the validity of the remaining provisions.

                                       26
<PAGE>

                  (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

                                       27
<PAGE>

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

                                       28
<PAGE>

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 monthly 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 except in the case of an emergency situation that
constitutes an immediate threat to the health and safety of the occupants of the
Premises, or the Premises itself, 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

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<PAGE>

foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in proportion
to the reduction in utility of the Premises caused by such Condemnation.
Condemnation awards and/or payments shall be the property of Lessor, whether
such award shall be made as compensation for diminution in value of the
leasehold, the value of the part taken, or for severance damages; provided,
however, that Lessee shall be entitled to any compensation for Lessee's
relocation expenses, loss of business goodwill and/or Trade Fixtures, without
regard to whether or not this Lease is terminated pursuant to the provisions of
this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property
of the Lessee and Lessee shall be entitled to any and all compensation which is
payable therefor. In the event that this Lease is not terminated by reason of
the Condemnation, Lessor shall repair any damage to the Premises caused by such
Condemnation.

15.      BROKERAGE FEES.

         15.1 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, or as may be reasonably required by
a purchaser, lender, or the Lessor, 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 tender 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.

                                       30
<PAGE>

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 Lassoes title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such
transfer or assignment and delivery of the Security Deposit, as aforesaid, the
prior Lessor shall be relieved of all liability with respect to the obligations
and/or covenants under this Lease thereafter to be performed by the Lessor.
Subject to the foregoing, the obligations and/or covenants in this Lease to be
performed by the Lessor shall be binding only upon the Lessor as hereinabove
defined. Notwithstanding the above, and subject to the provisions of Paragraph
20 below, the original Lessor under this Lease, and all subsequent holders of
the Lessor's interest in this Lease shall remain liable and responsible with
regard to the potential duties and liabilities of Lessor pertaining to Hazardous
Substances as outlined in Paragraph 6.2 above.

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

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

20. LIMITATION ON LIABILITY. Subject to the provisions of Paragraph 17 above,
the obligations of Lessor under this Lease shall not constitute personal
obligations of Lessor, the individual partners of Lessor or its or their
individual partners, directors, officers or shareholders, and Lessee shall look
to the Premises, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse
against the individual partners of Lessor, or its or their individual partners,
directors, officers or shareholders, or any of their personal assets for such
satisfaction.

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

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

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<PAGE>

23.      NOTICES.

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

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

24. WAIVERS. (See also Addendum Paragraph 69) 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. 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.

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<PAGE>

26. 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.

27. 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.

28. 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.

29.      SUBORDINATION; ATTORNMENT; NON-DISTURBANCE.

         29.1 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.

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

         29.3 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

                                       33
<PAGE>

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

         29.4 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.

30. 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).

31. LESSOR'S ACCESS; SHOWING PROMISES; REPAIRS. Lessor and Lessor's agents shall
have the right to enter the Premises at any time, in the case of an emergency,
and otherwise at reasonable times for the purpose of showing the same to
prospective purchasers, lenders, or tenants, and making such alterations,
repairs, improvements or additions to the Premises as Lessor may deem necessary.
All such activities shall be without abatement of rent or liability to Lessee.
Lessor may at any time place on the Premises any ordinary "For Sale" signs and
Lessor may during the last 6 months of the term hereof place on the Premises any
ordinary "FOR LEASE" signs, Lessee may at any time place on the Premises any
ordinary "FOR SUBLEASE" sign.

32. 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.

33. SIGNS. (See also Addendum Paragraph 70) Except for ordinary "For Sublease"
signs which may be placed only on the Premises, Lessee shall not place any sign
upon the Project without Lessor's prior written consent. All signs must comply
with all Applicable Requirements.

                                       34
<PAGE>

34. 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.

35. 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.

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

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

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

         37.2 OPTIONS PERSONAL TO ORIGINAL LESSEE. Any Option granted to Lessee
in this Lease is personal to the original Lessee, and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee is in full possession of the Premises and, if requested by Lessor, with
Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.

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

                                       35
<PAGE>

38. 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.

39. 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.

40. 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 fight 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 an the pan 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.

41. 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.

42. 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.

43. 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.

44. 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.

45. 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.

46. 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.

                                       36
<PAGE>

47. MEDIATION AND ARBITRATION OF DISPUTES. An Addendum requiring the Mediation
and/or the Arbitration of all disputes between the Parties and/or Brokers
arising out of this Lease |_| is |X| is not attached to this Lease.

48. RENTAL ESCALATIONS: The Base Rent shall increase four percent (4%) on each
twelve (12) month anniversary of the lease commencement.

49. CALIFORNIA BROKER DISCLOSURE: Chris Loughridge is a licensed California Real
Estate Broker.

50. MONTHLY COMMON AREA OPERATING EXPENSE ESTIMATE: In addition to the Base
Rent, Lessee shall initially pay a monthly charge of $1,500.00 which is an
estimate of the monthly Common Area Operating Expenses due under Paragraph #4.

51. RIGHT TO RECAPTURE: Lessor shall have the option, at Lessor's sole
discretion, to terminate the lease and recapture the Premises in lieu of
approving any proposed sublease or assignment.

52. SUBSTANCES FOR BIOMEDICAL RESEARCH: Lessor acknowledges that Lessee is in
the business of biomedical research. In the course of conducting such business,
Lessee will have on the Premises and will be handling substances that will
include, but not be limited to, certain chemicals, gases, solvents, and other
materials typically used in biomedical research. Lessee shall abide by, and be
in compliance with all City, State, and Federal Agency rules and regulations
governing the usage of said substances.

53. PHASE I ENVIRONMENTAL REPORT: Concurrent with the execution of the Lease,
Lessor shall provide Lessee with a copy of the Phase I Report prepared for
Lessor's lender. At the end of the Lease, Lessee shall provide Lessor with a
Phase I Report (or more detailed report if recommended by the preparer),
prepared by a reputable environmental company approved in advance in writing by
Lessor, indicating the Premises is free of any and all Hazardous Materials.

54. LESSEE INSTALLATIONS: Provided (a) it is acceptable to the general
contractor, (b) it does not interfere with the construction process, and (c) it
does not cause any delays in occupancy or construction, Lessee shall be allowed
access to the suite to install its furniture, trade fixtures, data and
telecommunications wiring and equipment, photo copy equipment, and other
business equipment. Lessee shall be solely responsible for and indemnify Lessor
against, any and all Costs and liabilities arising from, or related to, Lessee's
installations including, but not limited to, lost rent to Lessor and damage to
Lessee's installations.

55. LESSOR IMPROVEMENTS: Subject to any changes necessitated by the construction
process or the City of San Diego, Lessor shall construct the improvements to the
Premises, at its sole cost and expense, as described in the plans prepared by
Jennifer Roberts and the attached Exhibit "C". Notwithstanding the foregoing,
Lessee shall be solely responsible for the cost of (a) the double sink, (b) any
and all costs relating to hoods and their installation, (C) deionized water,
vacuum, compressed air, and nitrogen lines and equipment.

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<PAGE>

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 San Diego                     Executed at San Diego
on:___________________________________    on:__________________________________

By LESSOR:                                By LESSEE:

Nancy Ridge Technology Center, L.P.       MicroIslet, Inc., a Nevada corporation

By: Nancy Ridge Technology Center, L.P.   By: __________________________________
Name Printed___________________________   Name Printed:_________________________
Title: General Partner of the L.P.        Title: _______________________________

                                       38
<PAGE>

By: /s/ Chris Loughridge                  By: /s/ H. Hartounian
Name Printed: Chris Loughridge            Name Printed: H. Hartounian
Title: Manager of the LLC                 Title: President & COO
Address:  7920 Miramar Road, Suite #119   Address: 6540 Lusk Blvd., Suite C250
San Diego, CA  92126-4206                   San Diego, CA 92121
Telephone: (858) 272-4400                 Telephone: (858) 657-0287
Facsimile: (858) 272-4600                 Facsimile: (858) 657-0288
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.

                                       39
<PAGE>

                   ADDENDUM TO STANDARD INDUSTRIAL/COMMERCIAL
                   ------------------------------------------

                             MULTI-TENANT LEASE-NET
                             ----------------------

         This Addendum supplements the Standard Industrial/Commercial
Multi-Tenant Lease-Net ("LEASE") between Nancy Ridge Technology Center, L.P., a
California limited partnership, as Lessor and MicroIslet, Inc., a Nevada
corporation, as Lessee, to which this Addendum is attached. All terms not
defined herein shall have the same meanings as set forth in the Lease. To the
extent of any inconsistency between the terms of the Lease and the terms of this
Addendum, the terms of this Addendum shall control.

56. BASE RENT. The Base Rent payable during the term is as follows:

                  YEAR OF TERM                BASE RENT PER MONTH
                  ------------                -------------------

                  Oct. 2002 through Sept.     $16,623.90
                  2003*
                  Oct. 2003 through Sept.     $17,288.86
                  2004
                  Oct. 2004 through Sept.     $17,980.41
                  2005

         * Including the first partial month in the event the Commencement Date
is not the first day of the month.

57. LESSOR'S WARRANTY OF COMPLIANCE WITH BUILDING CODE AND RESTRICTIONS.
Notwithstanding the provisions of Paragraph 2.3 of the Lease, Lessor's warranty
includes compliance of the Building and the Premises with the Americans With
Disabilities Act ("ADA").

58. POSSESSION. The following provision shall modify the terms of Paragraph 3.3
of the Lease: "Notwithstanding the foregoing, in the event that the Premises
have not been delivered to Lessee by close of business on October 10, 2002,
Lessor shall arrange for Lessee to temporarily store its refrigeration units in
a San Diego facility having sufficient power capabilities for those units. The
costs of storage and transportation of the units from the temporary storage
facility to the Premises shall be borne solely by Lessor. The foregoing
provision shall not limit Lessor's requirements to deliver the Premises within
the time frame set forth in Paragraph 3.3"

59. COMMON AREA OPERATING EXPENSES. The following provisions are deemed added as
new Paragraph 4.2.(f):

         In the event that Lessee's Share of the Common Area Operating Expenses
increased by more than ten percent (10%) in any year of the Term, Lessee shall
have the right to audit Lessor's books and records as follows:

                                       1
<PAGE>

         (i) Lessee shall be entitled at any reasonable time during regular
business hours, after giving at least forty-eight (48) hours prior written
notice, to inspect Lessor's books and records (at the site of their location)
relating to Lessee's Share of the Common Area Operating Expenses, and to obtain
an audit thereof by its own staff auditor or independent auditor selected by
Lessee to determine the accuracy of such amounts billed to Lessee by Lessor.
Lessor shall provide copies of such books and records if requested by Lessee, at
Lessee's expense.

         (ii) If any such audit discloses a liability for Lessee's Share of
Common Area Operating Expenses which is less than the amount which Lessor billed
to Lessee, Lessor shall promptly refund to Lessor all amounts in excess of the
amount for which Lessee is actually liable (the "Refund Amount") as disclosed by
the audit.

         (iii) All costs of such audit shall be borne by Lessee. However, if the
Refund Amount is greater than $2,500.00, all costs of the audit shall be borne
by Lessor, not to exceed the sum of $1,000.00.

60. HAZARDOUS MATERIALS. The following provision shall modify Paragraph 6.2 of
the Lease: "Lessor warrants to Lessee that Lessor has no knowledge of the
existence of Hazardous Substances in, on or about the Premises in violation of
any Applicable Laws. Lessor further acknowledges and agrees that Lessee shall
not be liable to Lessor for the costs to remedy or clean up any Hazardous
Substances migrating or flowing on to the Premises from outside of the Premises,
including, without limitation, any off-Premises releases affecting ground water
beneath the Premises so long as such off-Premises release or discharge was not
caused by Lessee or its agents, contractors or invitees. Subject to the
limitations described below, Lessor shall indemnify, defend and hold harmless
Lessee from and against any out-of-pocket loss, liability, claim, expense
(including reasonable attorneys' fees and court costs) or damage resulting from
any Third Party Claim (as defined below) which is based on the existence of any
Hazardous Substance contamination in, under or about the Premises (including
groundwater) as of the Commencement Date of the Lease or any Hazardous Substance
contamination thereafter migrating in, under or about the Premises (including
groundwater). The phrase "Third Party Claim" means any lawsuit, administrative
action or other proceeding commenced and maintained by any governmental agency
or other third person or entity who is not a partner, principal, agent, employee
or affiliate of Lessee. Lessee shall promptly give Lessor notice of any such
Third Party Claim. Lessor's obligation of indemnification includes the
obligation to defend the Third Party Claims through qualified legal counsel
reasonably satisfactory to Lessee, provided Lessee need not have first paid any
such Third Party Claim in order to be so indemnified. Lessee shall cooperate
with Lessor in such defense."

61. ROOFTOP COMMUNICATION EQUIPMENT. Subject to compliance with the provisions
of Paragraph 7.3, Lessee shall have the non-exclusive right and access to
install, repair, replace, remove, operate and maintain communication equipment,
together with all cable, wiring, conduits and related equipment (collectively,
"COMMUNICATION EQUIPMENT"), for the purpose of receiving and sending radio,
television, computer, telephone or other communication signals to and from the
Premises in connection with Lessee's business at the Premises, at a location on
the roof of the Building reasonably acceptable to Lessor. Such use of the roof

                                       2
<PAGE>

for Communication Equipment shall be at no additional charge to Lessee. Lessee
shall retain Lessor's designated roofing contractor to make any necessary
penetrations and associated repairs to the roof in order to preserve Lessor's
roof warranty. Lessee shall comply with FCC OET Bulletin 65 on effective radiate
power.

62. ADDITIONAL PROVISIONS REGARDING ALTERATION REMOVAL. Notwithstanding the
provisions of Paragraph 7.4(a) and (b) of the Lease, the following improvements
and/or fixtures to be installed in the Premises shall not be considered as
Alterations or Utility Installations for purposes of Paragraph 7.4(a) and (b):
Refrigeration units, hoods, deionized water units and pumps, vacuum pumps,
compressed pumps and related equipment (but specifically excluding the piping
and lines related to such equipment. Notwithstanding any contrary provision in
Paragraph 7.4(b) of the Lease, if Lessor expressly consents to any Alteration or
Utility Installations constructed or installed by Lessee, Lessor shall notify
Lessee at the time of giving such consent whether or not Lessor will require the
removal of the Alteration or Utility Installation upon expiration of the Lease,
and Lessor's failure to so notify Lessee shall constitute a waiver of Lessor's
right to require Lessee to remove such Alteration or Utility Installation upon
expiration of the Lease. In addition, and notwithstanding any contrary
provisions, Lessee shall not remove and Lessor shall be entitled to retain any
computer network, telephone or security system cabling or conduits placed within
the walls, ceilings or floors of the Premises.

63. ADDITIONAL PROVISIONS CONCERNING DAMAGE OR DESTRUCTION. This section
includes provisions that modify and/or supplement the provisions of Paragraph 9
of the Lease concerning damage or destruction of the Premises. Except as
expressly set forth in subsections 67.1 through 67.3 of this Addendum, the
provisions of Paragraph 9 of the Lease shall be enforced in accordance with
their terms.

         63.1 PARTIAL DAMAGE-UNINSURED LOSS. Lessor agrees that Lessor's right
to terminate the Lease under Paragraph 9.3 of the Lease on account of an
uninsured loss shall not apply unless the aggregate cost and expense of
repairing and restoring the Premises exceeds Seventy-five Thousand Dollars
($75,000.00), and Lessor shall cause such repair and restoration to be completed
to the extent required in Paragraph 9.3 of the Lease. If Lessor elects to
exercise such right of termination and Lessee elects to exercise its right under
Paragraph 9.3 of the Lease to complete such repairs at its expense, Lessee shall
only be responsible for the repair or replacement costs in excess of
Seventy-five Thousand Dollars ($75,000.00), and Lessor shall be responsible for
payment of such costs up to a maximum of Seventy-five Thousand Dollars
($75,000.00).

         63.2 DAMAGE NEAR END OF TERM. Lessor agrees that Lessee shall have the
same right to terminate the Lease during the last six (6) months of the term of
the Lease as provided to Lessor under Paragraph 9.5 of the Lease, except in the
event such damage was caused by Lessee, in which event Lessee shall not have the
right to terminate the Lease.

         63.3 ABATEMENT OF RENT. The requirement in Paragraph 9.6(a) of the
Lease for Lessee to continue to perform its obligations under the Lease other
than those monetary obligations subject to abatement under Paragraph 9.6(a) of
the Lease, shall not apply to the extent that Lessee's ability to perform any
such other obligations is impaired by the damage or destruction of the Premises;
provided, however, the preceding exception shall not apply to any monetary
obligations. In addition, the waiver of Lessee of any claim against Lessor for
any damage suffered by reason of such repair or restoration shall not apply to
the extent such damage is solely caused by the gross negligence or willful
misconduct of Lessor, or its agents, contractors or employees.

                                       3
<PAGE>

64. JOINT ASSESSMENT. The following provision shall replace Paragraph 10.4 of
the Lease: "Real Property Taxes allocated to the Building and the Premises shall
be equitably apportioned by Lessor based on the respective valuations assigned
in the assessor's work sheets and the supplemental tax bills arising out of the
specific uses of various premises within the Building and the Project. In
particular, Lessee shall be responsible for one hundred percent (100%) of the
supplemental taxes assessed as a direct result of the tenant improvements
constructed on the Premises. Lessor also reserves the right in the future to
proportionately allocate the cumulative supplemental taxes assessed to
biotechnology related tenants of the Building based on the square footage of
their respective leased premises, and not on the specific assessed valuations
relating to their individual premises."

65.      ASSIGNMENT AND SUBLETTING.

         65.1 PERMITTED TRANSFERS. Notwithstanding anything to the contrary
contained in Paragraph 12, Lessee shall have the right, without the prior
written consent of Lessor, to enter into an assignment of the Lease or a
sublease of all or a portion of the Premises with an entity that is (i) Lessee's
parent organization, (ii) a wholly-owned subsidiary of Lessee, or (iii) a result
of a consolidation or merger with Lessee. Any such transfer shall be subject to
the following conditions: (1) Lessee shall remain fully liable during the
unexpired Term (except in the event Lessee is dissolved as part of a merger or
consolidation); (2) any such transfer shall be subject to all of the terms,
covenants and conditions of this Lease and any such transferee (a "PERMITTED
TRANSFEREE") shall expressly assume for the benefit of Lessor the obligations of
Lessee under the Lease by a document reasonably acceptable to Lessor; (3) the
Permitted Transferee shall have both a net worth and working capital sufficient
to perform the obligations of Lessee under this Lease (if the Permitted
Transferee's net worth and working capital are equal to or greater than Lessee's
net worth and working capital, respectively, as of the date hereof, this
condition will be deemed satisfied); and (4) Lessee shall give Lessor notice of
such transfer at least twenty (20) days prior to its effective date (which
notice shall include all documentation necessary to verify the conditions
contained in this Paragraph). To the extent Landlord's consent is required for
any other proposed assignment or sublease, such consent shall not be
unreasonably withheld, conditioned or delayed.

         65.2 TRANSFER PREMIUM. If Lessor consents to an assignment of the Lease
or sublease of all or a portion of the Premises (other than to a Permitted
Transferee), Lessee shall pay to Lessor the full amount of any Transfer Premium
received by Lessee from such transferee within ten (10) days following receipt
thereof. "TRANSFER PREMIUM" shall mean seventy-five percent (75%) of all rent,
additional rent or other consideration payable by such transferee in excess of
the Rent payable by Lessee under this Lease (on a per rentable square foot basis
if less than all of the Premises is transferred) after deducting the expenses
incurred by Lessee for (i) any changes, alterations and improvements to the
Premises in connection with the transfer and (ii) any brokerage commissions or
finders fees in connection with the transfer (collectively, the "TRANSFER
COSTS"). "Transfer Premium" shall also include, but not be limited to, key money
and bonus money paid by such transferee to Lessee in connection with such
transfer, and any payment in excess of fair market value for services rendered

                                       4
<PAGE>

by Lessee to such transferee or for assets, fixtures, inventory, equipment, or
furniture transferred by Lessee to the transferee in connection with such
transfer. For purposes of calculating the Transfer Premium, the Transfer Costs
shall be amortized on a straight line basis (without interest) over the
remaining Term.

66. ADDITIONAL PROVISIONS CONCERNING DEFAULT/BREACH/REMEDIES. This section
includes provisions that modify and/or supplement the provisions of Paragraph 13
of the Lease concerning a Default and Breach and remedies. Except as expressly
set forth in subsection 70.1 of this Addendum, the provisions of Paragraph 13 of
the Lease shall be enforced in accordance with their terms.

         66.1 DOCUMENTATION REQUIREMENTS. Except as expressly otherwise provided
in this Lease, the failure by Lessee to provide Lessor with reasonable written
evidence (in duly executed original form, if applicable) of (i) a Tenancy
Statement required pursuant to Paragraphs 16 or 36 of the Lease, (ii) the
execution of any document requested under Paragraph 42 (easements) of the Lease,
or (iii) the subordination or non-subordination of this Lease as provided in
Paragraph 30 of the Lease, where such failure continues for a period of ten (10)
days following written notice by or on behalf of Lessor to Lessee, shall
constitute a Breach. Except as expressly otherwise provided in this Lease, the
failure by Lessee to provide Lessor with reasonable written evidence (in duly
executed original form, if applicable) of (aa) compliance with Applicable Law as
required under Paragraph 6.3 of the Lease, (bb) the rescission of an
unauthorized assignment or subletting of the Premises under Paragraph 12.1(b) of
the Lease, or (cc) any other documentation or information which Lessor may
reasonably require of Lessee under the terms of this Lease, where such failure
continues for a period of thirty (30) days following written notice by or on
behalf of Lessor to Lessee, shall constitute a Breach.

67. WAIVER. No waiver by Lessee of any breach of any term, covenant or condition
hereof by Lessor shall be deemed a waiver of any other term, covenant or
condition hereof, or of any subsequent breach by Lessor of the same or of any
other term, covenant or condition hereof.

68. SIGNAGE. Lessee shall be entitled to reasonable building signage in
locations reasonably acceptable to Lessor and in accordance with Lessor's then
existing signage criteria. Lessee shall pay for all costs relating to the
design, fabrication, installation, permitting, maintaining and removal of the
signage. All signage shall comply with the Applicable Requirements. Lessee shall
remove all signage and repair any damage to the Premises caused by such removal
upon the expiration or earlier termination of the Lease.

                                       5
<PAGE>

                              RULES AND REGULATIONS
                                   EXHIBIT "A"

Attached to and Forming a Part of the Lease Agreement

         1. Lessor agrees to furnish two keys without charge. Additional keys
will be furnished at an option charge. Lessee shall not change locks or install
additional locks on doors without prior written consent of Lessor. Lessee shall
not make or cause to be made duplicates of keys procured from Lessor without
prior approval of Lessor. All keys to Lease Premises shall be surrendered to
Lessor upon termination of this Lease.

         2. Lessee will refer all contractors, contractor's representatives, and
installation technicians rendering any service on or to the Leased Premises for
Lessee to Lessor for Lessor's approval before performance of any contractual
service. Lessee's contractors and installation technicians shall comply with
Lessor's rules, regulations and specifications pertaining to construction and
installation. This provision shall apply to all work performed on or about the
Leased Premises or Property, including installation of telephones, telegraph
equipment, electrical devises and attachments and installations of any nature
affecting floors, walls, woodwork, trim, windows, ceilings and equipment or any
other physical portion of the Leased Premises or Property.

         3. Lessee shall not at any time occupy any part of the Leased Premises
or Property as sleeping or lodging quarters.

         4. No storage shall be permitted outside the Leased Premises,
including, without limitation, the storage of motor vehicles, trucks, boats,
trailers, pallets, drums, or equipment of any kind or nature, without the
permission in writing from Lessor. Lessee shall not be permitted to conduct any
work activity outside the Leased Premises. Lessee shall not work on motor
vehicles on or in the Premises.

         5. Lessee shall not place, install or operate on the Leased Premises or
in any part of the Building any engine, stove or machinery, or conduct
mechanical operations or cook thereon or therein, or place or use in or about
the Leased Premises or Property any explosives, gasoline, kerosene, oil, acids,
caustics, or any flammable, explosive or hazardous material without written
consent of Lessor. Lessee shall not use, keep or permit to be used or kept any
foul or obnoxious gas or substance on or around the Premises, which would
unreasonably disturb other tenants on the Project or is prohibited by a standard
form insurance policy. Notwithstanding the foregoing, this rule shall not be
construed to preclude Lessee's use of a microwave oven or similar appliances in
an employee break room.

         6. Lessor will not be responsible for lost or stolen personal property,
equipment, money or jewelry from the Leased Premises or the Property regardless
of whether such loss occurs when the area is locked against entry.

         7. No dogs, cats, fowl or other animals shall be brought into or kept
in or about the Leased Premises or Property.

                                       1
<PAGE>

         8. None of the parking, lawn areas, entries, doors or stairways shall
be blocked or obstructed or any rubbish, littler, trash, or material of any
nature placed, emptied or thrown into these areas or such area used by Lessee's
agents, employees or invitees at any time for purposes inconsistent with their
designation by Lessor. No Lessee shall permit any trash, oil, chemicals or any
foreign materials to be deposited or disposed of in the landscaped, parking or
common areas of the Project. Trash (not including oil, hazardous materials,
chemicals, which shall not be disposed of on the Project) shall be placed inside
the bins, at a level not higher than the tope of the bin and shall not be placed
outside the bin or in the enclosure area. Lessee shall cooperate with Lessor and
all other tenants of the development so that the common areas may be kept in a
clean and orderly condition and free of obstruction. Lessor provides free,
NORMAL use of waste containers and disposal service; however, Lessee shall
provide, at Lessee's expense, waste containers and regular disposal service as
may be required by Lessee in excess of the service made available by Lessor as
provided above. This shall preclude abnormal trash pick-ups as determined by
Lessor where trash generated by Lessee is considered excessive above average
usage.

         9. The water closets and other water fixtures shall not be used for any
purpose other than those for which they were constructed, and any damage
resulting to them from misuse or by the defacing or injury of any part of the
building shall be borne by the person who shall occasion it. No person shall
waste water by interfering with the faucets or otherwise.

         10. No person shall disturb occupants of the Building by the use of any
radios, record players, tape recorders, musical instruments, the making of
unseemly noises or any unreasonable use.

         11. Subject to the term of the Lease, no advertisement, picture or sign
of any sort shall be displayed on or outside the Premises without the prior
written consent of the Lessor. Lessor shall have the right to remove any such
unapproved item without notice and at Lessee's expense.

         12. Lessee shall not use any method of heating or air conditioning
other than that supplied by Landlord with the consent of Lessor.

         13. Lessee shall not disturb, solicit or canvas any occupant of the
Building or Project and shall cooperate to prevent the same.

         14. No persons shall go on the roof or in the meter room(s) without the
Landlord's permission.

         15. Business machines and mechanical equipment belonging to the Lessee
which cause noise or vibration that may be transmitted to the structure of the
Building, to such a degree as to cause structural damages or unreasonably
disturb other tenants shall be placed and maintained by Lessee, at Lessee's
expense, on vibration eliminators or other devices sufficient to effectively
control noise vibration.

         16. Except in the normal conduct of its business, Lessee shall not
regularly park motor vehicles in the parking areas after the conclusion of
normal daily business activities.

                                       2
<PAGE>

                  Lessee and its employees, agents and invitees shall park their
                  vehicles only in those parking areas designated by Lessor.
                  Lessee shall not leave any vehicle in a state of disrepair
                  (including without limitation, flat tires, out of date
                  inspection stickers, or license plates) on the Property. If
                  Lessee or its employees, agents, invitees park their vehicles
                  in areas other than the designated parking areas or leave any
                  vehicle in a state of disrepair, Lessor shall have the right
                  to remove such vehicles at Lessee's expense. Parking is shared
                  in common with all other tenants.

                  Parking shall be in compliance with all parking rules and
                  regulations including any sticker or other identification
                  system established by Lessor. Failure to observe the rules and
                  regulations shall terminate Lessee's right to use the parking
                  area and subject the vehicle in violation of the parking rules
                  and regulations to removal and impoundment. No such
                  termination of parking privileges or removal of impoundment of
                  a vehicle shall create any liability on Lessor or to be deemed
                  to interfere with Lessee's right to possession of the Leased
                  Premises. Vehicles must be parked entirely within the stall
                  lines and all directional signs, arrows and posted speed
                  limits must be observed. Parking is prohibited in areas not
                  striped for parking in aisles, where "No Parking" signs are
                  posted, on ramps, in crosshatched areas, and in other areas as
                  may be designated by Lessor. Parking stickers or other forms
                  of identifications supplied by Lessor shall remain the
                  property of Lessor and not the property of Lessee and are not
                  transferable. Every person is required to park and lock his
                  vehicle. All responsibility for damage to vehicles or persons
                  is assumed by the owner of the vehicle or its driver.

                  Lessee shall unload vehicles only in those areas designated by
                  Lessor for such purpose. During periods of loading and
                  unloading, Lessee shall not unreasonably interfere with
                  traffic flow within the project and loading and unloading
                  areas of other tenants. All goods, including materials used to
                  store goods, delivered to the premises of the Lessee shall be
                  immediately moved into premises and shall not be left in
                  parking or receiving areas overnight. Tractor-trailers, which
                  must be unhooked or parked with dolly wheels beyond the
                  concrete loading areas, must use steel plates or wood blocks
                  under the dolly wheels to prevent damage to the asphalt paving
                  surfaces. No parking or storing of such trailers will be
                  permitted in the auto parking areas of the Project or on
                  streets adjacent thereto.

         17. Lessee is responsible for the cleaning of his own entry, restrooms
and interior of windows. In the case of shared entries, hallways and restrooms,
each Lessee shall cooperate with the other Tenants sharing the facilities to
maintain good order and shall share the expense equally.

         18. Lessee will provide and keep in working order all necessary fire
extinguishers to provide adequate protection and meet all city, state and
federal requirements.

         19. Lessee shall not lay floor covering within the Leased Premises
without written approval of the Lessor. The use of cement or other similar
adhesive materials not easily removed with water is expressly prohibited.

                                       3
<PAGE>

         20. No stored goods (e.g. boxes, racking, raw or finish product, etc.)
shall be visible through Lessee's windows. Lessee shall use window coverings
that are acceptable to Lessor to prevent any such items from being visible
through the windows to the outside. It shall be Lessee's responsibility to
maintain the window coverings in good working order and condition so as to
maintain the aesthetic appeal of the Property.

         21. It is Lessor's desire to maintain the Property in the highest
standard of dignity and good taste consistent with comfort and convenience for
Lessees. Any action or condition not meeting this high standard should be
reported directly to Lessor. Your cooperation will be mutually beneficial and
sincerely appreciated. Lessor reserves the right to make such other and further
reasonable rules and regulations that in its judgment may from time to time be
necessary for the safety, care and cleanliness of the Leased Premises and for
the preservation of good order therein.

         22. Smoking of cigarettes, pipes or cigars is not permitted in the
Premises.

"LESSEE"

By: /s/ H. Hartounian                       Date:  7/5/02
    ------------------------------                -----------

                                       4
<PAGE>

                                    SITE PLAN
                                   EXHIBIT "B"

                         NANCY RIDGE TECHNOLOGY CENTER
                                   Site Plan

                  [image shows a map of surrounding buildings]

<PAGE>

                                DEMISED PREMISES
                                   EXHIBIT "C"

                      [image is floor plan of first floor]

                      Building 6370 Suite 112 First Floor

                      [image is floor plan of second floor]

                      Building 6370 Suite 112 Second Floor<PAGE>

                                                                    EXHIBIT 10.7

                                WARRANT AGREEMENT

         THIS AGREEMENT is entered into as of April 2, 2002, by and between ALD
Services, Inc., a Nevada corporation (the "Company") and Pacific Stock Transfer
Company, as Warrant Agent (the "Warrant Agent").

         WHEREAS, the Company proposes to issue 1,000,000 Class A Warrants (the
"Class A Warrants") and 500,000 Class B Warrants (the "Class B Warrants"), each
such warrant to purchase one (1) share of the Company's $0.001 par value Common
Stock (the "Shares") All such Class A Warrants and Class B Warrants are
hereinafter collectively referred to as the "Warrants;" and

         WHEREAS, the Company desires to enter into this Agreement to establish
the terms and conditions of the Warrants, to set forth the rights of registered
holders thereof, and to provide for the issuance, transfer, and exercise of the
Warrants, and related matters; and

         WHEREAS, the Warrant Agent is the Transfer Agent for the Company's
issued and outstanding securities and has agreed to act on behalf of the Company
under the terms of this Agreement in connection with the issuance, transfer and
exercise of the Warrants.

         NOW THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein, and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants, and
the respective rights and obligations thereunder of the Company, the holders of
the certificates representing the Warrants, and the Warrant Agent, the parties
hereto agree as follows:

         1. Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act on behalf of the Company under the terms of this Agreement
and the Warrant Agent hereby accepts such appointment.

         2. Form and Issuance of Warrants, Transfer Restrictions under
Securities Laws.

         2.01 The Warrant Certificates shall be substantially in the form
annexed hereto as Exhibit A and Exhibit B. Each Warrant Certificate shall be
signed by, or bear the facsimile signature of, the President or a Vice President
of the Company and shall be countersigned by the Warrant Agent. If any person
whose facsimile signature has been placed upon any Warrant as an officer of the
Company shall cease to be such officer before the Warrant is countersigned,
issued, or delivered, the Warrant may be countersigned, issued, and delivered
with the same effects as if such person had not ceased to be such officer.
Warrants shall be manually countersigned by the Warrant Agent and shall not be
valid for any purpose unless so countersigned. Warrant Certificates shall be in
registered form only.

                                       1
<PAGE>

         2.02 Upon the written order of the Company, the Warrant Agent shall
issue and register the Warrant Certificates in the names and denominations
specified in said order, and shall countersign and deliver the same in
accordance with said order. The terms "Holder" and "Warrant Holder" as used
herein shall at any time mean the person in whose name any Warrant Certificate
shall then be registered upon the books to be maintained by the Warrant Agent
for that purpose. Each Warrant Certificate shall be dated the date of
countersignature, whether upon initial issuance or subsequently.

         2.03 The Warrant Certificates upon issuance hereunder shall constitute
"restricted securities" as that term is defined in Rule 144 under the Securities
Act of 1933. Accordingly, there shall be imposed upon any Warrant Certificate
initially issued hereunder and upon any Warrant Certificate issued upon transfer
or exchange of the foregoing, a legend in substantially the following form:

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAWS OF ANY
         STATE AND ARE RESTRICTED SECURITIES AS THAT TERM IS DEFINED IN RULE 144
         UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE OFFERED
         FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
         REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM
         REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE
         ESTABLISHED TO THE SATISFACTION OF THE COMPANY.

         Notwithstanding anything to the contrary in this Agreement, no transfer
of a Warrant or Certificate bearing such a legend shall be effective unless the
Company shall be satisfied as to compliance with the requirements of such
legend.

         3. Exercises and Duration of Warrants.

         3.01 Subject to the provisions of this Agreement, each Class A Warrant
shall entitle the Warrant Holder, by exercising the Warrant, to purchase from
the Company one (1) share of the Company's $0.001 par value Common Stock at the
price per share of $6.00 in lawful United States money as adjusted from time to
time in the manner provided herein (the "Exercise Price" of the Class A
Warrants), and each Class B Warrant shall entitle the Warrant Holder, by
exercising the Warrant, to purchase from the Company one (1) share of the
Company's $0.001 par value Common Stock at the price per share of $12.00 in
lawful United States money as adjusted from time to time in the manner provided
herein. (the "Exercise Price" of the Class B Warrants). The Warrants shall be
exercisable at any time on or after August 1, 2002, and shall expire at 5:00
p.m. (Pacific Time) on July 31, 2007, or, if such day in Las Vegas, Nevada,
shall be either a holiday or a day on which banks are authorized or obligated by
law to be closed, then at 5:00 p.m. (Pacific Time) on the next following
business day (the actual time of expiration of the Warrants is hereinafter
referred to as the "Expiration Date"). Any Warrants not exercised prior to the
Expiration Date shall become void and all rights of the Warrant Holders under
such Warrants and this Agreement shall cease.

                                       2
<PAGE>

         3.02 A Warrant Holder may exercise a Warrant, in whole or in part, by
surrendering such Warrant, with the exercise form thereon duly completed and
executed, to the Warrant Agent at its principal office in Las Vegas, Nevada, and
paying to the Warrant Agent, in lawful money of the United States of America in
cash or by bank cashier's check or bank draft, the Exercise Price for each Share
to be purchased. The date of the surrender of the Warrant, with exercise form
duly completed and executed, and payment of the Exercise Price, whichever occurs
last, shall be "Date of Exercise."

         3.03 Upon receipt of a Warrant with the exercise form thereon duly
executed, together with payment in full of the Exercise Price for the Shares for
which the Warrant is then being executed, the Warrant Agent shall issue (or, if
the Warrant Agent shall no longer be the transfer agent for the Shares, shall
requisition from any such transfer agent) certificates evidencing the total
number of whole Shares for which Warrants are then being exercised in such names
and denominations as are required for delivery upon exercise of the Warrant, and
the Warrant Agent shall thereupon deliver such certificates to, or in accordance
with the instructions of, the Warrant Holder. Such certificates for the Shares
will be deemed to be issued, and the person to whom such certificates are issued
of record shall be deemed to have become a holder of record of such Shares, as
of the Date of Exercise, provided that if the stock transfer books of the
Company with respect to the Shares shall be closed as of such date, the
certificates for such Shares shall be deemed to be issued, and the person to
whom such Shares are issued of record shall be deemed to have become a record
holder of such Shares, as of the date on which such books shall next be open,
but at the Exercise Price and upon the other conditions in effect upon the Date
of Exercise, and provided further that the stock transfer books of the Company
with respect to the Shares shall not be closed for any period in excess of
thirty (30) days. If less than all of the Shares evidenced by a Warrant are
purchased upon a single exercise, a new Warrant for the balance of the Shares
not so purchased shall be issued and delivered to, or in accordance with
transfer instructions properly given by, the Warrant Holder. Warrants
surrendered upon exercise shall be canceled.

         3.04 At such time as the Company has received executed Warrant exercise
forms as specified in Section 3.02 hereof, accompanied by payments for exercise
of Class A Warrants totaling not less than $100,000 in the aggregate, the
Company hereby undertakes and agrees to file with the Securities and Exchange
Commission ("SEC") a registration statement (the "Registration Statement") on
Form S-3, or other appropriate form available for the registration of securities
under the Securities Act of 1933, as amended (the "Securities Act"), covering
all 1,000,000 shares of Company common stock issued or issuable upon exercise of
the Class A Warrants. The Company shall use its reasonable best efforts to
obtain effectiveness of the Registration Statement, but the registration of the
shares underlying the Class A Warrants shall not be underwritten. In connection
with the registration of the shares the Company shall have the following
obligations:

                  (i) Once declared effective, the Company shall use reasonable
efforts to keep the registration statement effective pursuant to Rule 415 at all
times until such date as is the earlier of (i) the date on which all of the
Class A Warrants have been exercised and the shares underlying such Class A
Warrants have been issued without restrictive legend, and (ii) the date on which
the unexercised Class A Warrants (the "Class A Warrant Registration Period");

                                       3
<PAGE>

                  (ii) The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
registration statement and the prospectus used in connection with the
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the issuance or resale of all of the shares
issued or issuable upon exercise of the Class A Warrants;

                  (iii) The Company shall furnish to the holders of the Class A
Warrants and/or to the holders of shares issued upon exercise of the Class A
Warrants, such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act as such
persons may reasonably request in order to facilitate the disposition of the
resale of the shares issued or issuable upon exercise of the Class A Warrants;

                  (iv) The Company shall use reasonable efforts to register and
qualify the shares issued or issuable upon exercise of the Class A Warrants
under such other securities or "blue sky" laws of such jurisdictions in the
United States as the holders of the Class A Warrants and/or the holders of the
shares issued upon exercise of the Class A Warrants may reasonably request and
maintain such registrations and qualifications in effect during the Class A
Warrant Registration Period; PROVIDED, HOWEVER, that the Company shall not be
required in connection therewith or as a condition thereto to (i) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3.04(iv), (ii) subject itself to general taxation in any
such jurisdiction, (iii) file a general consent to service of process in any
such jurisdiction, (iv) provide any undertakings that cause the Company undue
expense or burden, or (v) make any change in its charter or bylaws.

                  (v) If, in the reasonable judgment of the Company it is
advisable to suspend use of the prospectus relating to the registration
statement for a discrete period of time (a "Deferral Period") due to pending
material corporate developments or similar material events that have not yet
been publicly disclosed and as to which the Company believes public disclosure
will be prejudicial to it, the Company shall deliver to the holders of the Class
A Warrants and to the holders of any restricted shares issued upon exercise of
Class A Warrants a notice in writing to the effect of the foregoing (but shall
not obligated to disclose to such persons the facts and circumstances giving
rise to the foregoing) and, upon receipt of such notice, each such Warrantholder
or shareholder shall be deemed to have agreed not to dispose of any shares
covered by the registration statement (other than in transactions exempt from
the registration requirements under the Securities Act) until advised in writing
by the Company that use of the prospectus may be resumed; PROVIDED, HOWEVER,
that no Deferral Period shall be more than thirty (30) consecutive days;
PROVIDED, FURTHER, that the aggregate number of days in any such Deferral
Periods shall be no more than sixty (60) in any 6-month period.

         3.05 At such time as the Company has received executed Warrant exercise
forms as specified in Section 3.02 hereof, accompanied by payments for exercise
of Class B Warrants totaling not less than $100,000 in the aggregate, the
Company hereby undertakes and agrees to file with the Securities and Exchange
Commission ("SEC") a registration statement (the "Registration Statement") on
Form S-3, or other appropriate form available for the registration of securities
under the Securities Act of 1933, as amended (the "Securities Act"), covering
all 500,000 shares of Company common stock issued or issuable upon exercise of
the Class B Warrants. The Company shall use its reasonable best efforts to
obtain effectiveness of the Registration Statement, but the registration of the
shares underlying the Class B Warrants shall not be underwritten. In connection
with the registration of the shares the Company shall have the following
obligations:

                  (i) Once declared effective, the Company shall use reasonable
efforts to keep the registration statement effective pursuant to Rule 415 at all
times until such date as is the earlier of (i) the date on which all of the
Class B Warrants have been exercised and the shares underlying such Class B
Warrants have been issued without restrictive legend, and (ii) the date on which
the unexercised Class B Warrants (the "Class B Warrant Registration Period");

                                       4
<PAGE>

                  (ii) The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to the
registration statement and the prospectus used in connection with the
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the issuance or resale of all of the shares
issued or issuable upon exercise of the Class B Warrants;

                  (iii) The Company shall furnish to the holders of the Class B
Warrants and/or to the holders of shares issued upon exercise of the Class B
Warrants, such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act as such
persons may reasonably request in order to facilitate the disposition of the
resale of the shares issued or issuable upon exercise of the Class B Warrants;

                  (iv) The Company shall use reasonable efforts to register and
qualify the shares issued or issuable upon exercise of the Class B Warrants
under such other securities or "blue sky" laws of such jurisdictions in the
United States as the holders of the Class B Warrants and/or the holders of the
shares issued upon exercise of the Class B Warrants may reasonably request and
maintain such registrations and qualifications in effect during the Class B
Warrant Registration Period; PROVIDED, HOWEVER, that the Company shall not be
required in connection therewith or as a condition thereto to (i) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3.05(iv), (ii) subject itself to general taxation in any
such jurisdiction, (iii) file a general consent to service of process in any
such jurisdiction, (iv) provide any undertakings that cause the Company undue
expense or burden, or (v) make any change in its charter or bylaws.

                  (v) If, in the reasonable judgment of the Company it is
advisable to suspend use of the prospectus relating to the registration
statement for a discrete period of time (a "Deferral Period") due to pending
material corporate developments or similar material events that have not yet
been publicly disclosed and as to which the Company believes public disclosure
will be prejudicial to it, the Company shall deliver to the holders of the Class
B Warrants and to the holders of any restricted shares issued upon exercise of
Class B Warrants a notice in writing to the effect of the foregoing (but shall
not obligated to disclose to such persons the facts and circumstances giving
rise to the foregoing) and, upon receipt of such notice, each such Warrantholder
or shareholder shall be deemed to have agreed not to dispose of any shares
covered by the registration statement (other than in transactions exempt from
the registration requirements under the Securities Act) until advised in writing
by the Company that use of the prospectus may be resumed; PROVIDED, HOWEVER,
that no Deferral Period shall be more than thirty (30) consecutive days;
PROVIDED, FURTHER, that the aggregate number of days in any such Deferral
Periods shall be no more than sixty (60) in any 6-month period.

         4. Adjustment of Exercise Price and Shares Purchasable.

         4.01 In the event, after the date of this Agreement, the Company shall
issue any Shares as a stock dividend or distribution or shall subdivide the
number of outstanding Shares into a greater number of Shares, then, in either of
such events, the Exercise Price in effect immediately prior to such action shall
be proportionately reduced and the number of Shares purchasable pursuant to each
outstanding Warrant shall be proportionately increased; and, conversely, in the
event that the Company shall reduce the number of outstanding Shares by
combining such Shares into a smaller number of Shares, then the Exercise Price
in effect immediately prior to such action shall be proportionately increased
and the number of Shares purchasable pursuant to each outstanding Warrant
proportionately reduced. Whenever the Exercise Price and such Shares are to be
proportionately reduced or increased pursuant to this Paragraph 4.01, such
reduction or increase shall be based upon the number of Shares outstanding (or
deemed to be outstanding in the case of a dividend paid or distributed in stock
or securities of any other class of securities convertible into Shares, as
provided below in Paragraph 4.02) immediately prior to and after such dividend
or subdivision.

         4.02 Any dividend or distribution on outstanding stock of the Company
in securities which by their terms are convertible into or exchangeable for, or
consist of any option or right to purchase Shares shall be treated as a stock
dividend or distribution of Shares to the extent Shares are deliverable upon
conversion, exchange, or exercise of such securities (whether or not such rights
of conversion, exchange, or purchase are immediately exercisable). Except as
provided below, no further adjustment to the Exercise Price and number of Shares
purchasable pursuant to each outstanding Warrant shall be made upon the actual
issue of Shares upon the conversion, exchange, or exercise of such securities.
Upon the redemption or repurchase of such securities or the expiration or
termination of the right to convert into, exchange for, or exercise with respect
to, Shares, the Exercise Price and number of Shares purchasable pursuant to each
outstanding Warrant shall be readjusted to such price and number as would have
been obtained had the adjustment in the Exercise Price and number of Shares
purchasable pursuant to each outstanding Warrant been made upon the issuance of
only such Shares as were actually issued upon the conversion, exchange, or

                                       5
<PAGE>

exercise of such securities. If the purchase price or conversion or exchange
rate provided for in any such security shall change or a different purchase
price or rate shall become effective at any time, then, upon such change
becoming effective, the Exercise Price then in effect and number of Shares
purchasable pursuant to each outstanding Warrant shall be readjusted to such
price as would have been obtained had the adjustment made upon the issuance of
such securities been made upon the basis of (i) the issuance of only the number
of Shares theretofore actually delivered upon the conversion, exchange, or
exercise of such securities, and (ii) the Shares deliverable, immediately after
such change, upon the conversion, exchange, or exercise of such securities then
still outstanding. No readjustment provided for herein shall, when taken
together with any other readjustments attributable to the same securities,
increase any Exercise Price, or decrease Shares purchasable pursuant to each
outstanding Warrant, by an amount in excess of the total of all decreases of
such Price and increases in such number made prior to the date of such
readjustment pursuant to adjustments made upon issuance of or subsequent changes
with respect to such securities.

         4.03 In the event of any capital reorganization or reclassification of
the capital stock of the Company, any consolidation or merger of the Company
with or into another corporation (other than a merger with a subsidiary after
which the Company is the continuing corporation and which does not result in any
capital reorganization or other change of outstanding Shares), or any sale,
lease, or conveyance of all or substantially all of the assets of the Company,
that is effected in such a manner that holders of Shares are entitled to receive
securities and/or other property (including cash) with respect to or in exchange
for their Shares, the Company shall, as a condition precedent to such
transaction, cause effective provision to be made so that the Warrant Holders
shall have the right thereafter, by exercising their outstanding Warrants, to
purchase the kind and amount of securities and/or other property receivable upon
such event, as if such Warrant Holders had exercised the Warrants in full
immediately prior to such event. Any such provision shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 4. If, as a result of an adjustment
made pursuant to this Section, the Holder of any Warrant thereafter exercised
shall become entitled to receive shares of two or more classes of capital stock
of the Company or any other corporation or entity, the board of directors (or
other governing body if there is no board of directors) thereof (whose
determination shall be conclusive and shall be described in a certificate filed
with the Warrant Agent) shall determine the allocation of the adjusted Exercise
Price between or among shares of such classes of capital stock. In the event of
any subsequent adjustments to the Exercise Price pursuant to this Section, such
adjustments shall be made separately to the portion of the Exercise Price so
allocated to each of such classes of capital stock. The foregoing provisions of
this subsection similarly apply to successive capital reorganizations,
reclassifications, consolidations, mergers, sales, leases, or conveyances.

         4.04 Whenever the Exercise Price is adjusted as provided in this
Section:

                  (a)      The Company shall compute the adjusted Exercise Price
                           and the adjusted number of Shares issuable upon
                           exercise of the Warrants in accordance with this
                           Section and shall prepare a certificate signed by a
                           duly authorized officer of the Company setting forth
                           the adjusted Exercise Price and the adjusted number
                           of Shares issuable upon exercise of the Warrants, and
                           showing in reasonable detail the facts upon which
                           such adjustment is based. Such certificate shall
                           forthwith be filed with the Warrant Agent; provided,
                           however, that the Warrant Agent shall have no duty
                           with respect to any such certificate filed with it
                           except to keep the same on file and available for
                           inspection by Warrant Holders during reasonable
                           hours;

                  (b)      the Company shall cause to be mailed to the Warrant
                           Holders a notice stating that the Exercise Price and
                           the number of Shares purchasable upon exercise of the
                           Warrants have been adjusted and setting forth the
                           adjusted Exercise Price and the adjusted number of
                           Shares purchasable upon exercise; and

                  (c)      the Warrant Agent may, but shall have no obligation
                           to, inquire with respect to the existence of
                           circumstances, which might require an adjustment
                           under this Section.

                                       6
<PAGE>

         4.05 The form of Warrant Certificate need not be changed because of any
adjustment in the Exercise Price or the number of Shares issuable upon the
exercise of a Warrant. The Company may, however, at any time in its sole
discretion, make any change in the form of Warrant Certificate that it may deem
appropriate and that does not affect the substance thereof, and any Warrants
thereafter issued or countersigned may be in the form as so changed.

         5. No Fractional Shares. Notwithstanding any other provision of this
Agreement or any Warrant, the Company shall not be required to issue fractions
of Shares upon exercise of the Warrants or to distribute certificates which
evidence fractional Shares. If two or more Warrants are surrendered for exercise
at one time by the same Warrant Holder, the number of full Shares issuable upon
exercise thereof shall be computed on an aggregate basis. In lieu of any
fraction of a Share to which any Warrant Holder would otherwise be entitled upon
exercise of any Warrant, the Company shall pay to or in accordance with the
instructions of the Warrant Holder exercising such Warrant an amount in cash
equal to the same fraction of the closing price of the Shares on the last
trading day price to the Date of Exercise, or, if there is no closing price
within 30 days of the Date of Exercise, an amount, not less than book value,
determined in such reasonable manner as may be prescribed by the Board of
Directors of the Company. For purposes of this Section, the closing price on any
date shall be deemed to be the average of the daily closing prices for the
Shares for 30 consecutive trading days immediately prior to such date.

         6. Notices to Warrant Holders. If at any time after the date of this
Agreement, the Company shall:

                  (a)      declare any dividend or other distribution upon
                           Shares (except dividends payable in cash out of
                           retained earnings of the Company and except dividends
                           payable in Shares);

                  (b)      propose to offer for subscription to the holders of
                           Shares any additional shares of stock of any class or
                           any other securities convertible into shares of
                           stock, or any rights to subscribe thereto;

                  (c)      propose to effect any capital reorganization or
                           reclassification of the capital stock of the Company
                           (other than a change in par value or as a result of a
                           subdivision or combination of Shares), any sale,
                           lease, or conveyance of all or substantially all of
                           the assets of the Company, or any consolidation or
                           merger of the Company with or into another
                           corporation (other than a merger with a subsidiary in
                           which the Company will be the continuing corporation
                           and which will not result in any reclassification or
                           change of the Shares issuable upon exercise of the
                           Warrants); or

                  (d)      propose to effect any capital or involuntary
                           dissolution, liquidation, or winding up of the
                           Company, then in any such case the Company shall
                           cause notice thereof to be sent to each Warrant
                           Holder, at the earliest practicable time (and in any
                           event not less than 20 days before the date on which
                           the books of the Company shall close or a record
                           shall be taken for such distribution or subscription

                                       7
<PAGE>

                           rights or for determining rights to vote in respect
                           of any such event, or at least 20 days prior to the
                           date such event is to take place, if no record or
                           shareholder action is to be taken). Such notice shall
                           also set forth such facts as shall indicate the
                           effect of such notice on the Exercise Price and the
                           number and character of the Shares purchasable upon
                           exercise of the Warrants before and after any
                           adjustment for the occurrence of such event. The
                           failure of the Company to give any notice required by
                           this Section 6 shall not invalidate any corporate
                           action taken by the Company.

         7. Registration of Transfers; Exchange and Replacement of Warrant.

         7.01 Subject to any restrictions on transfer pursuant to Paragraph
2.03, the Warrant Agent shall from time to time register the transfer of any
outstanding Warrant upon records to be maintained by the Warrant Agent for such
purpose, upon surrender of such Warrant to the Warrant Agent for transfer,
accompanied by appropriate instruments of transfer in form satisfactory to the
Company and the Warrant Agent and duly executed by the Warrant Holder or a duly
authorized attorney. Upon any such registration of transfer, a new Warrant shall
be issued in the name of and to the transferee and the surrendered Warrant shall
be canceled.

         7.02 If any Warrant is lost, stolen, mutilated, or destroyed, the
Company and the Warrant Agent may, on such terms regarding indemnification and
other matters as they may in their discretion impose (which shall, in the case
of a mutilated Warrant, include the surrender thereof), issue and countersign a
new Warrant of like denomination as the Warrant so lost, stolen, mutilated, or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated,
or destroyed Warrant shall be at any time enforceable by any person.

         8. Warrant Holders not Shareholders. Nothing contained in this
Agreement or in any Warrant shall be construed to confer upon any Warrant
Holder, as such, any of the rights of a shareholder of the Company or any right
to vote on or give or withhold consent to any corporate action of the Company,
receive notice of meetings or other action affecting shareholders of the Company
(except as otherwise expressly provided herein), receive dividends or
subscription rights, or otherwise, until the Date of Exercise, except as
expressly provided in this Agreement. No Warrant Holder shall, upon the exercise
of a Warrant, be entitled to any dividends that may have accrued with respect to
the Company's issued and outstanding shares of Common Stock prior to the Date of
Exercise.

         9. Payment of Taxes. The Company shall pay all taxes, which may be
imposed in respect of any initial issuance of Shares upon exercise of Warrants.
Any stock transfer tax which may be payable in respect of any transfer involved
in the issue of any Warrants or in the issue of any certificates for Shares in a
name other than that of the registered Warrant Holder upon the exercise of any
Warrant shall be paid by the person surrendering such Warrant for transfer.

         10. Reservation of Shares.

         10.01 The Company shall at all times reserve and keep available, free
from preemptive rights, out of the aggregate of its authorized Shares, for the
purpose of enabling it to satisfy any obligation to issue Shares upon exercise
of Warrants, the full number of Shares issuable upon the exercise of all
outstanding Warrants. The Company covenants that all Shares which may be issued
upon exercise of the Warrants shall upon issue be fully paid and nonassessable,
and free from all taxes, liens, charges, and security interests with respect to
the issue thereof.

                                       8
<PAGE>

         10.02 If the taking of any action would cause an adjustment in the
Exercise Price so that the exercise of a Warrant while such Exercise Price is in
effect would cause a Share to be issued at a price below its then par value, the
Company shall take such action as may, in the opinion of its counsel, be
necessary in order that it may validly and legally issue fully paid and
nonassessable Shares upon exercise of the Warrants.

         11. Compliance with Stock Exchange and Governmental Requirements.

         11.01 If any Shares required to be reserved for issuance upon exercise
of Warrants hereunder require listing upon any national securities exchange
before such Shares may be issued upon such exercise, the Company will in good
faith and as expeditiously as possible endeavor to cause such Shares to be duly
listed.

         11.02 If any Shares issuable upon exercise of any Warrant require
registration or approval of any governmental authority (other than registration
under the Securities Act of 1933 as required under Section 3.04 or 3.05 hereof),
or the taking of any other action under applicable laws before the Shares may be
validly and lawfully issued, the Company will, in good faith and as
expeditiously as practicable after surrender of the Warrant to the Warrant
Agent, endeavor to secure such registration or approval or to take such other
action; provided that in no event shall Shares be issued, and the Company shall
have the authority to suspend the exercise of all Warrants, until such
registration or approval shall have been obtained or such other action shall
have been taken. All Warrants as to which an exercise is requested during such
suspension shall be exercisable at the Exercise Price and upon the other
conditions in effect on the date of surrender of the Warrant and payment of the
Exercise Price (whichever is later). If any such period of suspension continues
past the Expiration Date, the Warrant Agent shall recognize the exercise of all
Warrants, as to which there has been a request for exercise on or prior to the
Expiration Date, upon the removal of such suspension.

         12. Warrant Agent.

         12.01 The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the Company's covenants contained in this
Agreement or in the Warrants.

         12.02 The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any Warrant
Holder in respect of any action taken, suffered, or omitted by it hereunder in
good faith and in accordance with the opinion or advice of such counsel,
provided the Warrant Agent shall have exercised reasonable care in the selection
and continued employment of such counsel. The Warrant Agent shall incur no
liability or responsibility to the Company or to any Warrant Holder for any
action taken in reliance on any notice, resolution, waiver, consent, order,
certificate, or other paper, document, or instrument believed by it to be
genuine and to have been signed, sent, or presented by the proper party or
parties.

                                       9
<PAGE>

         12.03 The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent pursuant to this
Agreement, to reimburse the Warrant Agent for all expenses, taxes, and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent pursuant to this Agreement, and to indemnify the Warrant Agent and
save it harmless against any and all liability, loss, damage, or expense,
including reasonable attorneys' fees, incurred by reason of anything done or
omitted by the Warrant Agent in the execution of this Agreement except as a
result of the Warrant Agent's gross negligence or bad faith.

         12.04 The Warrant Agent shall be under no obligation to institute any
action, suit, or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more Warrant Holders shall furnish the
Warrant Agent with reasonable security and indemnity for any costs and expenses
which may be incurred, but this provision shall not affect the power of the
Warrant Agent to take such action as the Warrant Agent may consider proper, with
or without any such security or indemnity. All rights of action under this
Agreement or under any of the Warrants may be enforced by the Warrant Agent
without the possession of any of the Warrants or the production thereof at any
trial or other proceeding relative thereto, and any such action, suit, or
proceeding instituted by the Warrant Agent shall be brought in its name as
Warrant Agent, and any recovery of judgment shall be for the pro-ratable benefit
of the Warrant Holders as their respective rights or interests may appear.

         12.05 The Warrant Agent and any stockholder, director, officer, or
employee of the Warrant Agent may buy, sell, or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant
Agent from acting in any other capacity for the Company or for any other legal
entity.

         12.06 The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be determined solely by the provisions hereof.

         12.07 Any corporation into which the Warrant Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion, or consolidation to which the Warrant Agent shall
be a party, or any corporation succeeding to the corporate trust business of the
Warrant Agent, shall be the successor to the Warrant Agent hereunder without the
execution or filing of any paper or any further act on the part of the parties
hereto, provided that such corporation would be eligible for appointment as
successor Warrant Agent under the provisions of Section 13 of this Agreement.

         13. Change of Warrant Agent. The Warrant Agent may resign and be
discharged from its duties under this Agreement by giving to the Company notice
in writing, and by giving notice in writing to each Warrant Holder at his
address appearing in the Warrant register, specifying a date when such
resignation shall take effect, which notice shall be sent at least 30 days prior
to the date so specified. If the Warrant Agent shall resign or shall otherwise
become incapable of acting, the Company shall appoint a successor to the Warrant
Agent. If the Company shall fail to make such appointment within a period of 30
days after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Warrant Agent or by any Warrant Holder, then any
Warrant Holder may apply to any court of competent jurisdiction for the

                                       10
<PAGE>

appointment of a successor to the Warrant Agent. Pending appointment of a
successor to the Warrant Agent, either by the Company or by such court, the
duties of the Warrant Agent shall be carried out by the Company. Any successor
Warrant Agent, whether appointed by the Company or by such a court, shall be a
bank or trust company, or a stock transfer company in good standing, organized
under the laws of the State of Nevada or another state of the United States of
America and having its principal office in the United States of America. After
appointment, the successor Warrant Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Warrant Agent without further act or deed and the former Warrant Agent shall
deliver and transfer to the successor Warrant Agent any property at the time
held by it hereunder, and execute and deliver any further assurance, conveyance,
act or deed necessary for the purpose. Failure to give any notice provided for
in this Section, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Warrant Agent or the appointment
of the successor Warrant Agent, as the case may be.

         14. Notices. Any notice, request, consent, communication or demand
authorized by this Agreement to be given or made hereunder shall be in writing
and shall be deemed to have been sufficiently given or made if sent by mail,
first class or registered with postage prepaid, addressed as follows:

         If to a Warrant Holder:   to the address of such Warrant Holder as
                                   shown on the registry books maintained by the
                                   Warrant Agent. A Warrant Holder may change
                                   his address of record by giving notice to the
                                   Company and Warrant Agent hereunder.

         If to the Company:        30 Sembrado, Rancho Santa Margarita,
                                   California 92688, or at such other address as
                                   may have been furnished to the Warrant Agent
                                   in writing by the Company.

         If to the Warrant Agent:  5844 S. Pecos, Suite D, Las Vegas, Nevada
                                   89120, or at such other address as may have
                                   been furnished to the Company in writing by
                                   the Warrant Agent.

         15. Supplements and Amendments.

         15.01 The Company and the Warrant Agent may from time to time
supplement or amend this Agreement without the approval of any Warrant Holders,
in order to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Warrant Agent may deem
necessary or desirable and which shall not in any manner adversely affect the
interests of the Warrant Holders.

         15.02 With the consent of the Holders of Warrants representing the
right to purchase at least two-thirds of the Shares subject to all then
outstanding Warrants, the Warrant Agent and the Company may make any other
amendment in this Agreement, provided that no such change may shorten the time
of exercise of any Warrant or increase the Exercise Price without the consent of
each affected Warrant Holder. Consent of the Warrant Holders under this

                                       11
<PAGE>

Paragraph shall be evidenced by either (a) consents in writing to the amendment,
executed by the Warrant Holders and notarized or acknowledged (any consent so
given in respect of a particular Warrant shall be binding upon any subsequent
owner thereof) or (b) by the affirmative vote of the Holders of Warrants
representing the right to purchase at least two-thirds of the Shares subject to
all then outstanding Warrants, at a meeting of Warrant Holders called by the
Company or the Warrant Agent and held at such time and place as may be specified
in a notice of the meeting to be mailed to each Warrant Holder not less than
thirty (30) days nor more than forty-five (45) days prior to the date set for
the meeting. The Company or the Warrant Agent may establish a reasonable record
date for the determination of Warrant Holders entitled to vote at any meeting of
Warrant Holders and may make reasonable regulations for the conduct of such
meeting. Proxies may be used at any such meeting in the same manner as is
provided in the Company's bylaws with respect to proxies for meetings of its
stockholders. The Company shall not request or solicit the written consent of
any Warrant Holder to any action hereunder without giving written notice of such
request or solicitation to all Warrant Holders.

         16. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Nevada.

         17. Inspection of Agreement. A copy of this Agreement shall be
available at all reasonable times at the principal office of the Warrant Agent
at 5844 S. Pecos, Suite D, Las Vegas, Nevada, for inspection by any Warrant
Holder, provided the Warrant Agent may require any Warrant Holder to submit his
Warrant prior to permitting such inspection.

         IN WITNESS WHEREOF, the parties have caused this Warrant Agreement to
be executed as of the date first above written.

THE COMPANY:                                 THE WARRANT AGENT:

ALD Services, Inc.                           Pacific Stock Transfer Company

By: /s/ Thomas K. Russell                    By: /s/ Shelly Godfrey
    ------------------------------               -------------------------------
      Thomas K. Russell

Title: President                             Title: President
    ------------------------------               -------------------------------

                                       12
<PAGE>

                                    EXHIBIT A

                     CLASS A WARRANT CERTIFICATE NO. WA-001

                                ALD SERVICES, INC
                             (A NEVADA CORPORATION)

                           CLASS A WARRANT CERTIFICATE

                            [______] CLASS A WARRANTS
                        FOR THE PURCHASE OF COMMON STOCK

                            CUSIP NUMBER 001608 10 8

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAWS OF ANY
         STATE AND ARE RESTRICTED SECURITIES AS THAT TERM IS DEFINED IN RULE 144
         UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE OFFERED
         FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
         REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM
         REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE
         ESTABLISHED TO THE SATISFACTION OF THE COMPANY.

         THIS CERTIFIES THAT, for value received, ________________,
("Warrantholder"), is the registered owner of the above-stated number of Class A
Warrants ("Class A Warrants") of ALD SERVICES, INC., a Nevada corporation
("Company"), expiring on July 31, 2007, unless previously exercised or extended
("Expiration Date"). Subject to the limitations as described below, each Class A
Warrant entitles the Warrantholder to purchase one share of the common stock
$0.001 par value ("Common Stock" or "Shares"), of the Company, at a purchase
price of $6.00 per Share ("Exercise Price"), at any time beginning August 1,
2002 and until to the Expiration Date, upon surrender of this Certificate with
the exercise form attached hereto duly completed and executed, accompanied by
payment of the Exercise Price, to Pacific Stock Company, ("Warrant Agent"), 5844
S. Pecos, Suite D, Las Vegas, Nevada 89120. This Certificate and exercise of
these Class A Warrants will be subject to the provisions of the Warrant
Agreement dated April 2, 2002, ("Warrant Agreement"), between the Company and
the Warrant Agent, to which provisions the Warrantholder agrees by acceptance of
this Certificate. The provisions of the Warrant Agreement are fully incorporated
by reference into this Certificate as if fully set forth herein.

         If all Class A Warrants represented by this Certificate shall not have
been duly exercised on or before the Expiration Date, as it may be extended, the
unexercised Class A Warrants shall expire and this Certificate shall become
void. The Expiration Date may be extended from time to time for an indefinite
period, or the Exercise Price may be reduced, at the discretion of the Company
upon giving notice thereof to the Warrant Agent and giving subsequent notice
thereof to holders of Class A Warrants then listed on its books.

                                       13
<PAGE>

         The Warrantholder may exercise all or any of the Class A Warrants in
the manner and during the period stated above, but only for an even number of
Shares if less than all are exercised, upon due presentment of this Certificate
to the Warrant Agent. The Exercise Price must be paid in lawful money of the
United States of America, in cash or by personal check, bank check or certified
check payable to the order of the Company. If fewer than all of the above number
of Class A Warrants are exercised, the Warrant Agent shall execute and deliver
to the Warrantholder a new Class A Warrant certificate of like tenor evidencing
the number of Class A Warrants not exercised. Should any or all the Class A
Warrants be assigned, then upon due presentment of this Certificate by the
assignee to the Warrant Agent accompanied by payment of the transfer fee
specified from time to time by the Warrant Agent, and by payment of all transfer
taxes and other governmental charges due, if any, the Warrant Agent shall
transfer the Class A Warrants assigned on the transfer books and shall (subject
to the Warrant Agreement) execute and deliver to the assignee a Class A Warrant
certificate of like tenor representing the number of Class A Warrants assigned,
and if less than all of the Class A Warrants are assigned, execute and deliver
to the Warrantholder a Class A Warrant certificate of like tenor representing
the number of Class A Warrants not assigned.

         These Class A Warrants shall not entitle the Warrantholder to any of
the rights of stockholders or to any dividend declared upon the Common Stock
unless the Warrantholder shall have exercised these Class A Warrants and
purchased the Shares of Common Stock prior to the record date fixed by the Board
of Directors of the Company for the determination of holders of Common Stock
entitled to such dividend or other right. Holders of Class A Warrants are
protected against dilution of their interests represented by the underlying
shares of Common Stock upon the occurrence of stock dividends, stock splits or
reclassifications of the Common Stock, as provided in the Warrant Agreement.

         This Certificate shall not be valid unless countersigned by the Warrant
Agent.

         WITNESS the facsimile seal of the Company and the facsimile signature
of its duly authorized officer this 2nd day of April, 2002.

                                              ALD SERVICES, INC.

                                              By:
                                                  ------------------------------
                                                  Thomas K. Russell, President

COUNTERSIGNED:

PACIFIC STOCK TRANSFER COMPANY
5844 S. Pecos, Suite D
Las Vegas, Nevada 89120.

By:
    -----------------------------
         Authorized Signature

                                       14
<PAGE>

                          CLASS A WARRANT EXERCISE FORM

                               ALD SERVICES, INC.

         Date: ____________________, 20___

         The Undersigned hereby elects irrevocably to exercise the within Class
A Warrant and to purchase ________ shares of Common Stock of the Company called
for thereby, and hereby makes payment of $_____________ (at the rate of $6.00
per share of Common Stock) payable to ALD Services, Inc., in payment of the
Exercise Price pursuant thereto and, if such number of shares shall not be all
of the shares purchasable hereunder, directs that a new Class A Warrant
Certificate of like tenor for the balance of the remaining shares purchasable
hereunder be delivered to the undersigned at the address stated below. Please
issue the shares of Common Stock as to which this Class A Warrant is exercised
in accordance with the instructions given below.

                                             Signature:
                                                       -------------------------

                                             Signature Guaranteed:
                                                                  --------------

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

INSTRUCTIONS FOR REGISTRATION OF STOCK

Name
    ------------------------------------
         (Print in Block Letters)

Address
       ---------------------------------

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

                                       15
<PAGE>

                                   ASSIGNMENT
                    (To be executed by the registered Holder
                   to effect a transfer of the within Warrant)

         FOR VALUE RECEIVED, _______________________________________ does hereby
sell, assign and transfer unto __________________________________________ the
right to purchase _____________ shares of the Common Stock of the Company
evidenced by the within Warrant, and does hereby irrevocably constitute and
appoint ____________________________ ______________________attorney to transfer
such right on the books of the Company with full power of substitution in the
premises.

         Dated:____________________, 20__

                                            Signature:
                                                      --------------------------

                                            Signature Guaranteed:
                                                                 ---------------

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

                               * * * * * * * * * *

NOTICE:  The signature to this Assignment must correspond with the name as
         written upon the face of the within Warrant in every particular without
         alteration or enlargement or any change whatsoever, and must be
         guaranteed by a bank, other than a savings bank, or by a trust company
         or by a firm having membership on a registered national securities
         exchange.

                                       16
<PAGE>

                                    EXHIBIT B

                      CLASS B WARRANT CERTIFICATE NO WB-001

                                ALD SERVICES, INC
                             (A NEVADA CORPORATION)

                           CLASS B WARRANT CERTIFICATE

                            [______] CLASS B WARRANTS
                        FOR THE PURCHASE OF COMMON STOCK

                            CUSIP NUMBER 001608 10 8

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAWS OF ANY
         STATE AND ARE RESTRICTED SECURITIES AS THAT TERM IS DEFINED IN RULE 144
         UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE OFFERED
         FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
         REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO AN EXEMPTION FROM
         REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE
         ESTABLISHED TO THE SATISFACTION OF THE COMPANY.

         THIS CERTIFIES THAT, for value received, ___________________,
("Warrantholder"), is the registered owner of the above-stated number of Class B
Warrants ("Class B Warrants") of ALD SERVICES, INC., a Nevada corporation
("Company"), expiring on July 31, 2007, unless previously exercised or extended
("Expiration Date"). Subject to the limitations as described below, each Class B
Warrant entitles the Warrantholder to purchase one share of the common stock
$0.001 par value ("Common Stock" or "Shares"), of the Company, at a purchase
price of $12.00 per Share ("Exercise Price"), at any time beginning August 1,
2002 and until to the Expiration Date, upon surrender of this Certificate with
the exercise form attached hereto duly completed and executed, accompanied by
payment of the Exercise Price, to Pacific Stock Company, ("Warrant Agent"), 5844
S. Pecos, Suite D, Las Vegas, Nevada 89120. This Certificate and exercise of
these Class B Warrants will be subject to the provisions of the Warrant
Agreement dated April 2, 2002, ("Warrant Agreement"), between the Company and
the Warrant Agent, to which provisions the Warrantholder agrees by acceptance of
this Certificate. The provisions of the Warrant Agreement are fully incorporated
by reference into this Certificate as if fully set forth herein.

         If all Class B Warrants represented by this Certificate shall not have
been duly exercised on or before the Expiration Date, as it may be extended, the
unexercised Class B Warrants shall expire and this Certificate shall become
void. The Expiration Date may be extended from time to time for an indefinite
period, or the Exercise Price may be reduced, at the discretion of the Company
upon giving notice thereof to the Warrant Agent and giving subsequent notice
thereof to holders of Class B Warrants then listed on its books.

                                       17
<PAGE>

         The Warrantholder may exercise all or any of the Class B Warrants in
the manner and during the period stated above, but only for an even number of
Shares if less than all are exercised, upon due presentment of this Certificate
to the Warrant Agent. The Exercise Price must be paid in lawful money of the
United States of America, in cash or by personal check, bank check or certified
check payable to the order of the Company. If fewer than all of the above number
of Class B Warrants are exercised, the Warrant Agent shall execute and deliver
to the Warrantholder a new Class B Warrant certificate of like tenor evidencing
the number of Class B Warrants not exercised. Should any or all the Class B
Warrants be assigned, then upon due presentment of this Certificate by the
assignee to the Warrant Agent accompanied by payment of the transfer fee
specified from time to time by the Warrant Agent, and by payment of all transfer
taxes and other governmental charges due, if any, the Warrant Agent shall
transfer the Class B Warrants assigned on the transfer books and shall (subject
to the Warrant Agreement) execute and deliver to the assignee a Class B Warrant
certificate of like tenor representing the number of Class B Warrants assigned,
and if less than all of the Class B Warrants are assigned, execute and deliver
to the Warrantholder a Class B Warrant certificate of like tenor representing
the number of Class B Warrants not assigned.

         These Class B Warrants shall not entitle the Warrantholder to any of
the rights of stockholders or to any dividend declared upon the Common Stock
unless the Warrantholder shall have exercised these Class B Warrants and
purchased the Shares of Common Stock prior to the record date fixed by the Board
of Directors of the Company for the determination of holders of Common Stock
entitled to such dividend or other right. Holders of Class B Warrants are
protected against dilution of their interests represented by the underlying
shares of Common Stock upon the occurrence of stock dividends, stock splits or
reclassifications of the Common Stock, as provided in the Warrant Agreement.

         This Certificate shall not be valid unless countersigned by the Warrant
Agent.

         WITNESS the facsimile seal of the Company and the facsimile signature
of its duly authorized officer this 2nd day of April, 2002.

                                            ALD SERVICES, INC.

                                            By:
                                                --------------------------------
                                                Thomas K. Russell, President

COUNTERSIGNED:
PACIFIC STOCK TRANSFER COMPANY
5844 S. Pecos, Suite D
Las Vegas, Nevada 89120.

By:
    -----------------------------
         Authorized Signature

                                       18
<PAGE>

                          CLASS B WARRANT EXERCISE FORM

                               ALD SERVICES, INC.

         Date: ____________________, 20___

         The Undersigned hereby elects irrevocably to exercise the within Class
B Warrant and to purchase ________ shares of Common Stock of the Company called
for thereby, and hereby makes payment of $_____________ (at the rate of $12.00
per share of Common Stock) payable to ALD Services, Inc., in payment of the
Exercise Price pursuant thereto and, if such number of shares shall not be all
of the shares purchasable hereunder, directs that a new Class B Warrant
Certificate of like tenor for the balance of the remaining shares purchasable
hereunder be delivered to the undersigned at the address stated below. Please
issue the shares of Common Stock as to which this Class B Warrant is exercised
in accordance with the instructions given below.

                                            Signature:
                                                      --------------------------

                                            Signature Guaranteed:
                                                                 ---------------

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

INSTRUCTIONS FOR REGISTRATION OF STOCK

Name
    -------------------------------------
         (Print in Block Letters)

Address
       ----------------------------------

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

                                       19
<PAGE>

                                   ASSIGNMENT
                    (To be executed by the registered Holder
                   to effect a transfer of the within Warrant)

         FOR VALUE RECEIVED, _______________________________________ does hereby
sell, assign and transfer unto __________________________________________ the
right to purchase _____________ shares of the Common Stock of the Company
evidenced by the within Warrant, and does hereby irrevocably constitute and
appoint ____________________________ ______________________attorney to transfer
such right on the books of the Company with full power of substitution in the
premises.

         Dated:____________________, 20__

                                             Signature:
                                                       -------------------------

                                             Signature Guaranteed:
                                                                  --------------

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

                               * * * * * * * * * *

NOTICE:  The signature to this Assignment must correspond with the name as
         written upon the face of the within Warrant in every particular without
         alteration or enlargement or any change whatsoever, and must be
         guaranteed by a bank, other than a savings bank, or by a trust company
         or by a firm having membership on a registered national securities
         exchange.

                                       20

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