Document:

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EXHIBIT 10.38

                                 HIGHLANDS PLAZA
                            STANDARD OFFICE BUILDING
                                 LEASE AGREEMENT

         THIS LEASE is executed at San Diego, California, on December 14, 1992,
by and between BURNHAM PACIFIC PROPERTIES, INC., A CALIFORNIA CORPORATION, (THE
"LESSOR") AND Applied Retail Solutions, Inc. (the "Lessee").

1. DESCRIPTION OF PREMISES

         1.1 Lessor hereby Leases to Lessee and Lessee hereby hires from
ur-&uant to the terms, covenants, conditions and uses herein set forth,
approximate) 6,186 rentable square feet on the third floor known as Suite 335 of
the Building located at the co ess of 12707 High Bluff Drive, more particularly
described in the floor plan set forth in Exhibit "A" attached hereto (the
"Premises"), reserving to Lessor, however, the use of the exterior walls and the
right to install, maintain, use, repair and replace pipes, ducts, conduits, and
wires through the Premises in locations which will not materially interfere with
Lessee's use thereof.

         1.2 The Premises shall be improved with certain improvements (the
"Improvements") in accordance with plans and specifications approved by Lessee
and Lessor in writing. A general description of the Improvements are more fully
described in Exhibit "C". Lessor shall be responsible for improving the Premises
as described in Exhibit "C".

2. TERM

         2.1 The term of this Lease shall be for eighty-four (84) months
commencing on the earlier of (i) the date which is ten (10) days after Lessor
notifies Lessee that the Premises are ready for occupancy, or (ii) the date on
which Lessee shall take occupancy of the Premises (the "Commencement Date"). The
anticipated date on which the term shall commence is May 1, 1993.

         2.2 If Lessee shall occupy the Premises on other than the first day of
a month, the term of this Lease shall be extended by the number of days
remaining in the first calendar month of occupancy.

         2.3 Notwithstanding the anticipated Commencement Date set forth in
Section 2.1, if Lessor, for any reason, cannot deliver possession of the
Premises to Lessee on said date, Lessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease or the
obligations of Lessee hereunder; provided that, Lessee shall not be obligated to
pay rent until possession of the Premises is tendered to Lessee.

         2.4 In the event Lessor shall not have delivered possession of the
Premises within three (3) months from the Commencement Date set forth in Section
2.1, at Lessee's option to be exercised within ten (10) days after the
expiration of said three-month period, this Lease shall terminate and, upon
Lessor's return of any monies previously deposited by Lessee, the parties shall
have no further rights or liabilities towards each other.

         ;, 2.5 Lessee and Lessor agree to execute a supplemental agreement
within ten (10) days after receipt in the form requested by Lessor which shall
confirm the Commencement and Termination dates of This Lease once such dates are
known.

3. RENT

         3.1 Lessee shall pay to Lessor at the address set forth in Paragraph
30, or such other address as Lessor may advise Lessee in writing, without
deduction, offset or prior notice or demand, and Lessor shall accept, as rent
for the Premises the "Base Monthly Rental" outlined in Section 3.1.1 below. Said
monthly installments shall hereinafter be referred to as the "Base Monthly
Rental" and shall be due on the first of each month. Lessee shall deliver to
Lessor the Base Monthly Rental for the first month of the term thereof upon
execution and delivery of this Lease.

                                       -1-
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                  3.1.1 The "Base Monthly Rental", net of utilities, is as
follows:

                     Year                                      Rate
                       1                                    $18,775.76
                       2                                    $19,585.06
                       3                                    $20,394.36
                       4                                    $21,203.66
                       5                                    $22,012.96
                       6                                    $22,822.26
                       7                                    $23,631.56

         3.2 In the event that the date of entry by Lessee is not on the first
day of the month, Lessee shall pay-to Lessor prior to the first day of the first
full calendar month of occupancy, in lieu of the Base Monthly Rental, an amount
equal to the Base Monthly Rental multiplied by a factor having as its numerator
the number of days remaining in the month and as its denominator the number
thirty. Thereafter, rent shall be payable in accordance with the terms of
Section 3.1. The total consideration for the term of this Lease shall be
increased by the amount of the installment required by this Section 3.2.

         3.3 Lessee shall pay, if required, as additional rent, excess operating
expenses as defined in Section 11.3.

         3.4 Lessee acknowledges that late payment by Lessee to Lessor of the
Base Monthly Rental or other charges incurred under this Lease will cause Lessor
to incur costs not contemplated by this Lease, the exact amount of such costs
being extremely difficult and impractical to fix. Such costs include, without
limitation, processing, administrative and accounting charges, and late charges
that may be imposed on Lessor by the terms of any note secured by the mortgage
encumbering the Premises. If any payment of Base Monthly Rental, Excess
Operating Expenses, or other charges due from Lessee is not received by Lessor
when due, on the first day of the month or within ten (10) days, Lessee shall
pay to Lessor an additional sum of the greater of (a) six percent (6%) of the
overdue rent, or (ii) one hundred dollars ($100.00) as a late charge. The
parties agree that the late charge represents a fair and reasonable estimate of
the costs that Lessor will incur by reason of late payment by Lessee. Acceptance
of any late charge shall not constitute a waiver of Lessee's default with
respect to the overdue amount, or prevent Lessor from exercising any of the
other rights and remedies available to Lessor hereunder.

         3.5 Lessee shall deposit with Lessor the sum of Twenty-One Thousand Two
Hundred Three and 66/100 Dollars ($21,203.66), receipt of which shall be
acknowledged, as security for the full performance of the obligations of Lessee
under this Lease. Lessee has previously deposited with Lessor the sum of Five
Thousand Five Hundred Seventy-Three and 75/100 Dollars ($5,573.75) under a lease
dated July 13, 1988, and therefor Lessee only need deposit Fifteen Thousand Six
Hundred Thirty and 91/100 Dollars ($15,630.91) with Lessor at this time.

                  3.5.1 If Lessee shall be in default with respect to the
payment of Base Monthly Rental or any other covenant contained herein, Lessor
may use or retain all or any part of the security deposit for the payment of any
sum in default, or for the payment of any amount which Lessor may spend or
become obligated to spend by reason of Lessee's default. If any portion of said
security deposit be so applied or used, Lessee shall, within five (5) days after
written notice thereof, deposit an additional amount with Lessor sufficient to
restore said security deposit to the amount set forth above and Lessee's failure
to do so shall constitute a breach of the Lease.

                  3.5.2 If Lessee is not in default at the termination of this
Lease, Lessor shall return said security deposit to Lessee within two (2) weeks
after termination of this Lease, less any amounts required to restore the
Premises to good condition and repair, reasonable wear and tear excepted,
including damage resulting from the removal by Lessee of its trade fixtures of
equipment.

                  3.5.3 Lessor's obligation with respect to any security deposit
is that of a debtor and not as a trustee, consequently, such sums may be
commingled with rental receipts or dissipated and no interest shall accrue
thereon.

                                       -2-
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                  3.5.4 In the event of the sale of the real property of which
the Premises constitute a part, Lessor or its agents shall pay over to Lessor's
successor in interest the sums held as security or advance rent and notify
Lessee in writing setting forth the particulars of such transfer, including the
successor's name and address. Upon such written notification, Lessee shall have
no further claim against Lessor with respect to any such security deposit and
hereby waives all rights against Lessor in such regard.

                  3.5.5 In the event of foreclosure by the holder of any
mortgage or deed of trust encumbering the Premises, Lessor shall continue to be
liable for any security deposit and any such Mortgagee shall have no liability
or responsibility therefor.

4. USE

         4.1 The Premises shall be used and occupied by Lessee for general
office use and for no other purposes, without first obtaining the written
consent of Lessor.

         4.2 Lessee, at Lessee's expense, shall promptly comply with all laws,
ordinances, zoning restrictions, rules, regulations, orders and requirements of
any duly constituted public authorities now or hereafter affecting the use,
safety, cleanliness and occupation of the Premises. As it relates to this
Paragraph, Lessor shall make any alterations or repairs to the Building, but not
on the Premises, as required by law.

         4.3 Lessee shall not permit any use to be made or act to be done in or
about the Premises which would increase the existing rate of insurance upon the
Premises, or cause the cancellation of any insurance policy covering the
Building, nor shall Lessee sell or permit to be kept, used or sold in or about
the Premises any articles which may be prohibited by a standard form policy of
fire insurance. In the event that Lessee's use, other than a use as a general
office, increases said rate or causes the cancellation of a policy of insurance,
Lessor may, in its sole discretion terminate this Lease or charge Lessee, as
additional rent, the additional cost of insurance. Lessor, may charge Lessee, as
additional rent the additional cost of insurance. In the event Lessor is unable
to obtain additional insurance, Lessor shall have the right to terminate this
Lease.

         4.4 Lessee shall not commit, use, maintain or permit the maintenance of
any improper, immoral, lewd, unlawful or objectionable conduct on the Premises.
It is specifically covenanted and agreed that Lessee will not operate any police
licensed business on the Premises.

         4.5 Lessee shall comply with all nondiscriminatory rules and
regulations (the "Rules and Regulations") from time to time adopted by Lessor
with respect to the Building. A copy of the Rules and Regulations adopted as of
the date of this Lease are attached hereto, designated Exhibit "B", and
incorporated by reference herein. Lessor may, in its sole discretion, amend the
Rules and Regulations by written notice delivered to Lessee.

5. ALTERATIONS AND ADDITIONS

         5.1 Lessee shall not make any alterations, improvements or additions to
the Premises without obtaining Lessor's prior written consent. Any such
improvements, excepting movable furniture and trade fixtures, shall become part
of the realty and belong to Lessor. All alterations and improvements shall be in
conformity with the laws of all applicable duly constituted public authorities.
As a further condition to giving such constant, Lessor may require Lessee to
provide Lessor, at Lessee's sole cost and expense, a her, and completion bond in
an amount equal to one hundred fifty percent (150%) of the estimated cost of
such improvements, to ensure Lessor against any liability for mechanics' and
materialmen's liens and to insure completion of the work. Lessor's consent to
any alternations, additions, or improvements shall not be unreasonably withheld
or delayed.

         5.2 Prior to commencing any work relating to any alterations,
improvements or additions approved by Lessor, Lessee shall notify Lessor in
writing of the expected date of commencement. Lessor shall have the right at any
time thereafter to post and maintain on the Premises such notices as Lessor
reasonably deems necessary to protect Lessor and the Premises for mechanics'
liens, materialmen's liens or any other liens. Lessee shall pay, when due, all
claims for labor or materials furnished to or for Lessee for use in improving
the Premises. Lessee shall not permit any mechanic's or materialmen's liens to
be levied against the Premises arising out of work performed, materials
furnished, or obligations to have been Lessee's.

                                       -3-

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Lessee hereby indemnifies and holds Lessor harmless against loss, damage,
attorneys' fees and all other expenses on account of claims of lien of laborers
or fees and all other expenses on account of claims of lien of laborers or
materialmen or others for work performed or materials or supplies furnished for
Lessee or its contractors, agents or employees.

         5.3 Lessee may install trade fixtures, machinery or other trade
equipment in conformance with the ordinances of all applicable duly constituted
public authorities. Lessee may remove any of such trade fixtures or machinery
upon the termination of this Lease, provided that Lessee is not in default under
the terms of this Lease.

         5.4 In the event that Lessee installs improvements, machinery or trade
fixture. Lessee shall return the Premises on termination of this Lease to the
same condition as existed at the date of entry, reasonable wear and tear
excepted, including the removal of improvements approved by Lessor in Section
5.1, if Lessor's approval was conditioned upon Lessee's removal of said
improvements. Lessee shall, in any event, repair any damage resulting from the
removal of machinery of trade fixtures of Lessee.

6. UTILITIES MAINTENANCE AND REPAIRS

         6.1 Lessor shall, during all normal business hours, maintain and keep
lighted the common stairs, common entries and toilet rooms in the Building of
which the Premises are a part. For purposes hereof, normal business hours shall
be Monday through Friday from 8:00 a.m. to 6:00 p.m., and Saturday from 8:00
a.m. to 1:00 p.m. (excepting holidays). Lessor shall not be liable for, and
Lessee shall not be entitled to, any reduction of rental by reason of Lessor's
failure to furnish any of the foregoing when such failure is caused by accident,
breakage, repairs, strikes, lockouts or other labor disturbances or labor
disputes of any character, or by any other cause, similar or dissimilar, beyond
the reasonable control of Lessor.

         6.2 Lessee shall pay all charges for gas, electricity, heat, light,
power and air conditioning furnished to the demised Premises. In the event
Lessor is responsible for such payments, Lessor shall only be required to
provide heating, air conditioning and ventilation during normal business hours.
Wherever heat generating machines or equipment are used in the Premises which
affect the temperature otherwise maintained by the air conditioning system,
Lessor reserves the right to install supplementary air conditioning units in the
Premises and the cost thereof, including the cost of installation, and the cost
of operation and maintenance thereof shall be paid by Lessee to Lessor upon
demand by Lessor.

         6.3 Lessee shall pay ANY AND all tax assessments, license fees or other
charges made against or levied upon the trade fixtures, Lessee's improvements,
merchandise or other personal property of Lessee, or upon the business or the
use to which the demised Premises are put by Lessee.

         6.4 Lessor agrees at his own expense, to provide janitorial services to
the demised Premises. Said services shall be provided five (5) times per week.

         6.5 By taking possession of the Premises, Lessee shall be deemed to
have accepted the Premises as being in good, sanitary order, condition and
repair. Lessee shall, at Lessee's sole cost, and expense, keep the Premises and
every part thereof in good condition and repair. Lessee shall, upon the
expiration or sooner termination of this Lease hereof, surrender the Premises to
the Lessor in good condition, ordinary wear and tear excepted. Except as
specifically provided in an addendum, if any, to this Lease, Lessor shall have
no obligation whatsoever to alter, remodel, improve, repair, decorate or paint
the Premises or any part thereof. The parties hereto affirm that Lessor has made
no representations to Lessee respecting the condition of the Premises or the
Building, except as specifically herein set forth.

         6.6 Notwithstanding the provisions of Section 6.5 herein above, Lessor
shall repair and maintain the structural portions of the Building, including the
basic plumbing, air conditioning, heating, and electrical systems, elevators
installed or furnished by Lessor. Lessor shall not be liable for any failure to
make any such repairs or to perform any maintenance unless such failure shall
persist for an unreasonable time after written notice of the need of such
repairs or maintenance is given to Lessor by Lessee. There shall be no abatement
of rent and no liability of Lessor by reason of injury to or interference with
Lessee's business arising .from the making of any repairs, alterations or
improvements in or to any portion of the Building or the Premises or in or to
fixtures, appurtenances and equipment therein. Lessee waives the right to make
repairs at Lessee's expense under any law, statute or ordinance now or hereafter
in effect. In making repairs, Lessor shall use its best efforts not to
unreasonably interfere with Lessee's use of the Premises.

                                       -4-
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7. INDEMNIFICATION BY LESSEES

         7.1 Lessee does hereby indemnify, is liable for, and holds Lessor
harmless from any loss by reason of injury to person or property, from whatever
cause, all or in part connected with the condition or use of the Premises,
including without limitation, any liability for injury to the person or property
of Lessee, its agents, officers, employees, invitees, or trespassers, but
excepting any loss or injury resulting from the negligence of Lessor or its
agents, unless covered by insurance Lessee is required to provide. Lessee shall,
at Lessee expense, resist and defend any such action, suit, or proceeding or
cause the same to be resisted or defended by counsel designated by Lessee and
approved by Lessor. Lessee's obligation hereunder shall survive the termination
of this Lease if the incident requiring such defense occurred during the Lease
term.

         7.2 Lessee, as a material part of the consideration rendered to Lessor
in entering into this Lease, hereby waivers all claims against Lessor for
damages to goods, wares machinery and trade fixtures in, upon and about the
Premises and for injury to Lessee its agents, employees, invitees, or any third
person in or about the Premises from any cause at any time except Lessor's
negligence.

8. INSURANCE

         8.1 Lessee shall maintain in force a policy or policies of insurance
protecting Lessor and Lessee against each of the following:

                  8.1.1 Public liability and property damage insurance with
respect to the Premises insuring Lessee and Lessor against personal injury or
death and property damage in amounts (i) not less than five hundred thousand
dollars ($500,000) for injury or death to any one person in any one accident or
occurrence, (ii) not less than one million dollars ($1,000,000) for injury or
death to more than one person in any accident or occurrence, and (iii) not less
than two hundred thousand dollars ($200,000) per occurrence for damage to
property. The amount of such public liability insurance shall be increased from
time to time as Lessor may reasonably determine. All such bodily injury and
property damage insurance shall specifically insure the performance by Lessee of
the indemnity agreement as to personal injury or property damage contained in
Paragraph 7.

                  8.1.2 Insurance covering alterations, additions or
improvements permitted under Paragraph 5, trade fixtures and personal property
from time to time in or upon the Premises in an amount not less than one hundred
percent (100%a) of their full replacement cost from time to time during the term
of this Lease, providing protection against any peril included within the
classification "fire and extended coverage", together with insurance against
vandalism and malicious mischief. Any policy proceeds shall be used for the
repair or replacement of the property damaged or destroyed unless this Lease
shall terminate pursuant to Paragraph 18 hereof.

                  8.1.3 All policies of insurance to be provided by Lessee shall
be issued by insurance companies, with general policy holder's rating of not
less than A and a financial rating of not less than Class X as rated in the most
current available "Best's" Insurance Reports, and qualified to do business in
the State of California. Such policies shall be issued in the names of Lessor
and Lessee and, if requested by Lessor, the Mortgagee. The policies provided by
Lessee shall be for the mutual and joint benefit and protection of Lessor,
Lessee and the Mortgagee, and executed copies of such policies of insurance or
certificates thereof shall be delivered to the Lessor within ten (10) days after
the Commencement Date and, thereafter, within thirty (30) days prior to the
expiration of the term of each such policy. All public liability and property
damage policies shall contain a provision that the Lessor, although named as an
insured, shall nevertheless be entitled to recover under said policies for any
loss occasioned to it, its agents and employees by reason of the negligence of
the Lessee. Upon the expiration or termination of any such policy, renewal or
additional policies shall be procured and maintained by the Lessee to provide
the required coverage. All policies of insurance delivered to Lessor must
contain a provision that the company writing said policy will provide to Lessor
with twenty (20) days notice in writing in advance of any cancellation or lapse
of the effective date of any reduction in the amounts of insurance. All public
liability, property damage and other casualty policies shall be written as
primary policies, not contributing with and not in excess of coverage which
Lessor may carry.

                                       -5-

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                  8.1.4 Notwithstanding anything to the contrary, Lessee's
obligation to carry the insurance described in this Article may be brought
within the coverage of a so-called blanket policy or policies of insurance
carried and maintained by the Lessee, provided that (i) Lessor and the Mortgagee
shall be named as an additional assured hereunder as their interests may appear,
(ii) the coverage afforded Lessor will not be reduced or diminished by reason of
the use of such blanket policy of insurance, and (iii) the requirements set
forth herein are otherwise satisfied. Lessee agrees to permit Lessor at all
reasonable times to inspect the policies of insurance of Lessee covering the
Premises for policies which are not required to be delivered to Lessor.

         8.2 Lessor and Lessee hereby mutually releases each other from
liability and waive all right to recover against each other for any loss from
perils insured against under their respective fire insurance policies, including
any extended coverage and special form endorsements to said policies; provided,
however, this Section shall be inapplicable if it would have the effect, but
only to the extent that it would have the effect, of invalidating any insurance
coverage of Lessor or Lessee. The parties shall obtain, if available, from their
respective insurance companies, a waiver of any right of subrogation which said
insurance company may have against the Lessor or the Lessee, as the case may be.
In the event that the insurance company of Lessee does not waive the right of
subrogation against Lessor and its insurance company, Lessee shall (i) maintain
during the term of this Lease fire legal liability coverage with respect to the
Premises, and (ii) shall pay to Lessor upon demand, Lessor's cost incurred in
securing fire legal liability coverage protecting Lessor in the event of the
destruction of Lessee's property.

9. CARE OF THE PREMISES

         9.1 Lessee shall keep the Premises in good condition and repair and
shall not commit or permit any waste upon the Premises, including (i) the
replacement of light bulbs and florescent lights installed in the Premises, and
(ii) cleaning of carpet at regular intervals and upon termination of the Lease
to remove reasonable stains and discolorations caused by dirt. If Lessee fails
to keep the Premises in reasonable repair, Lessor may, at Lessor's option, enter
the Premises in order to replace same in good condition and repair and Lessee
shall immediately pay to Lessor the cost thereof, together with prime interest
rate plus 1.

         9.2 Lessee shall not commit or permit any nuisance, act or other thing
which may disturb the quiet enjoyment of other Lessees in the Building.

         9.3 Lessor shall provide normal janitorial services to the Premises
five (5) days per week.

10. TAXES

         10.1 Lessee shall pay prior to delinquency all taxes, assessments,
license fees, and other public charges levied, assessed or imposed or which
become payable during the term of this Lease upon any trade fixtures,
furnishings, equipment and all other personal property of Lessee installed or
located in the Premises. Whenever possible, Lessee shall cause said trade
fixtures, furnishings, equipment and personal property to be separately
assessed. If, however, any or all of said items shall be assessed and taxed with
the real property, Lessee shall pay to Lessor such taxes as are attributable to
Lessee's trade fixtures, furnishings, equipment and personal property within
fifteen (15) days after receipt of an invoice from Lessor advising Lessee of the
taxes applicable to Lessee's property.

         10.2 Lessor shall pay all other taxes, assessments, and the public
charges assessed or imposed, or which become a lien upon or become chargeable
against or payable in connection with the Building, personal property situated
in common areas of the Building, and real property on which the Building is
situated. With respect to any assessments which may be levied against or upon
said property, or which under the laws then in force may be evidenced by
improvements or other bonds and may be paid in annual installments, only the
amount of such annual installment, with appropriate proration for any partial
year, and interest thereon, shall be included within a computation of taxes and
assessments levied against the Premises.

                                       -6-

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         10.3 For purposes of this Lease, "taxes" shall also include each of the
following:

                  10.3.1 Any form of assessment, license fee, license tax,
business license tax, commercial rental tax, levy, charge, penalty, or tax,
imposed by an authority having the direct power to tax including any City,
County, State or federal government or special district thereof, as against any
legal or equitable interest of Lessor in the Premises or the real property of
which the premises constitute a part;

                  10.3.2 Any tax on lessor's right to rent or other income from
the Premises or as against Lessor's business or leasing the Premises;

                  10.3.3 Any assessment, tax, fee, levy or charge in
substitution, partially or totally, of any assessment, tax, fee, levy or charge
previously included within the definition of real property tax, it being
acknowledged by Lessee and Lessor that Proposition 13 was adopted by the voters
of the State of California in the June 1978 election and that assessments,
taxes, fees, levies and charges may be imposed by governmental agencies for such
services as fire protection, street, sidewalk and road maintenance, refuse
removal and for other governmental services formerly provided without charge to
property owners or occupants. It is the intention of Lessee and Lessor that all
such new and increased assessments, taxes, fees, levies and charges and all
similar assessments, taxes, fees, levies and charges be included within the
definition of real property tax for purposes of this Lease;

                  10.3.4 Any tax allocable to or measured by the area of the
Premises or the rental payable hereunder, including without limitation, any
gross income tax or excise tax levied by the State, any political subdivision
thereof, city or federal government, with respect to the receipt of such rental,
or upon or with respect to the possession, leasing, operating, management,
maintenance, alteration, repair, use of occupancy by Lessee of the Premises, or
any portion thereof;

                  10.3.5 Any tax upon this transaction or any document to which
Lessee is a party, creating or transferring any interest or any estate in the
Premises;

                  10.3.6 Real estate taxes shall not include Lessor's federal or
state income, franchise, inheritance or estate taxes.

11. COMMON AREAS AND OPERATING EXPENSES

         11.1 Common Areas shall include parking areas, driveways, entrances and
exits thereto, sidewalks, lobbies, elevators, corridors, stairways, landscaped
areas, and other areas and improvements provided by Lessor for the general use
of all Lessees, their agents, employees and invitees. Common Areas shall at all
times be subject for the exclusive control and management of Lessor, including
the Rules and Regulations described in Section 4.5. Lessor shall have the right
to construct, maintain and operate lighting facilities, in Common Areas, and to
police the same; to restrict parking by Lessees, their officers, agents and
employees to employees parking areas; to close temporarily all or any portion of
the parking areas or facilities; to discourage non-customer parking; and do and
perform such other acts in and to said areas and improvements as, in the use of
good business judgement, Lessor shall determine to be advisable with a view to
the improvement of the convenience and use thereof by Lessee, its agents,
employees and invitees.

         11.2 Operating Expenses shall include all expenses incurred by Lessor
for the maintenance, operation and management of the Building and Common Areas
including, but not limited to, insurance, maintenance and repairs, utilities and
services, taxes as defined in Section 10.2 hereof; security services, all costs
incurred in the management of the Building including but not limited to, the
reasonable cost of maintenance of an office in the Building, the wages of
personnel to implement such service, including taxes, insurance and other fringe
benefits associated therewith, elevator maintenance, property management fees;
water and sewer charges, maintenance common area and exterior landscaping;
parking area maintenance; lighting maintenance; repair of fire protection
systems; janitorial services, personnel and contractors engaged to provide such
services, supplies, materials, equipment and tools; labor; parking or utility
surcharges, assessed or imposed by or resulting from statutes, regulations or
interpretations of any governmental authority in connection with the Premises,
Building or Common Areas, but excluding loan payments, ground rent, brokerage
commissions and depreciation of the Building.

<PAGE>

         11.3 OPERATING EXPENSE ADJUSTMENT: For the purposes of this Section,
the following terms are defined as follows:

                  Base Year: 1993

                  Comparison Year: Each calendar year of occupancy after the
Base Year.

         Direct Expenses: All direct costs of operation and maintenance, as
determined by standard accounting practices, pursuant to Section 11.2 in this
Lease and calculated as if the Building is a minimum of ninety-five percent
(95%) occupied.

         If the Operating Expenses paid or incurred by the Lessor for the
Comparison Year on account of the operation or maintenance of the Building of
which the Premises are a part in excess of the Direct Expenses paid or incurred
for the Base Year, then the Lessee shall pay 28.22% of the increase as
additional rent. This percentage is that portion of the total Net Rentable Area
of the Building occupied by the Lessee hereunder. Lessor shall endeavor to give
to Lessee, on an annualized basis following the respecting Comparison year, a
statement of the increase which shall be used as an estimate for said current
year and this amount shall be divided into twelve (12) equal monthly
installments multiplied by the number of months from January in the calendar
year in which said statement is submitted to the month of such payment, both
months inclusive. Subsequent installments shall be payable concurrently with the
regular monthly rent payments for the balance of that calendar year and shall
continue until the next Comparison Year's statement is rendered. If the next or
any succeeding Comparison Year results in a greater increase in Direct expenses,
then upon receipt of a statement from Lessor, Lessee shall pay a lump sum equal
to such total increase in Direct Expenses over the Base Year, less the total of
the monthly installments of estimated increases paid in the previous calendar
year for which comparison is then being made to the Base Year; and the estimated
monthly installments to be paid for the next year following said Comparison Year
shall be adjusted to reflect such increase. If in any Comparison Year the
Lessee's share of Direct Expenses be less than the preceding year, then upon
receipt of Lessor's statement, any overpayment made by Lessee on the monthly
installments bases provided above shall be credited towards the next monthly
rent falling due and the estimated monthly installments of Direct Expenses to be
paid shall be adjusted to reflect such lower Direct Expenses of the most recent
Comparison year. Any overpayment in the last year of the Lease to be promptly
repaid upon expiration of the term.

         Even though the term has expired and Lessee has vacated from the
Premises, when the final determination is made of Lessee's share of Direct
Expenses of the Building the Operating Expenses for the Base Year shall be
equitably adjusted to reflect those Operating Expenses which theoretically would
have occurred had the Building been occupied in the Base Year at approximately
the same occupancy level as the Comparison Year.

         Annual and other determinations of Operating Expenses hereunder shall
be made reasonably and in good faith by Lessor. In the event of any dispute as
to the amount thereof, Lessee shall have the right after reasonable notice and
at reasonable times to inspect Lessor's accounting. If, after such inspection,
Lessee still disputes the Lessor's determination, certification as to the proper
amount shall be made by Lessor's independent certified public accountant, and
such certification shall be final and conclusive. Lessee agrees to pay the cost
of such certification unless it is determined that Lessor's original
determination was in error to Lessee's disadvantage by more than five percent
(5%). Lessee agrees that the payment of the estimated cost of any disputed sum
and, if applicable, the deposit of the estimated cost of the certification,
shall be conditions precedent to the initiation of the foregoing procedure.

         Notwithstanding anything contained in this Paragraph, the rentable
payable by Lessee shall in no event be less than the rent specified in Paragraph
4 hereof.

12. SIGNS

         12.1 Lessee shall not, without Lessor's written consent, affix or
maintain any sign, advertisement, notice or similar matter in the Building which
may be seen from outside the Premises. In the event of any violation of Lessee's
covenant hereunder, Lessor may remove such advertising matter and Lessee shall
pay to Lessor the cost of removal of same, as additional rent, including any
repairs required to the Building resulting from affixing such material.

                                       -8-
<PAGE>

         12.2 Lessee shall not, without Lessor's written consent, install any
lighting, amplifiers or similar devices in the Building which may be seen or
heard outside the Premises.

         12.3 Lessee shall not, without Lessor's written consent, solicit
business in common areas or distribute any hand bills or other advertising
matter in the Building.

         12.4 The Building is currently named Highlands Plaza, which name is
proprietary to Lessor. Identifying signs have been or will be erected consistent
with such name. Lessor, in its sole discretion, shall have the right to change
the name of the Building and/or signs identifying same at any time without any
liability to Lessee.

         12.5 Lessor shall grant Lessee monument or building signage at a
location to be mutually determined between Lessor and Lessee. Said signage shall
conform to all CC&R's of the San Diego Corporate Center. In addition, Lessee
shall have the right to install signage on the wall of the third floor lobby.
Lessee shall be responsible for the cost of all of Lessee's signs and
installation.

13. ENTRY BY LESSOR

         13.1 Lessee shall permit Lessor and Lessor's agents to enter the
Premises at all reasonable times (i) for the purpose of inspecting the same,
(ii) for the purpose of maintenance, repairs, alterations, or additions to any
portion of the Building, including the erection and maintenance of such
scaffolding, canopies, or fences, as may be required, or (iii) for the purpose
of posting notices of non-responsibility for alterations, additions or repairs.

         13.2 Lessor may, during reasonable business hours within sixty (60)
DAYS PRIOR TO the expiration of the Lease, enter the Premises for the purpose of
allowing prospective tenants to view the Premises.

         13.3 Lessor shall be permitted to enter the Premises for any of the
purposes stated herein without any liability to Lessee for any loss of
occupation or quiet enjoyment of the Premises resulting therefrom.

14. ASSIGNMENT AND SUBLETTING

         14.1 Lessee shall not either voluntarily or by operation of law,
assign, sell, encumber, pledge or otherwise transfer all or any part of Lessee's
Leasehold estate Lessee's employees, or sublet the Premises or any portion
thereof, without Lessor's prior written consent in each instance, which consent
shall not be unreasonably withheld. Any such assignment or other transfer or
subletting shall be subject in each instance to the recapture option of Lessor
set forth in Section 14.3. Lessor's consent shall be based upon a determination
that the same type, class and nature and quality of business, service management
and financial soundness of ownership shall exist after such assignment or
subletting and, provided further, that each and every covenant, condition or
obligation imposed upon Lessee by this Lease and each and every right, remedy or
benefit afforded Lessor by this Lease is thereby impaired or diminished. Consent
by Lessor to one or more assignments of this Lease or to one or more sublettings
of the Premises shall not operate to exhaust Lessor's rights under this
Paragraph. If Lessee is a corporation which, under the then current guidelines
published by the Commissioner of Corporations of the State of California, is not
deemed a public corporation, or is an unincorporated association or partnership,
the transfers assignment, or hypothecation of any stock or interest in such
corporation, association or partnership, the transfers assignment, or
hypothecation of any stock or interest in such corporation, association or
partnership in the ` aggregate in excess of twenty-five percent (25%), or
liquidation thereof, shall be deemed an assignment. Lessee agrees to reimburse
Lessor for Lessor's reasonable costs and attorneys' fees incurred in conjunction
with the processing and documentation of any such requested assignment,
subletting, transfer, change of ownership or hypothecation of this Lease.

         14.2 If Lessee desires at any time to assign this Lease or to sublet
the Premises or any portion thereof, it shall first notify Lessor of its desire
to do so and shall submit in writing to Lessor (i) the name of the proposed
subtenant or assignee; (ii) the nature of the proposed subtenant's or assignee's
business to be carried on in the Premises; (iii) the terms and provisions of the
proposed sublease or assignment; and (iv) such reasonable financial information
as Lessor may request concerning the proposed subtenant or assignee.

         14.3 No subletting or assignment, even with the consent of Lessor,
shall relieve Lessee of its obligation to pay the rent and perform all the other
obligations to be performed by Lessee hereunder. The acceptance of rent by
Lessor from any other person shall not be deemed to be a waiver by Lessor of any
provision of this Lease or to be a consent to any assignment or subletting.

                                       -9-

<PAGE>

15. ABANDONMENT

         15.1 Lessee shall not abandon the Premises at any time during the term
of this Lease. If Lessee shall abandon or surrender the Premises, or be
dispossessed by process of law, or otherwise, any personal property or trade
fixtures belonging to Lessee and left on the Premises shall, at the option of
Lessor, be deemed abandoned. In such case, Lessor may dispose of said personal
property in any manner and is hereby relieved of all liability for doing so.

16. BREACH BY LESSEE

         16.1 The occurrence of any of the following shall constitute a breach
and material default of this Lease by Lessee:

                  16.1.1 The failure of Lessee to pay or cause to be paid when
due any rent, monies, or charges required by this Lease to be paid by Lessee
when such failure continues for a period of three (3) days after written notice
thereof from Lessor to Lessee;

                  16.1.2 The abandonment as defined in Paragraph 15 of this
Lease, or the Premises, by Lessee;

                  16.1.3 The failure of Lessee to do or cause to be done any
act, other than payment of rent, monies or charges, required by this Lease;

                  16.1.4 Lessee causing, permitting, or suffering, without the
prior written consent of Lessor, any act when this Lease required Lessor's prior
written consent or prohibits such act; or

                  16.1.5 Any act of bankruptcy cause, suffered or permitted by
Lessee. For purposes of this Lease, "act of bankruptcy" shall include any of the
following:

                           16.1.5.1 Any general assignment or general
arrangement for the benefit of creditors;

                           16.1.5.2 The filing of any petition by or against
Lessee to have Lessee adjudged a bankrupt or a petition for reorganization or
arrangement under any law relating to bankruptcy, unless such petition is filed
against Lessee and same is dismissed within sixty (60) days;

                           16.1.5.3 The appointment of a trustee or receiver to
take possession of substantially all of Lessee's assets located in the Premises
or of Lessee's interest in this Lease; or,

                           16.1.5.4 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.

         16.2 In the event that Lessor issues a three-day notice, notice of
abandonment or comparable document by reason of Lessee's breach, and Lessee
cures such default, Lessee agrees to pay to Lessor the reasonable cost or
preparation and delivery of same.

         16.3 The acceptance by Lessor of rent due hereunder after breach by
Lessee will not constitute a waiver of such breach, unless a writing to that
effect has been delivered to Lessee.

17. REMEDIES LTON BREACH

         17.1 In the event of any breach by Lessee, in addition to other rights
or remedies of Lessor at law or in equity, Lessor shall have the following
remedies:

                  17.1.1 Lessor may recover from Lessee the rent as it becomes
due and any other amount necessary to compensate Lessor for all detriment
proximately caused by Lessee's failure to perform its obligations under this
Lease of which in the ordinary course of things would be likely to result
therefrom. Lessor may sue monthly, annually or after such equal or unequal
periods as Lessor desires for amounts due under this Section 17.1.1. The right
to collect rent as it becomes due shall terminate upon the termination by Lessor
of Lessee's right to possession. Lessee's right to possession shall not be
terminated unless and until Lessor delivers Lessee written notice thereof;

                                      -10-

<PAGE>

                  17.1.2 Lessor, either as an alternative or subsequent to
exercising the remedies set forth in Section 17.1.1, may terminate Lessee's
right to possession of the Premises by and upon delivery to Lessee of written
notice of termination. Lessor may then immediately reenter the Premises and take
possession thereof pursuant to legal proceedings and remove all persons and
property from the Premises; such property may be removed and stored in a public
warehouse or elsewhere at the cost of and for the account of Lessee. No notice
of termination shall be necessary in the event that Lessee has abandoned the
Premises. In the event that Lessor elects to terminate Lessee's right of
possession, Lessor may recover the following:

                           17.1.2.1 The "worth at the time of the award" of the
unpaid rent which has been earned at the time of termination. "Worth at the time
of award" shall be computed by allowing interest at ten percent (10%) per annum
from the first day the breach occurs;

                           17.1.2.2 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. "Worth at the time of award" shall be
determined by allowing interest at the rate of ten percent (10%) per annum from
the first day a breach occurs;

                           17.1.2.3 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 would be
reasonably avoided. "Worth at the time of award" shall be computed by
discounting such amount at the discount rate at the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1 %);

                           17.1.2.4 Any other amount necessary to compensate
Lessor for all the detriment proximately caused by Lessee's failure to perform
its obligations under the Lease or which in the ordinary course of things would
be likely to result therefrom including, but not limited to, expenses of
reletting, attorneys' fees, costs of alterations and repairs, recording fees,
filing fees and any other expenses customarily resulting from obtaining
possession of Leased Premises and re-leasing.

         17.2 It is understood that all covenants made by Lessee herein are
conditions of this Lease; therefore, in the event of any default by Lessee in
fulfilling any of the same, Lessor may at the time thereafter at its option
declare a forfeiture of this Lease, and any holding over thereafter shall be
construed to be a tenancy from month-to-month only, for the same rental and the
conditions, except as to term, as set forth in this Lease.

18. DAMAGE OR DESTRUCTION

         18.1 In the event that any portion of the Building is partially or
completely damaged or destroyed or declared unsafe or unfit for occupancy by any
authorized public authority for any reason other than Lessee's act, use or
occupation, which declaration required repairs to the Building, the rights and
obligations of Lessee and Lessor shall be as follows:

                  18.1.1 If the damage is covered under insurance carried by
Lessor or Lessee, Lessor shall repair such damage as soon as is reasonably
possible and this Lease shall continue in full force and effect;

                  18.1.2 In the event that such damage is not covered by
insurance carried by Lessor or Lessee, Lessor shall repair such damage, provided
that, such damage or destruction does not exceed twenty percent (20%) of the
then replacement value of the improvements, exclusive of trade fixtures,
equipment or machinery;

                  18.1.3 Notwithstanding anything contained herein above, (i) if
the Premises are damaged or destroyed to any extent during the last Lease year,
(ii) if the uninsured portion of such damage exceeds twenty percent (20%) of the
then replacement value of the improvements, or (iii) over twenty percent (20%)
of the Building shall be damaged or destroyed at any time, Lessor may, at
Lessor's option, cancel and terminate this Lease by delivery of written notice
to Lessee to so terminate. Said written notice shall be made within thirty (30)
days after the date of occurrence of such damage or destruction and shall be
effective as of the date of such notice. If notice is not given within thirty
(30) days, Lessor shall be deemed to have elected to restore the damage or
destruction and shall repair such damage as soon as reasonably possibly.

<PAGE>

         18.2 If Lessor elects or is required to make repairs, Lessee shall be
entitled to a reduction in rent during the time in which the repairs are being
made to the extent to which Lessee's use of the Premises is impaired.

         18.3 Lessor's obligation to restore shall not include the restoration
or replacement of Lessee's trade fixtures, equipment, machinery or any
improvements or alterations made by Lessee to the Premises. Lessee shall restore
and replace the same in the event that Lessor is obligated or elects to repair
any damage or destruction of the Premises.

19. CONDEMNATION

         19.1 If the Premises or any portion thereof are taken under the power
of eminent domain, or sold by Lessor under the threat of the exercise of such
power, this Lease shall terminate as the part so taken by Lessor under the
threat of the exercise of such power, this Lease shall terminate as the part so
taken as of the date that the condemning authority takes possession of the
Premise. If more than twenty-five percent (250) of the Premises is taken or sold
under such threat, either Lessor or Lessee may terminate this Lease as of the
date that condemning authority takes possession by delivery of written notice of
such election within twenty (20) days after such party has been notified of the
taking or, in the absence thereof, within twenty (20) days after the condemning
authority shall have taken possession.

         19.2 If this Lease is not terminated by Lessor or Lessee, it shall
remain in full force and effect as to the portion of the Premises remaining,
provided that, the rent shall be reduced by that proportion which the floor area
of the Premises taken dears the gross floor area. In such event, Lessor shall,
at Lessor's expense, restore the Premises to a complete unit of like quality and
character except as to size, as existed prior to the date on which the
condemning authority took possession. All awards for the taking of any part of
the Premises or proceeds from the sale made under the threat of the exercise of
the power of eminent domain shall be the property of Lessor, whether made as
compensation for diminution of value of the Leasehold estate, for the taking of
the fee, or as severance damage, provided, the Lessee shall be entitled to any
award for loss of or damage to Lessee's trade fixtures and removable personal
property.

20. SURRENDER OF LEASE

         20.1 The voluntary or other surrender of its interest in this Lease by
Lessee or a mutual cancellation of this Lease shall not work a merger, and
shall, at the election of Lessor, wither terminate all or any existing sublease
or subtenancies. Lessor shall exercise its selection within thirty (30) days of
any surrender or cancellation.

21. ATTORNEY'S FEES

         21.1 In the event that Lessor is required to engage legal counsel to
enforce any provisions of this Lease, Lessee shall pay, as additional rent, all
attorney's fees, legal action or proceeding between the parties, the ultimately
prevailing party shall be entitled to reasonable attorney's fees and expenses as
a part of the judgment resulting therefrom.

22. SALE OF THE PREMISES BY LESSOR

         22.1 Notwithstanding any provisions of this Lease to the contrary,
Lessor may assign, in whole or in part, Lessor's interest in this Lease and may
sell all or part of the real estate of which the Premises are a part. In the
event of any sale or exchange of the Premises by Lessor and assignment by Lessor
of this Lease, Lessor shall be and is hereby entirely freed and relieved of all
liability under any and all covenants and obligation contained in or derived
from this Lease or arising out of any act, occurrence or omission relating to
the Premises which occurs after the consummation of such sale, exchange or
assignment provided the transferee assumes the obligations of Lessor hereunder.

23. ESTOPPEL CERTIFICATES

         23.1 Lessee shall at any time during the term of this Lease, within ten
(10) days of written notice from Lessor, execute and deliver to Lessor a
statement in writing certifying that his Lease is unmodified and in full force
and effect or, if modified, stating the nature of such modification. Lessee's
statement shall include other details requested by Lessor, such as the date to
which rent and other charges are paid, Lessee's knowledge concerning any uncured
defaults with respect to Lessor's obligations under this Lease, and the nature
of such defaults

                                      -12-
<PAGE>

if they ARE claimed. Any such statement may be relied upon conclusively by any
purchaser or lender having an interest in the Premises. Lessee's failure to
deliver such statements within such time shall be conclusive upon the Lessee
that this Lease is in full force and effect, and that there are no uncured
defaults in Lessor's performance, unless notice of any such default has
previously been given to Lessor.

24. SUBORDINATION AND ATTORNMENT

         24.1 Except as otherwise provided herein, this Lease is hereby made
subordinate to any liens of any Mortgagee now or hereafter in force, and to all
advances made or hereafter made upon the security thereof. Any Mortgagee may, at
its option, subordinate its mortgage or deed of trust to this I-ease.

         24.2 In the event any proceedings are sought for foreclosure, or in the
event of the exercise of the power of sale under any mortgage or deed of trust
encumbering the Premises, Lessee shall attorn to the purchaser upon any such
foreclosure or sale and recognize such purchaser as Lessor under this Lease.

         24.3 Lessee, upon request of any party in interest, shall within ten
(10) days written request of Lessor execute such instruments and certificates to
carry out the intent of Sections 24.1 and 24.2 as shall be requested by Lessor.
If, within fifteen (15) days after a written request by Lessor to execute such
instruments, Lessee shall not have executed the same, Lessor may, at its option,
cancel this Lease without incurring any liability on account thereof, and the
term hereby granted is expressly limited accordingly.

         24.4 Notwithstanding any subordination, Lessee's right to quiet
enjoyment of the Premises shall not be disturbed if Lessee is not in default
under the terms of this Lease and this Lease shall remain in full force and
effect for the full term hereof.

25. HOLDING OVER

         25.1 If Lessee should remain in possession of the Premises after the
expiration of the term of this Lease without executing a new Lease or after
Lessor had declared a forfeiture by reason of a default by Lessee, then such
holding over shall be construed as a tenancy from month-to-month, subject to all
the conditions, provisions and obligations of this Lease insofar as they are
applicable to a month-to-month tenancy.

26. LIABILITY OF SUCCESSORS

         26.1 The covenants and conditions herein contained shall, subject to
the provisions as to assignment, apply to and bind the heirs, successors,
executors, administrators, and permitted assigns of all of the parties hereto
and all of the parties hereto shall be jointly and severally liable for the
covenants contained herein.

27. INTERPRETATIONS

         27.1 Whenever the singular number is used in this Lease, the same shall
include the plural, and the masculine gender shall include the feminine and
neuter genders, and the word "person" shall include corporation, firm, or
association, when required by the context.

         27.2 The headings of titles to the paragraphs of this Lease are for
convenience only and do not in any way define, limit or construe the contents of
such paragraphs.

         27.3 This instrument contains all of the agreements and conditions made
between the parties with respect to the hiring of the Premises and may not be
modified orally or in any other manner other than a written instrument signed by
all parties to this Lease.

         27.4 The laws of the State of California shall govern the validity,
performance and enforcement of this Lease.

         27.5 If any provision of this Lease is determined to be void by any
court of competent jurisdiction, such determination shall not affect any other
provisions of this Lease and such other provisions shall remain in full force
and effect. If any provision of this Lease is capable of two constructions, one
which would render the provision void and one would render the provision valid,
the provision shall be interpreted in the manner which would render it valid.

<PAGE>

         27.6 Upon written request of Lessor, Lessee agrees to execute any Lease
amendments not materially altering the terms of this Lease, if required by a
Mortgagee incident to the financing of the real property of which the Premises
constitute a part. Any changes affecting the consideration to be paid by Lessee
or modifying the term of this Lease shall be deemed as materially altering the
terms hereof.

         27.7 Except as may otherwise be expressly stated, each payment required
to be made by Lessee shall be in addition to and not in substitution for other
payments to be made by Lessee.

28. TIME OF ESSENCE

         28.1 Time is of the essence in this Lease.

29. FORCE MAJEURE

         29.1 Any prevention, delay or stoppage due to strikes, lockouts, labor
disputes, acts of God, inability to obtain labor or materials or reasonable
substances therefore, governmental restrictions, regulations, or controls, enemy
or hostile governmental action, civil commotion, fire or other casualty, and
other causes beyond the reasonable control of the party obligated to perform,
shall excuse the performance by such party for a period equal to that resulting
from such prevention, delay or stoppage, except those obligations of Lessee to
make payment for rental and other charges pursuant to the terms of this Lease.

30. RIGHT OF FIRST REFUSAL

         30.1 Lessee shall have the right of first refusal to lease any other
space that becomes available on the third floor upon the same terms and
conditions as Lessor would accept from a bona fide third party lessee. Lessor
shall notify Lessee in writing of any such offer Lessor is willing to accept,
and Lessee shall have five (5) days from receipt of Lessor's notice to exercise
Lessee's right of first refusal by delivering Lessee's notice of such exercise
to Lessor in writing. Failure to exercise said right as provided herein within
said five (5) day period shall be construed as Lessee's rejection of such right.
However, Lessee shall not have said right of first refusal so long as a then
tenant in the building remains in said space under a lease.

31. PARKING

         31.1 Free parking shall be provided in accordance with the project
parking ratio of four spacer per one thousand (4/1,000) square feet of usable
space.

32. NOTICES

         32.1 All notices to be given by one party to the other under this Lease
shall be in writing, mailed or delivered to the other party at the following
address:

         To Lessor:                          Burnham Pacific Properties
         610 West Ash Street, 20th Floor
         San Diego, California 92101
         Attention: Mr. Michael L. Rubin

         To Lessee:                      Applied Retail Solutions, Inc.
         12707 High Bluff Drive, Suite 335
         San Diego, California 92130
         Attention: Mr. Larry K. Lahodny

         32.2 Mailed notices shall be sent by United States Postal Service
certified or registered mail, postage prepaid and shall be deemed to have been
given on the date posting in the United States Postal Service.

         32.3 Either party may, by proper notice, at any time designate a
different address to which notice shall be sent.

                                      -14-

<PAGE>

33. SPECIAL PROVISIONS

         33.1 Lessor and Lessee acknowledge that Exhibits "A", "B", and "C" are
attached hereto and made a part hereof.

34. CONTINGENCY

         34.1 A portion of the Premises containing approximately 6,868 rentable
square feet is currently leased to Coordinate Healthcare Systems (CIGNA)
(hereafter "the CIGNA Premises"). Lessee is currently a sublessee of CIGNA for
an approximately 3,235 rentable square foot portion of the CIGNA Premises.

         34.2 This Lease is specifically contingent upon Lessor re-acquiring the
CIGNA Premises (including such portion thereof that Lessee currently is
subleasing).

         34.3 In the event Lessor is unable to re-acquire the CIGNA Premises,
this Lease shall be cancelled upon written notice by Lessor to Lessee and
thereafter shall be of no further force and effect. In such event, Lessor shall
have no liability to Lessee except for the return to Lessee of the additional
security deposit paid by Lessee in accordance with Paragraph 3.5 above.

         IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease as of
the day and year first above written.

LESSOR:                                      LESSEE:

BURNHAM PACIFIC PROPERTIES, INC., a          APPLIED RETAIL SOLUTIONS, INC., a
California corporation                       California corporation
By:
 Michael L. Rubin
 Executive Vice President                    By: /s/ Sam O. Picard
                                                 -------------------------------
                                                 Sam O. Picard
                                                 President

                                             By: /s/ K. Lahodny
                                                 -------------------------------
                                                 K. Lahodny
                                                 Executive Vice President

                                      -15-
<PAGE>

                                   EXHIBIT A

[graphic of Third Floor]

PREMISES 16,186 R.S.F.
THIRD FLOOR
Highlands Plaza

<PAGE>

                                   EXHIBIT "B"
                              RULES AND REGULATIONS

         1. Lessee agrees to abide by such rules and regulations now existing
and as amended at Lessor's discretion from time to time.

         2. No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed, printed or affixed on or to any part of the outside of the
Building without the prior written consent of Lessor. Lessor shall have the
right to remove any such sign, notice, placard, picture, advertisement or name
without notice to and at the expense of Lessee.

                  Any signs shall be installed at the sole expense of Lessee by
a person approved by Lessor and only at locations approved by Lessor. Inside
signs, notices, placards, pictures or advertisements must not be objectionable
from outside site, or from common area of the Building.

                  Lessee shall not place anything or allow anything to be placed
near the glass of any window, door, partition or wall which may appear unsightly
from outside. Lessor shall provide reasonable space on the directory sign for
Lessee's underwriters or affiliates.

         3. The directory of the Building will be provided exclusively for
displaying the name and location of Lessee only and Lessor reserves the right to
exclude any other names therefrom. Lessor shall provide reasonable space on the
directory sign for Lessee's underwriters or affiliates.

         4. The sidewalks, halls, passages, exits, entrances, elevators and
stairways shall not be obstructed by Lessee or used for any purpose other than
for ingress and egress from the Premises. The halls, passages, exits, entrances,
elevators, stairways, balconies and roof are not for the use of the general
public and Lessor shall in all cases retain the right to control and prevent
access thereto by all persons whose presence in the judgement of the Lessor
shall be prejudicial to the safety, character, reputation and interests of the
Building and its Lessees; provided that, noting herein contained shall be
construed to prevent such access to persons with whom the Lessee normally deals
in the ordinary course of Lessee's business unless such persons are engaged in
illegal activities. No Lessee or employee or invitee of any Lessee shall go upon
the roof of the Building.

         5. Lessor will direct any electricians as the manner and location of
any future telephone wiring. No boring or cutting for wiring will be allowed
without the prior consent of Lessor. The location of telephones, call boxes and
other office equipment installed in the Premises shall be subject to the prior
approval of Lessor in each instance.

         6. The plumbing facilities shall not be used for any purpose other than
that for which they are constructed, and no foreign substance of any kind shall
be thrown therein. The expense of any breakage, stoppage, or damage resulting
from a violation of this provision shall be borne by the Lessee, who shall, or
whose employees, agents and invitees shall have caused it.

         7. Lessee shall not mark, nail, drill or otherwise deface walls,
ceilings, partitions, floors, doors, wood paint, stone or metal work of the
Building.

         8. No Lessee shall lay linoleum, tile, carpet or other similar floor
covering so that the same shall be affixed to the floor of the Premises in any
manner except as approved by Lessor. The expense of repairing any damage
resulting from violation of this rule or removal of any floor covering shall be
borne by the Lessee by whom, or by whose contractors, employees or invitees, the
damage have been caused.

         9. Lessee shall not use, keep or permit to be used, or kept, any foul
or obnoxious gas or substance in the Premises or permit or suffer the Premises
to be used or occupied in any manner offensive or objectionable to Lessor or
other occupants of the Building by reason of any noise, odors and/or vibrations.

         10. Lessee, or its agents, shall not play any musical instruments or
make or permit any noises in the Building which are inconsistent with Lessee's
operation or business.

                                       -1-

<PAGE>

         11. Lessee, or its employees, clients, prospective customers, or
invitees, shall not loiter in the entrance or corridors of the Building, or in
any way obstruct the sidewalks, hallways, stairways and elevators, and shall use
the same only as a means of access to ingress or egress from the Premises.

         12. Lessee shall not overload the floor area of the Premises and the
weight, size and position of all safes and other heavy equipment shall be
subject to location designated by Lessor.

         13. All furniture, equipment and freight shall be moved in and out of
the Building only at hours and in accordance with rules established by Lessor.
Lessor will not be responsible for loss or damage to any furniture, equipment,
or other personal property of Lessee from any cause.

         14. No furniture, packages, supplies, equipment or merchandise will be
received in the Building or carried up or down the elevators between such hours
in such elevators as shall be designated by Lessor.

         15. On Saturdays, Sundays, and legal holidays between the hours of 7:00
p.m. and 8:00 a.m. and weekdays between the hours of 11:00 p. m. and 8:00 a. m.,
access to the Building or to the halls, corridors, elevators or stairways in the
Building or the Premises may be refused unless the person seeking access is
known to the person or employee of the Building in charge and has a pass or is
properly identified. The Lessor shall in no case be liable for damages for any
error with regard to the admission to or exclusion from the Building or any
person. In case of invasion, mob, riot, public excitement, or other
recommendation, Lessor reserves the right to prevent access to the Building
during such hours as Lessor, in its discretion, may determine to be necessary
for the safety of the Lessees and protection of the Building and the personal
property situated thereon.

         16. All keys for the Premises shall be provided to Lessee by Lessor and
Lessee shall return to Lessor any of such keys so provided upon the termination
of the Lease. Lessee shall not change locks or install other locks on doors of
the Premises. In the event of loss of any keys furnished by Lessor for Lessee,
Lessee shall pay to Lessor the cost thereof. Lessee reserves the right to secure
certain areas within the Leased Premises.

         17. No person shall enter or remain in the Building while intoxicated
or under the influence of liquor or drugs, unless such drugs are administered by
a licensed physician. Lessor shall have the right to exclude or expel from the
Building any person who, in the absolute discretion of Lessor, is under the
influence of liquor or drugs.

         18. Employees of Lessor shall not perform any work or do anything
outside of their regular duties without special instructions from the Lessor. No
employee will admit any person (Lessee or otherwise) to any office without
specific instructions from the Lessor.

         19. No Lessee shall install any form of window covering or ventilators
or similar devices visible from the outside of the Building without prior
written consent of the Lessor.

         20. Lessee shall not disturb, solicit, or canvass any occupant of the
Building and shall cooperate to prevent same.

         21. Lessee shall not keep or permit to be kept in the Building any
inflammable or highly combustible materials.

         22. Lessee shall not use the name of the Building in connection with or
in promoting or advertising the business of Lessee, except as Lessee's address
without the written consent of Lessor.

         23. Lessee shall upon completion of work, turn off all lights and other
machinery in the Premises to prevent waste and damages.

         24. Lessee may be installing vending machines on the Premises, provided
Lessor approves of their location.

                                       -2-

<PAGE>

         25. Showers & Lockers are for the exclusive use of tenants. Lockers may
be secured for 1 hour at a time. Overnight storage is not allowed and night
maintenance crews will remove all locks.

         26. All parking will be for the exclusive use of tenants, their
employees and guests. Boats, campers and motor homes, etc., are not to be left
on the property.

         27. Tenants and their employees will respect the "No Smoking" signs
posted in public restrooms in accordance with City ordinances.

         28. Tenants and their employees are expected to help maintain the
integrity and beauty of the Premises by not leaving trash, cigarette butts,
etc., in the atrium, hallways, and other common areas, unless left in containers
specifically marked for such purpose.

         29. Tenants and their employees are not to wade or swim in the
fountain, nor are any foreign articles or substances to be put into the fountain
or water.

         30. Not complying with the rules and regulations will constitute a
material breach of this Lease if so determined by judge or jury.

<PAGE>

                              FIRST LEASE AMENDMENT

THIS LEASE AMENDMENT is dated February 17, 1993, by and between Burnham Pacific
Properties, Inc., a California corporation ("Lessor"), and Applied Retail
Solutions, Inc., a California corporation. WHEREAS, on December 14, 1992,
Burnham Pacific Properties ("Lessor") and Applied Retail Solutions ("Lessee")
entered into a lease for approximately 16,186 rentable square feet, known as
Suite 335 of the building located at 12707 High Bluff Drive, San Diego,
California 92130; and

WHEREAS, Lessor and Lessee desire to amend said lease. NOW, THEREFORE, Lessor
and Lessee hereby agree as follows:

         1. Premises: The Premises described in Section 1 of the Lease shall be
reduced by 2,291 rentable square feet to reflect the actual square footage of
13,895 rentable square feet, more particularly described in the floorplan. set
forth in Exhibit "A-1" attached hereto which hereinafter shall supersede Exhibit
"A" attached to the Lease.

         2. Base Monthly Rental: Notwithstanding anything contained in the Lease
to the contrary, the Base Monthly Rental, net of separately metered utilities,
described in Section 3.1.1 of the Lease, shall be amended as follows:

                                                   Base Monthly Rental,
                                                    Net of Separately
                              Year                  Metered Utilities
                              1                        $16,118.20
                              2                        $16,812.95
                              3                        $17,507.70
                              4                        $18,202.45
                              5                        $18,897.20
                              6                        $19,591.95
                              7                        $20,286.701

         3. Operating Expense Adjustment: The Operating Expense Adjustment shall
continue in accordance with Section 11.3 of the Lease. Lessee's pro-rata share
of the building shall be amended to reflect the amended square footage in
Paragraph 1 above (13,895 rentable square feet), thereby reducing Lessee's
pro-rata share of the building to twenty-four and one-quarter percent (24.25 %)
for the purposes of calculating operating expense pass-throughs.

<PAGE>

         4. Tenant Improvements: Lessor shall pay to Lessee, Lessee's actual
cost of either purchasing or constructing a reception area desk, up to a maximum
cost of Two Thousand and No/100 Dollars ($2,000.00). Lessor shall make such
payment to Lessee within ten (10) business days after Lessor receives (i)
written notice from Lessee that such reception desk has been installed in the
Premises, and (ii) a final waiver of lien from Lessee's contractor and/or a paid
invoice from Lessee's supplier.

         5. Accept as provided herein, all other terms and conditions of the
Lease shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have hereunto set their hands as of the date
first written above.

LESSOR:                                 LESSES:

BURNHAM PACIFIC PROPERTIES, INC.,       APPLIED RETAIL SOLUTIONS, INC.

By:                                     By:
      Michael L. ubin
      Vice President
                                        Date:

<PAGE>

                           LEASE TERMINATION AGREEMENT

         THIS LEASE TERMINATION AGREEMENT ("Agreement") is made and entered into
as of this 18th day of December, 1992, by and between Burnham Pacific
Properties, Inc., a California corporation ("Lessor"), and Applied Retail
Solutions, Inc., a California corporation ("Lessee").

                                   RECITALS:

         A. Pursuant to the terms and provisions of that certain Office Building
Lease dated as of July 13, 1988, and amended as of June 25, 1992 (as amended,
the "Prior Lease"), Lessor (as the successor in interest to the original lessor,
Highlands Park Partnership, a California General Partnership) Lessor has leased
to Lessee approximately 6,145 net rentable square feet of space located on the
third floor, Suite 335 (the "Existing Premises"), within an office and
commercial building located at 12707 High Bluff Drive, San Diego, California
(the "Building").

         B. Lessor and Lessee desire to terminate the Prior Lease and execute a
new lease (the "New Lease") for approximately 16,186 net rentable square feet in
Suite 335 (the "New Premises") of the Building all on the terms and conditions
set forth therein.

                                   AGREEMENT:

         NOW, THEREFORE, in consideration of the mutual covenants and upon the
conditions contained herein, and for other good and valuable consideration
(including, without limitation, Lessee's execution of the New Lease), the
receipt and sufficiency of which are hereby acknowledged, Lessor and Lessee
agree as follows:

         1. Effective Date. As used in this Agreement, the term the "Effective
Date" shall mean the date after execution of the New Lease by both parties
thereto upon which (i) Lessee has fully occupied the New Premises (which date
shall not be earlier than the date the New Premises are substantially completed,
(as defined in Paragraph 2 of the New Lease), (ii) the contingency in Paragraph
34 of the New Lease has been removed, and (iii) Lessee is in compliance with all
of the provisions thereof.

         2. Termination of Prior Lease. Effective on the Effective Date, the
term of the Prior Lease shall be deemed terminated.

         3. Payment Obligations. In addition to any amounts that have or may
become due and owing under the Prior Lease and notwithstanding the provisions of
the New Lease, Lessee shall also remain responsible for the following:

                  a. Any expenses payable Lessor and/or to third parties,
including but not limited to, utility charges, real property taxes, rent,
operating expenses, and insurance premiums, which Lessee would otherwise have
been required to pay for or assume responsibility for pursuant to the Prior
Lease and which accrue during the term of the Prior Lease on or before the
Effective Date; and

                  b. Obligations payable to third parties unaffiliated in any
way with Lessor with respect to personal injuries or property damage occurring
during the term of the Prior Lease but prior to the Effective Date which Lessee
would otherwise have been required to pay pursuant to the Prior Lease.

         4. Rresentations and Warranties of Lessee. Lessee hereby makes the
following representations and warranties to Lessor (all of which representations
and warranties, together with all other representations and warranties made by
Lessee in this Agreement, shall survive the Effective Date):

                  a. Lessee has the full power, authority and legal right to
enter into and to perform and observe the provisions of this Agreement without
the authorization and consent of any other party or entity; this Agreement has
been duly and validly authorized and approved by all necessary corporate action
on the part of Lessee and will not violate the terms and provisions of Lessee's
bylaws or other organizational documents; and this Agreement has been duly and
validly executed and delivered by Lessee and constitutes a value, binding and
enforceable obligation of Lessee. All authorizations and consents required from
any other person or entity to enable Lessee to enter into this Agreement and
terminate the Prior Lease have been obtained.

<PAGE>

                  b. Lessee has not assigned, transferred or conveyed, and
agrees not to assign, transfer or convey, its interest in the Existing Premises,
the Prior Lease or any claims or potential claims it may have against Lessor.

         5. Indemnification. Lessee shall indemnify, protect, defend (by counsel
reasonably satisfactory to Lessor) and hold wholly harmless Lessor from and
against any claims, actions, causes of action, losses, liabilities, damages,
costs and expenses (including, without limitation, attorneys' fees and costs)
which arise out of or in connection with or inaccuracy in Lessee's
representations and warranties contained in this Agreement or any breach by
Lessee hereunder.

         6. Time of the Essence. Lessor and Lessee hereby acknowledge and agree
that time is of the essence of this Agreement.

         7. Invalidity of Provisions. If any provision of this Agreement is
found to be invalid or unenforceable by any court of competent jurisdiction, the
invalidity or unenforceability of any such provision shall not affect the
validity and enforceability of the remaining provisions hereof.

         8. Attorneys' Fees. If either party hereto commences an action against
the other to enforce any of the terms hereof, or to obtain damages for any
alleged breach of any of the terms hereof, or for a declaration of rights
hereunder, the prevailing party shall be entitled to have and recover from the
losing party reasonable attorneys' fees and costs, including without limitation,
any such fees and costs incurred in connection with any appeals, and any and all
bankruptcy claims, actions and proceedings deemed necessary or desirable to
enforce any of the terms of this Agreement or otherwise protect the interest of
such party.

         9. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California.

         10. Further Assurances. Each of the parties hereto agrees to execute
and deliver all such further documents and to take all such further actions as
may be reasonably required by any other party to effectuate fully the terms and
provisions of this Agreement, provided such documents orations do not materially
limit, reduce or impair the rights of the party upon whom such required is made.

         11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

         12. Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the heirs, successors and assigns of the parties hereto.

         13. Severability. Every provision of this Agreement is intended to be
severable. In the event any term or provision of this Agreement is declared to
be illegal or invalid for any reason whatsoever by a court of competent
jurisdiction, such illegality or invalidity shall not effect the balance of the
terms and provisions hereof, which terms and provisions shall remain binding and
enforceable.

         IN WITNESS WHEREOF, Lessor and Lessee have entered into this Agreement
as of the date first above written.

  LESSOR:                               LESSEE:

  BURNHAM PACIFIC PROPERTIES, INC.,     APPLIED RETAIL SOLUTIONS, INC.,
  a California corporation              a California corporation
  By:

                                       -2-

<PAGE>

                             SECOND LEASE AMENDMENT

THIS SECOND LEASE AMENDMENT is dated February 17, 1994, by and between Burnham
Pacific Properties, Inc., a California corporation ("Lessor"), and Applied
Retail Solutions, Inc., a California corporation.

WHEREAS, on December 14, 1992, Burnham Pacific Properties ("Lessor") and Applied
Retail Solutions ("Lessee") entered into a lease for approximately 16,186
rentable square feet, known as Suite 335 of the building located at 12707 High
Bluff Drive, San Diego, California 92130; and

WHEREAS, Lessor and Lessee amended said Lease ("First Lease Amendment") on
February 17, 1993; and

  WHEREAS, Lessor and Lessee desire to amend said Lease and First Lease
Amendment.

NOW, THEREFORE, Lessor and Lessee hereby agree as follows:

         1. Premises: The Premises described in Section 1 of the First Lease
Amendment shall be increased by 2,600 rentable square feet to reflect the actual
footage of 16,495 rentable square feet, more particularly described in the
floorplan set forth in Exhibit "A-2" attached hereto which hereinafter shall
supersede Exhibit "A-1" to the Lease. The expansion premises are more
particularly described in Exhibit "C" which shall be incorporated as a part of
the Lease.

         2. Commencement: The rental provisions of this Second Lease Amendment,
which are described in greater detail in Paragraph 3 of this Second Lease
Amendment, shall commence upon substantial completion of tenant improvements.
Lessor shall give Lessee not less than ten (10) business days prior written
notice of the date Lessor expects the Premises to be substantially complete.

         3. Base Monthly Rental: Notwithstanding anything contained in the Lease
or the First Lease Amendment to the contrary, the Base Monthly Rental, net of
separately metered utilities, described in Section 3.1.1 of the Lease, shall be
amended as follows:

                                                        BASE MONTHLY RENTAL,
                                                          NET OF SEPARATELY
              PERIOD METERED UTILITIES

             Commencement to 04/30/94                         $19,134.20
               05/01/94 to 04/30/95                           $19,958.95
               05/01/95 to 04/30/96                           $20,783.70
               05/01/96 to 04/30/97                           $21,608.45
               05/01/97 to 04/30/98                           $22,433.20
               05/01/98 to 04/30/99                           $23,257.95
               05/01/99 to 04/30/00                           $24,082.70

<PAGE>

         4. Operating Expense Adjustment: The Operating Expense Adjustment shall
continue in accordance with Section 11.3 of the Lease. Lessee's pro-rata share
of the building shall be amended to reflect the square footage in Paragraph 1 of
this Second Lease Amendment, thereby increasing Lessee's pro-rata share of the
building to 28.72 % for the purposes of calculating operating expense
reimbursements.

         5. Tenant Improvements: Lessor shall, subject to the provisions of this
Paragraph 5, at its sole cost and expense, construct improvements to the
expanded premises in accordance with Exhibit "C". Lessor shall not be
responsible for the cost of constructing improvements or providing labor,
materials or services which are not incorporated in Exhibit "C". Concurrent with
its execution of this Second Amendment to Lease, Lessee shall indicate its
approval of the scope of construction and other materials or services to be
provided by Lessor by initialing Exhibit "C" in the space provided. .

         6. Except as provided herein, all other terms and conditions of the
Lease shall remain in full force and effect.

         7. Successors and Assigns: This Second Lease Amendment shall be binding
upon and inure to the benefit of the successors and assigns of the respective
parties to this Agreement.

IN WITNESS WHEREOF, the parties have hereunto set their hands as of the date
first written above.

LESSOR:                                      LESSEE:
BURNHAM PACIFIC PROPERTIES, INC.             APPLIED RETAIL SOLUTIONS, INC.

By:                                          By:

<PAGE>

                              THIRD LEASE AMENDMENT

THIS THIRD LEASE AMENDMENT is dated August 17, 1994, by and between Burnham
Pacific Properties, Inc., a California corporation ("Lessor"), and Applied
Retail Solutions, Inc., a California corporation ("Lessee").

WHEREAS, on December 14, 1992, Burnham Pacific Properties and Applied Retail
Solutions entered into a lease for approximately 16,186 rentable square feet,
known as Suite 335 of the building located at 12707 High Bluff Drive, San Diego,
California 92130 (the "Lease"); and

WHEREAS, Lessor and Lessee amended said Lease ("First Lease Amendment") on
February 17, 1993; and

WHEREAS, Lessor and Lessee amended said Lease ("Second Lease Amendment") on
February 17, 1994; and

WHEREAS, Lessor and Lessee desire to amend said Lease, First Lease Amendment,
and Second Lease Amendment. NOW, THEREFORE, Lessor and Lessee hereby agree as
follows: 1. Premises: The Premises described in Section 1 of the Second Lease
Amendment shall be increased by 1,818 rentable square feet to reflect the total
footage of 18,313 rentable square feet, more particularly described in the
floorplan set forth in Exhibit "A-3" attached hereto which hereinafter shall
supersede Exhibit "A-2" to the Second Lease Amendment. The expansion premises
are more particularly described in the Exhibit "C" attached hereto which shall
be incorporated as a part of the Lease.

          2. Commencement: The rental provisions of this Third Lease Amendment,
which are described in greater detail in Paragraph 3 of this Third Lease
Amendment, shall commence upon substantial completion of tenant improvements.
Lessor shall give Lessee not less than ten (10) business days prior written
notice of the date Lessor expects the Premises to be substantially complete.

         3. Base Monthly Rental: Notwithstanding anything contained in the
Lease, the First Lease Amendment, or the Second Lease Amendment, to the
contrary, the Base Monthly Rental, net of separately metered utilities,
described in Section 3.1.1 of the Lease, shall be. amended as follows:

                                             Base Monthly Rental, Net
                                             of Separately Metered
                    Period                        Utilities
             Commencement to 04/30/95
             05/01/95 to 04/30/96                 $22,158.73
             05/01/96 to 04/30/97                 $23,074.38
             05/01/97 to 04/30/98                 $23,990.03
             05/01/98 to 04/30/99                 $25,821.33
             05/01/99 to 04/30/00                 $26,736.98

         4. Security Deposit: Article 3.5 of the Lease shall he amended to
reflect a security deposit of $22,158.73. Lessee shall deposit with Lessor,
concurrent with Lessee's execution of this Third Lease Amendment, the sum of
$955.07, representing the additional security deposit clue.

<PAGE>

         5. Operating Expense Adjustment: The Operating Expense Adjustment shall
continue in accordance with Section 11.3 of the Lease. Lessee's pro-rata share
of the building shall be amended to reflect the square footage in Paragraph 1 of
this Third Lease Amendment, therehy increasing Lessee's pro-rata share of the
building to 31.62% for the purposes of calculating operating expense
reimbursements.

         6. Tenant Improverr,ents: Lessor shall, subject to the provisions of
this Paragraph 6, at its sole cost and expense, construct improvements to the
expanded premises in accordance with Exhibit "C". Lessor shall not be
responsible for the cost of constructing improvements or providing labor,
materials or services which are not incorporated in Exhibit "C". Concurrent with
its execution of this Third Amendment to Lease, Lessee shall indicate its
approval of the scope of construction and other materials or services to be
provided by Lessor by initialing Exhibit "C" in the space provided.

         7. Except as provided herein, all other terms and conditions of the
Lease shall remain in full force and effect.

         8. Successors and Assigns: This Third Lease Amendment shall be binding
upon and inure to the benefit of the successors and assigns of the respective
parties to this Agreement.

IN WITNESS WHEREOF, the parties have hereunto set their hands as of the date
first written above.

LESSOR:                                      LESSEE:
BURNHAM PACIFIC PROPERTIES, INC.             APPLIED RETAIL SOLUTIONS, INC.

By:                                          By:

       Ira Schwartz
       Vice president                              Sam 0. Pickard

Date:     8-31-94                            Date: 8/29/94

                                             By:
                                                   Larry K. Lahodny
                                                   Date: 8/29/94

<PAGE>
                                                                  JOHN BURNBAM &
                                                                         COMPANY

410 WEST ASH STREET SAN DIEGO, CA 92101-3212 TELEPHONE 619-790-1333

April 4, 1994

Mr. Larry Lahodny
Executive Vice President
Applied Retail Solutions
12707 High Bluff Drive, Ste. 335
Sacs Diego, CA 92130

 Re:      Second Lease Amendment
          Lease dated December 14, 1992
          Suite 335
          12707 High Bluff Drive
          San Diego, CA 92130

 Dear Mr. Lahodny:

In accordance paragraph 2 of the referenced Lease Amendment, this letter is to
notify you that the expansion into Suite 310 will be substantially completed and
payment of rent will begin on Monday, April 11, 1994.

Please sign one copy of this letter and return it to me for our records. The
original of this letter wilt be mailed to you for your records and should be
kept with the Lease as a material part of the lease.

Sincerely,

Judith I-1. Chapman
Vice President - Portfolio Manager
Real Estate and Asset Management Division

                                             AGREED AND ACCEPTED;

                                             APPLIED RETAIL SOLUTIONS, INC.

                                             By: /s/ Larry Lahodny
                                                 -------------------------------
                                                 Larry Lahodny
                                                 Executive Vice President

                                             DATE:
                                                  ------------------------------

<PAGE>

                                                                        ORIGINAL

                             FOURTH LEASE AMENDMENT

         THIS FOURTH LEASE AMENDMENT is made and entered into this 7th day of
April, 1999, by and between PROPERTY LS OB ONE CORPORATION, an Oregon
corporation ("Lessor") and APPLIED RETAIL SOLUTIONS, INC., a Delaware
corporation ("Lessee").

                                    RECITALS

         A. Burnham Pacific Properties, Inc., Lessor's predecessor-in-interest,
and Lessee entered into that certain written lease agreement dated December 14,
1992 (the "Original Lease"), as amended by that certain First Lease Amendment
dated February 17, 1993 (the "First Amendment"), that certain Second Lease
Amendment dated February 17, 1994 (the "Second Amendment"), and that certain
Third Lease Amendment dated August 17, 1994 (the "Third Amendment")
(collectively, the "Lease"), pursuant to which Lessor's predecessor leased unto
Lessee and Lessee leased from Lessor's predecessor approximately 18,313 rentable
square feet of space commonly known as Suite 335 (the "Premises") located in
that certain office building known as 12707 High Bluff Drive, San Diego,
California 92130 (the "Building"), as more particularly described in the Lease.

         B. Lessor is the current owner of the building and has succeeded to all
of Burnham Pacific Properties, Inc.'s right, title and interest in and to the
Lease.

         C. The expiration date of the Lease has been previously documented
incorrectly in the Second Amendment and the Third Amendment as April 30, 2000.
The term of the Lease actually expires on August 31, 2000, and the parties
hereto desire to correct such error. Furthermore, Lessee desires to extend the
term for an additional four (4)-year period. Lessor agrees to so extend the term
of the Lease upon the terms and conditions outlined in this Amendment.

                                    AGREEMENT

         NOW, THEREFORE, for and in consideration of the facts mentioned above,
the mutual promises set forth below and other good and valuable consideration,
the sufficiency and receipt of,which is hereby acknowledged, the parties hereto
do agree as follows:

         1. Effective Date. Unless otherwise provided herein, the amendments to
the Lease outlined below shall be effective upon the Commencement Date (as
defined below).

         2. Commencement Date; Term of Lease. Section 2.1 of the Original Lease
shall be deleted in its entirety and replaced with the following:

                                        1

<PAGE>

         "2.1 The term of this Lease shall be for forty-eight (48) months
commencing on September 1, 2000 (the "Commencement Date") and ending on August
31, 2004 (the "Termination Date")."

         Also, Sections 2.3 and 2.4 are no longer applicable and, therefore,
shall be deleted in their entirety.

         3. BASE MONTHLY RENTAL. Due to the error in the prior amendments
regarding the expiration date of the Lease, as referenced in the recital
paragraphs above, as of the date this Amendment is executed, the last line of
the chart setting forth Base Monthly Rental in paragraph 3 of the Third
Amendment shall be changed to read as follows:

                   "05/01/99 to 8/31/00             $26,736.98"

         Also, as of the Effective Date of this Amendment, the chart setting
forth Base Monthly Rental in Section 3.1.1 of the Original Lease, as amended by
the First Amendment, Second Amendment, Third Amendment and the immediately
preceding paragraph of this Amendment, shall be deleted in its entirety and
replaced with the following:

         "Period                 Monthly P.S.F. Rate              Monthly Rental
         9/1/00 - 8/31/01               $2.05                     $37,541.65
         9/1/01 - 8/31/02               $2.12                     $38,823.56
         9/1/02 - 8/31/03               $2.19                     $40,105.47
         9/1/03 - 8/31/04               $2.26                     $41,387.38"

         4. SECURITY DEPOSIT. The security deposit currently being held by
Lessor in the amount of Twenty-Two Thousand One Hundred Fifty-Eight and 73/100
Dollars ($22,158.73) shall continue to be held by Lessor in accordance with the
terms and conditions of Section 3.5 of the Original Lease during the remainder
of the term of the Lease, as extended by this Amendment.

         5. Use of Premises. The following shall be added as a new Section 4.6
to the Lease:

                  "4.6 Lessee shall not bring or keep, or permit to be brought
         or kept, in the Premises or the Building any toxic or hazardous
         substance, material or waste or any other ;_ contaminant or pollutant,
         provided that Lessee may store and use toner, cleaning fluids, and
         similar office materials if such storage and usage is (i) permitted by
         applicable law and (ii) accomplished in strict compliance with such
         law. Lessee shall indemnify, defend, and hold Lessor harmless from and
         against any and all actions, costs, claims, damages (including without
         limitation, attorneys', consultants', and experts' fees, court costs,
         and amount paid in settlement of any claims or actions), fines,
         forfeitures, or other civil, administrative, or criminal penalties,
         injunctive or other relief (whether or not based upon personal injury,
         property damage, or contamination of, or adverse effects upon, the
         environment, water tables, or natural resources), liabilities, or
         losses arising from a

                                        2

<PAGE>

          breach of this prohibition by Lessee, its affiliates, agents,
          employees, contractors, subtenants, assignees, or invitees."

         6. INSURANCE. Article 8 of the Original Lease shall be amended as
follows. First, Section 8.1.1 shall be deleted and replaced with the following:

                   "8.1.1 Commercial general liability insurance which insures
          against claims for bodily injury, personal injury, advertising injury,
          and property damage based upon, involving, or arising out of the use,
          occupancy, or maintenance of the Premises and the Building. Such
          insurance shall afford, at a minimum, the following limits:

                   Each Occurrence                               $   1,000,000
                   General Aggregate                                 2,000,000
                   Products/Completed Operations Aggregate           2,000,000
                   Personal and Advertising Injury Liability         1,000,000
                   Fire Damage Legal Liability                          50,000
                   Medical Payments                                      5,000

         Any general aggregate limit shall apply on a per-location basis. Such
insurance shall name Lessor, Lessor's agent and advisor, Lessor's property
manager, including the trustees, officers, directors, agents, and employees of
each of the foregoing entities ("Lessor's Representatives"), and any mortgagee,
all as additional insureds."

         Second, the following shall be added as new sections of Article 8 to
the Original Lease:

                   "8.1.2 Business auto liability which insures against bodily
          injury and property damage claims arising out of the ownership,
          maintenance, or use of "any auto." A minimum of a $1,000,000 combined
          single limit per accident shall apply.

                    8.1.3 Umbrella excess liability insurance, on an occurrence
           basis, that applies excess of required commercial general liability,
           business auto liability, and employers liability policies, which
           insures against bodily injury, property damage, personal injury and
           advertising injury claims with the following minimum limits:

                    Each Occurrence                        $  2,000,000
                    Annual Aggregate                          2,000,000

         These limits shall be in addition to and not including those stated for
underlying commercial general liability, business auto liability, and employers
liability insurance. Such policy shall name Lessor, its trustees, officers,
directors, agents, and employees, Lessor's Representatives, and any mortgagee as
additional insureds."

         Existing Sections 8.1.2, 8.1.3 and 8.1.4 of the Original Lease shall be
re-numbered as Sections 8.1.4, 8.1.5 and 8.1.6, respectively.

                                        3

<PAGE>

         The second sentence of Section 8.1.3 (now numbered as 8.1.5) shall be
deleted in its entirety and replaced with the following:

          "Certificates of insurance shall include an endorsement for each
          policy showing that Lessor, its trustees, officers, directors, agents,
          and employees, Lessor's mortgagees and Lessor's Representatives are
          included as additional insureds on all liability policies other than
          employer's liability and workers COMPENSATION POLICIES."

         7. RIGHT OF FIRST REFUSAL. Article 30 of the Original Lease, including
Section 30.1 thereunder, shall be deleted in its entirety.

         8. CONTINGENCY. Article 34 of the Original Lease is no longer
applicable and, therefore, it shall be deleted in its entirety.

         9. EXPANSION SPACE. As of the date this Amendment is fully executed,
the following shall be added to the Lease as a new Article 34:

                    "34. EXPANSION SPACE. Subject to the terms and conditions
           contained in the following sections, Lessee shall be obligated to
           lease that certain space contiguous to the Premises known as Suite
           325 which contains approximately 1,308 rentable square feet (the
           "Expansion Space") as soon as it becomes available to Lessor for
           leasing.

                             34.1 Whenever the current tenant of the Expansion
           Space vacates the same such that the Expansion Space is available to
           Lessor to re-lease, Lessor shall notify Lessee in writing that the
           Expansion Space is available. Within ten (10) days after receiving
           such notice, Lessee shall execute a lease amendment in the form
           attached hereto and incorporated herein by this reference as Exhibit
           "D."

                             34.2 The effective date of Lessee's leasing of the
           Expansion Space shall be the date Lessor delivers the Expansion Space
           to Lessee with the Expansion Improvements (as defined in Section 34.3
           below) substantially complete. Lessor shall give Lessee ten (10)
           days' prior notice of the date that Lessor anticipates completing the
           Expansion Improvements and delivering the Expansion Space to Lessee.
           Lessee's leasing of the Expansion Space shall be for the same term,
           and upon the same terms, covenants, and conditions set forth in this
           Lease, except as follows:

                             (i) Base Monthly Rental shall be increased by an
                    amount equal to the then-applicable per square foot rental
                    rate set forth in Section 3.1.1 of this Lease (or otherwise
                    calculable based on the monthly figures set forth in such
                    section) multiplied by 1,308, provided, however, if the
                    effective date of Lessee's leasing of the Expansion Space
                    shall occur prior to September 1, 2000, Base Monthly Rental
                    owing under this Lease from such effective date through
                    August 31, 2000, shall be increased by an amount equal to
                    One and 95/100 Dollars ($1.95) multiplied by 1,308, and
                    thereafter increased in accordance with the table set forth
                    in Section 3.1.1 of this Lease.

                                        4
<PAGE>

                            (ii) Lessee's pro rata share of Operating Expenses,
                   as set forth in Section 11.3 of this Lease, shall be
                   increased by a percentage determined by multiplying 100 times
                   the result of dividing the square footage of the Expansion
                   Space by the rentable area of the Building.

                            34.3 Prior to delivering possession of the Expansion
          Space to Lessee, Lessor shall, at its sole cost and expense, complete
          those mutually agreed upon improvements set forth in the plans and
          specifications attached hereto and incorporated herein by this
          reference as Exhibit "I" (the "Expansion Improvements"). If Tenant
          makes any changes to the plans and specifications attached hereto that
          results in an increase in Lessor's costs to complete the Expansion
          Improvements, Lessee shall be solely responsible for such increased
          costs and shall reimburse Lessor for such increased costs upon receipt
          from Lessor of evidence of such increased costs. Other than the
          Expansion Improvements to be completed by Lessor, Lessee agrees to
          accept possession of the Expansion Space in its then-existing "as-is"
          condition."

         10. CONDITION OF PREMISES. Lessee acknowledges and agrees that Lessor
has agreed to extend the term of the Lease on the condition that Lessee accept
the Premises in their nowexisting "as-is" condition, with the following
exceptions. Lessor shall use commercially reasonable efforts to complete the
following improvements within the Premises as soon as possible after this
Amendment is fully executed: (i) install new building-standard carpeting,
selected by Lessee and approved by Lessor, in those portions of the Premises
designated by Lessee, at a cost not to exceed Eighteen Thousand and no/100
Dollars ($18,000.00) (the "Carpeting Allowance"), (ii) professionally clean the
carpeting in those portions in the Premises not having new carpeting installed
pursuant to (i) above, and (iii) repaint the interior walls of the Premises a
color selected by Lessee and approved by Lessor (hereinafter items (i), (ii) and
(iii) shall collectively be referred to as the "Improvements"). If the costs
incurred by Lessor to purchase and install the new carpeting in those portions
of the Premises designated by Lessee should exceed the Carpeting Allowance,
Lessee shall reimburse Lessor the amount of such excess costs upon receipt from
Lessor of evidence of such excess costs. Lessee agrees to hold Lessor harmless
from any interruption of business that may be suffered by Lessee and from any
other liability whatsoever resulting from the completion of the Improvements,
except for the gross negligence or intentional misconduct of Lessor, its agents,
employees or contractors. Lessor will use commercially reasonable efforts to
complete the Improvements as soon as possible after this Amendment is fully
executed, but can make no guaranty as to a specific date of completion, and said
completion date shall not affect the payment of rent due from Lessee under
Lessee's existing lease. Lessor shall be responsible for moving all of Lessee's
furniture, wall hangings, and wall coverings from the interior of the Premises
prior to Lessor commencing its work, and Lessor shall not be responsible for any
damage to such items except if caused by the negligence or intentional
misconduct of Lessor, its agents, employees or contractors; provided, however,
if the costs of moving Lessee's property should exceed Seven Thousand and no/100
Dollars ($7,000.00), Lessee shall reimburse Lessor for any such excess costs
upon receipt from Lessor of evidence of such excess costs. Lessee acknowledges
that Lessor has forewarned Lessee of the inconvenience that Lessee may
experience by occupying the Premises during the High8216.doc 5

<PAGE>

completion of the Improvements including, but not limited to, noise, dust and
debris, and that Lessor is accommodating Lessee's request to complete the
Improvements during Lessee's occupancy. All references in the Lease to any
tenant improvements Lessor previously agreed to complete within the Premises
(i.e. Section 1.2 of the Original Lease, paragraph 4 of the First Amendment,
paragraph 5 of the Second Amendment and paragraph 6 of the Third Amendment) are
no longer applicable and shall be deleted in their entirety.

         11. ADDITIONAL PROVISION. The following Article 35 shall be added to
the Lease:

               35. COMPLIANCE WITH LAWS

                            35.1 Lessee shall, at its sole cost and expense,
                   promptly comply with all laws, ordinances, rules,
                   regulations, orders, and other requirements of any government
                   or public authority now in force or which may hereafter be in
                   force, with the requirements of any board of fire
                   underwriters or other similar body now or hereafter
                   constituted, and with any direction or certificate of
                   occupancy issued pursuant to any law by any governmental
                   agency or officer, insofar as any thereof relate to or affect
                   the condition, use, or occupancy of the Premises or the
                   operation, use, or maintenance of any equipment, fixtures, or
                   improvements in the Premises, excluding requirements of
                   structural changes not related to or affected by Lessee's
                   acts or use of the Premises or by improvements made by or for
                   Lessee."

         12. NO FURTHER MODIFICATIONS. Except as otherwise set forth in this
Amendment, the terms and conditions of the Lease remain unchanged and in full
force and effect.

         13. COUNTERPARTS. This Amendment may be executed in counterparts, each
of which shall be deemed an original, and all of which when executed and
delivered shall together constitute one and the same instrument.

         14. AUTHORITY. Each party represents that the person executing this
Amendment for such party is acting on behalf of such party and is duly
authorized to execute this Amendment for such party.

                         [Signatures on following page.]

                                        6
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Fourth Lease
Amendment as of the date first written above.

 LESSOR:                    PROPERTY LS OB ONE CORPORATION,
                            an Oregon corporation

                            By: LaSalle Advisors Capital Management, Inc.
                                Its Authorized Agent

                            By: /s/ Jeffrey E. West
                               ----------------------------------
                               Jeffrey E. West
                               Its Vice President

                            By: /s/ William Barendrick, Jr.
                               ----------------------------------
                               William W. Barendrick Jr.
                               Its Principal

LESSEE:                     APPLIED RETAIL SOLUTIONS, INC.
                            a Delaware corporation

                            By:
                            Name: Sam Pickard
                            Title:  President

<PAGE>

                                   EXHIBIT "I"

                             EXPANSION IMPROVEMENTS

                                 [graphic here]

 GENERAL NOTES
 1.  FINISHES: NEW CARPET, PAINT, AND BASE.
 FLOOR PLAN NOTES
 3.  EXISTING WALLS TO BE REMOVED. PATCH AND REPAIR WALLS
     AS NECESSARY.
 4.  NEW ELECTRICAL AND TELEPHONE OUTLETS PER ENCLOSED
     PLAN.
 5.  NEW WALLS TO 6" ABOVE CI7LWG GRID - TYPICAL
 G.  EXISTING WALLS-TYPICAL.
 7.  INTERIOR GLASS - 3'W1DE X FULL HEIGHT.
 8.  BUILDING STANDARD DOORS TO h1ATCH 1x1STING.
 9.  FILL IN E(ISf(NG EXTERIOR DOOR LOCATION.

<PAGE>

                                   EXHIBIT "D"

                                 LEASE AMENDMENT

         THIS LEASE AMENDMENT is made and entered into this day of by and
between PROPERTY LS OB ONE CORPORATION, an Oregon corporation ("Lessor") and
APPLIED RETAIL SOLUTIONS, INC., a Delaware corporation ("Lessee").

                                    RECITALS

         A. Burnham Pacific Properties, Inc., Lessor's predecessor-in-interest,
and Lessee entered into that certain written lease agreement dated December 14,
1992 (the "Original Lease"), as amended by that certain First Lease Amendment
dated February 17, 1993 (the "First Amendment"), that certain Second Lease
Amendment dated February 17, 1994 (the "Second Amendment"), that certain Third
Lease Amendment dated August 17, 1994 (the "Third Amendment"), and that certain
Fourth Lease Amendment dated 1999 (collectively, the "Lease"), pursuant to which
Lessor's predecessor leased unto Lessee and Lessee leased from Lessor's
predecessor approximately 18,313 rentable square feet of space commonly known as
Suite 335 (the "Premises") located in that certain office building known as
12707 High Bluff Drive, San Diego, California 92130 (the "Building"), as more
particularly described in the Lease.

         B. Lessor is the current owner of the building and has succeeded to all
of Burnham Pacific Properties, Inc.'s right, title and interest in and to the
Lease.

         C. Suite 325 within the Building, also known as the Expansion Space (as
defined in Article 34 of the Lease which is set forth in the paragraph 9. of the
Fourth Amendment), has become available to Lessor for re-leasing and the parties
desire to enter into this Amendment to document Lessee's expansion into said
space.

                                    AGREEMENT

         NOW, THEREFORE, for and in consideration of the facts mentioned above,
the mutual promises set forth below and other good and valuable consideration,
the sufficiency and receipt of which is hereby acknowledged, the parties hereto
do agree as follows:

         1. Effective Date. The amendments to the Lease outlined below shall be
effective upon the date Lessor delivers the Expansion Space to Lessee with the
Expansion Improvements (as defined in paragraph 2. below) substantially
complete. Lessor shall give Lessee ten (10) days' prior notice of the date that
Lessor anticipates completing the Expansion Improvements and delivering the
Expansion Space to Lessee.

         2. Improvements. Prior to delivering possession of the Expansion Space
to Lessee, Lessor shall, at its sole cost and expense, complete those mutually
agreed upon improvements

                                       1
<PAGE>

                                                                        ORIGINAL

                              FIFTH LEASE AMENDMENT

         THIS FIFTH LEASE AMENDMENT is made and entered into this `L day of.;
1999, by and between PROPERTY LS OB ONE CORPORATION, an Oregon corporation
("Lessor") and APPLIED RETAIL SOLUTIONS, INC., a Delaware corporation
("Lessee").

                                    RECITALS

         A. Burnham Pacific Properties, Inc., Lessor's predecessor-in-interest,
and Lessee entered into that certain written lease agreement dated December 14,
1992 (the "Original Lease"), as amended by that certain First Lease Amendment
dated February 17, 1993 (the "First Amendment"), that certain Second Lease
Amendment dated February 17, 1994 (the "Second Amendment"), that certain Third
Lease Amendment dated August 17, 1994 (the "Third Amendment"), and that certain
Fourth Lease Amendment dated April 7, 1999 (collectively, the "Lease"), pursuant
to which Lessor's predecessor leased unto Lessee and Lessee leased from Lessor's
predecessor approximately 18,313 rentable square feet of space commonly known as
Suite 335 (the "Original Premises") located in that certain office building
known as 12707 High Bluff Drive, San Diego, California 92130 (the "Building"),
as more particularly described in the Lease. l

         B. Lessor is the current owner of the building and has succeeded to all
of Burnham Pacific Properties, Inc.'s right, title and interest in and to the
Lease.

         C. Suite 325 within the Building, also known as the Expansion Space (as
defined in Article 34 of the Lease which is set forth in the paragraph 9. of the
Fourth Amendment), has or will become available to Lessor for re-leasing and the
parties desire to enter into this Amendment to document Lessee's expansion into
said space.

                                    AGREEMENT

         NOW, THEREFORE, for and in consideration of the facts mentioned above,
the mutual promises set forth below and other good and valuable consideration,
the sufficiency and receipt of which is hereby acknowledged, the parties hereto
do agree as follows:

         1. Effective Date. The amendments to the Lease outlined below shall be
effective upon the date Lessor delivers the Expansion Space to Lessee with the
Expansion Improvements (as defined in paragraph 2. below) substantially complete
(the "Effective Date"). Lessor shall give Lessee ten (10) days' prior notice of
the date that Lessor anticipates completing the Expansion Improvements and
delivering the Expansion Space to Lessee.

         2. Improvements. Prior to delivering possession of the Expansion Space
to Lessee, Lessor shall, at its sole cost and expense, complete those mutually
agreed upon improvements depicted on the plans and specifications attached
hereto and incorporated herein by this reference

<PAGE>

as Exhibit "I" (the "Expansion Improvements"). If Lessee makes any changes to
the plans and specifications attached hereto that results in an increase in
Lessor's costs to complete the Expansion Improvements, Lessee shall be solely
responsible for such increased costs and shall reimburse Lessor for such
increased costs upon receipt from Lessor of evidence of such increased costs.
Other than the Expansion Improvements to be completed by Lessor, Lessee agrees
to accept possession of the Expansion Space in its existing "as-is" condition.

         3. BASE MONTHLY RENTAL. From the Effective Date through August 31,
2000, Lessee shall pay the Base Monthly Rental for the Original Premises in the
amount of Twenty-Six Thousand Seven Hundred Thirty-Six and 98/100 Dollars
($26,736.98), as set forth in paragraph 3 of the Fourth Amendment. In addition
to said sum, from the Effective Date through August 31, 2000, Lessee shall pay
Base Monthly Rental for the Expansion Space in the amount of Two Thousand Five
Hundred Fifty and 60/100 Dollars ($2,550.60).

         As of September 1, 2000, the chart in Section 3.1.1 of the Original
Lease, as amended by the First Amendment, Second Amendment, Third Amendment,
Fourth Amendment and the preceding paragraph, shall be deleted and replaced with
the following:

           "Period Rate          Monthly Rental
           9/1/00 - 8/31/01          $2.05                    $40,223.05
           9/1/01 - 8/31/02          $2.12                    $41,596.52
           9/1/02 - 8/31/03          $2.19                    $42,969.99
           9/1/03 - 8/31/04          $2.26                    $44,343.46"

         4. OPERATING EXPENSES ADJUSTMENT. Lessee's pro rata share of Operating
Expenses, as set forth in Section 11.3 of this Lease, shall be increased from
31.62% to 33.88%.

         5. PARKING. In consideration of Lessee's leasing of the Expansion
Space, Lessee shall be entitled to five (5) additional parking spaces at the
Building, in accordance with the parking ratio set forth in Section 31 of the
Lease.

         6. CONTINGENCY. Lessee acknowledges and agrees that, as of the date of
this Amendment, the Expansion Space is currently lawfully occupied by Laser
Power Corporation ("Laser Power"), however, Lessee has been informed by Lessor
that Lessor is negotiating the terms of a lease termination agreement with Laser
Power pursuant to which Laser Power will agree to vacate the Expansion Space
within five (5) days after said termination agreement is fully executed. Lessor
shall use commercially reasonable efforts to obtain Laser Power's signature on
said termination agreement simultaneously with the execution of this Amendment.
As soon as possible after Laser Power vacates the Expansion Space, Lessor shall
commence the construction of the Expansion Improvements and deliver the
Expansion Improvements to Lessee upon the date the same are substantially
completed. If Laser Power fails to execute the lease termination

<PAGE>

agreement referred to herein, or fails to vacate the Expansion Space, this
Amendment shall be null and void and of no further force or effect.

         7. No Further Modifications. Except as otherwise set forth in this
Amendment, the terms and conditions of the Lease remain unchanged and in full
force and effect.

         8. Counterparts. This Amendment may be executed in counterparts, each
of which shall be deemed an original, and all of which when executed and
delivered shall together constitute one and the same instrument.

         9. Authority. Each party represents that the person executing this
Amendment for such party is acting on behalf of such party and is duly
authorized to execute this Amendment for such party.

IN WITNESS WHEREOF, the parties hereto have executed this Lease Amendment as of
the date first written above.

  LESSOR:    PROPERTY LS OB ONE CORPORATION,
             an Oregon corporation
             By:  LaSalle Advisors Capital Management, Inc.
                  Its Authorized Agent

                         By: /s/ Jeffrey E. West
                             -----------------------------
                             Jeffrey E. West
                             Its Vice President

                         By:
                              William W. Barndrick, Jr.
                              Its Principal

LESSEE:    APPLIED RETAIL SOLUTIONS, INC.
           a Delaware corporation

<PAGE>

                                  EXHIBIT "I"

                             EXPANSION IMPROVEMENTS

                                 [graphic here]

4 - FIFTH LEASE AMENDMENT
w
general NOTE
1.  FINISHES: NEW CARPET. PAINT. AND BASE.
FLOOR PLAN NOTES
3. EXISTING WALLS TO BE REMOVED. PATCH AND REPAIR WALLS
 AS NECESSARY.
4.    NEW ELECTRICAL AND TELEPHONE OUTLETS PER ENCLOSED
 PLAN.
5.    NEW WALLS TO 6' ABOVE CEILING GRID - TYPICAL
6.       EXISTING WALLS-TYPICAL
7.  INTERIOR GLASS - 3'iNiDE X FULL HEIGHT.
 8.   BUILDING STANDARD DOORS TO MATCH EXISTING.
9.   FILL IN Existing Exterior DOOR LOCATION.
U:IUSERSIOPERF\HIGH8384.AMD

<PAGE>

                                  EXHIBIT "I"

                             EXPANSION IMPROVEMENTS

                                 [graphic here]

4 - FIFTH LEASE AMENDMENT
GENERAL NOTES
I.                                        FINISHES: NEW CARPET, PAINT, AND BASE.
FLOOR PLAN N(
3.EYISi'1NG WALLS TO BE REMOVED. PATCH AND REPAIR WALLS
 AS NECESSARY.
4.    NEW ELECTRICAL AND TELEPHONE OUTLETS PER ENCLOSED
 PLAN.
5.    NEW WALLS TO 6' ABOVE CEILING GRID - TYPICAL
E.       EXISTING WALIS-TYPICAL
7. INTERIOR CLASS - 3' WIDE X FULL HEIGHT.
 8.    BUILDING STANDARD DOORS TO MATCH EXISTING
9.   FILL IN EXISTING EXTERIOR DOOR LOCATION.
U:IUSERS\OPERFIHIGH8384.AMD<PAGE>
EXHIBIT 10.39

                                BRIN-MAR L.L.P.,
                        a California limited partnership

                                       and

                       ISLAND PACIFIC SYSTEMS CORPORATION,

                            a California corporation
                                   ("Tenant")
                            NEWPORT GATEWAY - TOWER I
                                   Suite 1200
                            19800 MacArthur Boulevard
                            Irvine, California 92715

                             DATED: March 29 ,1995

THE DELIVERY OF THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER TO LEASE, OR A
RESERVATION OF, OR OPTION FOR, THE PREMISES. THIS DOCUMENT SHALL BECOME
EFFECTIVE AND BINDING ONLY UPON EXECUTION AND DELIVERY HEREOF BY LANDLORD. NO
ACT, OMISSION OR STATEMENT OF ANY EMPLOYEE OR AGENT OF LANDLORD OR OF LANDLORD'S
BROKER SHALL ALTER, CHANGE OR MODIFY ANY OF THE FOREGOING.

<PAGE>

2.4         ANNUAL BASIC Rent                                          1
25          Monthly Rental Installments                                2
2.6         Tenant's Proportionate Share                               2
2.7         Base Year                                                  2
2.8         Security Deposit                                           2
2.9         Permitted Use                                              2
2.10        Tenant's Broker                                            2
2.11        Addresses for Notices                                      2
2.12        Parking Spaces                                             3
2.13        Initial Monthly Parking
            Structure Rent                                             3
2.14        Guarantor                                                  3
3.          TERM                                                       3
3.1         Term                                                       3
3.2         Commencement Date                                          3
3.3         Use and Occupancy Prior to Commencement Date               3
3.4         Holding Over                                               3
4.          BASIC RENT                                                 4
4.1         Basic Rent                                                 4
4.2         No Rent Bills                                              4
5.          ADDITIONAL RENT                                            4
5.1         Additional Rent                                            4
5.2         Tenant's Audit Rights                                      5
5.3         Tenant's Taxes                                             5
5.4         Recovery of Rent                                           5
5.5         Definitions                                                5
6.          SECURITY DEPOSIT                                           7
6.1         Security Deposit                                           7
6.2         Transfers of Security Deposit                              7
7.          USE AND OCCUPANCY                                          7
7.1         Use                                                        7
7.2         Compliance with Law                                        8
7.3         Laws Concerning Alterations                                8
7.4         Hazardous Materials                                        8
8.          PARKING                                                    9
8.1         Parking Spaces and Monthly Charges                         9
8.2         Indemnity                                                  9
8.3         Disclaimer of Liability                                    9
8.4         Assignment/Subleasing of Parking Spaces                    9
8.5         Parking Cards                                              9
9.          IMPROVEMENTS AND ALTERATIONS                               9
9.1         Landlord's Right to Perform Additional Construction       10
9.2         Tenant Alterations                                        10
9.3         Liens and Encumbrances                                    10
9.4         Removal of Improvements and Fixtures                      11
9.5         Signs                                                     11
10.         UTILITIES AND SERVICES                                    11
10.1        Landlord's Obligations                                    11
10.2        Electricity                                               12
10.3        Additional Services                                       12
10.4        Interruption of Utilities and Services                    13

                                       i
<PAGE>

13
13.1        Tenant's Insurance                                        15
13.2        Requirements                                              15
13.3        Limitation of Landlord's liability                        16
13.4        Indemnification of Landlord                               16
13.5        Waiver of Subrogation                                     16
14.         EVENTS OF DEFAULT AND REMEDIES                            16
14.1        Events of Default                                         16
14.2        Remedies                                                  17
14.3        Late Charges, Interest and Repeated Delinquency           17
14.4        Damages
14.5        Definition of Worth at the Time of Award
14.6        Reentry                                                   --
14.7        Reletting                                                 18
14.8        Payment by Tenant Upon Termination                        19
14.9        Termination of Agreements                                 19
14.10       Waiver by Tenant                                          19
14.11       Default by Landlord                                       19
15.         ASSIGNMENT AND SUBLETTING                                 19
15.1        Prohibition                                               19
15.2        Procedures                                                19
15.3        Assumption of Obligations                                 20
15.4        No Waiver                                                 20
15.5        Surrender and Change of Control                           20
15.6        Options Not Assignable                                    21
16.         ADDITIONAL PROVISIONS                                     21
16.1        Relocation of Premises                                    21
16.2        Subordination and Attornment                              21
16.3        Estoppel Certificates                                     22
16.4        Inspection and Access to the Premises                     22
16.5        Unavoidable Delay                                         22
16.6        Waiver                                                    22
16.7        Demolition and Renovation                                 22
16.8        Recordation                                               22
16.9        Entire Agreement                                          23
16.10       Notices                                                   23
16.11       Interpretation                                            23
16.12       Extent of Lease Obligations                               23
16.13       Brokers                                                   23
16.14       Payments                                                  23
16.15       Time of Essence                                           23
16.16       Applicable Laws                                           23
16.17       Waiver of Jury Trial                                      23
16.18       Attorneys' Fees                                           24
16.19       Relationship of Parties                                   24
16.20       Waiver                                                    24
16.21       Partial Invalidity                                        24
16.22       Construction of Lease Provisions                          24
16.23       Quiet Enjoyment                                           24
16.24       Limitation on Liability                                   24
16.25       Tenant as Partnership or Corporation                      24
16.26       Sale of Building or Property                              25
16.27       Signage                                                   25
16.28       Exhibits                                                  25

                                       ii
<PAGE>

         A. LANDLORD IS ~Vrltr"wv "Property"); and

         B. Tenant desires to enter into a. lease with Landlord for certain
office space in the building located on the Property, upon the terms, conditions
and covenants hereinafter set forth;

         NOW, THEREFORE, in consideration of the foregoing recitals, and the
terms, covenants and agreements set forth below, the sufficiency of which are
hereby acknowledged, Landlord and Tenant hereby agree as follows:

                                    ARTICLE 1
                                LEASE OF PREMISES

         Landlord hereby leases to Tenant and Tenant hereby leases and hires
from Landlord, without representation or warranty, express or implied, those
certain premises (the "Premises") described in Section 2.1 hereof located in
that certain office building (the "Building") at 19800 MacArthur Boulevard, in
the City of Irvine, County of Orange, State of California. Tenant shall also
have the non-exclusive right, in common with others, to use common entrances,
lobbies, elevators, stairs, serviceways and other common areas in and adjacent
to the Building (the "Common Areas"), provided, however, that Tenant shall have
no right to use any fire escapes except during a fire alarm or a fire or other
emergency. The Property, Premises, Building, and Common Areas, together with all
present and future improvements, additions and changes thereto and the adjacent
parking structure (the "Parking Structure") are hereinafter collectively -
referred to as the "Project".

         Tenant hereby acknowledges and agrees that the Project is located in
the City of Irvine, California and that the Project name, "Newport Gateway" is
recognized as merely being a tradename used by Landlord and does not constitute
a representation by Landlord of the current or future city in which the Project
is or shall be situated

                                   ARTICLE 11
                             BASIC LEASE PROVISIONS

         This Article contains the basic business terms of this Lease (the
"Basic Lease Provisions"). If there is any conflict between any of the Basic
Lease Provisions and any of the other provisions of this Lease, such' other
provisions shall govern and prevail.

         2.1 Premises: The Premises are outlined on the diagram attached hereto
as Exhibit "B" and are located on the twelfth 12th floor of the Building in
Suite 1200.

         2.2 Term: ten 10 years and zero 0 months. Section 3.1)

         2.3 Target Commencement Date: July 1. 1995. Section 3.2)

         2.4 Commencement Date: As defined in Section 3.2 and subject to
adjustment as provided in

* Rentable Square Footage shall be determined by establishing the Usable Square
Footage of the Premises in accordance with the Method for Measuring Floor Area
in Office buildings, ANSI Zb5.1-1980 and then multiplying the Usable Square
Footage by a "load factor" of 1.134, The Rentable Square Footage shall be
subject to adjustment for final field measurements or corrected area
computations as may be established by Landlord's Space Planner, and the Total
Monthly Rental Installments shall be adjusted accordingly.

         2.6 Tenant's Proportionate Share: 18.510 rentable square feet divided
by 286,130 square feet.

         Section 5.1) 2.7 Base Year: 1995. Section 5.1)

         2.8 Security Deposit: $ 38.278.68, subject to adjustment as provided in
Section 6.

         2.9 Permitted Use: Office and administration use. Article 7)

         2.10 Tenant's Broker: Cushman and Wakefield of California, Inc..

         Landlord's Broker: COMPASS Management and Leasing, Inc., Section 6.13

         2.11 Addresses for Notices S action 16.10
                 Tenant: After the Commencement Date, to the Premises and to:
                               St. Peter & Cooper
                               3 Embarcadero Center
                               Suite 2900
                               San Francisco, CA 94111
                               Attention: Joan Cullin
                               Prior to the Commencement Date:
                               12 Corporate Plaza
                               Newport Beach, CA 92660

         Landlord: The Equitable Life Assurance Society of the United States
         One Bush Street, Suite 1200 San Francisco, California 94104 Attention:
         Asset Manager - Prime Property Fund

                                      -2-

<PAGE>

         2.12 (A) PARKING SPACES

         2.13 Initial Monthly Parking Structure rent Rent:

              $ 50.00 per unreserved space.
              $125.00 per reserved space.

         5 reserved spaces. See Rider "Page 3-A"

         The rate for Parking Structure Rent is subject to adjustment pursuant
to Section 8.1.

         2.14 Guarantor:

                                   ARTICLE III

         3.1 TERM. The term of this Lease (the "Term") shall be for the period
set forth in Section 2? commencing on the Commencement Date (as defined in ion
 .2) and ending as of midnight on the last day of such period (the "Expiration
Date"), unless terminated earlier as provided herein.

         3.2 COMMENCEMENT DATE.

                  (a) Except as provided in Section 3.2 b below, the
Commencement Date shall be deemed to be the date Landlord delivers to Tenant
written notice of substantial completion by Landlord of the Tenant Improvements
(as defined in Exhibit E) and Rent shall commence to accrue as of said date.
Landlord and Tenant shall execute and deliver a memorandum in the form of
Exhibit "C" attached hereto setting forth the actual Commencement Date and
Expiration Date of the Term within five (5) days after Landlord's delivery of
said notice to Tenant. The failure of Landlord to deliver possession of the
Premises to Tenant on the Target Commencement Date shall not affect the validity
of this Lease, the Expiration Date or the obligations of Tenant hereunder and
shall not be construed to extend the Term of this Lease and Landlord shall not
be liable to Tenant for any loss or damage resulting therefrom.

                  (b) Notwithstanding any other provision of this Lease, if
Landlord is delayed in delivering possession of the Premises to Tenant by reason
of any act or omission of Tenant, including without limitation any act or
omission deemed a "Tenant Delay" pursuant to Exhibit "E" attached hereto, then
the Commencement Date shall be deemed to be the date that the Premises would
have been tendered by Landlord to Tenant in the absence of the Tenant Delay and
Rent shall commence to accrue as of said date, but the Expiration Date shall
remain unchanged.

         3.3 Use AND OCCUPANCY PRIOR TO COMMENCEMENT DATE. If Tenant shall for
any reason use or occupy the Premises in any way prior to the Commencement Date,
then during such prior use or occupancy Tenant shall be a tenant of Landlord and
shall be subject to the covenants and agreements set forth in this Lease other
than provisions pertaining to the payment of Basic Rent or Additional Rent.
Nothing herein shall be construed as Landlord's consent to Tenant's use or
occupancy of the Premises for any reason prior to the Commencement Date.

         3.4 HOLDING OVER. If at the expiration of the Term or any earlier
termination of this Lease, Tenant shall remain in possession without the written
agreement of Landlord or in circumstances where a tenancy would be created by
implication of law or otherwise, a tenancy from year to year shall not be
created by implication of law or otherwise, but Tenant shall be deemed to be a
monthly tenant only and SHALL PAY THE GREATER OF: (i) one and one-half times the
Rent (as defined in Section 5.4) payable for the last full month of the Term,
Building and otherwise upon and subject to the same terms and conditions as
herein contained, except for any provisions for renewal and tenant improvement
allowances. No provision of this Section 3.4, and no action of Landlord,
including without limitation the acceptance of any Rent by Landlord for periods
other than monthly periods, shay be deemed to extend this Lease or shall be
deemed to be consent by Landlord to any holding over by Tenant. Tenant shall
indemnify and defend by counsel acceptable to Landlord and hold Landlord
harmless from and against any and all, losses, costs, damages, liabilities,
claims and expenses 10ceau T.T t,~ 4rn M_ Tenant shall pay monthly rent for each
unreserved parking space in the amount set forth in Section 2.13 above.

         (c) Notwithstanding anything to the contrary contained herein, during
the Term of this Lease, Landlord shall abate Seventy Five anal 00/100 Dollars
($75.00) per stall per month for Tenant's reserved parking spaces, as set forth
in Section 2.12 a above, provided Tenant is not in a Monetary Default under any
of the terms and conditions of this Lease. In the event that Tenant at any time
is in Monetary Default under the terms and conditions of this Lease, such
reserved parking rent abatement shall cease for (i) the duration of the Monetary
Default or (ii) one (1) month, whichever is greater and Tenant shall pay monthly
rent for each reserved parking space in the amount set forth in Section 2.13
above.

         SECTION 3.2 COMMENCEMENT DATE (CONTINUED)

         (c) Notwithstanding anything to the contrary contained in Section and
 .W above, Tenant acknowledges that Area 1230, as shown in Exhibit B attached
hereto, is currently subject to a lease (the "Existing Lease") to an occupant
other than Tenant and may not be available for occupancy on the Commencement
Date. Landlord and Tenant agree that the target commencement date for Area 1230
is September 1, 1995. Landlord and Tenant acknowledge and agree that during the
period commencing on the Commencement Date through the date that Landlord
tenders Area 1230 to Tenant following (i) the expiration OF the Existing LEASE
AND (ii) the substantial completion of any Tenant Improvements relating to Area
1230, the Base Rent shall be reduced by $79.76 per day.

         (d) Notwithstanding the foregoing, in the event that Landlord is unable
to deliver the Premises, including area 1230, to Tenant within forty five (45)
days following the Target Commencement Date (the "Penalty Date"), which date
shall be extended for force majeure or for Tenant Delay (as defined in Exhibit E
including, but not limited to, failure of Tenant to (i) execute and deliver this
Lease to Landlord by March 17,1995, or (ii) deliver to Landlord an approved
pricing plan by March 17, 1995, or (iii) approve and deliver to Landlord
construction documents by April 5,1995, then, Tenant shall be entitled to
receive an amount (the "Penalty Amount") equal to the lesser of (i) Fifty and
No/00 Dollars ($50.00) for each day beyond the Penalty date that Landlord is
unable to deliver the Premises to Tenant, or (ii) Tenant's actual rent penalties
paid in holdover rent, which is in excess of Tenant's existing base rent
pursuant to the certain Section 20 of the Lease dated December 22, 1989 at 12
Corporate Plaza and Section 18 of the Lease dated June 9, 1994 at 13 Corporate
Plaza, Newport Beach. The Penalty Amount shall be credited against all rent
payable by Tenant to Landlord at such time as rent becomes due.

                                       3

<PAGE>

deduction or offset every year during we term THE ANNUAL BASIC RENT. Annual re
ant shall be paid monthly, in advance, in equal installments ("Monthly Rental
Installments") of the amount set forth in Section 2.5, commencing on the
Commencement Date and continuing on the first day of each month thereafter
during the Term, except (that the Monthly Rental Installment for the first month
of the Term shall be paid by Tenant to Landlord upon execution of this Lease by
Tenant. If the Commencement Date is a day other than the first or last day,
respectively, of a calendar month, then the Basic Rent for such partial month
shall be prorated in the proportion that the number of days this Lease is in
effect during such partial month bears to the number of days in that calendar
month, and such amount shall be paid upon the execution of this Lease and
applied toward the Basic Rent due for such first partial month.

         4.2 No Rent Bills. Notwithstanding anything in this Article 4 to the
contrary, all Monthly Rental Installments shall be due and payable on the first
day of each calendar month whether or not Landlord shall have given Tenant any
prior written notice or bill with respect thereto, and Landlord shall have no
obligation whatsoever to give Tenant any written notice or bill with respect to
any Monthly Rental Installment.

                                    ARTICLE V
                                 ADDITIONAL RENT

         5.1 Additional Rent. (a) Tenant shall, without deduction or offset, pay
the following to Landlord every year during the Term (collectively, "Additional
Rent"): (a) Tenant's Proportionate Share (defined in Section 2.6 of the excess
of the amount of Landlord's Taxes (defined in Section 5.5 b below) in each
Fiscal Period (defined in Section 5.1 b below) over Landlord's Taxes in the Base
Year (defined in Section 2.7), (ii) Tenant's Proportionate Share of the excess
of the amount of Operating Costs (defined in Section 5.5 c below) in each Fiscal
Period over the Operating Costs in the Base Year. If in any Fiscal Period
Landlord's Taxes are less than Landlord's Taxes in the Base Year, no Additional
Rent shall be payable for such Fiscal Period with respect to Landlord's Taxes,
and Tenant shall not be entitled to any rebate, credit or refund against any
amounts due under this Lease as a result of such underage. If in any Fiscal
Period Operating Costs are less than Operating Costs in the Base Year, no
Additional Rent shall be payable for such Fiscal Period with respect to
Operating Costs, and Tenant shall not be entitled to any rebate, credit or
refund against any amounts due under this Lease as a result of such underage.

         (b) As used herein, the term "Fiscal Period" shall mean each period of
twelve (1 2) calendar months commencing on January 1 and ending on December 31,
and any portion of any such twelve (12) calendar month period included in the
Term.

         (c) Landlord shall advise Tenant in writing of Landlord's reasonable
estimate of the Additional Rent payable by Tenant for each Fiscal Period
included in the Term. Tenant shall pay Additional Rent based on Landlord's
estimate in equal monthly installments due in advance concurrently with Tenant's
payment of Basic Rent. From time to time, Landlord may re-estimate, on a
reasonable basis, the amount of Additional Rent for any Fiscal Period and shall
advise Tenant in writing of such re-estimate and monthly installments for the
remaining balance of such Fiscal Period based on such re-estimate. After the end
of each such Fiscal Period, Landlord shall submit to Tenant a statement of the
actual Additional Rent payable for such Fiscal Period (which may be in separate
statements for Operating Costs and Taxes) h and the amounts by which Additional
Rent payable by Tenant differs from the aggregate installments of `, Additional
Rent paid by Tenant for such Fiscal Period. Within thirty (A days after the
submission of such i statement, Tenant shall pay to Landlord any amount by which
the Additional Rent payable by Tenant with respect to such Fiscal Period or
portion thereof exceeds the aggregate of the Additional Rent actually paid by
Tenant for such Fiscal Period, or Landlord shall credit against Additional Rent
next coming due any amount by which the Additional Rent payable is less than the
aggregate of the Additional Rent actually paid by Tenant for such Fiscal Period.
Within one hundred twenty (120) days after the expiration of the Fiscal Period
in which the Term expires, Landlord shall pay to Tenant a sum equal to any
credit due Tenant, or Tenant shall pay to Landlord a sum equal to any Additional
Rent owed Landlord, as the case may be. The provisions of this Section 5.1 c
shall survive the expiration or any earlier termination of this Lease.
Landlord's Taxes for the Base Year and Operating Costs for the Base Year shall
be prorated for purposes of calculating overpayments and underpayments of
Landlord's Taxes and Operating Costs for any Fiscal Period included in the Term
which is less than one year.

<PAGE>

COM09 c , to be five percent (5%) less than the an Count of Additional Rent for
the same Fiscal Period set forth in the statement submitted TO TENANT BY
LANDLORD IN WHICH EVENT LANDLORD SHALL PAY FOR the audit. Any such audit shall
occur only in such offices and such location at the Building as Landlord shall
designate. The amount of Additional Rent payable by Tenant to Landlord shall be
appropriately adjusted on the basis of such audit and, if the audit shows that
Landlord has overcharged Tenant, Landlord shall credit such overcharge against
the next installment of Additional Rent coming due hereunder,

         5.3 TENANT'S TAXES. Tenant shall pay prior to delinquency all Taxes
levied or assessed upon Tenant's equipment, furniture, fixtures and other
personal property located in or about the Premises, as well as any Taxes
attributable to the income, business, occupancy or sales of Tenant or any other
occupant of the Premises. If the assessed value of the property of Landlord is
increased by the inclusion therein of a value placed upon Tenant's equipment,
furniture, fixtures or other personal property, or of the business, income,
occupancy or sales of Tenant nor any other occupant of the Premises, Tenant
shall pay Landlord all such increases within thirty (30) days after written
demand by Landlord (or the proportion thereof resulting from said increase and
assessment). If Landlord's Taxes on the Property or the Building are increased
as a result of Tenant Improvements (as defined in Section 9.2 below) or Tenant
Alterations (as defined in Section 9.2 below), Tenant shall pay all such
increases to Landlord within thirty (30) calendar days after written demand from
Landlord. Upon Landlord's request from time to time, Tenant shall deliver to
Landlord receipts for payment of all the Taxes paid by Tenant pursuant to this
Section 5.3 and shall furnish such other information in connection therewith as
Landlord may reasonably require.

         5.4 Recovery of Rent. Basic Rent and Additional Rent and all other sums
payable by Tenant under this Lease (collectively, "Rent") shall be deemed to be
and shall be treated as rent and shall be payable and recoverable as rent, and
Landlord shall have all rights against Tenant for default in any payment of
Additional Rent or such other sum as in the case of non-payment of Basic Rent.

         5.5 DEFINITIONS. As used in this Lease: 'Taxes" shall mean all taxes,
rates, duties, levies, fees, charges, local improvement rates, and assessments
and reassessments, imposed, assessed, levied or charged by any municipal,
regional, state, provincial, federal, or other governmental body, corporation,
authority, agency or commission, provided that 'Taxes" shall not include: (i)
any special utility levies, fees or charges imposed, assessed, levied or charged
which are directly associated with initial construction of the Project, (ii)
inheritance, estate or income taxes or other taxes measured by net income unless
the same shall be imposed in lieu of Taxes; and (iii) any documentary transfer
tax imposed by the City of Irvine or the County of Orange arising from the use
or occupancy of space within the Building. In the case of special taxes or
special assessments which may be payable in installments, only the amount of
each installment paid during a Fiscal Period shall be included in Taxes for that
Fiscal Period. The amount of Taxes attributable to any Fiscal Period shall be
the amount of Taxes payable in such Fiscal Period, notwithstanding that in each
case the assessments for such Taxes may have been made for a different Fiscal
Period than in the Fiscal Period in which they are payable.

         (b) "Landlord's Taxes" shall mean the aggregate of all Taxes payable by
Landlord with respect to the Project and shall include, without limitation, any
amounts imposed, assessed, levied or charged in substitution for or in lieu of
any such Taxes, but shall exclude: (i) "Tenant's Taxes" (as hereinafter
defined); (ii) any taxes paid by any other tenant of the Building pursuant to
Section 5.3 above, and (iii) such taxes as a ital. gains taxes rarnior excess
profit taxes to the extent such taxes are not s a' a it levied in lieu of any of
the foregoing. Landlord may, in s discretion, allocate certain portions or ccom
ts om of the Landlord's Taxes exclusively to the Building or to any other
building located in the Project, as Landlord deems necessary in order to f
Landlord's Taxes shall not include any amounts payable by Tenant pursuant to
Section 5.3 (collectively "Tenant's Taxes") or payable by other tenants of the
Building pursuant to the provisions of their leases obligating them to pay real
property taxes attributable to improvements to their respective premises. If the
Building has not been assessed as a completed and fully occupied Building for
any Fiscal Period, Landlord's Taxes will be determined by Landlord as if the
Building had been assessed as a completed and fully occupied building for any
such Fiscal Period.

         (c) "Operating Costs" shall mean all costs incurred or which will be
incurred by Landlord in connection with the maintenance, operation and
administration of the Project. In calculating Operating Costs for the Base Year
and any Fiscal Period, if less than ninety-five percent (95%) of the

<PAGE>

cost of water and sewer charges; cost of electricity, fuel or other forms of
energy which are not separately metered and recovered or paid by tenants; cost
of insurance maintained by Landlord and cost of any deductible amount paid by
Landlord in connection with a claim made under such insurance; cost of Building
office expenses, including, without limitation, telephone, stationery and
supplies; costs of all elevator and escalator maintenance and operation; costs
of all Building personnel, including, without limitation, salaries, wages and
fringe benefits; cost of providing security; cost of providing janitorial
services, window cleaning, and garbage removal; cost of supplies and materials;
cost of decoration of Common Areas; cost of landscaping; (xiii) management fees;
(xiv) consulting engineering fees; (xv) cost of replacements, unless otherwise
included under Operating Costs under subsection (xvi), and cost of repair; (xvi)
cost of each "Major Expenditure" (as hereinafter defined) as amortized over the
period of Landlord's reasonable estimate of the economic fife of the Major
Expenditure, but not to exceed fifteen years, using equal monthly installments
of principal and interest at two points over the then current. reference rate of
Bank of America National Trust & Savings Association per annum compounded
semi-annually, but in no event to exceed the then maximum rate allowed by
applicable usury law. As used herein "Major Expenditure" shall mean any
expenditure incurred during or subsequent to the Fiscal Period in which the
Lease commences for replacement of machinery, equipment, systems or facilities
used in connection with the Project, or for modifications or additions to the
Project if one of the purposes of such modification or addition is to reduce
energy consumption or Operating Costs or was required by governmental
regulation; provided, however, that " major expenditure made the-pfejaet; and
costs and expenses incurred by Landlord in good faith in contesting or appealing
Landlord's Taxes. (d) Operating Costs shall not include the following:
(a) interest on debt and repayment of debt;

                                       -6-

<PAGE>

         6.1 Security Deposit (a). Upon Tenant's execution of this Lease,
Tenant shall pay to Landlord the sum set forth in Section 2.8 as security for
the payment by Tenant of any and all present and future debts and liabilities of
Tenant to Landlord and for the performance by Tenant of all of its obligations
arising under or in connection with this Lease (the "Security Deposit"). The
Security Deposit may be increased pursuant to Section 14.3 below. Landlord shall
not be required to keep the Security Deposit separate from its general funds and
shall not be deemed to hold the Security Deposit in trust for Tenant and Tenant
shall not be entitled to interest thereon. If Tenant defaults with respect to
any provision of this Lease, Landlord may, but shall not be required to, use,
apply or retain all or any part of the Security Deposit for the payment of any
Rent or any other sum in default, or for the payment of any other amount that
Landlord may spend or become obligated to spend by reason of Tenant's default or
to compensate Landlord for any other loss or damage that Landlord may suffer by
reason of Tenant's default, including, without limitation, costs and attorneys'
fees incurred by Landlord to recover possession of the Premises following a
default by Tenant. If any portion of the Security Deposit is so used or applied,
Tenant shall, upon demand therefor, deposit cash with Landlord in an amount,
sufficient to restore the Security Deposit to its original amount, and Tenant's
failure to do so within ten (10) days shall constitute a default hereunder by
Tenant.

         6.2 Transfers of Security Deposit. If Landlord conveys, assigns or
otherwise disposes of its interest in this Lease, Landlord shall deliver or
credit the Security Deposit to its successor and shall give Tenant notice
thereof as required by the California Civil Code Section 1950.7 or any successor
statute, and thereafter Landlord shall have no liability to Tenant to repay the
Security Deposit to Tenant. Subject to the foregoing and to Tenant not being in
breach of any obligation under this Lease, Landlord shall repay the Security
Deposit, or any balance thereof, to Tenant (or, at Landlord's option, to the
last assignee of Tenant's interest hereunder and Landlord shall have no
liability in respect thereof if said assignee shall fail to deliver the same to
Tenant or other person or persons entitled thereto) without interest within
thirty (30) days following the expiration or earlier termination of this Lease,
provided that all debts, liabilities and obligations of Tenant hereunder have
been satisfied. To the extent such debts, liabilities and obligations have not
been satisfied, Tenant shall remain fully liable to Landlord for their payment
and/or performance.

                                   ARTICLE VII
                                USE AND OCCUPANCY

         7.1 Use. Tenant shall:

         (a) use the Premises only for the purposes specified in Section 2.9 and
not use or permit the Premises to be used for any other purpose without the
prior written consent of Landlord.

         (b) not commit or permit any waste, injury or damage to the Property
including, without limitation, the Tenant Improvements (as defined in Exhibit E
and any trade fixture therein, normal wear and tear excepted, any loading of the
floors thereof in excess of the maximum degree of loading as determined by
Landlord, any nuisance therein or any use or manner of use causing annoyance to
other tenants and occupants of the Property or to Landlord;

             (c) not invalidate or cause an increase in the cost of any fire,
extended coverage or any other insurance covering the Building or insurance of
another tenant of the Building against perils as to which Landlord or such other
tenant has insured or which shall cause any policy of insurance on the Project
to be subject to cancellation; and (d) observe and perform, and cause its
employees, invitees and others over whom Tenant can reasonably be expected to
exercise control to observe and perform, the Rules and Regulations contained in
Exhibit "D" hereto, and such further and other reasonable rules and regulations
and amendments and additions thereto as Landlord may hereafter make and notify
Tenant in writing, except that Landlord may not enforce against Tenant any such
change or addition that is inconsistent with this Lease unless required by
governmental regulation or unless Tenant consents thereto. The imposition of
such Rules and Regulations shall not create or imply any obligation of Landlord
to enforce them against any *tfier tenant and Landlord shall not be liable to
Tenant for violation of any Rules and Regulations or the breach of any provision
in any lease by any other tenant or other party in the Building,

                                      -7-

<PAGE>

redecorating vacant space for tenants or other occupants of the Building;
Marketing crests including leasing commissions, attorney's fees in connection
with negotiation and preparation of leases and related agreement,;

         (viii) Expenses in connection with services or other benefits which are
not offered to Tenant or for which Tenant is charged directly by Landlord or an
independent contractor or a utility, by which are provided to another tenant or
occupant of the Building the cost of which is included as Operating Costs;

         (ix) Overhead and profit increment paid to Landlord or to subsidiaries
or affiliates of Landlord for goods and/or services in the building to the
extent the overhead and profit increment unreasonably exceeds the costs of such
goods and/or services rendered by unaffiliated third parties on a competitive
basis for Class-A Office Buildings;

         (x) Landlord's general corporate overhead and general and
administrative expense;

         (xi) Advertising and promotional expenditures, and costs of signs in or
on the Building identifying other tenants' signs;

         (xii) Services provided, taxes attributable to, and costs incurred in
connection with any retail and restaurant operations unless the square footage
attributable to the same are included in the rentable square footage
computations of the Building;

         (xvi) Costs incurred in connection with upgrading the Building to
comply with handicap, life, fire and safety codes in effect prior to the
Commencement Date; Costs arising from earthquake insurance, unless included in
the Base Year, or, if subsequently obtained, imputed into the Base Year;

         (xv) Costs incurred by Landlord due to the violation by Landlord of the
terms and conditions of any lease of space in the Building;

         (xvi) Costs arising from latent defects in the base, shell or core of
the Building or improvements installed by Landlord or repair thereof;

         (xvii) Costs for sculpture, paintings or other objects of art, and;

         (xviii) Costs arising from claims, disputes or potential disputes or
potential disputes, in connection with potential or actual claims, litigation or
arbitrations pertaining to the Landlord and/or the Building and/or Project.

         (e) Notwithstanding anything to the contrary contained in the Article
V, during the initial sixty (60) months of the Term in no event shall Tenant be
obligated to pay as Additional Rent in any Fiscal Period any increase in excess
of six percent (6%) from the preceding Fiscal Period ("Excess Costs") for those
certain Operating Costs line items set forth in Section 5.5 c vii vii@, (xi) and
xiii ; provided however, to the extent that such Operating Cost line item
increased less than six percent (6%) in any preceding Fiscal Period, (the "Saved
Amount," expressed as a Dollar amount), Landlord may include as Additional Rent
in the current Fiscal Period such Excess Costs in an amount equal to the Saved
Amount. Landlord and Tenant agree the Landlord shall include any unpaid Excess
Costs as Additional Rent in future Fiscal Periods until the earlier to occur of
(i) the termination of the term of this Lease or (ii) such Excess Costs are paid
as Additional Rent by Tenant.

                                       7
<PAGE>

action against Tenant (whether or not Landlord is a party thereto), that Tenant
has violated any law, statute, ordinance or governmental hale, regulation or
requirement, shall be conclusive of that fact as between Landlord and Tenant.

         7.3 LAWS CONCERNING ALTERATIONS. If the Building or the Parking
Structure should become subject to an earthquake or fire hazard ordinance or law
which requires extensive alterations to or demolition of the Premises, the
Building or the adjacent parking structure, Landlord may: (a) at its expense
comply with such ordinance or law, in which event Tenant agrees to cooperate
with Landlord and if necessary remove its personal property and trade fixtures
from the Premises as required for such alteration, and Rent shall be abated (to
the extent such Rent is covered by business interruption insurance or such
similar insurance the proceeds of which are delivered to Landlord) for that
portion of the Premises which is rendered unusable until said portion becomes
useable; or (b) if Landlord elects to demolish the Building or the Parking
Structure, terminate this Lease by giving Tenant ninety (90) days' prior written
notice of the termination. Tenant shall, at its sole cost and expense, cause the
Premises to comply at all times with the requirements of the Americans With
Disabilities Act (the "ADA") (42 U.S.C. f 12181 et se g), the regulations now or
hereafter adopted pursuant thereto, and any and all applicable state or local
laws, statutes, ordinances, rules and regulations concerning public
accommodations for disabled persons now or hereafter in effect. Tenant shall
indemnify, defend (with counsel approved by Landlord) and hold Landlord harmless
from and against any and all claims, judgments, damages, penalties, fines,
costs, liabilities and losses (including, without limitation, reasonable
attorneys' fees and disbursements) arising from Tenant's failure to comply with
this Section 7.3.

         7.4 HAZARDOUS MATERIALS. Landlord and Tenant agree as follows with
respect to the existence or use of "Hazardous Materials" (as hereinafter
defined) on the Premises:

         (a) Tenant shall not cause or permit any Hazardous Materials to be
brought upon, kept or used in or about the Premises by Tenant, its agents,
employees, contractors or invitees, without the prior written consent of
Landlord, which Landlord shall not unreasonably withhold as long as Tenant
demonstrates to Landlord's satisfaction that such Hazardous Materials: (i) are
necessary or useful to Tenant's business and will be used, kept and stored in a
manner that complies with all laws, statutes, ordinances, rules, regulations,
orders, requirements, and policies of any and all governmental agencies and
authorities and any fire insurance underwriters applicable to any such Hazardous
Materials ("Hazardous Materials Laws") and (ii) do not otherwise, due to the
quantity, nature or use of such Hazardous Materials, substantially increase the
risk of fire or other casualty to the Premises or the Project.

         (b) To the extent any Hazardous Materials are used, kept, or are
present in or on the Premises after the Commencement Date, Tenant shall ensure
that all such Hazardous Materials, and all uses thereof, are in full compliance
with all Hazardous Materials Laws.

         (c) If Tenant breaches the obligations stated in Sections 7.4 a or 7.4
b above or if the presence of Hazardous Materials on the Premises after the
Commencement Date results in contamination of the Premises or the Project, or if
Hazardous Materials are otherwise discharged or released from the Premises after
the Commencement Date, then Tenant shall indemnify, defend (with counsel
approved by Landlord) and hold Landlord harmless from and against any and all
claims, judgments, damages, penalties, fines, costs, liabilities and losses
(including, without limitation, diminution in value of the Project, damages for
the loss or restriction on use of rentable or usable space or of any amenity of
the Project, damages arising from any adverse impact on marketing of space in
the Project, and sums paid in settlement of claims, attorneys' fees, consultant
fees and expert fees) which arise during or after the term of this Lease as a
result of such breach, contamination, discharge, or release. This
indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any cleanup,
remedial, removal or restoration work required by any federal, state or local
governmental agency or political subdivision because of Hazardous Materials
present in, on or under the Project. Without limiting the foregoing, if the
presence of any Hazardous Materials on the Premises after the Commencement Date
results in any contamination of the Project, or otherwise results in the release
or discharge on, under or from the Premises of Hazardous Materials, Tenant shall
promptly take all actions at its sole expense as are necessary to return the
Project to the condition existing prior to the introduction of any such
Hazardous Materials to the Project or to otherwise remove and/or abate the
released or discharged Hazardous Materials; provided that Landlord's approval of
such actions shall first be obtained, which approval shall not be unreasonably
withheld so long as such actions would not potentially have any

                                       8
<PAGE>

Section 25315 of the California Health & Safety Code, and in the regulations
adopted and publications promulgated pursuant to them, or any' other federal,
state, or local environmental laws, ordinances rules, or regulations concerning
the environment, industrial hygiene or public health or safety now in effect or
enacted after this date.

                                  ARTICLE VIII
                                     PARKING

         8.1 PARKING SPACES AND MONTHLY CHARGES. Landlord hereby grants to
Tenant the right to use the parking spaces (collectively, the "Parking Spaces")
shown in Section 2,12 above on a non-exclusive basis in the Parking Structure at
the monthly rate PRAVAILIOGFREMTIAO-EA-EIME-DURING-TH6 TERM HEREOF for the '
purpose of the parking of automobiles by Tenant and Tenant's employees,
invitees, assignees, subtenants, contractors or licensees ("Tenant's
Employees"). Landlord's monthly charges shall be paid monthly in advance on the
first day of each month but shall be net of any parking tax or assessment by the
authorities m competent jurisdiction not controlled by Landlord, and any such
parking taxes or assessments so imposed shall be paid by Tenant on demand by
Landlord. The WHOM CHARGES ~TIEH-3~3-AL3EVE:

         8.2 INDEMNITY. Tenant shall defend by counsel acceptable to Landlord,
indemnify and hold Landlord harmless from and against any and all losses, costs,
liabilities, claims, damages and expenses (including, without limitation,
reasonable attorneys' fees and costs) due to or arising out of any act, omission
or neglect by Tenant or Tenant's Employees on or about the Parking Structure or
due to or arising out of any breach by Tenant of the provisions of this Lease,
or such rules as may be established from time to time by Landlord covering the
use of the Parking Structure (the "Parking Rules").

         8.3 Disclaimer of Liability. Landlord shall not be liable for any
injury or damage to persons using the Parking Structure or any loss, injury or
damage to or of automobiles or their contents or any other property in the
Parking Structure.

         8.4 Assignment/Subleasing of Parking Spaces. Tenant shall not assign,
sublease or license ("Transfer") any of its Parking Spaces to any person or
entity without the consent in writing of Landlord, which consent shall not be
unreasonably withheld with respect to any subtenant, assignee or licensee whose
use of such parking spaces is pursuant to an assignment or subletting of the
Premises that shall have been approved by Landlord.

         8.5 Parking Cards. Tenant hereby acknowledges and agrees that all
parking cards distributed by Landlord are the property of Landlord and shall be
returned to Landlord upon the expiration or earlier termination of this Lease.
Upon the expiration or any earlier termination of Tenant's right to use any
Parking Spaces, Tenant shall return the parking cards for such spaces to
Landlord. Inoperative cards will be replaced at no charge, but lost or broken
cards will be replaced at a cost established by Landlord from time, to time.

                                   ARTICLE IX
                          IMPROVEMENTS AND ALTERATIONS

      9.1 Landlord's Right to Perform Additional Construction. Landlord may at
any time change, add, alter or repair the Common Areas, or Building or Project,
including without limitation, the arrangement or location of entrances or
passageways, doors and doorways, corridors, elevators, escalators, stairs,
toilets, heating, air conditioning, electrical system, plumbing, water systems,
Building standard fixtures and window coverings, or other apparatus or part of
the Building, and Landlord may change the signs and graphics in or on the
Building, and the name, number, address or designation by which the Building is
commonly known. Tenant hereby agrees that no such change, addition, alteration
or repair shall in any way affect this Lease or cause any abatement of Rent or
give Tenant any right or claim for damages of any kind; provided that

         -9-

<PAGE>

in the Buil ' or the Project Charged with the cost of any work or materials.
Landlord shall not unreasonably withhold its approval to any Tenant Alteratiori
provided such Tenant Alteration does not affect any structural portions of the
Building and does not affect any utility system or other Building system.
Tenant's previous failure to comply with Landlord's reasonable construction
requirements for the Building shall be considered sufficient reason for
disapproval. In making, erecting or installing any Tenant Alterations, Tenant
shall not, without the prior written approval of Landlord, alter or interfere
with any installations which have been made by Landlord or others and in no
event shall alter or interfere with any window coverings or other light control
devices installed. in the Building. Tenant's request for any approval by
Landlord hereunder shall be in writing and shall be accompanied by a detailed
description of the contemplated work and, where appropriate, working drawings
and specifications thereof. If Tenant requires from Landlord drawings or
specifications of the Building in connection with Tenant Alterations, Tenant
shall pay the cost thereof to Landlord on demand. Any reasonable costs and
expenses incurred by Landlord in connection with Tenant Alterations, including,
without limitation, the cost of reviewing plans and specifications, faulty work,
delay and inadequate clean-up, shall be paid by Tenant to Landlord on demand.
All work to be performed by Tenant in the Premises shall be performed by
competent contractors and subcontractors approved in writing by Landlord prior
to commencement of any work, such approval not to be unreasonably withheld
(except that Landlord may require that Landlord's contractors and subcontractors
be engaged for any mechanical or electrical work). All such work, including the
delivery, storage and removal of materials, shall be scheduled through and shall
be subject to the reasonable supervision of Landlord, and shall be performed in
accordance with any reasonable conditions or regulations imposed by Landlord
including, without limitation, payment on demand of an administrative fee of ten
percent (10%) of the cost of the work of Tenant Alterations to Landlord for
supervision and administrative costs. Such work shall be completed in a good and
workmanlike manner in accordance with the description of the work approved by
Landlord and in accordance with all laws, ordinances, regulations and permits.
The supervision by Landlord of Tenant's work or work performed by Tenant's
independent contractors, agents or employees as aforesaid shall in no event
constitute a warranty by Landlord of the work so performed, nor shall Landlord
be responsible for or have any liability with respect to such supervision.
Copies of required building permits or authorizations shall be obtained by
Tenant at its expense and copies thereof shall be provided to Landlord. No locks
shall be installed on the entrance doors or in any doors in the Premises that
are not keyed to the Building master key system. If Landlord performs any such
work for Tenant, Landlord shall charge its then-standard fees.

         9.3 Liens and Encumbrances. In connection with the making, erection or
installation of Tenant Alterations and all other work, repair or installations
made by or for Tenant in the Premises, Landlord shall have the right and
opportunity to record and post notices of non-responsibility with respect to the
work, and Tenant shall comply with all the provisions of the mechanics' lien and
other similar statutes from time to time applicable thereto (including any
proviso requiring or enabling the retention by way of holdback or portions of
any sums payable) and, except as to any such holdback, shall promptly pay all
accounts relating thereto. Tenant will not create any mortgage, conditional sale
agreement or other encumbrance in respect of its Tenant Alterations nor shall
Tenant take any action as a consequence of which any such mortgage, conditional
sale agreement or other encumbrance would attach to the Project or any part
thereof. If any mechanics' or other lien for work, labor, services or materials
is asserted against the Project because of any claim against Tenant, whether or
not valid or contested, or any such mortgage, conditional sale agreement or
other encumbrance shall attach, Tenant shall within ten (10) days after receipt
of notice from Landlord procure the discharge thereof, including any certificate
of action recorded in respect of any lien. If Tenant fails to do so, Landlord
may pursue any of its remedies hereunder for default of Tenant, and may make any
payments or take any steps or proceedings required to procure the discharge of
any such liens or encumbrances. In such cases, Landlord shall be entitled to be
repaid by Tenant on demand for any such payments, and for all costs and expenses
in connection with steps or proceedings taken by Landlord, including attorneys'
fees. Landlord's right to reimbursement and to payment shall not be affected or
impaired if Tenant shall then or subsequently establish or claim that any hen or
encumbrance so discharged was without merit or excessive or subject to any
abatement, set-off or defense. Tenant shall indemnify, defend with counsel
acceptable to Landlord and hold Landlord harmless from and against all claims,
losses, liabilities; damages, costs and expenses (including, without limitation,
reasonable attorneys' fees) which may be incurred by Landlord in any proceedings
brought by any person against Landlord alone or with another or others for or in
respect of work, labor, services or materials supplied to or for Tenant. As a
condition to any consent by Landlord to any Tenant Alteration, Landlord may
require payment and performance bonds in form, substance and amounts
satisfactory to Landlord.

                                      -10-

<PAGE>

articles of personal property and all business and trade fixtures, equipment and
furniture; and Tenant may, at the times appointed by Landlord and subject to the
availability of freight elevators, remove its articles of personal property,
business and trade fixtures and furniture and equipment during the Term in the
usual and normal course of its business if the same has become excessive for
Tenant's purposes or if Tenant is substituting new items therefor.

         (b) In the case of every removal, Tenant shall repair, at the sole cost
and expense of Tenant, any damage caused to the Premises or the Project by such
installation and removal or, at Landlord's option, shall pay to Landlord all of
Landlord's cost of such repair. If Tenant fails to remove such items as
specified in Section 9.4(a)(i) above at the expiration or earlier termination of
this Lease as Landlord shall direct by written notice as provided above, or any
other items Tenant is required to remove at the end of the Term as provided
above, Landlord shall have the option, in addition to its other remedies under
this Lease, to remove the same from the Premises in any manner that Landlord
chooses and to declare to Tenant that the same are the property of Landlord, and
Landlord upon such declaration may, without notice to Tenant, store or dispose
of such items at private sale without legal process and retain any proceeds of
disposition, and Tenant shall be liable to Landlord for any expenses incurred by
Landlord in excess of such proceeds, if any, or in the event Landlord does not
dispose of such items, Tenant shall be liable to Landlord for any expenses
incurred by Landlord in the removal and storage of such items.

         9.5 SIGNS. Upon written request by Tenant, Landlord shall place the
name of Tenant or Tenant's trade name on the directory board of the Building and
on the main entrance door to the Premises. All signs to be so placed shall be
designed by Landlord. Such design and installation shall be at Tenant's sole
cost and expense and Tenant shall reimburse Landlord for all reasonable costs of
such design and installation upon demand by Landlord. Tenant shall not place any
signs, advertisements or notices of any kind whatsoever in, on or about the
Premises, Building or Project without Landlord's prior written consent, which
Landlord may withhold in its sole and absolute discretion. Without limiting the
foregoing, Tenant shall not place or permit to be placed any sign,
advertisement, notice or other display on any part of the exterior of the
Premises or elsewhere if such sign, advertisement, notice or other display is
visible from outside the Premises, without the prior written consent of Landlord
which may be arbitrarily withheld. Tenant, upon request of Landlord, shall
immediately remove any sign, advertisement, notice or other display which Tenant
has placed or permitted to be placed which, in the opinion of the Landlord, is
objectionable, and if Tenant shall fail to do so, Landlord may remove the same
at the expense of Tenant.

                                    ARTICLE X
                             UTILITIES AND SERVICES

         10.1 Landlord's Obligations. Subject to applicable laws, regulations,
ordinances and governmental requirements, Landlord shall:

         (a) maintain the temperature in the Premises in accordance with normal
occupancy of Premises for office purposes during hours to be determined by
Landlord (but to be at least the hours from 7:30 a.m. to 6:00 p.m. from Monday
to Friday, and Saturday from 9:00 a.m. to 1:00 p.m., inclusive, with the
exception of Holidays and Sundays), such conditions to be maintained by means of
the existing system for heating, cooling, filtering and circulating air. As used
herein, the term "Holidays" shall mean New Year's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Landlord shall
have no responsibility for any inadequacy of performance of the said system if
the occupancy of the Premises exceeds reasonable amounts for general office use
in comparable office buildings by office tenants for general office use, as
reasonably determined by Landlord, or if Tenant installs partitions or other
installations in locations which interfere with the proper operation of the
system of interior climate control or if the window coverings on exterior
windows are not kept fully closed;

         (b) Provide janitor and cleaning services to the Premises and to common
areas of the Building sufficient to cause the Premises and such common areas to
be in a reasonably clean condition in accordance with the standards of
comparable office buildings; and

         (c) Keep available the following facilities for use by Tenant and its
employees and

<PAGE>

eoftmors g sug access to me vunqn areas front time to time which may be provided
by Landlord for common use and enjoyment within the Project; and (iii) washrooms
as Landlord may assign from time to time which are standard to the Building,
provided that Landlord and Tenant acknowledge that where an entire floor is
leased to Tenant or some other tenant, Tenant or such other tenant, as the case
may be, may exclude others from the washrooms thereon. E a

         10.2 ELECTRICITY. .Landlord shall furnish electricity to the Premises
in amounts reasonably sufficient for usual and customary general office use
(which amounts shall be consistent with amounts furnished to office tenants in
comparable buildings located in the area in which the Building is located, but
shall not in any event exceed three watts per rentable square foot), for
lighting and for office eauioment capable of operating from the circuits
available to the Premises and standard to the Building, g-heufste 1e
-detefinieud-by-LaadleFd (but subject to governmental regulations.

         10.3 ADDITIONAL SERVICES. Upon Tenant's written request, Landlord may
(but shall have no obligation whatsoever to) supply services or materials to the
Premises and the Project which are not otherwise required under this Lease and
for use by Tenant (the "Additional Services") including, without limitation:
replacement o tufrbes and ballasts; (degree) carpet shampooing (including spot
cleaning); drapery cleaning; wall washing; locksmithing; removal of bulk
garbage; picture hanging; and special security arrangements.

         If Additional Services are supplied or furnished by Landlord at
Tenant's request, Tenant shall pay all of Landlord's costs of providing the
Additional Services and Landlord's administrative fee, all of which shall be
payable upon demand by Landlord. If Landlord elects not to supply or furnish
Additional Services, only persons previously approved in writing by Landlord
(which approval shall not be unreasonably withheld) shall be permitted by
Landlord or Tenant to supply or furnish Additional Services to Tenant, and the
supplying and furnishing of the Additional Services shall be subject to
reasonable rules adopted by Landlord and Tenant shall use reasonable efforts, at
Tenant's sole cost and expense to cause said persons to comply with such rules.

         10.4 INTERRUPTION OF UTILITIES and Services. Landlord shall not be
liable in any way for any failure to furnish any utilities and services when
such failure is caused by: (i) accident, breakage or repairs; (ii) strikes,
lockouts or other labor disturbances or labor disputes of any such character;
(iii) governmental regulation, moratorium or other governmental action; (iv)
inability despite the exercise of reasonable diligence to obtain electricity,
water or fuel; or (v) any other cause beyond Landlord's reasonable control. In
addition, Tenant shall not be entitled to any abatement or reduction of rent, no
eviction of Tenant shall result, and Tenant shall not be relieved from the
performance of an covenant or agreement in this Lease because of any such
failure.

         10.5 Excess Usage. If Tenant requires or uses more water or electrical
power than is reasonable for office purposes, as determined by Landlord,
Landlord may require Tenant to pay the cost of such excessive usage upon demand
and may install separate water or electricity meter(s) for the Premises, at

                                      -12-

<PAGE>

         11.1 LANDLORD'S OBLIGATIONS.

         (a) Landlord shall keep in a good and reasonable state of repair:

         (i) the exterior portions (including foundations and roofs) of all
buildings and structures from time to time forming part of the Project; Building
plumbing and electrical systems serving the Premises and systems for interior
climate control serving the Premises and any other systems provided for bringing
utilities to the Premises; and the Common Areas (including elevators).

         (b) Landlord shall also repair, so far as reasonably feasible, and as
expeditiously as reasonably feasible, defects in standard demising walls
constructed by Landlord, structural elements, suspended ceiling, electrical and
mechanical installations standard to the Building installed by Landlord in the
Premises if and to the extent that such defects are sufficient in Landlord's
reasonable discretion to impair Tenant's use of the Premises while using them in
a manner consistent with this Lease. Landlord shall in no event be required to
make repairs to Tenant Alterations made by Tenant, or by Landlord on behalf of
Tenant or another tenant, or to make repairs required by ordinary wear and tear
within the Premises.

         11.2 TENANT'S REPAIRS. Tenant shall, at Tenant's expense, repair,
maintain and keep the Premises, including the Tenant Improvements, in a good and
reasonable state of repair, provided that this obligation shall not extend to
structural elements in Building systems such as plumbing, electrical, heating,
ventilation and air conditioning or to glass on the Building exterior unless
repairs are required as a result of the acts or omissions of Tenant or Tenant's
Employees. If Tenant shall fail to so repair and maintain the Premises after
reasonable notice to do so, Landlord may effect the repairs and Tenant shall pay
the reasonable costs thereof to Landlord on demand. Tenant shall at the
expiration or earlier termination of the Term, peaceably surrender the Premises
and appurtenances in a good and reasonable state of repair, reasonable wear and
tear excepted.

         11.3 Misuse of Property. Notwithstanding any provision in this Lease to
the contrary, if any part of the Project is damaged or destroyed or should any
defect in the Property or Project arise through the negligence of or misuse by
Tenant or Tenant's Employees, or by anyone permitted by Tenant or Tenant's
Employees to be upon the Premises, Tenant shall pay Landlord on demand the
expense of repairs or replacements (including a reasonable administration
charge), of such defective item or of items so damaged or destroyed, together
with interest thereon from the date of expenditure until paid at the reference
rate of interest charged by Bank of America National Trust and Savings
Association to its most credit-worthy customers in effect as of such date of
expenditure (or a substitute rate of a comparable lending institution selected
by Landlord if Bank of America National Trust and Savings Association no longer
publishes a reference rate).

         11.4 DAMAGE OR DESTRUCTION.

         (a) If the Project or any portion thereof is damaged by fire or other
perils covered by insurance maintained by Landlord to an extent not exceeding
twenty-five percent (25%) of the full insurable value thereof and if the damage
thereto is such that the repair or restoration thereof may, in Landlord's
reasonable opinion, be completed within ninety (90) days after the date of such
casualty and Landlord will receive insurance proceeds sufficient to cover the
entire cost of such repair and restoration, Landlord shall commence and proceed
diligently with the work of repair and restoration and this Lease shall continue
in full force and effect. If such work of repair and restoration requires a
period longer than ninety (90) days to complete, in landlord's reasonable
opinion, or exceeds twenty-five percent (25%) of the full insurable value of the
Project, or if said insurance proceeds will not be sufficient to cover the
entire cost of such repairs, or such damage is the result of a cause other than
fire or another peril covered by Landlord's insurance, Landlord may either elect
to so repair and restore the Project and this Lease shall continue in full force
and effect, or Landlord may elect not to so repair and restore the Project and
this Lease shall in such event terminate. Under any of the conditions contained
in this Section 11.4 a , Landlord shall give written notice (the "Restoration
Notice") to Tenant of its intention within forty-five (45) days after the date
of such event of damage or destruction. If Landlord elects not to restore the
Project, this Lease shall be deemed to have

<PAGE>

to the amount of proceeds of tic insurance which tenant is required to maintain
under s t on 13 a that are paid to landlord, in no event shall tenant be
entitled to any compensation or damages for loss in the(degree) use of the whole
or any part of the premises and/or any inconvenience or annoyance occasioned by
such damage, repair or restoration.

         (d) 'Tenant shall not be released from any of its obligations under
this Lease in an event of casualty except to the extent and upon the conditions
expressly stated in this Section 11.4. Notwithstanding anything to the contrary
contained in this Section 11.4, if Landlord is delayed or prevented from
repairing or restoring the damaged Premises within ten (10) months after the
occurrence of such damage or destruction by reason of acts of God, war,
governmental restrictions inabili to procure the necessary labor or materials,
or other causes beyond the control of Landlord, LANDLORD AT ITS OPTION MAY
TERMINATE THIS LEASE, WHEREUPON LANDLORD SHALL BE RELIEVED FROM ITS OBLIGATION
TO MAKE SUCH REPAIRS OR RESTORATION AND TENANT SHALL BE RELEASED FROM ITS
OBLIGATIONS UNDER THIS LEASE AT THE END OF THE SAID TEN (10) MONTH PERIOD.

         (e) If Landlord is obligated to or elects to repair or restore as
herein provided, Landlord shall be obligated to make repair or restoration only
to those portions of the Premises which were originally provided at Landlord's
expense, and the repair and restoration of items within the Premises not
provided at Landlord's expense shall be the obligation of Tenant. Tenant agrees
to coordinate the restoration and repair of those items it is required to
restore or repair with Landlord's repair and restoration work and in
coordination with a work schedule prepared by Landlord, or Landlord's
contractor. Further, Tenant's work shall be performed in accordance with the
terms, standards and conditions contained in Article 9 hereof.

         (f) Notwithstanding anything to the contrary contained in this Section
11.4, Landlord shall not have any obligation whatsoever to repair or restore the
Project when the damage thereto is the result of any casualty which occurs
during the last twenty-four (24) months of the term of this Lease or any
extension hereof. However, Landlord shall be required to give the Restoration
Notice to Tenant of its intention within thirty (30) days from the date of such
event of damage or destruction. In the event Landlord elects not to repair or
restore the Project, this Lease shall be deemed to have been terminated as of
the date of such damage or destruction. (g) Landlord and Tenant hereby waive the
provisions of Subdivision 2 of Section 1932 and Subdivision 4 of Section 1933
and all of Sections 1941 and 1942 of the California Civil Code and any
provisions of any other statutes or court decisions which relate to the
abatement or termination of leases when leased property is damaged or destroyed
and agree that such event shall be exclusively governed by the terms of this
Lease.

                                  ARTICLE X11
                                  CONDEMNATION

         (a) If the whole of the Premises, a portion thereof, or a portion of
the Project as shall substantially interfere with Tenant's use and occupancy of
the Premises, as reasonably determined by Landlord, shall be taken by any lawful
power or authority by exercise of the right of eminent domain, or sold to
prevent such taking, either Tenant or Landlord may terminate this Lease by
written notice to the other effective as of the date possession is required to
be surrendered to such authority, which notice shall be made no earlier than
ninety (90) days prior to, and no later than thirty (30) days prior to, such
effective date. In the event a substantial portion, as reasonably determined by
Landlord, of the Project and/or the Building is so taken by eminent domain,
Landlord may, by written notice to Tenant, terminate this Lease effective as of
the date possession is required to be surrendered, which notice shall be made no
earlier than ninety (90) days prior to, and no later than thirty (30) days prior
to such effective date.

         (b) In the event of a taking of the Premises or the Project which does
not substantially interfere with Tenant's use and occupancy of the Premises, or
in the event other portions of the Project and/or the Building are taken and
Landlord elects not to terminate this Lease, Landlord shall promptly proceed to
restore the Premises (if affected) to substantially their condition prior to
such partial taking, and a reduction in Rent shall be made to Tenant in
proportion to the portion of the Premises of which Tenant shall be so deprived
on account of such taking,

                                      -14-

<PAGE>

(1) YEAR OR LESS, THIS LEASE shall remain IN FULL TREE and Cited AND TENANT
OBSERVE AND PERFORM an the terms, conditions and covenants of this Uwe,
including the covenant to pay Rent. Tenant shay receive the entire condemnation
award made for such. temporary taking, unless the taking extends for a period
after the expiration date of this Lease. In such event, any award made for the
period after the expiration of this Lease shall belong to Landlord. In addition,
if the taking expires prior to the termination of this Lease, Tenant shall
receive any award made for restoration of the Premises, and shall diligently
proceed to restore the Premises to its original condition, reasonable wear and
tear accepted, and such restoration shall be at Tenant's sole cost and expense.

         (e) For purposes of their Article 12, the terms "condemned",
"condemnation", "taken" or "taking" shay include a voluntary conveyance by
Landlord to the condemning authority under threat of condemnation and the term
"award" shall include the consideration paid by the condemning authority for
such deed.

                                  ARTICLE XIII
                             INSURANCE AND LIABILITY

         13.1 TENANT'S INSURANCE. Tenant shall obtain and keep in full force and
effect during the Term of this Lease, at its sole cost and expense, the
following insurance:

         (a) comprehensive general public liability insurance all on an
occurrence basis with respect to the business carried on, in or from the
Premises and Tenant's use and occupancy of the Premises and any other part of
the Project, including public liability and property damage insurance with
coverage for personal injuries or deaths of persons for any one occurrence or
claim of not less than Two Million Dollars ($2,000,000) or such other amount as
Landlord ma reasonably require upon not less than one (1) month notice at any
time during the Term, which insurance shall include Landlord as an additional
insured, shall protect Landlord in respect of claims by Tenant as if Landlord
were separately insured, and shall cover the performance of Tenant of the
indemnity provision in Section 13.4 hereof;

         (b) fire and extended coverage insurance with a vandalism and malicious
mischief endorsement, covering the Tenant Improvements, Tenant Alterations and
Tenant's trade fixtures and furniture and equipment in the Premises for not less
than ninety percent (90%) of the full replacement cost thereof, and which
insurance shall include Landlord as an additional insured as Landlord's interest
may appear;

         (c) rent or use and occupancy insurance against loss or damage
resulting from hazards specified in subsections (a) and (b), above, in an amount
equal to twelve (12) months Rent, plus insurance premiums under this Article;

         (d) Workers' Compensation and Employer's Liability Insurance in amounts
not less than that required by law and satisfactory to Landlord; and

         (e) insurance against such other perils and in such amounts as Landlord
may from time to time reasonably require upon not less than ninety (90) days'
written notice, such requirement to be made on the basis that the required
insurance is customary at the time for prudent tenants of properties similar to
the Project.

         13.2 Requirements. All insurance required to be maintained by Tenant
shall provide for deductibles satisfactory to Landlord and shall in all other
respects be on terms and with insurers with a Best's Insurance Reports rating of
not less than "AX" and who are otherwise satisfactory to landlord Each policy
shay contain a waiver by the insurer of any rights of subrogation or indemnity
or any other claim to which the insurer might otherwise be entitled against the
Landlord or the agents or employees of Landlord, and shay, also contain an
undertaking by the insurer that no material change adverse to Landlord or Tenant
will be made, and the policy will not lapse or be cancelled, except after not
less than thirty (30) days' prior written notice to Landlord of the intended
change, lapse or cancellation. All such insurance shall be primary insurance as
to all claims thereunder and any insurance carried by Landlord shall be excess
and non contributing with any insurance requirement of Tenant. Each such policy
shall name Landlord as an additional insured and any mortgagee under a mortgage
or beneficiary under a deed of trust covering any

                                      -15-
<PAGE>

Landlord pursuant to Section 16.10 herein, Landlord may (but shah not be
obligated to) obtain some or all of the additional coverage or other insurance
which Tenant shall have failed to obtain, without prejudice to any other rights
of Landlord under this Lease or otherwise, and Tenant shall pay all premiums and
other reasonable expenses incurred by Landlord to Landlord on demand.

         13.3 LIMITATION OF LANDLORD'S LIABILITY. Tenant hereby waives all
claims against Landlord, its agents and employees for any injury to Tenant's
business, or for any bodily injury or death of, or loss or damage to any
property belonging to, Tenant or any of Tenant's Employees, or anyone permitted
by Tenant or such other parties to be upon the Premises or in, on or about the
Project unless resulting from the actual willful misconduct or gross negligence
of Landlord or its employees. In no event shall Landlord be liable for any
damage which is caused by steam,, water, rain or snow or other thing which may
leak into, issue or flow from any part of the Project or from the pipes or
plumbing works, including the sprinkler system (if any) therein or from any
other place or for any damage caused by or attributable to the condition or
arrangement of any electric or other wiring or of sprinkler heads (if any). In
no event shall Landlord be liable to Tenant for any act or omission of any
occupant of the Building other than Landlord, its agents and employees, or of
any owner or occupant of any property adjoining the Building.

         13.4 INDEMNIFICATION OF LANDLORD. Except with respect to claims or
liabilities for damage which is covered by insurance maintained by Landlord, if
any, to the extent of the cost of repairing such damage, Tenant shall indemnify,
defend with counsel acceptable to Landlord and hold Landlord harmless in respect
of (a) all claims, demands, losses, damages, liabilities and actions for bodily
injury or death, property damage or other loss or damage arising from the
conduct of any work or any act or omission of Tenant or any of Tenant's
Employees, or anyone permitted by Tenant or such other parties to be upon the
Project, and in respect of all costs, expenses and liabilities incurred by
Landlord in connection with or arising out of all of the foregoing, including
the expenses of any action or proceeding pertaining thereto and including
reasonable attorneys' fees; and (b) any liability, claim, loss, cost (including,
without limitation, attorneys' fees and disbursements of counsel selected by
Landlord), expense or damage suffered by Landlord arising from any breach by
Tenant of any of its covenants and obligations under this Lease.

         13.5 WAIVER OF SUBROGATION. As long as their respective insurers so
permit, Landlord and Tenant hereby mutually waive their respective rights of
recovery against each other for any loss insured by fire, extended coverage and
other property insurance policies existing for the benefit of the respective
parties. Each party shall obtain any special endorsements, if required by their
insurer, to evidence compliance with such waiver.

                                   ARTICLE XIV
                         EVENTS OF DEFAULT AND REMEDIES

         14.1 Events of Default. The occurrence of any one of the following
events shall constitute a material breach and default under this Lease by
Tenant:

         (a) Tenant shall have failed to pay an installment of Basic Rent,
Additional Rent or any other amount payable hereunder when due where such
failure shall continue for a period of five (5) days after written notice from
Landlord to Tenant; provided, however, that any such notice shall be in lieu of,
and not in addition to, any notice required under California Code of Civil
Procedure Section 1161, et seq., or any successor statutes thereto;

             (b) Tenant shall have failed to execute and deliver such document
as required by Section 16.2 or Section 16.3 within the time periods specified,
where such failure shall continue for a period of three (3) business days after
written notice thereof from Landlord; provided, however, that any such notice
shall be in lieu of, and not in addition to, any notice required under
California Code of Civil Procedure Section 1161 or any successor statutes
thereto;

         (c) there shall be a default of any condition, covenant, agreement or
other obligation on the part of Tenant (other than monetary defaults described
in Section 15.1 a hereof or Section 15.1 d hereof) to be kept, observed or
performed hereunder, including the Rules and Regulations described on Exhibit
"D" attached hereto, and such default shall be continuing for a period of more
than fifteen (15) days

                                      -16-

<PAGE>

or about THE PROJECT AND TENANT AFTER Tel. rip( of notice in writing from
Landlord shall have failed to take such immediate steps as shall enable Landlord
to reinstate or avoid cancellation (as the case may be) of such policy of
insurance;

         (e) the Premises shall, without the prior written consent of Landlord,
be used: (i) by any persons other than Tenant or its permitted assigns or
subtenants; (ii) for any purpose other than that for which they were leased or
occupied; or (iii) by any persons whose occupancy is prohibited by this Lease;

         (f) the balance of the Term of this Lease or any of the goods and
chattels of Tenant located in the Premises shall at any tune be seized in
execution or attachment and such execution or attachment shall not have been
discharged or released within thirty (30) days thereafter;

         (g) Tenant makes, or has made, or furnishes, or has furnished, any
warranty, representation or statement to Landlord in connection with this Lease,
or any other agreement to which Tenant and Landlord are parties, that is or was
false or misleading in any material respect when made or furnished;

         (h) Tenant becomes insolvent as defined in the Federal Bankruptcy Code,
admits in writing its insolvency or its present or prospective inability to pay
its debts as they become due, is unable to or does not pay all or any material
portion (in number or dollar amount) of its debts as they become due, permits or
suffers a judgment to exist against it that affects Tenant's ability to conduct
its business in the ordinary course (unless enforcement thereof is stayed
pending appeal), makes or proposes an assignment for the benefit of creditors,
or any class thereof, for purposes of effecting a moratorium upon or extension
or composition of its debts, proposes any such moratorium, extension or
composition, or commences or proposes to commence any bankruptcy, reorganization
or insolvency proceeding, or other proceeding under any federal, state or other
law for the relief of debtors;

         (i) Tenant fails to obtain the dismissal, within thirty (30) days after
the commencement thereof, of any bankruptcy, reorganization or insolvency
proceeding, or other proceeding under any law for the relief of debtors,
instituted against it by one or more third parties or fails actively to oppose
any such proceeding, or, in any such proceeding, defaults or files an answer
admitting the material allegations upon which the proceeding was based or
alleges its willingness to have an order for relief entered or its desire to
seek liquidation, reorganization or adjustment of any of its debts; or

         (j) Tenant fails to pay its debts as they become due or to timely
perform its obligations, and as a result a receiver, trustee or custodian is
appointed to take possession of all or any substantial portion of the assets of
Tenant, or any committee of Tenant's creditors, or any class thereof, is formed
for the purpose of monitoring or investigating the financial affairs of Tenant
or enforcing such creditors' rights.

         14.2 Remedies. In the event of any default by Tenant, Landlord shall
have the following rights and remedies, all of which are cumulative and not
alternative and not to the exclusion of any other or additional rights and
remedies in law or equity available to Landlord by statute or otherwise:

         (a) to remedy or attempt to remedy any default of Tenant, and in so
doing to make any payments due or alleged to be due by Tenant to third parties
(and such payments shall be deemed included in the term "Rent" as used in this
Lease) and to enter upon the Premises to do any work or other things therein,
and in such event all reasonable expenses of Landlord in remedying or attempting
to remedy such default shall be payable by Tenant to Landlord on demand;

         (b) to terminate this Lease forthwith by written notice thereof to
Tenant or by leaving upon the Premises or by affixing to an entrance door to the
Premises notice terminating this Lease and to immediately thereafter cease to
furnish any services hereunder;

         (c) any other remedies available at law or in equity or elsewhere
provided in this Lease.

         14.3 LATE CHARGES, INTEREST AND REPEATED DELINQUENCY. Tenant hereby
acknowledges that late payment by Tenant of Rent and other sums due hereunder
will cause Landlord 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

                                      -17-
<PAGE>

TAD BANK OF MAUI ica National HUM M SAVINGS Association TO NS MOST CREDIT-WORTHY
CUSTOMERS ON THE date the overdue Rent or such other sum was due (or a
substitute reference rate of a comparable lending institution reasonably
selected by Landlord if Bank of America National Trust & Savings Association no
longer publishes a reference rate) or (ii) the maximum rate then permitted by
applicable law, such interest to start accruing as of the date such overdue Rent
or other such payment(s) are due. If a late charge is payable hereunder, whether
or not collected for any three (3) months in any twelve (12) month period, then
notwithstanding any other provision contained in this Lease, Rent shall
automatically become due and payable quarterly in advance rather than monthly,
and the Security Deposit held by Landlord shall be increased and Tenant shall
immediately pay to Landlord the amount necessary to increase the Security
Deposit to no less than three (3) months Rent (whether or not any Security
Deposit was previously required hereunder).

         14.4 Damages. If Landlord elects to terminate this Lease pursuant to
Section 14.2 b , then Tenant shall pay Landlord, and Landlord may recover from
Tenant:

         (a) the worth at the time of award of any unpaid Rent that had been
earned at the time of such termination; plus

         (b) the worth at the time of award of the amount by which the unpaid
Rent that would have been earned after termination until the time of award
exceeds the amount of such rental loss Tenant proves reasonably could have been
avoided; plus

         (c) 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 Tenant proves reasonably could be avoided; plus

         (d) any other amount necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform his obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom; plus

         (e) at Landlord's election, such other amounts in addition to, or in
lieu of the foregoing, as may be permitted from time to time by applicable
California law.

         14.5 DEFINITION OF WORTH AT THE TIME OF AWARD. As used in Sections 14.4
a and 14. b the "worth at the time of award" shall be computed by allowing
interest at the lesser of two percent (2%) above the reference rate of interest
charged by Bank of America National Trust and Savings Association to its most
credit-worthy customers on the date the amount became due (or a substitute
reference rate of a comparable lending institution reasonably selected by
Landlord if Bank of America National Trust and Savings Association no longer
publishes a reference rate), or the maximum rate then permitted by applicable
law. As used in Section 14.4 c , the "worth at the time of award" shall be
computed by discounting such amount, at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent

         14.6 REENTRY. In the event of any default by Tenant, Landlord shall
also have the right, with or without terminating this Lease, to reenter the
Premises and to remove all persons and property from the Premises and take
whatever actions may be necessary or advisable to relet protect or preserve the
Premises. Any property so removed may be stored in a public warehouse or other
suitable place or otherwise disposed of in Landlord's discretion at the expense
and for the account of Tenant. Landlord shall not be responsible for any damages
or losses suffered by Tenant as a result of such reentry, removal, storage or
other disposition, and no such action shall he construed as an election to
terminate this Lease unless a written notice of such intention is given to
Tenant or unless the termination thereof be decreed by a court of competent
jurisdiction.

         14.7 RELETTING If Landlord shall elect to re-enter pursuant to the
terms of this Lease or shall take possession of the Premises pursuant to legal
proceeding or pursuant to any notice provided by law, then if Landlord does not
elect to terminate this Lease as provided in this Article 14 Landlord may from
time to time, without terminating this Lease, either recover all rental as it
becomes due or relet the Premises or any part thereof for such term or terms and
at such rental or rentals and upon such other terms and conditions as Landlord
in its sole discretion may deem advisable, with the right to make alterations
and repairs to the Premises.

                                      -18-
<PAGE>

licenses, concessions or arrangments nts. TENANT SHALL, as of the DATE OF NOTICE
BY LANDLORD OF SUCH ELECTION, HAVE no further right to or interest in the rent
or other consideration receivable thereunder.

         14.10 WAIVER BY TENANT. To the maximum extent permitted bylaw, Tenant
hereby waives pr-vasiees-ef; Of-pretuGtisaS uner
afl.y-statutes;-+al(R)s,-rudicial-c-isieas-eF other laws to the extent any such
provisions are inconsistent with the terms hereof, including without
limitations, the rights and remedies of Landlord.

         14.11 DEFAULT BY LANDLORD. Landlord shall not be in default hereunder
unless Landlord fails to perform the obligations required of Landlord within a
reasonable time, but in no event later than forty-five (45) days after written
notice by Tenant to Landlord and to the holder of any first mortgage or deed of
trust covering the Premises, or the lessor of any underlying or ground lease
affecting the Project, in writing specifying wherein Landlord has failed to
perform such obligations; provided, however, that if the nature of Landlord's
obligations is such that more than forty-five (45) days is required for
performance, then Landlord shall not be in default if Landlord or such holder
commences performance within such forty-five (45) day period and thereafter
diligently prosecutes the same to completion. In no event shall Tenant have the
right to terminate this Lease as a result of any default or defaults by
Landlord, and Tenant's remedies shall be limited to any other remedy available
at law or in equity, including monetary damages and injunctive relief. Nothing
herein contained shall be interpreted to mean that Tenant is excused from paying
Rent due hereunder as a result of any default by Landlord.

                                   ARTICLE XV
                            ASSIGNMENT AND SUBLETTING

         15.1 PROHIBITION. Tenant covenants that it will not voluntarily or by
operation of law, sell, assign, sublet, transfer or hypothecate this Lease or
any rights thereunder or the Premises in whole or in part without the prior
written consent of Landlord, which Landlord shall not unreasonably withhold, but
which shall be subject to the conditions and other provisions of Sections 15 2
and 153 hereunder, each of which Tenant hereby stipulates and agrees is
reasonable. Without limitation, Tenant shall for the purpose of this Article 15
be considered to assign or sublet in any case where it permits the Premises or
any portion thereof to be occupied by persons other than Tenant, its employees
and others engaged in carrying on the business of Tenant, whether pursuant to an
assignment, subletting, license or other right, or where any of the foregoing
occurs by operation of law.

         15.2 PROCEDURES.

         (a) In evaluating a proposed assignment or sublease, Landlord will
consider the experience of the proposed assignee or subtenant in the enterprise
involved, the proposed use of the space, the business reputation, degree of
success in past enterprises, personal qualities, financial standing, available
capital and credit rating of such proposed assignees or subtenants, and whether
any proposed division of space by a proposed sublessee is a proper and rational
division of the Premises, and base its decision of whether or not to consent
upon its evaluation of these and any other reasonable factors which Landlord
deems necessary or appropriate in its evaluation of the proposed assignment or
sublease, subject to Landlord's right to terminate arising under this Section
15.2 c hereof. Without limiting what may be construed as a reasonable basis for
Landlord's disapproval of a subletting or assignment, it is hereby agreed that
any one of the following factors will be reasonable grounds for disapproval: The
proposed assignee or subtenant does not, in Landlord's reasonable judgment, have
a good reputation as a tenant of property; The use of the Premises by the
proposed assignee or subtenant is not permitted by this Lease; In Landlord's
reasonable judgment, the proposed assignee or subtenant is engaged in a
business, and the Premises, or the relevant part thereof, will be used in a
manner, that is not in keeping with the then current standards of the Building,
or that will violate any restrictive or exclusive covenant as to use contained
in any other lease of space in the Building or the Project;

                                      -19-

<PAGE>

         (vii) The proposed assignment or sublease fails to include all of the
terms and provisions required to be included therein pursuant to this Article;

         (viii) Tenant is then in default of any obligation of Tenant under this
Lease; or

         (ix) The proposed assignment or sublease conflicts with or violates any
provision in any other tenant's lease.

         (b) Tenant shall not assign this Lease or sublet the whole or any part
of the Premises unless: (i) Tenant shall have received or procured a bona fide
written offer to take an assignment or sublease which is not inconsistent with
this Lease; and the acceptance of which would not breach any provision of this
Lease if the terms of this Article are complied with and which Tenant has
determined to accept subject to compliance with this Article, and (ii) Tenant
shall have first requested and obtained the consent in writing of Landlord
thereto.

         (c) Any request for consent delivered by Tenant to Landlord shall be in
writing and shall be accompanied by a copy of the offer certified by Tenant to
be true and complete, and Tenant shall furnish to Landlord all information
available to Tenant and requested by Landlord as to the responsibility,
financial condition and business of the proposed assignee or subtenant.
Notwithstanding anything to the contrary in this Article, within twenty (20)
days after the receipt by Landlord of such request for consent and of all
information which Landlord shall have requested hereunder, Landlord shall havl a
the right upon written notice to Tenant, if the request is to assign this Lease
or sublet the whole of the Premises, to cancel and terminate this Lease, or if
the request is to sublet a part of the Premises only, to cancel and terminate
this Lease with respect to such part, in each case as of a termination date to
be stipulated in the notice of termination which shall be not less than sixty
(60) days nor more than ninety (90) days following the giving of such notice. In
such event, Tenant shall surrender the whole or part, as the case may be, of the
Premises in accordance with such notice of termination. Basic Rent and
Additional Rent shall be apportioned and paid to the date of surrender and, if
only part of the Premises is surrendered, Basic Rent and Additional Rent shall
after the date of surrender abate proportionately. In such event, Landlord may
lease the terminated Premises to the prospective assignee or sublessee without
liability of any kind (including without limitation a finders fee) to Tenant. If
Landlord shall give its consent, Tenant shall assign or sublet, as the case may
be, only upon the terms set out in the offer submitted to Landlord and not
otherwise. If Tenant does not consummate such assignment or subletting within
120 days thereafter, Tenant must once again seek Landlord's consent as set forth
in this Section 15.2 c . In any event, Landlord shall be entitled to receive alb
rent or other. premium or consideration paid or payable under or in connection
with the sublease, assignment or other transfer which is in excess of the Basic
Rent payable under this Lease for the portion of the Premises sublet or assigned

         15.3 Assumption of Obligations. No assignment of this Lease shall be
effective unless the assignee shall execute an assumption agreement in form,
scope and substance satisfactory to Landlord, assuming all the obligations of
Tenant hereunder, and shall pay to Landlord its reasonable fee for processing
the assignment. No subletting shall be effective unless the sublessee shall
execute an agreement in commercially reasonable form which provides that the
sublease is subject and subordinate to the terms and conditions of this Lease.

         15.4 No Waiver. No permitted assignment, subletting, mortgage or other
encumbrance of Tenant's interest in this Lease shall relieve the Tenant
signatory to this Lease nor any assignee of such tenant from its or their
obligation to pay Rent and to perform all of the other obligations to be
performed by Tenant hereunder. The acceptance of Rent by Landlord from any other
person shall not be deemed to be a waiver by Landlord of any provision of this
Lease or be a consent to any subletting, assignment, mortgage or t" other
encumbrance. Consent to any sublease, assignment, mortgage or other encumbrance
shall not bedeemed to constitute consent to any other attempted subletting,
assignment, mortgage or other encumbrance.

         15.5 SURRENDER AND CHANGE of Control. The voluntary or other surrender
of this Lease by Tenant or a mutual cancellation hereof shall not cause a
merger, and shall at the option of Landlord, terminate all or any existing
subleases or subtenancies or shall operate as an assignment to Landlord of such
subleases or subtenancies. If Tenant is a corporation that, under the then
current guidelines published by the Commissioner of Corporations of the State of
California, is not deemed a public corporation, or is an

                                      -20-

<PAGE>

the SeetiFity Diipq6k is no! gFeatef than ene (1) Monthly Rental Installment Ad
is aaHally Feeeived by th MUM U 14V~ V aa7 , under this Lease.

         15.6 OPTIONS NOT ASSIGNABLE. All options granted to Tenant under this
Lease shall be deemed to be personal, and shall not bt assignable to any
assignee or subtenant,

                                   ARTICLE XVL
                              ADDITIONAL PROVISIONS

         16.1 Relocation of Premises.'

         16.2 SUBORDINATION AND ATTORNMENT. Tenant agrees that thus Lease shall
be subject and subordinate at all times to all ground and underlying leases,
which now exist or may hereafter be executed affecting the Project, or any part
thereof, and to the lien of any mortgage, trust deed or like encumbrance which
may now exist or hereafter be executed affecting the Project, or any part
thereof, together with all renewals, modifications, consolidations, replacements
or executions thereof; provided, however, that the landlord under any such
underlying lease, or the holder or holders of any such mortgage, trust deed, or
like encumbrance placed on the Project subsequent to date hereof shall agree
that this Lease shall remain in full force and effect, and Tenant's possession
of the Premises shall not be disturbed by the termination of such underlying
lease, or in the event of a foreclosure or upon the exercise of a power of sale,
under any such mortgage, trust deed or like encumbrance, so long as the Tenant
is not in default under any provision of this Lease at such time.
Notwithstanding the foregoing, if any landlord under a ground lease or an
underlying lease or any such lienholder advises Landlord that it desires this
Lease to be prior and superior to any such underlying lease, mortgage, trust
deed or like encumbrance, this Lease shall be superior to any such Lease and/or
liens. Tenant agrees to execute and deliver upon ten (10) days notice and demand
of Landlord, any and all instruments desired by Landlord and/or such prior
landlord, or lienholders to subordinate (or, if applicable, to make prior and
superior) this Lease to any such underlying lease, mortgage, trust deed or like
encumbrance. Tenant further appoints Landlord as its agent and attorney-in-fact
for the term of this Lease to execute on behalf of Tenant any such instrument
which Tenant fails to execute within the ten (10) day period provided herein. In
addition, in the event of a termination of the underlying lease, or the sale of
all or any part of the Project upon foreclosure or upon the exercise of a power
of sale, Tenant shall upon request of the prior landlord or purchaser, attorn to
such prior landlord or purchaser and shall recognize such landlord or purchaser
as the landlord under this Lease; provided, however, that in the event of
foreclosure or the exercise of a power of sale, such lienholder shall not be
bound by any amendments or modifications of this Lease made without the prior
consent of such 6enholder and shall not be personally liable for any defaults by
Landlord under this Lease occurring prior to such foreclosure or sale. In no
event shall any successor-in-interest to Landlord be liable for any prepayment
of Rent in excess of one (1) Monthly Rental Installment, except for the Security
Deposit paid by Tenant to Landlord.-previdgd-that the amount A

<PAGE>

charges by Tenant; and (v) certu wing any other matters rLtAMIg to THE LEASE OR
1HA NRE11TIAT% AS UUDLOTD shall REASONABLY REQUEST. ANY SUCH STATEMENT MAY be
relied upon by any then existing or prospective lessor, PURCHASER OR
ENCUMBRANCER OF ALL CAR ANY PORTION of the Project.

         (b) At Landlord's, option, Tenant's failure to deliver such statements
within such ten (10) day period shall be a material breach of this Lease or
shall be conclusive upon Tenant: (i) that this Lease is in full force and
effect, without modification, except as may be represented by Landlord; (ii)
that there are no uncured defaults in Landlord's performance; (iii) that the
amount of the Rent and the Commencement Date, Expiration Date and terms with
respect to all options to extend the Lease are as represented by Landlord; (iv)
that the amount of 'the Security Deposit and prepaid rent is as set forth by
Landlord; and (v) are any other matters relating ~to this Lease or the Premises
as reasonably represented by Landlord.

         16.4 INSPECTION AND ACCESS TO THE PREMISES. Landlord shall be permitted
at any time and from time to time to enter and to have its authorized agents,
employees and contractors enter the Premises for the purposes of inspection,
window cleaning, maintenance, providing janitor service, making repairs,
alterations or improvements to the Premises or the Project, or to have access to
utilities and services (including all ducts and access panels, if any, which the
Tenant agrees not to obstruct) and Tenant shall provide free and unhampered
access for such purposes, and shall not be entitled to compensation for any
inconvenience, nuisance or discomfort caused thereby. Landlord and its
authorized agents and employees shall be permitted entry to the Premises for the
purpose of exhibiting them to prospective tenants. Landlord in exercising its
rights under this Section shall do so to the extent reasonably necessary so as
to minimize interference with Tenant's use and enjoyment of the Premises,
provided that in an emergency Landlord or persons authorized by it may enter the
Premises without regard to minimizing interference.

         16.5 Unavoidable Delay. If and to the extent that either Landlord or
Tenant shall be prevented, delayed or restricted in the fulfillment of any
obligation hereunder in respect of the supply or provision of any service or
utility, the making of any repair, the doing of any work or any other thing
(other than the payment of moneys required to be paid hereunder) by reason of:
(a) strikes or work stoppages; (b) being unable to obtain any material service,
utility or labor required to fulfill such obligation; (c) any statute, law or
regulation of, or inability to obtain any permission from any government
authority having lawful jurisdiction preventing, delaying or restricting such
fulfillment; or (d) other unavoidable occurrence, then the time for fulfillment
of such obligation shall be extended for any period specified in this Lease, or
during the period in which such circumstance operates to prevent, delay or
restrict the fulfillment thereof, whichever is shorter, and the other party to
this Lease shall not be entitled to compensation for any inconvenience, nuisance
or discomfort thereby occasioned; provided, however, that if Landlord shall be
prevented, delayed or restricted in the fulfillment of any obligation hereunder
by reason of any of such circumstances or occurrences and the fulfillment of
such obligation could not, in the reasonable opinion of Landlord, be completed
without substantial additions to or renovations of the PROJECT, LANDLORD may
terminate this Lease upon sixty (60) days prior written notice to Tenant. In no
event shall Tenant be entitled to any abatement in Rent in the event Landlord,
is so prevented, delayed or restricted in the fulfillment of any of such
obligations of Landlord as a result of any of such circumstances or occurrences.

         16.6 Waiver. If either Landlord or Tenant shall overlook, excuse,
condone or suffer any default, breach, nonobservance, improper compliance or
noncompliance by the other of any obligation hereunder, this shall not operate
as a waiver of such obligation in respect of any continuing or subsequent
default, breach, or nonobservance, and no such waiver shall be implied but shall
only be effective if expressed in writing.

         16.7 Demolition and Renovation. Notwithstanding anything contained in
this Lease to the contrary, if Landlord intends to demolish or to renovate
substantially all of the Building, then Landlord, upon giving Tenant one hundred
eighty (180) days' written notice, shall have the right to terminate this Lease
and THIS Lease shall thereupon expire on the expiration of one hundred eighty
(180) days from the date of the giving of such notice without compensation of
any kind to Tenant.

         16.8 Recordation. Tenant agrees with Landlord not to record this Lease
in any real property records or other records and not to register notice of this
Lease in any form without the prior written consent of Landlord. If such consent
is provided, such notice of Lease to be recorded shall be in such form as
Landlord shall have approved in writing and Landlord's consent may be
conditioned upon payment of

                                      -22-

<PAGE>

hereto, and that THIS LEASE and such &Uoas constitute the ENTIRE AGREEMENT
BETWEEN LANDLORD AND TENANT in connection with the subject matter thereof and
may not be modified except by an agreement in writing executed by Landlord and
Tenant.

         16.10 Notices. Any notice, communication, document or writing required
or contemplated by any provision hereof shall be given in writing and either (i)
delivered personally to Landlord or Tenant, (u) sent by first-class, prepaid
mail, return receilx requested, or (iii) sent by reputable overnight courier,
prepaid, addressed to Landlord or to Tenant, as the case may be, at the
address(es) set forth in Section 2.11. Every such notice, advice, document or
writing shall be deemed to have been given for all purposes hereunder, either:
(a) if personally delivered, upon such delivery; (b) if mailed as aforesaid,
upon the third day after being mailed, or the date of receipt shown on the
return receipt, whichever is earlier; or (c) if sent by commercial overnight
courier, upon the next business day following such sending. Either party may
change its address for purposes of this Section by giving the other party
written notice of the new address in the manner set forth above.

         16.11 INTERPRETATION. In this Lease, the terms "herein", "hereof",
"hereby, "hereunder", "hereto", "hereinafter" and similar expressions refer to
this Lease and not to any particular section, clause or other portion thereof,
unless there is something in the subject matter or context inconsistent
therewith. The parties agree that all of the provisions of this Lease are to be
construed as covenants and agreements as though words importing such covenants
and agreements were used in each separate section hereof, and that the captions
appearing for the provisions of this Lease have been inserted as a matter of
convenience and for reference only and in no way define, limit or enlarge the
scope or meaning of this Lease or of provision hereof.

         16.12 Extent of Lease Obligations. This Lease and everything herein
contained shall inure to the benefit of and be binding upon the respective
heirs, executors, administrators, successors, assigns and other legal
representatives as the case may be, of Landlord and Tenant, subject to the
granting of consent by Landlord to any assignment or sublease, and every
reference herein to any party hereto shall include the heirs, executors,
administrators, successors, assigns and other legal representatives of such
party, and where there is more than one tenant or there is a male or female
party the provisions hereof shall read with all grammatical changes thereby
rendered necessary and all covenants shall be deemed joint and several.

         16.13 BROKERS. Tenant represents and warrants to Landlord that it has
not had dealings with any broker or finder in connection with this Lease or the
Project other than Tenant's broker shown in Section 2.10 above, and that Tenant
knows of no other person who is or may claim to be entitled to a commission,
finder's fee or other like payment in connection herewith and Tenant shall
indemnify, defend by counsel approved by Landlord and hold Landlord harmless
from and against any and all claims, liabilities, losses, costs, damages or
expenses (including reasonable attorneys' fees and costs) that Landlord may
incur should such representation and warranty be incorrect. Landlord agrees to
indemnify and hold Tenant harmless from any claims, liabilities, costs, damages
or expenses (including reasonable attorneys' fees and costs that Tenant may
incur) arising out of or relating to any agreement by Landlord to pay a
brokerage commission, finder's fee or like payment to any broker or other person
relating to the leasing of the Premises; provided, however, that Landlord shall
not be obligated to Tenant if any such obligations arise in connection with any
broker or other person whose identity Tenant has failed to disclose to Landlord
as required by this Section.

         16.14 Payments. All payments to be made under this Lease shall be made
without prior legal notice or demand unless otherwise provided herein, in legal
currency of the United States of America to Landlord at the address specified in
Section 2.11 hereof, as altered from time to time by Landlord upon written
notice to Tenant.

         16.15 Time of Essence. Time is of the essence of each of the terms,
covenants and conditions to be kept, observed or performed under this Lease.

         16.16 Applicable Laws. This Lease shall be governed by and construed in
accordance with the laws of the State of California.

         16.17 Wavier of Jury Trial. Notwithstanding anything to the contrary
contained in the Lease, Landlord and Tenant hereby waive trial by jury in any
action, proceeding or claim asserted by either of the

                                      -23-
<PAGE>

reasonable attorneys therein. The provisions of this Section shall be applicable
in trial, arbitration and appellate proceedings, and in any action or
participation in, or in connection with, any case or proceeding under the
Federal Bankruptcy Code and any judgment, award or .decree rendered in any such
action or proceeding shall include an award thereof (collectively, an 'Action").
The obligation for fees set forth herein shall accrue on commencement of any
proceeding whether or not such proceeding is prosecuted to judgment or final
determination.

         (b) The prevailing party in any Action shall be entitled, in addition
to and separately from the amounts recoverable under Section 16.18 a above, to
the payment by the losing party of the prevailing party's reasonable attorneys'
fees, court costs and litigation expenses incurred in connection with (i) any
appellate review of the judgment rendered in such Action or of any other ruling
in such Action, and (ii) any proceeding to enforce a judgment in such Action. It
is the intent of the parties that the provisions of this Section 16.18(b) be
distinct and severable from the other rights of the parties under this Lease,
shall survive the entry of judgment in any Action and shall not be merged into
such judgment. The provisions contained in this Section 16.18 shall survive the
expiration or earlier termination of this Lease.

         16.19 Relationship of Parties. Neither the method of computation of
Rent nor any other provisions contained in this Lease nor any acts of the
parties shall be construed by the parties or by any third person to create the
relationship of principal and agent, partnership, joint venture or of any
association between Landlord and Tenant; other than the relationship of landlord
and tenant.

         16.20 Waiver. The acceptance of Rent or other payments by Landlord
shall not be deemed a waiver of any obligation of Tenant regardless of whether
Landlord had knowledge of any breach of such obligation. Failure to insist on
compliance with any of the terms, covenants or conditions hereof shall not be
deemed a waiver of such term, covenant or condition, nor shall such failure be
deemed a waiver or relinquishment of such rights and powers at any other time or
times.

         16.21 PARTIAL INVALIDITY. If any term or provision of this Lease or the
application thereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Lease or the application of such
term or provision to persons or circumstances other than those as to which it is
held invalid or unenforceable shall not be affected thereby, and each term and
provision of this Lease shall be valid and enforced to the fullest extent
permitted by law.

         16.22 Construction of Lease Provisions. The provisions of this Lease
shall not be interpreted against either party because such party prepared any
portion of this Lease, but shall be interpreted according to the application of
other rules of interpretation of contracts generally.

         16.23 QUIET ENJOYMENT. So long as Tenant shall observe and perform its
covenants and agreements hereunder, Tenant shall peacefully and quietly have and
enjoy possession of the Premises in accordance with the terms and provisions of
this Lease without hindrance by Landlord.

         16.24 LIMITATION ON LIABILITY. Notwithstanding anything contained in
this Lease to the contrary, Tenant and all of its successors and assigns agree
that, in the event of any actual or alleged failure, breach or default hereunder
by Landlord, their sole and exclusive remedy shall be against Landlord's
interest in the Project. Tenant and all such successors and assigns agree that
the obligations of Landlord under this Lease do not constitute personal
obligations of Landlord or of the individual directors, officers or shareholders
of Landlord, and Tenant shall not seek recourse against any of them or any of
their personal assets or any assets of Landlord other than the Landlord's
interest in the Project for satisfaction of any liability with respect to this
Lease.

         16.25 TENANT AS PARTNERSHIP OR CORPORATION.

         If Tenant is a partnership, then:

         (a) Tenant represents, warrants and agrees, as applicable, that it is a
partnership comprised of the general partners whose names are set forth in
Exhibit "F' attached hereto, that the general partners listed on Exhibit "F" are
all the partners of said partnership and that there are no other partners at the
present time, and that such partners are and shall for all purposes be jointly,
severally and collectively liable for the keeping, observing and performing of
all of the terms, covenants, conditions, provisions and agreements of this
Lease;

                                      -24-
<PAGE>

communications that may, hereafter be given by Tenant or by any of the partners
comprising Tenant; and

         (d) All bills, statements, notices, demands, requests or other
communications given or rendered to Tenant or to any of the partners comprising
Tenant shall be deemed given or rendered to Tenant and to each of the partners
comprising Tenant and shall be binding upon Tenant and each of such partners.

         If Tenant is a corporation Tenant and the persons executing this Lease
on behalf of Tenant hereby represent and warrant that the individuals executing
this Lease on Tenant's behalf are duly authorized to execute and deliver this
Lease on its behalf in accordance with a duly adopted resolution of the board of
directors of Tenant (a copy of which is to be delivered to Landlord upon the
execution hereof by tenant), and in accordance with the by-laws of Tenant and
that this Lease is binding upon Tenant in accordance with its terms.

         16.26 SALE OF BUILDING OR PROPERTY. Each conveyance by Landlord or its
successor of its interest in the Building or the Property prior to the
expiration or termination hereof shall be subject to this Lease and shall
relieve the grantor of any further obligations or liability hereunder, whenever
such obligations or liabilities shall have arisen or accrued. Tenant hereby
agrees to attorn to Landlord's successor in interest, whether such interest is
acquired by sale, transfer, foreclosure, deed in lieu of foreclosure or
otherwise, and upon the occurrence of any of the same, Tenant shall look solely
to the then owner of the Building and/or the Project for performance of all
obligations of and satisfaction of all liabilities of Landlord hereunder. The
term "Landlord" as used in this Lease shall mean the then current owner or
ground lessee of the Project, so that in the event of any sale, transfer or
assignment of the Project, or the making of any lease or leases thereof, or the
sale, transfer or the assignment of any such lease or leases, previous landlords
shall be and hereby are relieved of all covenants and obligations of Landlord
hereunder, It shall be deemed and construed without further agreement between
the parties, or their successors in interest, or between the parties and the
transferee or acquiror at any such sale, transfer or assignment, or lessee on
the making of any such lease, that the transferee, acquiror or lessee has
assumed and agreed to carry out any and all of the covenants and obligations of
Landlord hereunder accruing after the date of the sale, transfer or assignment
to Landlord's exoneration.

         16.27 Signage. Tenant shall be entitled to have Landlord place the name
of Tenant or Tenant's trade name on the main building marquis as well as on the
entry door off the elevator lobby located on the, floor on which the Premises is
situated. Such installation shall be at Tenant's expense; provided, however,
that if Exhibit "E" is attached hereto, such installation shall be deemed a
Building Standard Installation (as defined in Exhibit "E"). The following
Exhibits are attached hereto and are incorporated by reference herein and are
hereby made a part of this Lease: Exhibit "A" - Legal Description of Property
Exhibit "B" - Diagram of Premises Exhibit "C" - Memorandum of Commencement and
Expiration Dates Exhibit "D" - Rules and Regulations Exhibit "E" - Tenant
Improvements Exhibit "" General partners of Tenant Exhibit "G" - Miscellaneous
Additional Provisions

<PAGE>

By: THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STA'T'ES, a New York
corporation General Partner

By
 "Curtis
Investment Officer
By:
Name:
Title:

<PAGE>

Floor Plan here

Floor Plan
Suite 1220
First Right Space
TWELTH FLOOR
Suite 1200
Tenant: Island Pacific Systems Corporation
Address: 19800 MacArthur Blvd., Suite 1200

       This Exhibit "B" is intended only to provide a means of visually
identifying the Premises and does not constitute a drawing of the Premises to
scale.
                                   EXHIBIT "B"

                                       -1-

<PAGE>

         C.1 THE PREMISES HAVE BEEN accepted by TENANT, ALL IMPROVEMENT work. TO
A PER FORME Landlord has been completed and there is no deficiency in any
construction.

         C.2 Tenant is in possession cif the Premises.

         C.3 The Commencement Date of the Term of the Lease is ,limy I ,1995_,
and the Expiration Date of the Term of the Lvise is JUNE 30, M05

BRIN-MAR 1, L.P.,
a California limited partnership
By: THE EQUITABLE LIFE ASSURANCE
 SOCIETY OF THE UNITED STATES
 a New York corporation
 General Partner
  By:
  Christopher Curtis
  Investment Officer
020994-TI
"TENANT'":
ISLAND PAC FICEWbDRPORATI0N,
By:~
Name:~b                           `
Title:

                                   EXHIBIT "C'

                                      -1-
<PAGE>

AREAS or fire escapes any waste paper, dust., gar bage, refuse or anything else
whatsoever.

         D.2 THE WASHROOM PLUMBING FIXTURES AND other water apparatus shall not
be used for any PURPOSE OTHER THAN THOSE FOR WHICH they WERE CONSTRUCTED, AND no
sweeping, rubbish, rags, ashes or other substances shall be thrown therein. The:
expense of any damage resulting by misuse by Tenant shall be borne by Tenant.

         D.3 Tenant shall hermit window cleaners to clean the windows of the
Premises during normal business hours.

         D.4 No birds or animals shall be kept in or about the Building nor
shall Tenant operate or permit to be operated any musical or sound-producing
instruments or device or make or permit any improper noise inside or outside,
the Premises which may be heard outside such Premises.

         D.5 No one shall use the Premises for residential purposes, or for the
storage of personal effects or articles other than those required for business
purposes.

         D.6 All persons entering and leaving the Building at any time other
than during normal business hours shall comply with Landlord's after hours
Building security procedures, and Landlord will have the right to prevent any
person from entering or leaving the Building or the Project unless provided with
a key to the , Premises to which such person seeks entrance and a pass in a form
to be approved by Landlord. Any persons found in the Building at such times
without such keys and passes will be subject to Landlord's after hours Building
security procedures.

         D.7 No dangerous, explosive or hazardous materials shall be kept or
permitted to be kept in the Premises.

         D.8 Tenant shall not and shall not permit any cooking other than
microwave cooking and the preparation of beverages in the Premises. Tenant shall
not install or permit the installation or use of any machine dispensing goods
for sale in the Premises without the prior written approval of Landlord. Only
persons authorized by Landlord shall be permitted to deliver or to use the
elevators for the purpose of delivering food or beverages to the Premises.

         D.9 Tenant shall not bring in or take out, position, construct, install
or move any safe, business machine or other heavy office equipment without first
obtaining the prior written consent of Landlord. In giving such consent,
Landlord shall have the right in its sole discretion, to prescribe the weight
permitted and the position thereof, and the use and design of planks, skids or
platforms to distribute the weight thereof. All damage done to the Building by
moving or using any such heavy equipment or other office equipment or furniture
shall be repaired at the expense of Tenant. The moving of all heavy equipment or
other office equipment or furniture shall occur only at times reasonably
consented to by Landlord and the persons employed to move the same in and out of
the Building must be acceptable to Landlord. Safes and other heavy office
equipment will be moved through the halls and corridors only upon steel bearing
plates. No freight or bulky matter of any description will be received into the
Building or carried in the elevators except during hours approved by Landlord.

         D.10 Tenant shall give Landlord prompt notice of any accident to or any
defect in the plumbing, heating, air conditioning, ventilating, mechanical or
electrical systems or any other part of the Building.

         D.11 Tenant shall not mark, drill or in any way DEFACE THE walls,
ceilings, partitions, floors or other parts of the Premises and the Building
except in connection with reasonable picture hanging and wall decorations.

         D.12 Except with the prior written consent of Landlord, no tenant shall
use or engage any person or persons other than the janitor or janitorial
contractor of Landlord for the purpose of any cleaning of the Premises.

         D.13 If Tenant desires any electrical or communications wiring,
Landlord reserves the right to direct qualified persons as to where and how the
wires are to be introduced, and without such directions no borings or cutting
for wires shall take place. No other wires or pipes of any kind shall be
introduced without

                                   EXHIBIT "D"

                                       -1-

<PAGE>

         D.17 TENANT SHALL MAINTAIN IN good condition and repair, reasonable
wear and tear excepted, the rugs and drapes (if any) in the Premises and shall
arrange for regular spot cleaning and shampooing of carpets and dry cleaning of
drapes in a manner acceptable to Landlord.

         D.18 Tenant shall permit the periodic: closing of lanes, driveways and
passages for the purpose of preserving Landlord's rights over such lanes,
driveways and passages.

         D.19 Landlord and Landlord's employees shall have the right to examine
any and all packages or boxes that are removed from the Building by Tenant or by
any of Tenant's employees, contractors, agents, licensees or invitees from time
to time.

         D.20 Landlord shall have the right to make such other and further
reasonable rules and regulations and to alter the same as in its judgment may
from time to time be necessary or convenient for the safety, care, cleanliness
and appearance of the Premises and the Project and the same shall be observed by
the tenants, their employees and servants. Landlord also has the right to
suspend or cancel any or all of these rules and regulations.

                                  EXHIBIT "D"

                                       -2-

<PAGE>

perimeter offices.

         E.2. CONSTRUCTION MATERIALS. Unless otherwise specified in the Plan or
Cost Estimate or hereafter agreed in writing by Landlord, all materials and
finishes utilized in constructing the tenant improvements shall be Landlord's
building standard. Should Landlord submit any additional plans, equipment
specification sheets, or other matters to Tenant for approval or completion,
Tenant shall respond in writing, as appropriate, within five (5) working days
unless a shorter period is provided herein. Tenant shall not unreasonably
withhold its approval of any matter. Tenant further agrees that it shall
promptly complete and deliver to Landlord any disclosure form regarding
hazardous materials that may be required by any governmental agency as a
condition to the issuance of the building permit.

         E.3. PLAN REVISION. In the event that Tenant requests in writing a
revision in the Plan or in any other plans hereafter approved by Tenant, then
provided such change request is acceptable to Landlord, Landlord shall advise
Tenant by written change order of any additional cost and/or Tenant Delay (as
defined below) such change would cause. Tenant shall approve or disapprove such
change order in writing within two (2) business days following its receipt.
Tenant's approval of a change order shall not be effective unless accompanied by
payment in full of the additional cost, if any, of the tenant improvement work
resulting from the change order. It is understood that Landlord shall have no
obligation to interrupt or modify the tenant improvement work pending Tenant's
approval of a change order. All Tenant Improvement work, including the delivery,
storage and removal of materials, shall be scheduled through and shall be
subject to the reasonable supervision of Landlord, and shall be performed in
accordance with any reasonable conditions or regulations imposed by Landlord
including, without limitation, payment on demand of an administrative fee of
three percent (3%) of the cost of the work of the Tenant Improvement to Landlord
for supervision and administrative costs.

         E.4. TENANT DELAY. Notwithstanding any provision in the Lease to the
contrary, if Tenant fails to comply with any of the time periods specified in
this Exhibit, requests any changes to the work, furnishes inaccurate or
erroneous specifications or other information, or otherwise delays in any manner
the completion of the tenant improvements or the issuance of an occupancy
certificate (any of the foregoing being referred to in this Lease as a "Tenant
Delay"), then Tenant shall bear any resulting additional construction cost or
other expenses and the Commencement Date shall be deemed to have occurred for
all purposes including Tenant's obligation to pay rent as of the date Landlord
reasonably determines that it would have been able to deliver the Premises to
Tenant but for the collective Tenant Delays. In no event, however, shall such
date be earlier than the Estimated Commencement Date set forth in the Basic
Lease Provisions.

         E.5. TENANT'S AGENTS. Landlord shall permit Tenant and its agents to
enter the Premises prior to the Commencement Date of the Lease in order that
Tenant may perform any work to be performed by Tenant hereunder through its own
contractors, subject to Landlord's prior written approval, and in a manner and
upon terms and conditions and at times satisfactory to Landlord's
representative. The foregoing license to enter the Premises prior to the
Commencement Date is, however, conditioned upon Tenant's contractors and their
subcontractors and employees working in harmony and not interfering with the
work being performed by Landlord. If at any time that entry shall cause
disharmony or interfere with the work being performed by Landlord, this license
may be withdrawn by Landlord upon twenty-four (24) hours written notice to
Tenant. That license is further conditioned upon the compliance by Tenant's
contractors with all requirements imposed by Landlord on third party
contractors, including without limitation the maintenance by Tenant and its
contractors and subcontractors of workers' compensation and public liability and
property `. damage insurance in amounts and with companies and on forms
satisfactory to Landlord, with certificates of such insurance being furnished to
Landlord prior to proceeding with any such entry. The entry shall be deemed to
be under all of the provisions of the Lease except as to the covenants to pay
rent. Landlord shall not be liable in any way for any injury, loss or damage
which may occur to any such work being performed by Tenant, the same being
solely at Tenant's risk. In no event shall the failure of Tenant's contractors
to complete any work in the Premises extend the Commencement Date of the Lease
beyond the date that Landlord has completed its tenant improvement work and
tendered the Premises to Tenant.

         E.6. SUBSTANTIAL COMPLETION AND PUNCH LIST ITEMS. For purposes of this
Lease, substantial completion of the Tenant Improvements shall be defined as the
date upon which Landlord furnishes to Tenant a certificate certifying that the
Tenant Improvements have been substantially completed in accordance with the
Tenant's Plans. Within fifteen (15) days after receipt of Landlord's certificate
of substantial

                                   EXHIBIT "E"

                                       -1-

<PAGE>

         E.7 Tenant's Representative

         Tenant hereby designates Todd Hammett, Telephone Number (714) 760-5002

         As its representative, agent and attorney-in-fact for the purpose of
receiving notices,

         Approving submittals and issuing requests for changes, and landlord
shall be intitled to rely

         Upon authorizations and directives of such person (s) as if given by
tenant. Tenant may amend the Designation of its construction representative(s)
at any time upon delivery of written notice to Landlord.

<PAGE>

applicable to the Extended Term.

         b. Tenant shall deliver to landlord written notice of Tenant's election
to exercise its Option to Extend the Term of this Lease no later than six (ti)
months prior but no earlier than nine (9) months prior to the date the Term of
the Lease would otherwise expire.

         c. All rights of Tenant under the provisions of this Exhibit G shall
terminate and be of no further force or effect, notwithstanding Tenant's due and
timely exercise of the Option to Extend, if at any time during the

any covenant, obligation or agreement to be performed by Tenant under this
Lease.

         d. In the event Tenant timely exercises the Option to Extend as herein
provided, Basic Rent shall be adjusted as of the commencement dote of the
Extended Term ("Rent Ad Adjustment Date"), to the then current rate per rentable
square foot for new and renewal tenants in unencumbered space, similarly
improved and located with a similar term in comparable Class-A office towers in
the john Wayne Airport/Newport Beach area (the "Market Rate") as reasonably
determined by Landlord. Basic Rent during the Extended Term shall be further
adjusted in accordance with the terms and conditions of this Lease. In no event
shall the Basic Rent for the Extended Term be less than Basic Rent for the
immediately preceding rental period.

         e. The Option to Extend is personal to Tenant and shall automatically
terminate upon any assignment, transfer, hypothecation or encumbrance of this
Lease by Tenant or upon any sublease of all or a part of the Premises.

         f. As used herein, the term "Special Provisions" shall include any
matters interlineated or deleted from the printed text of this Lease, and all
provisions of any Exhibits attached to this Lease other than Exhibit "E", which
last designated Exhibits shall, however, be in Landlord's then current form.

         G.2. RIGHT OF FIRST OFFER . Continuing

         a. Provided Tenant is not in default under this Lease, Tenant shall
have T?.U~:(?)i?~ aright of fast offer (the "First Offer Right") during the
initial Term to lease certain space contiguous to the Premises as set forth in
Exhibit "B" (the "First Offer Space"), which First Offer Right shall be
exercised in accordance with and subject to the terms and conditions set forth
below. In the event that Landlord determines that the First Offer Space shall
become available for lease, Landlord shall notify Tenant in writing (the "First
Offer Notice"). Tenant shall have five (5) business days from the date of
delivery of the First Offer Notice within which to negotiate lease terms and
deliver to Landlord, Tenant's written commitment to lease the First Offer Space,
(the "Expansion Commitment"). If Tenant fails to timely deliver the Expansion
Commitment, Landlord shall be free to lease the First Offer Space described in
Landlord's notice to any third party. -AND- TANANT'S-IIIRGE-9FFEF -RIGHT-SHALL
TERMINATE

         b. If Tenant timely delivers the Expansion Commitment, Landlord shall
prepare an appropriate amendment to this Lease which incorporates the terms and
conditions which Landlord shall lease the First Offer Space to Tenant consistent
with this Section G.2. Tenant shall execute and deliver the amendment to
Landlord within ten (10) business days after receipt of the same from Landlord.
Should Tenant fail to deliver the amendment to Landlord within said ten (10)
business day period, Landlord shall be free to lease the First Offer Space to
any third party. c.Landlord shall (ease the First Offer Space to Tenant subject
to all of the terms and conditions of this `, Lease, except that (i) the term
shall commence on the date Landlord delivers possession of the First Offer Space
to Tenant shall continue thereafter for a term which is coterminous with the
Term of this Lease, (ii) the Basic Rent for the First Offer Space shall be the
Market Rate described in G.1, and (iii) such First Offer Space shall be
delivered to Tenant in "as is" condition.

         d. Tenant's rights under this Section G.2 are personal to Tenant and
such rights may not be assigned or transferred. Any attempt to assign or
transfer Tenant's rights under this Section G.2 shall be void and of no force or
effect. The rights granted to Tenant under this Section G.2 are subject and
subordinate to any prior expansion, extension, renewal or similar rights
previously granted by Landlord concerning any of the First Offer Space or any
agreement by Landlord and any tenant occupying the subject space from time to
time. Time is of the essence in connection with the exercise by Tenant of the
First Offer Right and the

<PAGE>

approval a1-ail u&.tuUX, 4uNl I .,,;v,,%~r3c..: . Monument Sign. Tenant's rights
under this Section G.3 are personal to Tenant and cannot be assigned or
transferred Tenant must occupy a minimum of 10,000 rentable square feet in the
Building to retain its rights under this Section G.3 to place Tenant's Monument
Sign on the Monument. Landlord and Tenant acknowledge and agree that the only
name approved to be placed on Tenant's Monument Sign is "Island Pacific Systems"
and no other name shall be placed on Tenant's Monument Sign.

                                  EXHIBIT " "

                                       -2-

<PAGE>

                       AMENDMENT NO. 2 TO LEASE AGREEMENT

         This Amendment No. 2 to Lease Agreement (this "Amendment No. 2") is
made as of the 30" day of December, 1999 by and between THE EQUITABLE LIFE
ASSURANCE SOCIETY OF THE UNITED STATES, a New York corporation ("Landlord") and
ISLAND PACIFIC SYSTEMS CORPORATION, a California corporation ("Tenant"). This
Amendment No. 2 amends and modifies the terms and conditions of that certain
Lease dated March 29, 1995 by and between Landlord and Tenant, as amended by
that certain Amendment No. I to Lease Agreement dated January 31, 1998 (as so
amended, the "Original Lease"). The Original Lease, as hereby amended, is
referred to herein as the "Lease." Capitalized terms which are not otherwise
defined in this Amendment No. 2 shall have the meanings ascribed to such terms
in the Original Lease.

                                    RECITALS

         A. Tenant and Landlord entered into the Original Lease, which sets
forth the terms and conditions relating to Tenant's occupancy of certain office
space located in Suite 1200 (the "Original Premises") and Suite 1220
("Additional Premises") of the twelfth (12th) floor of the Building at 19800
MacArthur Boulevard, Irvine, California. The Additional Premises and the
Original Premises are hereinafter collectively referred to as the Premises.

         B. Landlord and Tenant desire to (i) expand the Premises to include an
additional five thousand two hundred eighty-seven (5,287) rentable square feet
designated as Suite 950 on the ninth (9th) floor of the Building (the "Second
Additional Premises"), (ii) adjust the Base Rent and (iii) set forth certain
other matters of agreement between Landlord and Tenant.

                                    AGREEMENT

         FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which is
hereby acknowledged, Landlord and Tenant hereby agree as follows:

         1. Basic Lease Provisions.

                   (a) As of the Effective Date (as defined in Paragraph 3 of
          this Amendment No. 2), Items 2.1, 2.2, 2.5, 2.6, 2.7 and 2.12 of
          Section 2 of the Original Lease are hereby deleted and replaced in
          their entirety as follows:

<PAGE>

         "2.1. The Premises: The "Premises" shall consist of the following
suites:

             Original Premises                 Rentable Square Feet
                Suite 1200                            18,510
            Additional Premises                Rentable Square Feet
                Suite 1220                             2,724
                  Second
            Additional Premises                Rentable Square Feet
                 Suite 950                             5,287

 The Original Premises are outlined on the diagram attached as Exhibit "B" to
 the Lease, the Additional Premises are outlined on the diagram attached as
 Exhibit "B-1" to Amendment No. 1 to the Lease, and the Second Additional
 Premises are outlined on the diagram attached as Exhibit "B-2" to the Second
 Amendment to the Lease."

         "2.2 Term: Ten (10) years, commencing on July 1, 1995, and expiring on
June 30, 2005."

         "2.5 Monthly Rental Installments:

          (a)      Suite 1200:
<TABLE>
<CAPTION>

------------------------ ------------------- ---------------------- --------------------------
                                             Rate Per
Months                   Rentable            Month Per              Total Monthly
of Term                  Square Feet*        Square Foot            Rental Installment
------------------------ ------------------- ---------------------- --------------------------
<S>                      <C>                 <C>                    <C>
1-60                     18,510              $1.63                  $30,171.30
------------------------ ------------------- ---------------------- --------------------------
61-120                   18,510              $1.88                  $34,798.80
------------------------ ------------------- ---------------------- --------------------------

         (b) Suite 1220:

------------------------ ------------------ ---------------------- ---------------------------
                                            Rate Per
Months                   Rentable           Month Per              Total Monthly
of Term                  Square Feet*       Square Foot            Rental Installment
------------------------ ------------------ ---------------------- ---------------------------
Effective Date           2,724              $2.50                  $6,810.00
(Amend. No. 1)
- 6/30/2003
------------------------ ------------------ ---------------------- ---------------------------
7/1/2003 -               2,724              $2.75                  $7,491.00
6/30/2005
------------------------ ------------------ ---------------------- ---------------------------

                                        2
</TABLE>

<PAGE>

         (c) Suite 950:

*Rentable Square Footage shall be determined by establishing the Useable Square
Footage of the Premises in accordance with the Method for Measuring Floor Area
in Office buildings, ANSI a65.1-1980 and then multiplying the Useable Square
Footage by a "load factor" of 1.134. The Rentable Square Footage shall be
subject to adjustment for final field measurements or corrected area
computations as may be established by Landlord's Space Planner, and the Total
Monthly Rental Installments shall be adjusted accordingly."

         "2.6 Tenant's Proportionate Share (Section 5.1):

                  (a) Suite 1200: 18,510 rentable square feet divided by 286,130
         feet.

                  (b) Suite 1220: 2.724 square feet divided by 286,130 square
         feet.

                  (c) Suite 950: 5,287 square feet divided by 286,130 square
         feet."

                  "2.7 Base Year (Section 5.1).

                   (a)      Suite 1200 Base Year: 1995
                   (b)      Suite 1220 Base Year: 1998
                   (c)      Suite 950 Base Year: 2000"

                  "2.12 (a) Parking Spaces Article 8): 133 unreserved spaces. 5
         reserved spaces.

                   (b) Notwithstanding anything to the contrary contained
          herein, effective July 1, 1995 through June 30, 2000, Landlord shall
          abate Thirty and 00/100 Dollars ($30.00) per stall per month for
          seventy-five (75) of Tenant's unreserved parking spaces, as set forth
          in Section 2.12(a) above and effective July 1, 2000 through June 30,
          2005, Landlord shall abate Twenty-Five and no/ 100

<TABLE>
<CAPTION>

------------------------ ------------------ ---------------------- ---------------------------
                                            Rate Per
Months                   Rentable           Month Per                    Total Monthly
of Term                  Square Feet*       Square Foot            Rental Installment
------------------------ ------------------ ---------------------- ---------------------------
<S>                      <C>                <C>                            <C>
Effective Date           5,287              $2.65                          $14,010.55
(Amend. No. 2)
- 7/31/2002
------------------------ ------------------ ---------------------- ---------------------------
8/1/2002 -               5,287              $2.75                          $14,539.25
6/30/2005
------------------------ ------------------ ---------------------- ---------------------------

</TABLE>

<PAGE>

Dollars ($25.00) per stall per month for seventy-five (75) of Tenant's
unreserved parking spaces as set forth in Section 2.12(a) above, provided Tenant
is not in default pursuant to Section 14.1 below ("Monetary Default"). In the
event that Tenant at any time is in Monetary Default under the terms and
conditions of this Lease, such unreserved parking rent abatement shall cease for
(i) the duration of the Monetary Default or (ii) one (1) month, whichever is
greater and Tenant shall pay monthly rent for each unreserved parking space in
the amount set forth in Section 2.13 above.

         (c) Notwithstanding anything to the contrary contained herein
commencing as of the Effective Date through June 30, 2003, Landlord shall charge
Tenant Fifty and 00/100 Dollars ($50.00) per stall per month for a maximum of
forty (40) of Tenant's unreserved parking spaces, as set forth in Section
2.12(a) above.

         (d) Notwithstanding anything to the contrary contained herein,
effective July 1, 1995 through June 30, 2005, Landlord shall abate Seventy-Five
and 00/100 Dollars ($75.00) per stall per month for Tenant's reserved parking
spaces, as set forth in Section 2.12(a) above, provided Tenant is not in a
Monetary Default under any of the terms and conditions of this Lease. In the
event that Tenant at any time is in Monetary Default under the terms and
conditions of this Lease, such reserved parking rent abatement shall cease for
(i) the duration of the Monetary Default or (ii) one (1) month, whichever is
greater and Tenant shall pay monthly rent for each reserved parking space in the
amount set forth in Section 2.13 above."

2. Suite 950 Tenant Improvements:

         (a). Scope of Work. Landlord shall cause its contractor to construct
the tenant improvements for the Premises as shown in the space plan PP-1 (the
"Plan") prepared by Zilly Interior Planning & Design dated December 27, 1999.

         (b). Construction Materials. Unless otherwise specified in the Plan or
Cost Estimate or hereafter agreed in writing by Landlord, all materials and
finishes utilized in constructing the tenant improvements shall be Landlord's
building standard. Should Landlord submit any additional plans, equipment
specification sheets, or other matters to Tenant for approval or completion,
Tenant shall respond in writing, as appropriate, within five (5) working days
unless a shorter period is provided herein. Tenant shall not unreasonably
withhold its approval of any matter. Tenant further agrees that it shall
promptly complete and deliver to Landlord any disclosure form regarding
hazardous materials that may be required by any governmental agency as a
condition to the issuance of the building permit.

         (c). Plan Revision. In the event that Tenant requests in writing a
revision in the plan or in any other plans hereafter approved by Tenant, then
provided such change request is acceptable to Landlord, Landlord shall advise
Tenant by WRITTEN CHANGE ORDER of any additional cost and/or Tenant Delay (as
defined below) such change WOULD CAUSE.

                                        4

<PAGE>

Tenant shall approve or disapprove such change order in writing within two (2)
days following its receipt. Tenant's approval of a change order shall not be
effective unless accompanied by payment in full of the additional cost, if any,
of the tenant improvement work resulting from the change order. It is understood
that Landlord shall have no obligation to interrupt or modify the tenant
improvement work pending Tenant's approval of a change order. All Tenant
Improvement work, including the delivery, storage and removal of materials,
shall be scheduled through and shall be subject to the reasonable supervision of
Landlord, and shall be performed in accordance with any reasonable conditions or
regulations imposed by Landlord including, without limitation, payment on demand
of an administrative fee of five percent (5%) of the cost of the work of the
Tenant Improvement to Landlord for supervision and administrative costs.

         (d). Tenant Delay. Notwithstanding any provision in the Lease to the
contrary, if Tenant fails to comply with any of the time periods specified in
this Exhibit, requests any changes to the work, furnishes inaccurate or
erroneous specifications or other information, or otherwise delays in any manner
the completion of the tenant improvements or the issuance of an occupancy
certificate (any of the foregoing being referred to in this Lease as a "Tenant
Delay"), then Tenant shall bear any resulting additional construction cost or
other expenses and the Commencement Date shall be deemed to have occurred for
all purposes including Tenant's obligation to pay rent as of the date Landlord
reasonably determines that it would have been able to deliver the Premises to
Tenant but for the collective Tenant Delays. In no event; however, shall such
date be earlier than the Estimated commencement Date set forth in the Basic
Lease Provisions.

         (e). Tenant's Agent. Landlord shall permit Tenant and its agents to
enter the Premises prior to the Commencement Date of the Lease in order that
Tenant may perform any work to be performed by Tenant hereunder through its own
contractors, subject to Landlord's prior written approval, and in a manner and
upon terms and conditions and at times satisfactory to Landlord's
representative. The foregoing license to enter the Premises prior to the
Commencement Date is; however, conditioned upon Tenant's contractors and their
subcontractors and employees working in harmony and not interfering with the
work being performed by Landlord. If at any time that entry shall' cause
disharmony or interfere with the work being performed by Landlord, this license
may be withdrawn by Landlord upon twenty-four (24) hours written notice to
tenant.

i.       That license is further conditioned upon the compliance by Tenant's
         contractors with all requirements imposed by Landlord on third party
         contractors, including without limitation the maintenance by Tenant and
         its contractors and subcontractors of workers' compensation and public
         liability and property damage insurance in amounts and with companies
         and on forms satisfactory to Landlord, with certificates of such
         insurance being furnished to Landlord prior to proceeding with any such
         entry. The entry shall be deemed to be under all of the provisions of
         the Lease except as to the covenants to pay rent. Landlord shall not be
         liable in any way for any injury, loss or damage which may occur to any
         such work being performed by Tenant, the same being solely at TENANT'S
         risk. In no event shall the failure of Tenant's contractors to complete
         any work in the Premises extend the Commencement Date of the Lease
         beyond the date that LANDLORD HAS COMPLETED its tenant improvement work
         and tendered the Premises to Tenant.

                                        5

<PAGE>

         (f). Substantial Completion and Punch List Items. For purposes of this
Lease, substantial completion of the Tenant Improvements shall be defined as the
date upon which Landlord furnishes to Tenant a certificate certifying that the
Tenant Improvements have been substantially completed in accordance with the
Tenant's Plans. Within fifteen (15) days after receipt of Landlord's certificate
of substantial completion, Tenant shall deliver to Landlord a written punch list
("Punch List") setting forth the additional corrective work to the Tenant
Improvements which Tenant believes is required to be performed pursuant to the
Tenant's Plans. If no such Punch List is provided by Tenant within said fifteen
(15) day period, Tenant shall be deemed to have accepted the Premises in their
entirety and Landlord shall have no further obligation with respect to
completion of the Premises or the Tenant Improvements, In any event, following
Landlord's certification that all items listed on the Punch List which are
required to be completed, as determined by Landlord's Space Planner, hereunder
and under the Tenant's Plans have been completed or otherwise satisfied,
Landlord shall have no further obligation with respect to completion of the
Premises or the Tenant Improvements.

         (g). Tenant's Representative. Tenant hereby designates Todd Hammett,
Telephone Number (949) 476-2212, as its representative, agent and
attorney-in-fact for the purpose of receiving notices, approving submittals and
issuing requests for changes, and Landlord shall be entitled to rely upon
authorizations and directives of such person(s) as if given by Tenant. Tenant
may amend the designation of its construction representative(s) at any time upon
delivery of written notice to Landlord.

         3. Effective Date. The Effective Date of this Amendment No. 2 shall be
the date that the Second Additional Premises is delivered to Tenant by Landlord
for occupancy.

         4. Brokers. Tenant represents and warrants to Landlord that it has not
had dealings with any broker or finder in connection with this Amendment No. 2,
and that Tenant knows of no other person who is or may claim to be entitled to a
commission, finder's fee or other like payment in connection herewith and Tenant
shall indemnify, defend by counsel approved by Landlord and hold Landlord
harmless from and against any and all claims, liabilities, losses, costs,
damages or expenses (including reasonable attorneys' fees and costs) that
Landlord may incur should such representation and warranty be incorrect.'

         5. Effect of Amendments. Landlord and Tenant acknowledge that the
Original Lease, as amended by this Amendment No. 2, remains in full force and
effect in accordance with its terms.

         6. Entire Agreement. The Original Lease, as modified herein,
constitutes the entire understanding between Landlord and Tenant, and can be
changed only by a writing executed by Landlord and Tenant.

         7. Counterparts. If this Amendment No. 2 is executed in counterparts,
each is hereby declared to be an original; however, shall constitute but one and
the same agreement.

         8. Corporate and Partnership Authority. If Tenant is a corporation or
partnership, or is comprised of either or both of them, each individual
executing this Amendment No. 2 for the

                                        6
<PAGE>

corporation or partnership represents that he or she is duly authorized to
execute and deliver this Amendment No. 2 on behalf of the corporation or
partnership and that this Amendment No. 2 is binding upon the corporation or
partnership in accordance with its terms.

         9. Attorneys' Fees. The provisions of the Original Lease respecting
payment of attorneys' fees shall also apply to this Amendment No. 2.

         IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment
No. 2 as of the date first written above.

 "LANDLORD"                                   "TENANT"

THE EQUITABLE LIFE ASSURANCE                 ISLAND PACIFIC SYSTEMS
SOCIETY OF THE UNITED STATES, a              CORPORATION, a California
New York corporation                         corporation

By: /s/ Gene W. Fuller                       By:
--------------------------                   -----------------------------
Gene W. Fuller                               Todd Hammett
Investment Officer                           Chief Financial Officer

                                        7

<PAGE>

                                  EXHIBIT "B-2"
                              Diagram of Suite 950

Floor Plan                                                           NINTH FLOOR

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